Capitalism = Destruction?

Economics Economics Questions
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41

@BP:

  1. I wasn’t talking about anarchism. I was trying to hint to the OP a different context of thinking about “destruction”. I cited Schumpeter (a non anarchist capitalist) and Marx because they are the most well known users of the term. I was semi-aware Bakunin used the phrase (I think it is in the linked wiki article) but the fact remains his use of the word is just not the mainstream one. If Marx pilfered it off of him, that is certainly worthy to note - though I am unawareif that is how Marx came to the term - or even what Bakunin’s fleshed out theory of C/D is. Main point reiteration: anarchism was not on my mind when making the thread. I also guess I never realized Bakunin coined the phrase in socio-economic terms (if so, that is very important to note - and probably should be fought to upgrade Bakunin’s status and the use of the word in wikipedia)

  2. As for Marx and anarchism, I am simply not qualified to think about it. If a Marxist calls himself an anarchist, I can’t argue. Even more complx is just what Marx was. He was a very deep and complex thinker, so all I can do is take his general concepts as thy come - as I am no scholar. In general and for what it is worth, I don’t usually categorize Marx or Marxist movements with anarchist ones (other than the broad category of Leftist) - as I think history shows they usually were in seperate parties.

That said, and since this is going way off topic - I would love to see you do a new topic on what you are getting at with this Marx / anarchist stuff - seems you have something interesting on your mind.

42

Capitalism is the great reality through which everybody endeavors to live from the benefits of everyone else.

43

Maybe they were interested in money, maybe they weren’t. Edison sure seemed to be. Either way that’s irrelevant. The point is they were in it for their own self interest. That’s what matters. It makes no difference why they wanted to (and therefore voluntarily did) do the things they did…the fact is they wanted to, and that’s why those things got done. That’s called “free enterprise”.

But your implication here seems to contradict your own assessment. If all these supposed great inventors and entrepreneurs are not interested in money, where is all this profit motivation you’re talking about? See it’s a little hard to try to claim the world of technology is so great and yet the pursuit of profit had nothing to do with it, when your whole argument is that the problem with the world is that most everyone is interested in profit.

So which is it? Is everyone interested in profit or not? And if you’re going to claim they’re not, then I would have to ask what the heck you’re complaining about. If you’re going to claim they are, then I would ask where all the inventors and entrepreneurs (the people who create and produce and improve products and bring them to market…thus making everyone’s lives better) fit in…because one would think you would want to claim they of all people are the most concerned with profit.

But it sounds like you’re trying to have your cake and eat it too…you want to claim the world is entering hell in a hand basket because basically everyone is motivated by profit…but all the good stuff that we have — all the technology and processes we have that make our lives better — all that stuff is owed to people who aren’t at all interested in profit.

As ridiculous as that sounds, I can play along and we can see where that leads. Suppose half of all inventors and entrepreneurs were in it just for money…that that’s all they cared about. Would you grant that? I mean, you’re already arguing basically everyone is motivated by profit, and even though you want to claim famous inventors are somehow an exception, would you at least grant the possiblity that half of entrepreneurs and inventors are in it for the money?

Answer me this…what would the world look like if those people didn’t have that possibility of profiting from their invention/business to look forward to? And better yet, let’s even use your examples of famous people who (allegedly, according to you) weren’t interested in the profit…how interested do you think they would still be in doing all those things they did if you told them they could only keep a certain capped amount from their efforts? Do you believe they would work just as hard, with just as much fervor, with just as much interest and dedication? Or would they be even slightly less motivated? It sounds like you’re suggesting the outcome would be exactly the same. Because if you admit it would change even slightly, you’re admitting that we (i.e. everyone who has ever lived since then, and who will ever live in the future) have technology and processes that make our lives easier, more comfortable — better — because of an interest in profit.

And let’s take it a step farther, just to keep you honest and consistent. The only real way you could claim they weren’t “in it for money” would be if there would be literally no change in their effort and output if you mandated that they retain no profit from their work whatsoever. Are you willing to be intellectually consistent and make that claim?

44

This is a large part of the problem. This exemplifies it quite well. This is so confused, it doesn’t even make sense. I went into this this post (please have a look), but I’ll reproduce some of it here because I think it’s important:

Capitalism is not some kind of system written down on paper. Capitalism is basically a word to describe a market process that occurs when individual rights are respected. This was not “designed” by anyone.

To say something like “capitalism doesn’t take human nature and greed into account” [or “people pursue personal profit; with or without capitalism”] just oozes ignorance. You might as well just say human nature doesn’t take human nature into account [or “people pursue personal profit, with or without pursuing their own self interest”]. Again, human beings have a general concept of private property and a wish to avoid conflict. They are also self-interested, and tend to do things because they gain satisfaction from doing them…more so than they would by not doing them. (Otherwise, they wouldn’t do them.)

Capitalism is not some “theory”…it is a description of what takes place when self-interested individuals come together and, while respecting individual rights (i.e. property rights…including your physical body), interact to fulfill their desires. To say that it has “forgotten” something, or “left something out” or hasn’t “taken something into account” is just asinine. It’s like saying “the concept of flying doesn’t take into account the laws of aerodynamics”. Flying is the laws of aerodynamics. Capitalism is human nature.

The only way anyone can say otherwise is if they have a faulty definition of the word.

I realize some of that is kind of what you were trying to say, but your wording is entirely self-defeating.

45

That’s exactly what I began to think when I read:

“The ‘free market’ operates in a debt-based monetary system, created by our wonderful Federal Reserve.”

And then remembered:

“we should look back at the very foundations of our economic models. For example, why does profit have to be the incentive? Could we come up with an incentive that would be good for human-kind?”

46

The issue here seems to revolve around definitions of capitalism. I posted mine (just a standard dictionary definition), and in this definition what I said does not seem to be conflicting in any way:

“Profit does not require [an economic system chiefly of private ownership and production]”

“People pursue personal profit; with or without [an economic system chiefly of private ownership and production]”

It also seems to make sense when I use your definition:

“Profit does not require [a market process that occurs when individual rights are respected]”

“People pursue personal profit; with or without [a market process that occurs when individual rights are respected]”

Are you saying that people don’t pursue personal profit if there is no respect for individual rights, and, therefore, no market process that emerges when there is a respect for those rights? Are you saying people can’t profit without a respect for individual rights? I think we would both agree that actually achieving that profit is significantly more difficult without respect for individual rights (which is one reason why capitalism is better than the alternatives), but removing respect for individual rights in no way removes these motivations.

I do not see how this rewording of my statement follows from your definition of capitalism. People will pursue their own self interest whether or not individual rights are respected. The Soviets pursued self interest. The socialists pursue self interest today. They do it with violence instead of with a respect for individual rights, but they still pursue their own self interest. Billions of people live in places where individual rights are, to a great degree, not respected. They still pursue personal profit, but I wouldn’t describe their environment as capitalism.

47

To the posters z1235 and John James on the Venus/Zeitgeist scout comments: Nice observation! You almost got me…I’m not a scout but Peter Joseph himself! Mwahahaha!!!

No but seriously, I have watched the film, obviously. It raised some interesting questions, but it’s definitely not a feasible or desirable style of society. Once he went into the rant of abolishing private property, he pretty much lost me. However, his suggestions for using the scientific model for allocating resources is interesting. Then again, a true capitalist market would do this in effect anyway, lol

Basically, I’ve come to the conclusion that our current model of crony-capitalism practiced in America is so far away from pure capitalism, that it has clouded my judgment to the point that I thought capitalism has failed us. My new question is…where could we go from here? How could we possibly reverse decades upon decades of the fundamental dismantling of capitalism? Ron Paul anyone? It’s a start, huh?

48

I guess it does have more to do with how you look at it. Perhaps I went too far in including the suffix about individual rights being protected. The point of my description was better illustrated in the aerodynamics analogy…that capitalism is not some idea about how society should be organized (unlike most other political ism’s)…as Clayton says here, it is a description…a term used to describe what human beings do.

I’m aware that most would conflate private property with the notion of capitalism, and assert that without private property being observed, it’s not “real” capitalism. I can understand this viewpoint, but looking at a more literal sense,

As Friedman said “there’s a sense in which every country is capitalist”, and that this is why he uses the term “competitive capitalism” when he points out notions such as how “capitalism is not a sufficient condition for freedom. It’s a necessary condition.” (i.e. It’s not that you have freedom wherever you have capitalism, but you have capitalism wherever you have freedom.)

My whole point is that regardless, “capitalism” is not a system…at least not in the sense most people use that word. A better understood way of putting it might be to say it is a “process” or a “spontaneous order”. It is a term to identify and name the overal actions of people interacting with one another in an economic capacity. This is very different from something like “socialism” or “communism” or “marxism”, all of which are various ideas about how society should be purposefully organized and actions dictated…they are prescriptions for economic constructs…which by definition would mean that they are against the free nature of man (as, if society would operate that way naturally (i.e. voluntarily), force wouldn’t be necessary).

Despite this drastic difference, “capitalism” is regularly grouped with these and other social constructs as if it were even the same category of term…or at least as if it were describing a similar concept. My point here is that it is not.

No, I would not agree to that. In fact that is the exact opposite of the truth. Profiting in the absense of respect for individual rights seems to be much easier than doing so with such a handicap.

49

You are quite possibly the strangest newb I’ve encountered. Does this sudden change of heart (and brain) mean you’re not going to respond to my post? And here you were so quick to snipe at me for allegedly avoiding addressing points that were brought up.

50

Hanky, good work. And, Ron Paul, definitely.

JJ, some people have this style of asking questions in the form of statements/positions that they may not nesessarily hold but which they offer for dissection. Hanky may be one those types.

51

I kinda like Hanky.

52

♫♫ General Hanky, the christmas noob, he loves me, I love you.. ♫♫

53

I actually was waiting for a high pitch “hooowdy hiiigh” ever since this thread started.

54

Start with yourself - originary secession. The act of originary secession is simply realizing that authority which is imposed by force is not morally legitimate and that being given a vote doesn’t make it not imposition by force.

Re-orient your mode of thinking. Rather than trying to “change society” to be more comfortable for yourself, work on adjusting yourself to be more comfortable irrespective of the problems with society. Some of this adjustment may consist of resignation (e.g. to taxation which cannot be avoided) and part of it is learning how to live a healthy life without the approval of imposed authority.

Remember that the anti-capitalist is fighting gravity - it is human nature to produce, exchange and peacefully hold private property without aggressing against others. There are always those who attempt to subsist on the productive energies of others (thieves, robbers, burglars, frauds, con-artists, etc.) but these problems are naturally self-limiting as the victims denounce and retaliate against their aggressors. In the long run, the social engineering experiments of the anti-capitalists are condemned to oblivion.

Clayton -

55

Basically, I’ve come to the conclusion that our current model of crony-capitalism practiced in America is so far away from pure capitalism, that it has clouded my judgment to the point that I thought capitalism has failed us. My new question is…where could we go from here? How could we possibly reverse decades upon decades of the fundamental dismantling of capitalism? Ron Paul anyone? It’s a start, huh?

Hey, cool! I congratulate you on taking a step in the right direction!

The next step (if you’re interested) is to learn. Study history, some economics can’t hurt, and possibly a bit of philosophy.

Why? Well, the way I view things, to remedy the current situation we will need policy changes. To achieve policy changes, we need public support (this is the reality of the matter). We need a change in the intellectual culture in America that first of all realizes that we don’t have free markets in the US and that we’ve never had free markets (yes, that includes the Gilded Age, filled with government intervention). If you are able to spread the idea that capitalism is not evil to one more person, you help the cause.

Perhaps what would help most is… hang around these forums! While it appears that you’ve had a sudden change of mind on the matter, I do believe (due to personal experience) that better understanding the matter more deeply takes at least a few more days :wink:

So hang around, drop us questions, and ask yourself questions. Is X capitalism? Are you suuuuure? Do we need the government to fix it? Can we fix it in other ways? Can I morally accept initiating violence against people to change the world through government? (hopefully, the answer here is no).

First and foremost, dig deeper into the ideas of the free markets.

For example, what about Standard Oil? Wasn’t it a big bad free market monopoly? Didn’t meatpacking prove we need regulations? Wasn’t AT&T a company which simply got too big? Did greed cause the Great Recession? Can government create wealth?

If you’re interested in these questions about the markets, ask us!

Now, as to policy changes:

Demonopolization of the regulatory apparatus. We’re not against regulation. We’re against involuntary regulation. The government needs to stop distorting the market forces that resolve disputes efficiently. The law of unintended consequences and the calculation problem haunt all government actions.

Furthermore, remember you are talking to libertarians. Do you feel like you are ready to explore some ideas in libertarianism? It may challenge your ideas of society, government, regulation, free markets, and history. If you ask us what the best policies going forward would be, we will quite likely give you some libertarian answers, and we’d like it if you gave these some thought instead of being repulsed, so we’d like to know whether you’re interested in opening up your mind to alternative viewpoints (though the fact you came right to the lion’s den is nice to see :slight_smile: ).

I make this seem dramatic, but really, we’re not a cult. We’re a bunch of people. All I am saying is that in the beginning you might have some cognitive dissonance and feel slightly uncomfortable. Yet I know that for me this experience has been highly educational and I believe that we can improve the world.

On Ron Paul: He is certainly pro- free market. Yes, he would be a nice step. Remember, though, that we’d also need Congress to change how thigns work around here.

The very first step? End the FED and have a system of money which cannot be manipulated by government (I hesitate to offer free banking immediately for the present, but some of the other members here might think differently). End Fannie Mae and Freddie Mac.

Next step? Cut down the military budget. It is extremely wasteful and the best first step to cutting spending.

Third? End all subsidies.

Fourth? Starting removing federal departments. The ones least ingrained into the system will go first. Simultaneously, loosen up the reins of government in other departments as well.

Certainly, the market will experience certain shocks in the beginning as it adjusts to new roles, yet I do not think that it would take that long to settle into a comfortable pace of things.

At the same time, begin legalizing drugs. Prisons overflow with people slammed in for victimless crimes.

Legalize offshore drilling and open up free land in the US to homesteading.

Meanwhile, suggest private market solutions to state services such as police and firefighters.

Cut down regulations for starting new businesses.

After you’ve done dramatic cutting of the budget, slash those taxes. Eliminate income taxes outright immediately.

The market will all the while be adjusting to these things. After some time, the government should remove its remaining regulations and departments and then - click the logout button.

I realize I am suggesting a form of gradualism, but realistically, that is what we are capable of achieving with our limited power. The order in which government is cut down is important to allow the market to adjust.

I know many will point at me and say “gradualism in theory is perpetuity in practice!”, and you might be right. But the above is a beginning. If we can convince half the population of the above, we’d have made great strides. If we could do away with it in one fell swoop, all the better.

56

You are quite possibly the strangest newb I’ve encountered. Does this sudden change of heart (and brain) mean you’re not going to respond to my post? And here you were so quick to snipe at me for allegedly avoiding addressing points that were brought up.

John, I didn’t snipe at you…I simply asked if you were going to add to the conversation. I know my position may be difficult to understand. I’ve actually had two polar opposite positions. I wanted to believe in capitalism, I actually have been supporting Ron Paul. On the other hand, I’ve come to think people should have an open conversation about the foundations of our economic system(s). For the moment, all I can say is I’m completely stoked to find a forum where people actually discuss economics intelligently. I’m very glad you’ve added to this thread and will respond to you soon, just too tired to think right now!

57

Hanky don’t take it personally. I’ve been here about a month and JJ is regularly coarse, but I think he just wants to discuss as apersonally and logically as possible.

(typing that just reminded me of this, lol): http://www.youtube.com/watch?v=sR62WFl5Cv0

58

I stopped reading here, because if you really understood what you were saying then you would retract this statement and anything that follows based on it.

Let me explain what profit is. Profit is not simply an incentive. Profit is production. Literally.

Let’s say you try to make something. There can be only three outcomes:

A. You made something you can sell for less than the cost of its materials.

B. You made something and sold it for the same cost as its materials.

C. You make something and sold it for more than the cost of its materials.

Now, only in case C have you produced something sustainably, and only in case C have you made a profit. That’s the first key to understanding what profit is. Because in all except case C you have wasted your effort, you have worked for nothing. Profit is not simply motivation, it is payment for adding value and makes production in general possible. Nothing can be produced sustainably without profit.

But, what’s more, this principle extends to biology. You cannot even live without profit:

Suppose you eat something you obtained. There’s three possible outcomes (assuming it’s not poison):

A. You ate something that gives you fewer calories that it cost to obtain it.

B. You ate something that gives you the same calories that it cost you to obtain it.

C. You ate something that give you more calories than it cost you to obtain it.

Only in case C was it worth the effort. B keeps you on the point of starvation. In fact, there’ve been many indigenous societies that live in case B and it’s a pretty miserable way to live (see Cabeza de Vaca’s account of American Indian tribes).

I swear, I’m going to write a book called “The Philosophy of Profit” because it is such a misunderstood concept and needs to be rehabilitated in everyone’s mind. Profit is necessary for life itself, much less for business.

Gah, guess I’ll read down in any case.

Capitalism has proven to be very environmentally conscious compared to command economies. It has also given more access to wealth than centralized systems ever did.

Basic fallacy here. You seem to think that consumption ruins a thing forever. It doesn’t. Today’s consumed good is tomorrow’s new resource.

No big deal. Alternate energy tech will soon replace oil for primary energy generation. And we still have a few hundred years worth of oil left.

This is not actually true. Capitalism created the modern middle class. Previously it was the rich and powerful royals and the serfs. America created millions of millionaires.

False. Most fortunes are new fortunes, not inherited ones. Most millionaires in the US are first gen millionaires.

Lol

We don’t have a free market, that’s what has caused the recent problems. Almost everything you list here as a problem can be solved not by abandoning capitalism but by abandoning statism!

59

Hanky, don’t worry about JJ. He’s usually a great guy with great insights. It’s just that at times he gets pissed when he sees enough of people like aerview on this forum. You, however, appear to want to have a productive conversation, which is good!

60

You probably should have kept reading…namely to this post. Apparently one page of a Mises forum thread was all it took to convert him.