The foundations of hyper-capitalism
In his 1776 book, The Wealth of Nations, Adam Smith presents the basic structure and “laws” for the establishment of the capitalist economic system. More important to Smith than the establishment of a strict economic structure was the importance of personal freedom, which reflects some of the ideological trends of the time period. Smith’s main objectives were, “first, for the “good of the nation” he wanted to reduce government interference and replace it with greater individual freedom. After all, he reasoned, if every individual had the freedom to achieve his or her potential the result would be the greatest possible good for the whole nation. Second, he wanted to see England enjoy the great increase in output that he felt would result from a division of labor.” The introduction of these ideals into society resulted in the establishment of what has come to be known as the free market system or capitalism. Capitalism can best be described as embracing the following:
- Private property;
- Freedom of enterprise and choice;
- Self-interest as the dominant motive;
- Competition;
- Reliance in the price or market system; and,
- A limited role for government
“The primary driving force of capitalism is the promotion of one’s self-interest; each economic unit attempts to do what is best for itself.”
The basic precepts and ideals that are presented by these particular definitions demonstrate the importance that capitalism places on the role of the consumer. The first three parts of the framework of capitalism all revolve around the ability and will of the consumer who stimulates and creates the market itself. The significance of the consumer’s role in a capitalist system creates:
- A climate in which economic security cannot be guaranteed;
- A system in which consumers themselves are responsible for stimulating the economy;
- No guaranteed minimum income for consumers (while they fill their role of providing labor); and,
- A focus on competition while maintaining maximum profits, which assures that manufacturers will strive to operate while incurring only minimum, costs.
Although we have become accustomed to the benefits capitalism has generated in general, there is a downside to the manner in which it is practiced today. This is especially true “if you measure efficiency of labor in terms of output per hour of labor time as Western economists do (ignoring such hidden costs as unemployment, erosion of land, pollution of air and water, and squandering of often irreplaceable resources), market societies have been doing rather well.” The unmeasured, yet very real results of these ideals can be seen today with the mass exportation of jobs from the United States to less developed countries that have a lower cost of labor (as well as having less stringent environmental regulations). This has led to less consumer spending and has resulted in an economic downturn, or “recession”, within the American economy.
"Poverty is the parent of revolution and crime." -Aristotle
Posts
