Moral Foundations of Capitalism – Margaret Thatcher’s explanation

Capitalism is based on morality.

It is not based on self-centered greed. Quite the opposite. It is based on serving others.

Capitalism rewards people who serve others and meet their needs. Only after meeting someone else’s needs does the provider get a reward.

In 1995, Margaret Thatcher, Former Prime Minister of Great Britain expounded on The Moral Foundations of Society.

A few of many topics she covered in that speech were the moral foundation of democracy, law, and the founding of the U.S.

Let’s see what she said about Capitalism.  Following quotes are reprinted by permission from Imprimis, a publication of Hillsdale College:

The Moral Foundations of Capitalism

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Capitalism is based on morality

It seems as I try to explain why freedom is moral, I find the issues and explanations go deeper than I realized. Don’t quite know when I came to the conclusion that freedom is the moral option – it seems I’ve always believed that.

In The Moral Case for Capitalism: More than Utility, Jacqueline Otto explains that capitalism and morality go hand-in-hand:

Capitalism is designed to marry a man’s moral and material growth, so that both can be fully mature. (more…)

Profits are moral

“Profits earned honestly in the market are moral. They arise from morality and they reinforce morality.”

Providing goods or services that other people value and are willing to pay for is moral. Check out this video for a deeper explanation.

The Morality of Profit:

 

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Capitalism creates value for customers, vendors, and employees

Capitalism involves voluntary exchanges.

Vendors don’t have to supply a company.

Employees don’t have to work for a particular store.

Customers don’t have to shop there.

Each of those people do so because it provides value to them. The business in turn creates value for everybody it deals with, not just investors.

From the book Morality of Capitalism, available free from Students for Liberty here , here is one of many great comments from John Mackey, co-founder of Whole Foods:

Putting it generally, successful businesses create value. (more…)

Want to improve the lives of people at the bottom? Then provide economic freedom.

 “My family and I have succeeded by following the path to freedom. But that path is on the verge of vanishing. What we’re starting to see here in America now is a growth in the size and the scope of government that is now starting to look like the governments that we left behind.”

Here is how to lift people up the economic ladder:

Advancing economic freedom is the best way to improve human well-being, especially those at the bottom.

That’s the path to moving out of poverty and economic success. Check out this video from LIBRE Initiative:

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Under what economic model did the pilgrims almost starve? What different economic model allowed them to thrive?

Here’s the arrangement the Pilgrims used when they first landed:

“Although they planted household gardens almost from the start, they collectivized initial field and livestock operations. The settlers had some agricultural successes, but they were unable to grow corn in their common field. Within six months of reaching Plymouth, almost one-half of the population had perished from disease.

That’s a quote from Professor Robert Ellickson in Prof. Don Boudreaux’s article The Pilgrims’ economic progress.

A collectivized farming system didn’t work too well.  Starvation was the result.

So, they changed their plans: (more…)

How to guarantee shortages – make the price signal illegal

New Jersey has apparently made supply and demand illegal. The power of the state will hammer anyone who charges more than the state feels is reasonable by their standards. See Price gouging complaints in New Jersey as merely one report on the topic.

Making it illegal to sell stuff at the market price guarantees the shortages will get worse. Why?

People will panic-buy things they don’t need, retailers may not be able to get replacement stock, and some retailers may have to close their doors when they run out of stuff. 

As a natural and logical result, other people who really need something will find only bare shelves.

But it sure feels good to rant against ‘price gouging’.  Makes for great sound bites on TV.

On the other hand, if you let prices rise, the price signal will allocate the scarce goods to people who really need them. Why?

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