Wrong.
Capitalism is egoism for everyone, meaning everyone works for their self-interest. We know from Atlas Shrugged (1957) and many other Rand writings, that capitalists trade to make a profit, and this is morally admirable. They are wealth creators. Only the socialists are wealth expropriators.
We should be very grateful to millionaires and billionaires who earn their money through voluntary trade. (Let me make clear that in no way do I sanction dishonesty or breaking the law. Businesspeople who disagree with one or more laws should nevertheless obey them and work within the law to change them.) Honest capitalists provide us with a never-ending stream of goods and services that make our lives better and, at the deepest level, make our survival possible.
But it is important not to forget that customers and employees are also egoists. Free trade is actually a three-way street. The capitalists want to get the highest price possible for what they provide, but customers want to get the lowest price possible for what they buy. The customer’s goal, after all, is not to ensure the producer’s profit. Customers do not sacrifice themselves to the seller. Buyers routinely compare sellers. They look for the best deal they can get and are quite willing to abandon one seller for another in a flash if an alternative value is greater.
The same principle applies to employees. Applicants want the best jobs they can get. If a given employer does not offer what they want, they can and do look elsewhere. If a company does not treat its employees justly, or if the employees witness fraudulent activities, they look for better jobs with no concern for the effect on their current employer’s bottom line. Employees, like customers, are fully expected to look out for themselves.
But it is revealing that capitalists are condemned for being egoistic, but customers and employees are not, even though they all look to profit in their own way.
Why the double standard? It is because, customers aside, the top wealth creators have greater productive ability and thus make a lot more money than their employees. A big point of contention has involved CEO pay as a ratio of the median employee salary. Management guru, the late Peter Drucker, argued that the ratio should not exceed 20 to 1 or it would destroy employee morale.
In 2022, the Wall Street Journal conducted its own study based on available data from 482 of the S&P 500 companies [1]. The median ratios were divided into four quartiles. For the lowest quartile the median ratio was 85:1; for the highest quartile 481:1. Overall scores based on combining the five effectiveness factors were compared. The surprising result was that the higher the ratio, the greater the effectiveness. The 481:1 companies came out first, the 8:1 last, with the other two quartiles in between.
This study of, course, is neither the only nor the last word, though it does not support Drucker. But let me make a more fundamental point: there is no proven, objectively right ratio. Drucker’s assertion was not based on any facts. Different studies might find different results.
The real complaints about unequal pay are philosophical. Pay differences, as such, exist because some people are far more productive than others, and this, according to the left, is unfair. (Note: incompetent CEOs should be fired and eventually are. CEO turnover in the U. S. is about 16 percent per year.)
The left’s wish is that everyone comes out almost the same because they wish it to be so. Because some people are, in fact, more able than others, egalitarianism is, at root, a revolt against reality. They want capitalists to produce but not be commensurately rewarded. Although the left does not reject all differences, to them, they “feel” that some differences are just too large, too far from equality, as defined subjectively by them. There must be limits, chosen by them, on achievement. Some people are just too good.
The left, in short, advocates social injustice. They hate the good for being the good (Rand,1993, op. cit.). If America chooses to exploit the people it should admire, then it is doomed to end up as another failed nation in the dustbin of history.
Notes
[1] Wartzman, R., & Tang, K. (2022, July 30). Is there a relationship between high CEO pay and corporate effectiveness? Wall Street Journal p. R7. https://www.wsj.com/articles/relationship-between-ceo-pay-company-performance-11659127563
