Saturday, January 7, 2012

On economics, human action and capitalism

Every individual is constantly making choices in the marketplace. This is what we mean by “human action.” With each decision, the consumer decides how to use his or her limited resources (and they are limited whether one is a pauper or millionaire).

You and I are constantly making choices such as: "Will I be better off if I spend my money for this television or that television?" (comparisons between similar products) while, at the same time, we are also considering, "Will I feel better off if I spend my money by paying off my credit cards and getting another latte instead of buying a new TV?"

Even though we sometimes may feel coerced into buying a product (say, fuel for our car), we are still making a free-will decision. We are asking and answering questions like: "Will I be better off putting gas in my car or taking the bus to work? Or maybe I could just hitch-hike to work. Then again, maybe I'd be better off just quitting my job and not putting gas in my car ever." Even the things we feel we must do when we'd rather be doing other things—like going to work when we'd rather be fishing—are free-will choices based on which decision we feel will make our situation better (either in the short-term or the long-term).

Capitalism does not favor the alert! Life, in general, favors the alert.

People who pay more attention when they drive, operate heavy equipment or cross the street are more likely to survive and prosper than those who do not. People who are more willing to respond as effectively as possible to changes in their environment that will affect their short-term or long-term welfare will generally be better off than the lazy, indolent, lethargic or foolish.

That's not because capitalism is opposed to such people, but because such people fail to seize opportunities for surviving and thriving when the opportunities present themselves.

As they say, “Opportunity only knocks once.” But even if it knocks a multitude of times, there will still be those who will miss it.

That is not capitalism’s fault.

For more about what capitalism is or is not, read here.

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