Capitalism, the Free Market, and the Duties of Property and Contract, Note 1

Of course, the actual legal definition is not always the best way to promote the "general welfare." Rights to broadcast wavelengths are presently temporary privileges on the sufferance of the government, not real rights to property; and this method is justified on the ground of a scarcity of wavelengths. That scarcity of course no longer exists, but the control by government continues because politicians and bureaucrats enjoy having the chance to violate the First Amendment with broadcasters in ways that they cannot with the print media. That is of a piece with the politicization of economics and the decline in private property rights in this century.

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Capitalism, the Free Market, and the Duties of Property and Contract, Note 2

The case is similar to one of the supposed greatest evils of capitalism: child labor. One would think that Mediaeval children had just enjoyed carefree childhoods playing, growing, and learning until reaching maturity. Of course, nothing could be further from the truth. An interesting light on that can be found in a decree of the Ottoman Turkish Sultan Mahmud II, a great reformer, in 1824:

Whereas according to our Moslem faith, learning the elements of religion comes before everything else, taking precedence over all worldly considerations, most people avoid sending their children to school in these days and prefer to teach them a trade as artisans or apprentices when they reach the age of five or six, because of their desire to earn money quickly. This leads to widespread illiteracy and ignorance of religion, and hence has been the cause of our misfortunes. [For all these reasons] no man hence shall prevent his children from attending school until they have reached adult age. [Quoted in Paul Johnson's The Birth of the Modern]

This is of interest since it refers to conditions entirely outside of capitalism and European civilization -- it is indeed a desperate response to them. What it reveals, however, that children tended to start their working lives at five or six, was true quite generally until the wealth produced by capitalism enabled parents to educate their children instead relying on their income and until the greater productivity made possible by capitalism enabled employers to rely on much more highly paid adult workers, instead of children. The progress of child-protective legislation in England is revealing, for no legislation was ever passed until industrialists indicated that they could live with it. Mahmud II's decree, of course, had little effect, since families needed the income of their children in the sort of pre-industrial country that Turkey was. This is still a common fallacy: people assume that because child labor is bad, then it must be immediately abolishing everywhere for moral reasons, regardless of whether an economy is advanced enough to accommodate this change or not.

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Capitalism, the Free Market, and the Duties of Property and Contract, Note 3

Even "natural resources" are worth nothing until they come to be wanted by someone who has found some way to use them. And then they are only relatively valuable: OPEC discovered that charging too much for the oil "exploited" by the West created conservation that lowered demand. Inflation also devalued the payment. In constant dollars, oil now sells for no more than it did in 1970. On the other hand OPEC sought to charge more for oil only after Western states began to greatly inflate their currencies for political reasons, seduced by Keynsian economics. In the long run, OPEC's actions simply served to keep up with the inflation. We can hardly blame them for that, but then that isn't really what they thought they were doing.

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Capitalism, the Free Market, and the Duties of Property and Contract, Note 4

Swedish manufacturing companies are troubled with such high absenteeism that they often must hire 25% extra workers just so that the plant will be fully staffed. The deadbeat workers, of course, add to the cost of the product for everyone and subtract from the wages of all the workers and from the profits of the firm. Even with this kind featherbedding, Sweden still has a depression level of unemployment: 14% Recently, Sweden actually voted out its socialist government and is privatizing government owned enterprises. It is tough to break people's sense that they have a "right" to free public services, but there is growing international recognition that no such services are really free and that only the free market can solve the stagnation, decline, inefficiency, and corruption spawned by all such socialist devices and expectations. Unfortunately, the United States is evidently about to see a last great effort to institute socialist command and control mechanisms in the area of health care, despite all the evidence of failure in the often cited and even praised Canadian, British, German, and even Soviet health systems.

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Capitalism, the Free Market, and the Duties of Property and Contract, Note 5

Standard Oil controlled 90% of the US oil business in 1881. Nevertheless, prices continued to fall, in great measure because of competition with Russian oil; and by the time the Standard Oil Trust was prohibited in 1911, Standard's market share had declined considerably. If John D. Rockefeller had ever had a "monopolistic" control of the market, it was never used, as it could not have been used in the circumstances, to raise prices or prevent competition from arising.

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Capitalism, the Free Market, and the Duties of Property and Contract, Note 6

$380 in 1913 would be about $5700 in 1990 dollars. This should be compared with the prices of cars now that might be regarded as the equivalents of the Model T. Since there really aren't any cars cheaper than that, it should be clear that something has prevented the value of cars from falling further.

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Capitalism, the Free Market, and the Duties of Property and Contract, Note 7

Average US weekly earnings in 1995 were $486 ($25,272 per year). That would be about $32.40 in gold standard dollars. For a five day week, that would be $6.48 a day, or 130% of Ford's 1913 $5 a day (for a six day week). The growth in wealth over time is apparent in one statistic: the United States Gross Domestic Product per capita in 1900 was $246 (1995 dollars); in 1995 it was $25,514 (nearly identical to the average weekly earnings).

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Varieties of Civil/Social Rights, Note

Some supporters of Affirmative Action who happen to be East Asian themselves sometimes try to save their position by arguing that they are actually not as successful as people think, or that they are owed extra consideration because some people still discrminate against them. This kind of argument looks rather odd when Japanese and Chinese Americans have some of the highest family incomes in the country, well above "Anglo-Saxons," and when very large percentages of the Freshman classes at Berkeley or UCLA or UC Irvine are East Asian -- often 25% or more, and up to 50% at Irvine. Don't some people still discriminate against Jews, or even attack them with anti-Semitic vandalism and hate-crimes? Aren't Jews therefore still owed Affirmative Action consideration? Instead, it is actually politically fashionable in some quarters to be anti-Semitic.

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Copyright (c) 1996 Kelley L. Ross, Ph.D. All Rights Reserved