Capitalism

Photo Credit Unsplash

It always seems that people revere the capitalist system with little actual understanding of what is happening, so I’d like to take a quick look into it this week. Capitalism is defined by the Merriam-Webster Dictionary as “an economic system characterised by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.” Basically private entities control the economic system (ie making/selling products) and typically function around the concept of free and fair competition (ie anyone can make/sell products, even competing ones). The ideal benefit of capitalism is to spur innovation. If there is free and fair competition in the marketplace then anyone can design a better competing product. This competition should ensure that ultimately the consumer will decide the best product for the marketplace. 

Photo Credit Unsplash

However, people tend to forget that capitalism can work in a variety of different ways. For example, and the main reason I wanted to write about it, is that capitalism is the reason that there is currently a shortage of fast food workers. Many people who had these low-wage, stressful jobs, have decided not to return to them after the pandemic. Instead they are finding other jobs that have better benefits. Capitalism is clearly at work. If I had a business and needed to hire employees I would need to offer jobs that people are willing to work. My job offerings will be competing in a marketplace of other job offers. This is free and fair competition. If I don’t want to offer a competitive salary or benefits package, I don’t have to, but then I have to accept the fact that very few people will want to work for me when they can get a better salary or benefits elsewhere. 

There are those that argue that it isn’t capitalism at work, that the shortage in fast food workers is due to socialism and the government providing handouts. This is a distraction designed to help the wealthy protect their wealth at the expense of the lower classes. In order to survive, everyone needs a basic level of income. Everyone has housing expenses, utility costs, grocery bills. These things don’t disappear because you are poor. If the government’s unemployment benefits (which are not at all high) incentivize people to forego getting 2 or 3 stressful minimum wage jobs in order to make ends meet, then why shouldn’t they choose that option? The government has an interest in making sure its citizens are not starving or homeless. This interest can be fulfilled by providing adequate unemployment benefits. Businesses are then free to compete with the government’s unemployment benefits by raising their own. If the business is providing a safe environment with a decent salary, there should be no trouble attracting workers even with government competition. This is the heart of the capitalist system, fair and free competition with the end result helping to raise the standard of living for the least fortunate among us. 

On a side note: it is also worth noting that the way the current system is designed, there are numerous tax benefits and loopholes for the ultra-wealthy and corporations. These benefits are rarely seen as government handouts, when in fact they are. The question that we should remember is this: Why are government unemployment benefits that help the poor survive regarded as a bad thing, when typically unnecessary government tax benefits for corporations and the wealthy are regarded as perfectly reasonable? 

Capitalism isn’t a bad thing. It has been and can be used to increase innovation and productivity. It provides the structure for anyone to create better products for consumers. And it can be used to create a more equitable world if used in conjunction with governmental policy. The key, as always, is to create things in balance. The capitalist system will work best when paired with governmental policies providing for the basic survival of all citizens. So if we keep the free market and allow the government to act as the baseline competitor, we’ll all eventually win!