David R. Henderson  

Giving Thanks

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Here's a Thanksgiving message from my 2001 book, The Joy of Freedom: An Economist's Odyssey, from a chapter titled "The Joy of Capitalism."

I pointed out in Chapter 1 that British author Thomas Carlyle called economics "the dismal science" because the free-market economists around him were strongly opposed to slavery. For me, economics is the joyous science. I started off believing in economic freedom (sometimes called capitalism) as a moral imperative, as something that should exist because it is the only system in which people deal with each other on the basis of choice rather than on the basis of force. But the more I learned about economics, the more I saw that economic freedom was also enormously practical, that it delivered the goods better than any other system, and not just better, but incredibly better.

Capitalism's incredible productivity wasn't so easy for me to appreciate when I was in my teens and my early 20s. This was so for two reasons. First, starting at age 16, I was on my own financially and lived on a shoestring budget until I got my first full-time academic job as an assistant professor at age 24. Second, and more important, I was incredibly ignorant of economic history. Most of the history I learned in school was of the "who fought what war when and for what four reasons" variety. I learned very little about the day-to-day lives of ordinary people centuries ago.

In the last 20 years, though, I have found it easier and easier to appreciate capitalism. That's in part because my income, adjusted for inflation, has risen a lot. But it's also because the awesome technological revolution that has been going on around us has increased virtually everyone's real income--even those people whose incomes, adjusted for the government's faulty inflation measure, have been stagnant.

Think of what we can do nowadays, even those of us with modest incomes. If we miss a movie when it's in the theatres, we don't have to wait, the way we used to, until either it comes around again (unlikely) or is shown, years later, on TV, interrupted by ads and missing some of the best parts courtesy of network "censors." Instead, we can see the uncut version at our convenience on a video recorder that costs less than the earnings from three days of work at the minimum wage. We can rent the movie for a price that is often less than half of what we would have had to pay to see it on the big screen. I know we often take this for granted. One of the joys of capitalism is that we can take its awesome productivity for granted. But it's good, every once in a while, to have some wonder about the many things that are wonderful. A lot of "wonder robbers" out there think it's not "cool" to have wonder. But don't ever let anyone rob you of your sense of wonder. If you've already lost it, here's your chance to reclaim it.

Happy Thanksgiving to you all.


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COMMENTS (15 to date)
Nodnarb the Nasty writes:
Instead, we can see the uncut version at our convenience on a video recorder that costs less than the earnings from three days of work at the minimum wage.

A video recorder?! Hahah. Dude: Netflix.

Great post, and Happy Thanksgiving!

David R. Henderson writes:

@Nodnarb the Nasty,
A video recorder?! Hahah. Dude: Netflix.
Not in 2001.
Thanks, Nodnarb, and Happy Thanksgiving to you too.

JK Brown writes:

I've been enjoying the wonder of capitalism this past year. As I learn more of economics, but also, classical liberalism, I wonder at how easy it has made our lives. I didn't have a course in economics as college and even the most interesting humanities courses had schedule conflicts with my studies in Physics and job.

I've read a few of Mises' books recently. His 'The Anti-Capitalist Mentality' really defined where it comes from. I'm currently reading his 'Liberalism' which has helped me refine some of my observations that even libertarianism didn't reach.

Such as:

We liberals do not assert that God or Nature meant all men to be free, because we are not instructed in the designs of God and of Nature, and we avoid, on principle, drawing God and Nature into a dispute over mundane questions. What we maintain is only that a system based on freedom for all workers warrants the greatest productivity of human labor and is therefore in the interest of all the inhabitants of the earth.

Mises, Ludwig von (2010-12-10). Liberalism (p. 22). Ludwig von Mises Institute. Kindle Edition.

I like removing opposition of slavery from a moral question and placing it firmly on human self interest. It will be harder for a revival if those advocating it must argue against the greatest productivity.

ThomasH writes:

I think "dismal" is too strong a term, but the economic mindset does tend to focus on how optima are constrained. There are very few free lunches. The costs of public expenditure in a recession go down but do not disappear. Minimum wages transfer income to low paid workers, but some workers lose or fail to gain employment. Higher real incomes sometimes require breaking inflation ceilings. Freer trade brings higher total incomes in both countries but not everyone benefits. I'd even say that as the marginal income distribution has worsened in recent years, economists have become a little more pessimistic.

Pajser writes:
    Henderson: "I started off believing in economic freedom (sometimes called capitalism) as a moral imperative ... because it is the only system in which people deal with each other on the basis of choice rather than on the basis of force. "

I think it is because of not taking into account that private property is violent restriction of the freedom of non-owners. If that issue is ignored then yes, capitalism really looks voluntary. I have read your book; you have whole 5th chapter on private property. You do not address this issue. I admit, it may be too dry for a popular book.

    Henderson: "I saw that economic freedom ... delivered the goods better than any other system, and not just better, but incredibly better."

I can easily agree, if capitalism is compared with feudalism. But compared with socialism, its main alternative? From your book:

    Henderson: ... in the Soviet Union and other socialist countries, almost no production plants, farms, or other physical assets were privately owned. And the results could have been predicted ... The wonder is that for 70 years people claimed that socialism was some kind of ideal. How can it be ideal to set up a system that takes away people’s protections, destroys their incentive to work, and consigns hundreds of millions of people to grinding lifetime poverty and early death?

Economic progress of Soviet Union was very good, in terms of GDP/capita (PPP), not stellar, but significantly better than average capitalist country. Similarly for life expectancy: USA in early 1910's had 30 years longer life expectancy than Soviet Union, while in 1990 difference was 5 years only.

Jon Murphy writes:
I think it is because of not taking into account that private property is violent restriction of the freedom of non-owners.

Explain

Pajser writes:

Jon Murphy:

There is the beach. I want to sleep on the beach. As long as no one uses force against me - I have freedom to do that.

What if institution of private property on the beach is established? I sleep on the beach, two strong men wake me up and ask if I have permission from Mr. Owner. I say I do not know Mr. Owner. They say I must leave, or they will use force against me. My freedom is restricted, through force or threat of force, which is by definition, violence.

Maybe that violence is justified. It is important question. Burden of proof is on those who claim that it is justified. In either case, violence is still part of the system.

AlexR writes:

Happy Thanksgiving! And let's remember the circumstances of the first Thanksgiving celebration. After several years of poor harvest under communal farming, the pilgrims of the Plymouth colony decided to assign property rights in individual plots of land to each family. The resulting bumper crop was cause for celebration. From Bradford's account of the history of the Plymouth colony:

"All this while no supply was heard of, neither knew they when they might expect any. So they began to think how they might raise as much corn as they could, and obtain a better crop than they had done, that they might not still thus languish in misery. At length, after much debate of things, the Governor (with the advice of the chiefest amongst them) gave way that they should set corn every man for his own particular, and in that regard trust to themselves; in all other things to go on in the general way as before. And so assigned to every family a parcel of land, according to the proportion of their number, for that end, only for present use (but made no division for inheritance) and ranged all boys and youth under some family. This had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been by any means the Governor or any other could use, and saved him a great deal of trouble, and gave far better content. The women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability; whom to have compelled would have been thought great tyranny and oppression."

Jon Murphy writes:

Pasjer-

You begin with a false assumption. You do not have the right, you do not have the freedom, to sleep on the beach if you do not own it. You are the initiator of violence because of your act of trespassing.

Pajser writes:

Jon Murphy - I am not sure you disagree with me. I certainly have freedom to sleep on beach which is not owned at all - even if I do not own it by myself either. I simply do not need to ask anyone's approval.

The ownership is established by some human. He proclaims that no one - but him - has the freedom to use the beach. He restricts freedom of non-owners by force (or threat.) That is exactly what I claim - that private property is violent restriction of the freedom of non-owners.

You claim that if I sleep on such, owned beach I "initiate violence." That is equivalent to claim that owner's violence is justified. Maybe it is. Even if it is - it is still violent restriction of my freedom. I still have the point.

(And we still have important question - is that violent restriction of freedom really justified?)

Jon Murphy writes:

Is force in response to force violent? I think not.

Pajser writes:

If I sleep on the beach, I am not violent. I do not use force and I do not threat anyone.

Contrary, Mr. Owner uses force (or threat) to restrict my freedom. So, it is not as Henderson said "system in which people deal with each other on the basis of choice rather than on the basis of force." Exactly opposite, private property introduces violence as response on non violent acts.

You can say that by sleeping on beach, I "initiated the violence" although I am not violent. It is true - in capitalist system. In some other system - my sleeping on the beach wouldn't be "initiation of violence."

Khodge writes:

The Joy of Cooking might be a better book to reference for Thanksgiving, both for its practicality for the holiday and as a practicum for your economics posts.

Seth writes:

@Pajser - A main function of customs, rules and institutions in society is to deal with the infringements on freedom that come with folks living together in relatively close quarters.

Property rights does that. So, instead of you having to fight with 1000s of other people over what you can and cannot do on a beach, you can simply ask for approval from one, which seems a lot less violent.

Pajser writes:

Seth - resolution of possible conflicts on the beach is possible through democratic collective rule, established with explicit task to resolve the conflicts. Such governing doesn't require that anyone asks for permission before he uses beach. Everything that is not explicitly banned is allowed.

It is opposite with private property: everything that is not explicitly approved is banned for non-owners. Even if there is no possibility for conflict, one must ask permission - and it can be denied. Furthermore, there is no guarantees that private owner will actually resolve the conflict if it happen.

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