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OpenMarket: Morality of Capitalism

  • Betting on the Future: 25 Years Later

    September 29, 2015 12:48 PM

    Today is the 25th anniversary of the famous bet between economist Julian Simon and biologist Paul Ehrlich over the price of five metals: chromium, copper, nickel, tin, and tungsten. The bet has become legendary over the last quarter century because it stands as a proxy for two very different views: one that is optimistic about the future of the world and the ability of human beings to make life better, and one that is profoundly pessimistic and holds that human beings are consigned to a future of material poverty and misery. Julian Simon embraced the former view and Paul Ehrlich, to this day, emphatically represents the latter.

    Simon and Ehrlich were both public intellectuals with influence well outside of university economics and biology departments, although Ehrlich was far better known at the time—he had appeared on The Tonight Show with Johnny Carson six times by the time he and Simon agreed on the bet. I’ll let Prof. Pierre Desrochers of the University of Toronto describe the wager itself:

    In 1980, economist Julian L Simon challenged Paul R Ehrlich, the biologist and author of the best-selling Population Bomb, to put his money where his catastrophist mouth was by staking $10,000 on his belief that ‘the cost of non-government-controlled raw materials… will not rise in the long run’, with the minimum period of time over which the bet could take place being one year. If, as Ehrlich believed, the store of valuable resources was absolutely finite and subject to ever-increasing demand, the resources’ price would rise. Simon, however, argued that in a market economy characterised by freely determined prices and secured property rights, a rise in the price of a valuable resource could only be temporary as it would provide incentives for people to look for more of it, to produce and use it more efficiently, and to develop substitutes. In the long run, even non-renewable resources would become ever-less scarce as they are ultimately created by the always renewable and ever-expanding human intellect.

    The short version of story, of course, is that Simon won the bet when, 10 years later, all five of the commodities had declined in price. Ehrlich paid up, but never conceded the underlying point, continuing to write and proselytize about the impending global disaster that overpopulation and resource depletion were supposedly going to create. He has continued to be cited and featured as an éminence grise among environmentalists, appearing in such charming projects as the 2002 documentary Thank You for Not Breeding.

  • Free Enterprise: Sometimes We Forget

    September 28, 2015 11:58 AM

    When we find ourselves debating specific issues having to do with economics and business, we often forget how overwhelming the evidence is for the superiority free markets in general. Whether it’s our friends at a place liked AEI—“Take a bow, capitalism — nearly 1 billion people have been taken out of extreme poverty in 20 years”—or celebrities like U2 front-man Bono—“Capitalism takes more people out of poverty than aid”—it’s very clear that a free, productive economy brings the prosperity that alternate systems have consistently failed to deliver.

    Because this big picture is often lost amid the details of politics, it’s especially refreshing when we see someone highlighting this fact with a clear message. Researchers and academics often talk about the real causes behind prosperity and poverty, but those discussions rarely break through into the popular media. As we’ve long argued at CEI, market advocates need access to a broad-based communications outlet that reaches the majority of the American public—like TV advertising.

  • World Bank Increases Number of Poor

    September 25, 2015 11:22 AM

    The World Bank is considering changing its definition of what constitutes extreme poverty, raising the level below which someone is treated as extremely poor from $1.25 a day to $1.90 a day. This comes after a long trend of people moving out of the category, leading some to point out that the Bank may have an interest in maintaining high numbers of people defined as poor.

  • A First Look at Markets without Limits

    September 10, 2015 1:30 PM

    Georgetown University Associate Professor of Strategy, Economics, Ethics, and Public Policy Jason Brennan (left) celebrates the publication of his most recent book with co-author Peter M. Jaworski.Georgetown University professors Jason Brennan and Pete Jaworski (left) have a new book out with a fascinating premise: anything that it is morally permissible to do in the absence of money should be permissible to do for a monetary exchange. Or, as they put it themselves, “if you may do it for free, you may do it for money.”

    There are plenty of examples that come immediately to mind that challenge this premise—disapproval of prostitution (you’re free to have sex with another consenting adult—just not for money!) and the ban on compensating individuals who donate their organs, for example. The authors take on objections like these while also considering less common scenarios, such as whether one should be able to sell one’s vote in an election or conduct betting pools on terrorist attacks and natural disasters.

    The book is fresh off the presses, so a full review is still forthcoming, but it has garnered advance praise from economists like Pete Boettke and Tyler Cowen of George Mason University and Michael Munger of Duke. While you wait for your own copy to arrive from your online retailer of choice, treat yourself to a bite-sized version of Jason and Pete’s argument on the Foundation for Economic Education’s Anything Peaceful blog:

  • The Government Makes a Terrible Boyfriend

    August 14, 2015 8:51 AM

    He’s from the government, and he’s here to help. That’s the comic premise of this summer’s best YouTube video series, “Love Gov,” from the Independent Institute. In this case, though, the protagonist is the government, personified. The story begins when Scott “Gov” Govinsky meets sweet college student Alexis, and quickly takes an interest…in every aspect of her life.




    The series has already racked up over 1.5 million views, with positive reviews from fine folks like San Francisco Chronicle columnist Debra Saunders and the Hayek Institute’s Barbara Kolm, who declared the videos “brilliant.”

    Episode 1 of the five-part series sees Gov giving Alexis some questionable advice about her rapidly accumulating student loan debt. Her best friend Libby tries to steer her back to the sensible path, but Gov’s pushy know-it-all attitude threatens to nudge Alexis in a foolish direction.

    Gov goes on to dig his fingers into Alexis’ small business, butt into her healthcare decisions, mishandle her home-buying plans, and spy on her phone calls and emails. Where will it all end? You’ll have to watch the full series to find out. 

  • Mount Vernon Cheers: A Song to Commemorate "I, Whiskey"

    August 13, 2015 1:15 PM

    Our Indiegogo campaign for CEI’s new documentary “I Whiskey” is closing soon. So far, we have raised almost $75,000, but it’s not over yet. Please donate now if you haven’t, and if you have, you can always do so again.

    You can get some great souvenir t-shirts from this rewards-based crowdfunding campaign. And CEI is also fighting to legalize equity crowdfunding , so that future entrepreneurs can legally offer profit-sharing from their projects, as well as souvenirs like t-shirts, if they choose to do so. So, this crowdfunding campaign is not just about whiskey, but the future of crowdfunding itself, as well as the future of freedom.

    Subtitled “The Spirit of the Market,” “I, Whiskey” will show the creative process involved in distilling whiskey and tell the stories of American entrepreneurs and risk-takers in the whiskey biz. And one of those entrepreneurs is none other than the father of our country, George Washington.

    After Washington left office as first president in the 1790s, he commissioned James Anderson, an immigrant from Scotland, to build a whiskey distillery on the grounds of Washington’s Mount Vernon estate. It soon became one of the largest distilleries in the country. I have written previously about Washington’s whiskey making and his other entrepreneurial feats that are often overlooked. The great news is that Mount Vernon Estate and Gardens, with support from the Distilled Spirits Council of the United States, recently rebuilt the whiskey distillery on its original foundation for visitors to see and is even marketing a new whiskey based on Washington’s recipe

  • William Faulkner Said it Best: "Civilization Begins with Distillation"

    August 10, 2015 11:43 AM

    A jaunt down Route 151 in Virginia’s Rockfish Valley breathes life into Faulkner’s observation. For decades it was known simply as the valley’s “Main Street”—a stretch of pavement skirting the base of the Blue Ridge winding through small towns named Greenfield or Nellysford. Then things changed. What started with a single vineyard has transformed the Rockfish Valley Highway from a sleepy thoroughfare into what locals now call “Alcohol Alley,” reflecting the presence of wineries, breweries, distilleries, and even a cidery. With fermentation came opportunity, prosperity, and an improved community. Today, visitors from all walks of life flock to the region to enjoy what nature has to offer (including nature’s other offerings of hiking, fishing and skiing).

    Making whiskey is but one piece of the Great Story of Spirits. The Big Picture is the story of incremental progress, of continual innovation by degrees and accidents. It’s the story of how something of value is perfected by many without being planned, organized, or controlled. 

    It’s a story focused on tradition. The essential distilling process has gone largely unchanged over centuries. I've seen it up close throughout Speyside and Islay and other Scottish regions, and of course along the Kentucky Bourbon Trail.

    It is also a story of globalization and exchange. Distilling technology has traveled as peoples have migrated and settled in new places. At times, government intervention forced distilleries out of one region, only for them to spring up elsewhere to meet demand. James Anderson, driven from England by Parliament’s Scottish Whisky ban, immigrated to America, where he assisted George Washington in creating the renowned—and recently revived—Mount Vernon Distillery.

  • Why Thieves Hate Free Markets

    August 4, 2015 9:47 AM

    Don Boudreaux over at Café Hayek has just given a 2015 boost to a smart 2012 video from Learn Liberty on social cooperation in a free society. It’s worth spending another 3 minutes with, even if you’re one of the 1,394,608 people who have already seen it.

    In this video, Prof. Aeon Skoble of Bridgewater State University highlights one of my favorite themes: a market economy involves not only economic competition, but also an impressive degree of voluntary cooperation, even between entities one would assume to be direct rivals.

    For more great videos, check out the Learn Liberty channel on YouTube, and discover why Prof. Skoble can be heard admitting “to be perfectly honest, I’m not as sexy as Hugh Jackman.” 

  • Bastiat Society Rallies Business Leaders Together

    July 27, 2015 11:06 AM

    My venerable colleague Fred Smith and I just returned from the Hoosier State, where we were honored to be guests of the Indianapolis chapter of the Bastiat Society. Our event featured a few dozen local business leaders: executives, attorneys, and entrepreneurs, as well as a few elected officials. We all gathered to discuss the role that businesspeople can play in defending the free market and reviving an appreciation for the virtues of capitalism.

    It may be surprising to some, but not every business owner is a Hayek-quoting ideologue who has a photo of Ayn Rand on his desk. The majority are focused overwhelmingly on their customers, employees, and the day-to-day work of running their company. We have found that most business people spend very little time on politics in general, much less the intellectual arguments over the morality of capitalism and the ideas of classical liberalism.

    At the same time, we have also found that it’s difficult for think tank types and academics to defend the enterprise of capitalism without at least a few actual capitalists speaking up as well. Fred, in his essay “Countering the Assault on Capitalism,” explains this dynamic and its history quite well. The late economist Joseph Schumpeter theorized this conflict as far back as the 1940s – most business leaders would stick to what they know best, and leave the public debate over morality and economics to others. With discussions of the proper role of government dominated by groups with little sympathy to private enterprise, the rise of big government was easy to predict.

    Fortunately, we now have a robust cadre of scholars as well as a growing network of free market professionals, including the members of the Bastiat Society around the globe, as well as members of groups like the Adam Smith Society and Benjamin Rush Institute. With events like our dinner this week, we’ll be working to bring those two groups together to stand up to the ever-increasing expansion of the regulatory state.

  • What Cartoons Can Teach Us about Capitalism

    July 17, 2015 9:00 AM

    The Freeman has an excellent article by FEE advisory board member Robert Anthony Peters on economic lessons in popular culture—in this case focusing on the wealthiest of Disney’s characters, Scrooge McDuck. It may seem odd to look for pro-capitalist storylines from a character named after literature’s most famous miser, but Peters explains how the character’s originator, Carl Banks, made Scrooge McDuck an exemplar of the virtues of hard work, honesty, and strategic thinking.

    In a series of stories that highlighted economic concepts like subjective value, mutual gains from trade, and entrepreneurship, Banks sent Scrooge and his grand-nephews on a series of adventures in which they manage to escape peril and achieve success through quick thinking and smart financial decisions. He debunked utopianism a la Jonathan Swift when the gang visits “Tralla La,” a mystical land where greed is allegedly unknown, and showed the potential of free exchange in “Maharajah Donald,” a story in which Huey, Dewey, and Louie start off with an old pencil stub and end up, after a series of shrewd trades, with enough money to buy a steamboat ticket all the way to India.  

    And Banks certainly didn’t stumble upon these pro-market parables by chance. When he was writing for Uncle Scrooge comics, he knew he was confronting the collectivist trends of the mid-20th Century, once saying “I’m sure the lesson I preached in this story of easy riches will get me in a cell in a Siberian gulag someday.” Fortunately Banks escaped the gulag, and generations of viewers have been enriched because of it. Scrooge McDuck’s persona as a frugal but talented and honorable person even persisted into the 1980s cartoon series DuckTales, in which Uncle Scrooge delights in a fortune made through wise investments and honest deals.

    If you’ve got young children, you might want to brace yourself for 2017, when Disney will be launching DuckTales re-boot to be broadcast on Disney XD. Let’s hope the spirit of Carl Banks will continue to guide the writers and producers in the 21st Century version.


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