Why Capitalism Will Always Win!

On the 24th of October 1969, Uganda under Dr. Milton Obote moved to the left in what was commonly known as the Common Mans charter, which drove Uganda to the direction of socialism.Uganda was now going to take control of all state corporations e.g. banks, insurance companies, manufacturing companies,mining companies, transport among other sectors. This system was guided by the principle that “political and economic power must be vested in the majority.” In addition, it also followed that “we must move in accordance with the principles of democracy, a way that brings about human progress; ideas must be generated and citizens educated or not must be able to think for themselves, learn to work together, and to participate in the processes of government themselves.” It was therefore majorly talking about equal distribution of all resources amongst all Ugandans.

From time immemorial, humans have lived on three major principles. First is freewill which involves making personal choices; a man enters a supermarket and they want to put their intuition to play, juxtapose commodities of the same kind, and end up choosing one commodity over the other. Secondly is ownership, in that people are taught that at one point in life, they must be able to live independently from anyone else, have a family, have a home among other things on their own. Thirdly isinnovativeness and creativity i.e. new ways of doing old tasks;The story of creation shows us that God created the world out of nothing. Even when Adam and Eve were sent out of the garden of Eden, they had to figure out a way of living on their own. I’m seated writing on my laptop in the village, connected to Wi-Fi, because of the creativity of those who made this possible. I will expound on these three principles later.

In 1969, Former Ugandan President Apollo Milton Obote launched the Common Man’s Charter.

Capitalism is an economic system that is primarily involved with the generation of profits. Private individuals or entities own and control the factors of production (capital, labor, natural resources and entrepreneurship). These four are interplayed to achieve one common goal, profits.  Capitalism has existed for as long as we have traded in goods and services. In the olden days, profits were used to construct monuments, pyramids and cathedrals. When ownership of the factors of production was privatized, profits were now generated to fit the interests of private entities. However, in his book Wealth of Nations of 1776, Adam smith noted that these private entities were guided by an invisible hand. In other words, their activities were inreturn resulting into unintended economic growth and development through production of goods and services.

Capitalism used a market to trade in its goods and services and a capitalist market is regarded as free because people are free to decide on how to use their wealth and skills unlike other markets. Companies decide on what goods to produce and how much to charge while buyers decide on what and how much to buy.

We can’t talk about capitalism without mentioning private property rights (own something and do what you wish it with it), innovation (finding new ways to do old tasks) division of labor diversity in the production process i.e. some people doing agriculture others mining, others clothing etc., price mechanism (how the forces of supply and demand determine the prices of commodities) and profits (that portion of income that exceeds current revenue). These are the drivers of capitalism and interestingly, they all suit what Adam Smith said in 1776 that individuals naturally seek their own advantage. Which is why I said earlier, self-importance is the true nature of a human being no matter how collectively performing they might want to be. What am I saying? I will talk about the 3 main characters of humans and how capitalism best suits them to the extent that capitalism will always win. So let’s go to the capitalist market and see how these principles play out with the nature of man:

Free Will

This is generally about who gets to make the choices. The price mechanism determines what and how goods and services are chosen by the producers to be put on the market and what buyers chose to buy and at what prices. Man in his very nature prefers to exercise his intuition of comparison before having to buy a commodity or getting a service. Over the years,other alternative systems such as socialism, communism, fascism or whatever you may call it suggest collective production. By doing this, they choose what product to be put on the market for the benefit of the majority. But what of the individual choice. Isn’t it true of humans that they have different tastes and go for something because they have a sense of taste or interest in it?

Imagine you are stranded in traffic jam, and the state has suggested that no use of Boda bodas, strictly cars and you need to be somewhere at a particular time yet you are out of time. Do you have any other alternatives in place? Your answer would be a No. Does a No make you happy? You know the answer better.However, if Boda bodas were available, that would mean you have many alternatives in place. You would choose one basing on what you need at that particular time. Which is why the Move to the Left was a foul in itself as nationalizing a particular industry would mean producing the same goods and whether you want them or not, there were no alternatives. No human wants that! In fact, it’s a simple definition of a machine. Its machines that perform or function on software that was created by their engineer. And the state is no such engineer of man to get to the point of deciding what choices he makes.

Creativity

Steve Jobs a co-founder of the Apple companystated “you can’t just ask customers what they want and then try to give that to them. By the time you get it built, they will want something new.” He was trying to suggest that entrepreneurs must be innovative all the time, trying to find new ways of doing old tasks. Take for example, the innovations made on iPhones!During the ancient period and middle ages, factors of production were under state control and a few class of individuals such as the clergy and noble men. For a long time because of that arrangement, economic production was generally focused on the agricultural industry which revenue obtained therein was used to construct monuments, pyramids and cathedrals. Am not saying constructing such was bad, but it only limited diversity in development.

With the rise of capitalism, profits were now used to expand the factors of production without government control. For example,the invention of electricity started in 1600 with the discovery that rubbing silk would produce static electricity, then the discovery of the incandescent bulb by Thomas Edison in 1879, then the opening of the Niagara Falls hydroelectric power station, to electrifying almost everything in the world e.g. cars, home appliances, air conditioners. Before 1600, for a very long time we used oil lamps with the oil extracted from whales. In the communication sector, it was expensive to communicate with a person in the olden days e.g. through the use of letters, smokingsignals to communicate. Now a single text message to communicate not only to your followers on Facebook and Twitter but the whole world through sharing has now become a way of living.

The life of a human being is run by problem solving. Humans in their nature are tasked to solve problems which evolve each and every hour. A good example is the hunt for food. For over a long time, the only place to find food was in the garden and market place. Because of the many challenges that come along with food, perhaps people don’t want to be involved in farming and yet they need to eat, or because they are busy at work, and can’tfind time to prepare food for their lunch. Whatever your challenge might be, the good news is that you can now order food on your mobile and it is delivered within 20 minutes, fast and affordable. Speaking of food and delivery, the genius about capitalism is found in the tiny things, the things that nobodynotices. Looking at pizza, one of our most mundane and simple foods. It must be the last place people would look for innovation and engineering. It’s at its basic, a thin bread tapped by tomatoes and cheese on the top, sold through takeaways, deliveries, etc. Bread was originally looked at as regular food. Do you remember during the French revolution of 1789, Marie Antoinette’s response to the peasants who ran to her for Bread?

This has been possible because of the free market system of capitalism that enables everyone who has a solution to aproblem to join the market. Elon Musk who was once frustrated with traffic jam thought of a way to solve the problem by inventing the Boring Machine which provided space for movement of cars underground. As simple as that. Keynes a pro capitalist once stated “that capitalist growth does not have an end.” Even life problems have no end, they keep evolving and we must be innovative enough not only to find short term solutions but also long term. Fredrick Hayek another pro capitalist recognized that “these separate people manage through the price system to make something extra ordinarily complex,easier, cheaper and affordable”

The hyperloop transport system proposed by Tesla to curb delays. Former British PM, Margaret Thatcher described capitalism as problem solving. 

Self-interest

Capitalists on many occasions say that greed is good. At the face of it, they look like psychopaths, right?Morally, it might be bad to be greedy but let’s consider looking at greed in a liberal manner. I think greed is about one acting in their own interest with less regard for social pressure. Capitalists initiate something basing on what they want, with little regard of what society wants but still they can’t negate the fact of society in its totality. They want this initiative to sustain the kind of life they want. Let’s look at a few examples. Patrick Bitature, the CEO Simba group of companies, owner of Sky hotel on top of Nagulu hill a five-star hotel, owner of Simba telecom, the largest phone selling company in Uganda etc. started all this with hisown self agenda. Leaders go for leadership positions because oftheir own agenda. Elon musk invented the boring machine because he got bored while stuck in traffic jam. Entrepreneursdeep down in Kisenyi, a Kampala suburb, start businessesbecause they have their own agenda. Amirali Karmali also started Mukwano industries because of his own agenda. Same as Sudhir Ruparelia, Bill Gates, Jeff Bezos, Mark Zuckerberg etc.In fact, they are often rebuked by society that their inventions or innovations will never work, but they insist because of their self-agenda. One’s agenda varies from another’s. It may be to serve the nation, it may be to change something, it may be to improve the lives of his family, it may be to live the way one wants, it may be to earn profits, whatever you may call it, it is always out of the desire of one person for something.

However, when they say greed is good, they are actually restating the capitalist principle that “they were guided by an invisible hand. They do what they do for themselves, yet in effect they are improving the world, increasing production, improving the quality of production. Competition comes majorly about one’s desire to be the lead seller of the commodity they are majoring in, but the effect of competition is good quality products at cheaper and affordable prices e.g. the Coca Cola soda is 1k only. The free market entry improves service delivery around the world, e.g. in the soft drink industry, we now have a variety of commodities supplied on the market such as Coca Cola, Novida, Alakara, Mukamanayamba, Ntugasazi, Upepo, Umubano, Agahebuzo, etc. all over the country in a bid to earn profits yet in return they are making these products accessible to everyone which would have been expensive for one single company to provide and satisfy the different choices of people. In the fuel industry, fuel has been readily supplied because of the many stations that were started by the different private entities e.g. Total, Shell, City oil, Gaz, etc. In the bread industry, we have all these private bakeries such as Tip top, Kiddawalime, Sweet bread, Shoprite bread etc. It must be noted that originally there is one company producing a certain commodity or service but because also others believe they can sustain the lives they want through joining a particular industry as stated above, more of them are created. Isn’t it really good to be greedy?

Variety of products

When Adam Smith stated that “it’s is not from the benevolence of the butcher, brewer or baker that we expect our dinner but from their own regard to their own interest. He meant that in a capitalist market, both parties have their own interest in avoluntary transaction, but for one to obtain what he / she wants, they must address what the other wants. And to be able to do that, all the factors of production must be in their control, use them as they so wish without government intervention, in order to reach a desired end goal.

Adam Smith

Humans, initiate things because they want to benefit from them return; the benefit may be tangible or not, it maybe in the short run or in the long run, but some self interest in it exists. A local lady starts a restaurant at a nearby construction site not only because she wants to feed the hungry workers at lunch, but also because she wants to get some money and pay some bills.Students stand for leadership positions in schools, universities, not only because they want to serve the students or help them, but also because they want to improve their skills and build their careers. Taxi drivers enter into the transport sector not onlybecause they want to improve service delivery, but because they also want to make a living out of the taxis. Aga Ssekalala Srentered the poultry business not only because he wants to make sure people eat chicken, but also because he wanted to earn a living. Lawyers study the law not only because they want to become officers of the law but because they also want this profession to serve their self-agenda. Do you know how many people get employed because someone wants to solve their own problem?

Therefore, the move to the left was in effect bringing about economic dependence other than economic development. One of my folks said to me, the human thinking that government will always come to solve all our problems, is the thin line between us and economic prosperity. We want things to be done for us. We point at problems and put a blame on someone. We never take the personal initiative to solve the problems.”

From the day individual problem solving was termed capitalism, this system has faced very many challenges not to mention unequal distribution of resources and exploitation by the big capitalist giants hence the rise of socialism, fascism and communism where government gets involved in solvingproblems of its people. Let me ask. In a marriage setting, how long can you sustain another person outside your marriage, to solve your problems? I think what we need in our economy is a boost. States such as China, Russia, Brazil have prospered because of state guided capitalism, where large industries such as the transport sector, telecommunication, power and energy are owned by government but still allows an opportunity for private ownership of other companies with regulations such as subsidies, tariffs and tax policies to guide the economy and prevent the economic catastrophes caused by pure capitalism e.g. the Great Economic Depression of the 1930s.

There is one reason why at the end of the battle, capitalism will always win just like it did in the early 1990s. Margaret Thatcher a pro capitalist said “there is no alternative. Why? Becausecapitalism is a darling of humans, its exists in his very nature, long before someone termed it capitalism. In fact, I like to call it problem solving. Who doesn’t know that life is about solutions chasing away problems? Is it not what happens in the Capitalist market?