4 things capitalism is not

Hitler's socialism and racism are two sides of the same hatred of individual liberty. Monopolistic political power can never leave economic freedom unmolested. Socialism, therefore, is the best teacher of what capitalism is not. Political structures, big-government-liberalism, socialism, fascism and communism make four things clear about free enterprise.

1. Capitalism is not mugging or malfeasance

When a criminal threatens an elderly person with a hammer to steal a Social Security check, no one says what a great capitalist. Yet when Enron robs the pensions of retirees through dishonesty, some will call it a failure of capitalism. Forced transactions and malfeasance are by definition not mutually beneficial and voluntary, which must be present in every free-market exchange.

Bartering is also a form of capitalism because voluntary exchanges of value are involved. Bartering occurred in prehistoric times, and predates the use of coins and currency.

So long as free will exists, even in the most repressive totalitarian regimes and in prisons, people may want objects possessed by others and might be willing to make fair exchanges. Black markets develop because wanting value from another is indelibly written into human DNA; it's called self-interest. Capitalism cannot be fully controlled by government because freewill and self-interest are inborn and will always survive captivity.

Can you see that whatever capitalism brings to the marketplace first had to be created, invented, or sown and harvested? An honest capitalist more resembles a farmer offering crops for sale after a harvest than a greedy and desperate mugger, embezzler or crony capitalist who wants quick profits while not providing value in exchange to all involved.

Theft takes another's property without giving value in return. Reaping without sowing. Isn't this a good definition of greed? In this way, capitalism is less greedy than socialism precisely because no political or economic force and deception are required. Contempt for capitalism is the greed of socialism.

2. Capitalism is not gambling – win/lose

To the seller, value means profit, a valuable return on invested talents, effort and capital. To the buyer, value means low price, customer service and convenience. Capitalism only supplies what customers want. Therefore, what we call capitalism's greed is actually the customer's strong appetite to buy something.

Capitalism is never greedier than the customer's appetite to buy what the seller offers. Though this applies to gambling, namely the cost of a lottery ticket is so small relative to its potential payout, it doesn't meet another requirement of capitalism. Value after purchase. In gambling, the losing lottery ticket is worthless. Not so when you drive a car off the lot or buy gold; they will always have some value. This is why certain speculative investments and some option transactions closely resemble gambling.

3. Capitalism is not currency, coins and other tangible assets

Capitalism is the evolution of freedom becoming a marketplace. From my upcoming eBook, "The 9 Gifts of Capitalism – Why Prosperity Requires Freedom":

"When you think of wealth, what comes to mind? The visible fruits of opulence, not the hidden roots. The effects, not the cause. The outward manifestation, not the mystery behind it. These assumptions are superficial. Wealth has a deeper origin. Although capitalism gives birth to many products and services, its basis is an intangible force."
[See www.WilliamHamnetWall.com for more in Excerpts tab.]

4. Capitalism is not monopoly – no competition

Capitalism is like electricity; it follows very few and simple laws of nature. When these laws are violated, people get hurt. When you jam a screwdriver into an outlet, is electricity to blame for calamity? Or is the result a natural and easily predictive one? In other words, there is nothing unnatural about being electrocuted. Likewise, greater poverty and tyranny spawn inside socialist countries as naturally as maggots do within the carcass of a dead animal. It's a guarantee, not a criticism.

What are the intangible laws of capitalism? I have identified nine of them, including a diagram for each on my website above.

Here are two denotative attributes of capitalism that do not exist in government or private sector monopolies: Freedom to buy and sell legal products and services at market value. (Landlords are forced by rent-control laws to lease private property below market value.) Secondly, competition must exist in the marketplace so that greater choice is available for the buyer; for the seller, competition insures that pressure is applied to lower prices and to improve value of products and services in order to attract and retain customers.

The great irony of capitalism is that because freedom is required, both buyer and seller will refuse to finance the greed of the other party. No such limitations on greed exist for socialism because it can dictate what profits it receives, and what price fixing to enforce. Even in so-called socialist democracies with elections, when the public sector gains majority status, it "votes" to codify its own greed into law because the minority is powerless to defend its self-interest. Only capitalism curbs greed, never political hegemony.