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08/25/2003 Entry: "Free Market again"

Josh and Paul say I'm wrong about the free market, so I suppose I must be. I know very little economic theory, and I'm sure that they know lots. However, I'm sticking by my claim that the foundation of free market capitalism is selfishness (or self-interest, if you prefer).Josh wrote: The beauty of the free market, as most of my readers know, is that in order to maximize your own self-interest, you must first aim to maximize another's. In order to make money for myself, I must provide a valuable good or service to the rest of society (or some portion of it). So in effect the whole edifice isn't really built on selfishness, it's built upon service to others.It sounds great, put like that. And I know that there are some enterprises (mostly small ones) that genuinely do work in that way. But for every example like that there will be at least one (I want to say a dozen, but Josh would ask me to prove it and I don't have the time or energy) where money is being made by the destruction of someone else's livelihood, the exploitation of workers or the deliberate hoodwinking of consumers.Take the clothing manufacturer once based in Mid-Wales, one of the major employers in the area. They turned out good stuff, the customers of the stores that bought their stuff were happy bunnies. But the stores competitors were bringing in cheaper imports from overseas. You think the manufacturer hesitated to put people out of work and take their production to the Far East? Now the workers are unemployed, and the customers of the stores I mentioned have less choice. From an economic point of view - stock prices, market share and all that stuff - it made sense. But the only ones who really benefitted were the shareholders.

I wanted to sell a car, but couldn't be bothered with messing about. So I rang a dealer, who came to look. I explained I didn't want to be bargaining, so would he please just make me his best offer? He did. Are you sure that's the best you can do? says I. He assured me that there was no way he could offer more. I said I'd think about it. Later that day I sold it to someone else, but in the evening he rang me back. "Do you still have that car?" I explained I'd sold it, and for how much. "Oh" says the dealer. "I could have given you more than that!" And then he added, "In this game, you have to get the cars as cheap as you can."To which I couldn't help replying, "And in my game you have to be as honest as you can."

Or take the tremendous confidence trick that lies behind the whole "branding" phenomenon. Stick a bit of embroidery on the front of a baseball cap that would be overpriced at a fiver and you find that people can be persuaded to pay 19.95.

I'm not claiming this to be a cogent, rational critique of capitalism. It's anecdotal, disconnected, unsophisticated and naive. But not so naive as the belief that NewsCorp, Exxon, GF, SmithKline and all the rest are motivated by service to others.

Replies:

Capitalism not motivated by self interest?

That's not funny. That's completely insane.

Posted by Wood @ 08/27/2003 03:07 PM CST

I find the theory that capitolism is not motivated by self-interest fairly humorous. Maybe in it's purist sense would it be based on providing a needed service or good for a profit, but in reality, many people are trying to make as much money for as little product or service as possible. Take, for instance, the fellas and gals on the infomercials that sell a scheme to place lots of advertisements in newspapers all over the US and other countries. Relying on a percentage of responses asking for "the product", they can expect a huge return for little investment or service. Or, for instance, our wonderful, consumer oriented tobacco companies who now have ads on television sharing what they are doing out of the goodness of their hearts to help prevent teens from becoming smokers. What a load! They are making these claims about their anti-smoking campaigns because they lost huge lawsuits that made them do these things. But, get the right advertising agency and even the worst amongst us can be made to look good. I believe in a fallen creation and sinful human beings, that left to our own devices, will serve self before others for the most part. I'm one who believes that original sin centers around self-centeredness. That's when we make ourselves gods and the center of the Universe. Jesus came to free us from that slavery to sin and self and the decay that goes with it, but we human beings still don't get it as a group. Just ask the survivors in Jerusalem, Bombay or Bagdad. Do I sound synical? Maybe a little today, but I still believe there is hope for the world, but it's not found in us, it's found in relationships with the Creator of the world. He made it, we broke it and only He can fix it! Let's give Him a chance.

Posted by Ivan The Crank @ 08/26/2003 03:30 AM CST

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