Have you ever considered how important steel is in your life?
Your car, your toaster, your sink, and a whole bunch of other stuff is made with steel. Yet, if steel were not mass-produced, each household would have to mine for it, and craft it into whatever product they wanted to have. This would mean that products made with steel would only be accessible to a few extremely wealthy elites who could afford a mining operation and a slew of servants who would turn steel into useful products.
But with markets, we have a way for steel to be mined, distributed, and turned into a vast array of useful products that are then sold at affordable prices for even society’s poorest members.
Contrary to popular belief, steel tycoons like Andrew Carnegie amassed their fortunes not by making people poorer, but by making them richer, especially in the most meaningful way of all — increasing access to goods and services that improve quality of life.
So we can see then that capitalism, even with its allowance for income inequality, provides tremendous equality of access to goods and services. This is no small point because access to goods and services is essentially what wealth is. Money is nothing more than a medium of exchange.
This tendency for markets to bring about greater social equality can be seen in other ways as well. For instance, it is likely that Jeff Bezos and I have the same phone. And that is no small point either since phones are now central to our ability to navigate the world in both communication and commerce.
Tesla is already working on a car that will be affordable to the middle class.
Aldi’s is a grocery store food chain that made millions by making food more affordable to low-income people.
Today, even someone with a low to modest income can roll out of bed, push a button, and have any food or drink imaginable delivered to them in less than an hour. To have access to that kind of luxury, just 20 years ago, you would have had to be exceptionally wealthy since it would have required a personal butler. Now we all have access to it.
There’s also solid data that shows capitalism lifts people out of poverty. According to ourworldindata.org, since the 1990s, as economies throughout the developing world have been liberalizing, poverty has fallen by more than half:
Of course, there are goods and services where there seems to be a lot of inequality, but almost all of those are either government-run, or micro-managed by the government through heavy subsidization and regulation. These would include K-12 education and healthcare, just to name a couple of examples. And as I’ve written about elsewhere on my page, much of the blame for the large amount of inequality in the United States can be found in government policy generally. For example, we have the perverse incentive structures of the welfare state, mass incarceration, our stagnant K-12 education system, occupational licensure, and minimum wage laws that make it harder for people to get started in the work force etc.
Then there is the example of the COVID era, in which inequality has increased. But laying that at the feet of capitalism, as many have done, is very problematic. Capitalism is, in its most basic sense, an economic system based on private property and freedom of exchange. Yet in the COVID era people have been barred from work, entrepreneurship and consumption in ways that our generation has never seen before. So the blame for this increase in inequality lies with the stifling of capitalism, not capitalism itself.
What’s the takeaway here?
We have a distorted view of markets. The fact is, most of our quality of life in the industrialized world can be attributed to them. Before the advent of industrial capitalism, most of us ate dirt for breakfast and died of the common cold when we were like, 32. Now there seems to be no limit to the quality of life improvements that we can make through the continual innovation that characterizes our way of life.
If you don’t like what I have to say, then, by all means, tell me. Just remember that when you do, I get paid for every minute you spend on my post.
Ahhh, capitalism — the gift that keeps on giving.