Even in the Stone Age, capital made labor more productive. A paleolithic fisherman worked all day to spear enough fish to survive. He intuited that a net could make him much more productive but he had no capital. He slept less, working extra hours each day, until he accumulated enough fish (his capital) to survive the many days required to build the net. Our newbie capitalist then generated a surplus of fish to trade for other goods or to make more nets. His capital investment enhanced the well-being of his entire band. In the 21st century this still holds true – capital enhances labor.
Poor countries today are underdeveloped due to insufficient capital investment for a variety of reasons. Many are impoverished by obeisance to anti-capitalist ideologies. Others are destitute because they repel capital by not respecting property rights and the rule of law. Some lack educated work forces needed to properly operate capital equipment. Yet others remain poor because of confiscatory taxation and mind-numbing regulation. Many poor nations suffer from many or all of the above conditions. Even Europe and the USA could be far better off by lowering taxes, reducing regulations, eliminating uncertainty, ending creeping socialism and fully embracing capitalism.
Capitalists, like our paleolithic fisherman, are responsible for the rise of humanity from isolated hunter-gatherer-fishermen up to and including modern man. They enhanced the IQ of the human race by increasing human interaction and cross cultural contacts in early trading centers – where intrepid traders (mostly from the deepest end of the gene pool) left far more behind than their trading goods. There was however one dark side to this. Seeing the wealth created by early entrepreneurs, early politicians created various means to destroy wealth – a pattern that also still holds true today.
Traders, entrepreneurs, creators, innovators – capitalists all – have spawned enormous wealth, reduced poverty, increased life expectancy and boosted IQ. They are truly the heroes of the world. Who has done more to benefit the common man – Henry Ford, Thomas Edison, Steve Jobs, Sam Walton or any king, president or commissar?
If you doubt for a moment capitalists are the heroes of the world, look around you. Ponder with amazement the monuments they have bestowed on you. Gape in awe at the medical breakthroughs, consumer electronics, software, technology and the veritable cornucopia of everyday marvels. Average folks today live better than monarchs mere decades ago. World poverty has been halved in the past generation. Luxuries a short time ago are selling today at Wal-Mart or Costco for ridiculously low prices. Not a single one of these miracles was created by government.
Not uncoincidentally, capitalists are the antithesis of all socialist and utopian schemes. Without entrepreneurs we would be like the former USSR, Cuba, Venezuela and all the other hell holes that elevate the state over people. The greatest metric to measure the progress of a civilization is the rate at which it creates new wealth. The more new millionaires, the better that society is innovating, creating jobs, efficiently allocating its resources and responding to the needs and wants of all its members.
Labor Day is appropriate to honor work which is a noble activity. However, it must be expanded to honor capitalists who make labor more productive via their risk and investment. America is humanity’s ultimate capitalist bastion; let’s celebrate capitalism and the capitalists who had a dream and the will to see it through. The horn-of-plenty that is America today results from labor and capital – let’s honor them both!
The next post, scheduled for Labor Day, addresses public sector unions.
