Capitalism and its definition, characteristics, strengths, history and benefits. Western culture and non Western culture and free enterprise, market economy, market economies

Western Culture Knowledge Center:
What is Western Culture? • Reason • Individualism • Happiness • Rights • Capitalism

Contents
Introduction and Definition
Pre-capitalism -- Death Never Far
Capitalism The Savior
Bastion of Benevolence
Protects Link Between Reason and Survival
Non-Western Culture and Capitalism

Since Western culture recognizes rights and their foundation, it is capitalistic. This is because capitalism develops insofar as individuals are free to exercise their rights and choose to exercise them.[1]

Capitalism is a social system based on the recognition of rights, in which all property is privately owned. It is characterized by the pursuit of material self-interest and rests on a foundation of reason.

It is further characterized by saving and capital accumulation, exchange and money, the profit motive, the freedoms of economic competition and economic inequality, the price system, economic progress and a harmony of the material self-interests of all the individuals who participate in it.[2]

Pre-Capitalism -- Death Never Far
In Western Europe, before the development of capitalism in the late 1700s, life for the vast majority of Western Europeans was similar to life for everyone in the world at the time. Merely surviving was an immense struggle, and, on average, people were not expected to live beyond the age of 30.[3]

Famine in Western Europe was common, as was the mass death, infanticide and cannibalism that accompanied it.

Poverty was so severe that the following were considered luxuries usually available only to the rich: shoes, clothes without holes, adequate warmth, candles for light, eating utensils, toys, bathing more than once a month, healthcare, an education.

Work, assuming one could find it, usually consisted of dangerous, unrelenting and exhausting manual labor. And preparing a simple meal or performing routine household chores took precious hours. Sleeping four or more adults in one bed was common, as was all-pervading filth, including raw sewage running through the streets. Disease was everywhere, an inescapable trademark of this era.

The children of this pre-capitalism world were hit hardest. The mortality rate for infants under one year was at least 30%, and the rate for all children from birth to 19 years was at least 50%. And surviving children as young as five often needed to work to help ensure that their families did not become gravely impoverished.[4]

Capitalism The Savior
Capitalism ended this nightmare for Western Europeans. In a historical blink of an eye, it virtually wiped out poverty, countless diseases, hunger, child mortality, human misery and the need for child labor — and ushered in, for hundreds of millions of people, unprecedented levels of wealth, health, and abundance. Life expectancy in Western Europe, as a result, more than doubled to at least the age of 75.

Capitalism also emerged in the United States in the 1800s as well as other nations settled by Western Europeans—resulting in similar life-sustaining and life-enriching benefits. In the mid-20th century, capitalism spread to Asia, immensely improving life in many nations, such as Japan and South Korea. And, currently, capitalism is lifting millions from poverty in other parts of Asia, including India and China.

Capitalism = Higher Life Expectancy
Today, capitalism has at least some presence in nearly all nations of the world. It does not currently exist (and has never existed) anywhere in a full, perfect, and complete form. Wherever capitalism exists, it is mixed with statism. Statism is a social system based on the violation of individual rights; statism includes communist, socialist, fascist, simple dictatorship and “welfare” type systems.

The more a nation embraces capitalism, as opposed to statism, the more progress it achieves. One need only look at life expectancies around the world to see that this is true.[5]

Current life expectancy in nations where capitalism has significant presence (abbreviated list)
82 -- Australia
78 -- United States
82 -- Japan
81 -- Israel
80 -- Italy

Current life expectancy in nations where capitalism has only modest presence (abbreviated list)
71 -- Philippines
66 -- Russia
70 -- Honduras
65 -- Pakistan
59 -- Senegal

Current life expectancy in nations where capitalism has little or no presence (abbreviated list)
30 -- Haiti
47 -- Nigeria
45 -- Afghanistan
40 -- Zimbabwe
64 -- North Korea

Bastion of Benevolence
The engine behind capitalism’s ability to generate economic progress and the longer life expectancies that result is the division of labor and individual rights. Individual rights sanction each person to pursue his or her own self-interest and benefit—as long as he or she respects the rights of others.

This means that, under capitalism, a person can only obtain the cooperation of others voluntarily through trade, not through force. In other words, a person under capitalism, according to economist George Reisman:

“…must show [others] how cooperation with him is to their self-interest as well as his own and, indeed, is more to their self-interest than pursuing any of the other alternatives that are open to them. To find customers or workers and suppliers, he must show how dealing with him benefits them as well as him, and benefits them more than buying from others or selling to others.”[6]

For example, Henry Ford did not force people at gunpoint to buy his Model T. He attained customers, and thus benefited himself, because his automobile appealed to the self-interest of consumers since it was superior to other options open to them, such as the horse and carriage. Voluntary exchange for mutual benefit, which this is but one example of, is institutionalized under capitalism—resulting in continuous improvement of people’s well-being and standard of living.

Capitalism, then, is humanity’s bastion of benevolence: Under capitalism, there is only a harmony of rational self-interests because a person is only able to benefit himself by showing that he can benefit others.

Protects Link Between Reason and Survival
More fundamentally, capitalism leads to economic progress because it is based, not on faith or fantasy, but on reality and facts—specifically the objective requirements of proper human survival.

Capitalism recognizes that virtually everything that human life requires is ultimately a product of human reason. A Western, capitalist society protects this link between survival and reason by upholding one’s freedom to act upon one’s own rational judgment (in the pursuit of one’s own self-interest).[7]

Therefore, it’s no wonder that the countless achievements that make human life secure and enjoyable were created under capitalism, such as air travel, refrigeration, radio, television, nuclear power, medical cures, indoor plumbing, the motion picture, the telephone, the light bulb, the computer, the Internet and the automobile.

And it's no wonder that life under capitalism becomes increasingly secure and enjoyable. When human reason is free to operate, it is limitless in its ability to solve problems of human survival and to continuously improve the quality and longevity of human life.

The development and spread of capitalism raised the expectation of life at birth in the world from roughly 26 years in 1820 to 66 years in 2000, the greatest gain by far in 5,000 years of human history.[8] And assuming capitalism is not thwarted, life expectancy will likely rise to at least age 75 by 2050.[9] Capitalism clearly makes the Earth more and more habitable and friendly to human life, not less so.

It’s also no wonder that, under capitalism, human reason thrives in the form of economic planning. Capitalism, indeed, represents the opposite of chaos in that it is characterized by an immense amount of projection and preparation. For example, every day there are countless businesspeople who are planning to expand or contract their firms, who are planning to introduce new products or discontinue old ones, and who are planning to open new branches or close down existing ones. And every day there are countless workers planning to improve their skills, change their occupations or places of work, or to continue with things as they are. And every day there are countless consumers planning to buy homes, cars, stereos and how to use the goods they already have.[10]

From its rational foundation to the limitless and remarkable achievements, advances and economic planning that take place under it, capitalism is clearly the system of reason and for reason—and, therefore, the system that makes most of human life possible and worth living.

Nonwestern Culture and Capitalism
Since nonwestern culture does not recognize rights and their foundation, it cannot achieve capitalism and its benefits. In nations where nonwestern culture dominates—where theocratic, communist, socialist, fascist and military dictatorships rule—individuals are not free to act upon their own rational judgment in the pursuit of their own self-interest. In other words, government controls and regulations over the economic and political lives of the citizens severely impede or destroy the workings of capitalism in these nations.

As a result, these nations are characterized by widespread poverty, manual labor, unsafe working conditions, filth, disease, helplessness before nature, child mortality and child labor. In other words, these nations are much like the pre-capitalism Europe described earlier, as they would logically have to resemble.

• • • •

Capitalism is based on the recognition of rights. It is in harmony with humanity’s rational nature. It lifts people out of foulness and into prosperity. It is inherently and profoundly benevolent. It makes most human survival and happiness possible. Capitalism is, in short, one of the most beautiful words that can be spoken.

Everyone on earth should fight for capitalism and the Western ideals and values that make it possible as if their lives depend on them—because, in fact, they do.

[1] George Reisman, Capitalism: A Treatise on Economics; “Chapter 1: Economics and Capitalism” (Ottawa, Ill, Jameson Books 1998.) p.19.
[2] Ibid, p. 19
[3] Ayn Rand, Capitalism: The Unknown Ideal; “What is Capitalism?” (New York, Signet, 1982) p.19.
[4] Jackson Spielvogel, Western Civilization, Fourth Edition, (Belmont, CA, Wadsworth 2000) p. 533.
[5] CIA World Factbook 2010
[6] George Reisman, Capitalism: A Treatise on Economics; “Chapter 1: Economics and Capitalism” (Ottawa, Ill, Jameson Books 1998.) p.28.
[7] Ayn Rand, Capitalism: The Unknown Ideal; “What is Capitalism?” (New York, Signet, 1982) p.19.

[8] Deirdre McCloskey, The Bourgeois Virtues: Ethics for an Age of Commerce, (University of Chicago Press,) p. 26.
[9] Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects: The 2004 Revision and World Urbanization Prospects
[10] George Reisman, Capitalism: A Treatise on Economics; “Chapter 8: The Dependence of the Division of Labor on Capitalism” (Ottawa, Ill, Jameson Books 1998.) p.269.