In praise of Capitalism as the engine of freedom and equality

Karl Marx Tomb, Highgate Cemetery, London, “Workers of All Lands Unite”

I believe, always have believed, that capitalism is the absolute best way to organize a country and its economic system. The history of Western Civilization proves it, but it also proves that there have always been and probably always will be a sizable contingent of those who believe capitalism fosters selfishness and greed. Those who hold that mindset would substitute socialism as a system of happy cooperation where everyone is well treated and equally prosperous.

From each according to his ability, to each according to his needs” is a slogan popularized by Karl Marx in his 1875 Critique of the Gotha Program.

Sounds lovely doesn’t it? Here is the complete paragraph in which Marx wrote the phrase:

“In a higher phase of communist society, after the enslaving subordination of the individual to the division of labor, and therewith also the antithesis between mental and physical labor, has vanished; after labor has become not only a means of life but life’s prime want; after the productive forces have also increased with the all-around development of the individual, and all the springs of co-operative wealth flow more abundantly—only then can the narrow horizon of bourgeois right be crossed in its entirety and society inscribe on its banners: From each according to his ability, to each according to his needs!”

Marx must have believed that human beings are mostly kind hearted toward each other so they will be happy to share and share alike. Those with greater ability will be glad to share their personal gains with those of lesser ability. Marx used the word “communism” to mean common ownership instead of private ownership of all things created in a society. He believed that under a communist system a given society would produce such an abundance of goods that everyone would gladly share. After all, there would be such a bonanza of goods and necessities there’d simply be no reason for anyone to hoard.

In theory, under communism, all means of production and wealth are owned in common, rather than by individuals. In practice, a single authoritarian party controls both the political and economic systems. The fruits of the society are not shared by all. The ruling party takes what it wants, which is usually just about everything, and the people live a minimal subsistence life on whatever scraps the rulers allow them. Instead of everyone caring for each other, everyone is stealing as much as they can from each other. It becomes a struggle for survival, as we are seeing in Venezuela today.

William Bradford saw this first hand, more than two hundred years before Karl Marx was born. The Mayflower pilgrims had written into their original charter a system of communal property and labor.

Jerry Bowyer wrote in 2012:

As William Bradford recorded in his Of Plymouth Plantation, a people who had formerly been known for their virtue and hard work became lazy and unproductive. Resources were squandered, vegetables were allowed to rot on the ground and mass starvation was the result. And where there is starvation, there is plague. After 2 1/2 years, the leaders of the colony decided to abandon their socialist mandate and create a system which honored private property. The colony survived and thrived and the abundance which resulted was what was celebrated at that iconic Thanksgiving feast.

So America was not founded on capitalism. Instead, capitalism came to America to save the pilgrims of Plymouth Plantation from starvation.

Under capitalism if you are slapped down by job loss, health matters, family tragedy or some other misfortune, you do not need to abandon all hope for a better future. Many a person has lost a lucrative position, fallen on hard times, and yet arisen phoenix like from the ashes and gone on to newfound wealth and prosperity. One in a country committed to free markets can that occur, except of course for those who are able to climb to lofty a height in politics where graft and corruption provides prodigious rewards. That will always be open to only a few and they have to watch their backs at all times. Someone else will always be waiting a chance to take their place.

Even where freedom and opportunity in a capitalist state exists there will be many such stories of misfortune. The virtue of capitalism and free markets is that recovery from misfortune will also be likely. At least for those willing to pursue it. The personal story of Dr. Robert Wang, inventor of the  Instant Pot, is a current example:

The Instant Pot and How Empathy Is at the Core of Capitalism

[This was originally published at Fee.com and reproduced here with permission]

You don’t have to search far to read claims that capitalism is centered on greed and selfishness. For some, the assertion seems self-evident as they read, for example, stories of pharmaceutical companies dramatically increasing the price of important drugs. Those who hold a “capitalists are greedy” belief fail to distinguish between crony capitalists — who make their money through subsidies, mandates and government restrictions on competition — and entrepreneurs who make their money through fulfilling the most urgent needs of consumers.

The Instant Pot is a little story of how entrepreneurs unselfishly better our world. If you don’t have an Instant Pot or don’t cook, you are probably wondering what the fuss is about. If you have one, you know.

Without traditional advertising, Instant Pot has become a best-selling item on Amazon, selling 215,000 units on Amazon Prime Day. Bloomberg Magazine calls it a “magical pot.”

The Wonders and Success of the Instant Pot

Reimagined for the 21st Century, the Instant Pot combines slow cooker and pressure cooker features and adds others. We have two Instant Pots on our kitchen counter; most days, we use both.

Meals with whole grains and beans are staples in our home. When our pressure cooker didn’t seal, the meal was delayed. Scrubbing burnt pots was part of our routine. We assumed these frustrations were the price we paid for home cooking until the Instant Pot arrived. Dr. Robert Wang, the inventor of the Instant Pot, was certain there was a better way that only he could see.

In 2008, Dr. Wang, a Chinese immigrant to Canada with a Ph.D. in Computer Science, was laid off from his job. With $350,000 of his savings and the help of two other engineers, he founded his company Double Insight. The future would hold profit or loss; they did not know. In 18 months, the Instant Pot was invented.

Wang seeks relentlessly to improve his invention. He has read all 39,000 Amazon customer product reviews. He relies on customer feedback to design an ever-better user experience and adds cooking prowess to each new generation of the product. Since he doesn’t advertise, Wang credits his viral business success to product development and customer support.

Wang is following a rule of all successful entrepreneurs: Give customers what they want, not what you have. Customers didn’t want another choice of traditional cookers, they wanted a gadget that could help them make nutritious home-cooked meals in much less time and with a minimal learning curve. Yes, Dr. Wang created wealth for himself; but he did so by improving the lives of others, including a small economy of cookbook authors showing how to use the Instant Pot for every possible cuisine. Win-win.

Capitalist vs. Crony Capitalist

It is “crony” capitalists who seek to give the consumer what their company has and not what the consumer wants. Crony capitalists use government coercion to force the consumer to buy what they don’t want. Ethanol-laced gasoline is a good example. Who wants it? Ethanol hurts both consumers and the environment. With government mandates, the crony capitalist ethanol producers win, everyone else loses.

Successful entrepreneurs have empathy for the consumer; crony capitalists focus on their own needs.

In his book Wired to Care, business strategy advisor Dev Patnaik argues that the secret sauce of innovation is empathy. Success “requires [businesses] to leave their own agendas behind, and actually care about how other people see the world.”

Patnaik explains how empathetic organizations innovate faster:

“When people in an organization have an implicit understanding of the world around them, they make a thousand better decisions every day. They’re able to see new opportunities faster than companies that rely on secondhand information. And they spend less time and money arguing about things that should be intuitively obvious. Empathy drives growth because it tells an organization what’s valuable to the people outside its walls.”

Steve Jobs was famous for saying, “A lot of times, people don’t know what they want until you show it to them.” If you see arrogance in Jobs’ words, look again.

The highest expression of empathy,” writes Jeff Booth, the CEO of BuildDirect, is “addressing customer needs before they’re even aware of them.” Booth concludes, “When you can step into your customers’ shoes — and see the world from their perspective, not yours — it’s easier to walk miles ahead of the competition.”

Dr. Wang knows the open secret of business success — empathy. Empathy, not greed, is the essence of an entrepreneurial mindset that fosters innovation to meet the urgent needs of customers.

To those who assume capitalists are greedy, it may seem startling to call profit-seeking entrepreneurs compassionate. For many, compassion begins with politicians redistributing income. Yet, empathy is a gateway to compassion. When an entrepreneur sees clearly the unmet needs of others, action to alleviate the need is possible.

For millions of people, Dr. Wang’s invention has increased the benefits and reduced the sacrifices of preparing wholesome meals. Just a few years ago, Wang invested his time and money in the company and a product with unknown consumer demand; there was no guarantee of success. Is that not an act of compassion?

Entrepreneurs, not crony capitalists with their political enablers, bring you well-stocked supermarkets with fresh food from all over the planet and a better pot for cooking.

Reprinted from Intellectual Takeout.

Barry Brownstein


Barry Brownstein

Barry Brownstein is professor emeritus of economics and leadership at the University of Baltimore. He is the author of The Inner-Work of Leadership. To receive Barry’s essays subscribe at Mindset Shifts.

This article was originally published on FEE.org. Read the original article.

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