Two Myths about Capitalism

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Re: Two Myths about Capitalism

Postby Amorphos » Sun Jan 02, 2011 5:47 pm

The cumulative purchasing power of the middle-class far exceeds that of the wealthy. Most large corporations exist by catering to the needs and desired of lower and middle class people
.

Top 1% of households has 47% of the wealth [in america], 80% have 7% of the wealth, clearly the top 1% has the greater purchasing power. However you are right [ “..needs and desires of lower and middle class..” ] in that those corporations sell lots of products and hence need lots of people to sell them to. This is exactly my argument for redistribution of wealth, the more spending power that group has the healthier the economy.
What we are forgetting here is that the top 1% and 20% are they who do the major investing, almost every nation in the world is in massive debt and to whom ~ well to these extraordinarily rich people. Hence the centralising element [national debt and banking generally] creates a wealth far greater than the GDP’s of nations, and it is mostly harvested by that tiny minority. purchasing power!? they buy and own massive shares in the worlds businesses.

You will never get rid of that and achieve market anarchism! [if that is what you are aiming at] If you did take away centralisation and big govt then the unions would step in for the workers. Someone always grabs power.

What would stop successful companies from continuing to grow? E.g. where a supermarket buys up farms and suppliers, how can anything smaller compete with that? if they did what would stop them from buying said small business?
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Re: Two Myths about Capitalism

Postby iambiguous » Mon Jan 03, 2011 1:41 am

Eran wrote:The business cycle is a consequence of government intervention in the economy, most importantly in the setting interest rates and the money supply.


And for every narrative along this line there will be one that insist the government intervened in the economy precisely because the private sector was unable to avoid the crippling booms and busts.

Eran wrote:Even mainstream economists agree that the Fed's low rate policy in the early years of the previous decade played a critical role in fanning the housing bubble. Other government policies (e.g. creating moral hazard by rescuing financial institutions) are also involved. There is absolutely no evidence that pure free markets involve business cycles.


Perhaps that's because there has never been a historical era where crony capitalism did not largely rule the roost. Has there been in American history? What were the results?

Eran wrote:As for the treatment of employees, employers in a free society invariably improve the lives of their employees, at least in the eyes of those employees.


Come on, if that were the case then, initially, during the Industrial Revolution, Marxism, socialism, unions, organized labor etc. would never have gotten a toehold. And in the modern era corporations rely on government safety nets to keep the political reprecussions regarding their more egregious policies ever at a low boil. And the corporate media is always there to steer the discussion in the direction of the lesser of two evils.

Eran wrote:I have recently visited Vietnam and had a chance to ask people about their attitude towards shoe factories, often decried in the west as "sweat shops". Locally, people are eager to have those factories open, and seek employment in them because the terms of employment are better than any alternative open to them.


Yes, when the alternative is nothing at all, the sweat shops look mighty nice. But that doesn't justify the brutally explotative policies. And the ruling class in places like Vietnam and China are a crony capitalist's wet dream. American corporations drool over this kind of dictatorship over the proletariate.

Now, don't get me wrong. I'm no Communist. I recognize that the capitalist political economy is the worst one out there---except for all the others. But the apologists for capitalism refuse to acknowledge just how brutal a world this can be when the "bottom line" is always the number one consideration.

Eran wrote:An employer who treated his employees in a way that, overall, represented a package that was worse than alternatives available to them would quickly run out of employees.


Wasn't it Jay Gould who once said, "I can hire half the working class to kill the other halve"? Many an employer will treat his or her employees with as much disregard as he or she can get away with. The Ayn Randroids love to portray their working class heros as the ones employed by magnates like Hank Reardon. But Atlas Shrugged was basically a caricature of a cartoon in my view.

And it's not that capitalists are necessarily callous and uncaring sorts. It's just the very nature of the political economy. Fierce competition requires each employer to pay as little as possible in wages and benefits. It's the very nature of the beast to be exploitative.

iambiguous wrote:

One need but Google the Industrial Revolution to note why unions and communism became so popular. Capitalism is notorious for creating the very conditions that preciptate the politcial and economic interests that oppose it.

Eran wrote:The industrial revolution helped lift millions of people from the horrible life of subsistence farming to a life that was much better, giving them stable income and allowing them to afford what was previously considered luxuries. Dickensian myths notwithstanding, ask yourself why people chose to work in factories? Why didn't they stay in the farms in which their parents slaved all their lives?


Again, I don't deny there are two sides to this story. But I challenge anyone to investigate the conditions under which millions of working class men, women and children lived back then and then wonder why communism and organized labor burst onto the historical stage with a vengence in tandem.

Also, you ignore the psychological travails built into contraptions like Taylorism and the brutal alienation that is, in turn, built into production that is rationalized down to its most minute parts. It allows for extraordinary advances in production, of course, but it doesn't lessen the mental costs born by those doing the production.

Eran wrote:I agree that historical analysis is often complicated by the interplay between government and private forces. Still, being complicated doesn't mean such analysis is impossible.


It is possible of course but we inevitably bump into Disraeli's, "there are lies, damn lies and statistics." No matter your political stake in arguments like these you can always come up with "facts" and "anecdotes" to "win" the argument.

Eran wrote:Consider different societies with different degrees of government involvement. Other things being equal, the less government, the more prosperity.


Yes, but China may well be the future and here the government and the economy are often interchangable. It may come down to a contest between different renditions of crony and/or state capitalism. Laizze-faire capitalism? It is no where to be seen.

Eran wrote:Or consider different sectors of the economy. The more government involvement (health, education), the worse the performance. Contrast those with food supply and high-tech.


Again, bring out the statistics! America is the only industrial nation that does not deem health care to be a fundamental right of its citizens. And for every "horror story" you can pluck down from Canada, there are at least as many or more such calamities here in America.

Eran wrote:As for the first paragraph, it is, of course, correct. The perspective I am defending, specifically, sees government as a pure evil, without ANY redeeming features whatsoever.


Again, bring out the anecdotes! These "metaphyscal", Objectivist arguments are so purely ideological it is simply not challenging to address them. Any number of untold millions of men, women and children have benefitted from government programs. And, as always, it is the "fit" that counts. And everyone sees this from differing historical, cultural and experential perspectives. To imagine government being reduced down to practically nothing is simply infantile in my view.

iambiguous wrote:

The concern I always have is the manner in which capitalism and the government are just two ways of saying the same thing. At least here in the US of A.

Eran wrote:They are always intertwined, but not in uniform amounts. Even if abolishing government is currently an unrealistic goal, reducing its size and involvement (or at least preventing its growth) is not.


Abolishing the government is so close to la la land it is not even worth the time to consider; and reducing it is always neck and neck historically with expanding it. in my view, you need to put a leash on that intellectual leash you use to divide the world up into...patriots and pinheads?

And, like Glenn Beck, do you have an absolute opinion on God too?
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Re: Two Myths about Capitalism

Postby iambiguous » Mon Jan 03, 2011 2:00 am

Just bumped into this over at the Huff Post from the New York Times:

By ERIC LIPTON and NICOLA CLARK

The king of Saudi Arabia wanted the United States to outfit his personal jet with the same high-tech devices as Air Force One. The president of Turkey wanted the Obama administration to let a Turkish astronaut sit in on a NASA space flight. And in Bangladesh, the prime minister pressed the State Department to re-establish landing rights at John F. Kennedy International Airport in New York.

Each of these government leaders had one thing in common: they were trying to decide whether to buy billions of dollars’ worth of commercial jets from Boeing or its European competitor, Airbus. And United States diplomats were acting like marketing agents, offering deals to heads of state and airline executives whose decisions could be influenced by price, performance and, as with all finicky customers with plenty to spend, perks.


Here is how capitalism actually works out in the world. It is crony down to the bone.

This is from wikileaks, of course. And the powers that be will do anything to shut it down because the leaks expose the huge gap between how the US portrays its foreign and economic policies and how they really unfold instead. You tell me: where does Washington end and Wall Street begin?
He was like a man who wanted to change all; and could not; so burned with his impotence; and had only me, an infinitely small microcosm to convert or detest. John Fowles

Start here: viewtopic.php?f=1&t=176529
Then here: viewtopic.php?f=15&t=185296
And here: viewtopic.php?f=1&t=194382

"Gail, it’s as if someone dared 2020 to get worse, and 2020 replied: 'Just try me.' Right now I’m just sitting on my porch, awaiting a plague of locusts." Bret Stephens
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Re: Two Myths about Capitalism

Postby Eran » Mon Jan 03, 2011 9:21 am

Ganapati wrote:
Eran wrote:Do you honestly believe the American Revolution was the result of people being persuaded that independence from Great Britain will result in short-term prosperity? Or was it motivated by the idea (or ideology) of freedom and independence?

You must be kidding, right?

The American Revolution was not about freedom or independence. It was about power. Their demand "no taxation without representation" was to be represented in the English Parliament, not to govern themselves freely. Even that was an excuse. About the only tax that the Crown levied at the time of the revolt was tax on tea.

That after gaining power they claimed to have been motivated by ideals like liberty and antipathy to monarchy etc are testimonials to their dishonest and devious nature that continues till date. There is nothig more disgusting than slave-owners like George Washington and Thomas Jefferson waxing eloquent about "individual liberty"!

Historic events such as the American Revolution involve many people, each with their own understanding and motivation. The leaders of the revolution may have been motivated by the desire for power. They would never have been successful, however, without the support of a large fraction of ordinary Americans. It is the ideology those ordinary Americans believed in to which I was referring.

Being represented in the English Parliament wouldn't have realistically resulted in a reduction in the (very minor) taxes to which the colonists were subjected. Rather, it was a manifestation of what they considered political freedom - the right to be represented.

Subsequently, the goal changed to become total independence. Again, I would argue that for most people, total independence represented an aspect of political freedom, rather than the expectation of an improved standard of living.

The masses never had, nor expected, to have power, except in the democratic sense. What the motivation of their leaders was is beside my point which is that people can and often have been motivated by ideologies that do not promise immediate material reward.
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Re: Two Myths about Capitalism

Postby Ganapati » Mon Jan 03, 2011 11:38 am

Eran wrote:Historic events such as the American Revolution involve many people, each with their own understanding and motivation. The leaders of the revolution may have been motivated by the desire for power. They would never have been successful, however, without the support of a large fraction of ordinary Americans. It is the ideology those ordinary Americans believed in to which I was referring.

Being represented in the English Parliament wouldn't have realistically resulted in a reduction in the (very minor) taxes to which the colonists were subjected. Rather, it was a manifestation of what they considered political freedom - the right to be represented.

Subsequently, the goal changed to become total independence. Again, I would argue that for most people, total independence represented an aspect of political freedom, rather than the expectation of an improved standard of living.

The masses never had, nor expected, to have power, except in the democratic sense. What the motivation of their leaders was is beside my point which is that people can and often have been motivated by ideologies that do not promise immediate material reward.

Will you have me believe that American people were motivated by a desire to "liberate Iraqis from oppression" or that they feared Saddam's "WMD" were a theat to them as well? I lived in the US right upto the invasion of Iraq in 2003 and one thing I saw whenever Iraq was mentioned on the TV, irrespective of what channel it was, was that it had the second largest oil reserves in the world. The funny thing was George W Bush, after the invasion, practically joked aboout "WMD" by searching for them under his desk in the oval office and everyone got to see how the "liberators" were "welcomed with flowers". Yet 59 million people (52%) chose to return him to power in November 2004. Are you saying the motivations of Americans a couple of centuries ago were drastically different from those living today? If so, what are the grounds for believng that?
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Re: Two Myths about Capitalism

Postby Ganapati » Mon Jan 03, 2011 12:30 pm

quetzalcoatl wrote:
The cumulative purchasing power of the middle-class far exceeds that of the wealthy. Most large corporations exist by catering to the needs and desired of lower and middle class people
.

Top 1% of households has 47% of the wealth [in america], 80% have 7% of the wealth, clearly the top 1% has the greater purchasing power. However you are right [ “..needs and desires of lower and middle class..” ] in that those corporations sell lots of products and hence need lots of people to sell them to. This is exactly my argument for redistribution of wealth, the more spending power that group has the healthier the economy.
What we are forgetting here is that the top 1% and 20% are they who do the major investing, almost every nation in the world is in massive debt and to whom ~ well to these extraordinarily rich people. Hence the centralising element [national debt and banking generally] creates a wealth far greater than the GDP’s of nations, and it is mostly harvested by that tiny minority. purchasing power!? they buy and own massive shares in the worlds businesses.

From your own statement it appears the only things that can be redistributed are the shares in the world's businesses since that is about the only thing the wealthy own and the rest don't. What difference do you expect such a redistribution to make to the actual goods and services in the economy?
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Re: Two Myths about Capitalism

Postby Amorphos » Tue Jan 04, 2011 2:27 am

From your own statement it appears the only things that can be redistributed are the shares in the world's businesses since that is about the only thing the wealthy own and the rest don't. What difference do you expect such a redistribution to make to the actual goods and services in the economy?


The proportions of difference can be changed, people in the third world paid a reasonable amount etc, I want to increase people ability to be self sufficient. More importantly the national debts could be cut greatly and only affect that top !%.

I do understand that the national debt creates growth, but in times like these it is strangling the more unstable economies. Every nation should have the same credit ratings, otherwise the poorer nations are paying back a greater proportion and hence are adding more to the global wealth pool, equally the richer nations borrow at a lower rate and hence pay less proportionally into that pool whilst also being able to borrow more. Essentially this makes rich nations richer and poor nations poorer, and the poor nations contribute to the wealth of the rich at a detriment to their own economies!

It is exactly the same for individuals, the whole process of capitalisation/centralisation of wealth is what creates such vast differences and instability in the world.
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Re: Two Myths about Capitalism

Postby xhightension » Tue Jan 04, 2011 9:49 am

it depends on how one interprets power. The wealthy will have more leverage, but the rebellion of millions can trample that weak, big-shot CEO
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Re: Two Myths about Capitalism

Postby Calrid » Tue Jan 04, 2011 11:12 am

Capitalism is a religion and its temples are its banks and the priests and high priests politicians and corporate chairmen.

Their have always been the wealthy and the poor, what there has never been is any real will to do anything about it.

"The problem with the poor is poverty, the problem with the rich is uselessness."

GBS

There are responsible ways of making money and then their are the psychopaths who run corporate monopolies whos only wish is to get richer only for the sake of it like some vapid blood sucking often non tax paying twat.

You don't want to be a responsible member of a responsible society fine go live on an Island who the hell cares about Libertarians anyway, it's either just communism with a rebrand or capitalism for sharks.
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Re: Two Myths about Capitalism

Postby Eran » Tue Jan 04, 2011 11:28 am

Ganapati wrote:Will you have me believe that American people were motivated by a desire to "liberate Iraqis from oppression" or that they feared Saddam's "WMD" were a theat to them as well? I lived in the US right upto the invasion of Iraq in 2003 and one thing I saw whenever Iraq was mentioned on the TV, irrespective of what channel it was, was that it had the second largest oil reserves in the world. The funny thing was George W Bush, after the invasion, practically joked aboout "WMD" by searching for them under his desk in the oval office and everyone got to see how the "liberators" were "welcomed with flowers". Yet 59 million people (52%) chose to return him to power in November 2004. Are you saying the motivations of Americans a couple of centuries ago were drastically different from those living today? If so, what are the grounds for believng that?

The latter. Early support for the Iraqi war was based on the belief that Saddam both possessed an advanced WMD program, and was likely to use them or make them available for use against the US. The American administration propagated this false belief precisely because it was critical for the early popular support of the war. There was a secondary, implicit, thread that hinted at the amount of oil in Iraq, but I don't recall any explicit reference to that oil, nor to the way in which the war was supposed to advance American interests vis-a-vi the oil.

The story changed quickly after the invasion, as not trace of WMDs was found, by which time the "liberation" story was tried (and failed) to rally popular support. By that time, though, the war had its own momentum, as wars often do.

I think there is a drastic difference (as you would expect) between the American Revolutionary War and any subsequent American war. The Iraqi war, much like WWII and the Cold War was "sold" as an essential step to protect American security. I am not sure the extent to which similar lies were used to justify previous wars of aggression by the Americans. Conceivably, naked economic interests would have been more acceptable in the past than they are today.

Normally, more sophisticated discussions of the causes of War go beyond superficial popular motivation and explore the interests and motives of the leaders, political and public opinion. In the context of such discussion, I would share your perspective. Our current discussion, though, grew directly from a consideration of what popular opinion may be based on.
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Re: Two Myths about Capitalism

Postby Eran » Tue Jan 04, 2011 11:36 am

quetzalcoatl wrote:What would stop successful companies from continuing to grow? E.g. where a supermarket buys up farms and suppliers, how can anything smaller compete with that? if they did what would stop them from buying said small business?

The answer is "diseconomies of scale". Large companies tend to lose their competitive edge, despite lower costs.
In a previous post, I wrote:
Eran wrote:The answer, I think, is that economies of scale are counteracted by "diseconomies of scale". Large businesses suffer from the same problems that governments do. They lack the flexibility to react to local conditions. They lose the benefit of the price mechanism to efficiently allocate internal resources. They have entrenched "elites" (management) whose personal interests may not be aligned with those of the business as a whole. They may not properly incentivised internal innovation. They tend towards a sense of complacency. They certainly hold no monopoly on innovation within their area.

For all those reasons (and others), even large, previously-successful and seemingly-entrenched businesses routinely decline, fail and even go out of business. Who would have thought, in the '70s, that an upstart like Microsoft could overtake IBM? In the '90s that Google could overtake Microsoft? In each case, the incumbent enjoyed numerous advantages, including reputation, economies of scale, large R&D departments, and a solid capital base.
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Re: Two Myths about Capitalism

Postby Eran » Tue Jan 04, 2011 12:04 pm

iambiguous wrote:
Eran wrote:Even mainstream economists agree that the Fed's low rate policy in the early years of the previous decade played a critical role in fanning the housing bubble. Other government policies (e.g. creating moral hazard by rescuing financial institutions) are also involved. There is absolutely no evidence that pure free markets involve business cycles.


Perhaps that's because there has never been a historical era where crony capitalism did not largely rule the roost. Has there been in American history? What were the results?

American history never included an era in which Banking was free, but other countries, including Scotland and Canada, had broadly free banking systems. In those cases, there were no major booms and busts. Those eras ended by legislative fiat, serving the interests of government (namely the benefit of monopolising the money supply for political purposes).

The US did have an era, in the second half of the 19th century, in which industrial production was largely free. The era corresponded to unprecedented growth and prosperity, including improvement in the overall standard of living without any of the doomsday scenarios regarding disenfranchisement of the poor or the impact of monopolization currently associated with laissez-faire economies.

iambiguous wrote:
Eran wrote:As for the treatment of employees, employers in a free society invariably improve the lives of their employees, at least in the eyes of those employees.


Come on, if that were the case then, initially, during the Industrial Revolution, Marxism, socialism, unions, organized labor etc. would never have gotten a toehold. And in the modern era corporations rely on government safety nets to keep the political reprecussions regarding their more egregious policies ever at a low boil. And the corporate media is always there to steer the discussion in the direction of the lesser of two evils.

Marxism never did get a toehold amongst the people supposedly its most ardent beneficiaries - the industrial working class. It has become popular with the intelligencia, as well as the oppressed peasants of Russia and, later, China and elsewhere.

Unions and Organized Labour are a more recent development. That people want to improve their situation further by use of force (the upshot of the labour movement) is neither a surprise, nor an indication that they are mistreated. By the same logic, crony-capitalism is a "proof" that capitalists are being exploited in our current system!

iambiguous wrote:
Eran wrote:I have recently visited Vietnam and had a chance to ask people about their attitude towards shoe factories, often decried in the west as "sweat shops". Locally, people are eager to have those factories open, and seek employment in them because the terms of employment are better than any alternative open to them.


Yes, when the alternative is nothing at all, the sweat shops look mighty nice. But that doesn't justify the brutally explotative policies. And the ruling class in places like Vietnam and China are a crony capitalist's wet dream. American corporations drool over this kind of dictatorship over the proletariate.

Now, don't get me wrong. I'm no Communist. I recognize that the capitalist political economy is the worst one out there---except for all the others. But the apologists for capitalism refuse to acknowledge just how brutal a world this can be when the "bottom line" is always the number one consideration.

The alternative is not "nothing at all", but rather the subsistence farming these people have been engaged in for many generations. Industrial development helped and continues to help lift people out of horrible poverty into relative prosperity.

The same story held in 19th century and early 20th century Europe and America, without the political system of China and Vietnam. That some people are indeed violently exploited by government is nothing new, but doesn't take away from the fact that the vast majority of workers in such factories go there voluntarily, even enthusiastically. What evidence do you have to suggest that "brutal exploitation" is taking place?

iambiguous wrote:
Eran wrote:The industrial revolution helped lift millions of people from the horrible life of subsistence farming to a life that was much better, giving them stable income and allowing them to afford what was previously considered luxuries. Dickensian myths notwithstanding, ask yourself why people chose to work in factories? Why didn't they stay in the farms in which their parents slaved all their lives?


Again, I don't deny there are two sides to this story. But I challenge anyone to investigate the conditions under which millions of working class men, women and children lived back then and then wonder why communism and organized labor burst onto the historical stage with a vengence in tandem.

If only those same people bothered to give the same level of attention to the alternative available to those same people before they were thus "exploited"...

iambiguous wrote:Also, you ignore the psychological travails built into contraptions like Taylorism and the brutal alienation that is, in turn, built into production that is rationalized down to its most minute parts. It allows for extraordinary advances in production, of course, but it doesn't lessen the mental costs born by those doing the production.

I am not ignoring anything. Rather, I am deriving my deductions from the simple observation that people willingly signed up to work under those conditions. The conditions may seem unbearable to you and me, with our modern sensibilities and Western affluence. I can assure you they were far from unbearable to the people previously used to living on the edge of starvation.

iambiguous wrote:
Eran wrote:I agree that historical analysis is often complicated by the interplay between government and private forces. Still, being complicated doesn't mean such analysis is impossible.


It is possible of course but we inevitably bump into Disraeli's, "there are lies, damn lies and statistics." No matter your political stake in arguments like these you can always come up with "facts" and "anecdotes" to "win" the argument.

I am not actually using historic "facts" to make my argument. My argument is primarily based on sound logic - the idea that in a free society, people always act voluntarily, and, by definition and by their won standards act to improve their lot. That your standards are different from yours is besides the point.

Historic anecdotes are used as illustration, not as proof.

iambiguous wrote:
Eran wrote:Consider different societies with different degrees of government involvement. Other things being equal, the less government, the more prosperity.


Yes, but China may well be the future and here the government and the economy are often interchangable. It may come down to a contest between different renditions of crony and/or state capitalism. Laizze-faire capitalism? It is no where to be seen.

If you are looking for an ideal, you won't find it. But again, compare the economic performance of China before and after Capitalist reformation. Compare North and South Korea, East and West Germany, China and Hong Kong, Chile and Venezuela. Everywhere you look, more economic freedom corresponds to increased prosperity for all.

iambiguous wrote:
Eran wrote:Or consider different sectors of the economy. The more government involvement (health, education), the worse the performance. Contrast those with food supply and high-tech.


Again, bring out the statistics! America is the only industrial nation that does not deem health care to be a fundamental right of its citizens. And for every "horror story" you can pluck down from Canada, there are at least as many or more such calamities here in America.

I am not talking statistics, but broad public perception. And note - I didn't bring American Health Care as a shining example of free markets. On the contrary - the American Health Care system exhibits deep government involvement, hence its perceived (and real) failures.

iambiguous wrote:
Eran wrote:As for the first paragraph, it is, of course, correct. The perspective I am defending, specifically, sees government as a pure evil, without ANY redeeming features whatsoever.

Any number of untold millions of men, women and children have benefited from government programs.

I would be happy to hear of a single case in which government program benefited people more than it harmed them.

The infantile thing is to imagine that just because government takes care of X in our society, no government means nobody will take care of X. A Soviet iambiguous might have argued that since government provides food to the people, everybody would starve without government. In the West, the private market does an excellent job of providing cheap, varied and healthy food to all.

Without government help, the poorest people in India and Africa manage to educate their children (see "A Beautiful Tree"). There is no doubt that the much wealthier people of the West could do the same. Without government involvement in Health, Charity, Security and Roads, private companies will compete to provide far superior services.

Again, I am not relying on statistics or historic anecdotes, but on sound logic, which I will be happy to explore with you.

iambiguous wrote:
Eran wrote:They are always intertwined, but not in uniform amounts. Even if abolishing government is currently an unrealistic goal, reducing its size and involvement (or at least preventing its growth) is not.


Abolishing the government is so close to la la land it is not even worth the time to consider; and reducing it is always neck and neck historically with expanding it. in my view, you need to put a leash on that intellectual leash you use to divide the world up into...patriots and pinheads?

And, like Glenn Beck, do you have an absolute opinion on God too?
[/quote]
If abolishing government is too much for you to consider (don't feel bad - you are not alone in that), how about starting by reducing government's role? Is it also "la-la land" to consider less or no government involvement in regulating every tiny aspect of our lives, from health and education to zoning, transportation, energy, foreign trade, labour relations, money supply, banking, etc, etc?

How about scaling back government to its level of only a generation or two ago? Also la-la land?

And yes, like Glenn Beck, I have an absolute opinion on God. My opinion on God, however, is the exact opposite of his. If I would attached the label "la-la land" to anything, it would be to the variety of religious beliefs generally venerated in our society.
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Re: Two Myths about Capitalism

Postby Eran » Tue Jan 04, 2011 12:12 pm

xhightension wrote:it depends on how one interprets power. The wealthy will have more leverage, but the rebellion of millions can trample that weak, big-shot CEO

Or, to take a slightly more charitable view, the wealthy have more options. However, the large-scale allocation of resources in society is geared towards satisfying the needs of the many, not the few.

Most importantly, without political power to leverage, the wealthy have very limited power over the poor. A minor government official can have power over your life (as when you need his signature on some pesky form). However, even Bill Gates cannot tell you what to do, or stop you from doing what you want with your property. In that sense, nobody has power over others in a free society (that's why it is called free). Not even the richest.
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Re: Two Myths about Capitalism

Postby Amorphos » Tue Jan 04, 2011 8:23 pm

The answer is "diseconomies of scale". Large companies tend to lose their competitive edge, despite lower costs.
In a previous post, I wrote:


Good points there, in the past did not the small businesses simply get bought out by the larger ones [or pushed out by other means]?

Equally if you don’t have govt stopping unions from having power, then surely we would end up with unions being all-powerful. If the markets were left to their own you simply get a power shift left or right.
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Re: Two Myths about Capitalism

Postby Eran » Tue Jan 04, 2011 10:04 pm

quetzalcoatl wrote:
The answer is "diseconomies of scale". Large companies tend to lose their competitive edge, despite lower costs.
In a previous post, I wrote:


Good points there, in the past did not the small businesses simply get bought out by the larger ones [or pushed out by other means]?

Equally if you don’t have govt stopping unions from having power, then surely we would end up with unions being all-powerful. If the markets were left to their own you simply get a power shift left or right.

In a free Market, there are "other means" beyond attracting your competitors' customers by offering better products at lower prices.

Depending on the specific circumstances, a larger company may or may not be able to attract enough of its small competitors' consumers.

Sure, a large company could try to buy out competitors. But as soon as tries to raise prices, new competitors will enter. Standard Oil tried to monopolise the oil industry in the 19th century. It failed.

As for labour unions, they invariably base themselves on using violence to prohibit non-members from taking the jobs at the terms members reject. In a free society, labour unions couldn't exist, let alone grow unchecked.
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Re: Two Myths about Capitalism

Postby Amorphos » Tue Jan 04, 2011 11:04 pm

In a free Market, there are "other means" beyond attracting your competitors' customers by offering better products at lower prices.


Indeed, like e.g. specialisation. Though we have seen with supermarkets they are happy to expand into those areas, but are never the less limited.

Depending on the specific circumstances, a larger company may or may not be able to attract enough of its small competitors' consumers.


Yes but in many cases e.g. food, electrical, raw materials and furnishings etc they can. As long as they hold the major market share they control power.

Sure, a large company could try to buy out competitors. But as soon as tries to raise prices, new competitors will enter. Standard Oil tried to monopolise the oil industry in the 19th century. It failed.


True but they can keep prices lower ~ out of reach for smaller competitors.

As for labour unions, they invariably base themselves on using violence to prohibit non-members from taking the jobs at the terms members reject. In a free society, labour unions couldn't exist, let alone grow unchecked.


True again, if a big company simply sacks all its workers when they ask for a raise or don’t capitulate on cuts etc, then unions feel they have to picket lines to stop the new workers from replacing them. So you need a govt to stop them doing that, …by force! Somehow you have to stop both unions and cooperative collectives in order for a free-market to exist, and that means it is not a free market?
If workers don’t have some measure of response then employers would pay them the minimum they could, and without govt induced minimum wage that could be very little indeed ~ especially as there are always plenty of workers.
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Re: Two Myths about Capitalism

Postby Eran » Tue Jan 04, 2011 11:18 pm

As long as a large company keeps its prices low and its consumers happy, what "power" are you concerned about?

As for unions, consider an analogy. Say you own a grocery store, and a competitor opens another one across the street and offers lower prices. Would you be justified in forming a picket line and violently stopping your clients from shopping at your competitor? Wouldn't your competitor be justified in using force to defend its property?

Unions do not fight employers. That's an illusion. Unions use violence to prevent their competitors - non-members. That's wrong. The employers are perfectly justified using force to protect their property, as well as any "scabs".

Using force to protect property rights is part of the free market. It doesn't make it unfree.

As for pay levels, those depend asymptotically on the marginal productivity of the workers. As I tried to explain in e thread on prices, at the market clearing price, the quantity offered is equal to the quantity demanded. That is true with respect to shoes (no surplus and no shortages). It is also true with respect to workers. At the correct wage level, there are no "plenty of workers". In fact, employers compete for each other to attract employees.

The proof is simple - most workers, in the US and elsewhere, are neither unionised nor work at minimum wage. How do you explain that? Why does Walmart, for example, pay its employees more than minimum wage?
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Re: Two Myths about Capitalism

Postby Amorphos » Wed Jan 05, 2011 12:11 am

As long as a large company keeps its prices low and its consumers happy, what "power" are you concerned about?


Wage hierarchies, we seam to be heading toward a dualistic society of mass MW workers and all important bosses and entrepreneurs, if ‘power’ goes to the latter this would only increase. Surely it would be better if power and wealth were distributed better ~ more evenly, such that all or most people are then independent [self sufficient] and one man doesn’t have to provide for the next? For me this is a fundamental requirement of individualism and market anarchism.

As for unions, consider an analogy. Say you own a grocery store, and a competitor opens another one across the street and offers lower prices. Would you be justified in forming a picket line and violently stopping your clients from shopping at your competitor? Wouldn't your competitor be justified in using force to defend its property?


Indeed, but people would form collectives where it gives them power and better wages, unless they are forcibly stopped. Consider another analogy; your boss demands that in order to compete you must take a wage cut and would not then be self sufficient, yet he gives himself a massive cut/share of the profits as his own wage. There are only 7 people working in your small business and he pays himself the equivalent of all their wages, he could spread the wealth more evenly and make up the difference between that company and the competetor, or sack you/cut all wages. Surely you need some means by which to force a fair resolution to the matter?

Using force to protect property rights is part of the free market. It doesn't make it unfree.


Sure but define property; the proportion of gross profits which go to the worker, bosses and to centralising factors [banks, investors, national debt etc] are constantly redefined, in this is where ‘power’ lies. Each side in the equation should have accountability thus workers need unions, bosses need fair investment [is short selling fair?] and banking.

I was watching american football and a guy said that the owners may move a team to another location, and yet most of its money derives from the local supporters. We could say that they invested in the team every time they bought a ticket, and yet the only investors that count are the owners. What I am asking is if all contributions to a given effort are an investment? If they were considered so then the supporters would all have a stake in such companies, just as a worker should have a stake in a company.

As for pay levels, those depend asymptotically on the marginal productivity of the workers. As I tried to explain in e thread on prices, at the market clearing price, the quantity offered is equal to the quantity demanded. That is true with respect to shoes (no surplus and no shortages). It is also true with respect to workers. At the correct wage level, there are no "plenty of workers". In fact, employers compete for each other to attract employees.
The proof is simple - most workers, in the US and elsewhere, are neither unionised nor work at minimum wage. How do you explain that? Why does Walmart, for example, pay its employees more than minimum wage?


Well woolmart just as any other supermarket pay a small amount over MW, which is nowhere near enough to be self sufficient. My wife works in the local coop and sees how much they take every day, and believe me they could pay far more. Now to the supermarket more pay would be less profits, but to you it means you pay more tax so that my wife’s wage is brought up to the given level via working tax credits. Universally speaking would it not be better if such employers paid a more reasonable wage so that YOU don’t have to supplant that wage with the rewards of your efforts?
The workers do most effort for what occurs in such companies, even management are on relatively low wages, the top bosses do very little of the effort but gain the most from the profits. If the most of the economy went by a similar model then most people would have very little to buy products with, and their wages supplanted with wealth from others or we would end up back in Victorian times.

Market anarchism to me means fair shares for all from bosses to workers, basically because I don’t want to pay for other peoples wealth [bosses or workers]. :)


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Re: Two Myths about Capitalism

Postby Ganapati » Wed Jan 05, 2011 7:58 am

Eran wrote:
Ganapati wrote:Will you have me believe that American people were motivated by a desire to "liberate Iraqis from oppression" or that they feared Saddam's "WMD" were a theat to them as well? I lived in the US right upto the invasion of Iraq in 2003 and one thing I saw whenever Iraq was mentioned on the TV, irrespective of what channel it was, was that it had the second largest oil reserves in the world. The funny thing was George W Bush, after the invasion, practically joked aboout "WMD" by searching for them under his desk in the oval office and everyone got to see how the "liberators" were "welcomed with flowers". Yet 59 million people (52%) chose to return him to power in November 2004. Are you saying the motivations of Americans a couple of centuries ago were drastically different from those living today? If so, what are the grounds for believng that?

The latter. Early support for the Iraqi war was based on the belief that Saddam both possessed an advanced WMD program, and was likely to use them or make them available for use against the US. The American administration propagated this false belief precisely because it was critical for the early popular support of the war. There was a secondary, implicit, thread that hinted at the amount of oil in Iraq, but I don't recall any explicit reference to that oil, nor to the way in which the war was supposed to advance American interests vis-a-vi the oil.

The story changed quickly after the invasion, as not trace of WMDs was found, by which time the "liberation" story was tried (and failed) to rally popular support. By that time, though, the war had its own momentum, as wars often do.

If that were true, wouldn't people have felt cheated to have been lied to and being led into such a horrible action and thrown George W Bush out for that reason alone? Why would he get 52% vote?

As for oil, you are right: no explicit reference was ever made or how it was suppoed to benefit Americans nor was one needed. Almost every American knew the benefits to USA of controlling an oil-rich country, the case didn't have to be made explicitly. Just mention what the size of the potential prize is and people will make the connection which is exactly what the press did in the run up to the invasion.
I think there is a drastic difference (as you would expect) between the American Revolutionary War and any subsequent American war. The Iraqi war, much like WWII and the Cold War was "sold" as an essential step to protect American security. I am not sure the extent to which similar lies were used to justify previous wars of aggression by the Americans. Conceivably, naked economic interests would have been more acceptable in the past than they are today.

It was naked economic interests that led to the revolution too.
Normally, more sophisticated discussions of the causes of War go beyond superficial popular motivation and explore the interests and motives of the leaders, political and public opinion. In the context of such discussion, I would share your perspective. Our current discussion, though, grew directly from a consideration of what popular opinion may be based on.

When wars were the exclusive past time of the elite, ordinary people's involvement is minimal. The elite didn't even have to justify wars to the people. But as people's involvement in the affairs of the society grows and they are in a position to support or oppose, they become accountable too.

It is disingenious for people to continue to approve an elite when an opportunity arises, but dissociate themselves from their actions. If the elite cannot be trusted with absolute power to rule over you, why would you trust them with absolute power (that comes with a military invasion) over others who are weak merely because they claim to be spreading some lofty ideals?
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Re: Two Myths about Capitalism

Postby Calrid » Wed Jan 05, 2011 8:02 am

"Naturally the common people don't want war: Neither in Russia, nor in England, nor for that matter in Germany. That is understood. But, after all, IT IS THE LEADERS of the country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is TELL THEM THEY ARE BEING ATTACKED, and denounce the peacemakers for lack of patriotism and exposing the country to danger. IT WORKS THE SAME IN ANY COUNTRY."

--Goering at the Nuremberg Trials

Says it all really.
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Re: Two Myths about Capitalism

Postby Eran » Wed Jan 05, 2011 10:24 am

quetzalcoatl wrote:
As long as a large company keeps its prices low and its consumers happy, what "power" are you concerned about?


Wage hierarchies, we seem to be heading toward a dualistic society of mass MW workers and all important bosses and entrepreneurs, if ‘power’ goes to the latter this would only increase. Surely it would be better if power and wealth were distributed better ~ more evenly, such that all or most people are then independent [self sufficient] and one man doesn’t have to provide for the next? For me this is a fundamental requirement of individualism and market anarchism.

I am not sure where you see signs for a "dualistic society". In any event, market anarchism, by definition, means allowing free market forces to act without any attempt at central direction.

One of the myths I was trying to exposure in the OP was the link between wealth and power. Only government can translates wealth into power. In a free society, wealth gives you options, but not power over others.

You also refer to being independent (self sufficient) which I take to be in the economic sense of being self-supporting. Every able-bodied person in the West can easily be self-supporting. If there is a minimum amount of income required, it is much below what almost anybody can earn. Discussions over the poorest members of Western societies are not about survival, but about the maintenance of a standard of living which would be envied by both billions of people around the world, and our own ancestors only a generation or two ago.

quetzalcoatl wrote:Indeed, but people would form collectives where it gives them power and better wages, unless they are forcibly stopped.

Who ever forcibly stopped anybody from forming collectives? Some collectives are viable, but most are not. That's the reason they are not common. I have absolutely no objection to collectives, and I don't know any free market capitalist who does.

quetzalcoatl wrote:Consider another analogy; your boss demands that in order to compete you must take a wage cut and would not then be self sufficient, yet he gives himself a massive cut/share of the profits as his own wage. There are only 7 people working in your small business and he pays himself the equivalent of all their wages, he could spread the wealth more evenly and make up the difference between that company and the competitor, or sack you/cut all wages. Surely you need some means by which to force a fair resolution to the matter?

Let's assume, for the purpose of this discussion, that your boss owns the business in question. It is his business. He has a right to hire and fire at will (subject only to the terms of any employment contract). By the same token, you have the right to leave him and work for a better company, or start your own business. This is the meaning of a free market.

As I previously indicated, at the market wage level, there is no excess of employees. In fact, employers have to compete to attract employees. Abusive bosses will soon find themselves either without employees, or having to pay up to make up for ill-treating their employees.

quetzalcoatl wrote:
Eran wrote:Using force to protect property rights is part of the free market. It doesn't make it unfree.


Sure but define property; the proportion of gross profits which go to the worker, bosses and to centralising factors [banks, investors, national debt etc] are constantly redefined, in this is where ‘power’ lies. Each side in the equation should have accountability thus workers need unions, bosses need fair investment [is short selling fair?] and banking.

I'd be happy to define property. By far the most important two things you need to appreciate about property are: (1) each person unconditionally owns their own body, including the labour of their own body, and (2) people ought to be free to voluntarily exchange their property with the property of others.

The vast majority of wealth in our society has been created by people's labour, and justly belongs to the people who created it. Assuming your boss started the business himself, the business belongs to him. You and he have voluntarily contracted to exchange property - his money for your labour. There is not correct "proportion" that needs to go to workers, management or owners. It is purely a function of their voluntary agreements.

quetzalcoatl wrote:
Eran wrote:As for pay levels, those depend asymptotically on the marginal productivity of the workers. As I tried to explain in e thread on prices, at the market clearing price, the quantity offered is equal to the quantity demanded. That is true with respect to shoes (no surplus and no shortages). It is also true with respect to workers. At the correct wage level, there are no "plenty of workers". In fact, employers compete for each other to attract employees.
The proof is simple - most workers, in the US and elsewhere, are neither unionised nor work at minimum wage. How do you explain that? Why does Walmart, for example, pay its employees more than minimum wage?


Well Walmart just as any other supermarket pay a small amount over MW, which is nowhere near enough to be self sufficient.

But why would Walmart pay even a dime over MW? If there are so many workers, why would they bother?

The answer, of course, is that Walmart, like all employers, is working hard to attract good employees, paying them in competition to other employers. Again, there is not set amount which is enough to be "self sufficient". It is a function of the standard of living to which you aspire. People need to be realistic, and aim at a standard of living which they can afford. Then, any working person can be "self sufficient".

quetzalcoatl wrote:My wife works in the local coop and sees how much they take every day, and believe me they could pay far more.

Unless your wife works as an accountant (and possibly even then), you, with all due respect, can have no clue of how much they could pay. Do you really know how much the coop pays in rent (or mortgage interest), energy bills, promotions, suppliers, banks, taxes, regulatory compliance expenses, and more taxes? Do you know how much money has to be set aside for future expansion, to keep up with the competition? How much money is spent assuring the quality of the produce, identifying and selecting suppliers, deciding what products to buy and how to best display them? How about HR costs, including recruitment and management? Transportation? Accounting?

I know nothing about the supermarket business, except that it is a very competitive market, with actors constantly emerging and going out of business. I strongly doubt the coop could pay "far more" while still being a viable business.

quetzalcoatl wrote:Now to the supermarket more pay would be less profits, but to you it means you pay more tax so that my wife’s wage is brought up to the given level via working tax credits. Universally speaking would it not be better if such employers paid a more reasonable wage so that YOU don’t have to supplant that wage with the rewards of your efforts?

That sounds like a good argument against "tax credits". I would much rather we, as a society, based our support for less fortunate members on voluntary action. However, if we did have to use state coercion for income redistribution, I would much rather it was done as tax credits than by forcing the coop to overpay your wife. As I tried to explain in the thread On Prices, forcing the coop to pay more will result in fewer jobs, and possibly unemployment for your wife. Would you (or us as a society) be better off then?

quetzalcoatl wrote:The workers do most effort for what occurs in such companies, even management are on relatively low wages, the top bosses do very little of the effort but gain the most from the profits. If the most of the economy went by a similar model then most people would have very little to buy products with, and their wages supplanted with wealth from others or we would end up back in Victorian times.

Victorian times represented an era of rapid growth and progress, far superior to what preceded it. As to the situation you describe, who are the top bosses? Are they the owners? If so, they are reaping the reward of the hard work and investment that went into creating the business (if you think it is not hard to create a business, why don't more people, including yourself, just do it?). If the top bosses are not the ultimate owners, ask yourself why the ultimate owners choose to pay them so much for so little work. Isn't it possible that the owners know something you don't? After all, it is their money, not yours!

quetzalcoatl wrote:Market anarchism to me means fair shares for all from bosses to workers, basically because I don’t want to pay for other peoples wealth [bosses or workers]. :)

Market anarchism is not everything to everybody. Anarchism by definition means no government. Without government, all transactions are voluntary. That makes them, by definition, "fair" in my mind.
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Re: Two Myths about Capitalism

Postby Amorphos » Wed Jan 05, 2011 8:11 pm

Calrid

IT WORKS THE SAME IN ANY COUNTRY.


This is why accountability is key, leaders can only do that if they have power. Globalisation and national decentralisation would do the trick because it takes power away from any central force/person.

Eran

I am not sure where you see signs for a "dualistic society". In any event, market anarchism, by definition, means allowing free market forces to act without any attempt at central direction
.

The greater the difference between rich and poor the greater the duality, we could end up with a two tier society of low paid workers and managers, up against super rich bosses and corporates.
I agree about market anarchism in principle, not so sure in practice. Apart from that, how is it possible to remove the current centralising factors, there is virtually no way to get rid of national debts. The stock markets and investment banks also centralise. secondly the public sector VS the private sector is a duality in reasoning, really the public sector provides services that we need just as much of the private sector does. I dont see why it cannot be privatised as cooperatives and provide the same services.

One of the myths I was trying to exposure in the OP was the link between wealth and power. Only government can translates wealth into power. In a free society, wealth gives you options, but not power over others
.

Any kind of influence over others is power, some banking institutions are richer than some nations, even the model we use denotes the spread of power. Workers have little power because there are always large amounts of them [except for the more highly skilled etc], in a free market a boss can easily sack a worker and replace them with someone cheaper [= power], workers can gang up and make demands of bosses [= power]. I think we need govt not only to get democracy into the equation but also to balance all these forces, we also need more measures to bring accountability to govt ~ limit their power.

You also refer to being independent (self sufficient) which I take to be in the economic sense of being self-supporting. Every able-bodied person in the West can easily be self-supporting. If there is a minimum amount of income required, it is much below what almost anybody can earn. Discussions over the poorest members of Western societies are not about survival, but about the maintenance of a standard of living which would be envied by both billions of people around the world, and our own ancestors only a generation or two ago.


‘Self-supporting’ is what I meant yes. Good point you make about what that is, I would think the ability to have a car legally on the road and to pay a small mortgage or rent, then to have a reasonable amount for food, clothing etc is the bare minimum. You wont achieve that on minimum wage without working tax credits, then equally the more people whom live like that greater the austerity! Pay them more and they buy more, if we don’t want economies where people can buy lots of technology etc then we may as well be communists.
Would you not agree that essentially we create reasonable wealth and independence or we pay for that anyway? If individuals cannot self-support then you either end up with austerity or you pay for their lifestyles via taxes ~ which is the very means by which govt derives its power!

Who ever forcibly stopped anybody from forming collectives? Some collectives are viable, but most are not. That's the reason they are not common. I have absolutely no objection to collectives, and I don't know any free market capitalist who does.


Well e.g. farming cooperatives have limited success due to govt intervention in the common agricultural policy, other than that I agree. Even though collectives could be more efficient they need the right model to work effectively, however you will never get investors, banks and the like to invest in a system which takes their power away. This is my main concern with a small govt, only by govt could we ever employ an universal model which doesn’t work from the top down [the power hierarchy].

Let's assume, for the purpose of this discussion, that your boss owns the business in question. It is his business. He has a right to hire and fire at will (subject only to the terms of any employment contract). By the same token, you have the right to leave him and work for a better company, or start your own business. This is the meaning of a free market
.

Indeed that’s how it currently works ~ people at the top of any hierarchy have most of the power. In practice even in boom times it is difficult for people lower down the scale to mediate any power on those above them. You say its ‘his’ business, which I can see in terms of inventor/entrepreneurs yet often a business is attained hereditarily, more importantly a business is a set of relationships/agreements, if you don’t pay the workers a self-supporting wage then you pay for their upkeep via corporation taxes etc which endorses the state.
If you want to get rid of the state then you either create more poor people of you give them ‘all’ independence. If we don’t get past the selfish pov - if I may, we will never get past the need for a state and the masses wont vote for nor accept a fully privatised model where it makes them and/or others worse off. I know it’s a terribly socialist notion but the model needs to always be progressive or it is a failure.

As I previously indicated, at the market wage level, there is no excess of employees. In fact, employers have to compete to attract employees. Abusive bosses will soon find themselves either without employees, or having to pay up to make up for ill-treating their employees.


Yes but there are ever more low wage earners, the wealth divide is getting greater and the middle classes are dwindling ~ these are facts as you know. Just because those workers accept low or minimum wage it doesn’t mean it’s a good thing, increasingly too greater taxes [like the vat rise] are needed to pay for their upkeep and the nat-debt.

I'd be happy to define property. By far the most important two things you need to appreciate about property are: (1) each person unconditionally owns their own body, including the labour of their own body, and (2) people ought to be free to voluntarily exchange their property with the property of others.
The vast majority of wealth in our society has been created by people's labour, and justly belongs to the people who created it. Assuming your boss started the business himself, the business belongs to him. You and he have voluntarily contracted to exchange property - his money for your labour. There is not correct "proportion" that needs to go to workers, management or owners. It is purely a function of their voluntary agreements.


I agree about personal property of self and labour, but what about land and raw materials [the anarchist argument]? One can I think own the utility of those but only on the condition that it is not to the detriment of all others. For example everyone must have the right to either grow their own food or be fed, and to build their own house or be given shelter, hence welfare ~ but we don’t want that to be a ‘welfare state’ do we! Equally to feed everyone we need all the implementations of modern farming techniques and technology, so we cannot give people the right to land. That welfare has to be accepted as a necessary element to society and be paid for within the model for a fully privatised economy. It is not a charity it is a right. This is why ideally we need full employment and freedom to choose, ideally we also need to provide self-supporting wages within that too, or we loose our basis and the entire argument Imho.

Unless your wife works as an accountant (and possibly even then), you, with all due respect, can have no clue of how much they could pay. Do you really know how much the coop pays in rent (or mortgage interest), energy bills, promotions, suppliers, banks, taxes, regulatory compliance expenses, and more taxes? Do you know how much money has to be set aside for future expansion, to keep up with the competition? How much money is spent assuring the quality of the produce, identifying and selecting suppliers, deciding what products to buy and how to best display them? How about HR costs, including recruitment and management? Transportation? Accounting?


For sure I don’t, but with 3 workers at a little more than MW taking 2k every hour for them I don’t think paying £7 would hurt too much. They pay for it anyways in corporation tax to top up their wages with tax credits.

I better stop there for now before this post gets too long lol.

…yes it was an argument against tax credits, because they are redistribution via the state and we don’t want the state to exist right?
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Re: Two Myths about Capitalism

Postby iambiguous » Wed Jan 05, 2011 8:17 pm

Eran wrote: American history never included an era in which Banking was free, but other countries, including Scotland and Canada, had broadly free banking systems. In those cases, there were no major booms and busts. Those eras ended by legislative fiat, serving the interests of government (namely the benefit of monopolising the money supply for political purposes).


Scotland and Canada? How "broadly" was the banking freedom and how long historically did this freedom last? And what of the rest of the world---aren't they basically reflections of what Marx construed as "political economy"?

Eran wrote: The US did have an era, in the second half of the 19th century, in which industrial production was largely free. The era corresponded to unprecedented growth and prosperity, including improvement in the overall standard of living without any of the doomsday scenarios regarding disenfranchisement of the poor or the impact of monopolization currently associated with laissez-faire economies.


The era of the Robber Barons? And the bottom line once again is this: for every pro-capitalist narrative brought forth there are going to be anti-capitalist narratives in turn. You point out all the good things it brought and someone else points out all the bad things that tagged along. And, more than just occasionally, you're talking about the very same things.

iambiguous wrote:

Come on, if that were the case then, initially, during the Industrial Revolution, Marxism, socialism, unions, organized labor etc. would never have gotten a toehold. And in the modern era corporations rely on government safety nets to keep the political reprecussions regarding their more egregious policies ever at a low boil. And the corporate media is always there to steer the discussion in the direction of the lesser of two evils.

Eran wrote:Marxism never did get a toehold amongst the people upposedly its most ardent beneficiaries - the industrial working class. It has become popular with the intelligencia, as well as the oppressed peasants of Russia and, later, China and elsewhere.


Not Marxism per se of course but any number of its political/historical progeny very much took a toehold. On literally hundreds of millions of men and women around the globe. But in America there was a very, very sophisticated alliance between Wall Street, Washington and the media to "get the Reds". From the Palmer Raids and the Red Scare on through to McCartyism the ruling class brutally drew the line. It was only when a successful labor movement spun itself into the AFL/CIO that an alliance did ensue between some sectors of the working class and the crony capitalists in Wall Street and in Washington. But that was abandoned as soon as possible with the advent of "outsourcing" in the global economy.

Eran wrote: Unions and Organized Labour are a more recent development. That people want to improve their situation further by use of force (the upshot of the labour movement) is neither a surprise, nor an indication that they are mistreated. By the same logic, crony-capitalism is a "proof" that capitalists are being exploited in our current system!


I invite folks to pick up a copy of Labor's Untold Story by Richard Boyer and Herbert Morais to peruse the other side of the coin here. And most of the force [and subterfuge] you'll find came at the hands of the capitalists and their political lackies in the government and in the press.

And all crony capitalism is really proof of is that laissez faire capitalism has never actually existed [to any significant extent] in our modern era. The capitalists are more than willling to work hand in glove with the government. Again, see my post above regarding the myths of free market capitalism.

Eran wrote: The alternative [to sweatshops] is not "nothing at all", but rather the subsistence farming these people have been engaged in for many generations. Industrial development helped and continues to help lift people out of horrible poverty into relative prosperity.


Yes, there is that side of the story. I have never denied it. But there is another side as well. Many of these farmers were driven off the land [especially in South America] so it could be consolidated into huge ranches to raise the cattle needed to supply the beef to corporations like MacDonalds. Tens of thousands of families were forced to move into the cities and take the jobs in these sweatshops. And the conditions they were forced to work under has been well documented. Thus the price they pay for their "relative prosperity" is rarely addressed by, among others, the shock capitalis "boys" from Chicago who, along with Wall Street, the U.S. government, the CIA and the US military, pursued the Monroe Doctrine with a vengenance. They did everything they could for as long as they could to install and to sustain reactionary thug regimes throughout Central and South America. If the local governments dared to be anything other than "banana republics" there was hell to pay.

And there are in fact many books that highlight the horrific reality of sweatshops around the globe; but my own personal favorite is still Slaves To fashion: Poverty and Abuse in the New Sweatshops by Robert Ross. Its main focus is the apparel industry, but it is equally applicable to many more.

Your argument is basically that, "yes, capitalism can sometimes be hell but it's not as hellish is all the other systems". As though this somehow justifies the conditions that capitalism breeds both in and out of the sweatshops. Either you treat people as ends in themselves or you treat them soley as a means to your own end. Again, it is the very nature of capitalism to use up and then, if necessary, to discard its workforce. So, sure, take that tact if you must, but don't try to sweep the horror stories embedded in capitalism over the centuries under the rug as though everything it touches is analogous to a paragon of virtue.

Fortunately, capitalists can always count on their partners in the political sphere [the hated government] to extend a safety net to keep the working class and the poor from openly revolting. And the corporate press is always ready to do its part in distracting citizens from more radical options. The genius of American capitalism in particular is how it creates vast swaths of "just plain folks" like "Joe the Plumber" committed either to mindless evangelical religion, mindless right wing populism or mindless consumerism, pop culture and celebrity worship.

And billions of dollars are made on it to boot!!

iambiguous wrote:

Also, you ignore the psychological travails built into contraptions like Taylorism and the brutal alienation that is, in turn, built into production that is rationalized down to its most minute parts. It allows for extraordinary advances in production, of course, but it doesn't lessen the mental costs born by those doing the production.

Eran wrote: I am not ignoring anything. Rather, I am deriving my deductions from the simple observation that people willingly signed up to work under those conditions. The conditions may seem unbearable to you and me, with our modern sensibilities and Western affluence. I can assure you they were far from unbearable to the people previously used to living on the edge of starvation.


You "willingly" do a lot of things when there are no other viable alternatives. And, again, you act as though this were all the justification the multi-national capitalists [and their political cronies] need to rationalize the hellholes they can beget. As though they had no further moral obligation whatsoever to create more humane and just conditions. Just say, "well, hell, it could be worse for them!" and get on with your plush life at Goldman Sachs.


Eran wrote:I am not actually using historic "facts" to make my argument. My argument is primarily based on sound logic - the idea that in a free society, people always act voluntarily, and, by definition and by their won standards act to improve their lot. That your standards are different from yours is besides the point.


Yes, but the "logic" flows from the historical needs of those who own and operate the means of production within the framework of the capitalist political economy. It's not some metaphysical truth a la Ayn Rand. There is no such thing as an irrefutably rational Free Society. These things always involve the evolution of enormously complex social, political and economic relationships that can go in many different directions with respect to entirely mutable relationships between corporations, workers, governments and citizens.

Eran wrote:If you are looking for an ideal, you won't find it. But again, compare the economic performance of China before and after Capitalist reformation. Compare North and South Korea, East and West Germany, China and Hong Kong, Chile and Venezuela. Everywhere you look, more economic freedom corresponds to increased prosperity for all.


Again, I have long conceded the economic benefits of capitalism. I just try to put it all in context. There are enormous costs being paid by literally hundreds of millions of folks around the globe when their interests are summarily stuffed into the demands of those who attend always and only to the bottom line. That they "choose" this is the Potemkin Village trotted out by folks who refuse to own up to the pain as well as the prosperity capitalism bestows. Often they just embrace the contempt for the working class and the poor the Ayn Randians invariably espouse: They deserve what they get because, quite frankly, they are lesser mortals.

Eran wrote:I am not talking statistics, but broad public perception. And note - I didn't bring American Health Care as a shining example of free markets. On the contrary - the American Health Care system exhibits deep government involvement, hence its perceived (and real) failures.


Yes, and that is precisely because the healthcare industry wants it that way. Did you even follow the political process that became "Obamacare"? The hospitals, the insurance industry, the pharmeceutical companies and all other major adjuncts of Healthcare Inc. were clearly on board. For example, check out the internet site OpenSecrets.org. Just pop in the names of the politicians who "guided" this legislation along in Congress and the White House. You will immediately get an inside look at how the expression "just follow the money" came into existence. Do you actually believe if Mr. Smith came to Washington today things would really be any different then they were back then? It's not nearly as out in the open perhaps but it is basically the same.

That is how capitalism works "in reality". That is how capitalism has always worked in the modern era. And even though there are libertarian ideologues in the new Congress hell-bent on dispatching Obamacare, let's see how they fare "in reality".

Eran wrote:I would be happy to hear of a single case in which government program benefited people more than it harmed them.


Of course, you mean aside from all the government programs aimed in the general direction of the corporate partners themselves, right? Or do you actually believe that pork barrel projects from Washington are forced on the "private sector" against its wishes?

As for the rest of us there is social security, veterans benefits, FEMA [when the reactionaries let it work], programs aimed at keeping the poor afloat, programs aimed at providing a modicum of workplace safety, programs aimed at providing at least some healthcare and educational benefits for children, programs aimed at sustaining a modicum of economic stimulus when the "private sector" slumps down into the bust phase of the "business cycle".

Etcetera.

Now, you will tote out your own narrative here and "prove" that, "in reality", there is considerably more harm meted out than good. And then the other side will do the same. Me, I have no illusions this can ever be settled philosophically once and for all. But then I am not an ideologue hell bent on hammering the world into my words. I readily admit such transactions always involve enormous ambiguity, confusion, uncertainty---and a whole slew of additional shades of gray.

Eran wrote:The infantile thing is to imagine that just because government takes care of X in our society, no government means nobody will take care of X. A Soviet iambiguous might have argued that since government provides food to the people, everybody would starve without government. In the West, the private market does an excellent job of providing cheap, varied and healthy food to all.


Yeah, we saw how the private sector rushed in to fill the gap during the Great Depression and during the recent Great Recession. The folks on Wall Street were veritibly lined up to keep people in their homes, to keep folks gainfully employed, to keep food on their tables, to keep unemployment checks in their pockets, to keep the pain to an absolute minimum.

And the "private sector" in agriculture might be able to provide even cheaper food if their cohorts in the government would stop subsidizing them or paying them not to grow crops in order the keep prices artifically high.

iambiguous wrote:

Abolishing the government is so close to la la land it is not even worth the time to consider; and reducing it is always neck and neck historically with expanding it. in my view, you need to put a leash on that intellectual leash you use to divide the world up into...patriots and pinheads?

Eran wrote:If abolishing government is too much for you to consider (don't feel bad - you are not alone in that), how about starting by reducing government's role? Is it also "la-la land" to consider less or no government involvement in regulating every tiny aspect of our lives, from health and education to zoning, transportation, energy, foreign trade, labour relations, money supply, banking, etc, etc?


Sure, we are at a historical juncture now where the cry is for reduced government. But that can easily change. It depends on the staggeringly complex interplay of hundreds and hundreds of variables that intertwine across the vast stretches of a global economy ever embedded in contingency, chance and change.

La la land is embodied in the minds of all those who actually believe the "human condition" is reducible down to one or another dogmatic and doctrinaire catechism...the secular equivalent of a religious liturgy.

Eran wrote:I have an absolute opinion on God. My opinion on God, however, is the exact opposite of his. If I would attached the label "la-la land" to anything, it would be to the variety of religious beliefs generally venerated in our society.


I am rather certain myself that God is just the mother of all psychological defense mechanisms. You don't actually believe in God do you? Or is your God at Cato or the ARI?
He was like a man who wanted to change all; and could not; so burned with his impotence; and had only me, an infinitely small microcosm to convert or detest. John Fowles

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Re: Two Myths about Capitalism

Postby Amorphos » Wed Jan 05, 2011 10:20 pm

La la land is embodied in the minds of all those who actually believe the "human condition" is reducible down to one or another dogmatic and doctrinaire catechism...the secular equivalent of a religious liturgy.


Just like to say I really liked that.
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Re: Two Myths about Capitalism

Postby Eran » Thu Jan 06, 2011 1:24 pm

quetzalcoatl wrote:
I am not sure where you see signs for a "dualistic society". In any event, market anarchism, by definition, means allowing free market forces to act without any attempt at central direction
.

The greater the difference between rich and poor the greater the duality, we could end up with a two tier society of low paid workers and managers, up against super rich bosses and corporates.

I don't see how that follows. We could have a society with a large gap between the poorest and the richest, but the gap being filled by a large middle-class of intermediate levels of income. Such a society may have high levels of income inequality (reflecting highly disparate levels of productivity), but it wouldn't be "dual" in any sense.

quetzalcoatl wrote:how is it possible to remove the current centralising factors, there is virtually no way to get rid of national debts.

Clearly the way to get rid of national debt is to sell state property. In the US, that would include vast federal lands, as well as roads, and, of lesser value, buildings and equipment. Some federal organizations (e.g. FDA) could potentially be privatised as well.

If the proceeds from such sales are insufficient to cover the debt, the US government would simply declare bankruptcy, with debtors only getting some fraction of their assets back.

quetzalcoatl wrote:The stock markets and investment banks also centralised.

Actually, stock markets and investment banks are private. No need to change there (except, of course, by removing investment banks from government pay).

quetzalcoatl wrote:secondly the public sector VS the private sector is a duality in reasoning, really the public sector provides services that we need just as much of the private sector does. I dont see why it cannot be privatised as cooperatives and provide the same services.

I agree. Not sure about "cooperatives". Surely, the workers of a public agency are welcome to join together and bid for the agency. If cooperatives are really more efficient, they should be able to bid higher than private competitors.

quetzalcoatl wrote:Any kind of influence over others is power, some banking institutions are richer than some nations, even the model we use denotes the spread of power.

There is a huge difference between mere influence and power. It's the difference between being able to evict you out of your house (government power), and being able to tempt you to sell your house for a high price ("power" of wealth). The former is morally repugnant. The latter is perfectly legitimate. It is a mistake to group together both types of "power".

quetzalcoatl wrote:Workers have little power because there are always large amounts of them [except for the more highly skilled etc], in a free market a boss can easily sack a worker and replace them with someone cheaper [= power], workers can gang up and make demands of bosses [= power]. I think we need govt not only to get democracy into the equation but also to balance all these forces, we also need more measures to bring accountability to govt ~ limit their power.

I disagree with your analysis. If a worker is paid a "market wage", he cannot be replaced with someone cheaper. There isn't an infinite supply of equally qualified workers. In fact, at the proper wage levels, employers compete to attract and retain the best employees. No employer can survive for long with a casual attitude towards firing workers.

For unskilled worker, it may be easy to find an equivalent replacement. But by the same token, it is equally easy for the worker to find a replacement employer.

Democracy is a mechanism for electing government, not a goal in-and-by itself. If we eliminate government, democracy becomes moot.


quetzalcoatl wrote:‘Self-supporting’ is what I meant yes. Good point you make about what that is, I would think the ability to have a car legally on the road and to pay a small mortgage or rent, then to have a reasonable amount for food, clothing etc is the bare minimum.

I have just returned from a visit to South East Asia, where most people feel themselves fortunate to now be able to afford motor bikes. Cars are generally out of the question. I don't see why having a car is part of "the bare minimum". As for rent, payments can be very high or very low, depending on size, location and quality. Again, it is impossible to talk of a "bare minimum". As an aside, various government regulations (including but not limited to zoning) make housing much more expensive than it needs to be. The same, of course, holds with respect to cars and virtually every other product. Without government, life will be much more affordable.

quetzalcoatl wrote:if we don’t want economies where people can buy lots of technology etc then we may as well be communists.
Would you not agree that essentially we create reasonable wealth and independence or we pay for that anyway? If individuals cannot self-support then you either end up with austerity or you pay for their lifestyles via taxes ~ which is the very means by which govt derives its power!

Demand-side thinking puts the horse ahead of the carriage. The free market allocates production based on consumer preferences. If people cannot afford "lots of technology", than the economy should not produce it. I don't actually believe that is the case though. Only a small fraction of Americans are paid minimum wage or are unionised (outside government). I see no reason why, without government, the pay of most people would go down. In fact, government taxes and regulations drastically reduce the ability of employers to pay their employees more than they currently do. Without government, people would make much more money than they currently do.

quetzalcoatl wrote:Even though collectives could be more efficient they need the right model to work effectively, however you will never get investors, banks and the like to invest in a system which takes their power away.

I don't understand your logic. Why would banks lending money to a cooperative have less power than when lending to a privately-owned company? As for investors, obviously, they expect a return for their investment. You cannot eat your cake and eat it too. Either the employees are the owners (in which case they have to come up with the equity for the business), or you recruit outside investors (in which case they will expect something in return for their investment, and rightly so).

quetzalcoatl wrote:This is my main concern with a small govt, only by govt could we ever employ an universal model which doesn’t work from the top down [the power hierarchy].

This is backwards. Government is the ultimate "top down" model.

quetzalcoatl wrote:You say its ‘his’ business, which I can see in terms of inventor/entrepreneurs yet often a business is attained hereditarily, more importantly a business is a set of relationships/agreements, if you don’t pay the workers a self-supporting wage then you pay for their upkeep via corporation taxes etc which endorses the state.

I don't see how inheritance makes a difference. If I inherited a business from my father, he has merely passed to me the property which was rightly his. If he built the business, he had every right to dispense with it as he pleased.

People become business owners by either getting it as a gift (in which case they merely take over the rights of the previous owner), by starting it (your "inventor/entrepreneur" model) or by buying it from its rightful owner. In each case, the business is legitimately theirs. Nobody is forced into working for a business. Employees are welcome to negotiate part-ownership or other rights (e.g. extended notice period, arbitration prior to dismissal, etc.). There is no need for government to dictate the nature of a voluntary agreement between employee and employer.

quetzalcoatl wrote:If you want to get rid of the state then you either create more poor people of you give them ‘all’ independence. If we don’t get past the selfish pov - if I may, we will never get past the need for a state and the masses wont vote for nor accept a fully privatised model where it makes them and/or others worse off. I know it’s a terribly socialist notion but the model needs to always be progressive or it is a failure.

Only a small minority of people actually benefit from the state. And most of them are not poor at all - they are politicians, crony capitalists and unionised government workers. Politicians are very adept at showcasing their benefits while hiding its cost. They steal from your pocket while handing you (a fraction of) what they stole. Even the poorest people pay sales tax (VAT in Europe). Further, government regulations make everything more expensive than it needs to be, with the poorest suffering the most.

quetzalcoatl wrote:Yes but there are ever more low wage earners, the wealth divide is getting greater and the middle classes are dwindling ~ these are facts as you know. Just because those workers accept low or minimum wage it doesn’t mean it’s a good thing, increasingly too greater taxes [like the vat rise] are needed to pay for their upkeep and the nat-debt.

Either people accept what others are voluntarily willing to give them in exchange for their services, or you are forcing productive members of society against their will to help others. I think that's morally wrong. If I am going to help anybody, it will be the truly needy of the world, rather than people who find it difficult to afford a car. Btw, the poor in America enjoy a standard of living higher than that of the middle classes in the '70s. Why is that unacceptable?

quetzalcoatl wrote:I agree about personal property of self and labour, but what about land and raw materials [the anarchist argument]? One can I think own the utility of those but only on the condition that it is not to the detriment of all others. For example everyone must have the right to either grow their own food or be fed, and to build their own house or be given shelter, hence welfare ~ but we don’t want that to be a ‘welfare state’ do we! Equally to feed everyone we need all the implementations of modern farming techniques and technology, so we cannot give people the right to land. That welfare has to be accepted as a necessary element to society and be paid for within the model for a fully privatised economy. It is not a charity it is a right. This is why ideally we need full employment and freedom to choose, ideally we also need to provide self-supporting wages within that too, or we loose our basis and the entire argument Imho.

If you agree with me about self-ownership than you must logically reject the income tax, at least on wages and the fruits of property acquired using wages. Land and raw materials rightly belong to their first users. Consider for a moment the gradual process whereby new land and raw materials are being put into use. Before the first person uses them, they are worthless. It is the first user that typically converts what was a worthless piece of land into a productive asset. Doesn't he deserve to own that asset?

The question of land ownership is, however, vastly overblown. Only a tiny fraction of the wealth of our society is in unimproved land and raw materials. The vast majority of wealth is created - by people's work. That wealth ought to belong, we both agree, to the people who created it. Consider the wealthiest people in the US. How many of them trace their wealth back to the acquisition of previously-unowned land or natural resources? None!

quetzalcoatl wrote:…yes it was an argument against tax credits, because they are redistribution via the state and we don’t want the state to exist right?

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