Aquamarine said:
The US and western europe have now too little capitalism. All long-term projections shows that the current welfare state cannot be supported in the future.
I'm sorry but this sounds too much as an ideology that has to be supported at all costs. The "US has too little capitalism" sounds a bit like Stalin wasn't communist enough, that's why the soviet union didn't work out.
It seems to me, as I said, that die-hard capitalist proponents make tautological statements of the kind. If something works well somewhere, it is used as an argument in support of the ideology to be defended, and if it doesn't work out, then there wasn't enough of it.
The theoretical problems with capitalism are the following:
- the market system is a kind of weighted voting system, where the more money you have, the more your vote counts (because the more you can consume and hence send out market signals). As such, there is an instability that will converge to making the rich richer and the poor poorer, with a production that is optimised to satisfy the rich.
- most market analysis is based on steady-state solutions (no time dynamics). It is not because you have a steady-state solution that the time-dependent dynamics will evolve towards it (you can have dynamical instablities, especiall when there are delays).
- there is a positive feedback, in that the "choice of the consumer" is now in a large part determined by publicity, which is financed by the producers. So there aren't the two essential poles anymore that are supposed to keep each other in balance: the producers determine demand, and they determine offer.
- because of economies of scale, there is a natural tendency to make big corporations. Normally this should be offset, from a certain size onward, by the increased overhead. But the problem is that big companies have two extra assets: first, they have more publicitary muscle and hence can change the demand at their wishes ; second, they start to be able to influence political power and can thus influence the rules of the game. So there is also a tendency towards quasi monopoly.
The two reasons why capitalism works, are much simpler: they are based upon a glorification of greed and the menace of poverty.