As an economic system capitalism has a formal definition. Looked at as a game individuals play—some of them
"Seeking Wealth and Power"—one unfamiliar with it might ask
certain questions. How is
this game is played? What
knowledge is needed to play? Many
succeed modestly by working hard and making sound financial
decisions—which requires financial literacy.
The National Endowment for
Financial Education describes this as "the ability to read,
analyze, manage, and communicate about the personal financial conditions
that affect material well-being"—"including the ability to
discern financial choices, discuss money and financial issues without
(or despite) discomfort, plan for the future, and respond competently to
life events that affect everyday financial decisions, including events
in the general economy."
What about those who succeed wildly—what strategies do
"the masters of the game" employ?
Besides their own hard work, these people typically "put
their money to work." To
many, capitalism is a game in which "it takes money to make
money." Often the
investment capital used is not even one's own—it's borrowed money.
Typically the key question behind the decision to invest in
something is "Will the expected annual rate of return on the
investment exceed the annual interest rate charged for the money
borrowed to make the investment?" Suppose $ 1 million of financing
is obtained. If a project returns 15 %/yr and the cost of financing is
5%/yr, the net return is 10%/yr, or $100,000/yr. Of course not everyone can get million dollar financing at
low interest rates!
a person who is well-equipped to succeed in "Seeking Wealth and
Power." Let us
describe him. (Sorry
ladies, Forbes magazine lists of rich people typically include
few women!) He 1) is an
economic individualist (theme #19) who thrives on competition; 2) simply
believes with respect to money that "More is Better" (theme
#26B), has no "money hangups," and believes (in the words of
Bob Weinstein, author of Winning the Battle With Your Money Hangups),
"Money is the national yardstick by which ability is
measured...Having a great deal of money means you're respected.";
4) is endowed with "excessive
or reprehensible acquisitiveness"
(a dictionary's definition of greed);
a Machiavellian who feels "the end justifies the means" and
that "nice guys finish last";
6) believes in "the power of positive thinking"; 7) has
read the 1937 classic book Think and Grow Rich, by Napoleon Hill,
and is a living embodiment of quotes from it like "a winner never
quits" and "desire backed by faith knows no such word
Hill's book "conveys the experiences of 500 men of great
wealth who began...with nothing."
He "describes the famous Andrew Carnegie formula of personal
achievement by which he accumulated hundreds of millions of dollars for
himself and made no fewer than a score of millionaires of men to whom he
taught his secret." But not everyone can win: competition im-
plies both winners and losers.
In his 1889 essay "A Gospel of Wealth," Andrew Carnegie
commented on "the price which society pays for the law of
competition." "[While]...the law may be sometimes hard for the
individual, it is best for the race...it insures the survival of the
fittest in every department."
Carnegie was joined by other economic lions of America's Gilded
Age—such as John D. Rockefeller, Chauncey Depew, and James J.
Hill—in using Social Darwinism to justify their wealth.
Still, Carnegie felt there was a limit to how much a rich man
needed for personal use. Upon
reaching that limit, Carnegie felt he should begin "disposing of
surplus wealth...by using it year by year for the general good." While historians would later link the rise of capitalism to
the creation of such surplus—made possible by, as John Calvin put it,
"unceasing activity in the service of God"—and the
Protestant work ethic, there was one sin that Carnegie sought to avoid.
In his words, "The man who dies...rich dies disgraced."
Consider two extraordinarily wealthy men of recent decades:
Ferdinand Marcos, who disregarded Carnegie's advice, and Bill Gates, who
is taking some of it to heart. Marcos was president of the Philippines from 1965-1986.
As head of a kleptocracy, he looted the nation's economy an
estimated $5 — 10 billion while many Filipinos starved.
While Manila's city dump was home to 3,000 families,
Marcos' wife Imelda's personal ward-robe included 4600 pairs of
shoes, and 500 black brassieres!
In contrast, MicroSoft cofounder Bill Gates has a sense of
distributive justice. The
world's richest person as 2009 began
(see Figures #43a and #43b) with net worth
~$40 billion, he also heads the largest charitable foundation. With additional funding provided by multibillionaire Warren
Buffet, as 2009 began the Bill and Melinda Gates Foundation had an
endowment of $35 billion. It
was annually providing $ billions to fund programs aimed at combating
extreme poverty and promoting healthcare in developing countries
While Gates now pursues philanthropic activities fulltime,
aspects of the aggressive business strategy he used in managing
MicroSoft—which brought anti-trust litigation by both American and
European governments—are reminiscent of tactics used by others who
have built great fortunes. The
building of many late 19th and 20th century fortunes involved
questionable or illegal business practices— including insider trading,
collusion, monopoly, union busting, and massive political campaign
contributions to key legislators (often funneled through lobbyists).
While some defend the wealthy, and many more lust to be counted among
them, others are uncomfortable in a plutocratic "Winner Take All
Society." In such
societies, as Molly Ivins
described it, "A few people get ungodly rich, and the rest of us
back to worldview theme #43