Dear Reader,
On this Christmas Eve, I want to acknowledge the “elves of capitalism.” Many of us wouldn’t even be alive today without their diligent toil. They’re still hard at work, though the expansion of government power has made their jobs much harder over the years.
In a state of nature, we would be struggling for survival as most all of humanity did from the beginning of recorded history until the late Middle Ages, when the first lights of capitalism as we know it began to appear on the horizon.
Over the next several hundred years, and especially during the 19th century, life itself was transformed. The state of nature was vanquished, and the world completely re-made in the service of human well-being.
We were born into a world of amazing prosperity that our generation did not create. We have the expectation of living to old age, but this is completely new in the sweep of history, an expectation we can only have had since about 1950. The shift in population reflects that dramatic change, too.
The Elves of Capitalism Created a World of Bounty
There were probably 250 million people alive 2,000 years ago, and it took until 1800 for the 1 billion mark to be reached. One hundred and twenty years later, that was doubled. Three billion people lived on the planet by 1960, and there are eight billion today.
Charting this out, you gain a picture of a world of stagnation and stasis from the beginning of recorded history until the Industrial Revolution, when life as we know it today was first experienced by humankind. Most of us never did anything of our own merit to cause us to benefit from this amazing world.
We’re surrounded by bounty in this man-made world, a world completely unlike anything that has existed in 99.9% of the rest of the history of the world. And how very few bother to investigate the causes! We take it all for granted.
We use our technology, eat foods from all over the world available for sale a few blocks from our home, hop on planes that sweep us through the air to any destination on the planet, instantly communicate with anyone anywhere, and yet we’re remarkably indifferent and incurious about what forces operate within this world to have turned the cruel state of nature into an earthly paradise.
Actually, the situation is worse than that. Many are openly hostile to the institutions and ideas that have given rise to our age of plenty. We’ve all seen the protests on television in which mobs of iPhone-carrying young people are raising their fists in anger against commercial society, capitalism and capital accumulation and demand just the type of controls, expropriation and regimentation that are guaranteed to drive us back in time to the restoration of castes, poverty and shortened lives.
They’re plotting to kill the elves of capitalism.
The Six Elves of Capitalism
There are actually six elves of capitalism, and they go by the following names…
First, there’s private property, without which there can be no control of the world around us. It wouldn’t be necessary if there were a superabundance of all things, but the reality of scarcity means that exclusive ownership is the first condition that permits us to improve the world. Collective ownership is a meaningless phrase as it pertains to scarce resources.
Second, there’s exchange. So long as it is voluntary, all exchange takes place with the expectation of mutual benefit. Exchange is a step beyond gift giving because the lives of both parties are made better off by the acquisition of something new.
Exchange is what makes possible the formation of exchange ratios and, in a money economy, the development of the balance sheet for calculation profit and loss. This is the foundation of economic rationality.
Third, there’s the division of labor that permits us all to benefit from cooperating with one another toward mutual enrichment. This is about more than dividing up productive tasks. It is about integrating everyone into the great project of building civilization.
Even the master of all talents and skills can benefit by cooperating with the least skilled among us. The discovery of this reality is the beginning of true enlightenment. It means the replacement of war with trade and the replacement of exploitation with cooperation.
Capitalism’s Other Three Elves
Fourth, there’s risk-taking entrepreneurship that bravely pulls back the veil of uncertainty that hides the future from us and takes a step into the future to bring us every manner of material progress.
Uncertainty over the future is a reality that binds all of humanity; entrepreneurs are those who do not fear this condition, but rather see this as an opportunity for improving the lives of others at a profit.
Fifth, there’s capital accumulation, the amassing of goods that are produced not for consumption, but for the production of other goods. Capital is what makes possible what F.A. Hayek calls the “extended order,” that intertemporal machinery that stabilizes the events of life over time. Capital is what makes planning possible. It makes the hiring of large workforces possible. It allows investors to plan for and build a bright future.
The sixth elf isn’t an institution, but a state of mind. It’s the desire for a better life and the belief that it can happen if we take the right steps. It’s the belief in the possibility of progress. If we lose this, we lose everything.
Even if all the other conditions are in place, without the intellectual and spiritual commitment to climb higher and higher out of the state of nature, we’ll slip further and further into the abyss. This state of mind is the essence of what came to define the Western mind, and which has spread to the entire world.
Together, these elves constitute a team with a name, and that name is capitalism. If you don’t like that name, call it something else: the free market, free enterprise, the free society, liberalism or just make up your own. What matters isn’t the team name but the constituent parts that make up that team.
The elves of capitalism made our world beautiful. We must never lose consciousness of what they have done for us.
Regards,
Jeffrey Tucker
for Freedom Financial News
