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Thread: The fall of capitalism

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    just me duncan drennan's Avatar
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    The fall of capitalism

    Capitalism has come to represent some sort of freedom. We are free to choose our own destiny and create wealth. But are we creating wealth, or just self-wealth these days?

    When we see politics permeate every sector of life, we call it totalitarianism. When religion rules all, we call it theocracy. But when commerce dominates everything, we call it liberty. Can we redirect capitalism to its proper end: the satisfaction of real human needs? Well, why not?

    The world teems with elemental wants and is peopled by billions who are needy. They do not need iPods, but they do need potable water, not colas but inexpensive medicines, not MTV but their ABCs. They need mortgages they can afford, not funny-money easy credit.

    To serve such needs, however, capitalism must once again learn to defer profits and empower the needy as customers. Entrepreneurs wanted! With micro-credit, villagers can construct hand pumps and water filters from the clay under their feet. Pharmaceutical companies ought to be thinking about how to sell inexpensive retro-virals to Africans with HIV instead of pushing Botox to the “forever young” customers they are trying to manufacture here. And parents can refuse to relinquish their gatekeeping roles and let marketers know they won’t allow their kids to be targeted anymore.

    To do this, we will require the assistance of democratic institutions and an adult ethos. Public citizens must be restored to their proper place as masters of their private choices. To sustain itself, capitalism will once again have to respond to real needs instead of trying to fabricate synthetic ones – or risk consuming itself.
    The full article is certainly worth a read and a think.
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    Site Caretaker Dave A's Avatar
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    How can the author confuse commercialism with liberty? For starters, capitalism is no guarantee of democracy.
    The trouble with opportunity is it normally comes dressed up as work.

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    Platinum Member Marq's Avatar
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    Confusion Politics..methinks?? Certainly a definition problem exists.

    Made me think of confused politicians:-

    From an article in yesterdays Daily News about the Durban street naming fiasco :-

    Mlaba said it was time to build the province.
    "This is the time to talk. We all represent the same communities and need to engage to ensure peace and unity in a province that is seen as less competitive economically, but has great potential," he said.
    This is after they have steamrolled the name changes through, provoked all and sundry,ignored public sentiment, told every minority group (and majority groups) where to put themselves, created huge financial burdens after having ignored eia's and other inputs, trying to railroad a rates bill through to the detriment of all, created additional electrical charges that few have questioned and generally seem intent on destroying Durban.

    Shades of the same confusion politics that Magube sprouts?

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    Silver Member Graeme's Avatar
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    Spearing the Bull

    For those who do not read Finweek, the following letter sums up events in SA rather nicely:

    “Sizwekzi Jekwa, in her Black and White column (12 June), ponders the lack of entrepreneurship in South Africa. Imagine a satirical cartoon: A bull - reflecting growth, industry, jobs and economic well being - lies dead with a thousand spears in it. Imagine the blood leaking out of it inscribed with the words “Capital, skills and enterprise”. Imagine labels on the spears reading every conceivable tax, labour law, black empowerment, “equity” this and that, mining laws, compliances and regulations, local government taxes, Excon, etc, etc. Imagine three mighty warriors called African nationalism, the SA Communist Party and Labour throwing spears at the dead bull. The spears in their hands are labelled land expropriation, competition law and “healthcare”.
    The underlying caption of the cartoon could read: “Legislative overkill….” That’s how investment and enterprise see it.

    How do emerging countries manage without all that legislation - and achieve higher growth rates to boot? If business (big, medium and small) is overburdened and under-investing what chance do the indigenous people have to grow organically? Do aliens worry about registering for tax?

    SA is too complex for its own good and legislation is more often than not ill considered and counter-productive. Pulling out one or two spears won’t save the bull. Government regulates every aspect of life in SA yet is completely useless in itself, unable to deliver much to anybody. It talks, takes, looks after itself and consumes its inheritance.
    SA is de-industrialising and losing its capacity to produce under the sheer weight of Government and the hurdle it presents. Where would SA be today were it not for the huge price increases of minerals? As the world locomotive slows, SA will have plenty of time to ponder why its system and politics are failing. Like all socialist regimes the environment breeds - as you say - lazy, uninventive South Africans. Soon we’ll become victims justifying the system.”

    Mike Sampson
    Econresearch

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    Dave A (19-Jul-08), duncan drennan (20-Jul-08)

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    Email problem Alta Murray's Avatar
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    What an excellent article,Graeme, thank you. In ye olde English -- Capitalism does not a welfare state make.

    Capitalism is actually such a cool phenomena, it creates it's own checks and balances in the sense that profit becomes the boundaries. Capitalism is supposed to flourish as free enterprise, so whilst it does not guarantee democracy, it does, and has to, by it's own essence, have free enterprise (freedom) as it's playing field. Wow, sorry, that sentence reads like a politician wrote it

    When Government becomes a source of employment, as opposed to serving it's people, it will become a burden and carry complexity.

    I might be wrong, with all the other things on my plate i have not had time to explore this fully, but it seems to me like the economy is struggling to become a hybrid of all the forms that have gone before. I, for one, believe in capitalism, and that the government should take care of the welfare of the nation.

    It is surely not our responsibility to provide the ABC's, the water etc. so if the market demands Botox and iPods -- supply! Is that not what business people do?

    Or hang on a second, let me hang up my hat, close my doors, as I am surely not providing basics to this world, and try to fill Governments shoes for them. I wonder what I shall eat? Should I feel guilty that I have picked up what life gave me, studied and work until two in the morning, made it on my own, not had a vacation in 8 years, nor a weekend off, and that I now am one of the people that have meaningless demands like expensive perfume?

    Last night I have been told that I am a know-it-all, always sprouting research and stats so let me get off my little soap box for a while

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    Site Caretaker Dave A's Avatar
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    That really paints the local picture so well, Graeme. Thanks.
    Quote Originally Posted by Alta Murray View Post
    Capitalism does not a welfare state make.
    But it is an excellent way to finance one.

    I see the problem being when capitalism is confused with social systems. It is an economic system. Capitalism is about the most effective economic engine for generating wealth we've come up with so far. Nothing more, nothing less. Its only test for success is (and should be) the ability to produce profit from an enterprise.

    What is done with the wealth created is the next step, and that is where social systems come into play. And it needs a healthy dose of wisdom.

    Some can be spent on improving social conditions.
    Some must be reinvested to increase the capitalist economic engine to produce more wealth for future consumption.

    In July 2007 I wrote an article called Bulletproof for our newsletter. Quite apart from the example used, it was also motivated by what I saw as the overburdening of the economic engine that is expected to finance our social reform. And now the chickens are coming home to roost.

    Our government seems driven to manage (perhaps even own) both wealth creation and how it is used. Business is increasingly being burdened with "social responsibilty" whether it can afford it or not. The responsibility really needs to be placed elsewhere, financed out of the distributable excess made from the economic engine.

    If you look around at what are steadily becoming the most effective socialist systems, the wealth was generated first, and then from the abundance the social support emerged. History has already shown that attempts to shortcut this process have failed so far.
    Quote Originally Posted by Alta Murray View Post
    Last night I have been told that I am a know-it-all, always sprouting research and stats so let me get off my little soap box for a while
    We really appreciate people with that kind of knowledge around here, Alta. So keep on bringing it on
    The trouble with opportunity is it normally comes dressed up as work.

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    just me duncan drennan's Avatar
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    Quote Originally Posted by Dave A View Post
    I see the problem being when capitalism is confused with social systems. It is an economic system. Capitalism is about the most effective economic engine for generating wealth we've come up with so far. Nothing more, nothing less. Its only test for success is (and should be) the ability to produce profit from an enterprise.
    Is it really? Our whole social structure as well as our economic structure are based on the ideas of capitalism. For example, capitalism and rights are inherently linked. The concept of a free (laissez-faire) economy goes hand in hand with capitalism's social structures. The economic system can't exist without the social system. I found this tour of capitalism, and also some history and fundamentals quite interesting.

    Quote Originally Posted by Alta Murray View Post
    I, for one, believe in capitalism, and that the government should take care of the welfare of the nation.
    This is an interesting comment, as if you look at the tenets of capitalism the role of the government is only to protect the rights of the individual. If we start talking about welfare, surely that is more in line with socialist thinking?

    I have a number of question marks around capitalism at the moment - it may be the best we have so far, but that does not limit us from creating new and better systems. Here is a group who are trying to figure out better ways.

    I have come to realise that I have two big issues with capitalism,

    1. We do not have infinitely growing resources, and capitalism requires resources to fuel expansion of wealth.
    2. There is no concept of responsibility within capitalism, only rights which are defensible by force.
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    Site Caretaker Dave A's Avatar
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    Hmm. Rather than go into detail about the extraordinary leap in logic right at the end of the tour, I think this extract on Capitalism.org from SiteTiki.com has relevance:
    The Capitalism Site is a moral, political, and economic defense of the unknown ideal: laissez-faire capitalism. The term 'capitalism' is used here in the broader philosophical political sense, and not in the narrower economic sense, i.e. a free-market.
    I tried to track down the ownership of the site - didn't get very far... Identity of the owner is protected.

    The history and fundamentals link is far more relevant I think. Linking Capitalism with social freedom is questionable, particularly if we look at the industrial revolution which was financed by capitalism, but it could be argued also produced a form of enslavement of the masses.

    In my opinion, extending capitalism beyond an economic system only leads to confusion. The inherent self-interest of capitalism needs to be balanced by a social system and social values.
    Quote Originally Posted by duncan drennan
    We do not have infinitely growing resources
    Only if you limit your thinking to raw physical resources
    Last edited by Dave A; 20-Jul-08 at 09:47 PM.
    The trouble with opportunity is it normally comes dressed up as work.

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    If only "capitalism" had some sort of built in ethics though!

    At a dinner party recently a friend who has an excellent business, and has made a fortune, who has almost everything he could possibly need or want - passed this comment - "last week I checked out our competitors prices and he charges way more than we do, so even though we are making an enormous profit, I put up my prices to match his, as we already have more work to handle than we could cope with!
    Is'nt that great! He said! Money for jam! "

    I forced myself to keep quiet as I know how I felt would be extrememly unpopular!

    Surely this type of: Me! Me! Me! "grab everything I can get" mentality and "unethical" price increases - results in the perception of capitalism as evil.

    Capitalism - Business today - means make as much profit as you can!
    Period!

    Unfortunately in certain industries there is insufficient competition, or Govt. control to naturally control costs! Steel, Fuel, Food etc.

    I worry a lot about this as our particular "niche" market, just does not permit price increases, it is becoming more and more difficult to make a profit!

    Every day brings communication advising our suppliers increased costs - we accept this as "normal", but what is one to do when our market simply will not accept increased prices for services? We have brain stormed this - from a number of angles! please dont take this post to mean that we have not tried various forms of strategy.

    I absolutely do not agree in the government having any control on prices, but it seems to me as if the "have's and have nots" are now potentially categorised by their field of business, the adage that "the cost can be based on what the market will bear!" - might be fine for some industries, but weakens other's!

    I believe all of business and economics is "Balance" - through natural laws!" and whenever this is out of kilter - problems follow!

    Forgive the "vent" - perhaps just jealous!

    Yvonne

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    Site Caretaker Dave A's Avatar
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    In theory, your happy friend should have more competition entering his field in time. The question would be "What are the barriers to entry?"

    Closer to home on your tight margins, it takes a bit of courage to be a pricing leader, but every industry needs them. The trick is not to compete on price but on some other aspect that is important to enough people for you to be viable. You don't need all the business. Pursue the part of the market you want - the part that pays best.
    The trouble with opportunity is it normally comes dressed up as work.

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