You are here

OpenMarket: Morality of Capitalism

  • How Capitalism Created the Modern Family

    April 22, 2015 1:07 PM

    Prof. Steve Horwitz of St. Lawrence University has a fascinating article up at MarketWatch, in which he argues that many of the major changes in family structure and gender roles we have seen over time are primarily a result of market forces and increasing prosperity. Serendipitously, I recently attended a lecture by Prof. Jerry Muller, presented by the Snider Center for Enterprise and Markets, in which he made many of the same connections.

    The Industrial Revolution, for example, created new opportunities for wage labor outside the home and family farm, so all sorts of poor people—men, women, and children—ended up taking those jobs to contribute to the household’s income. As real wages rose with increased productivity, more men were able to become sole breadwinners for their entire family, and children and women were able to return to the domestic sphere. Many of those children went to school rather than doing any physical work, and women generally assumed the role of what many people today consider the “traditional” homemaker.

    But in many ways that tradition was short-lived. As an array of labor-saving devices for the home proliferated in the early 20th Century, women were again seeking career opportunities outside the home. Horwitz points out that this has led, for example, to more women working with young children, a trend that itself has been made possible because women, in recent decades, have been having fewer children on average, making paid daycare a more affordable option.

    I suspect Horwitz and Muller might disagree on the second half of Horwitz’s MarketWatch article that applies the same analysis to sexual orientation and individual expression, but the overall theory—that “social” trends have a lot more to do with economic effects than many historians and sociologists acknowledge—remains a compelling one.

  • Capitalism Makes a Comeback on Campus

    February 25, 2015 12:15 PM

    There’s exciting stuff going on in the world of higher education these days for fans of free markets. Just last week, the University of Arizona’s Center for the Philosophy of Freedom received a $2.9 million grant from the John Templeton Foundation to help build a network of philosophy, politics and economics (PPE) programs at several universities around the world.

    Closer to home here in Washington, D.C., the new Ed Snider Center for Enterprise and Markets at the University of Maryland is making a strong showing out of the gate. Earlier this month the Center hosted a debate over income inequality and public policy including current Executive MBA students and outside speakers Yaron Brook and Paul Vaaler. The video content from that event is well worth re-visiting for anyone who was unable to attend in person.

  • When Kittens Explode

    February 20, 2015 11:31 AM

    A fascinating Kickstarter funding campaign just ended yesterday, and it was a major one. A new card game with the alarming title of “Exploding Kittens” (don’t worry—no actual kittens were harmed) has managed to raise $8,782,571 over the last 30 days. This makes it the third most highly funded Kickstarter campaign ever, and the one with the most total backers.

    Exploding Kittens is a wonder of the Internet age—a party game full of goofy images and bizarre characters that was 1000-percent funded in less than an hour of its launch. It’s unlikely to have attracted the venture capital bigwigs from Shark Tank or the product acquisition VPs from Parker Brothers and Hasbro. The title alone is edgy enough to make your average Toys ‘R’ Us executive nervous, yet it’s clearly a product hundreds of thousands of people are willing to pay for. Thank you, Internet.

    The advent of online crowd funding, of which Kickstarter is merely the best known platform, has become one of the most exciting developments in recent business history. At a time when voices from the left are again arguing that the history of the “self-made man” in America is built on myth, the projects that have been successfully crowd funded demonstrate that a single person—or a small team—with a good idea can produce something customers love and make some good money in the process. What could be more American than that?

  • The Empire Strikes Back!

    February 9, 2015 1:34 PM

    Right-of-center groups have for some time become a bit complacent. Sure the left had the universities, the media, and pop culture—but we had the think tanks. In the world of principled and ideologically motivated policy, we were dominant—libertarian and conservative groups were growing in size and influence. We were—for a while—unchallenged.

    No longer. The left and its financial supporters have realized that gap in their force array and have poured resources into addressing that deficiency. The Center for American Progress—the left’s Heritage Foundation—and the New America Foundation (CAP’s more intellectual counterpart) have become influential counters.

    The most recent example of that is CAP’s new product, Report of the Commission on Inclusive Prosperity“Inclusive” is one of the many adjectives used to modify “capitalism,” joining terms like “crony,” “conscious,” and “creative” to suggest that—with a bit of tweaking—capitalism can be saved. The report resonates with the old themes of the left: “technological progress benefits primarily highly skilled workers” (the shift from skilled long bowmen to muskets? The shift from skilled bookkeepers to offshored data processors?); an obsession with shifts in the distribution of monetary income (very little discussion of offsetting changes in the quality or prices of goods); worries about worker mobility; a view of the market as one of power struggles rather than evolving voluntary arrangements. 

    It’s an interesting glimpse into the way the left is seeking to repackage its messages. Not much new: an appeal to envy, the plea for achieving “creative destruction” in a static economy, an unchanged belief that growth depends on government-led industrial policy, and clichés about technology and education. The left is desperate to retain control of the egalitarian moral high ground. This salvo is unlikely to succeed, but the broader approach should concern us.

  • Educating Tomorrow’s Business Leaders on Markets and Politics

    February 9, 2015 10:44 AM

    This weekend I attended a fascinating event at the University of Maryland’s Robert H. Smith School of Business on the subject of economic inequality. Prof. Rajshree Agarwal put together a program that included a series of short debates by her Executive MBA students, followed by a one-on-one debate on the same questions between University of Minnesota Prof. Paul Vaaler and Ayn Rand Institute Executive Director Yaron Brook.

    Participants argued for and against propositions such as “Taxes (existing and new) should be used to reduce inequality of outcomes” and “CEO pays should be capped at some percentage of the lowest paid employee in the firm.” The MBA students were assigned positions and debated based on recent readings, while Vaaler and Brook argued their own personal convictions on the meaning of economic inequality and the role of both business and government in responding to it.

    Prof. Vaaler emphasized the role of participatory democracy in setting societal norms for questions like the just distribution of wealth, while Brook dismissed concerns about inequality per se, arguing that economic rewards should flow to whomever has earned them, regardless of the resulting distribution. The MBA students followed up with a highly engaged series of questions for both speakers.

    Finally, the students were polled on a series of four questions having to do with inequality and had their responses contrasted with the answers they gave before the debate began. On 3 out of 4 questions, the students moved closer to Brooks’ position—that either inequality is not an issue of paramount concern in the first place, or that public policy measures like capping CEO pay were not well advised.

    While the specific result was encouraging from a free market point of view, the fact that business school students were being challenged on these issues at all is especially important. Business schools do an excellent job training future business leaders in areas like program management and creative problem solving, but don’t necessarily focus on questions of politics and morality that are, nevertheless, also vital to operating a business in a heavily-regulated, mixed economy. Prof. Agarwal, who leads the newly launched Snider Center for Enterprise and Markets at the University of Maryland, is doing an excellent job of challenging her students on these issues. I have no doubt that tomorrow’s shareholders will thank her when her students become CEOs themselves.

  • 7 Quotes about Communism: Take 2

    December 8, 2014 6:38 AM

    A few years ago I assembled several quotes about Communism that I thought would make good epitaphs for it.  Unfortunately, the ideology has turned out to be far from dead.  But the quotes I collected were pretty good, and I figure there’s no better time to dust them off again than today, the 23d anniversary of the dissolution of the Soviet Union.

  • Thanksgiving and Markets

    November 26, 2014 4:03 PM

    When the Pilgrims of Plymouth Colony celebrated the first Thanksgiving on Massachusetts’ Cape Cod, they shared a feast with the Pokanoket tribe, in thanks to God for the colony’s bountiful harvest. As Plymouth Governor William Bradford explained in his memoirs, ending the colony’s initial communal system produced the abundance of the first Thanksgiving, and marked the end to famine and plague, during which half the colony died. Governor Bradford explained that initially, “The strong…had no more in division of victuals and clothes than he that was weak and not able to do a quarter the other could...”

    The key to the Pilgrims’ success? Embrace of the market. Bradford observed the commune overcame its problems:

    The experience…may well evince the vanitie of that conceite of Plato & other ancients, applauded by some of later times; that ye taking away of propertie, and bringing in comunitie into a comone wealth, would make them happy and florishing; as if they were wiser then God. For this comunitie (so farr as it was) was found to breed much confusion and discontent, and retard much imploymet that would have been to their beneflte and comforte...

    So they begane to thinke how they might raise as much corne as they could, and obtaine a beter crope then they had done, that they might not still thus languish in miserie.

  • Corporate Action against Disease Points Way to Resiliency Strategy for Developing World

    November 20, 2014 11:33 AM

    In a piece at The Freeman today, I examine how corporations in the developing world have reacted to the threat to their workers from diseases such as Ebola, AIDS, and malaria, for example:

    Firestone, one of the world’s leading tire producers, needs vast amounts of rubber and owns a huge rubber plantation in Liberia. The property encompasses 185 square miles, employs 8,000 people directly, and indirectly supports 72,000 more people who live either on the property or in surrounding communities.

    When the first case of Ebola appeared on the property, the company initially attempted to place the victim in a hospital in the country’s capital, Monrovia. Company officials quickly realized that the facilities there were inadequate, so Firestone set up its own Ebola ward in the company hospital. By mid-September, the facility was full. But through careful management, the disease was contained. A few weeks later, the facility was almost empty.

    Firestone was able to do this because it had wealth, valued its employees and their families, and recognized the importance of stopping the disease. This is not an isolated example of a private company acting this way.

  • The Tesla File: Government Favors Cut Both Ways

    October 16, 2014 4:57 PM

    Electric vehicle manufacturer Tesla Motors has become a fascinating case study in economic freedom in recent years, although the narrative is a complicated one. The most recent development for Tesla has come out of Michigan, where the state legislature has banned car manufacturers from selling vehicles directly to the public or from owning dealerships themselves, new restrictions that effectively outlaw Tesla’s entire sales strategy, at least in the Great Lakes State. Michigan is not alone, however, in erecting restrictions on marketing and sales of cars that seem to target or effect only Tesla. Arizona, Maryland, Texas, and Virginia also ban the company from selling its cars in their states, although they can operate showrooms and residents can make purchases online. Colorado, Georgia, New Jersey, Ohio, and Pennsylvania also have restrictions or are in legal disputes with Tesla over what they can and can’t do in those states.

    Having to fight for the right to sell an otherwise legal product to willing customers – legislature by legislature – has created what Tesla’s James Chen has referred to as “a game of whack-a-mole in every state.” Just as the company has made its case before one state’s officials, another state comes along and threatens to erect barriers that suspiciously seem to harm only Telsa while protecting market incumbents from increased competition. This can only happen so many times before it begins to seem like more than a coincidence. In this scenario, CEO Elon Musk is cast in the role of the victim of opportunistic legislation lobbied for by bigger, more entrenched rivals – the underdog fighting cronyism between big carmakers and state politicians.

  • Farewell to Our Friend, Leonard Liggio

    October 14, 2014 1:14 PM

    We are saddened to hear our friend Leonard Liggio passed away this morning. Today, the liberty movement has lost an intellectual champion. The Competitive Enterprise Institute has lost a colleague and ally. And on a personal note, I have lost a reliable, ever-present partner since I first started working in this movement several decades ago. 

    Leonard was long the Don of the free market community. Realizing that CEI needed to move out of its infancy stage and expand its board of directors in the early 1990s, Fred Smith approached Leonard, who quickly agreed to serve on our team. He continued with that board role for nearly two decades, moving to emeritus status only last year. Leonard was whimsical in his conversation, grounded in his idealistic commitment, and often bemused by CEI’s temerity in translating classical ideas into actual reform. And, he was always supportive. 

     I asked Fred to recount a few of his own memories of Leonard. Here is his reply:  

Pages

Subscribe to OpenMarket: Morality of Capitalism