What should replace capitalism?

Great Debates
141

The problem is that both sides need to consent. It’s true, in a sense, that I’d never consent to buying anything for more than a penny if I “actually had a choice”, but the seller’s consent is exactly as important as mine (sure as he wouldn’t consent to the transaction if he “actually had a choice” about getting me to pay twice as much as I’d like).

So, sure, laborers would never consent to less than “profit minus capital” if they actually had a choice – and the folks putting up the capital would never consent to less than “profit minus capital” if they actually had a choice. But since both sides need to consent, neither side has that choice.

142

This theory of labour value has been discredited for a century or more and is, on the face of it, absolutely pig-stupid. In fact, it’s barely even a coherent answer, and it beggars belief that a person who has ever actually held a job would think it.

Tell me; a guy works on a widget assembly line. The widgets he works on are sold for a total of $15 million. Should be be paid $15 million?

Okay, you say, but 150 people work in the asembly factory… should they split the $15 million? Okay, but who pays the electric bill?

How do you pay the gas bill?

Repairs on the assembly line?

How do you pay the widget engineer?

The salesman?

The receptionist? What’s her end product?

Do you differentiate between pay for the apprentice widget assembler and the 19-year veteran who’s a lead hand and teaches safety courses? How do you value that?

How do you value the “end product” produced by a teacher? A soldier? A police officer?

Honest to God, man, you AREN’T perfect and omniscient.

143

I’d also like to put to rest this idea that workes don’t have choices. We all make choices all throughout our lives. We decide what education to get and/or what skills to develop. We decide how far we will move, geographically, for work. We decide whether to marry young or older and when to start a family.

Now, if we abandon our ability to decide those things and throw ourselves at the mercy of the market, I guess that could be a situation where we are “exploited”.

But the fact is, we establish laws to prevent fraud, and we have a society with all sorts of opportunities to gain education and useful skills, and if you don’t like what the market offers you, then create your own damn opportunities. Plenty of people have done that. I know lots of successful programmers and engineers, carpenters and plumbers, policemen and teachers. When you view everyone as a victim of evil capitalists, you just demonstrate your paternalistic attitude to real adults who are able to make good or bad decisions about how to order their lives.

Sure, there are going to be the small minority of people who literally can’t take care of themselves and need some paternalistic organization to make sure they can just survive, day to day. But setting up our entire economic system as if the “vast majority” (to use DtC’s phraseology) of people were in this situation is nuts.

144

Seriously, indeed.

Hey Dio, let’s say there aren’t any profits for the first year of a business. According to your formula, the workers would be paid a negative number. This is what you intended, right?

145

Ok, I can show you where your machine is broken, exactly where it is broken.

Capitalism at base is people trading whatever they have for whatever they can get, at the best prices they can get, or pay. Over time, any capitalist system will produce winners and losers. Some people will be more skilled traders, some will have goods that are more valued than others. They will grow wealthier and wealthier over time.

Generally the people who will rise to the top in a capitalist system will be the ones whose only concern is making more money. After all, capitalism is an ethics-free system, it’s just economics, and does not require that its players act ethically.

Once these people reach the top economically, they wish to remain there. They can do so by competing successfully with others, but they are aware that there are others out there who are almost as skilled as they are at competing in a capitalist economy. If only they could ensure that the rules of the marketplace are altered to keep themselves on top.

Well of course they can, because they have money, and money is a form of power. And they can bribe government officials (or in the US, “make campaign contributions to,” it’s pretty much the same thing nowadays) in WHATEVER form of government exists (not just democracies) to make laws that give them a huge competitive edge. So they do. They don’t care about the general welfare, only themselves, as is proper in a capitalist system.

So any capitalist system will eventually become a simple oligarchy where wealth becomes increasingly concentrated in the hands of a few, to such an extent that the excesses of the oligarchy eventually bankrupts the system and leads to a huge economic disaster that CAN but does not NECESSARILY lead to a “reset” for the system, with the system cooled down for a bit until the oligarchs find a new way to concentrate all the wealth in their own hands, leading to a new crash. Happened in the Gilded Age with the robber barons, happened in the 1920s, and happened in the recent Great Recession.

It’s no good saying that “we will regulate more and better” because the wealthy oligarchs will fight attempts to regulate their activities, however unethical, immoral or even dangerous to the society as a whole, and they’ll succeed over time … because they have money, and money is a form of power.

I don’t know how you solve this conundrum while maintaining a strong economic system, but I’m sure one will come along, and whatever that solution is, whether it is a variant of capitalism or a new economic system entirely, it will supplant capitalism very rapidly … because it will be more efficient than what we have now.

The closest thing I can come up with to an answer would be for economists and governments to recognize this essentially malign and self-defeating aspect of capitalism and start enforcing rules and regulations based on how affluent and successful the capital markets make members of the middle class. Assume the wealthy classes can take care of themselves, and will. Recognize that once successful capitalists become entrenched at the top, they become the enemy, no matter how much they profess to love capitalism. Then pass whatever laws and regulations are needed to make sure the middle class has an equitable share of the wealth of the country … say 60 percent as opposed to the present 2 percent.

However, as sure as I am sitting here, the oligarchs will fight any such program relentlessly, with all the power and wealth they can bring to bear. Which would be … a lot. Probably a lot more than simple intelligence and altruism can bring to bear.

146

It’s measurable by the value of the end product.

Easily. I’d never want to, though.

147

All I’m talking about is profit sharing, for God’s sake. Is it really that radical?

148

Why does polarization of wealth occur in capitalist systems? I can see why it happens in other systems, but why in capitalism? Is it really because those at the top bend the rules to keep themselves there and/or use their wealth to “unfairly” crush any competitors (whatever that means)?

If I wanted to start a business, the bank would never give me a large enough loan. But those with lots of wealth can start many businesses, and have much more opportunity for wealth-creation. All I have is the ability to sell my labour for a wage.

Even more simply, I can put my saved $100 into an investment account, and if things are looking awesome, make back $10 per year. This won’t cover my basic costs of living. But a rich person can invest $1,000,000 and make back $100,000: more than enough to cover his costs. So it superficially seems that the rich can easily get richer, while the poor are powerless and stuck where they are.

But as it’s been said above, I only risked $100, while the rich person risked $1,000,000 - and so the difference in rewards is fair because it’s proportionate to what was risked. Even if me and him are equally skilled in investing, he still gets more return, because he had more to invest. This doesn’t necessarily lead to polarization though, does it? He can easily lose all his “riches” and end up where I have always been.

So what does all this mean? Is polarization an intrinsic/natural phenomenon within capitalism? And if so, why? Or does there have to be “unfair” manipulation for polarization to occur?

149

Mandatory profit sharing with no sharing of risk or loss. That is not only radical, it’s nuts.

150

By who?

No, and this isn’t close to what I’m saying. When I say “labor,” I mean it collectively, not that every single individual should get more than the CEO. I mean that the more of the profits shouild go collectively to the workers than to a few douchebag investors who do nothing.

The douchebag investers

This is all labor, so the answer is still the douchebag investers.

151

Why should there be any risk for those who do the labor? Why is just compensation so radical?

152

That’s not a problem of capitalism. That’s a problem of the political system that has it’s reach into every aspect of the economic sphere and is ripe for corruption and the kind of power brokering you’re talking about. Every system creates winners and losers and people who have influence in the political realm. If you want to prevent that, you need to limit the power of the political realm.

153

I would prefer that, actually. I would hope that forcing investers to pay the true value of labor would lead to more of that - not “government” ownership, but ownership by the workers themselves with no place for parasites.

154

Why should there be any upside in profit for those who do the labor? Are you really unfamiliar with the concept of moral hazard? Let someone reap rewards w/o risk and they have a lopsided sense of the risks of failure.

It’s not just.

155

Getting back to the original question, since the last 50 or so posts have been pretty much useless, I figure we’ll start to see the beginning of a serious answer if/when controlled fusion goes online and, perhaps, is followed up with small-reactor designs that can be widely distributed and even mobile. That’ll be the beginning of a “technology unchained” future that will force a major rethink of all economic systems.

156

What is the source of this “true value” of which you speak? It’s only “true” because you think it’s true. In reality, the only value that exists is the value that we, subjectively, put into something. As usual, you are trying to win the debate by creating your own definitions.

157

Because they are the producers.

Just for the hell of it, I’ll go ahead and agree that the workers can share in the risk. The value of the end product will be determined by the marketplace.

Are children working in sweatshops justly compensated?

Have you ever seen a real sweatshop with real children? I have. I wonder if you could tell them that they’re justly compensated.

158

Can someone clarify:

Are those who work for minimal pay doing what they do voluntarily, or are they “forced” like you suggest? Consider 3 groups: slaves, children in sweatshops, and minimum-wage earing Americans.

I can see how slaves are “forced”. Their obedience is enforced by governmental powers.

It’s my understanding that children in sweatshops are there through “choice”, but since they have no other choice, it’s not really a choice at all. Of course, they are free to choose to not work… so I’m not sure what to make of this. But I’ve read some case-studies in the past that showed that in many societies where there is currently child-labour, these children were actually much better off. Their communities had their own land, farms, etc, and were easily able to feed themselves. But through government policies, encouraged and promoted (eg bribery) by large corporations, they took the land away from these self-supporting communities… and conveniently place sweatshops on top of them. Since they couldn’t work the land for food, they had to work in factories, and then purchase food. Strangely, they worked twice as much, and had half the food.

Is this choice? Or is this a roundabout way that governments and corporations “force” them?

With #2 in mind… how is it different for those earning minimum wage in America today? Would you have to somehow argue that they were better off in the past? Would you have to prove that someone forcefully placed them into poverty?

159

I certainly agree with this part (don’t have a real opinion on the second part of your post). This has devolved into a particular flavor of the Dio show, sorry to invoke that cliche. Dio gets off on calling capitalists “douche bags” while he gets to rant nonsense, varying between some indeterminate notion of “fairness” and completely incoherent economic assertions that mix and match financial terms like Mad Libs. Seriously, guys, do you see this ending anywhere good? You can offer a friggin’ dissertation, with 100 well-researched cites, and Dio’s response will be some variation of “Bullshit. It’s self-evidently unfair, and those guys are douche bags.” And only one end of that exchange will be having any fun.

160

Power is power. Either you put in place power systems to oppose accumulated power, or that accumulated power will move to change the rules of the game to improve its position. If I grow big enough, fast enough, I will use my size advantage to destroy the competition. If the threshold to enter competition (think billions for a silicon fab plant) is large, I win.

Limiting political power in the economic realm is an interesting idea. Do you think our country will be at an advantage or disadvantage if we limit its power in the economy if competing countries retain that power?