Recently, a fan of the facebook page asked us to refute something that was posted on another page. I felt that the points are important enough to be a blog post as well so that everyone can read it. Amanda, thanks for pointing out this post and asking us to refute it!
The post is original from a page with the naive title of What if Money Didn’t Exist? They posted the following video:
They had the following quote too:
“A capitalist society is one where most people, rich and poor, believe all sorts of things that are really just value judgements that relate back to the economic system, for example, that a person who doesn’t work is worthless, that leisure (beyond a few weeks a year) is sinful, that more belonging will make us happier, and that worthwhile things (and people) will invariably make money. In short, one of the biggest evils of capitalism is not that there are corrupt people at the top – this is true in any human hierarchy – but that capitalist ideas teach all of us to be anxious, competitive, conformist and politically complacent”
A fan of ours, Amanda, requested that we refute this so I wrote the following as a comment. Enjoy!
Yes, it is correct to say that the current system right now is corporatism and not capitalism. Capitalism, very simply, is just voluntary trade. This talk of leisure as a sin is just nonsense. Austrian Economists, who are very often advocates of private property and free markets, acknowledge that leisure is very desirable for human actors. It’s part of the reason they compete on the market, to become successful enough to have more time for leisure.
Marx and communism/socialism by extension is wrong because Marx is himself a classical economist that held onto the labor theory of value. The labor theory of value places value and prices essentially as follows:
Producer Goods -> Consumer Goods -> Economic Actor’s Mind
What it is saying is that the inputs of labor and other factors in the producer good bestow value on the consumer good which places the value in the mind of the consumer or economic actor.
Unfortunately for Marx, communists and socialists, there was this thing called “The Marginal Revolution” in which, thanks to many in the Austrian School like Carl Menger, the concept of subjective value was introduced into economics. This pretty much flips the order of the Labor Theory of Value on it’s head.
Economic Actors Mind -> Consumer Goods -> Producer Goods
This model dictates that economic action is Human Action. That without the individual looking to ease “perceived uneasiness” in their lives, there would be no economics (economics being the allocation of scarce resources in order to achieve ends). Collectives are just collections of individuals with their own subjective values and goals that they wish to accomplish. The collective itself does not have a final end.
Any economic theory outside of this and outside of the Austrian School of economics attempts to “quantify” value. This is impossible. Ludwig Von Mises said it best in his Treatise on money called ‘The Theory of Money and Credit”
“Value-judgments on this principle would have to be expressed as follows: ‘The satisfaction that I could get from the consumption of a certain quantity of commodities is a thousand times as great as that which I get from the consumption of an apple a day.’ or ‘For this quantity of goods I would give at most a thousand times this apple.’ Is there really anybody on earth who is capable of adumbrating such mental images or pronouncing such judgments? Is there really any sort of economic activity that is actually dependent on the making of such decisions? Obviously not.”
Value is created in the mind of the economic actor. Each actor has a different set of values and ends they wish to obtain. Therefore a collective that banishes voluntary trade (which is all capitalism is) and replaces it with commands and designs of the collective is eventually doomed to fail since the collective cannot decide for every individual how best to ease their “perceived uneasiness”. Economically, this is why socialism and communism lead to shortages and coercive states.
Capitalism, in it’s pure form is just voluntary trade. Trades do not occur unless unless both actors or participants in the trade benefit from it. One actor values an apple more than the money in their pocket and the other actor values the money more than the apple in their friut stand. They make a trade and both actors walk away from the transaction happy to have their “perceived uneasiness” satisfied. Socialism and communism relies on coercion being used in order for the central economic plans of the collective to function. Even with this coercion, the system is due to fail because as I stated, it cannot calculate what each individual actually wants/needs.