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Private Capitalism Means Progress

Ever since Karl Marx coined the word "capital," this word has taken on an unpleasant connotation in the minds of many men.

Yet it is true that capital MUST exist or we will revert to such primitive savagery that human life would be reduced by about 90 per cent of its present numbers.

What is capital? It has been defined many ways. But in essence it constitutes the savings made by men which are then invested in the tools of production. A primitive stone awl is capital. A knife is an enormous improvement in working capital. So is an ax that can fell a tree or a hammer that can drive a nail.

These things come into being by virtue of the human ability to save and to invest.

Savings, to begin with, appeared wholly as energy. Nowadays, we make savings principally with money. But in the end, money, too, is merely energy that has been expended. It should be apparent to anyone that a primitive man who busies himself with making a stone tool is not able to hunt deer at the same time. His investment of energy in a tool, by means of which he can do more work and make more weapons, is an investment and a savings.

It is, we believe, axiomatic that capital will exist. What is not axiomatic is who will own the capital.

To simplify, we could say that there are only two kinds of people who will own capital. Either capital will be owned by the producers of capital ... individuals; or it will be confiscated by a non-producer and held by him. Non-producers can be organized and called "the state."

There is little purpose in a system which would grant a producer the freedom to produce some item of capital goods only to have it confiscated.

This introduces the concept of immorality as well as impracticality. An act of theft is an act which removes from the producer that which he has produced. This is viewed universally as an act of theft, until the act is sanctioned by a state. Then, strangely, the intrinsic nature of the act is lost. While it would be wrong for an individual non-producer to take something that another has produced, by stealth or violence, if the non-producer is sanctioned by divine "right" or by an "election," most people do not view the act as one of theft. But, intrinsically, it is an act of theft.

All innovations to come to the human race which have resulted in man's progress have been made by individual producers. This is true even if the state has subsidized the process. States do not make innovations. They may reward someone for making an innovation but states are collectives lacking in moral judgment and in individual initiative.

Thus, all progress men have experienced has occurred because some individual man thought of a better tool, a better process, a better end product. To think of this at all is an individual thing.

Men in conventions and in committees have had lots of experience with this type of thing. While a pooling of ideas can be helpful, the end result is individual.

So, it becomes obvious that human progress in this world is related to individual ownership of capital. Capital cannot be destroyed or we will die. But capital can be stolen. If it is, the capital owner recognizes that it is unprofitable for him to own capital for it makes him the target of predation.

This is an evil when no one protects the individual. It is an intolerable evil when the act of looting occurs at the hand of the very agency the individual has hired to protect him and his capital.

The major question of our time relates to the ownership of capital. And it follows that if capital is not owned privately, it will be owned by the collective.

It also follows that if capital is ever totally owned by the collective, individuals will not produce.

Capitalism vs. Colonialism

We hear a great deal these days about the "exploiting" of backward peoples and the capitalistic colonialism supposedly villainous and attributed to American capitalists primarily.

Socialist thinkers usually phrase their criticism along these lines: "Private enterprises from various countries (usually America) exploit the natural resources of these countries which is robbery." In place of such private enterprises, the socialists argue in favor of government intervention to end "colonialism."

Let us see what happens when private enterprise moves into a foreign nation.

The first thing that occurs is that hundreds of thousands, usually millions of dollars are brought in for purposes of investment in land and resources. Secondly, costly machinery and power tools are imported. Finally, native labor is hired at wages usually far in advance of the going wage rate of the particular nation involved.

What is the purpose of this costly outpouring of money, machines and top management? To exploit? To lay waste? To plunder? Is the purpose to INCREASE costs of production in such a place? To what end?

Do the daring adventurers in foreign lands seek to cut their own throats?

On the contrary, having sunk a lot of capital and capital goods into a foreign country, the only possible way out for the enterpriser is for him to produce an astonishing array of goods -and services and to sell them at a price that will produce a profit for him.

Is such an investor anxious to quit the country as quickly as possible? If so, why does he go there at all?

As a matter of fact, any investor or enterpriser in a foreign place goes there only because he expects to make profits. He anticipates becoming so reliable, so trustworthy, so dependable, when it comes to producing needed and wanted goods, that his customers will want him to remain. Forever, if possible. He cannot afford to make even the initial investment unless he has some hopes of remaining to earn some profits as a result of his daring.

Firms established by international investors in foreign places are the most enduring and the most reliable of all organizations extant in any such location. The capital is invested in poor countries with the hope of making those countries rich in products and in productivity. Modern techniques are introduced, natives trained and paid well, know-how and prosperity are spread everywhere. And customers come, VOLUNTARILY, to buy things they didn't even know could be produced.

This is NOT colonialism, it is capitalism. And it is profitable for all concerned or it cannot endure.

Now let us examine colonialism. Definitively, it is governmental dependency. It is the kind of "assistance" proffered to a nation through its government and by means of another government. It is politically dominated and controlled.

When colonialism exists, the "aiding" country decides what products already made in that country are usable in its country. These it agrees to purchase with taxpayers' money. In exchange, the "aiding" government decides what it has in surplus. It may be something that is not needed in the country being colonialized. But, no matter.

A treaty exchange agreement will be entered into whereby the production of the colonial nation may be exported and the surplus of the colonializer imported.

Russia has been one of the major sustainers of colonialism. Virtually every one of its offers of "foreign aid" falls into this classification. Unfortunately, America is not far behind in this practice. For the American government, in its economic interventionism, is neither better nor worse than any other.

Fortunately, however, from America there also comes a great surge of private productive capital and know-how unmatched by any other nation on earth. It is world-wide capitalism for which the nationals of every country on earth are starving.

Capitalism Means Savings

The illusion persists that those with much are villains. With it as a necessary corollary goes the illusion that those who have little or nothing are the heroes who are deserving of every good thing in life.

This is the Marxist argument. It assumes that those who are capable of producing abundance, in some way exploit those who are incapable of producing much of anything. How does one "exploit" the impoverished? The concept is nonsense. One does not take from those who have nothing worth taking.

The success of those with much is based entirely upon the free choices of their customers. Let any man or any corporation lose all its customers, and within a matter of months the man or the corporation would cease to have an economic existence.

The core of capitalistic success relates precisely to the ability of the successful capitalist to SAVE something for his customers. He saves them time, or money, or convenience, or all three. This saving is why people patronize him. If he did not save them something, they would not patronize him at all.

No one is forced to go into a grocery store, for instance, to buy a can of soup. The reason grocery stores sell soup is because this is a cheaper and a better way of getting soup than any other way that is known. Let the individual conclude that the price of soup in cans is too costly or the final product is inferior to home-made soup and he will obtain his own ingredients through his own efforts. Then he will make his own soup.

What is the individual's time worth who raises or produces his own ingredients? What are the raw materials worth, the land, the cultivation, the harvesting, the cleaning, the preparation? This depends on each individual.

There is nothing to prevent the person having a grudge against canned soup from making his own soup. If he feels he can do it

cheaper and better than one of the soup manufacturers, and can obtain it in some other way than through a grocery store, he is free to try.

Suppose he does so. Does this mean that he is a villain if the grocery store loses his business? There is nothing to compel him to patronize a single grocery.

The argument is sometimes raised that if a man is able to purchase groceries at a store other than a grocery store, the grocer will go out of business. This, it is deemed, is unfair. It is not unfair.

Each customer has the right to select the store of his choice, or to select no store at all. No one trades at ALL stores. Does this mean that he is being unfair to the stores in which he does NOT trade? Of course not.

Each customer is free to do the best he can for himself. If this means that he stops being a customer at any particular time, that is his business. If the grocery store stays in business, it is because it is saving money and time and providing convenience for many who patronize that store.

But the customer will only offer his patronage at any time or place when such offering is to his own advantage. No one goes to a store simply because he is convinced that the store is run by "nice" people who "need" the business. What of the other "nice" stores which also "need" the business?

What of the "need" of the customer, who is always within his rights to do what is best for himself ?

There are so many loose notions extant among those who do not bother to learn how capitalism works, that many misconceptions exist. Frequently, people who do not understand capitalism and the market place, fear these things and invoke government to protect them.

But, government is mere people.

The thing which characterizes all government is that the people in government have guns. They can use force. But they cannot make capitalism or the market place work better by force. This process injures capitalism and its effectiveness.

People outside of government cannot compel anyone. Therefore, they succeed or fail according to their ability to SAVE something for someone. The entire system of capitalism is erected on a structure of service to all in a voluntary manner.

Capitalism... The Big Future

Having gotten this nation off to a fast gallop by our early emphasis upon free enterprise and private property, we have acquired a national guilt complex over our success via the capitalist route.

Today's young people seem to have a phobia concerning the making of money. It isn't that they don't want money. Indeed, they do. But they want to get it the "easy" way, with out effort if possible.

Only rarely now do we run across young people with a burning zeal to DO something. Instead, we find scores of young people starting their careers in a negative framework of reference.

"I don't have to succeed mightily," we are told. "I'd just like to have a modest income at a job that isn't too hard. Then, after I've worked the required number of years I can retire and do some of the things I really want to do."

This seems to be more or less standard nowadays.
We can remember when young people used to talk of doing ... really DOING something. Their schemes were on occasion harebrained, far-fetched, often unrealistic. But they wanted to make something or provide something, or invent something, or figure a new way to improve our way of living.

They dreamed of making fortunes and were all ready for the big gamble. They might not succeed but they wanted to be free to try. And how they rejoiced that they lived in a country where people could try. Maybe they'd fail, and this they knew. But at least they would have had an opportunity. And this they cherished above all.

Nowadays, there seems little enthusiasm for a risk such as this. The sure, safe jobs, with a big firm, or in politics or civil service, or the army . . . these are the lode-stones to draw the youthful metal. Ask a young man or woman today what he or she wants to be. Most don't seem to know or to care. They want someone else to tell them what to do. Few visualize themselves in positions of authority. It is almost as though life were a chore that had to be faced. Therefore, the youth of today faces it with some stoicism but with little enthusiasm.

It is like the young fellow about to be drafted. He doesn't want to go into the army. He has no yen for a military career but he knows he will have to serve his bit. It's a chore. A duty. He faces it almost grimly, looking beyond those years to a time when he will be outside the pales of the stockade once again.

So with his major incentives for life. What he really wants is to retire. Until he can manage that, well, he'll accept some work-a-day post to assure himself eating money. When the time has passed and he can get retirement pay or social security or both, then and then only will he come alive.

Instead of trying to make a place for himself, the typical young man wants someone else to make a place for him. It is no wonder, when government has grown so large that frustration occurs at virtually every level.

Why take risks? Government will stand behind you to comfort and solace you. Especially if you remain obedient and tractable and don't get into political controversy.

One would think everything worth while had been done. But it hasn't. We are not at the end of human experience; rather, we only now are beginning to learn enough to know that all prior times are but a prelude to a magnificent tomorrow.

Tomorrow will be a time for the giants. Small men are in the ascendancy today, but that day is already slipping into twilight. Tomorrow's world will be a world for those rare persons who have not forgotten that the big rewards go to the big adventurers.

Capitalism is still the biggest adventure of all. What is wrong with success? Or profits? Or independence? Or the thrill that comes to those who have dared, and won the race?

Pine Tree Press – June 1963 – Robert LeFevre