# 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:** 6
**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, 8:44pm UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/101 "2015-01-16T20:44:53Z")
> [@BrainGlutton](#): > > That is a continuum, not a dichotomy. Sure, as highlighted by my example of modern state capitalist economies. It’s still rather obvious that one side is preferable. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 16, 2015, 9:07pm UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/102 "2015-01-16T21:07:05Z")
> [@Stringbean](#): > > Sure, as highlighted by my example of modern state capitalist economies. > > It’s still rather obvious that one side is preferable. Yes, social democracy is preferable, based on performance record. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 16, 2015, 9:12pm UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/103 "2015-01-16T21:12:30Z")
> [@Enterprise](#): > > Though to be fair, no social democracy that I know has done away with capitalism, though many have severely fettered it. Exactly. A continuum, not a dichotomy. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 16, 2015, 9:13pm UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/104 "2015-01-16T21:13:47Z")
> [@Shodan](#): > > I don’t know what this is supposed to mean. The particulars are what we are talking about. > > Regards, > Shodan **Will** made a sweeping generalization, and I responded with a better one. ---
**Author:** ![ITR\_champion](https://avatars.discourse-cdn.com/v4/letter/i/c67d28/32.png) [@ITR\_champion](https://boards.straightdope.com/u/ITR_champion)\ **Post date:** [January 17, 2015, 1:50am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/105 "2015-01-17T01:50:14Z")
> [@Enterprise](#): > > 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. Is there any serious thinker who says that capitalism is “so great that we should not even consider others”? I’m quite willing to consider others. I wouldn’t mind seeing some shifts in the direction of distributism. But the fact remains that if someone says he wants “something like socialism or communism” then merely listing “defects” of capitalism won’t cut it. The defects of socialism and communism are well known, starting with the fact that communism slaughtered many millions and forced billions to live in grinding poverty. As long as the defects of communism are vastly greater than the defects of capitalism, listing defects of capitalism gives us absolutely no reason to desire a shift to communism. ---
**Author:** ![ITR\_champion](https://avatars.discourse-cdn.com/v4/letter/i/c67d28/32.png) [@ITR\_champion](https://boards.straightdope.com/u/ITR_champion)\ **Post date:** [January 17, 2015, 2:26am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/106 "2015-01-17T02:26:11Z")
> [@Enterprise](#): > > 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). China and Vietnam are communist countries. India and Bangladesh are not officially communist, but their style of government has been strongly influenced by socialist thinking. Looking at the [Index of Economic Freedom](http://www.heritage.org/index/ranking), we find that the four countries you listed are not at all free. The high poverty levels that we find in those are the result of their governments’ control over the economies. 50 years ago, China attempted to eliminate all capitalistic enterprises and have total centralized economic control. Tens of millions starved to death as a result. Today China allows some profit-seeking enterprises under tight regulation. There’s more freedom than in Mao’ s time, but much less than in a first-world country. As a result the Chinese people live better than they did in Mao’ s time, but worse than us who live in first world countries. While businesses in China can hire and fire workers, workers face tough government intervention. They have legal limits on where they can work, what pay and benefits they can ask for, and so forth. If the communist government didn’t put these limits on its own people, fewer of them would be poor. People like you, who prefer socialism or communism to capitalism, are advocating for systems that keep billions of people in poverty unnecessarily. East Asia provides an excellent opportunity to see the results of capitalist and socialist policies side by side. The most capitalistic countries in that region are Hong Kong, Singapore, Taiwan, Japan, and South Korea. The least capitalistic include North Korea and Laos alongside the four you listed. Which group has the lower poverty rates? In which group would you rather live? ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 17, 2015, 2:36am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/107 "2015-01-17T02:36:34Z")
> [@ITR\_champion](#): > > Is there any serious thinker who says that capitalism is “so great that we should not even consider others”? Yes, there are, for certain values of “serious.” ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [January 17, 2015, 3:30am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/108 "2015-01-17T03:30:18Z")
> [@BrainGlutton](#): > > Yes, there are, for certain values of “serious.” Cite? ---
**Author:** ![furt](https://avatars.discourse-cdn.com/v4/letter/f/439d5e/32.png) [@furt](https://boards.straightdope.com/u/furt)\ **Post date:** [January 17, 2015, 3:35am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/109 "2015-01-17T03:35:25Z")
> [@Enterprise](#): > > 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 this is where you are so far off base. You speak as if these are new problems that haven’t been considered, or that people haven’t looked for alternatives and considered all the ones that have been offered. They have been considered, exhaustively. At it’s peak, there were 200,000 registered members of the American Communist Party, and larger percentages in most other western nations. They have been put into action, repeatedly. Dozens of nations have reorganized their economies along collectivist principles and it’s led to catastrophe in nearly every case. Everyone is well aware of how Capitalism fails us. Hell, I personally have two advanced degrees and have been out of work for months; it’s been the worst year of my life. I can tell you first-hand aaaallll about inefficient use of talent in the modern labor market. And yet, I’d much rather be in a free-market system than in the one you advocate. > [@](#): > > Similarly, capitalism quite obviously is not doing a good job in providing everybody with food, although food is such an inelastic market: millions of people starve not because we do not have the food, but because it does not get sold to those who need it. There is a demand for food, but nobody is selling; why? Capitalism does a fantastic job of providing people with food. Worldwide, famine has largely been eliminated, and the freeing of third world economies is a huge part of why. Where famine exists in the 21st century, it’s usually a deliberate military/genocidal tactic. Certainly famine in longstanding free market economies has never come remotely close to what China and Russia experienced. ---
**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 17, 2015, 3:36am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/110 "2015-01-17T03:36:20Z")
> [@Enterprise](#): > > In fact, however, economic growth is a concern (as you rightly note, the primary concern) only for capitalism, because growth is the only thing that keeps the illusion of a perpetual improvement for everybody up (well, to be fair, it’s not an illusion to some: some peoples’ lives are being bettered by growth). Without economic growth, per-capita wealth declines as the population increases. Without economic growth, the only way to move capital to new ventures is to take it away from others. Zero economic growth is a recipe for poverty and civil unrest. > [@](#): > > But the problem with growth is that it cannot possibly be perpetual: at some point, whenever that point may be, we will run out of resources (this must be a logical truism, no?). Sure, and one day the universe will die a heat death. The question is whether or not resources are significant limitation to growth for the foreseeable future. And the answer is no. Furthermore, it’s possible to have economic growth without increasing the consumption of resources. In fact, economic growth can cause a reduction of resource consumption. Consider a factory that hires some engineers to come in, examine their production, and figure out how to improve efficiency. Sometimes that requires purchasing new capital goods, but sometimes it doesn’t. It can a procedural change, an addition of inspections at key point, re-arrangement of equipment on an assembly line, or whatever. So this company has invested in mental effort, the result of which was a change which improves its product yield from 95% to 98%. That extra 3% of production represents less waste and more output goods for the same inputs. Economic growth just happened, and resources were actually saved. Consider the desktop publishing revolution, which exchanged real paper from trees with bits in a computer. Efficiency was improved, the cost of producing documents went down, and that causes economic growth while also saving resources. But here’s a reason why Capitalism is good at resource management: If we do wind up with scarcities, the price will go up. This will stimulate more production and more research into alternatives. If the price goes up high enough, it may even be feasible to get those alternatives from other bodies in the solar system. Or we may learn how to synthesize them, or abandon the material entirely in favor of something else. But whatever we do, if we allow prices to reflect supply and demand, the economy will adapt. Compare this to how governments operate. Their decision-making is based much more on political concerns and pressure from interest groups. China’s central planning has created huge apartment complexes that are sitting empty because they misjudged the changes in the economy. The U.S. government is now mandating that NASA build a new heavy lift launch system for which there is no mission, and for which there will be better private alternatives. Not only that, but they are mandating that the new system use existing Space Shuttle manufacturing facilities, even though they’re not really suitable. NASA already wasted billions trying to build a man-rated rocket out of a space shuttle solid fuel motor. Why? Because efficiency wasn’t as important as maintaining the jobs of ex-shuttle workers in politically important states. In the meantime, the private space market is focused like a laser beam on cost and efficiency, and SpaceX is on the verge of re-landing their booster stages which will cut the cost of access to space dramatically AND save resources. This will result in more profit for SpaceX, and thank God. Because without profit, we’d be stuck with a bloated white elephant of a pork-laden goverment space program. This is another example of economic growth resulting from figuring out how to save resources. So your entire premise that economic growth requires ever-increasing resource consumption is just wrong. > [@](#): > > Or possibly, we will have produced so much money (through financial speculation or, perhaps, merely from compound interest) that there’ll not be enough things to buy with the money. In either case, collapse must follow. Can anything grow for ever, I guess, is the question I’m asking. Money is not wealth. These days, people seem to forget that simple fact. You can print all the money you want, and it won’t make us any wealthier. Can anything grow forever? In practical terms, why not? However, this does get us into a tricky area in economics: How exactly do you measure growth? What is GDP, and is it a reasonable measure of how well an economy is functioning? In the digital age, does GDP make sense as a key variable? After all, economic growth doesn’t have to consume resources at all. And in the internet age we are replacing goods that are tracked for GDP calculations with goods that aren’t. For example, if I want to be entertained, I can go out to a movie. My consumption of that entertainment will be tracked - the theater will take in money, the movie production company will report its profits, etc. But what if I stay home and log on to the internet and watch a movie someone made for fun on Youtube? No cash changed hands, no physical goods were consumed. But my choice would look like it’s reducing GDP, even though I’m just as happy as I would have been at the movies, and the person who made the show I watched is happy that he’s getting hits. If I buy a new suit, that gets recorded in GDP statistics. If I pay someone virtual dollars to make me a virtual suit for a virtual meeting carried out in cyberspace, It’s not, even though the essential activity of dressing to meet people might be unchanged. So it’s a tricky business. > [@](#): > > Who is “you” in this example? And _how_ has she grown the economy, even conceding that that’s desirable? Economic growth happens when more value is produced for the same inputs. > [@](#): > > This is true (in parts, anyway), and I offer two considerations in return. The first is this: it is a myth that capitalism is particularly effective at any of things you describe in your list. Cite? Can you give me one scholarly site showing that in the general case another economic system is more efficient at allocating resources and coordinating economic activity? Do not confuse this with social goals. The fact that your preferred group doesn’t get as much as it wants is not an example of lack of efficiency - it’s a value judgment. > [@](#): > > First up, overproduction and underconsumption are real facts of economic life, and of utterly astounding failures of management (I doubt you would deny this?). We’re talking in the general case here - not outliers or edge conditions. Sure, a new iPhone release may cause a temporary shortage of that product. But these are unusual cases. For the vast majority of goods and services we exchange, our system gets them where they need to go, in the right quantities, almost all the time. So much so that you take it for granted. In planned economies, it’s common for basic commodities and staple goods to simply vanish from the shelves. Factories would get shut down because there would be a shortage of lubricating oil or screws or whatever. This was so chronic in the Soviet Union that people would join queues and wait in line for hours to get whatever was at the end of the queue, without even knowing what it was. The logic was that people were queuing, so whatever it is at the end must be in demand. So you’d get there and find out that they were selling shoes, but not in your size. You’d buy them anyway in hopes that you could trade them with someone else for something you need. And of course, there was a huge black market in the Soviet Union, and the government looked the other way because they recognized that having a market was helping to reduce the mess that their failed planning was causing. Another thing: Don’t believe for a second that socialist and even communist countries don’t have ‘profit’, and don’t have wealth disparities. Even if everyone gets ‘paid’ the same, ways are found to reward and punish people in order to create incentives. So a factory manager might get paid the same as a worker, but the factory manager would get use of the factory’s limousine and summer cottage. Everyone might be able to afford a car, but if you weren’t politically connected you might wait on a list for 10 years to get one, while the connected person gets one right away. You might have money, but nothing to spend it on whereas the factory manager gets special access to the GUM department store where products are available that aren’t sold to the general public at any price. So there will always be wealth inequality, no matter what your system is. The question is, how would you like that managed? You can either let people become wealthy because they are selling products that make the lives of many people better, or you can let them become wealthy because they are politically connected or have curried favor with the powers-that-be. Which one do you think is more fair? > [@](#): > > It is also logically coherent, unless you insist that there is a telos to the capitalist system other than the accumulation of capital (I’m not sure you do). If the accumulation of capital is the chief goal, however, then production does not depend on “what’s needed” (meaning social uses), but “what can be profitably exchanged.” Capital accumulating is not the goal of capitalism. Capital accumulation is the _mechanism_ by which we manage our economy without central planning. Without capital accumulation private industry could not build large projects. Without capital accumulation you don’t have venture capital, which means people with good ideas can’t find funding. Without capital accumulation you can’t buy your own house or save for your own retirement. Capital accumulation is also efficient because it causes economic power to accrue to the people who have already demonstrated the ability to use it to help others as demonstrated by their ability to sell goods to many people. > [@](#): > > Your example of the grocer is well taken—but you will remember, probably, images of harbors full of loaded containers, parking lots full of unsold cars, and houses empty of inhabitants, in 2008, all a consequence of misjudged demand. Those harbors full of loaded containers had nothing to do with misjudging demand - they sat in the harbor because no one could figure out how to be paid because of the financial crisis, and without payment they refused to offload their goods to their customers. The minute the crisis ended and stable money was restored, that stuff cleared away. > [@](#): > > Similarly, I don’t think it’s possible to claim that capitalism can also have its shortages (of iPhones, if nothing else, whenever a new one comes out). Similarly, capitalism quite obviously is not doing a good job in providing everybody with food, although food is such an inelastic market: millions of people starve not because we do not have the food, but because it does not get sold to those who need it. There is a demand for food, but nobody is selling; why? So capitalism is at fault because it’s not providing food to people who live in countries that aren’t capitalist? I assume you’re talking about the 3rd world, since no one is starving in any capitalist country I can think of. In fact, the poor in America tend to be more overweight than the rich. You know where people are having trouble getting basic goods and foodstuffs? Venezuela. A country sitting on huge energy reserves, and which has no reason to have a wrecked economy. But when the socialists took over and nationalized production they destroyed the information required to manage their economy, jailed the people who know how to run things, and by fixing prices caused shortages. Foreign investment plummeted as the risk of expropriation of foreign assets went up. The result is that a country that should be one of the wealthiest in the region is having trouble providing the staples of life to its people. > [@](#): > > Your argument is not quite a strawman: capitalism does successfully distribute goods and services in some places in a highly efficient manner (as long as efficiency is only measured internally, without regard for tangential costs that are not immediately monetarily calculated, such as long term costs to the environment, of course). Whereas planned economies always take those things into account, right? You might want to sniff the air in Beijing before answering. But yes, externalities can be a form of market failure, and there’s a role for government in correcting for that. But only in true cases - not as an excuse to tightly regulate everything. We have other methods for controlling externalities as well, such as the tort system. > [@](#): > > But only when there is a profit to be expected, and hardly always; but always to the detriment of some, as at all stages of this organization, profit must be made. As soon as there is no profit to be made, all the demand in the world will not efficiently organize the market’s non-response. ‘Demand’ is not a thing, it’s a curve. The demand for ipads at $10/ea would be massive. The demand for iPads at $100,000 each would be insignificant. So if you have high demand and no profit, that just means that the price at which the demand exists is too low to allow for the creation of the thing the people demand. That’s not a problem with capitalism: It’s a problem with reality. It’s not capitalism’s fault that there’s a big un-met demand for $10 iPads. We just don’t know how to make them that cheaply. But I would trust capitalism to find the most efficient way to make iPads before I’d trust the government. > [@](#): > > it’s not as though the market magically manages resource allocations even where it manages to do so “properly”. Rather, a lot of computational effort goes into the determination of what prospective demands will be, effort that every grocer undertakes when he plans future inventory, every wholeseller when she buys the stuff to sell to the grocer, every maker of oats when he orders the cartons to put them in, every carton maker when she buys woodpulp, and so on. Planning, in other words, decentralized in individual parts of the chain, is already a fact of economic life. The difference between the capitalist economy and a socialist economy in that sense is not planning, it’s the question of profit. You’re wrong. A market economy is not planned - it’s emergent. It’s the result of billions of choices being made every day under a system of consistent rules. No one decides what the price of something must be, what the national consumption of steel should be, what percentage of resources should be allocated to different areas of the economy. These things simply emerge from the interactions. A good analogy (as far as analogies go) is an ant colony. Ant colonies are very complex. They have nurseries, food storage, and other specialized areas. The ants themselves are organized into workers, warriors etc. Some guard the ant hill. Some forage for food. The percentage of ants in these roles changes with conditions. Ants will build rafts and bridges out of their bodies to span chasms or float the colony to safety in floods. Ants will raid other colonies and force the other ants to live as slaves in their own. They will go to war, and they fight in complicated ways. Ants are extremely efficient at economic growth, ant-style - they search out new food and allocate just enough ants to bring all the food back to the ant hill. And yet, there are no central ant controllers. The queen of an ant colony is just a breeder, and many colonies have no queen. So how is all this complexity happening? How do the ants know to increase food foraging, build bridges, or how to maintain temperature in the nursery by bringing in just enough rotting vegetation? Which ant decides how many should be workers vs warriors or nursery attendants? An alien looking at all this could easily assume that ants are intelligent. But they aren’t. An ant is just a little machine with some fixed rules and responses. It’s these rules that create all the complexity. An individual ant doesn’t know how to build a bridge - he doesn’t even know that there’s such a thing. I’ll give you a quick example of how this works: An ant in the ‘foraging’ state behaves through simple rules: [ul] [li]Walk randomly, but move away from any ant that’s closest to you. [/li][li]If you find food, take it straight back to the ant hill, leaving a trail of pheromones. [/li][li]If while walking randomly you discover a trail of pheromones, follow it away from the hill, then if you find food follow that trail back, adding your own pheromones.[/li][li]If you get to the end of the pheromone trail and there is no food, start milling about randomly again. [/li][/ul] That simple set of rules creates an amazingly efficient mechanism for food gathering. Ants stream out of an ant hill, and immediately start fanning out while carrying out a search grid. When an ant finds food, he takes it back to the ant hill leaving a pheromone trail back to the food source. Ants near him smell the pheromones and head for the food source. If they find more food, they take it back to the hill, strengthening the pheromone trail. That attracts ants from even farther away, so the line of ants marching to the food grows. As the food supply diminishes, some ants don’t find any, and the pheromone trail starts to fade. But now ants are searching the area where the last food was found. That’s the most likely place to find more, after all. If they do, they rebuild the pheromone trail and more ants come. If they don’t, eventually they give up and head back to the ant hill and start all over again. And so it goes. No central planning. Looked at from a macro level, you will see what looks like a little industrial economy. Large food sources have lots of activity at them. Smaller food sources have fewer ants bringing food back. But it’s all nearly optimal. I would defy any central ant controller with a clipboard to devise a better way. Now consider a direct analogy in a human economy. Millions of people are empowered to search for ways to improve the economy. If someone comes up with a new product, money flows to it in proportion to how big the demand is. Money is like the pheromone trail. If the demand is high, it attracts capitalists who pour more capital investment into that area. They’ve been signalled that there is a large unmet demand of society in that area, after all. Now the money/pheromone trail gets even bigger, attracting more investment. But once the profit margins drop, the money start accumulating somewhere else. But maybe more people start investigating variations on that theme, or using information they learned by the first product they invent something even better. A mechanism like that causes capital to flow where it needs to go without any planner making that decision for everyone. At the macro level, it is spontaneous order generated by the micro decisions of people operating in a capitalist rule system. If money is the ‘pheromone’ that allows this to happen, taking it away will have the same effect as taking pheromones away from the ants - you destroy their ability to communicate with the others, and the entire cooperative system breaks down. This, by the way, is what Adam Smith called “The Invisible Hand”. It’s a force that pushes people to do what society wants and needs if they want to make a profit. That force is an emergent property of the system, and not something under the control of individuals or amenable to the dictates of central planners. > [@](#): > > Q _Central_ planning is not the crucial aspect of socialism, though: the socialization of the means of production is. And how does production get managed and its results allocated after you’ve destroyed all the signals that allow the market to work? All I can think of is bureaucracy and planning, but perhaps you have another idea? > [@](#): > > There is no major reason why each of the nodes you describe needs to turn a profit, and why each of those nodes cannot do the work it does under capitalism as well under a system in which all information gets passed on exactly as before, except nobody is expected to make a profit. How does that information get passed on? If I can’t make a profit, why would I even open a business? If the government is running the business, how does the price system possibly work? Prices aren’t effective unless people have the freedom to respond to them. And prices are created through the process of individuals and businesses being forced to choose between all the things available to spend their resources on. Without profit, none of this works. > [@](#): > > I’m not chiefly interested in giving my view of socialism, but rather the problems of capitalism. I can also respond to specific issues that you feel I’ve missed. > I would much rather not do so here, where I’m concerned with showing the problems that capitalism has. We can do a separate thread on that, perhaps? You cannot discuss the problems of capitalism in a vacuum. I can say that one problem with capitalism is that it hasn’t gotten us sentient robots yet. That’s meaningless unless you can show how some other system could have done it. So I would really, really like you to describe, in as much detail as you can, how you would efficiently manage production and consumption in a society that does not allow profit. Feel free to start another thread if you think it’s necessary, but I think it’s relevant to this one. > [@](#): > > I really don’t know how “vast majorities” of anything behave, not knowing vast majorities of anything. I’m not doing too good a job of it, but note this: capitalists aren’t evil per se, nor businessmen bastards. It’s not the people in the system that are the problem, it’s the system itself and the demands it makes. I’ve already described how capitalists get wealthy by providing goods and services to other people. Shoddy companies and poorly run companies tend not to survive. Now tell me - what checks and balances are in your socialist system to prevent bastards from using the power of government to their own ends, or against the wishes of the people? Did you know that noted socialist revolutionary Hugo Chavez died with a net worth of $2 billion dollars? He managed to extract that much from the Venezuelan economy in just a few years, despite that economy being only a tiny fraction of the size of the U.S.'s. How does your system prevent that from happening? > [@](#): > > But you’re wrong, categorically, historically, empirically wrong, when you say the market forces people to deal fairly with one another. The market is amoral. The market permits real slavery and wage slavery (as it has historically—I doubt you deny that?). The market permits child labor and starvation wages (as it has historically). The market permits (indeed, demands) laying off workers in order not so that a company may survive, but that its profits may increase. The market permits pharmaceutical companies to charge almost any price on monopoly medicines without regard for the lives of people. And so on, and so forth. So I’m fully with you on debating the merits of the market as a tool for the effective organization of an economic system (I disagree that it is such a tool, but I see how you think that); but I’d very much like to see actual, hard evidence on the market’s “forcing people to deal fairly with one another”. All you have to do is look around at all the goods that have quality higher than the government minimum standards, all the people with wages higher than the minimum wage, and you can see that SOMETHING is driving good behavior other than government. Why did car makers start putting ABS brakes in cars when they weren’t mandated by government? Software and web sites are totally unregulated. How come it all works so well? If you think hard about that, you might start to gain some understanding of how market forces push people ‘as if by an invisible hand’ into doing good for others if they want to do well for themselves. ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [January 17, 2015, 3:49am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/111 "2015-01-17T03:49:51Z")
> [@Sam\_Stone](#): > > But here’s a reason why Capitalism is good at resource management: If we do wind up with scarcities, the price will go up. This will stimulate more production and more research into alternatives. If the price goes up high enough, it may even be feasible to get those alternatives from other bodies in the solar system. Or we may learn how to synthesize them, or abandon the material entirely in favor of something else. But whatever we do, if we allow prices to reflect supply and demand, the economy will adapt. > > Compare this to how governments operate. Their decision-making is based much more on political concerns and pressure from interest groups. China’s central planning has created huge apartment complexes that are sitting empty because they misjudged the changes in the economy. The U.S. government is now mandating that NASA build a new heavy lift launch system for which there is no mission, and for which there will be better private alternatives. Not only that, but they are mandating that the new system use existing Space Shuttle manufacturing facilities, even though they’re not really suitable. NASA already wasted billions trying to build a man-rated rocket out of a space shuttle solid fuel motor. Why? Because efficiency wasn’t as important as maintaining the jobs of ex-shuttle workers in politically important states. Easy example: helium. Congress established a National Helium Reserve during World War One, and ever since has subsidized the cost of helium production. This caused a very rare, irreplaceable substance to be artificially priced so cheaply that we use it for party balloons. The result of this squandering? [The planet is running out of helium, fast.](http://www.slate.com/articles/health_and_science/holidays/2012/11/macy_s_thanskgiving_day_parade_2012_helium_is_wasted_in_floating_parade.html) And while it’s great at entertaining children with balloons, helium is also used [in M.R.I. machines, scientific research, fiber optics, aerospace technology.](http://www.nytimes.com/2013/05/04/opinion/collins-an-ode-to-helium.html) Sometime soon, we’ll look back on all the helium we wasted, and curse our ancestors for it. ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 17, 2015, 8:33am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/112 "2015-01-17T08:33:21Z")
**Shodan** : > [@Shodan](#): > > I assume, therefore, that your version of socialism makes no pretense that they will improve things overall, or that economic growth will be enough to support a growing population. I think “my” (it’s not really mine, better minds that mine have thought it up) socialism would improve things, and it would do so without the emphasis on economic growth. I don’t think that would be a problem, either: just for starters, the U.S. economy has grown by a factor of seven since 1950 ([roughly](http://ourworldindata.org/data/growth-and-distribution-of-prosperity/gdp-growth-over-the-last-centuries/)), while population has about [doubled](https://www.census.gov/history/www/through_the_decades/fast_facts/1950_fast_facts.html). > [@](#): > > “You” refers to the people making pins. The economy grows because more pins are produced from the same inputs. How does the economy grow if anybody produces more pins? It grows the companies stock of pins, but unless they can realize a profit somewhere with those pins, they’re making a net loss; if they never sell those pins, they go bankrupt, and bankruptcies don’t grow the economy. So at the very least, you’ll have to admit that economic growth can only happen when the additional production of pins gets sold somewhere. And this is (one of the) fundamental problems of the system (check the link I provided **Sam Stone** ). > [@](#): > > No, it’s not a myth, as the example contrasting the West vs. the USSR (and East Germany vs. West Germany and North vs. South Korea, etc.). Okay, let’s tackle the last one first: South Korea. A good example, because its economic rise has comparatively little to do with the workings of the free market and everything with five-year plans and what’s called “indicative planning” (as explained [here](http://thebreakthrough.org/archive/a_lesson_in_economics_from_haj)). For both the USSR and East Germany, I’d ask you to be a little more specific: what about the contrast am I supposed to take in? It always feels like I’m supposed to say: oh, the outcome proves it all; is that it? If so, I think the point is more complicated than you make it out to be, and that, at any rate, I have already agreed that central planning is probably not the way to go anyway. > [@](#): > > The reason capitalism is more effective than a planned economy is thru pricing, as **Sam Stone** explained. Without laying any onus on **Sam** , he has _claimed_ that pricing is a more effective system for managing demand, without really establishing this. It’s difficult to establish, too, I admit, and I’d have a hard time disproving the claim. All I’d like to say is that it’s a claim only, not a fact. > [@](#): > > There is no distinction between “what’s needed” and “what can profitably be exchanged” in a capitalist system. Consumers are communicating what they want to buy by bidding up the price for it. There’s two ways of replying to this: either I say: you’re right, there’s no difference between what’s needed and what can be exchanged for profit, and that’s part of the problem. We could probably have avoided a major ebola outbreak in Africa if “needed” drugs had been available this time last year; they were made available only when a “market” of sorts arose (industrial nations willing to invest in helping quell the epidemic). I have a moral problem with that–but it’s the way things work under capitalism. Or I say: you’re wrong, there’s of course a difference: think about the 2012 hurricane on the East Coast, where immense amounts of goods were made available to suffering people without demanding payment–without waiting for the market to step in and determine how much a gallon of clean drinking water should cost. If nothing else, your shorthand is not how the market works, even ideally. You’re describing essentially a demand economy–but I’d think most market advocates would agree (as I think **Sam Stone** does) that its supply and demand together that (somehow) determine price. A simply current example: demand alone cannot explain the low, low price of oil. > [@](#): > > That’s exactly the problem with command economies - bureaucrats decide what consumers want most. When they are wrong, there is no efficient mechanism to communicate that they are wrong. In capitalist economies, consumers decide what they want most. Those who do not respond to the information conveyed by rising or falling prices and demand, either lose money or go out of business. This is what was wrong, in part at least, with some command economies (it’s worked well for South Korea, as noted above), yes. But it doesn’t logically follow that no alternative system can be devised that provides the same feedback. As I said: you’re implying essentially that any decentralized decision-making system can only function when personal profit is involved. It’s just not true, and it can’t be shown to be true. We know that non-profits can organize themselves perfectly well, for one thing; we know that the military can go to just-on-time delivery, which requires considerable planning at every stage, without being expected to turn a profit. And so on. > [@](#): > > Often because someone is interfering with the free market and causing the famine. See Stalin deliberately starving millions, Mengistu engineering famines in Ethiopia, etc. Often, yes. But I’m not seeing a Stalin killing people anywhere right now. You’re misunderstanding me when you imply that I’m a fan of Stalin’s, or that I’m not seeing the difficulties of existing or historical alternatives to capitalism. > [@](#): > > The trouble being that this winds up a state-owned and -enforced monopoly, where the free market is not allowed to operate. And whoever owns the means of production decides how it is run. If the state owns them, then those decisions are central planning almost by definition. Which is why I’ll remind you of what communism is: the withering away of the state. There’s no government in capitalism (nor in some forms of socialism) that isn’t the people. Again, I find this bit of the discussion distractive and don’t want to engage in it here, because it opens more fears again (no government! you’re a looney!) that aren’t helpful in a discussion of the economic system. ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 17, 2015, 9:03am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/113 "2015-01-17T09:03:09Z")
> [@WillFarnaby](#): > > Not to mention profit is the only way we can be sure we are improving the value of inputs. If I take lumber valued at $200 and labor valued at $200 and produce a chair exchanged for $450. I have benefitted everyone involved. If I take lumber valued at $200 and labor valued at $200 and produce a chair exchanged for $350, I have not only lost money for myself, but have lowered the valued means more so than I have increased the valued ends in the economy and impoverished society. “The valued means” and the “valued ends”? I’m even sure this is logically coherent. How could you possibly have “impoverished” society? Everything you’ve spent is still within society–even the fifty dollars you’ve failed to realize for yourself. You may be impoverishing yourself, by distributing your wealth elsewhere. > [@](#): > > Say you are the successful entrepreneur in the first example and I am the poor entrepreneur in the second. Your profit allows you to acquire more lumber and labor so that you can continue to take lower valued inputs and create higher value outputs, enriching society. After my loss, it will be more difficult to command the resources needed. This is a good thing because I was decreasing the wealth of society. But you’re begging the question: first, by assuming that we need an entrepreneur to enrich society. If I build a chair and sell it for 400$ (thus recouping my costs), I have enriched society by a chair–a use value that didn’t exist before. As I have noted above, if you sell the chair for 450$, those 50$ need to come from somewhere. You’d say they come from the (still somewhat mystical) workings of the market; fine. What do you invest them in? You need to purchase some kind of actual value with them at some point, right? But where does value (not price, not money, not wealth) come from, if not from labor? And if that’s the case, then you’ve just made yourself able to buy a quarter day’s worth of labor (actual value) with money that reflects no actual value. > [@](#): > > If we both continue along these lines, you can see it is the person who best increases wealth in a society who also earns the most profit. Does the obverse work, too? The person who makes the most profit must automatically be the person who best increases wealth in a society? If not, why not? ---
**Author:** ![Stringbean](https://avatars.discourse-cdn.com/v4/letter/s/d6d6ee/32.png) [@Stringbean](https://boards.straightdope.com/u/Stringbean)\ **Post date:** [January 17, 2015, 9:03am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/114 "2015-01-17T09:03:24Z")
> [@Human\_Action](#): > > Easy example: helium. Congress established a National Helium Reserve during World War One, and ever since has subsidized the cost of helium production. This caused a very rare, irreplaceable substance to be artificially priced so cheaply that we use it for party balloons. > > The result of this squandering? [The planet is running out of helium, fast.](http://www.slate.com/articles/health_and_science/holidays/2012/11/macy_s_thanskgiving_day_parade_2012_helium_is_wasted_in_floating_parade.html) And while it’s great at entertaining children with balloons, helium is also used [in M.R.I. machines, scientific research, fiber optics, aerospace technology.](http://www.nytimes.com/2013/05/04/opinion/collins-an-ode-to-helium.html) > > Sometime soon, we’ll look back on all the helium we wasted, and curse our ancestors for it. Soil on the moon is rich with Helium. If we really needed more without a terrestrial alternative, we could mine lunar soil. ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 17, 2015, 9:15am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/115 "2015-01-17T09:15:40Z")
> [@Shodan](#): > > Correct (obviously). _Because profit is the signal that somebody has correctly divined what the consumer really wants._ Not what the state thinks he should want, what he really wants. What he really wants, because he forgoes all the other possibilities and is willing to exchange something he values for something he values more. Because economics is the study of what people do under conditions of scarcity - when you can’t have whatever you want by wishing for it. You have to exchange for it. > > In theory I want a car that costs $65,000. In practice, I want something else that costs $65,000 _more_. So I buy the something else, and whoever produced and supplied the something else makes the profit and the BMW salesman and manufacturer do not. More power to you that you have $65.000 dollars to spend, to be sure. I really want a polio vaccine, but I’m a Nigerian farmer who barely scrapes by from day to day. I don’t have the money to buy polio vaccine. Does that mean I don’t really want it? Or say I’m an unemployeed woman in Birmingham, who’d really want to eat apples and salads, but can’t pay the [triple cost](http://www.telegraph.co.uk/news/11149644/Healthy-diet-costs-three-times-that-of-junk-food.html)of these things. Does that mean I don’t want apples? It means no such thing, of course. Which means that prices aren’t the way to go to determine anything much about “what people want”. And again, even if prices did manage to do what you claim they do (determine what people want), the automatic conclusion that they are the only method to do is (again, logically and historically) not correct. ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 17, 2015, 9:50am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/116 "2015-01-17T09:50:43Z")
> [@RickJay](#): > > The first and most obvious problem is that you seem to be assuming goods flow from China, India and Bangladesh to the USA, Canada, and Germany, and therefore goods flow from the poor to the rich. Which would be a rather interesting point if it were true, but of course it’s not. No, I’m really assuming no such thing. I’m not even sure why I should be assuming it, and what it would mean? > [@](#): > > The industrialized world would be much better off if poor countries weren’t poor. We are much better off for South Korea not being poor anymore; now South Koreans buy our things, and they make better things for us than they did before. I don’t disagree that we’d all be better off if we were all better off. I saying it’s impossible for the system to work unless surplus value accruing TO someone is taken FROM someone somewhere–and that means (at the very, very least, has always meant historically) that poverty is necessarily created somewhere in the (now global) system: in the 1850s, it was English wage laborers in the textile mills (see the descriptions in Engel’s quite harrowing _Condition of the Working Class in England_); in the 1900s, it was American immigrant workers in the Chicago stock yards (see Upton Sinclair’s less harrowing _The Jungle_); in the 1950s, it was (still) colonial workers working for wholly extractive companies, from Standard Oil to Dole Fruits; in the 2000s, it’s Indian and Chinese laborers in t-shirt factories (and the mass of unemployed, which capitalism structurally produces). > [@](#): > > I don’t recall offhand, but I would be stunned if Marx felt labor was a “irreducible function” but natural resources, space, time, and the like were not. That would be a really amazing oversight. Natural resources without labor remain inert, of course; if by space you mean, distance to the market, that’s quite obviously time (if by space you mean “land”, that’s an inert natural resource); and time, as I said, is crucial for Marx, because as I said upthreat, it’s all about “socially necessary labor-_time_”. > [@](#): > > I didn’t say that. I mean, it seems obvious to me that it must logically be true that some people are just stupid, but to be perfectly frank I suspect people who run a business are vastly more aware of the centrality of human labor than people who do not run businesses. A business run by someone who fails to recognize that human effort is central to an enterprise is a business that will be dead and buried by the middle of next week, if not sooner. Can you clarify something for me? What does “human effort is central” mean here. “I need human labor”? Or “I need to make sure that my workers are humanely treated?” Because the former is evidently true; the latter is evidently not true (see my examples above). > [@](#): > > Here is where your policy of “we can’t discuss anything except capitalism” is a deliberate cop out. > > The problem with this criticism is not that it’s wrong, it’s that it’s not a criticism of capitalism. It’s a criticism of EVERY system, at least every system beyond hunting and gathering. People are valued according to the contribution they make; every single human being on earth is viewed but all the other human beings as being a role, or a set of roles. I am viewed by every person who knows me as having value based on my fulfilment of a role, be it as an employee, a father, a husband, a son, the second baseman on my softball team, a friend, a brother, and so on. The reduction of a person to their value in a role is not at all a feature exclusive, or even particularly indicative of, capitalism; it is a feature of the human condition. It is every bit as true in a communist, fascist, or feudal monarchist system. It was true of Japan during the civil war era of the 1500s, of East Germany, of Canada today, of republican Rome. It’s an inherent part of human perception. You aren’t criticizing capitalism, you’re making an observation about how human beings work. First up, I’d appreciate if you’d not insinuate against my good faith here. You may claim that it’s a cop-out, that’s fair enough; and my decision is deliberate oly because I truly think arguing _for_ socialism here will not be helpful; but it’s most certainly not a “deliberate cop out”. Secondly, yes, you’re right, we’re all “valued” (we should find a better word, perhaps, in order not to confuse the “values”) according to the way we play certainly roles. Only capitalism would have us equate the way we treat our spouses, children, and friends, with the way we create profit for our employer, though. My criticism is not that we make judgments about how good we are as parents or goalkeepers–my criticism is that capitalism is a system that dooms people to poverty and death simply on account of how good they are at making profit for their employer (in fact, not even that: at how great their marginal profit-making rate is, because, as we know, fully profitable companies sometimes fire people to be even more profitable) no matter how good a parent they are (though not no matter how good a goalkeeper they are). > [@](#): > > The secret to a free market system is that it’s one of the best ways to make use of that facet of the human condition, providing you’ve got some other safety nets in place. I promise this’ll be my only (deliberately) non-substantive remark: high-wire and trapeze artists require safety nets; it’s a very apt metaphor in that sense > [@](#): > > Of course we do make an effort to go beyond “what does this person do for me,” or most people do, to treat others with a modicum of respect and decency accounting for their being fellow human beings. And there are people we love, who get an extra does of altruism. But, again, we always do that, no matter the “system.” Yes, we do. I’m not dissing humans, I’m dissing the system. ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 17, 2015, 10:10am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/117 "2015-01-17T10:10:51Z")
> [@ITR\_champion](#): > > Is there any serious thinker who says that capitalism is “so great that we should not even consider others”? I’m quite willing to consider others. I wouldn’t mind seeing some shifts in the direction of distributism. But the fact remains that if someone says he wants “something like socialism or communism” then merely listing “defects” of capitalism won’t cut it. The defects of socialism and communism are well known, starting with the fact that communism slaughtered many millions and forced billions to live in grinding poverty. As long as the defects of communism are vastly greater than the defects of capitalism, listing defects of capitalism gives us absolutely no reason to desire a shift to communism. **ITR champion** , I’ll admit I was (mentally) doing you a disservice for assuming that you’d be up in arms about any talk about re-distributing wealth. You are quite right that ultimately, I would have to defend my notion of socialism-communism; but it’s been my experience that the necessary first step is to convince people that there’s something wrong with capitalism in the first place, and that it is okay and possible to imagine alternatives to it. This is my sole reason for going this route (and, of course, the fact that I began this thread in response to a post by **Sam Stone** that was pro-capitalism (as I perceived it), and I merely wanted to say why it was wrong; I see nothing incoherent about that). And you’re providing another good (though after-the-fact) reason for my choice in your last part: talking about communism in the OP would have been an even quicker way of getting people throw the “obvious” example of “communism’s failure” at me (“communism has slaughtered millions;” well, no, or: ditto for capitalism). The story is way more complicated than that: it involves questions of what communism entails, whether the USSR was “communist” or not, whether it failed because it was communist, whether the failure of one version of communism predetermines the failure of all, and so and so forth. It’s a debate worth having, but not within a different debate. > [@](#): > > East Asia provides an excellent opportunity to see the results of capitalist and socialist policies side by side. The most capitalistic countries in that region are Hong Kong, Singapore, Taiwan, Japan, and South Korea. The least capitalistic include North Korea and Laos alongside the four you listed. Which group has the lower poverty rates? In which group would you rather live? See the link I provided on South Korea. The same, actually, goes for Japan: Japan’s vaunted “capitalist” economy also heavily involved state organization and control, as does Singapore’s. (Hong Kong’s not a country anymore). I’d say something about Taiwan, but I know nothing about Taiwan. Incidentally, you’re having it all kinds of ways right now. Vietnam has experienced [positive growth](http://www.tradingeconomics.com/vietnam/gdp-growth) for a decade and more, even in the global recession; [Japan hasn’t](http://ieconomics.com/japan). Communism outperforming capitalism by capitalism’s very own standards? ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [January 17, 2015, 10:15am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/118 "2015-01-17T10:15:22Z")
I believe in capitalism. Free-market pricing provides an elegant, if imperfect, solution to the central problems of economics. Some of the greatest eras of productivity increase in history were the result of entrepreneurs encouraged by laissez-faire policies. All other things being equal, one can expect the more capitalist economy to outperform, by many important measures, the more socialist economy. All this is probably well known to most Dopers, even those complaining about capitalism’s failings. But, per the OP’s request, I will focus on capitalism’s failings in this post. I first summarized my general appreciation of free-market principles because I’ve posted on this Board before. 🆒 Even with this preface I fully expect some Dopers to rebut my remarks as though I were advocating Soviet-style central planning! My remarks should be taken not as an argument against capitalism, but as an argument against the unfettered capitalism often espoused by today’s extreme libertarians. I’ve previously recommended [an _Atlantic Monthly_ article titled “The Market as God”](http://www.theatlantic.com/magazine/archive/1999/03/the-market-as-god/306397/). Despite that AFAICT, no Doper has ever clicked that link, I’ll recommend it again; and I’ll use “Free Market Religion” to distinguish the extreme almost-religious fascination with capitalism from my more moderate appreciation. First, let’s think about price setting. The extremists think that, almost by religious axiom, free markets always sets a “correct” price for everything. Let’s dispose of this. Note that land ownership inevitably hinges on political matters. We might agree that an individual who invests effort to erect structures, or to cultivate corn or fruit trees, owns the land representing his work, but what about wild trees on that land? What about rights to the water in a stream passing through that land? What recourse does a landowner down-stream from the first have, if too much water is diverted? Such decisions will be political or judicial, rather than of simple “market principles.” Since the prices of wild fruit or irrigation water will depend on such political decisions, the concept of a “natural market price” for such things is invalid. As another example, suppose that different societies have different cultural views of, or make different political decisions about, child labor. The “market price” of labor will depend on such views or decisions. More simply, the price of labor will depend on relative bargaining power. Because of inelasticities, and opportunities for implicit price-fixing, the wage level in a society will depend on things like right-to-work laws. Which wage-level, unionized or right-to-work, is the “natural free-market wage”? Since, closed-shop contracts are generally freely-agreed contracts, the answer is less clear-cut than libertarians imagine. Certainly the “right” of workers to organize is no more inhumane than the “rights” of capitalist monopolies, many of which, despite Adam Smith’s warnings, are implicitly endorsed by today’s hyper-capitalists. Organizing labor is related to the “Prisoner’s Dilemma” in that laborers may be motivated to “defect” and turn scab. In positing “natural prices” should we assume real people behaving the way real people do, or abstract logicians? Such quandaries should make it clear that “natural price” can be an arbitrary concept. Much of the Western world’s property rights derive from land deeds first granted by Charlemagne or William the Bastard and upheld ever since. Suppose the Franks or Normans had made someone Duke of the Atmosphere, and that Duke’s descendants levied a charge on oxygen to this day? Most of us would happily pay more for our oxygen than we do now! And we do have to pay for some things that “ought” to be free. There are various external costs (cf. Tragedy of the Commons) that are not and _can not_ be accounted for without political intervention. There are even very simple examples of economic systems where the free market leads to sub-optimal equilibria. In an earlier thread I mentioned Braess’ Paradox as an example of such. (IIRC, one Doper claimed to have a general free-market workaround for Braess’ Paradox, but he has never explained or linked to any relevant journal article.) The second point I want to make is that the success of American capitalism is often exaggerated. If you compare the economic performance of U.S. versus France, for example, you’ll find that a large part of America’s “advantage” is the higher hours-worked per worker. If you compare the GDP of U.S. and France on a per worker-hour basis, rather than the usual per worker-year, France won’t look so bad. Indeed, since leisure does have value, countries like France with longer vacations and shorter work-weeks than the U.S. might be judged more prosperous than the U.S. if the value of leisure is factored in. Moreover, even acknowledging the virtues of laissez-faire capitalism, its virtues are often overestimated. Look at the first two graphs in [this article](http://aneconomicsense.com/2012/07/20/the-shift-from-equitable-to-inequitable-growth-after-1980-helping-the-rich-has-not-helped-the-not-so-rich/). The last decades of the 1800’s, when railroads and pipelines built by capitalists were enhancing the American economy, actually show no greater net growth than the trend line. Finally, consider income inequality. Continue down to the 3rd and 4th graph on the above linked page and see that recent trends in the U.S. are to increasing gaps in wealth and income. These gaps create social and economic problems. Hyperlibertarians argue that these gaps are the inevitable result of unfettered capitalism, but what capitalism (outside extreme cases like lawless Somalia) has ever been completely unfettered? We can appreciate the virtues of capitalism without giving up political and cultural virtues like progressive taxation, workers’ rights, regulations against pollution, etc. ~ ~ ~ ~ ~ On a separate incidental matter, the discussion of slavery misses a point: much serfdom is _voluntary_ servitude; in medieval Europe, vassals pledged themselves to landowners in return for protection and subsistence. Indeed, since a given worker might have little value to a potential employer _unless_ he commits to many years of service, one would think hyperlibertarians should _endorse_ voluntary servitude. (Some serfdom agreements were binding on the serf’s descendants: I think this is where many would draw the line.) ---
**Author:** ![Enterprise](https://avatars.discourse-cdn.com/v4/letter/e/76d3ee/32.png) [@Enterprise](https://boards.straightdope.com/u/Enterprise)\ **Post date:** [January 17, 2015, 10:36am UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/119 "2015-01-17T10:36:25Z")
I’ll tackle **Sam Stone** ’s post in a while (it’s long and complex!). > [@furt](#): > > Everyone is well aware of how Capitalism fails us. Hell, I personally have two advanced degrees and have been out of work for months; it’s been the worst year of my life. I can tell you first-hand aaaallll about inefficient use of talent in the modern labor market. And yet, I’d much rather be in a free-market system than in the one you advocate. You don’t know what system I advocate, because I have not done so. But I know why you think so, because you think the only alternatives to capitalism have been tried and found wanting. You are (no offensive intended) a dupe of the system: it’s told you that it’s realistically the only way things can be organized. Can you explain why you’d rather be unemployed in capitalism than be employed in a different system? Not without making assumptions about the kind of system you think I’m advocating, either believing it to be like Stalinist Russia or by calling it a pipe dream. > [@](#): > > Capitalism does a fantastic job of providing people with food. Worldwide, famine has largely been eliminated, and the freeing of third world economies is a huge part of why. Where famine exists in the 21st century, it’s usually a deliberate military/genocidal tactic. Certainly famine in longstanding free market economies has never come remotely close to what China and Russia experienced. One would wish it were possible not to reflexively shout “yeah, but THEY are much worse , and THEY are communists!” [And therefore all communisms would produce equally horrendous outcomes? Communists can’t learn lessons?] Here: [famines](http://en.wikipedia.org/wiki/List_of_famines)? [World Hunger](http://www.theguardian.com/global-development/2014/oct/16/world-food-day-10-myths-hunger?CMP=twt_gu). Something like on eigth of all people live in hunger. And if you’re claiming that capitalism is what “freed” the third world economies–even accepting that, capitalism is also what bound those economies in the first place through imperialism. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [January 17, 2015, 1:50pm UTC](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911/120 "2015-01-17T13:50:32Z")
> [@Enterprise](#): > > I don’t disagree that we’d all be better off if we were all better off. I saying it’s impossible for the system to work unless surplus value accruing TO someone is taken FROM someone somewhere– But that is simply not true; it is, indeed, self-evidently not true, as people are getting wealthier by any reasonable measure, worldwide. The average human being is materially wealthier than they were in, say, 1960, by either mean, median, the percentage of people in absolute poverty, any way you want to measure it. How is that possible if what you’re saying is true? In your last few posts you seem to be falling back into the economics-is-a-zero-sum fallacy. It indisputably isn’t. That is not even a remotely true statement, not under ANY economic system save “everyone just steals things.” Labor CREATES value, by your own admission. If you make something and trade it to me for something else, we are both wealthier and no one is poorer. > [@](#): > > Secondly, yes, you’re right, we’re all “valued” (we should find a better word, perhaps, in order not to confuse the “values”) according to the way we play certainly roles. Only capitalism would have us equate the way we treat our spouses, children, and friends, with the way we create profit for our employer, though. But that isn’t true. It’s beyond any rational argument that it is not true. People in all manner of economic systems are treated as cogs in a machine, and it’s here that your “let’s not discuss any other kind of system” can’t work because it’s a central part of your argument that this feature is unique to capitalism. People in socialist systems are treated the same way; in the Soviet Union coal miners were valued as coal miners by GOSPLAN. In Japan under the Tokugawa Shogunate, if you were a rice farmer, well, that was your purpose, to farm rice. Ancient Sparta treated people as their roles to an extent inconceivable to a modern person. That’s how the system saw you, valued you. It’s been this way basically forever. Modern free market capitalism didn’t create this concept at all. It didn’t even enhance it. Indeed, the world’s capitalist countries appear to place far more value on human being just for being human beings than any other societies that have ever existed, at least amongst large civilizations. Capitalist nations have, for the most part, more social safety nets, more respect for individual rights, more freedom of expression, a wider range of forms of artistic expression, more progressive social outlooks and do a better job caring for those with limited economic value. than other societies. Of course, one can say that’s not the capitalist part of those societies, it’s the governmental part - but it is beyond doubt that those things seem to be rather strongly correlated. Correlation isn’t causation, but you must admit it’s a hel[l of a strong correlation. Honest question; why do you think that is? I have my own theory. [Previous page](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911.md?page=5) [Next page](https://boards.straightdope.com/t/on-the-many-failings-of-capitalism/709911.md?page=7)