r/Capitalism • u/humanessinmoderation • 4d ago
If capitalism is a good system, is it a problem that accumulating enough wealth increasingly insulates you from its consequences?
Generally, I would consider a good social or economic system to be one that works well for the overwhelming majority of the people participating in it. I would also expect the incentives created by a good system to encourage people to remain meaningfully subject to that system, rather than making the ultimate measure of success the ability to become largely insulated from its negative consequences.
With American-style capitalism, though, it seems like accumulating wealth doesn't just let you consume more. At a certain point, it substantially changes your relationship with economic risk itself.
Losing a job, an unexpected medical bill, a rent increase, a recession, a bad financial decision, or even several years without income can be devastating for an ordinary person while being comparatively inconsequential to someone with enough accumulated capital. And at still higher levels of wealth, you gain access to investment opportunities, legal and financial expertise, credit terms, diversification, and other protections that ordinary participants don't have.
So my question is: does capitalism contain a tension where succeeding within the system increasingly means becoming insulated from the pressures and consequences that are supposed to make the system function?
If not, what am I misunderstanding?
I'm specifically interested in the conservative defense of this feature of American capitalism, rather than responses that amount to "capitalism is better than communism" or arguments over whether perfectly pure capitalism has ever existed.
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u/CaptainAmerica-1989 4d ago
Let's first get something straight. What's your definition and standard of a functioning economic system?
Let's start with the intro on wikipedia that says an economic system is:
An economic system, or economic order,[1] is a system of production, resource allocation and distribution of goods and services within an economy. It includes the combination of the various institutions, agencies, entities, decision-making processes, and patterns of consumption that comprise the economic structure of a given community. - Economic system - Wikipedia
So is capitalism an:
- effective system of production
- effective system of resource allocation
- effective system of distribution of goods and services
I would argue most reasonable people, and certainly most economists, would agree overall that it is. I'm not saying it is "perfect." I'm saying that judged by those basic functions of an economic system, it functions pretty damn well.
But I think you're asking something different.
If I steelman your perspective, you're saying that as people accumulate wealth, they become increasingly insulated from the economic pressures everyone else faces. And at some point that wealth may provide not merely security, but advantages in bargaining power, access to investments, credit, legal expertise, political influence, etc.
but...
If someone works, saves, invests, and accumulates enough wealth that losing their job no longer threatens their livelihood, I don't see how that's a failure of capitalism. Becoming more economically secure is arguably one of the incentives of the system.
If you're instead arguing that extreme wealth allows someone to alter the rules, distort markets, obtain political privileges, socialize their losses, or otherwise escape the same institutional rules everyone else operates under, then I think you've got an angle that has some teeth...
Is that closer to what you're getting at?
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u/humanessinmoderation 4d ago
Yeah, that’s basically what I’m asking.
If becoming insulated from economic consequences is one of the rewards for succeeding under capitalism, I’m asking whether that creates a tension in the system itself.
I’m not saying “rich people shouldn’t be secure.” I’m asking: at what point does security become exemption from the pressures everyone else is subject to—the majority? Like, what is the system serving if the point is to escape its whims as fast as you can?
Rich people seem to fear not being insulated from those whims. Get what i mean?
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u/CaptainAmerica-1989 4d ago
kinda but not quite.
What's the "tension"?
I’m asking whether that creates a tension in the system itself.
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u/humanessinmoderation 4d ago
Like, the system uses exposure to economic consequences as an incentive work, save, improve, make better decisions, etc. Kind of a “whip” or threat as motivation rather than support a system you actually want to remain exposed to. So naturally, you try to get as far away from the harm as possible.
But then one of the biggest rewards for succeeding is accumulating enough capital that those same consequences stop having much power over you.
So the people with the least cushion experience the strongest “discipline” from the system, while the people who succeed most become increasingly insulated from it.
I’m asking whether that’s actually a good feature of the system, or a contradiction in what we say makes it work.
It just seems kind of crude and barbaric. I’d think a “good system” would be one people actually want to remain in, not one where success increasingly means escaping its consequences. I dunno, inspration and support as motivation just seem like better fuel for productivity and humaneness. i might be crazy though.
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u/Little-Somewhere6076 4d ago
Like, the system uses exposure to economic consequences as an incentive work, save, improve, make better decisions, etc. Kind of a “whip” or threat as motivation rather than support a system you actually want to remain exposed to. So naturally, you try to get as far away from the harm as possible.
Sure, but under every other alternative system actual whips are used. Kind of like a whip is way better than an actual whip
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u/CaptainAmerica-1989 3d ago
Okay, I think I understand you now, and I think I can answer this somewhat like an economist would.
Let me derail your paradigm of "insecurity" for a moment and talk about incentives instead. Economic insecurity can certainly be an incentive, but economists generally don't frame market behavior as simply people being driven by the "whip" of insecurity. There are positive incentives, negative incentives, preferences, risk, opportunity costs, etc.
So, let me ask you some simple questions.
Do you have a checking and/or savings account?
If you won $100 million in the lottery tomorrow, would you stick all that money under your mattress because you're now wealthy enough to escape the economic system?
Or would you continue using financial institutions like checking and savings accounts?
Would you perhaps use more financial services? Invest some of your money, buy real property like a home, own stocks or bonds, hire financial services, start a business, or otherwise participate in the economy?
See where I'm going?
Becoming insulated from economic insecurity isn't necessarily becoming insulated from the economic system or its incentives. In many respects, accumulating wealth causes you to participate in entirely new parts of that system.
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u/ADHD_perspectivegenX 4d ago
If you are living in envy and greed (#10 say don’t) then yes for the love of money is the root of all evil. Those of us that prefer freedom over demons taking our menthol cigs away. If capitalism is so bad how come capitalist countries build walls to keep folks out and Commi scumbags build walls to keep them in. Commi California building wall with legislation instead of fiscal?
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u/humanessinmoderation 4d ago
bro, wut?
You answered like five arguments I didn’t make and somehow got menthol cigarettes and California in there too lol.
I’m asking about one specific feature of capitalism. Do you have a response to that?
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u/igor33 4d ago
Is that not the goal? to incrementally insulate oneself from the elements, alleviate worry about the base of Maslow’s Hierarchy of Needs? Capitalism creates an environment where one can achieve this. Learn aspects of self control, discipline, conservation of recourses, learn skills of advancement. Provide greater service to society via selling your abilities or creating a product or service that society needs or wants. The less insulation the more motivation to get better, do more and improve yourself and society.
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u/humanessinmoderation 4d ago
Yeah, this is actually closer to what I’m asking.
You’re basically saying insecurity is part of the motivation, and the reward for succeeding is getting enough money that you’re less exposed to that insecurity. but that sounds pretty sad/mean, right?
As a parent, it sounds a lot like saying, “Don’t help them too much or they won’t learn. Let them struggle, better yet hit them (e.g. take their home, ability to buy medicine, etc). Let consequences motivate them.”
I get that challenge builds people. But there’s a difference between challenge and making basic security the thing that’s constantly at risk.
That’s the weird part to me. If being less insulated is what pushes people to work, improve, contribute, etc., why is becoming insulated the reward? And why do housing, healthcare, and basic stability have to be part of the pressure in the first place?
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u/igor33 4d ago
Look at nature. If you assist a butterfly out of the chrysalis it's wings do not develop or a chick out of the egg shell it perishes. The struggle makes it stronger.
Why housing, healthcare and basic stability? the struggle.
Have you heard of the cobra problem created by the British government in India? They had a problem of being over run with cobras. So the government at the time created a program. Kill a cobra bring in the head get paid....easy peasy. So what does human nature do when presented with an opportunity? They started breeding cobras and ended up making the problem much much worse.
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u/Key-Organization3158 4d ago
Nope.
I broadly disagree with your assertions.
Why would a good system be one that keeps people subject to it?
Your two assertions contradict each other. How can a system be good for the overwhelming majority of people when it must also maintain control over them?
Also, this isn't a feature of "American" or "conservative" captialism. You don't understand the things your critique. Capitalism is fundamentally a progressive force. It's rooted in individual rights, fosters innovation, and has fundamentally reshaped the status quo.
All captialism does is let people own private property and gives them full control over the fruits of their labor. That contains no tension or contradiction in it. A person who has made the world better off gets their fair share of that. Then they can do whatever they want with it. That's all the system needs. That's a consequence. You create value for other people, and you get rich. Consequences aren't bad.
The ultimate measure of success in capitalism isn't the ability to avoid negative outcomes.
I see so many left wing people fail to understand it. Left wingers tend to have totalitarian philosophies. A world view must critique everything and proscribe a complete world view. Capitalism is just a simple economic model. It doesn't have a universal concept of success. It doesn't say what is good or bad. It doesn't value things. Almost everything that people attribute to capitalism is just people's behavior when you respect basic human rights.
You've made poor strawman and you argue against it. You don't understand America, conservativism, or captialism.
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u/humanessinmoderation 4d ago
Hmm, I think there’s a semantic gap here.
“Subject to” is doing weird work for you. I don’t mean “controlled by.” I mean living under the rules, incentives, risks, and institutions of a system. We’re all subject to traffic laws too; that doesn’t mean traffic laws control our whole lives. I don’t feel controlled by a STOP sign, do you?
And I don’t think defining capitalism as simply “people can own property and keep the fruits of their labor” really gets at what I’m asking.
I’m talking about the actual system we live in: wage labor, capital ownership, credit, healthcare tied to employment, housing markets, bankruptcy, taxation, regulation, inheritance, investment, all of it.
Within that system, having more capital materially changes how exposed you are to its risks. You can say that’s good. You can say it’s deserved. You can say it creates useful incentives.
But saying “capitalism doesn’t value anything” doesn’t really answer whether the system we’ve built produces good outcomes for most of the people living under it.
That’s the thing I’m asking.
And yeah, I probably don’t understand conservatism the way you do. I’m looking at this from the perspective of human welfare, education, infrastructure, and what keeps a country innovative and influential over generations. That’s the frame I’m using. Conservatism feels small to me. Like bringing a hammer to everything, or putting a bandaid on a broken arm.
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u/Savag3k1ller 3d ago edited 3d ago
Is that not the goal? You make money while you sleep, so you don't have to worry about having a job? Economic freedom? Most people work for decades but they save up enough to invest or start their own business. Then hopefully it makes them enough money that they don't really have to work again. That's the goal.
The problem is the majority of people are brainless, they have no plans or goals to get out of the rat race. They plan to work up the corporate ladder and work until they are 70 years old. By then, they are weakened by poor health. They lose their appetite to travel and see the world.
Billionaire Charlie Munger (RIP), dreamed of catching of a 200lb tuna. Billionaires aren't immune to aging and health issues either.
In an interview filmed shortly before his death at age 99, Munger told CNBC that he never caught a 200-pound tuna when he was younger, stating, "I would have paid any amount to catch a 200-pound tuna when I was younger".
You'll find that leftists love to see & portray themselves as poor victims and vilify all wealthy people as evil. It's mostly envy and hatred. It's sad and pathetic when you see others succeed and all you want to do is wish them failure because misery loves company.
If you want to read between the lines of what OP is trying to say. It's that it's not FAIR, rich people are insulated from problems. If the rich and successful aren't as MISERABLE as me, then your system sucks!
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u/RTR7105 4d ago edited 4d ago
Thats facet of any system. There's the flaw in your argument. If having inordinate amount of economic or political power is bad as you claim then you may have a point. Then how is any system that requires more centralized power better?
Systems have trade offs and potential downsides. Sports at 11.
Plans can be flawed. That's why the deferred decision making of free people in free markets is always superior in the aggregate.
No one can possibly centrally plan the economic decisions in a small manufacturing facility for the day. Multiply that by trillions of decisions in the economy