capitalism is good for the poor, especially.

Economics Economics Questions
1

thinking about the effects of capitalism on the poor requires no little than a recollection of the robinson crusoe model. This model posits that at first, crusoe has nothing, except his labor, to use. This case is totally analogous to the situation where a man has nothing to supply except his physical manpower -no wealth, or special skill except his ability to apply force to a task. Yet we see that crusoe can easily become a wealthy man or can at least improve upon his previous impovershment, through work. So in a like manner, capitalism secures a laborer a just price -when labor is in high demand, the laborer is paid high wages. But the free market system is also flattering to the poor in their character as consumer. Robinson Crusoe has to acquire food (or what-have-you) and he gets it by applying scarce means. At first though, it will be significantly harder for him to acquire food, at least in comparison to his later efforts. Add a second person to Crusoe’s island and what this manifests as is a high price. So we see that free trade is good for those people who need to find work -this is seen in high wages, and free trade is good for those persons who are in the greatest need -and this is seen in high prices.

This is one point that I think that we as libertarians always forget in addressing objections to capitalism. It is good to show that unemployment is really ephemeral on the free market but there are indeed real and completely tangible benefits that free trade has for the poor, which no government could provide from out of its illusory promises, should be brought forward as one of the selling points of capitalism -agree or no?

2

Yes, I agree. The Robinson Crusoe model is a great way to get people to re-think their misconceptions about capitalism, especially the fallacy that capitalism exploits the poor.

3

yes, and what I forgot to write, Lee O, is that in the oft-quoted case where people are too poor to afford some item (x); the crusoe model shows that not only is it not bad that the poor shouldn’t be able to afford that item (say health-care) but that it would be positively negative for the state to interfere, for if someone is too sick to find a cure, then forcing them to slave for a cure is pointless and more exploitative than charging high prices.

The robinson crusoe model also eloquently displays the effects of price controls. Namely they support the first suppliers while those who are trying to sell themselves, those in a robinson crusoe position, are completely exploited. Either that or they dilute the influence of the first buyers, while those who were willing to forgo the purchase, now find themselves in a position to effectively take from those who value the item greater. No greater engine of oppression could be erected against the poor than the state.