An Introduction To Capitalism — What I Learn from the Book.
I’m discussing Capitalism based on what I read in Eamonn Butler’s An Introduction to Capitalism.
The definition from the book:
“Capitalism is the broad meaning of capital. It can be in the form of physical, financial, moral, and human resources. However, government intervention often ruins the pure meaning of capitalism.”
At first glance, I thought this book will guide me through the origin and the basic principles of capitalism. Instead, it criticizes the uprising view about socialism and common misunderstanding about capitalism being the root cause of oppression, greed, economic catastrophe, and inequality. This book argues that capitalism is actually the fundamental rationale of a liberal, cooperative, and dynamic society.
Eamonn defines capital into several major definitions such as:
- Physical Goods
Physical Goods are usually attributed to things like equipment, industrial machinery, computer, or maybe a factory. However, people usually forget to use these types of capital to expedite their productivities. For example, maintenance in the battery market will yield on electric-powered trucks/cars. In another instance, a recycled-based market will propel the usage of machines, shipments, logistics, and buildings based on their true values. These kinds of examples are usually neglected by people who do not see them as capital.
- Financial
Most often than not, financial capital is referred to as “money” used by sole proprietorships or corporate to expand and boost their efficiency and effectiveness. For instance, a fund manager could take a loan from a bank to lend it to businesses that need it for expansion. In return, the businesses would yield profit for people who had invested in the fund manager.
- Infrastructure
Infrastructure comprises of public facilities such as roads, bridges, and ports, which would help people to expedite their productivities. Infrastructure usually entices many debates, whether it is more appropriate to be controlled publicly by the government or privately (right?). Regardless, better infrastructure will also propel for better productivity.
- Human Capital
Lastly, this is the most important capital of any others. American Economist Gary Becker did not define it as human capital, but he defined it more profoundly. Human capital is talking about ourselves, the quality of people who could be more productive. We go to school, improve ourselves, learn a lot of skills, keep ourselves healthy, etc.
The presence of the market helps us to maximize our potentials. The market provides us formal education, the market gives us access to healthcare facilities, the market provides us gym, running tracks, and sports center, etc. Human capital also needs conducive circumstances in order to robustly improve ourselves.
This book states that capitalism needs a decent system to maximize its potentials. Therefore, the presence of a state is needed. Capitalism proponents argue that the capital should not be controlled by the state, defining the possibility of corruption and political interests in it. On the other hand, the presence of the state will guarantee individual rights, justice, and collaborations without coercion, property rights, intellectual rights, etc. Hence, the presence of the state should be 50:50 restricted in this case.
On an important note, this book also states that “Moral” is one of the most necessary capital because it will form a sense of fair competitiveness that would eventually be beneficial for the market to become productive, creative, and heterogeneous.
Several key takeaways from this book that I might conclude are:
- Invest in Yourself
Human capital is the most important capital of all. You decide your own productivity. It is okay if you want to take a rest during the weekend, but make sure you hustle during your weekdays. You determine how many languages you want to be able to speak. You determine which musical instruments you would master. You determine whether you want to be greedy or a man/woman with morals. Eventually, the market provides it all, it is YOU who will determine what you want to be, what you decide to master, and how you want to be labeled in society.
- Capitalism Propels Growth
As the market has already provided it all, capitalism will provide growth opportunities for everything. The economy, the people, the prosperity, etc. For instance, you can read this article because of capitalism. You are able to scroll your Instagram and Twitter because of capitalism. Even you can graduate because of the help of capitalism (if you use Google and Wikipedia). This defines that capitalism will help you to improve yourself and break your limits.
Don’t forget that “Moral” is a capital and it will determine how people would be perceived in society.
That’s all.
Regards,
Hidayah Rizki Ramadhan
