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Tuesday, February 1, 2005
Controlling markets

It is a constant wonder to me that clever people out there argue the benefits of capitalism. Yes, they believe in free markets, and spurn the namby-pamby week-kneed socialists who want a safety net for every possible failure. They see capitalism as the answer to create a vibrant economy, for reward of the successful, and penalties for the weak and feeble. Capitalism gets the best out of the economy. They say it is ultimately good for business, and wholesome for an individual’s well-being.
But, hold on a minute, aren’t they confusing a few issues here? In espousing capitalism they talk about free markets. Yet, these concepts are not the same.
Indeed, capitalism and socialism have far more in common than capitalism and free markets. The reason is that they are both about control.
Socialism is about controlling people through political power; capitalism is about controlling people through financial power. On the other hand, free markets are about free choice, the freedom to set up a business, the freedom to do so with borrowed funds, amongst other things, and the freedom to make decisions in an economy unencumbered by lies and deceit.
Capitalism prevents this by controlling access to money. The Board has a lot more to do with social engineering than running a corporate enterprise. People are controlled by the promise of promotion and the promise of a pay rise. They must remain loyal to the corporate culture, and conspire to ensure consumers get the worst possible deal for the highest possible price, spending millions in the process of advertising claims of honesty and integrity.
Those successful at the game become ‘big business’, with boasts about dividends for shareholders (most of whom are equally big corporates). The best in the field get generous share option schemes and huge pensions, paid for in the currency of choice. It should not be surprising that they are particularly successful when dealing with socialist countries.
Free market economies are generally the best way to go, though it is hard to find a true, pure example in the world. Free markets also need capital to work. The problem is no one has yet come up with a way to raise capital without becoming a capitalist. By Nigel Benetton

Copyright © Insurance Times and Investments® Vol:18.1 1st February, 2005
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