Myths & Misconceptions About Capitalism


1. Capitalism favors the wealthy

The Reality: Capitalism favors the hardest-working, the most creative, the most inventive, thoughtful, unique, and innovative people. True capitalism has never been about accruing wealth for wealth’s sake; rather financial rewards act as motivators and catalysts to bring about progress and change. Capitalism, in its true sense, is about the overnight success stories and the self-made millionaires. Wealth is merely a byproduct of having brought a great new idea, concept, technology, service, or product to society. The wealthy who are corrupt or disliked by the public at large would end up going broke in pure capitalism.

2. Capitalism makes poor people poorer

The Reality: Capitalism is about new ideas and ways of doing things, and receiving monetary reward for jobs well done. Modern socialism itself has evolved out of capitalistic thinking, creating, and progress. In the USA, much of modern socialism grew out of Franklin Roosevelt’s post-Depression “New Deal” policies.  Back in that bygone era when even a wheelchair-confined old guy could become president based on the merit of his new ways of thinking, American politicians (who were also chosen based on the merit of their ideas) realized that having a social safety net for the less fortunate was better for society as a whole than the alternative: people dying in the streets, disease being spread, possible riots, looting, crime. Capitalists like Woodrow Wilson and FDR invented modern Western socialism, and, in FDR’s case, the payoff was monumental: the people elected him president for four consecutive terms!

3. Regulation is anti-capitalist

The Reality: Regulation is and has always been a necessary part of capitalism. You cannot enroll in an introductory-level economics class without hearing about the many rules and regulations that must exist for the theoretical “pure capitalist” market to work at theoretically “perfect” level. Regulations have always included zero-tolerance antitrust laws, penalizing collusion, and equalizing the playing field between “big business” and small upstart challengers. The government enforces most of the regulations by levying taxes, which brings us to…

4. Taxes are anti-capitalist

The Reality: Some taxes, namely those that serve a specific and necessary purpose, are cornerstones of the theory of capitalism. Taxes that help to ensure a level playing field, for example “sin” taxes, medical insurance/taxation, and taxes enacted to penalize predatory conglomerates, cartels, oligopolies, and the like have always been essential parts of pure competitive capitalism. Just as profits, rewards, and success can be considered the economic “carrots” in capitalism, taxes and fines are the supplementary “sticks” in the system. The yin and the yang that maintain the system’s fairness according to people’s individual worthiness, not according to people’s hoarded money earned from prior success.

5. Capitalism is about major corporate conglomerates and multi-billionaires

The Reality: Capitalism, in its true sense, heavily penalizes monopolies, cartels, and billionaires who sit on their money. Capitalism is about the theoretical system of “perfect competition” among all people. Mom-And-Pop shops simply cannot compete with modern international enterprises if initial wealth is a factor. Capitalistic theory mandates that starting wealth and power be inconsequential and argues that everyone should have an equal chance to start out at ground level. For this reason, monopolistic conglomerates are the antithesis of capitalism, as much so as Marxist Communism is.

6. Capitalism is anti-environment

The Reality: Capitalism is “democracy of the wallets”. Society values our natural land and a clean planet. We value clean air, clean water, mountains, lakes, oceans, deserts, plains, forests, jungles, and all that comes along with them: recreation, food, medicine, leisure. Although these things are shared resources which makes them difficult to impossible to price monetarily, pure capitalism isn’t just about financial gain or instant gratification. All but the most reckless of monopolists see this since, for most of us, capitalistic payoff is usually very gradual. By regulating against monopolies, capitalism also safeguards against planetary destruction.

7. Capitalism favors monopolies

The Reality: Monopolies are as antithetic to capitalism as Marxism is. Whether a single Communist government chairman or a single business enterprise’s CEO controls all of a resource, the economic outcome is the same. The anti-competitiveness is the same. Capitalism levels the playing field for all, monitoring against and punishing any person or entity who unfairly targets its competition for destruction.

8. Capitalism is the polar opposite of socialism

The Reality: Socialism, in the form of taxes, fines, fees, penalties, and social safety nets for the disfranchised have always been part of modern capitalism. Capitalism’s goals of equalizing entry to all business markets, balancing initial income levels, widely disseminating market information, and ensuring healthy competition across all business and social sectors is, in many ways, exemplary of modern socialism in action.

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    1. Erik Garcés: “Oligopolies and monopolies are the death of liberty” | THE JEENYUS CORNER « The Jeenyus Corner

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