Perhaps I did not read the OP carefully enough, then, when I stated my agreement.
I did not realize that they invoked the idea that capitalism creates wealth only to discredit it.
Exploitation of labor and resources are the means by which capitalism creates wealth. However, classic capitalist theory as I understand it does not deal with the limits of labor and resources.
For that reason, I disagree with the notion that dedication to capitalist principles (read: laissez-faire) should not be the main guiding political philosophy for any nation in this day and age.
Evil Captor…No one maintains the right to work at any one job, any one field for his/her entire working career. Capitalism forces companies to change, improve and compete…not stagnate and wallow. The same goes for the workforce. I started college as an architect major and found that a glut of future architects in the classes above me, so I changed over to Math/Computer Sciences to either teach, or hopefully get into JPL (and working as a full time forklift driver before and during my college years), but then an opportunity came up with my wife (a social worker) and myself (math, comp sci, geography, accounting, bus. management backgrounds) starting our own business running a day program for developmentally disabled adults. I even tell my employees and encourage them to go back to school to improve themselves so they can find better jobs or be ready just in case our sector goes bust.
I don’t feel sorry for your sector in the least bit…DIVERSIFY…anybody with an IQ of 140 should have figured that out a long time ago.
As for Capitalism…I thought dwindling resources or a reduction in population were the real killers.
I think it means what I think it means. And just so we’re clear, what I think it means is setting up a shoddy, easily demolished version of another’s argument so you can demolish it and demonstrate your argument’s correctness, without having to deal with their actual argument – which is exactly what I think you did.
Show me where I advocated forcing individual companies to retain programmers to do jobs that can be done more cheaply elsewhere. You can’t, because I haven’t. Straw man, see?
What I think might be more productive is a government program to fund new apps and hardware – something like the WPA for programmers. They wouldn’t make nearly as much as they would in the private sector, but their skills would be put to use and the program might just come up with a killer app or two.
I know, you guys hate govt. and all, but you must understand, I don’t care that you hate govt. I’m a pragmatist. I think capitalism is flawed and that government can and should be used to deal with its shortcomings. Don’t like it – convince me that capitalism doesn’t have recessions, that skilled people don’t work in jobs that make no demands on their skills, etc.
And just to be VERY CLEAR because several responses to my posts show that people haven’t gotten this point: I think the problem with skilled, intelligent people being unemployed, or underemployed, isn’t just that the situation is tough for them (though of course it IS and that alone is worth addressing) but because we as a society lose the benefits of all those years of training and all that skill and intelligence. Ya think we can just throw perfectly good people away like garbage on such a scale and not lose something important? Is that the most efficient utilization of our human capital?
The key phase here is by 2004. Obviously, other years will occur after 2004, with further losses. Could get very bad, very fast.
Not my proposal.
I feel sure that capitalism as we know it is doomed to fail, which is what being supplanted by a better system is. You wanna slap labels on things, go at it.
I’m glad you were able to change careers successfully, and I suspect you are not alone among displaced IT students, but what was the point of all that math/IT studying you did in college? You might as well have been a liberal arts major. I’m sure your IT skills come in very handy for your new business, but doesn’t it seem like overkill? Wouldn’t it be better if the skills and knowledge you acquired in college could be put to some sort of useful purpose?
Wrong again. Driving a truck is a service, and one that is in greater demand than writing code. Therefore driving trucks is more valued, and has a greater effect in spurring the economy.
Your notion about how the programmers’ skills are being “wasted” by doing some job other than programming only makes sense if research and development was the only function that was being outsourced. It isn’t.
I can’t. Neither can you convince me that any other possible economic system would not have recessions, or that skilled people in those systems always work in jobs that they enjoy.
It doesn’t affect the point. Recessions and people changing jobs are part of the process of adjustment driven by the market. And there are no systems that are not subject to the laws of the market place.
There isn’t anything inherently better or worse about any job, if there is less demand for that job relative to all others. If driving trucks is more in demand than writing software, then it is better for everyone if I drive a truck. And what I was doing before I started driving is irrelevant. Acquiring outmoded skills is a waste of time, and no amount of government spending is going to change that. Which was exactly the point of the buggy whip example. Nobody needs buggy whips anymore, and it makes little difference if you have been spending the last twenty years becoming the most efficient buggy whip manufacturer in creation. And reassigning you as director-in-chief of R&D at the federal Buggy Whip Research Institute is not going to change that.
Better you should drive a truck, or maybe design a robot that can drive a truck and address the labor shortage in truck drivers and create a demand for truck-driving-robotics software.
Or put on a paper hat and practice saying, “You want fries with that?”
Absent moving trucks, you can’t sell those new goods. All the innovation and new goods in the world are useless unless people can buy PCs and peripherals to use them on. You cannot take one profession and assign it an arbitrary value because you personally think it’s more important; a modern industrial economy doesn’t work that way. Your beloved computer software industry is dependent on truck drivers (and mechanics, dispatchers, trainers, load brokers, the companies that build trucks…) to be able to sell the goods needed to support it. You’re ALSO dependent upon the mining industry (you can’t make computers without the minerals used in manufacturing them) the polymer and plastics industries, manufacturing plants, the media, standards bodies, the electric utilities, wire drawing companies, the steel industry, the police and court systems, the legal profession, etc. etc.
Let me be frank; if all the computer programmers quit tomorrow and refused to return to work for one year, there would be disruption in keeping computer systems running until we could train up new ones, and hardware and software innovation would stop for the year. Bad stuff, but we’d survive, and most of the truck drivers (and everyone else) would still be employed. If all the truck drivers quit tomorrow the economy would collapse in a week. How would stores get their products? How would you get FOOD? The food industry is almost totally truck-dependent. An economy is MORE than just innovation; it’s infrastructure, capital equipment, established expertise, financial liquidity and flexibility, transportation, monetary stability, civil law enforcement, and many other things. All those things have enormous value.
You’re demonstrating a remarkable - well, actually, it’s not remarkable, it’s common to the industry - degree of occupational arrogance. Sorry, but computer programmers just aren’t the super-valuable cogs in the machine you seem to think they are. If they WERE more valuable, then they’d all be employed for more money than a truck driver makes. But they aren’t, so they aren’t. That’s how we assign value in a free market - by what people are willing to pay for it.
I’m doing no such thing. Capitalism is working just fine thank you. I really don’t care about programmers vs. truckdrivers either. What I do wonder about is what the future will bring. In short:
Should we eventuelly come to a point of global equality, will that mean the end of capitalism as we know it?
I’ve argued that this might be the case, but as the description of the forum says: For the great questions of our time. I guess I could’ve put this in GQ, but I can’t see that there is a factual question here.
With the outsourcing of jobs to India, it’s clear that companies will seek out locations where labor is cheaper, if at all possible. I don’t really see a problem with that either and good for the people of India. In many companies, labor costs is the biggest single expense and trying to cut costs is the responsibility of the CEO. Outsourcing, making things more efficient, whatever. Truckdriving can’t be outsourced and of course a number of jobs have to be filled here and now, which will be true in the future too.
But I suspect that a lot of the profits, for many companies, in many trades, is a result of moving production to where labor is cheap. This creates wealth. I don’t know what’s been the motor of the US economy over the past ten years, but for Sweden, it’s been telecom and farmaceuticals. Most of the Ericsson phones are made in China and Astra is making Losec all over the place. Sweden is a welfare state and that welfare is of course paid for by taxes. The welfare state is going bankrupt, but it would’ve happened sooner, had the big companies, like Ericssons, not made tremendous profits during the late 90’s. But had Ericsson and others not had the chance to outsource, the profits would’ve been smaller and I think that the welfare system would look less appealing.
It’s many times beyond my scope to grasp global economy and looking at trends, this is just idle specualtion on my part. But if the whole world levels out, then surely profits will go down, and in effect less wealth will be made. And can’t there be some point where ‘everyone earns above average’ which seems to be the goal for many unions, or more practrically, where there no longer is the possibilty of creating wealth through exporting costs?
This is, at least not on my part, not a debate about capitalism vs. socialism. And those saying that I’m clueless have more or less resorted to hand waving and saying that capitalism can’t fail and that there’s nothing better or asking me what that should be. I simply don’t buy that. The Romans gave free grain to all citizens and they clearly thought they had found the perfect way to run the economy. Socialism/communism didn’t work, but hindsight is a beautiful thing. If the system was so flawed, then all the commie scares post WWII was just stupid, I guess. Why not just sit back and watch the communist block fold in on itself? And there really is know reason to try to invent a new system, while the one we have is working. Should the necessity come up, one will be invented.
It seems to me that some posters think that the fall of Soviet and the conversion on the sly to free market in China, is a clear evidence that capitalism cannot fail, and that we’ve reached the end of the line. I look at history and see a lot of generations before us, who thought they were the crowning achievment of a long historical trend. None of them were, and society kept evolving.
And the thing about the pyramid scheme is that the people who buy into it, during the middle phase still make money, and still have the illusion that wealth indeed is being created, while those at the top still get stinking rich. It’s only when the scheme comes to a grinding halt that everyone realize that it was just a con.
Do you no see that your premise of “capitalism is a pyramid scheme” has been thoroughly disproven in this thread? Perhaps you need to define what you think cpitalism is if you don’t see it. A pyramid scheme shuffles around a fixed amount of goods. No wealth is created. Capitalism, or the free market, allows for the input of entirely new goods that never existed before as well the creation of more goods. If you still are hanging on to your premise, then I don’t think I can contribute anything more to this thread.
Increasing labor costs, or any other costs for that matter, don’t inevitably spell doom for an industry. Therefore I don’t see why it would spell doom for the whole world.
OK, so labor costs are high, and there are no cheaper countries you can outsource to. So you automate (if you can). If you can’t automate, your workers can demand higher wages, which cuts into your profits. So you raise prices. Either the market can support those prices (because everyone is earning middle-class wages, world-wide), and your profit margin stays the same. Or it can’t, so you go out of business, and you and your workers migrate to industries that cannot automate, and for which the market can support increased prices.
If you are arguing that no such industries will exist, what will prevent workers from reducing their wage demands to the level that will allow their employer to earn a profit?
So everyone on earth earns $50,000 per year (in real terms). But no industry can survive or turn a profit if they pay their workers $50,000 per year. I don’t know about you, but I will go to employers and offer to work for $45,000 per year. Maybe that will be low enough that my employer can make a buck. If not, I’ll go to $40,000, or less.
Eventually, we return to the level where it becomes profitable to hire me. At which point, the out-sourced jobs start to trickle to my country. Or somebody comes up with an idea so efficient that he will make a profit even if they pay me $50,000 a year.
I guess my point is that the market adjusts. If the demand for labor at a given wage level exceeds the supply, then wages go up. If the supply of labor exceeds the demand, wages go down. Eventually, in either case, you reach a dynamic equilibrium. Employees want to earn more, but can’t. Employers want to pay less, but can’t.
That’s one of the things that creates wealth. I think the mistake is thinking that this is the only thing that creates wealth.
Efficiency is what creates wealth. If you take labor costs as a given at some level, however high that level might be, the winner in the economic race is the one who can produce more and higher-quality goods or services at that level.
The point that “capitalism cannot fail” is that it isn’t really possible to have a world where everyone is making so much money that everyone is unemployed. Even if you assume that everyone owns machines that will create whatever you want at the touch of a button, someone has to build and maintain the machines. And therefore there will be a demand for workers, paid in whatever currency (other than machine-produced goods) they choose.
Out-sourcing makes sense, in certain industries and for certain jobs. But once you can no longer out-source, the other factors that make for wealth creation will continue to operate. And your markets will be all that much larger, because everyone is earning more money.
Should we eventuelly come to a point of global equality, will that mean the end of capitalism as we know it?
No. Just because we are equal today does not mean that I won’t be competing. If you don’t compete, you will be left behind.
** It’s many times beyond my scope to grasp global economy and looking at trends, this is just idle specualtion on my part. But if the whole world levels out, then surely profits will go down, and in effect less wealth will be made. And can’t there be some point where ‘everyone earns above average’ which seems to be the goal for many unions, or more practrically, where there no longer is the possibilty of creating wealth through exporting costs?**
I don’t see how more equality or the absence of cheap labor would in every case reduce profits. Some firms would become more productive and efficient. They would innovate. Smaller profit margins would favor the bigger monster corporations that could spread costs across more units of production. Higher wages would allow workers to demand more goods.
It’s only when the scheme comes to a grinding halt that everyone realize that it was just a con.
As long as the government can engage in deficit spending, I think they would step in and “prime the pump”. Thus putting people back to work and more importantly, spending money.
The OP does raise an interesting question. At the time Smith wrote The Wealth of Nations and for a long period thereafter most economies were essentially local. Most products were being consumed by the same community that produced them. This ensured that there had to be some connection between a community’s collective earning power and their spending power - if businesses lowered their wages too far, their customers wouldn’t be able to pay for their products.
But we’ve entered an era where transportation has become some easy that we’re approaching a point where most of the products that are consumed are being produced outside of the community that consumes them. This is eliminating a strong disincentive to lower wages. It’ll be interesting to see what happens if this trend continues.
IMHO, there’s no such thing as overkill when it comes to education as long as you do eventually apply some aspect of it, otherwise it would be a waste. To get the grant to start our business (which is now 12 years old…not really a new business anymore), we had to compete with other grant writers and businessmen to enter in the contract with the state to provide services. My wife had the program background (since she used to evaluate such programs) and I had the background to provide cost projections, transportation routes for the region that we would serve, spreadsheets, state employment laws and torte law, etc…enough to know how to stay out of trouble or seek counsel before I actually made a crucial business decision. We scored 98/100 on our grant proposal, and our combined skills was a major factor in our success, which is directly attributed to our college backgrounds. (My wife had a degree in Psych - Human Development.)
Owning a business where we provide a service to the developmentally disabled is definitely useful in purpose (for me, purpose = food, shelter, clothing, plus non-essential items), even though not everything I learned in Applied Math/Comp. Sci. is used. I got over that because I realized long ago that no matter where you work, you will not use everything that you learned in college, but you showed that you had the ability to learn and pass classes that were core to your skill (that you may never use) and other classes that were not relevant to your field of study that may be of use. That is a valuable asset to have just in case your company decides to make a crucial direction decision-making and the subsequent adjustment of workforce will be a consequence, and your additional skills just might help you survive the change(s), or you’ll be more apt to rebound with a new job.
And what about me? I’m not wasting math and IT training driving trucks, I’m wasting Biology and Anthropology training fiddling with computers. Shouldn’t it be more efficient for me to be a biologist, after all I spent 4+ years of my life studying it. And trust me, there is never ever an occasion where my knowledge of fossil invertebrates or island biogeography helps me at work. Total dead loss as far as my economic prospects are concerned.
Now, if you have computer skills but are looking to change careers you are far far ahead of the game, since 90% of all jobs out there will have some intersection with computer technology. Even truck driving. In fact, the more I think about it, the more I think the kind of people who make good technology people would also make good long-haul truckers. That aside, it seems to me that the idea of “the computer guy” as a profession is dying. Most people will be using computers, it will just be a part of your job as a teacher, or scientist, or sales rep, or engineer, or florist, or farmer, or fashion designer. So if you’re a computer guy, the key is to be a florist who’s also a computer guy. I don’t think there will be nearly as much room to be just a computer guy.
The pace of change is accelerating. It took thousands of years to move from hunter-gatherering to farming. It took hundreds of years to move from farming to industrial work. It took decades to move from industrial work to technology work. And now people’s technology skillsets are becoming obsolete within their lifetimes.
If you look at it the right way, having your job made obsolete should be a positive sign…the skilled work that you used to do, that was so difficult, and so annoying, and used skills so difficult to learn, now is not needed any more. You don’t have to waste your life doing that crap anymore. A dishwasher is now a name for a machine, not a job description. And that’s a GOOD thing, even if the guy who used to wash dishes by hand was an artist with a scrub-brush and a towel.
Capitalism cannot fail because it is the only system that takes into account actual market forces. The market and the basic rules of supply and demand are in effect regardless of what system you choose to operate under, much like the force of gravity. And like gravity, those forces can be overcome temporarily by expanding energy (or in the case of economics, transfering money).
A capitalist system offers the most freedom - buy and sell what you want and for how much you can get for it, work where you want or can, live where you can afford. The alternative is complex beurocracies that try to take everyone’s needs into account yet meet almost no ones.
These various strawman arguments about labor this and outsourcing that are simplistic at best. As anyone who studied Econ knows, wages is just one of many variables that all react to each other in a modern economy. Technology advances do not eliminate jobs. They free up resources to perform other work that society needs. It’s why we aren’t all still living on farms and society didn’t collapse with the invention of the automobile, airplane or computer.
Some regulation is necessary to smooth out the rough spots, maintain healthy competition, and prevent abuses, but it’s still capitalism. The idea that some flavor of capitalism won’t always exist just seems ridiculous.
Most of the people I know who studied engineering went to work for management consulting firms. Why? Because it pays more and 80% of business is managing information. If you can’t interpret numbers presented to you in a meaningfull way, you are pretty much at the mercy of anyone who can present a pretty picture of what they think you should do.
The short answer of course is yes. But only because you include the phrase “as we know it”, and only because I interpret that phrase to mean the aggregate of all people’s understanding of capitalism. That is, what we think of as capitalism will very likely be different in 100 or 200 years. But I would argue that most of this “difference” is a result of our misunderstanding of capitalsim rather than of some flaw in capitalsim itself.
Let me see if I can help.
This is your primary misunderstanding. Some trades do this heavily. Some trades do this a little and many trades do not do this at all.
This is your second mistake. Remember that you have said many businesses biggest expense is labor. Think of this expense as another way that the wealth created by the business is used. That is, much of the wealth created by a business right now goes to pay salaries. If salaries increase, then that simply means that more of the wealth created by the business will be spent there. Businesses will simply reduce their profits (keep less of the wealth for themselves) or they will find a way to increase the amount of wealth created with the same amount of labor.
Well, this is 2 questions. No, everyone cannot be above average. At least not in the same sense and at the same time. If you want to compare average lifestyles accross times, however, then yes, everyone today could be above average compared to those of an earlier time.
Even if you assume that exporting wealth is A major factor in wealth creation, it is not the only one. I don’t think it is even the biggest one. Someone earlier mentioned that imports into the US are around 1.7 trillion. The failed to mention that the economy of the US is something like 11 trillion. So, at worst (taking all imports as an exportation of labor which is really silly, since many of those imports come from other industrialized nations) exporting labor can only account for 20 percent or the economy. Hardly the major factor you keep “suspecting” if of being.
This part of your question you got right. Surely the economy of the next century will be unrecognizable to us. Where you are stumbling is in assuming that what we have now is truely capitalism and that what will come after may not be. Think of it this way. Society (culture, everyday life, however you want to phrase the concept) will surely be totally unfamiliar in a hundred or so years. But whatever it is, it will still be the aggregate behavior of people trying to live their lives.
There are many other characteristics of pyramid schemes you should look into. They also tend to fail much more quickly than you might think. Ponzi himself only lasted a few months. And we named the concept after him. If capitalism itself relied on anything so flimsy as the discovery of new natural resources or the exploitation of human labor (that’s exploitation, not utilization), it would have died a hairy death long ago.