Capitalism, that’s what makes our society here in America go around and around. Some will argue that it’s based on greed, those that are money hungry, while others will claim that it’s based on giving. By giving, it’s giving the people what they want before they even know that they want it.
I think Henry Ford said it best, he believes that we can find what people want if it already exists, we have to invent it. As entrepreneurs, that’s what we have to do. Henry Ford claims that long ago if he asked what people want, they’d say a faster horse, and that’s because ford cars didn’t yet exist. He created a more reliable, more efficient mode of transportation that was an absolute no brainer to purchase. When looking at entrepreneurs and capitalism as a whole, Henry Ford is one of the best out there.
The reason that it seems capitalism and entrepreneurship is more about giving then taking, to me is due to the risks involved. How much time, effort and money is invested into these endeavors, where the only driving factor is a belief that their idea that it could work. They must truly believe that their vision could improve the lives around them so much that they are willing to invest everything that they have to make it come to life. The risk is great, but the outcome could be even greater, which is what keeps these people going.
Now, if their idea works out, they will reap the benefits, as talked about in The Returns of Giving: Wealth and Poverty, Chapter 3. Reciprocity is an expectation if they can get a foot in the door to the market. Usually the seller is reciprocated via money, however fame goes right along with it usually. The gift of giving in the realm of capitalism comes with a very high reward.
In terms of viewing capitalism, my point is further proven by the idea that capitalism is driven by gifts rather than the exchange. Now, don’t get any of us wrong, the exchange is still a very important aspect, as being a capitalistic society we are driven by money as a reward. However, expanding the market isn’t due to exchange but by the creation of new things or ideas in general.
Now, what I really learned about in both the reading and video was gaining human sympathies. I had never heard of this concept before in economic terms, but it genuinely made sense to me. When someone does something for you, you may feel indebted to them in some way shape or form, you may not pay them back in money but by doing some type of favor for them. This idea brings us to a main point that, “The notion that supply creates its own demand is a principle of classical economics called Say's Law,” (Gilder, 33). We’ve learned that the basis of capitalism is on giving a gift to someone, usually something that person didn’t know that they needed. It’s the act of giving first and receiving that.
Investments of something are made without the guarantee of a monetary return, or any type of return for that matter. This very notion is the example of giving. These entrepreneurs give and give and give, until they achieve something great, at which point and only that point is when they’ll start to see a return. Now, people might like the idea and invest in it, but that investment is under the presumption that at some point they will be paid their money back. It’s a tough world out there, and entrepreneurs need to have a lot of grit and try to get to where they want to be.
I feel like as of now it’s almost harder to be a small business owner, with corporations like Walmart to compete with. Low production, low profit stores will struggle to support themselves and to get the name out there. It takes a lot of discipline, and usually the aid of people with a lot to spare to give them money to increase production so they have a chance at competing. It reminds me of the show, “Shark Tank,” where investors will take a shot of someone, and sometimes these people end up being very successful.
There is a flip side to this, which Adam Smith expressed implicitly. To sum up his beliefs, he believes the mega-rich must’ve been involved in some type of scandal or to quote, “deal with the devil” in order to get where they are today. I guess we’ll never truly know just how everyone gets into their wealth. I’m sure it’s a mix of both, as I think it is naive to believe all the wealthy did it in an ethical way. They’re bad people out there, and unfortunately the wealthy have enough of a protective cushion to pay anyone off who looks at them the wrong way.
Overall, I found both the reading and video enlightening and I will continue to look at capitalism in new ways as the course goes on.
