Capitalism is not the Stock Market
Over the course of the past few weeks several people have mentioned to me their feelings that perhaps capitalism was dead - after all, its 20th century godfather, Alan Greenspan, believes he may have overestimated the benefits of competition and underestimated the collusion and greed of various individuals and companies awash in the credit default swaps. This may be true to some degree, but one should consider how much of this is really based in fear, a desire to have a simple answer to a complex problem and dare I say a victim mentality that begs the need to have someone to blame. There is plenty of blame to go around and some healthy portion is often found in the mirror.
As my social circle often hear me evangelize the virtues of capitalism, it's really no surprise that folks might want to take a shot at one of my deep seated beliefs. Yet, the most obvious error that I see is that people have equated nearly every way of making money as a direct trait of capitalism, and that is simply not true. On the whole, the making or losing of money on the growth of one's stock portfolio or the value of one's home, doesn't really represent a key tenet of capitalism (the simple owning of private property notwithstanding). Capitalism is an environment where one takes a certain amount of risk/money and applies effort/energy in order to deliver a good or service in a manner free from government intervention/control allowing the buyer to determine the product/service value through the benefit of competition - meaning if the supplier charges too much, another person or entity may offer a better value, giving the buyer a choice.
It has always irked me a little that many people in our society are considered capitalists simply because they made successful "bets" in the stock, bond, or derivative markets. Those individuals seldom if every have any influence on the outcome of the company's real worth, they didn't really deliver anything of value and the money they invested never really benefitted the company - as it is nearly always an exchange between two third-parties (IPO's notwithstanding). People that go to Las Vegas and bet on a game of chance are not considered capitalists - but at least in their case, they made decision on whether to take another card or not, which some sort of an influence over the outcome.
The stock market may be high profile, but has little real influence on tangible capitalistic activities. Yes, investment capital is surely influenced by the panic felt by a plummeting DJIA, but that's more of a reactionary mindset. Regardless of the government regulation that is coming - and surely due - it is not likely going to have much effect on real capitalism. America will always be a country built on capitalism because of its genuine fabric of innovation, independence and expectation of choice. The 25 million small, private businesses in America representing 50% of the gross domestic product are testament that Capitalism is here to stay and has little if anything to do with the Stock Market.
As my social circle often hear me evangelize the virtues of capitalism, it's really no surprise that folks might want to take a shot at one of my deep seated beliefs. Yet, the most obvious error that I see is that people have equated nearly every way of making money as a direct trait of capitalism, and that is simply not true. On the whole, the making or losing of money on the growth of one's stock portfolio or the value of one's home, doesn't really represent a key tenet of capitalism (the simple owning of private property notwithstanding). Capitalism is an environment where one takes a certain amount of risk/money and applies effort/energy in order to deliver a good or service in a manner free from government intervention/control allowing the buyer to determine the product/service value through the benefit of competition - meaning if the supplier charges too much, another person or entity may offer a better value, giving the buyer a choice.
It has always irked me a little that many people in our society are considered capitalists simply because they made successful "bets" in the stock, bond, or derivative markets. Those individuals seldom if every have any influence on the outcome of the company's real worth, they didn't really deliver anything of value and the money they invested never really benefitted the company - as it is nearly always an exchange between two third-parties (IPO's notwithstanding). People that go to Las Vegas and bet on a game of chance are not considered capitalists - but at least in their case, they made decision on whether to take another card or not, which some sort of an influence over the outcome.
The stock market may be high profile, but has little real influence on tangible capitalistic activities. Yes, investment capital is surely influenced by the panic felt by a plummeting DJIA, but that's more of a reactionary mindset. Regardless of the government regulation that is coming - and surely due - it is not likely going to have much effect on real capitalism. America will always be a country built on capitalism because of its genuine fabric of innovation, independence and expectation of choice. The 25 million small, private businesses in America representing 50% of the gross domestic product are testament that Capitalism is here to stay and has little if anything to do with the Stock Market.
Labels: capitalism, small business, stock market
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