Capitalism is a distinctly Protestant economic system in the same way as democracy is a distinctly Protestant political system. Democracy has never worked in Catholic Nations over the longer run. Neither did capitalism. The reason is the same. Capitalism, like democracy, put the collective above the individual. Both are collectivistic systems, one political the other economic. In Catholic societies both lead to social unrest and chaos.
In its most competitive form, capitalism is characterized by the absence of barriers, legal or otherwise, for anyone to enter or exit any kind of economic activity, either as a buyer or as a seller or both. In this system of competitive capitalism prices of goods and services are set by the impersonal process of the market. Each man through his decisions to buy or sell potatoes participates in the process which leads to the formation of the price of potatoes. But his own decisions are insignificant in the final outcome. The price of potatoes is ultimately determined by the behaviour of the crowd, both as buyers and sellers.
If, at a given moment, the price of potatoes is too high so that existing producers are making economic profits, new producers will enter the industry, increasing supply and lowering the price, and this process will continue until the price has fallen to that level where no economic profits are made anymore. If, on the other hand, the price is too low so that existing producers are making losses, a number of them will go bankrupt, reducing supply and increasing price to the point where there are no losses anymore.
Under capitalism the crowd is the king and the individual is the servant. Each individual must adjust his decisions to the decisions of the crowd, otherwise he will forego profits that could have been made, or he will go bankrupt. Capitalism thus requires a cultural environment where individuals are ready to recognize the superiority of the crowd over themselves. This is the cultural background of a Protestant society, not that of a Catholic society.
A Catholic society is a highly personalized society. It puts the individual above the crowd. It does not accept economic hardship imposed on any group of peopele which is caused by the impersonal process of the market, that is by factors for which the people affected are not to blame. The culture of this society will favour some help to the group adversely affected, usually through government intervention. Clearly, it is this very same government help that destroys the pure system of capitalism. But the alternative, letting the people affected go bankrupt, would be a source of social upheavel and ultimately of social chaos.
Let me illustrate this point with two examples. First, the case of high school teachers. With the decrease in the number of students over the last decade there is a large surplus of teachers in government payrolls, amounting to several tens of thousands. In a pure capitalist system these people would have been fired long ago. And yet, the government prefers to keep them in payrolls, even if they have no students to teach. And society does not protest. The reason is that firing teachers by the thousands would result in social protests which, most likely, would be supported by the population.
Consider now the case of the recent truck-drivers' strike. The increase in the costs of fuel would have sent a lot of these people bankrupt in a purely capitalist system. Yet, they revolted and threatened the state, and in so doing they received the general, if apparently indifferent support of the population. The government gave in and they got the costs of fuel subsidized. Obviously, we cannot talk anymore about a competitive, capitalistic system in the transportation sector.
The important question to ask is thus the following: under this cultural, Catholic culture, what would you have done if you were the prime-minister? Would you fire tens of thousands of teachers under the flag of capitalism and face social unrest? Further, would you refuse to give in to the truck-drivers' demands and let them paralyze the country and ultimately bring down the government?
Capitalism is no solution to Portugal's economic problems because the cultural background for this system to work simply is not there.
In its most competitive form, capitalism is characterized by the absence of barriers, legal or otherwise, for anyone to enter or exit any kind of economic activity, either as a buyer or as a seller or both. In this system of competitive capitalism prices of goods and services are set by the impersonal process of the market. Each man through his decisions to buy or sell potatoes participates in the process which leads to the formation of the price of potatoes. But his own decisions are insignificant in the final outcome. The price of potatoes is ultimately determined by the behaviour of the crowd, both as buyers and sellers.
If, at a given moment, the price of potatoes is too high so that existing producers are making economic profits, new producers will enter the industry, increasing supply and lowering the price, and this process will continue until the price has fallen to that level where no economic profits are made anymore. If, on the other hand, the price is too low so that existing producers are making losses, a number of them will go bankrupt, reducing supply and increasing price to the point where there are no losses anymore.
Under capitalism the crowd is the king and the individual is the servant. Each individual must adjust his decisions to the decisions of the crowd, otherwise he will forego profits that could have been made, or he will go bankrupt. Capitalism thus requires a cultural environment where individuals are ready to recognize the superiority of the crowd over themselves. This is the cultural background of a Protestant society, not that of a Catholic society.
A Catholic society is a highly personalized society. It puts the individual above the crowd. It does not accept economic hardship imposed on any group of peopele which is caused by the impersonal process of the market, that is by factors for which the people affected are not to blame. The culture of this society will favour some help to the group adversely affected, usually through government intervention. Clearly, it is this very same government help that destroys the pure system of capitalism. But the alternative, letting the people affected go bankrupt, would be a source of social upheavel and ultimately of social chaos.
Let me illustrate this point with two examples. First, the case of high school teachers. With the decrease in the number of students over the last decade there is a large surplus of teachers in government payrolls, amounting to several tens of thousands. In a pure capitalist system these people would have been fired long ago. And yet, the government prefers to keep them in payrolls, even if they have no students to teach. And society does not protest. The reason is that firing teachers by the thousands would result in social protests which, most likely, would be supported by the population.
Consider now the case of the recent truck-drivers' strike. The increase in the costs of fuel would have sent a lot of these people bankrupt in a purely capitalist system. Yet, they revolted and threatened the state, and in so doing they received the general, if apparently indifferent support of the population. The government gave in and they got the costs of fuel subsidized. Obviously, we cannot talk anymore about a competitive, capitalistic system in the transportation sector.
The important question to ask is thus the following: under this cultural, Catholic culture, what would you have done if you were the prime-minister? Would you fire tens of thousands of teachers under the flag of capitalism and face social unrest? Further, would you refuse to give in to the truck-drivers' demands and let them paralyze the country and ultimately bring down the government?
Capitalism is no solution to Portugal's economic problems because the cultural background for this system to work simply is not there.
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