Capitalism and its Ability to Diversify

One day it occurred to me how specific and particular my job was. I am a content writer who describes in either laymen terms or more technical jargon if someone should or should not buy a product, use a service, or partner with a certain computing or telecom organization. As a child, one broke down the different work fields into extreme categories like “farmer”, “doctor”, “mechanic”, but this was quite indicative of work before the 19th century as the vast majority of the population worked either as a farmer or a factory worker, with hardly any specialization. The advent of capitalist markets changed everything.

Historic Poverty and the Population Miracle        

It’s no secret that the population of people on earth exploded after the industrial revolution kicked in. Not just that but also an agricultural transformation has also been underway since the 17th century as farming practices became more and more sophisticated, feeding more and more people. This increase in population led many thinkers and scientists to conclude a ruin of the earth was imminent. Paul R. Ehrlich famously said in his book The Population Bomb that hundreds of millions of people would starve and that the world may never recover.

The reverse happened and a population miracle occurred. Despite a 7-fold population increase, global poverty decreased dramatically and the standard of living has never been higher for so many. Only in the span of some 30 years has extreme poverty dropped from 44% of the population to now below 10% [1]. This means that less than 10% of the world lives on $1.90 a day compared to the 2000s when almost 30% lived in such a way, and even in the 1800s when 84% lived in absolute poverty [2]. There is an observable factor that leads to this prosperity and I mentioned it in the previous section: capitalism.

Why Market Economies Work

One shouldn’t be shocked to learn that the reason why countries escape such high levels of poverty is that they have economic growth. But what causes economic growth and what stagnates it? I and many others who are vastly more intelligent than me believe it is because of capitalism or, in the case of trade, a market economy.

What makes a market economy or an economy where capitalist policies are implemented more efficiently than a planned economy is that it can organically reflect the desires of the consumer. Not only this but market economies also allow for private ownership, free exchange, no price-fixing, and productive markets; planned markets do away with all of this. History tells us that the communist regimes of the pass used controlled economies to their fullest extent and thus suffered financially to the fullest extent.

This is not to say that social programs should be done away with, oh on, only that a full-blown socialist styled economy, a planned economy, can not and has not borne fruit. Eastern Europe is still behind Western Europe in every metric of wealth. China which held influence over all of its neighbors during its dynasty days suddenly was getting left in the dust by Japan, South Korea, Taiwan, and Singapore (until it then abandoned its planned market). The modern poster child for a failed planned economy is none other than Venezuela, a country rich in every conceivable natural resource yet is seen as one of the poorest in the western hemisphere.

The freer a market the more economic growth is expected. And the more economic growth, the more specific and particular labor can get.  

Capitalism and Diversification of Valued Services

I started this post talking about how my job existed within a broad industry, but the work I do is very exact. I educate Conectrix’s clients on whether a certain product is right for their business model. Work like this is wholly the result of a capitalist system.

Thinking back to a planned economy, those systems allowed for only one or very few competitors in an industry which was essentially branches of the state. The Soviets controlled how many cars where to be made, Mao’s agents mandated how much steel was to be produced, and Chávez seized the oil and determined what the price would be. The flaw of all these methods is that they again do not reflect the will of the consumer and become near arbitrary and ultimately catastrophic.

In a market economy, whatever service or product is hot the market will naturally funnel money into because that is what the consumer cares about. This concept is best explained as voting with your wallet; what you buy you are in theory supporting and want to continue growing and getting better.

In market economies, successful industries can diversify as more peoples, ideas, and ultimately competitors enter that spot to get a piece of the pie. It just so happens that IT is hot in the market because the internet is just getting bigger and bigger and more encompassing in its features. So many companies have IT needs, be it telecom or computing, but there are so many options for them to choose from because the competition is so intense in the industry.

Where Conectrix Fits into the Picture

In a sense, I should be thanking capitalist policies that facilitated the creation of my job. Without a market economy but a planned one, America would be ruled by some despot who decided which industries would succeed and which would be liquidized for the “betterment” of the people.

From solving the population growth problem to creating a corporate technology management company named Conectrix, capitalism ultimately allows for the needed market diversification to promote economic growth and give people jobs, tailored to their talents.

[1] Our World in Data: Global Extreme Poverty, https://ourworldindata.org/extreme-poverty

[2] Poverty Headcount ratio at $1.90 a day, https://data.worldbank.org/indicator/SI.POV.DDAY?locations=1W&start=1981&end=2015&view=chart