# On the Many Failings of Capitalism **URL:** \ **Category:** Great Debates\ **Created:** [January 15, 2015, 5:51pm UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911 "2015-01-15T17:51:38Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [January 16, 2015, 5:19am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/61 "2015-01-16T05:19:05Z")
> [@John\_Mace](#): > > What part of free market allows someone to make another person a slave? The part where the freedom of the _market_ is more important than the freedom of _people._ The libertarian ideal where the only rights are property rights. > [@WillFarnaby](#): > > What you say when you say you are against laissez faire capitalism is that you are against a state of affairs in which individuals are free to make decisions regarding their person and property. That’s right. Just as I think they don’t have a right to put _their_ bullets through _my_ head. Announcing that something is your property doesn’t give you the right to trample over everyone else. Laissez faire capitalism is the war of all against all, where everyone is the enemy and the only freedom is the freedom to be killed or enslaved by whoever has more power than you. And where the only function of the government is to serve as an iron boot to keep the slaves from revolting. ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [January 16, 2015, 6:07am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/62 "2015-01-16T06:07:58Z")
> [@John\_Mace](#): > > Call it an axiom if you like, but if a system is supposed to be defined as “the free exchange of goods and services” and you build in involuntary exchanges of services, then you can’t call it a free market anymore than you can call a cat a dog. The free exchange of goods and services, sure, but it doesn’t define what goods and services can be sold and what can’t. We can own animals, we can’t sell bodily organs, and you can pay for sex in some places and not in others. To make those decisions you have to think on a different level and with a broader perspective. Some things are deemed not to have a price, but it isn’t the market that decides which. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [January 16, 2015, 6:15am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/63 "2015-01-16T06:15:13Z")
It’s quite possible that early American capitalism was enhanced by slavery, but then it might also be true that capitalism ended slavery. Well, not capitalism per-se, but the industrial revolution that was enabled in large part by the adoption of capitalism. If you look at the economics of slavery, it’s really only cost-efficient when the slaves are essentially being treated as simple machines. You can whip someone into picking cotton efficiently, and you can monitor their cotton-picking to make sure they work hard. But you can’t whip someone into being a knowledge worker or an engineer or even a good technician. And it’s very hard to tell if you’re getting full output from someone sitting behind a desk. And slaves weren’t free - they required housing, and food, and clothes. If they had children, those needed to be provided for too. And you had to feed them enough and treat them well enough that they could work the fields without dying or becoming too slow to be valuable. So ultimately, the industrial revolution displaced slavery by simply making it not cost-effective. But you can’t credit that to ‘Capitalism’ per se. But if we’re going to use slavery to slam capitalism, I think it’s totally appropriate to point out that it was _government_ that really enabled it. It was also government that enabled the continued discrimination against blacks after emancipation. The Jim Crow Laws, the incredibly immoral difference in sentencing between users of crack (a ‘black’ drug) and cocaine (a ‘white’ drug), the Davis-Bacon act which froze black workers out of the federal construction business, the fact that huge numbers of young black men are in jail for non-violent crimes while white collar criminals get probation in ‘country club’ jails for much more serious offences against the public. The ghettos that resulted from the ‘Projects’ - liberal ideas about urban planning that had the effect of congregating the poor into poorly built public housing and incredibly bad public schools. These are all the creation of government. One of the best things about the free market is that it is color-blind. Or more correctly, color blind in that it is a reflection of the morality of the people who participate in it. With one exception: because the people have to transact with each other, they have the ability to pressure one another and to some extent have to please each other. A boycott of Nike forced them to shut down a 3rd world, profitable factory. Any company that tried to open a ‘Whites Only’ shop would quickly find that in most places honourable white people will not go within 500 yards of the place and he will go out of business. And socially conscious people can start their own businesses and attempt social change that way. That may be the most effective weapon of all. But the beauty of this as a tool of social control is the anonymous nature of it. Again, voting with our dollars allows us to express our moral sentiments and try to sway others. And we can do it without having to convince 51% of the country to agree with us. Coalitions and networks of mutual interest swirl through the economy. But no one can be held to blame, because the price system abstracts away everything but the core message. Capitalism is also MUCH better for discriminated minorities. If the population wants to discriminate against you, they will. In the marketplace, that’s very hard to do because they have no idea who they are dealing with. That’s why Israel can sell goods and services to Saudi Arabia and Jordan and even Iraq. Capitalism allows us to get along. People that discriminate by race or religion damage their competitiveness by limiting their market and pool of employees. If their discrimination is obvious, they may face boycotts and lawsuits. The market punishes them for not aligning their behaviour with the prevailing social norms. The alternative to capitalism is central planning and control. That means using political power to force the losing side of every vote into compliance. Too much of that and you get an awful lot of anger, politicization of everything, people breaking off into factions and partisan groups, crony capitalists and rent-seekers directing the law towards their bank accounts, and ultimately tribalism and a breakdown of social order as resources shrink and wealth diminishes. Capitalism isn’t perfect, but it’s a hell of a lot better than that. Of course, reality lies between those extremes, on both sides of the argument. I read a good quote somewhere today: “If you want to win over your opponents and convince them that you are right, going after their weakest arguments does no good. You won’t convince them until you defeat their best arguments.” That is true across all subjects, in my experience. It’s certainly true for me: the only times I change my opinion are when someone manages to convince me that my core arguments are wrong. But when arguing against libertarianism, you guys seem to want to reflexively paint us as holding the beliefs of the most extreme fringe figures you can find. That makes the argument easier, but far less effective. I’ve outlined the core strengths of capitalism - its ability to transmit the information necessary for efficient economic coordination, its existence as an evolved, complex adaptive system, the beauty of its structure, the fact that it abstracts away unnecessary information other than what’s necessary for economic coordination and communication which allows us to live more peacefully with each other (unless you want to count the Ford vs Chevy wars…). I’ve also outlined the core dangers of excessive government, and the nature of its inefficiency. If you want to argue effectively, focus on those ideas, and not on what some ‘libertarian’ blogger said, or what you learned about libertarianism from an article in Salon or The Huffington Post. ---
**Author:** ![Kobal2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kobal2/32/20_2.png) [@Kobal2](https://boards.straightdope.com/u/Kobal2)\ **Post date:** [January 16, 2015, 6:31am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/64 "2015-01-16T06:31:41Z")
> [@ITR\_champion](#): > > Can you please provide a cite for this claim? [Cite](http://www.salon.com/2013/09/29/ronald_reagans_shameful_legacy_violence_the_homeless_mental_illness/). > [@](#): > > One month prior to the election, President Carter had signed the Mental Health Systems Act, which had proposed to continue the federal community mental health centers program, although with some additional state involvement. Consistent with the report of the Carter Commission, the act also included a provision for federal grants “for projects for the prevention of mental illness and the promotion of positive mental health,” an indication of how little learning had taken place among the Carter Commission members and professionals at NIMH. With President Reagan and the Republicans taking over, the Mental Health Systems Act was discarded before the ink had dried and the CMHC funds were simply block granted to the states. The CMHC program had not only died but been buried as well. An autopsy could have listed the cause of death as naiveté complicated by grandiosity. The claim that the Reagan administration “shut down” all funding isn’t strictly true, but it allocated the funding to States with no oversight whatsoever. So, in practice, shut it down. Because “free money !” Here’s [another cite](http://www.motherjones.com/politics/2013/04/timeline-mental-health-america). But don’t feel too bad - Thatcher screwed the mentally ill too. Google “Care in the Community”, if you, too, seek chronic depression. ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 16, 2015, 7:55am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/65 "2015-01-16T07:55:09Z")
> [@Shodan](#): > > Right, right - hence your reference to the “means of production”. You may ignore details of phraseology, I think; I’m not denying that I’m a socialist, I’m merely pointing out that the thread is not intended to fulfill the purpose of comparison–defenders of capitalism should be able to defend it on its own merits, and we will not introduce another source of inaccuracies, such as your belief in what socialism does or does not. > [@](#): > > I understand your reluctance to talk about the real world, instead of merely allowing some vague maunderings about self-actualization and how those nasty capitalists are exploiting the poor. Understand, but do not sympathize. > I’m sorry - what misled you into thinking that your opinions as to my contributions were at all significant? > > Did you have any response to my explanation about how capitalism requires the poor was the most preposterous bullshit **Shodan** , I would appreciate a civil tone here, if you don’t mind. It’s my thread, after all, so if nothing else some common courtesy might be indicated. I’ll not reply to any contribution that has the word “bullshit” in it, for one thing. You’ll have to rephrase your reply, by the way, if I’m supposed to answer: “less opportunity of exercise” is a bit opaque for me. Sorry. ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 16, 2015, 8:01am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/66 "2015-01-16T08:01:14Z")
> [@iamthewalrus\_3](#): > > I think most people would argue that a system with slavery is by definition not a free market. All the enslaved are not able to operate in the marketplace, therefore it is not free. > > So, the process of going from a system with slavery to one without it is sort of by definition brought about by a process other than the free market, because a free market definitely does not exist prior to that point (and might exist afterward). > > How free a capitalist market is is not a simple binary switch, but exists on a spectrum. But there’s a fundamental difference between regulations like “you can’t own people” that make people more free to do what they want, and regulations like “you can’t sell people a house for $x”, which might protect people from bad decisions, but do restrict some people from doing what they want. I’m not sure I should be replying to these issues separately, but it seems more helpful to keep the issues separate. If folks’d rather I put everything into one reply, let me know. I’m not sure about your first paragraph, because it seems to imply a misunderstanding of the free market: it’s not a market in which the goods are free, its a market unfettered by regulations that would impinge upon your right to trade. Slaves are not participating in the market, they are commodities; the freedom of the market itself is unimpinged by the goods sold thereon. You’re right that there are stradations to the freedom of the market, but I was trying to go for the ideal free market for purposes of discussion here, since that seems to be closest to the libertarian point of view. ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 16, 2015, 8:04am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/67 "2015-01-16T08:04:05Z")
> [@BrainGlutton](#): > > Social democracy has a better track record. Though to be fair, no social democracy that I know has done away with capitalism, though many have severely fettered it. ---
**Author:** ![Budget\_Player\_Cadet](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/budget_player_cadet/32/205_2.png) [@Budget\_Player\_Cadet](https://boards.straightdope.com/u/Budget_Player_Cadet)\ **Post date:** [January 16, 2015, 8:07am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/68 "2015-01-16T08:07:27Z")
[QUOTE=Sam Stone] The only reason you consider working for someone for an agreed-upon wage ‘exploitation’ is because you believe that the businessman is ultimately the powerful entity here, [/QUOTE] I disagree with his point about exploitation, but you surely agree that in almost any economy, for the vast majority of situations, there is a very serious power divide between the employee and the employer, right? This only gets worse in a recession. ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 16, 2015, 8:10am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/69 "2015-01-16T08:10:31Z")
> [@Lemur866](#): > > You can’t just assert that capitalism is unfair without proposing some other method of allocating scarce resources that would be superior. And then we can argue over whether that change would be more or less likely to produce more or less unfairness, depending on our personal opinions and biases. Otherwise you’re just complaining that it’s unfair that you get wet when you walk in the rain. Maybe it is, but who’s going to solve the problem for you? God? God doesn’t seem likely to address the problem for you, so what’s the alternative? I think I can, and in fact I think I must. The benefit of establishing the essential problems of capitalism are, to me at least, quite obvious: to weaken the idea that it’s so great a system that we should not even consider others. The point of the exercise is, essentially, to say: how many deficits will you accept in the system before you’re going to start looking for alternatives? My alternative, as I said, would be something like socialism or communism, yes; but my point is to say that capitalism fails you every day, and you may draw your conclusions freely accordingly. (The rain bit, I think you’ll agree, does precisely what I’m fighting against here: it naturalizes by analogy something that we needn’t take to be the natural state of things.) ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 16, 2015, 8:16am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/70 "2015-01-16T08:16:05Z")
> [@XT](#): > > That’s it. That’s what it is and what it’s ‘for’. YOU are the free market. I am the free market. Everyone reading this is the free market. And it’s for setting the price of goods and services between sellers and buyers. > > I’ll let Sam take the first shot as answering your other questions…especially since you basically handwaved away the folks who already tried to answer them without actually addressing their replies (no, as far as I can tell, did you address Sam’s responses to you in the linked thread with anything like honest debate, but maybe I missed that part). It’s a bit of an odd complaint, since I started a whole thread about addressing **Sam** ’s responses, rather than doing so off-topic in a different thread? At any rate, I know what the free market is (supposed to be), and I’m not sure how the fact that I’m caught in it makes it any better. Could you elaborate? ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 16, 2015, 8:36am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/71 "2015-01-16T08:36:18Z")
> [@RickJay](#): > > This is not only an emotional, rather than factual, argument, but is rather obviously false. It is obviously the case that many people - well, actually MOST people - who do not own the means of production are not “poor.” I do not own the means of production, but I am not poor, nor are, well, most citizens of any industrialized country. But capitalism, somewhat obviously today I think, does not stop at the industrialized countries? Compared to you and I, how are the people in India, China, Bangladesh, Vietnam, etc., etc., where our goods are actually produced (where they are literally laborers) not poor? They are, in fact, poor even by their internal standards (for example in [India](http://en.wikipedia.org/wiki/Poverty_in_India). > [@](#): > > Again, this is both an emotional argument and visibly false. You’re making the same error Marx made, which is to assume that labor has a fixed value independent of the manner in which it’s applied. This is not actually what Marx is saying, though. For Marx, value is socially necessary labor time–i.e. (much simplified), if you’re taking forty days to build an Ark, but everybody else does it in ten, you’ve not added thirty labor days of value. > [@](#): > > Value does not just come from the delta between wages and the value of the labour, as is plainly evident to anyone who’s tried to run a business. It also comes from the delta between physical inputs and their value, from innovation, organizational effort, management effort, so on and so forth. Yes, that’s true. But: at the bottom of all of these things, Marx argued (and I agree, for what it’s worth) the only irreducible function is labor time. Physical inputs–somebody made those, right? Organizational and management effort–that’s time spend, right? Innovation–that also takes labor, no? In other words, you’re quite right that not everybody who runs a business realizes that at the bottom of everything is human labor (or work, if you prefer, as it sounds less communist). Marx called this non-realization “alienation,” by the way. > [@](#): > > Your entire argument rests on the assumption that if you are paid $15 an hour and are worth $20 an hour to your employer, that’s “exploitation.” As you have circularly defined “exploitation” it’s going to be hard to argue you out of that, but your circular argument fails to account fr the fact that the worker’s work has no intrinsic value; it is valuable solely BECAUSE she has that particular job and is doing that particular work. That is what fixes the market value for her labour at $15. Yes, that’s the capitalist mantra, certainly: thank (somebody) you have a job, otherwise your labor/life would be pointless. I’m not sure why this is, to your mind, not exploitation–it’s in fact precisely exploitation in that the worker’s dependency on the job allows her to be hired for less than the value of her work? > [@](#): > > You’re further making the assumption that the difference between the wage and the per hour value of the labour is purely exploitative, but it’s clearly not; if it were, the worker would simply stay home and generate $20/hour. They can’t, though, because the job is what creates that value. Your comeback to this will be “but if only she owned the means of production…” but, of course, she quite often can, and there’s no evidence that would change the wage rate. Nobody can opt out of the system right now–that’s why it’s a system. So the comeback that “why doesn’t she just stay home then” isn’t going to lead us anywhere. Nor am I saying it is “purely” exploitative (whatever that means) in all cases everywhere–some people **do** freely contract, of course. The point is that most people cannot, and do not–just not the people (mostly) that you can see these days. Walmart packers are perhaps your closest local equivalent. And yes, some people can open their own business, rise to the top, etc., etc.; if that were categorically impossible, the system would long have failed (ah, perhaps; I’m letting my poetic nature slip past me here). But the point is that individual success stories detract from the overall nature of the system, because for every Bill Gates, there’s a million people living in abject poverty. ---
**Author:** ![Stringbean](https://avatars.discourse-cdn.com/v4/letter/s/d6d6ee/32.png) [@Stringbean](https://boards.straightdope.com/u/Stringbean)\ **Post date:** [January 16, 2015, 9:35am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/72 "2015-01-16T09:35:13Z")
Merely using the term “means of production” shows you haven’t a clue about the past 50 years of economic progress. We don’t build things anymore. The means of production are the cash register and the espresso machine at Starbucks. You’re just spouting archaic Marxist rhetoric. This isn’t the 1860’s. No one is being exploited. ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 16, 2015, 10:07am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/73 "2015-01-16T10:07:03Z")
**Sam** , I appreciate you being here. Sorry about the dig at you in the OP, but can I (I’m not in the position to do so now, but I’ll do it anyway) ask that we try to refrain from the personal attacks for the purposes of this thread (anywhere else, I’m game!)–like the bit about “caricature in my head” below? I’d be obliged. > [@Sam\_Stone](#): > > I never said anything of the sort. I merely said there is a big difference between equality of opportunity and equality of outcome, and that it’s better to focus on the former than the latter. In fact, I specifically said that opportunity was NOT equal, and gave several examples. You need to read what I actually said, and not what the caricature in your head is saying. Alright, but that would make the relationship between opportunity and the free market, what? I’m genuinely puzzled here at the argument you’re making then, because if you’re all for equality of opportunity, and the free market does not provide it (even the ideal free market), then why not (at least hypothetically) ask for a different system? > [@](#): > > Never said that either. I said that capitalism does not require poverty, but when you have a large normally distributed population of things the 80/20 rule generally applies. [SNIP] > > This appears to be a law that emerges out of the interaction of actors in a complex system. It’s not designed, it’s not the result of exploitation, and it’s not clear that anything can really be done about it without destroying efficiency. > > So wealth inequality is not a requirement of capitalism, it is the inevitable result of group interaction without interference. That doesn’t mean anyone has to be poor. The poor in North America today are incredibly wealthy compared to the rich of even 200 years go in absolute terms. But if you are going to measure poverty always as a ratio of wealth, then yes it’s hard to see how you can ever get rid of it, for the simple reason that people are not equal in ability, work ethic, opportunity, intelligence, luck, etc. Ah, thank you. I didn’t quite get that at all. But I’m puzzled by its implications (sorry I’m not offering debate just yet, just clarifications): you say, if I get you correctly, essentially that any system in which no interference takes place will have a similar ratio of wealth inequality. That may be true (or it may not, lacking test cases), but how does it absolve capitalism? Do you hold that the 20% who hold 80% of the wealth got that wealth by ability, work either, intelligence, opportunity, and luck? And why is “luck” (whatever it is) a permissible variable here? (Again, sorry for the many questions.) [/QUOTE] Still torching the straw men, I see. I never said at any point that the market solves all questions ideally, and in fact I took pains to state that markets are not perfect and that they can fail. I merely said that the market works better than any other alternative we have, and that it works best when it coexists with a social safety net. But I can see how you got confused: such statements don’t match the libertarian radical vision of me you have in your head. Best to just ignore what I’m actually saying and let the caricature speak, or else your brain might explode from cognitive dissonance. [/QUOTE] I did say, repeatedly, that I was asking for clarification on things I get wrong, did I not? What’s the need to slam me for doing so? I’m listening, aren’t I? I’m not sure I can offer much debate here (since you’re not saying _why_ you think that market is the best alternative), but I’ll say that I’m finding this all a bit mythic, largely because I’m still not sure what market you’re actually advocating. What is the basis on which you would decide, for example, how much regulation this market can take (since as you said, you’re not actually advocating a free market)? > [@](#): > > Of course, I never said that. I specifically said that not everyone is born equal, and will not have equal results. And you’re right - ‘opportunity’ is a hard thing to pin down. Certainly a person born into a rich family has more ‘opportunity’ than someone born in a ghetto. On the other hand, a rich person expected to take over the family business may have less ‘opportunity’ than a middle-class person with a degree and no expectations for what career and lifestyle he may choose. And ignoring the rich/poor divide, a person who came of age in the 1990’s had a lot more opportunity to make millions in the emerging internet economy than a person born 10 years earlier or later. We are all constrained by our environment in some way. Okay, but if opportunity is what you’re after, and you’re agreeing it’s hard to pin down, aren’t you in a bit of a moral quandary? How can you ignore the moral question about the relative opportunity of a person born (for no fault of their own) in a ghetto vs that of the child of rich parents? > [@](#): > > The real question is whether this is a problem that can be ‘fixed’ with legislation. In some cases, yes. In others, no. Rather than trying to give everyone completely equal ‘opportunity’, I would suggest we restrict ourselves to ensuring that everyone has access to the fundamental tools required to achieve success. Minimum health care standards, basic education, etc. For example, I’m not opposed to programs that provide resources for people seeking jobs, subsidized night school programs, and that sort of thing. I would also include things like ‘business incubators’ that provide basic tools like shared office spaces, copying/shipping services, internet services, etc. Thanks for the clarification! > [@](#): > > But if you think equality of opportunity can only be achieved by redistributing all the wealth so everyone is on an equal footing, you would be destroying the system in order to allow everyone to participate in it. In Venezuela they decided it was unfair that poor people didn’t have access to modern electronics, so the state simply mandated that the stores sell them at reduced prices, even if it was below their cost. When stores didn’t comply, they were nationalized, store owners arrested on charges of ‘price gouging’, etc. The result is that those electronics are no longer available for anyone at all. You’re mistaken in your conclusion, for a number of reasons. I _do_ believe that genuine equality hinges on “redistribution,” yes. But the result of that redistribution would not be the “equal participation in the system,” but the dismantling of the system: the end of capitalism. Within capitalism, redistribution of wealth serves the laudable goal of alleviating poverty, nothing more, and equalizing to a small extent the naturalized “it’s just the way it is” 80/20 distribution that you offered above (not sure about the numbers, by the way, since most wealth distribution tables I find are divided into 1%, 10%, 50% vs the rest). I’m not too familiar with the example of Venezuela, but it’s generally familiar; it’s difficult to escape the system in a world in which that system is in full control, especially for a comparatively small and industrially backward country. I’m not sure that it proves anything (though I’ll admit its illustrative value). > [@](#): > > [SNIP; I hope I didn’t lose too much of your argument here] The only reason you consider working for someone for an agreed-upon wage ‘exploitation’ is because you believe that the businessman is ultimately the powerful entity here, and that he is using that power to coerce, trick, or manipulate the workers and consumers for his benefit. In fact, the powerful entity is the market itself, and the worker, businessman, and consumer are all slaves to it. If the businessman tries to sell his product at prices above the market price, no one will buy it. If the consumer demands a price lower than the market price, no one will sell to him. If the businessman tries to offer a wage that is below the prevailing market rate for the skills he is looking for, he won’t find workers. And so it goes. In a capitalist environment, everyone is entering the contract willingly, and everyone expects to benefit. Is this the actual capitalist economy, or an ideal one? I agree that it is the ideal one; I disagree that it is the actual one. I’m in fact frankly puzzled that anyone can claim that. You’re right to say that everybody is a slave to the market, but some slaves are slavier than others. Yes: if there is a particular skill set required to do a job, and that skill set requires education, an investment of time, etc., etc., then the businessman will be required to pay a wage adequate to that (Marx said that, by the way), and if he tries not to, then he’s going to fail–unless, of course, there’s a surplus of workers. Which is usually the case these days. And then your “entering the contract willingly” becomes as devoid of morality as it was back in 1860: because one side must take the contract in order to live (often, barely), while the other can hold out a contract to the next worker down the line. I’m genuinely (really) puzzled how you cannot see that this is a weird argument to make even empirically–not to mention logically or historically. > [@](#): > > Does this mechanism always work? No. There are certainly market failures and legislation is appropriate in those cases. But those are the edge cases. The vast majority of transactions are carried out in the context of a functioning market. And that’s still the best mechanism we know of for coordinating economic activity. And here we part ways again. I realize that to defend the market system, we must necessarily argue that its repeated (you can almost set your clock by them) failures of the market to do what it promises to do (rationally organize the economic sphere by virtue of the interactions within it) you must necessarily make these market failures aberrations. But they aren’t: again, they are constitutively necessary for the capitalist system simply because of its central feature, the eternal accumalation of wealth. In simple terms: if more and more wealth (not value!) is produced by the system (through speculation mostly, these days), this wealth requires an outlet (unless you want to keep simply sitting on it, like Buffett, Slim, Gates): new markets, simply put, into which it can be poured to, well, generate more wealth. But this is quite obviously a spiral: it’s impossible to do, there’s always going to be an end point to it. And then what happens, what always happens, is that wealth gets destroyed: sometimes, when we’re lucky, it’s Lehman Brothers; more often, it’s homeowners house prices. > [@](#): > > I think you are using the Marxian labor theory of value, which says that the ‘value’ in a product is the sum of the labor that went into it. That’s simply wrong. It’s always been wrong. Value is relative - it’s whatever people decide something is worth in the context of a market transaction. If a businessman spends $100 to make a product that turns out to be valued at $70, he will go out of business. If he makes a product for $10 that has a value of $100, other competition will arise and sell a similar product at a lower cost. This process drives products down to the cost of production plus whatever profit is enough to warrant investing in that product’s development rather than putting the money in a bank account or investing in something else. As I noted in a different reply, you think it’s wrong, but you’re misreading the theory. The question which the labor theory of value engages is not “what price can you realize” but “where does the value of a given good come from”; and the answer is “socially necessary labor time”. You’re talking about prices. In simple terms: if a businessman spends 10$ to make a product that has an exchange-value of 100$, then 90$ of that are surplus value produced by paying (in steps down the line) a worker less money than the value of her product would have “required”. > [@](#): > > If you want to know how the businessman adds value, it can be through many means - inventing more efficient processes, creating the infrastructure that allows a good to be brought to market, discovering needs and desires that no one else discovered, having better ideas about product design, you name it. Yes, I’m not disputing that. I’m only suggesting that it’s not the whole story. For one thing, few businessmen do any of these things on their own anymore (and when they do, I have little problem crediting them). No businessman “creates infrastructure”–workers do, building roads planned by planners, perhaps thought up by a master businessman. If they do, they get paid for their labor, and at each step in this where profit accumulates (to the construction firm and the planning bureau, for example), where wage work is involved, the workers get paid for their labor power, but less than the value they’ve actually created–otherwise there could not have been any profit. You don’t make money by ideas, you make money through commodities (or, sadly these days, by object-less financial speculation)–and that requires labor (so does financial speculation, of course). > [@](#): > > You don’t have to own the capital to benefit from it. Why do you think workers in North America make so much more than workers in China or Africa? It’s not because we are ‘exploiting’ them. It’s because our own labor is magnified by capital investment and infrastructure. An auto worker can be paid $35/hr because his labor is magnified by hundreds of millions of dollars of equipment, and because the company he works for has built up a sales and distribution network that creates a division of labor that makes the whole production chain more efficient. And also because the company exists in a country with ready access to markets, good roads, a healthy, educated population, etc. Workers in America make more because they need more money to reproduce their labor power (in simple terms: life costs more in America); and because there are labor unions, let’s not forget. Otherwise, I’m not getting what you’re arguing here: an auto worker “can” be paid much more than 35$ an hour, and an Indian day laborer also “can” be paid much more than the measly 1$ that he gets–just cut down the company’s profit margin a little. > [@](#): > > Let’s say you eliminated the evil corporation, and gave an auto worker the raw material to make his own cars, and all the tools he needs. He has to design them, put them together, test them, market them, sell them, maintain them, etc. Just how much do you think his labor would be worth then? Pretty much zero because it would take a lifetime to build a single car, and it would be so expensive and probably of such low quality that no one would buy it. And if the businessman had to build his infrastructure himself…you’re right. No individual worker can be as effective as an entire collective of workers, addressing different aspects of the job. I’m not sure what that proves. > [@](#): > > So one of the values a businessman brings is the skill to put together an organization of people that creates a division of labor that allows each person to focus on what they do best. In the Marxian sense, every employee is ‘exploiting’ the labor of every other employee - except that no one is being exploited because they are all there voluntarily. And they all benefit because the sum of their labor provides more value to each than their individual labors would be capable of doing where they not organized and provided with the capital equipment and corporate infrastructure needed to be efficient. No, in the Marxian sense no such thing takes places, I’m sorry to say, because no employee extracts surplus value from the labor of any other employee, only the company does (incidentally, I’d be fine with doing away with the “businessman” stand in for the company, simply because it worked for Marx (single people still owned factories), and it doesn’t work well anymore today: even the top managers of most firms are employees these days). You are right to say that the collective of workers creates more than the single worker could; but you’re implying that the only possible way to get those workers together is through the market, when it, even historically, is not: the Pyramids got built, afterall, and the Great Wall, and the Lincoln Tunnel). > [@](#): > > The market is certainly subject to fluctuation, bubbles, etc. It’s a complex adaptive system, and such systems can be noisy and have sudden transitions between states. But this isn’t something you can regulate - these are emergent phenomenon not under the control of anyone - not even government (especially not government). Government does not have the information required to predict or control this stuff. Why “especially not government”? You’re quite right, by the way–which is why we should get rid of the market. > [@](#): > > The solutions to this is not centralization of power and decision-making. That will only make it worse. The correct solution is diversity, redundancy, and other anti-fragile structures. For example, in nature a beehive is an example of a complex adaptive system. The bees regulate the temperature of the hive by alternately beating their wings to generate heat, or just stretching them out to act as radiators, cooling the hive. If all the bees did this together (or were directed to by a central bee authority), you would see wild temperature swings. But this doesn’t happen because a beehive is genetically diverse, and each sub-species of bee has a different threshold temperature so they kick in at different times. > > In a capitalist economy, redundancy created by competitive marketplaces, freedom of action for individuals, and decentralization of power help to mitigate this. > > Centralizing power will result in either even bigger swings, or the avoidance of variance will go too far the other way and choke off the dynamism required to create economic growth. Much of this is begging the question, though. “Economic growth”–why do you think we need it? Why will centralization result in bigger swings and make things worse (how, even?)? **Sam** , again, I’m much obliged. I’ll take a quick breather here before tackling your other reply, if you don’t mind. ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 16, 2015, 10:28am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/74 "2015-01-16T10:28:58Z")
> [@Stringbean](#): > > Merely using the term “means of production” shows you haven’t a clue about the past 50 years of economic progress. > > We don’t build things anymore. The means of production are the cash register and the espresso machine at Starbucks. You’re just spouting archaic Marxist rhetoric. This isn’t the 1860’s. No one is being exploited. Sorry, final thing before my rest, just because I’m being directly addressed. **Stringbean** , without trying to be unduly harsh to you, I would be very much obliged to you if you could just not post here anymore, at least not on this intellectual level. Reasonable people may disagree on whether the free market works, but to say “we don’t build things anymore…” is not getting us anywhere in this debate. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [January 16, 2015, 11:29am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/75 "2015-01-16T11:29:45Z")
> [@Trinopus](#): > > I won’t go on at length or highjack the thread…but…I have to disagree. Societies have collective decision-making powers, and act in ways that individuals cannot. > > Individuals fight in wars, but nations fight wars. > > Otherwise, you have to apply the same dictum to all collectives. “The market” doesn’t make decisions either. But…decision-making is what the market actually excels at, possibly its most admirable quality. No. The market does not act. “The market” is shorthand for the sum of voluntary transactions between individuals. “Society” is shorthand for the state of affairs that comes about as a result of interactions between individuals. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [January 16, 2015, 11:35am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/76 "2015-01-16T11:35:01Z")
> [@Enterprise](#): > > [ol] > [li] Free-market capitalism (but not, apparently, contemporary American capitalism?) would provide all with equality of opportunity, leaving everybody free to prosper according to the extent of their talent, skills, and work ethic.[/li][li] Capitalism does not require that anybody be poor (although, see the thread above, maybe it does, but only 20%).[/li][li] The market solves all questions ideally: there is no better tool to set prices, wages, or indeed (necessarily) anything that cannot be as easily quantified, such as the problem of ecological pollution.[/li][/ol] The argument against the first item is the strongest and most important, because if it were true, then the moral impact of the other two questions would be reduced because everyone would have more ability to alter their situation. It is the most useful argument to make in the real world, where people praise the capitalist system mostly as an argument to lower taxes. After all, if everyone is entirely responsible for their financial situation, then they’re morally responsible as well and so there’s no need for any taxes to provide for those who cannot afford the basics of life. However, since there isn’t an equality of opportunity (which is basically agreed upon in this thread,) then it follows that there are at least some who are desperately poor who are equally as deserving of the necessities of life as those who are rich. So then, some argue that we _still_ don’t need to do anything about inequality. But they are then conceding the moral high ground. The only argument they have left then is an argument that capitalism works better. This is actually true in some arenas of life. For instance, sports and entertainment, where one’s ability to create popular consumable content does correlate somewhat with one’s success, and where the consumers are not mortally harmed by not being able to listen to music or watch a football game, and where governments do not have a very good track record of creating popular content. However, health care is another story. Health care is at least as good, and consumes less percentage of GDP, in countries other than the US. One’s need for health care is largely uncorrelated to one’s life choices (being in one’s genes and randomness instead,) and we have already conceded that one’s ability to pay for it is also not entirely related to one’s hard work (not to mention children’s health), and the practical results are clear. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [January 16, 2015, 11:47am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/77 "2015-01-16T11:47:29Z")
> [@Der\_Trihs](#): > > That’s right. Just as I think they don’t have a right to put _their_ bullets through _my_ head. Announcing that something is your property doesn’t give you the right to trample over everyone else. > > Laissez faire capitalism is the war of all against all, where everyone is the enemy and the only freedom is the freedom to be killed or enslaved by whoever has more power than you. And where the only function of the government is to serve as an iron boot to keep the slaves from revolting. Perhaps you have familiarized yourself with the basic fundamentals of libertarianism and heard about the non-aggression principle. As a quiz I will ask you what part of putting a bullet through someone’s head is in violation of the NAP? Hm, seems to me laissez faire capitalism brought about unprecedented peace and prosperity to 19th century America. ---
**Author:** ![Quartz](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/quartz/32/267_2.png) [@Quartz](https://boards.straightdope.com/u/Quartz)\ **Post date:** [January 16, 2015, 1:48pm UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/78 "2015-01-16T13:48:46Z")
> [@Enterprise](#): > > Yes, capitalism does require that some people be poor. This is one of the most idiotic statements I’ve seen in a long time. Capitalism does not require some to be poor. A capitalist economy is not a zero-sum game. You cannot have all the chips. Capitalism gives the opportunity for some to be richer than others, sure, but it does not require that some be poor. ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 16, 2015, 1:55pm UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/79 "2015-01-16T13:55:04Z")
> [@Quartz](#): > > This is one of the most idiotic statements I’ve seen in a long time. Capitalism does not require some to be poor. A capitalist economy is not a zero-sum game. You cannot have all the chips. Capitalism gives the opportunity for some to be richer than others, sure, but it does not require that some be poor. **Quartz** , your objection, such as it is, has been tackled at some length above already, and you’re welcome to contribute to that discussion. I would however ask that you try to keep it civil–I’ll not call your statements “idiotic,” and maybe you can respond in kind. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [January 16, 2015, 1:57pm UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/80 "2015-01-16T13:57:15Z")
> [@Enterprise](#): > > You may ignore details of phraseology, I think; I’m not denying that I’m a socialist, I’m merely pointing out that the thread is not intended to fulfill the purpose of comparison–defenders of capitalism should be able to defend it on its own merits, and we will not introduce another source of inaccuracies, such as your belief in what socialism does or does not. > > **Shodan** , I would appreciate a civil tone here, if you don’t mind. It’s my thread, after all, so if nothing else some common courtesy might be indicated. I’ll not reply to any contribution that has the word “bullshit” in it, for one thing. > > You’ll have to rephrase your reply, by the way, if I’m supposed to answer: “less opportunity of exercise” is a bit opaque for me. Sorry. So, no substantive answers at all. Imagine my surprise. Regards, Shodan [Previous page](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911.md?page=3) [Next page](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911.md?page=5)