The fall of capitalism

[Dave A]

That really paints the local picture so well, Graeme. Thanks.

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.

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

[duncan drennan]

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.

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.

[Alta Murray]

Nooo Duncan, don't you dare stray off. You do need resources, sure, but it might just be the gray matter between your ears, and that seem to go on forever. As for exhaustable resources, in the wrong hands it becomes a politcal tool of relevance. The Boer Wars ring a bell? I would rather have that in the hands of people who have long term profits in mind.

No responsibility? You can try that, and it might even work for a while, I have seen this happen, but the system will spew you out eventually.

It is not a perfect model, but what is? I am going to put my foot in it again, it seems that the model is straining to become a hybrid, and I don't think it is such a bad thing to find a new expression to mirror the times we live in. That was it's origin to start off with, so it seems natural for this to happen. A community farm and the way we all have to get up at 4 to work it seems like a great idea to my mind, just like the Russians did,and I am ducking whilst I type this.

But please!! What astounds me is that people are ranting on about poverty and the haves and have nots like they just discovered them. I hear this a lot, so please pardon the irritation. Hallo! They have been there throughout history, and I am not saying feed them cakes, but the gap between the two has been bigger.

I have tried my best to help people my entire life, ever since I was little, so let me leave yu with this gem : Some people want to be helped, some don't, they get stuck with the begging bowl sydrome and a sense of entitlement. It matters not what your background or disability in this life -- if you want to make it out, you will.

What system would one propose to change that? Feed those that think the world should take care of them? Encourage this type of thinking? Next time you put a dime in a beggars bowl, offer them a job and see what happens.

laissez-faire usually used in connection with aristocrats? Now it is the meritocrats who rule.

[duncan drennan]

The single driving fundamental of capitalism is to create a profit - essentially to sell goods/services at a higher value than we obtain them for.

Our ability to do that is governed by some form of social system. For example, individual freedom is a prerequisite for capitalism. We would not call a country which enslaved its people to work to create profit for a single person a capitalist society, we would call that a dictatorship. Inherent in our current discussion of capitalism is the concept of the individual's freedom to trade.

i.e. Capitalism (in the economic sense) requires a social system to support it, and thus we must look at both the economic and social system.

With regards to capitalism and ethics - there is no mention of ethics or responsibility in the profit fundamental of capitalism. All that is required to be a capitalist is the drive to create profit.

Just to be clear: I believe ethics and responsibility are incredibly important, but technically they are not a requirement for capitalism. In a lot of ways, this is the reason for this discussion.

Going back to the original post which started this thread. I probably should have entitled it "The downfall of Capitalism" instead. One of the problems with capitalism is that once basic needs are met it must continue to manufacture needs (create demand). If there is not sufficient demand, then profits dwindle. If you can create an artificial demand, then profits can continue. It you want to create a demand for vehicles, then move people away from their workplaces and access to public transport (i.e. create suburbs).

The way to overcome this limitation of profit was worked out quite a while ago (in the 1920s). If you can convince people that no matter how much they have it is never enough then you have won - you have created consumers. (The Gospel of Consumption is a very interesting read)

The effects of this on us, I believe, are profound. From human happiness through to increasing pollution and dwindling natural resources. The system and its effects are so deeply ingrained into our society and conscious that we struggle to see the correlation between it and the outcomes.

I am sure we all believe that the creation of profit is a good thing - we are all business owners after all - but when responsibility is replaced with rights we end up with a flawed system that exploits people (either subtly or expressly) as well as our habitat. We see this all around us, from consumerism to abject poverty, from polluted rivers to global warming.

[Dave A]

Reading that last post, I think you have made a strong case against advertising, Duncan

With regards to capitalism and ethics - there is no mention of ethics or responsibility in the profit fundamental of capitalism. All that is required to be a capitalist is the drive to create profit.

Just to be clear: I believe ethics and responsibility are incredibly important, but technically they are not a requirement for capitalism. In a lot of ways, this is the reason for this discussion.

I think Alta makes a strong point on this. Ultimately, you still need customers, and unethical behaviour can hurt that. There is a balancing force even at an economic level.

I agree you need the right social conditions for a healthy capitalist environment. But the presence of capitalism should be part of the overall socio-economic condition, not the cause of it.

Capitalism does have its drawbacks, mainly that not everyone is starting off the same capital base. But there is an adage (I'm trying to remeber who said it) "Distribute the world's wealth evenly amongst all its citizens, and it is only a matter of time before it ends up back in the same hands."

For me that is the appeal of capitalism - everyone has an opportunity. The starting point for each of us might well be different, but whether we realise that potential or is largely up to us.

[Dave A]

Thinking about this, perhaps the core is that capitalism does not and should not function in isolation. To this extent, sites like capitalism.org are actually harmful.

What do you think?

[Alta Murray]

I agree, no model will function in isolation, by it's essence it can not. I think the confusion stems from the fact that when one studies economics, the lines become blurred, and politics confused the matter even further as the flag for democracy was capitalism, and the cold war did not help either JFK actually determined that to win the hearts of people for democracy, one should be able to show them that capitalism works.

So no, it can not function in isolation, but like religion, it can be used to meet other needs. I will never think an opinion harmful though, and if silly enough to read and believe, that is down to stupidity of the reader. I think we have moved well into the info age, and that has prompted us to become thinking human beings, though Duncan would label that an artificial need that has been met Come to think of it, that has negated the move towards mobilization.

Let's do something new -- come up with a better model than capitalism, and motivate. For two pages we have been complaining and analyzing, just like a cackle of woemen So lets find a solution......

[Alta Murray]

Inherent in our current discussion of capitalism is the concept of the individual's freedom to trade.

Agreed -- but then one can not impinge on that freedom in any way, nor stand by the side and decide for the 'free individual' what is an artificial or real need. Sometimes the market will fill a need, and sometimes a want, but that will differ from individual to individual.

i.e. Capitalism (in the economic sense) requires a social system to support it, and thus we must look at both the economic and social system.

Granted, but chew on this -- Prostitution is the oldest profession in the world, it has endured for centuries. Does society condone prostitution? No, it does not, therefore the social system becomes the lion that doesn't roar, and economics in conjuction with a social system becomes irrelevant. But only in some cases, which creates the confusion that reigns.

.... it must continue to manufacture needs (create demand). If there is not sufficient demand, then profits dwindle. If you can create an artificial demand, then profits can continue. It you want to create a demand for vehicles, then move people away from their workplaces and access to public transport (i.e. create suburbs).

Read that too in my fav ec.text book of all times, but I don't agree. Look at current urban development or look at the old London if you will. That is not about creating artificial needs! It is called growth, and as we can not jog to work like some Highlander transversing the moors, we need transport. Transport existed in all it's forms throughout history, under all economic systems, so to blame capitalism for that one, is not correct. Or did all socialists jog to work, running from suburbs to Moscow? Did socialism not produce submarines, or did they swim and attacked with their snorkels?

Capitalism can not 'manufacture' needs. I can not think of one instance in history where a human being went : Well, I have all my basic needs met, so I am happy. As a species we will always want more without any outside influences, it is called evolution, and it is the secret of our success in the food chain. We will always strive for more!

I can think of many instances where the market failed to create a product that took off, think of books in the beginning. Not a smash hit at first, but it was the thirst of knowledge that drove the advent, not the market place that created an artificial need.

The way to overcome this limitation of profit was worked out quite a while ago (in the 1920s). If you can convince people that no matter how much they have it is never enough then you have won - you have created consumers.

No, again, the people need no convincing whatsoever in this regard. Enough will never be enough, good thing too, otherwise we would still be stuck in some cave, but even in that scenario, can you not see the one guy eyeing the bigger fire in the next cave?

Would that make me part of a bad system if I rocked up with matches? Am I then creating an artificial need?

I think what you mean is that we compete and complete our irmage with a luxury car for instance. That is then an 'artificial need' created by the market place? It is not an artificial need, people will always look towards outward signs to determine pecking order if you like. Way back it was horses, kid you not, and stealing a horse was a capital offence.

It is human nature, plain and simple, and to blame a system that conforms to human nature doesn't make sense.