There are many people who blame ‘capitalism’ for the world’s economic problems, such as poverty, unemployment, inequality, and environmental destruction. This common belief is based on a confusion of meaning, and a lack of analysis. It is neither surprising nor noteworthy that many people fail to apply consecutive thought to economic issues, but it is sad that the Dalai Lama, as a great religious leader, has not fully applied his compassionate thought to examine the causes and effective remedies of social problems.
It is sad that the Dalai Lama, as a great religious leader, has not fully applied his compassionate thought to examine the causes and effective remedies of social problems.
The Dalai Lama, leader of Tibetan Buddhists, has identified himself as a Marxist socialist. He blames ‘capitalism’ for economic inequality, and sees the Marxist alternative as the alternative that would increase equality. He advocates a more “human approach," which implies less ‘capitalism’ and more socialism. The Dalai Lama adds that he is not a Leninist, meaning that his Marxist views do not imply a desire for a totalitarian state.
The Dalai Lama believes that Marxism is founded on moral principles, such as economic equality, while ‘capitalism’ is founded only on the pursuit of profit. His social and economic views were published in the 1996 book Beyond Dogma: Dialogues and Discourses. He said there that Marxism is concerned with the poor and with exploited minorities. Therefore, he said, “I think of myself as half-Marxist, half-Buddhist.” The Dalai Lama had studied Marxist ideology in China during the 1950s, and became attracted to it.
The essential problem with the word ‘capitalism’ is that it is used both as a label for current economies, which are a mixture of markets and governmental interventions, and for the concept of private enterprise and free markets. Its use as a label for mixed economies makes it meaningless to blame "capitalism" for economic problems.
This confusion is similar to blaming diets for ill health. The diet of most people is a mixture of healthy foods such as vegetables and unhealthy stuff such as excessive sugar. The proposition that ‘bad diets’ cause illness may be true, but it tells us nothing about which elements of our diets are causing the problem.
To blame “capitalism,” meaning the mixed economy, for economic inequality, is meaningless, as this does not tell us which elements of the economy are causing the problem, whether it is markets or interventions.
Likewise, to blame ‘capitalism,’ meaning the mixed economy, for economic inequality, is meaningless, as this does not tell us which elements of the economy are causing the problem, whether it is markets or interventions. Blaming ‘capitalism’ is worse than useless; it fogs the mind, because the label for mixed economies gets confused with the other meaning, private enterprise, so that, in a sly tacit shift of meanings, markets get blamed for economic woes.
It is meaningless to accuse ‘capitalism,’ as a label, as only caring about profit and ignoring the poor, because the actual ‘mixed economy’ cannot have any thoughts or feelings. Moreover, the concept of a pure market economy does have an ethical basis. The pure market is an economy in which all activity is voluntary. The concept of voluntary human action implies the existence of a universal ethic, or natural moral law, that designates acts as good, evil, or neutral, with voluntary action being good or neutral, and involuntary action consisting in coercive harm, which is evil.
One of the premises from which natural moral law is derived is the concept of human equality, that human beings have an equal moral worth, and should therefore be equal in the application of law. Human equality does not imply that all persons should have an equal income or wealth, because moral equality implies an equal self-ownership of all persons. Therefore, each person properly owns his wage and the goods and investments bought from his wage. Income, however unequal, that comes from labor, including entrepreneurship, is not an evil outcome.
Much of the inequality in income and wealth throughout the world comes from having title to land, and that system of land tenure is not ‘capital’-ism
However, natural resources are not a creation of human action, and equality implies that the benefits from land, measured as rent, be shared equally. Economic analysis also tells us that the benefits from the public goods provided by government generate higher land rentals and site values, and these gains become a subsidy to landowners when the provision is paid by taxes on wages rather than on rent. Much of the inequality in income and wealth throughout the world comes from having title to land, and that system of land tenure is not "capital"ism, i.e. not a result of owning capital goods such as buildings, tools, and inventory.
The mixed economy does create poverty, but not from private entrepreneurship. The poverty comes from government's taxing the poor and subsidizing the rich. A study by the Institute on Taxation and Economic Policy and the Pew Research Center recently concluded that the poorest fifth of households pay more than twice the state and local tax rate (11 percent) as the richest one percent. Also, although the rich pay a much higher rate on their income, many of the rich get their money back in the form of the higher rent and land value generated by government spending. The taxes on the poor are much higher than that found in the study, as there are federal excise taxes included in goods, and taxes and restrictions on labor and self-employment add to the interventionist burden of the poor.
“There is in nature no reason for poverty.”
The economist Henry George wrote that “There is in nature no reason for poverty.” Poverty and excessive inequality are caused by human institutions. If Marxism implies income redistribution or government ownership of industry, this treats the symptoms, not the causes. The main causes are the stifling of labor and enterprise from taxation and imposed barriers, and the subsidy of land from public goods paid from the taxation of labor and economic investment. The remedy is a truly free market with taxes only on pollution and land value.
The Dalai Lama is the first to admit that he is a human being equal to all others. But he holds a special place as the leader of a religion that seeks enlightenment. He had promoted land reform in his younger years, and so he would be sympathetic to a broader and deeper land-benefit equalization, applying the Buddhist spiritual concept of "pure land" to society on earth.
If someone close to him could nudge him to read Henry George's classic Progress and Poverty, or an updated work such as Land: A New Paradigm for a Thriving World by Martin Adams, then the Dalai Lama would become a much greater global leader in promoting effective reforms that would not only promote equality but also greater prosperity and social peace.
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FRED E. FOLDVARY, Ph.D., is an economist and has been writing weekly editorials for Progress.org since 1997. Foldvary's commentaries are well respected for their currency, sound logic, wit, and consistent devotion to human freedom. He received his B.A. in economics from the University of California at Berkeley, and his M.A. and Ph.D. in economics from George Mason University. He has taught economics at Virginia Tech, John F. Kennedy University, Santa Clara University, and currently teaches at San Jose State University.
Foldvary is the author of The Soul of Liberty, Public Goods and Private Communities, and Dictionary of Free Market Economics. He edited and contributed to Beyond Neoclassical Economics and, with Dan Klein, The Half-Life of Policy Rationales. Foldvary's areas of research include public finance, governance, ethical philosophy, and land economics.
Foldvary is notably known for going on record in the American Journal of Economics and Sociology in 1997 to predict the exact timing of the 2008 economic depression—eleven years before the event occurred. He was able to do so due to his extensive knowledge of the real-estate cycle.