The Biggest Opponents of Capitalism are Often Capitalists

Ideally capitalism is a system of voluntary transactions. Unfortunately we don’t live in an ideal world and often those who profit the most from capitalism are also its biggest opponents:

In the 1940s, Joseph Schumpeter said that the capitalists would ultimately destroy capitalism by insisting that their existing profitability models perpetuate themselves in the face of change. He said that the capitalist class would eventually lose its taste for innovation and insist on government rules that brought it to an end, in the interest of protecting business elites.

While socialists often talk about profits eventually ending up in the hands of a mere few capitalists the truth is this couldn’t happen without the state’s involvement. Profits are a temporary phenomenon unless a coercive monopoly can be established. The reason for this is simple, when people see somebody making great profits they want a piece of the action and start a competing enterprise in the same market. When Henry Ford started raking in money others wanted a piece of the action and we ended up with competing companies such as Chevrolet. Chevrolet offered options that Ford didn’t, like an engine with more than four cylinders and automobiles that came in colors other than black. People wanting a six cylinder engine in a blue car now had an option and Ford found its profits dwindling as automobile buyers started going elsewhere. In the end this sparked great advancements in the automobile industry as each company tried to outdo the other, consumers won in the end.

Fast forward to today. The digital age have turned formerly scarce goods like music, movies, and literature into infinitely creatable bits. This change has caused problems for record companies, movie producers, and book publishers because their services are becoming obsolete. Instead of looking into new ways to innovate and profit they have turned to the state to protect their decrepit business models. Organizations like the Record Industry Association of American (RIAA) and the Motion Picture Association of American (MPAA) have been lobbying the state for more draconian copyright laws and stricter enforcement. The capitalists have become the ones trying to destroy capitalism.

As the article I linked to explains the Internet wasn’t the first creation to send established producers into a panic. Televisions were supposedly going to destroy live performances, cassette tapes were supposedly going to destroy album sales, and way back in the day the printing press was supposedly going to destroy new literature. None of these things have panned out and future claims of goods being destroyed by new technology won’t pan out either.