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Rhetoric can’t fully explain a complicated market

John Koenigshofer Berkeley
Monday August 20, 2001



Marion Syrek’s letter of 8/10 barely deserves to be dignified by a response. However, her misunderstanding is so profound it must be corrected. 

As is often the case, extremists and ideologues employ generalized and inflated rhetoric to make their uninformed case. Syrek suggests that all “stockholders, landlords and moneylenders” are “parasites” and will eventually be “driven out of the temple.” Using Biblical imagery she attempts to imbue her beliefs with higher authority and credibility. The trick fails. Anyone participating in the marketplace understands her erroneous and superficial assertions. 

First, when stockholders receive dividends they have earned it. Their labor, converted to money, converted to stocks is put to work to support/invest in companies. The dollars raised by the companies via stock sales is used for research, development and expansion (innovation and job creation). Often times stock investors, who risk their money, (which is the symbol of their labor) will lose money. When an investment goes well and dividends are paid they are compensated for the use (and risk) of their money. 

Money is the most abstract form of capital. Classically speaking, capital is anything that produces value. So, be it a tractor plowing fields or money invested to create a better tractor that plows fields more quickly, it is all capital at work. It is labor at varying degrees of abstraction. 

“Moneylenders” are no different. They earn and/or consolidate capital (money) organize and systemize its distribution and make it available, often to those with a good idea, vision or inspiration. In some cases these funds build homes, bridges or even laboratories where stock financed companies do research seeking a cure for AIDS or a thousand other diseases. Once again, capital in motion creates jobs and innovation. 

Landlords too earn what they are paid. Landlords often work(ed) at some trade, earn money and buy a building. That is, trade labor (symbolized by money) for a structure. The new the landlord might rebuild, improve, and expand that structure. Once it is rented the landlord pays taxes (into the public coffers) on the property and profit. The landlord also pays to insure, repair, manage and maintain the structure. It is not a passive process. It involves earning capital, investing it (risking it), working and creating a usable item/object or service which is provided in exchange for pay (rent). 

Like most knee-jerk leftisms Syrek prefers simplified and vilified interpretations of our profoundly complex and fluid system. She forgets that the market economy has doubled the average human life span and increased food production 50 fold in this century alone. This system has inspired the technology that allows us to circle the planet in a couple of days, visit grandma across the continent in mere hours and to instantly speak with someone on the opposite side of the Earth. The market economy encourages and facilitates our inquiry into the very nature and foundation of life as reflected in the mapping of the genome and other profound sciences. 

Syrek should consider housing (without hot water), communications (a phone in every fourth home), quality of food (no fresh vegetable in winter), water (often not potable) and medicine (hard to find) in Moscow in ‘980. Consider also the stagnation of Soviet science in the areas of transportation, computer technology and bio-genetic research. A non-market economy guarantees one thing, stagnation. 

Who are the “wealthy” Syrek refers to? The actor I know who has just received his “big break” after years of effort and on his way to Los Angeles to make big money? Or the long time poor painter who now garners $30,000 per painting after years of refinement and discipline? Is it the Vietnamese immigrant who arrives in the U.S. with no money and now employs a half dozen people in a gardening business, owns his own home and several apartment units? Perhaps it is the Russian immigrant I know who does hard physical labor, builds capital, develops credit, borrows money, buys houses, rebuilds them and sells them for a profit? Or maybe it is the person I know who invented Handi Wipes and made a fortune. Perhaps it is my cousin and her husband who are nurses and earn over $’70,000 per year. They have just returned from a 4 month trip to Asia and Europe. 

Simple stated market economy allows people to pursue and realize dreams. This is good for individuals and society. The creation and inspiration of the individual elevates and improves society. 

The view Syrek represents is less a political or economic one and more the sour grapes psychology of those who prefer complaint to creativity. I pity those who spend their time whining rather than inventing. The greatest thing an individual can do is transcend his/her circumstances and limitations. Such growth only occurs in the challenging and rewarding environment of a free market economy. The alternative is collective mediocrity under the parental control of lumbering bureaucratic states. 

I prefer the challenge. 


John Koenigshofer