Why Capitalism Works | 5 Minute Video

Cultural depictions of capitalism are almost all negative. There's the Monopoly guy with the top hat and cigar. There's Gordon Gekko saying, "Greed is good." And, most recently, there's the hedonism of the "Wolf of Wall Street". The message is clear: capitalism is selfish. Socialism, or something like it, is selfless. In fact, the opposite is true. Renowned social critic George Gilder offers this startling insight: capitalism, at its core, is first an expression of altruism; that is, of giving. An entrepreneur can only succeed by satisfying a customer's need. This is why capitalism, and only capitalism, can create the prosperity that all societies crave and why all other economic prescriptions are doomed to failure.

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Script:

Now no one disputes that all economic systems reflect the intrinsic self-concern of human beings. But only capitalism creates a group of people, known as entrepreneurs, who have no choice but to concern themselves with the needs and desires of others. These others are their customers.

Few economists, however, actually study the behavior of these entrepreneurs, the creative leaders of capitalist businesses. If they did, they would discover that entrepreneurs by the very nature of what they do must shun greed.

First and foremost, responding to others is the very opposite of greed.

Second, greed, in the economic sphere, is normally expressed as the immediate consumption of goods and services. I grab what I can without regard for others. But entrepreneurs must begin by saving, which is defined as forgoing consumption to achieve long-term goals. Often it takes months, sometimes many years to bring a new product or service to market.

Furthermore, entrepreneurs must collaborate with others, building teams to achieve their aims. In designing their goods and services, they must -- once again -- focus not on their own needs but on the needs of others. This, too, is the opposite of greed.

So, what entrepreneurs do when they seek profit is far more than self-interest. Rather, profit is a measure of how well a company has served others. Under capitalism, a business prospers only if customers voluntarily trade for its output.

[docholliday]

How is it "greed" if you want to keep what you earned, but not "greed" to want what someone else earned?

[BunkerSquirrel]

This video aged like Francium-223. Why are my clothes wearing out faster? Why do I need a new phone every couple years? Why do I need a monthly subscription to use the heated seats or batteries already installed in my car? Why can’t I install whatever software I want on a product I supposedly already own?
Corporate America will do everything in their power to wring as much capital from you as possible. This idea of corporate altruism goes against the principle and legal demands of capitalism. A public business, the greatest structure for success in capitalism, must put profits above all else. They are legally required to generate wealth for shareholders. And to that end, they will do anything to generate demand for their goods and placate dissent, including funding YouTube channels that advertise the “philanthropic” tenants of capitalism while writing off the funds they “donate” to that end.

[KoLecnac]

While I am a big fan of Capitalism, I can't agree with his use of the word "altruism".  Altruism is defined by selfless concern for others.  The self-interested profit motive component of Capitalism precludes the economic system from truly meeting that definition.

[davidcurtiswatts]

Okay, but what about JP Morgan? The Rothschild Family? The destruction of Nikola Tesla? The Military Industrial complex? Central Banks? Oil Companies? The FDA and Monsanto? I don't disagree with what has been said, but one has to acknowledge that this is a one dimensional sugar coated version of a far more complex issue.

[jasonavramenko]

Capitalism is a genuinely strong economic system. However, the key word in its definition is "voluntarily." In order for capitalism to actually be the 'best' system, consumers need to know what they are purchasing; meaning they can't be lied to, deceived, manipulated, or forced in any way. Unfortunately, price-fixing and deceitful advertising and market manipulation is an acceptable practice....which means consumers are not free to choose.

[RangerTroll]

"Say what you want about Americans, but we understand Capitalism. You buy yourself a product, you get what you paid for." - Max Payne

[nicoleawwad]

Capitalism's main goal is profit. And since labor is the highest cost of production, why would capitalism benefit anyone but those who own businesses? Since most of the human workforce is working in service or labor... how does this benefit them? Who can be an entreprenuer? Most people can't even pay for fare to get to work... so how exactly could they afford to start a flower shop? Individual stories do not amount to the history of the masses of people.

[tonyreno]

The people who have never started a business don't realize how totally true this video is. Talking about what it is like to run a business if you've never run wan is like talking about what it's like to have a baby if you've never had one. And yet people would never do it with having babies, but do it all the time with running businesses. "Oh the business-man this .. and the businessman that ..."

Business is just like he said. You work for months to get read to be able to sell something, you open the door of business and hope that you've guessed right.

It is amazing how many former outspoken liberals, people like Sonny Bono and George McGovern will try to start a business and suddenly realize they've had it all wrong all along.

Apple can't bring policemen to your door and force you to buy iPhones. Google can't force you to put up videos, or to click on their ads, or to advertise with them if you don't want to. The only way these guys have of going into your pocket is to offer you something that you think is worth it. They have no other hook.

The only parts of the economy that are struggling today are the parts where the government jumps in to help. There's no software shortage, no smart phone shortage, no computer shortage, no automobile shortage. Where are the shortages? In exactly those places where big brother government says, "We can't trust capitalism, so we are going to move in and decide the winners." So you have the FDA controlling introduction of pharmaceuticals, and we get maybe 2 or 3 new drugs a year, if we're lucky. You have the IRS setting up special exemptions for employer supplied health insurance, and rates are going through the roof. You have government backed specially regulated student loans and college costs are skyrocketing. To what end? A better education? A healthier body?

Capitalism works. The myth that people get sold on is the idea that capitalist wealth is unfair. So it's unfair that Bill Gates, the guy who's software made computers household items should be so wealthy, never mind the fact that billions of people are using his product. It's unfair that Google's founders Brin and Page should be so wealthy, never mind that they've opened up knowledge to the world, gave a highly targeted advertising platform to advertisers and a hosting platform for would-be movie and TV producers. It's unfair for Mark Zuckerberg to be wealthy because what's he done but given free hosting to a billion people. It's unfair that the Walton's should be wealthy because what have they done but put 10, 000 supermarkets around the world in rural areas that used to have to pay double with no selection. Yep, that's the theory. It's unfair that Apple should make all that money, after all what have they done but given you a video-phone you can carry around in your pocket.

So who does deserve your money? Not those greedy people bringing you products, services, 24 hours a day, seven days a week, no, not them at all. Clearly the right people to give our money to are the Bernie Sanders and the Hilary Clintons of the world. Their the ones who should be making those billions because I just know if they take those profits away from those mean old capitalists that I'll be better off. Those capitalists don't deserve any money for giving us stuff. Only the good socialists deserve money for . . . for . . . for . . . for taking money away from those people we buy stuff from. That's it. Close those businesses down. They're evil I tell you, evil. Let's all just pass the money back and forth to each other. Yep, that's the solution.

The video is obvious to anyone who has run a business, one they started from scratch themselves. If you don't understand the video, or think the guys making it up, just go start a business. Mow lawns or something. Sell flowers, t-shirts. Doesn't matter. Start a business and you'll see that this video is right on the money.

[yarpen]

"Make me rich! Everything 25% more!"

Wow, I had no idea EA opened a flower shop.

[blueelectricsmoke]

For the record, Gilder *is not* an economist. He's a journalist who failed out of Harvard freshman year and landed a career thanks to the Rockefeller family. He's also a senior fellow at the creationist Discovery Institute. 

[Cinqmil]

No infinite growth on a finite planet.

[eeklarthing]

We're not concerned about entrepreneurs, we're concerned about corporations and big institutes.

[pukalo]

"The problem with socialism is that eventually you run out of other people's money."

[ThZuao]

Then, you create a website where people can store their memories and show them to their friends. The idea attracts a venture investor, who gives money to finance infrastructure, allowing the site to grow and remain free to users. Other investors pour in money, the site becomes incredibly popular. An internet giant takes notice and offer billions for your site, while hiring you and all of your current staff with a fat salary. You accept. Your site grows massivelly. Memories become education, art, news, entertainment... Reaching and connecting fans and artists, educators and students, billions of people that will never meet in real life, all sharing, all learning and enjoying togheter.

All that, then someone comes and writes on it "BUTT CAPTALESM DOSNT WORCK!!!"

[Evija]

A very interesting though. But I think htere's a small problem... They not only serve others to their needs, but they also create some of these "needs" with marketing. They manipulate people into wanting  things they don't actually need and that is not for the good of people. Maybe that's just consumerism, but are these two really seperable...

[JimboJoeAH]

this almost felt like a 1950's propaganda film.

[gary_beniford]

so much hate for capitalism here what is so unfair about having to work to get resources? naturally those who figure out how to get resources the fastest will become rich and be able to buy more than they need but they have that option because they worked out a system to make the resources.

[petersz]

Most great inventions were created by government and the public sector. The Internet:- a government program started in the 1960s, computers:- all the initial technology developed in public universities.

[EpicLuigi]

I love the comments section and its hilariously black-and-white views. You're all like children.

"Capitalism's bad!"

"No! Socialism's bad!"

"No! Capitalism's bad!"

"No! Socialism's bad!"

[cvsWebDesigns]

Capitalism in an ideal environment is great, and it worked well in the states initially. What is described here is a true free market in action, not a quasi-fascist state we have today. It's quasi-fascist because large corporations create regulations that make entry into a market difficult if not impossible. Our system works for emerging markets, but once they become "too big to fail" we lose the free market and the government will protect them at the tax payers expense in return for favors, be it donations or deals.

Our shop failed after 15 years, mostly because of burn out of never quite making enough to prosper. I was complaining to a supplier that was allowing their products to be sold online at below what distributors were selling it. His response was classic ... "it takes money to make money, that's a law of business." Not sure if that was really the case, but we did just fine after dropping that vendors products from our offerings. Point was money can distort the market so much as they will lose much to run over "the little guy" .. hence why emerging markets are so important for the entrepreneur.

Now this 3:43 video is great and gives a rosy picture, without real world corruption that has crept in today. Just look at the banks today, a "good" bank just doesn't screw you as bad as the "bad" banks. Adam Smith's Invisible Hand over shadows his morals required for a free market to work. Morals include paying a fair wage and not closing factories to open in countries that allow slave labor and destroy the environment. The "Invisible Hand" doesn't care that their stuff breaks and is made by slaves ... just that it's cheap.

Don't get me wrong, but capitalism is the best system as long as it's run with morals. Seems like any system works well with morals ... Dennis did a video years ago suggesting Genesis 1:1 is the most important verse in the Bible ... if God IS and people obey God, almost any system will work.