The Fallacy of “Capitalism Is Unfair”

‘Oil prices are rising. Health care is too expensive. It’s so unfair! I’m so angry! Obama had better do something about this—and now!’

First of all, we have to get straight what a ‘price’ actually is. There is no such thing as a ‘fair’ price. A price is something that happens primarily as a result of the relationship between supply and demand. In other words, the more demand goes up for something while the supply of the product/service stays the same, the higher the cost will be.

A classic example is the cost of gas. Another one? Medical care. In both of these areas, there is rising demand without rising supply. Of course, there are many other factors at work too, including politics and government; but even with these complicating factors, supply and demand is at the root of what sets the prices.

The environmentalist movement has restricted not only the production of oil, but the production of just about anything for man’s use on earth that the leaders of the environmentalist movement deem socially incorrect. Most Americans, at least implicitly—under the yoke of guilt or humility—support this movement. As a result, our elected leaders have allowed us to become much more dependent on foreign oil than would otherwise be the case. Foreign oil comes primarily from countries that are run by dictators. The best our government can do is appease those dictators to keep the oil flowing.

If you think about it, we’re not only dependent on oil from foreign lands. We’re dependent on dictatorships retaining the hold they currently—and unjustly—have over their people. If the dictatorships in these countries fall apart, it could certainly upset the apple cart and send the price of fuel skyrocketing even more than it already has.

That’s why, for decades, our government has tended to use diplomacy to keep things the way they are, rather than shake things up in a way that would be better for both ourselves and others.

Yes, it’s a mess. But don’t blame it on capitalism. Capitalism doesn’t stand a chance in this environment. It’s amazing and remarkable that we have any capitalism at all. Free countries negotiating with nations run by dictators and thugs? This isn’t capitalism. Free countries essentially outlawing the production of more fuel because of insipid environmentalist demands and restrictions? This isn’t capitalism, either. Capitalism depends on the preservation of private property above all.

Neither dictatorship nor environmentalism are champions of profit, consumer spending or private property. In a free market order, environmentalists and naturalists would be free to take the millions they receive in donations and buy up all the land they wanted. They could keep this land under the control of their benefactors for generations—indeed, forever—with the full support and protection of the government of a free society. At the same time, oil companies would be free to buy up any land they deemed profitable for the production of oil and other fuels that might be discovered along the way. The very same government that protected the absolute property rights of the naturalists—who want to use their land to enjoy birds and trees—will also protect the absolute right of the oil company to drill and otherwise dispose of its land as it sees fit. That’s how it would work in a free society which respects the existence of individual property rights and allows capitalism to flourish.

I know that this approach is too ‘extreme’ for most people. Both Democrat Barack Obama and Republican Mitt Romney, in fact, find this approach anathema, since both are (in varying degrees) self-proclaimed environmentalists, and both have roundly condemned capitalism in their careers.

Yet each of these candidates—like every one of us—is counting on capitalism to flourish in order to be able to continue to enjoy life as we know it—or indeed, to even survive at all. Imagine all the money that goes into preserving and protecting a wildlife refuge. Whether that money comes from tax dollars or individuals who give to groups such as The Sierra Club, the money has to come from somewhere. The money exists because the people who give their $5, $100 or million dollars all survive and even thrive in an economy created by the hated virtues of capitalism. You can’t ride your bike—and you certainly can’t drive your car—all the way to the Grand Canyon or your local state park unless capitalism created and built and distributed the bike and the car—and created, manufactured and distributed all the materials needed to maintain the park.

Anyone who condemns, turns his nose up at, or takes for granted the virtues and the necessities of capitalism is making a horrible mistake’unless he’s outright suicidal.

Under capitalism—real capitalism or even constrained capitalism, like we have—cost is an inherent part of life. Cost is a form of communication between buyers and sellers. There’s no such thing as a ‘fair’ or ‘unfair’ price because a price is a reflection of the way things are. To say it’s unfair for the cost of something to go up as more and more people compete for the same product is like saying the weather isn’t fair, or genetics isn’t fair. Such attitudes stem from a childlike view of reality in which some outside, parental force is distributing everything in a certain way and has choices about how things will be distributed.

If prices keep rising, the only solution is to get more of the product/service, or to find an alternative product/service that accomplishes the same goal. Whining about fairness won’t change a thing.