Whereas religion asks us to believe in something, money asks us to believe that other people believe in something.
For thousand of years, philosophers, thinkers and prophets have besmirched money and called it the root of all evil. Be that as it may, money is also the apogee of human tolerance. Money is more open-minded than language, state laws, cultural codes, religious beliefs and social habits. Money is the only trust system created by humans that can bridge almost any cultural gap, and that does not discriminate on the basis of religion, gender, race, age or sexual orientation. Thanks to money, even people who don’t know each other and don’t trust each other can nevertheless cooperate effectively.
It follows that an increase in the profits of private entrepreneurs is the basis for the increase in collective wealth and prosperity.
Smith’s claim that the selfish human urge to increase private profits is the basis for collective wealth is one of the most revolutionary ideas in human history — revolutionary not just from an economic perspective, but even more so from a moral and political perspective. What Smith says is, in fact, that greed is good, and that by becoming richer I benefit everybody, not just myself. Egoism is altruism.
Smith taught people to think about the economy as a “win-win situation,” in which my profits are also your profits. Not only can we both enjoy a bigger slice of pie at the same time, but the increase in your slice depends upon the increase in my slice. If I am poor, you too will be poor since I cannot buy your products or services. If I am rich, you too will be enriched since you can now sell me something.
The Indian subcontinent too was conquered not by the British state, but by mercenary army of the British East India Company. From its headquarters in London, it ruled a nighty Indian empire for about a century, maintaining a huge military force of up to 350K soldiers, considerably outnumbering the armed forces of the British monarchy.
The British demanded and received control of HK, which they proceeded to use as a secure base for drug trafficking. In the late 19th century, about 40M Chinese, a tenth of the country’s population, were opium addicts.
After the Battle of Navarino, British capitalists were more willing to invest their money in risky overseas deals. They had seen that if a foreign debtor refused to repay loans, Her Majesty’s army would get their money back.
This is why today a country’s credit rating is far more important to its economic well-being than are its natural resources. Credit ratings indicate the probability that a country will pay its debts. A country devoid of natural resources, but which enjoy peace, a fair judicial system and a free government is likely to receive a high credit. As such, it may be able to raise enough cheap capital to support a good education system and foster a flourishing high-tech industry.
They offer governments the same advice that Zen masters offer initiates: just do nothing.
But in its extreme form, belief in the free market is as naive as belief in Santa Claus. There simply is no such thing as a market free of all political bias. The most important economic resource is trust in the future, and this resource is constantly threatened by thieves and charlatans. Markets by themselves offer no protection against fraud, theft and violence. It is the job of political systems to ensure trust by legislating sanctions against cheats and to establish and support police forces, courts and jails which will enforce the law. When kings fail to do their jobs and regulate the markets properly, it leads to loss of trust, dwindling credit and economic depression.
The individuals who bought the shares, the brokers who sold them, and the managers of the slave-trade companies rarely thought about the Africans. Nor did the owners of the sugar plantations. Many owners lived far from their plantations, and the only information they demanded were neat ledgers of profits and losses.
Capitalism has 2 answers to this criticism. First, capitalism has created a world that nobody but a capitalist is capable of running. The only serious attempt to manage the world differently — Communism — was so much worse in almost every conceivable way that nobody has the stomach to try again. We may not like capitalism, but we cannot live without it.
The second answer is that we just need more patience — paradise, the capitalists promise, is right around the corner. True, mistakes have been made, but we have learned our lesson, and if we just wait a little longer and allow the pie to grow a little bigger, everybody will receive a fatter slice. The division of spoils will never be equitable, but there will be enough to satisfy every man, woman and child — even in the Congo.