23 Things They Don't Tell You About Capitalism

What they tell you

Many people get upset by inequality. However, there is equality and there is equality. When you reward people the same way regardless of their efforts and achievements, the more talented and the harder-working lose the incentive to perform. This is equality of outcome. It’s a bad idea, as proven by the fall of communism. The equality we seek should be the equality of opportunity. For example, it was not only unjust but also inefficient for a black student in apartheid South Africa not to be able to go to better, ‘white’, universities, even if he was a better student. People should be given equal opportunities. However, it is equally unjust and inefficient to introduce affirmative action and begin to admit students of lower quality simply because they are black or from a deprived background. In trying to equalize outcomes, we not only misallocate talents but also penalize those who have the best talent and make the greatest efforts.

What they don’t tell you

Equality of opportunity is the starting point for a fair society. But it’s not enough. Of course, individuals should be rewarded for better performance, but the question is whether they are actually competing under the same conditions as their competitors. If a child does not perform well in school because he is hungry and cannot concentrate in class, it cannot be said that the child does not do well because he is inherently less capable. Fair competition can be achieved only when the child is given enough food – at home through family income support and at school through a free school meals programme. Unless there is some equality of outcome (i.e., the incomes of all the parents are above a certain minimum threshold, allowing their children not to go hungry), equal opportunities (i.e., free schooling) are not truly meaningful.

More Catholic than the Pope?

In Latin America, people frequently use the expression that someone is ‘more Catholic than the Pope’ (mas Papista que el Papa). This refers to the tendency of societies in the intellectual periphery to apply doctrines – religious, economic and social – more rigidly than do their source countries.

Koreans, my own people, are probably the world champions at being more Catholic than the Pope (not quite in the literal sense – only around 10 per cent of them are Catholics). Korea is not exactly a small country. The combined population of North and South Koreas, which for nearly a millennium until 1945 used to be one country, is about 70 million today. But it happens to be bang in the middle of a zone where the interests of the giants – China, Japan, Russia and the US – clash. So we have become very adept at adopting the ideology of one of the big boys and being more orthodox about it than he is. When we do communism (up in North Korea), we are more communist than the Russians. When we practised Japanese-style state capitalism (in the South) between the 1960s and the 1980s, we were more state-capitalist than the Japanese. Now that we have switched over to US-style capitalism, we lecture the Americans on the virtues of free trade and shame them by deregulating financial and labour markets left, right and centre.

So it was natural that until the nineteenth century, when we were under the Chinese sphere of influence, we were more Confucian than the Chinese. Confucianism, for those who are not familiar with it, is a cultural system based on the teachings of Confucius – the Latinized name of the Chinese political philosopher, Kong Tze, who lived in the fifth century bc. Today, having seen the economic successes of some Confucian countries, many people think it is a culture particularly well suited to economic development, but it was a typical feudal ideology until it came to be adapted to the requirements of modern capitalism in the second half of the twentieth century.[1]

Like most other feudal ideologies, Confucianism espoused a rigid social hierarchy which restricted people’s choice of occupation according to their births. This prevented talented men from lower castes from rising above their station. In Confucianism, there was a crucial divide between the farmers (who were considered to be the bedrock of society) and other working classes. The sons of farmers could sit for the (incredibly difficult) government civil service examination and get incorporated into the ruling class, although this happened rarely in practice, while the sons of artisans and merchants were not even permitted to sit for the exam, however clever they might be.