Two Myths about Capitalism

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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?

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.

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?

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.

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.

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.

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.

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.

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.

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.

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.

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?

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

By ERIC LIPTON and NICOLA CLARK

[b]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. [/b]

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?

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?

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.

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

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.

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.

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

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.

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!

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?

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”…

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.

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.

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.

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.

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.

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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.

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.

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.

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.

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.

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

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.

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?

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.

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?

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.

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]. :slight_smile:

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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.

It was naked economic interests that led to the revolution too.

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?

“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.