“What I am referring to is the rise of what might be termed individualism over collectivism. This is the idea that our world view has shifted from the need to play a minor part in a bigger society to the view society, and pretty much everything else, should revolve around us.”
In an op-ed for the Australian newspaper two months ago, Bernard Salt, a partner at KPMG – an auditing, taxation and financial advisory firm – argued that people have become self-centred. That people worry more about themselves than they do about the wider society.
He backs his view saying:
“If you are not claiming every thing you are entitled to, and more, then you are seen as a bit of a loser. And I suspect this is because today we believe we are entitled to a standard of living that is more or less disconnected to any notion of how hard we work.”
That paragraph proves Mr. Salt doesn’t understand individualism. In fact, we’ll explain how individualism is the most important ingredient for economic prosperity and progress.
But first, back to Mr. Salt…
Individualists Don’t Sponge Off the State
The mentality he rails against is actually the mentality of collectivism, and not individualism.
People who are individually minded, those who rightly act in their own interests, have no desire to sponge off the state. Simply because they prefer to keep what they earn and would like others to keep what they earn.
Collectivism is where you get the entitlement mentality.
You know the saying, “What’s mine is mine and what’s yours is mine”!
In a collective economy… an idea always needs approval from an “Ideas Tsar”… a central planner who decides on behalf of the market which ideas live and die.
Now, that’s not to say collectivist societies can’t develop new ideas. The difference is, the State decides which ideas will be successful, not the market.
The 1960s “Space Race” is a good example. How was the Soviet Union able to put the first man in space when it was a communist nation? And why was the capitalist United States second?
For the answer you just need to consider the cost of the “Space Race”. Sure, the Soviets got there first… but look at the cost… millions of people living in abject poverty… an economy that could barely produce a workable car… queues for even basic food items… no medicines – except drugs for athletes… and so on.
By contrast, the individualistic United States had plenty… 40 car firms of various sizes (by the way, 680 auto firms came and went between 1900 and 1930. That’s creative destruction for you!)… little poverty… supermarkets crammed with food… the best healthcare system in the world… and so on.
The difference was entrepreneurs could flourish. The government didn’t dictate what companies could produce.
But in order to be the first nation into space, the Soviets had to devote all their resources to it, and subject their citizens to decades of poverty, violence and oppression.
In contrast, the Americans got a man into space by only devoting a fraction of its resources.
Free Markets, Not Governments Fund Essential Services
In short, individualism and free markets provide society with the things governments take the credit for – health, education, public buildings, etc. If it wasn’t for the actions of the market, like the Soviet Union, none of these services would be possible.
But it all relies on an economic environment that allows creative destruction. Where new ideas can spontaneously break through to succeed or fail.