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Capitalism, the Good Society

  1. Oct 12, 2004 #1
    Research overwhelmingly shows that the road to long-term reduction of poverty and more wealth for all is more capitalism.
    http://www.cato.org/research/articles/vas-0109.html [Broken]
    http://www.hazlitt.org/e-texts/poverty/ [Broken]

    Yes, child labor, low pay, long working hours and dangerous working conditions existed in the period following the industrial revolution. But the comparison should be made to period before that, a period when population growth was regulated through starvation and disease. The industrial revolution in agriculture and industry made it possible for almost all people to survive, but in the beginning at price of the above.
    The reduction in working hour, the part of life in work and working conditions have been due to capitalism, not from socialistic reductions in capitalism. The primary mechanisms have been increased wealth/capita and competition for the workers among the capitalists.

    One criticism is that recently the poor in the US has not seen their income rise or rise much less than those with a higher education. However, increasing international trade and competition means that the group for comparison must include people doing similar and competing work worldwide. And that group as a whole, which includes Chinese and other Asians, have had increasing income. Especially when considering that the size of the group suddenly increased very rapidly after the fall of communism.
    And it is not possible to protect workers in the US by making those in other countries poorer, for example by tariffs:

    Further discussion about the apparent rising inequality:

    A Malthusian catastrophe as the end of growth has been predicted many times before and always wrongly. Ironically, Malthus formulated his theory exactly when it ceased to work. The industrial revolution (or more correctly capitalistic revolution, since that was primary cause both in agriculture and industry) caused the amount of wealth to increase much faster than population growth. There is no reason that this cannot continue in the future.

    Of course, the capitalistic system must continue for growth to continue. Sadly, capitalism is in retreat in western civilization.
    http://mwhodges.home.att.net/intl-spend.htm [Broken]
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  3. Oct 12, 2004 #2
    Capitalism should be understood as what the various indexes of economic freedom try to measure: Rule of law, property rights, low taxes, few regulations, small state, sound money, and free trade. In short, a state that prevents people from gaining from others though the use of violence, but let voluntary cooperation build the rest of society.
  4. Oct 12, 2004 #3


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    What job growth in the past few years has been in government. The private sector has shown very little growth and within it, the manufacturing sector has shrunk. The US is evolving into a state that produces little and buys from abroad on credit. See the recent special section on China and the US in The Economist.
  5. Oct 12, 2004 #4
    This is true but I am uncertain if you mean that this is the fault of capitalism. That is not the case, it is the decline of capitalism, measured for example by the constantly growing government share of GDP, that is causing real growth to falter. Se the last of the links above. The same author has many more good articles on the current state and future of the US economy.
  6. Oct 12, 2004 #5


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    Yeah, as you can probably tell, I'm a big fan.
    That's socialism and it scares me that we're moving in that direction. The USSR subsisted by selling its natural resources while using massive social welfare to sustain its internal economy. What they did (and we are now doing) is basically financial bloodletting. It needs to stop.

    One caveat, I'm not so much concerned about outsourcing low-end job as buying finished-products from other countries. Right now people are outsourcing anything and everything they can. But the pendulum is swinging back: Dell recently stopped outsourcing its support because of the negative respone it got. Of more concern though is the finished-products: buying a Chinese product made in China means both the salaries of the employees and the profits stay in China.
  7. Oct 14, 2004 #6
    I don't understand how we are even close to anything but capitalism, or how we could be moving toward socialism. Two and a half minutes three times per half hour on telivision, a 90 page magazine filled with 40 pages of actual content, commercials not only before the movie, but integrated into the movie, wasted trees on the doornob, mailbox, and under the wiper, park benches with some inconsiderate hobo feeding ducks covering up half of State Farm's phone number, telemarketers, collosally commercial corporate collages covering those stock cars that look like puke if you squint your eyes and those sexy beer-drinking babes in bikinis distracting me into smashing into the car in front of me on the expressway; all of these things pretty much tell me we have a free-market economy.

    In fact, outsourcing, importing and exporting are all functions of global capitalism. Competition among the international free market for control of capital fits the definition. I do agree that it is worse for the United States and its economy to import everything from China, Taiwan, etc. but the U.S.A. still does plenty of its own stuff, including electricity, recording music, etc. plus plenty of internal trading (stocks, bonds, currency, etc.) commodities, and a wide range of products that say "Made in the U.S.A.", a lot of these things exported for U.S.A. profit.
  8. Oct 14, 2004 #7
    Advertising is only a small part of the economy and not inherently evil:

    The diminishing of capitalism can be seen in such trends as the ever increasing government share of GDP or constantly increasing regulations in all parts of society, making, for example, medical research or energy production constantly more expensive. There is a link for government share of GDP above, here is another for regulation by the same author. (Who has the endorsement of Milton Friedman, one of the most prominent economists of this century).
    http://mwhodges.home.att.net/regulation.htm [Broken]

    Free trade is a necessary part of the capitalistic system that has increased wealth for all where applied, including the poorest. However, it should not be denied that capitalism and free trade can temporarily make some groups poorer. One examples would be the very large group of people dependant on horses when the combustion engine appeared. But it would not have been a good idea for society to protect these people by prohibiting the combustion engine. Long term, not even for those states most dependent on the horse industry.
    Similarly, certainly some workers in the US can be affected negatively by international competition while competing workers abroad are gaining. But for humanity as a whole, more people are gaining than are losing. And also similarly, a little more long-term, all people in the US will gain from the increased growth from free trade.
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  9. Oct 14, 2004 #8


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    Something else just struck me - it annoys me greatly that one of the biggest complaints people have about capitalism is inequality. Though it is mostly true that the division between rich and poor is bigger in capitalism (unless you compare the peasants to the king...), but so what? Pre-industrial revolution, everyone was pretty much equal -- equally poor. How is that a good thing? In industrialized countries, yes, its true that the rich can be a thousand times richer than the poor, but the poor are a thousand times richer than the poor in non-industrial countries. Do people complaining about the income gap really want us to go back to living in dirt-floor log cabins?

    "Equality" is politically-correct B.S. Give me freedom instead.
  10. Oct 14, 2004 #9
    Capitalism has not future with our current money suply system...
    Fractional reserve banking is a fraud legalized by the goverment for the private bankers... have Proffs..

    Please Read:

    Abstract: This paper looks at the history of money and its modern form from a scientific and mathematical point of view. The approach here is to emphasize simplicity. A straightforward model and algebraic formula for a large economy analogous to the ideal gas law of thermodynamics is proposed. It may be something like a new ``F=ma'' rule of the emerging econophysics field. Some implications of the equation are outlined, derived, and proved. The phenomena of counterfeiting, inflation and deflation are analyzed for interrelations. Analogies of the economy to an ecosystem or energy system are advanced. The fundamental legitimacy of ``expansion of the money supply'' in particular is re-examined and challenged. From the hypotheses a major (admittedly radical) conclusion is that the modern international ``fractional reserve banking system'' is actually equivalent to ``legalized economic parasitism by private bankers.'' This is the case because, contrary to conventional wisdom, the proceeds of inflation are not actually spendable by the state. Also possible are forms of ``economic warfare'' based on the principles. Alternative systems are proposed to remediate this catastrophic flaw.

    http://econpapers.hhs.se/scripts/redir.pl?u=http%3A%2F%2Feconwpa.wustl.edu%3A80%2Feps%2Fmac%2Fpapers%2F0203%2F0203005.pdf;h=repec:wpa:wuwpma:0203005 [Broken]

    More simple and short version:
    I Want The Earth Plus 5%

    (If you read this text you will understand where this mises.org came from:

    The Mises Institute's coat of arms is that of the Mises family, awarded in 1881 when Ludwig von Mises's great-grandfather Mayer Rachmiel Mises was ennobled by the Emperor Franz Josef I of Austria. In the upper right-hand quadrant is the staff of Mercury, god of commerce and communication (the Mises family was successful in both; they were merchants and bankers). In the lower left-hand quadrant is a representation of the Ten Commandments. Mayer Rachmiel, as well as his father, presided over various Jewish cultural organizations in Lemberg, the city where Ludwig was born.)
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  11. Oct 14, 2004 #10
    by the way.. you talk about how more capitalism help the poor.... i am from a 3rd wrold country.. Argentina.. and i can tell you, here it didn't help much....
    In the 90' our ex president "Liberalized" the economy.. what happened?
    Us and europeans banks came in, and with them us and european multinational corporations... the banks gave credits to this corporations and with this credits the corporations buyed our bigest and more rentable industries and companies. That simple.. now we depend on them for everything.. including water, Electricity, comunications, fuel, media, etc. and of course they are no more than 3 or 4 corporations by sector and they bribe our corrupted politicians... so they can charge anything they want. they services are deficient, they have no competition (couse they buy them all with credits), and they are monopolics. in 10 years, 50% of the population are poor and can't access any of these elemental services.

    Sorry my english i don't speak very well..
    Pd: the same happened in every country of latin america, almos synchronized..
    Pd2: in 15 years these companys have no care for the enviroment, my father use to swing in a river called "Riachuelo" now if you dive,, you die... it is so polluted it is BLACK, the soure of the pollution, REPSOL from espain, SHELL from usa, and other..
    PD3: why do we have to pay for the oil to US corporations at dolar price, if we export half our production and us imports half of its needs in oil?
    Last edited: Oct 14, 2004
  12. Oct 14, 2004 #11


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    As already said, it has to be implimented correctly before it can help.
  13. Oct 14, 2004 #12

    And many more here:
    http://www.google.com/u/Mises?hl=en&submit.x=0&submit.y=0&&q=argentina [Broken]

    The environment unfortunately tend to become a secondary issue for most people when a country is poor. When the country get richer, there will be more protection for the environment.

    One thing to ponder: Rivers are usually examples of "The tragedy of the commons", meaning that since the river has no owner (except vaguely a mostly inefficient state), there is no one with a strong interest in protecting the river. Yes, private owner(s) would demand payment for getting drinking or agricultural water, fishing, bathing or otherwise using it, but he would also work to protect it so he could continue to get those payments.

    3. I am not sure what you are asking. This may be an answer to your question, otherwise ask again.
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  14. Oct 14, 2004 #13


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    Capitilization might work for a country if it is a closed system but when you open it up to have the inequalities of the countries, then I believe you have a problem. A few people from developed countries bring the development into the less developed countries for themselves, and there they have no real competition. Our economy in the US is unstable because manufacturing is outsourced and then they bring it back to sell it to the people in the US for a highly inflated price, at least most of your giant corporations. If capitilism was introduced equally throughout the world everyone standing on the same footing it might work but then again it might not.
  15. Oct 14, 2004 #14
    another thing.. capitalism today is controled by a little group of very very powerfull corporations and banks worldwide, they are the ones who pushes globalization..

    for example in america 90% of the media, newspapers, radios etc. is controled by 8 corporations..

    Acumulation of power is more dangerous than capitalism or comunism.

    about the money..

    Why are countrys poor??
    for example.. argentina we have food to feed 3 times our entire population, but 30% is starving... The food industry is controled 80% by 5 foreing corporations.

    "There are four things that must be available for paid work to take place:

    -The work to be done.
    -The materials to do the work.
    -The labor to do the work.
    -The money to pay for the work to be done.
    If any of those four things are missing, no paid work can take place. It is a naturally self-regulating system. If there is work to be done, and the material is available and the labour willing, all we have to do is create the money. Quite simple."

    "Ask yourself why it was that depressions happened. All that went missing from the community was the money to buy goods and services. The labour was still available. The work to be done was still there. The materials had not disappeared, and the goods were readily available in the shops, or could be produced but for the want of money.


    "The understanding of this issue of money into the community can be best illustrated by equating money in the economy with tickets in a railway system. The tickets are printed by a printer who is paid for his work. The printer never claims the ownership of the tickets … And we can never imagine a railway company refusing to give passengers seats on a train because it is out of tickets. By this same token, a government should never refuse people the access to normal commerce and trade by claiming it is out of money."
    Extract from a letter written by Rothschild Bros of London to a New York firm of bankers on 25 June 1863:

    "The few who can understand the System (Cheque Money and Credits) will either be so interested in its profits, or so dependent on its favours, that there will be no opposition from that class. While on the other hand, the great body of people mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint and perhaps without even suspecting that the system is inimical (hostile, hurtful) to their interests.

    The following quotation was reprinted in the Idaho Leader, USA, 26 August 1924, and has been read into Hansard twice: by John Evans MP, in 1926, and by M.D. Cowan M.P., in the Session of 1930-1931.
    http://www.mises.org/ is a banker controled website:
    The Mises Institute's coat of arms is that of the Mises family, awarded in 1881 when Ludwig von Mises's great-grandfather Mayer Rachmiel Mises was ennobled by the Emperor Franz Josef I of Austria. In the upper right-hand quadrant is the staff of Mercury, god of commerce and communication (the Mises family was successful in both; they were merchants and bankers). In the lower left-hand quadrant is a representation of the Ten Commandments. Mayer Rachmiel, as well as his father, presided over various Jewish cultural organizations in Lemberg, the city where Ludwig was born.)

    The mises is a family of bankers, i don't belive what they say
    Please Please read this: http://www.relfe.com/plus_5_.html
  16. Oct 14, 2004 #15
    Both "papers" want a world without interest rates and the first also without growth.
    This is the common socialistic idea that the capitalist do no work, and therefore should get no pay. Anyone doing serious investment can tell that it takes enormous work to decide which projects should get resources.

    Furthermore, a capitalist is someone who have saved and could consume something enjoyable now, but instead chooses to let someone else use his savings in return for getting more enjoyment in the futures. Without this possibility of getting more in the future, there would be no lending since there is always a risk of losing the investment.

    Regarding mises.org, I am unsure of your point. The first paper had them as a good reference and not among a capitalistic conspiracy. They are also very critical of the fractional reserve and fiat system, but from the viewpoint of too little capitalism.
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  17. Oct 14, 2004 #16
    Proven wrong by empiric research. More capitalism have made all richer were introduced, including the poorest. This has worked although there are enormous variation in capitalism in the world. See my first links. And there is not more capitalism in the US today, but much less than before.
  18. Oct 14, 2004 #17
    Regarding Argentina, read the links given before.

    Regarding depressions, they follow a period of malinvestments. If resources have been invested in many pointless projects without use and the bubble suddenly collapses, it will take some time to change society and start new, more productive companies. If a house poorly built collapses, it cannot immediately be replace by a new.

    Regarding the developing world, it is certainly not lack of printed money that is missing. Latin America have tried hyperinflation many times, always with a catastrophe as a result.
    Third world countries generally have, in no particular order: corruption, bureaucracy, inflation, many regulations, crime, lacking property rights and socialism. In short, to little capitalism.

    Both developed and developing countries must realize that it is not someone else who are primarily to blame for their problems. There is no conspiracy, you are not automatically entitled to anything and you should consider that bad results may actually be caused by yourself. Grow up.
    Last edited: Oct 14, 2004
  19. Oct 15, 2004 #18


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    Your points are excellent, as usual (are you an economist?), but let me expand just a touch on this one:
    You can expand this to talk about the pay gaps between workers and managers that are a key point of socialists. Why should managers make more money if they don't do any "work?" The answer is that managing requires making decisions that affect a large number of people and have a large influence over the company. Being a manager is a big responsibility and that responsibility is worth a lot of money.
  20. Oct 15, 2004 #19


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    Marxists do not say managers do no work. Managers are employees just like factory workers, and Marxists would advise them to look to see if their own class interests don't in fact match those of the factory workers. Recent white-collars layoffs may encourage them to do so.

    The people who do no work and are class enemies to the Marxists are the "owners of the means of production". Rich people who own the corporations, and whose work, if any, is more of a hobby than a productive enterprise. Great example, G.W. Bush before he entered politics.
  21. Oct 15, 2004 #20
    I am not a marxist. i am not against Capitalism neither... but yes against The economic model "Neoliberalism" that US and europe are forcing us to adopt using the IMF now and Military dictatorships in the 70's...

    This economic model only makes richer the richers, and poor the poorest, i am middle class here, and each year we are closer to the poor class.. while the rich, a little 10% who owns 80% of the whealt is getting richer..

    60% of our salary goes to pay services (Water, Communications, Oil) who are all oligopolic foreing corporations from us and europe.

    50% of the government national budget go to pay "International Creditors" IMF, WB, IDB, while 30% of our population is starving....

    I have a text i would like you to read.. it's an interview to the winner of the nobel prize in economics. Ex director of the World bank, He was fired for telling the trut:

    http://www.gregpalast.com/detail.cfm?artid=78&row=1 [Broken]
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  22. Oct 16, 2004 #21
    Communism have killed more than 100 million people since 1917.

    There have also been "experiments" where people with a similar culture and prosperity have been divided into capitalistic and communistic parts: North and South Korea, East and West Germany, China and Taiwan/Hong Kong.

    One big problem with socialism it that there must be a small group of people making the decisions for all. It is not possible to vote on all small details and the capitalistic price system leads to inequality and should be abolished. But this small group of people have much less computational ability than when all people participate in the capitalistic price system. Socialism is inherently more stupid than capitalism.

    One other problem is that people will not work as well when paid regardless of results or efforts. Trying to reward only effort, even if possible to measure, will mean that much work is wasted without result.
    Last edited: Oct 16, 2004
  23. Oct 16, 2004 #22
    The IMF, WB and so on should be abolished. They have created a very wealthy aristocracy of people living on the poverty in the thirld world. They transfer money paid by tax to themselves and to the ruling elite in the thirld world. The worse result they produce, the more money they get. They have become an institution for creating poverty. Opposite to what would happen in a free market and a typical example of why the state should interfere as little as possible.

    Argentina have been in default to IMF and others since 2001, so those numbers are incorrect. The default is good and you should certainly not seek new loans from the mentioned state agencies. Hopefully, this will mean that after a while, foreign investment will be from people with a real interest in building society: capitalists.

    Argentina is not a capitalistic society, in fact one of the least. Here are some of the problems that should be fixed by yourself, not by others:

    I am well aware of the tragedy of Argentina. Not long ago having a living standard least equal to that of Europe, it's recent economic history is the opposite of more capitalistic countries like Hong Kong.
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  24. Oct 28, 2004 #23
    How Excessive Government Killed Ancient Rome:

    And in my opinion, many other empires in history. For example, this gives an excellent explanation of the cyclical collapses of the various Chinese empires.
  25. Oct 28, 2004 #24
    Capitalism can’t function by it self. It has to much tendency to monopolize the power of a view. The tragic experiment of the UDSSR doesn’t mean that communise don’t functions ore has to be Stalinism. What defeated the communise was dictatorship and not the economical system. Ever seen a repressive system witch worked better because of capitalism?

    Only one element of Capitalise is good: responsibility and competition. Deadly competition with damage worse then any real war ever fought. 100 Million casualties.. Peanuts.
  26. Oct 28, 2004 #25
    The Soviet Union, Eastern Europe, China, North Korea, Kampuchea and Vietnam tried somewhat different variants of communism. And they continuously tried to vary the system to make it work, seen for examples in the various catastrophic experiments by Mao. All attempts failed.

    And communism cannot work even theoretically, see posts above.

    Furthermore you are ignoring the massive empirical evidence that supports the capitalistic system.

    Vietnam and China is examples of repressive systems that have worked better since abandoning communism in favor of capitalism.
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