Capitalism

Why does capitalism exist instead of some other system? Why is capitalism so imperfect?

Capitalism has existed for at least 200 years, since the Industrial Revolution. In that time it has been seriously challenge by other systems, I mean seriously challenged, but it still stands. Not only does it stand, it has destroyed the competition. Why does it continue to reign when so many think it is such a bad system? Why is it the only economic system left in the world?

The reason I think it lives on, even though it is imperfect, is because it is the one system that has shaped itself to reflect the imperfect nature of humankind. Other systems failed because they didn't take into account human nature and its predisposition. Capitalism has molded itself to the human race. The abuses in capitalism reflect the abuses humans are capable of. However, and this will be hard for some to believe, capitalism works to temper and contain those abuses. It has done so in a cajoling manner whereas other systems, like communism, have forcefully tried, unsuccessfully, to mold us into something we are not. It works with our idiosyncrasies and irrationalities whereas other economic systems tried to end or stamp them out. Capitalism, simply, is the best system that can be had under the circumstance, considering humankind's obtuseness and intransigencies.

The idea that capitalism is truly laisser faire and unfettered is a misconception. We could not survive unfettered capitalism. It would be too high octane and dangerous to handle. If it were unfettered there would be many more calamities like Enron and depressions. In the end there would be nothing. If you think the environment is suffering now, with unfettered capitalism there wouldn’t be one. Why would capitalism destroy the very thing that gives it life, as so many think? Capitalism is about economic renewal so it has to take care of it assets - the environment, resources and its people. Yes it is full of contradiction. Nevertheless, it tries to reconcile and resolve them. If it didn't, it, like Marx believed, would have destroyed itself long ago.

People thing that capitalism stands on its own, that it doesn’t liaison with other systems. No system is an island. It liaisons with democracy. It gets feedback and discipline from democracy. This makes capitalism part of a mixed economy, mixed with democratic values, debunking another misconception that we don't have a mixed economy. Partnered with democracy it has cultivated and maintained mutually beneficial values like freedom, public health care, a semblance of equality, work ethics, security and public transportation. Its partnership with democracy is a big reason for its ascendancy, in the same way capitalism has contributed to democracy’s ascendancy.

Another reason why I think capitalism has continued where others have failed is that it deals with economic realities. In this instance I am talking about the natural laws and imperatives that govern us. For instance, the communist command type of economy distorted and manipulated nature's economic realities, like the availability or lack of resources and their true value. It also lied about its industrial and agricultural capabilities, letting down those who had put so much faith in it. Communism's behavior was like that of trying to reverse the law of gravity. Because of these distortions there were always shortages, corruption and staggering incompetence under it. Also, the communist economic model didn't account for the fact that periodically it would have to restore and repair itself due to natural wear and tare. It did not have the psychological awareness of the need for economic renewal, restoration and progress that capitalism has. Capitalism stares economic reality right in the face. Other systems failed because they tried to circumvent reality, the reality of human nature and nature’s nature.

One reason people dislike capitalism is because it has this edge to it, a sometimes unfair and destructive edge. It treats people unequally and it causes social upheaval unnecessarily. However, this edge is what makes capitalism successful and the public wanting more. Apart from making wealth, it keeps society economically flexible and imaginative. It induces economic reforms and innovations when needed. If there were rules made to restrict and destroy this edge capitalism would loose its flexibility and the ability to be the material provider we have expected it to be. Other economic systems the world has known were not as agile, inventive or adaptive as capitalism, hence they not longer being with us.

Humankind has this inherent lazy and complacent streak in it. It doesn’t like change. However the central theme of economics, this husbandry and most essential discipline of humankind, is change. A host of factors are responsible for economic change, like the fluctuation of prices, the movement of people, entropy, renewal and the replacement of consumed items. Why capitalism and the free market system rules, instead of a controlled system like communism’s command economics or traditional economics or mercantilism, is because it jars and motivates us out of our natural laziness and complacency, behaviors that can be detrimental to our economic well being. Communism, in particular, allowed people to wallow in such behavior.

I can hear readers saying “yes, but” about capitalism and what I said. Life is full of yes, buts. For capitalism to remain credible and working for us there must always be a chorus of yes, buts. It must always be made to account for itself in order that it remain a viable, legitimate system. Communism, the last challenger of capitalism, didn't allow itself to be questioned or criticized and that is one big reason why it is no longer with us.