Last week, a popular New Age author, Marianne Williamson addressed Occupy LA.  Normally, I ignore New Agers, but this one is trying to establish a Department of Peace.  That was enough to get me to watch her video:

http://www.youtube.com/watch?v=EZPna2RfXzE

Part way through, though, I was starting to get irritated. She didn't hone in on the point, and just seemed to be talking a lot without saying anything.  Then at the end, she said that capitalism is morally and ethically neutral.  I blew my top.

I happen to belive that capitalism is amoral and encourages greed.  I don't think it's ethically neutral either.

Then she said that a fruit stand is capitalism.  That was the last straw.  That's why you're reading this now.

The definition of capitalism from dictionary.com is:


This is a good definition of capitalism.  Let's break it apart:


In a capitalist system, the means of production are land, factories, offices, tools, computers, etc.  They're privately or corporate owned, meaning that they belong to individuals or to corporations. A corporation is a specific type of  organization that operates a business.  The key point is that the businesses are private property.

The businesses don't belong to the state, and they don't belong to the workers.

Second, the definition states:


This isn't quite right.  The word "free" should be removed, because all capitalist markets are regulated, and there are some people who would say these markets aren't really "free".  But, within a typically regulated market in the US, it's pretty "free" - the rules are the same for everyone, and barriers to entry aren't too rigged.

In a capitalist market, development is related to accumulating and reinvesting profits.  This is the main quality of a capitalist system, as distinguished from other systems -- it's that money is invested into businesses, profits are taken, and then the money is re-invested into businesses.

More importantly, the amount of money you can get affects the amount of business you can conduct, and the amount of profit you can gain.  So people with more money are better able to succeed economically in a capitalist system.

To illustrate this, consider two businesses: a fruit stand, and a supermarket.

Starting a fruit stand requires very little money up-front.  Even a laborer could save the money required to open a fruit stand. 

A supermarket requires a lot of money, and would  require a bank loan, investors, or an extremely wealthy owner.

A fruit stand can be operated by one person when it opens.  It may take a while for business to get going, but the ongoing expense is only one person, the owner.

A supermarket requires a large staff.  It may take a long time for business to start making money.  During this time, the expenses are high.  Staffers need to get paid.  A lot of food can go to waste if the power bill isn't paid.  Then there's the mortgage on the half-city-block worth of land.

When a business lacks enough cash to operate at a loss for a while, it's said to be undercapitalized.  An undercapitalized business will fail for lack of cash.

It's possible is that the fruit stand, if successful, will find competition from a new supermarket nearby.  In this situation, the fruit stand can be crushed - and the banks won't help keep the business afloat, because the supermarket is likely to permanently harm the fruit stand's profits.  Investors may even give loans to the supermarket, in the hope that the fruit stand is crushed and the supermarket can have a monopoly on selling fruit.

In a capitalist system, the amount of capital you can amass matters.  So, in a capitalist system, you need credit, banks, bankers, and investors.  These banks and bankers become extremely important because they become experts at investing in businesses.

Capitalism is not "neutral" as Williamson asserted.  Indeed, it's not only biased, but it virtually requires banks and capital to seek to invest in capital-intensive firms that can compete with, take over, or destroy undercapitalized small businesses.

There's more to capitalism than what's described above, but they're beyond the scope of this argument.