What is a Capitalist?

The title of “Capitalist” gets different responses from different people. Why is that? Either people have differing ideas of what the word means, or they have differing opinions on whether it is good or bad. Let’s start with a definition of capital:
Capital is the stock of accumulated goods, or an asset.
An asset is any item of economic value.

So then capitalism is an economic system that enables and fosters individuals and businesses to accumulated goods with economic value, or assets.

Not Always Been the Case in History
Individuals have not always been able to accumulate assets throughout history. Under pharaohs and kings and lords of the manor, individuals could accumulate only small amounts of assets for their own personal use. For example, a man could own a shovel and other hand tools for working the soil, but he couldn’t own the land itself. In many countries, the king was sovereign and was the only one who actually owned anything. Everyone else was granted the use of his possessions, his assets, at his will and pleasure. At one level, the people were able to buy and sell and exchange so they were engaging in a market and even capitalism, but only with meager personal items of little value. At a higher level, the king was the only one with assets and was restricting anyone else from accumulating any meaningful level of assets.

What makes Capitalism Different
Capitalism enables individuals to accumulate assets that can be bought and sold in a market free from control to anyone who wishes to participate. The price does not change depending on who you are. Assets are transferable from one person to another through exchange. Exchange delineates the change in ownership. What can be owned, is at the heart of capitalism, since anything that can be owned and exchanged is an asset.

Under Capitalism, things can be broken down into separate parts for exchange. For example, with many types of bonds, the bond purchaser gives money to an institution and receives back a note promising to repay the money plus interest. The two parts of the bond can be separated into two separate assets: the promise to repay the original amount, and the promise to pay interest. The bond purchaser can actually sell these two parts separately in the market. Why would anyone want to sell a note on the repayment of just the original amount? Maybe they need the money now. Maybe they have a great business plan and could use that money it to make even more. Most likely the price of this note would be for less than what will be paid back ($950 for a note that will pay $1000 in a year, for example). And the note for the interest payment will go for some positive amount, depending on what other interest-paying opportunities exist in the market to choose from. These types of sales happen all the time in the bond market, which is much larger than the stock market. What is different about capitalism is that it allows individuals to separate things of economic value into separate assets (if they wish) and sell those to anyone else in a market without interference

What Can Be Broken Down Into Assets?
What has economic value? The answer is: anything that affects you economically. If you are acting rationally and voluntarily, you only buy something if you value the thing you bought more than retaining the money for it. If you buy a car for $10,000, you valued that car more than your $10,000 (otherwise you wouldn’t have bought it). The reverse is true for the seller. But how much do you value your job? Less than your salary and benefits (otherwise you would quit). Perhaps you don’t like your job, but you like your salary more than not having a job with no salary, so you don’t quit. What about your life? Does your life have a price tag? To you, probably not. You probably do not consider your life as an asset that can be bought, sold, or exchanged for any price. It is outside of the market and should not be included in it. Yet, you probably have life insurance, but you probably have life insurance not as really insurance on the value of your life, but rather insurance on your productivity, or income that you would be making had you not died. Can you turn your future productivity into an asset? Can someone else?

There is a famous example of a company placing a price tag on human life. When Ford made the Pinto, at a certain point they realized that with the current design of the car, that a certain number of people would be killed in collisions. They also knew that they could improve the design of the car so that fewer people would die, but that would cost them more to make the car. They estimated what the financial cost to the company would be for having to pay settlements to the families of those that were killed in collisions. They decided not to improve the design because the increase in the cost for the improved design was greater than the savings they would receive by not having to pay as much in settlements to the families of those killed in collisions. The most profitable route for them was to use the inferior design, even though they knew that this would actually cause more people to die. It can be argued that Ford was a business and its purpose was to make money. It was an economic entity that made decisions based on economic values. They weren’t actually killing anybody. There was no intent to harm people. Yet they would be causing more people to die because of economic considerations. They separated the cost of manufacturing the car from the cost of settlements to families. They could assign a dollar amount to each and compared the two. They actually turned the cost of settlements into an asset (negative in this case, or a liability). It wasn’t human life per se that had the price tag, but how the loss of that life would economically affect the company. So although they made a purely economic decision, it had very real implications of things that most people would consider outside the economic realm.

Distortions Can Occur
I you look at everything as an asset, distortions in values can occur. If you look at a business, you can identify goods and trademarks and intellectually property, all of which is ownable and transferable. But what if you look at, say, your church congregation, or your neighborhood organization, or even your family? What assets do you see? Should you see any assets? What about a school, or a city? What assets does a country have? I would argue that there are limits to what should even be considered an asset. I consider it exploitation when one tries to extract assets from people or places that should not be considered assets in the first place. For example, human life (or more correctly, the economic impact from the loss of human life), should not be considered an asset (no one can own it, it can’t be transferred, etc). Other things like “town character” and genetic code should not be considered assets that can be owned or transferred. But when everything that has economic impact (which is just about everything) is “assetized” and owned and sold and government upholds the sale, then we have Capitalism taken to the extreme.

Capitalism can cause people to have a distorted view of what should be an asset, and what should not. Capitalism can cause things to be divided into separate parts things that should not be divided. If you look at everything as being composed of separate assets that can be sold in the market, you will have a distorted view of things. Your "perspective" changes (and according to Principle #4 determines action). The notion of “value” of things actually changes and takes on an economic representation. Look over the 13 Principles of Prosperity and note how everything takes on an economic slant, even those things that should be outside of the economic realm.

“God Is a Capitalist”
Rick Koerber says he made the subtitle of one of his books, “If God is A Capitalist, Why are Most Christians Socialists?” (see video http://www.youtube.com/watch?v=b1oyZazXZxY). Koerber defines a capitalist in a way he claims is the “classical” definition: that capitalists are “people who value freedom and liberty, who recognize the principles in the Constitution of the United States, and the revolution begun, but not yet finished, as the ideal the prototype for living lives worth living. It’s more than just investing. Capitalists live much differently to the chagrin of many in society. As the backbone in society, as the least appreciated. Capitalists are the world’s producers.” I find no basis in this definition of a capitalist. Capitalism says nothing about the Constitution or how one should live his life.

At another time on his radio show (Dec 24, 2007) he says, “A capitalist is someone who refuses to allow the idea in their mind that force or deception is ever appropriate in human relations.” Koerber misses a crucial point: Capitalism can cause distortions in values without using any force. Capitalism is only about a system that allows things of economic value to be turned into assets and be accumulated. It has no comment on how that should be done or whether that should be done. So, no, I don’t think God is a capitalist, unless we ascribe some extra meanings to the term. But I think this is an attempt to ascribe a morality to an economic system that is amoral by definition. Capitalism itself cannot be good or bad, only what people do with it. And if there is a confusion of terms (“capitalist” mean something morally good to me but neither good or bad to you), then I can says that acts done under “capitalism” are good. Then what Ford did with the Pinto was good (because they were being capitalists). Then considering most everything as assets that can be separated and sold, is good. Even God becomes a capitalist Himself.