The standard argument people make in favor of social programs or communism is that there is no reason why we have any poverty when we are the richest country in the world. On the surface this makes sense. Why can we not just distribute all our resources evenly? Some capitalists wrongly make the argument that without profit that there would be no incentive to work. Although this may be true the reason for profit is not about incentive at all.
I believe that there is a fundamental misconception about profit. The point of profit is to be a gauge as to how well the supply chain distributes resources. The point of a supply chain is to provide the most amount of resources to the end consumer at the lowest cost. I make sure to use cost rather than price because even without a monetary system there are still costs to any supply chain. The costs are what resources go into the supply chain in order to produce the end result.
If more resources go into producing a product than are extracted from the process there is a negative result that lowers standard of living if this becomes wide spread it is unsustainable. Costs don’t just include resources but everything that is involved in the process. Even the environmental impact is part of the cost. However, there is no direct way to gauge these costs without profit.
When you look at every apparent ill of capitalism you will find socialism beneath the surface. I have always contended that corporations are essentially governments with an opt out clause. Those usually most affected by corporate ills either cannot afford to invest or are turned away from those investments. When it comes time to vote, the bottom line is all that matters. I do understand that a corporation is a necessary evil, but make no mistake; the corporate structure is an exercise in collectivism. The same ills that plague government plague corporations.
By now you might be wondering what I am getting at. It is simple, the free market system is the only way humans have conceived to raise the lot of the average man for the long term. Not free market corporatism, but capitalism. That is individuals striving for their own betterment with their own resources. As Milton Freedman once said, “people are more responsible spending their own money than other people’s money”. This holds true even with corporations. This is why I believe that corporations should be regulated. This is why I believe such a belief is not inconsistent with free market capitalism. Fighting the entire capital system in favor of socialism is like trying to replace a part in a car without knowing which part is not working. It is collectivism and the transfer of economic freedom to others, whether governments or board of directors, that is the problem. Replacing one form of collectivism with another is not the answer.