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Two Myths You Are Not Told About Capitalism

Greed and inequality are not the evils of capitalism but the proof that the world is improving.

[Leer en español]

In today’s chapter we are going to confront two of the main myths that have eroded the reputation of capitalism in recent history. It is time to dot the “i’s” and tidy up this mess. It does not do justice to the truth the claims made by its enemies on one side or the other about its responsibility for increasing inequalities between people (social inequality) and things (economic inequality).

This is not the end of the matter that also, and as if this were not enough, they attribute to those who make use of their logic to provide wealth and opportunities to be greedy and selfish. As if they were unscrupulous agents dominated by any method within their reach to practice extortion and multiply misery. All this has very little to do with the state of affairs when one rigorously confronts the repercussions of capital on the prosperity of peoples.

If we look at the data without looking for excuses, the matter is very clear. In the last ten years poverty in the world has been reduced by 45 % to 8.6 % of the world population. Child mortality and illiteracy have also fallen at a good pace, although to a lesser extent (3.9 % and 8.4 % respectively). Life expectancy, on the other hand, has ballooned from 69 to 72.2 years. In their fundamentalist blindness, have they overlooked this reality? Probably yes. And perhaps it is, as a result of those moments where anger invades our accurate judgment to attend rigorously to the truth of things. Thus, capitalism, like Jesus Christ before, is accustomed to carry on its shoulders the weight of a world that cultivates on the innocent, its faults.

Let us begin with the issue of inequality. No one can deny that it is on everyone’s lips. There is no speech that does not make itself respected and does not use inequality to shine. It will be another thing if it occupies some place in reality, but it certainly crowds the shelves. It is no coincidence that the most influential book at the beginning of this century has taken inequality as its protagonist (Piketty’s Capital in the 21st Century) and that every year tens of thousands of works concerned with its effects are published. I who am dedicated to the subject have seen my gastritis removed to the brain every time (and there are many) that I come across one of these works. Having lost the battle in the face of an undeniable fall in poverty, the enemies of capitalism insist on using inequality to discredit it.

A relative concept that gives free rein to perversion, since it can always be argued that no matter how well life treats us, it treats us badly in relation to our neighbors. This hides a trap. The perception of a greater distance can be fed at the same time that it is reduced. But how? By replacing the scale of measurement ‘One’ kilometer can become ‘One thousand’ meters. Economists do this by inflating inequality by adjusting monetary income to the exchange rate or narrowing it to purchasing power parity. When adjusted between countries, it tends to reduce, but increases when calculated for each country and between time periods (see in this sense the studies of Robert Wade who collects up to 8 ways of analyzing inequality in the world).

So how can we talk about inequality being reduced de facto when the statistics are so unstable? To do so, we must clarify the lens and delve a little deeper into the shifting sands of statistics. In order to exaggerate the seriousness of inequality, scandal is often used. Bill Gates, one of the most controversial figures on the planet, is presented and compared to one of the bottom 99%. No one in their right mind will deny that the owner of Microsoft is far more buoyant than any of us. However, that which makes him infinitely richer is increasingly much poorer. Let me explain. Bill Gates hoards more dollars than I do. But he doesn’t enjoy more education or expect to live longer than any of us can. His leisure, like mine, is spent playing online chess and waiting in line at the supermarket like the rest of us. Now let’s put the world before capitalism. Bill Gates would figure to be an absolute monarch and I a commoner. Our inequality would be so vast that it would run through our veins. His blue blood would hold me back from even receiving an audience. I would be illiterate while he, fluent in several languages, would enjoy more years of life than I could ever imagine for myself.

Capitalists are said to be greedy people whose greed knows no bounds. (Archive)

And now the disturbing question: how is it possible that there is no record of inequality or concern among its people before the advent of capitalism? Could it be that what capitalism brought with it was our concern for inequality, not inequality itself? And yet, how could such a contradictory fact be possible? Not if we study human nature in depth. In the eighties of the last century I remember that in Spain when someone suffered from a tumor, people referred to it as “la cosa” (the thing). A few years ago in a supermarket I asked the cashier where I could get a handful of mushrooms (for my salad) and she, frightened, asked me very politely to refer to it as mushrooms. Then I understood that Zetas is the name given to the violent bunch of drug traffickers in the city. Moral of the story: no one names what they cannot relate to. Things are only referred to when they are no longer a real threat. And now that cancer, while deadly, is no longer lethal, “the thing” is given its name. The same seems to happen with inequality. When it used to corrode the customs and habits of the people, thinking about it was out of place. Now, however, when it only seems to affect our pockets, it is extolled as a “dreadful” tragedy.

There is something else in all this. While we have done our best to explain how inequality can be reduced in an increasingly troubled world, we have not yet made clear why it is inequality and none other that occupies our greatest concern. For that we must turn our attention to the nature of capitalist competition. So let us get down to business: what is competition in the final analysis? It is to accept that all our securities will be preserved by the pleasure that others take in what we offer them. No one will try to get hold of our skills if they are not seen as something useful to others. And of course preferences turn out to be so arbitrary that our well-being will clearly be governed by uncertainty.

There is more to all this. While we have done our best to explain how it is possible for inequality to be reduced in an increasingly worried world, we have not yet clarified why it is inequality and none other that occupies our greatest concern. For that we must turn our attention to the nature of capitalist competition. So let us get down to business: what is competition in the final analysis? It is to accept that all our securities will be preserved by the pleasure that others take in what we offer them. No one will try to get hold of our skills if they are not seen as something useful to others. And of course preferences turn out to be so arbitrary that our well-being will clearly be governed by uncertainty.

The second of the myths delves into the effects of competition in making our perception of life more vulnerable. Capitalists are said to be greedy people whose greed knows no bounds. Aberrant, their greed to become ever more prosperous puts the health of the planet and the well-being of all at risk. However, what the enemies of capitalism call greed, I call survival. Let’s return to Bill Gates as a category of the perfect millionaire. I find it very difficult to accept that this man spends all his worries on the bottom line. His concerns are often linked to global issues such as the environment or poverty reduction. The figure of a greedy man is much more like that of the Monopoly businessman with a vigorous cigar and a wad of bills sticking out of his trench coat. Few of the rich are left like this and those who are, are not very rich (the poet reminds us of what is lost is sung).

Why, then, does capitalism aim at the creation of unlimited wealth? Precisely because of the fragility of wealth itself. As a result of its fragility, capitalist competition reduces to its minimum expression the years that any company enjoys general sympathy. Those corporations that used to be inherited from parents to children and then to grandchildren have passed away. The fragility associated with competition means that the wealth enjoyed is always threatened by the intrusion of a new competitor. This is why what the enemies of capitalism call greed is nothing more than the result of being threatened by a very slippery wealth. I am sorry for them but greed and inequality are not the evils of capitalism but the proof that the world is improving.

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