Jump to content
House Price Crash Forum

Uk Forgetting What Capitalism Is


Recommended Posts

Capitalism to me is building up capital. It might be on the free market it might not. For example protected state owned companies certainly build up capital.

Now imagine I am a steel baron and I have two giant steel mills which I hold free and clear. I notice there is growing demand for my steel so I borrow a ton of money and build a third steel plant. I then pay the debt off that steel plant over time. Say it takes me 12 years and the debt on the third plant is paid off.. I now own three steel mills free and clear. The barriers to entry to competing with me are unbelievable.

But I notice in Britain the idea is you can borrow against the value of the existing steel mills, issue dividends, buy back shares.. or in other cases the capital of the stee mills allows a leveraged buyout. Now those 3 steel mills I mentioned are encumbered by enormous debts, trying to compete in the marketplace against companies in other nations which have much less debt. Not surprisingly our companies keep failing against these competitors.

Link to post
Share on other sites

In some respects Marx might well be proved right yet becuase all Capitalism has done is relied on Debt to bail itself out of each recession or depression over the last century or so, only this time round debt cant be used becuase too much has been issued this time round on a global scale hence the QE tricks.

One of Marx's ten points to solving the problems inherent in capitalism was for the state to take control of the central bank. Which the UK did in 1946.

Now with the central bank as the output gaps zooms upwards.. as production rises greatly, while wages fall.. the central bank can simply print into existenence cash and distribute the 'means of consumption' to the masses. Independent of the ability of the masses to negotiate higher wages in the capitalist economy.

This not only helps the people, but bails out the owners of the capital, because now real demand steps in for their production.

Link to post
Share on other sites

Capitalism isn't about building capital, that's just a result of running a successful business though I'd say expansion is more efficient than sitting on cash. Capitalism is offering a product or service (which is a peice of cake) then the hard part is marketing it. So you could say capitalism is about being a good salesman or trader.

Link to post
Share on other sites

Capitalism is an all encompassing excuse to be used whenever wealthy and powerful people want to screw someone over.

It is whatever it needs to be in order to do that.

People making stuff and trading with each other isn't capitalism. That doesn't have a name, because it isn't a 'system', its simply one of the many ways people organise themselves when left to their own devices.

Edited by (Blizzard)
Link to post
Share on other sites

Capitalism isn't about building capital, that's just a result of running a successful business though I'd say expansion is more efficient than sitting on cash. Capitalism is offering a product or service (which is a peice of cake) then the hard part is marketing it. So you could say capitalism is about being a good salesman or trader.

That is a free market. Nothing like the same thing as Capitalism.

Link to post
Share on other sites

Capitalism to me is building up capital. It might be on the free market it might not. For example protected state owned companies certainly build up capital.

I've been wondering about this recently but didn't have enough to go on to start a thread.

It seems like the point of capitalism is to build up capital as you say, which means the capital is doing the work for you from then on. (whether by better manufacturing or more efficient skills). This allow living standards to rise, with the caveat that the capital should not get concentrated into too few hands which can then be used to basically enslave everyone else.

The current system seems to have been turned into one that tries to maximise GDP. The easiest way to do that is to borrow and spend, even if the spending is on consumption rather than creation and maintenance of capital. It's easy to see where this is going to end.

So capitalism just turned into consumerism with the current mantra "must spend to save jobs" and "must issue more credit to keep the economy of recession".

To translate to a personal level, capitalism would be building yourself house to provide long-term housing for yourself, improving your skills and minimising consumption. Consumerism is just buying anything you fancy with a credit card until it eventually runs out.

The current financial system actually seems to inhibit capitalism and promote consumerism. (based on far more money being lent against existing property for speculation rather than being used to build new property).

Maybe GDP should be adjusted to account for debt to see how we are really doing.

VMR.

Link to post
Share on other sites

If you dig deeply into the successful companies in the USA, a country that is reportedly the land of freedom, democracy and capitalism, you will find that almost every significant, successful company has had very intimate relationships with national government. In most, if not all cases, the two are operating as a single, undivided organism.

From experience, I wouldn't have the foggiest idea of what is really capitalism.

Link to post
Share on other sites

If you dig deeply into the successful companies in the USA, a country that is reportedly the land of freedom, democracy and capitalism, you will find that almost every significant, successful company has had very intimate relationships with national government. In most, if not all cases, the two are operating as a single, undivided organism.

From experience, I wouldn't have the foggiest idea of what is really capitalism.

Correct, and the situation in the UK is pretty much the same

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.

  • 415 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.