11/30/17

Saw a college chick that was a big proponent of "smashing capitalism" and installing a marxist/communist system. It got me thinking why do people hate capitalism? First thing that's interesting is that people don't know what capitalism is. Discuss what it is, as it seems to be hotly debated on its beginning, etc.

  1. To start, the Wikipedia page is wrong on the definition of capitalism. It describes it through the lens of Marxism and calls it an economic system.
  2. Capitalism more so resembles a social system based on individual rights.
  3. The economic system under capitalism that advocates for private industry and production, would be the free market economy. Adam Smith described capitalism using the emergence of the division of labor:
Wealth of Nations:

Every man thus lives by exchanging, or becomes in some measure a merchant, and the society itself grows to be what is properly a commercial society.

  1. The people who understand the practicality of life, know they must develop some ability to produce something that may lead to a valuable and exchangeable surplus that can be traded on the market.
  2. Capitalism is social and natural while the economic system must be reflected in the private and individual institutions that allow for the free exchange of goods.

Comments (62)

11/29/17

Marxism as it was written was supposed to be the final sustainable iteration of a thriving Capitalistic society. In that sense, they're right that it's never been attempted correctly. The philosophy was a response to oligarchy - a state under which people were understandably dissatisfied. The thing is that it was written by an angsty, privileged, self-important young adult with no practical life experience. It failed to take into account basic human incentive structure. Marxism can never work in humans. Democracy rests on the premise that the majority is right, which is also incorrect.

I like Capitalism. Intelligence creates wealth which creates influence... it's a lot more above the table than most other places.

heister:

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11/29/17

I agree. Perhaps some of the chagrin from folks stems from i) misunderstanding of marxist theory and ii) the misunderstanding of capitalism's intent.

My belief was that capitalism unfettered would likely lead to the same path as socialism/communism unfettered. On one end of the spectrum you will have a scenario where a select few folks have a centralized amount of substantial wealth, and are charged of creating products/services that are consumed by folks. However, if it's an ultimate race to the bottom to the extent that folks can't afford to consume, then it becomes a bit of a cannibalizing incident (wholly theoretical, however). OTOH, socialism unfettered really only works as long as others are gregarious in the sentiment that there is a cap on where they can aspire to, as well satisfaction garnered from societal utility broadly rather than individual utility. The second that someone wants to aspire higher, or is dissatisfied of a free rider incident, the infrastructure likely crumbles.

I like capitalism very much, as it allows for opportunities and upward social mobility the likes of which no society in the past was able to accomplish. While there are certainly cases of folks living in poverty, it's not unlike others living under different forms of economic regimes. I suspect much of the dismay from many come from seeing a greater spotlight on global issues and the perception of systemic conflict (a large part due to social media, which tends to emphasize sensationalized events while minimizing commonplace happenings in my view), while misdirecting it's root cause.

There's a closer meaning to my user name. Try reading it quickly. Perhaps you will then understand ;P

11/29/17
alpha_q:

My belief was that capitalism unfettered would likely lead to the same path as socialism/communism unfettered. On one end of the spectrum you will have a scenario where a select few folks have a centralized amount of substantial wealth, and are charged of creating products/services that are consumed by folks. However, if it's an ultimate race to the bottom to the extent that folks can't afford to consume, then it becomes a bit of a cannibalizing incident (wholly theoretical, however).

This is a very noteworthy point. Capitalism does seem to advocate for the accumulation of wealth by a very small minority of the population. The Marxists view capitalism as being a system that allow what they call "capitalists" to control the means of production. The basis and cause of oppression today is by the wealthy "capitalists" from a Marxist's point of view.

It's important to understand this because it's easy to see why this point is made and widely believed. You can see that this does seem to be the case. And it is easy to understand why capitalism becomes such a strong sense of frustration.

I don't know what ways this phenomenon of wealth accumulation and control can be reduced or eliminated. One interesting thought I had is that government and regulation creates a framework for stronger capital accumulation. Regulation acts as a limiting force on how production develops. Take land rights, as an example, only after a permit and sometimes with the requirement that a certain high barrier of investment is agreed on, can someone develop a piece of land. That means not everyone can produce off land.

But, I think if capitalism is going to survive, some form of mechanism needs to be created to increase competition and minimize the affects that large capital accumulation has on market dynamics, if that's possible. Otherwise, people will constantly feel suppressed, separating their identity away from "the capitalists".

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11/30/17
alpha_q:

On one end of the spectrum you will have a scenario where a select few folks have a centralized amount of substantial wealth, and are charged of creating products/services that are consumed by folks. However, if it's an ultimate race to the bottom to the extent that folks can't afford to consume, then it becomes a bit of a cannibalizing incident (wholly theoretical, however).

Totally disagree with this statement and it is in of itself a mis-characterization of capitalism. Sure, you have the Warren Buffets of the world with extreme wealth but capitalism does not beat everyone into the ground but instead creates a pretty healthy middle class.

Take a drive through any suburb in the U.S. as an example. We're not all living in shanty huts while Carl Icahn and Warren Buffet count stacks of cash.

I think that you're falling into the popular trap of wanting to present balanced views as to not offend anyone too much. Some views are right and some are wrong. Socialism and Capitalism do not lead to the same place.

12/4/17

Its controversial as fuck and people bring up WWII, North Korea etc but I think now days democracy is overrated.

12/4/17

What's the alternative to our Democratic Republic though? A council of benevolent multidisciplinary geniusus would be rad. But they would need to truly be gods not to eventually get into it with each other and polarize the public.

heister:

Look at all these wannabe richies hating on an expensive salad.

Best Response
11/29/17

Saw a college chick that was a big proponent of "smashing capitalism" and installing a marxist/communist system. It got me thinking why do people hate capitalism? First thing that's interesting is that people don't know what capitalism is. Discuss what it is, as it seems to be hotly debated on its beginning, etc.

The point you made, that people don't understand capitalism, is at the heart of the issue. People like the college student you observed have not taken the time or made the effort to sufficiently understand why capitalism came about and why it is arguably the greatest concept to have been created and implemented by mankind.

The virtues of capitalism can be explained in a way that should make today's anti-capitalists take pause and reevaluate their position towards it. Think about how and why capitalism came about (speaking in general terms - there will be exceptions to what follows). For thousands of years the world's largest civilizations were ruled by monarchies who controlled wealth along with the top castes of people. The poor working class had limited rights and essentially no wealth. As we fast forward through human history it isn't until the time of feudalism that capitalism's early seeds begin to take root. Once the working poor gained legal status such as having private property rights, they finally were granted the ability to accumulate wealth. At that point the working poor had an incentive to specialize in a specific trade so that they could earn profit from their skills. This evolved to become the specialization of labor, which then branched and evolved to create the system of capitalism that we know today. Explaining all of this has been done in volumes of books, but I believe this is the gist of the evolution (the main point being that most humans finally had the right to own property and reap what they sow). Tying this back to the first point I made, today's anti-capitalists fail to understand that capitalism was sought after and essentially built by the working class. As OP stated, capitalism is inherently tied to freedom and democracy. To that point, was it not the working classes who started the French Revolution and similar revolts around the world in an attempt to gain equal social status and economic freedom? The kings and queens of Europe certainly did not encourage this upheaval of centuries of economic and social status-quo. In summary, it was the very people who today's anti-capitalists are trying to protect were the ones who catalyzed capitalism in the first place!

When I speak to anti-capitalists and anti-Wall Street people today, or read their articles and blogs, I've noticed that they don't understand that capitalism has increased the standard of living for all people. I'm reminded of one of Margaret Thatcher's most famous quotes; "What the honorable member is saying is that he would rather that the poor were poorer, provided that the rich were less rich". Yes, there is inequality inherent in capitalism. But overall, everyone's level of wealth has been increased by capitalism and everyone has an opportunity to improve their lot in life. This is not so in communist economies, and is the reason why communism is a horrible philosophy and method for improving the lives of the poor. To illustrate just one example, take the most vilified aspect of capitalism today..."Wall Street". Anti-capitalists see investment banks as evil institutions that steal money from the poor. But if we explained that it is access to the capital markets that allows America's middle-class to have a 401(k), a home, cars, etc...then anti-capitalists would understand that despite the occasional acts of greed and theft that occur in our financial system, it is impossible to have the living standards that we do today without the healthy functioning of the capital markets (which Wall Street facilitates).

A lot of the hatred for capitalism could be done away with if we only educated people better about its merits.

11/29/17

This was very well written, thank you! It definitely put into perspective the history I had been taught in grade school. I certainly wasn't encouraged to reflect on history in this sort of angle while I was in school, this totally would have gone over my head.

11/29/17

I love how you quoted your Screen Name's namesake. :)

11/29/17

The free flow of capital is the back bone to a free and open democracy. I also love when people assert that money is the root of all evil......like you really want to go skin a beaver to trade pelt for your next meal??

Monkey see. Monkey Doo [Doo].

11/29/17

Why do people hate capitalism? Simply because they can not compete and are at least rational enough to choose a system where their ability to compete is not necessary. However that is where their rationality ends, they align themselves with a system that has zero use for people who have below average ability to compete. Now why do the smart people support this system? Simple, they see it as an easy way to gain more power.

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11/29/17

One bit about Capitalism that trips me up is the environmental shit. I'm pretty Libertarian-leaning until it comes to the environment, at which point I go full Lefty. I don't even know that regulation is the answer, but there was just a 30-car pileup in Mumbai because of pollution and I won't buy ginger from China at the grocery store. And I don't want to have to wait for China to stop polluting because not enough dicks like me won't buy their shitty ginger root. But at the same time, they grew and shipped a 3-lb bag of a perishable goods thousands of miles across the world and want to sell it to me for 99 cents. So that's sort of nifty as well...

heister:

Look at all these wannabe richies hating on an expensive salad.

11/29/17

I believe externalities are a commonly cited problem with capitalism. Seems to be one of the few legitimate criticism with the system and shows a need for some type of controls.

12/4/17

Thats when market based policies come in handy I think

11/29/17

The worst environmental offender, China, is mercantilist--I'm not sure China is, strictly speaking, a capitalist country (although I can see both sides of the argument). In fact, looking around the world, the most polluted and filthy countries are either explicitly not capitalist or they are emerging economies where capitalism is relatively new (and I'm not talking about the fake pollutant, CO2).

11/29/17

Them and South Korea are Croney Capitalist success stories. Except for the bits about baby girls stuffed in sewer pipes and mass disappearances of old people every year... shit like that

heister:

Look at all these wannabe richies hating on an expensive salad.

12/1/17

No regulation is the answer. Let people sue the fuck out of companies for damaging land. Those who put their faith in regulation are saying that pollution is fine to a certain level. Also regulation comes with lock outs and other obstacles to recourse. Why not let companies do what they want but make them responsible for what they do? That seems like a damn quick way to solve the problem.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

12/1/17

Would you get rid of eminent domain then?

heister:

Look at all these wannabe richies hating on an expensive salad.

12/1/17

I would get rid of eminent domain for private industry. The government can still use it for actual society benefit things such as roads.

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11/29/17

I agree that part of the reason hate capitalism is because they don't understand it, but a bigger reason that is connected to misunderstanding is that what most people see as capitalism is cronyism, and view capitalism as the cause for the 2008 crash.

11/29/17
Stay.Hungry:

I agree that part of the reason hate capitalism is because they don't understand it, but a bigger reason that is connected to misunderstanding is that what most people see as capitalism is cronyism, and view capitalism as the cause for the 2008 crash.

Well let's not get ahead of ourselves, it was certainly part of the problem lol.

If you find yourself feeling lost, go climb a mountain.

12/1/17

No it wasn't. Capitalism is not and has never caused a financial crash. Considering that capitalism doesn't really exist in its pure form anywhere, it sure as hell gets blamed for just about everything.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

11/29/17

People hate responsibility, effort and results all three attributed to Capitalism.

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where's your sense of humor?

12/4/17

so true

11/29/17

Capitalism started at the end of the Middle Ages when skilled laborers and craftsmen in Europe started gaining more bargaining power and began forming guilds and companies. But it really didn't take off until credit became more easily available to common folks and joint-stock companies were invented in the 1600s (the English invented the modern public corporation and the Dutch invented the stock market).

After all, what better way for a government or company to raise capital for its empire than by issuing debt?

"Work ethic, work ethic" - Vince Vaughn
11/29/17

Correct, and the Italians invented modern banking, and the French were the earliest adopters of modern finance, which was created by a Scotsman (John Law). The modern world really did emerge in institutions created in the last 500 years or so.

11/29/17

Markets naturally occur. Specialization, trade, free association all occur naturally.

Forced equality, redistribution and centralization are not natural things, yet humans keep trying.

"When you stop striving for perfection, you might as well be dead."

11/29/17

lmao

11/30/17

On the whole I support capitalism but I don't think it should be exempt from serious criticism. As I see it, the focal flaw of capitalism as a system is that it generates and then imposes external costs on society, and in some cases, these externalities can be quite grave. Because free-markets and non-interventionism lay at the heart of capitalism any sort of intercession, whether preemptive or reactive, to address these externalities becomes a gross violation of the system itself-- essentially it lacks an effective moderating force and rejects any form of exogenous intervention.

Just to outline a few of the foremost negative "externalities":

Income Inequality: Income inequality is not categorically a bad thing, but there is surely an optimal level for society. I would contend that its best represented by a Laffer curve type function. However, left unchecked income inequality begets more income inequality and initiates a positive feedback loop. If you look at U.S. history, overwhelming outside forces were required to reset the system periodically, such as WWII. Income inequality is now reaching pre WWII highs.

Asymmetric Power and Influence: Concentration of wealth also leads to a concentration of power. In turn this creates a system with less equal opportunity and a political process that increasingly favors the powerful. Research has shown that the political opinion and preference of those in the bottom 90% have literally zero impact upon public policy.

Climate/Ecological Impact: Deforestation, pollution, resource depletion, ect are all severe ecological externalities that require strong economic incentives or regulatory insistence to combat.

These are just a few quick examples. The insinuation here is not that capitalism is inherently bad or that these issues do not exist in other economic systems. The point is that unrestricted capitalism, without sensible guardrails, can erode and cannibalize the society it relies on. Not necessarily to the degree portended by Marx, but enough to warrant legitimate attention.

11/30/17

Please explain income inequality. How does income inequality beget more income inequality e.g.the rich get richer?

I think 1800s capitalism is different than whatever we have now, and I contend that the central bank created in the early 1900s has had a huge negative effect on "pure" capitalism. Also our social security and New Deal programs were implemented to the detriment of future generations.

12/1/17

Sure, its largely due to a preponderance of advantages that accumulate and accompany wealth. These include education, asset composition and investment income, political influence, and lower implicit and explicit rates of discount. Inversely, there are factors that disproportionately affect the poor, automation, de-unionization, globalization, and the shareholder revolution.

The relationship between income and education is as strong as you'd expect. However, the cost of secondary education has outpaced virtually any other good. Additionally, those in the top 40% on average tend to spend 4x on education what those in the bottom 60% spend.

The top 20% own 92% of America's share of stocks. In the last 20 years the DOW has quadrupled while real median wages have barely budged. The runaway affects of this should be obvious. Investment income, which is very concentrated, has eroded labor income-- see shareholder revolution.

In fact, because of the stagnation in wages the majority of purchasing power of U.S. households is afforded by debt and debt only. Recent studies have shown that debt among U.S. households is rising 60% faster than wages. This is another dynamic that perpetuates income-inequality.

Automation and globalization are topics that have been beaten to death so I won't belabor them but they disproportionately affect the poor and enrich executives and shareholders.

EDIT: Look no further than the Tax reform bill getting rammed through as I write this. We just had 8 years of monetary stimulus in the form of ZIRP and QE that disproportionately benefited large corporations who used their access to cheap capital to buyback stocks and drive asset prices up versus capex, wages, innovation, ect.

Today we are witnessing stock markets at all time highs, record profit margins, record cash balances, record share buybacks, record executive compensation, and record levels of household debt. Yet despite the soaring heights of the markets, corporate profits, and executive pay we are going to pass a debt-fueled tax reform whose focal point is lowering corporate tax rates. Again, it goes back to asymmetric power and influence on public policy. Corporations have been using the near-free capital available to them to buy back stock over the last 8 years, which enriches the top 20%, but more specifically the top 10%.

The additional capital made available via tax reform will be no different. This is how income inequality begets more income inequality.

12/1/17

The lack of originality and ingenuity is appalling from Washington to Wall Street and industry. I believe Trump was supposed to shake up Washington but has not done anything except the tried and failed deficit ballooning tax cut. At least Obama did his progressive thing with some style.

"Loser terrorists" & "bad hombres"

"Typical candidates are those who attended a top-tier academic institution"
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12/1/17
Schreckstoff:

Today we are witnessing stock markets at all time highs, record profit margins, record cash balances, record share buybacks, record executive compensation, and record levels of household debt. Yet despite the soaring heights of the markets, corporate profits, and executive pay we are going to pass a debt-fueled tax reform whose focal point is lowering corporate tax rates.

Isn't this tax bill being passed through reconciliation? And doesn't that mean that it will be certified as at least deficit neutral?

Regardless, your premise seems to be that the rich corporations are demanding these corporate tax cuts, so they are being delivered. Talk about assuming the worst motivations of your political foes. I've been following this general corporate tax rate debate for 10+ years, and it has always been about economic principle. People like me would even argue that the corporate income tax rate should be 0% (in fact, I do argue that).

12/1/17

The tax bill is being passed through reconciliation which means it must conform to the Byrd Rule. The section of concern in the Byrd Rule for the GOP is that the bill cannot add to the deficit outside of the 10 year window.

The joint committee on taxation released an analysis last night that concluded even with economic growth factored in, the bill will add approximately a trillion dollars to the deficit over the next ten years. This merits concern, but does not violate the Byrd Rule as its within the 10-year window.

Its still uncertain, as the bill has continued to be written and amended behind close doors, but it's anticipated that in order to satisfy the Byrd Rule the majority of tax cuts will sunset after 10 years (similar to the Bush tax cuts), with the corporate tax cuts remaining permanent. At least that appears to be the stated preference, but the bill will not take its final form for quite some time.

I'm not assuming malevolence, I just don't see a cogent economic argument for debt-fueled tax cuts, after 8 years of monetary stimulus, at this point in the business cycle. Everyone has principles, but they should never be held and imposed with a mindset of consequences be damned.

12/1/17
Schreckstoff:

The tax bill is being passed through reconciliation which means it must conform to the Byrd Rule. The section of concern in the Byrd Rule for the GOP is that the bill cannot add to the deficit outside of the 10 year window.

The joint committee on taxation released an analysis last night that concluded even with economic growth factored in, the bill will add approximately a trillion dollars to the deficit over the next ten years. This merits concern, but does not violate the Byrd Rule as its within the 10-year window.

Its still uncertain, as the bill has continued to be written and amended behind close doors, but it's anticipated that in order to satisfy the Byrd Rule the majority of tax cuts will sunset after 10 years (similar to the Bush tax cuts), with the corporate tax cuts remaining permanent. At least that appears to be the stated preference, but the bill will not take its final form for quite some time.

Solid points.

Schreckstoff:

I'm not assuming malevolence, I just don't see a cogent economic argument for debt-fueled tax cuts, after 8 years of monetary stimulus, at this point in the business cycle. Everyone has principles, but they should never be held and imposed with a mindset of consequences be damned.

We are celebrating--jubilantly--3.3% quarterly GDP growth. The cogent economic argument is that the wealth of the nation and the living standard of Americans is wildly different with 2.00% annual growth over 50 years vs 3.00%. In other words, Americans will be much wealthier and living much better lives in the long run if we can achieve higher growth. Over a short time period it's sort of an academic argument; over a half century, it's night-and-day (quick Excel indicates that 50 years of 3% vs 2% growth indicates America is almost 63% wealthier with higher growth).

12/1/17

I don't disagree with any of the above; it's purely a math problem with a clear right and wrong answer. But the simplicity that makes it attractive also makes it a poor representation of reality and the complexities that govern it.

In reality, the distribution of that growth rate matters. The average American is probably unaware of the Bureau of Economic Analysis, or what their quarterly or annual report says, but they do know what's in their bank account and what their W-2 says. If the average American is locked out of the majority of gains attained by that 3% growth rate, as they have been from the 1980s onward, then it's of no solace to them. The economy is not an impersonal, aggregate metric to the majority of Americans.

What's best for the economy, a 3% growth rate of a 2% growth rate is the wrong question. A better question is what's better for society, a 3% growth rate with intensifying income inequality, or a 2% growth rate with a slightly more equitable distribution. Perhaps, it's a false dichotomy but it's a step closer towards reality and the trade-offs that exist. The economy cannot be treated purely as a monolith whose best interests always square with the best interests of society. There has to be some degree of Rawl's veil of ignorance when conducting any sort of sovereign decision-making. Otherwise you quickly arrive at absurd conclusions, like a 5% annual growth rate where all the gains are concentrated across the top .0001% is optimal because it grows the economy the fastest.

12/1/17
Schreckstoff:

In reality, the distribution of that growth rate matters. The average American is probably unaware of the Bureau of Economic Analysis, or what their quarterly or annual report says, but they do know what's in their bank account and what their W-2 says. If the average American is locked out of the majority of gains attained by that 3% growth rate, as they have been from the 1980s onward, then it's of no solace to them. The economy is not an impersonal, aggregate metric to the majority of Americans.

But the average American has a much higher standard of living in 2017 than in 1987, and that's largely because of private investment. The wealthiest may have benefited the most in terms of wealth, but I'd argue that middle class Americans have better things today than billionaires in the 1980s. Even expensive cars from 1987 are laughably bad compared to today's production models. My Audi S3 would embarrass the nicest cars of 1987.

Schreckstoff:

What's best for the economy, a 3% growth rate of a 2% growth rate is the wrong question. A better question is what's better for society, a 3% growth rate with intensifying income inequality, or a 2% growth rate with a slightly more equitable distribution. Perhaps, it's a false dichotomy but it's a step closer towards reality and the trade-offs that exist.

I'd argue that high economic growth is an unqualified good for society since the wealthy (at least in America) don't operate in a bubble.

12/1/17

Just came across this article:
https://austrian.economicblogs.org/stockman/2017/stockman-debt-taxes-growth-gop-job/
It's a pretty thorough deconstruction of the tax reform bill by the Director of the Office of Management and Budget under Ronald Reagan. It's acerbic and strongly disapproving of the bill but levies some pretty insightful criticisms. Worth a read regardless of how you feel.

12/2/17
Schreckstoff:

Just came across this article:
https://austrian.economicblogs.org/stockman/2017/stockman-debt-taxes-growth-gop-job/
It's a pretty thorough deconstruction of the tax reform bill by the Director of the Office of Management and Budget under Ronald Reagan. It's acerbic and strongly disapproving of the bill but levies some pretty insightful criticisms. Worth a read regardless of how you feel.

I mean, I agree with what he's saying, but literally every bad part of the tax bill can be indirectly (or directly) associated with the fact that Democrats so oppose a corporate income tax reduction that the only way to get the tax cut through is via reconciliation, which requires all kinds of fiscal gymnastics. I agree that most of this tax bill is utterly asinine, but that's the price we have to pay to realize corporate income tax reform with socialists controlling 48 senate seats (I love how Ted Cruz asked Dem Senator Maria Cantwell what she thought the difference was between socialists and Democrats, and she couldn't answer).

12/4/17

External costs? Every system has costs...what is this "serious critique" that one must level that will fix this? That's how this universe works...we aren't god, there are always trade offs. Capitalism is the best because, once again, it's how the universe naturally works.

And really, I mean true free markets. Not the crony, centralized, mostly quasi-socialist system we now have in place. Critiquing "capitalism" based on the current state of Western economies is not useful or relevant, might as well rate Ferrari as a company based off the performance of Lamborghini road cars.

Clearly you have no idea how a free market actually functions - the market is the moderating force. Incentives are the moderating force...that's literally the point. How do you suppose it should be done instead? The way it's been trending over the last 200 years, and failing?

Are you arguing another world war is preferably to income inequality?

Concentration of power is by nature not capitalism or free markets. We have such an incredible concentration of power right now precisely because we've slowly eroded our freedoms and liberties in order to gain some of the so-called "necessary moderating forces" that you claim are so vital to a healthy society.

The US leads the way in generally keeping a clean environment. This insane, ridiculous assumption that naturally all free markets want to destroy the environment has no basis in reality, fact or really anything other than childish, nonsensical drivel that comes from extreme far-left ideologue talking points.

I get what you may think the problem is, but I really must ask you to think about how exactly we got to the point we are now...we have nothing like unrestricted capitalism, and we haven't almost as soon as we signed the constitution into place.

"When you stop striving for perfection, you might as well be dead."

12/4/17

Take a deep breath.

The criticism is not that external costs exist. It's that the system shuns any attempt to moderate those externalities from any force outside of the system itself. This can slow or suppress response times in addressing or removing said externalities, especially when they are the source of a competitive advantage.

The invisible hand was conceived when the world economy was largely mercantilist and even prior to the industrial revolution. It's efficacy as a moderating force in a global economy where corporations comprise 69 of the top 100 world economies is inadequate at best. Unless you think you can dismantle or reset the current state of the world economy then your fetishizing of pure capitalism is just a theoretical wet dream. Transnational corporations have enough scale, capital, and clout now to command the system that you contend would moderate them.

PeterMullersKeyboard:

Capitalism is the best because, once again, it's how the universe naturally works.

Capitalism is an immutable law of the universe? Again, capitalism relies on a sovereign authority recognizing and enforcing private property laws. This, in and of itself, is already a violation of the state of nature and requires the assistance of an entity outside of capitalism-- the state. I think I get your point, but the statement was to grandiose and clumsily stated to let be.

PeterMullersKeyboard:

Are you arguing another world war is preferably to income inequality?

This is an absurd and pointless form of argumentation. It's a baseless straw-man with no substantiation with regards to either A.) the intent of my argument or B.) the logic behind the presented dichotomy.

PeterMullersKeyboard:

This insane, ridiculous assumption that naturally all free markets want to destroy the environment has no basis in reality, fact or really anything other than childish, nonsensical drivel that comes from extreme far-left ideologue talking points.

This is not the assumption, it's just a useful strawman for you to rebuke. Again, there is no assumed malevolence towards nature or anyone or anything else, it's just corporations optimizing their outcome within the existing incentive structure. The actual argument is that in some cases, the organic incentive structure of the system itself is either not strong enough, or too short-term focused, to protect long-term collective public interests-- such as deforestation, soil depletion, oceanic pollution, ect.

PeterMullersKeyboard:

I get what you may think the problem is, but I really must ask you to think about how exactly we got to the point we are now...we have nothing like unrestricted capitalism, and we haven't almost as soon as we signed the constitution into place.

My critique was of capitalism through the lens of the 21st century economy. Pure capitalism is merely a thought exercise, as is pure socialism, or pure anything anything at this point. Perhaps, "pure capitalism" is as impeccable and self-sustaining as you contend, but it also exists in a vacuum and arguing about its sanctity does little to advance the current state of economic affairs.

12/4/17

The only one writing multi-page-length responses is you, I suggest you do the breathing.

Regulation is how we got here...gov't trying to pick winners and losers, as well as trying to "protect" people from themselves is how we got here. Our current crony system has nothing to do with free markets nor is it a natural outgrowth from such a state.

I'm not going to respond to this post any further until you can explain to me how ownership of property violates natural law...that's one of the most insane, ridiculous statements I've ever seen made on this forum.

You bring up a lot of things that are non-issues, those are also straw men. Please, defend your absurd notion that private property is unnatural. Then perhaps I can make some sort of response. The rest is just hand-wringing and nonsense.

"When you stop striving for perfection, you might as well be dead."

12/1/17

Capitalism is simply a system of free exchange rooted in private property. It represents the mechanisms that naturally emerge from the ownership of one's productive effort and the ability to exchange with other productive parties. The ownership component creates the incentives required to stimulate production (i.e., your ability to generate and retain the return/loss). The exchange component creates the mechanism required to direct production (i.e., the price mechanism).

To put it another way, capitalism is a cooperative system where strangers produce for strangers. It's why/how, as an example, Croatian blue-fin tuna fisherman supply Japanese consumers without even knowing them. People liken markets to democracy but, in fact, markets are far superior to democratic political systems. If you want a yellow tie, for example, you can purchase a yellow tie. You do not need permission from 51% of the public.

Marxism/communism is not an alternative system. It's simply the destruction of social institutions that have emerged organically over time. It destroys them but it does not replace them. When you read Marxian literature (real Marxian literature, not the shit that e-socialists post on huff post comments board), you'll notice that it's just a critique of capitalism. This is why all socialist/communist systems necessarily degenerate to state-run/crony capitalism.

"Elections are a futures market for stolen property"

12/1/17

"Prior to capitalism, the way people amassed great wealth was by looting, plundering, and enslaving their fellow man. Capitalism made it possible to become wealthy by serving your fellow man."

12/1/17

Capitalism is not "social and natural" - it is grounded in hard-won institutions which are legalistic in nature. Think of the Magna Carta, or the first joint venture companies in mercantile Europe. It is about private property, plain and simple - private property that is harnessed to generate privately held profit. In contrast to tribal, feudal, or communist/some socialist formulations of the economy, capitalism rests upon the notion that private rights to property and transactions involving those properties must be held sacrosanct and protected from violation by mutual covenants that are enforced by the Leviathan. In many ways, this makes for a great system.

The reason people are mad, however, is because there are many permutations of capitalism in society, not all of which serve people well from a utilitarian perspective (i.e. the greatest good for the greatest number), or an ethical one. Unfettered free market capitalism tends to lend itself to a system of haves and have-nots - and if you have a sacrosanct right to own only meager posessions, like the displaced agrarians of the industrial era, then the concept loses a bit of its shine.

There's also crony capitalism where private property exists, but the channels of transacting with your property are calcified and exclusionary, and the Leviathan may protect the covenants of its cronies better than those of the non-cronies.

A number of atrocities have also been committed and justified in the name of acquiring private property and profit - colonialism, slavery, war, etc.

Further, a system which holds private property and the individual rights of its owners above all else may neglect to address issues like the tragedy of the commons and other collective action problems. Just because you own a factory that pollutes, do you have the right to churn out noxious gas to the detriment of your fellow man?

I think it is naive to discuss a world without the notion of private property - it just seems ludicrous to me that a system without this concept could function in a way that imparts maximum benefit to its members. What I think is more reasonable to discuss is the ways in which private property may sometimes need to be regulated in order to avoid some of the harms discussed above.

12/1/17

It's true that private property is a key function of modern capitalism. I think Esuric's point about capitalism being natural is that functioning trade markets have always sprouted up throughout history--trade between humans is natural. Take Venezuela, for example--a despicable socialist tyranny. There is a vibrant black market for virtually everything--this market operates under the natural laws of supply and demand and the innate idea of private property (that what I trade to you is mine and I have the right to give it up or not for that which you posses).

12/1/17

What I meant my "natural" is that, whenever you have property you "naturally" get exchange, which "naturally" creates the system we call "capitalism." It's an if-then logical progression. I didn't mean to imply a seamless social process.

"Elections are a futures market for stolen property"

12/1/17

To clarify - my contention against the notion of "natural" is aimed at the OP. I think Esuric's comments, and his use of the word "natural" are spot on. The free market, and other forms of relatively free exchange are the logical result of institutionalized private property.

I was just not clear on what OP meant by "Capitalism is social and natural while the economic system must be reflected in the private and individual institutions that allow for the free exchange of goods", but from what I can gather, I think he mistakenly characterizes how capitalism came about.

Institutions do not follow from capitalism in the first place - capitalism follows from institutions in the first place. Capitalism is not merely the exchange of goods - a barter system achieves that. It is the socially sanctioned and contractually enshrined notion that what you produce or acquire is yours, and not the tithe of your church, your lord, your tribe, or any other paternalistic ruler. On this point, I think the three of us are in agreement.

12/1/17
Fugue:

To clarify - my contention against the notion of "natural" is aimed at the OP. I think Esuric's comments, and his use of the word "natural" are spot on. The free market, and other forms of relatively free exchange are the logical result of institutionalized private property.

I was just not clear on what OP meant by "Capitalism is social and natural while the economic system must be reflected in the private and individual institutions that allow for the free exchange of goods", but from what I can gather, I think he mistakenly characterizes how capitalism came about.

Institutions do not follow from capitalism in the first place - capitalism follows from institutions in the first place. Capitalism is not merely the exchange of goods - a barter system achieves that. It is the socially sanctioned and contractually enshrined notion that what you produce or acquire is yours, and not the tithe of your church, your lord, your tribe, or any other paternalistic ruler. On this point, I think the three of us are in agreement.

I'm delineating between capitalism and the "free market" in that quote. I said that I don't believe capitalism at its core is an economic system, but rather it is a social system. The ideology tries to explain the way social beings act through their production specializations and when making markets.

The free market is an economic system to codify these actions and promote fairness, justice, security, etc. I think there is a confusion; capitalism is at the top of hierarchy and explains social actors, while economic systems are subjected to the social ideology.

"Loser terrorists" & "bad hombres"

"Typical candidates are those who attended a top-tier academic institution"
-Most job applications

12/4/17

Ah yes, more regulation - that's worked so well, hasn't it?

Some of you really need to spend some time in the real world.

"When you stop striving for perfection, you might as well be dead."

12/4/17

...Thanks bud. Maybe you could disclose your position in the real world so that we can all benefit from your worldly knowledge, and how it applies in this debate? No? Then sit down and be quiet with this BS.

I'm a conservative and generally think that the government does a poor job with regulations. I think Dodd Frank and Basel II/III are great examples of regulation run amok, because rather than limiting credit risk, regulations are increasing it by crowing large lenders out of the middle and lower market.

Nonetheless, if you cannot understand why there needs to be a regulatory response to resolve collective action problems like climate change, you are most likely being an ignorant mouthpiece for the brand of conservatism that is on its way out the door in today's world.

Next semester, I suggest you register for a Game Theory class and start out by learning about the prisoner's dilemma. That should set you on your way to eventually having the requisite knowledge for engaging in this conversation.

Some other regulator-driven stuff that OP has probably concluded hasn't "worked so well", in his unique experience as a participant in "the real world":

  • The Securities Exchange Commission, created by regulators to facilitate transparency in the markets.
  • The Federal Reserve Bank, created by politicians to stabilize aspects of the economy
  • Credit rating agencies, whose judgments as to creditworthiness are mandated by regulators as part of a legitimate offering.
  • The busting of trusts in the early 20th century, to avoid a host of problems arising from monopoly
  • Sarbanes-Oxley, which was devised to hold executives accountable for financial chicanery that they ordered or sanctioned after WorldCom and Enron

The list goes on...

12/4/17

Oh man, he's mad now.

So all you have is climate change? That's it?

You've made a lot of incorrect assumptions, haven't offered much in terms of actual, concrete arguments. If you have anything interesting to say, please feel free to do so...otherwise this strange role play you're trying to engage in where I'm your student or some such is rather uninteresting to me.

Learn some humility, little guy. It'll serve you well in life.

"When you stop striving for perfection, you might as well be dead."

12/4/17

Hush. I added more examples because I knew you would be a prick and demand them. Read again and get back to me.

12/4/17

Incredible, asking you to support your argument is "being a dick" ? How old are you? You must be one of those people that needs a safe space every time someone you don't like comes to your campus and interrupts your women's art history studies.

You've just listed a bunch of organizations that have failed in doing what they set out to do, I have no idea how the hell you think this is an argument of any sort.

Sarbanes-Oxley clearly didn't work. Credit rating agencies clearly didn't work. The federal reserve clearly hasn't worked. The SEC is the least effective but is only necessary because now we have giant, all-powerful financial institutions that are practically arms of the government now. If that wasn't the case, we wouldn't need them.

Have any more arguments to make? Or just more posts where you get off on speaking to strangers like some sort of strange, rape-y uncle? I must say I have little interest in that.

"When you stop striving for perfection, you might as well be dead."

12/4/17

Troll better, guy. Or if this is serious, I beg of you, go to a meeting for a debate club. Good day to you.

12/4/17

So, no argument, no response. If your only answer to critiques of your non-argument is "troll better" - I feel sorry for you. I sure hope you don't work in the industry, you might have a rough go at it.

Have a nice day. And keep tossing that MS, I love seeing these notifications.

"When you stop striving for perfection, you might as well be dead."

12/2/17

My experience is that people who hate capitalism don't really hate "regular" capitalism, but crony capitalism. And that's understandable.

How politicians can be bought (through lobbying) for pennies, relatively speaking, is disgusting. Or entities masquerading as capitalist free-market supporters, while pocketing politicians for special treatment, essentially making competition almost impossible (looking at you, telecom).

Next time you speak with anti-capitalist people, try to find out what they really hate.

12/2/17

Human existence is built upon oppression and taking advantage of others.
Capitalism, by definition, is pillared by those two actions. (which is totally fine)
So yes, it is human nature.

12/4/17

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"When you stop striving for perfection, you might as well be dead."

12/6/17
12/7/17

"When you stop striving for perfection, you might as well be dead."

12/4/17