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Creativity and ideas are the substance of capitalism

Posted: August 20, 2012 at 9:50 am   /   by

In an earlier post, we called your attention to a story of the miracle of free enterprise—and the nightmarish specter of government, which may soon cast its occulting shadow over this miracle.

Again and again, we learn that government doesn’t get it. The government “experts” who have been placed, and have placed themselves, over us, don’t get it. They try to control it. They try to take it, to bottle it, to redistribute it. But they don’t even know what it really is.

Here’s a hint: It’s not a thing at all.

The aforelinked article is somewhat long, but well worth it. Here are a few excellent excerpts:

The belief that wealth consists not chiefly in ideas, attitudes, moral codes, and mental disciplines but in definable static things that can be seized and redistributed — that is the materialist superstition. It stultified the works of Marx and other prophets of violence and envy. It betrays every person who seeks to redistribute wealth by coercion. It balks every socialist revolutionary who imagines that by seizing the so-called means of production he can capture the crucial capital of an economy. It baffles nearly every conglomerateur who believes he can safely enter new industries by buying rather than by learning them. It confounds every bureaucrat of science who imagines he can buy or steal the fruits of research and development.

Even if it wished to, the government could not capture America’s wealth from its 1 percent of the 1 percent. As Marxist despots and tribal socialists from Cuba to Greece have discovered to their huge disappointment, governments can neither create wealth nor effectively redistribute it. They can only expropriate and watch it dissipate. If we continue to harass, overtax, and oppressively regulate entrepreneurs, our liberal politicians will be shocked and horrified to discover how swiftly the physical tokens of the means of production dissolve into so much corroded wire, abandoned batteries, scrap metal, and wasteland rot.

Capitalism is the supreme expression of human creativity and freedom, an economy of mind overcoming the constraints of material power. It is not simply a practical success, a “worst of all systems except for the rest of them,” a faute de mieux compromise redeemed by charities and regulators and proverbially “saved by the New Deal.” It is dynamic, a force that pushes human enterprise down spirals of declining costs and greater abundance. The cost of capturing technology is mastery of the underlying science. The means of production of entrepreneurs are not land, labor, or capital but minds and hearts. Enduring are only the contributions of mind and morality.

[ . . . ]

Most of America’s leading entrepreneurs are bound to the masts of their fortunes. They are allowed to keep their wealth only as long as they invest it in others. In a real sense, they can keep only what they give away. It has been given to others in the form of investments. It is embodied in a vast web of enterprises that retains its worth only through constant work and sacrifice. Capitalism is a system that begins not with taking but with giving.

[ . . . ]

Wealth all too often comes from doing what other people consider insufferably boring or unendurably hard.

[ . . . ]

The competitive pursuit of knowledge is not a dog-eat-dog Darwinian struggle. In capitalism, the winners do not eat the losers but teach them how to win through the spread of information. Far from being a zero-sum game, where the success of some comes at the expense of others, free economies climb spirals of mutual gain and learning. Far from being a system of greed, capitalism depends on a golden rule of enterprise: The good fortune of others is also your own. Applied to both domestic and international trade and commerce, this golden rule is the moral center of the system. Not only does capitalism excel all other systems in the creation of wealth and transcendence of poverty, it also favors and empowers a moral order.

[ . . . ]

“The market economy,” he wrote, “fosters empathy and benevolence, yet without destroying individuality,” because for an individual to prosper in a market economy he must understand and appeal to the needs and wants of others.

[ . . . ]

Here we go again, in the New Millennium. The themes of exploitation and zero-sum equality continue to preoccupy the media. Congress remains enthralled with static accounting rules that assume tax-rate reductions will not alter economic behavior. In this model, the only way to expand tax receipts is to raise rates on the “rich.”

[ . . . ]

A successful economy, however, is driven less by the sharp edges of incentives than by the unimpeded flow of information and its conversion into knowledge and wealth through falsifiable experiments of enterprise. Increasing revenues come not from a mere scheme of carrots and sticks but from the development and application of productive knowledge.

[ . . . ]

Greed, in fact, only motivates capitalists to seek government guarantees and subsidies that denature and stultify the works of entrepreneurs. The financial crash of 2007 and beyond reflected orgies of greed among crony capitalists awash in government guarantees and subsidies, sitting on their Fannies and Freddies, feeding in the troughs of Treasury privileges and government-insurance scams. Greed leads as by an invisible hand to an ever-growing welfare and plutocratic state — to socialism and near-fascist corporatism.