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

[boneyard bill]

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?

You wouldn't have 4 workers. You would have 4 capitalists who also happen to be blue-collar workers skilled in their profession. But to create a worker's cooperative, those 4 worker-capitalists would have to turn over ownership of their shares to their new employees. Most investors don't do that. They took the risk, and they want to reap the rewards for themselves.

Henry Ford was a very blue-collar guy who paid his workers very well by the standards of that day, but he wasn't about to let his employees run his company.

 

[Harry Bosch]

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.

This is correct. The fact is that worker owned companies start every single day. I've started two. They can work when the workers have common goals, like and trust each other, have similar work ethics, and can agree to equitable exit plans. But it is rare for people to share equally all of these traits. Then as the company grows, differences emerge that often tear the entity apart. I have found that worker owned companies of professionals (attorney's, CPAs, and etc.) can work best. But all details of the operation must be agreed to in a very long operating agreement.

 

[untermensche]

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?

The term worker owned means you gain a share of ownership through your labor. It is a system where labor has intrinsic value as opposed to capitalist systems where most labor only has a market value. Which means lowest possible price for the capitalists. Isn't that convenient.

If 4 people can run a company all by themselves and they own it then it is a 4 person worker owned company.

If 4 people own a company and totally control the company and have more than 4 workers then they are a dictatorial company, with 4 dictators.

 

[untermensche]

You wouldn't have 4 workers. You would have 4 capitalists who also happen to be blue-collar workers skilled in their profession. But to create a worker's cooperative, those 4 worker-capitalists would have to turn over ownership of their shares to their new employees. Most investors don't do that. They took the risk, and they want to reap the rewards for themselves.

Henry Ford was a very blue-collar guy who paid his workers very well by the standards of that day, but he wasn't about to let his employees run his company.

Henry Ford is the rare capitalist exception who lived about 100 years ago.

Funny how we can't seem to find any modern day capitalists who believe in paying workers fairly.

And the fact that he wasn't about to let the workers run the company, and give up dictatorial control, does not mean they couldn't do it better.

 

[Axulus]

One of the biggest positives I think is that it allows greed to be channeled into socially productive endeavors. One can get fabulously wealthy by providing goods and services to other people in society at prices they are willing to pay, giving them a better option for their money that was previously nonexistent. You make the most profit when you do this by using as little of society's resources as possible (land, labor, capital). The more people you transact with (and thus satisfy with the better option), the wealthier you become.

In communism or socialism, or any other alternative system, how can greed be channeled in a socially productive manner? Greed doesn't magically disappear from human nature under other systems.

 

[Nice Squirrel]

In communism or socialism, or any other alternative system, how is greed to be channeled in a socially productive manner? Greed doesn't magically disappear from human nature under other systems.

Well if we are talking about European socialism, the capitalist incentive is still there. If we are talking communism, the road to the top is through correct party action and the exercise of power. (The whichphilosophy who is from China could give us insight into this if he still posts on that account. -- WHat do you say WP?)

 

[boneyard bill]

You wouldn't have 4 workers. You would have 4 capitalists who also happen to be blue-collar workers skilled in their profession. But to create a worker's cooperative, those 4 worker-capitalists would have to turn over ownership of their shares to their new employees. Most investors don't do that. They took the risk, and they want to reap the rewards for themselves.

Henry Ford was a very blue-collar guy who paid his workers very well by the standards of that day, but he wasn't about to let his employees run his company.

Henry Ford is the rare capitalist exception who lived about 100 years ago.

Funny how we can't seem to find any modern day capitalists who believe in paying workers fairly.

And the fact that he wasn't about to let the workers run the company, and give up dictatorial control, does not mean they couldn't do it better.

If they can do it better, why don't they?

 

[boneyard bill]

One of the biggest positives I think is that it allows greed to be channeled into socially productive endeavors. One can get fabulously wealthy by providing goods and services to other people in society at prices they are willing to pay, giving them a better option for their money that was previously nonexistent. You make the most profit when you do this by using as little of society's resources as possible (land, labor, capital). The more people you transact with (and thus satisfy with the better option), the wealthier you become.

In communism or socialism, or any other alternative system, how can greed be channeled in a socially productive manner? Greed doesn't magically disappear from human nature under other systems.

It works because it's voluntary. Businesses must entice consumers to part with their money at their company rather than at a competitor. This is the problem with communist and socialist systems. There is no way for their enterprises to fail. Nobody ever fails, consequently the whole system must eventually go under.

 

[Togo]

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?

Easy - Change the tax structure to favour pay over declared profit.

Most family-owned businesses follow the same sort of model - the aim is not to declare a profit, but to provide maximum income for the family. That's why so many Pakistani owned corner stores in the UK have aged relatives and children running the till, stacking shelves, or just keeping an eye on the customers. The point of the business is to provide income for the extended family, so you employ lots of family members. This makes these businesses some of the least efficient and least profitable in Europe, on paper, but they serve the needs of the owners very well. Large family corporations work on a similar basis - you put the useless nephew on the payroll, because it's a cheaper way of getting him money than paying him out of profits.

Any worker-owned cooperative, such as most law firms, can easily work this system by distributing the profit at the end of the year in the form of a bonus.

The worker-owned cooperative is not an unusual or odd system. It is, in effect, very common in law, banking, medicine, surveying, accountancy, plumbing, any kind of professional service from up to and including small prostitution businesses, grocers, craftsmen and handyman businesses, vermin control, high-tech start-ups, and so on. About the only businesses that aren't run by employees for employees are large businesses, businesses that involve large amounts of cheap or seasonal labour such as some forms of agriculture, large retail businesses, restaurants, and so on. Most businesses aren't run to make a profit.

 

[Emily Lake]

akirk already addressed unhindered trade between humans, so I'll leave that point aside.

The Benefits of Capitalism

From my perspective, under capitalism, the most prominent benefit that occurs is in the realm of innovation and risk taking. Research and development, the delving in to new ideas, and the creation of new technologies and new inventions is fraught with risk. It's uncertain, and may not work out. It's expensive, and requires a significant amount of up-front investment with no guarantee of future profit.

Governments may be willing to do some investment in innovation, but it's often limited to either military applications or those few endeavors that have an absolute and clear public benefit (certain medicines for example). But they very rarely invest in things that might seem whimsical or unusual.

Committees, as one might find in a situation where all businesses are employee-owned, also tend to be less likely to invest in uncertain outcomes. In this case, it's a matter of the marginal value of a dollar. Consider a group of 100 people, each of whom has $10,000. If they're each asked to invest $1000, that's 10% of their savings, with only a 20% chance that they'll get that money back along with a marketable product. On the other hand, if the 100 people consists of 99 people each of whom has $5000 and one person who has $505,000, and only the wealthy person is being asked to invest. In that case, the $100,000 investment is 20% of his savings, but it is marginally of less value because he still has $400,000 left. For him, that 20% chance of recouping his investment and having a marketable product is more likely to be palatable, simply because that money is excess from his perspective, where it's a hardship for each of those 100 equal-income people to give up.

Thus at the end of the day, having some wealth concentrated allows for the marginal value of those monies to be low enough that the owners of those monies are willing to part with it and invest in many things that otherwise wouldn't see the light of day.

The Downsides of Capitalism

On the other hand... there is the risk that those monies become too concentrated, in too few hands. And since the decisions to invest in innovation and research are being made by individual people, there is the risk that those specific individuals may not be interested in investing. Or perhaps they're not interested in investing in useful, worthwhile, and beneficial things. There's an aspect of social expectation and culture involved that can either encourage or completely obliterate the benefits of having wealth concentrated enough to gain a reduced marginal value.

 

[ksen]

The Benefits of Capitalism

From my perspective, under capitalism, the most prominent benefit that occurs is in the realm of innovation and risk taking. Research and development, the delving in to new ideas, and the creation of new technologies and new inventions is fraught with risk. It's uncertain, and may not work out. It's expensive, and requires a significant amount of up-front investment with no guarantee of future profit.

Governments may be willing to do some investment in innovation, but it's often limited to either military applications or those few endeavors that have an absolute and clear public benefit (certain medicines for example). But they very rarely invest in things that might seem whimsical or unusual.

Results from limited government investment in innovation:

the internet
optical digital storage
flourescent lighting
communications satellites
water purification systems
supercomputers
digital communications
radar
gps
nanotechnology
heart monitors
solar panels
wifi
human genome project
infant formula
the microchip
50,000+ mile tires
touchscreens
fire-resistant clothing
vaccines

Results from private investment in innovation:

the pet rock
furbies
erection medicine
red slime

 

[Nice Squirrel]

Results from limited government investment in innovation:

junk

Results from private investment in innovation:


erection medicine

 

[rousseau]

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?

Those are good points.

I wasn't trying to suggest that other systems are superior, but rather point 1 seems to be the method to a better system, and point 2 seems to be the fundamental flaw with capitalism (and maybe every other system).

 

[Loren Pechtel]

akirk already addressed unhindered trade between humans, so I'll leave that point aside.

The Benefits of Capitalism

From my perspective, under capitalism, the most prominent benefit that occurs is in the realm of innovation and risk taking. Research and development, the delving in to new ideas, and the creation of new technologies and new inventions is fraught with risk. It's uncertain, and may not work out. It's expensive, and requires a significant amount of up-front investment with no guarantee of future profit.

Another big advantage of capitalism:

People don't agree. The result of capitalist competition is a variety of paths are tried, the results show what is the best approach. Systems where the path is laid down from above are much worse at testing a variety of paths and thus are less likely to find the best solution.

 

[Loren Pechtel]

Results from limited government investment in innovation:

the internet
optical digital storage
flourescent lighting
communications satellites
water purification systems
supercomputers
digital communications
radar
gps
nanotechnology
heart monitors
solar panels
wifi
human genome project
infant formula
the microchip
50,000+ mile tires
touchscreens
fire-resistant clothing
vaccines

The problem with your list is that these aren't all-or-nothing items. Yes, the initial development was from the government but private industry has gone *FAR* beyond what the government originally developed.

 

[Canard DuJour]

Positive : fantastic productivity and incentive to develop novel goods and services.

Negative : labour/capital antagonism resulting in cyclical financial crises, austerity and systemic unemployemnt, despite - or sometimes because of - the above.

 

[ksen]

Results from limited government investment in innovation:

the internet
optical digital storage
flourescent lighting
communications satellites
water purification systems
supercomputers
digital communications
radar
gps
nanotechnology
heart monitors
solar panels
wifi
human genome project
infant formula
the microchip
50,000+ mile tires
touchscreens
fire-resistant clothing
vaccines

The problem with your list is that these aren't all-or-nothing items. Yes, the initial development was from the government but private industry has gone *FAR* beyond what the government originally developed.

Nobody has ever denied that private industry does a good job of commoditizing government innovations.

 

[Emily Lake]

The Benefits of Capitalism

From my perspective, under capitalism, the most prominent benefit that occurs is in the realm of innovation and risk taking. Research and development, the delving in to new ideas, and the creation of new technologies and new inventions is fraught with risk. It's uncertain, and may not work out. It's expensive, and requires a significant amount of up-front investment with no guarantee of future profit.

Governments may be willing to do some investment in innovation, but it's often limited to either military applications or those few endeavors that have an absolute and clear public benefit (certain medicines for example). But they very rarely invest in things that might seem whimsical or unusual.

Results from limited government investment in innovation:

the internet
optical digital storage
flourescent lighting
communications satellites
water purification systems
supercomputers
digital communications
radar
gps
nanotechnology
heart monitors
solar panels
wifi
human genome project
infant formula
the microchip
50,000+ mile tires
touchscreens
fire-resistant clothing
vaccines

Results from private investment in innovation:

the pet rock
furbies
erection medicine
red slime

Hmm, yes, very selective. I won't challenge your list, although some of them certainly could be challenged (fluorescent lighting and optical digital storage, for example).

I will however, add a few things that you seem to have very conveniently left off of your "Results from private investment in innovation" list:

Airplane
Model T
Vacuum cleaner
Fleming valve (first practical diode)
Bakelite
Cellophane
Zipper
Pyrex (more specifically, borosilicate glassware)
Band-aid (first self-adhesive sterile bandages)
Insulin as a treatment for diabetes
Television
Spiral binding
Aerosol can
Scotch tape
Neoprene
Polaroid photography
Nylon
Photocopier
Ballpoint pen
Teflon
Microwave oven
Tupperware
Velcro
Superglue (arguable... it was re-purposed as a reject from a government funded military endeavor)
Bar code
Liquid Paper aka White-out
Acrylic Paint
Astroturf
Contact lenses
Kevlar

Then you've got the whole pile of Windows and Apple products.

I've left out most of the computer-related items, as it's difficult to make a clear case for whether they're government-sponsored or privately-sponsored. They're very incestuous. Additionally, they all build on one another in a way that would just create a rabbit hole of argumentation.

 

[untermensche]

Airplane

This was one idea that was totally taken over by the government and advanced.

Who knows how long, or if ever, private enterprise would have created the modern jet.

 

[Nice Squirrel]

Airplane

This was one idea that was totally taken over by the government and advanced.

Who knows how long, or if ever, private enterprise would have created the modern jet.

The best innovator is war.