EDUCATORS’ PERSPECTIVE
immediate aim of the capitalist; nor must the profit on any single transaction. His aim is rather the unceasing movement of profit-making. This boundless drive for enrichment, this passionate chase after value, is common to the capitalist and the miser; but while the miser is merely a capitalist gone mad, the capitalist is a rational miser. The ceaseless augmentation of value, which the miser seeks to attain by saving his money from circulation, is achieved by the more acute capitalist by means of throwing his money again and again into circulation.
Of course, it is never wise to leave the definition of a system to that system’ s opponents. Many who are more sympathetic to capitalism have attempted to arrive at a more satisfactory description. For instance, Appleby defines capitalism as“ a cultural system rooted in economic practices that rotate around the imperative of private investors to turn a profit. Profit seeking usually promotes production efficiencies like the division of labor, economies of size, specialization, the expansion of the market for one’ s goods and, above all, innovation.”
Sociologist Rodney Stark suggests that,“ Capitalism is an economic system wherein privately owned, relatively wellorganized and stable firms pursue complex commercial activities within a relatively free( unregulated) market, taking a systematic, long-term approach to investing and reinvesting wealth( directly or indirectly) in productive activities involving a hired workforce and guided by anticipated and actual returns.”
Finally, economist Deidre McCloskey argues that capitalism is“ merely private property and free labor without central planning, regulated by the rule of law and by an ethical consensus.” She, like Appleby, goes on to point out,“ Above all modern capitalism encourages innovation.”
This is the system that young people are questioning. Unfortunately, those same young people are usually unable to clearly articulate what they mean by capitalism. Thus their arguments against it are usually couched in general terms such as evil, greedy, materialistic or opportunistic. In denisk0
Portrait of Karl Heinrich Marx, who was critical of capitalism and described it as,“… the unceasing movement of profit-making.”
order for capitalism to evolve, adapt and achieve continuous improvement, its critics must propose well-developed arguments targeting specific deficiencies of the system. They should also suggest ways to correct these deficiencies. Lacking that, the only alternative is to call for an end to the system, which would be tragic.
The increasing antagonism towards capitalism is troubling. The first step towards resolving this problem is to develop a clear understanding of the issue at hand. The descriptions of capitalism offered by Appleby, Stark and McCloskey provide a good starting point for addressing capitalism’ s role in our world. In upcoming issues, this column will examine the history of capitalism in order to identify its strengths and weaknesses. We will also consider whether capitalism is by its very nature a transitory economic system that will eventually lead to something better, explore the ethical nature of capitalism and weigh in on the role of government and society in a capitalistic system.
The young people who will shape our economic future need a balanced, informed understanding of capitalism.
Emotionally charged calls for ending the system should be taken seriously and met with calm, thoughtful responses. If there is a superior economic system, we should strive to develop it. However, history indicates that the alternatives to capitalism can be dark and foreboding indeed.
Brian Grinder is a professor at Eastern Washington University and a member of Financial History’ s editorial board. Dr. Dan Cooper is the president of Active Learning Technologies.
Sources
Appleby, Joyce. The Relentless Revolution: A History of Capitalism. W. W. Norton & Co.: New York. 2010.
Braudel, Fernand. The Wheels of Commerce: Civilization & Capitalism 15th-18th Century, Volume 2. Harper & Row: New York. 1982.
Ekins, Emily.“ Poll: Americans Like Free Markets More than Capitalism and Socialism More Than a Govt Managed Economy.” Reason. February 12, 2015.
Marx, Karl. Capital: A Critique of Political Economy. Penguin Books: London; New York. 1990.
McCloskey, Deirdre N. The Bourgeois Virtues: Ethics for an Age of Commerce. University of Chicago Press: Chicago, IL. 2006.
Novak, Michael. The Spirit of Democratic Capitalism. Madison Books: Lanham, MD. 1991.
Prout, James P. Review of Adaptive Markets: Financial Evolution at the Speed of Thought, by Andrew W. Lo. Financial History. Fall 2017. 37 – 38.
Sedláček, Tomáš. Economics of Good and Evil: The Quest for Economic Meaning from Gilgamesh to Wall Street. Oxford University Press: Oxford; New York. 2011.
Stark, Rodney. How the West Won: The Neglected Story of the Triumph of Modernity. ISI Books: Wilmington, DE. 2014.
Steverman, Ben.“ Get Rid of Capitalism? Millennials Are Ready to Talk About It.” Bloomberg. com. November 6, 2017.
Stokols, Eli.“ Socialism, Capitalism Seen in New Light by Younger Americans.” The Wall Street Journal. December 6, 2017.
12 FINANCIAL HISTORY | Winter 2018 | www. MoAF. org