Shannon Turner – Period 7
The main goal of capitalism is to provide the cheapest goods to all consumers. Capitalists believe that an individual can gain wealth through innovation and hard work. Both Ludwig Von Mises and Adam Smith attempt to prove these points. Since the theory of capitalism is flawed, their ideas and their writings are flawed as well. Capitalism restricts its workers; they believe the government should only interfere to break up monopolies, and the capitalistic view on individualism doesn’t take outside factors into account.
In a capitalistic nation, companies are always looking to increase their profit margin. To achieve this, these major businesses cut both wages and labor, while the workers are still expected to create the same output. Cutting wages and labor is a company’s first move when they want to increase their revenue. This shows one of the major flaws with capitalism. Von Mises states that “the employees themselves are the customers consuming the much greater part of all goods produced” (Liberty and Property). When companies pay workers as little as possible, they barely have enough money to survive, let alone keep the economy circulating by consuming. Companies don’t want to pay much higher than the minimum wage because it cuts into their profit margin. In fact, many companies and capitalists are in favor of getting rid of the minimum wage overall.
Locke stated that all men are naturally free, but are also naturally selfish. Companies are meant to pay their workers based on ability. But as an entity, they become selfish; their ultimate goal has moved from bringing consumers the cheapest goods to making the most profit, to the detriment of the workers. Companies and wealthy individuals will do everything in their power to protect their money and take extra precautions to make sure no one takes it from them. If big corporations could do whatever they wanted, most of them would violate human rights laws, including child labor and unsafe working conditions, and also add to pre-existing environmental problems by dumping tar and deforestation.
Von Mises and Smith agree that an individual, through his own merits and perseverance, can move up in the world. All humans are supposed to be born equal. However, in the world we live in today, some people are born with a lot more power than others. This proves that an individual, through his own merits, cannot move up in the world. Since individuals are not all on a level playing field, it is almost impossible for one to gain higher status in a capitalistic society. This neglects to think about uncontrollable factors like low-income families. A child born into a family living under the poverty line is obviously not going to get the same opportunities as someone born into wealth, no matter how hard he works. Growing up with barely enough to buy food means most likely no college degree for the intelligent, yet impoverished child. The amount of employers willing to hire someone with no college degree decreases each year; therefore, that child born into a poor family will be forced to take a minimum wage job, repeating the entire cycle. This seemingly-equal American citizen cannot free himself from the grips of poverty because he could not control the financial situation of the family he was born into.
Instead of being told to do what they love and follow their dreams, children are being bred to study what will get them a job. The world is so competitive and selfish that a job relating to one’s passion is no longer acceptable. Von Mises even contradicts himself, saying that “a man of average intellectual abilities has no chance to rise to the rank of a captain of industry” (Liberty and Property). He tries to make up for this statement by going on about how “the sovereignty that the market assigns to him in economic affairs stimulates technologists and promoters to convert to his use all the achievements of scientific research” (Liberty and Property). However, this doesn’t disprove his first statement. An average man has no hope of climbing the social ladder while capitalism is in effect.
An example of how capitalism doesn’t work can be seen all throughout the Gilded Age. The late nineteenth and early twentieth century was filled with manipulation and schemers. After the Civil War, there was a massive wave of immigrants who thought America would be the answer to all of their dreams. However, there weren’t nearly enough jobs for all the people coming to this new land. Only those with enough money, skills, or who already had relatives living in the United States were able to provide quality lives for themselves and their families. Those who were poor and unskilled had a hard time making enough to survive. Because these immigrants were so desperate, companies could hire them, put them in terrible working conditions, and pay them little to nothing. Child labor was widespread in the Gilded Age. Both adults and children worked all day, every day, with no breaks, and barely made enough income to survive. The individual immigrants who were poor and unknown were unable to climb the money ladder and make something of themselves in this country. The only hope they could find was with other immigrants from their home country, something to remind them of life back in another world.
At this time, the government viewed itself only as a provider of essential services like roads and justice. Other than individuals being wronged, the government could not care less about what happened to America’s inhabitants. This governmental view led to machine politics, which is when “the official government [is] supported and manipulated by a shadow government of bosses and associations…sprang up to provide vital services to people who had no other recourse” (Gilded Age Scandal and Corruption). William Marc Tweed used bribery and kickbacks to gain millions of dollars from contractors and suppliers, who had to pay in order to keep their jobs.
At the beginning of the twentieth century, companies started using new methods and cheap labor to get the most profit they could muster. The government was extremely behind in thinking, so the corporations continued to use cutthroat ways to gain money, both legally and illegally. America was built on the laissez-faire philosophy; when the government finally realized it was time to step in, it was too late. Corruption was prevalent.
Smith states that “He will be more likely to prevail if he can interest their self-love in his favor, and show them that it is for their own advantage to do for him what he requires of them” (Division of Labor). He goes on to say to succeed in this, one must not talk of his own necessities but of their advantages. Smith proves that capitalism is about true exploitation and persuading people to give up their own time for an individual’s own personal gain. The world would be a much better place if people stopped thinking of personal gain, and instead thought of the nation and the world as a whole.
Capitalism makes us less free. As seen in the Gilded Age, it brings out the selfishness in everyone. Capitalism pleases the rich and the uneducated poor, who have been persuaded by the wealthy that it benefits the entire population. They are given hope that they, too, can one day be rich. But the likelihood of this happening is slim to none. Von Mises says that “[individualism] aims at the creation of a sphere in which the individual is free to think, to choose, and to act without being restrained by the interference of the social apparatus of coercion and oppression, the State” (Liberty and Property). However, that assumes that all people in a capitalistic society and honest, selfless, and generous. At least in the United States, that is far from the truth. Capitalism stifles true individual freedom and prevents our nation from becoming the greatest in the world.
Aboukhadijeh, Feross. “Gilded Age Scandal and Corruption” StudyNotes.org. StudyNotes, Inc., 17 Nov. 2012. Web. 05 May. 2013.