True Capitalism

"If an exchange between two parties is voluntary,

it will not take place unless both believe they will benefit from it"

-Milton Friedman, Free to Chose

Since its inception, the economic philosophy of capitalism had been under constant fire, both from the left and the right. However this essay is not to discuss the criticism of capitalism directly, but to explain some of the things capitalism is accused of, and whether or not they are truly in line with the economic philosophy of capitalism. In particular, monopolies and economic imperialism and colonialism will be addressed.

First of all, however, it is important to remember that few people working in the economy, whether a unionist, a business owner, or a white collar bean counter, want a free market. Yes, this is cynical, and there are exceptions, but by and large, they don't want unrestricted trade because they fear it will cost them (and if I have low expectations, I won't be disappointed). The unionist wants labor laws that will boost his wages at the cost of his employer or other workers; the bean counter wants lower taxes and more government services; the businessman wants laws that maximize his profits and minimizes his competition. All of theses are contrary to capitalism, but the businessman is the most important here.

A monopoly is a marketplace situation where a single provider of a good or service controls all or nearly the entire market share. This can be a private company, as in the case of Microsoft or DeBeers, or it could be a government service, as in the case of the British National Health Service. As this is about capitalism, government monopoly will not be discussed. The simplest explanation as to why monopoly is uncapitalistic is this: capitalism is based on coercion-free exchange. To quote Milton Friedman "Exhange is truly voluntary only when nearly equivalent alternatives exist. Monopoly implies the absence of alternatives and thereby inhibits effective freedom of exchange." This is why anti-trust laws are so important for a free market. Another quote on monopoly by Milton Friedman gives us some idea of the origin of monopoly, and what school of economic theory they are better associated with: "Monopoly frequently, if not generally, arises from government support or from collusive agreements among individuals." Monopoly is not an intended consequence of any philosophy except socialism, and that is government monopoly. Private monopoly is best associated with mercantilist theory, as best illustrated by the East India Company in the 18th century, although it is largely independent of the aims of any.

Capitalism has also been accused on driving colonialism in a search for new markets. It is undeniable that desire for increased wealth and economic growth has driven such actions in the past, but this has nothing to do with capitalism, as has sometimes been alleged. People have used free trade as an excuse to justify such actions, but it is only an excuse. Free trade is by its nature, free and completely voluntary. A band of armed men telling you that you have a new trading partner is no more capitalism than state ownership. The acts of 19th century corporations in Africa had everything to do with greed and nothing to do with capitalism. Mercantilist economic theory is far more likely to drive colonialism. The objective of economic self-sufficiency requires that a nation must take territory abroad for resources the mother country lacks, whereas a capitalist nation would need to trade for it.

Capitalism is an economic theory that rejects the use of force, because in the end it turns out better for everyone. It rejects the creation of monopoly, because monopoly inhibits the free market. Sale of fraudulent products is an unacceptable because it relies on a form of coercion. Many people and organizations will use Free Trade as a shield for coercive acts that have nothing at all to do with free trade.

Okay, this essay sucks, but give me a break. It's the first one I've written in over two years that hasn't been on the social, political, and economic ramifications of increased literacy in France between 1680 and 1780, or something like that.