What are the positive and negative qualities of a capitalistic model?

[rousseau]

Without getting into our usual fierce debate of whether or not capitalism is a good thing, here's a quick little brain work-out:

What are the positive qualities of a capitalistic model?

and

What are the negative qualities of a capitalistic model?

 

[Tom Sawyer]

The main benefit is that it is the best way to reward hard work and effort through the resulting success.

The main drawback is that once you have success, it is far easier for you to shut the door on others also trying for success in favour of consolidating your own power.

 

[Nice Squirrel]

I would say the main benefit is that it allows for more initiative and a greater degree of creativity through risk taking.

They drawback is that it results in oligarchy and eats itself unless checked by social of governmental forces.

 

[TV and credit cards]

That it motivates people.
That it motivates people.

 

[whichphilosophy]

In reality most economies are a mix of both.

 

[GenesisNemesis]

That it motivates people.
That it motivates people.

Some people.

 

[arkirk]

I think many people are mistaking the word Capitalism for the trade between humans that has always existed. We exist as a species in an environment that is common to us all. We are free to trade in ideas and in cooperation and in goods and indeed will always do so. This free trade, when it becomes unbalanced, creates differences in advantage which sometimes prove to be unfair. This occurs especially when people trade only for advantage and power and lose their sense of community. It is my opinion that is what has happened in our country and indeed in most countries in the world today. When peace, and life itself becomes a commodity that must be bought, then the idea of fair trade goes out the door and we begin to have intransigent traders and bookkeepers who feel it is their place to severely handicap others in the process. I think that is where we have arrived.

People in an attitude of mutual trust can be motivated by a desire for the common good. There actually is such a thing. That would be to create conditions where human suffering is reduced to a minimum. Capitalism, with all its formulas often lets this take second, third, and sometimes last place in priority. It need not be that way. Government could be a means of limiting this kind of disparity. Today, our government does no such thing. People need to feel free to go back to the drawing board and make changes to our system of governance. It has to be independent of Capitalism and at the same time promote initiative. This does not seem to me to be an impossible task, but it is difficult when some individuals sequester the commons solely for their own desires for power.

 

[Togo]

There are a number of different stakeholders in an economy. The providers of capital, the providers of labour, the providers of expertise, the providers of infrastructure, the consumer, and so on. Our present system puts a great deal of emphasis on capital, hence capitalism. This has the advantage of focusing on the useful application of capital. In focusing on that, it of course demphasises the useful application of skills, the welfare of the labour force, and all the other stakeholders. This is why, for example, in a high-tech start up, the guy who mastered the technology and made it viable doesn't get as much reward as the people who provided the capital to start up the business, or the people who worked day and night to make to it happen, and why entrepreneurs in general make less money than venture capitalists. We've decided that the most important step is renting the capital.

The result of this focus is now a world where there's actually quite a lot of money around, and seemingly very little to invest in, where workers havn't had a pay rise in a long time despite a growing economy, where being an entrpreneur doesn't get you as much income as working in a bank, where developing knowledge for it's own sake is a carerr for those who don't mind being poor, and where patents are worth comparatively little compared to a marketable product.

There are far worse systems out there. But it's hard to shake the idea that rewarding capital providers is producing diminishing returns, and we need to pay at least some attention to the rest of the system.

 

[AthenaAwakened]

From the video

Let me explain. At its core, the economic system we have here in the United States is based on two basic things: 1) the right of any person or group of people to run and operate a business and 2) the right of any person or group of people to buy goods or services from the business of their choice.

This system is called the free enterprise system and is designed to give people the broadest choice of goods and services possible and reward those people (we call them entrepreneurs) who provide the best goods and services.

If you ask someone like Rand Paul, he'd say somebody participating in this sort of system is a "capitalist." But the cleanest definition of a capitalist is someone who uses their money – their capital – to make more money. Some capitalists do this by investing their capital in the stock market; others do it by investing in other people's start-up businesses: they are called venture capitalists.

These kinds of capitalists do play their part in our society. Sometimes, they help small businesses get off their feet. But here's what you won't hear on Fox Business or CNBC: capitalists aren't that productive and they aren't actually necessary. Many are just like Paris Hilton: they sit around on their butts by the pool all day waiting for their dividend checks to come in. They make money while contributing absolutely nothing to the rest of society.

And here's the thing: free enterprise works just as well without capitalists, capitalism, or even venture capitalists. Worker-owned cooperatives are just as successful as any business backed by a massive Wall Street loan. The Mondragon Cooperative in Spain, for example, employs more than 90,000 people, includes more than 250 companies, and generates a yearly revenue of around $25 billion. There are NO capitalists involved; it's entirely owned by its workers.

 

[rousseau]

I think many people are mistaking the word Capitalism for the trade between humans that has always existed. We exist as a species in an environment that is common to us all. We are free to trade in ideas and in cooperation and in goods and indeed will always do so. This free trade, when it becomes unbalanced, creates differences in advantage which sometimes prove to be unfair. This occurs especially when people trade only for advantage and power and lose their sense of community. It is my opinion that is what has happened in our country and indeed in most countries in the world today. When peace, and life itself becomes a commodity that must be bought, then the idea of fair trade goes out the door and we begin to have intransigent traders and bookkeepers who feel it is their place to severely handicap others in the process. I think that is where we have arrived.

People in an attitude of mutual trust can be motivated by a desire for the common good. There actually is such a thing. That would be to create conditions where human suffering is reduced to a minimum. Capitalism, with all its formulas often lets this take second, third, and sometimes last place in priority. It need not be that way. Government could be a means of limiting this kind of disparity. Today, our government does no such thing. People need to feel free to go back to the drawing board and make changes to our system of governance. It has to be independent of Capitalism and at the same time promote initiative. This does not seem to me to be an impossible task, but it is difficult when some individuals sequester the commons solely for their own desires for power.

This is an interesting and relevant point because it seems to suggest that capitalism isn't the result of conscious decision making, but is rather how human nature has manifested itself in the form of an economic model.

So from a moralistic level we often decry capitalism as a negative, oppressive system, when in actuality humans by their own nature are technically evil and oppressive, and the only way to better our system of trade is to regulate our own capacity to act in a self interested manner.

 

[rousseau]

As for the question itself, what I had in mind as a benefit is something that hasn't been mentioned:

The production of novel goods and services.

Because of free enterprise some of the stuff that's a part of the every day human experience is absolutely incredible.

As a negative, as has been mentioned the system causes an imbalance of power. And even if those on the low end of the spectrum are wealthier relative to the past, they still experience poverty relative to those in power.

 

[untermensche]

What is the capitalist model?

It seems that capitalists try to push the system as far as they can to improve their lot at the expense of lowly workers and workers push back to improve their lot.

And whatever system evolves is called capitalism. Parts of the world in the 18th Century were called capitalist. Totalitarian China is called capitalist.

Right now we are in a period of great worker passivity and extreme power of capitalists as they control the Congress and the Supreme Court.

The major feature of present day US "capitalism" is the extent of the economy that is nothing but speculation and has no productive value.

This model is an insane model.

 

[boneyard bill]

From the video

Let me explain. At its core, the economic system we have here in the United States is based on two basic things: 1) the right of any person or group of people to run and operate a business and 2) the right of any person or group of people to buy goods or services from the business of their choice.

This system is called the free enterprise system and is designed to give people the broadest choice of goods and services possible and reward those people (we call them entrepreneurs) who provide the best goods and services.

If you ask someone like Rand Paul, he'd say somebody participating in this sort of system is a "capitalist." But the cleanest definition of a capitalist is someone who uses their money – their capital – to make more money. Some capitalists do this by investing their capital in the stock market; others do it by investing in other people's start-up businesses: they are called venture capitalists.

These kinds of capitalists do play their part in our society. Sometimes, they help small businesses get off their feet. But here's what you won't hear on Fox Business or CNBC: capitalists aren't that productive and they aren't actually necessary. Many are just like Paris Hilton: they sit around on their butts by the pool all day waiting for their dividend checks to come in. They make money while contributing absolutely nothing to the rest of society.

And here's the thing: free enterprise works just as well without capitalists, capitalism, or even venture capitalists. Worker-owned cooperatives are just as successful as any business backed by a massive Wall Street loan. The Mondragon Cooperative in Spain, for example, employs more than 90,000 people, includes more than 250 companies, and generates a yearly revenue of around $25 billion. There are NO capitalists involved; it's entirely owned by its workers.

Of all people, you have chosen to cite the most economically illiterate commentator on economics that is available. Almost everything Hartman has to say about economics is nonsense, and this commentary is no exception. If Hartman had chosen to contrast "free enterprise" with "fascism," then the distinction he draws might be meaningful, but Rand Paul, like most Republicans simply shorten the phrase, "free market capitalism" to capitalism only and everyone understands what they mean.

Meanwhile, he also suggests that worker owned companies are somehow not capitalist because they are owned by workers rather than by outsiders. Of course that distinction is simply incorrect. Unless the companies are given them by their owners (which happens on rare occasions), the workers must invest their money and assume the risks of starting an enterprise just like any other capitalists do.

Guess what. Most capitalists fail. Only 2 out of 10 businesses survive for more than two years. So why aren't there more worker-owned businesses out there? Is anything stopping them? Yes. The market. Like any new business, most of them fail.

As for the capital gains tax preference. It doesn't particularly favor the rich, and Hartman's desire to see it repealed actually happened under Reagan, the guy Hartman blames for all of our economic problems even though he left office 25 years ago. It was the Clinton Administration which re-instated the capital gains tax preference.

 

[boneyard bill]

The great advantage of capitalism is that it allows people to generate great wealth which everyone shares in.

The great disadvantage of capitalism is that it tends to degenerate into crony capitalism (also known as fascism) as the wealthiest beneficiaries of capitalism tend to seek even more wealth and power by controlling the state and getting it to intervene on their behalf. This is known a "regulatory capture," but it really goes far beyond that into virtual oligarchic rule.

 

[Bomb#20]

Without getting into our usual fierce debate of whether or not capitalism is a good thing, here's a quick little brain work-out:

What are the positive qualities of a capitalistic model?

and

What are the negative qualities of a capitalistic model?

There are basically two positive qualities. It mostly lets people do what they want as long as they don't coerce others, which tends to directly make people happy. And since a lot of what people choose to do with that freedom is make themselves wealthier, it produces an enormous amount of wealth, which tends to indirectly make people happy.

There are basically two negative qualities. It gives people an incentive to persuade others to choose short-term happiness over long-term happiness, resulting in high levels of self-destructive activities such as smoking. And it generates such an enormous amount of wealth that it increases the carrying capacity of the ecosystem for humans, resulting in so many humans that the temperature goes up and the carrying capacity for other species goes down.

This is an interesting and relevant point because it seems to suggest that capitalism isn't the result of conscious decision making, but is rather how human nature has manifested itself in the form of an economic model.

All economic models are ways human nature has manifested itself. The only model with any claim on being more natural than the others is hunting and gathering. Capitalism may not be the result of conscious decisions to bring about capitalism the way socialism is, but it's still the unintended result of conscious decision making -- mostly seven hundred years of English legal cases.

So from a moralistic level we often decry capitalism as a negative, oppressive system, when in actuality humans by their own nature are technically evil and oppressive, and the only way to better our system of trade is to regulate our own capacity to act in a self interested manner.

And those doing the regulating won't be evil oppressive humans acting in a self interested manner?

As a negative, as has been mentioned the system causes an imbalance of power. And even if those on the low end of the spectrum are wealthier relative to the past, they still experience poverty relative to those in power.

How do you figure capitalism is the cause of the imbalance of power? Under what non-capitalistic system would there not be an imbalance of power?

 

[crispy]

Capitalism is a really good way of producing (more than) what is necessary, so that people can get the wares they want when they need it, as in contrast to a planned economy.

Capitalism is a really bad way to make sure we don't fuck up our planet.

 

[untermensche]

Meanwhile, he also suggests that worker owned companies are somehow not capitalist because they are owned by workers rather than by outsiders. Of course that distinction is simply incorrect. Unless the companies are given them by their owners (which happens on rare occasions), the workers must invest their money and assume the risks of starting an enterprise just like any other capitalists do.

Do you think somebody like Donald Trump got filthy rich by using his own money?

He began by borrowing off the value of his father's real estate and has borrowed ever since.

He got rich by borrowing and owning.

This is how worker owned companies would begin to create wealth. By borrowing and owning.

All that is needed is a worker centered as opposed to capitalist centered banking system set up to help worker owned businesses get started.

 

[Jayjay]

All that is needed is a worker centered as opposed to capitalist centered banking system set up to help worker owned businesses get started.

How would a "worker centered banking system" be different than what we have now?

 

[whichphilosophy]

Meanwhile, he also suggests that worker owned companies are somehow not capitalist because they are owned by workers rather than by outsiders. Of course that distinction is simply incorrect. Unless the companies are given them by their owners (which happens on rare occasions), the workers must invest their money and assume the risks of starting an enterprise just like any other capitalists do.

Do you think somebody like Donald Trump got filthy rich by using his own money?

He began by borrowing off the value of his father's real estate and has borrowed ever since.

He got rich by borrowing and owning.

This is how worker owned companies would begin to create wealth. By borrowing and owning.

All that is needed is a worker centered as opposed to capitalist centered banking system set up to help worker owned businesses get started.

That is very true what you say. In Italy where I often have meetings, some companies are cooperatives.

However if you have 4 workers who want to start a business and get a loan, how in the first instance could you distinguish this from 4 capitalists without creating a lot of read tape?

 

[boneyard bill]

Meanwhile, he also suggests that worker owned companies are somehow not capitalist because they are owned by workers rather than by outsiders. Of course that distinction is simply incorrect. Unless the companies are given them by their owners (which happens on rare occasions), the workers must invest their money and assume the risks of starting an enterprise just like any other capitalists do.

Do you think somebody like Donald Trump got filthy rich by using his own money?

He began by borrowing off the value of his father's real estate and has borrowed ever since.

He got rich by borrowing and owning.

This is how worker owned companies would begin to create wealth. By borrowing and owning.

All that is needed is a worker centered as opposed to capitalist centered banking system set up to help worker owned businesses get started.

As you pointed out, Donald Trump was already rich due to inherited wealth. That made it easy for him to borrow money. But how many of Trump's projects have gone under? Quite a few I believe. So Trump lost money on a number of deals. Trump could afford it. But for workers whose intent is to provide secure employment, those losses would be disastrous.

There's nothing stopping workers from doing collectively what capitalists do individually. Save up your money to provide the seed corn to allow you to borrow the rest from a bank and then take the risk. How many workers trust their fellow workers enough to do that. Most workers who save up their money choose to invest it individually. They don't want to lose control of it. They don't want to give it up to some committee that may or may not know what they are doing. They don't want to take the risk when it means giving up control of their money.