Friday, January 23, 2009

The Unfettered Capitalist: Introduction



We live in world of scarcity and uncertainty about the future. Mankind's struggle with these undeniable facts has shaped our world. Despite his shabby treatment in the mainstream media, the unfettered capitalist is the hero of the modern economy. The unfettered capitalist takes risks to organize scarce land, labor, and capital to meet the needs of consumers in the face of an unseen future. If he succeeds in satisfying consumers he profits; if he fails he may go bankrupt.

What does he need to do his beneficial work? He needs a system of private ownership where agreements to exchange goods can be freely made. Is today's capitalist unfettered? Hardly. Rare is the opportunity today to operate in a truly free market. Yet the entrepreneur continues on, fettered as he is by taxation and regulation which hinders him and thus impoverishes us all. The capitalist, who today can only dream of being unfettered, remains the hero of the entrepreneurial drama.

In this series, The Unfettered Capitalist, I hope to highlight the careers of the great unfettered capitalists of the past, both the heralded and unknown, either lionized or villainized. Hopefully the reader will gain a greater appreciation for the contributions of the unfettered capitalist and an appreciation for what we are losing as the government continues to tax and regulate us into poverty.

Capitalism has recently taken a beating. While most concede what capitalism has done for our material prosperity, they also believe that capitalism, without strong government regulation, produces many social ills: the rich grow richer at the expense of the poor, huge monopolistic corporations dominate our political process, workers work under horrendous conditions, and boom and bust cycles of prosperity and depression plague us. Superficially satisfying as this critique may be, it is simply wrong, from beginning to end.

Why does this critique persist? The answer is fairly simple. Our education system is controlled by the purveyors of these myths. As a people, we are simply miseducated. My own education is fairly instructive. I remember vividly being taught by my eleventh grade history teacher all about Keynesian counter-cyclical fiscal policy, i.e. that the government should increase taxes and cut spending during an economic expansion and should do the opposite during a recession. This is pure nonsense driven by the idea that the free market is cannot correct its own errors and so needs fine tuning by a beneficent government. I discovered free market economics in the same way that many great things happen, by chance. I was indeed looking for answers about how the world worked and why no one seemed to have a satisfactory answer when I read an article by Lew Rockwell about the the breakdown of the monetary system established at Bretton Woods after World War II. I followed the article's recommendation to read What Has Government Done to Our Money? by Murray Rothbard; this was my conversion experience to laissez-faire capitalism.

The rest of our typical history class is like-wise permeated with anti-capitalist mythology. The Gilded Age was a time when unfettered capitalism produced the robber barons who ruthlessly exploited workers, brutally put down unions, gouged consumers, and corrupted politics. All this changed when government rode to the rescue using new antitrust laws to break up monopolies, passed new laws to protect workers and consumers, and tamed big business excesses with income taxes and regulatory boards like the Interstate Commerce Commission.

Capitalism had its biggest crisis in the Great Depression. Franklin Roosevelt's New Deal established the government regulatory structure in labor, banking, taxation, and consumer protection that we are still under. Changes and additions to government regulation have followed but the anti-capitalist premises of the New Deal have remained.



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