• Welcome to the PopMalt Forums! Whether you're new to forums or a veteran, welcome to our humble home on the web! We're a 20-year old forum community with thousands of discussions on entertainment, lifestyle, leisure, and more.

    Our rules are simple. Be nice and don't spam. Registration is free, so what are you waiting for? Join today!.

Capitalism: What It's Really About

ExpectantlyIronic

e̳̳̺͕ͬ̓̑̂ͮͦͣ͒͒h̙ͦ̔͂?̅̂ ̾͗̑
There are so many myths and misunderstandings about capitalism that I have trouble knowing where to begin, but I want to discuss it. I suppose I can start with the most basic concept justifying and underpinning the system: capitalism is not a zero-sum game. Many cling to a cynical belief that there must always be winners and losers in every transaction. Some even call themselves capitalists while extolling this belief. Nonsense. Let me give a basic example of the type of win-win situation that underpins the market:

Bob grows rutabagas. He grows more rutabagas than he can use. Susan grows leeks. She grows more leeks than she can use. So Bob trades his excess rutabagas for Susan's excess leeks. Both benefit. Now Bob has leeks he wanted, and only had to give up unwanted rutabagas. Susan now has rutabagas she wanted, and only had to give up unwanted leeks.

A crude and basic example, sure, but it describes how wealth is created in a capitalistic system. This is economics 101. Capitalism is about cooperation and mutual benefit. In a capitalistic society we rise together and sink together. If Susan cannot grow her leeks, then Bob cannot trade his rutabagas for them, and the excess rutabagas rot: wealth is lost. This fact goes ignored by communists and laissez-faire capitalists alike. The communists say capitalism is about greed and gaining at the loss of another. The laissez-faire capitalists say the success of the many owes to a few, and the rest are simply a burden.

It is true that the greedy and sociopathic often do very well for themselves under a capitalistic system, but mostly by being driven to work with others for the mutual benefit of both parties, where they otherwise might not. It is also true that for the market to function, there must be some disparity, some winners and losers; but not to any great degree, and the market is not aided but hurt when people fall so far they cannot stand up again.

Everyone has the capability to create value and wealth: the capability to be a supplier. There is no "supply side". The laborer creates wealth by selling his time, intellect, know-how, and strength. The entrepreneur does the same. Even a stay-at-home mom or dad creates wealth by raising healthy and productive children. Those with mental and physical disabilities that keep them from working create value by merely by being there for those who care for them. Everyone is a supplier.

I have more to write on this, but no time right now, so I'll leave it at that. Anyways, I suspect this post is long enough already. :)
 

SmilinSilhouette

Registered Member
A defense of capitalism by EI? I didn't expect that! :lol:

As I have told you, I am so glad that you are posting more these days. What you wrote I agree with totally.

I am in sales, I produce nothing. What I do is add value to the process. I am the oil in the machine of productivity. I manage relationships, inform the uninformed, and market our products and services to consumers. In my line of business it MUST be win/win/win. By that I mean I must bring value to my customer. I must help my customer to be more successful, or they will not continue to do business with me. I must help him better serve his customers so that he may be successful and continue to do business with me. I must be effective and sell so that my company and all the people that work there can continue to create, improve, service, and maintain our products. My only success in life is predicated upon learning from others and then teaching others what I have learned. That is the core of capitalism. Just as the master craftsman takes an apprentice in order to increase productivity, he also passes on the skill and knowledge to the next generation. His customers benefit from high quality goods, his apprentice benefits from earning a wage and learning a skill. The craftsman benefits from his years of hard work paying off and providing for his old age.

The idea is that I do not have to take the food off my neighbors table in order to eat, if we all contribute our part then we will make a bigger table to hold the bounty of our combined efforts and everyone will have their fill.

Everyone has value and everyone has their own unique capabilities. Everyone can contribute.
 

CaptainObvious

Embrace the Suck
V.I.P.
This is a very written post, EI, and I agree with it completely. I have always said capitalism is not a zero-sum game and everyone can benefit from it.

Just like an other system there is a danger of some taking advantage of others and I have no problem with a government ensuring this is kept to a minimum, but I agree those that paint it as about greed is incorrect.
 

Sim

Registered Member
Yes, I agree with all you have written. Great posting. I wish I could show that to more people over here in Germany (you might not believe it, but just as American right-wingers drive me crazy, German left-wingers often do the same).

But I'd like to add a few ideas: While you have outlined the strong sides of the market, I still believe there are a few bad side effects. The market is definitely very strong when it comes to efficiency. There is no more efficient system to allocate goods, resources and services, with minimal loss of wealth.

I don't mean classic examples of "market failure", like externalities, information assymetry and so on. Probably you all know what I mean, and probably everybody agrees those are cases where there is a limited role for the government.

But I mean while the market may be great regarding efficiency, it's maybe not very good when it comes to normative considerations as fairness or equality. By no means am I advocating communism or total equality. But I think too much inequality, as markets often create, isn't good either. It's even a genetic trait of humans that most of them tolerate only so much inequality. For example, studies suggest that people find it in order when a responsible, productive person makes 15 times more than a low-skilled worker. But not more. But in a free market, especially a free financial market, you easily get people who make a 100 times as much as a cleaning lady, or even a 1000 times as much. It's probably genetic that people think this is unfair.

Another point is that the market cannot take care of misery. Some people just have less to sell on the market, than they need to make for a living. Think of ill or handicapped, who need a lot of money for treatment, but cannot work, as an extreme example. Low-skilled, unintelligent, elderly, sick and ill cost more than they make. According to market logic, there is no place for them.

That flies in the face of the conviction that every person has a right to live, the right on a life in dignity and that even sick, ill, weak are valuable. The market just reflects how things are, in Darwinistic terms, it does not know any ethical or moral considerations.

That's why I believe that while it's necessary to protect a strong market, that can play out it's greatest strength -- efficiency --, we at least need some corrections for these bad side effects. Of course they should not be too intrusive, and their effect be in a reasonable relation to the loss of efficiency these corrections cause. But I believe the market alone cannot do that.
 

fractal

Eye see what you did ther
Wonderful post. The first thing I've read on the internet that explains Economics in English. Thank god you didn't use jargon like virtually everything about Economics on the net. I look forward to more of your posts. Do you know any good sites where Economics is explained in a way that's easy to understand? Or atleast builds on from the basics to more advanced concepts?
 

PretzelCorps

Registered Member
Fantastic post!

Now, to go on a tangent --> Susan, who happens to be a shrewd negotiator, convinces Bob, who is something of a dullard, that he really really needs her leeks more than his excess rutabagas, so she gets more value out of the deal through negotiation. Winter comes and Bob runs out of vegetables; doom impending, Susan, being no large-scale economist and thinking only of the profits to be had, offers to trade back some of her excess stores for a large portion of Bob's land. Next year, Bob doesn't produce enough to survive on, nevermind trade with; when Susan refuses to help him out, citing the free market and constitutional legality of the matter, Bob loses his mind with rage and burns Susan's crops. Susan and Bob die horrible, horrible deaths.

The real question here being, when all of the power to shape our economy rests in the hands of people who refuse to understand it or respect it's capacity to affect all of our long term interests, how far do we allow free, unregulated capitalism to go?
 
Last edited:

maat

Registered Member
But I mean while the market may be great regarding efficiency, it's maybe not very good when it comes to normative considerations as fairness or equality. By no means am I advocating communism or total equality. But I think too much inequality, as markets often create, isn't good either.
Part of the success of free markets is that it rewards achievement and punishes failure. Motivation is the most important key to prosperity. Anytime attempts are made to equalize outcomes, you have to way the damage done in the process. Motivation is usually the victom of these attempts.

It's even a genetic trait of humans that most of them tolerate only so much inequality. For example, studies suggest that people find it in order when a responsible, productive person makes 15 times more than a low-skilled worker. But not more. But in a free market, especially a free financial market, you easily get people who make a 100 times as much as a cleaning lady, or even a 1000 times as much. It's probably genetic that people think this is unfair.
I'm amazed at when workers are affended by the high pay of CEO's, yet they root their favorite golfer, baseball or football player on despite their high earnings. Tiger gets paid alot by Nike, but it is the CEO who gets critisized.

Another point is that the market cannot take care of misery. Some people just have less to sell on the market, than they need to make for a living. Think of ill or handicapped, who need a lot of money for treatment, but cannot work, as an extreme example. Low-skilled, unintelligent, elderly, sick and ill cost more than they make. According to market logic, there is no place for them.
This is dangerous ground, everyone wants for the unfortunate to have quality of life. But, how do you encourage this without damaging freedoms and motivation? This is where I have faith in free humans and charity.

That flies in the face of the conviction that every person has a right to live, the right on a life in dignity and that even sick, ill, weak are valuable. The market just reflects how things are, in Darwinistic terms, it does not know any ethical or moral considerations.
This is true. This is why freedom needs a moral society. The more a society becomes secular, the more it will impose socialism by a central planner. Is america too secular to be free?

That's why I believe that while it's necessary to protect a strong market, that can play out it's greatest strength -- efficiency --, we at least need some corrections for these bad side effects. Of course they should not be too intrusive, and their effect be in a reasonable relation to the loss of efficiency these corrections cause. But I believe the market alone cannot do that.
IMO, you have to fight harder for freedom and charity as apposed to centrally planned equality. What we have today is the inbetween dying on the vine.
 
Top