I Yes it does. Notice in your sentences you describe a system that you say has no property rights. But what does the word ownership mean. If property is owned by the state then the state holds all property rights. If property is owned by individuals then individuals hold property rights. I’m not sure what ownership means otherwise.
Now, the success with which a state enforces these rights IS another question. But I would contend that fewer effective rights is an example of less capitalism rather than an example (as you seem to be saying) of more capitalism.
But it is not capitalistic. It may be competitive in the same way that lions fighting over a kill is competitive (or nations competing in a war for that matter ), but it is not the same as competition between private owners of resources in a free market.
I think we agree on the definition of capitalism, we just disagree on what it means. You seem to be of the opinion that the more enforceable property rights are, the less that society is capitalist. I would suggest that the opposit is true.
If I am not free to transport my goods to market because any bandit along the road can steal them, then I am effectively blocked from entering the market?
Isn’t it obvious that the degree to which I am blocked from entering the market is one way to measure the degree to which the society is capitalistic?
It is interesting to note how you lump all of these activities into “side effects of capitalism”. But you left out a few:
Take over the government and install yourself as the only legal state monopoly.
Hire assassins to kill the board and managers of you competition.
Simply bomb the factories of you competiton.
Do these activities fit ?
Capitalism is a philosophical set of economic and political principles. It is not a label like “French” or “American”. Pointing out bad things that happen in countries which you have labeled capitalistic and saying that those bad things are part of capitalism or side effects of it is in Maeglin’s words, a “fallacy of composition”.
But by this tortured logic, Soviet Russia was a capitalist economy. People got paid money, they were free to spend it on anything available to them. Oh, the state owned everything “in principle”, but that was just their particular mechanism for protecting (or not) individual property rights.
This is somewhat tounge in cheek :). But not altogether.
Setting aside the lack of property rights (private ownership) and freedom to participate in comerce (free markets) what do we have left in the definition of capitalism?
Not quite, I wasn’t listing hypotheticals, those are real world examples of deleterious activities that happen frequently in free, capitalistic societies. That’s not to say you can’t have a company or industry attempting to corruptly gain an advantage in a communist or authoritarian state, but I’m not attempting to prove otherwise. I’m pointing out, correctly, that the assumption that capitalism will necessarily result in an increase in efficiency and quality is wrong.
Of course. People will do evil things no matter the principles under which the society is held together. The question about capitalism vx statism has to do with which set of principles encourages evil behaviors and which discourages it.
Well, would do you think people are more or less likely to practice business ethically within or without the purview of oversight and regulation? More to the point if capitalism doesn’t encourage breaking the rules why are the most egregious examples (i.e. Enron, Worldcom, Microsoft, etc.) all found in the most capitalistic nation in the world?
If accounting was mandatory everyone would understand depreciation and realize what they were losing on the cars. The definition of capitalism says nothing about how many people should know accounting. Would a capitalist system where 95% of the population understood accounting work the same way as one in which only 5% of the population understood accounting? If not then the question under debate is not sufficiently detailed. Complex realities don’t yield to simple yes/no answers.
If this is an economic wargame then the smart people want the dumb people to stay dumb. Is that what some people really mean by capitalism? CAVEATE EMPTOR SUCKER!!!
You’ve also stated things which imply the oppossite. I have no idea what you actually believe.
Depends on how you define capitalism. If you consider it only to include only completely amoral competition, then no, since there are more effective ways to advance than inovation. But this sounds more like a cyberpunk scenario. However, given adequate legal auhtority and a business culture that promotes peaceful and legal competition, which I (and many like me) consider to be a neccessary part of capitalism, it does produce innovation in quantities greater than any other system.
Its hardly sophistry to suggest that the two have certain similarities, especially as they pertain to innovation.
First of all I disagree with you analysis that the most agregious management behavior is to be found in capitalist countries. If it seems that way, I would take another look at your sources. The single example of Stalins collectivization of Ukranian farmers oupaces all of the examples of capitalist abuses by millions of people. And this is only 1 example, and may not be the worse for all I know.
Secondly I would like to point out that capitalism does have built into it “ovrersight and regulation”. Just not necesarily the kind of state run oversight you mean. Notice that the people responsible at Enron and Worldcom are in for quite a large amount of liability. And I’m not talking about prison. the stock holders of those corporations may have quite a few rights to seek compensation.
Finally, I notice you snuck Microsoft in there. Do you really think that their actions have constitued fraud on the same scale as Enron? I know I will be reviled just for suggesting that Microsoft may not be the spawn of the devil, bu I’m not sure their sins rise to the same level.
OK, I need to address this attitude for a little. I’m not picking on you, dal, others have expressed it as well. And I don’t want to hijack this thread any more than it already has been. However, disclaimers aside…
Normal business transactions between free individuals are not predatory by nature. Leaving aside fraud (which falls outside “normal”), as long as force is not used to induced participation (which falls ouside “free”), business INCREASES wealth, not decreases it, and I would argue, not merely tranfers it.
If I own a widget which bought for $1. You are working on a project for which a widget will increase its value by $10. You offer me $5 for my widget. Both of our wealth has increased.
You see, if I am free to sell the widget, why would I sell it for less than I thought it was worth? And if you are free to buy it, why would you pay more than you thought it was worth? This is how wealth is created. It is not dug up from the ground, or stolen from others, it created by the normal everyday transactions between participants in the free market.
I realize this is a short explanation for a long winded idea, but think of it this way: If normal economic activity is merely tranfering wealth from one place to another; Then why is the population so much larger now AND so much richer?
An interesting counterpoint… If you’ll permit me sometime to ponder it I’ll post a rebuttal later (if I can think of one).
**
I have to disagree here. Yes there is some oversight in our capitalistic economy, but capitalism as a concept is defined by the removal of boundaries to competition. It’s literally the definition of laissez faire, ‘to leave it alone.’
I do believe M$ is up there with Enron and Worldcom, the only difference is they are still making money. For all its rhetoric about the freedom to innovate, Microsoft is actively working to prevent its competitors from doing just that, through its monopoly strength, lobbying, buyouts, and a slew of less notorious anti-competitive tactics.
And you’d be wrong. Enron and Worldcom were noted for stock manipulation and accounting tricks to make the companies appear more valueable and elss troubled than they really were, and they collapsed after periods of massive (illusory) growth. Microsoft, in contrast, has been chugging along steadily for 20 years. Hardball legal tactics, reprehensible though they might be, are not the same as cooking the books.
And capitalism is rarely pure “laissez-faire”. The corporation has a strictly-defined legal structure and the rights of shareholders are clearly spelled out. The Enron and Worldcom managers that were engaged in illegal activity can be (and should be) held to criminal and civil charges. Capitalism isn’t supposed to be a matter of “screw everybody and run for the hills with the dough”. Ideally, it encourages individual rights and responsibilities.
Of course, it’s easy to dis capitalism by looking at Enron. In reponse, we’ll happily dis socialism by looking at Chernobyl.
You are very close to an important realization with this point.
We are reffering to 2 distinct types of oversight. The way you are using the term (I think) you mean state agencies which police businesses and make sure they don’t do anything “unfair”. The way I was refering to oversight was specifically addressed to the managers of Worldcom and Enron. Those companies were not wholly owned by those managers. They had stock holders. All of the assets of those companies were the private property of the stockholders. The managers were hired to use those assets in certain ways. Through trickery and deciet they succeeded in transfering those assets to themselves instead. While the details differ, it is morally no different than if the managers had broken into the stockholders homes.
My point being, that the idea of private ownership of property along with the idea that property cannot be transfered except by voluntary participation of all parties concerned, implies a certain oversight on the behavior of any Manager. And this oversight is definatly built in to the concep of capitalism.
No problem. I think we have hijacked this thread enough.
Let me know if you open a thread along those other lines.
If you reread my posts you’ll find I never said MS and Enron are culpable for the same crimes, I said they are both examples of capitalism gone awry. And ‘hardball legal tactics’ is quite the understatement. Bill Gates literally held the federal government at bay in a case of clear monopolization. Windows is a bloated, buggy, pilfered piece of shit and everyone in the software industry knows it, and yet over 90% of the market is running it.
And that’s just the point, ideally Enron execs shouldn’t be able to ransack the pension fund, MS shouldn’t be able to throw its weight around like it does, and big business in general shouldn’t be able to pollute the air, but in a climate of deregulation, privatization, and decentralization, all hallmarks of a highly capitalistic society, it does happen, and at an alarming rate.
This thread isn’t about defending the alternatives to capitalism, its about exposing capitalism’s flaws.
Before I make any statement, I want to pose a challenge to those defending capitalism. Before you make absurd statements, ask yourself ‘is it also true that this cannot happen in a capitalistic economy?’. A lot of posts point out problems that are problems in capitalistic economies as well as their target.
Another food for thought is that government (a monolithic entity as someone put it) is an integral part of capitalism and the invisible hand theory. Without it capitalism would be a failure - yet some are arguing that central control is the anti-christ of capitalism…
Pervert & Bryan Ekers & mssmith537 re: widget examples and laws of diminishing returns
Prevert, some of what you wrote makes me thing you are unclear on economies of scale. Your calculations assume a 1 to 1 level of efficiency (i.e the new mega-entity will have a per unit cost the same as the individual corporations). This is not the case and to repeat why would just be redundant. I’ll have to refer you to my previous posts. Byran has a more solid argument (the post slightly tainted by the last line), but the law of diminishing returns hold that only one variable can be changed (labour in our case). The mega corporation may not have 5 times as much equipment, 5 times the plant capacity, etc but it will be larger than any one corporation was previously. This means that we do not have the same size plant as one corporation so the application of the laws of diminishing returns is unclear. (There is no requirement for us to start with 5 seperate corporations, so merging them into one corporation would not have to happen - it could always have been one corporation)What is clear is that you are trying to argue 5 seperate corporations can match the output of one mega corporation at the same cost. If you conceed the mega-entity is able to provide the same amount of goods even one dollar cheaper you have conceeded the point that more efficient use of the same resource is given by the non-capitalist structure. Can neither of you see your position is untenable?
I’ve listened to the arguements but there is not a peppercorn of evidence in any of the arguments that competition is the only instigator for innovation. Despite repeated calls for clarification on why a single-entity is forbidden to have innovation unless it is in a competitive environment no one has been able to justify it. I will stop commenting on it after not because I conceed anything, just that repeating myself is a waste of good bandwith.
Smiling Bandit & mssmith537 re: monolithic entity
Our government is an example of such an entity but it doesn’t sound as convincing as monolithic entity. In theory any commercial product can be controlled by the government, a point worth considering. And by no means am I making any statement about freedom or innovation in my OP. Arguments I don’t agree with have spun that idea off.
pervert re: dang widget theory again
If I knew that the cost for you to produce the widget was $1 then I would have a problem with your 500% markup.As a business can I be said to be effectively using my companies limited capital resources by paying for an item that costs only $1 to make for $5. The sellers wealth has increased by $4 in your example, whereas a reasonable sale price of say $2 would translated to $1 wealth for seller and $3 wealth for buyer - the same $4 wealth is generated.
As cainxinth mentioned my intent in this thread was to explore the faults with capitalism, but I’ve somehow been charged with defending every alternative (even communism and Stalin)…
Finally I am surprised - with offence intented to no one - that there have not been stronger arguments for capitalism, they are out there and some I know are indefensible and I could do nothing but conceed them, yet no one is bringing them up… instead I am defending some of the weaker arguments for capitalism imho…
I have read you posts very carefully several times. You have mentioned the idea of economies of scale, but you have never explained how it might allow the mega corporation to increase its output so drastically simply by removing competition. I agree that I am arguing a 1 to 1 efficiency. But you seem to be arguing a 5/2 increase in efficiency. From what? And you seem to indicate that the competition with other companies is what prevents this from occuring.
<sillyness>
I’ve tried to go over these things from a reasoning standpoint, but maybe some rediculous speculation would help.
Are the workers more conciencious since they don’t have to worry about competition?
Maybe the widget parts suddenly and spontaneously divide themselves since they are not worried about competition.
Or perhaps 2 workers operating 1 machine (instead of 1 per machine) are sudenly able to produce 10 times as much.
Or the machines themselves suddenly have increased capacity since they are not competing.
<end sillyness>
Seriously. I may be assuming a 1 to 1 productivity, but you are the one assuming duplicated work. Which screw in the widget assembly process is being inserted twice such that removing the competition leads to increased productivity?
But you see, you’ve missed the point. As I said, the widget is worth $10 dollars to you. So, you’re actually saying that you would have a problem paying $5 for something that is worth $10 to you?
The point that you missed is that the concept of value depends on an answer to the question “value to who?”. And as such can have a different measure from place to place, person to person, and time to time.
While I support your right to hold any opinion you want, I think it is silly of you to worry about how much profit your supplier is making as long as he is providing good value to you. But that view is common amongst many people. However, when you claim that my profit is a reason to shut me down, or steal from me, that is another issue altogether. You see as I explained in another post, business is not a zero sum game. Just becaus I earn a dollar does not mean that you lost one.
Finally, I agree that we are arguing 1 of the least compelling reasons that capitalism is better than the alternatives. The thread has meandered around the OP. The fact that capitalism leads to more wealth is the least of the reasons why it is the best eonomic/politcal system known. However, that has been our discussion. A more thourough discussions of why freedom is prefferable to slavery or why individuals make better decisions for themselves than bureaucracies do could be moved to another thread.
OK, but what is this magical property of capitalism that you think is preventing nervana? If 5 corporations compete to produce widgets, then they each might be doing similar things. But as far as putting widgets together, that is as far as screwing sub assemblies together, they are not duplicating each others work. the vast majority of the duplication will be found in the overhead.
Return to the widget production line example. Can you explain why you think 200% more man hours per week will lead to 500% more widgets? In your example you simply stated it. Can you justify it?
), but it is not the same as competition between private owners of resources in a free market.