Capitalism : Why I Still Firmly Believe In It

Hey there! Like always, I say welcome to this episode.

The Encyclopedia Britannica Money defines Capitalism as; an economic system, dominant in the Western world since the breakup of feudalism, in which most means of production are privately owned production is guided and income is distributed largely through the operation of markets. (https://www.britannica.com/money/capitalism)

                                                                                 

I'm a cautious capitalist. Today, I felt compelled to write a piece about Capitalism to complete and publish my piece on why I still believe in Capitalism. This article has been lavishing in my drafts since 2021 until today when I got to interact with someone on social media after she claimed capitalism was to blame for the current surging Cocao prices in international markets. All while appearing to be enjoying the products of capitalism (iPhone).

For starters, artisanal gold miners have descended into cocoa farms in the former Gold Coast (Ghana) causing pits and probably altering the mineral balance for the local ecosystem. I say probably because I have not researched thoroughly on the reasons why cocoa production and subsequent supply coming from Ghana and Ivory Coast (leading producers of cocoa in the world) have dropped. This has caused products like chocolate to see a surge in prices too as cocoa is the main component of chocolate. As an aside, this means the cocoa value from Cameroon (my country) has increased in international markets and as someone who grew up farming cocoa, I feel happy for the farmers back home and our own farms. But that's beside the point. I have always been a proponent of the climate change fight and the environment as a whole depends on the individual to make lifestyle changes. In other words, if capitalism is producing these products that are damaging our world and stealing from some groups of people, it is because the demand for these products is always there. 

The thing is, whenever you debate someone on Social media, the chances are high that such a person will want to speak on topics they're probably not knowledgeable enough on. And from my little argument on the internet today, I have to say at the very least, this person didn't understand the basic Economics 101 teachings of supply and demand. She outrightly said she was not a socialist but rather that she was a communist. At this point, I had to resort to being petty and just laughing. Anyone who even suggests being a communist should hide their face from the civilized and free world. 

In 2021 I had to publish a scientific paper on environmentally sustainable agricultural practices within the European Union. While going through the literature and finally with my results, I realized that people were never interested in taking care of the environment without being incentivized with money to do so. That is, the agricultural practices that benefit the environment will mean these farmers/people will have to sacrifice some of their crop output for the benefit of the environment. I found out that most could care less and for the Dutch farmers, I could understand their protest because these are fundamentally the only way they have been able to survive even with the less subsidies and the government playing games with their lands. However, this demographic of people is not the youth. What I mean by this is that, while there is a real environmental issue at hand, the youths appear uneducated and ignorant about what needs to be done. By my standards, most governments (especially the Western ones) are doing enough in this regard. The youths like this young lady today are outright hypocrites (whether ignorant of it or not, that is not the point). This young lady had an iPhone in her hand and was somehow bashing capitalism. When I called her on it, she quickly pointed out that it was refurbished as if that gives her the right to remain ignorant in her view that we need to do away with capitalism completely. It's a pity that she identifies as a communist. I was once in Brussels for a conference. Coincidentally, Greta T and her supporters (which I happen to be too) were out protesting. When the protest was done, I could see, these very youths descending into the H&M, Primark, and, other shopping centers and coming out with shopping bags full of clothes (majorly). It was pure hypocrisy on display (still I don't know if they are ignorant or not). It will not be surprising to see that most of these youths have more clothes and other stuff than they need. And these are things that drive demand and enrich the so-called millionaires and billionaires they want to tear down. Jeans and beef (meat) are one of those products that threaten portable water systems around the world. Thus altering the climate change fight for which they were out protesting. Thus, the small things they should pay attention to seem to be ignored. Collectively, these small things cause serious strain to the fight against environmental protection for which capitalism has been criticized. You'll read this and still place orders on Amazon then go out and criticize Jeff Bezos for being a billionaire. Hypocrisy

Sullivan, D. and Hickel, J (2023) in their Capitalism and Extreme Poverty: A Global Analysis of real wages, Human Height, and Mortality since the Long 16th Century offer the most compelling case to date against capitalism by now introducing the metrics other than GDP which more accurately capture how the individual is doing within the economy. Despite their efforts, one has to look at the work done by the economists and researchers at the Hoover Institute (https://www.hoover.org/research/socialism-has-failed-period) as to why Capitalism is still the best economic and political model for the 21st-century world. The majority of the popular debates like those I had with this lady on social media today always end with anti-capitalism suggesting that socialism or communism are the routes to go by. A man once said those that ignore history are bound to repeat it and if this lady and those with her views ever get their chance at politics, we are doomed to end up like the many failed socialist and communist states of the past (North Korea, Venezuela, Cuba, Mao-China, Nazi Germany, Stalin and Lehning Russia etc) because they ultimately result in tyranny. 

Ha-Joon Chang in his book "23 Things They Don't Tell You About Capitalism" offers the best critique yet of capitalism (23 Things They Don't Tell You About Capitalism - Wikipedia). Yet, concludes that we need a form of capitalism in which there is more government involvement. In 2008 there was minimal government interference in the way free markets operated and this led bankers to create financial securities that were not backed by the required economic principles or foundations. For example, you need a down payment to buy a house and the ability to pay the life of the loan taken for the house. However, banks allowed people who had nothing to buy their own houses, issuing them receipts and using these contracts/receipts to create financial assets that were being bought and sold by investors. All happening without government oversight. This was the kind of capitalism that Ha-Joon reprimanded and also the imperialistic institutions like the World Bank, International Monetary Fund, and World Trade Organization and their way of doing business with developing countries. So in a nutshell, Ha-Joon does not say to do away with capitalism but to find a way to better manage it because he acknowledges the benefits of this system to others like socialism, communism, etc.  

Like my idol Ray Dalio (one of the greatest hedge funders), I believe capitalism can do better and needs perhaps an upgrade. Unlike those against capitalism who suggest more dangerous routes as alternatives to Capitalism, I believe and identify that after the onset of capitalism challenges such as income inequality and environmental degradation can be addressed through policies like universal basic income, more progressive taxation, and regulations to promote sustainable practices. All these cannot be achieved when we have ever-polarising politics of the left and right. That is to say, we need more people in politics who are neither left-leaning nor right-leaning for society to progress in this direction. Now, the Swedish/Nordic Model appears a great model but these Scandinavian nations are tiny states with very little variation in demographics. They have a system that survives because a common group of people can agree and vote on how to live. However, in more diverse societies this is more challenging. Also, the Swedish model has great government interference which is something that can easily plunge into tyranny. Additionally, this model will face challenges as we already see these states experiencing a rise in right-wing politics as more liberals have openly welcomed immigrants which can cause more diversity and result in differing views. A model like the Nordic one requires one view and not a diverse one. 

You must have heard about what a powerful manufacturing powerhouse Europe used to be. You must also have heard how Donald J Trump kept saying he wanted to bring back US manufacturing from China to the US.  The Western world and most of the world depend heavily on Chinese manufacturing. How did US, European, and world manufacturing shift to China? One major factor is due to cheap labor costs and Chinese supply chains. But let us focus on what most people anti-capitalists like to pick out which is cheap labor cost. As famous economist and statistician Milton Friedman once stated capitalism aims to deliver profits to its shareholders, most European shareholders allowed their manufacturing to move to China mainly to benefit from cheap labor and increase their profits. People will say the people in China are less paid and ethically, they have a point. However, let us look at the bigger picture, China has gone from a poor no-country to a global power in about 20 years and I'll bet my life that Western manufacturing facilitated this greatly. Thus, alleviating many Chinese citizens of poverty. Also, I like to point out that just because the minimum wage in the West is $15 doesn't mean it has to same in China as the economies are different. Can companies pay $15 and more and still be profitable in China? Yes. But it is on those companies to do not some social action. This lady should be ashamed for criticizing capitalism with an iPhone. She had good moral views and opinions about making the world a better place but she is a hypocrite doing so. This was my issue with her and with others like her. 

Finally, as a day trader, who gets to see most of the time the forces of demand and supply in action on a daily and how free markets capitalism allocates value to where value is due, I must say, it in this day and age, each person can put in the effort to be a better person and benefit from the world economy which is 100% capitalistic. There is no reason to sit and complain and even so, we have government to take care of those who can't put in this effort. That is why taxes are paid. A life lived on being a good person for society is a good life. There's no shame in doing your honest best to help yourself and those around you. We should learn to know when we are biting the hand that is feeding us so as not to appear as hypocrites. Prof. Dr. Jordan Peterson once said, "You should clean up your room first before trying to go out and fix the world". 

Thank you for reading and stay blessed being a better person.