Freeman

ARTICLE

What Is a Capitalist?

The Capitalist Is a Benefactor of Man

SEPTEMBER 01, 1994 by ROGER M. CLITES

Filed Under : Central Planning, Poverty

Roger Clites teaches at Tusculum College in Tennessee.

Not many years ago rabble-rousers were able to ruin the career of almost anyone by labeling him a “communist.” Now there are those who attempt to slander a person similarly by calling him a “capitalist.” When we look at all the mischief done by self-proclaimed communists we can see that that term may have deserved to be considered derogatory, although we must admit it was often misapplied. When people use the term “capitalist” in a derogatory manner, however, we question whether they know what a capitalist really is.

The first tangible act of a capitalist must be self-denial. In order to accumulate capital to save and invest, which is how one becomes a capitalist, one must first refrain from consuming a part of what one has produced and risk losing through his investment what he could have enjoyed at the time. Would those who label others “capitalist” defend their supposed ridicule by decrying the act of self-denial?

Another act of a capitalist is to provide capital goods, tools, and machines, for others to use in their work, so that those others may be more productive. Capitalists are sometimes accused of exploitation when they hire others to use their capital goods. But how are those others exploited if they prefer the employment offered them by the capitalist to any other alternative available? The capitalist did not force them to accept the employment he offered; they accepted it voluntarily in preference to anything they could develop on their own and in preference to anything else available. This is in direct contrast to what the communist or socialist does. In a controlled economy, where the factors of production, including labor, are allocated and forcefully directed by planners, exploitation really takes place.

A capitalist is one whose savings and investments make it possible for others to live above absolute poverty. Without capital with which to work, we would still be living in caves—if we were living at all—and wearing loincloths. Throughout much of history, poverty has been the condition of most of mankind, except for a few rulers who were the real exploiters of their fellow men. Even today poverty is the general condition of a large portion of the world’s population. Only in those parts of the world where relative freedom made possible the accumulation of capital have the masses of people attained higher levels of material well-being. Only when and where people were allowed to keep the fruits of their labor to save and invest capital could economic progress take place.

Without the accumulation and application of capital to agriculture the enormous productivity of farmers in the United States could not have been attained. Without the accumulation and application of capital to increase productivity, child labor would still be as widespread in the United States as it is in India where child labor laws have failed to abolish it. Without capital today’s women would not have been liberated from the household drudgery which enslaved women of past generations. Modern grocery stores and cookstoves have eliminated the need for spending a whole day at least once a week doing the family baking. Automatic washers and dryers have done away with backbreaking work of drawing water, scrubbing, boiling, and wringing out the family laundry. Wash-and-wear fabrics have substantially reduced the time and toil spent on ironing, first with flat irons that had to be heated again and again on a hot stove, and more recently with electric irons which reduced the toil substantially but fell far short of eliminating it.

We flip a switch instead of chopping wood to heat our homes. Even the equipment used to cut logs today represents a substantial improvement over earlier days. Arduous labor of many kinds has been done away with by the introduction of capital equipment, the use of computers, and the activities of capitalists. A list of the contributions of capitalists would be almost endless.

Sometimes the capitalist is painted as dooming workers to “dehumanizing” toil, monotonous, repetitive work. On the contrary, productivity is so much greater, even in routine work, that workers have far more leisure time to engage in pursuits other than grubbing for a living. Far from dehumanizing mankind, capitalism has enhanced the quality of life.

No matter how you consider the capitalist, he is not the evil person he is portrayed by many to be. Those who presume to malign him by labeling him a capitalist, which he is, should consider what that label really means. A capitalist begins by denying himself consumption he could have enjoyed, undertakes risk, transforms his savings into tools and machines that help to increase production, and so becomes a benefactor of man.

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September 1994

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Unfortunately, educating people about phenomena that are counterintuitive, not-so-easy to remember, and suggest our individual lack of human control (for starters) can seem like an uphill battle in the war of ideas. So we sally forth into a kind of wilderness, an economic fairyland. We are myth busters in a world where people crave myths more than reality. Why do they so readily embrace untruth? Primarily because the immediate costs of doing so are so low and the psychic benefits are so high.
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