Why Capitalism is Doomed

[Dragon]

I don't know (or care) what you do in your own real life. (FWIW, I own my own business too.)

Bull crap. If that were true, you'd know there's nothing "capitalist" about what government is doing to business.

Going by the dictionary definition of that term, we have a capitalist system. If you want to use some idiosyncratic, ideology-driven re-definition of the word "capitalist" that's your privilege, but be warned that it will lead to complete confusion.

Of course, there's some evidence that may be precisely your intent . . .

 

[Widdekind]

"Vast pools of available labor" is exactly the problem. Capitalism works best (from the viewpoint of the people, that is) when there is a tight labor market.

Of course, that's part of the inherent difficulty of capitalism under even the best conditions, that conflict of interest between the capitalist and everyone else. From the capitalist's point of view, a tight labor market is a problem as it drives up operating costs. Thus, capitalists are naturally prone by the logic of business success to seek the conditions under which the people will reject the capitalist system. It succeeds only insofar as they are unable to do this. The problem today is that that inability has been remedied. The success of capitalism is dependent on the failure of capitalists. The success of capitalists results in the failure of capitalism.

true -- if (and only if) you "exorcise" entrepreneurial spirit from capitalism; your definition, of the word "capitalism", is bereft of "entrepreneurism" & "competition"; accordingly, when current producers improve efficiency, and eliminate jobs, then "that's it, game over", and the unemployed become serfs & thralls for-ever-more

false -- if (and only if) capitalism is "(re-)juvinated" with "entrepreneurial competitive spirit"; accordingly, innovative entrepreneurs will compete, to hire labor, to build their "visions" for humans' futures


many posts in this thread have alleged, that corporations form "Government-backed oligopolies", which wield Government Force, to eliminate today's competitors, and tomorrow's entrepreneurs, so as to "Threaten" workers with eternal poverty, so as to "Force" down wages -- i.e. "Fascism" ("White-Collar Bullying" vs. Communist "Blue-Collar Bullying")

what you have written, is the 19th century AD Marxist doctrine, that "Capitalism must degenerate into Fascism" (in its financial death-throes); Karl Marx's "... must ..." is being Government en-Forced (by many means, that gear-together, in complex inter-actions, that collectively co-act, to kill Capitalism)

"two wrongs (Fascism vs. Communism) won't make one right (Libertarian-Capitalism animated with Entrepreneurism)"; the former both resort to Force, that both undermine Free-markets, generated by visionary Libertarian-Capitalists

White-Collar Fascism vs. Blue-Collar Communism amounts to a Greed-driven "western-civilization-wide civil war", where-with-in "everybody sees the stupendous profits produced by Capitalism... and starts a shark-feeding-frenzy, resorting to Force, until they cannibalize themselves into Doom" (per Dragon's OP, which is possible, plausible, & probable, unless westerner's "do as JFK said ['ask how they can contribute'], not as JFK did ['assassinated']")

employing "Evolutionary" terms, Dragon has described a "Capitalism" berefted of "Entrepreneurial Adaptability"; and predicted that, in the absence of "Adaptation", impending "Extinction"; and thereby proved the importance, of "Entrepreneurial Competition" as "Pillars of Libertarian-Capitalism" (without which the system collapses)

 

[itfitzme]

We've also set the precedent that, if the government decides your business is too big to go through the bankruptcy and restructuring process because you'll have to lay off too many people, then they can go ahead and take over and restructure it as -they- see fit. In the case of GM, that involved telling the bond holders to take a f'in hike.

Except, and you may provide evidence to the contrary, Congress didn't force GM, Chrysler or Ford to do anything. The government has no legal grounds within which to force a free market company to do anything outside of the established laws. And if they try, it will go to trial and all the way to the Supreme Court before anything happens. Companies have every right to declare chapter 11 if they want to.

Congress made funds available, with claw back conditions, that GM, Chrysler and Ford could use as a loan. GM and Chrysler decided to take the loan. Ford did not. And the loan was to be paid back within a time limit. Just a well, as with any creditor, the lender has every right to put whatever restrictions it wants to on the loan, including telling bond holders to go take a f'in hike.

If GM and Chrysler had decided that they wanted to declare chapter 11 bankruptcy, they would have done so.

And you can bet your sweet patooty that the UAW was part of that decision making process, if not right up front, then in the back ground because the UAW is as much a part of the supplier of automobiles coming out of Detroit as is any one of the Big Three.

{BTW, good for you for the spelling of f'in. Nice civil touch.}

 

[daveman]

Not what this is about. Capitalism is doomed BECAUSE of human nature, and because it can no longer provide prosperity for most people.

U.S. millionaires population expanded by 8% in 2010 - Mar. 16, 2011

It is if you're willing to work for it.

No one's going to give you wealth because it's NOT FAIR!!! if they don't.

Are you saying that we can ALL be millionaires?

No. I'm saying if you want to be wealthy, or at least better off than you are, stop whining and get off your ass.

The U.S. economy had a nominal size of $15 trillion in 2011. Per capita GDP was $48k -- which means, of course, that it was quite impossible for everyone to be a millionaire last year. With about 24% of income taken by the top 1% richest people, that means the average income of 99% of the people was a bit under $37k.

The problem isn't that you can't do well without working for it. The problem is that for most people, there's no way for them to do well if they ARE willing to work for it.

When I was a boy, capitalism had a lot of popular support because (in the mixed economy version that prevailed at the time) it seemed to work. It allowed most people to find work that gave them a modest middle-class income. Note: that's MOST people. It's not just the smartest, just the most aggressive, just the luckiest. It's MOST people.

If people give up on capitalism ever again providing opportunities like that, it will lose popular support, and it will be brought down. I can see no way for it to restore those opportunities, frankly. Even if we were to restore the programs and policies of the 1960s, those worked only because of high demand for labor that gave unions the bargaining leverage to keep wages high. If demand for labor is slack, collective bargaining won't be successful. The union will be in too weak a position.

That's why I believe that capitalism is doomed. I understand the ideological reasons why some of you don't want to accept that. Your problem is that most people don't give a damn about free market ideology one way or the other. All they care about is results, and the results are lacking.

The results are lacking because government, especially this administration, is doing everything it can to hamper business.

You're cutting off the feet of a runner and then complaining that he can't run.

 

[itfitzme]

"Vast pools of available labor" is exactly the problem. Capitalism works best (from the viewpoint of the people, that is) when there is a tight labor market.

Of course, that's part of the inherent difficulty of capitalism under even the best conditions, that conflict of interest between the capitalist and everyone else. From the capitalist's point of view, a tight labor market is a problem as it drives up operating costs. Thus, capitalists are naturally prone by the logic of business success to seek the conditions under which the people will reject the capitalist system. It succeeds only insofar as they are unable to do this. The problem today is that that inability has been remedied. The success of capitalism is dependent on the failure of capitalists. The success of capitalists results in the failure of capitalism.

true -- if (and only if) you "exorcise" entrepreneurial spirit from capitalism; your definition, of the word "capitalism", is bereft of "entrepreneurism" & "competition"; accordingly, when current producers improve efficiency, and eliminate jobs, then "that's it, game over", and the unemployed become serfs & thralls for-ever-more

false -- if (and only if) capitalism is "(re-)juvinated" with "entrepreneurial competitive spirit"; accordingly, innovative entrepreneurs will compete, to hire labor, to build their "visions" for humans' futures


many posts in this thread have alleged, that corporations form "Government-backed oligopolies", which wield Government Force, to eliminate today's competitors, and tomorrow's entrepreneurs, so as to "Threaten" workers with eternal poverty, so as to "Force" down wages -- i.e. "Fascism" ("White-Collar Bullying" vs. Communist "Blue-Collar Bullying")

what you have written, is the 19th century AD Marxist doctrine, that "Capitalism must degenerate into Fascism" (in its financial death-throes); Karl Marx's "... must ..." is being Government en-Forced (by many means, that gear-together, in complex inter-actions, that collectively co-act, to kill Capitalism)

"two wrongs (Fascism vs. Communism) won't make one right (Libertarian-Capitalism animated with Entrepreneurism)"; the former both resort to Force, that both undermine Free-markets, generated by visionary Libertarian-Capitalists

White-Collar Fascism vs. Blue-Collar Communism amounts to a Greed-driven "western-civilization-wide civil war", where-with-in "everybody sees the stupendous profits produced by Capitalism... and starts a shark-feeding-frenzy, resorting to Force, until they cannibalize themselves into Doom" (per Dragon's OP, which is possible, plausible, & probable, unless westerner's "do as JFK said ['ask how they can contribute'], not as JFK did ['assassinated']")

employing "Evolutionary" terms, Dragon has described a "Capitalism" berefted of "Entrepreneurial Adaptability"; and predicted that, in the absence of "Adaptation", impending "Extinction"; and thereby proved the importance, of "Entrepreneurial Competition" as "Pillars of Libertarian-Capitalism" (without which the system collapses)

I would like to politely ask if you would stop with all the fancy font-work. I realize that it all has very specific meaning for you. But I find it so distracting as to make your publications completely incomprehensible. It simply is not standard and therefore is not intuitive. Especially the light gray, which is just to hard to read.

If you really want to go for completely unreadable, you might try yellow buried in blue, which are at opposite ends of the wavelength and there fore focus entirely differently on the retina, making the yellow all fuzzy. (Or is red and blue worse? Hmm. Just some ergonomic thing I recall that gets people to not pay attention to the finer print.)

Depends on what you're after.

 

[Dragon]

No. I'm saying if you want to be wealthy, or at least better off than you are, stop whining and get off your ass.

Ah, that common confusion of conservatives. Being terminally selfish themselves, they cannot understand anyone else arguing from principles.

I know it's hard for you, but try, please: this is NOT about me. This is NOT about me making more money. This is about everyone.

 

[Dragon]

true -- if (and only if) you "exorcise" entrepreneurial spirit from capitalism

No. Everything I said was said in full recognition of the spirit of entrepreneurism; in fact, that spirit is what has caused the problem, by enabling capitalists to find a solution to tight labor markets.

Entrepreneurism only works to the general advantage to the extent that the motives of entrepreneurs and of the people generally are compatible. Where they are not compatible, indeed hostile, as in this case, entrepreneurism is a curse, not a blessing.

 

[Ava]

This is for discussion of something I wrote for my blog recently. You can find it here: The Dragon Talking: Why Capitalism is Doomed

The basic reasoning goes like this. Economic systems, like governments, exist on popular sufferance -- by the consent of the governed, to use Jefferson's phrase. Each can be described, therefore, in terms of a social compact: the people allow the system to go on, in return for promised gains.

With capitalism, the unwritten agreement was that the people would allow an economic system in which a few privileged and powerful individuals controlled most of the wealth, in return for their managing it so as to create rising standards of living for most people. But in order for that to work, there has to be a high demand for labor, which can be leveraged by one of several means into high wages.

Today, we are increasingly in a situation where labor is not needed to produce wealth. That means that even as the economy grows, demand for labor doesn't grow with it, and capitalism can no longer provide rising standards of living for most people. Unemployment is too intractably high, demand for labor too low, and downward pressure on wages accordingly great.

Since capitalism can't fulfill its side of the tacit bargain, it is losing popular support. When that loss reaches a critical point, the system will be replaced by -- something else. Exactly what else is a good question. But unless high demand for labor can be restored, capitalism is doomed, and I see no way to do that.

Here are six ways which would doom capitalism.

-- Universal health care. The health care bill had very little to do with health care. It had everything to do with unionizing millions of hospital and health care workers, as well as adding 15,000 to 20,000 new IRS agents (who will join government employee unions). Obama doesn't care that giving free health care to 30 million Americans will add trillions to the national debt. What he does care about is that it cements the dependence of those 30 million voters to Democrats and big government. Who but a socialist revolutionary would pass this reckless spending bill in the middle of a depression?

-- Cap and trade. Like health care legislation having nothing to do with health care, cap and trade has nothing to do with global warming. It has everything to do with redistribution of income, government control of the economy and a criminal payoff to Obama's biggest contributors. Those powerful and wealthy unions and contributors (like GE, which owns NBC, MSNBC and CNBC) can then be counted on to support everything Obama wants. They will kick-back hundreds of millions of dollars in contributions to Obama and the Democratic Party to keep them in power. The bonus is that all the new taxes on Americans with bigger cars, bigger homes and businesses helps Obama "spread the wealth around."

-- Make Puerto Rico a state. Why? Who's asking for a 51st state? Who's asking for millions of new welfare recipients and government entitlement addicts in the middle of a depression? Certainly not American taxpayers. But this has been Obama's plan all along. His goal is to add two new Democrat senators, five Democrat congressman and a million loyal Democratic voters who are dependent on big government.

-- Legalize 12 million illegal immigrants. Just giving these 12 million potential new citizens free health care alone could overwhelm the system and bankrupt America. But it adds 12 million reliable new Democrat voters who can be counted on to support big government. Add another few trillion dollars in welfare, aid to dependent children, food stamps, free medical, education, tax credits for the poor, and eventually Social Security.

-- Stimulus and bailouts. Where did all that money go? It went to Democrat contributors, organizations (ACORN), and unions -- including billions of dollars to save or create jobs of government employees across the country. It went to save GM and Chrysler so that their employees could keep paying union dues. It went to AIG so that Goldman Sachs could be bailed out (after giving Obama almost $1 million in contributions). A staggering $125 billion went to teachers (thereby protecting their union dues). All those public employees will vote loyally Democrat to protect their bloated salaries and pensions that are bankrupting America. The country goes broke, future generations face a bleak future, but Obama, the Democrat Party, government, and the unions grow more powerful. The ends justify the means.

-- Raise taxes on small business owners, high-income earners, and job creators. Put the entire burden on only the top 20 percent of taxpayers, redistribute the income, punish success, and reward those who did nothing to deserve it (except vote for Obama). Reagan wanted to dramatically cut taxes in order to starve the government. Obama wants to dramatically raise taxes to starve his political opposition.
With the acts outlined above, Obama and his regime have created a vast and rapidly expanding constituency of voters dependent on big government; a vast privileged class of public employees who work for big government; and a government dedicated to destroying capitalism and installing themselves as socialist rulers by overwhelming the system.

Add it up and you've got the perfect Marxist scheme -- all devised by my Columbia University college classmate Barack Obama.

Obama's agenda: Overwhelm the system - Opinion - ReviewJournal.com

 

[Dragon]

Actually, capitalism would survive all of those six changes just fine. The only thing that would doom capitalism, aside from something that would doom civilization itself, is if the people stop supporting it. That will happen if the people are convinced that it will never bring back widespread prosperity.

 

[Wiseacre]

Capitalism would work just fine if we did a better job or running it. Doesn't matter what your economic system is, people will take advantage of whatever they can to improve their position relative to others, by fair means or foul. Okay, not everyone would use dishonest methods, but the gov't still has to prevent abuses without unduly limiting economic growth. IMHO, neither party has done well at that, pretty much since the getgo.

 

[Wiseacre]

Actually, capitalism would survive all of those six changes just fine. The only thing that would doom capitalism, aside from something that would doom civilization itself, is if the people stop supporting it. That will happen if the people are convinced that it will never bring back widespread prosperity.

Which again is a function of mismanagement by the gov't. Plus, I'd argue that if you extend the social safety net to a majority of people, capitalism takes a big hit from lack of participation. It'd be banana republic time, with little or no expansion or innovation or entrepeneurship. But by God, we'll all be equal.

 

[Dragon]

Actually, capitalism would survive all of those six changes just fine. The only thing that would doom capitalism, aside from something that would doom civilization itself, is if the people stop supporting it. That will happen if the people are convinced that it will never bring back widespread prosperity.

Which again is a function of mismanagement by the gov't. Plus, I'd argue that if you extend the social safety net to a majority of people, capitalism takes a big hit from lack of participation. It'd be banana republic time, with little or no expansion or innovation or entrepeneurship. But by God, we'll all be equal.

All of that assumes that labor is necessary to create wealth. What I'm saying here is that we're in a situation where, increasingly, less and less labor is required to produce wealth. The labor of many people becomes superfluous and unnecessary. Not only does that result in high and intractable unemployment, but it also puts downward pressure on wages for such jobs as remain.

If we can produce wealth without labor, or with much less labor, of what value is it to motivate people to work? And, conversely, if we remove that motivation, why should we care? It's not as if we need them to work. So who cares if they are not motivated to?

Another solution, though, has emerged from discussions of this subject elsewhere. If it became standard practice for everyone to hold a part-time job, but to be paid what we consider now to be full-time wages, that would also suffice, at least for quite a while. The question being, of course, how to make that situation a reality.

 

[daveman]

No. I'm saying if you want to be wealthy, or at least better off than you are, stop whining and get off your ass.

Ah, that common confusion of conservatives. Being terminally selfish themselves, they cannot understand anyone else arguing from principles.

I know it's hard for you, but try, please: this is NOT about me. This is NOT about me making more money. This is about everyone.

I know. And as I said: If you want to be wealthy, or at least better off than you are, stop whining and get off your ass. That applies to everybody. And it's a sound principle.

The world doesn't owe you anything for your mere existence.

You cannot understand this.

 

[daveman]

Actually, capitalism would survive all of those six changes just fine. The only thing that would doom capitalism, aside from something that would doom civilization itself, is if the people stop supporting it. That will happen if the people are convinced that it will never bring back widespread prosperity.

No other system can bring widespread prosperity.

History shows this. It's undeniable.

 

[daveman]

Actually, capitalism would survive all of those six changes just fine. The only thing that would doom capitalism, aside from something that would doom civilization itself, is if the people stop supporting it. That will happen if the people are convinced that it will never bring back widespread prosperity.

Which again is a function of mismanagement by the gov't. Plus, I'd argue that if you extend the social safety net to a majority of people, capitalism takes a big hit from lack of participation. It'd be banana republic time, with little or no expansion or innovation or entrepeneurship. But by God, we'll all be equal.

Equally miserable. But equality is the goal, not quality of life.

The left doesn't give a shit about people as individuals.

 

[Dragon]

I know it's hard for you, but try, please: this is NOT about me. This is NOT about me making more money. This is about everyone.

I know. And as I said: If you want to be wealthy, or at least better off than you are, stop whining and get off your ass.

You know, but then you repeat yourself, demonstrating that you don't know.

Dave, once again: this is not about me. Suggestions for what I can do to make more money are therefore completely irrelevant and inappropriate. I know what to do to make more money, thank you very much. That's not what this is about.

 

[Dragon]

Actually, capitalism would survive all of those six changes just fine. The only thing that would doom capitalism, aside from something that would doom civilization itself, is if the people stop supporting it. That will happen if the people are convinced that it will never bring back widespread prosperity.

No other system can bring widespread prosperity.

History shows this. It's undeniable.

Actually, history shows that a mixed-model economy with socialist programs and regulations applied to a privately-owned base perform much better than either a pure capitalist or pure socialist model. But we seem to be entering into uncharted territory now, so that history cannot be taken as a straightforward guide.

 

[Wiseacre]

" All of that assumes that labor is necessary to create wealth. What I'm saying here is that we're in a situation where, increasingly, less and less labor is required to produce wealth. The labor of many people becomes superfluous and unnecessary. Not only does that result in high and intractable unemployment, but it also puts downward pressure on wages for such jobs as remain. "

Okay, let's get into the labor issue. It's true that an over abundance of labor results in a downward pressure on wages; the only answer to that is an increase in the number of jobs with some skill or training required. We've already got hundreds of thousands of skilled jobs begging for people to fill them; damned if I know why we haven't begun to change our education/training systems to steer those people that want to do that kind of work into those fields. It's true that technological advances have reduced the requirements for unskilled labor, we've been doing that for at least the last century. The word has to go out to every kid in America - you can't get by anymore with just a HS diploma, you need to be able to learn a skill or profession or your future is not going to have many options. Maybe we need a paradigm shift, a change of attitude that says doing a good job at anything is worthwhile, even if it's picking tomatoes.

To me, the real answer is more competition, and encouraging innovation and entrepeneurship to improve the standard of living for everybody. You do everything you can to grow economically, getting new businesses to flourish. IMHO we've gone too far with the big corps and big unions, I'd rather see more smaller companies and less powerful unions. Too many little guys getting squeezed out, too much gov't interference. We're strangling the golden goose; not smart.

 

[Wiseacre]

Actually, capitalism would survive all of those six changes just fine. The only thing that would doom capitalism, aside from something that would doom civilization itself, is if the people stop supporting it. That will happen if the people are convinced that it will never bring back widespread prosperity.

No other system can bring widespread prosperity.

History shows this. It's undeniable.

Actually, history shows that a mixed-model economy with socialist programs and regulations applied to a privately-owned base perform much better than either a pure capitalist or pure socialist model. But we seem to be entering into uncharted territory now, so that history cannot be taken as a straightforward guide.

Not sure that comparison is true, considering that most capitalist systems, including our own, have been poorly managed by the gov't. I hate to keep harping on the gov't, but to me that's their main responsibility, outside of national security and a few other issues. Also not sure any mixed models are all that great either, or that what's works in a small country somewhere would work as well here.

 

[georgephillip]

"Politicians argue over big government so they can avoid talking about big capitalism, the larger source of our predicament.

"But reality is not cooperating with their evasions. Despite the so-called recovery, the economic pathologies generated by unbounded capitalism during the past thirty years are expanding.

"Falling wages and surplus labor, swelling trade deficits and foreign indebtedness, deepening inequality and the steady destruction of the broad middle class—the political system does not have an answer for any of these."

Reimagining Capitalism: Bold Ideas for a New Economy | The Nation

The richest 1% of Americans "earned" about 65% of all economic gains under the Bush expansion.
They have "earned" 93% of all gains over the past two years.
The rich are the problem that "choosing" between R or D will not solve.