Why Capitalism is our Predominant Economic Model

[rousseau]

I have a few minutes to spare this morning so am going to take a stab at drawing out my thoughts on this topic. I'll try to be a little more brief than I was in my thread Re-Framing Capitalism, and I may not be as active in this thread as I was that one. My thinking here springs from the heuristic Path of Least Resistance which I also made a thread about.

If my understanding of the history is correct, Capitalism has actual, historical origins in England. I won't fight on this point too much as I don't know the history well. But my argument in this thread is more about the social origins of Capitalism, why it arose, and not something else. My argument is basically this:

Capitalism is the conceptually simplest system following a world that was dominated by monarchy, and the easiest to implement in a new, complex, and legalized world. Essentially, we're moving from an economic system where a small elite has dominion over most of the land, to one where we make the dominion over land a more legalized, and standardized process. Essentially - as Weber would say - more rationalized. Instead of one, dominant sovereign, now every unit of land effectively has it's own 'sovereign' or owner. In effect, this was the only practical way to move on from the world we were coming from, at the time. You have a central body that makes the laws, and has authority to enforce them, but you give everybody the power to maintain their own unit of land or property, because the central body doesn't have the means to do so.

Now on Socialism as envisaged in the past century or so:

Socialism, in contrast, is a theory that's not truly dichotomous with Capitalism. It's an economic model we imagine could be better than the previous one. But symbolically it represents a kind of regulatory end-point where we 'perfected' capitalism, and have achieved a more fair system of dominion over land. In terms of actual social practice, capitalism would have to come first, while a more regulated model (socialism) would have to come next. Capitalism dominates first because it's conceptually simpler - the path of least resistance. Making it more effective takes time and work.

Historically, when people actually tried to implement Socialism, they did it the wrong way. Basically, they imagined a system to be possible and tried to hammer a square peg into a round hole, rather than doing the hard work of understanding how to actually make the current system better, and work for more people.

I'd also argue about Socialism that helping the 'collective' is more about long-term sustainability than the distribution of power, which is a major miss in our current theory.

So to actually improve Capitalism we need regulation and to make it more effective, but logically this has to come after it's initial state. The initial stage of capitalism was better than what came before, but needs further rationalization to be better than what it was. We envisioned what this could be (Socialism), but in practice we need to find an actual, pragmatic way forward from what we have now. I'd also argue that the way forward needs to be about long-term environmental sustainability, not economic re-distribution. Re-distribution can be a part of it, but only when it serves the more important goal of sustainability.

 

[steve_bank]

Capitalism in the form of trade, investment, and profit goes back to the early civilizations.

Laissez Faire Capitalism in the 18th century was about minimizing government control of economies.

I think Smith wrote capitalism was a natural fit to human nature. Humans are competitive and aggressive. Capialism as we have it tody povides a wide range of freedoms.

Capitalism today is not the capitalism of Marx.

Russian communism forced what they thought was a fair and equal system. It ended up suppressing initiative learing to a dull lifeless system.

Similar in China. One of the first Chinese reforms was to allow farmers to grow more than the state mandated production and sell the excess. The result was food supply increased.

Today China has a stock market, invetment, profit, and a wealthy vlass. Capitalism won out because it works better for everyone in one way or another.

 

[rousseau]

Capitalism in the form of trade, investment, and profit goes back to the early civilizations.

I don't know my economic history as well as I should, but for the sake of this discussion I think you need to isolate the definition of Capitalism as being linked to the modern state system.

I don't disagree that it's roots stretch deeper into history, but most current-day debates assume we're discussing an economic model of a nation state.

 

[steve_bank]

I'm not an expert, just general reading.

Free market capitalism as I see it today.

1. Low government control of the economy.
2. Market forces determine what and how much gets produced.
3. Value of goods, labor, services,nd resources vary wit supply and demand.
4. Ownership of biliousness, IOW means of production, not limited to any class. Theatrically but to a large degree. Theroretical equal opportunity.
5. Free market competition
6. Risk and reward.

I was neck deep in technology and it works as advertised. Free market competion keeps proces down and fosters innovation.

The computer PC competion was legendary, at least to us inside. Apple literally started in a garage, as did the original HP. I think it was a teen or 20 something who got the idea of making motherbords and Dell was born. The IBM clone PC market competition.

The power of Apple, MS, and Amazon are anti freemarket. They should be broken up.

To me socially it equates to freedom of action. You can go anywhere you can find a job. No ne tells what to do or where to go.

That's the positive side.

The negative side is human nature as well. Without oversight a comany like MS will gobble up cometitoon, as it does.

 

[Loren Pechtel]

Capitalism works because it puts the decisions as to how to allocate resources in the hands of those who have shown they can allocate resources well. It needs government regulation to deal with external harms that would otherwise result.

 

[steve_bank]

Capitalism works because it puts the decisions as to how to allocate resources in the hands of those who have shown they can allocate resources well. It needs government regulation to deal with external harms that would otherwise result.

That's a good way of putting it.

 

[Thomas II]

 

[Harry Bosch]

Capitalism works because it puts the decisions as to how to allocate resources in the hands of those who have shown they can allocate resources well. It needs government regulation to deal with external harms that would otherwise result.

Capitalism works because it's really difficult to run a business. I've started 3. And most entrepreneurs aren't going to work 80 hours a week unless there is a hope of a payoff. There has to be an incentive. Socialism just doesn't provide enough incentive.

 

[Cheerful Charlie]

Feudalism died out in England. Charles I's attempt to re-establish divine right of kings brought civil war to England and killed that for good. What was next? Merchantilism. Google wikipedia for that. And then there was the Hanseatic league from about 1200 CE to 1500 CE. Might as well check that out. Economic history is complex.

 

[Tharmas]

Feudalism died out in England. Charles I's attempt to re-establish divine right of kings brought civil war to England and killed that for good. What was next? Merchantilism. Google wikipedia for that. And then there was the Hanseatic league from about 1200 CE to 1500 CE. Might as well check that out. Economic history is complex.

I agree with the above. The East India Company was founded in 1600 I believe, as an eminently capitalist institution. It was quickly integrated into British foreign policy. I think it’s safer to say that capitalism evolved rather than that it was invented. This certainly doesn't invalidate your thesis as I understand it, of being the path of least resistance.

 

[Cheerful Charlie]

Again, check out merchantilism. Basically, never sell commotidies. Sell finished products. Do not export silver or gold. Protect your industries. Tarrifs and taxes. With Britain, the American colonies got the short end of the stick with such policies. Which was a main cause of the American revolution. Merchantilism spawned the Opium Wars. Trade wars that became hot wars. The Netherlands vs Britain for example. Merchantilism combined with the industrial revolution changed human history in a most major way.

 

[rousseau]

Feudalism died out in England. Charles I's attempt to re-establish divine right of kings brought civil war to England and killed that for good. What was next? Merchantilism. Google wikipedia for that. And then there was the Hanseatic league from about 1200 CE to 1500 CE. Might as well check that out. Economic history is complex.

I agree with the above. The East India Company was founded in 1600 I believe, as an eminently capitalist institution. It was quickly integrated into British foreign policy. I think it’s safer to say that capitalism evolved rather than that it was invented. This certainly doesn't invalidate your thesis as I understand it, of being the path of least resistance.

When I mentioned the 'historical origin' I was referring to evidence presented in a book called The Origin of Capitalism which is summarized here. The author argues that there was a point of time when we saw the 'beginning' so to speak, of how our world works today.

But I definitely have no qualms calling it an evolutionary process that began in an earlier period. You're right that the main point I was trying to emphasize is that it's a conceptually simpler system.

 

[Politesse]

Capitalism works because it puts the decisions as to how to allocate resources in the hands of those who have shown they can allocate resources well

Highly effective thieves, in other words.

As well as, of course, their children, grandchildren, great-grandchildren, pastors, lodge fellows, fraternity brothers, and friends.

 

[DBT]

Capitalism works extremely well for those who are good at business and making money. With a descending order of success for those with less opportunity and/or business ability, low income employees, etc.

 

[rousseau]

As well as, of course, their children, grandchildren, great-grandchildren, pastors, lodge fellows, fraternity brothers, and friends.

This is an interesting comment, because at some point we're driving down to the fundamentals of what a living thing actually is, and does. Do any other living things prioritize anything but those closely related to them? Can we do otherwise? Is this something we do consciously, or is it instinctive / a social dynamic we're forced into?

 

[rousseau]

Capitalism works extremely well for those who are good at business and making money. With a descending order of success for those with less opportunity and/or business ability, low income employees, etc.

There's been a huge increase in population since the inception of Capitalism, so that suggests life has gotten easier for the poor, no? Am I wrong about that?

 

[Politesse]

As well as, of course, their children, grandchildren, great-grandchildren, pastors, lodge fellows, fraternity brothers, and friends.

This is an interesting comment, because at some point we're driving down to the fundamentals of what a living thing actually is, and does. Do any other living things prioritize anything but those closely related to them? Can we do otherwise? Is this something we do consciously, or is it instinctive / a social dynamic we're forced into?

Why on earth would you try? We're social organisms, and require community to survive at all.

But I don't think we ultimately benefit from the systems of caste division that capitalist policies, by vastly accelerating wealth disparity between arbitrarily defined social strata, strongly encourage. Who do you consider close community? The "crazy lady" wandering down the street and muttering is not really the alien being most passersby will treat her as. At the very least she shares a community with those she meets, and she's probably literally a cousin to most of them, no more than six or seven generations back. Genealogists will attest to this rule: most families who have lived in the same region for more than a couple generations are relatives to each other, and maybe more recently than they imagine. But class divisions oblige us to pretend that we have no significant connections or mutual responsibility to anyone not of our class. This is ultimately injurious to general well-being.

 

[rousseau]

But class divisions oblige us to pretend that we have no significant connections or mutual responsibility to anyone not of our class. This is ultimately injurious to general well-being.

In practice, the tendency likely runs a lot deeper than that. Likely very few of us seriously prioritize anyone who isn't either a parent, sibling, or child. That doesn't always mean they don't want to care about others, but usually we're spread so thin materially that we can only help, to any significant extent, our very closest relatives.

I'd argue that policy at the class level is rarely about helping one's own class, it's about helping oneself, who is a member of the class. The aggregate effect is that the class experiences material gain, but it doesn't have much to do with altruism toward peers.

And that's partly what I'm getting at - at some point we're talking about how actual people function in the physical world, completely isolated from the economic system they happen to be living in. It's a great ideal to support your 25th cousin, but do any people actually do it beyond nationalism? Have they ever? Will they ever? That's a good question.

 

[rousseau]

In practice, the tendency likely runs a lot deeper than that. Likely very few of us seriously prioritize anyone who isn't either a parent, sibling, or child. That doesn't always mean they don't want to care about others, but usually we're spread so thin materially that we can only help, to any significant extent, our very closest relatives.

I'd argue that policy at the class level is rarely about helping one's own class, it's about helping oneself, who is a member of the class. The aggregate effect is that the class experiences material gain, but it doesn't have much to do with altruism toward peers.

And that's partly what I'm getting at - at some point we're talking about how actual people function in the physical world, completely isolated from the economic system they happen to be living in. It's a great ideal to support your 25th cousin, but do any people actually do it beyond nationalism? Have they ever? Will they ever? That's a good question.

I'll just add, that this runs into one of the points I was making in the original post. That Socialist theory is just another manifestation of this dynamic - it's usually about the 'collective' insofar as more money comes to the individual supporting the collective policy. It doesn't have much to do with the long-term 'collective' health of the actual society.

Which is likely the major problem we're running into now. Almost no one cares about anything beyond their short-term bottom line, regardless of where they are on the political spectrum.

 

[Politesse]

I think the wave of intense social paranoia and suspicion of collectivism currently characteristic of US and Canadian social life is more temporally and geographically bound than you realize.