How early Capitalists saved Europe

Interesting history lesson by Ludwig Von Mises that shows early capitalism in Europe saved people from starving to death.

It states that in the early 18th century, prior to the industrial age, there were only about 6 million people in Europe. 1-2 million were outcasts that did not fit into the feudal system (no room at the inn?), and so wandered in an abject state of poverty.  The feudal system was limited in what it could do, and was focused on benefitting on a small group at the top. Then, some people began small cottage industries.  Instead of manufacturing luxury items for the rich, they made simple things for the common person.  Now, where there once were 2 million people, 1/3 of the population of England starving to death, there are 53 million people with a safety net.  This means that many children who would have died of starvation, survived and thrived because of capitalism.

Today, we see the same thing happening. India and China had extreme poverty and starvation, with millions dying over the years.  The Soviet Union had 30-40 million people starve to death under Stalin’s restrictions over the economy. With capitalism, they now have a middle class, and the poor are better off than they were even 10 years ago.

American poor mostly have a place to live, food, televisions, heat/air, cars and an IPhone.  Many of our poor are better off than the rich people of 17th century Europe.  As noted by Mises, most business today is focused on providing basic services for the average person.  I remember spending $10,000 to buy the Air Force an early 1x speed CD-ROM burner. Thanks to competition and supply/demand, faster CD/DVD-burners come in most computers at a fraction of the cost today.  People through out the world now have phone and computer service because of cell phones and tablets. Average Americans can buy raspberries and cantaloupes in the winter because of trade with Mexico.

Capitalism is not perfect.  There are excesses and abuses of the system.  But the system, when left to work, tends to fix its own problems.  When government steps in, it tends to twist capitalism into something else, creating big pockets of stagnation that are not self-correcting.

For example, there are major areas of our school systems that are broken. Yet, because of government interference and monopolies (including teachers’ unions), they are as bad as ever.  Free capitalistic forces in education would shut down bad schools and replace them with better schools.  Instead, we get one government program after another, none of which make any real difference, except growing political constituencies.

Freedom allows some people to do bad things.  Guess what? They are doing bad things even with rules and regulations!  The difference is how much time, energy, and money is spent on punishing Americans, rather than using those resources to grow opportunities.

How would it be if government intrusions (intentional or not), caused our children to go hungry or be ignorant, while leaving a rich cadre to rule over them as did the kings and lords of feudal days?  Freedom saved Europe centuries ago, is saving many countries today, and is still our best hope for economic progression.

5 thoughts on “How early Capitalists saved Europe

  1. Mises is the most underrated thinker of the 20th century. His production — under very difficult circumstances (he was a Jew who had to flee Austria in the 1930s, and then he could not get a good position at a university in the U.S.) is truly amazing.

    Considering the point of the article, let’s take a look at “Les Mis,” which describes quite well the situation in France in the early 19th century, right as the industrial revolution is beginning. Jean Valjean is the hero, right? What does he do after leaving prison? He starts a *factory.* Victor Hugo recognized that the early capitalists were not the villains we often see them as today. They were providing jobs to people *that did not exist before and providing products to middle class people rather than just the rich.* They were heroes.

    Now, obviously the tragedy of Les Mis is that factory workers with a child and no family had no safety net and so if a horrible lecherous supervisor decides to fire such a person, they truly did suffer. Such was the life of Europeans throughout history. (This is one of the reasons so many decided to emigrate to the U.S.). But people often miss the point that Jean Valjean provided jobs to hundreds of people, and this is a heroic thing to do. (And by the way, Jean Valjean became very rich and spent much of his money helping the people of the town).

    On another post, we can discuss how voluntarism organized during the industrial revolution to help the people without a safety net. Hint: churches and mutual aid societies. By the early 20th century there were many non-government institutions to help the Fantines of the world.

  2. Thanks, Geoff.

    BTW, an article that just came out states that the USA is no longer in the top ten economically free nations list anymore. It seems GWBush and Obama have both turned us into a declining superpower with declining freedoms. IOW, we’re heading back to the days when a select few are well to do, and the rest will go hungry or without.

    http://online.wsj.com/news/articles/SB10001424052702303848104579308811265028066?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303848104579308811265028066.html

  3. Speaking of Val Jean, I know this briefly is considered by him, but think of the Kantian dilemma he faced in turning himself and losing the factory to rescue the mis-accused.

    Fantines life was ruined because she lost her job (and made some poor decisions) Now because Val Jean prized doing whats right for his own soul (confessing and suffering the legal consequences of a life on the run… and doing good along the way) hundreds of women likely went on to suffer Fantines fate.

    Should he not have condemned himself to hell, by remaining free to provide for Fantine and the daughter while letting the wrongfully accused die(which condemns him to hell but saves others) ? What would Nephi do…

    But I guess in our culture he should have respected the law of the land and turned himself in…

    Moral calculus gets you every time. There are so many weighty matters in that story its a shame how much drivel our society produces now in comparison.

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