Capitalism: the still unknown ideal

Several years ago, I signed up for an introductory economics course at a private California university. On the first day of instruction, the professor began his lecture with, more or less, the following round of gibberish:

“Today, class, we begin our lesson in economics. ‘What is economics?’ you say.

“Well, the first thing you must remember about economics, is that it primarily involves natural resources.

“Resources are finite things — things like land, labor and capital, which happen to be the factors of production. But we’ll get into that later.

“For now, the first thing you need to know about natural resources, is that they are scarce. Scarcity — or, more precisely, the scarcity of natural resources — is basically the first lesson of economics. The second, of course, is its proper allocation and distribution, in the most fair and efficient manner possible.

“A lot of people will tell you about the free market, free enterprise system. They call it ‘laissez faire’, and they will claim that it is fair; that it is fair to leave the allocation of these precious and scarce natural resources totally unregulated, in the hands of the greedy.

“Now let me ask you students something. All of you registered for this class. You each had to make an appointment and line up to sign up for this class. (This was back in 1991, before automatic touch-tone telephone or Internet registration.)

“Now, what if there were no university regulation involved? What if the registrar told all of you to stand at one end of the football field and run to the other end to get your registration? Obviously, the fastest runners would get there first. What would happen to the cripples, to the slower ones? Is that how we want to allocate natural resources? Is that fair?”

After that first day of class, I walked right over to the registrar’s office and dropped the class, “Microeconomics 101,” which should have been subtitled, “introduction to Marxist economics.”

Wealth is not gold but mind. Natural resources are meaningless without skill, ability, creativity, entreprenuership — and the free and open commercial environment that naturally promotes and sustains them. The Philippines, for example, has (or had) more natural resources than many of her much more prosperous Asian neighbors, yet still it remains “The sick man of Asia,” immersed in avoidable poverty.

Capitalism is not a zero sum game, with winners, the more able, ruthlessly exploiting the losers, the less able. Capitalism benefits all, though some obviously more than others. As Winston Churchill once remarked, “The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of misery.”