ripleofdeath
Registered Senior Member
if capitalism worked we would not have had the global credit crunch.
can't get more simple than that
can't get more simple than that
Does capitalism work?
- Thread starter lixluke
- Start date
There will always be greedy people in the world. Capitalism does not work because of greedy people.
The following implies that our current economic system is capitalism.
If you analyze history from the end of the era of feudalism & the start of the industrial revolution, you will realize that capitalism worked very well for about 150-200 years.
You will also realize that capitalism (the laissez faire variety) started being replaced some time between about 1880 (maybe earlier) & about 1910. In the United States, it became terminally ill in 1913 when the constitution was amended to allow a federal income tax. It has been slowly evolving into a mixture of socialism & capitalism with loss of voter control due to the complexity of the system, voter ignorance, & the motivations (not good) of politicians. Perhaps slowly dying would be more precise than evolving.
A very good approximation of laissez faire capitalism existed in the United states from perhaps 1750 (or earlier) to about 1920 (or perhaps until about 1935). The standard of living & comfort level of the working class improved by leaps & bounds in that era of laissez faire capitalism.
If you want to see evidence of the effects of that system, obtain & study Sears Roebucks catalogues from 1897 & 1909: Reprints are available from Amazon & ebay.
Those catalogues were made available to typical farmers, farm hands, & industrial workers. They were not produced for the benefit of the wealthy of that era. They indicate the items that ordinary working class people could afford to buy. Compare the items available to those ordinary people with what was available to ordinary people prior to the industrial revolution.
The standard of living & comfort level of ordinary people continued to grow until some time in the second half of the 20th century. The growth continued due to momentum of the economy well after capitalism started being replaced by a mixed economy.
Politicians & Ivory Tower academics compare wages & working conditions of the 17th & 18th centuries with those of the 20th century. They use such comparisons as evidence that capitalism was a bad system & that modern unions & social legislation saved the working class from the oppressive industrialists & bankers (aka Robber barons).
If you consider the productivity of a laborer in the early days of the industrial revolution with the productivity of his 20th century counterpart, you will realize that the increased wages & improved working conditions were due to incredible increases in productivity due to capital investment in machinery & improved manufacturing methods. Closed die forging was not invented until about 1860. In the 20th century it was made incredibly efficient due to induction heating & upset forging technology. In addition, automatic machine tools, extrusion processes, & other modern methods had a huge impact on productivity.
For example: In the early industrial revolution & well into the middle of the 19th century, a man could make at most 20 or so crude metal items in a day. A modern worker using an upset forging machine can make 50 or more high quality forged items per hour. The increase in wages was due to that increased productivity. The improvement in working conditions was due to the use of modern machinery & hardly any requirement for muscle power. Think of the old time black smith working with tongs, a heavy hammer, & an open furnace. Compare him with the operator of a modern upset forging machine. The metal is heated using induction heating (no open furnace) & all the power is supplied by the machine.
How much of the increase in salary & working conditions would you attribute to improved productivity & the use of modern machines & how much would you attribute to social legislation & labor union activities?
It is fairer to compare early capitalism with the feudal system it replaced instead of comparing it with the 20th century.
It also indicates an ignorance of economic history. Note that intelligent & well educated people can be ignorant.
If you analyze history from the end of the era of feudalism & the start of the industrial revolution, you will realize that capitalism worked very well for about 150-200 years.
You will also realize that capitalism (the laissez faire variety) started being replaced some time between about 1880 (maybe earlier) & about 1910. In the United States, it became terminally ill in 1913 when the constitution was amended to allow a federal income tax. It has been slowly evolving into a mixture of socialism & capitalism with loss of voter control due to the complexity of the system, voter ignorance, & the motivations (not good) of politicians. Perhaps slowly dying would be more precise than evolving.
A very good approximation of laissez faire capitalism existed in the United states from perhaps 1750 (or earlier) to about 1920 (or perhaps until about 1935). The standard of living & comfort level of the working class improved by leaps & bounds in that era of laissez faire capitalism.
If you want to see evidence of the effects of that system, obtain & study Sears Roebucks catalogues from 1897 & 1909: Reprints are available from Amazon & ebay.
Those catalogues were made available to typical farmers, farm hands, & industrial workers. They were not produced for the benefit of the wealthy of that era. They indicate the items that ordinary working class people could afford to buy. Compare the items available to those ordinary people with what was available to ordinary people prior to the industrial revolution.
The standard of living & comfort level of ordinary people continued to grow until some time in the second half of the 20th century. The growth continued due to momentum of the economy well after capitalism started being replaced by a mixed economy.
Politicians & Ivory Tower academics compare wages & working conditions of the 17th & 18th centuries with those of the 20th century. They use such comparisons as evidence that capitalism was a bad system & that modern unions & social legislation saved the working class from the oppressive industrialists & bankers (aka Robber barons).
If you consider the productivity of a laborer in the early days of the industrial revolution with the productivity of his 20th century counterpart, you will realize that the increased wages & improved working conditions were due to incredible increases in productivity due to capital investment in machinery & improved manufacturing methods. Closed die forging was not invented until about 1860. In the 20th century it was made incredibly efficient due to induction heating & upset forging technology. In addition, automatic machine tools, extrusion processes, & other modern methods had a huge impact on productivity.
For example: In the early industrial revolution & well into the middle of the 19th century, a man could make at most 20 or so crude metal items in a day. A modern worker using an upset forging machine can make 50 or more high quality forged items per hour. The increase in wages was due to that increased productivity. The improvement in working conditions was due to the use of modern machinery & hardly any requirement for muscle power. Think of the old time black smith working with tongs, a heavy hammer, & an open furnace. Compare him with the operator of a modern upset forging machine. The metal is heated using induction heating (no open furnace) & all the power is supplied by the machine.
How much of the increase in salary & working conditions would you attribute to improved productivity & the use of modern machines & how much would you attribute to social legislation & labor union activities?
It is fairer to compare early capitalism with the feudal system it replaced instead of comparing it with the 20th century.
An interesting point of view.
Laissez faire captitalism worked very well because it required ambitious people to apply their efforts to producing usable goods & services at prices the ordinary person could afford to pay.
Our modern system allows ambitious people an alternative to producing worthwhile goods & services at reasonable prices. They can be politicians, bureaucrats, tort lawyers, lobbyists, patronage free loaders, merger experts, & business people who spend a lot of of their resources/time using the pay to play system.
The word greedy begs the question. Ambitious is more apt.
Laissez faire captitalism worked very well because it required ambitious people to apply their efforts to producing usable goods & services at prices the ordinary person could afford to pay.
Our modern system allows ambitious people an alternative to producing worthwhile goods & services at reasonable prices. They can be politicians, bureaucrats, tort lawyers, lobbyists, patronage free loaders, merger experts, & business people who spend a lot of of their resources/time using the pay to play system.
And those who have more resources/time can afford to play the system more. They can dictate not only what goods and services are produced, but the response of politicians, bureaucrats, tort lawyers, lobbyists, merger experts, business people: and even at what price goods are accepted, and by whom.
No thanks. I appreciate the improvement of industry and working conditions via capital investment, but there's no reason a nation-state should not be able to do the same, while still preserving the rights of its workers. The 'myth' of the robber barons was no myth.
No thanks. I appreciate the improvement of industry and working conditions via capital investment, but there's no reason a nation-state should not be able to do the same, while still preserving the rights of its workers. The 'myth' of the robber barons was no myth.
GeoffP: You, like most others, do not understand either capitalism or the problems of a strong central government. You are sheep who believe in the system without ever studying history & applying some critical analysis to such study.
Before we had a strong central government, industrialists & financiers best interests were served by providing goods & services at reasonable prices in order to make a profit. They had no motivation to finance election campaigns, pay lobbyists, & work the government for lucrative pork barrel projects.
There is a lot of reason that a nation-state cannot do the same thing. The USSR was an example of a nation state which alleged to run the system for the workers. It actually ran the system for the benefit of the political leaders & the vast bureaucracy.
We have evolved into a nation driven by sound bites & demagogues rather than being a nation of thinkers. To understand the implications of history, it requires an effort equivalent to passing a 1 or 2 semester course in college. Unfortunately, even those who attend college & take courses in history, political science, & economics are taught by ivory tower academics who are believers in the myth of socialism.
The USSR is often called a perversion of good socialist principles. Actually it was the logical outcome of such a system. A strong central government & a large bureaucracy is required to implement socialist principles. Such a system works for its own self interest, not for the good of the ordinary citizen.
Interestingly, there are a few in the academic community who are advocating libertarian socialism, which is sometimes called anarchy socialism. It is a romantic notion which could be implemented in a small community, but is impractical on the scale of a modern nation with millions of citizens.
It took the ivory tower academics over 100 years to recognize that a strong central government is a problem not a solution to problems. Only a few of that group have recognized the evils of the strong central government (Chomsky is one of them). Those few are now advocating the quant notion of libertarian socialism. At least they recognize the true problem: The strong central government. Maybe there is hope for the system slowly evolving into something better, but I think it might require a collapse & a new start.
As for the robber barons: They were heros not villains. They built railroads, manufactured all manner of worthwhile consumer products, financed labor saving machinery & efficient production methods. They were harder on each other (the competition) than they were on the consumers & workers.
I know that it is a waste of time to try to educate those who have been brainwashed into believing that the government is a savior & that entrepreneurs are the enemy. I am retired & occasionally Amuse myself by wasting time & effort on this issue. Perhaps there might be one or two who will take the time to learn about the problems of the strong central government.
Before we had a strong central government, industrialists & financiers best interests were served by providing goods & services at reasonable prices in order to make a profit. They had no motivation to finance election campaigns, pay lobbyists, & work the government for lucrative pork barrel projects.
There is a lot of reason that a nation-state cannot do the same thing. The USSR was an example of a nation state which alleged to run the system for the workers. It actually ran the system for the benefit of the political leaders & the vast bureaucracy.
We have evolved into a nation driven by sound bites & demagogues rather than being a nation of thinkers. To understand the implications of history, it requires an effort equivalent to passing a 1 or 2 semester course in college. Unfortunately, even those who attend college & take courses in history, political science, & economics are taught by ivory tower academics who are believers in the myth of socialism.
The USSR is often called a perversion of good socialist principles. Actually it was the logical outcome of such a system. A strong central government & a large bureaucracy is required to implement socialist principles. Such a system works for its own self interest, not for the good of the ordinary citizen.
Interestingly, there are a few in the academic community who are advocating libertarian socialism, which is sometimes called anarchy socialism. It is a romantic notion which could be implemented in a small community, but is impractical on the scale of a modern nation with millions of citizens.
It took the ivory tower academics over 100 years to recognize that a strong central government is a problem not a solution to problems. Only a few of that group have recognized the evils of the strong central government (Chomsky is one of them). Those few are now advocating the quant notion of libertarian socialism. At least they recognize the true problem: The strong central government. Maybe there is hope for the system slowly evolving into something better, but I think it might require a collapse & a new start.
As for the robber barons: They were heros not villains. They built railroads, manufactured all manner of worthwhile consumer products, financed labor saving machinery & efficient production methods. They were harder on each other (the competition) than they were on the consumers & workers.
I know that it is a waste of time to try to educate those who have been brainwashed into believing that the government is a savior & that entrepreneurs are the enemy. I am retired & occasionally Amuse myself by wasting time & effort on this issue. Perhaps there might be one or two who will take the time to learn about the problems of the strong central government.
kmguru
Staff member
According to David Smick:
Indded, today's world economy bears a striking resemblance to the integrated markets and overwhelming prosperity of the period from 1870 to 1914, which noted economists John Maynard Keynes described as "an extraordinary episode in the economic progress of man." That, too was a period punctuated by continual financial crisis - and also great prosperity.
kmguru
Staff member
Since Capitalism is not a person or entity, does that mean the confidence must be directed towards the government like in China?
Not really .
The global credit crunch was due to greed and lack of regulations and control . Communism and socialism have proven time and time again that they can not survive . The standard of living in non capitalist countries is a disaster .
ripleofdeath
Registered Senior Member
nice post Dino !
it does sound somewhat familiar though.
when did yo write this ? im sure i have read this before(maybe a year or two).
i am well aware of the differences in the actual systems however we still have millions screaming reds under the bed and just look at the racism and hatred for Barak being openly displayed (surely that's illegal?).
the vast majority of people are ignorant and lazybrained and care not for the intricacies of how society is run or managed.
it does not escape my attention that you assert the catalog concept as being unchallenged & without comparative measure.
What is also not mentioned is life expectancy and quality of life for the statistical majority & the rate at which unemployment has been created by industrialization VS optimal levels of industrialization Vs genocidal population control.
im a little short on time right now but if you care to comment on those issues i shall come back and continue the discussion later on.
You are quite wrong. I intimately follow the events leading to the development of capitalism.
Are you saying that these are good things? Surely not. You mention the USSR as an example, but there is no reason to contrast capitalism with that specific entity; capitalism is a failure entirely on its own. The stratification of the working class and the rich, the creation of artificial barriers to progress, the concentration of wealth by a few percent of the population, the exploitation of workers worldwide, the arbitrary privileging of everything from security to health care, the pillage of the natural environment and the creation of a tottering, unstable and artificial construct of imaginary money: are there any more damning indictments of capitalism than these things? Meanwhile, you yourself are arguing for the superiority of capitalism over sheer feudality. Good God, man, have you listened to yourself? Economic exploitation was preferable to actual, legal servitude? Little surprise there. You assume mankind can do no better?
Not in the slightest. Even the Soviets realized that they were not the intended endpoint of the historical dialectic: the phrase "true Communism in our time" was not made for nothing. They fully realized the issue and made repeated promises of the eventual achievement of true communalism, although the specific individuals and their apparati almost certainly had no real intention of every actually reaching this goal.
Hardly comforting to their prolitarian victims and not at all true - or perhaps you can point to the capitalist fat cat that died from the inhalation of steel plant air, or that of the coal mines, or who were blackballed by the chief whips of the middle management and ended their days in the poor house. My father knew people exploited by the disconcern of capitalists, real capitalists, much like the robber barons you seem to be idealizing. They were not heroes, but rather vampires; and that you defend them is utterly reprehensible.
Finally, 'brainwashed' is a term more suitable for those that consider their immoral usage of other people's lives to be their due. Generally, this sense of inflated privilege is instilled early in life; it is best countered then, also.
I agree capitalism works and it works very well. But like every machine, and process yet devised it needs to be tweeked from time to time. It needs to be oiled and maintained.
Capitalism is the best system yet devised to allocate scare resources. Where we get into difficulty is when the system gets gummed up (corrupt politicians). As an example, China is gumming up this capitalist system and free trade by not floating its currency. Another example, physicians (US) using government to limit the supply of physicians. Another example, drug companies using influence to ban Americans from buying prescription drugs oustide the United States.
Capitalism is great at production...but it does need maintenance. Civil rights is another matter outside the realm of capitalism.
GeoffP: You do not seem to have read my post or else you did not understand it. Consider one of your replies (in Bold) to one of my remarks.
The following also indicates that you do not understand what I posted.
You reguritate all sorts of sound bites damning capitalism without any supporting arguments.
You seem to have no knowlege of the fact that laissez faire capitalism greatly improved the standard of living & working conditions of the working class from circa 1700 to circa 1900.
You do not seem to realize that up to about 1950-1960 a typical worker supported a family without the spouse having a job. Up until about that time, every generation of workers was better off than their parents. Even though laissez faire capitalism had been replaced by a mixed economy, its momentum continued for 50 or so years after it started to die slowly.
Now we have a system where many families are having a difficult time with both spouses working. This is due to the fierce overhead required to support the bureaucracy, lobbyists, pork barrel projects, and other activities which work the government (at all levels).
What we have now is a failure of the system which replaced laissez faire capitalism. To cite one objection you have to the current system is the massive shift of ecomomic power to a very small group of wealthy people. Such concentration did not occur during the era of laissez faire capitalism from circa 1700 to circa 1900 (lasting perhaps until about 1935-1950). Yes there was a small group of extremely wealthy people. However their total income was small compared to the total income of the typical worker, the professional class, and the small scale entrepreneurs.
BTW: I am well aware of the communist claim that their goal was the withering away of the state, resulting in a prolitariat utopia. History does not show any trend in that direction. History shows a decay of the economy and either a growth or a status quo in the size and cost of the USSR government & its bureaucracy.
Study some history & apply some critical judgment to that study.
No!! I consider the following bad activities: Financing election campaigns, paying lobbyists, & working the govenment for pork barrel projects. Such activities did not occur in the era of laissez faire capitalism. In the laissez faire capitalism era, the entrepreneurs & financiers produced an amazing amount of consumer goods & services at prices affordable to the typical worker. The latter is good
The following also indicates that you do not understand what I posted.
There are several indications in my post that capitalism improved the standard of living & working conditions of the typical worker over a period of perhaps 200 years. You seized on one remark about comparing capitalism to the feudal system which the industrial revolution replaced, ignoring other very cogent remarks which support laissez faire capitalism.
You reguritate all sorts of sound bites damning capitalism without any supporting arguments.
You seem to have no knowlege of the fact that laissez faire capitalism greatly improved the standard of living & working conditions of the working class from circa 1700 to circa 1900.
You do not seem to realize that up to about 1950-1960 a typical worker supported a family without the spouse having a job. Up until about that time, every generation of workers was better off than their parents. Even though laissez faire capitalism had been replaced by a mixed economy, its momentum continued for 50 or so years after it started to die slowly.
Now we have a system where many families are having a difficult time with both spouses working. This is due to the fierce overhead required to support the bureaucracy, lobbyists, pork barrel projects, and other activities which work the government (at all levels).
What we have now is a failure of the system which replaced laissez faire capitalism. To cite one objection you have to the current system is the massive shift of ecomomic power to a very small group of wealthy people. Such concentration did not occur during the era of laissez faire capitalism from circa 1700 to circa 1900 (lasting perhaps until about 1935-1950). Yes there was a small group of extremely wealthy people. However their total income was small compared to the total income of the typical worker, the professional class, and the small scale entrepreneurs.
BTW: I am well aware of the communist claim that their goal was the withering away of the state, resulting in a prolitariat utopia. History does not show any trend in that direction. History shows a decay of the economy and either a growth or a status quo in the size and cost of the USSR government & its bureaucracy.
Study some history & apply some critical judgment to that study.
While capitalism may deserve part of the credit for the advance in the masses’ general welfare in those two centuries it surely is a minor factor compared to:
(1) Discovery of germs and development of PUBLIC (paid for) water and sewerage systems.
(2) Discovery of stored energy in oil and the kerosene component so whale oil not needed for lighting.
(3) Discovery of electricity and its use in electric motors to replace horse power in transportation (trolleys) and water power in factories.
(4) Invention of steam powered boats for global commerce and trains for land transport of goods
(5) Invention of vaccinations and many other health care medicines (aspirin being one, I think)
(6) Invention of steel (not just cast iron) and metallurgy in general.
(7) Thousands of other inventions, for two agricultural examples: T. Jefferson’s invention of the modern plow that cuts deep and flips the soil over burying the surface grass as “green manure” and Haber’s process for “fixing” atmospheric nitrogen to make fertilizer.
(8) Development of labor unions to counterbalance the power of the factory owners and elimination of child labor (nimble little fingers tending the looms).
(9) Development of assemble line and work specialization for increased productivity. (No, H. Ford did not do that.) Assembly line production of pulleys (with standardized, interchangable parts) for sailing ships started 100 year earlier and Adam Smith’s “pin factory” concepts were applied during these two centuries, especially after (4) opened global markets.
I am sure I left out several others but these were the first that came to mind. Also, I think but am not sure, that much of Europe where many of these occurred was more a “mercantile” than a capitalistic system. If so, then not only was capitalism very minor factor, - it was not even necessary.
If any one factor were to be given credit, I would give it to scientific thought replacing superstitions in man's relationship to the world and it possibilities.
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The same kind of laissez faire which exploited workers from 1700 onward until the development of unionisation? The same kind of laissez faire which got us into the present financial crisis?
Well, bully for it. In that little soundbite, you forgot to add that the Industrial Revolution was marked by widespread exploitation. Have you never even heard of Charles Dickens? Meanwhile you laud it for being better than feudalism. Well, so is dung for dinner. Meanwhile, you dole out this absurd propaganda:
Are you mad? You yourself have stipulated to the existence of robber barons. Or did you suppose they were actual stick-em-up robbers who were just very good at it, like Robin Hood but without the giving to the poor?
I don't think you really understand what it is you're trying to preach. Saying that laissez faire capitalism is better than feudalism is like saying that the pan is a little cooler than the grill.