Capitalism Produces - Socialism Distributes

[wonderpup]

I think your thought experiment makes way too many assumptions. The biggest assumption is that the 10% of the population that owned the mandroids would distribute anything at all. I submit that they would use the mandroids to create more wealth, way beyond food and shelter, like spaceships and energy sources purely for themselves. They have no use for the other 90% of the population and indeed the 90% would be a constant security threat. It would be feeding the enemy.

What you describe here is not capitalism- it more closely resembles the old USSR, which was my point. The inability of a purely capitalist system to process the social consequences of it's own operations would eventually bring it down. So some 'socialist' dimension is needed to make capitalism work- left to it's own devices it would eventually bring about social and/or environmental collapse.

[CrashedOutAndBurned]

Surely capitalism needs socialism, else who pays for the bail outs and for massive welfare to keep the losers from taking up arms and clubbing the capitalists to death and getting their hands on resources?

Edited July 2, 2010 by CrashedOutAndBurned

[Guest sillybear2]

What you describe here is not capitalism- it more closely resembles the old USSR, which was my point. The inability of a purely capitalist system to process the social consequences of it's own operations would eventually bring it down. So some 'socialist' dimension is needed to make capitalism work- left to it's own devices it would eventually bring about social and/or environmental collapse.

I dunno, the 'mandroid' concept pretty much sums up the Chinese workforce, especially in terms of goods being imported into this country, whether they were produced by humans or magical worker bots in a far away place seems beside the point.

[Authoritarian]

Demand is a function of the ability to pay. People with no job= no money= zero demand.

There will always be jobs available as long as humans continue to have material needs. The presence of capital doesn't physically prevent people from providing themselves with what they want, it does the opposite. Capital helps us obtain what we want.

Put it this way- if it were possible to replace every human being with a machine in order to increase shareholder profit, the logic of capitalism would demand this course of action, would it not?

Or as happens in the real world, we use machinery to multiply output and as a result of the increased production the demand for labour rises.

So what is this absurdity telling us? That Capitalism is a simplistic model of reality that fails to capture the externalities of it's own operations. It would-if it could- destroy itself by eliminating the demand for it's own output.

When people attack capitalism they tend to focus on the negative externalities, are there no positives to be reaped from the deployment of capital? More capital creates more jobs, there was no such thing as a laptop repair man two hundred years ago because laptops didn't exist, thank God capitalism allowed the creation of jobs in the computer market.

To promote this dumb mechanism as a template for human civilisation is like voting to put a toaster in charge of the world.

Having toaster in charge would be better for the population than a centrally commanded economy, given the choice between a toaster and Nulabour the bread heater gets my vote every time.

.

[babesagainstmachines]

There will always be jobs available as long as humans continue to have material needs. The presence of capital doesn't physically prevent people from providing themselves with what they want, it does the opposite. Capital helps us obtain what we want.

Or as happens in the real world, we use machinery to multiply output and as a result of the increased production the demand for labour rises.

When people attack capitalism they tend to focus on the negative externalities, are there no positives to be reaped from the deployment of capital? More capital creates more jobs, there was no such thing as a laptop repair man two hundred years ago because laptops didn't exist, thank God capitalism allowed the creation of jobs in the computer market.

Having toaster in charge would be better for the population than a centrally commanded economy, given the choice between a toaster and Nulabour the bread heater gets my vote every time.

.

You make lots of points. All of which are unfalsifiable, therefore untestable, therefore irrelevant.

[Authoritarian]

You make lots of points. All of which are unfalsifiable, therefore untestable, therefore irrelevant.

Sorry, I didn't mean to trample all over your religious beliefs like that.

Have you got anything relevant to say or are you just here on a wind-up?

Edited July 2, 2010 by Chef

[babesagainstmachines]

Sorry, I didn't mean to trample all over you religious beliefs like that.

Have you got anything relevant to say or are you just here on a wind-up?

Maybe you can explain a methodology to test the validity of your assertions. Proclamations are the domain of the religious, after all.

Edited July 2, 2010 by dazednconfused

[Authoritarian]

Maybe you can explain a methodology to test the validity of your assertions. Proclamations are the domain of the religious, after all.

No thanks, I don't need to prove myself to you, comrade.

Perhaps if you disagree with any of my points you can use the mountain of evidence that you're obviously sitting upon to attack my claims.

Fire away.

Edited July 2, 2010 by Chef

[Guest_ringledman_*]

Have you got anything relevant to say or are you just here on a wind-up?

A pointless poster. Always knocks the anti-statists without ever providing any uselful arguments from the left.

Can bear if only for the tits...

Edited July 2, 2010 by ringledman

[Authoritarian]

A pointless poster. Always knocks the anti-statists without ever providing any uselful arguments from the left.

Can bear if only for the tits...

A typical leftie trait. Never argue for the positives of your own ideas, just attack the right for being heartless capitalist bastards.

NuLabour are experts at this particular line of inquiry.

Edited July 2, 2010 by Chef

[LJAR]

I have rather missed the boat here but anyway:

All societies are capitalist, the question is how that capital is controlled. By far the best system we have found so far is to allow people to do as they will and can with it (free markets).

They do have problems - markets are very bad at pricing in externalities, such as pollution, this does require regulation.

The mandroid argument is complete rubbish. There would be no economic collapse because the "mandroid effect" has happened before with farming, mining, manufacturing, washing clothes etc etc. each time we found things to do that had not been done before, things get cheaper and man gets richer.

The wealth argument also seems to assume that there is a fixed pie to be shared out. What capitalism does is increase the size of the pie, and (the recent corporatism of the last 30 years nonwithstanding) it has increased equality massively since 1800. Which was when the first real experiments in free markets began.

Communally provided education and health care (they are not free) I would say are very good things, very definitely things we should work to protect. I think they should be controlled by the people who pay for it such as the free schools in Sweden and the charter schools in the USA.

Poverty I would define in an absolute manner - by my definition there are almost no poor in the UK or the developed western world. There have been almost none for 50 years, and we can't seem to trumpet this fact as a great success. The proportion of wealth does not bother me nearly so much as absolute wealth. So owning your own house, a car, being able to support your spouse/partner and children and put good food on the table. These are things that we should strive for, not keeping up with the Joneses.

People in China and India are poor compared to the west. They are poor because historically they have had very centralised and controlled economic models that have meant they missed out on the growth that the west has had over the last 250 years.

Both countries are richer today than 50 years ago because they have been liberalising their markets and setting people more economically free.

To say that the Scandanavian countries are very socially redistributive (and they are) and they are also rich misses the point. Their economic systems are very free market, there was no bail out for Saab for example. Their welfare policies are also much more effective at helping people into work than ours. In the UK it seem we would rather just pay people to be poor, to our surprise they remain poor!

[wonderpup]

There will always be jobs available as long as humans continue to have material needs.

Needs are not the problem in my scenario- its ability to pay that's the the problem

The presence of capital doesn't physically prevent people from providing themselves with what they want, it does the opposite. Capital helps us obtain what we want.

Capital is by definition a scarce resource- and lack of access to it can and does prevent people from providing for themselves.

Or as happens in the real world, we use machinery to multiply output and as a result of the increased production the demand for labour rises.

If it takes ten men to lift a log and one man to operate a log lifting machine- does that machine increase or decrease the demand for labour? Machines used to be called 'labour saving devices' because they allowed more work to be done by less people- it's hard to see how this process can increase labour demand.

When people attack capitalism they tend to focus on the negative externalities, are there no positives to be reaped from the deployment of capital? More capital creates more jobs, there was no such thing as a laptop repair man two hundred years ago because laptops didn't exist, thank God capitalism allowed the creation of jobs in the computer market.

I'm not attacking capitalism, I just don't agree that it could form the basis of a viable society all by itself, as the OP seemed to be claiming- it's just too crude a construct.

There is a basic self contradiction embedded in the capitalist system; it is driven to maximise both productivity and sales- the first being achived by reducing availialbe spending power, and the second being dependant on that spending power.

So the more 'productive' the system is- the more it reduces the share of available wealth going to labour via technology and wage arbitrage- the less demand there is for the output it creates.

And there is no way for the system to 'see' this, the free market has no immunity to this problem built into it's DNA- that's why it would never work as a 'standalone' template for a human society. It would continue to mindlessly pursue it's contradictory goals until it blew up.

[Guest Steve Cook]

Needs are not the problem in my scenario- its ability to pay that's the the problem

Capital is by definition a scarce resource- and lack of access to it can and does prevent people from providing for themselves.

If it takes ten men to lift a log and one man to operate a log lifting machine- does that machine increase or decrease the demand for labour? Machines used to be called 'labour saving devices' because they allowed more work to be done by less people- it's hard to see how this process can increase labour demand.

I'm not attacking capitalism, I just don't agree that it could form the basis of a viable society all by itself, as the OP seemed to be claiming- it's just too crude a construct.

There is a basic self contradiction embedded in the capitalist system; it is driven to maximise both productivity and sales- the first being achived by reducing availialbe spending power, and the second being dependant on that spending power.

So the more 'productive' the system is- the more it reduces the share of available wealth going to labour via technology and wage arbitrage- the less demand there is for the output it creates.

And there is no way for the system to 'see' this, the free market has no immunity to this problem built into it's DNA- that's why it would never work as a 'standalone' template for a human society. It would continue to mindlessly pursue it's contradictory goals until it blew up.

You have explained the intrinsic, internal contradictions in capitalism very clearly WP. Thank you. It's certainly made it clearer for me.

I have a question, though. Is the inherent contradiction a function of capitalism in particular, or one of human, economic behaviour in general?

In other words, if humans naturally compete with one another for limited resources in a way that is not regulated or restricted in some way, what is to stop the contradictions arising that you have described irrespective of what label we might place on such economic activity.

Edited July 2, 2010 by Steve Cook

[wonderpup]

I have rather missed the boat here but anyway:

All societies are capitalist, the question is how that capital is controlled. By far the best system we have found so far is to allow people to do as they will and can with it (free markets).

They do have problems - markets are very bad at pricing in externalities, such as pollution, this does require regulation.

The mandroid argument is complete rubbish. There would be no economic collapse because the "mandroid effect" has happened before with farming, mining, manufacturing, washing clothes etc etc. each time we found things to do that had not been done before, things get cheaper and man gets richer.

The wealth argument also seems to assume that there is a fixed pie to be shared out. What capitalism does is increase the size of the pie, and (the recent corporatism of the last 30 years nonwithstanding) it has increased equality massively since 1800. Which was when the first real experiments in free markets began.

Communally provided education and health care (they are not free) I would say are very good things, very definitely things we should work to protect. I think they should be controlled by the people who pay for it such as the free schools in Sweden and the charter schools in the USA.

Poverty I would define in an absolute manner - by my definition there are almost no poor in the UK or the developed western world. There have been almost none for 50 years, and we can't seem to trumpet this fact as a great success. The proportion of wealth does not bother me nearly so much as absolute wealth. So owning your own house, a car, being able to support your spouse/partner and children and put good food on the table. These are things that we should strive for, not keeping up with the Joneses.

People in China and India are poor compared to the west. They are poor because historically they have had very centralised and controlled economic models that have meant they missed out on the growth that the west has had over the last 250 years.

Both countries are richer today than 50 years ago because they have been liberalising their markets and setting people more economically free.

To say that the Scandanavian countries are very socially redistributive (and they are) and they are also rich misses the point. Their economic systems are very free market, there was no bail out for Saab for example. Their welfare policies are also much more effective at helping people into work than ours. In the UK it seem we would rather just pay people to be poor, to our surprise they remain poor!

The point about the Mandroid effect was not the technology- it was more to demonstrate the point re externalities that you make yourself. The point being that if (and I grant it's a big if) a technology came along that would- in fact- put almost everyone on the planet out of work forever- there would be no way to avoid doing this in a market based system, since competition would force everyone to deploy that technology or be driven out of business.

So I think we both agree that a society that tried to run itself totally as a market place would eventually be done in by it's failure to deal with externalities - either in the form of pollution/resource depletion, or social unrest if too many people ended up losing out. The idea that the 'invisible hand' could replace all other forms of government regulation and control is pure fantasy.

[Guest sillybear2]

The point about the Mandroid effect was not the technology- it was more to demonstrate the point re externalities that you make yourself. The point being that if (and I grant it's a big if) a technology came along that would- in fact- put almost everyone on the planet out of work forever- there would be no way to avoid doing this in a market based system, since competition would force everyone to deploy that technology or be driven out of business.

So I think we both agree that a society that tried to run itself totally as a market place would eventually be done in by it's failure to deal with externalities - either in the form of pollution/resource depletion, or social unrest if too many people ended up losing out. The idea that the 'invisible hand' could replace all other forms of government regulation and control is pure fantasy.

Andy Grove, that well renowned crypto-communist that helped found Intel understands this, he thinks the system is eating itself :-

How to Make an American Job Before It's Too Late: Andy Grove

An interesting excerpt :-

"You could say, as many do, that shipping jobs overseas is no big deal because the high-value work -- and much of the profits -- remain in the U.S. That may well be so. But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work -- and masses of unemployed? "

He's basically asking where the mass demand for all these nice iPhones and computers will come from if nobody has a job, or they're struggling to get by. Another case of capitalism failing to account for its unintended consequences and mispriced externalities.

"Our fundamental economic beliefs, which we have elevated from a conviction based on observation to an unquestioned truism, is that the free market is the best economic system -- the freer, the better. Our generation has seen the decisive victory of free-market principles over planned economies. So we stick with this belief, largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better. "

[...]

"Most Americans probably aren't aware that there was a time in this country when tanks and cavalry were massed on Pennsylvania Avenue to chase away the unemployed. It was 1932; thousands of jobless veterans were demonstrating outside the White House. Soldiers with fixed bayonets and live ammunition moved in on them, and herded them away from the White House. In America! Unemployment is corrosive. If what I'm suggesting sounds protectionist, so be it."

Edited July 2, 2010 by sillybear2

[LJAR]

The point about the Mandroid effect was not the technology- it was more to demonstrate the point re externalities that you make yourself. The point being that if (and I grant it's a big if) a technology came along that would- in fact- put almost everyone on the planet out of work forever- there would be no way to avoid doing this in a market based system, since competition would force everyone to deploy that technology or be driven out of business.

So I think we both agree that a society that tried to run itself totally as a market place would eventually be done in by it's failure to deal with externalities - either in the form of pollution/resource depletion, or social unrest if too many people ended up losing out. The idea that the 'invisible hand' could replace all other forms of government regulation and control is pure fantasy.

Indeed the invisible hand does not work in all cases, but in works in many more than we use at the moment. (you could apply it to education, healthcare, welfare etc etc) and have almost no need of the enormous governmental bodies we have today. The thing is that in a truly free market, nobody exchanges unless they benefit. So very few people "lose out". Again the verdict of history is that now nobody in the western world lives like most of the population did in 1800, or like many people still do today.

There is no tool more powerful than the free market for alleviating poverty, it is still true and the Chinese and Indians are harnessing it (somewhat cackhandedly).

Your mandroid argument Is still flawed I feel, since if you looked at the world 200 years ago and said:

"If technology comes along that can do the work of 20 men with the labour of one and replaces 95% of the workforce we will be done for"

People may have agreed with you, but it has happened (and happened many times) and there was no real problem with it.

If people have their work replaced, it will only be because the goods can be made cheaper by replacing the people (otherwise why would they be replaced).

Equally, if there is no market for the goods - because no one can afford to buy them - then the machine made products will fail. In practice what has happened historically when 90% of people have been made redundant is that they have found other things to do. The onus is on you to demonstrate why "this time it would be different".

edit - the purchasing power argument ignores that prosperity is the sum of the goods and services that we produce and consume ( I agree that there is more to life, but then I only consume what I want to and others should be free to do the same). So if someone is made redundant, but the total goods and services remain the same then we are no poorer as a group. As soon as they find something else to do, total production goes up and we get richer. It happens again and again.

Edited July 2, 2010 by LJAR

[Injin]

The point about the Mandroid effect was not the technology- it was more to demonstrate the point re externalities that you make yourself. The point being that if (and I grant it's a big if) a technology came along that would- in fact- put almost everyone on the planet out of work forever- there would be no way to avoid doing this in a market based system, since competition would force everyone to deploy that technology or be driven out of business.

But there is no need to be in business. New technology doesn't invalidate old.

So I think we both agree that a society that tried to run itself totally as a market place would eventually be done in by it's failure to deal with externalities - either in the form of pollution/resource depletion, or social unrest if too many people ended up losing out. The idea that the 'invisible hand' could replace all other forms of government regulation and control is pure fantasy.

Well if the whole society ran on those principles, there would be no unrest.

Rather than seeing being given the opportinity to create more wealth for a time and then it going away again as a negative, it would be seen as the positive it really is.

[Authoritarian]

Needs are not the problem in my scenario- its ability to pay that's the the problem

As long as people are able to use their labour they'll have the means to pay, allow people to use capital and their ability to pay will be enhanced, this is why we invented capital in the first place.

Capital is by definition a scarce resource- and lack of access to it can and does prevent people from providing for themselves.

So you agree that we need more capital then?

If it takes ten men to lift a log and one man to operate a log lifting machine- does that machine increase or decrease the demand for labour? Machines used to be called 'labour saving devices' because they allowed more work to be done by less people- it's hard to see how this process can increase labour demand.

Your model of the economy contains a fundamental flaw. It assumes that the total amount of jobs available is fixed so the creation of new capital robs the poor of work. This is not true, as technology develops new markets open up and more jobs become available, there are 1000's of industries that are around now that were unthinkable even 50 years ago. Capital provides us with an increase in net opportunity, and this opportunity can only be exploited by labour.

As a computer man I would have thought you'd have instinctively recognised this.

I'm not attacking capitalism, I just don't agree that it could form the basis of a viable society all by itself, as the OP seemed to be claiming- it's just too crude a construct.

There is a basic self contradiction embedded in the capitalist system; it is driven to maximise both productivity and sales- the first being achived by reducing availialbe spending power, and the second being dependant on that spending power.

So the more 'productive' the system is- the more it reduces the share of available wealth going to labour via technology and wage arbitrage- the less demand there is for the output it creates.

And there is no way for the system to 'see' this, the free market has no immunity to this problem built into it's DNA- that's why it would never work as a 'standalone' template for a human society. It would continue to mindlessly pursue it's contradictory goals until it blew up.

The profit maximisation of capital is self regulating in a free market. If a hair dresser gets greedy and charges £300 per haircut then they'll quickly find themselves out of a job as people purchase their own scissors to cut their hair.

As somebody else commented, 95% of people used to work the land but capital freed large numbers of those people and allowed them to do something else, which made us richer. This process wasn't planned in advance, it happened naturally without state intereference and it would be fair to assume that this method wold continue to work in the future if given the chance.

Edited July 2, 2010 by Chef

[Tired of Waiting]

Like fück it does. Not without socialism.

Left alone it will just concentrate wealth and opportunity to an ever smaller number of people.

America has never been socialist, and its working class has one of the best standards of living in the globe.

[wonderpup]

You have explained the intrinsic, internal condradictions in capitalism very clearly WP. Thank you. It's certainly made it clearer for me.

I have a question, though. Is the inherent contradiction a function of capitalism in particular, or one of human, economic behaviour in general?

In other words, if humans naturally compete with one another for limited resources in a way that is not regulated or restricted in some way, what is to stop the contradictions arising that you have described irrespective of what label we might place on such economic activity.

I think the issue would arise in any system of trade- not just capitalism- because of the unique place human beings occupy in the dynamic. We are both a resource of the system in the form of labour- and also the consumer of it's output- and it's the tension between these two functions that gives rise to the contradiction- as a user of the labour resource we would want to pay people as little as possible, but as the seller of the output we would like the highest price from the consumer. ( whose ability to pay is determined by the price his labour can command)

[Guest Steve Cook]

America has never been socialist, and its working class has one of the best standards of living in the globe.

This is the same working class that has a higher infant mortality rate, lower levels of literacy/numeracy and shorter lifespan than Cuba is it? Personally, I can think of no other "developed" industrial country in which I would less wish to be poor and working class.

Edited July 2, 2010 by Steve Cook

[LJAR]

This is the same working class that has a higher infant mortality rate, lower levels of literacy/numeracy and shorter lifespan than Cuba is it? Personally, I can think of no other "developed" industrial country in which I would less wish to be poor and working class.

Live in Cuba and see how much you like it. Statistics do not even come close to telling the whole story. (why do so many try to leave and come to the USA I wonder? there is no stampede the other way, I wonder why?)

The working class are so much better off in the USA than in even developed Europe it is a joke.

Stats from communist countries are also notoriously doctored, even more so than ours.

[Guest_ringledman_*]

Live in Cuba and see how much you like it. Statistics do not even come close to telling the whole story. (why do so many try to leave and come to the USA I wonder? there is no stampede the other way, I wonder why?)

The working class are so much better off in the USA than in even developed Europe it is a joke.

Stats from communist countries are also notoriously doctored, even more so than ours.

I am not just saying this as a free marketeer, but Cuba is the most awful place I hae ever visited. People are so down and out.

The waiters on the resorts earn $100 a day, the same as a doctor in a month. Everyone demands tips from Westerners to pay for the appauling state salaries.

The only successful parts of Havana are the markets that the government have had to open. So sad to see.

The ******** that comes from them having a great education system and health care is not matched by their general day to day lives.

Visit and see the repressed state. Its appauling that statist can ruin their citizens lives in this way. Disgusting.

[miko]

America has never been socialist, and its working class has one of the best standards of living in the globe.

And America has 2 million people living in what are know as tent cities , and going to charities for food , lots of them are working people .

It also has 30-35% of its population unable to access basic health care never mind more involved health care.

[LJAR]

It also has 30-35% of its population unable to access basic health care never mind more involved health care.

Wrong, all Americans are entitled to emergency care, the poorest are covered by medicaid and the old by medicare. Most of the rest who don't have health care just don't want it or don't need it.

Their system is ******ed up (mainly due to the govt screwing it up), but at least don't peddle the usual lies told about it.