In our society today, Capitalism is defined as the trade and industry of our society being controlled by private owners for their own income. However, there are different opinions about how capitalism is used to further one’s interests. In this week's article by Gilder, he describes capitalism as a way of giving and serving to individuals in our society through the process of trade or purchase. We also learn in this week’s article by Smith, that he views capitalism as creating products purely for self-interest and self-love. In the lecture videos, we see evidence around how important it is to figure out the correct definition of capitalism plus understand the factors that play a role in each of the theories by these authors. In my opinion, I think that Gilder’s definition and book makes the most sense to me when defining capitalism.
To start, I really enjoyed this week's reading because it was very clear and gave definitions of the words he used. For instance, Gilder (Gilder, 2012, p. 29) expresses the word “mumi” and describes it as the big man or someone that is very successful. He then goes on a couple pages later (Gilder, 2012, p. 32) to use an analogy about the meaning of the word by describing this by using a comparison of a feast to the mumi. The analogy of the investment and investor made the most sense in my head and put it into a better perspective. Having this analogy and definition within the article helped me gain a better understanding of what Gilder was trying to convey about capitalism.
In addition, I felt that this week's reading was a continuation of the readings we have done the past couple of weeks because it was talking about a lot of the topics we had previously read about. In particular, the idea that in order for a trade to be successful, each individual has to see a higher value of the other’s item. Also, this reading talked about the specialization an entrepreneur must have in their field of work in order to become successful versus trying to produce everything by themselves. I think both of these topics hold a high importance and describe them best as to how our society and market function. Without a means of exchange and individuals producing their best work, we would not have nearly the amount of products in the market that fit our wants and needs.
It seems like we can we see Gilder’s definition of capitalism all around us. We have entrepreneurs privately owning companies that they make a profit from, and we see them trading with other individuals to keep the marketplace moving. It is stated in the article,
“The circle of giving (the profits of the economy) will grow as long as the gifts are consistently more valued by the receivers than by the givers” (Gilder, 2012, p. 32).
This quote supports the idea that for a trade to be successful, the giver has to make something that is valued by someone else, and once the giver determines what people are willing to buy, then they will make a profit. I think this quote also supports Gilder’s definition of capitalism because it shows that our economy works through producing items people need, offering them for sale, making sure that it is a benefit for another individual, trading it to the receivers and therefore keeping the economy moving. If an individual is not willing to accept the trade, by the definition that Gilder expresses, then it is the seller's responsibility to make changes because that is what true capitalism is all about. This might include changing their product, lowering their price, finding cheaper ways to produce their item, marketing to a different audience or a little bit of all of these options.
Lastly, the reason I did not appreciate Smith’s definition is because I feel that capitalism is not always about the personal gain of the individual. When self-interest and self-love is mentioned, I disagree. Although the lecture videos helped to categorize the four different factors of Smith’s definition, I still agree with Gilder’s explanation of capitalism the most. Throughout our past readings, I have learned that the entrepreneur and our market work around meeting individual’s wants and needs in our society. Therefore, when Gilder mentions a means of giving to others and benefiting others, I find that to be truer to the definition of capitalism.
At the end of this article, Gilder explains that a lot of capitalism depends on faith. If people don’t have faith in what they are buying and can trust in what the seller is saying about their products, then there will not be much giving and receiving. I completely agree with his theory on this, along with his definition of capitalism. It is very important to believe in the goodness of people in business, that they are not out for self-interest, so that we have confidence in purchasing items that we need to survive. We all expect the truth of people in enterprise and hope we can trust each other during an exchange, so that our needs can be met, and we can continue to move forward with business. Having a better understanding of capitalism and the way our market works has really made me appreciate entrepreneurs. I did not realize how much they contributed to our society.
Gilder, G. F. (2012). Chapter Three: The Returns of Giving. In Wealth and poverty (pp. 27–49). essay, Regnery Publishing, Inc.
