Capitalism and Survival of the Fittest

A few days ago I got into a conversation with a friend who said (something to the effect) that capitalism was the survival of the fittest and look what a mess this got us into. Such as I am, I couldn't let it pass so I wrote a brief commentary. To be sure, this is a lengthy topic and many volumes have been written on it, so there are many things left out, naturally. Either way, here it is.

The term capitalism itself was coined by none other than Karl Marx himself. He used the term to describe an economic system where owners of capital rather than lords and aristocrats were able to make economic decisions about production in society as was the case in the manorial and feudal system. Later on classical liberals such as Ludwig von Mises and others were quite happy to use this term since it described rather well precisely what they were arguing in favor of. Namely, that economic decisions in society be left to those who were, through economy and entrepreneurship, able to amass ever greater amounts of capital by satisfying the demands of their customers. And therein lies the difference. Whereas before persons of nobility, regardless of their merit, were able to determine production and extract income from their subjects through coercion, in this new system called capitalism there were no limits nor subscribed production processes. Anyone could become a capitalist, provided only they saved and had the insight to invest in capital equipment that would prove valuable as a means of satisfying consumer demands. Private property rights became central to this economic system since any infringement on property rights would necessarily mean an expropriation of property, which greatly reduces the incentive to invest in capital. Capital will be invested in and accumulated more readily and heavily if the investor can expect to generate an income from it free from expropriation and a system with built-in disincentives to invest in capital (which is therefore destructive of capital accumulation) could hardly be called capitalism.

However, I cannot blame anyone for using the term capitalism to describe our current state of affairs, many people have done so in the past and continue to do it at present. After all, capital is a class of inanimate objects and attaching an –ism to it can hardly describe a series of interactions between individuals in a society. But I would still prefer to use the term capitalism to describe the free market and resort to the use of corporatism, fascism or socialism to describe the modern economy. Common to all these systems, which vary in degree, rather than character, is an economy centrally planned by an institution who’s decrees are enforced by violence and intimidation. And this description is much more akin to the world today than a system where private property is absolute and the only way of gaining property is through voluntary exchange and homesteading.

When you say survival of the fittest, that only begs the question – fittest for what? In the pre-capitalist society where no large scale markets existed, exchange was very limited and most people produced for their own needs, most rich people, with the exception of the few merchants, were rich because they exhibited the the greatest skills in warfare. They suppressed their fellow men and were able to extract from them because they were the fittest in physical strength and could just take what others had produced. However, with the advent of capital, i.e. tools and machinery for large scale production, one was able to become rich by producing for, and not taking from, the masses. In such a system one could only succeed, save a few exceptions, of course, by producing something people wanted and could afford. In such a system survival of the fittest means the fittest in producing things the public values and one could hardly see anything wrong with that. Virtue, rather than violence, then, becomes the norm. You will also notice that this is not descriptive of our social order today. The whole edifice of the State run society is founded in coercion, confiscation and violence.

Either way, if by survival of the fittest you mean survival of the fittest to tax, regulate, punish and coerce then yes, capitalism is what we have and it’s horrible and I denounce it. But we would also be (perhaps more so) well justified to say capitalism is the survival of the fittest in serving their customers, in which case we do not have capitalism at all.

So when you say capitalism is to blame for all this mess, you should probably qualify it with a bit more than »survival of the fittest«.


Matej Avsenak Ogorevc