(U.S.) Imperialism

[Bryan_Ekers]

What is often missed, though, is that WE are also losers in this system. By “we” I mean the majority in the imperialist countries.

Wow, talk about living in the here-and-now. As soon as I finish bulding my Wayback Machine, I’ll invite Chumpsky for a little trip back to the 19th-century and he can how much life really sucked for the majority. Compared to that, living in houses with televisions and refrigerators seems downright civilized. Poverty exists in the United States, and will continue to do so, but how is the “majority” living in misery, or even serious discomfort?

From what I’ve seen, Chumpsky can’t challenge claims that capitalism does more good than evil, but he’d rather concentrate on the evil for personal reasons. At the very least, he’s never suggested a viable alternative (abolishing private property strikes me as very unviable).

And wealth is not a zero-sum game, no matter how many times he claims it is. Were there a finite supply of gold coins in the world, and all commerce was conducted using these coins, he might have a valid argument. A simple look at the growing GNP of the United States since World War II would show a growing national wealth, not simply a grab from the poor to the rich.

Svinlesha:

You mean, like his earlier claim that there’s no distinction between ”building an Auschwitz and building a MacDonalds?”

I see. How very adult of you.

I agree with chula: sounds like you need to be reminded of which forum you’re in.

My rhetoric (that Chumpsky makes no distinction between capitalism and fascism) was prompted by Chumpsky’s rhetoric (in which he makes no distinction between capitalism and fascism) in similar threads, including this little charmer from his opener for this thread:

What I can’t understand is what the rest of the world is thinking when they appease the U.S. in its bloodthirsty ambitions. Don’t they understand that when you demolish international law, that your own security is reduced? After all, it was only 60 years ago when another British head of state appeased a different aggressive state bent on world-wide domination. Or perhaps they are all just cowards, afraid to stand up to the bully on the block.

As for being reminded of what forum I’m in, I’d like to remind you of what message board we’re on. The tone of the Straight Dope has always been one of facts but also of irrevererence for dogma and a low tolerance for hooey. Chumpsky tosses around the hooey pretty freely and invites challenge and ridicule (though not blatant personal attacks while in GD) when he makes wild claims without support.

[Maeglin]

Take your time, Mr. Svinlesha.. I don’t usually have a chance to post on weekends, anyway. Drop me an email if the thread drops and I haven’t yet replied.

[quote]
If I concentrate on the systemic flaws of capitalism, it is because I want to understand the system itself. Simply looking at various abuses and individual flaws doesn’t tell you much, unless they are a part of a consistent pattern.[/quick]

While this may make sense on a certain level, Chumpsky, I don’t think it is all that helpful to bringing serious analysis to bear. If you want to understand the system itself, you are best served learning about it the good old fashioned way.

First of all, you are conflating two different concepts when you refer to capitalism. Capitalism is a system of private ownership. To be perfectly honest, who actually owns the goods is of less importance to me than how they are distributed, that is to say, in free, competitive markets. Believe it or not, I don’t care all that much who owns the goods. Just how they get traded around.

There are lots of good arguments against capitalism, and I am receptive to most of them. Arguments against a competitive market, however, generally arise from a certain ignorance with respect to their operation.

Liberal capitalists will defend the system as being inherently good, despite its many flaws, imputing the bad aspects to “individual political and market failures,”

No, no, and no again. There is nothing good or bad about it, either intrinsically or extrinsically. I happen to like competitive markets because they are demonstrably useful, and quite frankly, they look pretty when you draw the graphs right.

However, this can only go so far. It could perhaps explain one failure in isolation, or two, or even a dozen. However, it cannot explain the overall tendency, nor can it explain the entirely consistent pattern we see throughout the world.

This is fundamentally contradictory to your assertion that the vast majority of the world’s wealth is controlled by a tiny minority of people. The fact that such patterns may exist should come as no surprise, since it is the same people screwing up and exploiting others over and over again. If you want to relate this to capitalism or free marketeering, it will require a much stronger argument.

Another way to look at it is to see it as the perfectly predictable consequence of a system that works exactly as it is supposed to.

And this is where we fundamentally disagree. Every failure you see you can integrate in your internally consistent worldview, and no amount of data is going to change that. This is manifestly not an argument I wish to broach, especially if your knowledge of the nuts and bolts of competitive markets is insufficient.

It is quite clear who benefits from the globabl capitalist system. The largest beneficiaries are the ruling classes of the imperialist powers in North America and Europe.

You take the existence of a “ruling class” for granted. How does one become a member of the ruling class? What are the criteria? According to some theorists I am probably a member of the elite, to others, perhaps not. I sure as hell don’t look or feel particularly elite.

They essentially run the system.

How exactly does anyone run a system as gigantic, complex, and unpredictable as the world economy? Especially in which prices adjust at the speed of thought? If this is the case, how do any of them ever lose, which they do with astonishing frequency. I think your understanding of the “system” as anything so monolithic is in error.

Another class which benefits from the system is the comprador class in the Third World, those who hold power in Third World countries. They benefit it terms of power and wealth, and their job is to maintain the system.

Who are these people, exactly? Government leaders? Businessmen? Somewhere in between? Please list a few names, if you would, so we can attack this problem with empirical rigor.

They must show proper obeisance to their masters in the imperialist countries, and in return they are rewarded with power and wealth.

If the masters are so powerful, they don’t have to reward the compradors at all. Once again, can you please offer some examples of this system in action?

Who loses? The losers in this system are most of the population of the world. The biggest losers are the working classes of the Third World. They create the wealth that is expropriated, while they spend their lives toiling in miserable labor usually for subsistence wages.

In a lot of ways, this is true, but perhaps not for all of the reasons that you may think. For example, innovations and changes in the global economy are very fast. This requires constant reallocation of goods, services, and priorities. Due to generally accepted rules concerning intellectual property, firms have near monopolies on new processes for a substantial period of time. This tends to warp their business procedure to take maximum advantage of this period of monopoly. Third world works often take it in the ass due to this lack of competition.

We lose for several reasons. For one thing, the same class war that is waged globally is waged locally. The same market pressures that force wages down around the world work at home also. There is thus a constant struggle for livable wages, for environmental and workplace safety regulations, and so on. So, there is the class war aspect of it, where we are the losers.

Without which pressure downwards we would not enjoy the high quality of life, the affordable consumer goods, and the substantial jobs in the service industries. Life is full of trade-offs, Chumpsky, and that is the bottom line. Every action, every policy, every trade has an opportunity cost. The fact that you may not like the result is due to society having different priorities than you do, not due to the fact that we live in a somewhat capitalist society which flourishes in a somewhat competitive market.

Nations that have more mixed economies approach problems of wealth and poverty differently, but the bottom line is that they face exactly the same tradeoffs. A dollar you give to Person A is a dollar you cannot give to Person B.

We also lose when the rest of the world is forced to be poor. We lose not only because of the depraved immorality of it, but we miss out on the benefits of living with others from different cultures who have decent lives. We are greatly impoverished from the lack of the potential contributions that could be made to our own culture by those abroad. We further lose by the creation of hatred at our country for what has been done to the poor around the world.

You are missing the most obvious point of all, Chumpsky. If you believe Parenti’s article that capitalism must expand, and if you believe that capitalistic firms must constantly seek new markets to invest in, then you come to the inarguable conclusion that poverty in the third world does not benefit the rich. If most of the world’s laborers are poor, who will buy their goods?

That’s the biggest problem with your analysis, as I see it. It is useful to have limitless sources of cheap labor…for awhile. But investment will continually increase, processes will undergo continuing refinement, and high quality goods will be produced more cheaply. It’s the enormous markets of the third world that provide the greatest potential for growth. Hence elimitating poverty should be a priority for every major far-sighted capitalist. Why this is not always so is intrinsically linked to short-sighted stupidity, not the idea of the competitive market or private ownership.

MR

[Maeglin]

Oops, mind the code error in paragraphs 2-6, please.

[Mr.Svinlesha]

Maeglin:

Well, I can’t sleep, so I might as well write.

To start with, I’ll just assume that you are more knowledgeable in this subject than I am, since you appear to be. But let me nevertheless begin by pointing out what I perceive to be a contradiction in your argument.

You state that you agree with my claim that, as time goes on, Capitalism tends to create growing disparities in the distribution of wealth – which is clearly a systemic critique. You follow this admission with a list of other factors that tend to exacerbate Capitalism’s tendency towards unequal distribution. But then you conclude:

• The problem I tend to have with Chumpsky’s analysis (and yours, to a lesser extent), is that it only seems to make room for systemic criticisms, rather than criticisms levelled at specific flaws, inadequacies, or failures. For the record, I tend to be quite liberal, and often favor programs which redistribute wealth in order to combat poverty. But I tend to see poverty as the product of individual political and market failures rather than as a flaw in the entire system.

My response is this: I have no problem at all with the view that other factors, beyond those that we might refer to as ”systemic,” have an impact on wealth distribution. Some of them, like those you’ve listed, may tend to have a negative impact on distribution, while others, conceivably, might even have a positive impact – such as, for example, the philanthropic gestures of the very wealthy. However, it seems to me that with this argument you attempt to both have your cake and eat it, too – first by agreeing with my systemic critique, and then by concluding that ” poverty [is] the product of individual political and market failures rather than … a flaw in the entire system*.”

So – which is it?

You continue:

• I’d love to give that a shot. How does one distinguish whether a country relies more or less on the “free market”?

*Touché! I was afraid someone might ask that question. I agree – this issue becomes very complex when we subject it to a detailed analysis.

I can only suggest a kind of general outline. It might be possible to differentiate states, in terms of the policies they pursue, along a continuum between neo-liberal on the one end and socialistic on the other. But even that sort of typology might be too crude to rely upon. If I were to discover that in some ways, or in certain sectors, the Swedish economy is more ”capitalistic” than its US counterpart, I wouldn’t be surprised.

Anyway, I mentioned the above as means of setting up my presentation of income distribution trends in the US. I figured that most readers wouldn’t disagree too strongly with the assertion that the domestic economic policies of the US government are more neo-liberal in orientation than, say, those of most European states (with the possible exception of Britain).

Regarding your Ghana example:

• Let’s pretend that Ghana has relied heavily on globalization and free marketeering. But if the price of cocoa plummets, all the capitalism in the world won’t keep it from poverty. Contrast that with a nation in the middle east, whose oil industry is entirely nationalized. Comparing the levels of poverty between the two countries while oil prices are high and cocoa prices are low is no way to falsify this model. The problem is the ceteris paribus.*

Several points: To begin with, my claim regarding falsifiability does not require cross-country comparisons. You will note I didn’t suggest that we needed to compare countries in order to falsify my predictions: I suggested that we needed to look at the trends in income distribution, over the long run, in one country that is ”particularly capitalistic.” (I would like to rephrase that clumsy statement into something like ”the domestic economy of a state that implements relatively neo-liberal financial policies,” but you get my drift I hope.)

On the other hand, you do bring up an interesting point that I hadn’t considered, namely, context. Of course, in the face of a contracting economy, poverty will increase, both in terms of depth and numbers – that almost goes without saying. To my mind, however, the important question is the following: how do these fluctuations in growth and decline affect income distribution? When the cocoa market bottoms out, are the losses to Ghana’s economy spread evenly across groups? Or do some groups bear the brunt of the economic contraction, and the resulting increase in poverty, while others slide by, relatively unscathed? And finally, can we say anything about the impact of the reigning economic system in Ghana on how these losses are distributed across the population?

This leads back to my original assertion in a way, and one possible kink in my claim of falsifiability: when presenting evidence of increasing disparity in the US economy, I failed to take into account the growth rate of the GNP over the same period. And this leads in turn to a whole gaggle of interesting questions about the relationship between GNP growth and income distribution. I had assumed that between 1974 and 1994 the US had undergone a relatively robust period of economic growth. But is it possible that sluggish growth was also played a role in the increasing levels of disparity? And for those of you who are critical of what you call the ”zero-sum” theory: how fast does an economy have to grow, exactly, in order for poverty to be significantly alleviated?

• Yet I feel that some of my above explanations plus American’s very special brand of cronyism contribute more to this problem than a system of free enterprise and private ownership. *

Again: does this mean that you disagree with the ”systemic critique?” Then what of your previous agreement with it, above?

Regarding East Germany: it has been the object of a massive rebuilding project, with an incredible level of investment, has it not? A sort of mini-Marshall Plan? I’m not sure how this helps your claims regarding income distribution.

Well, I better wind down for tonight. I just want to conclude with some brief observations regarding wages.

I was aware that I wasn’t providing a full picture of the way wages work in my last response, but that was because you claimed that you did not know of any arguments that demonstrate that ”taking money from the poor” was ”inherent in the system” of capitalism. So I thought I would offer you a couple. I agree, as you point out, the labor market functions on basically the same principles as any other market. Regarding this:

• If wages are in equilibrium, this benefits firms the most, because at this point they maximize their consumer surplus. Its benefits to employees are obvious, for at equlibrium, the greatest number of people are employed at the highest wage.

*Could you explain this statement a little further?

• Once again, you are missing half the equation. Competition has an equally positive effect on wages. If firms are going to produce the highest quality goods at the lowest prices, they need to employ the most talented and experienced people. This upward push on wages balances the need to produce goods cheaply until equilibrium is reached.

*I disagree with this claim, especially in a global context. As I understand it, wage levels in a free market depend primarily upon the amount of labor available. It is only when shortages of labor make themselves felt that we observe an upward pressure on wages. You should see the way the ordinary working stiff is treated out on the market: ”Take it or split! There are 10 more at the door, waiting for your job!” And so on. I have an interesting case example concerning this, by the way, but I will have to try to post it later.

Finally: may I ask, for the sake of future reference, whether I’m addressing a man or a woman? Rather embarrassing, really, but I can’t quite make it out from your user name.

[Chumpsky]

*Originally posted by Maeglin *
**First of all, you are conflating two different concepts when you refer to capitalism. Capitalism is a system of private ownership. To be perfectly honest, who actually owns the goods is of less importance to me than how they are distributed, that is to say, in free, competitive markets. Believe it or not, I don’t care all that much who owns the goods. Just how they get traded around.

There are lots of good arguments against capitalism, and I am receptive to most of them. Arguments against a competitive market, however, generally arise from a certain ignorance with respect to their operation.**

I think it might be yourself who is misunderstanding what capitalism is. Capitalism is not merely a system of private ownership. Private ownership has existed in almost every economic system since the beginning of what we call “civilization.” Yet, we do not consider all of these systems to be capitalist.

What is capitalism? Well, capitalism is usually associated with three essential characteristics:

(1) An economy that produces for the market. The existence of a market, or the trading of goods does not make a capitalist economy. Rather, in the capitalist system, goods are produced for the market and production is determined by what the market will bear. This is distinguished from a system where production is determined by what people need. For example, in Haiti in the early 1990’s, Haitians were working for agribusiness enterprises which produced exotic fruits for the yuppie market in the U.S., while Haitians were starving to death. The market determined where profit lie, namely in the yuppie market, and so production was oriented toward this market, as opposed to feeding the population.

(2) Monopoly of the means of production. In the capitalist system a small minority possesses the majority of the means of production, while the rest own very little. In the U.S., for example, this has reached ridiculous heights. The conservative writer Kevin Phillips wrote a book recently, Wealth and Democracy: A Political History of the American Rich, discussing the concentration of wealth in the U.S. and its effects on democracy (all negative). Roughly, 1% of the population controls 40% of the wealth, 2% control 60%.

(3) The existence of wage labour. In the capitalist system, labour itself is a commodity to be sold on the market. The worker no longer owns the means of production; he cannot make use of his labour power for the conduct of his own enterprise; if he wishes to avoid starvation, he must sell his labour power to the capitalist. Alongside the markets where food, CD’s and SUV’s are sold, there also is the labour market where the working class must sell its labour power in order to live. As with other products, the capitalist seeks to buy cheap and sell dear, pushing the price of labour ever downward, cheapening working life more and more.

No, no, and no again. There is nothing good or bad about it, either intrinsically or extrinsically. I happen to like competitive markets because they are demonstrably useful, and quite frankly, they look pretty when you draw the graphs right.

The tendency of capitalist markets is that they become less competitive. The ruling class ever seeks cooperatives, cartels and other interlocking mechanisms of cooperation among themselves. You see, everybody believes in socialism in reality, it is just that the ruling class wants socialism for themselves, and market discipline for the rest.

To quote from Robert McChesney’s book Rich Media, Poor Democracy:

“News Corporation heir Lachlan Murdoch expressed the rational view when explaining why News Corporation is working closely with Kerry Packer’s Publishing and Broadcasting Ltd., the company that with News Corp. effectively controls much of Australian media. It’s better, contends Murdoch the younger, if we are not ‘aggressively attacking each other all the time.’ In the global media market the dominant firms compete aggressively in some concentrated oligopolistic markets, are key suppliers to each other in other markets, and are partners in yet other markets. As the headline in one trade publication put it, this is a market where the reigning spirit is to ‘Make profits, not war.’ In some respects, the global media market more closely resembles a cartel than it does the competitive market-place found in economics textbooks.”

McChesney is talking just about the mass media, but the rule is quite general. Among the top corporations, you have a vast web of interlocking boards of directors, where the same people sit on a number of boards. They are not interested in competing as much as in making money, and they have learned that the market is highly destructive. Here is the first page brought up by google when I do a search for “interlocking boards directors corporations”:
http://www.verdant.net/corp.htm
The material is quite standard.

The market is fine for you, but not for me, in the capitalist ideology. The poor and the powerless need market discipline, but the powerful get plenty of help from the sort of inverse Marxism that is the norm in the ruling class.

[Beagle]

As with other products, the capitalist seeks to buy cheap and sell dear, pushing the price of labour ever downward

Wages are going ever downward?

What about the many (middle class) people who own stock? Do they have no “ownership of the means of production”?

[Chumpsky]

*Originally posted by Beagle *
Wages are going ever downward?

Yes, in the absence of any corrective mechanism. If left to its own devices, the market pushes wages ever downward, until you have ideal of just bare subsistence, where the worker earns just enough to stay living in order to work for the capitalist. This is basically the situation in capitalist paradises like Guatemala or Indonesia.

It is only by mass popular pressure and organizaition that wages for the working class are pushed upward. Wages tend, more or less, to be proportional to the amount of power the working class has. Where the labour movement is weak, wages are low; where it is strong, wages are high. This is not exact, obviously, but it is true to a first approximation.

**What about the many (middle class) people who own stock? Do they have no “ownership of the means of production”? **

Very little. An even tinier percentage of the population controls the vast majority of the stock. I don’t have the cite on me, but I think it is something like 5% own 80% of the stock.

At any rate, the middle class family who owns a few shares of Microsoft really has no power over public policy decisions, whereas Bill Gates has an enormous influence. The capitalists maintain an overwhelming share of ownership and control over the means of production.

[Bryan_Ekers]

*Originally posted by Chumpsky *
I think it might be yourself who is misunderstanding what capitalism is.

Well, he’s closer that you are. Your first “essential characteristic” is pretty close, but the second and third are lacking.

(2) Monopoly of the means of production. In the capitalist system a small minority possesses the majority of the means of production, while the rest own very little. In the U.S., for example, this has reached ridiculous heights. The conservative writer Kevin Phillips wrote a book recently, Wealth and Democracy: A Political History of the American Rich, discussing the concentration of wealth in the U.S. and its effects on democracy (all negative). Roughly, 1% of the population controls 40% of the wealth, 2% control 60%.

This is not an essential element of capitalism, though it often ends up this way. It is, however, an essential characteristic of hierarchical systems, including pre-capitalist aristocracies and monarchies generally. Capitalism didn’t invent the practice of a small minority controlling most of the resources. It’s actually the best system to give an individual a chance to increase his wealth, using his own talent, drive and luck. Compare that to the rigid caste systems that still exist today.

(3) The existence of wage labour. In the capitalist system, labour itself is a commodity to be sold on the market. The worker no longer owns the means of production; he cannot make use of his labour power for the conduct of his own enterprise; if he wishes to avoid starvation, he must sell his labour power to the capitalist. Alongside the markets where food, CD’s and SUV’s are sold, there also is the labour market where the working class must sell its labour power in order to live. As with other products, the capitalist seeks to buy cheap and sell dear, pushing the price of labour ever downward, cheapening working life more and more.

Well, of course a worker can make use of his labour power. he can seek other employment if he finds his present employer unsuitable. The worker can also educate himself and gain experience to make his skills more desirable in the marketplace. I’m not sure at what point you thought slavery became an essential element of capitalism. It may have been, once.

Wage power does vary, naturally. While a factory worker in the post war economic boom (i.e. 1945-1965 or so) may have earned enough to own a house and keep a family, a more modern family may find they have to have two wage-earners to support their lifestyle. I don’t see an inevitable downward spiral, though, nor do I envision a return to Bob Cratchet-ish wages.

The tendency of capitalist markets is that they become less competitive. The ruling class ever seeks cooperatives, cartels and other interlocking mechanisms of cooperation among themselves.

Well, that’s one of those “every philosophy has the seed of its own destruction” arguments. Conglomerates can and do grow in the interest of economies of scale, but they often collapse in the interest of efficiency, plus the freedom of a capitalist democracy allows the creation of newer, leaner companies that can challenge the establishment.

You see, everybody believes in socialism in reality, it is just that the ruling class wants socialism for themselves, and market discipline for the rest.

Ooooookay. What’s your point?

[Chumpsky]

By the way, it is not just me who is claiming that the capitalists seek dominion over the entire Earth. They say it themselves. Check out, for example, the National Security Strategy
(By the way, most of the lies in this document can be deciphered if, after every instance of the word “freedom” you insert the phrase “for capital.”)

This document is a prescription for achieving total global dominance of western capital.

“The U.S. national security strategy will be based on a distinctly American internationalism [i.e. imperialism] that reflects the union of our values and our national interests [i.e. ruling class interests].”

Funny enough, they feel a need to point out that capitalism has won:

“That great struggle is over. The militant visions of class, nation, and race which promised utopia and delivered misery have been defeated and discredited.”

This is why there is no misery in capitalist countries like Indonesia or Guatemala.

The most important statement, however, is this:

“The great struggles of the twentieth century between liberty and totalitarianism ended with a decisive victory for the forces of freedom—and a single sustainable model for national success: freedom, democracy, and free enterprise.”

“Free enterprise,” yes indeed. You see! Right there on the White House web site–exactly what I have been saying! Any nation that attempts an alternative path must be brought back into the fold, by whatever means necessary. There is only ONE single sustainable model for national success: capitalism.

The great journalist John Pilger has an excellent article about the new, more aggressive U.S. imperialism:
America’s Bid for Global Dominance

[Chumpsky]

*Originally posted by Bryan Ekers *
**Well, of course a worker can make use of his labour power. he can seek other employment if he finds his present employer unsuitable. **

I.e., he can sell his labour power on the market.

Really, Bryan, I get the feeling that you aren’t even trying any more.

[Bryan_Ekers]

*Originally posted by Chumpsky *
**I.e., he can sell his labour power on the market.

Really, Bryan, I get the feeling that you aren’t even trying any more. **

Funny, I could make the same observation about you, except that I’d be correct. Do you have a job? Are you free to quit that job and get another job, if it offers a higher salary, more benefits, better working conditions, or any combination of the above? If you are self-employed, are you free to start doing other tasks? If you are not employed, are you free to send out resumés in an attempt to secure employment? And would you be free to choose which employer to work for?

If you are not free, please let Amnesty International know that slavery is still being practiced in America.

[Daoloth]

Chumpsky, do us a favor. Go to a bookstore or library and get a copy of Reflections on a Ravaged Century by Robert Conquest. Read it with an open mind. Then continue. Thanks.

[js_africanus]

*Originally posted by Mr. Svinlesha *
Two compliments so far! This must be my lucky thread

I’m not so sure luck has anything to do with it. I’m thinking about making a rule to not engage you in debate because I can’t shake the sinking suspicion that you are giving me just enough rope…**

I guess this is what is being continually referred to in this thread as the ”zero-sum proposition.”

I think I brought up the notion and I should have gone into more detail. I apologize for not doing so. I’m going to use this post for a brief digression on the concept of the zero-sum game as it is not only a useful tool for viewing the world, it also bears on the issues at hand.

In mathematics and economics there is a branch of study known as game theory. A game, in economic parlance, is any situation that has three elements: a set of “players”, a set of strategies for each player, and a set of payoffs for each possible combination of player strategies. This is actually a very loose definition. For example, a possible game would be whether to punt on a third down in American football, or even whether to put your heavy infantry in the center or on the wings of a battle formation. A well known game is the Prisoner’s Dilemma.

A zero-sum game is a game where the payoffs always sum to zero. To put another way, what one player wins is equal to and opposite of what the other player loses. Poker (not in a casino) is a good example: if Mr. Svinlesha and I play a hand of poker, the money I lose will be exactly equal to the money he gains–always.

So, in context of the current thread, if international trade, for example, were a zero-sum game, then the amount of benefit that country A receives from trading with country B is always equal to the amount of harm country B receives from the same trade. This, as I understand it, is what informed mercantilist trade policies. I suppose it makes a certain amount of sense if one’s conception of a nation’s wealth were limited to the amount of gold it had–if Indian carpet weavers sold carpets to Britons, then the gold going to pay for the carpets was wealth lost to India. That, of course, does not justify the cutting of the thumbs off Indian carpet weavers (a real event as I understand). Who know what people were thinking?

Anyway, a long time ago, Adam Smith and David Ricardo showed that trading between nations could actually be mutually beneficial. Consider this simple example (as I mentioned before, Landsburg has a good discussion): State A is located in a steep, rocky valley with a raging river at the bottom, and State B is located in a plain with good moisture, but no concetrated water resources. If each state produces and mills it’s own grain they will both do poorly. State A can’t grow much grain, though it has plenty of power for mills; State B can grow lots of grain, but must mill by hand. However, if State B puts all its efforts into growing and State A into milling, then together they can grow and mill more than they could do on their own. This is where trade is beneficial. It is not a zero-sum game…if they cooperate and each do what it is good at, then the total grain grown and milled is greater than the the sum of their individual efforts. That’s absolute advantage. Regarding comparative advantage, it turns out that even if one state is better at producing both, they can still benefit if their domestic price ratios are different. In economics this is Basic Stuff, that’s why I’m not providing cites. There are plenty of resources in the library, etc., just search for “comparative advantage.”

Anyway, when I remarked that economic activity isn’t a zero-sum game I was saying that cooperating and trading and so on actually makes more available. I mentioned Landes’ paper “What do Bosses Really Do?” That is a good illustration.

Consider for a moment a common misconception. If I buy a Big Mac, I pay $3.00, let’s say. The naive view is that this is a zero-sum trade: I pay $3.00 and I get a burger “worth” $3.00; McDonald’s gets $3.00 and loses a burger worth $3.00. Seems clear. However, since demand is a decreasing function with respect to quantity, and since the market as a whole only faces one price, there remains alot of people who would have been willing to pay more than $3.00 for a Big Mac. Abstracting for simplicity, there is only one person who purchased a Big Mac who felt that the Big Mac was worth exactly $3.00. Everybody else who purchased Big Macs felt they were worth more. Those people enjoyed what is called consumer surplus: the difference between what they were willing to pay and what they did pay. Likewise, producers enjoy producer surplus. This component of welfare is intangible (for lack of a better word), but it is real. Hence, market trading is not a zero-sum game. Consumer & producer surplus inherent in market activity makes more welfare available. Again, this is Basic Stuff. Any principles of microeconomic text book should contain a discussion of these concepts.

I doubt that there is a simple proof that economic activity is zero-sum. The hurdles to overcome start with Smith and Ricardo and go from there.

If you are interested in game theory, Thinking Strategically is a good introduction.

[js_africanus]

*Originally posted by Daoloth *
**Chumpsky, do us a favor. Go to a bookstore or library and get a copy of Reflections on a Ravaged Century by Robert Conquest. Read it with an open mind. Then continue. Thanks. **

Didn’t I open with a quote from that book? Talk about going full circle…

[js_africanus]

*Originally posted by Chumpsky *
Well, there goes your credibility. Next time try to avoid referencing a well-known liar.

I am my own Cassandra.:rolleyes: Seriously though, for a well-known liar, Lomborg has done something very odd. On his web site he has placed easy to follow links for not only his supporters, but also his detractors. He may be a liar, but at least he’s an honest liar. No matter, no need to really comment on such an ad hominem. Lomborg’s book is one of the best referenced I’ve ever encountered, with plenty of web pages for ease, so any third parties can check the figures themselves.

You hope that by labelling me as a communist the debate will be over, that the connection will be made that “Chumpsky = communism = gulag.” This tactic is quite insulting to the reader (not to mention myself).

Again, not too much need for comment. Let me merely note first that the act of putting a debate into clear theoretical light is hardly accusatory. Second, being an anarchist is orthogonal to one’s leanings on communism & capitalism. Consider David Friedman’s interesting paper on the defense of anarchy & law. For the opposite end of the scale, consider Dennis, the Constitutional Peasant, in Monty Python’s Holy Grail. Yes, anarchosyndaclism is a thread in the tapestry of Marxist thought.

Originally posted by Estilicon
damm you to hell

I hope god has a sense of humor. I think your English is quite good, by the way.

I think that you and Chumspy are speaking of two different worlds, he is talking about Earth in the 21 century and you are speaking of Smith-Ricardo land.

Good observation. Let me more explicitly stake my primary ground with an analogy. Now this is merely an analogy for illustration, not for proof, so please, nobody bother poking holes in it.

Consider democracy. Democracy comes in many different forms. The democracy of ancient Athens would be completely foreign to us today. Likewise, even though Yuri Avnery has noted that Arafat is the only Arab chief of state who was chosen in free elections, under close international supervision, personally overseen by ex-President Jimmy Carter, few self-respecting zionists would acknowledge that the PA is a democratic institution. In spite of these variances, I’m sure that most people on this thread would agree that democracy is a Good Thing. The idea that the government should represent the will of the people through voting in free elections hardly seems like a concept that is inherently corrupt. Yet, in the U.S. at least, many problems do exist. Rich people, for example, can use their wealth to increase their influence by giving disproportionate amounts of money to campaigns. Incumbents can use the power of incumbency to get their names out and maintain their offices.

The thing is, these problems aren’t problems inherent in democracy, they are problems in the laws governing a particular state’s expression of democracy. Campaign finance laws and (the lack of) term limits are the problem; not democracy. When one sees the corruption inherent in current U.S. campaign finance laws, one does not say, “Democracy is corrupt!” One says, “Our campaign finance laws are corrupt!” It would be deceptive to blame democracy loudly, then quietly add, “Well, it’s the current expression of democracy that I have a problem with.” To blame democracy one needs to craft a general argument as to why democracy, in and of itself, is corrupt. Otherwise, leave democracy out of it.

I am defending capitalism itself, in the same way I would defend democracy itself, even though campaign finance laws, for example, are corrupt.

Now Chumpsky notes that he is “talking about the actual system that exists in the real world,” even though he clearly blames capitalism in the same way that democracy is blamed in the example above. If he has a problem with trade policy, lax anti-trust laws, and the political motives of private and public individuals, inter alia, then he should be saying so explicitly and leave capitalism out of it. If he is going to mention capitalism, then he should come up with a general argument as to why capitalism is bad. He really doesn’t seem to have done so. That’s fine if his goal is to talk “about the actual system that exists in the real world.” But if that is his goal, then he should explicitly state where his beef lies and leave capitalism itself out of the argument.

In fact he seems to be trying to eat his cake and have it, too. He goes on to say that “[he] agree[s] with 99% of communist analysis of capitalism.” If I thought he was of low character, I’d suggest that he trying to argue like a creationist. Regardless, the time has come for Chumsky to either fish or cut bait. If he wants to agree with 99% of what communists say about capitalism, then he needs to present a clear argument as to why capitalism, in general, is bad. I offered one for him, the labor theory of value. I also showed him why it was false. He must either drop capitalism as an object of protest and focus merely on the laws and institutions that are the problem, or he must provide a general argument as to why capitalism is inherently corrupt. And he must do so explicitly.

(Mr. S. & Maeglin: Labor theory of value a straw man?! I’m hurt.)

Mr. Svinlesha if you are suspicious of my characterization of the labor theory of value, you have a right to be. My characterization was simplistic and very ugly. The labor theory of value does have a long and rich history pre-dating Marx by a very long time. Marx’s version is confusing. Nevertheless, I apologize for imposing that theory on you.

You state that the capitalist skims off the difference between the market price and the production costs. I disagree with this characterization. I am having real trouble thinking of a way to discuss it in this forum.

Okay, here’s one way. Suppose I have a sum of money and that I can spend it on something for me, I can buy a shotgun and a Doberman and put the rest in a safe, or I can start a business. With my first option I’m enjoying the consumption of my money. With the second, I’m enjoying the security of my money. With the third, I get neither the enjoyment of consumption (since it goes to starting a business) nor the security (since the business probably won’t succeed for very long). I’m giving up consumption and security to start a business, and in the process providing jobs to the people I employ and goods to my customers. For what?! To say that I’m merely “skimming off the difference between the market price and the production costs” is to say that I should give all my consumption and security for no reward at all! That hardly sounds like a just and equitable system and, with all due respect, I am a little bit outraged.

Here’s another example: my mother has stock in Ford. She could just sell the stock and spend the money. She could just sell the stock and put it in an FDIC insured account. Instead she keeps it in Ford–at great risk. She’s lost alot of money recently (and my folks aren’t rich). But by taking that risk and giving up current consumption she is providing jobs and quality Ford products (if everybody sold their Ford stock the price would go to zero and Ford would be in a right mess). But by your characterization, she is just skimming off the difference between the price and the cost of production.

Here’s another way to look at it. Optimization happens on the margin–it is a calculus problem. Do you know how nature always tries to either maximize or minimize something, hence bubbles are round for example? Well, we can think of economic actors doing the same thing. Indeed, let’s assume that producers seek to maximize profits. That seems fair, no? To do that she subtracts her cost function from her revenue function to get her profit function and she takes a bunch of derivatives. These derivatives are the marignal thingies I mentioned earlier. If we look at her revenue function and take the marginal revenue for labor we get the marginal revenue for a worker. That value is the value that a worker brings to the table–and as that is the case, that is the value that she deserves to be paid. It is the difference between “the value produced by all labor” minus “the value produced by all labor minus her”. That is the value that she brings to the firm, do you see? The “value produced by all labor” minus “the value produced by all labor but her” gives the value that she produced. (Since the world is imperfect and unfair, we are assuming that everybody is equally productive.)

Okay, here’s the deal. Since price is a decreasing function of quantity, and since production generally exhibits decreasing returns to scale for a single input, the marginal product of labor is less than the average product. Let’s take the first part of that last sentence for illustration. Suppose there is a 7-foot tall person alone in a room. The average height is seven feet. Suppose a 6-foot tall person enters the room. Now the average height is 6.5 feet. Supposes a 5-foot tall person now enters. Then the average height will be 6 feet. See how since we have each person entering being shorter than the previous person, the newest person, that is the marginal person, is shorter than the average of the whole room. Well, we have a “similar” thing happening when price is a decreasing function of quantity. As we add more labor we get greater output, but since the price of the good is falling as output increases, the marginal value of the labor is less than the average value. If we took the average value of labor multiplied by the total amount of labor, we would have the total value produced. But each unit of labor only produces value equal to the marginal product of labor, which is less than the average. Thus the marginal product of labor multiplied by the total amount of labor is less than the total product. That difference seems to be the “skimming” you are speaking of.

Do you see how it isn’t “skimming” at all? Each unit of labor is being paid its maginal product, i.e. what it earns, and yet there is money left over. That is the money that the capitalist gets for a) giving up current consumption, b) taking a risk, and (for Ayn Rand) c) providing jobs and goods. Seriously, does this make sense??

Okay, if we flip the problem and consider capital instead of labor, the whole analysis fits perfectly. Just replace capital with labor, and machine with worker, and you end up with capital being paid its marginal product and money being left over. Yet the workers do not “skim” money off, do they? They, like the capital, are paid what they earn.

I’ve tried to be lucid and not obfuscate the argument. I don’t know if I have succeded.

My final, last ditch, repsonse is this: aren’t you shifting the burden of proof? After all, you say that the capitalist skims off value, but it shouldn’t be up to me to prove that she doesn’t. It should be up to you to prove that she does. But I won’t advance that postion just yet, since it seems rude. But it may come up in the future…

Let me note something about mercantilism. I guess I was wrong about the dates & whatnot. I’ve taken several course on the history of economic thought and was quite confident that mercantilism predated capitalism as I mentioned before. So I stopped by the library and got out The Evolution of Economic Thought by W. E. Kuhn. He states that “from about the thirteenth century onward, capitalist enterprise slowly began to attack the framework of feudal institutions…” pg. 394. Well I’ll be buggered. I could have sworn that I have never heard of capitalism predating the time circa Adam Smith. C’est la guerre.

Being a good debator, I hope, I have left other avenues of assault for when one fails. To wit, the work of Smith and Ricardo still represented a watershed in economic thought. The discovery and analysis of absolute and comparative advantage, for example, really changed the paradigm. Unfortunately, as the perverse popularity of Pat Buchanan can attest, it has yet to change the Zeitgeist. Indeed, speaking of early “capitalistic” enterprise, Kuhn says that “the industrial and commercial evolution was marked by monopolistic public policy and private business practice and was thus inimical to the true spirit of capitalism.” pg. 395 (Italics his, bold mine.) He has some more explanation that I don’t think is really vital right now.

Let me end by touching on the issue of the rich gaining at the expense of the poor. First off, just saying it and throwing out data points really doesn’t prove anything. That’s why my reference to Lomborg carries weight; he gives long-term data and a clear understanding of how to deal with numbers. This is a big world and we can throw out data points to the end of time and nothing will be proven. Real statistical analysis must be offered before any empirical conclusions can be (tentatively) reached. With that in mind, here is an article from The Economist and the original article that it references. Notice that the original article takes a sample of 92 countries over 40 years. This is nothing to sneeze at. Unless someone can offer a better data set…well, you know, it is good evidence, although I’m sure a few ad hominems will fly because of it.

Another approach would to be to find time series data for Gini coefficients. If you don’t know what that is, look it up. For example, this site notes that the census finds that the “increase” in the Gini coefficient, which maxed in 1991/1992, is not stastically significant, i.e. there is no evidence that it has risen. Here is some country Gini figures that I really didn’t want to take the time to look at, but somebody else can if they really want to. Here is another ad hominem prompter that shows that “there appears to be little systematic relationship between growth and changes in aggregate inequality.” Be sure to check out figure 3. Here is a data set that I haven’t analyzed, but you are welcome to. Maybe I will tomorrow. Anyway, while it is possible to lie with statistics, it is much easier to lie with a few well chosen examples, and that’s what, in my experience, a few data points are: well chosen examples.

Whew. I’m beat.

[Chumpsky]

*Originally posted by js_africanus *
Lomborg’s book is one of the best referenced I’ve ever encountered, with plenty of web pages for ease, so any third parties can check the figures themselves.

Some comment regarding your reading habits seems to be in order here…

There are so many things wrong with Lomberg’s theses one hardly knows where to start. One of his central claims is that natural resources have not been declining, and have in fact been increasing! He buttresses this claim by pointing out that we continue to discover new oil reserves, etc. This facile argument is typical of Lomberg. While it is true that we do, in fact, continue to discover new oil reserves, and our capacity for exploiting nature increases with technological advances, the fact still remains that natural resources are finite. What is important are the rates of discovery, which have been declining in the case of oil.

Lomberg’s rabid anti-environmentalism has assured him a platform to put forward his views. His views satisfy the fundamental requirement for mainstream distribution: they serve the powerful. Never mind that actual environmental scientists overewhelmingly reject his views, the important thing is that he supports power. Look, for example, at the reviews of his book on his website. There are fawning reviews from all the mouthpieces of power, the Washington Post, The Economist, and so on, and even from power itself, a World Bank executive.

Second, being an anarchist is orthogonal to one’s leanings on communism & capitalism. Consider David Friedman’s interesting paper on the defense of anarchy & law. For the opposite end of the scale, consider Dennis, the Constitutional Peasant, in Monty Python’s Holy Grail. Yes, anarchosyndaclism is a thread in the tapestry of Marxist thought.

This paragraph suggests that your knowledge of anarchism consists of nuggets gleaned from a Monty Python movie. Indeed, if your knowledge of anarchism is akin to Friedman’s, than you have a very distorted idea of what it means. When I read through Friedman’s essay I could not discern anything that even remotely connected with anarchist thought. He seems to use the term “anarchy” in the sense of “chaos,” not in the sense that anarchist thinkers and actors have thought of the term. Here is a good place to start for learning about anarchism:
http://flag.blackened.net/intanark/faq/index.html
It is a virtual certainty that you have not bothered to read through this FAQ, else you would have read, “Anarchism is, essentially, a revolt against capitalism.”

Anarcho-syndicalism is not a “thread in the tapestry of Marxist thought.” Indeed, Bakunin was Marx’s prime opponent in the First International. Marxist and anarchist ideas have always been diametrically opposed regarding revolutionary theory.

I am defending capitalism itself, in the same way I would defend democracy itself, even though campaign finance laws, for example, are corrupt.

You defend it by simply repeating a whole series of myths of capitalist economics.
What are the myths of capitalist economics

Now Chumpsky notes that he is “talking about the actual system that exists in the real world,” even though he clearly blames capitalism in the same way that democracy is blamed in the example above.

Perhaps you have not been reading carefully enough. Either that, or you decline to address my contention that the problems with capitalism are systemic. That is, they arise from the system itself.
What’s wrong with the current system?

In fact he seems to be trying to eat his cake and have it, too. He goes on to say that "[he] agree[s] with 99% of communist analysis of capitalism."

Yes. I do. I agree with communist analysis of capitalism on most points. Recall that Marx’s magnum opus was not called Communism. It was called Capital. His prime concern was with the evils of capitalism. I share these concerns with Marx and other communists. Where I disagree with “Marxist” thought is regarding revolutionary theory. I disagree with the whole “dictatorship of the proletariat,” and “vanguard party” business. I am highly skeptical of any authority. The essential difference between communists and Marxists is that Marxists believe that the ends justify the means, whereas anarchists believe that the means are the ends. The main tendency in anarchist thought is that you have to create the revolution in the society, by changing minds and attitudes, after which the revolution becomes merely a consumation of this work. The Spanish Revolution of 1936, for example, was preceeded by decades of organizing and education. Marxists believe (I realize that I am highly oversimplifying things here, but just to make a point) that a Vanguard Party can take state power and act to institute a dictaroship of the proletariat, from which will flow the new socialist society. We saw how well that worked in Russia.

(By the way, I put “Marxist” in quotes to distinguish a particular body of thought that is commonly associated with Marx, but is not necessarily implied in Marx’s own thought. Marx himself once famously declared, “I am not a Marxist.”)

Okay, here’s one way. Suppose I have a sum of money and that I can spend it on something for me, I can buy a shotgun and a Doberman and put the rest in a safe, or I can start a business.

This is exactly the problem with your approach. You are taking these simple situations of individual actors acting in a hypothetical system in which all actors are relatively equal.

This is not the system I am talking about when I am speaking of capitalism.

Again, when I talk about capitalism, I am talking about the actual system that exists in the world today. I am talking about a system that is dominated by huge concentrations of power protected by an enormously powerful state with world-wide reach. If you wish to address capitalism, then you must address the problems that exist in the real world, not whether or not you are going to buy a shotgun or not. To quote from Estilicon above in this thread,

“I think that you and Chumspy are speaking of two different worlds, he is talking about Earth in the 21 century and you are speaking of Smith-Ricardo land.”

I would have no problem with capitalism if it actually existed in the form you have imagined in your head, where the most serious problem is regarding shotguns and dobermans. What I do have a problem with is the highly authoritarian, hierarchical and oppressive system that turns people into commodities, to be used up so as to create wealth for a narrow ruling class.

If you want to address the real problems with capitalism, as it exists in the actual world, then address the problems that are created by concentration of wealth and power. Address the problems that are created when people are reduced to a commodity, and so on.

Imperialism, the highest form of capitalism, has encircled the globle, turning people and nature into commodities to be sold on the market. Everything must be geared toward creating profit for concentrated power, and no state must be allowed to develop an alternative to this system, as it is, in the words of our President, the “single sustainable model for economic development.”

[Chumpsky]

*Originally posted by js_africanus *
So, in context of the current thread, if international trade, for example, were a zero-sum game, then the amount of benefit that country A receives from trading with country B is always equal to the amount of harm country B receives from the same trade.

The nice thing about defining your terms in the course of a debate is that you can define them in order to support your point of view.

First of all, this evils of imperialism are NOT limited to one country exploiting another. You seem insistent on taking these highly simplified models, instead of addressing the problems in the actual world.

Allow me to refer you to the essay linked to in the initial post. To quote from Parenti:

“By ‘imperialism’ I mean the process whereby the dominant politico-economic interests of one nation expropriate for their own enrichment the land, labor, raw materials, and markets of another people.”

It is actually kind of amazing that in 4 pages of debate, nobody has addressed any of the points raised in the initial post.

When I say that it IS a zero sum game, it is clear what I mean. I obviously do not mean, for example, that there is a finite amount of money in the world that must be divided up amongst the varioius actors. No, it simply means that the creation of fabulous wealth requires the creation of incredible poverty. The tendency of capitalist markets is that they push wages down. The tendency of imperialism is that the imperial powers seek out states where wages are low, where regulations are minimal, and where profits are high. The role of the state in this enterprise is in creating and optimizing these conditions in the third world.

I will now break a rule I have maintained up until now on this message board, and I will quote from Chomsky. In the late 1970’s, Edward Hermann, Professor Emeritus of Finance of the Wharton School, did a study of the relation between U.S. intervention and human rights. What he found was that where the U.S. has intervened more, in terms of foreign aid and related factors, the human rights situation tends to be worse. There is a direct correlation between U.S. aid to a country and a poor human rights record. (This was in the 1970’s, when the situation wasn’t nearly as horrific as it is now.) The findings of this study are detailed in a book co-written with Noam Chomsky, The Political Economy of Human Rights They wrote,

“Whatever the attitudes of the U.S. leadership toward freedom at home–and as noted, this is highly ambiguous–systematic policies towards Third World countries, described in detail below, make it evident that the alleged commitment to democracy and human rights is mere rhetoric, directly contrary to actual policy. The operative principle has been and remains economic freedom [note: see the link to the National Security strategy I linked to above]–meaning freedom for U.S. business to invest, sell, and repatriate profits–and its two basic requisites, a favorable investment climate and a specific form of stability. Since these values are disturbed by unruly students, deomcratic processes, peasant organizations, a free press, and free labour unions, “economic freedom” has often required political servitude. Respect for the rights of the individual, also alleged to be one of the cardinal virtues of the West, has had little place in the operating procedures applied to the Third World. Since a favorable investment climate and stability quite often require repression, the United States has supplied the tools and training for interrogation and torture and is thoroughly implicated in the vast expansion of torture during the past decade.”

The U.S. empire is the most sophisticated and powerful that has ever existed. Its requirements are that a states resources are open to exploitation by western capital. It thus seeks to change the internal policies of a state just enough to satisfy these conditions. Sometimes this requires very little in the way of direct intervention, as in the case of the more pliant client states like Costa Rica. Other times it requires the destruction of an entire country, like Vietnam. The rule is quite general though: every state must fit into the “one sustainable model for economic development.”

[Mr.Svinlesha]

Oy oy oy… the more I read, the more confused I get.

Clearly, ”Capitalism” is itself a disputed concept. Part of the problem we experience in discussing Capitalism seems to be related to the various meanings different people attribute to the term. For example, most of the participants in this thread would agree that, left to its own devices, Capitalism tends to produce monopolies. In addition, most of us would agree that monopolies are bad. But are monopolies a ”pathological product” of the capitalist system, or are they merely a true expression of its modus operandi?

I suspect that different commentators would give different answers to that question. Those who defend Capitalism will argue that monopolies are distortions of the true spirit and aim of a capitalist economic system; those who criticize it will claim that monopolistic control of the economy is one of the actual goals that motivates capitalists.
Maeglin:

To condense my previous reply, I would like to ask you the following:

Imagine a perfect capitalist system, one in which there are no market failures, cronyism, political distortions, protectionist tariffs, inheritance bequethments, and so forth. In addition, this system contains no labor unions (to affect wage levels through collective bargaining) or redistributive programs to the poor (beyond those supplied via the system itself, i.e., no welfare payments). Is it your contention that under such conditions a Capitalist economic system would tend over time to distribute wealth more and more equitably?

I admit this might not be a very fair way to frame the issue, but I’m just trying to get a sense of the basics of your argument. For what it’s worth, as a critic, I would contend that under the conditions stated above, Capitalism would tend towards ever-increasing income disparities, in the traditional manner as predicted by Marx.

By the way, while I’m glad to read about an effective health care program in rural Tanzania, I’m not sure of how such a program is relevant to our discussion of the dynamics underlying the labor market and wages. I’d be interested in hearing why you’ve labeled the program ”capitalistic” as well: is it some sort of privately-run-for-profit health insurance system?

On a final note, I want to address this point, which you originally directed towards Chumpsky:

• If you believe Parenti’s article that capitalism must expand, and if you believe that capitalistic firms must constantly seek new markets to invest in, then you come to the inarguable conclusion that poverty in the third world does not benefit the rich. If most of the world’s laborers are poor, who will buy their goods?

That’s the biggest problem with your analysis, as I see it. It is useful to have limitless sources of cheap labor…for awhile. But investment will continually increase, processes will undergo continuing refinement, and high quality goods will be produced more cheaply. It’s the enormous markets of the third world that provide the greatest potential for growth. Hence elimitating poverty should be a priority for every major far-sighted capitalist. Why this is not always so is intrinsically linked to short-sighted stupidity, not the idea of the competitive market or private ownership.*

You broach a very important question here. It is a conundrum, I believe, that Marx would refer to as one of the internal contradictions of Capitalism.

Actually, one of my primary criticisms against Capitalism is precisely the fact that it is ”short-sighted.” I believe that conditions of intense market competition constrain economic actors in such a way that they cannot really think about the long term results of their actions, not at least if they wish to survive (let alone flourish) in the marketplace. In fact, when you think about it, your argument would seem to lead to some fairly strange conclusions. If it is in the best interests of capitalism for workers to earn more, thus increasing demand and expanding the market for commodities, then why does management, in negotiations with labor, always strive to hold wages as low as possible? Would it not make more sense for them to simply raise wages, spontaneously, so as to generate more income via the market? And if that’s the case, how do we explain the existence of labor unions at all? Why was the working class forced to struggle so violently for improved working conditions, higher wages, and so forth? Furthermore: why this movement towards outsourcing manufacturing to less developed countries, where wages are lower? By your logic, doing so would represent little less than corporate suicide – and yet, there can be no doubt that this is precisely what we observe occurring these days, on a massive scale.

I would like to suggest that the solution to this apparent paradox can be found in the realization that the dynamics which drive decision-making at the level of individual companies, or corporations, are not the same as the dynamics which shape the world economy at a macroeconomic level. While I agree with you that capitalist production also requires a market for its goods, I suggest that it is far from obvious that such considerations motivate the day-to-day business decisions of individual corporations. As long as they have a market for their goods in the first world, they have no reason whatsoever to increase wages or working standards in the third.

Not to harp, but this is where World Systems Theory comes in handy as a useful analytic tool (I linked a brief introduction to WST on page 3 of this thread). According to this model, the interesting and lucrative markets are found in the capitalist core, where the wealth expropriated from the periphery is floating about. Volvo, for example, owns a car factory in Sao Paulo, Brazil; but the workers employed in that factory are most emphatically not members of Volvo’s target market. However, those of us privileged enough to live in the capitalist core definitely benefit from the low wages Volvo’s Brazilian employees are paid when we decide to buy a Volvo, and so do those who own stock in the company.
js:

Welcome back! How was your sister?

Thanks for the lecture on the concept of the zero-sum game (”ahem”), but I think I have a pretty good idea of what the term means.

In addition, I’m well aware of the theory of comparative advantage. You may be surprised to learn, however, that in the history of development economics comparative advantage has proven to be a resounding failure. Development policies in the third world that attempted to employ comparative advantage strategies simply failed to produce improvements in the host country’s economy. Granted, most of them rested upon the presupposition that developing countries had comparative advantages only in the field of agricultural production – like Maeg’s Ghana example, above. Unfortunately, the global markets for coffee, cocoa, tea, etc., proved too volatile to provide a solid basis for stable, long term economic growth, IIRC.

Oh, by the way, since you mentioned Adam Smith – did you know that he was the originator of the Labor Theory of Value?

Regarding Lomborg: I was also of the impression that his work has been generally discredited. I remember reading a whole list of web articles that more or less dismembered his research, and I believe this topic has been discussed in GD before. Perhaps a topic for a new thread?

With regard to this:

• You state that the capitalist skims off the difference between the market price and the production costs. I disagree with this characterization. I am having real trouble thinking of a way to discuss it in this forum.*

Yeah, this discussion is a bit more complicated than I suspected it would be.

• I’m giving up consumption and security to start a business, and in the process providing jobs to the people I employ and goods to my customers. For what?! To say that I’m merely “skimming off the difference between the market price and the production costs” is to say that I should give all my consumption and security for no reward at all! That hardly sounds like a just and equitable system and, with all due respect, I am a little bit outraged.

*Look, I happen to think that small businesses and entrepreneurship are great. I’ve worked a small business myself, and enjoyed wheeling and dealing, buying and selling, negotiating business agreements, and trying to outsmart the competition. (I’m American. What can I say? I guess its in my blood.) If ”capitalism” consisted primarily of small business entrepreneurship of that sort, I doubt I would have a problem with it. My problem starts – I know this might sound a bit paradoxical – because I believe that capitalism is, in actuality, inimical to small business interests – especially capitalism in its pure form. When I ran a small bookstore over here in Sweden, I experienced this problem first hand; we had no chance, really, in competing with larger chains. We simply couldn’t squeeze out a profit, and in fact the store has gone belly-up since I left it about a year ago.

Everyone deserves a reasonable wage for the work they do. But what we see in a capitalist system, at the macroeconomic level, is a situation in which a very small portion of the population (say 1 or 2%) have access to, and control over, vast amounts of wealth. When they start a business, they sacrifice very little – the equivalent to what you might consider pocket change, for example. You have the resources to chose between a Doberman and a shotgun, with a safe, or a business. They can easily do both, and then travel the Côte d’Azur for an exclusive vacation.

I’ll try to get back with more commentary on your reply as soon as I get the chance. I’m not sure I follow your argument for what I suspect is the neo-classical concept of marginal utility, but we can return to that. And I’ll look over the links you’ve posted (I see that your Economist article mentions the Kuznet ”inverted U” – ah, the good old days!) as well.

Finally, regarding this:

• Well I’ll be buggered.*

My God. I certainly hope not.

[Shodan]

Some comment regarding your reading habits seems to be in order here…

There are so many things wrong with Lomberg’s theses one hardly knows where to start. One of his central claims is that natural resources have not been declining, and have in fact been increasing! He buttresses this claim by pointing out that we continue to discover new oil reserves, etc. This facile argument is typical of Lomberg. While it is true that we do, in fact, continue to discover new oil reserves, and our capacity for exploiting nature increases with technological advances, the fact still remains that natural resources are finite. What is important are the rates of discovery, which have been declining in the case of oil.

Lomberg’s rabid anti-environmentalism has assured him a platform to put forward his views. His views satisfy the fundamental requirement for mainstream distribution: they serve the powerful. Never mind that actual environmental scientists overewhelmingly reject his views, the important thing is that he supports power. Look, for example, at the reviews of his book on his website. There are fawning reviews from all the mouthpieces of power, the Washington Post, The Economist, and so on, and even from power itself, a World Bank executive.

One comment about your debating tactics seems to be in order here.

You have not provided an instance of Lomberg lying, which is what you mentioned as the reason why his arguments should be dismissed out of hand.

What you have provided is another reason why your arguments should be dismissed out of hand - you cannot, or will not, present your evidence.

Instead, we get references to the Black Flag website. You will excuse me if I don’t take their word as gospel, either.

Oh wait, I forgot - any reputable cites would mean that you had sold out to the seats of Power.

Regards,
Shodan

[js_africanus]

Chumsky, it is amazing to me that you would actually have the nerve to assert first that “the nice thing about defining your terms in the course of a debate is that you can define them in order to support your point of view”, and then quickly follow with, “When I say that it IS a zero sum game, it is clear what I mean.” Your hypocrisy is the last straw. I have gone to great lengths to treat you with respect. Yet you continue practice a style fitting of Duane Gish. Well, I’m done engaging you. Good riddance.

Mr. Svinlesha, I’m glad to be back; my sister is well. Thank you!

Sir, you write

Clearly, ”Capitalism” is itself a disputed concept. Part of the problem we experience in discussing Capitalism seems to be related to the various meanings different people attribute to the term. For example, most of the participants in this thread would agree that, left to its own devices, Capitalism tends to produce monopolies. In addition, most of us would agree that monopolies are bad. But are monopolies a ”pathological product” of the capitalist system, or are they merely a true expression of its modus operandi?

Oy vey! That was the point of my democracy analogy. Let me press forward with it so that I may make myself clear. You’ll recall that I noted that democracy has been expressed in many different ways. Some decidedly corrupt, in my opinion. The democracy of ancient Athens would probably appear pretty corrupt to us today. Personally, I would say that the democracy of Israel, where the P.M. must hobble together a government that can be smashed at leisure by extremist groups, is quite corrupt. And there are probably alot of people who would say that U.S. democracy, with its campaign finance laws, is corrupt.

But none of those examples are of Democracy, the idea and ideal. To look at U.S. democracy and say, “A-ha! Democracy is corrupt!” is simply false, because it only represents on particular sect of democracy.

Let me try another tack. Suppose an atheist and a christian were to debate the morality of christianity. To do so, they would have to take a very general view of the religion. They could not claim to discuss christianity and yet only debate Catholic doctrine. That would leave out all the Protestants. Similarly, they could not discuss biblical literalism, and yet claim that their discussion represents christianity in general. I think a very good example of how christianity needs to be defined for a general discussion is the one used by Bertrand Russell in his piece Why I Am Not A Christian: a christian is one who believes in god and immortality, and that Jesus was, if not devine, at least the best and wisest of men. He is giving a minimalist definition to which all christians can at least agree meets a minimal standard. Of course, some sects may not like such a relaxed definition, but the fact remains that their sectarian views are probably not considered very christian by others.

Russell’s lecture is useful here in a second sense: he provides a clear and general argument as to why there is no good reason to be a christian. One does not have to be convinced by it. But that’s not the point, the point is that he says that he shall explain why he isn’t christian, and does so, rather than explain why he isn’t Catholic or Seventh Day Adventist or Mormon. Analogously, to say that capitalism is bad, one must provide a Russell-esque definition of capitalism and argue that capitalism by that general definition is bad. Nobody has done that–except you, Mr. Svinlesha with your skimming argument. I thank you for that.

It’s easy to prove that some forms of capitalism are bad. Sudhartho’s (sp?) crony capitalism in Indonesia is a prime example. I would say that the libertarian view of capitalism is bad. But neither of those represent capitalism per se in the same sense that Catholicism doesn’t represent christianity per se.

So, as you say, I would tend to agree that when capitalism is left to its own devices, monopolies tend to accumulate. But “capitalism left to its own devices” doesn’t fit the Russell-esque definition of capitalism. It is merely an extremist sect of capitalism. It cannot be used as proof that capitalism is corrupt.

An example of a Russell-esque definition of capitalism might be a system with at least some rights to private property, where one may purchase plant & equipment and hire workers in order to supply goods in a market. That is a very general definition, indeed. Yet to discuss capitalism as an idea & ideal, then that is the sort of definition we need.

This definition makes almost no statement about the legal environment in which capitalism is expressed, in the same way that Russell’s definition of christianity makes almost no statements about the specific dogmas in which christianity is expressed. It is the sectarian dogma that produces extremism and violence as a pathological product of christianity. Similarly, it is the legal environment that produces the monopolistic enterprises that are the pathological product of capitalism.

Do you see how it is not capitalism that is inimical to small producer oriented competitive markets? Rather it is the legal (and political) environment that allows the concentration of wealth to such a great degree. To what degree such laws and regulations should be made and enforced is a “sectarian” discussion, and not a question of capitalism itself.

Does that make sense? If not let me know and I will try again. I never claimed to be a great writer and I appreciate your already ample patience.

Now please let me break up the narrative to note a few quick things:

Sorry about giving a redundant discussion of the zero-sum-game concept. I wasn’t sure if there was confusion, so I took a chance.

I don’t think that comparative advantage is on as shaky of footing as you may have been led to believe. Consider this article by Krugman for example. I actually received my masters in econ. in 1998, and I have never really heard that comp. adv. was in any crisis. You’re right that agricultural commodities are probably not the most stable thing in the world–but I think that discussion ultimately belongs in another thread.

Regarding Lomborg, I’ve read many pros and cons, along with discussions with biologists and environmental economists, and he seems to come out quite well. His book, after all, is really just listing data. Since I have experience in econ. and statistics, I can attest that his handling of data is good, for example looking at long data sets and using purchasing power parity. Plus, in 2001 he was honored by the World Economic Forum and in 2002 he was named director of Denmark’s Environmental Assessment Institute. Most critiques I’ve read really boil down to attacking him rather than his numbers. For example, Matt Ridley’s response to Scientific American’s critique notes that SA “confirmed many of Lomborg’s statistics, and found only a few trivial misquotations and ellipses…” My favorite critique of the book was the BBC online reporter who said that the book’s biggest problem was that it was so “damnably reasonable.” As if a few hundred pages of unreasonable panic would have been better.

The irony here is that all the data he cites are publicly available and much of them online, yet we discuss second hand critiques when we could just check some randomly chosen facts ourselves.

Finally, I just wanted to note that I kind of threw out those Gini references in a rather rude manner in my previous post. It was late and I was frusterated. That is now excuse, however, and I apologize for losing patience.

Oh, and I’ll try not to get buggered.