Why Capitalism is Doomed

[docreflex]

mass production, mass consumption in order to provide jobs,, can it continue???? No gorilla in the room look the other way. Just talk politics an economy class 101

It's not "in order to provide jobs". Obviously. People don't want to work. They work in order to consume. If people were satiated with consumption then there'd be no need to mass consume in order to provide jobs, since there wouldn't need to be more jobs per capita since people don't want to consume more. So that reason makes no sense. Consumption is the end itself, not a means. It happens because people want to consume.

I have seen jobs dry up in construction ,,dry up in these last 15 years or so. Just to much production from high skilled production orientated workers who make good money. No high demand for homes,,no high demand for a high skilled trade person. We are so dependant on cheap oil to make our economy and car culture continue. The problem goes beyond economy an politics,,,, that is what neeeds to be adressed , either we do or our kids surely will. They will wonder about us??

 

[DSGE]

mass production, mass consumption in order to provide jobs,, can it continue???? No gorilla in the room look the other way. Just talk politics an economy class 101

It's not "in order to provide jobs". Obviously. People don't want to work. They work in order to consume. If people were satiated with consumption then there'd be no need to mass consume in order to provide jobs, since there wouldn't need to be more jobs per capita since people don't want to consume more. So that reason makes no sense. Consumption is the end itself, not a means. It happens because people want to consume.

I have seen jobs dry up in contruction dry up in these last 15 or so. Just to much production from high skilled production orientated workers who make good money. No high demand no high demand for a high skilled trade person. We are so dependant on cheap oil to make our economy and car culture continue. The problem goes beyond economy an politics,,,, that is what neeeds to be adressed , either we do or our kids surely will. They will wonder about us??

I can't make head nor tail of that paragraph. The only part I could comprehend was "we are so dependent on cheap oil". Which is obvious. We need energy to run things. Our standard of living will fall if the relative price of energy goes up. But so what? Unless you have a plan for peace in the middle east, oil shocks are just a fact of life.

 

[asterism]

If you're not going to properly use terminology and just make shit up as you go, the entire point you're trying to make becomes self defeated. Capitalism never failed, it was hijacked by central panners and passed off as capitalism to shield the reality of what was really happening. Which is why I find myself correcting people on a constent basis regarding what is, and what is not in economics.

zactly

 

[asterism]

If you're not going to properly use terminology and just make shit up as you go, the entire point you're trying to make becomes self defeated.

I'm using the term the way most economists use it. I'm not, admittedly, using it the way ideological right-wing free-market purists like yourself use it. However, I stand by my usage as proper and normal.

I'd like you to substantiate that statement with some references. Please show how "most economists" use the term "capitalism" in the same way you are.

Capitalism never failed, it was hijacked by central panners

Oh, please. I have no more patience with that crap than I do with Marxist crap, which is just as pie-in-the-sky nonsense as you're giving us, but certainly no worse. If you're not going to use the term to refer to something in the real world, why bother using it at all?

 

[asterism]

You have a weird idea that jobs will go away. The economy works on ever higher levels of specialization. Adam Smith's famous division of labor. Every advance in technology creates jobs. Jobs aren't going away.

Just because we have managed to create new jobs every generation before, that doesn't mean we will manage to create enough now so that all can feed their families through their own labor.

It is theoretically possible that with our current level of mechanization we are nearing a profound limit.

Maybe there will be new layers of jobs in the service sector, for an example that my puny mind can come up with, but do these jobs come with a living wage?

The current trends are pretty scary.

Perhaps the "living wage" is just too high in the USA. Maybe some more market induced efficiencies are needed. Why is the living wage in the USA more than twice the global average income?

 

[asterism]

One idea I'm kind of playing with right now is a "right to capital." The underlying notion being that, contrary to what I said earlier, maybe all or most people CAN self-support as entrepreneurs. Maybe a mostly labor-free economy can be one in which everyone is an owner. But of course that would require that everyone have access to capital, and also to education to achieve the skills necessary.

This is still kind of vague and in early stages of thinking.

Everyone has access to capital and education to achieve the skills necessary. Obviously some have access to greater education and greater capital, but that's just human nature in every system so far.

 

[asterism]

Wealth is not created without labor, even in automation and information technology.

There are numbers larger than zero but less than infinity. Creating wealth with increasingly less and less labor creates high and intractable unemployment; creating it literally with NO labor would mean that nobody is employed at all. Which one of those situations am I saying we're in?

Not true. The owners of the property creating that wealth are employed, if by nothing else than by allocating their profits. If they don't do that then they employ others who will.

The wealth you're referring to is mainly hinged on the monetary system in place. Where "money" is printed out of thin air and passed out to the corporations, banks, etc favored by govt. that wealth is largely an illusion.

Well, that describes some of what we refer to as "wealth," but not all. I agree that too much of the economic activity in this country consists of shuffling money around without actually producing anything of value, but that's not what I'm referring to here. I'm talking about the real economy that produces goods and services for market, which still exists even if the financial overlayer has grown too big relative to the whole.

The answer is capitalism and anchoring run away monetary inflation (a gold standard/return to or a serious fed reserve policy change), govt. collusion with corporation/industry and allow people to pursue their passions in true market competition.

How is that going to solve the problem of high and intractable unemployment? That is not a result of monetary policy, but of advancing technology (together with free trade and outsourcing, but an end to the latter would only increase use of the former).

You should do some research into Mercantilism. You're really just rehashing that argument, and Adam Smith's Wealth of Nations was a response. Under Mercantilism and Malthusian theories, we shouldn't exist right now.

 

[asterism]

I'm waiting to read a 'true' definition of capitalism. So far the only statements made assert what we have today is not capitalism. How about defining what is capitalism.

Well, as I know you can use a dictionary or encyclopedia as well as any of the rest of us, I'll assume you're looking for the reasons apologists are saying that what we have today isn't "real" capitalism. I can take as stab at that.

Exactly

From my perspective, the most important redeeming feature of capitalism is its ability to decentralize power in society. It does this by keeping political power and economic power separate. That's the whole point of 'laissez faire'. That doesn't mean the government has no part to play - they set the basic ground rules and protect property rights - but otherwise they don't get involved in our economic decisions.

Got it

It's the fact that modern "capitalist" states have largely failed to honor laissez faire that leads me to say that what we have isn't capitalism. More and more we are merging economic and political power - with the state becoming more and more involved in managing our economic affairs, and corporations becoming more and more involved in politics. I think this is a very dangerous centralization of power.

Interesting. At first read I agree with all but your first sentence

That's why it's so frustrating to hear pronouncements that 'capitalism' has failed. We've failed to maintain the separation of political and economic power that is required for capitalism to even exist, so it's sort of hard to see how it's failed.

It seems to me the failure to maintain the separation of political and economic power threatens our democratic institutions and puts us on a slippery slope to devolve from a republic where the representatives represent the best interests (as best as can be determined by honest men and women using due diligence) of all of the people into a republic in name only, where the interests of the wealthy are fully represented and only enough is provided to the hoi polloi to prevent insurrection.

As for total deregulation, as implied by lassiez faire, the consequences of such have been seen in past centuries, where rules were absent the rich got richer, the poor got poorer and the environment suffered. Regulations protect capitalism from the capitalists. To borrow a phrase, it's really that simple.

How much regulation is the question begging for an answer.

You have a valid point regarding the separation of political and economic powers. That's why I wholeheartedly disagree with the regulating body (the government) acting as a participant in the economy.

 

[itfitzme]

We will do better to look at "oligopolies".

Capitalism is, simply the right of private ownership. Describing the recession as a crisis in capitalism is an oversimplification that has no chance of ferreting out the fundamental causes.

Capitalism cannot be classified as "doomed" as a response to the '07 recession simple because it is capitalism that has led to a standard of living that has increased by 25% in thirty years.

Individuals work to procure housing, to purchase food, to raise children, to sustain life. And in the process of working, people strive to improve their standard of living.

A large percentage of 160+ million working individuals strive to find opportunities to increase their standard of living, through educational and business opportunities.

Capitalism allows individual to accumulate wealth and to improve their standard of living. In doing so, they improve the overall standard of living for society at large.

The term "Corporatism", a generic term which simply identifies the formation of people into groups for a common cause, has been adopted to identify the formation of national and global ologopolies with political influence.

It seems senseless to use "corporatism" when a more descriptive term, oligopoly, is already available.

The term oligopoly is well defined and includes precise models of how oligopolies form and perform in an economy. Oligopolies are similar in nature to monopolies with the difference of the market being dominated by more than one private company.

Oligopolies form out of economic circumstances similar to monopolies which enjoy economies of scale and barriers to entry. An additional benefit occurs when the product is one of necessity.

While classical theory would suggest that competition between companies drives prices downward, classical theory is dependent on there being a statistically large number of companies and consumers in the market place such that cooperation becomes impossible.

When there are few companies, monopolistic behavior will form out of simple learned behavior. Without knowledge of why, as the companies strive to increase profit, they will naturally find a balance that maximizes that profit. If profit can be had by restricting output, then output will be restricted. If profit can be had by maintaining high price levels, then prices will be held high.

Corporate organizations is a natural outcome of cooperation, whether it be within a framework of capitalism or otherwise. Capitalism itself, when it exists within the framework of a classical market is nothing less then beneficial.

Market control by oligopolies is distinctly different. It is a secondary and natural outcome of two of the best economic processes for advancement and growth, corporatism and capitalism. But corporatism and capitalism are not the problem.

Whether the product is energy, health care, or financial services, the results are the same. Within the framework of capitalism and corporatism, certain products lend themselves well to these two devices. As we strive for efficiency, costs are reduced. And with some products, scale alone provides enormous efficiencies.

It is noted, in a comment, this very effect of improved efficiency that has moved even service oriented companies into the realm of efficiencies of scale. "As services are now being automated, jobs are simply disappearing and not being replaced. There is no fourth category." Indeed, with the creation of automated checkout systems at large grocery chains, fewer workers are needed as checkers.

But, again, it is not capitalism or corporatism that is at issue here, it is increasing efficiencies, especially efficiencies that create economies of scale. The very existence of these economies of scale, which rely on a large investment in capital equipment, create barriers to entry. No small market can compete with the pricing available by a large grocery chain able to sell volume at pennies of profit.

Oil refining is a continuous process of production. The same equipment will generate billions of barrels of production for little more fixed cost then it takes to produce millions. With the advent of information processing advances, both health care insurance and banking are able to serve a million more customers with no substantial increase in costs per unit.

Every market that can be identified, as falling under this heading of "bad corporatism", is identifiable as a market dominated by oligopolies. Basic game theory in a basic micro economics course tells us, and these companies, exactly how to act to maximize profit.

There is little disagreement on the details, barriers to entry, economies of scale, every improving efficiency, and political influence. The first three describe monopolies and oligopolies.

There is no doubt that the issue is specifically global and national oligopolies, not capitalism or corporations in general.

Still, this is an age old argument and concern. With every recession that follows an increase efficiency, the same old complaint arises, the loss of jobs to modernization, (and imports). This is the argument your grandfather had and his grandfather's grandfather. The question is, why is this one any different?

 

[editec]

Unbridled capitalism is rather like a snake eating its own tail.

Eventually the reality found in capitalism: " nothing succeeds like success" leaves so many people berift of capital that they cannot play their roles in the system.

Then the snake has to let go for a while (read the lenders must EAT the DEBTS) so the system can start again.

When that doesn't happen fast enough either revolutions happen, or a long period of authoritarianism exists where most people suffer at the hands of a few.

 

[TakeAStepBack]

We will do better to look at "oligopolies".

There is merit to this. But in my understandings, this is more of a result of corporatism, than the root cause of this failing economic system. Let's look at some info on both.

Oligopoliy

(ˌɒlɪˈɡɒpəl&#618

— n , pl -lies
economics a market situation in which control over the supply of a commodity is held by a small number of producers each of whom is able to influence prices and thus directly affect the position of competitors.

This isn't exactly what we see going on today. The top few monopolies, if you will, ultimately do not set price points for a given commodity. The reason for this is that govt. intervention, most profoundly in central banking controlled currency/monetary measures/policies of the money supply and value. In many industries, govt. subsidizes and regulatory measures favorable to the monopolies through a collusion process. So in reality, it appears these top few set price points, but they do not. Govt. "organs", in concert with with these corporations that have gained monopoly (largely through government handy work) do that.

Which is most closely associated with corporatism. As the definition of corporatism:

: the organization of a society into industrial and professional corporations serving as organs of political representation and exercising control over persons and activities within their jurisdiction

Which is effectively what we see in almost all industries today. The "state" serves as the political affiliation (or organs) by which large corporate/industry monopolies form and corner a sector of the market. Driving out competitors.

More on it here corporatism (ideology) -- Britannica Online Encyclopedia

 

[Widdekind]

The "state" serves as the political affiliation (or organs) by which large corporate/industry monopolies form and corner a sector of the market. Driving out competitors.

"barriers to entry" are anti-competitive

our global economy, and species, is becoming anti-competitive, i.e. "enforced un-competitiveness"

no?

i challenge that

 

[Widdekind]

Unbridled capitalism...

what part of our economy is not-bridled ? "barriers to entry", "no-bid contracts", "regulations"

if you can call "straight-jacketed" instead "un-bridled"; then you are World Dictator, and your Fiat Decrees will become Imperial Law

 

[Widdekind]

... Economic productivity (that is, production of real wealth) falls into three categories: agriculture, manufacturing, and services. When only agriculture was automated, farm workers moved into the factories. When manufacturing became automated, factory workers moved into services. As services are now being automated, jobs are simply disappearing and not being replaced. There is no fourth category.

Innovation for new ideas as one "fourth" category... govt. subsidies.regulatory measures is what causes the accumulation in an industry to push others out of [and] corner a market.

Government = Force; any "barrier" to economic activity is Imposed by Force, i.e. Government

prima facie, Government Force is Imposing non-innovation, non-entrepreneurism, non-vision-for-the-human-future. I.e. Government Force is "annihilating the human adaptive spirit"; human businesses, buoyed by bail-outs, are becoming "world-wide Zombie Firms". nominally, if Governments reflect Publics; then humans themselves are psychically motivated to Forcefully Impose their own "Zombie Malaise"

where is Ghandi ? JFK ?

 

[Widdekind]

Oligopolies form out of economic circumstances similar to monopolies which enjoy economies of scale and barriers to entry. An additional benefit occurs when the product is one of necessity...

Every market that can be identified, as falling under this heading of "bad corporatism", is identifiable as a market dominated by oligopolies...barriers to entry, economies of scale, every improving efficiency, and political influence.

Government = Force
"political influence" = Government = Force = "bad corporatism" = "good bullying" ??

nominally,
Government = Public
Public = "political influence" = ... = "bad corporatism"

prima facie, global human populations desire "bad corporatism" = "good bullying" = "global gangster culture"
prima facie, global corporations have global Public support (for "bad" economics, i.e. bad at "making money", ipso facto "good" at "taking money" ? "people prefer plunder to labor" ?)

 

[Widdekind]

Definition of 'Market Economy'
An economic system in which economic decisions and the pricing of goods and services are guided solely by the aggregate interactions of a country's citizens and businesses and there is little government intervention or central planning. This is the opposite of a centrally planned economy, in which government decisions drive most aspects of a country's economic activity.

Government = Force

free-markets = no Force ("Force vs. freedom")

central-planning = Martial Law ("gun-point economics")

"creeping encroachment" of Government Intervention, into the US economy, represents de facto "extension of Somebody's Martial Law" into the same

 

[Widdekind]

govt. is issuing out "the wealth" through...intrusion into the market -- creating monopolies in vast amounts of industries -- does high unemployment become intractable... the pay your govt. to play system. Central planning squeezing the life out of the markets ...

the crippling of competition [and] smaller capital ventures being pushed out by govt. intrusion to keep their favorites without more competition, but with less. We see this in almost every industry today.

Government = Force
Government = Doom of capitalism

ergo, the "Doom of capitalism" is being "en-Forced" ("financial Doomsday")

according to a former foreign-exchange-student study-partner, the "third world" (e.g. India) is the land of "pay gov't to play", i.e. where Force "destroys competitiveness", and "leaves even the '7 wonders of this world' in ruins" -- if by the "en-Forced Doom of Capitalism", the "Empire State Bldg. & Sears Tower collapse"; then they would merely join 5000 years of human failures ("the more things change, the more they never did", "there is nothing new within AUs of our G0-class star")

i demand to challenge that

 

[Widdekind]

As for total deregulation, as implied by lassiez faire, the consequences of such have been seen in past centuries, where rules were absent the rich got richer, the poor got poorer and the environment suffered.

when in "past centuries" did standard-of-living ever decrease (under capitalism)? According to common-knowledge, poor people today "live like kings" compared to poor people yesterday.

 

[Widdekind]

failure to maintain the separation of political and economic power threatens our democratic institutions

i.e. "separation of Money & State". what role might "Religion & State" play ? please ponder, that "Religion" psychically "Super-motivates" humans to "bend the rules" for "The Just Cause" (but the 'slippery slope' rule, of 'yield an inch, yield a mile', never bends). cp. 9/11 ?

 

[Widdekind]

Creating wealth with increasingly less and less labor creates high and intractable unemployment; creating it literally with NO labor would mean that nobody is employed at all.

true -- improving technology displaces human labor, in the "short-term", in the production of "known" commodities

false -- large labor pools, of cheap & available workers, affords entrepreneurial opportunity, for the production of "unknown" new & novel commodities, especially large-scale super-projects

we live on one small asteroid, in a vast universe -- you can think, of nothing else, to do, to generate wealth, in this whole "sandbox the size of space" ? The US Navy has EM-powered rail-guns; the Japanese have high-speed EM-powered mag-lev trains; i want a "mass-driver", 2000km of "mag-lev-train-sized rail-gun", to accelerate multi-kilo-ton payloads, to orbital velocities, making exploitation of space economical ("train-loads of payloads to space, for the price a train ticket")... next up, space-factories, space-habitats, asteroid-mining...

please ponder:

to build a mass-driver, would possibly require using the Himalayas as a "ski jump", elevating the "barrel mouth" up above as much friction-causing atmosphere as possible; a track could be laid, from the tip of India, up to K-2, nearly +9km altitude, near the Pakistani border; the "ski jump" could be blasted through to K-2, using Soviet-pioneered nuclear demolitions techniques; ultimately, space-exploitation will require advanced nuclear power, e.g. nuclear-pulse-propulsion systems...

but now, pan-Islam-allied "Big Oil" hates me, for promoting "evil alternative energy"...
and Leftist-allied "environmental" groups hate me, for promoting... "evil alternative energy"...
and, quickly, super-motivated Government Interventionists crack down, Denying the use... of "evil alternative energy"...

and, no, there's no debate...

and so much for "mass-drivers", on earth (Nominally, by the Will, of "the Lord of the worlds", of "the Kingdom of the heavens", Whose "other-worldly Power" Intervened into the lives of Muhammad, Jesus, & Moses; and Who Intervenes into earth-bound humans' history, to this day, to keep all mankind, in a psychic state of enthralled "submission" (evidently only on earth), Nominally).

even if you harbor doubts, that mass-drivers are much more than "Japanese mag-levs X USN rail-guns"; then still even trying to think about what to do, with vast pools of human labor, marooned on an isolated asteroid, in the vast reaches of space, rapidly treads on "Everybodies' toes", from Green-Peace, to PETA, to earth-global Islam, to "the Lord of the worlds" of "the Kingdom of the heavens"... all of Whom co-act, to make "getting anything off the ground" human-surprisingly Super-challenging​