More thoughts on Capitalism
Nov 17
Posted: under Business, Economy.
At the heart of the capitalistic system is personal integrity. Webster defines integrity as, adherence to moral and ethical principles; soundness of moral character; honesty. Moral and ethical principles deal with right and wrong in an absolute sense. Lying is always wrong, stealing is always wrong, cheating is always wrong. Truth is always right, keeping what is yours is always right and honesty is always right. We know this is correct because if we are on the receiving end of a lie, theft or cheating we demand justice or a righting of the wrong. Companies don’t lie, steal or cheat, individuals do. When we speak of companies, we are not talking about impersonal entities, rather of people just like us, with hopes, dreams and goals. They want to have enough to provide for their aspirations and the well being of society. As long as these persons (the company) are meeting the customer’s expectations by profitably providing a quality service or product at a price that the market will bear, everyone benefits. The customer is happy because his requirements are met, the producer is happy because he made a profit and can meet his obligations, the government should be happy because by taxation they can continue to serve the people by securing our safety and enforcing the contracts so essential to a free market.
When a person working for a company lacks integrity, whether an executive or machine operator, everyone suffers because profits suffer. If the executive is calloused to the interests of his investors, customers, employees and community, because of hubris (selfishness), the self regulating aspect of capitalism will begin. Customers will complain and look for competing products or services, competitors will gain market share, profits will decline, investors divest, employees find more fulfilling employment and ultimately the company will either find a new executive with personal integrity to change the corporate culture or close. If the machine operator lacks personal integrity and works as little as possible, he reduces the productivity of the plant, increasing the cost of goods sold and reducing profitability. When this cycle is repeated many times in a plant, the company loses its competitive edge and ultimately closes.
The problem comes when government (also made up of individuals) uses its power to regulate a self regulating economic system (capitalism). These regulations cause innumerable unintended consequences. Regulations that dictate product specifications such as CAFE (Corporate Average Fuel Economy) standards on automobiles has brought the industry to it knees. Instead of the market regulating what models are produced, bureaucrats set standards based upon some fictitious depletion of oil supply, make believe environmental concerns or liberal ideology. In order to meet the standards, car makers resort to smaller, less powerful, less profitable cars. This leads to loss of market share and ultimately fewer car companies.
Profits are the fuel of our lives and economy. Without profits there are no paychecks issued, no groceries purchased, no retirement savings, no funds for government to do anything, etc. As long as there are honest individuals, the capitalistic free enterprise system will flourish and meet the demands of the market.
Dave Coke
