Does Capitalism Truly Reduce Poverty and Increase Wealth for All?

[russ_watters]

@Russ Watters. I want to say that I’m not interested in only the USA.. As we seen before we life in a world witch is globalised. I would like to see figures witch includes the really poor on our planet.

Aquamarine's poverty rate figure (dropped by 50% in the past 25 years) is global. And while I would also like to see some numbers on wider segments of the population, the destitute poor are (were) a huge fraction of the global population by themselves. So really, you could say that capitalism has actually helped more poor people than rich people.

But beside of that. The income really don’t says to much in your country. You have to see that relatively poor people have to pay more for healthcare, schools, food, security… then in your golden 60th. Therefore your Inflation numbers may be correct for the hole economy but isn’t the same fore all Income classes ore aren’t taken to account.

I'm not sure what you mean - inflation is a measure of buying power and is largely based on consumer goods (like food). And the poor don't generally pay anything at all for healthcare, schools, or security.

 

[Tom McCurdy]

American capitalism is a fraud perpetuated by such lie engines as the Cato institute and the Heritage Foundation. They say the words but what they do is really play monopoly. The rich have gotten richer and the rest of Americans have gotten poorer in recent times. See http://www.zmag.org/
Malthus has been proven correct. Today there are more starving people than ever before. The world is overpopulated and global warming is proof, accompanied by massive unprecedented extinction. The US is on the brink of economic collapse when the oil runs out. Hopefully this capitalism cult will be short lived.

The US although heavily oil dependent will not go into economic collapse when the oil runs out... besides capatialism works and is probablly the best system for any country to use to be sucessfull. If the US were to go into economic collaspe that would severly F@#k up the enire world's economy. The only real danger to the US economy right now is the growing power of the EU.

 

[Selbstüberschätzug]

@Russ Wetters

The figures saying something about the earning from below 1 $ per day.

The second colon says something about 2 $ per day. Here the figures are 66.7 to 52.9.

Considering that the globalisation has reached in the last town in the world in the last 25 years the figures saying nothing. ( Before the globalisation many where able to live without any money now the situation has changed)

Aside of that what caused the increase the wealth (manly for the already rich / threshold countries) in the world ( and in this perspective) capitalism or technologies?

Yes Inflation is based on a common goods-basked. But if you are poor the things witch you are forced to by from this basked are others then if you are rich. Won’t explain this to the last detail.

 

[CharlesP]

This is factually wrong and the facts have been given to you. You have no excuse for continuing to assert this: it may have been ignorance before, but now its a lie.

A lot of people don't agree with you. I just heard (NPR) that three million people have died in the Congo in recent years.
http://zena.secureforum.com/Znet/zmag/articles/nov97sklar.htm
http://zena.secureforum.com/Znet/zmag/articles/hermanjulyaug98.htm
http://www.larouchepub.com/other/2001/2803_import_bubble.html
I don't think that capitalism or even humanity can stop this death sentence http://dieoff.org/page137.htm.

 

[Aquamarine]

A lot of people don't agree with you. I just heard (NPR) that three million people have died in the Congo in recent years.
http://zena.secureforum.com/Znet/zmag/articles/nov97sklar.htm
http://zena.secureforum.com/Znet/zmag/articles/hermanjulyaug98.htm
http://www.larouchepub.com/other/2001/2803_import_bubble.html
I don't think that capitalism or even humanity can stop this death sentence http://dieoff.org/page137.htm.

Congo is certainly not a capitalistic country. On the other hand, there have been a great reduction in poverty in those countries that have embraced capitalism. And as much of the world has embraced capitalism, there has been a huge reduction in poverty worldwide.

Looking only at income in the US and those poor there, read the thread from the beginning and especially my first post. In addition, I do not understand how capitalism can be to blame since government size and regulations are constantly increasing. In other words, those negative effects you think are due to capitalism have happened at the same that capitalism is slowly decreasing in the US.

And the malthusian energy catastrophe have been discussed in several other forums where your arguments have been proven wrong.

 

[polyb]

If I may interject,

aquamarine and russ, can you point out any problems with "capitalism" per se? Because all I have seen in this thread suggests that you guys think that it is some kind of pancea. For me that raises the flag!

So how about it?

 

[russ_watters]

aquamarine and russ, can you point out any problems with "capitalism" per se? Because all I have seen in this thread suggests that you guys think that it is some kind of pancea. For me that raises the flag!

So how about it?

There are, of course, problems with capitalism and we've never claimed there aren't. Dealing with the power of large corporations is still difficult, even with the Sherman Act. Dealing with those who fail in the Darwinian process is a big problem. The US isn't anywhere near complete capitalsim because of such problems with it.

Neither of us have said anything like what you are implying. All we're saying is its the best system out there and has been enormously successful - and that is straightforwardly, factually true. What should raise a red-flag for you is the lies being told here against it!

 

[selfAdjoint]

I have a theory that capitalism, left to itself, tends toward oligopoly. I know that von Mises or one of the other gods of the Austrian school has an argument that this is due to government interference, but his data is from Germany, which was dirigiste from the git-go. If you look at the US, we do have the Sherman Antitrust act, and every generation there's a high profile prosecution under it - Ma Bell, Microsoft, etc. And yet in spite of this anti clumping trend in the US, practically every manufactured product the consumer buys is manufactured by a Pareto oligarchy: 50% of the products are made by one company, 20% by another, 10%-15% by a third, and the rest by a gaggle of small guys. In older product lines the small guys are thinned out. The evolution from Adamic competition to oligarchy is fast, too, see the history of the desktop computer.

 

[polyb]

Thanks selfAdjoint, you delivered a point before I even had a chance!

I would like to further your hypothesis and take it to a more generalized prospectus of economics: Any economical system will tend towards a system of oligarchy. I think Pareto demonstrated this in his work and sets a basis for which to come grips with the inherent problem of any economic system. Namely people who will do anything and everything to monopolize an economy for their own benefit. I don't care how you name it: capitalism, socialism, communism, etc., everyone of these has demonstrated that they can be manipulated by those willing to do so. Unfortunately many people can not see the factual forest for the semantic trees. So comes the question of what kind of system would best. Well I would have to contend that perhaps we can start with a rationalism that stands in recognition to the very simple fact of these human shortcomings. Fortunately many of the founders of the U.S. were painfully aware of this problem and has given us something to go by.

I was also trying point to russ that even though capitalism has it's merits, it also has it's detriments as well. An example can easily be seen in the current situation involving medicine. In the pursuit of profit people are not necessarily getting the treatment they need and quite a few are getting "bad medicine" which is lethal. Market forces do not work in the same way with medicine as it does say with tennis shoes. Sure, I can buy a pair of shoes that are lousy and not buy them again, thus implementing the "market force". But when it comes to medicine, well I may not have a second chance to exercise the same discretion and force the market into correction.

I would also like to reframe this whole debate into the system of game or graph theory. I think it would be more enlightening and robust in terms understanding the inherent complexities of economy. Otherwise all particpants in this "game" of internet chatroom discourse will actually lose because there will be nothing more than a bunch of huffing and puffing the the tune of "my sophistry is better than yours"!

 

[selfAdjoint]

I would also like to reframe this whole debate into the system of game or graph theory. I think it would be more enlightening and robust in terms understanding the inherent complexities of economy. Otherwise all particpants in this "game" of internet chatroom discourse will actually lose because there will be nothing more than a bunch of huffing and puffing the the tune of "my sophistry is better than yours"!

Cosma Shalizi has some stuff in his archives in that direction. Here is his site:

http://www.cscs.umich.edu/~crshalizi/weblog/

 

[polyb]

Cosma Shalizi has some stuff in his archives in that direction. Here is his site:

http://www.cscs.umich.edu/~crshalizi/weblog/

WOW! Thanks selfAdjoint, a blogger right up my own wacky alley! I would like to do my graduate studies in complexsystems and Cosma seems like the kind of people I would like to study/work with. It is going to take me a while to find his stuff on game/graph and economics though. Once again, thanks!

 

[selfAdjoint]

Hope you can study with him; he's looking for work, as you will find if you study his site. All my best wishes for you; I think complex systems are the secret of a lot of what we need.

 

[Aquamarine]

Those thinking that capitalism most lead to a harmful oligopoly should read this thread. Skip to my last posting if in hurry. Read for example the history of why the Sherman act was created:
https://www.physicsforums.com/showthread.php?t=47769&page=5&pp=15

That there is a oligopoly in many markets is not an argument in itself. That reflects that fact that in those market that is the best structure, for example markets requiring very large investments cannot have many small competitors. Those arguing otherwise must show that oligopoly is more harmful than some regulated alternative, not that it exists in some cases.

There are those who for various reasons have less ability and may not be able to compete. But they would have those difficulties in any system and they must be supported by the others. That is charity, no matter if it is done by the state or individuals. And as I have pointed out in this article before, why cannot charity have competition and efficiency like other sectors of society?

Regarding medicine, it is no different than any other market. The demand is endless, for example it would be good if all people could have an complete body MIR scan and interpretation by the very best radiologist every year. But since that is not possible, the free market is the best way to organize the limited resources available.

Regarding the tennis shoe example, firstly there should be the possibility to sue for things like false advertisement or malpractice, secondly competition is not done by one individual but by many. And people are learning from the mistakes and experiences of others. This can be a market in itself, like magazines doing reviews of computer games, cars or various household devices.

There are of course problems in capitalism that may require limitations. One very interesting theoretical one is "The tragedy of the anticommons". But I think it is actually an argument that there are some property rights laws that are better than others, not an argument against property rights in itself. That problem can be solved by competition between many small states that have somewhat different laws.
http://www.sciencemag.org/cgi/content/full/280/5364/698

Other proposed problems (often imaginary or having good if less than perfect solutions or with no proof that there exists better solutions):
http://en.wikipedia.org/wiki/Market_failure

 

[selfAdjoint]

That there is a oligopoly in many markets is not an argument in itself. That reflects that fact that in those market that is the best structure, for example markets requiring very large investments cannot have many small competitors. Those arguing otherwise must show that oligopoly is more harmful than some regulated alternative, not that it exists in some cases.

You can say that, but it destroys the thing that the market is valued for: its invisible hand in setting prices. Oligopolies work by administering profits, and contrary to economics 101, when they don't sell enough product, they may not lower the price but raise it, to make their profit constant with the lower sales. Ford and GM have actually done this in the past. This behavior is known as inelastic prices, and the prices of an awful lot of what we buy in the US are inelsatic. What then becomes of the free market? What becomes of equilibrium economics?

 

[Aquamarine]

You can say that, but it destroys the thing that the market is valued for: its invisible hand in setting prices. Oligopolies work by administering profits, and contrary to economics 101, when they don't sell enough product, they may not lower the price but raise it, to make their profit constant with the lower sales. Ford and GM have actually done this in the past. This behavior is known as inelastic prices, and the prices of an awful lot of what we buy in the US are inelsatic. What then becomes of the free market? What becomes of equilibrium economics?

No, oligopoly means few participants, not that they are not competing. Since they are competing, they cannot raise their prices above their competitors. They can of course try to form an agreement with each other limiting competition, but in practice they will usually try to cheat on each other, breaking the agreement. And outsider will see the large profit potential and will enter the market as new competitors. In the end those companies keeping the agreement will be the losers, with their market share taken by those cheating and new competitors.

 

[russ_watters]

AKA - price fixing, which is not a market force (its a way to circumvent market forces) and is also illegal. The airlines have done this as well.

 

[Aquamarine]

AKA - price fixing, which is not a market force (its a way to circumvent market forces) and is also illegal. The airlines have done this as well.

Yes, but some argue that it not necessary to regulate that. Cheating and new competition will in the end stop price fixing by itself. The regulations have a cost in oversight and in bringing cases into the justice system. And more importantly, that in many cases the regulations have been used by weaker competitors to restrict a stronger competitor that produced superior goods to lower prices.

 

[Burnsys]

here in argentina in 2001 we had a mayor economic crisis.. 20% of the people went below the poverty line, i guess that means less demand. but oil prices rised, telephone, electricity, food, everything rised when lees people have the money to buy them.

oil corporations (Repsol, shell, exoon) in argentina always rise the prices togheter,they never fight each other, and when a new small company emerge, they buy it... they leave us no choise but to buy OUR oil extracted from OUR soil to them.
Btw, they have polluted our rivers too...

 

[Aquamarine]

here in argentina in 2001 we had a mayor economic crisis.. 20% of the people went below the poverty line, i guess that means less demand. but oil prices rised, telephone, electricity, food, everything rised when lees people have the money to buy them.

oil corporations (Repsol, shell, exoon) in argentina always rise the prices togheter,they never fight each other, and when a new small company emerge, they buy it... they leave us no choise but to buy OUR oil extracted from OUR soil to them.
Btw, they have polluted our rivers too...

Regarding Argentina and energy:
http://www.mises.org/fullstory.aspx?Id=1518

And we have discussed Argentina before in this thread, including the rivers.

 

[selfAdjoint]

No, oligopoly means few participants, not that they are not competing. Since they are competing, they cannot raise their prices above their competitors. They can of course try to form an agreement with each other limiting competition, but in practice they will usually try to cheat on each other, breaking the agreement. And outsider will see the large profit potential and will enter the market as new competitors. In the end those companies keeping the agreement will be the losers, with their market share taken by those cheating and new competitors.

That's just idealistic dreaming. It is in the interest of the CEO of any of these oligarchs to achieve the maximum profit for a given cost. Competition militates agains that, by driving down prices. Cooperation is more cost effective in many instances, and cooperation under the table is how they do it. Even Adam Smith understood that; he specifically stated that his invisible hand only worked if there were so many producers that they couldn't effectively collude.

 

[Aquamarine]

That's just idealistic dreaming. It is in the interest of the CEO of any of these oligarchs to achieve the maximum profit for a given cost. Competition militates agains that, by driving down prices. Cooperation is more cost effective in many instances, and cooperation under the table is how they do it. Even Adam Smith understood that; he specifically stated that his invisible hand only worked if there were so many producers that they couldn't effectively collude.

Yes, if they all keep the agreement, everybody gain a little. But those who cheat gain much more by taking market share from the others. A classic prisoner's dilemma. And do not forget the possibility of new outside competitors who see the huge profit potential.

But that is just theory. Let us instead look at the real world.

Yet the actual history of antitrust enforcement has never warranted this widespread academic and political support. There is little in the classic antitrust cases to convince anyone -- much less an economist -- that monopoly power is a free-market problem, or that the firms indicted (and convicted) under the antitrust laws were damaging the public interest. Indeed, the cases often demonstrate that the firms involved were reducing costs and prices and engaging in an intensely competitive process, and that the antitrust laws -- whatever their alleged intent -- were employed to restrict and restrain the competition process.[4]

Do read on in the original article:
http://www.cato.org/pubs/pas/pa021.html
http://www.econlib.org/library/Enc/Monopoly.html

 

[FZ+]

I'm curious how you are going to solve the public good/externality problem with a pure capitalist society.

 

[Aquamarine]

I'm curious how you are going to solve the public good/externality problem with a pure capitalist society.

The classic example is a lighthouse that could be built if many merchants contributes resources. But may not be built since many wait for the others to build it without wanting to contribute themselves. The point being that everyone can use the lighthouse, even those not contributing. This would be an argument for central planning of society, forcing everyone to contribute.

There are arguments against this. One being that if one large merchant or a group of large merchant gain from building the the lighthouse, they will build it even if many of the small merchants do not contribute. That everybody that gain something must contribute if usually false, in the real world there are usually many who gain without contributing themselves. Another example, if there is a new corporation creating employment in a town, the town stores will gain by the increased wealth without contributing themselves to starting the new corporation.

Opponents would then assume a lighthouse not possible to build if not all or almost all contribute. But that means a lighthouse that takes all of the resources available in society to build. And it is usually very risky to invest everything available in a single project. It it usually not possible to predict exactly which project will succeed in the future, meaning that it usually better to have many project and let competition decide which one was the best in the real world. That is one of the fatal weaknesses of central planning, it requires perfect knowledge of the future. Regarding the lighthouse example, some of those not wanting to contribute may have a potentially better idea, like that of transporting the goods by a new land transportation system or have another system for navigating by night. But if he is forced to contribute everything he has to the lighthouse, he can never develop this potentially better idea. And even if he have some resources left, his potentially less expensive idea may not now be interesting to build since the more expensive lighthouse will be built anyhow by force.

 

[Aquamarine]

Regarding oligopolies, there is in fact at least one major problem. That is that they may be very effective in organizing lobby groups. They may have great difficulty in keeping an agreement about prize fixing due to the prisoner's dilemma. It often very hard for other to know when cheating occurs when large buyers ask for offers, when giving reduced prized on other goods in compensation for buying, when giving perks, when giving better support or when giving outright bribes to persons responsible for doing large wholesale purchases.

But regarding political lobbying, there is little conflict of interest and it is much easier for the others to know if someone is not contributing. So oligopolies may be very good for asking the government for regulations and subsidiaries for their industry. Those with opposing interests, like consumers and taxpayers, are so many that they have difficulty in organizing. And every special interest group cost them little, it is only when there are many that the taxpayers and consumers lose much.

This is probably one the main causes of the undermining of capitalism in the western world today.

 

[Aquamarine]

Beguiling curves of the Swedish model
http://www.washingtontimes.com/commentary/20040425-102740-9436r.htm

The Mystery of Capital
https://www.physicsforums.com/showthread.php?t=58265

Capitalism and Corruption:
http://alpha.montclair.edu/~lebelp/EconFreedomandCorruption.html

 

[CharlesP]

Do read on in the original article:
http://www.cato.org/pubs/pas/pa021.html
http://www.econlib.org/library/Enc/Monopoly.html

If you folks don't know about the Cato Institute, Heritage foundation and Discovery Institute, well it is an education. These outfits and many more are funded by industry to the tune of a hundred million a year each roughly. They have the staff and expertise to wage an effective public relations war against science and get the legislation that makes the most profit. They have even corrupted the study of economics itself with the "Trickle Down Theory" (invented by public relations operatives).

 

[Aquamarine]

The Discovery institute advocates conservative Christian views. Not libertarian economics.

Regarding the Heritage foundation and Cato institute, I would suggest attacking their arguments instead of their character. Their budgets are 30 and 15 million dollars.

 

[CharlesP]

Ward Churchill has recently made news. His writing is on this list which can introduce readers to a point of view not well understood in the USA. It is worth reading:
http://www.kersplebedeb.com/mystuff/s11.html

 

[X-43D]

The ideal social system is when there is no money or property at all. When populations were a few, humans traded goods and services but not for money profit.

 

[Smurf]

The point of wether capitalism increases prosperity or not is completely irrelevant because capitalism is inherently unethical because it imposes on the individual's freedom. Prosperity should be secondary to liberty.

 

[X-43D]

Freedom from economic authorities is also ideal for survival in nature.

 

[russ_watters]

The ideal social system is when there is no money or property at all. When populations were a few, humans traded goods and services but not for money profit.

Why is that ideal?

 

[russ_watters]

The point of wether capitalism increases prosperity or not is completely irrelevant because capitalism is inherently unethical because it imposes on the individual's freedom. Prosperity should be secondary to liberty.

How does capitalism impose on freedom and what is a better alternative?

 

[selfAdjoint]

How does capitalism impose on freedom and what is a better alternative?

The classic marxist answer is that the putative free choice between an employer and a prospective hiree is not a free one because it is not symmetric. Few employers who control all the jobs, and many people who, from no fault of their own but just from the capitalist organization of society, have to sell their labor power.

Fantasies about what all those poor people COULD do, if only they weren't themselves but the fantasiast, are not proper responses to this.

Smurf may have a different answer from an anarchist perspective.

 

[russ_watters]

Fantasies about what all those poor people COULD do, if only they weren't themselves but the fantasiast, are not proper responses to this.

You mean like labor unions...?

Smurf may have a different answer from an anarchist perspective.

Yes, I'd really like to hear Smurf's explanation.

And in any case, though you mentioned Marxism, you didn't explain why it would be better.

 

[nanorobot]

Communism is still better than capitalism. If resources were to be shared equally around the world, perhaps we all would have been relativily poor but thus equal.

Sharing is the only way to stop poverty. There is enough food to feed everyone. The problem is that western nations have made money profit their god.

 

[Automagman]

Communism is still better than capitalism. If resources were to be shared equally around the world, perhaps we all would have been relativily poor but thus equal.
Sharing is the only way to stop poverty. There is enough food to feed everyone. The problem is that western nations have made money profit their god.

Oh my god. Before i get started on this one i have to ask. Are you serious or is this just a joke?

 

[Wishbone]

Communism is still better than capitalism. If resources were to be shared equally around the world, perhaps we all would have been relativily poor but thus equal.
Sharing is the only way to stop poverty. There is enough food to feed everyone. The problem is that western nations have made money profit their god.

absoultley rediculous. Communism is not better than capitalism, as can be seen by any communist system. We all know communism doesn't work for many reasons. Competition, the root of capitalism is the true root of human advancement.That is not the problem, take for example what went on in mogadishu, you will see that although the help was coming from the UN, which right now is the lousiest organization on Earth, it was these african day-to-day dictatorships and the root of problem in africa...

 

[Wishbone]

The point of wether capitalism increases prosperity or not is completely irrelevant because capitalism is inherently unethical because it imposes on the individual's freedom. Prosperity should be secondary to liberty.

Wrong, learn the definition to capitalism. it infringes on no rights whatsoever... Yay pretend economist trolls FTW! Stop posting. Prosperity and liberty go hand in hand with capitalism.

 

[selfAdjoint]

Wrong, learn the definition to capitalism. it infringes on no rights whatsoever... Yay pretend economist trolls FTW! Stop posting. Prosperity and liberty go hand in hand with capitalism.

The practical situation that the majority have to sell their labor power at a disadvantage because of the asymmetrical transaction between many would-be laborers and few rich employers is in fact an unjust restriction of the laborer's right to a fair deal.

This is not economics it's social justice. Economics, as you have apparently studied it, just assumes the capitalist system and then describes (rather poorly) how it works.

 

[jim mcnamara]

As a quick aside, it seems very interesting that two economists, using different axioms (belief systems) take what seem to me to be identical data sets and reach diametrically opposite conclusions.

As an example: tax cuts vs. tax increases and their impact on economic growth.

During the Reagan Presidency the economy got better (i.e, unemployement declined, GDP increased) because taxes were lowered.
Or. During the Clinton Presidency the economy got better (same metrics)
during a period of tax increases - which reduced the deficit and made things improve.

I've seen presentations making both these points. Obviously both speakers have to be ignoring what really is going on. Or are promoting a political point of view in the guise of economic "reasoning". Or both.

 

[nanorobot]

Wrong, learn the definition to capitalism. it infringes on no rights whatsoever... Yay pretend economist trolls FTW! Stop posting. Prosperity and liberty go hand in hand with capitalism.

Not always. Capitalism has its own hierarchial and authoritarian institutions. It is not really free for the poor.

 

[Wishbone]

The practical situation that the majority have to sell their labor power at a disadvantage because of the asymmetrical transaction between many would-be laborers and few rich employers is in fact an unjust restriction of the laborer's right to a fair deal.
This is not economics it's social justice. Economics, as you have apparently studied it, just assumes the capitalist system and then describes (rather poorly) how it works.

none of this infringes on any liberties. the liberty with capitalism not shared by communism, is the liberty to compete. Although you may see a market where wealth is highly tilted towards owners, and the labor base is lacking, that description lacks the idea that any may rise to the level he or she wishes. The laborer's right to fair deal comes from the competition between employers for the supply of labor. This right, this liberty, is not given in other economies.

Economics, doesn't assume anything, but basic human thoughts, recorded through thousands of years (incentive, etc.). Then, everything is built from there.

 

[Wishbone]

Not always. Capitalism has its own hierarchial and authoritarian institutions. It is not really free for the poor.

it is free to the poor, because they have the choice to rise or not. This isn't a caste system...

 

[nanorobot]

it is free to the poor, because they have the choice to rise or not. This isn't a caste system...

No it's not. They do not always possesses the money, resources and access to education to go up.

 

[Wishbone]

No it's not. They do not always possesses the money, resources and access to education to go up.

you can go up without money, if you had money, you'd already be up. Access to education is up to them, sometimes its more difficult to work your way to the top, however it is always within reach.

 

[nanorobot]

Free cooperation between free individuals is more effiecient than a system of involuntary competiton and hierarchial domination.

 

[selfAdjoint]

you can go up without money, if you had money, you'd already be up. Access to education is up to them, sometimes its more difficult to work your way to the top, however it is always within reach.

This is a fantasy if we interpret "always" as meaning "for everybody". You can't show it's available even to everybody who is capable of carrying on an independent social life (i.e. not institutionalized). At its worst this attitude is used to blame poor people for their poverty, because the opportunity of getting rich "was always available" to them.

 

[nanorobot]

We all depend on one another for survival and development. This is why there is a division of labor in current societies.