I've never cared for the term "capitalism." I like the economic system it represents, just not the word itself. Why? Because in a true capitalist system, a laissez-faire system, there is no "-ism." There's no underlying ideology. There are only free people, trading freely with one another, without fraud or coercion, trades in which both parties attain a perceived gain in value. If a neighbor is selling his boat for $10,000, and I like the boat, I buy it; I want the boat more than I want the $10k, and he wants my $10k more than he wants the boat. We both gain. That's how liberty works. If a trade is carried out by deceit, it is fraud. If it is carried out by force, it is robbery. Only free trade is morally acceptable.
We haven't had a truly capitalist economy in the United States for some time.
So what is "the economy?" Politicians like to talk about it, to tout its ups and cast blame elsewhere for its downs. But what is it?
Well, it's almost everything we do, every decision we make. If I buy my neighbor's boat, it's an economic decision. If I pay a local handyman to paint our house, something we are actually doing right now, that's an economic decision. If I buy a candy bar and a bottle of pop, that's an economic decision. If one of the kids in our family decides to pursue a college degree or get a welding certification, that's an economic decision. Any interaction that involves any trade of any kind is an economic decision.
The tool we use to carry out these trades is money. The United States has a fiat currency, which troubles many, myself among them, but money remains the tool that we use to trade with each other, skill for skill, talent for talent, resource for resource, and every other possible permutation. Money is a manifestation of our work; we produce value in our work, for which we are paid in money, which we can use to carry out all the economic transactions that surround and define our lives.
Every economic decision we make has far-reaching consequences.
I recently bought a new pickup truck. Aside from the personal satisfaction (if you want to see a happy redneck, let him buy a new truck), that transaction had far-reaching consequences. In return for my new (used) pickup, I surrendered a fair amount of currency I had held for such a purchase, and financed the balance. I wanted the pickup more than the purchase price, and the dealership wanted the purchase price more than the pickup, so both sides realized a gain. I gained a pickup. But the other side of the trade?
The salesman received his commission on the sale. With that and his commissions on other sales, he can pay his mortgage, buy groceries, pay for the Townhall VIP subscription I was delighted to discover he had, to take his wife to dinner; in other words, all of the economic decisions he makes on a daily basis.
The finance manager, I'm given to understand, receives his salary plus a small commission. His commission for his work in helping me obtain financing for the balance of my truck, quickly, easily, and without hassle, will allow him to also carry out all of the economic decisions he makes.
Production of the truck itself had far-reaching economic consequences. Production of it and trucks like it employ thousands at the Louisville, Kentucky Ford Super Duty plant, which in turn supports makers of tires, of wiring, of sheet aluminum for the body, of lights, of wheels, of carpet, of the computer that seems to run everything in the truck, of every switch, knob, fastener, doodad and thingamajig that goes into that massive, complex machine. It involves the miners who mined the ore, the foundry workers who refined and cast the metal, and who produced the engine block. It involves the oil-field workers who brought in the petroleum that provides materials that go into plastics, tires, and many other components.
The process employs the truckers who move the truck from Louisville, the dock workers who likely loaded the truck onto a ship at a West Coast port for shipment to Anchorage, and the trucker who brought it to the dealership. When the truck was traded in, it helped ensure the jobs of the dealership mechanics who examined it, detailed it, changed the oil, and prepared it for a new owner.
All of that was put in motion by my driving a truck I spotted on the dealership lot, and telling my wife, "I think this is the one I've been looking for." Look at all that decision did. And if I stop by our local gas station later and buy a bottle of pop, that decision likewise is the culmination of just such a long, complex, value-producing chain, from the providers of the raw materials to the bottlers in the lower 48, to the truckers, the shippers, the driver who brought the cases of soft drinks out here to a small gas station and convenience store out in a small village in the Susitna Valley, so I could enjoy a cold fizzy drink.
That, and billions of transactions like it, by millions of people, every day, every hour, every minute - that is the economy. It's nothing mysterious, although it, like the Earth's climate, is vast, chaotic, and beyond our ability to truly understand.
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That's why socialist systems, and any other system that attempts to "fix" the market by addling it with the long-handled spoon of government, always fail. No central planner, no economic council, no dictator, no panel of Top Men can ever understand, much less capably control or improve upon, these billions and billions of decisions. Markets, as I'm often pointing out, are often messy, but they usually get things right in the end. Socialist systems, or any system where government interferes with people's economic decisions, are doomed. They fly in the face of human nature; people will always seek out their own personal best interests, and government cannot do that for them.
Free trade is just that: Free people, freely trading their own property, skills, talents, and abilities with each other, without deceit or coercion. This is the only acceptable way to establish an economy. This is the only moral way to establish an economy.
There’s a word for this model of economics: Liberty. This is a system in which people are free to do what they please with their talents, resources, skills, and wealth, without interference by government. That's how it should be. That's not, sadly, how it is.
