# Can "capitalism" really work any more? **URL:** \ **Category:** Great Debates\ **Created:** [May 12, 2013, 3:55am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125 "2013-05-12T03:55:49Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [May 13, 2013, 3:33am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/41 "2013-05-13T03:33:50Z")
> [@TriPolar](#): > > I said tendencies toward monopolies. More of everything is ending up in the hands of a few owners. They don’t have to reach a true monopoly to create the situation where people are no longer willing to keep feeding them. That may take a long time in our economy, or sooner that you think since one of things the select few own is the government. The reason that doesn’t happen is because new industries supplant old. GM and its shareholders once got rich, now they are in the poorhouse. Strangely, the usual anti-capitalist types mourned the fall of GM. World trade also increases competition and thus prevents monopolies. ---
**Author:** ![Aeschines](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/aeschines/32/16251_2.png) [@Aeschines](https://boards.straightdope.com/u/Aeschines)\ **Post date:** [May 13, 2013, 3:35am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/42 "2013-05-13T03:35:07Z")
> [@Measure\_for\_Measure](#): > > You haven’t put forth any reasons why this would occur. Because the system is set up so that businesses have to grow. They can’t _all_ grow, so either they have to have a war to get each other’s business (which has an economic cost by itself, since a large business going out of business or even just downscaling puts a burden on the economy) or they just fail to grow and just sit there. Investors then can make no money on their investments, or very little in the form of dividends, which creates another problem. I think that the malaise we see in Japan since 1989 is a very good example of the hypothesis, but it’s true I can’t prove it. The LES is prone to so many upheavals that usually some cataclysm would intervene before my hypothesis could be tested. That fact doesn’t speak well of the LES, though. > [@](#): > > Failure to apply conventional macroeconomics. I’m saying that extended slumps like the one we have now and the one that Japan has experienced are entirely avoidable. I don’t see how you can say that with confidence without their having been an economy that has successfully prevented such slumps over the long term using the tools you deem sufficient. It would be like saying doctors have the means to cure the common cold and prevent it from reoccurring without their having actually been a successful example yet. > [@](#): > > Anyway, the basics were understood in 1955 after Samualson’s textbook was widespread. The first systemic treatment of the macroeconomy was only introduced in 1935, and systematized by the end of that decade. That’s not even very much time to prove the tools work, especially since the economy has been changing so much during the period. > [@](#): > > Waving your hands about systemic failure isn’t especially helpful. I actually asked a question in the OP that I would like to see answered: How would the numbers add up for a set of big companies in an economy once population growth stalled? This could be modeled in a spreadsheet, I would think. ---
**Author:** ![sisu](https://avatars.discourse-cdn.com/v4/letter/s/df705f/32.png) [@sisu](https://boards.straightdope.com/u/sisu)\ **Post date:** [May 13, 2013, 3:36am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/43 "2013-05-13T03:36:10Z")
> [@adaher](#): > > The reason that doesn’t happen is because new industries supplant old. GM and its shareholders once got rich, now they are in the poorhouse. Strangely, the usual anti-capitalist types mourned the fall of GM. > > World trade also increases competition and thus prevents monopolies. This is why some of the banks should have been allowed to fail, as soon as something is too big to fail we have a problem. In it’s purest sense world trade works, but alas. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [May 13, 2013, 3:39am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/44 "2013-05-13T03:39:13Z")
Real wages have risen in Australia, not including the Lesser Depression. [http://www.bigpondmoney.com.au/australian-average-wages-1989-to-2009](http://www.bigpondmoney.com.au/australian-average-wages-1989-to-2009) Total compensation has increased in the US, while wages have stagnated. Don’t just look at the first chart here: [http://www.econbrowser.com/archives/2005/12/declining\_real.html](http://www.econbrowser.com/archives/2005/12/declining_real.html) This last problem, wage stagnation during times of US economic prosperity is an example of a knotty problem. Methinks health care reform would help, but the latter is hard both politically and conceptually. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [May 13, 2013, 3:49am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/45 "2013-05-13T03:49:47Z")
> [@Aeschines](#): > > Because the system is set up so that businesses have to grow. They can’t _all_ grow, so either they have to have a war to get each other’s business (which has an economic cost by itself, since a large business going out of business or even just downscaling puts a burden on the economy) or they just fail to grow and just sit there. Investors then can make no money on their investments, or very little in the form of dividends, which creates another problem. But they can all grow (roughly speaking): that’s what economic growth provides. In practice, businesses try to increase market share, but that occurs in times of high productivity growth as well. (Incidentally, earnings and sales are discussed in nominal terms, which includes inflation. If you look at earnings series, they are pretty volatile. And there are plenty of companies that don’t raise their dividend very often. ) Plenty of firms pay no dividends, have shitty earnings growth and have terrible corporate governance. It doesn’t cause them to spontaneously combust. > [@](#): > > I actually asked a question in the OP that I would like to see answered: How would the numbers add up for a set of big companies in an economy once population growth stalled? This could be modeled in a spreadsheet, I would think. Four percent inflation would cover up a lot of blemishes. And proxy fights are triggered by low _relative_ performance. If everyone is treading water or even shrinking that doesn’t necessarily lead to systemic collapse. Lower output leads to less demand for labor (and higher unemployment), but that’s an entirely different mechanism. ---
**Author:** ![sisu](https://avatars.discourse-cdn.com/v4/letter/s/df705f/32.png) [@sisu](https://boards.straightdope.com/u/sisu)\ **Post date:** [May 13, 2013, 3:58am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/46 "2013-05-13T03:58:50Z")
> [@Aeschines](#): > > You’re right, it will stop making sense. But it may be that the malaise will set in even before we would reach the steady-state level. I think Japan’s economy reached artificial “maturity” sometime after the bubble burst. There was still a lot more work to do that wasn’t getting done, but money could not find its way toward doing it. For example, most households today in Japan do not have a dishwasher, despite the fact that this has been standard equipment in the US since the 50s or 60s. Under-the-counter models virtually don’t exist. Beyond that, you have a really bad housing situation. It’s supposed to be a wealthy nation, but most people don’t even have what we would consider decent closet space. I don’t see why not having a dishwasher or living in higher density housing makes Japan a bad example of LES? In Australia we didn’t see dishwashers as a standard appliance until maybe 20 years ago. Guess what in Australia we have clothes lines and in America there are more clothes dryers. So what? They are cultural measures and not an economic ones. ---
**Author:** ![Aeschines](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/aeschines/32/16251_2.png) [@Aeschines](https://boards.straightdope.com/u/Aeschines)\ **Post date:** [May 13, 2013, 4:06am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/47 "2013-05-13T04:06:56Z")
> [@Measure\_for\_Measure](#): > > But they can all grow (roughly speaking): that’s what economic growth provides. Yes, but you can’t have macro economic growth without a population increase or productivity growth. > [@](#): > > If everyone is treading water or even shrinking that doesn’t necessarily lead to systemic collapse. Lower output leads to less demand for labor (and higher unemployment), but that’s an entirely different mechanism. Right, it leads to malaise a la Japan. I never said that the problem would be systematic collapse due to the population no longer growing. Although the LES _is_ prone to systematic collapse for various reasons, as history demonstrates. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [May 13, 2013, 4:07am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/48 "2013-05-13T04:07:46Z")
That depends on whether resistance to them is cultural or simply a product of them being unaffordable. In the US we have more stuff because we have more disposable income than anyone else. ---
**Author:** ![sisu](https://avatars.discourse-cdn.com/v4/letter/s/df705f/32.png) [@sisu](https://boards.straightdope.com/u/sisu)\ **Post date:** [May 13, 2013, 4:16am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/49 "2013-05-13T04:16:44Z")
> [@adaher](#): > > That depends on whether resistance to them is cultural or simply a product of them being unaffordable. In the US we have more stuff because we have more disposable income than anyone else. Sorry mate but cite please. ---
**Author:** ![sisu](https://avatars.discourse-cdn.com/v4/letter/s/df705f/32.png) [@sisu](https://boards.straightdope.com/u/sisu)\ **Post date:** [May 13, 2013, 4:21am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/50 "2013-05-13T04:21:05Z")
> [@Aeschines](#): > > Yes, but you can’t have macro economic growth without a population increase or productivity growth.Right, it leads to malaise a la Japan. I never said that the problem would be systematic collapse due to the population no longer growing. Although the LES _is_ prone to systematic collapse for various reasons, as history demonstrates. Collapse? Pretty strong word for it. It didn’t collapse it slowed is all. Communism in Russia collapsed. Well you can have macro growth at a country level if you are exporting as we do, but this will probably come to an end when the entire world is happy with how rich they are. :dubious: ---
**Author:** ![bldysabba](https://avatars.discourse-cdn.com/v4/letter/b/ecccb3/32.png) [@bldysabba](https://boards.straightdope.com/u/bldysabba)\ **Post date:** [May 13, 2013, 5:45am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/51 "2013-05-13T05:45:05Z")
The OP’s complaint(argument?) seems to be that everyone can’t be a winner, hence the game is at fault. ---
**Author:** ![sisu](https://avatars.discourse-cdn.com/v4/letter/s/df705f/32.png) [@sisu](https://boards.straightdope.com/u/sisu)\ **Post date:** [May 13, 2013, 6:37am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/52 "2013-05-13T06:37:57Z")
> [@bldysabba](#): > > The OP’s complaint(argument?) seems to be that everyone can’t be a winner, hence the game is at fault. yep I think that anyone who expects a stable/everyone wins outcome is never going to be happy. There will always be winners and losers in the game of life in any system. We are all equal but some of us are more equal than others. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [May 13, 2013, 6:39am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/53 "2013-05-13T06:39:45Z")
> [@sisu](#): > > Sorry mate but cite please. > **[Median income](https://en.wikipedia.org/wiki/Median_household_income)** > > The median income is the income amount that divides a population into two groups, half having an income above that amount, and half having an income below that amount. It may differ from the mean (or average) income. Both of these are ways of understanding income distribution. Median income can be calculated by household income, by personal income, or for specific demographic groups. When taxes and mandatory contributions are subtracted from income, the result is called net or disposable income. ... Plus the US has a lower tax burden, meaning more cash income in the hands of the people. ---
**Author:** ![sisu](https://avatars.discourse-cdn.com/v4/letter/s/df705f/32.png) [@sisu](https://boards.straightdope.com/u/sisu)\ **Post date:** [May 13, 2013, 7:05am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/54 "2013-05-13T07:05:00Z")
> [@adaher](#): > > [Median income - Wikipedia](http://en.wikipedia.org/wiki/Median_household_income) > > Plus the US has a lower tax burden, meaning more cash income in the hands of the people. Oh median income level is very different to disposable income, now I understand your logic. But when I look at this page I see very different figures for example Australia? [http://en.wikipedia.org/wiki/Median\_household\_income\_in\_Australia\_and\_New\_Zealand](http://en.wikipedia.org/wiki/Median_household_income_in_Australia_and_New_Zealand) Does the US have a lower tax burden? Don’t just look at the payroll tax you need to consider other taxes and also what services are provided by government to offset some of those taxes. For example you could argue the 1.5% medicare surcharge I pay is a tax but then if look at the return the community gets it almost zeroes out. Your argument that people have more money in their hands does not effect the amount of money available it just democratizes the spending of that money and that is cool. I don’t know what the answer is but I have a hunch. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [May 13, 2013, 7:17am UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/55 "2013-05-13T07:17:51Z")
Well, there’s more money available too. The US has a much higher per capita GDP than nearly everyone else as well. I think Norway might be higher. But anyway, if capitalism doesn’t work anymore, then we’re up the creek because no alternative system has yet been developed that doesn’t result in extreme human misery and oppression. ---
**Author:** ![Colophon](https://avatars.discourse-cdn.com/v4/letter/c/f05b48/32.png) [@Colophon](https://boards.straightdope.com/u/Colophon)\ **Post date:** [May 15, 2013, 1:03pm UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/56 "2013-05-15T13:03:08Z")
Capitalism is a system entirely predicated on _perpetual exponential growth_. Therefore, of course it can’t work, at least not in the long run. Anyone who ever studied the maths of population growth in school biology lessons ought to be able to see that. The Petri dish will eventually fill up with crap. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [May 15, 2013, 1:18pm UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/57 "2013-05-15T13:18:44Z")
That’s true as well, although I think we’re more likely to find a capitalism that works with population stability than some other system. Socialism also requires growth, because the young have to support the old. So that doesn’t work either. ---
**Author:** ![eschereal](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/eschereal/32/18939_2.png) [@eschereal](https://boards.straightdope.com/u/eschereal)\ **Post date:** [May 15, 2013, 3:50pm UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/58 "2013-05-15T15:50:07Z")
> [@Colophon](#): > > Capitalism is a system entirely predicated on _perpetual exponential growth_. Therefore, of course it can’t work, at least not in the long run. But that is what space exploration is for, right? We must be able to expand out into the solar system -\> galaxy -\> alternate realities in order that capitalism can continue to expand and thrive. Theoretically, if we can find the physics to support the theory, capitalism could continue to expand for quite a long time. I mean, look at Star Trek (the USS _Enterprise_), it clearly shows a very familiar form of capitalism spanning many thousands of parsecs. That _must_ be realistic. Right? ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [May 15, 2013, 9:14pm UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/59 "2013-05-15T21:14:42Z")
> [@adaher](#): > > But anyway, if capitalism doesn’t work anymore, then we’re up the creek because no alternative system has yet been developed that doesn’t result in extreme human misery and oppression. Sure, if you’re operating at the same level of generality as the OP. But drill down an inch and you will see that there are pretty significant differences between crony capitalism as practice by Suharto in Indonesia, the Japanese post-Zaibatsu system where large producers of final products lend funds to smaller suppliers (IIRC), the German bank-dominated system, the US equity-dominated system of 1945-1980 which had skeptical financial regulators and the US equity dominated system of 2005, where banks were trusted not to make decisions resulting in their insolvency in the absence of federal bailout. Big differences. Go an inch deeper and distinguish between problems of aggregate demand stabilization and simply designing a financial system that is less prone to panics. Very different problems. Then dig another foot and we can discuss policy. ---
**Author:** ![Mijin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mijin/32/9369_2.png) [@Mijin](https://boards.straightdope.com/u/Mijin)\ **Post date:** [May 15, 2013, 10:13pm UTC](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125/60 "2013-05-15T22:13:22Z")
> [@For You](#): > > But that is what space exploration is for, right? We must be able to expand out into the solar system -\> galaxy -\> alternate realities in order that capitalism can continue to expand and thrive. Theoretically, if we can find the physics to support the theory, capitalism could continue to expand for quite a long time. I mean, look at Star Trek (the USS _Enterprise_), it clearly shows a very familiar form of capitalism spanning many thousands of parsecs. That _must_ be realistic. Right? Firstly, there is no reason why, in principle, to grow an economy requires using more stuff. In the case of human activity to date, it sometimes does, and sometimes does not. Sometimes we just make better or more efficient use of something. For the star trek scenario, I’m not sure what you’re getting at. It’s doubtful we’ll be trading latinum with other species that are human caricatures. But if you’re implying our growth is not sustainable, I’m afraid the universe can support our exponential growth for billions of years. Heck, the solar system alone could handle all our needs for _millions_ of years, such is the degree to which we have not scratched the surface. If you’re implying capitalism won’t still exist, I don’t see it. Capitalism doesn’t require everyone to want or need to trade, as long as some proportion do, it exists. The only way I can see humans ceasing to trade is if we have all our needs met, which in turn I can only see happening in a virtual environment. And even then, I don’t think every human would be willing to live in a VR. [Previous page](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125.md?page=2) [Next page](https://boards.straightdope.com/t/can-capitalism-really-work-any-more/658125.md?page=4)