Misunderstanding Capitalism

[NWRatCon]

Free market purists do not live in the real world. The invisible hand is invisible because it is a ghost.

In order for free markets to exist, it is necessary to have frictionless transactions - perfect information and no outside pressures. Neither of those conditions have ever existed, nor can they.

Moreover, there are two conditions that markets cannot address: externalities - e.g. environmental degradation, war, natural disasters; and "the tragedy of the commons"- the depletion of natural (minerals, forests, water, fisheries) and other resources (say, housing) beyond replacement.

And then there is the problem of humanity. Markets don't care about human suffering beyond making money off it. If it is not profitable, it is not addressed. (Destitute people don't spend money).

 

[NWRatCon]

No, it isn't, even in small town, because there is no way for all of the businesses to effectively monitor each other.

That's total nonsense. It's typical to make assertions that simply cannot be backed up by facts. Interesting world you live in, where facts simply don't matter.

 

[aociswundumho]

No, it isn't, even in small town, because there is no way for all of the businesses to effectively monitor each other.

That's total nonsense. It's typical to make assertions that simply cannot be backed up by facts. Interesting world you live in, where facts simply don't matter.

Then explain how it would work. Explain how all of the businesses in a small town could monitor each other's payroll, and more importantly, why each business would want their competitors to know how much they are paying their employees.

 

[devildavid]

The OP is simple minded online libertarianism that never fails because it is never tested in reality. In real life, natural resources cannot all be owned as property. And not all property was ever purchased, it was mostly taken by force, then the rulers established the idea of private property to benefit themselves. It is a libertarian sham.

 

[soylentgreen]

This is what I was talking about. Capitalism is simply about protecting private property rights. It can't "trend towards controlling the government." Capitalism is not the wealthy or powerful firms that try to control the government. Say that instead. The wealthy and powerful have always had a hand in controlling the state, regardless of what the economic system is. Capitalism has nothing to do with that.

And your statement about the "excesses" of competition seems to be, once again, talking about something other than capitalism. Are you talking about crimes? Are you talking about fraud? Those things are illegal under a system of private property protections. So what exactly do you mean?

Part in bold. Not quite true. The ownership of private property is an essential basis for capitalism. but capitalism is actually all about the free exchange of goods and services between different parties;

It is up to a government based on capitalist principals to uphold the right to own private property.

So while essential to the core of capitalism it is not merely about private property that is the job of government.

 

[NWRatCon]

Part in bold. Not quite true. The ownership of private property is an essential basis for capitalism. but capitalism is actually all about the free exchange of goods and services between different parties;

It is up to a government based on capitalist principals to uphold the right to own private property.

So while essential to the core of capitalism it is not merely about private property that is the job of government.

There's a lot to unpack in such a short presentation! I completely agree that a "capitalist system" cannot exist in the absence of a government to protect those interests in private ownership. The sine qua non of capitalism is ownership of... capital (most often in the form of fractional interests).

The distinction I raised earlier, though, addresses your claim that "capitalism is actually all about the free exchange of goods and services between different parties". Here I disagree (mildly). That is what "free market capitalism" espouses, but capitalism can, and most assuredly does, exist outside of markets being "free". Moreover, socialist systems can also allow the "exchange of goods and services" in relatively free forms, even though excessively constrained by the government - e.g., the sale of bread by a baker at a price set by the state. The exchange is between a willing seller and a willing buyer - thus "free" - but the "profit" potential is moderated by state action. Nonetheless, exchanges occur and profits are made.

Finally, I agree, as stated earlier, that private ownership is necessary but not sufficient to describe a "capitalist system". There always has to be a "modifier".

 

[soylentgreen]

There's a lot to unpack in such a short presentation! I completely agree that a "capitalist system" cannot exist in the absence of a government to protect those interests in private ownership. The sine qua non of capitalism is ownership of... capital (most often in the form of fractional interests).

The distinction I raised earlier, though, addresses your claim that "capitalism is actually all about the free exchange of goods and services between different parties". Here I disagree (mildly). That is what "free market capitalism" espouses, but capitalism can, and most assuredly does, exist outside of markets being "free". Moreover, socialist systems can also allow the "exchange of goods and services" in relatively free forms, even though excessively constrained by the government - e.g., the sale of bread by a baker at a price set by the state. The exchange is between a willing seller and a willing buyer - thus "free" - but the "profit" potential is moderated by state action. Nonetheless, exchanges occur and profits are made.

Finally, I agree, as stated earlier, that private ownership is necessary but not sufficient to describe a "capitalist system". There always has to be a "modifier".

I should be more distinct here. Free market was also a term used by smith and had a different meaning from the present meaning of laissez-faire. The part in bold is more as to what smith meant. Where as laisez faire just means unfettered by government control.

 

[NWRatCon]

I should be more distinct here. Free market was also a term used by smith and had a different meaning from the present meaning of laissez-faire. The part in bold is more as to what smith meant. Where as laisez faire just means unfettered by government control.

Here we completely agree.

 

[NWRatCon]

I legitimately like to discuss, and think about, economic theory and application. It is unfortunate that the OP was such a poor vehicle for doing so, but I think we've taken care of most of the manufacturer's defects by now.

 

[What if...?]

Why does a job that is easily attainable by a 16 year old need to provide a basic standard of living? I'm all for people being able to live and live comfortably but people as a society need to understand that if all jobs pay a standard of living wage then only jobs that are of that value will be offered and people will have to use self checkouts and push their own shopping buggies from the parking lot.

Are 16 year olds doing all of those jobs?

My fast food habit says no.

Does the work need to be done? Is there any reason besides keeping payroll down those can’t be full time jobs?

What y’all are really advocating for is taxing kids for “work experience” with low wages, crappy work. Cheap labor and a built in reason why that cheap labor must remain cheap at all costs.

 

[What if...?]

Why does a job that is easily attainable by a 16 year old need to provide a basic standard of living? I'm all for people being able to live and live comfortably but people as a society need to understand that if all jobs pay a standard of living wage then only jobs that are of that value will be offered and people will have to use self checkouts and push their own shopping buggies from the parking lot.

Or some folks may have to accept lower profits. That’s the other angle of attack.

 

[What if...?]

People are greedy - but government regulators are people too. If human beings are as awful as you are implying they are, then giving a tiny handful of them political power over everyone else will make thing worse, not better.



But the only way your theory works is if politicians are morally superior to the rest of us. Good luck coming up with any evidence for that.

Maybe not morally superior but suffering from their addiction to power as opposed to addiction to wealth. And in a democracy we can take their power away.

No way to take your bosse’s power away. Or your landlords.

 

[ataraxia]

Who tf cares? If you believe you are underpaid, then quit go work somewhere else. If no other business will pay you more, then the company you are working for is providing you with your best option.

The end result of that policy usually is that a handful of people in any given country end up with more money than the GDP of entire nations, and everyone else starves. It's not a very sustainable or functional way to run a stable country.

 

[What if...?]

Walmart has approximately 1.7 million associates (employees) in the U.S. 550,000 of whom are "minimum wage" employees (Walmart's AVERAGE is $17). "Walmart's minimum starting wage will rise to $12 an hour from $11..." WTLF? Each hour he earns $10,192. Each day of the CEO's wages is over $80,000 - enough to pay for the annual pay of the 2 average workers, and 3 1/2 minimum wage workers. What's wrong with this picture? Is his work really worth 600 times that of the average employee?

His employers are the stockholders and he must be making them a lot of money for them to pay him that much.

 

[aociswundumho]

Maybe not morally superior but suffering from their addiction to power as opposed to addiction to wealth.

Then they have no right to rule over other people, regardless of any idiotic popularity contest.

And in a democracy we can take their power away.

Until a sufficiently power hungry individual turns a democracy into a dictatorship.

No way to take your bosse’s power away. Or your landlords.

Nonsense. You can quit any job or find another apartment and you are done with both of them forever.

 

[aociswundumho]

The end result of that policy usually is that a handful of people in any given country end up with more money than the GDP of entire nations, and everyone else starves. It's not a very sustainable or functional way to run a stable country.

So people are starving in the US? Last time I checked, the poor in the US have the highest rate of obesity.

 

[ataraxia]

So people are starving in the US? Last time I checked, the poor in the US have the highest rate of obesity.

That's because in the United States today, we now have a lot of oppressive government regulations and safety nets. When things were more free, like the Gilded Age, things were not so great. We didn't just start making regulations because things were working out so great.




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[What if...?]

Of those I would agree with water and air.

Maybe even land but that would create a whole host of issues to deal with.

IDK. Here in California housing costs are ridiculous but most of the land is actually empty. Just being held for future profit.

I think finite things that are part of the basic human survival need set need to be watched as points of exploitation, “rent seeking”. Dog in the manger capitalism. Don’t want the hay, but gonna charge the cows for it. Because you can.

 

[aociswundumho]

That's because in the United States today, we now have a lot of oppressive government regulations and safety nets.

Is the claim here that government regulation creates prosperity? Because Cuba has even more government regulation than the US.

When things were more free, like the Gilded Age, things were not so great. We didn't just start making regulations because things were working out so great.

You claimed:

The end result of that policy usually is that a handful of people in any given country end up with more money than the GDP of entire nations, and everyone else starves.

Now you're saying that this situation only existed 100 years ago.

 

[NWRatCon]

His employers are the stockholders and he must be making them a lot of money for them to pay him that much.

"Institutional investors hold about 33% of Walmart's total shares outstanding, which is a relatively small share compared to institutional holdings of other large-cap stocks. This relatively small share, however, can be explained by the fact that the Walton family, in some way or another, holds the majority of the company's total shares outstanding, at about 50.1%."

 

[ataraxia]

Is the claim here that government regulation creates prosperity?

Business needs a solid system of laws and law enforcement. It cannot function in a completely chaotic free environment.

Importance of Rule of Law to Business

2012books.lardbucket.org

Thinking business can function in a completely unregulated, "free" environment is like thinking you can have a car with only a gas pedal, and no brakes or a steering wheel- and have it work in any functional manner.

Because Cuba has even more government regulation than the US.

The difference between a good driver and a bad one is knowing when to judiciously use the gas pedal, brakes, and steering wheel- not having a car with no brakes or steering wheel, nor a car with only brakes and nothing else.

You claimed:



Now you're saying that this situation only existed 100 years ago.

What's the only difference between 100 years ago and now? Better laws and regulation. If you go back to doing things the same old way, you will get the same old results.

 

[Peacenik]

The other day I was watching a YouTube video discussing a TV show. They claimed the show was anti-capitalism because it showed the government tricking/forcing some local people out of their land in order to hand it over to a company who would presumably strip mine it. That's not capitalism. Capitalism would be the company offering money for the land, and if the locals reject the offer, then that's the end of the story.

It seems people associate capitalism with any economic activity and with any private individual or firm making a profit. This is not so. Capitalism is simply when property is held and controlled in private hands. If I start a charity, solicit donations and then use the money to buy food and medicine for the poor, that's capitalism. If I own a piece of land and I make it a nature preserve, that's capitalism.

I often see criticisms of capitalism regarding crimes committed by wealthy people or firms to advance their interests. That's not capitalism, that's just a crime. If a company decides to cut costs so they can lower their prices below the competition that's capitalism. If a company decides to burn down the factory of their competition, that's a crime.

The latest academic trend is to say that slavery is somehow a part of capitalism. They talk about how slaves were considered "property" and were bought and sold and used to make the slave owner a profit. These superficial terms give the impression that slavery is akin to a free market firm doing business, but this is the opposite of the truth. The ultimate in private property is ownership of your own person. You cannot alienate (transfer control of) your body, so no one other than you can own yourself. Thus slavery is a violation of private property rights and not at all compatible with capitalism.

What other ways is capitalism mischaracterized?

Slavery is not a mischaracterization of capitalism. Slaves were considered property. The USA made that disgusting part of capitalism illegal.

 

[NWRatCon]

Business needs a solid system of laws and law enforcement. It cannot function in a completely chaotic free environment.
....
What's the only difference between 100 years ago and now? Better laws and regulation. If you go back to doing things the same old way, you will get the same old results.

You have a much chance of him understanding basic economics as you have of teaching a 10-year-old differential calculus when they can't comprehend arithmetic.

 

[aociswundumho]

Business needs a solid system of laws and law enforcement. It cannot function in a completely chaotic free environment.

Importance of Rule of Law to Business

2012books.lardbucket.org

Sorry, but your "lardbucket" link is wrong. The "rule of law" is a myth. Government-run courts are openly biased in favor of the wealthly and the politically-connected. That's one reason why private arbitration is such a huge industry.

Thinking business can function in a completely unregulated, "free" environment is like thinking you can have a car with only a gas pedal, and no brakes or a steering wheel- and have it work in any functional manner.

Something like 17% of the world's GDP is off the books, so you can go ahead and flush that claim down the toilet.

The difference between a good driver and a bad one is knowing when to judiciously use the gas pedal, brakes, and steering wheel- not having a car with no brakes or steering wheel, nor a car with only brakes and nothing else.

The information needed simply isn't available to anyone. You cannot know the individual preferences of millions of different consumers and producers.

What's the only difference between 100 years ago and now? Better laws and regulation. If you go back to doing things the same old way, you will get the same old results.

So the "everyone else starves" was false, and you knew it was false, yet you wrote it anyway.

 

[ataraxia]

Sorry, but your "lardbucket" link is wrong. The "rule of law" is a myth. Government-run courts are openly biased in favor of the wealthly and the politically-connected. That's one reason why private arbitration is such a huge industry.

Why the Rule of Law is an absolute Necessity for Businesses to Prosper

This article explains why the rule of law is absolute necessary for businesses to prosper and operate in various countries. The article uses examples of how businesses operate in countries such as China and India and how this differs from the West in terms of the whole system of law enforcement...

www.managementstudyguide.com

Importance of Rule of Law for Business

Legal experts state that the rule of law as it relates to business is a necessary part of regulating the economy. Read this article for more.

marketbusinessnews.com

The Importance Of The Rule Of Law In Business Success – The BlackWell Firm

theblackwellfirm.com

Something like 17% of the world's GDP is off the books, so you can go ahead and flush that claim down the toilet.

Sure. With results like that people get talc in the cocaine they shoot up and end up with strokes. The free market at work, right?

The information needed simply isn't available to anyone. You cannot know the individual preferences of millions of different consumers and producers.

No one prefers to be lied to in the marketing materials.

So the "everyone else starves" was false, and you knew it was false, yet you wrote it anyway.

Why was it false? Everyone else DID starve.