Why Capitalism Fails

A debate with a libertarian, Ockjay, on the merits of the system that is failing us, and would fail us even more if it were unrestrained

by David Sims

My Opening Statement

CAPITALISM has proved to be another system for economic organization that fails in the long run. Both capitalism and socialism work at first, and it would appear that “in theory” both can be made to work forever, but in actual practice neither works well for long.

Socialism fails because each person who can will try to take out of the commons at least a little more wealth than he puts into it, thinking that his cheating isn’t enough to matter because someone else will take up the slack. But everyone has the same idea, and their aggregate cheating does matter.

Have you ever observed a “book swap” charity for a period of time? The rule is “take a book after leaving a book.” As the weeks go by, the books that are left in the common pile, available for taking, become ever more tattered and ever lower in desirability with respect to subject matter. That’s an example of the tragedy in the commons, which is the most fundamental reason for why Marxism fails. Ayn Rand was quite good in explaining that part of the picture.

The state can try to control the cheating that goes on in a Marxist economy by inflating its police apparatus, but the cost of that apparatus eats into the commonweal without producing anything of marketable value to offset those costs. Socialism always fails, sooner or later, unless there is some natural fix, something in human nature that provides a patch for the tragedy of the commons.

But capitalism, too, always fails in the long run. Like socialism, it works in the beginning, sorting men out according to their abilities, and rewarding most those men whose effort produces the greatest added marketable value.

But for capitalism to continue to work, every generation would have to begin anew, without any accumulation of wealth from the past to skew the distribution of rewards in the present away from contributions made in the present. Because it does not matter, in the end, how unearned wealth accumulates; the only thing that does matter is whether it does.

Capitalism permits inheritance, the command transfer of private property to a designated new owner upon the death of the previous owner. And therein is the flaw: inherited wealth isn’t earned by its owner, yet it leads to a class segregation of men that has nothing to do with how much wealth they have earned; i.e., nothing to do with how much or how well or how significantly they have worked.

The possession of wealth in amounts much larger than that of the average person, in turn, conveys a decisive advantage in the pursuit of more wealth. The advantage conferred by being rich increasingly overshadows every innate human virtue, eventually even intelligence. The initially tight correlation between wealth owned and wealth earned slackens and then disappears.

The legal inheritance of wealth and the consolidation of wealth in the state lead to the same final conditions: privilege for a few, slavery for the many, and in neither case does the allocation of resources promote the increase, or even the preservation, of human quality.

As the measure of man moves from his genes to his bank accounts, from his blood to his wallet, from what he is to what he owns, the worth of man as a biological organism dwindles, until finally he is no longer fit to live in the world.

The owner of a bulldozer might claim that he is stronger than 20 lumberjacks because his machine, driven by his certified hireling, can knock over trees faster than any 20 lumberjacks can. However, the power that fells the trees doesn’t reside in any capability that the owner has, but rather in the fossil fuel that the bulldozer burns to supply torque to its treads. The past accumulation of energy, being merely purchased in the present by a man who didn’t do anywhere near the work needed to justify his having the price of that purchase, is commonly misrepresented as being the capitalist’s own, present powerfulness.

Money is, at best, a fictional model for the energy economy. It is a model that isn’t necessarily accurate. The real currency of nature is energy, and human economic systems are subsystems of the natural world. Money works best when it is well-correlated with the energy dynamics of the economy. Capitalism and socialism, and above all monetized debt banking, reduce and then reverse the correlation between money and energy, until men who do no work are rewarded with all of the benefits of work. The details might vary, but the end result is the same.

Ockjay said, “America has shown that Capitalism works well when there aren’t a ton of federally run programs allowing those who mooch off the system to do so.”

I described the principle by which capitalism fails, and its failure thereby has been the rule since capitalism itself began. That is, the failure of capitalism predates the rise of the modern welfare state. Capitalism doesn’t fail for everyone at once, as socialism might. It fails for the population piecemeal. It has failed for the poor, for the people who didn’t inherit wealth, who grow in number over time because of the increasing concentration of wealth.

Although some poor people lack the ability or the motivation to avoid poverty, to them are added another group of people who are poor because there aren’t jobs for them, who get denied or the run-around when they seek jobs.

Capitalism constantly looks for ways to reduce labor costs. Automation made human labor less necessary than it had been when capitalism first appeared. When automation did appear, people who had the talent, the skills, and the motivation to make contributions began to find no jobs, or to become uncompetitive with mass-production if they tried to employ themselves.

And all the while that the poor man was scrambling to find something to do, the rich man wasn’t working. No. He was spending money and “owning things,” which, if it is work at all, it isn’t very strenuous. The rich man is a property owner with the attitude that his strength is greater than that of a company of axe-swinging lumberjacks because one of the things he owns is a bulldozer.

If you were to strip them both of their property, including their clothing, and compare the capitalist and the lumberjack side-by-side, it would be obvious that the lumberjack was the superior biological organism, physically. And there’s no reason to suppose that the lumberjack would be the capitalist’s intellectual inferior, either, because legal inheritance sabotages the link between mind and wealth.

That’s all the rich man really does: own things, buy and sell things, and issue commands regarding the use of things. For everything else, even if it is “intellectual work,” like accounting or lawyering or chemistry, he can hire out. In the real world, being a Hank Rearden is not necessary to being a successful capitalist. He risks his money, you say? He never earned most of that money! Inheritance skews the distribution of rewards in the present away from contributions to the productive enterprise that are made in the present.

As the few become more successful, more people get involuntarily disengaged. Wealth does not spread as capitalist apologists told us it would. As the rich get richer, the distribution of wealth becomes ever-narrower. Eventually, capitalism concentrates wealth so much that almost everybody is disengaged, and it is obvious (to a proverbial man from Mars) that the economic system has failed generally and not just for a few misfits.

The modern welfare state does make things worse, but not because it takes money from the most wealthy and redistributes it to those who are struggling. If that’s what it did, then it would have done well.

However, the welfare state earmarks redistributed wealth according to need (per the Marxist idea) and not according to expected payoff. You get more of what you pay for, and if you pay for sludge, then sludge will abound. Properly done, social welfare can be an investment, salvaging human talent that would otherwise be wasted in poverty. But welfare doesn’t set about salvaging talent; it merely gives a free ride to people who will never rise to their feet, no matter how much free money they get.

There are people who are like Ireland, who will bounce back after a hard fall. Providing support to these people is a sound investment, since they will repay it and go on to create more wealth.

There are people who are like Haiti, who can make any amount of wealth disappear without ever creating any new wealth to offset what was invested in them.

Social welfare would be a boon if it sorted people upon their biological merits and ensured that these merits would be preserved and that opportunities would be found for their use. The best people would be encouraged to marry each other and to have many children. The inferior people would be encouraged to have no children through being denied access to public assistance — no matter how much they might “need” it.

Ockjay said, “No, capitalism works all the time, it just does not guarantee individual positive results — that does not mean it fails. It does exactly what it is suppose to do (and has been working for hundreds of years).”

As I told you, capitalism always fails, just as much as socialism fails, in the long run. The details differ, but the fact of eventual failure is the same.

Socialism works in the beginning. So does capitalism.

Socialism fails because everyone wants to cheat a little and have someone else work a little harder, or consume little less, to make up for his cheating, but since everyone has the same expectations, the socialist economy fails. The government can postpone the failure for a while by legislating economic crimes and by moving goods around, but the result is that the entire country fails at once, much as the Soviet Union collapsed in 1990.

Capitalism fails, too, but not in exactly the same way. Capitalism does not fail for everyone at once. It fails for a few at first. And then it fails for more people in the following generation. And the pattern continues. As time goes by, there are fewer people who will tell you that capitalism “works just fine” because it has not yet failed for themselves, and there are more people who will say that capitalism has failed because it has failed for them.

How do you identify failure? I suppose that we might vote on it. But what is the purpose of an economic system, anyway? Is it to leave a few people grandly rich with inherited wealth and many people poor, regardless of their ability to create wealth? As laws were made for men, and not men for laws, the same is true, I think, about economic systems. There’s nothing holy about capitalism; it is to be judged by whether or not it does what an economic system ought to do.

Not every poor person is poor because he lacks motivation or because he lacks talent. Whereas there certainly are such people — human sludge — there are also poor people who have been pushed out of the productive enterprise. The number of job seekers is greater than the number of job opportunities. Inheritance makes possible increases in the scale of production, or mass production, which makes self-employment in small-time production uncompetitive and eliminates it as a remedy to joblessness.

When capitalism fails for you, then you will very likely cease to sing a song of its magical efficacy. Until then, sing on. You do have freedom of speech.

Ockjay said, “If you are searching for an equal outcome for everyone, you are not looking for capitalism.”

I was searching for no such thing. I judged two economic systems, Marxist socialism and capitalism, and I found both of them flawed by internal processes that cause their eventual failure. The path to failure differs; the fact of failure does not. If I was “searching” for anything, then it was for an economic system that could endure longterm without failing. It seems to me that, in order to continue viably for a long time, an economic system must not distribute rewards for labor done in the present away from contributions to wealth created by labor in the present. Both socialism and capitalism do this, albeit they do it differently. But, details to one side, it’s fundamentally the same flaw and it leads to the same result.

Ockjay said, “Capitalism allows for failure as well as reward and you are not accurately representing that fact in your argument. Reading your post, one might get the idea that capitalism makes every capitalist wealthy, rolling in the Benjamins, however, 66% of businesses fail within 10 years…”

I was aware of that. And, in fact, it is an argument that I can use. The readiness of capitalism to forgive failure varies according to the wealth of the man who tries to start a business. If a very rich man does this, and the business fails, then he is out some of the money in his pocket. Maybe. But if someone who isn’t rich does the same thing, he probably won’t be able to summon enough money of his own to repay his past loans and then again pay the start-up costs in another business. If he fails, he’s toast. He’s bankrupt. He might never be able to try again.

So the fact that most business ventures fail is another way in which inheritance builds a wall between the haves and the have-nots. The haves can shrug and try again. The have-nots cannot.

Ockjay said, “McDonald’s started with one man and one food cart in 1937. Fast forward through 76 years of successes, failures, good business decisions, bad ones, long work hours, tons of capital for expansion and today we have the employees of this company demanding to be paid more because the company is successful.”

A few success stories are expected. They are exceptions, and we don’t judge the character of anything by exceptions. The worth of capitalism as an economic system is measured by how many worthy people are left poor despite the gains of others. What is a worthy person? He’s someone who could have done well by his own efforts in the first generation to practice the economic system, before the distribution of rewards in the present lost their strong and positive correlation with contributions made in the present.

Ockjay said, “Capitalism is about the individual, not the collective. Capitalism permits ownership, ownership permits inheritance.”

That’s true. But that kind of ownership is a conditional value. Whether it is good or bad depends on what its consequences are. Here we begin to examine the nexus between rights and morals.

In any proper moral system, the highest value is the survival of the practitioner group.

Why survival? Because nothing matters to the dead. Because neither truth, nor justice, nor freedom, nor comfort have any value to inanimate things. Because only to something alive may anything else be good.

Why the group, rather than the individual? Because what does not exist is worthless, and what can’t exist for long probably isn’t worth much. Moral systems are social constructs, existing in the minds and in the behavior of their practitioners. The success of the moral system varies in rough proportion to how many people practice it. If one of them dies, the moral system is weakened but not destroyed. If they all die, their moral system dies with them.

Individuals usually have in inflated opinion of their own worth. As ephemeral beings, they will inevitably die. Nothing whatever can preserve the individual life for very long. But the race of the individual — the group to which he belongs by birth — might endure forever. Of course, a race, too, can die. Australopithecus, for example, is dead. But until its population falls below the number required for longterm genetic viability, a race is potentially immortal.

Rescue a man from death, and the value of your effort might last no longer than the man does. Unless you save one of those particular men who will go on to provide a benefit to your race. So when an economic system allocates benefits among men, the objective which guides that allocation should be the preservation, empowerment, and betterment of the race.

Any moral system that puts any theory of rights before the survival of the race is improper and ought to be discarded in favor of a proper moral system. Why? Because people who practice a moral system that puts anything other than survival in first place of value will, sooner or later, find themselves in circumstances for which their survival is in conflict with whatever that other thing is. At that moment, they will either abandon their improper moral system in favor of a proper one, or they will become extinct, and their improper moral system will die with them.

Any moral economic system must, likewise, put the survival of the race in first place of value, and any theories about “rights” that interfere with that value must be discarded, under a natural penalty of death, sooner or later, if it is not.

I hope that clarifies where I was going.

Ockjay said, “Please give your assessment of exactly what the failure of capitalism looks like if this is your position. You can’t do it.”

Of course I can. I said in the beginning of my discussion here that capitalism works “in theory,” and I’ve been hearing a lot of that theory lately. It’s a theory in which capitalism “works all the time,” even if it isn’t working to achieve any specific worthwhile purpose. Capitalism, in theory, works even when it spreads misery around the globe, when some fraction of the people are starving, and when children are being worked to death. In other words, capitalism doesn’t commit atrocities by accident; oh no, those atrocities are part of the plan, and capitalism causes them to happen intentionally. That theory of efficacy is something mankind would be better off without, I think. Certainly most of mankind.

The United States is not presently at the point where people are starving and children are being worked to death, but that time will come, and, in other countries, it has come and gone, and will come again.

Ockjay said, “Capitalism always adapts.”

Capitalism adapts in a way that preserves capitalism, but that does not mean anyone should regard the adaptations as worthwhile or that the preservation of capitalism is a good thing.

Capitalism adapts by pushing some men out of the productive enterprise, however skilled and motivated they might be.

Capitalism adapts by corrupting the state and enlisting its powers in the causes of capitalists.

Capitalism adapts by hiring workers to make machines that will ensure that workers will never need to be hired again.

Capitalism adapts through business competitions which Run Their Courses, after which the winning corporation consumes the losing one and excretes a bunch of formerly employed people into the unemployment dung bucket.

Capitalism adapts by raising the scale of production, in pursuit of higher profits, until self-employment becomes uncompetitive and is no longer a remedy for unemployment.

Capitalism adapts by ensuring, through inheritance, that certain men get wealth that they did not earn simply because they were favored in another capitalist’s Will.

You can fantasize all you like about how you think capitalism ought to work, but anyone can look around and see how capitalism actually has been working. Not everything that “works” does what should be done.

Now, perhaps capitalism is the wolf, and most of us are fawns who end up as the wolf’s dinner. All right. If the capitalists can get away with that — forever — then it might be morally right for them to impose on us. But if ever we discover a way to kill the wolf, then it will also be right for us to do so, just as it would be right for a mama deer to give a wolf a lethal kick in the head to keep him away from her fawn.

Ockjay said, “If, as you insinuate, a small group of people were to end up with all the money in the world, a new form of currency would emerge, making the old currency worthless. That’s capitalism working. And it’s a beautiful thing.”

Except that this particular adjustment is overdue.

It’s past time for the concentration of wealth to cause these hypothetical new currencies to emerge. And they have to some extent. Bitcoin comes to mind. But none of the new currencies has become dominant, and none of them is legal tender. If you trade in a currency that isn’t legal tender, then it is possible for creditors to seize your property, used as collateral, while denying to a judge that you ever offered them suitable payment.

Capitalism isn’t the baddest predator in the world. Capitalism does have the flaws that I’ve identified, and it does have the effects I’ve described. But there’s something worse loose in the world, something more evil, which preys on the wolves and the fawns alike.

The Constitution authorizes Congress to create money for the United States, and the money is to be gold or silver. It never authorized Congress to contract the creation of money to any other party, and since the Constitution did not give Congress that power, Congress has no such power. And yet, in 1913 Congress did exactly what it wasn’t supposed to do, when it passed the Federal Reserve Act, unconstitutionally giving the authority to create money to a private corporation, owned by bankers, run by bankers for their profit, who create money by loaning it, and who require interest to be paid upon the loans. The Federal Reserve System ensnared the United States in an illegal and treasonous bargain whereby the amount of money owed to the Federal Reserve would exceed the amount of money in circulation, and sooner or later the excess debt would be collected through the forfeiture of tangible assets. Like real estate.

The Federal Reserve System is, and has always been, a scam designed to endebt the government, endebt the corporations, and endebt the citizenry, and then, when the debts are as large as they can become, to call them due and have the courts strip away all of America’s public and private property, which the bankers will use as they please and auction off to the highest bidder (China) any properties they, themselves, have no use for. And the Americans will be homeless in a land that once was theirs, but is no longer.

This isn’t a secret to those involved. Every congressman has known about it. So has every Senator. So has every President. So has every Justice. So have the bankers, of course. The people who didn’t know, for quite a long time, were common US citizens, deliberately miseducated about economics in their high school lessons, and so remained ignorant of the treason of their government and of the resulting danger to themselves and to their posterity.

Ockjay said, “Socialism does not work at all. The socialist economic structure provides for everyone as a group according to what they need. In order for that to happen, an arbitrary standard emerges that is based upon the general needs of the group but neglects the actual needs of the individual as they have become relative to the group. Socialism never works.”

That isn’t true. Socialist countries have large bureaucracies devoted to finding out what the citizen needs. Of course, bureaucrats in socialist countries are no more effective than are those in capitalist countries, and you get about the same levels of well-intended stupidity and of malicious meddling under color of law. But the tragedy of the commons is what eventually brings socialism to an end. And it doesn’t occur immediately. Socialism does work, for many of the people using it, at first.

And the same is true of capitalism. Both systems can begin well. Both systems rot as they age. Whereas you might quibble that capitalism keeps doing what it was designed to do, you’ve never told me what that what is. Whatever capitalism was designed to do, it is something other than what an economic system ought to do, which is to maintain strong and positive correlations (1) between ability and opportunity and (2) between present rewards and present labors — or between wealth owned and wealth earned.

Ockjay said, “Nope. This is one of the many reasons why socialism sucks, but not why it fails. Socialism fails because it is impossible to fulfill the needs of the individual when focusing on the needs of the collective. Socialism is it’s own downfall. And it fails from day 1. It does not work at all.”

In what way does a collective have needs that are not also the needs of the individuals thereof? If socialism failed from the first day, then no socialist country would endure longer than a day. But they do. Some of them run on for decades before they fail. And, when they do fail, they collapse entire, rather than piecemeal. The reason they collapse entire is that the socialist government tries to postpone the end by moving bits of the commonweal hither and yon, keeping the system going as long as they can. But eventually their bubble bursts, and it bursts because of the tragedy of the commons.

Ockjay said, “Your premise that capitalism is about gaining wealth is wrong. When a business fails, that is capitalism working. You are saying that if you don’t end up wealthy that capitalism didn’t work for you. That is wrong.”

Try not to strip “working” of every context that gives the word any meaning. To what purpose does capitalism “work,” when, in the long run, few people become wealthy and many people become poor? Is that purpose worthwhile? Might some other purpose be better?

Ockjay said, “No one is saying that capitalism is holy. But it is the only system that produces the results it promises, thus being the only system that is successful.”

Try not to strip the words “results” and “successful” from every context that gives those words meaning. What “result” does capitalism promise? Please be specific. By what measure do you judge “success”? Again, please be specific. It seems to me that capitalism does not have results of which most people should approve, mainly because whatever “success” you might have been referring to, it isn’t enjoyed by many of the people concerned.

As I said, when capitalism fails for you, then you will very likely cease to sing a song of its magical efficacy. Until then, sing on. You do have freedom of speech.

Ockjay said, “I lost my business due to low demand of my product in this economy. That’s not failure of capitalism as capitalism never promised that I would be successful in my business endeavor or that people would have to buy my product to keep me in business. That’s a change in supply and demand. Capitalism is still working and the free market is ripe for opportunity and innovation.”

All right then. You are a true-believer. Capitalism is a religion for you, and you’ve proved yourself faithful. (Assuming, as I will, that you’re telling the truth.) But capitalism isn’t working as well as it once did. That’s what I was trying to say in my first comment here, but my reasoning apparently was unrecognized. Maybe a metaphor will help.

Long ago, during ancient times, it was fairly easy for a philosopher to think up and expound upon ideas that made him famous. He might get into trouble for doing it, but the job of philosopher required more bravery than intellect. At first. To be sure, a lot of ancient philosophers were very smart fellows, but the field was open to mediocre minds to put in a memorable word or two.

And it was the same in mathematics. The area of a square? The area of a triangle? Ha! The area of a circle might provide some challenge, until some smart person filled it up with little squares and then counted them, estimating the areas of cut-off fractions of squares as he went. He’d eventually discover the value of π that way, at least approximately.

And likewise, in many other intellectual fields.

But as time went by, all the easy discoveries were made. It became steadily more difficult for later people to add to the sum of human knowledge. Better brains and higher IQs were required. Today we have stuff like models of the early universe, which only people with very good math skills and a knowledge of quantum physics, astrophysics, and general relativity can hope to understand, let alone improve. Comparable advancement with machines made understanding them well enough to repair them, let alone to build them, something that only a few people had the innate potential to be trained for. As far as advancing the state of the art goes, the mediocrities now matter no more than the retards do.

Since human quality has become the bottleneck for human progress, the thing to do is raise the human quality, preferably in some gentle, but effective manner. I recommend assortative mating, the pairing of male ability with female ability to raise the average of the distribution for ability in the offspring. I also recommend that social welfare be used in the manner opposite to that in which it is used now. Instead of meeting “needs,” public assistance should be used to inhibit births among persons of low human quality and to promote births among persons of high human quality.

As you might guess, I have no problem with people being poor to the point of starvation. However, I do have a problem with the waste of human quality, which means I don’t like Marxism. And I don’t like capitalism, either, for the same reason.

Ockjay said, “You have not given any proof that capitalism ever fails, you have just listed some anomalies of the system. Please give an actual example of a capitalist system that has failed. That will help.”

You haven’t provided any meaningful definition for the “success” you ascribe to capitalism. Do that, and then we shall see whether I’ve anything to say about it. What is it, exactly, that capitalism “succeeds” in doing? Is it something good? Please, enlighten me.

Ockjay said, “So, you don’t consider an economic system that has been around since the dawn of humans to be a successful economic system?”

You do realize that humans commonly fail to learn from their mistakes, so that a bad idea is repeated again and again. Having a history isn’t the same thing as having a record for good results.

Besides socialism has also been around since the dawn of humans. Arguably, it predates humans. The mammalian family structure is socialist, since every mammal baby ever born required care and protection at the expense of some other living creature, and, if he lived, then he must have gotten it.

Ockjay said, “The question is not ‘How do you measure failure?’, it is ‘How do you measure success?’ It is quite obvious that your measure of success is wealth.”

No, no. It is not. I had thought that I was clear about that. The measure of success for an economic system is how well it maintains the link between ability and earning power, and the link between earned wealth and owned wealth. Capitalism is strong with both links in the beginning, but they become steadily weaker as time goes by, until men who do little work own much wealth and gain more rapidly, while men who do much work have barely a subsistence reward and no savings.

I never said that there should be no poor. I only said that there should never be lacking a way for someone of ability to avoid poverty. Whereas you will always have a fraction of human sludge, people without enough ability to get anywhere even if you were to get behind them and push, there are also lots of able poor people who would like not to be poor around today. And their numbers are growing.

Ockjay said, “The wealth of the person does not matter at all. If a business fails, it fails regardless of how much money someone has in their accounts. You are conflating risk vs. loss. If a poor and a wealthy person each invest $5,000 and that money is lost, they both lose the exact same amount but the poor person took the bigger risk. Risk and loss are not the same thing. That is like saying, ‘Well, if you are rich, you will only lose 5% of your investment and if you are poor you will lose 90% of your investment.'”

You miss the point. And it was a point that I had made clearly in the text I shall quote, videlicet:

Quoting David Sims: “If a very rich man opens a business enterprise, and it fails, then he is out some of the money in his pocket. Maybe.”

Quoting Ockjay: “This makes no sense. Rich or poor, if you lose $5,000 in a failed business it is still $5,000 lost. Money has a set value and is not based upon the wealth of the owner.”

Quoting David Sims: “But if someone who isn’t rich does the same thing, he probably won’t be able to summon enough money of his own to repay his past loans and then again pay the start-up costs in another business. If he fails, he’s toast. He’s bankrupt. He might never be able to try again.”

Ockjay said, “You are implying a standard where none exists. The free market determines the access of funds based upon risk. That poor person can get the same funding that a rich man can as long as the risk of investment is low and the product demand is high. Are you really trying to sell this idea as part of your argument?”

I did not conflate risk and loss. I pointed out an obvious truth. The rich entrepreneur has the wherewithal to start over. He can settle up with his investors and his creditors, if he even has any. He will have lots of money left over to try again. And again. And again. Until he hits upon the business idea that makes good for all his previous failures. The not-rich entrepreneur typically gets only one shot, and, as you yourself have recognized, most of those shots fail. That means capitalism forgives the rich man his failures, but it does not likewise forgive the not-rich man for failure. It reinforces the class wall.

Sure, there are exceptions. But we don’t judge anything by exceptions, except when we are made dishonest by undisclosed considerations.

Furthermore, there is a difference in standard. Because, as should be obvious, the rich man usually doesn’t need to convince anyone to back him. He can support his own hobby ventures with ease. So when you made your caveat “…as long as the risk of investment is low and the product demand is high…” you really weren’t saying very much about the prospect of the not-rich entrepreneur for liquidity after a business failure.

The fact that most business ventures fail is another way in which inheritance builds a wall between the haves and the have-nots. The haves can shrug and try again. The have-nots cannot.

Ockjay said, “None of this statement is based on fact. The have-nots can also shrug and try again. There is no try-again police out there stopping poor people from starting again.”

Yes, there are. When the not-rich entrepreneur fails, usually his creditors will hold him accountable for the repayment of loans. They will take his assets to the extent allowed by law, and they will hound him for any remainder. A court might order him to pay a certain amount each month, and the police will be prepared to toss him into jail if he doesn’t make those payments. He cannot shrug and try again. He might, someday, be out of the pit that his failed venture put him into, but he probably won’t recover quickly.

Ockjay said, “Your entire argument is based upon the ‘exceptions’ of capitalism.”

No. But yours apparently is.

The worth of capitalism as an economic system is measured, inversely, by how many worthy people are left poor despite the gains of others.

Ockjay said, “This statement confirms my suspicion that you don’t understand capitalism at all.”

I do understand capitalism. And what I said was correct. You have confirmed that you don’t understand the meaning of worth at all.

Man was not made for the law, but the law for man.

Neither was man made for an economic system, but the economic system for man.

The economic system which works best is the economic system which works best for man. Notice my context “for man” in connection with the word “works”? Clearly, you either have no context, no purpose for an economic system to work toward, or else you have a context that you have chosen not to reveal.

Ockjay said, “You view everything from a collective standpoint, and that’s why you connect economic systems with morality as you do. I don’t view the wealth of my neighbor as something that I should have a claim to, so nothing you say about this will apply to me. I have no opinions on the survival of others nor do I wish to ‘invest’ in the survival of humanity. I will worry about myself, thanks.”

You attribute to me thoughts that are not mine. I am not a Marxist. I don’t consider my neighbor to be my resource. When I described the nexus between rights and morals, I wasn’t presenting my preferences. I was, rather, describing a connection that I believe that I’ve seen in nature, a moral system preferred by nature over all others, and which is applicable in human affairs simply because everything we do is subject to natural law and because all of our systems are subsystems of the natural world.

In any proper moral system, the highest value is the survival of the practitioner group.

Ockjay said, “Nope. The highest value is the survival of the individual. Without the individual, there can be no group.”

That’s backwards. The individual proceeds from the race, not contrarily. If someone asks you whether he would suffer the greater loss if he were, on one hand, to throw away an apple, or, on the other hand, to destroy the tree on which the apple grew, you wouldn’t have any problem knowing what the right answer is. But with a simple shift in topic, in which instead of an apple, you have a man, and instead of a tree, you have his race, you suddenly get the priority in reverse order. How strange that is.

Ockjay said, “Without the individual, the group does not exist. The very make up of the thing you are valuing gets it value from that which you are discounting. If you value the group, the individual ceases to exist, eliminating the group. You can’t have it both ways.”

You are the one who should ponder the statement “You can’t have it both ways.” I’ll illustrate once again, this time by bumping the logic down a notch.

Without the atom, the individual (person) does not exist. The very make up of the person you are valuing gets its value from the atoms you are discounting. If you value the person, the atoms cease to exist, eliminating the person.

That reasoning is ridiculous, of course. But it was exactly as ridiculous when you did it.

Quoting David Sims: “Rescue a man from death, and the value of your effort might last no longer than the man does. Unless you save one of those particular men who will go on to provide a benefit to your race. So when an economic system allocates benefits among men, the objective which guides that allocation should be the preservation, empowerment, and betterment of the race.”

Ockjay said, “Wrong again. Meeting the needs of the individual does this. That man you just saved was an individual, not a group. Let’s say the man will cure cancer in 15 years but we don’t know that and right now he is hanging off the edge of a cliff and 5 people of the group have to risk their lives to get close enough to save him. No one stands there and says, we should save him because he may one day cure cancer and that would be good for the group. You save him because you are meeting his individual need, right now, to be saved. Why are you taking individual applications and applying them in group form?”

Meeting the needs of the race doesn’t imply losing resolution at the individual level. You seem to have come up with a Lazy Man’s Socialism from somewhere, where good intentions don’t apply and the government really couldn’t give a damn about whether the economic system facilitated anyone’s betterment. In other words, you blatantly will not allow your Marxist opponents (among whom I am not) the chance to present their case in its own best light, as any honest philosopher will do, and then proceed to show them why their system won’t work anyway.

But let me take your own example. You perhaps thought that it was capitalist, but it is not. It’s socialist: the man should be helped because he has need of help, and our noble sacrifice, our risk in providing that help, comrade, is just. Not because he can repay us, whether now or later, no matter in what way, but because he needs us. Is that the Soviet National Anthem I hear?

As for me, though, I would help him if he appeared to be a much better man than I am. But I doubt whether my certainty that he would find a cure for cancer would persuade me that he is sufficiently better than I am to gain my help. Why? Because I’m not sure that humanity should counter any more diseases by medical means. It would be much better for mankind to improve itself by eugenic means, so that it is no longer susceptible to cancers, or at least not nearly as much as it is now.

By the same principle, a race with perfect eyesight is better than a nearsighted race whose individual members all have perfectly corrective eyeglasses. All else being equal.

Quoting David Sims: “Any moral economic system must, likewise, put the survival of the race in first place of value, and any theories about ‘rights’ that interfere with that value must be discarded, under a natural penalty of death, sooner or later, if it is not.”

Ockjay said, “This sounds like something Hitler would have said, and scares the crap out of me. You are walking a slippery slope here. Not sure what direction you imagine this kind of thinking will lead, but it has nothing to do with economic systems.”

The phrase “like something Hitler would have said” does not mean the same thing that false does. This is the reason for Godwin’s Law, a rule in informal debate in which the first person to introduce an extraneous comparison to Hitler or the Nazis is judged to have lost the debate.

Quoting David Sims: “Capitalism adapts in a way that preserves capitalism…”

Ockjay said, “Yep, that is what I said. You were wrong. I rest my case.”

I’ll continue, then, starting with something I said before.

Man does not exist for the law, but the law for man.

Likewise, man does not exist merely so that an economic system can endure; rather, the economic system should operate in order that man can survive and improve himself.

If an economic system has endured heretofore, it means that some men must also have endured the while, but that doesn’t tell you whether or how long it will continue hereafter, nor does it tell you what effect it has had on the human quality of man.

Take a capitalist man and put him in a wilderness with the challenge that he survive. Can he? You might ask what purpose the question has, thinking that a sensible capitalist would avoid wildernesses. But what if the human world were to change, as it has occasionally done in the past, so that instead of the capitalist man going to the wilderness, the wilderness came to the capitalist man?

Has capitalism softened men so that they now depend on their technical props and would die without them? An economic system should not do this to men. It should strengthen their innate virtues, not cause them to wither. It should supplement their biological attributes, not supplant them. It should enable men to earn and trade amongst each other, so that no one with motivation and ability suffers from a shortage of necessary things. It should reward men according to their productive contributions, and it should not sabotage the principle that wealth earned should be equal to wealth owned.

There’s a partial summary of purpose, which a worthwhile economic system should serve. Nothing made by man, whether laws or culture or machines, exists for its own sake, but for man’s sake. For his survival, first. And then for his betterment. So that man retains his cutting edge for continuing his advance on all fronts, for doing more difficult things than he has ever done before, for taking strides in the future that will make those of his past seem like baby steps.

There was a Star Trek character who was scripted a very wise comment. “Improve a mechanical device and you may double productivity. But improve man and you gain a thousandfold.” And, as I recall, this character was one of the bad guys. Still, he was right.

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Source: David Sims