Or why capitalism is the only way there is.
I am writing this because the obvious ignorance and half witted, half digested, make-you-feel-special-and-caring sophisticated-cosmopolitan-woman pick up lines that pass for discussion of economical, social and political matters related to socialism and communism peddled on this forum have managed to rattle me enough. Considering the audience, i will steer clear of two possible pitfalls. Firstly, i will not use quotes, even to books/texts considered very well known, so well known in fact that you are likely to flunk high school if you didn’t get them. Instead i will try an all-in-one packaging method, putting everything that is needed in here, and fatally cutting out a lot of the very interesting, but sadly an iota too sophisticated sub discussions in the literature. Secondly, i will construct, or attempt to construct this text so that the would be linguistic relativists aren’t easily dragged off track by some unlikely approach to my words. Whether that will succeed, or whether it can ever in fact succeed to any measure is entirely a matter open to discussion.
Preliminaries (where we define our terms. Please do not skip this part. If you do and later on try to build an argument showing you to have skipped, you will be ridiculed, insulted, at the very best ignored. Not worth the risk.)
Money is a shorthand. Money represents work. That is not however to mean, as the more muscularly inclined of you will automatically imply, the work to make something. It means the work to get something. Entirely different matter. The 10$ you pay for a hamburger does not represent the work that went into making the bread and mixing the toxic poisons they conventionally call “ham”, then frying it all in indigestible natural-identical fats that are more plastic identic than natural identic. The 10$ represents the work one would have to do to get a hamburger, starting at your current position. Hence, if you are in Brooklyn, its a decent deal. If you are in Manhattan its an excellent deal, considering you will probably be hard pressed to find one for that cheap there, and if you are in Sudan it is probably a very very good deal considering they are Muslims and don’t eat pork. Do not be fooled by thinking a hamburger is a hamburger. There is no such thing. Water in the desert is not just water. Getting this simple difference clear will hopefully help you understand some of the everyday dilemmas that no doubt plague your waking hours.
While a hamburger is not a hamburger, money is always money. That is the purpose we have them for, and thats why they are a shorthand. It would be practically impossible to keep mental track of what is each single object worth to each single guy there is and always factor it in. For instance consider there are 2 bottles of coke, and 3 glasses of milk, 3 hamburgers, 1 cheeseburger and 2 sushi servings. This is all the economy there is, nothing else. Consider the population is joe, koe, loe, poe and doe. These five fellows are hungry. Who gets what ? Maybe koe likes coke more than loe. By how much ? Maybe joe is a vegetarian, maybe doe is japanese, maybe loe doesn’t really like milk, but doe really really hates milk. As opposed to joe who really really absolutely and forever hates milk. How do you split all that ?
Some idiots also known as pragmatists thought hey, if there are a bunch of people desiring a bunch of resources, and there is not enough to get around you should split everything so that the total amount of suffering is minimal, or the total happiness is maximal. But who has a right to decide on happiness ? If koe and loe both want a hamburger, and there is only one, who gets it ? Check out the silly shit they came up with : let the people decide for themselves ! Is this idiotic or what ? Actually trust loe and koe to duke it out for themselves ? Not make them apply to a committee to split their food for them ? Not depend on the state ? Horrible ! Keep this up they might even be able to resolve most of their problems by themselves, and not need our help. What good would we be then ? Might as well go fry hamburgers for a living.
The more perceptive of you might have spotted the snicker and sarcasm in this last paragraph. What you might not know however is how precisely what i say relates to what happens. Unbelievably, it does.
So lets see, we got 2 cokes and 3 milks, 3 hamburgers, 1 cheeseburger, 2 sushi. Now lets ask our blokes, who wants what ?
J : i am very hungry, so i want 2 cokes and 3 hamburgers please
k: i am not only hungry but also very very smart, so i want 2 milk and 2 sushi, and should get it before anyone else.
L: i am a loving and compassionate fellow, and i been doing so much good to the world that giving me 1 hamburger and 1 cheeseburger and 1 or 2 cokes would only be fair
p: im gonna beat the living shit out of the lot of you if i don’t get my protein. 3 hamburgers and 3 milks, lets go.
D: i am on a diet, so 1 sushi and 1 cheeseburger, and a couple milk will do me fine. Got chocolate fudge anywhere ?
Which puts us in the unpleasant position that not only we ate the chocolate fudge before we started writing this, but also we just found out we need 3 or 4 cokes, 7 milks, 7 hamburgers, 2 cheeseburgers and no less than 3 sushi servings. Excellent. Thats roughly twice the stock, so obviously somebody is definitely going to diet some. Who and how much ? While smarties like future man would have us debate whether loe should get an enforced diet, or wether the smart or the caring should get the food first, or maybe they should all draw lots, or better yet we eat it all and they can go sweat their own, the aforementioned part time idiots part time very smart utilitarianists found what is in fact a mathematical solution for our problem. Which is to say it is not open to debate, it is correct and proven correct. Lets see.
Okay, each of you put prices on the stuff we got, lets see what happens.
J: to me the stuff is worth 5$ the 1st coke, 3$ each subsequent, 10$ the 1st hamburger, 7$ the next and 5$ the last, and the rest of the stuff i wouldn’t touch if you paid me.
K: i would pay 15 for the 1st milk because i am very thirsty, and 3 for the 2nd, and 12$ the 1st serving of sushi. I don’t know about the 2nd, i am not all that hungry… maybe 5$ ?
l: i would pay 15 for the hamburger, 12 for the cheeseburger and 15 for the 1st coke. Maybe 3$ for the 2nd.
P: meh im not all that rich, so 5$ each hamburger and 4$ each milk.
D : i want the sushi bad man, 15$ for it, and the cheeseburger too, 12.5$. each milk 3$.
Now we are getting somewhere. Lets order this :
cokes: 15$ loe, 5$ joe, 3$ joe, 3$ loe. Since we only have 2, both joe and loe get 1.
milks: 15$ koe, 4$ poe, 3$ doe, 3$ koe. Since we only have 3, koe gets 1, poe 1 and doe 1.
hamburgers : 15$ loe, 10$ joe, 7$ joe, 5$ x3 poe. Since we only have 3, loe gets one, joe gets 2.
cheeseburgers : 12$ loe, 12.5$ doe. So doe gets it.
Sushis : 15$ koe, 15$ doe, 12$ koe. Since we only have 2, koe and doe get it.
So this is how we split things then :
joe gets 1 coke of 2 he asked originally and 2 hamburgers of the 3 he asked. His own valuing of this would be 22$.
koe gets 1 milk and 1 sushi of the 2 each he asked. His own valuing of this would be 30$.
loe gets 1 coke of the two he wanted and 1 hamburger, but no cheeseburger. His own valuing of this would be 30$.
koe gets 1 milk of 2, and 1 sushi of 2. he valued this at 27$.
poe gets a glass of milk of the 3 hamburgers 3 milks he wanted. His valuing of this would be 4$.
doe gets the cheeseburger and the sushi, but no milk. According to himself, what he got is worth 27.5$.
Regardless of what we actually sell all the shit for, the total value of this particular way of splitting it, according to the only people who should have a say is 150.5$. Any other way of splitting things would result in a total value of the things eaten that is less. Hence it would produce less happiness and more misery. I can not insist enough on the following points :
The above is nothing else, and nothing less than a mathematical description of the problem of dividing things to people. It is not conjecture, it is not arbitrary, it is not conventional or a convention. It is, just as the line being the shortest distance between two points in euclidean space, or the circle the geometric place of all points at equal distance from a center, a matter of necessity. Mathematical necessity and logical necessity. You are not at your leisure to accept it or not, or maybe just look for something else that would better fit with your “identity” or “personal preferences”, one that would suit your mood and rock your boat. To all this you do not matter, to the point we could say you do not exist. It is here before you, it will be here after you finally surrendered your miserable black soul, it is universal and unchanging as all math and all logic. It can never be later proven to have been mistaken. It can not be amended or improved upon. To disregard it makes you an idiot, just as disregarding math or logic makes you an idiot.
Which brings us to the second concept we are defining today, ie the market. When we say market we refer to the above example. That is what a market economy is all about. You are free to say anything you want, but if you want your opinions to be respected and me to stop calling you an idiot you have to firstly understand and secondly offer good criticism to the above market model.
Historically there have been a few lines of criticism, that we shall briefly look at now.
- The people have no clue what they should be spending their money on. I perfectly agree, they do not. However, this leaves us with the impossible problem of who better than the people themselves knows what money should be spent on ? The burden of proof is so huge on convincing us that any other agency than the people involved should decide how to split resources that an exceptionally sound argument needs to be presented. Simply stating that sometimes the market economy apparently fails to make the best of a situation, and backing or attempting to back that with more or less extensive historical data misses the point in two important ways. Firstly, any other system of dividing resources ever used to date in any extensive form also apparently failed to make the best of situations, arguably in much more obvious and painful ways. Secondly our conclusions are a matter of deduction not induction. Arguing inductively against deductions is at least naïve. It does not matter how many times and how utterly wrong the implementation of the above failed or appeared to fail. It still stands correct, and fault is to be found elsewhere. This is essentially the argument various flavours of communists/socialists present when saying that Stalin does not invalidate their theoretical model because Stalin is a reality not a theory.
2a. the above is a theoretical model, and as such can only be applied to theoretical people, but in practice the model has to be supplemented with mechanisms to compensate for the fact that real examples are always a lot more complicated than what we have studied, and while people have limits on their ability to effectively judge situations, especially when time is a factor, naturally occurring situations have no limit on their complexity. Hence it might be a good idea to limit the possible complexities of natural situations by adding a few extra principles to the above system. This is perfectly valid and understood criticism, and it is in fact applied widely by that which is called a market economy. It is the reason why, when you go to a fastfood and ask for a hamburger, you aren’t asked back whats it worth to you. They have fixed prices to simplify your life, because if you had to ponder how much is a hamburger worth to you every five minutes there would be precious little time for anybody to get anything done. Instead of doing it the hard way, always keeping real time track of all the people’s current valuation of a hamburger, and all the ham and burger stocks worldwide and always factoring things to get prices that fluctuate a millionth of a cent every minute they do it a simplified way, using fixed prices and trying to compete each other, selling cheaper or better hamburgers for the same prices as the competition (note that better for same price is, in fact, also cheaper, just another way of saying it)
2b. the above is a theoretical model that presumes a sort of equality between economic agents (the puffy academic name for the likes of joe and poe) that might or might not happen in reality. Consider the million dollar poker game. If i have a million dollars in a bag and you have a crisp hundred bill, and we play poker, no cheating no marked cards no anything on those lines and play together until one man gets all i will win. Because i can afford to loose a lot more than you, i need a lot less luck than you to take all your money. It is in fact what casinos do to make money. They don’t cheat, they don’t steal. They simply keep you from cheating them and then crush you with their respectively larger budgets. Arguably 100 dollars means to you a lot more to you than it means to me, because it is all the money you got to your name, and i might not even bother pick a bill up. Arguably clever economical agents can use to their advantage such bottlenecks, of capital, of time, or resources, of knowledge etc. This too is perfectly valid and understood criticism, and it is in fact applied by what we call market economies. It is the reason stock exchange trading is so heavily regulated, to prevent insider trading for instance. It’s the reason there exist trust laws, not permitting companies to merge as to take up entire markets.
Notice that point 2 deals with obvious sufferances of what is known as competition, ie when economical agents don’t have the meta-resources (2a, by meta resources we simply mean the brainpower, or computer power. It is mistaken to assume truth is self obvious. Data has to be processed and data processing is a relatively expensive endeavour) or the resources (2b) to keep balance. While further points and discussions along the lines of point 2 are perfectly valid, welcome and likely to get you respected and influential, they are not outside capitalism. They are capitalism at its finest, and arguing them does not invalidate the system, quite the contrary might be argued.
One would suspect we are now reasonably equipped to proceed to the next stage, looking at what capitalism is and how it works. Capitalism is based on a few assumptions.
- People have a fundamental and inalienable right to property.
- The purpose of any political or economical system is to create the most possible happiness and the least possible unhappiness for the people.
- The only judges for happiness and unhappiness are the people themselves, and only to the extent of their respective happiness or unhappiness. Whether they are self consistent or not, whether they say they know or say they know not, whether we know better or not, there is no other judge, and can not be no other judge.
4.(in response to detrop) All the resources that compose the economy are at least sometimes in less supply than the total demand for them. For those resources that are always in more supply than the total demand, [for instance but not limiting, words of a language, or spaces in the list of abstract concepts] this does not apply.
These are fundamental assumptions capitalism is based on. If they are invalidated, capitalism ceases to exist. However, if these premises are met, the system arising is capitalism. You are wrong in supposing capitalism is something that happens in the proximity of the wall street, a sort of mystic fluid oozing out of the banks and credit cards, some sort of economical ether. Capitalism is simply that form of social organization that is based on the 3 above assumptions. In as much as what you regard as an ideal system would meet and require the above 3 assumptions, you are in fact talking about a form of capitalism. Considering that, it might be beneficial for you to analyze what are the differences between capitalism as you see it (whether you call it panseism, socialism or pseudokreutzfeldism) and how it actually is implemented in various countries, and consider the possible reasons for those differences. It might even come to pass that you realize you have been wrong on some minute count or other.
That said, we can proceed to see what capitalism is not, or does not necessarily imply.
Firstly, is wrong to suspect there is any necessary connection between capitalism and greed. One can be a capitalist and greedy, one can be a capitalist and generous. One can be a communist and greedy, one can be a communist and generous. The concept that it is greed that makes things move in capitalism, as opposed to love, or altruism in some vaguely defined flavour of communism is laughable. The desire for objects moves any economy. If you don’t want a car, you wont buy or otherwise acquire a car. If nobody wants a car, cars wont be produced. If cars aren’t produced, there is no need for cheaper oil, better steel, better brakes, better leather chairs. If there is no need for any of those, there is little need for advanced math or experimental physics or chemistry. Pretty soon there is no need for anything at all, and we just sit around and bask in the greatness of the oneness or whatever the meditation fad is those days.
However, regardless of our meditation skills, we still breathe, and if we do we will need to eat, and if we don’t want to starve we need to get food produced. And since we make food, might as well make it good, and since we are eating might as well watch tv, or drink a beer, or get laid using contraception so as to not be pushed out of the house by all the offspring resulting (because then we would need a bigger house). Its not greed that moves the economy, its need. People need to eat, and people need cars. Sure, they don’t need cars all that much, but being asked hey, what do you need more, a car or 20 grand, many people each month answer “gimme the car”. Obviously they need a car at least some. Why would we call this greed ? Nobody thinks they will buy all the Cadillacs so there will be none left for anyone else. Nobody tries to get all the money so there wont be any left for anyone else. What people are after is comfort, and satisfying their perceived needs, and from here to greed is a long long way.
Of course, as with any demagogical approach, a detractor will never say it is the people that are anything negative, such as greedy, or ugly, or lazy. They will just try and single a group out and attempt the age old “lets kill these guys and get their property and then we can just sit around doing nothing for a while”. That doesn’t work, for a few reasons, that we will look into bellow.
Firstly, you probably know that inflation is bad. I bet however that you can not explain why is inflation bad. Okay, smartiepants, you asked for it. Now take five minutes and come up with a single good reason why inflation is bad, open notepad and note it down. Before you read on !
Remember what money is ? Money is a shorthand as i have said, and it represents the work that would go into finding an object or other. Now we can look into detail at that feeling of unease you had when you read that explanation above. Hang on… this cant be right, you mean to tell me there is no necessary link between money and objects ? That is precisely what i am telling you. Money is not a shorthand for objects, or production, or value. It is a shorthand for work, as i defined it. Well then, who is to say that if i have money i can actually buy anything for it ?
Nobody.
That is the long and the short of it. You can have all the money in the world and it might not buy you a drink of water. After the first world war, that they lost as their have a habit to, the Germans saw that first hand. Their mark, that used to be relatively as strong as the British pound lost its value at such a rate that people needed a bag of money to buy bread that didn’t fill the bag. Prices would sometimes increase five fold in 24 hours. Eventually they had billions of marks that were not enough to buy a tin of milk. That can always happen. It is called inflation, and it is the sign of a broken balance. The balance between money in circulation, as a shorthand for the work people are willing to put into acquiring goods and goods effectively on the market. If there aren’t enough goods, obviously money becomes meaningless. However, it doesn’t simply die out. It becomes gradually meaningless.
It is the job of intelligent people known as central bank governors (federal reserve chairman in the us) to keep that balance. Together with the respective governments they make policies so as to try and keep things balanced. Now you suddenly realize why the fed uses an interest rate as its primary ways to do that, just as the European bce uses an interest to control the European economy, don’t you ? If you don’t lets explain. An interest represents money paid for the use of money. It also represents what is the natural increase of property value. Hence, if there are relatively too little goods on the market, and too much money floating around, rising the interest will make people spend less money on goods, and save more, which then constitutes capital for various entrepreneurs to make more goods with. If however there are too many goods, and not enough money, lowering the interest will make people spend more, and save less, thus forcing entrepreneurs to be more efficient with their capital expenses. It is this two state engine that generates economical efficiency, and is ultimately responsible for your relatively high standard of life.
Now lets imagine somehow we get 500 millions extra. Suppose the aliens land in future man’s back yard and hand him 250 suitcases at 2 millions each, in crisp new bills.What does that add to the economy ?
Nothing.
Alan Greenspan will have a fit seeing the M3 (a symbol for the money in circulation) just peaked for absolutely no good reason, probably precisely when he kinda needed it not to, because thats the way these things happen. Then the poor guy will have to take countermeasures, which will probably again fuck over most of the policies he was trying to implement to get unemployment under control and the financial discipline of the corporations somewhat more manageable. At the end of the day, everything will cost 1/10,000 th more, so what in fact happens is each and every American will pay on average 2 dollars over a quarter or two so the lump of money future man got for no good reason can be happily ignored. Because future man got the money the wrong way. Nobody gave it to him. Sure you can imagine the aliens are somebody, but since they are not part of the economy, they are economically nobody. Money cant just be created out of nothingness. The workings of a successful economy produce money, and for anyone to have money in a market economy, somebody has to give it to them. Not Santa Claus, not the aliens, but somebody who is somebody economically, integrated in the economy. Otherwise the situation is the equivalent of the government printing more money. It will not generate any value, it will generate inflation, distrust in the currency and a good many other ills.
And if we decide tomorrow to put a cap on all fortunes, and all excess currency be handed over to whatever entity, that is no different. You can not just get money like that. You have to work for it. Otherwise all you do is produce inflation and instability. It is a false impression that money is a value in itself, that can be used as a value in itself. It is not. It is a shorthand, a mere symbol, and as such it is meaningless and useless outside of the system that created it.
The only way you can get money meaningfully is to exchange something of value for it. Otherwise you are not getting money, you are just getting pieces of paper. And all the people that are very rich got their money that way. They sold something, and got paid. They didn’t rob in the streets. They didn’t embezzle it or steal it or whine to the aliens or the gods or the public. They are not beggars. They do not get money out of compassion or fear or faith or any other emotion. They get money because what they do is useful, at least in the estimation of the ones paying them. Which is, incidentally, the only meaningful way to get money. Now it is entirely possible that one or another or all of them in fact did steal and embezzle. But if they did, from a strictly economical point of view, they created nothing but problems. And the fact that the economy works, that there is food in the stores and cars for sale in the dealerships and whores on the streets and smart ass democrats churning away grants in their ivory towers, all chasing the green buck is or should be enough proof that the thieves and robbers are an exception.
If you have made it this far, i would like to thank you for your patience. I would further like to apologize for the rethorics of the entire text, that are liable to have seemed offensive. In the circumstances, i considered it vital that the otherwise banal information in this text be presented in such a way as to challenge and maybe even force an otherwise uninformed reader to reconsider his premises. Whether i have succeeded or not is of course doubtful, but i don’t see any other way it could have been meaningfully attempted. Being a very short summary of a truly vast field, this attempt is a very brave bid. As such, i can not claim it is definitive, at least not just yet. It will maybe get edited later on if i decide some thing or other got left out that was in fact very important. Do not take this to mean anything in it might be overturned, or is a matter of conjecture or opinion. It is not and it will not. Only way it can get modified is to either expand a point or add one, whats there is there to stay. In the unlikely event you manage to disprove anything in there, you should probably apply for a Nobel prize.
(should you want to quote this outside of the forum, you are asked to kindly supply a link to the entire text, as found here. ty)