Adam Smith Institute

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Just what it is that this capitalism thing is good at?

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Putting aside my usual insistence that capitalism and markets are very different things, a quick question on what is it that the system we commonly call capitalism is so good at? What, really, is the benefit that it brings to us all?

For $70,000 (£42,000), it may not seem like a very good deal: all you get is a polished silver box containing a USB drive on a black velvet tray.

What you get is your personal genome. So, is capitalism simply good to provide exclusive trinkets for billionaires? There are those who say that it is of course, but that would be to grievously misread what is happening here.

The cost of the procedure is dropping fast, and while $70,000 is a significant expense by even a Wall Street banker’s standards, it seems inconsequential when compared with the $3 billion cost of decoding the very first genome — a project that was completed in 2003, after 13 years. Today the same process takes six to eight weeks. By 2015, says Mr Conde, personalised sequencing is likely to cost under $1,000, and take only days.

From $3 billion to $1,000 in only 12 years: yes, the thing which capitalism is so good at is making things cheap.

This is why it works as a socio-economic system. Leave aside all the morality plays of exploitation and the like for a moment and think purely as an entirely hard hearted pragmatist. We've got cheap food now, we can all fill our bellies at the expenditure of trivial, by historical standards, amounts of labour. Cheap clothing: it's within the memory of those alive that Sunday Best really did mean one's second and only other set of clothing. Even housing which seems so expensive has increased in quality so much that it is cheap by any long term comparison. Add medicine, transport, heating, alomst any sector of the eonomy or consumption that you wish to mention. All are incredibly cheap by the only standard that really matters: how long and how hard must we labour to get them.

As that hard headed pragmatist you would note that the capitalism/markets thing is the only system which has managed to achieve this. No other system that we've ever tried has done that truly remarkable thing, offer a sustained, long lasting and general rise in the standard of living: the reason being that no other system comes remotely close to capitalism's ability to make things cheap.

Not bad for a system derided (wrongly) for being based upon nothing but greed, is it?