I’m working on a new video. I mean to explain capitalism from the ground up, and thereby dealing with a lot of objections that we hear so often, but not by refuting it’s logic but by explaining how things actually work. If people don’t hear an alternative explanation, they’ll keep falling back into bad ideas.
I’m going to explain a story about pure capitalism. It will include the stance that Adam Smith, Friedman, Rand, Hayek and even Mises’s ideas were not compatible with capitalism, and I will explain why.
I don’t want to make the video too long, but I do want to deal with the essentials. I’ve also collected a good number of excellents links that the listener can go to if he wants to learn/hear more about it. I’m going to have the find a way to integrate those links eloquently into the video.
As with my last video ( How Could A Voluntary Society Function? ), I aim to make it very easy to follow using elaborate imagery. It would be nice if it could be a little more animated, such as this, but I don’t know if I can pull that off without help, or if it’s needed. If I spend some time making nice colorful and insightful images, that should do the trick to make it pleasant looking.
These are the chapters. I have so far written the first draft for chapters 1 to 10. After posting this I’ll start working on the last two chapters. Getting feedback on what I have so far is important and will affect how I do the last part.
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You and Nature
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Other People
links:
The Division of Labor and Society (by Jörg Guido Hülsmann) - http://www.youtube.com/watch?v=bHf2uQhoCYQ#t=36m12s
Direct Exchange and Barter Prices (by Robert P. Murphy) - http://www.vforvoluntary.com/young-econo…hap06.html
Calculation and Socialism (by Joseph T. Salerno) - http://www.youtube.com/watch?v=b7zzH8ruLDc
- Money
links:
Division Of Labor and Money (by Hans-Hermann Hoppe) - http://www.youtube.com/watch?v=rIxd6ezDPOk
The Theory of Banking (by Hans-Hermann Hoppe) - http://www.youtube.com/watch?v=-3PKHVbOet8
Gold and the Periodic Table of the Elements (with Sanat Kumar) - http://www.npr.org/blogs/money/2011/02/1…insteinium
- Employment
links:
Wage Slavery (by Stargazer5781) - http://www.youtube.com/watch?v=urASFJClhdI
- Interest
links:
Capital and Interest (by Hans-Hermann Hoppe) - http://www.youtube.com/watch?v=8OS5Jqn4o_E
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Stocks
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Insurance
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Regulation
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Crime
links:
How Could A Voluntary Society Function? (by Nielsio) - http://www.youtube.com/watch?v=tE9dZATrFak
The Origin and Nature of International Conflict (by Hans-Hermann Hoppe) - http://www.youtube.com/watch?v=M0R1cftftsY#t=31m05s
- The Environment
links:
Free Market Environmentalism (with Walter Block) - http://www.youtube.com/watch?v=XMxgYY_q-AI
Conservation and Property Rights (by Murray N. Rothbard) - http://www.youtube.com/watch?v=kPy9j3vtKCs
- Incompatible Ideologies
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Socialism
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Democracy
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Intellectual property
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Adam Smith
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Milton Friedman
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Ludwig von Mises
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F.A. Hayek
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Ayn Rand
- Case Examples
- Sweat shops
- Unemployment
- Monopolies (Microsoft, Ford?)
(- Oil spill)
links:
Monopoly and Competition (Murray N. Rothbard) - http://mises.org/media/4603/
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The text so far. What happend in my last video is that I thought I had the text done, but when I was in the process of adding imagery, I noticed that parts of the text didn’t flow well enough and needed changed and additions. So none of this is very final, but it will help to have a good starting point.
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- You and Nature
Imagine.. you are the only human on the planet. ..and around you you find only the natural world and no human products whatsoever.
You have desires. You require goods to satisfy many of these desires. Laboring in nature allows for the production of these goods. If not all is consumed which was produced, then savings accumulate. These savings can be used up during a time when you decide not to produce goods for consumption but goods used for production. These producer goods allow you to produce more and better products.
- Other People
Now.. you meet another person who is involved in his own production. He is different from you and his surroundings are a little different than yours. Therefore, it takes him more time to produce certain things and less time to produce other things.
To give a simplified example, a day of laboring gives you 10 ripe fruits or 5 bird eggs, and a day of laboring gives him 5 fruits or 10 eggs. The possibility that now arises is where you produce only fruits and he only eggs, and after every day you exchange 1 for 1, leaving you both with 5 fruits and 5 eggs for every day. That is significantly more than you would have had if it was still you by yourself. His production has now become important to you and your production to him.
Now that both of you are focusing on one kind of production, you get more efficient at that, which ends you up with more goods to consume or save (and invest), or with more time which allows you to produce new kinds of goods.
More people enter the scene. The way the people in this market coordinate what they produce is through the use of prices. If one person’s daily production is 10 fruits or 5 eggs, and he values both of these kinds of foods equally, then someone has to offer him more than 2 pieces of fruit for one egg of his, or more than 1 egg for every 2 pieces of fruit, to make him better off. He could just as well produce them himself if he is offered less than those prices. The prices all the individuals are asking informs everyone which goods make sense to produce. Highly needed goods will be produced more, and the prices will keep changing depending on the environment, the abilities, the production goods and the desires of the individuals. If an individual becomes wealthier in this situation, it means he has traded a high value in goods and so has produced a high value in goods.
A voluntary exchange only takes place if both individuals perceive to benefit with the exchange as compared to without it. An interference with the production process or the free exchange by individuals thus is harmful to the economy. Because of this there is the development of the concept property. It means: that from nature which you have turned into something valuable, becomes yours. It is a societal concept. People’s bodies are also considered their property.
Besides trading, two or more individuals can also decide to hold their property in common ownership. Under trading, each person makes sure his situation is improved by it. Under sharing, this aspect is disregarded. In a small tribe or a family this may occur, but some imposition of rules exists even there to prevent abuse. A system where a large group of people use true common ownership, and thus don’t check if they’re personally benefited, and don’t send out signals of their production skills, environment and desires through the use of prices, will end up terribly inefficient and underdeveloped.
- Money
Besides exchanging what you produced for something that you desire, you can also exchange what you produced for something that you don’t desire but that you can trade later for something that you do desire. If you have fish and you desire wheat, and someone is willing to pay you in eggs, and eggs more easily allows you to trade for wheat, then it makes sense to agree to the trade. From these tendencies a common good of exchange develops in any barter economy; a money. It is the product of human action but not of human design.
Within a market, there tends to be one good which outperforms all other goods in its capacity as exchange medium. This can change over time as new goods are discovered and the available amounts vary. When two separate markets connect and become one trading area, the competition sparks up again with one winner. In a world market of uninhabited trade and exchange, there would be at any moment one dominant common exchange good.
The emergence of a money makes economic calculation much easier. What you sell and what you buy is now expressed in the same unit. A profit in production means that you incurred less in costs than you received in the sale. A profit thus means that the market evaluates your production as adding value to resources. If you continually make a loss, you will run out of money and resources that you use in production, which will subsequently shift to producers able to handle them more productively. A better insight into the cost of production also makes it easier to shift production to areas where profits are made (‘I can provide that cheaper’), or where profits could be made with innovated products.
- Employment
Besides trading material goods for material goods, it is also possible to trade the good labor for material goods, or to trade labor for labor. These trades can too raise the amount an individual earns with a day’s labor. An entrepreneur is someone who incurs an investment in labor and/or goods for the purpose of selling transformed goods or services at a higher price. In doing so the entrepreneur takes on the risk of the success of the undertaking. The investment in labor is the creation of jobs which have a stable reward without the risk of losses.
- Interest
Loaning out goods to another person brings about the risk of not being paid back. Interest is the price someone pays to obtain a loan, and it is at the same time the incentive for someone to loan out valuable scarce goods.
- Stocks
A stock is an investment in an entrepreneurial project, allowing it to exist and partakes in the profits or losses. Through the use of stocks, many people can pool their resources together if they perceive this to be profitable.
- Insurance
Insurance is a trade where one party assumes a risk of another party. The customer is charged a surplus over the estimated payout (the occurrence multiplied by the cost), which is the incentive to take on such risk with the use of valuable scarce goods.
- Regulation
Goods and services that one wishes to buy contain a degree of uncertainty about their quality. A third party can offer its services by gaining and providing information about certain offerings in the market. They can review samples, they can collect ratings from previous customers, or they can ask for access to the production process of the producers. To persuade customers to buy, producers have a strong incentive to get such information out.
- Crime
To protect oneself against crime, weapons can be purchased. Defensive services can also be acquired. The fundamental way in which crime is lowered is through increasing the upsides of peaceful cooperation and increasing the downsides of aggression. This can be accomplished through establishing the reputation of individuals. Third parties can provide the service of arbitrating on and recording the actions between trading partners. This increases the reward for cooperation because it is evidence that more easily allows future trades and it increases punishment for aggression because it makes future trades much more expensive if not outright impossible; this in turn is an incentive to make things right with the victim.
- The Environment
As established before, in capitalism you cannot harm other people’s property. This means if someone has settled a farm, and you set up a farm next to him, you cannot put chemicals in the ground that end up in his land because you are damaging his property that he is using in production. The second mechanism at play is that when you can own a resource that you are turning into valuable use, that you’re also interested in the value of the resource. This means that you’re not just thinking of the immediate return but also about the returns in the future, and the value of the property itself on the market (which is a reflection of the estimation of future returns with the property by buyers).
If someone is cutting down trees then it means he either has a use for the trees or a use for the land. If he has a use for the trees in the market, then he would benefit from more trees in the future, and he can establish a property right in the land by planting new trees and protecting them. If he has another use for the land then it is because price and profit signals from the market signal tell him that a use besides selling trees is valuable; like creating an accessible park or a hospital.
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