How Capitalists Serve the Public Interest
The view of the day is that the “greedy rich” are sitting on stacks of cash hidden away in Swiss bank accounts or the Cayman Islands that are doing nothing but fueling their acquisitive vanity while actively preventing the emancipation of their fellow man. With a little redistribution, those stacks of cash could eradicate poverty from the face of the earth and fund social programs that would help the many. After all, who really needs a billion dollars, let alone several billion?
The greatest challenge defenders of the market economy face today may be to convince the general public that private wealth actually fulfills a social function that is beneficial to all, and that it is an indispensable one. Redistributing wealth that is earned legitimately through the voluntary exchange of goods and services will actually prove harmful to everybody, and actively hinder the abolition of poverty.
First, we must accept that the majority of people feel a profound emotional sense of disapprobation at the very existence of the extremely rich. It seems unconscionable to them that one person might heat his private swimming pool all through the winter while others die of starvation. But is this really all that the billions of the “greedy rich” are doing? Buying yachts and funding champagne-fueled caviar parties at ritzy hotels?
Most people have the dim sense, of course, that when someone becomes very rich they “invest it,” whatever that means, but they do not have a clear understanding of what the consequences of those investments are. They maybe think, as Marx did, that “capital begets profit.” That all those digital dollars are doing is amassing interest, which is extracted from the economy, rather than paid in exchange for providing value to it.
In his book Socialism (1922), Ludwig von Mises made a startling observation starting with the fact that, in common usage, the term ownership typically applies to something that we enjoy exclusive control over for our own use—the private ownership of a toothbrush, say, or the exclusive use of the house we live in. Very few people have a problem with this form of ownership. Even the classic anarchists, starting with Proudhon, who declared that “property is theft,” acknowledged the right to property for personal use. The interesting point that Mises made is that the accumulated wealth of the capitalist is alm
Article from Mises Wire