Why Capitalism is Doomed

[CrusaderFrank]

East Germany v. West Germany
Haiti v Dominican Republic
North Korea v South Korea
Taiwan v Peking
Mexico v California

Time and again in side by side test, Progressive economics and ideology is a 100% Fail.

 

[Dragon]

Frank, you really shouldn't post in threads where you're incapable of understanding the topic. Just a free piece of advice.

 

[CrusaderFrank]

Frank, you really shouldn't post in threads where you're incapable of understanding the topic. Just a free piece of advice.

The topic is: "Dragon is wrong in the trillion column. Again"

 

[CrusaderFrank]

Oh, how could I leave off
Cuba v Florida?

 

[Dragon]

Not only do you not understand the thread topic, you don't even seem to know what it is. You keep posting as if this was about capitalism versus socialism, when it's not. I've said several times now that socialism is doomed for the same reason capitalism is doomed.

Not one or the other, but neither-nor. Got that?

Probably not. Too fraggin' dumb.

 

[CrusaderFrank]

It pains Dragon whenever I mention it, but the Communist Peoples Republic of Vietnam has rejected the 100% guarantee fail of Progressive redistributive economics in favor of free enterprise and free markets.

As a result, (did you know this?) the went from having to import 1 million tons of rice annually to keep from starving to death (the Progressive Redistributive North Korea don't even bother feeding their people so they starve) to the second largest exporter of rice on the planet.

Same people, same country, but now under a better, American inspired system

 

[Dragon]

Keep those knees jerkin' Frank.

You know, though, this is an intelligent topic, and I'm only interested in posts from intelligent people who actually want to think about the subject, like what dblack posted above. So you're going on ignore, too. I just can't waste time with idiocy like this. On other, less serious threads it's amusing, and I may take you off ignore once I'm satisfied this thread has completely run its course, but for now, go away.

 

[CrusaderFrank]

Keep those knees jerkin' Frank.

You know, though, this is an intelligent topic, and I'm only interested in posts from intelligent people who actually want to think about the subject, like what dblack posted above. So you're going on ignore, too. I just can't waste time with idiocy like this. On other, less serious threads it's amusing, and I may take you off ignore once I'm satisfied this thread has completely run its course, but for now, go away.

I have to keep reminding you that Reality has totally kicked your OP's ass

 

[dblack]

which circles back around to my question: what kind of 'free trade' is it that redistributes wealth and tells people that they can't work for wages if they want to?

"Free trade" has never sufficed to distribute wealth adequately...

Well I don't want government distributing wealth in the first place, given that everyone will have a different idea of what it means to do so 'adequately'.

I find your second point rather weirdly expressed. Nobody works for inadequate wages because they want to. In all cases, it's because they have to -- because they can't get better and must have something. If I could wave a magic wand and restore demand for full employment, and if thereafter government policies drove wages up so that any job people could find paid a decent wages, those complaining about it would NOT be the working class. So it's kind of absurd to phrase an objection to such policies as defending the rights of job-seekers.

Hmm... it seems you've restated your argument here, so maybe that's why my view sounds absurd. I was actually responding to this statement:

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.

Now, above, you've modified this to 'inadequate wages' which I guess does make my response seem absurd, but even at that I'd argue against policies that attempt to impose uniform standards of 'adequacy'. This is the same debate over nearly ever regulatory state argument where well-meaning reformers take an essentially authoritarian view - willing to force their 'standards' on others via coercive government.

So it's not a question of whether the government regulates the economy -- it will, and that's that -- but only of how it does and on who's behalf.

I've never been able to take that argument very seriously. The question is how much we want to indulge that power. Focusing on who wins and loses misses the point. It's more or less the "I'd rather be a hammer than a nail" line. I'd rather work to minimize the 'hammering'.

But that's all by the by with respect to the thread topic. As I said, the old ways that worked when I was a boy will not work anymore, because they depend on full employment, which we no longer have and are (I believe) not going to get back. When I say that capitalism is doomed, I don't mean laissez-faire capitalism (that died decades ago), I mean the entire system of an economy dominated by privately-owned for-profit corporations. Like any economic system or any government, it exists on the sufferance of the people. The people have supported it not for any philosophical principles (about which they care jack-diddly and in most cases know bugger-all anyway), but purely because it delivered: it provided rising standards of living for most people.

That remains to be seen. Some of us still value freedom for it's own sake.

 

[CrusaderFrank]

Keep those knees jerkin' Frank.

You know, though, this is an intelligent topic, and I'm only interested in posts from intelligent people who actually want to think about the subject, like what dblack posted above. So you're going on ignore, too. I just can't waste time with idiocy like this. On other, less serious threads it's amusing, and I may take you off ignore once I'm satisfied this thread has completely run its course, but for now, go away.

I won't indulge the idiocy of redistributive economics; it has a guaranteed 100% Fail Rate. Worse, it always comes with gulags and mass graves.

You found some one who will bat you around like a little chew toy, I'm happy for you.

 

[Dragon]

You seem to be suggesting that wages should be based on some other factor(s) than market forces, perhaps need.

No, that's not quite right. What I'm saying rather is that when you get down to the particulars of what constitute "market forces," you find that a lot of this is set or at least influenced by government policy. With respect to the labor market, important government policies include trade agreements, tax policy, immigration policy, and enforcement of labor rights (especially collective bargaining rights). All of this influences either the demand for labor or the bargaining leverage held by labor or both, and so the way that "market forces" result in wages being set. It can be done in one direction or the other, to drive wages up or to hold them down, but it can't NOT be done.

Except occasionally with something like minimum wage laws, the government doesn't try to replace market forces. Instead, it uses government policy to help determine how those forces operate.

Do you believe those mixed systems you referred to are paying employees a higher wage than necessary?

What does "necessary" mean? Higher than would happen if government policy were set to keep wages down instead of push them up? Certainly. And therefore, higher than they could possibly be? Absolutely. Is this higher than "necessary"? According to whom?

Can't imagine how overpaying workers would result in higher employment, or make up for the loss of jobs from advances in technology.

Well, it certainly won't do the latter, which is why I'm not advocating it at this point. I'm merely pointing out a problem. It's a new problem, so solutions applied in the past to other problems won't solve it.

This business of wealth redistribution, do you really think you're going to get enough revenue to make a significant difference?

Let's talk a little about this word "redistribution." I don't like it much, and consider it misleading, because it implies that wealth is naturally, or even rightly and properly, distributed in a certain way, and that any change in this is interfering with something else. Or it even ignores the fact that wealth is distributed in the first place, and treats it as if it magically found its way into the hands of those who own it, as if this were a static state to be revised and not an ongoing process that might be shaped so as to generate a desired future outcome.

The reality is that in an advanced economy, wealth is produced collectively, not individually, and the more advanced the economy the more true that becomes. Prior agreements and laws determine how the wealth, once produced, is divided among all citizens and residents. There is no such thing as "natural" ownership. Nature does not come with title deeds. Ownership is a societal artifact, something that law, custom, and tradition determine through interactions with one another and with society as a whole.

In a capitalist economy, the way this works involves an agreement among the owners of capital, their employees, and their suppliers. The business produces X volume of goods to market, which are sold to generate a certain revenue. The suppliers get paid Y for the raw materials and other goods necessary to produce the goods marketed by the company. The employees get paid Z in wages. The investors get back the remainder. How these agreements come about is a function of bargaining leverage on all sides and so is influenced by government policy, but whatever happens the agreement determines how the collectively-produced wealth is divided up. This is the ORIGINAL distribution of wealth -- and it's not something that just happens, it's something that our laws, customs, and other factors which we collectively decide MAKE happen in this way.

Now, in addition to this, we have to regard the distribution of wealth as a circle, not a straight line. Because (and to the extent) the workers receive a share of the goods produced -- that is to say, because wealth is distributed -- a market exists for the goods and services produced. It all comes down to the economy producing goods and services and getting them into the hands of those that need and want them; anything along the way like profits and contracts and whatever is just means to that end, or impediments to it, as the case may be. Producing goods and services and distributing them among the people is the job of an economy; success in doing this makes an economy successful.

The problem we're facing now, as I see it -- and this is a new problem, so old liberal solutions won't work to solve it -- is that we are now in many cases able to produce those goods and services without labor, or with much less labor. So a crucial part of the way that a capitalist economy distributes goods and services among the people is breaking down.

Imagine, if you will, the logical conclusion of this: an economy in which ALL jobs are gone, and EVERYTHING is produced by machine. (I'm not saying we'll ever reach that point; it's probably not cost-effective to do so. But it serves as a good illustration to consider it anyway, sort of like an ideal gas.) A company, owned by investors, produces cars (let's say) entirely through robot labor. All other companies do the same, producing whatever it is they produce. There are no jobs, and so for anyone who is not a capitalist, that means there's no income.

But how can those cars be sold? They can't, because nobody has an income with which to buy them, except for other capitalists, and there just aren't enough of those; plus all of them are running into slack sales for the same reason. And so, for failure to distribute wealth, for maximum efficiency in the production of wealth, the entire economy breaks down and everyone starves.

And yet -- if we step outside the demands of capitalism for a moment, and forget the fact that the investors "own" and are entitled to the revenues of the companies producing all this stuff, the idea of robots and other machines doing all the work could sound a lot like a return to the Garden of Eden, couldn't it? Nobody would work a job because nobody would have to. We would all be served by mechanical slaves providing us plenty of everything, including leisure with which to do whatever we want.

Two pictures of an extreme of this development, one nightmarish, the other utopian. Neither represents precisely where we are going -- but both serve to illustrate the developments I'm referring to.

EDIT: dblack, please read this post. I think it responds to your statements, too.

 

[Wiseacre]

My major concern with your pov is the conclusion or inference that the problems of unemployment by reason of automation, technological advances, and other factors can be blamed on the capitalistic economic model rather than the gov't. It is the gov't that is charged under the Constitution to regulate commerce, and it totally their failure if the system does not operate on a fair yet effective manner.

That said, right now the UE rate for some segments of our society is too high, and there is no doubt in my mind that sooner or later we're going to see demonstrations and rioting in the streets here in America if the situation does not dramaticlly improve. We can do a hell of a lot better than what we've been doing to creae more jobs; if we don't it won't be because capitalism is an inferior economic model.

 

[Wiseacre]

" 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. "


The other notion I want to address is this issue of a declining demand for labor in the face of an increasing population. It's probably true that it's easier to create wealth these days with less labor, but it's not like the demand for labor is receding all that fast. Right up until the recession hit, our GDP was growing nicely for most years and so was the number of people employed. That is because the American system of capitalism and it's gov't created a culture whereby new ideas and entrepeneurs could flourish. I see no reason why we can't resume the upward trend. Seems to me we're doing a poor job of encouraging new businesses and industries that create the most new jobs; that is not the fault of capitalism, that's a problem of governance.

 

[Widdekind]

"Free trade" has never sufficed to distribute wealth adequately

in the Ice-Age, stone-age hunter-gatherers "freely traded" stone, wood, food, hides, and other materials, over "free exchange networks" spanning hundreds to thousands of km; they survived an Ice-Age (without Government Intervention)

Nobody works for inadequate wages because they want to. In all cases, it's because they have to -- because they can't get better and must have something

everybody wants to be wealthy; but if anybody willingly works, for any wage, than that wage is economically "adequate" (else they would not have willingly worked for it)

The government will manipulate the economy, because those whose interests it represents will demand that it do so

i demand no Government Intervention, which is not in my interests

if i'm a "minority", the US protects the same ?

the government initially began doing so at the behest of the corporate interests, in ways that were far from liberal, and began implementing liberal economic policies only later. "Laissez-faire" in practice was not laissez-faire, it was just a set of government regulations entirely in the favor of capital and not at all in the favor of labor.

would you please cite a source, for that factual assertion?

uncritically accepted, Fascism by business (one wrong) does not justify Communism by workers (another wrong), akin to "over-correcting when losing control of a car"

How long do you think that situation would last, in the face of massive lobbying efforts and public outcry?

"public outcry" = "lobbying"

a modern economy CAN'T EXIST without substantial government oversight...

So it's not a question of whether the government regulates the economy -- it will, and that's that -- but only of how it does and on who's behalf.

Government is dominated by Lobbies, vying for control, of "interest-group-neutral" Government Force

if "Government Guns" will mindlessly "threaten wherever they're pointed"; then that really is an unstable system

... full employment, which we no longer have and are (I believe) not going to get back... laissez-faire capitalism...died decades ago

evidently -- the Libertarian party is impotent, and dominated by other parties (first-hand knowledge)

uncritically accepted, Lobbies dominate Government to dominate economies; Lobbies dominate... economies; those economies are unsustainable; perhaps the Lobbies are unsustainable ? apparently, people prefer Lobbies to Governments to economies; such seems exactly backwards

 

[Widdekind]

"market forces," you find that a lot of this is set or at least influenced by government policy... it can't NOT be done.

you're con-fuse-ing

• economic market forces
• Government Forces

according to you, Government Force, once Existing, cannot resist "throwing its weight around" in the market. Since Government = Force (intrinsically), you're saying that non-Coercive, non-Violence-Threatening resolutions are impossible

wealth is naturally, or even rightly and properly, distributed in a certain way, and that any change in this is interfering with something else.

in the absence of Government Force, "free & willing" market activity would evolve along some particular course; in the presence of Government Force, "coerced & unwilling" market activity is compelled to evolve along some other particular course

when is "coerced unwilling" market activity "better" than "free & willing" economics ?

prima facie, i read "tax the rich, to give ['jobs'] to the poor"...

There is no such thing as "natural" ownership. Nature does not come with title deeds. Ownership is a societal artifact, something that law, custom, and tradition determine through interactions with one another and with society as a whole.

Tyrannosaurus Rexes enforced their "property rights", with multi-ton bite-forces; your Governments en-Force "ownership" with Police pistols & Military machine-guns

In a capitalist economy, the way this works involves an agreement among the owners of capital, their employees

where do you witness "agree-ment" on this board ? you yourself advocate, instead, use of coercive, threatening Government Force

agreement determines how the collectively-produced wealth is divided up.

coercive, threatening Government Force is not "agree-ment", unless "gimme your money, and i won't shoot" is accepted as "agreement"

it's not something that just happens, it's something that our laws...MAKE happen

yes, with coercive & threatening Government Force

Producing goods and services and distributing them among the people is the job of an economy; success in doing this makes an economy successful.

slavery produces, and distributes...

we are now in many cases able to produce those goods and services without labor, or with much less labor.

yes, existing goods & services; what about "new & novel" yet-to-be-innovated goods & services ?

the idea of robots and other machines doing all the work could sound a lot like a return to the Garden of Eden, couldn't it?

the words "G-a-r-d-e-n of E-d-e-n" truly influence your desires & intentions, for the future, of human politics & economics (e.g. Government Force), on earth ? I.e. "we should all return (back) to the Stone Age" ?

 

[CrusaderFrank]

Dragon has no experience whatsoever with Free Enterprise, he learned it all from books. I said it before and it bears repeating: it's like Helen Keller describing Impressionism

 

[itfitzme]

" 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. "


The other notion I want to address is this issue of a declining demand for labor in the face of an increasing population. It's probably true that it's easier to create wealth these days with less labor, but it's not like the demand for labor is receding all that fast. Right up until the recession hit, our GDP was growing nicely for most years and so was the number of people employed. That is because the American system of capitalism and it's gov't created a culture whereby new ideas and entrepeneurs could flourish. I see no reason why we can't resume the upward trend. Seems to me we're doing a poor job of encouraging new businesses and industries that create the most new jobs; that is not the fault of capitalism, that's a problem of governance.

It has been enough just to watch. But if you are discussing labor utilization, you might want to have some actual data to work from.

Here is some useful information;

This is the labor force to total population since about 1950;

It shows that the labor force as a percentage of the total population has increased steadily since 1960, finally coming to an upper limit in 1990.

This is the labor force to civilian non-institutionalized population 16+.

It also has increased steadily, finally maxing out in 1992, abouts, then beginning to decline in about 2001.

Another look, is total employment to the total population.

It shows the same trend, ever upward until it hits the maximum at about 48.8%. This 48.8% seems to be every available adult.

It would be nice to be able to get the non-civilian in there as the military is employment. And differentiating out disabled, retired, and institutionalized to see if, in fact, it is every able bodied adult would be useful.

But we got what we got.

The reason for employment to total population is because the labor force is variable as is the civilian non-institutionalized population 16+. So the LF to CNIP16 and employment to LF is a bit relative. Total population is what it is.

Having hit this upper limit of employment is a rather remarkable change that occurred. It deserves some consideration if we are to discuss labor utilization, efficiency and standard of living.

Since about 2000, we have been in uncharted territory with labor utilization at it's limit. Every recession is some sort of structural change. And in 2001, the government outlays per capita in real dollars began an upward trend. Before that, it remained flat per capita. It seems awfully coincidental that both government outlays increased simultaneously with that labor limit.

Unfortunately, it seems that the economy must recede before it can restructure. And, unfortunately, a whole bunch of systematic risk developed in the frontier of capitalism wealth generation, single family home investment opportunities.

I don't know how much light this sheds on your discussion. That's up to you. But clearly, if we want to talk about labor utilization, efficiency and standard of living, it really helps to have the actual data to work from.

You might find these useful as well.

This is standard of living, GDP per capita and per worker.

In close up bracketing the recession.

Notice that, if we consider just workers, standard of living doesn't really drop much. It suggests that the economy simply shrinks, shedding workers to keep standard of living stable and increasing for those that are working. And that makes some sense. People don't take a pay cut and the CPI didn't recede for long. Rather, we just dump a bunch of people out of the game.

And efficiency just kind of keeps on going.

 

[Widdekind]

in round numbers,

• from 1960-90, women entered the work-force, increasing employable population percentage from 35-50%
• employed percentage peaked at 49% / 50%, i.e. ~2% UE, by the end of Clinton's administration; and again by the end of (younger) Bush's administration
• employed percentage dropped to 45% / 50%, i.e. ~10% UE, by the beginning of Obama's administration (there floundering as if without help)

prima facie, political cycles imprint upon the economy (as if political factionalism trumps making money); what if foreign creditors ever want their money back ?

 

[ThinkCritically]

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.

You have shown your hand now Dragon....you do know that Helen Keller was a leader of the communist party.....and you think she was brilliant.....I think that about sums it up.

 

[Dragon]

Thanks to ifitme for those data. Against that background I need to say that the technological advances I'm talking about (the ability to automate service jobs) only began in the 1980s in embryo. That's when the personal computer was invented and put on the market. The development of computer networks, and finally the internet, accelerated the process through the 1990s and into the 21st century. At this point, the main advances relevant to what's going on are in software.

As ifitzme's data shows, expansion of the work force (on the supply side of the equation) can be absorbed; despite the increase in percentage of the population in the work force, full employment was maintained. Contraction on the demand side is another matter. That's what we're facing today, but we've only faced it on any significant scale in the last decade or two.

EDIT: The reason why expansion of the work force can be absorbed is because every worker is also a potential consumer, expanding the demand for goods and services; as long as the need for work to produce goods and services persists, the supply of paid labor creates its own demand -- which is the only situation in which Say's law actually holds true.