Supporters of capitalism are crazy, says Harvard

reply to post by cognoscente



If everybody got an equal share of goods, then the value of those goods would decrease, and the value of the machines would subsequently increase. As a matter of fact, there would never be an equal share of goods for everybody, because somebody will impose some sort of system of restriction to enforce such "equality." Those same methods can subsequently be used to create inequality, or to impose conditions for access.

There is a segment of the population that doesn't wish to innovate.

I'm going to explain the way I see the various forms of market...

If you have a mule, which will represent the people, there are two ways to make it move, the carrot in front of it, or the stick behind it.

In true Marxism you give the mule neither, and rather rely on the mule itself to guide itself. There's no punishment on a personal level for really under-performing, and there's no carrot to strive for.

Under a totalitarian government, like North Korea, you have just the stick, and the only motivation is to avoid a whack in the bottom. The problem I see here is that eventually the mules bottom will become sore, and the mule will turn on you.

In capitalism you have a carrot, success, and a self-inflicted stick. Noone will do you wrong if you don't perform or succeed, but you'll be homeless, starving, etc. As long as you keep striving for the carrot you avoid the whack in the bottom.

Originally posted by rich23
So, which is it to be? Rules or no rules? Or, you want "some rules" but not "regulations". What's the difference?

I think he means that the market should consist of educated buyers. It should be obvious by now how that experiment turned out.

And quoting the Mises institute. What a bunch.

What is the "Mises institute?"

They're basically funded to try to persuade useful idiots that the mythical "free market" is a good thing. A guy I knew years ago gave me a printout of one of their articles. At the time of the California brownouts, it was arguing that more deregulation, not less, was what was needed.

There are conspiracy theories about the rolling brown-outs in California, as well as the power outage in New York.

The then Governor of California, Gray Davis, took some of the power companies to court for several billion dollars for ripping off the State of California. The power companies then had a secret meeting with Arnie to persuade him to run for governor. They bankrolled the "recall" vote and Arnie's candidacy. When he got into power, the lawsuit went away.

That's how the free market works. That's why people who believe in it are believing in Santa Claus and the Tooth Fairy.

Exactly. To suggest that the entire US economy operates in that fashion is ludicrous.

Why, economists would enforce the rules.

I'd love to see you try to explain how economists are going to enforce these "rules" which aren't "regulations". Nice one, Adam Smith.

Besides that, putting the interest of scientists above everyone else is technocracy.

Actually, there should be some oversight of the free market... but not by the government.

So who, then? I think Jon Stewart's busy doing a fantastic job on The Daily Show... maybe Steven Colbert could be persuaded.

Too bad Steven Colbert can do nothing except whine and bitch. At least CNBC has a purpose, namely supporting the hegemony.

And we would have to check on the economists who would help oversee the market.

Any other vague ideas you'd like to bat around?

hilarious.

That is basically how the executive branch of government already operates. Timothy Geithner didn't get to where he is by twiddling his thumbs.

reply to post by Techsnow



If socialism were so good, then why is China reverting to capitalism?

Socialism assumes that all people appreciate equality. We don't.

Oh don't be so blind as to think in terms of black and white.

No system in its pure form can function.


Pure socialism is doomed to sit idle and ultimately rot away in the end.
Pure capitalism is doomed to have a single victor, in the end, owning everything and everyone.

It's a mix that works.
Luckily, there are no countries that use pure capitalism or pure socialism.
What a nightmare that would be.



The underlying problem with capitalism is that in the end, someone wins.

And when someone manages to get on top of everyone else, competition ceases to function. The only entity left is the victor, and everyone else becomes a part of that victor... including the nation itself.

Like a game of monopoly, eventually, someone owns the board... and essentially becomes the bank.



As such, the problem with capitalism is that it has to be restarted.

reply to post by Zepherian



Fiat currency isn't necessary for the US economy. It's merely necessary for certain bankers.

In the US anybody can be rich, and financial wealth can be attained merely by hording riches and passing them down from generation to generation where they accumulate further. Eventually those riches will buy wealth. The US economy also works in a way that it enables a fraction of the people to horde riches while not negatively impacting others.

In a socialist economy, the only thing you pass to future generations is your name.

It is annoying when people make straw man arguments against unfettered free market capitalism. Please, somebody show me where it actually exists today?

Originally posted by johnsky

The underlying problem with capitalism is that in the end, someone wins.

Although the winning is not the problem. Its that while you are winning and once your victory is final, you change the rules of the system so that over time they become less and less a "free market." Being the best at a game is not the problem. The fact that those who win at the free market game also get to change the rules of the game is the problem. Changing the rules of the game is what leads to this;

Originally posted by johnsky
And when someone manages to get on top of everyone else, competition ceases to function.

Competition ceases to function because the winner or person with the lead also ensures they are the one who has the most say in the writing of the rules.

Originally posted by johnsky
The only entity left is the victor, and everyone else becomes a part of that victor... including the nation itself.

This part is not true. This is sort of the "trickle down" idea. That if one guy wins, the success trickles down to everyone who was playing the game that the winner exploited. This never actually happens. You as a loser of the game are NOT part of the victor. You are a resource to be exploited. And if you fail to be beneficial, you will be discarded and find yourself utterly outside of the victory. As in cases where vast numbers of the poor were driven out of their home country as "undesirable." (see the founding of America, Canada, and Australia.) Or slaughtered. Or left to starve. Etc. You absolutely do not become part of the victor. The victor IS the victor because he/she is adept at exploiting cooperative tendencies he/she does not share in the least.

Originally posted by johnsky
As such, the problem with capitalism is that it has to be restarted.

Or a mechanism must be implemented that prevents financial success from having anything at all to do with rule making. An utter and profound separation of politics and industry. Thus avoided the need for messy, painful, expensive, and potentially fatal "restarts." It becomes increasingly expensive and dangerous to attempt to hit the restart button when the current "victor" has nuclear weapons.

Originally posted by vcwxvwligen
reply to post by cognoscente

 

If everybody got an equal share of goods, then the value of those goods would decrease, and the value of the machines would subsequently increase. As a matter of fact, there would never be an equal share of goods for everybody, because somebody will impose some sort of system of restriction to enforce such "equality." Those same methods can subsequently be used to create inequality, or to impose conditions for access.

There is a segment of the population that doesn't wish to innovate.

It's interesting you say that. The value of those goods would certainly decrease psychologically. I mean, that could very well be important. But wouldn't that imply a world full of bratty children, who don't particularly care about the outcome of using those free resources meaningfully? I don't really see people whining and complaining because their neighbor received an extra steel frame for, let's say, the motorcycle he's planning to build in his garage. I don't think you can justify this kind of jealousy unless it hurts you, whether it affects your own ability to do what interests you. If there are no shortage of steel frames, no one worries. This system suggests that by using those goods no one suffers relatively in terms of wealth or opportunity, because people's only motivation is first, discovery, and next, self improvement.

[edit on 22-3-2009 by cognoscente]

Originally posted by Zepherian
reply to post by grimreaper797

 

Well, yes and no.

We got to the current situation because free markets still lead to the concentration of wealth, because of the money has gravity situation I explained in my first post here. The oligarchs, to get richer, made the FED, which is really just a continuation of the aristocratically inspired european banking models.

But they got rich enough to do it because they had the psychopathic motivation to concentrate wealth to it's full potential, destroying competition and taking over the state (or being taken over by the state, by the royals, that one is up for debate and investigation I guess).

Capitalism evolved free, but it's natural dynamic is centralization, which smothers freedom, imo.

The Rothschilds were greedy and conniving, not necessarily artistocratic. They were a poor family living in the forest until they broke into the banking industry. In fact, it was the Catholic Church that took riches away from the artistocracy. There is a difference.

"Concentrating wealth to it's full potential" was less about psychopathy than plausable deniability IMO. This has less to do with capitalism than basic greed.

As a matter of fact, capitalism was born out of the Magna Carta, which was actually created to prevent an overthrow by the English aristocracy, after the king (the state?) had abused his power.

Originally posted by vcwxvwligen

As a matter of fact, capitalism was born out of the Magna Carta, which was actually created to prevent an overthrow by the English aristocracy, after the king (the state?) had abused his power.

How so? I just read it, and I do not see how that document lays the foundation for a free market at all. It seems to me more to be a concession made under fear of losing power to those closest to seizing that power. An agreement to share power rather than hold it in solitude.

It certainly does not seem in any way to call for a free market. It was a move from monopoly to oligopoly by virtue of necessity. The monopolist had bitten off more market share than he could effectively manage, and was in danger of losing the whole thing. So he agreed to a deal that limited his monopoly powers. While it did tone down the scope of those monopoly powers, it did so with the intent and effect of preventing competition from toppling him, (the action of the invisible hand). In a sense, this is the opposite of what you would expect to see in a free market. In a free market, the king would be overthrown and there would be a new kind. Until he was overthrown by the next king.

The free market is a model of natural selection. Thats why it works. It models for economics the billion + year successful strategy employed by nature. When you exempt your self from natural selection, (by cutting deals that limit competition) you are thwarting or attempting to thwart the free market competitive action. Kingships have for most of history been a thwarting of a free market. Originally the King was actually the best at something. Fighting, leading, etc. And they were not selected by blood, but by merit in battle. Over time, someone came up with the lovely idea that it was a position that should no longer be based on individual merit, but that should pass from parent to child without regard for merit. And the duties of leadership expanded into privilege, the right to make the laws that kept you in power. Including the right to encode into law that your former competitors sacrifice their own interests, (their lands, resources and lives) to keep you in business.

If you overreach, you risk losing the "stable" of domesticated humans that support you. By having to take more from them than they are willing and able to pay, and exposing yourself to either revolution, or risking them allowing a hostile takeover by a competitor. So, to reduce the amount you must spend to keep your position, you have to share some of the wealth with your competitors to keep them satisfied and reduce the likelihood that they will usurp you, or force you to demand so much from your people that they will rebel. Your competitors are motivated to take the bribe because their position also relies on an unfree market. They cannot show utter disregard for the system of laws of privilige in place or there is no system of law that has legitimacy to keep their competitors from tearing out their throats in turn.

So, as I see it. The Magna Carta was nothing more than a concession won by the competitors. It was not a move to a free market at all. But a power sharing agreement that actually reinforced and ensured the survival of an un-free market.

reply to post by grimreaper797



Actually, credit is a trust that is based on a person's history


Fiat currency takes a large chunk of the blame because of the problem of inflation. Without the ability to inflate currency, there would only be a certain amount of it in circulation at a given time.

For instance, if the US paid the Chinese $1 trillion dollars of asset-backed money, plus however many billions in interest, then that money would be gone from the US economy until whenever the Chinese would decide to spend it. However, with fiat currency, taxpayers put that money back in, and paper can be printed to make up for any short-term lack. To increase the value of the fiat currency, you simply have to generate demand, either by take some out of circulation, or increasing the intrinsic value of whatever can be purchsed with US dollars.

Then there is the common problem of any capitalist system, even with real precious metals or otherwised indexed currency. This is that money has gravity. It takes money to make money, and the more money you have the easier it is to make money, it's an exponential,

That is 110% incorrect. All it means when you have more money is you have more assets to risk. That doesn't mean the risk will pay off. That is the huge misconception that brought us to a 50% market failure. That as long as you had the assets and value, be it credit or physical assets, that it was a profitable venture.

More money means that you can explore more ideas.


Don't think that someone can't just show up and take everything, just look at medieval fiefs, and the Old World kingdoms. Barring that, humans mess up, even humans with lots of resources. Some humans force other humans to mess up, which, to me, is more playing God than "capitalism saving itself."

A system of robots could never thrive in a capitalist society. This I will concede.


All hierarchies form through unequal stores of resources, whether those resources are physical strength, psychological strength, mental capacity, or even food and water. Hierarchies are diminshed the more people collectivize, but, again, human nature precludes this.

Yes, business do want to control you and your decision-making. This works to:

• Sway customers away from existing competitors
  
• Discourage potential new competitors
  
• Maximize profit margins
  
• Engage in social engineering ("charities")
  
• Create a leagacy for the people involved (again, human weakness)
  

Any rich people giving charitable donations to the needy becomes an authority. That authority can be abused to engage in social engineering.

Lots of charities refuse to discuss how the money really gets into their collection plates. As a result, people are miseducated about it, and perpetuate a cycle of ignorance. This mentality, then, trickles up to government, from the "grassroots."


The problem isn't cooperation, but when the power of cooperation is abused by those "smart greedy" people.

reply to post by incoherent_television



This is so wrong.

Equality requires planning. Chaos does not generate equality. People intrinsically hedge against chaos, because of simple fear.

Corporate sharing is a very real component of the "free market," because sharing allows investors to infuse capital.

I agree with this definition of "freedom" but the aforementioned description of "free markets" is not an exercise in freedom.

reply to post by grimreaper797



You clearly don't understand the concept of "backing." Backing means that if you decide to withdraw from US economy, you can cash in your dollar bills for something else that can be traded.

This is not the same as buying an ounce of gold with US dollars, because the cost of an ounce of gold always changes. Rather, this means that a $100 bill will always yield a standard portion of gold, determined by the government.

The value of the dollar is not determined by the price of gold. Rather, it is a floating-rate currency, meanings that its value is determined solely by the foreign exchange market.

Actually, strong dollar = greater market for imported goods

No, smart people greedy = money funnelled into tax havens

The "lucky guy who owns all the world's resources" doesn't exist, because private property needs to be cycled in an out of the market, so that average people give up more of their own resources to have it. It's just a matter of time before people give up their privacy for an iPhone.


[edit on 22-3-2009 by vcwxvwligen]

[edit on 22-3-2009 by vcwxvwligen]

Originally posted by incoherent_television
This example is a little misleading. The US pulled out of Bretton Woods in 1971. What you're describing sounds more like capital than currency. Currency is a medium of exchange: it says, "I performed X hours of work which I can trade for Y product."

This is completely wrong. The concept that the market is exchanging work for property is a poor man's mentality. Currency facilitates trade.

Relatively few assets represent physical holdings. If I give a bank $1 and they lend out $8, those $8 are assets and my original $1 is a liability. The value of the $8 lent out -- why they qualify as assets -- has to do with the function of currency as a promise that a certain amount labor will be performed at some point in the future.

That is wrong. The $1 is the bank's liability only if they have to pay more money to keep it (interest payment, insurance, storage fees, etc). The bank's main liability is not the $1, but the debt to repay that $1. The debts to pay back the $8 are the bank's assets, not the $8 itself. The value of those assets may actually be 40 cents per year, if the bank charged 5% interest. The bank's net worth, however, is the $8 + the value of assets

Strong currency= More likely foreign investment.

Do you mean: weak US currency = foreigners invest? There are lots of businesses that want a weak dollar because foreigners can then buy more US-made goods.

Businessmen want a stable ("strong") currency, because then it's easier to plan for the future. If the dollar is predicted to increase in value, then, indeed, it's a "strong" currency.

I would take economic freedom over political freedom any day of the week, although it's best to have both of course. There is nothing I dislike more then working for someone or taking orders from someone else, I was bored out of my mind before I started my own business. Sure I still have to answer to my customers but i have freedom over how i run the business and there is always something to keep my mind occupied. In short without capitalism I would go insane.

Originally posted by grimreaper797
That is fine so long as 500 dollars worth in gold reserves is coming in every month, and the dollars are being printed out accordingly. Unfortunately, in economic booms in the 1920's when the boom was manufactured out of credit lines, even under a complete gold standard, the interest would exceed the inflow of gold, and thus debt would be created.

The Great Depression happened because the banks simply stopped giving out loans. It was domestic terrorism before they even gave it a name.

What would happen under a complete gold standard is that the interest would exceed the inflow of gold, and eventually the credit limit for many people would be hit and then consumption plummets because nobody has money. They all have to pay back their credit, and interest on said credit. Many may never get out of that debt to the creditor. They may have a steady balance of 5000 dollars on their bill, after interest. The issue with that is that every month, they just created more debt for the overall system.

In a perfect system that may happen, but what happens in the real world is that when a person's credit line is exhausted, his property is repossessed. A more terrifying scenario would simply be to horde the gold.

So I stand by my original point that this is a credit crisis, not a fiat currency issue.

A credit crisis caused by banks handling questionable "assets" as collateral.

You are pretty much saying what I said. I just don't see how you connect that to fiat currency. It can just as quickly happen under a backed currency system. The only difference is that under a backed currency system, once back runs occur, the entire system collapses and defaults, leaving anyone who didn't get their share, broke and screwed.

Under a backed currency, people simply steal the reserves. Everyone playing fair would be able to claim his reserves and re-deposit them, whereby a new money system can then be instituted.

True, the market decides the value of the currency, but it does nothing to address the relationship between money loaned and money repayed.

Neither does backed currency. If I have 5000 dollars on hand, backed 100% by gold, and I lend it to you at 10% a month, every month I am demanding 500 dollars that probably doesn't exist in the system.

Of course the money exists. If the money doesn't exist then you can't collect any interest.

And since all money is loaned with interest it dosen't address the key problem of their being more debt than equity in the economy.

Say you have a gold standard. Suddenly the market has a boom in coffee beans, if it was a fiat currency, the currency would go up in value accordingly. Under a 100% gold backed currency, the currency could not go up since it is not gold inflow that increased. The demand for the dollar would go up since we had this boom in coffee bean resources, but we couldn't put more dollars out. This would choke the economy to death in the long run.

Having a specific resource backed currency is a very bad idea because its not an accurate representation of the value of the economy which that currency represents. Gold standard is obsolete.

Money, as it is setup now, is a negative energy, it dosen't add value to the economy, it just sucks out value to the people sitting on the legal right to issue monetary credit (credit here being in reality debt). Deficit state spending for example is a euphemism for the nations paying the banks interest to use their own currencies.

Gold can be horded, or re-appropriated.

Backed currency doesn't symbolize the value of an economy? What ever happened to the "golden rule" ?

Fiat currency takes some of the blame, because its value is arbitrary.

If I owed 50 ounces of grapes, and they turned into raisins, then I must come up with a plan to get even more grapes for the same loan. On the other hand, if I owed 50 pieces of grapes, then the creditor would have to accept the raisins.

Things like credit/debt issues, deficit spending, interest rate manipulation, its not the fault of the system, but the people running it. Fiat currency can be manipulated easier than backed currency, it is true. That doesn't change the fact that backed currency can be manipulated and exploited very easily as well.

I don't know. Backed currency can be manipulated by tampering with the reserves. I'm finding it difficult to come up with another way. The very fact that the value of fiat currency is easier to manipulate makes it a target for criticism.

Fundamentally, gold backing is obsolete to fiat currency. In practice, Fiat currency has been getting utterly exploited on every front to cheat people out of their assets. No doubt there. But criticizing the system for the faults of the people running it does nothing.

Well, maybe the system enables certain acts. Not all crimes are created equal.

We agree on many points. Where we disagree is where the blame is. The blame is on the people practicing the regulation of currency and the credit market, not the fundamentals themselves. The market is fundamentally sound. Its the practices that are destroying our economy and monetary value.

Maybe the blame can be placed on people who knew the flaws in the system ahead of time, and neglected to fix them?

Originally posted by TheOracle
A refreshing wind of change is blowing

Refreshing for whom?

Originally posted by traderjack
Actually, in a true free market economy ole' Sam would have never grown to more than a few department stores at best. It was DAS GOVERNMENT that gave him his wealth via corporate welfare. Moreover, monopolies would not exist because people like HEIR GATES would not be able to kill innovation via abuse of the trademark laws.

That being said, I kinda like the Star Trek model. Self improvement and individual achievement is the purpose of society. That's not communism or socialism by the way, so all the ardent right wing nut jobs relax! Star Trek is the world we could have without any monetary system at all.

If not through trademark laws, then through other measures, like price fixing and rumor-mongering.

If only the characters on Star Trek would stop using Masonic symbolism ...

Originally posted by Henry Fnord
“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”

John Maynard Keynes

And I'll tell you all right now that I for one don't believe it. A scarcity mindset breeds greed which breeds evil.

Always.

Nope, that quote is an over-generalization.

You'd be surprised to find out how scarce money is under a socialist system.

Originally posted by cognoscente

Originally posted by vcwxvwligen
reply to post by cognoscente

 

If everybody got an equal share of goods, then the value of those goods would decrease, and the value of the machines would subsequently increase. As a matter of fact, there would never be an equal share of goods for everybody, because somebody will impose some sort of system of restriction to enforce such "equality." Those same methods can subsequently be used to create inequality, or to impose conditions for access.

There is a segment of the population that doesn't wish to innovate.

It's interesting you say that. The value of those goods would certainly decrease psychologically. I mean, that could very well be important. But wouldn't that imply a world full of bratty children, who don't particularly care about the outcome of using those free resources meaningfully? I don't really see people whining and complaining because their neighbor received an extra steel frame for, let's say, the motorcycle he's planning to build in his garage. I don't think you can justify this kind of jealousy unless it hurts you, whether it affects your own ability to do what interests you. If there are no shortage of steel frames, no one worries. This system suggests that by using those goods no one suffers relatively in terms of wealth or opportunity, because people's only motivation is first, discovery, and next, self improvement.

I'm assuming that under such a system, machines would make steel frames, which would then be used to make new motorcycles. The machines could also be used to build new machines. Eventually, the Earth's natural supply of iron would be drained, after being wasted on falty or otherwise unwanted steel frames.

Do you mean "envy?"

In the current system, as it exists, people have options to do other tasks besides discovery or brainstorming new inventions. Lots of people engage in lots of creative pursuits already besides inventing.