Thread: An explanation for the failure of capitalism

Originally Posted by jockeys

KP, first off, good thread. Don't really agree with you, but good thread. This is why I like SRP!

Some thoughts:
1. you seem to think that the producer is, to some degree, screwing the consumer by getting more benefit from the trade. well, the consumer is BUYING it, so at some point he earned the money by being a producer of his own. so, even if the cobbler is screwing me when I buy shoes, I'm going to screw him right back when he buys something from my store, because I'm getting more benefit that him by selling him one of the countless widgets I produce that he needs. in essence, I am trying to say that all consumers are producers, at some level. no one is only a consumer, and no one is only a producer, so I would view your pebble game as oversimplifying the problem. Nobody's screwing anybody, everybody benefits from trade, but some people will benefit more. There's nothing morally (or in any other way) wrong with that. The point of this game is that everyone can do what is best and right, and we can still not get a good solution. Furthermore, not everybody produces countless "things" they could never use themselves to trade. Some people trade labor. Trading labor will always get you less of a benefit than trading something else.
2. you say capitalism has failed; I say it never got a chance. true lassez faire capitalism, afaik, has NEVER been implemented in the modern world. the current system we have here (I am American) is a sad, socialist mockery of real capitalism, and furthermore, (boy, the other rabid libertarians are gonna love me for this) that the government's constant interference with free trade is what's ruining it, not the idea itself. I still believe true free trade would be far superior. we aren't likely to find out, though, the gov't seems to enjoy riding around snug and secure in the pockets of anti-competitive lobbyists. No pure economic theory has ever been implemented, from pure capitalism to pure communism, or even pure feudalism. There have always been elements of other organizations that are retained from historical periods, and advancements from other systems that have been added on in a more or less ad hoc way. But more or less free exchange systems have been tried. It was prevalent Great Britain before and during the Irish Potato Famine, and it was prevalent in the US in the era of the robber barons. And I agree with you that it is better than any other pure economic theory that has been tried before. That doesn't mean it is perfect.
3. assuming you are correct, and capitalism is doomed to failure, what would you propose as an alternative? (not being antagonistic, just curious)

To answer your third question, because apparently, I have to put something outside the quotes, the only change I would add is a periodic redistribution of wealth. If you want me to be more specific in terms of a concrete policy, than I would suggest we eliminate the standard tax deduction on income tax forms, and replace it with a non-wastable tax credit equal to $15000 per adult individual, and $5000 per dependent child.

Originally Posted by Kantian Pragmatist

To answer your third question, because apparently, I have to put something outside the quotes, the only change I would add is a periodic redistribution of wealth. If you want me to be more specific in terms of a concrete policy, than I would suggest we eliminate the standard tax deduction on income tax forms, and replace it with a non-wastable tax credit equal to $15000 per adult individual, and $5000 per dependent child.

while that sounds appealing to me personally, and appeals to my decidedly libertarian way of thinking, what, specifically, would you hope to accomplish with that? or is it just a general way of favoring the individual over the conglomerate?

Originally Posted by jockeys

while that sounds appealing to me personally, and appeals to my decidedly libertarian way of thinking, what, specifically, would you hope to accomplish with that? or is it just a general way of favoring the individual over the conglomerate?

It would counter the effects of inequality that builds up in such a system of free exchange as I have described. It wouldn't return things to their initial, absolutely equal state, but it would prevent individuals from being priced out of participation in the economy. I would think it would also be important to index the tax credit to inflation, once the credit has been established. And there are a lot of other reasons to favor this. It would let single mothers stay home with their kids, and lessen the pressure on parents to constantly work, so they could check homework, and encourage their socialization. It promotes personal freedom in that it would give the individual the option of "opting-out" of being someone else's laborer in a job they dislike. It gives them some capital they can use to form their own small business. It wouldn't require us to promote some religion or any religion at all in order to alleviate these inequality effects, preserving the freedom to believe. This is actually an idea I've been thinking about for some time, and I haven't found a downside to it yet, other than a possibility for a short-term spike in inflation. But as I said, inflation isn't necessarily a problem, unless it leaves some group of people out.

Kant

In every post you make it becomes more clear that your only solution for anything is government intervention. Any and every idea that doesn't lead only to greater power for your idealized government ivory tower utopia will be rationalized away with the weakest of arguments bolstered only by a volume of words. I'm done playing now. Once you sit down read a deffinition of FREEDOM perhaps we can discuss thing in the future.

Originally Posted by Kantian Pragmatist

It would counter the effects of inequality that builds up in such a system of free exchange as I have described. It wouldn't return things to their initial, absolutely equal state, but it would prevent individuals from being priced out of participation in the economy. I would think it would also be important to index the tax credit to inflation, once the credit has been established. And there are a lot of other reasons to favor this. It would let single mothers stay home with their kids, and lessen the pressure on parents to constantly work, so they could check homework, and encourage their socialization. It promotes personal freedom in that it would give the individual the option of "opting-out" of being someone else's laborer in a job they dislike. It gives them some capital they can use to form their own small business. It wouldn't require us to promote some religion or any religion at all in order to alleviate these inequality effects, preserving the freedom to believe. This is actually an idea I've been thinking about for some time, and I haven't found a downside to it yet, other than a possibility for a short-term spike in inflation. But as I said, inflation isn't necessarily a problem, unless it leaves some group of people out.

all well and good... but where does the money come from? to my way of thinking, the only way for the government to be able to afford to NOT take so much of our money is to spend less... a LOT less, if your numbers are to be realized. such a radical budgetary shrinkage would seem to necessitate a much smaller government than is currently in place.

also, by "tax credit" do you mean "rebate," or "reduction of taxable income?" from your wording it is not clear, they are two very different things.

In spite of the explanation for the failure of capitalism, capitalism still hasn't failed.

Originally Posted by jockeys

all well and good... but where does the money come from? to my way of thinking, the only way for the government to be able to afford to NOT take so much of our money is to spend less... a LOT less, if your numbers are to be realized. such a radical budgetary shrinkage would seem to necessitate a much smaller government than is currently in place.

also, by "tax credit" do you mean "rebate," or "reduction of taxable income?" from your wording it is not clear, they are two very different things.

I mean rebate. Think of it like being paid to file your taxes, no matter how much money you've made, you get paid the same amount.

As for paying for it, I rather like Milton Friedman's suggestion of a 50% flat tax on all income regardless of its source. We could also pay for it by reducing our national defense spending, since we pay more for our national defense than nearly the entire rest of the world combined.

Tim, I believe my suggested fix here is among the least interventionist things a government could do to effect the economy. Police forces, fire departments, road services, and typical forms of welfare are far more interventionist. Please don't mischaracterize me here. The only intervention here is so that a system of free exchange can sustainably continue without limiting anyone's personal liberty. I know full and well what the definition of freedom is and what it entails. Consequences of actions is not a part of the theory of freedom, it is part of the theory of existence. Self-control of action is part of the theory of freedom. I believe relying on religion or culture to "self-correct" this problem with free exchange is incredibly naive and ultimately wrong, given the history of organized religion in the world.

Originally Posted by Kantian Pragmatist

Tim, I believe my suggested fix here is among the least interventionist things a government could do to effect the economy. Police forces, fire departments, road services, and typical forms of welfare are far more interventionist. Please don't mischaracterize me here. The only intervention here is so that a system of free exchange can sustainably continue without limiting anyone's personal liberty. I know full and well what the definition of freedom is and what it entails. Consequences of actions is not a part of the theory of freedom, it is part of the theory of existence.

How can any intervention not effect personal liberty? That is the essence of eliminating freedom.

Police forces and fire protection are not by nature interventionist, they like road services are the services we pay the government for. All of your ideas require direct intervention in every citizens life, thereby proving you are not a fan of liberty.

Consequences of action must be allowed for freedom to exist. the ability to fail is the only motivator to succeed. Without the desire for success why be free.

Originally Posted by Kantian Pragmatist

Self-control of action is part of the theory of freedom. I believe relying on religion or culture to "self-correct" this problem with free exchange is incredibly naive and ultimately wrong, given the history of organized religion in the world.

What problem were we talking about again?

Oh yea the lack of a safety net to catch the stupid or unlucky. See the only reason to have a safety net is to allow the lowest common denominator to propagate. Doing this weakens our system creating the very instability you fear so much.

I still fail to understand why you think a system based upon free exchange will fail. It is the most basic system possible. You have what I want, I can't take it so I must earn it. How can that fail?

Let's see capitalism bad, pure socialism bad, communism bad, dictator bad, gathering berries to stay alive bad, anarchy bad! Did I miss any? Which of the forgoing is the one that most want to live under? All these systems are made by man and, as we all know, they are not perfect.


My 2 cents

Richard

Originally Posted by Wildtim

How can any intervention not effect personal liberty? That is the essence of eliminating freedom.

Police forces and fire protection are not by nature interventionist, they like road services are the services we pay the government for. All of your ideas require direct intervention in every citizens life, thereby proving you are not a fan of liberty. How can you fail to recognize that you contradict yourself within the span of two lines? We don't pay the government for these things, they tax us to provide these things. By your own admission, such taxation is intervention and limits freedom. Moreover, the exercise of these entities is interventionist by their very nature. Police intervene in the natural interaction between people, limiting some actions that are objectively available, and forcing other interactions that at least one party many not desire to engage in. Fire departments intervene in the natural occurrence of fires. Roads intervene in the natural lay of the land, curtailing some interaction between people and expanding others. Would you prefer that we return to some Hobbesian state of nature that never really existed in the first place anyway? I suppose some men prefer things red in tooth and claw.

Consequences of action must be allowed for freedom to exist. the ability to fail is the only motivator to succeed. Without the desire for success why be free.
Are you kidding me? Success is its own motivator, that's why it's called success. When you succeed, then you are better off than if you haven't tried. When you fail, you are worse off than if you haven't tried.


What problem were we talking about again?

Oh yea the lack of a safety net to catch the stupid or unlucky. See the only reason to have a safety net is to allow the lowest common denominator to propagate. Doing this weakens our system creating the very instability you fear so much. Why do you presume that there is such a thing as a lowest common denominator among people? People are not inherently stupid or unlucky. They can, and ought to be taught and corrected.

I still fail to understand why you think a system based upon free exchange will fail. It is the most basic system possible. You have what I want, I can't take it so I must earn it. How can that fail?

Re-read the games. Try to grasp how it represents a system of free exchange where the benefit of exchange is consistently differential in the same direction. I'm not talking here about individual trades, but the effects of all trading taken together. An individual trade, so long as its free, will always benefit both parties to the trade. That is the truth with which we begin. But the accumulation of many such trades can result in a situation which is not beneficial.