On the road to serfdom

Capitalism is an economic and social system in which capital, the non-labor factors of production (also known as the means of production), is privately controlled; labor, goods and capital are traded in markets; and profits distributed to owners or invested in technologies and industries. (Wikipedia)

Like most people, you have probably not reflected much over who decided what furniture you should have in your house, what clothes you should wear, what your profession should be or where you should live. I'm guessing that these were all your own choices. Most people are quite capable of deciding what to do with their money and with their life for themselves. In fact, do you think that anyone else besides you could make better choices about what you should do with your life than you?

Of course not, and that is the beauty with a free market capitalist system. Nobody dictates what you should consume. It is a system that seems so perfect in its design that one would think that only a God could have created it to fit so well in our complex economy. But actually, it is quite simple; demand from consumers drives which products that are offered and competition leads companies to develop their products or suppress prices enough for consumers to choose theirs over their competitors'. Private companies have incentives to produce what the consumer wants since they will make profits from their sales if they are good enough. In the end, a close to perfect balance is achieved.

So what screws up the system sometimes? Well, the opposite of free market of course, that is, a controlled market. We try to protect certain interests by regulation, subsidies and tariffs, which lead to higher consumer prices or taxes. What people sometimes don't think about is that these measures to control the market also lead to inequality between people and suppression of economic development.

Yet, capitalism is very often scolded as if it was the work of the Devil. The system has been attacked for causing poverty, sweat shops, job losses and lately for causing global warming.

Venezuelan President Hugo Chavez held a quite shocking speech (to me anyways) on the Copenhagen Climate meeting on Wednesday. I happened to watch it live, and the perhaps most shocking part of the speech was that the attendees of the meeting were applauding him as he stated that capitalism needed to be dismantled. Here is a selection of quotes from venezuelaanalysis.com.

One could say, Mr. President, that a spectre is haunting Copenhagen, to paraphrase Karl Marx, the great Karl Marx, a spectre is haunting the streets of Copenhagen, and I think that spectre walks silently through this room, walking around among us, through the halls, out below, it rises, this spectre is a terrible spectre almost nobody wants to mention it: Capitalism is the spectre, almost nobody wants to mention it.

It’s capitalism, the people roar, out there, hear them.

Let’s not change the climate, let’s change the system! And consequently we will begin to save the planet. Capitalism is a destructive development model that is putting an end to life; it threatens to put a definitive end to the human species.

The cause, undoubtedly, I return to the theme of this whole disastrous panorama, is the destructive metabolic system of capital and its embodied model: Capitalism.

Socialism, the other spectre Karl Marx spoke about, which walks here too, rather it is like a counter-spectre. Socialism, this is the direction, this is the path to save the planet, I don’t have the least doubt. Capitalism is the road to hell, to the destruction of the world.

If capitalism resists, we are obliged to take up a battle against capitalism and open the way for the salvation of the human species. It’s up to us, raising the banners of Christ, Mohammed, equality, love, justice, humanity, the true and most profound humanism. If we don’t do it, the most wonderful creation of the universe, the human being, will disappear, it will disappear.

After this powerful speech, perhaps a few of us are convinced that capitalism is the cancer that is destroying the earth and creating a divide between the rich and the poor. As I see and hear about the protests in Copenhagen, it wouldn't surprise me if many will soon be demanding socialism and a one world government that can govern this perceived gigantic problem. Because many believe that nothing can save us unless we give up our way our life and hand over responsibility to one institution. Capitalism got us into this mess, so socialism will surely get us out of it, right?

The problem with a controlled market still persists though. In order to tackle environmental problems, poverty must be dealt with, but how do they expect to create greater prosperity in developing countries or the world in general if the market forces that created prosperity here are no longer let to work? Because of the capitalism system, we are able to afford investment in clean energy, and since there is a demand for it, companies invest in it. To start forcing developing countries to switch to clean energy before they can afford to provide their citizens with the basics: food, housing and education, seems backward. But that is just what socialism does: it dictates over the people. Capitalism must follow the wishes of the people.

If we beg for socialism, that is what we will get, and it might not be the Utopia that we expected.

These cartoons in video format from 1950 show exactly what the problem with a controlled market is.