TED-Ed: Is Capitalism Actually Broken?

[Rickeroo]

I think what upsets people about capitalism is that like all economic systems, it's applied to a fallible and highly variable population. Problems manifest as a result. Economic systems are discussed as if everyone is a robot with identical capabilities, goals, and temperament.

 

[blue scorpion]

Capitalism without the ownership of land?

ROFL

How much money is spent on rent and mortgages every year? So people have to work to pay to live on the planet.

You lost me there. You raise a question that I said I would love to discuss and made no comment one way or another. Was your question pointless? Why did you ask it?

 

[Peter]

Neoliberal democracy with its all encompassing economic program is unsustainable and should be replaced. Running the government like a business and the commodification of politicians is incompatible with democracy and the mark of a banana republic.

The washington consensus of the 80s and 90s got us to this point.

Surely if we just keep giving tax cuts to the ultra wealthy it'll eventually trickle down to us smelly normals?

 

[NWRatCon]

Is capitalism broken? Only to the extent that one would call a street brawl a broken boxing match.
As with any "game" when it ceases to be played by fair, equitable rules, it will not produce the expected or desired results.
It is also a crucial aspect that the rules evolve with the game itself, reflecting new abilities, methods and resources and of course that those rules be uniformly applied to all "players" at all times.

Marquess of Queensbury (or Queensberry) Rules.

I completely agree. The key to functionality of capitalism is fair rules. Right now, 't'aint fair.

The answer is not to throw everything out, but to adjust the rules. FTX is an abject lesson in what happens when rules are not applied.

I'm a big advocate of much stricter rules and confiscatory taxation (but that's a different thread). Big faults require major adjustments.

At present, our democratic institutions are corrupted by unfettered capitalism, and that needs to change.

 

[nucky9]

Marquess of Queensbury (or Queensberry) Rules.

I completely agree. The key to functionality of capitalism is fair rules. Right now, 't'aint fair.

The answer is not to throw everything out, but to adjust the rules. FTX is an abject lesson in what happens when rules are not applied.

I'm a big advocate of much stricter rules and confiscatory taxation (but that's a different thread). Big faults require major adjustments.

At present, our democratic institutions are corrupted by unfettered capitalism, and that needs to change.

Agreed, but change is unlikely unless/until the disparities cause people to rethink their position in the class structure. Right now, people are distracted enough not to fight too hard for much of anything.

And it's a vicious cycle. The right gets into power, and pillages as much as they can from wherever they can for the upper class. Then, the 'left' (more central, for the parties on our continent) get in, reduce the pillaging somewhat (but never outright stopping it) and throws a few bones to keep people happy enough, but no happier. Repeat ad infinitium.

I mean, you mentioned Musk - he's firing cars into orbit, just because he can, while hundreds of millions (10's of millions if confined to only N. America) face insecurities to basic needs. You'd think that would wake some people up, but instead the man has a massive cult following, cheering him on in his adventure to accumulate even more wealth.

It's become too easy to influence people who are too easily influenced.

 

[NWRatCon]

This is probably a good thread to explain what my avatar description means: "eco-social marketeer". It's a real thing. At base, marketeer means I support the concept of capitalism (private ownership) as an economic principle, but eco-social identifies that the market needs to be counter-balanced to meet the needs of the environment and to provide social goods.

Our (American) current approach to market regulation is too close to laissez-faire, and that is damaging the economy, the environment, and our society - the trifecta of dysfunction. (Ironically, those most affected by this circumstance flock to the party - Republican - that exacerbates these problems. Go figure.)

I'm no free-marketer, but neither am I a communist, or "planned economy" advocate (except for certain economic sectors). Rather, I understand that "markets" are not the solution to many major problems, principally preservation of public resources (ecology) and provision of the general welfare (social). So, instead, the "market" must be forced to address those interests, primarily through taxation and other economic policies.

 

[Doppelgangirl]

Capitalism is, by its very nature, unstable. That doesn't make it good or bad, that is just reality. In order for it to function, it has to have governance. (That's why I liked the OP video, because it explains the levels of governance and the inputs into the process.)

"Free Marketeers" - and we have many of them here - ignore these realities and pretend that "Capitalism is self regulating". That has always been nonsense. The late 1800s demonstrated that in spades, as the OP points out. Our current conditions also provide a stark example of the failures of capitalistic thinking. It's not so much that "capitalism is broken", it's that it doesn't do everything it claims to do, like the elixirs that were prevalent in the late 1800s. Often it is harmful to the very entities that it is supposed to be "helping".

That “invisible hand” is total BS. It relies on individuals acting in a *rational* way (rational self interest). The problem is all too often, humans act *irrationally* and sometimes against their best interests… look at voting patterns in the US.

Capitalism is based solely on a profit motive— many things required for a stable, peaceful, functioning society are not meant for profit. I’m looking at healthcare and education, in particular.

Access to those two things for everyone would likely help level the playing field - in the most “laissez faire” way possible.

At the moment, it seems we’re on a “race to the bottom” where cheaper and faster is the goal, and people/labor have almost no real voice in the conditions they are subjected to.

 

[NWRatCon]

That “invisible hand” is total BS. It relies on individuals acting in a *rational* way (rational self interest). The problem is all too often, humans act *irrationally* and sometimes against their best interests… look at voting patterns in the U

Capitalism is based solely on a profit motive— many things required for a stable, peaceful, functioning society are not meant for profit. I’m looking at healthcare and education, in particular.

Access to those two things for everyone would likely help level the playing field - in the most “laissez faire” way possible.

At the moment, it seems we’re on a “race to the bottom” where cheaper and faster is the goal, and people/labor have almost no real voice in the conditions they are subjected to.

Well said. I agree with all of your comments. There are two fallacies in the way most people explain capitalism - the first is the invisible hand/rational actors fallacy. One only has to spend one day trying to follow the stock market to appreciate how spurious that claim is. Share prices bounce all over the place, the market panics on various news events, and it shows "irrational exuberance" all of the time, creating volatile bubbles that burst unexpectedly.

The second fallacy is the fallacy of "equal information". The theory behind open markets is that participants have availability of information to make informed decisions - informed buyers and informed sellers reach mutually acceptable prices. That is just blatantly untrue. FTX, again, is a great example. All kinds of information was hidden from participants, but that is true of almost every major (and most minor) market player. Insiders have enormous advantages, officers hide information from the public to prop up share prices, markets for particular services or commodities get manipulated - even at the local level sellers hide information from buyers to prop up prices, like "sale" prices that are based upon fake MSRPs. Each of those manipulations skew markets, as do monopolies. The entire enterprise is inherently dishonest, especially when the players are not constrained by rules.

Then there are various outside pressures that also distort commerce, like wars, pestilence, and environmental disasters.

 

[NWRatCon]

Access to those two things for everyone would likely help level the playing field - in the most “laissez faire” way possible.

At the moment, it seems we’re on a “race to the bottom” where cheaper and faster is the goal, and people/labor have almost no real voice in the conditions they are subjected to.

You also raised another glaring fault in capitalism, and that is the divorce of productive labor from the benefits of the enterprise. I personally believe that all publicly traded companies should be required to issue compensatory stock certificates to all employees on an equitable basis (ESOPs). I also think executive pay should be tied to the average compensation of all employees.

 

[Peacenik]

A pretty fair explanation of capitalism, the nuances in various systems of capitalism, who benefits, and explores factors that determined whether modern capitalism is broken.

Excellent video.

Spot on.

I always laugh when somebody claims we have to choose between capitalism and socialism, and they label any kind of government intrusion into markets as socialism.

Seems to me that is exactly what the powerful want them to think.

 

[blue scorpion]

Capitalism is based solely on a profit motive

Yes, BUT inevitably the question arises about the legitimacy of the profit, the magnitude of it and whether any considerations should influence it beyond the market.
For instance, we have antitrust laws which curb capitalism. Then we can ask what is a just return especially when a considerable portion of the profit is generated by someone else's labor. Is there some responsibility to society which by its very existence makes capitalism possible.

 

[Doppelgangirl]

Well said. I agree with all of your comments. There are two fallacies in the way most people explain capitalism - the first is the invisible hand/rational actors fallacy. One only has to spend one day trying to follow the stock market to appreciate how spurious that claim is. Share prices bounce all over the place, the market panics on various news events, and it shows "irrational exuberance" all of the time, creating volatile bubbles that burst unexpectedly.

The second fallacy is the fallacy of "equal information". The theory behind open markets is that participants have availability of information to make informed decisions - informed buyers and informed sellers reach mutually acceptable prices. That is just blatantly untrue. FTX, again, is a great example. All kinds of information was hidden from participants, but that is true of almost every major (and most minor) market player. Insiders have enormous advantages, officers hide information from the public to prop up share prices, markets for particular services or commodities get manipulated - even at the local level sellers hide information from buyers to prop up prices, like "sale" prices that are based upon fake MSRPs. Each of those manipulations skew markets, as do monopolies. The entire enterprise is inherently dishonest, especially when the players are not constrained by rules.

Then there are various outside pressures that also distort commerce, like wars, pestilence, and environmental disasters.

Agreed.

“Equal” bargaining power is a problem, too.
So called “right-to-work” states come to mind.
It’s not a “free” contract when basic needs are on the table- rent, food, etc.

 

[Doppelgangirl]

Yes, BUT inevitably the question arises about the legitimacy of the profit, the magnitude of it and whether any considerations should influence it beyond the market.
For instance, we have antitrust laws which curb capitalism. Then we can ask what is a just return especially when a considerable portion of the profit is generated by someone else's labor. Is there some responsibility to society which by its very existence makes capitalism possible.

Agreed.

In 2022, nobody should be living in the equivalent of Dickensian England-ish conditions and still be allowed to call itself “first world.”
Big fan of mixed economies.
I truly believe healthcare and education are key in a stable society.

 

[blue scorpion]

In 2022, nobody should be living in the equivalent of Dickensian England-ish conditions and still be allowed to call itself “first world.”
Big fan of mixed economies.
I truly believe healthcare and education are key in a stable society.

Absolutely.

 

[NWRatCon]

Agreed.

“Equal” bargaining power is a problem, too.
So called “right-to-work” states come to mind.
It’s not a “free” contract when basic needs are on the table- rent, food, etc.

You keep raising excellent points. I'm also a huge advocate for unions to create bargaining power. There are only two ways to balance the "bargaining power" of major corporations or industries, the government and equally large bargaining units.

To create a legitimately balanced economy, the benefits of labor have to be elevated to equality with capital contributions. That's why I find some taxing structures so anti-economic, like "capital gains", "carried interest" and "inhertance" tax exemptions so offensive (yet another thread topic). They all give benefit to owners over workers.

 

[NWRatCon]

Agreed.

In 2022, nobody should be living in the equivalent of Dickensian England-ish conditions and still be allowed to call itself “first world.”
Big fan of mixed economies.
I truly believe healthcare and education are key in a stable society.

There is no legitimate reason why a nation as wealthy as ours cannot care for all of its denizens. Social Security and the ACA have been the two greatest impacts on stabilizing the economy on behalf of the people in a century. Genuine economic historians understand this. Education is the next great project.

 

[NWRatCon]

So, I'm gonna summarize. Capitalism is an aging structure that has been subjected to deferred maintenance for a century. It's decrepit, but there are salvageable bones. It needs a complete remodel. It needn't be torn down, but it is beyond a fixer-upper.

 

[cpwill]

The video does a find job of giving a basic introduction to what distinguishes different economic systems, but it then goes off the rails making assertions that are either demonstrably false or certainly unproven. A few examples:

• The claim was made that it is somehow uniquely capitalist to lead to something like “putting imbalming fluid in milk.” That is ridiculous. Fraud has been part of civilization since there as been civilization.

• Next, the video consistently relies on the assertion that income inequality is bad, and does so with out question. I found citing England interesting as there’s data “before capitalism.” I’ve posted this before, but it certainly is relevant here. Let’s look at income and income distribution “before capitalism” and after:

View attachment 67424822​

Yes, there is more income inequality after capitalism, but that is consistent with a much improve state of economic affairs since 1800.​

• Lastly, while capitalism has no doubt led to greater levels of CO2 emission, the idea that somehow greater government control must be the answer is silly. The most centrally managed (i.e. government managed) top-ten economy in the world is China, and it is also by far responsible for the most C02 emissions and the problem is only getting worse. The more capitalist (i.e. the less centrally managed) economies in Europe and the US have done a far better job curbing C02 emissions, as their CO2 growth rates are now flat or declining.

No, capitalism isn’t broken, but its “problem” is that its continued success leaves the control freaks among us with a weaker grip on your life than they would prefer.

Reminded me of this old one:

 

[NWRatCon]

Reminded me of this old one:


View attachment 67426155

This reminds me of the old saw, "but at least he made the trains run on time..."

 

[psikeyhackr]

I think what upsets people about capitalism is that like all economic systems, it's applied to a fallible and highly variable population. Problems manifest as a result. Economic systems are discussed as if everyone is a robot with identical capabilities, goals, and temperament.

If we had made accounting/finance mandatory in the schools since Sputnik maybe the population would not be so fallible and variable by now. Instead we have people hiding information from each other in an economic power game.

My 20 year old commentary:

Economic Wargames

The global economy is a giant multilevel, multiplayer chess game. It is however, being played in the dark. The powers that be, have the overhead lights switched off. To have any chance you need a flashlight, and that would still leave the problems of learning the rules and developing your...

blog.lostsoulscorp.com

Economic Wargames Opinion: https://john-holton.livejournal.com/187356.html

Economic Wargames

www.spectacle.org

Saying capitalism is broken is like comparing to a machine that worked properly at some time. Never happened.

 

[Rickeroo]

If we had made accounting/finance mandatory in the schools since Sputnik maybe the population would not be so fallible and variable by now. Instead we have people hiding information from each other in an economic power game.

My 20 year old commentary:

Economic Wargames

The global economy is a giant multilevel, multiplayer chess game. It is however, being played in the dark. The powers that be, have the overhead lights switched off. To have any chance you need a flashlight, and that would still leave the problems of learning the rules and developing your...

blog.lostsoulscorp.com

Economic Wargames Opinion: https://john-holton.livejournal.com/187356.html

Economic Wargames

www.spectacle.org

Saying capitalism is broken is like comparing to a machine that worked properly at some time. Never happened.

An interesting read! It's true that planned obsolescence, profit motive and other corporate factors conspire against the consumer. There's also a cultural aversion to talking about personal finances. Americans feel duty-bound to cosume maximally. We tend to glorify the income side of things (Musk, Bezos, Gates), so the commoner doesn't have a concept of what expenses do to their only source of income. Through advertising and other forces, the default for most is that they will be overspent. I've seen this happen with my boss and my brother.

 

[blue scorpion]

I'm also a huge advocate for unions to create bargaining power.

I have mixed feelings about unions. While it is undeniable that unions have achieved great results in protecting workers rights and wellbeing, I believe that unions have also created a number of negative results.

To create a legitimately balanced economy, the benefits of labor have to be elevated to equality with capital contributions.

Good point.

That's why I find some taxing structures so anti-economic, like "capital gains", "carried interest" and "inhertance" tax exemptions so offensive (yet another thread topic). They all give benefit to owners over workers.

Income is income and should all be taxed uniformly. Inheritance that is liquid, has been already taxed I believe, all else that has increased in value, is income.

 

[blue scorpion]

If we had made accounting/finance mandatory

What good would those be without basic reading and math skills?
For a nation such as the US to have such a pathetic education system is outright tragic.

 

[NWRatCon]

I have mixed feelings about unions. While it is undeniable that unions have achieved great results in protecting workers rights and wellbeing, I believe that unions have also created a number of negative results.

Thus it is with almost everything. But, on the whole, unions have been a net positive.

Income is income and should all be taxed uniformly.

This is a point I make often. Our tax system is insanely skewed.

Inheritance that is liquid, has been already taxed I believe, all else that has increased in value, is income.

Actually, rarely.

 

[Peter]

There is no legitimate reason why a nation as wealthy as ours cannot care for all of its denizens. Social Security and the ACA have been the two greatest impacts on stabilizing the economy on behalf of the people in a century. Genuine economic historians understand this. Education is the next great project.

It doesn't help when you have a section of society determined to vote against their own interests because they've been told that only the rich and megacorperations matter.

They'll hapilly vote for a tax cut for billionaires and large companies even if it means less money for public schools, transport and other public services.