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At Large
Capitalism’s Gift of Peace
The Korean peninsula demonstrates the fundamental differences between free and fettered markets.
The Korean peninsula demonstrates the fundamental differences between free and fettered markets. As always, there are the free market’s obvious attributes of prosperity and democracy. However as recent events have shown, peace should not be overlooked. And just as importantly, neither should its proper attribution to a free market.
In one relatively small section of the world, the stark differences between the world’s most important dichotomy is clearly visible. In South Korea, a capitalist market, open society, and democracy exist. In North Korea, a closed market, closed society, and totalitarian regime exist. You also have a stark distinction between peace and war.
Perhaps capitalism’s most overlooked attribute is peace. Virtually all conflicts of the last century have been initiated by fettered market, authoritarian states. Often the world’s armed conflicts have been between two such regimes. Contrastingly, military conflicts have almost never pitted two capitalist, democratic nations against one another.
Socialist, communist, fascist, or simply non-ideological dictator-governed nations have almost always been the world’s aggressors. When capitalist democracies are drawn into armed conflict, it is almost always against such economically-fettered nations.
The reason for states’ predilection to war or peace goes back to their underlying economic systems. To fully appreciate it, we must understand the economics motivating each.
Capitalist countries find war a last resort. War is both expensive and wasteful. It is these states’ worst economic investment — diverting their resources from productive uses to an unproductive one.
Virtually any alternative to war is a better investment for a capitalist nation. War only becomes plausible when the failure to meet military aggression sets the stage for even greater long-term costs — continued aggression that will inevitably be even more costly than short-term resistance to it. If the calculation is simply between conflict and non-conflict, the latter is the cheaper and therefore preferable alternative.
In economics, cost is the return from an alternative use of a resource. Thus for a capitalist nation, the opportunity cost of war is excessive.
The economic calculation of war is just the opposite for the fettered market nation. The opportunity cost of war to such a nation is less. By definition, their economy is already operating on a suboptimal allocation of its resources. North Korea is the extreme example. Its economy is so bad that conflict is actually its best economic investment.
However, even if the extreme case is not the point of comparison, the difference in the opportunity costs of conflict between a free and a fettered market nation is significant.
Another aspect of a free market is the fact that it is likely to produce a free society and government, while a fettered economy can produce neither.
Both Milton Friedman and Frederick Hayek underscored this essential difference due to differing economic systems. Friedman stated: “…[W]e know of no society that has ever achieved prosperity and freedom unless voluntary exchange has been its dominant principle of organization. We hasten to add that voluntary exchange is not a sufficient condition for prosperity and freedom…Many societies organized predominantly by voluntary exchange have not achieved either prosperity or freedom, though they have achieved a far greater measure of both than authoritarian societies. But voluntary exchange is a necessary condition for both prosperity and freedom.”
Hayek made the same point: “The free market is the only mechanism that has ever been discovered for achieving participatory democracy.”
The reverse is equally true. Where a fettered market exists, a fettered people are sure to as well. A person who is not allowed to own private property, is not truly free himself. A people who can own property and dispose of it freely, will forever be a check on a state’s attempt to monopolize power.
The result is that fettered markets produce governing systems that make going to war not only less economically unappealing, they also produce political systems with fewer means to stop the government from acting on its diminished economic disincentive to conflict. Dictators can take their nations into war with relative ease and then keep them in such a conflict for relatively longer periods of time.
With democracies, again, the case is just the opposite. Going to war requires near political unanimity and that unanimity is continually being reevaluated as a war continues.
Capitalism is frequently credited with only the most prosaic of goals and ends in society. In fact, it is really the protector of society’s most sublime goals. In other societies, peace and prosperity are uncommon occurrences, happening in contradiction to their economies and their resulting political systems. In capitalism, peace and prosperity are its defining attributes. They are overlooked precisely because they have become commonplace to those of us fortunate enough to reside in such an economic-political system.
About the Author
J.T. Young served in the Department of Treasury and the Office of Management and Budget from 2001 to 2004 and as a Congressional staff member from 1987 to 2000.
Letter to the Editor View all comments (19) | Leave a comment
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Doctor Right| 12.15.10 @ 8:16AM
Maybe we can divide this country up equally between the Liberals and Conservatives?
The Liberal half (call it "Liberalia") can govern themselves with a "living and breathing Constitution", and Obama can be their "El Presidente". The Conservative half ("Conservativia"?) will choose to adopt the original Constitution as it's governing document.
Inside of 5 years, half the knuckle-head Liberals who opted for Utopia will be trying to illegally cross the border to a better life in Conservativia.
Worse luck for them - Conservativia takes border security VERY seriously!
After a shower and a box lunch (care of President Palin), we'll give them a small, hand-held copy of the original Constitution, and send them on their way BACK to Utopia.
cmx| 12.15.10 @ 2:07PM
Look at an electoral map, the country is already carved up.
UpChuck.Liberals| 12.16.10 @ 12:48AM
Yeah and I'm stuck on the wrong side thanks to the liberal Kalifornia idiots.
Wingnut| 12.15.10 @ 8:38AM
Hi
Oh, here we go again with the YAY CAPITALISM crap. Sad.
We ALL see the pyramid scheme symbol on the back of the USA one dollar bill. We ALL see the servitude infestation in capitalism. We ALL see the "pay up or lose your wellbeing" Chicago mob-like felony extortion widespread within capitalism. We ALL see the "join or starve" felony extortion done to the 18 year olds... by this ugly competer's church called capitalism. We ALL see how forcing competer's religions onto 18 year olds, and/or LURING them into it with bling-dangling and promises of empowerments... kills membership in the cooperator's church (Christianity/socialism). We ALL understand that AmWay (American Way) (New World Order) got "the exclusive" (legal tender) on the TYPE of survival coupons (money) accepted in supply depots (stores) and leverages 18 year olds into the organization via that felony activity. (It puts AmWay-coupon slaving requirements called price tags... on all the survival goods). We ALL understand how sure-to-collapse farmyard pyramids work... from our childhoods. Upper 1/3 are "heads in the clouds" while the kids on the bottom ALWAYS GET HURT from the weight of the world's knees in their backs. And, we ALL see how such systems are illegal, immoral, and just plain sick.
We American Christian socialists are patiently awaiting the natural fall of the pyramid-o-servitude, or the busting of the free marketeers felony... by the USA Dept of Justice. We Christians are VERY CLOSE to issuing a cease and desist order until the servitude and inequality goes away... which means it turns into a commune. Commune is a word we LOVE when used in the word "community"... but its one the caps HATE when used in the word "commune-ism". Go fig. PROGRAMMED!!
Do a Google IMAGE SEARCH for 'pyramid of capitalist' to see a full color picture made way back in 1911, when capitalism was first discovered to be a con/sham instigated by the Free Masons/Illuminati. Folks sure bought into the thing... hook, line, and sinker just the same. The caps didn't even check if a string was attached! Now THAT'S easy fishing, eh?
Time to level the felony pyramid scheme called capitalism. Abolish economies and ownershipism worldwide, and hurry. Economies just cause rat-racing, and rat-racing causes felony pyramiding. BUST IT, America! Look to the USA military supply/survival system... (and the USA public library system) for socialism and morals done right. Equal, owner-less, money-less, bill-less, timecard-less, and concerned with growth of value-criteria OTHER THAN money-value. Quit doing monetary discrimination immediately, and make it illegal. There are MANY measurement criteria of "value"... not just dollars. Try morals, efficiency, discrimination-levels, repairability, etc etc. Economies are cancerous tumors, and to cheer for their growth... is just insane. Profiting causes inflation, so if caps LIKE inflation, and if they LIKE a terrible time in afterlife when they meet the planet's ORIGINAL OWNER before caps tried to squat it all with ownershipism, then keep it up with the felony pyramiding. I dare you. While us Christians are finally bulldozing that pyramid scheme back to level, lets make servitude and "join or starve" (get a job or die) illegal in the USA, and lets level the architecture seen in USA courtrooms, too. Right now, USA courtrooms are church simulators or "fear chambers", by special design. Sick.
Isn't that back-of-the-dollar pyramid... a Columbian freemason symbol? And WHERE is the USA gov located? District of Columbia? (Not even part of the USA!) How much more blatant can ya get? The "Fed" runs a pyramid scheme called the free marketeers. If you're using the "federal reserve note" certificates, or using no-other-living-thing-on-the-planet entitles of ownership, you're bought into a servitude/slavery con/sham... called capitalism. Pyramiding 101.
Larry "Wingnut" Wendlandt
MaStars - Mothers Against Stuff That Ain't Right
(anti-capitalism-ists)
Bessemer MI USA
Ray| 12.15.10 @ 12:12PM
Larry, you left out the most important words that's printed, "stamped,' on our currency: In God We Trust (All Others Pay Cash!)
Alan Brooks| 12.15.10 @ 1:54PM
Larry has been drinking too much fluoridated water mixed with grain alcohol.
Occam's Tool| 12.15.10 @ 6:18PM
Dear Alan:
Apparently Larry has not been drinking pure grain alcohol---thus, he has messed with his precious bodily fluids.
noah| 12.28.10 @ 9:09PM
I think the last like is the most telling: "Bessemer MI USA". If you don't like the US, you can leave. You are free to go to France of somewhere else socialist. That is what is so great about capitalism. If you don't want to go, leave the rest of us alone because you are choosing to 'inflict' capitalism upon yourself. Also, there is a a difference between equality of condition and opportunity. Capitalism provides equality of opportunity; everyone has the same opportunities. Communism provides equality of condition; everyone is the same. Socialism is a weird mix of the two. Look how well it is going though, France had massive riots over changing the retirement age by something around 3 years. On the other hand, the US has the largest economy in the world and is the largest current superpower. But I digress, the point is capitalism may not be perfect but its the best we got.
Lois| 12.15.10 @ 9:39AM
Wingnut, you have chosen the most appropriate name for yourself I have seen.... But catch a clue, if you ever get true socialism you can kiss your religion good bye. Just go back into the basement and fire up another one.
Ken (Old Texican)| 12.15.10 @ 9:51AM
Wingnut,
Thank you!
Other than Booger's masterpieces, that was the best thorough-going satire I have read here at TAS.
I began laughing during the first sentence, and I am still wiping the tears of laughter out of my eyes.
Again, thank you.
WTF| 12.15.10 @ 8:34PM
South Korea is a toilet. Pyongyang is one of the world's most beautiful cities.
Wingnut| 12.16.10 @ 8:29AM
Ahhh, this is a personal bashing site. I thought someone was talking about economies, capitalism, and social orders. Nevermind. Lynch away.
Richard Posner | 12.16.10 @ 11:56AM
Peace? Are you completely delusional or just terminally stupid?
Capitalism rakes in more profit from war and death than anything else on its menu of scams, extortion, oppression and exploitation.
Brian| 12.16.10 @ 4:17PM
Democracy is government created by and for the benefit of the people, not corporations. Capitalism without effective controls puts wealth - and therefore power - into the hands of an elite few, who now control government through lobbying, media and influence peddling. With the American Government now fully controlled by the corporations, Democracy has been killed. Dead. Gone.
Capitalism is like fire: if carefully controlled it can be a powerful tool for the benefit of mankind; left uncontrolled it destroys everything in its path.
a| 12.16.10 @ 5:42PM
YT Yung Your comments are total wrong, looks that u never read any history book.
my recommendation to you is to read more before u writing anything.
all your information of the world probably u get it from CNN, ABC news, wake up baby.
capitalist system is the responsible of all the Wars that occurred since the humanity begins.
foo| 12.17.10 @ 9:16AM
Didn't we do something in Iraq a few years back?
RetUSA1/75| 12.18.10 @ 6:55AM
J.T.; I find your comments thought provoking, and you have a point, however, in my short span of life I do not remember Korea or Vietnam, Haiti, Somalia, Bosnia or Grenada, Panama, SA, etc, etc, invading America due to ecomomics. Or vice-versa which is very much true with just the invading aspect. Much of US democratic economic history regarding these countries in my lifetime is not entirely conducive with your column. If I am off point, please let me know. No kidding.
Robert| 12.18.10 @ 1:47PM
I'm sorry, but this article is an example of collectivist junk thinking. The proper economic principles are being invoked but they are being grossly misapplied. When Super-Dynamics Inc. can sell the government politicians tanks bought wit...h dollars taxed from other citizens they will gleefully watch and applaud when the government politicians waste those resources getting those tanks blown up in senseless conflicts. The key point is this: There is NO "WE"; there are only individuals and individuals acting together to advance common goals. "The nation" as a nation, does not "invest"; it is pressured to act in certain ways that advance the interests of one pressure group at the expense of other pressure groups who are less effective at the political game. "Democracies" can and DO engage in senseless warfare. The question is not one of which economic system a country has but how much unaccountable power it has over the lives and property of the people. Small, "liberal" (libertarian) governments with less power tend to have capitalist economies and stay out of wars since it is harder for one group to politically exploit other groups through processes like war-making. Large governments with lots of power over the lives and property of the people are, by definition, less capitalistic and however "democratic" those governments may be, get involved in all sorts of foreign intrigues, among them, war-making, at the behest of pressure groups who intend to use the "war-efforts" to profit themselves at the expense of everyone else. "Wingnut's" problem is precisely the one the article's author has: attributing to the economic system the problems created or absent due to the political system. It's the power, not the economics. The collectivist-thinkers put the cart before the horse.
johannaz| 3.18.11 @ 3:17AM
Wingnut makes glancing blows on the primacy of sound money and the effects present because of its total usurpation from accountable representatives.
The U.S., being the most robust example of capitalism, is often viewed as a pure instance of unfettered markets even while watching the federal monster and innumerable parasites demand ever more sacrifice. Every problem mentioned above is not the result of capitalism--it is the diminution of it and antithetical to it. Fortunately, pure capitalism isn't necessary.
But the idea that corruption, cronyism, or the rest of man's grasping have condemned capitalism below any other system yet tried defies evidence or ignores the cleverness of people.