Does capitalism work?

[baumgarten]

Hi there, cool skill. I didn't know you were still participating in this discussion. I left you a message on page four.

 

[Dinosaur]

For over 50 years I have been reading articles and reading/listening to opinions relating to capitalism. It has always intrigued me that intelligent well educated people (including a few of my college professors) have strange concepts and incorrect views on many economic issues.

• First: Agricultural based economies prior to the early renaissance were zero sum economies. For those unaware of what this means, a zero sum game is like playing poker. The winner’s gain is somebody else’s loss. The feudal lord in Europe or the maharajah in India essentially took food from those who planted and harvested crops, giving little or nothing in return (except perhaps "protection" from another master who would run the system the same way).
  
  A capitalist economy is not a zero sum game, which is why the average person was so much better off after 100-200 years of a good approximation to laissez faire capitalism. Most anti-capitalists ignore how well off the average person was in the period between 1890 & 1910 without social legislation, government regulation, or strong labor unions. To hear them talk, everybody was down trodden and miserable except for the rabbero barons.
  
  The organizational abilities of the so called robber barons created jobs, goods, and services. Their activities (along with the efforts of workers and financiers) actually created wealth. They did not profit at the expense of the consumer or the worker. Compare the lot of the average person in the era from 1400 to 1700 with the average person in 1800 to 1920, especially those living in the era from 1890 to 1910. The increase in standard of living was due to the efficiency of a capitalist system, not due to the activities of labor unions, government regulation, or social legislation.
  
  Yet many who put capitalism donw describe it as a zero sum economy, although they neither use the term nor understand the meaning of it.
  
  
• The entrepreneur wants to maximize his total profits, not his profit per item. In most circumstances, maximizing the selling price tends to be a poor strategy, although I very often hear those arguing against capitalism claiming that a monopoly would result in exorbitant prices. I have yet to be given evidence of this occurring: It is always a prediction of the high prices that would result if . . . .
  
  
• There has never been the type of monopoly that anti-capitalists talk about, without government legislation creating the monopoly position. In America the Western railroads were the first, having been given a monopoly position because the government wanted to expand westward faster than could be accomplished via privately financed railroads in a competitive environment. Various utilities (telephone, radio & TV broadcasting, & electric power, for example) were given exclusive franchises.
  
  
• Standard Oil under the original John D. Rockefeller is often used as an example of a coercive monopoly. In that era, (prior to the automotive and modern chemical industries), petroleum products were primary used for gas lights, heating, and power generation. Rockefeller had over 90% of the petroleum market (perhaps as much as 95%), but that was only about 40% of the overall market. Wood & coal were serious competitors for heating and steam engine purposes. Rockefeller pretty much gave his customers decent prices & service. He was hard on his competitors, but that is the name of the game. Why should the government worry about companies who do not compete efficiently?
  
  
  
• Company towns and businesses in small towns favored by local politicians were the worst abuses that occurred in the so called robber baron era. These abuses came to an end more due to better transportation and the ability of people to move away from the situations, rather than being ended by labor union activity and government regulation. I always wondered why hypothetical evils due to monopoly positions are often discussed, but hardly anybody is even aware of the factory town situations which actually existed.
  
  
  
  BTW: Some factory towns provided a wonderful environment for workers and those who ran small businesses like grocery stores, tailor shops, et cetera. For example check out the history of Hershey Company & Hershey, Pennsylvania. For an example of a coercive company town, check out Continental Motors Corp, in Muskegon Michigan (this company also ran a reasonable factory in Detroit, where there were other factories offering employment).
  
  
  
• I have contempt for any who claim that a northern factory worker in the 1800-1860 era would trade places with a southern slave. I have heard this claim, but have never seen supporting historical data.
  
  
• Capitalism is primarily based on trading goods and services under terms deemed satisfactory to all participants.

I expect many to make noise about the above issues, but I do not expect anything other than the same nonsense I have heard before.

I await the diatribes and fallacious arguments.

 

[dixonmassey]

I'm not reading that long bullshit right now (sorry).

Seems you've figured out everything so why bother?

But I will comment that efficiency in capitalism does not equate to profit margins.

Profit margins are driving force #1. Again, seems you've figured capitalism out, so please tell me what is efficiency?
Is it maximum output per a) unit labor, b) unit investment, c) unit energy....? Whatever you'll chose, how are you going to incorporate “externalization” costs into efficiency calculations? Or you, as every other economic pundit, are going to ignore those costs? Or, let me guess, you have no clue what is externalization to begin with.

But I will comment that efficiency in capitalism does not equate to profit margins.If that was the case, then you'd be paying $15 for a pack of cigarettes.

That's a PROFOUND thought. I'm kind of perplexed that such a luminary missed that gross sales are a function of at least TWO variables – price per unit and number of the units sold. In their turn, price per unit and number of the units sold are functions of hell knows how many factors. Profit maximization is NOT simple business of jacking up the price. If that would be so simple, top salesmen and marketeers would not be making much, much more $ than the top brain surgeons and rocket scientists combined After all, even a monkey can jack up the price.

Google “profit margin”, looks like you have very vague if any understanding of that concept.

It has to do with production and consumption. If goods are being produced in the least costly way possible and they are being consumed as quickly as they are being produced, then that's efficient production.

One more PROFOUND thought, worthy of Dilbert . Does it mean that high end products are less efficient than cheap junk for the mass consumption? One can make thousand % of profit on high end prestige items, but that would be less efficient that making $ 3/acre of corn, which is immediately consumed by pigs, which are immediately consumed by human whales, which are immediately lipposucted so they can consume lots of pork again. How consumption rate is related to the efficiency of production specifically? What in the hell is efficiency?

 

[dixonmassey]

Capital is the physical manifestation of a surplus.

Is surplus supposed to be some kind of a physical entity, like grain? If so, physical manifestation of the physical entity does sounds a little bit circular. There is nothing physical about gigabytes of 1 and zeros in bank's computers. It's just that those gigabytes can buy physical stuff .

As for me, Capital is some abstract (and overall useless in the wild) concept (like money) or equally useless compounds (like gold and silver). that can be used to buy people's “willingness” to work . Capital is not pile of material things. It would be extremely difficult to pile 70 billions worth of beans, for example. However, Capital can magically make those things to appear.

All material things we enjoy comes from labor, not from Capital, not from surpluses. In the absence of Capital, most people are extremely obsessed with the question, “will somebody benefit from my labor more than I'll get back?” Capital is like a cross-bred between whip and carrot, forcing/encouraging people to work without questioning who'll benefit more.

Accrued capital is perceived like some kind of external, dispassionate measure of one's right to the certain share of products of labor. Needless to say that such a perception is a result of the cultural indoctrination for hundreds of generations. It's kind of like self-fulfilling prophecy, we don't now any better, as a person born&grown in a dungeon knows nothing about sun. People have face in capital. Capital is nothing but faith. In the dire circumstances, when the physical survival in at the stake, faith in abstract Capital usually evaporates. Capital transforms into a loaf of dry bread, for example.

 

[dixonmassey]

A surplus is the product of division of labor and economies of scale, which accrued to humans first by settling in permanent villages where a surplus could be stored,

Hunter gatherers are perfectly capable of accumulating surplus of skins, dried meat, grain, etc. People settled in villages because hunters gatherers managed to narrow down the area needed to support them through primitive agriculture, domestication, etc (some hunters were more specialized on domestication than the others). My guess is that first villages were something like military bases to control territory. There was not much of surpluses to guard at first. North American Indian villages were definitely not the places to accumulate surplus and engage into division of labor.

and later by enlarging those villages so that people with special skills that enriched the community and increased the surplus could work at them full-time.

That's nice fitting in of primitive societies into the modern capitalist dogma and wordage . However, I don't think they are correct.

First, the amount of surplus needed to support full time specialized craftsmen should be quite substantial. The amount of surplus each village family could accumulate was quite low( even in the bountiful areas). Famine was frequent guest to the European villages way into the capitalist age with all its specialization, industrialization and scientific progress. Most of village smiths, potters, etc. are /were also part time villagers growing their own food. In poorer societies like medieval Russia, some crafts (like masonry) could not be supported (voluntarily) by locals, period. Not enough of stuff to spare. Heavy hand of the government encouraged peasantry to find reserves.

I doubt that 10,000 years ago there have been village thinkers saying something like this, “if only we could consume enough of potter's pots, so he could quit farming, that would be a first stepping stone to a plasma TV, survivor and a plate full of Frankenstein foods.”

Second, what was a stimulus for a primitive potter to produce more clay pots than that satisfying his needs? What he's going to do with all that extra meat/grain he'll get? Deposit In the Chase Manhattan ? Loan to less fortunate villagers to get even more meat and grain in the future? Hire apprentices and grow a business so that he can get even more meat/grain in the future? At those primitive times having bigger herd of something could not be easily transformed into political power, social status, etc.

Inadvertently, you transpose the urges of the capitalist elites (systematic accumulation of capital through organized exploitation of labor) onto primitive societies. Primitive elites didn't give a flying jack for that. They were more into plunder, tribute, gold. Life of the primitive villagers was more filled with survival (and rare contentment) than accumulation.

 

[dixonmassey]

For over 50 years I have been reading articles and reading/listening to opinions relating to capitalism. It has always intrigued me that intelligent well educated people (including a few of my college professors) have strange concepts and incorrect views on many economic issues.

Nice piece of apologetics. The picture you've created is so perfect, it's almost as good as paradise. Which makes me wonder, if it's you, not professors, missed something.

 

[baumgarten]

And what is that theory if not secret? Marx's capital? Russian state-mafia medley of capitalism with rudements of the late socialist economy is described by the same misterious theory as Japanese corporatism? I greatly doubt that. Devil is in details.

What are you on about? If you want to know the theory, read a textbook. Take a class. It's not only public, it's science. I feel like I'm talking to cool skill now.

I do see connection between lower quality and freer trade, do you?

No. The shirt I'm wearing was made overseas, and for the price it's of amazingly good quality. A similar quality shirt made in America would cost much more.

Low quality products are prevalent because there's a lot of demand for them, not because "free trade lol!" The latter reason doesn't even make sense.

I repeat, capitalists are in business of making profit margin as large as possible. Things on the list may or may NOT improve profit margins. The production itself may become in a way of the larger profit margins . That's why, novadays, bulk of the "wealth" is created by means of financial speculations. No need for money - stuff - money sequence. Stupid Marx. Money can make money directly.

You mean financial transactions? A substantial number of people want that sort of thing. They're there because there's a market for them. Market economy. Get it?

Financial transactions are not considered a part of production, however. There is still plenty of production in the world.

Usually, tariffs were correlated with domestic availability. Secondly, capitalists are not identical clones, they have different intere$t$. Some of them would be benefited by higher tariffs on item X, the others by lower one. There was constant scrabble about it.

However, you live in the soon to be deindustrialized country. Most of the stuff is made elsewhere. Naturally, if everything is made elsewhere, and there is neither will nor desire to create something locally, tariffs are in the way of the Wal-Mart style businesses.

All right, let me put it this way. An individual business in a specific situation may find benefit in a tariff. But in general - from a macroeconomic perspective - tariffs reduce overall output by discouraging trade. Less trade means more diversity of domestic production, and that means less opportunity for a country to specialize in the areas of production in which it is most efficient.

The rumors about "comparative advantage" are greatly exaggerated to serve as crack troops in a corporate pro globalization propaganda war. As a matter of fact, there are not that many products enjoying permanent comparative advantage. Banana, oranges, rubber, oil... mostly foodstuff and mineral resources. Every other "comparative advantage" is largerly an artificially created/imaginary/ and volatile concept. What does Germany make that USA can't make equally efficiently?

Germany, eh? Convenient example. What does China make that the USA can't make equally efficiently? Almost everything.

Today, a manufacturer can move plants abroad and "import" goods back. All what is left inside are domestic services, which have zero value on the international market. However, miraculuously, Western countries manage to trade "domestic" services of majority of population for the real, physical goods brought from abroad.

They use a bleeding-edge miracle technology called currency to make this possible.

Seems you've figured out everything so why bother?

Right back atcha, buddy.

 

[Roman]

A capitalist economy is not a zero sum game, which is why the average person was so much better off after 100-200 years of a good approximation to laissez faire capitalism. Most anti-capitalists ignore how well off the average person was in the period between 1890 & 1910 without social legislation, government regulation, or strong labor unions. To hear them talk, everybody was down trodden and miserable except for the rabbero barons.

The organizational abilities of the so called robber barons created jobs, goods, and services. Their activities (along with the efforts of workers and financiers) actually created wealth. They did not profit at the expense of the consumer or the worker. Compare the lot of the average person in the era from 1400 to 1700 with the average person in 1800 to 1920, especially those living in the era from 1890 to 1910. The increase in standard of living was due to the efficiency of a capitalist system, not due to the activities of labor unions, government regulation, or social legislation.

You aren't accounting for technological development at all. Factories allowed greater production, not just capitalism. Standards of living went up because more could be gleaned from less, and medicine became a real science.

Just comparing GDP can be misleading. For instance, a middle income person is infinitely richer than all the Rockefellers combined when it comes to, say, curing his cancer with todays technology than having 19th century quacks operate on you.

 

[dixonmassey]

What are you on about? If you want to know the theory, read a textbook. Take a class. It's not only public, it's science. I feel like I'm talking to cool skill now.

What theory shall I learn? Supply side, Keynesian, neoclassical, classical, marxist? Could they be all correct at the same time, the same place, the same circumstances? The truth is - economics theories are servants of the dominant ideology. They are called by the mighty ones to legitimate their policies. The same way as Zeus was called by the Ancient to bless/legitimate something.

No. The shirt I'm wearing was made overseas, and for the price it's of amazingly good quality.

Everything you are wearing is made overseas. You see, I was talking about quality not quality/price ratio. Thus, "for the price" does not apply.

A similar quality shirt made in America would cost much more.

How much more exactly? Have you noticed the smallest drop in jeans prices after the last three North American plants were closed two or so years ago? Plants are shipped out not to provide you with cheaper goods, but to hike up the bottomline. Shirt which costs $4 to produce is sold for $20, and you are pissing hot because it could cost you $25 had it been made locally. Had it been made locally, it would have cost $20 to produce. That $20 to produce would have diffused into local economies and pockets. $4 to produce overseas means that $16 were settled down in the few pockets. $5/shirt pacifier should not turn off the common sense of the so called consumers. After all the people who've boosted their profits from $5/shirt to $16/shirt need just that many gardeners, lackeys and prostitutes.

Low quality products are prevalent because there's a lot of demand for them, not because "free trade lol!" The latter reason doesn't even make sense.

Lot's of stuff doesn't make sense to me. However, certain level of humility allows me not to equate "making sense to me" with "making sense at all". Try it.

Given a choice between BMW and Ford Escort what would you choose? Have it occured to you that the choice of the raman noodles for dinner instead of caviar sandwich is somehow correlated with one's income?

 

[dixonmassey]

First: Agricultural based economies prior to the early renaissance were zero sum economies. For those unaware of what this means, a zero sum game is like playing poker. The winner’s gain is somebody else’s loss. The feudal lord in Europe or the maharajah in India essentially took food from those who planted and harvested crops, giving little or nothing in return (except perhaps "protection" from another master who would run the system the same way).

Yup all that agriculture, literacy, arithmetics, domestication, administration, architecture, greek philosophy, roman law, wheels, plows, .... were just byproducts of the zero sum agricultural economies. Then capitalism has come to deliver all us from the darkness and lead us to the infinity and beyond. What have early capitalists given in return to the slum dwellers slaving for them, a bowl of swill? What do "investors" give in return to the working people? Generous permission to work? So did feudal lords. How % on investment is different from chief-rent feudal lords charged serves?

Not much has changed, it's just that feudal lords were substituted with its highness Capital (more exactly with its holders).

 

[lixluke]

No, no - it's not that your point isn't valid because you don't know what you're talking about. It's that you don't know what you're talking about because you're wrong. See? That makes much more sense

This is not what you specified before.
The truth is that anybody who puts the most infintesimile relevance to the status of the person making the statement is a blithering fool of a clown. 1000% relevance should be directed towards the statement with no relevance whatsoever to the person making the statement.

 

[lixluke]

Well, you never actually tell us what economic dysfunction is.

Yes I do. I clearly explained how to measure dysfunction.

You do the same thing for "desperation."

Yes I do. I clearly explain what desperation is.

 

[lixluke]

For over 50 years I have been reading articles and reading/listening to opinions relating to capitalism. It has always intrigued me that intelligent well educated people (including a few of my college professors) have strange concepts and incorrect views on many economic issues.

• First: Agricultural based economies prior to the early renaissance were zero sum economies. For those unaware of what this means, a zero sum game is like playing poker. The winner’s gain is somebody else’s loss. The feudal lord in Europe or the maharajah in India essentially took food from those who planted and harvested crops, giving little or nothing in return (except perhaps "protection" from another master who would run the system the same way).
  
  A capitalist economy is not a zero sum game, which is why the average person was so much better off after 100-200 years of a good approximation to laissez faire capitalism. Most anti-capitalists ignore how well off the average person was in the period between 1890 & 1910 without social legislation, government regulation, or strong labor unions. To hear them talk, everybody was down trodden and miserable except for the rabbero barons.
  
  The organizational abilities of the so called robber barons created jobs, goods, and services. Their activities (along with the efforts of workers and financiers) actually created wealth. They did not profit at the expense of the consumer or the worker. Compare the lot of the average person in the era from 1400 to 1700 with the average person in 1800 to 1920, especially those living in the era from 1890 to 1910. The increase in standard of living was due to the efficiency of a capitalist system, not due to the activities of labor unions, government regulation, or social legislation.
  
  Yet many who put capitalism donw describe it as a zero sum economy, although they neither use the term nor understand the meaning of it.
  
  
• The entrepreneur wants to maximize his total profits, not his profit per item. In most circumstances, maximizing the selling price tends to be a poor strategy, although I very often hear those arguing against capitalism claiming that a monopoly would result in exorbitant prices. I have yet to be given evidence of this occurring: It is always a prediction of the high prices that would result if . . . .
  
  
• There has never been the type of monopoly that anti-capitalists talk about, without government legislation creating the monopoly position. In America the Western railroads were the first, having been given a monopoly position because the government wanted to expand westward faster than could be accomplished via privately financed railroads in a competitive environment. Various utilities (telephone, radio & TV broadcasting, & electric power, for example) were given exclusive franchises.
  
  
• Standard Oil under the original John D. Rockefeller is often used as an example of a coercive monopoly. In that era, (prior to the automotive and modern chemical industries), petroleum products were primary used for gas lights, heating, and power generation. Rockefeller had over 90% of the petroleum market (perhaps as much as 95%), but that was only about 40% of the overall market. Wood & coal were serious competitors for heating and steam engine purposes. Rockefeller pretty much gave his customers decent prices & service. He was hard on his competitors, but that is the name of the game. Why should the government worry about companies who do not compete efficiently?
  
  
  
• Company towns and businesses in small towns favored by local politicians were the worst abuses that occurred in the so called robber baron era. These abuses came to an end more due to better transportation and the ability of people to move away from the situations, rather than being ended by labor union activity and government regulation. I always wondered why hypothetical evils due to monopoly positions are often discussed, but hardly anybody is even aware of the factory town situations which actually existed.
  
  
  
  BTW: Some factory towns provided a wonderful environment for workers and those who ran small businesses like grocery stores, tailor shops, et cetera. For example check out the history of Hershey Company & Hershey, Pennsylvania. For an example of a coercive company town, check out Continental Motors Corp, in Muskegon Michigan (this company also ran a reasonable factory in Detroit, where there were other factories offering employment).
  
  
  
• I have contempt for any who claim that a northern factory worker in the 1800-1860 era would trade places with a southern slave. I have heard this claim, but have never seen supporting historical data.
  
  
• Capitalism is primarily based on trading goods and services under terms deemed satisfactory to all participants.

I expect many to make noise about the above issues, but I do not expect anything other than the same nonsense I have heard before.

I await the diatribes and fallacious arguments.

It is a zero sum game. Slavery, Massacre of Indians for land, and capitalism. They all create a situation in which the rich live off the labor of the poor. Modern economics is based on the scarcity fallacy.

 

[baumgarten]

Yes I do. I clearly explained how to measure dysfunction.


Yes I do. I clearly explain what desperation is.

Point me to where. Saying it is true doesn't make it true.

 

[lixluke]

No kidding. I never said saying something is true makes it true.
Truth exist whether anybody says it or is aware of it or not.

 

[baumgarten]

Well, you said you clearly showed how desperation and dysfunction can be measured. Where? Or at least give me a summary.

 

[lixluke]

Show me where I sais saying something is true makes it true.


In a community of people such as the community of earth, there is organization under institution. The purpose of institution is to serve the individual. The functionality of a community is a range from 0 to perfect. Perfect is a society which fully accomodates the individual.

A community moving steadily towards the "perfect ideal" is practical/functional. A community with no interest in this movement is impractical/disfunctional. A comminity is only functional because it is intentionally moving in the practical direction.

Desperation is a state of lack. It is not a mind state. Every individual no matter the location on the planet is in need of various necessities. This planet contains resources far more abundant that humanity could ever consume in many lifetimes. Furthermore, over centuries, these resources regenerate themselves. Every moment new resources are springing to fruitation while other resources are being used. The planet is a giant vat of abundance and virtually unlimited resources.

Disillusional idiology is the idioligy of scarcity. It is a false idiology. This idiology is the basis of the disillusional paradigm of economics. The truth is not based on scarcity, but based on abundance. The disillusional paradigm, and any economic system based on this paradigm such as capitalism leads to the destruction of the individual as well as the destruction of environmental abundance and regeneration capabilities. Paradigms of scarcity include false paradigms of human nature, and other regurgitated fallacies that stupid people use to defend their disfunctional institution like crabs.

Global warming, for example, is no different from the human body heating up when it is ill.

The basis of a functional institution is the prosperity of the individual. The basis of a disfunctional institution is the destruction of the individual. Desperation is a very important tool in a disfunctional community.

The story of the crab is that in wich the crab enters a trap. Many crabs are in a trap with a hole on top for easy escape. When an intelligent crab starts climbing towards the escape hole, remaining crabs grab hold of him, and pull him down. Sometimes tearing off his limbs or murdering him.

 

[baumgarten]

In a community of people such as the community of earth, there is organization under institution. The purpose of institution is to serve the individual. The functionality of a community is a range from 0 to perfect. Perfect is a society which fully accomodates the individual.

That scale is meaningless as it is. What units graduate the scale? How do they relate to other units? You said it can be measured; I assume there are certain empirical data I should be looking for in the real world which can quantifiably indicate the functionality of society.

You didn't specify which individual, either. What if only one individual is accommodated? Is society then functional, or must all individuals be accommodated? What constitutes accommodation?

Desperation is a state of lack. It is not a mind state. Every individual no matter the location on the planet is in need of various necessities. This planet contains resources far more abundant that humanity could ever consume in many lifetimes. Furthermore, over centuries, these resources regenerate themselves. Every moment new resources are springing to fruitation while other resources are being used. The planet is a giant vat of abundance and virtually unlimited resources.

One of the assumptions we make in economics is that people have unlimited wants. For all intents and purposes, this is true; you cannot dictate to another person what he does and doesn't desire. Thus there is an unavoidable, constant state of lack.

If you mean to say that there is a lack of necessary goods in desperation, then who decides what is necessary? If not the individual in need, then why not?

Disillusional idiology is the idioligy of scarcity. It is a false idiology. This idiology is the basis of the disillusional paradigm of economics. The truth is not based on scarcity, but based on abundance. The disillusional paradigm, and any economic system based on this paradigm such as capitalism leads to the destruction of the individual as well as the destruction of environmental abundance and regeneration capabilities. Paradigms of scarcity include false paradigms of human nature, and other regurgitated fallacies that stupid people use to defend their disfunctional institution like crabs.

I agree, the paradigm of economics is disillusional.

In earlier times, when trade was less common and most of society's production was domestic, scarcity was a real problem. We were surrounded by plentiful natural resources, but the amount of resources actually available for exploitation was quite scarce. The population of a society was rather low, and with the technology of the times, resources could only be tapped at a certain rate. These societies therefore didn't produce very much, and despite a seeming infinite bounty around them, famine was a constant threat.

Populations eventually grew, and technology advanced. More people than ever before were able to harvest food and build shelter with unprecedented productivity. In particularly lush areas, this led to an explosion of population. Cities were built, and from these grew the first great civilizations. But even in these prosperous times of plows and irrigation, there were only so many farmers, and natural resources were used at a finite rate. A meager harvest was still cause for concern, and from time to time starvation again reared its ugly head.

Today is an age of global trade. The rate at which we plunder the fruits of the earth is phenomenal. An entire region of the world can devote itself to one field of production; its inhabitants can get everything else they need from the other side of the world. In total, we currently produce more than enough to feed every living human being on the planet; and although there is still famine, the quality of life in areas where there is none is higher than it has ever been. The key to every single one of these areas is that it engages in the global production cycle that has become of civilization. It is this process that has caused the great surplus in our society. We have it to thank for our comfortable, excessive lifestyle.

Many places are not so fortunate. They are relatively cut off from the rest of the world, and with few trading partners, they must depend mostly on themselves. Some, like the societies of old, are able to be self-sufficient. Others live in areas that are simply incapable of accommodating populations that are truly massive in comparison to those that inhabited the world when such isolated ways of living were the norm. Here famine is terrible. Someone living under these conditions would trade his first born for the opportunity to have the lifestyle of the poorest of Americans.

Unfortunately, Americans have their own troubles coming. The world population only grows, and current rates of production may not be able to grow with it. This planet is only able to support about ten billion humans at the same time, and not for long. Scarcity is the middle name of the twenty-first century and beyond. Countries will literally go to war over farmland. Populations will migrate en masse to escape the violence and hunger of the most densely populated regions. Hardly just a "fever," if global warming melts the ice caps and the sea comes up to swallow our coastal civilization, it will only exacerbate the situation.

In today's world, abundance is the illusion.

 

[baumgarten]

What theory shall I learn? Supply side, Keynesian, neoclassical, classical, marxist? Could they be all correct at the same time, the same place, the same circumstances? The truth is - economics theories are servants of the dominant ideology. They are called by the mighty ones to legitimate their policies. The same way as Zeus was called by the Ancient to bless/legitimate something.

You're right. All theory is nothing more than sophistry. None of it works. The economy is magical.

Everything you are wearing is made overseas. You see, I was talking about quality not quality/price ratio. Thus, "for the price" does not apply.

If I can actually afford the shirt now that it's cheaper because it was made overseas, that's an increase in quality. Price has everything to do with it.

How much more exactly? Have you noticed the smallest drop in jeans prices after the last three North American plants were closed two or so years ago? Plants are shipped out not to provide you with cheaper goods, but to hike up the bottomline. Shirt which costs $4 to produce is sold for $20, and you are pissing hot because it could cost you $25 had it been made locally. Had it been made locally, it would have cost $20 to produce. That $20 to produce would have diffused into local economies and pockets. $4 to produce overseas means that $16 were settled down in the few pockets. $5/shirt pacifier should not turn off the common sense of the so called consumers. After all the people who've boosted their profits from $5/shirt to $16/shirt need just that many gardeners, lackeys and prostitutes.

Good for them if they can get away with it (again you're moralizing the economics), but businesses that put too much income into profit aren't competitive. They usually invest most of it in capital so they can expand the business and produce more shirts for less. In two years, I'm buying a better quality shirt for $15, or the same quality shirt for $10. The American company only had $5 to split between profit and capital, so I'm paying about the same for their shirts.

Lot's of stuff doesn't make sense to me. However, certain level of humility allows me not to equate "making sense to me" with "making sense at all". Try it.

Where is your humility now? Forget the sanctimonious lectures. Let's discuss the topic.

Given a choice between BMW and Ford Escort what would you choose? Have it occured to you that the choice of the raman noodles for dinner instead of caviar sandwich is somehow correlated with one's income?

Supply and demand. What about it?

 

[baumgarten]

Does it mean that high end products are less efficient than cheap junk for the mass consumption? One can make thousand % of profit on high end prestige items, but that would be less efficient that making $ 3/acre of corn, which is immediately consumed by pigs, which are immediately consumed by human whales, which are immediately lipposucted so they can consume lots of pork again. How consumption rate is related to the efficiency of production specifically? What in the hell is efficiency?

Sorry. I missed this comment before.

It doesn't mean that high end products are inefficient. You are making the mistake of considering a high-quality product and a low-quality substitute product as the same, but there are separate demands for each of them. It would be "inefficient," in this perspective, to only produce the lower-end item because a demand for a better quality such-and-such is not being filled.

I think your primary fault in this whole discussion is your preconceived notion that capitalism is one guy going, "How can I screw over everyone else the most completely?" People are greedy; so what? Capitalism accommodates greed, and if that is your issue - that you don't believe a political system should encourage greed - then just say so. I would agree with you rather than argue.