Why Capitalism is Doomed

[daveman]

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.

Editing my post to make it say something it didn't is dishonest and intellectually bankrupt.

You left out:

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.​

And it looks like I was right. You cannot understand it.

 

[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.

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.

When has pure capitalism ever been tried in long term and large scale?

 

[Dragon]

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.

An increase in the number of jobs, yes; an increase in the skill or training required, no. That's an expression of what I call the competitive fallacy: confusing the competitive advantage of one part of the whole in relation to other parts, with baseline factors affecting the whole in toto. Generally speaking, it's true that jobs which require more skill or training do pay more; what I'm talking about, though, is a factor that drops pay for all work across the board. As real wages fall (or fail to rise with productivity), it always remains true that highly skilled labor pays more than unskilled labor, but wages for both drop (or fail to rise with productivity).

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.

I don't know either, and that's a good recommendation. However, it won't solve the underlying problem, even though it's worth doing. The total number of job seekers far exceeds the total number of jobs. That means that, even if we retrained everyone perfectly to fill all of the jobs that aren't being filled now, we would still have high, intractable unemployment. Not as bad as now, obviously, but still higher than a healthy economy should present.

It's true that technological advances have reduced the requirements for unskilled labor, we've been doing that for at least the last century.

It's not just unskilled labor. It's also eliminating a lot of skilled labor. Years ago, I worked as a document processor, using word processing software to format documents. It was pretty well paid while it lasted, and it was certainly skilled work. It no longer exists; word processing software has become so easy and user friendly that specialists in it simply aren't needed. The need for bank tellers, grocery checkers, legal assistants/paralegals, customer service representatives, even associate attorneys is declining due to advances in software.

I like what I do now (writing articles and ghostwriting and editing books) much better than I did anything i ever did before, but there's even software out there that can do a lot of what I do! So far it hasn't seemed to cut into my work load any, but I know it's only a matter of time, further advances, and marketing. In the end, there are very few areas of even the most skilled jobs that can't be automated. A real human being has to appear in court, but software can do legal research and prepare arguments and briefs. A real human being has a bedside manner (or doesn't), but software and robots can do medical research, prepare medications, diagnose diseases and prescribe treatments, even (potentially) perform surgery better than a human doctor. Some of this is being done already.

All of the old answers, whether progressive or conservative, depend on wages paid for work to distribute wealth, and so only work to the extent that work is needed to produce wealth. Even classical socialism Soviet-style didn't guarantee people an income independent of working, it guaranteed people a job instead -- and today, I don't see how it could. So what I'm saying is a reason why capitalism is doomed is also a reason why socialism is doomed.

It seems to me that we need to think outside the box and recognize that we're entering unknown territory.

 

[Dragon]

That applies to everybody. And it's a sound principle.

It's no more sound than expecting everyone to be a millionaire. I can do as you suggest (and am doing so). Many people can't. That's exactly the problem.

 

[Dragon]

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.

When has pure capitalism ever been tried in long term and large scale?

Are you going to nitpick over the word "pure" now? Will you agree that American capitalism before the Great Depression was at least closer to being "pure" than after World War II? Will you agree that it was also closer to being "pure" than any advanced nation practices today, particularly the mixed-model economies of western Europe, Canada, Japan, Australia, etc.?

 

[Wiseacre]

Do you want technological advances or not? If you do, there is going to be some jobs lost as a result, no way around it. There's no economic model that comes close to providing the innovations that capitalism does; We just have to do better at creating new opportunities as older technologies die out. The trick is to create an environment where new businesses and new industries can start up and grow, creating new jobs to replace the old ones that were lost. No other system is better at doing that than capitalism.

If you want to bring it all to a screeching halt, then by all means throw out capitalism and go with a gov't run socialist/communist/fascist system of some type. I don't think living conditions will improve nearly as much under anything other than a free market. Blaming capitalism for society's ills id ridiculous; doesn't matter what model you choose, human nature will find a way to create advantages for someover others. We just haven't been running it right, perhaps because our politicians are only interested in the short term (the next election) vs the long term that offers the best answers for everybody.

 

[boedicca]

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.

Actually, history shows quite the opposite.

 

[Dragon]

Do you want technological advances or not? If you do, there is going to be some jobs lost as a result, no way around it. There's no economic model that comes close to providing the innovations that capitalism does; We just have to do better at creating new opportunities as older technologies die out. The trick is to create an environment where new businesses and new industries can start up and grow, creating new jobs to replace the old ones that were lost. No other system is better at doing that than capitalism.

If you want to bring it all to a screeching halt, then by all means throw out capitalism and go with a gov't run socialist/communist/fascist system of some type. I don't think living conditions will improve nearly as much under anything other than a free market. Blaming capitalism for society's ills id ridiculous; doesn't matter what model you choose, human nature will find a way to create advantages for someover others. We just haven't been running it right, perhaps because our politicians are only interested in the short term (the next election) vs the long term that offers the best answers for everybody.

As I've repeatedly stated, we need to think outside the box here. No, I don't want to toss out technological advance. No, I don't want a government run state socialist economy. As I said above, the same thing that dooms capitalism also dooms that.

We need something different from either one.

 

[Dragon]

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.

Actually, history shows quite the opposite.

The opposite of what, that a mixed model economy does better than pure capitalism or socialism, or that we are entering into uncharted territory now?

If the first, I disagree, and this is why all of the advanced world today has exactly such a mixed economy. If the second, there is no way that history can ever show that we are entering uncharted territory, or that we are not. That's why they call it "uncharted."

 

[boedicca]

No we don't. The failures of statism and central planning in no way prove that capitalism and free markets don't work.

 

[boedicca]

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.

Actually, history shows quite the opposite.

The opposite of what, that a mixed model economy does better than pure capitalism or socialism, or that we are entering into uncharted territory now?

If the first, I disagree, and this is why all of the advanced world today has exactly such a mixed economy. If the second, there is no way that history can ever show that we are entering uncharted territory, or that we are not. That's why they call it "uncharted."

You offered no proof. But as a general rule, compromising principles by incorporating antithetical values is a bad idea.

 

[CrusaderFrank]

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.

It's like Helen Keller writing about Impressionism

 

[boedicca]

I'm fairly certain that Helen Keller would have been far more coherent on any subject than Drag-On is.

 

[Dragon]

Actually, history shows quite the opposite.

The opposite of what, that a mixed model economy does better than pure capitalism or socialism, or that we are entering into uncharted territory now?

If the first, I disagree, and this is why all of the advanced world today has exactly such a mixed economy. If the second, there is no way that history can ever show that we are entering uncharted territory, or that we are not. That's why they call it "uncharted."

You offered no proof. But as a general rule, compromising principles by incorporating antithetical values is a bad idea.

On the contrary, I did offer proof -- from history, which is the subject under discussion. The U.S. economy, after World War II, incorporated socialist aspects of social programs and regulation on a base of private ownership; it was a mixed economy, and FAR outperformed the U.S.e economy before the Depression. If you look at the richest, most advanced countries in the world today, all of them without exception are mixed economies. That includes western Europe, Canada, Japan, Australia and New Zealand, as well as the U.S. On the other hand, if you look at the poorest countries, almost all of them are either much closer to pure capitalism or much closer to pure socialism. We can also compare the dismal performance of the Soviet Union to show that pure socialism is a bust.

As for your theoretical consideration stated above, I suggest that it's not a case of incorporating antithetical values so much as striking a middle ground between extremes.

 

[boedicca]

Here's the problem with that: you can't see the unseen. The socialism adopted by the U.S. came at a huge opportunity cost, the ultimate result being the massive debt and likely financial collapse we now face.

 

[Dragon]

I'm fairly certain that Helen Keller would have been far more coherent on any subject than Drag-On is.

I have to wonder if you've ever actually read any Helen Keller. You may think you just insulted me. It was a mild insult if any. She was quite brilliant and articulate.

 

[Wiseacre]

Do you want technological advances or not? If you do, there is going to be some jobs lost as a result, no way around it. There's no economic model that comes close to providing the innovations that capitalism does; We just have to do better at creating new opportunities as older technologies die out. The trick is to create an environment where new businesses and new industries can start up and grow, creating new jobs to replace the old ones that were lost. No other system is better at doing that than capitalism.

If you want to bring it all to a screeching halt, then by all means throw out capitalism and go with a gov't run socialist/communist/fascist system of some type. I don't think living conditions will improve nearly as much under anything other than a free market. Blaming capitalism for society's ills id ridiculous; doesn't matter what model you choose, human nature will find a way to create advantages for someover others. We just haven't been running it right, perhaps because our politicians are only interested in the short term (the next election) vs the long term that offers the best answers for everybody.

As I've repeatedly stated, we need to think outside the box here. No, I don't want to toss out technological advance. No, I don't want a government run state socialist economy. As I said above, the same thing that dooms capitalism also dooms that.

We need something different from either one.

OK, let me know when you think of what that might be. Cuz frankly I can't think of any possible economic model that improves on the basic idea of free trade: a transaction conducted between 2 parties that is freely entered into. I also cannot imagine any other system whereby you can innovate new technologies without losing jobs. So, you therefore have to create jobs somewhere else, what can possibly be a better way to do that than capitalism?

You're not happy with what's we've got, and that's fine, you have a lot of company. But while we wait for somebody to develop a better alternative, I suggest we improve the present system and it's governance. If there's one thing I'm certain of, it's that we can do a lot better at promoting competition and reducing fraud and unfair business practices.

 

[Dragon]

Here's the problem with that: you can't see the unseen. The socialism adopted by the U.S. came at a huge opportunity cost, the ultimate result being the massive debt and likely financial collapse we now face.

So we had no massive debt after World War II? So we faced no financial collapse in 1929? Not to mention 1873, 1893, and many other occasions prior to the reform of our financial institutions?

One can always posit "might have beens." The real world evidence is that every mixed economy that has ever existed has far outperformed every pure capitalist or socialist economy that has ever existed. One can refute this only by reference to an idealized imaginary economy in cloud-cuckoo land, which is exactly what you have done here -- an argument with absolutely no worth whatsoever.

 

[boedicca]

Here's the problem with that: you can't see the unseen. The socialism adopted by the U.S. came at a huge opportunity cost, the ultimate result being the massive debt and likely financial collapse we now face.

So we had no massive debt after World War II? So we faced no financial collapse in 1929? Not to mention 1873, 1893, and many other occasions prior to the reform of our financial institutions?

One can always posit "might have beens." The real world evidence is that every mixed economy that has ever existed has far outperformed every pure capitalist or socialist economy that has ever existed. One can refute this only by reference to an idealized imaginary economy in cloud-cuckoo land, which is exactly what you have done here -- an argument with absolutely no worth whatsoever.

Here's a little story about that: You're Wrong.

Massive debt in war time is temporary. The current era is the decades long result of transforming a relatively free economy into a statist one. Debts for war were temporary and paid down. The current debt is pure government and entitlement expansion. The only reason it hasn't completely cratered yet is due to ZIRP. Well, that game is going to be up soon. Get ready for the double dip...not that we ever really had a recovery.

 

[Dragon]

OK, let me know when you think of what that might be. Cuz frankly I can't think of any possible economic model that improves on the basic idea of free trade: a transaction conducted between 2 parties that is freely entered into. I also cannot imagine any other system whereby you can innovate new technologies without losing jobs. So, you therefore have to create jobs somewhere else, what can possibly be a better way to do that than capitalism?

You're not happy with what's we've got, and that's fine, you have a lot of company. But while we wait for somebody to develop a better alternative, I suggest we improve the present system and it's governance. If there's one thing I'm certain of, it's that we can do a lot better at promoting competition and reducing fraud and unfair business practices.

You are defining capitalism in terms of "free trade," when that is only a part of the set of defining characteristics. I don't think we should eliminate that. What we are going to HAVE to eliminate, though, is dependence on wages paid for work as it has been and is now, to distribute the wealth our economy produces.

Unless we DO distribute that wealth effectively and broadly, the economy will break down for lack of consumer demand, and also it will lose the popular support that it depends on to be allowed to exist. If we have high and intractable unemployment, then wages paid for work CAN'T do the job of distributing wealth. Which means that something else will have to.

I don't have a final answer to what that should be, admittedly.