Look at Capitalism, A (1955)

prrams has been presented to help all of us understand better our advantage our American way of life for today's topic let's join now a group of young people at the National Education Program Workshop Arkansas at the classroom lecturn is Dr Clifton El gainus Jr noted young historian we have discussed socialism and communism in our last two classroom sessions now and director National Education Program says that if each generation of Americans will develop a clear understanding of our American System of capitalism how it works and the comparative advantages it produces for all citizens then neither socialism nor communism ever will become established in America so let's see if we can develop a better understanding of capitalism but first who will Define for us the term Capital that is in its economic sense all right Joan suppose you define it for us well money capital's money that's right but only partially right let me demonstrate here is a dime suppose I take this dime and buy some ceramic clay now then my money which is capital has has been converted into raw material which it logically follows must also be capital I mle this clay into a child's toy animal you would regard the energy expended by me as capital now when I finish I bake this clay toy in my oven at home this oven or any machine I might use in achieving the final product must also be be regarded as capital then I add the final touch and sell this toy for 39 or at least I try to and if I should succeed I take the 39 cents reinvest it in clay and start the cycle again employing again all the Farms which capital may take as raw materials as energy as machine and so on Capital in a few words is money at work producing things and since I am in charge of the cycle I'm a capitalist yes well what if you have to borrow that money like so many businesses do to start that cycle then that makes the lender a capitalist too since it is his money at work producing something and he becomes a part of the cycle capitalism is a system in which econic wealth or capital is used to produce goods for sale or in other words to produce new wealth but Professor gayus aren't there different kinds of capitalism yes there are and the differences can be vitally important state capitalism is often the first stage of socialism we might say that state capitalism exists when the government achieves a combination of ownership and control and business and industry large enough to permit it to dominate the nation's economy and there are forms of capitalism in which production and distribution are governed by cartels or monopolies fixing prices and permitting no competition this Farm existed in many European countries in the time of KL Marx and during this Century before Socialism or communism gain control yes John an important fact that we must emphasize is that America capitalism is quite unique there never has been a system quite like it in all history so let's examine the structure of American capitalism there are three great pillars the first and foremost of these is who can tell us all right Louise isn't it the principle of private ownership of property yes yes it is this principle of private ownership is undoubtedly the most fundamental element in the structure of American capitalism consider for instance home ownership which is a bright American goal for most of our people the desire to own one's own home one's own property provides a real incentive for almost all Americans to bring out their most productive efforts and the American system what's yours is yours what you do with it is your business you can squander it away or you can work harder and produce more and have more the principle of the private ownership of property is the number one target of the Socialist and communist they believe in government ownership and control Carl Marx in The Communist Manifesto wrote the the of the Communist may be summed up in a single sentence abolition of private property so private property is the foremost pillar supporting the American system and our personal freedom that brings us to the Second Great pillar who can tell us what it is all right Mary the prophet motive yes indeed this is the stimulus that brings private ownership to life and expands its usefulness to society as a whole in one sense profit is property when an individual produces more than the basic living requirements for himself and his family the Surplus is profit which he can use as he sees fit an automobile is not a basic requirement for survival nor is a television set yet most American families want them and have them because all normal human beings want more than the bare necessities of existence the capitalistic principle of private ownership gives them the privilege of earning and keeping enough Wealth Beyond their food and shelter requirements to afford to buy the other things they want but Professor gayus what about the individual who doesn't produce a product of his own what I mean is what about the employee the worker well you remember we said that energy is capital ability is capital when we as employees work for someone else we are not selling our time we're selling our services our ability when we get paid if we save a little of our income we're profiting and we can become employers if we wish and if we can develop management capabilities many of America's greatest industrialists were employees who saved and developed their capabilities if we do not develop into employers we still can become producers or capitalists by investing our Surplus our savings in some Enterprise which is producing something 18 million ordinary Americans own stock in businesses and industries if I borrowed money from you to make my clay toys you would become producers since your Capital would help produce my toys the business world is full of actual examples General Motors for instance is just a group of people who with their dimes and dollars are producing products for sale there are more than half a million stockholders with their savings invested in General Motors and why do they invest their dimes and dollars they want to make a profit it is a normal wholesome motivation Dr gayus I once heard a clergyman say that the profit motive is not a good motive do you agree with him I'm sure the clergyman wasn't a socialist or communist but that happens to be what the Socialist and communist say about the profit m motive and yet most Converse to socialism and communism joined up because of the promise of personal benefit or profit would a clergyman be able to fill his church if he told prospective members that there is no personal reward or profit and giving one's life to God how many of you students study at dinner each evening instead of having the momentary pleasure of some favorite pastime I think you would want to say that study can be worth What mo motivate you then a desire for learning a desire perhaps for good grades but with a belief that in the end you will render a more valuable service and receive more for it if you didn't hope to profit you wouldn't study what I'm trying to say is that the profit motive is active in most human behavior that's important to remember and now to the third of the three great pillars in American capitalism all right Gary the open market yes the open competitive market where anyone can offer his wees for sale at whatever price he can get is a benefit not only to business and industry but to the individual as well let's go back to our toy animal illustration let's suppose that we develop an ability to make attractive little ceramic toys and that children all the nation want these toys we expand our Enterprise probably on borrowed money and and began making profit another toy manufacturer seeing our ceramic toys cutting into his sales and profit does some research and finds that he can make an unbreakable toy very much like ours and sell it for less money than we're getting at the same time making a profit he can do this because we have a free competitive market in America challenging achievement the consumer are buyer gains when we have this constant competition in the marketplace the best products at the lowest cost emerge have you ever seen one of the early automobiles manufactured in America it was really something to behold when it was manufactured only a few wealthy people could own an automobile and even for them it was likely to break down on any 10m trip today there are more automobiles in America than there are families and almost every family owns one competition the free market brought this about Henry Ford was determined to outstrip other manufacturers he went after the mass Market with his low price Model T produced with his remarkable mass production techniques he won the low price Market but not for long others competed and competed so well that the product continued constantly to improve what competition in the free market has done in the production of automobiles it has done for thousands of other things with private ownership of property the profit motive and the competitive free market American capitalism produces more wealth than the next 10 Nations all combined you and I benefit tremendously because of our great productive system American capitalism our individual efforts Bring Us rewards higher than those realized by any people on the Earth with one day's wages an American for example can buy this big supply of food an englishman's daily wage by contrast will buy only this much and the Russians just this much so let's remember these pillars of freedom and progress when we hear or see the Socialist or the Communist trying openly or secretly to undermine them these factors can be destroyed through subversion or through our own shortsightedness or apathy in defending them surely all of us can feel gratitude and pride toward American capitalism its record of imp proving human welfare is unmatched in all history next week we shall examine American capitalism's widespread distribution of wealth until then class [Music] dismissed the American Adventure series is a production of the National Education Program Cersei Arkansas Dr George S Benson director Dr Clinton Al ganus Jr was our instructor this is a continuing series based on the unique political and economic system which has made America great watch for the next presentation of the American Adventure