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How Would You Teach Capitalism?

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limitgov Posted: Wed, Jan 25 2012 2:30 PM

Here's Khan Academy's video aka "lesson" on capitalism.

http://www.khanacademy.org/video/when-capitalism-is-great-and-not-so-great?playlist=History

How would you teach it?  Or, is there already a video on youtube that you think does a really job?  Or, do you think the Khan Academy video does a really good job?

I figure we could talk about the content of Khan Academy, since we use that sometimes as evidence that the free market would work just fine for education.

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Clayton replied on Wed, Jan 25 2012 3:04 PM

OK until he got to the part on monopoly... just kept going downhill from there.

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fakename replied on Wed, Jan 25 2012 3:24 PM

If I had to teach about capitalism, I would just teach it as economics since there really isn't any system outside of capitalism, there's only pro-economics and anti-economics.

 

In the academy's defense though, I think the lesson was trying to stimulate thought, not lay down a definitive view one way or the other; it was more dialectical than demonstrative.

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How Would You Teach Capitalism?

I guess I wouldn't really explain "capitalism", I would explain market economics. From there the superiority of capitalism automatically follows.

I would explain the free lunch fallacy, which is the main reason that people still support national socialism. And I'd explain the calculation problem.

"They all look upon progressing material improvement as upon a self-acting process." - Ludwig von Mises
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Neodoxy replied on Wed, Jan 25 2012 3:26 PM

The video does a terrible job of actually introducing capitalism, the perspective is entirely un-economic, as well as small in scope, and it is somewhat misguided. It also doesn't explain exactly what capitalism is in the first place. 

I prefer an old fashioned look at the matter:

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Nielsio replied on Wed, Jan 25 2012 3:28 PM

Capitalism In One Lesson

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Clayton replied on Wed, Jan 25 2012 4:03 PM

I forgot about that vid, Nielsio... that's definitely one of your best.

@OP: Right now, I am most interested in the moral/spiritual underpinnings of what we loosely term "capitalism." The danger of talking about capitalism in normative language (e.g. "we ought to be capitalist") is that capitalism describes the behavior of a group of individuals. Making normative statements regarding group behaviors is inherently collectivist. Non-collectivist morality can only address itself to the individual actor because non-collectivist morality has not to do with social outcomes but with action itself. If you eschew collectivism, morality can only properly discuss individual choice.

This is what has lead me to consideration of the moral/spiritual conditions for capitalism because it is impossible to eschew collectivism and make normative statements regarding the outcomes of group behavior at the same time. Rather, what is needed is some way to say "this is what you, as an individual, ought to do and ought not to do, and here's why." And this leads directly to the consideration of the problems of what is right and wrong and how can you know this and by what authority are such matters decided, and so on. I think what we need is a "morality of capitalism"... actually, I think most of it already exists, it just needs to be brought together into one cohesive whole.

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"If I had to teach about capitalism, I would just teach it as economics since there really isn't any system outside of capitalism, there's only pro-economics and anti-economics."

How are you defining 'economics'?

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Nielsio replied on Wed, Jan 25 2012 4:37 PM

+1 Clayton,

 

What you're talking about is what is coming up in my criticism of Hoppe, that I'm working on now.

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Neodoxy replied on Wed, Jan 25 2012 5:02 PM

Clayton,

I'm struggling to understand exactly what it is that you mean beyond simply stating that an individualistic morality is needed rather than a collectivistic morality. I also don't understand how exactly one could even have a "morality of capitalism" when capitalism is considered for what it really is. 

Could you elaborate or clarify in any way?

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Clayton replied on Wed, Jan 25 2012 5:40 PM

I'm struggling to understand exactly what it is that you mean beyond simply stating that an individualistic morality is needed rather than a collectivistic morality. I also don't understand how exactly one could even have a "morality of capitalism" when capitalism is considered for what it really is.

Could you elaborate or clarify in any way?

Well, capitalism (and praxeology more generally) is definitely a value-free science, as Mises reiterated. I'm speaking more to the OP video... "Should we have capitalism or should we have socialism?" Of course, this question is not using the word "capitalism" in exactly the way Mises used it since there is no "should" to capitalism, it simply describes the conditions that pertain under voluntary exchange, private property, etc.

Nevertheless, the intent of the question seems valid enough even if it is not phrased in precise language. Essentially, this is the question that divides the public into "left" and "right". As Rothbard argued, the utilitarian argument for capitalism is a losing argument; the counter-argument will inevitably win. The counter-argument is that our moral duty as human beings is a higher priority than attaining the highest possible standard-of-living. This argument has been used by the Progressives for over a century to devastating effect. Yet, the majority of apologists for capitalism blindly stumble on with the attempt to apply purely value-free utilitarian arguments to the debate. "If you want to have a good standard-of-living, then what you need is capitalism" which the Progressives quickly translate for the audience to, "If you want to be rich, then you just have to accept that Chinese children are going to have to be enslaved by heartless Multi-National Corporations." So much for utilitarianism.

But the fact is that there is something bigger at stake, here. Capitalism isn't just more practical, it really is on the moral high ground. By ceding the moral high ground, capitalism is doomed to failure as a social norm. So, I think the question we need to focus on answer is how exactly is capitalism more moral?

The answer lies, in my opinion, in the Epicurean philosophy of ethics and, with some caveats, in some schools of Buddhism. Until you understand what is right and wrong (for yourself), you cannot understand why capitalism is the morally best social order. Once you understand what is right and wrong, capitalism follows naturally. Of course you have no business taking what belongs to another person under any pretext, and no matter how wealthy you imagine they are. Once you see that that's the case, you will immediately perceive that socialism (and coercive governance, generally) is obviously immoral.

So, I think the path forward is a moral revolution. People need to hear about Epicurus's ideas. They need to hear about the (correct interpetations of) the Four Noble Truths of Buddhism. They need to hear about the basic concepts of praxeology as expounded in HA which provide a comprehensive and precise social scientific foundation on which to filter out the mistakes of Epicurus and Buddhism and extend these ideas into their own lives and how to develop their very own theories of right living.

They need leaders to help them do this. I think the demand is there and is growing in direct proportion to the strength and power of the police state. The meat-headed, useful patriotic idiots are a loud minority. As the old proverb says, "the empty vessel is the loudest". Those in the silent majority that have to get up every day and go to work and pay taxes and try to make ends meet with ever-more-worthless money know they are getting shafted but don't have the luxury of quitting their job to become political activists while their children starve. They are trapped by a system that they don't understand beyond its inescapability.

There is strength in numbers. The sole individual who has had the "lightbulb" go off in his head and "gets it" and realizes that the entire system is a sham is helpless. In fact, he is worse off than he was before. As Cypher says in the Matrix, "Ignorance is bliss." And as long as your neighbors do not understand why the system they serve is actually evil, there is no chance they will ever resist it, even passively. But if the truth begins to spread and people begin to have a moral revolution in their lives, the status quo suddenly becomes highly tenuous.

People will stop "believing in" paying their taxes, being honest with government officials, and so on. The structure immediately begins to strain and crack as more and more people simply stop running on the job and start walking instead. Why are we killing ourselves for the little pittance that is left over once the redistributionary Establishment gets done with our paychecks? To hell with them, we'd rather live poor and happy with our family and friends and not serve these jerks than run ourselves to death on the absurdist corporate treadmill so we can buy a few more trinkets from the company store. The Greeks are not as stupid as you might think. I'm painting the issue in very high contrast but you get the idea. People who are awake to their slavery become much less enthusiastic to serve the Status Quo, thus initiating its demise.

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tunk replied on Wed, Jan 25 2012 5:57 PM

Clayton:
you have no business taking what belongs to another person under any pretext, [...] no matter how wealthy you imagine they are.

What's your basis for this statement? What I mean is, what's your grounding for libertarian ethics? Given your Buddhist-influenced approach I'm sure you have an interesting answer.

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"Well, capitalism (and praxeology more generally) is definitely a value-free science"

"Capitalism isn't just more practical, it really is on the moral high ground."

 

Don't these two statements contradict each other? I mean, what one considers 'moral' is based on a value judgement is it not?

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Clayton replied on Wed, Jan 25 2012 6:52 PM

What's your basis for this statement? What I mean is, what's your grounding for libertarian ethics? Given your Buddhist-influenced approach I'm sure you have an interesting answer.

Well, it goes back to what is right or wrong at all. What is right and wrong? To put it in slightly over-simplified language, the Epicurean answer is that what is pleasurable is good and what is painful is bad. The Buddhist answer is very similar, though they attach a lot more nuances than the Epicurean view. This is the (highly misunderstood by Westerners) concept of Karma.

The answer given by both schools is that stealing is wrong because it leads to pain, which is why I gave the allegory of the $1,000. So, it's wrong for the same reason that anything else is wrong: it leads to your own suffering. (Yes, they have thought about actions which have no apparently painful consequences but which we still regard as "wrong" anyway... that's a separate subject).

Understanding what actions are going to have painful consequences (initiate retaliatory response from others) and why they have painful consequences is a problem of understanding the cause-and-effect nature of the world. As the Buddhists teach, the end of suffering is the elimination of ignorance (of cause-and-effect). The Buddhists distinguish between "Karmic cause-and-effect" and ordinary cause-and-effect. The world as it is unfolding follows the ordinary laws of cause-and-effect but when you intervene as an act of will to alter the unfolding of the world, you set into motion a Karmic chain of cause-and-effect. The consequences of virtuous Karmic causalion is pleasure and the consequences of evil Karmic causation is suffering.

Again, the Western understanding of these concepts is heaviliy distorted - we can slightly reframe them in line with the Misesean concept of human action... when you act (alter the course of the unfolding of the world), you set into motion a set of chain of events which, in the long run, will be either pleasurable or painful. If you set into motion a chain of events that is, in the long-run, painful, you have acted evilly and vice-versa. Of course, we are reasoning in circles here so we simply dismiss the whole discussion by noting that the relationship between good and evil and pleasure and pain is purely formal. What we mean by "good" is that which has pleasant outcomes and what we mean by evil is that which has unpleasant outcomes.

The end of suffering lies in the elimination of ignorance of Karmic cause-and-effect. When you act and thereby inflict upon yourself suffering, this is always the result of ignorance since no living creature knowingly chooses its own suffering. We can reinforce the Buddhist doctrine by introducing the more modern concept of time preference which arises from the uniquely human ability to predict the long-run consequences of an action by means of reason and intelligence rather than instinct alone. Time preference arises as the result of our ability to understand the long run Karmic consequences of our actions. This explains the mystery that what is painful (in the short run) can be good and what is pleasant (in the short run) can be evil despite the fact that we have taken pleasure and pain to be, by definition, synonymous with good and evil (respectively).

If you're interested in learning about Buddhism, I strongly recommend you insist on getting it from the source, I've found that Western interpretations - even by supposed experts in Buddhism - are highly unreliable.

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Clayton replied on Wed, Jan 25 2012 6:54 PM

Don't these two statements contradict each other?

Did you read my post? You do realize that the same word can have more than one meaning?

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Neodoxy replied on Wed, Jan 25 2012 7:17 PM

I believe that I understand what you're saying now, but I have to say that I generally disagree. I'd argue a few things

1. That the utilitarian arguments for capitalism are the only ones which really work

2. That there is no singular reason why it is that a logical investigation of ethics upon an individualistic basis would have to result in capitalism, that's entirely a matter upon the values of the individual in question

3. That there is little hope of ever making the mass number of people understand and justify the individualist ethic

Justification for 1.

Mises engages in quite a convincing bit of argumentation at the beginning of Human Action where he talks about how in the end only arguments which benefit the great majority of people will impel them to action: Every political party, ever ideology, which has gained power in the past century has inevitably revolved around either an increase in living standards or insurance of security, which in many ways amounts to the same thing. The majority of people have always been rather on the fence about moral issues, they've say back whilst their streets are filled with the homeless, millions have been slaughtered in foreign genocides, and as the governments from around the world still perform their daily task of extortion, and this has all been with the libertarian case morality in existence, and still not taking hold. 

I agree that moral arguments are important, but the fact is that to many, probably even the vast majority, moral arguments cannot work because they have the moral high ground because they are the direct result of mainstream thought/morality of our time, you cannot change the moral frame of the debate, the only thing that you can do is to expose how your solution is superior according to their own criteria of superiority, and because almost all anti-capitalistic moralities are inevitably utilitarian in one way or another, exposing the fact that the poor will be made better off under capitalism than in a welfare state displays that both in a utilitarian and moral sense (according to their view of morality) libertarianism is a superior system. 

Inevitably the true utilitarian argument for free markets (I believe a much better term than capitalism to describe the system we propose) lies in the fact that it's not just the highest standard of living, it's the most humanistic that a society can possibly be. If the sick are to be taken care of, then they will be kept in better care with less cost to the populace under a free society than a state run society unless the state run society is inherently un-democratic. You will never convince any but an enlightened society to fight for a decrease in their own standard of living, to hurt themselves, or to hurt others materially without an inherently collectivistic/mystical symbol to fight for, I.E god/state/nation, and even these are usually only as effective as they are utilitarian to their members. 

Justification for the second assertion:

Morality is what one should do. What one should do is a matter of value, because should is a reflection of action, and action is a reflection of value. Therefore, if it is in one's values to disregard the will of others, and only embrace their own, or to disregard the wills of others in favor of major ends, then people will choose to disregard the values of others, and reject capitalism wheresoever it defies the ends that they seek. 

The subjective nature of man inherently means that there is, cannot, and will never be, an absolute and singular moral answer for any system. This is why Rand, Rothbard, and Nozick have failed. You speak of a capitalistic ethic as if it is a new idea, but it's something that's been around, and has been failing, for decades. Indeed, the ultimate failure of moral arguments.

Justification for my final assertion:

Most people aren't intellectually curious in any way, the failure of democracy and the degradation of the current system has shown this. Intellectual liberation requires just that, walls to be broken down, taboos to be broken, and new paths discovered. The majority of people will never go down this route, they have no reason to, they don't have the will to, and they don't have the honesty to. Never in history has this happened, and never will it happen because the vast majority of people have no intellectual curiosity or ambition.

In every intellectual revolution, every one, there have always been intellectual elites who guide the entire process, and people at a lower level who have been reached through a simplified belief system that usually plays either to conservative tendencies or to utilitarian values. There has never been anything close to an "intellectual hierarchy", where a huge number of people have been intellectually liberated or changed in a very serious way. 

We can reach out to a huge number of people, but we will never break or convert the vast majority, because they are impossible to convert in a very serious way. We will only ever reach them upon a utilitarian level in one of three ways

1. The emphasis of the increasing standards of living of the vast majority on a free market

2. The capability for the improved provision of public goods and general welfare on all fronts on a free market

3. The increased ability of individual action and happiness seeking on a free market.

Then there come the conservative values that can also be played into:

1. The lack of abuse of power on a free market

2. The amount of individual freedom on a free market

3. The security and independence of a free market.

None of these have to do with huge liberations of an individual, and all remain more or less inside the current paradigm with a change in means, rather than a change in ends or values, which will never be directly achieved in favor of the libertarian standpoint.

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Clayton replied on Wed, Jan 25 2012 7:45 PM

@Neodoxy: Take a look at my post above elaborating on the Epicurean/Buddhist theory of morality. In essence, it goes back to saying that the distinction between highest pleasure (utility) and highest good (morality) is a false dichotomy. But making this case is more complicated than just saying "utility and morality are the same". First, a false conception of utility (which most people have) results in a false conception of morality, so those individuals' conception of utility is not the same as morality. Second, this realization is something that must be reached by each individual before that individual's attitudes and behavior can change.

It is not just a public policy problem. It's not that we need academics and politicians to realize that utility and morality are the same... even if they did, it wouldn't fix anything. We need the people at large to come to understand this. And that's why I say we need a revolution in morality. Everything you've said about why capitalism will not be morally appealing to people is absolutely true so long as they retain a false conception of their own highest pleasure and its identity with the highest good.

And you are absolutely right that intellectual leaders are required in order for this to come about. I see a growing opportunity for more "Ron Pauls" to rise up and begin spreading the truth about how to be happy and fulfilled in life and how this relates to individual morality.

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limitgov:
How would you teach it?

Depends on how much time I have.  Something along the chronology presented here...

Beginner videos

 

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fakename replied on Thu, Jan 26 2012 12:01 AM

Consumariat:

 

"If I had to teach about capitalism, I would just teach it as economics since there really isn't any system outside of capitalism, there's only pro-economics and anti-economics."

How are you defining 'economics'?

If we are going to teach that capitalism is based on human action, then if you are human then capitalism is the only possible way of organizing exchanges and the economy is just a lattice-work of exchanges.

 

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Clayton replied on Thu, Jan 26 2012 1:03 AM

More on morality: I've also been thinking lately about the calculation problem in the context of morality and I think that it applies. When I try to think about what you want and do that, I am "groping about in the dark" in the same way that Mises speaks of central economic planning:

The paradox of “planning” is that it cannot plan, because of the absence of economic calculation. What is called a planned economy is no economy at all. It is just a system of groping about in the dark. There is no question of a rational choice of means for the best possible attainment of the ultimate ends sought. What is called conscious planning is precisely the elimination of conscious purposive action.

Ludwig von Mises – Human Action

The fact is that I cannot know what you want. Now, this concept is not meant to skirt serious moral issues such as charitable giving to those who are destitute, and so on. After all, it is obvious that a starving man would dearly love to eat a piece of bread. But beyond these rather cartoonish examples, guesses about someone else's ends are just that, guesses. Look at married people - many people spend their whole lives together and never figure out what will make each other happy despite living in close proximity for decades.

Now, Mises is specifically talking about calculation in terms of money - the ability to make complex trade-offs between highly unlike goods (in particular, input factors of production versus output goods). But the individual does not need money to judge his own satisfaction and his own schedule of wants. In fact, the calculation problem presupposes the already existing schedule of wants.

Of course, you could just tell me what you want and then I could do that. There are two issues with this, however. The first is honesty - because you might be able to manipulate me into do something I would not do if I knew your true wants, you may lie about your wants. The second problem is ought - why do I owe you anything more than you owe me? So, what we really have here is a mutual tug-of-war between all individuals to get others to serve their wants. Those who succeed in persuading others to serve them are well served and those who do not either resort to greater force or they are not served at all by others.

Choice is rationalized when costs and benefits accrue to the individual who is responsible for making the decision that brought them into being. When one man is forced to pay the costs of another man's decision, that choice is subsidized and will be over-produced, and vice-versa. With the concept of Karmic causality in mind, we can apply this same idea to morality, we can see how the standard conception of moral duty towards others (do unto others as you would have them do unto you) is a perverted attempt to apply this idea.

But when you evaluate right and wrong based on its effects on others (attempt to internalize the costs you are imposing on them), you are acting blindly. Rather, what you should do is let others tell you when your actions are affecting them and then act accordingly. Then, your respective interests are balanced out. When you act and your action does not cause them to complain, you will not be impeded from satisfying your wants by your false belief that you are harming another.

The problem of lying remains, of course, and this is why life is complicated. Nobody really knows when anybody else is telling the truth about their subjective state of mind. But in the long run, this does not matter, because it is from this network of complaints, bickering, heckling and disputes that social norms emerge and it is social norms which help us decide whether a complaint is reasonable or unreasonable.

If I paint my house blue and you complain about the color, that's probably not a reasonable complaint. How do I know this? Well, the rules that have emerged regarding my rights in the color of my own house versus your rights in the aesthetic taste I exhibit in the color of my house say that, barring some written contract to the contrary, I have the right to paint my own house any color I please. But that doesn't mean I'm not an asshole for painting my house electric blue and you and my neighbors are likely to treat me accordingly. The same principle applies to personal relationships - marriage, business associates, friends and even family. What is generally considered acceptable or unacceptable behavior "out there" is what constitutes the fabric of social norms that determine whether others are going to accept or reject your behavior as out-of-bounds and punish you by shunning you or even retaliating against you, socially.

Moral ideas that push individuals to constantly try to look at things through the eyes of others (empathic morality) have the right idea about what a healthy society is (compassion is definitely good!) but they are missing the crucial step of how to get there. The primary factor in your choices must be how those choices will (in the long run) affect you and you alone because it's hard enough to get that right, let alone trying to figure out how your actions will affect others who are having just as much difficulting figuring out how their actions will affect themselves.

Hence, conflict should not be anticipated beyond the extent to which your "intuitive theory of the world, including yourself and others" (which is informed by social norms and law) makes it clear that conflict will arise from a given course of action. When you judge the conflict that will arise from a course of action to be worth the attainment of the ends sought, then you should choose that course of action irrespective of the conflict that will arise. There is no reason to believe that a non-conflict world is ideal.

This is simply a microcosm of the libertarian legal theory of tort. There are no absolute prohibitions or obligations; there are simply individuals who get into legal disputes and there are commonly accepted and applied rules which are consulted in the resolution of such disputes.

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