Twisted View of Capitalism

by Don Boudreaux on July 2, 2013

in Creative destruction, Growth, Myths and Fallacies, Standard of Living

Here’s a letter to the Program Director of a Washington, DC-area NPR-affiliate, WAMU:

This morning one of your newscasters pitched an upcoming report on an entrepreneur whose business plan is to make medical products “widely available to the poor.”  The newscaster described this entrepreneur’s efforts as “capitalism with a twist.”

There’s no twist.  Making goods and services increasingly affordable – turning what yesterday were luxuries available only to the rich into products that today are commonplace in even the most modest households – is what entrepreneurs under capitalism have done from the start.  Think Josiah Wedgwood.  Think John D. Rockefeller.  Think Gustavus Swift.  Think Richard Sears.  Think Henry Ford.  Think Sam Walton.  Think Michael Dell.

As Joseph Schumpeter observed in 1942, “Electric lighting is no great boon to anyone who 
has enough money to buy a sufficient number of candles and to pay 
servants to attend them.  It is the cheap cloth, the cheap cotton and 
rayon fabric, boots, motorcars and so on that are the typical 
achievements of capitalist production, and not as rule improvements
 that would mean much to the rich man.  Queen Elizabeth owned silk 
stockings.  The capitalist achievement does not typically consist in 
providing more silk stockings for queens but in bringing them within
 reach of factory girls in return for steadily decreasing amounts of 
effort.”*

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

* Joseph A. Schumpeter, Capitalism, Socialism, and Democracy (New York: Harper & Row, 1942), p. 67.

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