Smith vs Gilder
When taking into account George Gilder and Adam Smith's ideas on capitalism, I would agree with Dr. Trost that both are correct. Smith takes on a more pessimistic point of view than Gilder, and I feel like we have seen both their ideas come to fruition. We have seen Gilder’s idea that capitalism is giving, and so many entrepreneurs have given their ideas and time to support their ideas to help improve our world. We wouldn’t have cars or airplanes without society, which I feel like has benefited society as a whole. On the other hand, Smith’s more pessimistic values are also true, because I feel like as much as the government does try to prevent monopolies we see them all the time. It’s become a lot harder for someone to break into running their own business, so I do see Adam’s point. However, I think in whatever system is implemented there will always be good and bad, it’s just about trying to find the best system we possibly can.
To add on to that, when taking into account the four things people are driven by, it’s easy to see that Gilder’s ideas of capitalism are more driven by self sacrifice and reciprocity while Smith’s ideas are more driven by greed and self interest. However, how are these not two sides of the same coin? If the things you are doing are with the idea that you will be reciprocated, is that not being driven by greed? If you’re only doing it with the expectation of receiving something worth your while, is that not directly related to greed?
Capitalism is an Exchange
I think that capitalism is a lot less selfless than Gilder seems to imply. The whole basis of capitalism is of supply and demand. You get what you give, and money is a driving factor for many if not most people. I feel like we can’t blame anyone for that either, as we need money to put a roof over our heads and food on the table. While I can agree that capitalism does involve giving, I think it’s the giving of ideas, but with the motive for profit. If it was all about giving and not receiving I feel like we wouldn’t see people complain about work all the time, but we do. The fact of the matter is that people have to give in order to receive, which takes away this self sacrifice idea that is being thrown around.
To look at capitalism and the idea of give in take, one might wonder what would happen if that balance gets out of hand. Such as, if there’s too much giving and not enough receiving. This quote, which Thomas Sowell has explained in his two books stuck out to me, “The theorem, associated with the name of French economist Jean-Baptiste Say, essentially maintains that the sum of the wages, profits, and rents paid in manufacturing a good is sufficient to buy it (Gilder, 56.)” This allows there to be a balance of purchasing power and production power, therefore helping balance supply and demand limiting glut of a product. Keynes accepted this quote as truth, however he said there can be issues when the money from production is saved. This takes the money out of the cycle, and can pose a problem to the economy if more people save and spend less, meaning more supply than demand. This can be a businessman's worst nightmare, because if there’s an overflow of supply prices will drop. The economy is a very fragile thing and many people don’t realize how the public's decisions impact everything as a whole.
Innovation
Another idea I found interesting in this reading, is that in an economy with perfect competition we will never see any innovations. Ten years from today, I’m sure there will be something new on the market that everyone will say they just have to have that doesn’t even exist yet. Take the iPhone for example. When I was born there was no iPhone and now just about everyone has one. While the iPhone does have competitors, I feel like they’re so far ahead of the game that others are continuing to try and catch up. In a way, this could be an example of ‘monopoly capitalism.’ The competitors are trying to keep up, but the iPhone is very clearly winning the race and has been for multiple years now.
Overall, while capitalism drives innovations it does have its flaws. However, I don’t think its flaws are greater than other economic systems so it’s probably the best choice we can make for now. An argument we see in this paper is that capitalism may be critical for democracy as a whole. That very well may be true, but until someone is able to prove that wrong we’ll probably just take that as truth.
