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Life and Liberty
Apr 10, 2023 05:44 pm
Public post
Economic Myths #14 - Share the Wealth
Needless to say, with such a high ranking in academic circles, almost every “accomplishment” of the post-war government that he led (with the possible exception of decolonisation) is likely to be an anathema to libertarians. Not only did he nationalise key industries such as the railways, canals, road haulage, coal mining, gas, electricity, telephones and steel manufacturing, he practically created the “cradle-to-grave” welfare state, the jewel in the crown of which was the now untouchable sacred cow, the National Health Service. Furthermore, he successfully entrenched the “Keynesian consensus” – the idea that full employment would be maintained by Keynesian fiscal policy – that was to unite all parties of any stripe for the three decades ending with the election of Margaret Thatcher’s government.
With such profound and fundamental changes to British society, many of which are still felt today, it is important to have an insight into Attlee’s motivations towards the legislation that his government passed.
Attlee’s own background, (not unlike that of most left wing intellectuals) was decidedly non-working class. The son of a solicitor, he was raised in Putney, an area of London populated by the professions. He was educated at an independent school and later read Modern History at University College, Oxford. He was not exactly born with a silver spoon in his mouth but neither was he consigned to a life of working in factories or down the coal pits.
According to Wikipedia, Attlee’s original political leanings were conservative. It was only after he spent three years managing a charitable institution for working class boys in Stepney, East London, that he “came to the view that private charity would never be sufficient to alleviate poverty and that only direct action and income redistribution by the state would have any serious effect”. Thereafter, he became a “full-fledged supporter of socialism”.
With such self-assuredness, can we expect Attlee’s post-war government to have come close to (as the infamous Beveridge Report that influenced his government’s policies put it) “abolishing want”? Unfortunately, the facts speak otherwise:
- Coal production in 1947 fell seven million tons below the output of privately owned mines ten years earlier, resulting in a three week industrial power cut in London and the Midlands;
- The government constructed 134,000 fewer homes per year at a higher cost per unit than were built in either of the two years preceding the war;
- Wages were frozen to wartime levels while the cost of groceries soared as their supply declined;
- When US and IMF loans dried up, the costs had to be borne by the British working man, leading to the “taxation and tears” budget of 1949.[1]
And summing up the welfare state:
The [Beveridge] plan merely furnished a thin cushion against total disaster for the most impoverished third of the population. True, every citizen (whether or not he needed it) was entitled to prenatal care, a birth subsidy, hospitalization and medical care of sorts, unemployment insurance, an old-age pension, funeral costs, and an allowance for his widow and dependent orphans. The subsidies and allowances were tiny, and, with mounting inflation, barely sufficed for the poorest – sixteen dollars at birth and eighty dollars for a pauper burial. Medical services were spread so thin that even at the price of nationalizing the existing medical profession, it was impossible to guarantee first-rate care. With food rations hovering near the starvation level, sickness became more frequent and national; production fell still lower. So poverty was not eliminated but increased to plague proportions, and life was a nightmare for everyone but the most dedicated bureaucrats. A man might have “social security,” yet he could not go out and buy a dozen eggs. After four years of Socialist government, he was only entitled to an egg and a half per week, as decreed by Marxist No.1, John Strachey, Fabian Minister of Food and Supply.[2]
The origin of Attlee’s political views betrays his belief in a common economic error, a belief that can clearly have disastrous consequences if its holder happens to one day become the leader of his country.
The view that either private charity or forced redistribution is the solution to poverty is based on the flawed notion that there is a fixed pool of wealth for everyone – that when one person possesses wealth it necessarily results in another person being without it. From this false premise it follows that the alleviation of the poverty of one person requires wealth to be disgorged from another.
The solution to poverty, however, is that wealth is created and not simply redistributed – the pie gets bigger and not just chopped up in a different way. Capitalism and the free market, far from creating haves and have-nots, involves the progressive accumulation of capital that produces more products at cheaper prices that everyone can buy. More factories, more machines, and more tools that produce a greater supply of goods for less and less effort serve to alleviate material poverty. All of us become better off as a result.
If, on the other hand, wealth is to be confiscated from some and redistributed to others, it retards this very process of wealth creation. While a specific redistribution may allow the beneficiaries to afford to purchase a bit more in the short term, in the long run there will be less work, less saving, and less capital investment and accumulation. The number of products produced will fail to increase and thus their prices will remain high and out of the reach of the poor. Redistribution is, therefore, a temporary solution at best. At worst, it traps the people permanently in the stagnant poverty that you are trying to get rid of.
Let us imagine ourselves, for one minute, as employees of the charitable institution of which Attlee was manager. How do we interpret that which we may see every day? From some kind of absolute standard, the poverty and destitution of the slums in the East End of London may have been “terrible” or “bad”. No one would ever seek to deny this.
However, it is important to realise that poverty, fundamentally, is not caused by humans but by nature. The Earth is not, and never has been, the Garden of Eden, full of delicious goodies that are ripe for our picking. The first person who trod the virgin soil of the Earth was in a position of absolute, crippling poverty by our modern standards. All he had was himself and his bare hands – no shelter, no food, no clothes, no tools, absolutely nothing. (Indeed, we might ask, how on Earth would “redistribution” have helped him when there was nothing to distribute!). But from the moment he dug the soil with his hands, from the second he picked up the first plank of wood to build into a shelter, from the day he fashioned a tool from basic materials such as a rock and a stick, so began the long, slow process of capital accumulation and wealth creation, a process that only really began to accelerate in the early 1800s.
Humans, in other words, have to work to overcome the natural state of poverty in order to build up a civilisation as prosperous as the one we have today. To view a snapshot of this process at any one moment in history and to declare, self-righteously, that “those people over there are in poverty!” is to judge this march of progress against an ideal – as if the earth should be the Garden of Eden. The appropriate standard against which to make a judgement, however, is the best that can be done given the eternal condition of scarcity.
If, therefore, one was to cry “something must be done” upon witnessing an “appalling” condition, one ignores the possibility that something is already being done and has currently reached its best possible stage before moving forward to bring greater things. Wealth creation and capital accumulation takes time – we did not get refrigerators and cars the very moment the first person on earth decided to get off his backside and start working. But this process has caused the percentage of people living on one dollar a day to fall from 85% to 20% in two hundred years – and that achievement has been accomplished while the population has multiplied five or six times.
The only way, then, by which we can judge that there is “too much poverty” at any one time is to ask a single question – is there anything that is slowing down or causing an artificially imposed constraint upon the process of wealth creation?
The answer can only be what Franz Oppenheimer referred to as the “political means” for an individual to gain wealth – that, rather than work oneself to use unowned resources, or to trade goods voluntarily with others, one confiscates them violently from people who already own them.
Although we can see that Attlee’s solution – redistribution through the welfare state – is a major part of the “political means”, so too is any restrictive and regulatory encroachment upon private property. In Attlee’s day, we can point to the fact that the decade of his birth, according to historian David Cannadine, marked the peak of aristocratic power and influence in British society. Today, it is the power of the privileged financial barons of Wall Street that benefit from cheap, freshly printed money, robbing the poor of the their purchasing power and ploughing it into fake assets, causing bubbles, malinvestments, booms, busts, unemployment and misery.
If we really want to solve poverty, we should be removing these barriers to wealth creation that favour the privileged elites rather than compounding the entire sorry state of affairs with further economic evils.
Next week’s myth: Unemployment
---
Notes
Notes
[1] Rose L Martin, Fabian Freeway – Highroad to Socialism in the USA 1884-1966, Western Islands Publishers (1966), Ch. 7.
[2] Ibid., 76.
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Life and Liberty
Apr 03, 2023 03:32 pm
Public post
Economic Myths #13 - Wealth Inequality and "The 1%"
The inequality of wealth and income is a frequent bone of contention in the mainstream media. According to The Guardian, 1% of the world’s population will own two-thirds of its wealth by the year 2030. A typical response to this kind of revelation is the following utterance from the Executive Director of Oxfam in 2015:
An explosion of inequality [is] holding back the fight against poverty. Do we really want to live in a world where 1% own more than the rest of us combined?
The mainstream debate over this issue fails to understand the true nature of the problem (although, interestingly, The Guardian article referred to above is unusually far sighted in recognising some of the causes of inequality).
The pro-free market side is wont to point out that such inequality “doesn’t matter” and that governments should not do anything to interfere with the progress of business. The likely call from the opposite side, however, is for increased taxation and redistribution and, indeed, Oxfam itself stressed the need for a greater crackdown on tax avoidance by large, multinational corporations. However, the reality is much more nuanced than the false dichotomy between “pro-business” and “pro-government/anti-poverty”.
On the one hand, we can agree that wealth inequality does not, on its own, create any problems for the generation of wealth and the reduction of poverty. The common attitude towards the rich appears to assume that someone like Warren Buffett or Bill Gates has tens of billions of dollars lying around in a bank account for them to spend and enjoy.
The reality is that these figures represent the value of capital goods – machines, tools, factories and so on – that are invested in producing goods and services that everyone wants to buy. If these resources are in the hands of just a few people – say, “the 1%” – who most accurately devote them to the most urgently desired needs of consumers, then there is nothing economically deleterious with wealth inequality. Indeed, wealth inequality, in this scenario, is exceedingly good as any attempt to reduce it would divert resources into the hands of those less capable of directing them to the ends that people desire, or into the hands of those who would consume them. It is capital investment – more capital invested in more production processes to churn out more products that people need – not taxes and redistribution that solves the plight of poverty.
However, this scenario is conditional upon the crucial aspect that resources must be in the hands of those who are best suited to serving the needs of consumers. In other words, those who are rich must have become so by meeting those needs. Unfortunately, it is patently obvious that the current ownership structure does not reflect the voluntary choices of consumers. Rather, it is the product of crony capitalism, of cheap printed money that is ploughed into malinvestments, and of taxpayer funded bail outs when it all collapses. The growth in wealth inequality is due not to the fact that consumers are voluntarily choosing to place that wealth in the hands of a few select people; it is because the government is throwing cheap money at this tiny elite so they can steal all of the world’s assets.
What, then, is the solution to this problem? Taxation and redistribution would clearly compound the economic evils rather than solve them. And, in any case, in spite of the hullaballoo about tax avoidance, the rich will always be able to influence tax policy to their benefit and to arrange their affairs so as to avoid it as much as possible.
Instead, what is needed is a wholesale withdrawal of the state from either supporting or hindering anyone in the pursuit of gaining wealth. All wealth should be obtained through the voluntary nexus of serving the needs of consumers and everyone should gain their riches through their abilities and not through their political connections.
One interesting question is what might such a world look like? Would it encourage wealth inequality or would such inequality be unlikely?
On the one hand, it is arguable that wealth would still be highly concentrated. Genuine entrepreneurship is a rare talent and is likely to always remain so. On the other hand, however, if that is the case it is also likely that those particular individuals who own the world’s resources will rotate relatively quickly, with the top dogs remaining on the pedestal for only a short time. Indeed one aspect of the current wealth divide that is ignored is whether the same people remain stuck within their wealth/income group or whether there is relatively fluid movement between the different groups.
Successful entrepreneurs make their biggest successes when they are small, nimble and contrarian. Once they have achieved their wealth, however, and their enterprises have morphed into large, multinational companies, they become large, unwieldy, inefficient and complacent. A former rebel becomes a part of the establishment who then becomes vulnerable to the insights of later entrepreneurs.
This can perhaps be illustrated with the technology industry where no, single player has managed to dominate each successive era. Microsoft put a PC into everyone’s home in the 1980s-90s; Google was the number one in internet search; Facebook was on top with social networking; and we are now, seemingly, in a fourth phase where Apple dominates smartphone technology and other hand-held devices. No single outfit has been able to carry through its dominance from one era to the next. Corporate dynasties and everlasting companies controlling everything will certainly not be a feature of a genuinely free market.
Even a stock investor such as Warren Buffett, who has profited from a great many businesses in numerous decades, would be unlikely to achieve the wealth that he has done. Buffett’s mantra of value investing relies upon the price of a stock to fall below the underlying value of the business, and for the price to then reach parity with, or exceed, that value. But the large distortions in stock prices – both up and down – have occurred precisely because of central banks flooding the markets with cheap, freshly printed money that results in excessive booms and busts. It is unlikely that Buffett, in a genuine free market, would have been able to buy and sell at such favourable prices as he was able to do in recent decades.
The same phenomenon also accounts for the wealth of Amazon CEO Jeff Bezos, who currently [2018] occupies the top spot on the list of the world’s richest individuals. As successful as Amazon has been, Bezos is unlikely to have achieved his level of wealth without Amazon having been one of the seemingly over-hyped and over-privileged “FAANG” (Facebook, Amazon, Apple, Netflix, Google) stocks, which have been the main beneficiaries of the artificial, stock market gains since 2008.
Moreover, it is also possible that a free market would serve to make capital ownership more diffuse. As wealth creation ensues and the standard of living rises, ordinary people will find themselves with increasing amounts of disposable income that they may decide to divert into saving rather than increased consumption. Such funds, through savings accounts and the bond market, may form the backbone of investment funds that are ploughed into productive use. Thus, ownership of the claims on the proceeds of production may be more diverse than it is at present.
Either way, however, we can be sure that the resulting structure of production and ownership will be one that best serves the desires of consumers, changing and adapting as the tastes of consumers change. Ultimately, it will always be the everyday folk, through their purchasing habits, who decide on the level of wealth inequality – not the state and central banks handing out favours to their political cronies.
Next week’s myth: Share the Wealth
Life and Liberty
Mar 06, 2023 05:54 pm
Public post
Economic Myths #9 - Social Safety Nets
[First published on Free Life]
The first problem with this theory is that poverty is not some selectively appearing disease that makes a magical appearance every now and then to infect an otherwise healthy and wealthy society. Rather, poverty is the natural state in which human beings first found themselves. When Adam and Eve were expelled from the Garden of Eden they saw that the world was a barren and harsh place that is capable of providing precious little – may be just air to breathe – without the conscious effort of its inhabitants. The only way to alleviate this terrible situation is for humans to work to produce the goods that they need and, eventually, to bring about capital investment in order to expand the amount of consumer goods that can be enjoyed – whether it’s cheap food, housing, education, holidays or whatever – a process that only really got underway in any significant form in the 1800s.
If, therefore, the individual beneficiaries of a social safety net are not able to produce these goods themselves then it follows that somebody else must do so. Legislating the welfare state into existence does not, unfortunately, create the goods and services it needs to dispense to the poor and needy in order to banish poverty and want. Rather, existing goods have to be forcibly confiscated from those who have produced them and dished out for free to those that haven’t. Social safety nets are compulsory redistribution programmes, not wealth creation programmes and any benefit one receives under them will be at the expense of another person.
The economic effects of this are familiar to economists not only in the “Austrian” tradition but of other free market persuasions also. The most naïve error made by any proponent of redistribution is to believe that people’s behaviour is somehow hermetically sealed from the government intervention that seeks to achieve a certain end – i.e. that increased taxes on a certain activity will not discourage people from carrying out that activity; or that increased funding to eliminate a “dire” situation will not, in fact, exacerbate that situation. Whenever a new tax is proposed the estimations of new revenue to be raked in are often based, incorrectly, on the assumption that people will still wish to carry on doing the taxed event just as they did before, as if the tax makes no difference. And if some new programme to be financed by this revenue is proposed, they will calculate the amount of money needed to cure only the existing problem without considering whether throwing money at it will make that problem worse. All else being equal, if you pay people to do something they will do more of it; if you charge someone to do something they will do less of it.
Applying this understanding to the case of social safety nets, if people are charged to produce wealth in order to fund them then the cost of creating wealth is forcibly raised. Relative to other activities such as engaging in more leisure time, the attractiveness of producing more goods, more capital and more resources is reduced. There will, therefore, be less production, less capital investment and fewer consumer goods at higher prices – hardly the situation that one would expect to be conducive to the abolition of poverty. Similarly, if you grant a guaranteed right to be paid upon the occurrence of a bad event – such as sickness and unemployment – then you lower the cost of that event while the relative cost of preventative measures is raised. All else being equal, you will have more sickness, more unemployment and so on. Indeed, most of the afflictions which may cause a person to fall into hardship are not sudden accidents but are, in fact, a consequence of the lifestyle and environmental choices that a person may make – choices that are influenced by relative costs/benefits.
For instance, children, in particular, appear to be little more than a metaphorical blank cheque that the state writes to “protect” them from poverty and hardship (indeed, the focus of many social safety nets today appears to be on so-called “hardworking families” – never mind the fact that single people or childless couples may also work hard and struggle to make ends meet). Children, however, do not appear out of nowhere and, but for the most exceptional of circumstances, a conscious decision must have been made at some point to have a child – or at least to carry out the act of procreation. The economic effects that we outlined will therefore result from any safety net that benefits parents with children. If you pay people when they have children then all of the existing children will not suddenly be transported to the land of milk and honey. Instead, there will be more children in more families struggling to pay the bills who are desperate for a handout. The resources to feed these hungry, young mouths must be confiscated from those who do not have children – either through inability, a lack of desire or as the result of a financial decision – and redistributed to those who do.
The running theme through all of this, therefore, is that throwing free money at a problem in which people have at least some kind of influence will only aggravate that problem. Indeed, in spite of more than half a century of the welfare state the Western world still seems to be afflicted by the scourge of poverty – although a rather bizarre form of it where those who are poor appear to suffer more from obesity rather than from starvation. Moreover, it is also the case that expenditure on healthcare and other entitlements is shoving most states down the road to bankruptcy. Should it not be the case that “progress” is characterised by a reducing, rather than an expanding social safety net?
A powerful weapon in the arsenal of proponents of the welfare state is the false dichotomy – that the choice is either between a government social safety net motivated by “care” and “compassion” on the one hand or some kind of selfish, greedy, sink-or-swim and dog-eat-dog society on the other. This is plainly ridiculous; the free market exists precisely because people have needs and others are willing to advance the means to fulfil them. The whole edifice of investment and capital accumulation is not to benefit only the well off – rather, its task is mass production of more and more goods and services at lower prices for the ordinary person. Moreover, the purpose of insurance – presently and regrettably distorted by government interference – is to protect you from genuinely catastrophic events that are not your fault in return for a premium paid in advance.
Opting for the alternative of the free market does mean the abolition of care and compassion and the sudden appearance of selfishness and “rugged individualism”. Rather, it gives people the freedom to be caring and compassionate. Indeed it is such private benevolence that is discouraged by the social safety nets as they obliterate the need to cultivate familial and personal relationships upon which you can rely. Real benevolence, selflessness and caring for one another springs from these relationships and from private choice; the forced redistribution demanded by the state, however, leads to the very opposite – bitterness, antagonism and cynicism when your hard earned money is taken to be given to others, all of whom – in spite of whether they are genuinely needy or not – are tarnished as work shy, endless breeders. It is no accident that many of the great charitable foundations and mutual organisations appeared in the nineteenth century, the most relatively free and capitalist period in history – and not in the era of the welfare state. As for the argument that social safety nets are necessary for civilisation, what could be less civilised than wrestling something you want from someone at the point of a gun?
The social safety net therefore needs to be realised for the destructive force that it is; not as a hallmark of economic and societal progress but as one of retrogression of civilisation and as a retarding influence on the very real cure for poverty and illness – more capital, more production and more goods for everyone to be able to buy at cheaper prices.
Next week's myth: Taxes Benefit "Us"
Life and Liberty
Dec 08, 2022 06:37 pm
Public post
Is the Free Market Uncaring?
This misunderstanding is common not only among the opponents of libertarianism but also, occasionally, among those libertarians who mistake freedom for libertinism. How can we counter these straw man attacks?
Libertarianism as a philosophy – by which we mean the theoretical endeavour to determine what are valid legal rights – neither is nor has ever pretended to be a complete blueprint of how a person should live his life. It only states that each person should be given the freedom to choose what he does with his person or property. Having that choice does not mean that it is a good thing for him to, say, decide upon keeping everything he has for himself. One could easily argue that he should, for example, give some of his money to the poor. Simply because a person cannot be forced to make one choice or the other does not mean that his choices are immune from all other forms of moral scrutiny; it's just that libertarianism a) states that these choices cannot be forced, and b) stops short of discussing these other aspects. So as long as any positive, moral obligation is not enforced with violence then it is in accordance with the libertarian ethic.
Collectivism, however, is markedly different. For when a collectivist posits a certain, forced redistribution of wealth and income amongst society, this is usually based on an all-encompassing moral and political theory. So, for example, a collectivist might state not only that a person should donate a portion of his income to the poor, but that also he should be forced to do so. It is this aspect that makes collectivists look more “caring” and “sensitive” to the needy – the fact that they are prepared to “enforce” their moral outlook seems to show that they mean business. So even if libertarians manage to defuse accusations of selfishness, they can still come across as cold and uncaring through their reliance on only a vaguely defined notion of voluntary charity to take care of society's ills.
There are three possible ways in which view this may be countered.
The first is to admit that libertarians are somewhat guilty of contributing to this view, as few have developed an additional moral philosophy on top of their commitment to individual freedom (although, having said that, challenging state violence in today’s world is more than enough to be getting on with). We must be prepared to turn our attention to developing not only our own, private, moral philosophies, but also to understanding which positive behaviours are conducive to sustaining a free society on a sociological and psychological level so as to craft a resonating political strategy.
Second – and contrary to popular opinion – the history of ideas has seldom been one of “liberty” versus “collectivism” or of “freedom” versus “tyranny”; rather it has been that of one version of collectivism versus another. As Ludwig von Mises points out, every planner has his own, mutually exclusive grand plan when it comes to determining how society should be shaped:
In the eyes of Stalin, the Mensheviks and the Trotskyites are not socialists but traitors, and vice versa. The Marxians call the Nazis supporters of capitalism; the Nazis call the Marxians supporters of Jewish capital. If a man says socialism, or planning, he always has in view his own brand of socialism, his own plan. This planning does not in fact mean preparedness to coöperate peacefully. It means conflict.[1]
By pointing out this fact libertarians can demonstrate how, in a free world, each person and community can pursue, in harmony, the peaceful ends that they believe are morally right with their own property. To pursue those ends violently wouldn’t breed a proliferation of care and compassion. Instead, it would just mean endless antagonism with everyone else who happens not to share your view.
Third, if a collectivist claims to care about the needy in society then we are entitled to ask why he favours a system that is almost guaranteed to make everyone poorer than they already are. In other words, why do they oppose the very system – capitalism and freedom – that has been responsible for the most significant increase in the standard of living in the whole of human history?
It is easy to forget that poverty is the natural state of human existence outside the Garden of Eden. A political system can certainly perpetuate this natural state. But only when our ingenuity has been allowed to flourish through individual freedom have we been able to harness the powers of nature so as to increase the amount of wealth and satisfaction that we gain from them. If we compare the condition of human existence in 1800 (where 85% of the world’s population was living on $1 a day) to that of today (down to 20%) then we can see that freedom has been exceedingly good to the poor.
Perhaps smart libertarians, accused of ignoring the plight of the needy, should raise this point and query whether, in fact, it is their ideological opponents who are really the ones who don’t care?
--
Notes
[1] Ludwig von Mises, Omnipotent Government: The Rise of the Total State and Total War, Liberty Fund/Ludwig von Mises Institute (2010), 242-3.
--
Notes
[1] Ludwig von Mises, Omnipotent Government: The Rise of the Total State and Total War, Liberty Fund/Ludwig von Mises Institute (2010), 242-3.
Life and Liberty
Jul 26, 2022 05:19 pm
Public post
Freedom – the Law of the Jungle?
It is often asserted that a system of free market capitalism reduces everyone to the level of animals, subject to the "law of the jungle". Similar emotive epithets accuse capitalism of being little more than a "dog eat dog" or "winner takes all" economic system. However, as we shall see now, nothing could be farther from the truth.
Under a capitalist system all property is privately owned, and all legal exchanges must be voluntary, not coerced. However, for a voluntary exchange to occur both parties must expect to benefit from the exchange. If they did not expect to be better off then neither would have made the exchange. The exchange is therefore productive as it is designed to leave each party with something that they deem to be better than what they had before.
Once you extrapolate this to an entire economy, we can see that the very reason why capitalism is able to lift whole populations out of the slum of poverty is because people invest in the production of goods that other people want to buy. They then trade these goods for other goods that they themselves want. Everyone's lives are better off - it is a plus-sum operation that creates more for everybody.
Contrast this, however, with state intervention. Such interventions, such as taxation, are involuntary, i.e. the taxed individual has no choice as to whether the exchange occurs. But if he would not have made the exchange voluntarily then it follows that he does not regard the exchange as being to his benefit compared to an alternative. Instead of having his tax money taken to be spent on the salaries of bureaucrats, he might have preferred instead to buy a new suit or car. Hence, while the state benefits, the forced giver manifestly does not. Further, as it is not possible to measure utilities between individuals we cannot say that the eventual recipient of the funds gains "more" than the tax-payer loses.
In contrast to the productive nature of capitalism, taxation and other forms of coerced exchange are, therefore, fights over existing goods; the state wades into an extant process of production and decides that someone other than the productive party should possess those goods. In contrast to capitalism, this is manifestly a zero-sum game, with one party reaping what another loses.
What could be closer to the law of the jungle than this? Animals in the jungle are not productive; they fight with other animals for the restricted goods that nature has offered them so that they may survive. What one animal gains another animal loses. "Dog eat dog" is therefore a more appropriate description of political fights for taxpayers' money rather than for free exchange.
Finally, "winner takes all" would be a more apt description for democracy than for capitalism. With private property and free exchange, the minority does not have to restrict itself to purchasing the products and services that the majority wants. Most people might decide to shop at the mall, but that does not force others to do so; they are quite free to continue spending their pounds or dollars at a boutique. In a government election, however, the minority – the losers – always has to put up with the successful candidate, even though they may have wanted neither him nor his policies. Such a system benefits only the majority – the winners, who take all – at the expense of the hapless losers.
Criticising capitalism as a “winner takes all” system is usually the effort of those who - on account of their own inability to serve the needs of others - believe that they have failed to benefit sufficiently from free exchange. To remedy this, they want to take what other people have to fulfil their demands for "fairness" or "equality". As we can see, however, it is the resulting squabble over existing resources which would truly reduce human civilisation to the law of the jungle.
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