Sunday, December 05, 2004

Lefty responds

If you were around last week to catch my hosting of the Carnival of the Capitalists you would have read about my misgivings with capitalism and my theme for the day of capitalism benefitting those who aren't at the top of the pyramid. There were several great postings and comments on both the topic and my attitudes so I thought I'd pick one in particular to respond to here.

Alex asks:

What is it with latter-entrepreneurs and disliking capitalism? Is it that you're trying to escape it (at least symbolically) by not working for an established business, or perhaps a worry about the lack of a guaranteed outcome in a capitalist economy? If the latter, you can take solace in the fact that history shows that capitalism alternatives don't offer a lot of safe bets either... ;-)

Snark aside, I'm genuinely curious. It seems like, if anybody, entrepreneurs - strongly self-motivated people with a vision of independent success - should be bigger fans of a system that lets them proceed however they want and keep their winnings than anybody...

I'm interested, and heartened, to hear Alex say there are other new entrepreneurs out there who think similarly to me in this regard. I can't speak for them of course but Alex's theories don't really ring true with me.

Certainly I'm trying to escape a particular lifestyle by creating my own. Rather than symbolically escaping capitalism though, I think I'm escaping the far more literal boredom that would follow with working for something I had no real interest in.

As for guaranteed outcomes, if I was worried about those I don't think I'd be doing this at all.

I think my dislike for capitalism is largely derived from guilt. I grew up in prosperous times and have never had to want for anything of real significance. I look around though and I see huge gaps between what I have as young middle class male and what basic needs others lack in both my country and elsewhere. When I look at the capitalist elites the difference between the haves and have nots is so monumental I find it obscene.

How could anyone be satisfied with a system that can produce such discrepancies and unfairness?

Note there that I did say "be satisfied with a system". I don't hate capitalism, and I don't have anything radically better to replace it with. I am however not satisfied with it in it's current form. I want us to do better, I want us to actively work towards bridging the gap between rich and poor and protecting the environment. I want us to do these things not just as flow-on affects but as primary goals, equal in importance to our current goals of making money and increasing shareholder value. To treat them as anything of less importance just doesn't seem very human to me.

...entrepreneurs should be bigger fans of a system that lets them proceed however they want and keep their winnings than anybody

I'm definitely a fan of a system that lets me proceed however I want, however I'm not such a fan of a society that has become obsessed with keeping their winnings to a degree that defies all logic. The term multi-millionaire seems non-sensical to me. What can you do personally with several million dollars that you can't do with one million? Plenty of things I'm sure, but are those things really that important?

On this point I'm speaking from some level of experience. To start my new venture I've dropped my salary to almost a third of what it previously was. It's now much closer to what I'd be getting on unemployment benefits than the average Australian's weekly wage. To my surprise my quality of life is pretty much unchanged if not improved. If my software is a success I don't really envisage changing my current lifestyle all that much. For me at least it seems what they say about a simpler life really is true.

So maybe that's what I'm really riling against here. Not so much the capitalist system but instead the capitalist societies that are our implementations of it. Everything looks great in theory, in practice we can always do better.

6 Comments:

At 2:27 PM, Blogger amortiser said...

Lachlan,
You have set out a lot of the criticisms of capitalism that I have heard often. I will endeavour to deal with a few.

What you get from your business are not "winnings" they are "earnings". They are the reward for the effort that you have put in to provide a service for your customers. They have paid you what you have agreed for the product or service you have provided.

"Winnings" are generally the result of a gamble a person may make on a result which is mostly beyond the gambler's control. In business your earnings are based on the quality of your own efforts, ability and judgement.

You make criticism of what a multimillionaire does with his money in the context that he cannot possibly make use of it all. Aside from the fact that he has earned it and as such is morally entitled use it how he wishes the millionaire probably spends only a fraction of his wealth on so called conspicious consumption. The wealth is invested in his business to expand it or is invested in other businesses so that they may grow and expand on the judgement of like minded individuals.

This is the motive power and the engine that drives a modern economy and provides countless opportunities for emerging entrepreneurs who don't have the capital to start off but have ideas that are worth pursuing.

What is the alternative to such a system? Obviously the millionaires "excess" needs to be redistributed? By whom and to whom? What sort of people will be attracted to this "noble" task?

The projects that these people support have no real support because they rely on coercion to achieve their ends. Their means of support is cultivating the evil of envy and the "virtue" of egalitarianism. They promote the concept of equality of outcomes rather the equality of rights. Everywhere they implement their programs and to the extent that they are successful the ranks of the poor increase in direct proportion.

I wonder why you feel "guilt". It seems that you subscribe to the "zero-sum" view of capitalism. The success of one means the poverty of another. The normal lot of the ordinary citizen before the Industrial Revolution and the birth of capitalism was grinding poverty and being dominated by feudal lords and monarchs with a life expectancy not much over 30 years.

The fact that ordinary citizens can now succeed based on their own effort and ability rather that class entitlement should be cause for celebration rather than an outpouring of guilt.

If you make a motzer from your business you are free to spend it as you wish and that includes giving it away. In Australia a business hero, Dick Smith, did exactly that with a company he set up selling Australian Made products. All the profits went to charity. He recently put ads in the newspapers saying that he has been unable to expand his business in any way through this policy (doh!) and consequently his ability to service his customers has been badly affected. He realises that he does more for everybody by being selfish and reinvesting his profits or distributing them to investors who will spend them as they see fit.

Be proud of your achievements in business. Your profits are the reward your customers pay you for the service that they have received. If you fail them you will be suitably punished as well.

Above all never feel guilty about your own achievements. Guilt is emotional punishment for moral failure. Being successful through your own efforts is something to be proud of not disgusted by.

I hope I have given you a few reasons for hosting 'Carnival of the Capitalists". Long may you do so.

 
At 10:35 AM, Anonymous Anonymous said...

I'd like to start by applauding amortiser's commentary. I heartily agree and could not have said it better.

What can you do personally with several million dollars that you can't do with one million? Plenty of things I'm sure, but are those things really that important?As it turns out, there are a lot of things you can't do with only one million dollars. In my country, the rule of thumb is that $1,000,000 invested will produce $30,000 per year of after tax income.

There are many cities here where one could find it difficult to live on that income. You could certainly survive, but you may not be able to live near family or friends. You might have to live in high crime areas. You might not be able to afford travel or education opportunities that interest you. It also might not be enough income to hedge against predictable economic or medical risks.

To start my new venture I've dropped my salary to almost a third of what it previously was. It's now much closer to what I'd be getting on unemployment benefits than the average Australian's weekly wage. To my surprise my quality of life is pretty much unchanged if not improved. If my software is a success I don't really envisage changing my current lifestyle all that much.Have you tried attracting a mate, recently? :-)

And of what kind of life does your mate dream? Were you thinking of perhaps having a couple of children?

Have you ever sat down and figured out how much money you'll need over the next 40 years? Did you remember to account for taxes and inflation? A million dollars may begin to look like a modest, even inadequate, sum.

Actually, I think your opinion about modest living reflects some wisdom. Unfortunately, much of society is poorly informed and lacking wisdom. And since you interact with society, you may discover that modest means give rise to practical difficulties.

I think my dislike for capitalism is largely derived from guilt ... When I look at the capitalist elites the difference between the haves and have nots is so monumental I find it obscene ... How could anyone be satisfied with a system that can produce such discrepancies and unfairness?In the interest of self-knowledge, I encourage you to explore the roots of your guilt. Who stands to profit from your guilt and compliance?

A scientist, trying to remain unbiased might wonder about "variations in resource distribution." When you say to yourself that these "discrepancies" are "obscene" and "unfair," whose voice do you hear in your mind? Why were you inclined to select such perjorative terminology?

Are your views based on a review of properly sampled evidence? Or is it really your mother, father, priest, or television doing the talking? I'm not raising these questions to indict you. Rather, you may be surprised at who is mucking around in your head.

None of this, by the way, is meant to discourage you from discovering something better than capitalism. Just don't be too eager to drink the socialist Kool-Aid that is being passed around.

 
At 9:10 PM, Blogger Lachlan said...

Thanks for spending so much time replying to my post Amortizer and Anonymous. It's really rewarding to engage people through this medium. Unfortunately I'm run off my feet this week and can't give you the response that's warranted but watch this space early next week and I'll try to reply. It'll probably be a comment here rather than a new blog entry (I've got to get back to software soon or people are going to get anxious).

 
At 2:07 PM, Blogger Troy Worman said...

I am a big fan of capitalism, but as you say, we can definitely do better. To start, how about some humanity.

 
At 8:18 AM, Anonymous Anonymous said...

> To start, how about some humanity.

Okay. What did you have in mind?

 
At 9:50 PM, Anonymous Anonymous said...

A couple of points - how much of the "have nots" are a result of people who don't try, or are lazy? You can't help people if they won't help themselves. So focus on those who want to put in the effort and hard work - and there's still lots of those people around.

Have you looked into the recent books and trends on Social Capitalism? There are lots of people working towards a better capitalism. Much of it is an individual or grassroots effort within the current system - rather than waiting for someone to make a system, you can make it yourself.

Where to start? Here's some organizations that help people to become self sufficient by running their own business. A loan or grant of $100 can do wonders for some people. I found out about one of these through Audible.com, who are supporting the Trickle Up program:

Trickle Up: http://www.trickleup.org/
ACCION International: http://www.accion.org/
Charity Navigator: http://www.charitynavigator.org/
Fast Company Social Capitalist Awards: http://www.fastcompany.com/social/

There are already plenty of groups working to make a difference, actively working towards bridging gaps and improving the world. Even Bill Gates is doing his part. All you have to do is join in - no need to feel guilty.

 

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