Tuesday, January 28, 2014

The Mother Of Contention And Discord

"The settlers now began to consider corn more precious than silver."

Governor William Bradford (1590 - 1657)

And why wouldn't they?  Something is only money insofar as it is accepted.  What would silver have bought the colonists of the Mayflower Ship?

For various reasons, including bad planning, the Mayflower colonists (they weren't called "Pilgrims" until centuries later) landed at the 42nd parallel, the Cape Cod area, at the start of winter, November 1620.  As a part of the Virginia Company of London they were to land between 38 and 41 degrees latitude, but stopped at the 42nd instead.  Some say they were running low on drink, which was a non-alcoholic beer.

They called their settlement the Plymouth Plantation.  Due to cold, disease and starvation only 50 of the original 102 survived the first winter.  It was a disaster.

To begin, they implemented a system of communal labor for the colony.  It was a system demanded of them by their investors in England, and called "the common course and condition," including a communal stewardship of land. 

That was thought to be the most fair system to distribute what had been produced.  Each member of the colony was given a plot of land to tend and his production was to be given to the common storehouse.  It was then redistributed as needed.  What each received was a set amount of grain, and no matter how much he had produced.

By the spring of 1623, and no larger than 150 people at that time, the colony was still struggling to provide enough food for itself and had been returning nothing to the investors in England. What were they to return to investors?  A tax of 50% of all produced!

The result of the common course and condition suffered from an immediate affliction - some were unwilling to work, knowing that they would receive a set amount of grain no matter what they had given.  This created overall discontent among those who actually worked, a loss of respect for some and was considered unjust.  And this among, as Bradford called them, "godly and sober men."

Newcomers would arrive and find no bread, little food and disarray.  Wrote Bradford in his journal, "So they began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery."

They had a colonial confab and decided to go with, wait for it -  


Bradford again records, "At length, after much debate of things, the Governor (with the advice of the chiefest among them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves; in all other things to go in the general way as before.  And so assigned to every family a parcel of land, according to the proportion of their number."

This "brought a very good success," and Bradford records that more land was privatized.

Not only did the families each police themselves as to production and produce, they began trading with each other!

This foundation of economic freedom produced results that were staggering.  FREE ENTERPRISE!  Within two years the trade between the families had extended to the nearby, and friendly, Wampanoag tribe, which created access to other types of goods!  And then consider the Governor's comment above - they had no need of silver as money or desire.  They had precious corn!  And other things!


Private property, individual economic incentive, improved their standard of living, and spurred economic growth - AND PROSPERITY!

So, brothers and sisters of the congregation, what can we learn from free enterprise experiment of the Plymouth Plantation?

When William Bradford died, one of the many books in his estate was one written by Jean Bodin, called Six Books of A Commonweale.   In it, Bodin criticizes Plato's Republic, which, of course, preaches utopianism.  Plato's idea was to abolish private property, and reduce most people to slavery overseen by high-minded, Wizards of Wonderfully Smart guardians, who would be the decision makers for the republics' slaves.  To rebut that, Bodin argued that communal property was "the mother of contention and discord," and any society based on it would wither and die because "nothing can be public where nothing is private."

Later, when the Plymouth Colony was absorbed by the Commonwealth of Massachusetts, nobody heard again of the "common course and condition."

And necessarily so.  And they all lived happily ever after.

Until communal redistribution reared its ugly head again.

The End.

Tuesday, January 21, 2014

Was A World Saved By Capitalism Or Social Democracy?

"The increase of social wealth is not accompanied by a diminishing number of capitalist magnates, but by an increasing number of capitalists of all degrees."

Eduard Bernstein (1850 - 1932)

We should define a word - magnate.  

What does Dr. Bernstein mean by magnate?

It is a word derived from the Latin word magnus, which means "great man."  In our lexicon, magnate is used in the business context as it refers to a wealthy and influential person.

Notice when he lived.  He saw the rise of the Industrial Revolution.  He witnessed how capitalist societies produced men of who took great risks, built entire industries from scratch, and created wealth never before known in world history.  Wealth not only for themselves, mind you, but their nation and their nation's people.

He saw how the the wealth in capitalist societies did in fact make its way to all strata of society, raising all boats and improving the standards of living of those living in those societies.

Dr. Bernstein saw the great goodwill and philanthropy of the richest, and how much influence they had with their generosity toward the improvements they deemed worthy - improvements in education, music, museums, medicine, parks and science.


This economic benevolence flew in the face of his social democratic beliefs.  He began his economic thinking believing in the fragility of capitalism.  He saw its downs, beginning with the economic crisis of 1873 in Europe, which continued into the 1890s, as consistent with his beliefs that capitalism did not have the strength of the social democratic movement, which would ultimately lead the reformist labor movement toward new heights in economic prosperity and socialist ideals.  That, of course, never happened.

At one point he befriended Friedrich Engels, and began advocating the gradual development of socialism.  He saw the bourgeoisie as oppressive parasites, using the ignorant masses as necessary cogs in their machinery of business, abusing them and grinding them down as they, THEY, the masses of the proletariat, pushed the bourgeoisie up in life!

Living in London, however, he saw how that society operated.  He had seen, and read about what was happening in the United States, and how productive industry there expanded fast and thrived in a free enterprise setting.  He returned to Germany no longer believing that socialism would grow as the product of a revolt against the capitalist middle class.

Were the capitalists ruthless at times?  Yes, certainly, within the contexts of their purview.  They were trying to build industries, not mere businesses, but industries.  And they grew incredibly rich.  But people from all over the world flocked to them to work.  Conditions weren't good at times, but they worked, and were able to move, in many cases, from that work to better work.  People continued to flock, unabated.  And, where they demonstrated intellect and capacity, they moved up within their industries and businesses.  Some even started businesses of their own!

He saw and documented how the west, the capitalist societies, grew incredibly rich as well.  He saw their growth and riches as organic, and growing as a whole.

Toward the end of his life he thought he witnessed the popularity and reforms of social democracy.  Then he was unable to dissuade his country from its attraction to the Italian Fascists.  And later his social democratic movement morphed and became the German move toward National Socialism.  He was horrified by the bloody Nazis and their thinking.  His society was not free, it was CONTROLLED.  His beloved social democracy broken, it was in this time frame when he came out with the quote above.

Six weeks after his death his country was to give way to the incredible evil of a man named Hitler. 

Capitalism, free enterprise, then, had to turn to its ability to produce and create and organize, and all of its wealth and energy was then directed toward the defeat of a world-wide threat that was to combine into an allied/political axis on both sides of the world.  It was a sinister axis that wanted to combine to control EVERYBODY in the world in ways that were not social or democratic, as Bernstein desired.

Capitalism, free enterprise, was called on to save the world from crushing, brutal economic and political CONTROL.

And it did.

Tuesday, January 14, 2014

Capitalism And Free Enterprise Created The Garage

 "The market is not an invention of capitalism.  It has existed for centuries.  It is an invention of civilization."

Mikhail Gorbachev

And to say "centuries," certainly it would be true that it's many dozens of centuries!  Millennium after millennium.

Is this a back-handed slap at capitalism?  I don't think so.  He knew better.  He learned better.

Instead it is the admission that markets, and therefore free market economics, work.  It's an admission that they can't be controlled, by gubments, bureaucrats, and of course "new" philosophies proposed by "wonderfully smart" people.

It's an admission that it is impossible to manage all of the trillions of combinations and permutations of billions of people, most unknown one to the other, voluntarily contributing, interacting, and competing to produce and provide what ever good or service is that they want the Invisible Hand of free markets to manage, and efficiently distribute!

It's an admission that socialized, collectivized, communized, Leninized, Stalinized, and any other "ized," managed economies don't work.  And can't.

And why CAN'T they?

Because, as Gorbachev says above, markets are the natural course of civilization!  Markets NATURALLY exist!  Markets, not bureaucrats, are WONDERFULLY SMART!

Anything that interrupts the market process is an impedance and a downer.  And doesn't work.

What does capitalism do?  It merely employs the free-market system!  Capitalism ALLOWS free markets to work.  No impedance, no downers.

If, therefore, freedom to voluntarily interact is the hallmark of civilization, what is the best way to organize civilization?

The Founding Fathers knew the answer to that.  Their radical creation was to protect the INDIVIDUAL, and INDIVIDUAL RIGHTS, from the soft and hard tyranny of dictators and gubments!  And to protect them from the soft and hard tyranny of the "wonderfully-smart" bureaucrats who think they can do it a better way and CONTROL the individual.

And the Founding Father's most understood individual right, without which free markets cannot work?  


Private property, free from soft and hard tyranny, where people could be, and live, and create lives.

And create other things!  To play off of Mr. Gorbachev's quote above, what did private property create?


The garage you say?  What do you mean?

Who knows who created the garage.  We know who created the garage door, says he with a wink and a link.

Why would I say that private property created the garage?  What's so cool about the garage?

Who knows how many tens of thousands of businesses started in, or were managed in, the garage.

But to name a few - how about Amazon, Apple, Disney, Google,
Harley Davidson, Hewlett-Packard, Lotus Cars, Maglite, Mattel,
and the Yankee Candle Company.  

Are there more?  Sure!  Some known, some unknown.  But more!

So, the next time you hear that capitalism, and free enterprise, did not do anything, and did not invent anything, you have a ready answer!!

You simply say,  

"Yes they did!  
Capitalism and free enterprise created the garage!"

Tuesday, January 7, 2014

Not For A Day - But Kings And Queens Always

"The capitalist achievement does not typically consist in providing more silk stockings for queens but in bringing them within the reach of factory girls in return for a steadily decreasing amount of effort."

Joseph Schumpeter (1883 - 1950)

When I was a kid there was a TV show called "Queen For A Day."  While I never watched it, being as I was a young boy, during the show some lucky woman would be lauded with the title of queen, treated wonderfully and received many gifts.  She was crowned "queen for a day."

Before capitalism, who were societies' recipients of the best?  It was the kings, or other dictators, and those whom they allowed to be rich.  If there was another kingdom, king or lord nearby that was similarly rich and powerful, the idea was to wipe them out, take them over and enjoy their stuff.  All of it.

Would that gotten gain be distributed throughout the kingdom and make its way to the populace and subjects of the conquering king?

Well, no!  Are you kidding?  To quote the movie line, it's good to be the king!  And the king's men.

But what did capitalism, and free markets, as an ECONOMIC system, introduce to the world, and to individuals (you know, the populace and subjects of the entire realm)?

The ability to act with self interest, voluntarily trading goods and services, and interacting with others so economically entrusted with the ability to act for themselves!  The very voluntarism with which they acted regulated all like an "invisible hand."  And this "hand" guided them toward greater efficiencies, and wealth.

For the first time in history production generally increased, prices generally came down, wealth was generally created, and, DEMONSTRABLY,  all boats were raised by the rising tide of free enterprise!  Kings and kingdoms were gradually replaced by gubments, at least by those societies able to make it happen.

Then something radical made the scene.  A group of men got together to write into law a Constitutional ability to protect the rights of people, individuals, to do those capitalist,  free-enterprise  things.  And this Constitution was to protect them, and to protect the rights of all of the populace and subjects of the entire realm, from further gubmental tyranny.

And with these freedoms, recognized as God given, people began to act for themselves and were not so acted upon.

The ultimate result of all of that individual, market-guided, and protected voluntary trade of goods and services, a free enterprise, was that all the privileges formerly reserved for kings and queens became WITHIN THE REACH OF AND EVENTUALLY THE EXPECTED staples and consumer goods for all, even the factory workers.  Yes, even Dr. Schumpeter's "factory girls" could enjoy silk stockings!  And live like queens.  Queens, that is, in comparison to those around the world still bound by dictators and who did not yet enjoy the rising tide of free enterprise.

Are there economic strata in a free enterprise system?  Of course.  That is baked into the cake.  Not everyone has the same capabilities and intelligence, drive and dreams, preparation and pluck.  But all are free, or made free Constitutionally, to act for themselves and not be acted upon - IF THEY SO CHOOSE!

If society is divided into five levels of income achievement, the very hallmark of a capitalist, free-enterprise economic system is that people continually move in and out of the different strata.  Both UP and DOWN.  We hear the rags to riches stories all the time.  We hear of the rich losing it all to earn it back again, sometimes many more times than once!  We hear of "the dream," and in our country we call it the "American dream," of working hard to achieve and rise from one income level to another.  Eventually most of us land in the economic level where we are most comfortable, or most capable.