Re-Framing Capitalism

[DBT]

There is carrying capacity and livability to consider. Even if technology permits ar doubling of the world population, or more (yes, I know that population growth is slowing), is that something we should aspire to? Something in terms of economic growth (or something else), to work towards? if so, why?

 

[Hermit]

When there are an overwhelming number of people on the planet, we have to somehow devise a system that approaches fairness in who has access to property and who doesn't. Note, I'm not claiming that the current system is completely fair, but that our current economic model is an attempt at making it more meritocratic.

Capitalism is neither aiming to achieve fairness, nor meritocracy. It is based on the desire to make money. To all else it is blind.

 

[steve_bank]

t's very tempting to think a significant improvement in society can be computed -- that we can analytically calculate what society would be better and then just trade ours in for it. But anyone familiar with multi-variable optimization knows the way to get improvement is by incremental change, measurement, and undoing steps that are observed to make things worse; and that the process of convergence to the optimum goes faster when the individual steps are smaller.

I agree. It is far too complex to analytically derive an optimum solution. The left wants drastic large scale immediate change. The right wants no change. In the middle is incremental change. The education system is a good example.

In fact it would be near impossible to get an agreement on what optimum means to begin with.

Here in Seattle and Washington state progressives made changes to the police and justice system in the interest of optimizing their vision of fairness and justice. Prohibit police from hot pursuit for non violent crimes and car thefts go up.

They ignored the potential negative side effects which inevitably arose.

The system evolved it was not designed.

Tinker with it too much and we get unintended consequences like the supply chain problems we have from COVID.

 

[rousseau]

When there are an overwhelming number of people on the planet, we have to somehow devise a system that approaches fairness in who has access to property and who doesn't. Note, I'm not claiming that the current system is completely fair, but that our current economic model is an attempt at making it more meritocratic.

Capitalism is neither aiming to achieve fairness, nor meritocracy. It is based on the desire to make money. To all else it is blind.

I think you misunderstand. Capitalism is inextricably tied to the state system; it's the state system, not capitalism, that gives rise to increasing fairness and meritocracy. Capitalism itself is a result, not a cause.

 

[steve_bank]

In an Econ 101 class the teacher asked 'What is the purpose of capitalism? said something like to provide the greatest possible number of goods and services at the lowest cost.

He pointed his finger at me and said sharply 'Wrong, the purpose of capitalism is to make a profit'.

It took a while when I started working to fully grasp that. People invest expecting a return on investment. It is all based on the profit motive. Job creation is a side effect. Raising standards of living is a side effect not a goal.

I think Smith argued that capitalism is a natural human form.

The profit motive means business is always trying to reduce cost and increase efficiency. Labor is always tryingto maximize wages and benefits. It is a never ending dynamic.

On the extree labor side some expect busness to provide cradle to grave support. Auto unions had very generous pensions which in the end were not sustainable by te auto companies. The see saw battle between labor and management.

Same with postal workers. I think it was recently changed to a 401k.

 

[rousseau]

t's very tempting to think a significant improvement in society can be computed -- that we can analytically calculate what society would be better and then just trade ours in for it. But anyone familiar with multi-variable optimization knows the way to get improvement is by incremental change, measurement, and undoing steps that are observed to make things worse; and that the process of convergence to the optimum goes faster when the individual steps are smaller.

In fact it would be near impossible to get an agreement on what optimum means to begin with.

Sustainable, secure communities for people to raise children is what it should be.

 

[Swammerdami]

In an Econ 101 class the teacher asked 'What is the purpose of capitalism? said something like to provide the greatest possible number of goods and services at the lowest cost.

He pointed his finger at me and said sharply 'Wrong, the purpose of capitalism is to make a profit'.

I think it's silly to expect there to be a single answer.

The reason societies are eager to embrace a capitalist model is to maximize production: You were right; that is a society's PURPOSE in adopting this model.

But the reason an entrepreneur, or any individual within a capitalist society, acts as he does is to maximize the profit or income for himself and his family.

 

[bigfield]

t's very tempting to think a significant improvement in society can be computed -- that we can analytically calculate what society would be better and then just trade ours in for it. But anyone familiar with multi-variable optimization knows the way to get improvement is by incremental change, measurement, and undoing steps that are observed to make things worse; and that the process of convergence to the optimum goes faster when the individual steps are smaller.

In fact it would be near impossible to get an agreement on what optimum means to begin with.

Sustainable, secure communities for people to raise children is what it should be.

Everyone agrees on that, already. They just disagree on which people.

 

[rousseau]

t's very tempting to think a significant improvement in society can be computed -- that we can analytically calculate what society would be better and then just trade ours in for it. But anyone familiar with multi-variable optimization knows the way to get improvement is by incremental change, measurement, and undoing steps that are observed to make things worse; and that the process of convergence to the optimum goes faster when the individual steps are smaller.

In fact it would be near impossible to get an agreement on what optimum means to begin with.

Sustainable, secure communities for people to raise children is what it should be.

Everyone agrees on that, already. They just disagree on which people.

And how it's accomplished. IMO, sustainability needs elements from both liberal and conservative ideology. Democracy achieves this by blunting excesses from both fringes, and we end up landing closer to the center, with more balanced decisions.

 

[Bomb#20]

It's very tempting to think a significant improvement in society can be computed -- that we can analytically calculate what society would be better and then just trade ours in for it. But anyone familiar with multi-variable optimization knows the way to get improvement is by incremental change, measurement, and undoing steps that are observed to make things worse; and that the process of convergence to the optimum goes faster when the individual steps are smaller.

Nitpick: I am familiar with multi-variable optimization. The process of incremental improvements will find a local optimum but generally not a global optimum. 'Simulated annealing' is one technique to escape from a local optimum: make a plausible change even though it reduces performance, and hope that incremental improvements from that new state will lead to a better optimum.

This is true, but that illustrates my point too. You keep the change because you're throwing the dice and hoping it will lead somewhere better, because you're using an optimization procedure that says to do that with a certain probability, because experience shows this works better than the so-called "hill climbing" procedure that never accepts a negative step. What simulated annealing is NOT doing is accepting a change that reduces performance because you've calculated something better lies in that direction. Algorithms, like people, can benefit from taking into account that they are not infallible.

Does this have any relevance to human society? Maybe. Revolutions often reduce productivity in the near term, but provide a new starting point that MIGHT eventually lead to higher performance than achieved by the old regime.

I know a guy who was solving the Traveling Salesman Problem with simulated annealing. He tried a bunch of ways to improve its results, tuning the temperature schedule and so forth; but what really made it converge faster to a good solution was when he changed the mutation mechanism from swapping two random cities to reversing the path between two random cities. I.e., instead of using the obvious type of mutation, ABCDEFGHI changing to ABGDEFCHI, he adopted the transformation rule where ABCDEFGHI changes to ABGFEDCHI. This way at each experiment he was only replacing two of the inter-city legs in the route instead of four. Bingo! Consistently better solutions in less CPU time.

You can reduce productivity in the near term but provide a new starting point that might eventually lead to higher performance than achieved by the old regime just as well with a small evolutionary step as you can with a revolution. And your odds of success will be a lot more favorable.

 

[Bomb#20]

In an Econ 101 class the teacher asked 'What is the purpose of capitalism? said something like to provide the greatest possible number of goods and services at the lowest cost.

He pointed his finger at me and said sharply 'Wrong, the purpose of capitalism is to make a profit'.

If it's any consolation, he was wrong too.

 

[Bomb#20]

There is carrying capacity and livability to consider. Even if technology permits ar doubling of the world population, or more (yes, I know that population growth is slowing), is that something we should aspire to? Something in terms of economic growth (or something else), to work towards? if so, why?

I'm not sure what the right thing to be working toward is; but a lot of people argue that as life spans increase, we need to grow the population so in the future there will be enough workers to support all the retired people. A lot of people evidently can't recognize a Ponzi scheme when they see one.

 

[steve_bank]

t's very tempting to think a significant improvement in society can be computed -- that we can analytically calculate what society would be better and then just trade ours in for it. But anyone familiar with multi-variable optimization knows the way to get improvement is by incremental change, measurement, and undoing steps that are observed to make things worse; and that the process of convergence to the optimum goes faster when the individual steps are smaller.

In fact it would be near impossible to get an agreement on what optimum means to begin with.

Sustainable, secure communities for people to raise children is what it should be.

You are doing what the progressives do, political catch phrases ignoring human reality. When it comes to exct polical definitions and metrics a consensus is impossible.

In Seattle for 20 years we have been hearing nice sounding sound bites on the homeless. A lot of money spent and still a worsening problem.

When I say optimal solution I don't men general goals, I men te specific mechanics on how to implement a change and how to make it stable.

 

[steve_bank]

There is carrying capacity and livability to consider. Even if technology permits ar doubling of the world population, or more (yes, I know that population growth is slowing), is that something we should aspire to? Something in terms of economic growth (or something else), to work towards? if so, why?

I'm not sure what the right thing to be working toward is; but a lot of people argue that as life spans increase, we need to grow the population so in the future there will be enough workers to support all the retired people. A lot of people evidently can't recognize a Ponzi scheme when they see one.

That is true. With our low birth rate it is why we need immigration. Japan has aging population problem. They need young people at the bottom but are not welcoming to immigration as North America is.

 

[steve_bank]

In an Econ 101 class the teacher asked 'What is the purpose of capitalism? said something like to provide the greatest possible number of goods and services at the lowest cost.

He pointed his finger at me and said sharply 'Wrong, the purpose of capitalism is to make a profit'.

If it's any consolation, he was wrong too.

Oh really. Then what is it, altruism that drives the economy?

China went form a communist failure to a form of free market economics where one can get rich.

One of the first post Mao reforms was allowing farmers o grow more food above the collectivist quota and sell it for profit. Agriculture grew.

Russian communists eliminated a profit incentive. Wages, production, and prices were set by the state. The result was an economy unable to provide basic needs. A gloomy grey culture.

 

[rousseau]

t's very tempting to think a significant improvement in society can be computed -- that we can analytically calculate what society would be better and then just trade ours in for it. But anyone familiar with multi-variable optimization knows the way to get improvement is by incremental change, measurement, and undoing steps that are observed to make things worse; and that the process of convergence to the optimum goes faster when the individual steps are smaller.

In fact it would be near impossible to get an agreement on what optimum means to begin with.

Sustainable, secure communities for people to raise children is what it should be.

You are doing what the progressives do, political catch phrases ignoring human reality. When it comes to exct polical definitions and metrics a consensus is impossible.

In Seattle for 20 years we have been hearing nice sounding sound bites on the homeless. A lot of money spent and still a worsening problem.

When I say optimal solution I don't men general goals, I men te specific mechanics on how to implement a change and how to make it stable.

Well you asked what 'optimum' means, not how to get there. I'd argue that a stable environment to raise children is an objective optimum - what else would it be? But yes, not all will agree on that, or how to get there.

 

[Bomb#20]

... a lot of people argue that as life spans increase, we need to grow the population so in the future there will be enough workers to support all the retired people. A lot of people evidently can't recognize a Ponzi scheme when they see one.

That is true. With our low birth rate it is why we need immigration. Japan has aging population problem. They need young people at the bottom but are not welcoming to immigration as North America is.

 

[Bomb#20]

In an Econ 101 class the teacher asked 'What is the purpose of capitalism? said something like to provide the greatest possible number of goods and services at the lowest cost.

He pointed his finger at me and said sharply 'Wrong, the purpose of capitalism is to make a profit'.

If it's any consolation, he was wrong too.

Oh really. Then what is it, altruism that drives the economy?

A lot of things drive the economy. Profit and altruism are two of the things on the list. But "What drives the economy?" and "What is the purpose of capitalism?" are two different questions. Capitalism doesn't have a purpose. Individual actions and individual agents have purposes; capitalism is an emergent phenomenon that's just what happens as a side effect of a lot of actions by a lot of agents, each of which has its own usually very provincial purpose.

China went form a communist failure to a form of free market economics where one can get rich.

One of the first post Mao reforms was allowing farmers o grow more food above the collectivist quota and sell it for profit. Agriculture grew.

And if we dig down, and if the CCP opens up all its files, we'll probably find out that the reason the reform was made was not to create profit, or to create more food, but to cause communist official X to win some petty power struggle against communist official Y.

Russian communists eliminated a profit incentive. Wages, production, and prices were set by the state. The result was an economy unable to provide basic needs. A gloomy grey culture.

Quite so. But the capitalism the Russian communists eliminated hadn't come to Russia for the sake of profit. Alexander II turned Russia capitalist because he was afraid if he didn't free the serfs there'd be a revolution.

 

[bilby]

Alexander II turned Russia capitalist because he was afraid if he didn't free the serfs there'd be a revolution.

Well it's a good thing that the Russian Empire dodged that bullet.

 

[steve_bank]

The point isthe experiments in centralized large scale control of economies failed. Russia collapsed and never recovered. China pragmatcally adapted and succeed.

Capitalism is failing, but no one will seriously say that in public. Musk buying out Twitter to make into his own vision to 'save the world' is a reflection of that.

IMO China now has more sustainable model.

The question is what is the purpose of the economic system. Do we serve the system or does the system serve us? Kids are raised in a culture in which max efficiency 24/7 is the norm. To me teen suicide and addiction is an obvious symptom of our economic system

Post WWII the idea was that manufacturing technology was going to give us more free time.

The idea that the economy will rovide a high percentage of living wage jobs is unrealistic. Wages and housing are subject to supplyand demand.

Our 19th century idea of economic freedom now gives us the likes of Musk and Trump for which there are no group limits.