Tuesday, November 10, 2009

Capitalism promises neither to produce heaven on earth nor to engineer any New and Better Man

10:46 AM A Final Thought on November 9th from Cafe Hayek by Don Boudreaux
Here’s a letter that I sent this morning to the Gray Lady:

Slavoj Zizek rightly complains – if with understatement bordering on the vulgar – of being “deceived” by communism (”20 Years of Collapse,” Nov. 9). But like many other pundits who feign wisdom by steering clear of what they mistakenly interpret to be an extreme position, he complains also of being “disillusioned” by capitalism.

Capitalism is indeed poles apart from communism, but not in a way that renders society best served by some compromise between the two. Unlike communism and milder forms of collectivism, capitalism is not imposed; it is simply what arises when adults are free to engage in consensual commercial acts in cultures that respect private property rights and largely reject both status and superstition as guides to decision-making. Also unlike communism, capitalism conscripts no one to serve other persons’ ends; individuals can opt out of capitalist societies.

Perhaps most importantly, unlike communism, capitalism promises neither to produce heaven on earth nor to engineer any New and Better Man – and so capitalism gives rise to none of the murderous zealotry endemic to communism. Sincerely, Donald J. Boudreaux

Simonizing from Cafe Hayek by Don Boudreaux
Here’s a letter that I sent yesterday to the Washington Post:

Brian Czech repeats one of today’s most frequently heard mantras – namely, that continued economic and population growth spell disaster for the planet and humanity (Letters, Nov. 5).

Virtually all available evidence contradicts this doomsday claim. For example, the earth’s population today is seven times larger than it was in 1800, and yet most people today live lives that are far more sanitary, healthy, long, and rich in experiences than were those of all but the most privileged potentates and pooh-bahs before the industrial age. Each hectare of land now feeds more mouths and clothes more bodies than ever before. Water and air in capitalist countries are cleaner than they were a century ago, or even just 50 years ago – and still getting cleaner. Available supplies of oil and most other raw materials show no signs of being depleted, despite the fact that today we use absolutely larger quantities of these materials.

Mr. Czech commits the common mistake of assuming that humans are net consumers of resources. But when markets are reasonably free and property rights extensive and secure, most people are net producers. History amply supports this claim. I challenge Mr. Czech or anyone else to offer evidence to the contrary. Sincerely, Donald J. Boudreaux

Selfishness is No Virtue from Adam Smith's Lost Legacy by Gavin Kennedy

Smith’s criticism of Bernard Mandeville (Private Vice, Public Benefit, 1724) is quite specific on selfishness and Greg Baldwin attributes to Adam Smith what Mandeville became notorious for – making a virtue out of selfishness, a theme taken up by Ayn Rand (The Virtue of Selfishness), another person confused with Adam Smith’s diametrically opposed and explicit views about morality. Self interest is not about selfishness.

If everybody tries takes and few give in exchange, commercial society would be impossible. The very act of exchange is about each giving something to the other party which they prefer in place of what they give up to get it.If everybody expects others to give without them getting something back, we would soon be impoverished. Poverty is the absence of exchange relations; it is not caused by them, Greg.

Self-Interest is Not Selfishness from Adam Smith's Lost Legacy by Gavin Kennedy

Each party is self-interested in the outcome, but (and it is an important ‘but’) neither can obtain what they want without addressing what the other wants in voluntary exchange transactions. Two utterly selfish egoists would seldom, if ever, come to a voluntary agreement – neither would give up anything in place of demanding their price “or else”. As Smith put it, in social converation we “persuade” to get what we want. Highlighting why something (what we offer to give) is good for someone is often a good place to start when seeking what we want to get.


Adam Smith never said anything like: ‘the common good emerges when everybody works for their own selfish interest’... In fact, Smith never spoke favourably of selfishness. Richard confuses him with Ayn Rand (1960s) or even Bernard Mandeville (1734). They both lauded selfishness (Rand by making it a virtue and Mandeville by making it a social compulsion – ‘private vice, public benefits’). But not Adam Smith; he called Mandeville's theory 'licentious'. -- Friends Like Richard Are No Help At All from Adam Smith's Lost Legacy by Gavin Kennedy

Adam Smith never endorsed a policy of, or the behaviour of, greed. That is to confuse Adam Smith with Bernard Mandeville, author of the Fable of the Bees, 1734 (written over the years 1704 to 1737), who made greed a private vice but a public good. Folly Of Relying on Poor Teaching from Adam Smith's Lost Legacy by Gavin Kennedy

I am familiar with the works of Adam Smith and know something about his use of the metaphor of ‘an invisible hand’, which he used once in 1759 in The Theory of Moral Sentiments at TMS IV.1.10: p 184, and once in 1776 in Wealth Of Nations (short-title) at: Book IV.ii.9: page 456. He also, for the record referred to ‘the invisible hand of Jupiter’ in an essay, unpublished in his lifetime, known by its short-title as History of Astronomy, when he described the ‘pusillanimous superstition’ in pagan societies. In none of these cases was his use of an invisible hand metaphor anything to do with how simple price markets work. Indeed, the operation of market choice is so simple that your charming six-year-old daughter can understand how they work. -- from Adam Smith's Lost Legacy by Gavin Kennedy

Some things are sufficiently constant in human affairs - and self-interest, even greed, is among them - that they explain nothing. "Greed" certainly can be unleashed to do harm, but it can also be harnessed to do good. -- Donald J. Boudreaux "Greed" Is Not an Explanation from Cafe Hayek

The fact is that the relationships each of us has with our fellow citizens overwhelmingly are of the arm’s-length, impersonal variety. They are market relationships, governed chiefly by self-interest on both sides of each exchange. They are not the sorts of personal relationships that guide decisions made within households. They are, indeed, precisely the sorts of relationships that each of us has with strangers from foreign countries. The Nation Is Not a House from Cafe Hayek by Don Boudreaux

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