For those of us living in capitalistic societies, we don’t always consider that capitalism has products of its own. In my view, just like a factory produces widgets, a garden produces vegetation, and a government produces laws and manufactures power, capitalism has its own products.
Some of the products may be obvious, some not so much. But let’s take look.
[1] Wealth. Wealth is probably the most obvious product of capitalism. By taking raw materials and producing a product which is sold, hopefully for more than the cost of the inputs, wealth is created. This is no different if the product is a factory item or a labor-created item. For example, if a laborer trades time for money, how the laborer uses their income can produce wealth. This is not an automatic process, for if laborer is able to spend less than they earn, they they are able to create some of their own wealth. If the laborer spends as much or more than they earn, their wealth is not created–debt is.
[2] Debt. Here we find that debt is one of the major products of capitalism. Rare indeed is a major corporation with no debt. And if this company has no debt, then I would argue that at one time it did. And then there is debt that individuals get themselves into. This too is a product of capitalism. By attempting to expend more than one has earned, debt is incurred. This debt can be seen as “positive”, as for a mortgage when buying a house, or “negative” as when incurring consumer debt such as from credit card overuse.
In addition, what is debt to one person is an asset to another. When you borrow money, whether from a bank or using a credit card, your incur debt. But to the institution from which you borrow, you are now an asset, because you will generate income and wealth for them. So we can say wealth and debt are two sides of the same coin.
It has been said that there can be no wealth without debt. At a individual level, debt may not be necessary, However, once a large organization is needed to accomplish a large task or engage in some kind of production, debt is a necessity. Without debt, no one person has the resources to fund such endeavors. So while we may revile individual consumer debt, corporate debt is a given.
No government exists without the need for issuing bonds and other instruments of debt. The needs of government are so vast, no immediate taxing ability can cover needs funds. Thus, again, debt become a necessity,
[3] Risk and [4] Envy/Greed. I combine these because they are so closely related. The result of seeing someone else’s possessions often produces a “Oh! I want that” reaction. This is envy in action, sometimes called greed. In order to attempt to fulfill that desire, one must embrace risk. In fact, risk is the creation of the envy/greed impulse. Without the desire for “more”, there would be no need for risk to exist. But all are the products of the desire impulse.
The businessman who presents a business plan to a bank loan officer, and the laborer who overuses their credit card are both operating in some similar ways regarding their desire for “more.” And both are engaging in their own form of risk.
[5] Poverty. The corollary of wealth. Or, the other side of the same coin. While some get wealthy, others are embraced by poverty. Much as been written over centuries about the causes of poverty. But is seems to me that since resources and wealth are unequally distributed in our societies, poverty is as inevitable for some as wealth is for others. It also goes without saying that various aspects of education, self-awareness, and perception are highly influential in both manifesting wealth and poverty.
When we survey these items–wealth, debt, risk, envy/greed, poverty–and see that not only are they the products of capitalism, they are also the mechanisms through which capitalism works. Without these five operands, capitalism could not operate and would not exist. Therefore, we can say they are also the requirements of capitalism.
This short review of the products and requirements of capitalism is intended to provide a place from which to consider one’s role in the products and requirements of the financial system in which we live.
What is your take on this overiew? Let me know here.
The geometric design illustrated is from an anonymous 16th century watercolor manuscript of designs that has no author’s note, editor’s preface, or text commentary. Courtesy Herzog August Bibliothek, Wolfenbüttel, Germany.
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