With Halloween behind us and Thanksgiving around the corner, this is a great time to stop the scaremongering about great wealth producers and thank them instead.
At the national level the defamation of America’s top producers has reached obscene depths. Rather than cheer on Jeff Bezos and Elon Musk in their quest to open up space and help put humanity on the path to colonizing the solar system, many people mocked or damned them instead. (If you haven’t heard William Shatner’s remarks upon landing from a Blue Origin trip to space, they’re well worth contemplating.)
After government overwhelmingly flubbed the Covid response by screwing up testing and needlessly delaying vaccines (although I’m not denying Operation Warp Speed worked in the other direction), the main bright spot was the development of vaccines by the large companies Pfizer, Moderna, and Johnson & Johnson. The response of many was to demand that government expropriate their intellectual property. If governments want to expand vaccine production they should just pay for it. And, by the way, corporations including Amazon helped keep people’s pantries full and their internet connections live during this difficult time.
A proposed tax on “unrealized capital gains” prompted leading economists such as Tyler Cowen to sound the alarm. Such a tax either would obviously discourage investments, especially riskier ones, or prove unmanageably complex, bureaucratic, and riddled with insider perks. And then there is the proposed “minimum corporate tax,” which would result in higher consumer prices, less-robust wage growth, and less business expansion. But, hey, as long as we’re sticking it to the devil corporations, right?
Capitalism mischaracterized
Much of Colorado’s left has followed the broader trends. Stephanie Vigil, a Democratic candidate for state house last year from the Colorado Springs area, recently Tweeted, “Rich people are not the source of wealth. A human person can only be so productive with their own labor. No one can work hard enough to produce tens of billions of dollars. You can’t make that much money; you can only take it.”
I replied: “The labor theory of value is wrong (and has been widely recognized as wrong since the late 1800s). People like Bezos and Musk, through their organizational talents, greatly magnify the productivity of many other people and, hence, earn their wealth.”
If it were true that Bezos added no value to Amazon, and other productive billionaires added no value to their companies, but instead just stole the value of people’s labor, then two things would have been easily possible.
First, someone such as Vigil easily could have started a competing company, offered to pay all of Bezos’s employees the “full value” of their labor, and shut Bezos down. But of course that was impossible, because the employment contracts were win-win rather than exploitative, and because Vigil has no idea how to run a large successful company. (Neither do I, by the way.)
Second, all of Bezos’s employees could have just quit and worked independently to stop being “exploited.” That was impossible, too, because, without the organizational structure of Amazon (or some other corporation), almost all of them would have been much less productive. We should be grateful for all the producers who make our lives better, and we shouldn’t leave out those who start and develop great companies!
Vigil is hardly alone in her anti-capitalist sentiments. Denver City Councilwoman Candi CdeBaca told the Independent in 2019, “Capitalism, by design, is extractive, and in order to generate profit in a capitalist system, something has to be exploited. I believe in community ownership of land, labor, resources, and distribution of those resources.” Last year CdeBaca called for a rent freeze, and property owners be damned.
It’s socialism that’s exploitative
CdeBaca throws in two terms here than must be untangled. In a sense, all human activity is “extractive” in that it requires the use of some natural resources. Socialism is no less “extractive” in that broad sense. You cannot live without using some natural resources. The question is whether we’re using natural resources intelligently or stupidly. Usually people use the term “extractive” with a negative connotation to mean the stupid use of resources. For example, the Soviet Union had, and Communist China still has, horrible environmental standards.
Now we have a problem in that carbon (and other) emissions contribute to long-term global warming, but the problem is not extraction per se. Rather, we need to figure out how to generate lots of electricity by other means, probably mostly through a combination of nuclear and solar power. And that will require capitalists. (Government has a role to play in a capitalist system in controlling pollution.)
The other term, exploitation, almost always is used by people on the left to mean that business and property owners inherently loot their employees and renters. That view is completely false, a holdover of Marxist fallacies that just won’t die. Capitalism properly understood is characterized by mutual consent and bars the use of force. Socialism, by contrast, makes exploitative force the basis of human relations. “From each according to their ability”—or else.
Some Colorado political activists are explicitly socialists. There is (of course) a Boulder County Democratic Socialists of America organization. The Denver Party for Socialism and Liberation has been active in protesting the death of Elijah McClain. On that issue I’m sympathetic, as I have written. But police reform is not inherently a socialist cause. I know of many capitalists who champion sensible police reform, including the Cato scholar Clark Neily and the University of Colorado philosopher Michael Huemer. Radley Balko, a top journalist covering police abuses for the Washington Post, used to work for the libertarian Reason magazine. The blunt fact is that socialist regimes have been among the world’s most oppressive police states. In terms of numbers of people slaughtered, Chairman Mao is the worst mass-murderer in human history.
In the name of fighting imaginary exploitation by billionaires, who, insofar as they act as productive capitalists and not as seekers of government favors, interact with employees and customers on voluntary terms, many people on America’s left seek to implement the real and extremely destructive exploitation of force. The proper way to handle existing problems within our mostly-capitalist economic system is not to throw out capitalism but to strive for a more-perfect capitalism, which is to say a system that more fully recognizes people’s rights to interact by mutual consent.
Ari Armstrong writes regularly for Complete Colorado and is the author of books about Ayn Rand, Harry Potter, and classical liberalism. He can be reached at ari at ariarmstrong dot com.
