Capitalism
“Capital” is simply “money and goods” used to produce more “money and goods.” Merriam-Webster tells me the first known use of the term “capitalism” goes back to 1833.
It is slightly interesting that “Banking” goes back to 1660. Then the parable of the “minas” also comes to mind (where earning “interest” is mentioned in passing – not as the central message).
If you want to be slightly cynical you might argue that humans are “economic animals” (the first occurrence of “economic” popping up in 1599 with an archaic meaning of “of or relating to a household or its management” – thank you Merriam-Webster).
If I have a point – it is simply that human beings are capable of creating goods and services and then exchanging those goods and services for “something else” (“money” is a convenient concept – the word first appeared in English in the 14th Century).
Behaviorism
If you are a student of human development – you might recognize the “behaviorist” theory of human motivation that tries to boil down all human actions to “reactions to stimuli” of some form – e.g. incentives, rewards, punishments of various forms.
This always sounds plausible – i.e. why does anyone do anything? they want “something” in exchange?
It isn’t as bad as it may sound – the “something” doesn’t have to be “money.” Someone donating their time to help those in need might be receiving a non-tangible benefit – something like “sense of purpose”, “self-worth”, or the REALLY hard to nail down “happiness.”
Human beings are also complex emotional beings – so saying that someone did something for a SINGLE purpose is always hard. We can get an understanding of someone by observing what they “do” AND how they “do it.” The amount of “character information” in a single action is limited – the more “behavior data” available, the more accurate the “character profile.”
Fictional Characters
When you are reading a novel or watching a movie – one of two lines of dialogue or a few actions may be there to “say something important” about the character.
e.g. In a “cute” movie from 1993 “Amos & Andrew” Nicolas Cage plays a petty thief with a terrible “sense of direction” – which becomes “character information” as well as “running joke” (warning: this movie makes fun of a LOT of “self righteous” authority stereotypes – so it isn’t exactly “politically correct” in 2021 – but it is “fun”)
I also have a terrible “sense of direction” – which if I was a fictional character might be important – but in the real world doesn’t mean anything in particular except that I shouldn’t be the first choice to drive if “navigation without Google” is required.
Wait, where are we going?
Most “-isms” aren’t inherently good or bad. It is always the implementation of the “system” that becomes problematic.
So pick you favorite “-ism” – on paper it probably looks perfect/pure/”good.” Implement it with human beings, and things get messy.
Consider “capitalism” – how can anyone object to the idea of people using “money and goods” to make MORE “money and goods.” In an efficient “market economy” we would see natural division of labor – e.g. not everyone needs to make their own bread every day, the baker can specialize in “baking bread” – the butcher can specialize in “meat production” – and the candlestick maker can specialize in whatever candlestick makers did 😉
The baker/butcher/candlestick maker will probably produce better quality products at a lower price – so even when they add a small amount to the price of their product to make a “profit”, the consumer is better off than if they had to do it all themselves.
Then the wise craftsman would set aside part of their profits and invest it in expanding/improving their craft, or hiring/training workers to produce more quality goods and services.
Assuming everything goes well, eventually the craftsman has “money and goods” to invest in other enterprises – so our baker/butcher/candlestick maker has suddenly become a “capitalist.”
Historically I can say that “community ovens” where common 1500 years ago, then folks would bring there bread to the baker and pay to have it baked, eventually got to the point where (in the U.S. at least) we have “walls of bread” at the supermarket – all due to individuals acting in their own best interest and providing a needed service.
A modern version of that story is told in “The Donut King” – and also the negative side of human nature. i.e. Ted Ngoy built a “donut empire” by helping others and then greed and lust destroyed that empire.
Banking
Explaining the modern “banking system” probably requires its own class – but at a basic level it is still just a “business” that holds peoples money and lends out that money to other people in exchange for “interest.”
That “money” stuff also has a “time-value” – which is really not important at the moment.
ANYWAY – when our wise baker wants to “invest” his profits he would start by putting some of his money in a bank/financial institution of some kind.
If the bank pays our baker “2% interest” on deposits and then is able to lend that money at 4% to the butcher (who wants to expand his business) – then once again, everyone wins.
Once again, “banking” isn’t good or bad – just a business. Once again the real problem becomes “greed” not financial institutions/capitalism.
Our imaginary banker might be making a living off of that 2% difference between loans and deposits. Even if our banker is completely honest – there is always the risk of “moral hazard” – e.g. what happens if the Donut King takes out a big loan to “expand the business” and then runs off to Las Vegas and loses it all on blackjack?
Well, in the real world financial institutions are heavily regulated and have to keep a certain amount of “reserve capital” for “bad loans.”
Again, once normal people get involved and not “theoretical models on paper” – things get messy.
Frank Capra
Frank Capra was one of the great movie makers of early Hollywood. Many of his movies get interpreted as “communist sympathizing” by biased modern audiences.
Since it tends to get shown every Christmas season “It’s a Wonderful Life” is probably Mr Capra’s most familiar movie to “modern audiences.”
If you watch the movie – it is a small – and easy to miss – plot point that Mr Potter (the movie’s villain) buys the local bank during an economic downturn. Mr Potter is guilty of both bitterness and greed – and uses the bank for those purposes.
The “true capitalist” in the movie is George Bailey (played by Jimmy Stewart). Mr Bailey runs the “Building and Loan” – which in 2021 terms would probably be considered a “credit union.”
I suppose there is someone that hasn’t seen the movie – so I won’t give away the ending. I’ll just point out that “people working together for common benefit” is not unique to ANY “-ism” –
George Bailey is (probably) exceptionally generous, while Mr Potter is exceptionally greedy – so if anything the movie is a morality tale about the superiority of generosity over greed – BUT certainly not an endorsement of communism.
Looking at Frank Capra’s movies as a whole – you see a common thread of “individual liberty over authoritarianism.” Of course he was making movies in and around the Great Depression – but if his movies are concerned with a particular “-ism” then it is “individualism.”
Remember the command is to “love your neighbor as yourself” – so individuals within a society have obligations to other members of that society as well as privileges within that society. BUT society does not “own” the individual and society does not “owe” the individual anything – we are all free moral and economic agents with responsibilities
Have I mentioned these things get “real world” messy very fast …
Who makes the decisions
Look at all of the “-isms” from 10,000 feet and they kind of look the same. The key differentiator in “real world economic systems” usually centers around who makes the decisions.
SO should you bake bread or make candlesticks? Maybe one, maybe the other, probably you want to do something completely different – should you make that decision or should someone else tell you what you are going to do?
Well, almost everyone is going opt for “let me make my own decision.” Which is the fantasy that “true communism” tries to sell – maybe in an truly efficient optimal society where “everyone VOLUNTARILY contributes as required” AND “everything required for living is freely available” that might be possible.
Meanwhile in the real world – “real work” tends to get neglected simply because, well, it is “work.”
The oversimplified history lesson
HISTORICALLY – most folks have been subsistence farmers. i.e. “choosing a career” (for the average person) was never really an option for MOST of human history.
Then, well, “capitalism” happened – ok, from a “western civilization” point of few the “Black Death” wiped out enough people in Europe that “economic mobility” increased. Labor became scarce – and therefore more valuable.
The old “middle school world history textbook” explanation of the divisions of Medieval Europe was that there were three groups – 1. those that “fought” (the upper class/nobility), 2. those that “prayed” (the Church), and 3. those that “worked” (everyone else – again, a lot of subsistence farmers).
The rise of a skilled middle class/merchants kind of disrupted the status quo. Then the wealth accumulated by that skilled middle class/merchants combined with the “body count” from the Black Death allowed for “social mobility.”
SO as a rule of thumb – we see “economic liberty” always precedes “civil liberty.”
Unions
Squeezed into that mess somewhere are “trade unions.” Once upon a time these were formal agreements between a “master” and an “apprentice” intended to provide labor for the “master” and training for the “apprentice.”
In a world without “accreditations”/”licenses”/”certifications” the apprenticeship was a way to pass on skills and give some guarantee of “quality” to the consumer. e.g. paying for the “trade union approved” work might cost a little more – but you could expect quality work.
The “modern labor union” probably dates back to the industrial revolution and the creation of “factories” and then the “assembly line.” The “union job” might still be skilled labor, but the trend was towards “unskilled commodity labor.”
The “assembly line” broke the creation/assembly process into smaller processes – i.e. a single worker was easily replaced because the skills to perform the task could be easily taught/learned (no long drawn out master/apprentice process required).
Unions Good
There were a LOT of “abuses of labor” early in the industrial revolution. Child labor, long work days, no “job security” or “workman’s compensation” – early “labor unions” helped bring about needed reform.
The real motivation for “management” to change how they treated “labor” probably revolved around productivity and worker efficiency.
Henry Ford famously offered a $5 a day wage in 1914 (when the average daily wage was around $2). The improved wages cut down on employee turnover and improved Ford’s profitability – i.e. paying workers more made them stick around longer and the company actually made more money.
In “modern times” organized labor is on the decline for any number of reasons – part of the problem is that “the Unions” got big and corrupt at worst/inefficient at best.
Unions not so good
Yes, the modern workplace owes “unions” a great deal – but the old “Animal Farm” story applies – i.e. if/when the “new masters” start acting like the “old masters” the ordinary worker pays the price.
The decline of the American auto-industry serves as a good example – with the Unions illustrating that “greed” is a problem for “labor” as well as “management.”
Yes, it is a complicated issue – but ideally the “union” should be a partner with “management.” If the relationship is adversarial then no one “wins.”
e.g. For years “Southwest Airlines” treated their labor union as a partner – and had a long run of profitability (and appear to be coming out of the pandemic fueled downturn).
ANYWAY – unions aren’t “good” or “bad.” If they serve their members by providing a common communication platform, then they are doing a great job. If all the “union” does is collect dues, make political contributions, and bitch about how management doesn’t want to pay more, then they are probably NOT doing a great job.
Unions and Communism
Another pet peeve is the idea that somehow “unions” and “communism” are dependent on each other when they are completely unrelated.
Unions are not “communism”, communism is not “unions” – unions are about organization, “communism” (as it exists in the real world and not some academic fantasy) is about gov’ment control of the economy.
I suppose a communist regime might require all workers join a union – but again, that is “management” (i.e. the gov’ment) communicating with “labor” (i.e. individual workers) en masse.
Meanwhile in a “free market capitalist” system the decision to form a union or not would be left up to the workers – not coerced from above.