Why Capitalism is our Predominant Economic Model

[rousseau]

I'm not suspicious of collectivism at all. What I'm suggesting is that current collective theory is often aiming in the wrong direction.

 

[bilby]

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.

It's the dominant opinion of a tiny handful of old men, led by Rupert Murdoch and the Viscounts Rothermere, who have had a stranglehold on public discourse for a few decades.

Everyone knows that it's the only sensible way of looking at reality, because it's the only way most of reality has been presented to them for most of their lives.

 

[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.

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?

Does 'easier' justify the ever growing divide in wealth, privilege and power?

 

[Loren Pechtel]

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.

Spouse doesn't make the list?!

 

[BH]

I think capitalism prevails because we can't all have everything for various reasons and the reasons given under the capitalist moral worldview placates most people psychologically. You don't get rich--its somehow your fault. It's not that we can't all have a job or a business that makes us rich. There is not enough of that to go around no matter how smart or hard working you are. For some reason it's easier to accept we are to blame. I'm not picking on capitalism or endorsing another economic system Its just interesting why people think that way.

 

[rousseau]

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.

It's the dominant opinion of a tiny handful of old men, led by Rupert Murdoch and the Viscounts Rothermere, who have had a stranglehold on public discourse for a few decades.

Everyone knows that it's the only sensible way of looking at reality, because it's the only way most of reality has been presented to them for most of their lives.

Neither of these posts really address the argument I was making, which is that the cultural ethos of the 'collective' is completely wrong-headed for the most part. Unless someone's vision is completely oriented to long-term sustainability, which, for some people, it likely is.

But lately I'm starting to come across more post-structural ideas, which lead me to believe that re-orienting our concept of the collective likely isn't possible. We're going to go down fighting each other.

 

[Politesse]

Neither of these posts really address the argument I was making, which is that the cultural ethos of the 'collective' is completely wrong-headed for the most part. Unless someone's vision is completely oriented to long-term sustainability, which, for some people, it likely is.

I'm curious what you mean by "long term", here?

 

[rousseau]

Neither of these posts really address the argument I was making, which is that the cultural ethos of the 'collective' is completely wrong-headed for the most part. Unless someone's vision is completely oriented to long-term sustainability, which, for some people, it likely is.

I'm curious what you mean by "long term", here?

I'm starting with the premise that the reason people co-operate with each other to build well functioning communities is (for the most part) to make it easier for them to survive and raise children, meaning stability across time. So if we're genuinely interested in supporting the collective (everyone in the community), then our ultimate political goal should be stability across time in relation to the current context. Re-distribution can be a part of that, but only insofar as it serves the larger goal.

But in practice most political activism centers on co-opting the community so the sub-group gets more of the national pie. I don't think there's anything wrong with re-distributing wealth, and in some cases it's definitely needed. But I also don't think genuine stability really factors into many people's political ideas. Most of us don't want a better functioning group so we can, as a whole, live better over time. We want money and resources right now. This is exactly what you'd expect from evolutionary theory.

But the more I think about this problem the more I realize that people just won't accept a solution like this. Popular political ideas are, foremost, going to serve the individual or sub-group, not the whole group.

So to answer your question more directly. There's no specific timeframe, I'm just thinking that our politics need to revert from short-termism to long-termism. Which will likely never happen.

 

[Politesse]

This is exactly what you'd expect from evolutionary theory.

"Evolutionary theory" does not necessarily favor nation-states, though, a concept of very recent origin that may not actually last for a very long term, at least as a biologist might define a long term. I don't know that analogizing nations as communal entities to begin with is very apt, they always were an attempt to use a metaphorical construct to paper over the natural heterogeny of an empire.

 

[rousseau]

This is exactly what you'd expect from evolutionary theory.

"Evolutionary theory" does not necessarily favor nation-states, though, a concept of very recent origin that may not actually last for a very long term, at least as a biologist might define a long term. I don't know that analogizing nations as communal entities to begin with is very apt, they always were an attempt to use a metaphorical construct to paper over the natural heterogeny of an empire.

A nation state, or group of states should be a stabilizing force for it's members, until it's not anymore, then I'd expect it to fracture. I have no problem not calling them communities, but that right there might be the crux of the problem. Loyalty flows from the family or group upward, not the other way around. Groups want to profit from the nation-state, but don't put as much thought into it's overall health.

 

[SIB]

"collectivism" is great on paper and if there were less "tribal ties" and greed and more "nationalism" (oh no, I hear it now). A common goal is so neo like ... So that ends that discussion for all but less logical people. They can keep wishing and ignoring observation.

However, for me, capitalism with a healthy sprinkling of socialism is more healthy for most people.

The big thing is the "Law". The law is above all people. With the human herds, that needs to be trumped every day. "justice" is different. As seen with how some people have made cities so unsafe by stopping the people that are actually trying to help. But they sure are insightful ... lol. Again, less logical mind sets won't be able to process that, but whatever. Down we go.

 

[rousseau]

"collectivism" is great on paper and if there were less "tribal ties" and greed and more "nationalism" (oh no, I hear it now). A common goal is so neo like ... So that ends that discussion for all but less logical people. They can keep wishing and ignoring observation.

It would be useful for the public discourse on economics to be a little more.. accurate. You're never going to achieve perfection, but you'll get closer if you know what you're aiming for. Early Sociologists framed the debate a certain way, though, and now that's pretty much what we get. And Sociology is still struggling to become a true science over a century later.

I can't help but make an analogy with Christianity, which spread for 1800 years before Darwin provided a serious rebuttal that actually entered public discourse.

However, for me, capitalism with a healthy sprinkling of socialism is more healthy for most people.

I'd attribute good outcomes to a healthy democracy and sane electorate, myself. And yet most of the world still isn't living under a true democracy.

 

[JohnG]

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.

I've always had a problem with this statement. I don't dispute that some people are competitive and aggressive, many are not so much.

I don't see this as a trait that any social system should be built around. Our species is communal by nature. We accomplish all great things (pretty much everything for that matter) as a group or part of a system that includes the cooperation of others.

Much of competitiveness stems from insecurity. - which often lends itself to toxic outcomes. Wars, inequity, racism, etc..

I won't dispute that it can inspire people to do better in certain situations, but it should be recognized that often it does not.

Listening to paleo-cons talk about this reinforces my belief that they are full of crap.

 

[rousseau]

I wouldn't call human nature or capitalism to be only about competition myself, aspects of both are quite collaborative. But if you're out to critique something you'll often have blinders towards the positive sides (and how they actually function in practice).

Capitalism is about the management of property, at it's core. But it can't solve the problem of limited resources, or competition for resources - that's a human problem.

 

[Swammerdami]

Setting aside stored wealth (precious objects or money), wealth divides into three types: Land, manpower, and everything else. Family housing would be a major component of "everything else", especially during pre-industrial times, but it gets subsumed as value added to land. "Everything else" is mostly capital and includes the means of production (factories, heavy equipment, robots), along with means of transportation (roads, ships, railroads, pipelines).

Capitalism is often defined as private ownership of the means of production (and transportation^*) and I think we should stick to that definition. There was little capital in ancient times, so "capitalism" was hardly an issue. Land and manpower were the main types of wealth; the ratio between their values (rent versus wage) was a key parameter. Ships were an exception and owning or operating one or more ships was often key to wealth and power. Roads and aqueducts are capital, but were often provided by a King for free enjoyment by all. Roads' utility depends on safety. European kings finally acquiring the military power to police their roads helped the transition from the long recession of feudalism to the modern era.

Please note that entrepreneurship does not depend on capitalism. Craftsman have always earned more than unskilled laborers. The skilled worker (e.g. cook or handyman) might want some capital (e.g. kitchen or tools) to ply his/her trade but the amount of capital is modest. When we think of capitalism, we should not think of George selling his software apps on Tiktok. Or even of Ma and Pa operating a small chain of hamburger stands. We should think of giant corporations and billionaires.

Let's start with some of America's super-rich. Rockefeller bought up oilfields -- okay -- and built pipelines (means of transportation) which became natural monopolies. How would the petroleum revolution have played out had the government insisted on building and owning the pipelines? Unclear. But Rockefeller's heirs are still collecting rent on the infrastructure system created in the 19th century. (Patents expire after 20 years; should there be a time limit on ownership of major infrastructure?) Vanderbilt and Gould are two of the super-rich whose wealth depended on railroad ownership. Neither was a railroad inventor; they were "money men." J.J. Astor was a tremendous entrepreneur. But let's not forget that much of his wealth came from opium smuggling, including illegal opium sales in China.

More recently, much capital wealth is Ideas: It has an intangible non-material form. Apple's wealth isn't in the form of factories -- It's stock Price-to-Book ratio is a whopping 50:1. Microsoft and Facebook are examples of corporations deriving huge rents after being in the right place at the right time.

We can agree to disagree about how much the rent-collecting Idea Capital of a company like Facebook or Microsoft reflects real value to society. But much capital "creation" in the most recent decades is caused by financialization often with negative value to society. Yet this is tolerated or even encouraged by the Religion of Capitalism.

Well, that's all for now. I just hope to move the conversation to a better definition of capitalism. I hope we can agree that Ma and Pa getting a bank loan to expand their restaurant has a different character from Bain Capital issuing junk bonds and driving Toys'R'Us into bankruptcy.

I'll link again to this 1999 article which presents an interesting view about the foolishness of post-rational American "capitalism." I'm afraid things have only gotten worse since 1999.

 

[rousseau]

Setting aside stored wealth (precious objects or money), wealth divides into three types: Land, manpower, and everything else. Family housing would be a major component of "everything else", especially during pre-industrial times, but it gets subsumed as value added to land. "Everything else" is mostly capital and includes the means of production (factories, heavy equipment, robots), along with means of transportation (roads, ships, railroads, pipelines).

Capitalism is often defined as private ownership of the means of production (and transportation^*) and I think we should stick to that definition. There was little capital in ancient times, so "capitalism" was hardly an issue. Land and manpower were the main types of wealth; the ratio between their values (rent versus wage) was a key parameter. Ships were an exception and owning or operating one or more ships was often key to wealth and power. Roads and aqueducts are capital, but were often provided by a King for free enjoyment by all. Roads' utility depends on safety. European kings finally acquiring the military power to police their roads helped the transition from the long recession of feudalism to the modern era.

You'll get no argument from me on that definition. I'm not suggesting a different definition, I'm suggesting what the core driver of capitalism is, which gives rise to - 'private ownership of the means of production'. Fundamentally, capitalism is a means of organizing property. But in this case that organization leads to private ownership, which leads to your definition.

You can't have an organized system of legalized property ownership, without giving people the right to create industry. You can take that right away later, or regulate it. But the original driver is property ownership.

If people want to rail against the negative impacts of capitalism, that's fine, but it's not really want this thread is about.

 

[Harry Bosch]

The reason why capitalism is the dominant business structure is because it works better. It's as simple as that. In America, you can start any kind of company that you want to. My wife worked for a very successful employee owned company, Winco. Awesome company. But in most cases, IMO, capitalist companies work better. In a capitalistic company, entrepreneurs are rewarded strongly when they work hard, increase efficiency, produce superior products, find a better way to innovate, and etc. In a collective, the incentives just aren't as strong.

 

[Cheerful Charlie]

Human economies in Europe moved in various broad systems over time. Slave econmies. Feudalism. Mercantilism. Laissez faire capitalism. Social democracy. Communism. Today's modern American capitalism is deeply flawed and will, over time change. Hopefully for the better.

 

[bilby]

The reason why capitalism is the dominant business structure is because it works better. It's as simple as that. In America, you can start any kind of company that you want to. My wife worked for a very successful employee owned company, Winco. Awesome company. But in most cases, IMO, capitalist companies work better. In a capitalistic company, entrepreneurs are rewarded strongly when they work hard, increase efficiency, produce superior products, find a better way to innovate, and etc. In a collective, the incentives just aren't as strong.

For the exact same reasons, most nations in the world, throughout history, have been autocracies or oligarchies.

In an oligarchy, rulers are rewarded strongly when their peasants, serfs, and slaves increase output. In a democracy, the incentives just aren't as strong.

Of course, "works better" might not be considered to be synonymous with "rewards hard working bosses better", by all participants in either a company or a nation. But who cares about the opinions of people who don't work hard enough to own a company (or rule a fiefdom)?

We all know that in a capitalist economy, the people who work the hardest - who have the heaviest physical labour, the dirtiest conditions, and the most dangerous workplaces, are the owners of companies; While the guys who just collect a wage packet each week are swanning around having "working lunches", attending conferences in Las Vegas, and relaxing on their yachts.

Obviously those hard working bosses deserve greater rewards.

 

[rousseau]

The reason why capitalism is the dominant business structure is because it works better. It's as simple as that. In America, you can start any kind of company that you want to. My wife worked for a very successful employee owned company, Winco. Awesome company. But in most cases, IMO, capitalist companies work better. In a capitalistic company, entrepreneurs are rewarded strongly when they work hard, increase efficiency, produce superior products, find a better way to innovate, and etc. In a collective, the incentives just aren't as strong.

To bring this back to the OP, my take would be that capitalism can't be 'better' because there was no realistic alternative at the time of it's inception, and there is still no realistic alternative beyond continuing to build on and regulate it. So it's not so much that it 'works better', it's that it's 'what worked and is working'.

But if you consider the environmental impact we've caused in the past few centuries (humans, not capitalism), saying that it 'works' likely needs a qualifier. More accurately, it's 'what happened' and 'what is happening'.