Is making a profit at the expense of your fellow man a moral action? Does capitalism as an economic system maximize the good, and how? If not, what would a moral alternative look like? (Even if only in theory.)
Is Capitalism Moral?
Capitalism isn't defined as making a profit at the expense of your fellow man. Assuming the market is indeed free, each person makes decisions that maximize their own interest.
I buy a product because it is more valuable to me than the work I provided to earn the money it costs to buy it. You may provide that same product and sell it at a cost that allows you to make more money than the expense of producing it. Same is true for labor. Win/Win.
I buy a product because it is more valuable to me than the work I provided to earn the money it costs to buy it. You may provide that same product and sell it at a cost that allows you to make more money than the expense of producing it. Same is true for labor. Win/Win.
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secretwealth
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"each person makes decisions that maximize their own interest."
Well, they make decisions that they think maximize their own interest. Important difference there. The question is--is it immoral to profit on another person's misunderstanding of what maximizes their own interest? Was P.T. Barnum a bad man?
Well, they make decisions that they think maximize their own interest. Important difference there. The question is--is it immoral to profit on another person's misunderstanding of what maximizes their own interest? Was P.T. Barnum a bad man?
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Spartan_Warrior
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If you sell a product at a cost that is greater than the expense of producing it, haven't you profited at someone else's expense? Maybe I shouldn't have worded it that way. I think secretwealth captured what I meant a bit better. Capitalism would rightfully, based on supply and demand, have you overprice a bottle of water to a dying man in the desert. You can say that the dying man is a free agent and simply values getting a drink more than his life savings, and surely this is true--but does that make it morally right to take his savings all the same? Furthermore, to extrapolate that, is any market truly free? Surely there are coercive circumstances in every transaction, from the overt (your car's stranded on the side of the road and you have no choice but to call a tow company) to the covert (advertising, peer pressure).
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George the original one
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secretwealth
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A couple of things, to play devil's advocate:
"Yeah, profiting from stupidity is questionably moral"
Why is that, exactly? What's bad about being smarter--and profiting from that intelligence? And where is the line? If I study more about a stock and buy it at a lower price than someone on the marketplace who just buys it because they "feel it in their bones" that it'll go up, am I being immoral? What about selling Made in China knick knacks to tourists by Central Park? Where exactly do you draw the line between profiting from another's stupidity and profiting fair enough?
Secondly--regarding the dying man in the desert: of course that's unethical, but the marketplace involves plural buyers. I can't charge anything I want to that dying man in a functioning capitalist market, because next to me will be someone willing to see the water a bit cheaper. As opposed to a socialist, communist, or feudal system, where there's only one seller: the government.
"Yeah, profiting from stupidity is questionably moral"
Why is that, exactly? What's bad about being smarter--and profiting from that intelligence? And where is the line? If I study more about a stock and buy it at a lower price than someone on the marketplace who just buys it because they "feel it in their bones" that it'll go up, am I being immoral? What about selling Made in China knick knacks to tourists by Central Park? Where exactly do you draw the line between profiting from another's stupidity and profiting fair enough?
Secondly--regarding the dying man in the desert: of course that's unethical, but the marketplace involves plural buyers. I can't charge anything I want to that dying man in a functioning capitalist market, because next to me will be someone willing to see the water a bit cheaper. As opposed to a socialist, communist, or feudal system, where there's only one seller: the government.
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jacob
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Capitalism as a system maximizes the use of productive resources.
If such efficiency (ROI) is a good, capitalism is internally consistent and functional. Consequentially capitalism is a moral system.
However ... is capitalism good for humans? In capitalism (without corruption), capital tends flows to where it's treated the best. Since humans come with widely different skills, some humans will end up with far more capital than others. Since humans tend to be close-minded, tribal, and short-sighted in nature, albeit with many exceptions, capitalism is likely not a good fit for humans as a sole guiding system.
Then again, neither is technology and so many other modern things. So because humans are what they are capitalism and other technologies are regulated in order to get the benefits and curtail some of the downsides that are incompatible with human nature.
If such efficiency (ROI) is a good, capitalism is internally consistent and functional. Consequentially capitalism is a moral system.
However ... is capitalism good for humans? In capitalism (without corruption), capital tends flows to where it's treated the best. Since humans come with widely different skills, some humans will end up with far more capital than others. Since humans tend to be close-minded, tribal, and short-sighted in nature, albeit with many exceptions, capitalism is likely not a good fit for humans as a sole guiding system.
Then again, neither is technology and so many other modern things. So because humans are what they are capitalism and other technologies are regulated in order to get the benefits and curtail some of the downsides that are incompatible with human nature.
Who's morals?
I think capitalism, at least as in it's current evolution (which might not even be capitalism?) is based on the hyper exploitation of resources that are not infinite. They will run out and we could all die. Morals aside, it's irrational.
On a more personal scale, I think wage slavery is anti-life, selling things is rarely moral, and selling services is usually moral.
I think capitalism, at least as in it's current evolution (which might not even be capitalism?) is based on the hyper exploitation of resources that are not infinite. They will run out and we could all die. Morals aside, it's irrational.
On a more personal scale, I think wage slavery is anti-life, selling things is rarely moral, and selling services is usually moral.
We can never be 100% moral and no one would ever agree on what would make us 100% moral. We do the best with what we have. Even though I completely agree with Jacob when he says, "Since humans tend to be close-minded, tribal, and short-sighted in nature, albeit with many exceptions, capitalism is likely not a good fit for humans as a sole guiding system", it is our best base system at this time.
That does not mean it should be implemented and allowed to run unrestrained. Market forces are not magic. They need to have a lot of checks and balances built in (such as the Glass Steagal Act, the SEC, etc.).
(Personally, I would like to see the commercial and investment banks broken up, and require all investment banks to be partnerships. Those guys would watch their risk profile like a hawk if they were partnerships again.)
We also need to understand that capitalism will corrupt or find work arounds for all of these checks and balances, as such we need to constantly be making changes to the checks and balances (campaign finance reform is a current example).
A nice step forward would be eliminating the idea of any market being trully a "free market." We might as well try and find a unicorn, as to try and find a trully free market.
Far too often capitalism is treated as religion when it is merely a tool. A good tool, but one we need to protect ourselves from, because of...ourselves.
That does not mean it should be implemented and allowed to run unrestrained. Market forces are not magic. They need to have a lot of checks and balances built in (such as the Glass Steagal Act, the SEC, etc.).
(Personally, I would like to see the commercial and investment banks broken up, and require all investment banks to be partnerships. Those guys would watch their risk profile like a hawk if they were partnerships again.)
We also need to understand that capitalism will corrupt or find work arounds for all of these checks and balances, as such we need to constantly be making changes to the checks and balances (campaign finance reform is a current example).
A nice step forward would be eliminating the idea of any market being trully a "free market." We might as well try and find a unicorn, as to try and find a trully free market.
Far too often capitalism is treated as religion when it is merely a tool. A good tool, but one we need to protect ourselves from, because of...ourselves.
Maybe a better question is:
Does using the capitalist system to gain money through the efficient use of capital outweigh the human (low wages, manipulation through advertising cars and drugs for instance) and environmental costs (oil's probably the biggest one here, but soon the buying up of water resources) incurred?
The reason this interests me is that I'm on the cusp of buying some index funds and mutual funds with a low management expense ratio but every time I look at the list of the top performing S&P 500 stocks or Dow Jones I see environmental and human costs on the back of the biggest potential potential profits.
I had a roommate in University who stressed how important it was for him to get rich at all costs and then give back to his family and the world through charity and I argued back that his profits would cause so much damage that his 'giving back' would be like giving a band-aid to someone after you stabbed them. A bit dramatic but it felt like it got the point across in terms of scale and relative benefits to people who are already at a disadvantage.
Is it morally consistent to believe in saving the environment by personally choosing to not have a car but then having a piece of your investment income coming from oil companies? Same with drug companies or luxury commodites/products that you would never buy.
Does using the capitalist system to gain money through the efficient use of capital outweigh the human (low wages, manipulation through advertising cars and drugs for instance) and environmental costs (oil's probably the biggest one here, but soon the buying up of water resources) incurred?
The reason this interests me is that I'm on the cusp of buying some index funds and mutual funds with a low management expense ratio but every time I look at the list of the top performing S&P 500 stocks or Dow Jones I see environmental and human costs on the back of the biggest potential potential profits.
I had a roommate in University who stressed how important it was for him to get rich at all costs and then give back to his family and the world through charity and I argued back that his profits would cause so much damage that his 'giving back' would be like giving a band-aid to someone after you stabbed them. A bit dramatic but it felt like it got the point across in terms of scale and relative benefits to people who are already at a disadvantage.
Is it morally consistent to believe in saving the environment by personally choosing to not have a car but then having a piece of your investment income coming from oil companies? Same with drug companies or luxury commodites/products that you would never buy.
I don't view capitalism as a real philosophy, but merely a tool or a technology for distributing resources.
Capitalism is no more "moral" or "immoral" than a knife, a skillet or a computer. Everything has its proper use and also improper ones.
But its a mistake to worship technologies as idols. Or attach morality to a mere process. It only makes you a slave to a machine.
Same goes for Marxism or mercantilism for that matter. Almost all economic theories/processes can work at the right place and time, but will also yield bad results (and revolutions) at the wrong place and time.
To a person who only has a hammer, every problem looks like a nail. And to the person who worships hammers, all other tools are immoral. Kind of like the practice of charging interest in the middle ages. Christians were forbidden to do it because it was considered immoral.
Capitalism is no more "moral" or "immoral" than a knife, a skillet or a computer. Everything has its proper use and also improper ones.
But its a mistake to worship technologies as idols. Or attach morality to a mere process. It only makes you a slave to a machine.
Same goes for Marxism or mercantilism for that matter. Almost all economic theories/processes can work at the right place and time, but will also yield bad results (and revolutions) at the wrong place and time.
To a person who only has a hammer, every problem looks like a nail. And to the person who worships hammers, all other tools are immoral. Kind of like the practice of charging interest in the middle ages. Christians were forbidden to do it because it was considered immoral.
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secretwealth
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The thing is, Marxism isn't a polar opposite to capitalism, as some people seem to think. Marx saw capitalism as a necessary stage in economic development, as societies and technologies advance and grow more sophisticated. It was one step towards communism. Marx was no more against capitalism as Darwin was against monkeys.
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Spartan_Warrior
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Interesting responses. I started this thread with the pleasant late night fantasy that perhaps there is some economic system in which producers can profit from their product and/or labor without consumers having to foot the expense of that profit. An economy where no one gets the short end of the stick, compared to now when there is technically only one winner--either the buyer getting a deal while the seller sells at a loss, or the seller getting a profit at the expense of the buyer. This is speaking objectively in terms of material cost, I suppose, not considering how either entity values their labor (that is, how the producer values the labor used to produce, and how the consumer values his labor used to earn money to consume). The problem, if it is one, is that the value of labor is subjective. Personally, I don't think a physician's labor is worth $300/hr (or a CEO's is worth $5000/hr), in the same way I don't think the man in the desert's labor of carrying water is worth the thirsty man's life savings. But I'm sure the physician, and CEO, and maybe even the man with the foresight to carry water in the desert, beg to differ.
A central economy in which labor has a set price might "fix" this, but that strikes me as no more moral for reasons I suspect are obvious.
Truly, the most moral economy I can think of is perhaps no economy at all--one merely comprised of self-sufficient producers who produce only what they need for themselves, without trade at all. Then labor is "naturally" valued at what it produces. The labor of picking bananas is worth bananas, proportionate to the effort/efficiency/skill of the labor, etc. Then no one's getting ripped off in a transaction due to market factors beyond their control, and resources would presumably be used in the most efficient way possible, because the labor involved in taking more than needed would essentially constitute ripping themselves off. (Kinda like how people naturally ride a bicycle in a much smoother and more efficient manner than they drive--they can "feel" the extra effort involved in being inefficient.)
Ironically this may sound like an anti-technology position, but if anything, maybe new technologies (e.g. 3D printers) will open the possibility for a more producer-based economy.
The next most moral system I can think of would be a bartering economy. Somehow this seems like a fairer way to trade than subjectively valuing labor at a certain dollar amount.
And I realize my saying that labor is subjectively priced in capitalism might seem wrong, but it is the case IMO. There may be an objective "market price" that is the ideal nexus in terms of supply and demand in the market, but I don't see how that can ever be known. Suppliers just make their best estimate of it, and we all know how emotions (like greed) can color human decisions.
When I think about it, on the other hand, the markets I feel are most inappropriately priced (e.g. education, medical) are those that are heavily subsidized, driving prices higher. Perhaps this is the corruption/crony capitalism at play.
Finally, on that note, I really like the idea of capitalism as a tool. But even a tool can have features of morality depending on its purpose. If the tool is a weapon with the purpose of killing, the weapon that does that in the least painful way seems more moral than the weapon that's most brutal and painful*. This is entirely separate from the moral content of the user's intent (e.g. killing in self defense versus murdering innocents).
*We could possibly extrapolate this to indicate that "efficiency" is indeed a moral virtue in a tool (or economic system).
@Bigato: That's very true, everyone has different moral theories. For these purposes I'm assuming a basic utilitarianism, where the most moral actions are those that maximize "the good" (pleasure, contentment, etc) for the most people possible while likewise minimizing "the bad" (pain, discomfort, death).
A central economy in which labor has a set price might "fix" this, but that strikes me as no more moral for reasons I suspect are obvious.
Truly, the most moral economy I can think of is perhaps no economy at all--one merely comprised of self-sufficient producers who produce only what they need for themselves, without trade at all. Then labor is "naturally" valued at what it produces. The labor of picking bananas is worth bananas, proportionate to the effort/efficiency/skill of the labor, etc. Then no one's getting ripped off in a transaction due to market factors beyond their control, and resources would presumably be used in the most efficient way possible, because the labor involved in taking more than needed would essentially constitute ripping themselves off. (Kinda like how people naturally ride a bicycle in a much smoother and more efficient manner than they drive--they can "feel" the extra effort involved in being inefficient.)
Ironically this may sound like an anti-technology position, but if anything, maybe new technologies (e.g. 3D printers) will open the possibility for a more producer-based economy.
The next most moral system I can think of would be a bartering economy. Somehow this seems like a fairer way to trade than subjectively valuing labor at a certain dollar amount.
And I realize my saying that labor is subjectively priced in capitalism might seem wrong, but it is the case IMO. There may be an objective "market price" that is the ideal nexus in terms of supply and demand in the market, but I don't see how that can ever be known. Suppliers just make their best estimate of it, and we all know how emotions (like greed) can color human decisions.
When I think about it, on the other hand, the markets I feel are most inappropriately priced (e.g. education, medical) are those that are heavily subsidized, driving prices higher. Perhaps this is the corruption/crony capitalism at play.
Finally, on that note, I really like the idea of capitalism as a tool. But even a tool can have features of morality depending on its purpose. If the tool is a weapon with the purpose of killing, the weapon that does that in the least painful way seems more moral than the weapon that's most brutal and painful*. This is entirely separate from the moral content of the user's intent (e.g. killing in self defense versus murdering innocents).
*We could possibly extrapolate this to indicate that "efficiency" is indeed a moral virtue in a tool (or economic system).
@Bigato: That's very true, everyone has different moral theories. For these purposes I'm assuming a basic utilitarianism, where the most moral actions are those that maximize "the good" (pleasure, contentment, etc) for the most people possible while likewise minimizing "the bad" (pain, discomfort, death).
"Truly, the most moral economy I can think of is perhaps no economy at all"
The problem with no economy is that we always stand on the shoulders of others to advance. Without this frameworkd we would probably slowly collapse back to the stone age. Even smithing would be too labor and capital intensive for everyone to do it.
"The next most moral system I can think of would be a bartering economy."
I don't see how a bartering economy is any different than our current economy. Money is really just an advanced form of bartering. In a barter economy everything would still be assigned a value, but it would be multiple values (5 apples or 2 oranges for a pound of flour, but what if I only have milk? much more complicated). It would be much more difficult to actually get what you needed.
Bartering would also be much less efficient, which makes it morally questionable.
I do agree that certain tools are more moral than others.
The problem with no economy is that we always stand on the shoulders of others to advance. Without this frameworkd we would probably slowly collapse back to the stone age. Even smithing would be too labor and capital intensive for everyone to do it.
"The next most moral system I can think of would be a bartering economy."
I don't see how a bartering economy is any different than our current economy. Money is really just an advanced form of bartering. In a barter economy everything would still be assigned a value, but it would be multiple values (5 apples or 2 oranges for a pound of flour, but what if I only have milk? much more complicated). It would be much more difficult to actually get what you needed.
Bartering would also be much less efficient, which makes it morally questionable.
I do agree that certain tools are more moral than others.