Productive Capitalist v Parasitic Capitalist

Many of the criticisms the left make of capitalism are ill-informed or just plain wrong, many but not all. Unlike their proposed solutions, which are all wrong. When discussing economics it is important to distinguish between productive capitalism and parasitic capitalism. There are many people and organisations hard at work in the capitalist economy doing things that benefit only themselves or things that even harm other people. To take just one example, psychics – fortune tellers, spiritualists and the like – are either delusional or scammers, sometimes both, who prey on the gullible and the vulnerable. If you don’t believe that, check out some of the predictions they make and compare them with what actually happens.

This short video shows so-called psychic Sylvia Browne telling the mother of Amanda Berry her daughter was dead. Any police officer would have said the same thing, although not so confidently. Of course, in this case a miracle happened, but Amanda’s mother went to her grave believing this garbage, and Sylvia Browne went to her own grave at the age of 77 having predicted she would live until she was 88. Let us stay in this world though.

One capitalist very much in the news at the moment is Elon Musk. Musk has been developing new technologies that will eventually improve all our lives. Whatever he is doing now, Bill Gates gave the world cheap computing. Most people who rail at evil capitalists on YouTube don’t see the irony that if it were not for this handful of (overwhelmingly white) men, their voices would go unheard.

Other contemporary capitalists include Richard Branson, a man who started from virtually nothing but is now worth well over $3 billion; Malcolm Walker, founder of the Iceland supermarket chain, and the inventor James Dyson.

Although psychics and other parasites work in the capitalist economy, there are others who are more accurately described as working in finance. This includes but is not limited to, banking. Although modern banks provide many auxiliary services – for example your bank may act as your executor – the traditional functions of  a bank are to act as both a strongroom and as a bookkeeper. Most people still believe banks lend money; they do not, rather they create credit, as Major Douglas demonstrated a century ago. This is something they should not be permitted to do, but there is no indication that they will be prevented from doing so any time soon. In addition to their legitimate functions, banks and other financial institutions play games with other people’s money, something alluded to erroneously as investing. 

As Professor Quigley points out in Tragedy & Hope: “…the use of the corporate form of industrial organization as a means for bringing the savings of the many into the control of a few by sales of securities to wider and wider groups of investors (including both managerial and laboring groups) would lead to a separation of management from ownership and to a great increase in the number of owners.”

That is indeed true, but when they invest in managed funds, those owners delegate their powers to the fund managers. But it isn’t only fund managers who play games with money; small time speculators and traders do the same thing, although generally they risk their own capital.

There is currently a gent advertising on YouTube who does this. Although he will remain nameless, he has an impeccable English accent, runs a dedicated website, and offers his services to anyone who wants to become a parasite like him. Day in, day out he buys and sells currencies. This type of trading is called Forex, and although there is a place for it as there is for buying and selling shares, the transactions he and his fellow parasites make do not plant so much as an ear of corn, much less put food on people’s tables.

Sadly, he is far from the only person offering this service to others, the vast majority of all trades carried out daily have no legitimate purpose, they are made simply to generate fees for fund managers, and as with smaller traders, to profit from productive capitalists, including those countless millions of men and women who do real work in every nation on Earth.