Capitalism v. ???

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Permalink Reply by David Miller on November 9, 2009 at 4:54pm

Hahaha, that does sound like the perfect book for me!
So you're saying that American Capitalism is kind of like Russian Communism. That it isn't the system so much as it is how the system is warped by corruption?

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Permalink Reply by John D on November 9, 2009 at 5:31pm

The saying goes... the love of money is the root of all evil (this or similar). The basic problem is that we humans can get too greedy. The more that power is collected the more corruption and greed is possible.

Capitalism itself is not the problem. The problem is how the economy is managed, regulated, and adjusted to promote fairness. Free and "pure" capitalism has all kinds of problems with distribution of wealth and fairness.

At the same time, Capitalism is very efficient. Each individual has the best knowledge of how to buy and sell. These individual decisions fuel productivity that is somewhat shared with everyone.

Communism is a great utopian idea... but it works like crap. It is highly ineffiecient, and takes away motivation from individuals.

IMHO - nothing works better than a well regualted capitalistic economy (even though it is far from perfect).

Jacqueline's suggestion sounds good and wiki is not too bad either... http://en.wikipedia.org/wiki/Capitalism

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Permalink Reply by John D on November 9, 2009 at 9:45pm

Ha ha... okay Larry... whatever you say. I am smart enough to not argue with you about this one!

I am interested to know someone who actually claims a central planned communist economy is as efficient as a capatalistic system with local economic decision making. I will ponder your suggestion.

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Permalink Reply by Jason Spicer on November 10, 2009 at 12:51am

I think a fair argument could be made that the economies of Britain, Germany, and the United States in WWII were essentially centrally planned communist arrangements. It's reasonable to think that communism writ large is unlikely to work for extended periods, because people do expect to retain the fruits of their own labors under normal circumstances, but communism certainly has worked in small groups (where everybody knows and trusts each other, and people can choose to leave the commune) and during periods of national emergency where everybody pulls together for an urgent common goal. British, German, and US industry was almost entirely conscripted into the war effort, with people willingly enduring rationing out of patriotism. Captains of industry in each country made lots of money, but they weren't building tanks because the free market demanded them. That had to wait for the SUV craze in the US in the 1990s, and even then, gun turrets were not in vogue.

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Permalink Reply by Jaume on November 10, 2009 at 4:25am

communism certainly has worked in small groups

Absolutely. I know at least a few examples of entrepreneurial communism that still work today, like the fisheries on the Isla de la Natividad (Mexico). Not only did they become richer than their competitors, but they also preserved their halieutic resources thanks to strict policies and quotas everyone agreed on and committed to. It's comforting to see that the 'tragedy of the commons' is not always a fatality.

Now their main problem is to protect their coasts from pillaging from other fishermen who depleted their own fishing areas.

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Permalink Reply by Jason Spicer on November 10, 2009 at 1:47pm

Yeah, the tragedy of the commons doesn't always work out tragically. I think the difference is if the people working the commons think of it as owned by everybody vs owned by nobody. If it's the former, then they all take care of it and frequently discuss shared obligations and rewards and work out issues. If it's the latter, it's just treated as a sewer that empties in some other dimension.

I remember reading somewhere about communal farming and game management in England, and how it all worked out very well until the King said common land was his, not theirs. At that point, poaching took over and it became a zero-sum game. And the modern examples of the ocean and the atmosphere perfectly demonstrate what happens when everybody thinks nobody owns a resource.

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Permalink Reply by Creature on November 9, 2009 at 8:04pm

I'd start looking here. What are these places doing that make their population so much happier? It looks like unemployment has something to do with it. What sort of programs to they have? In the end its not what system we're using, so much as whether or not it has a positive influence on the population.

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Permalink Reply by David Miller on November 10, 2009 at 12:25am

What a terrific article! I thought Forbes just talked about rich people- sweet. Of course half of the US would discount it because it's French and all smart... and stuff. I can't help but think this may have more to do with governence.

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Permalink Reply by Mike Harvison on November 9, 2009 at 9:03pm

In America we have two systems working side by side. Cronyisim for those who can afford to buy a Congress Person, Capitalism for everyone else.

Too many people have been drinking the Ayn Rand cool-aid about the efficiency/wisdom/efficacy of markets. Markets are driven by people, people acting within markets are driven by fear and greed.

Much has been made of the “self correction” of markets. Yes, markets do correct, after they have destroyed themselves. November 23, 2008 Alan Greenspan delivered the Mea Culpa for Ayn Rand's ideas when he stated in effect “My ideology was wrong” http://krugman.blogs.nytimes.com/2008/10/23/let-us-now-praise-alan-... . To bad this simple admission has not gotten more press. Where is the Nietzsche of our day to proclaim “Ayn Rand is Dead”.

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Permalink Reply by Jason Spicer on November 10, 2009 at 12:41am

Yeah, the problem with US capitalism is that the Chicago School of Economics has been adopted as a secondary religion by too many people. The central tenet being that markets are the best possible decision makers, and the less regulated the markets, the better the decisions. Unfortunately, this is bunk, because it assumes equal access to market information, which is simply never attainable, along with perfectly rational market participants, which are as rare as Vulcans here on Earth. Producers always have more market information than consumers, so the system is inherently tilted toward those with more capital. Thus, the rich get richer and the poor get poorer, unless something helps to level the playing field, like, say, government. And emotions are almost always part of any market decision, so rational decisions are less likely. The proof of my twin assertions is as close as the nearest impulse-buy counter at your neighborhood grocery checkout. If the Chicago School had any bearing on reality, impulse-buys would not exist.

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Permalink Reply by David Miller on November 10, 2009 at 12:48am

The whole reason that I've begun to doubt capitalism is exactly the fact that it seems greedy, but then that may be a cultural failing. Am I getting this wrong or is the major strength of capitalism that competition is encouraged in the market and for communism is that the people work towards unified goals? And both are twarted by Cronyism (thanks for the new word Mike H.). But it seems to me that cronyism exists everywhere. Perhaps the question is what works best to counter this?
And Jason, that was very well said and echoes pretty much every negetive thought I've ever had about our system. It is SO frusterating that I can't even read a page of an economics text book without wanting to kill myself. It's not that it's too complicated (which it probably is) it is just so redundant, contradictory, and twisted.
That's right it's like reading religious texts (or law for that matter).

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Permalink Reply by Jaume on November 10, 2009 at 4:51am

I can't even read a page of an economics text book without wanting to kill myself.

That's understandable. Noone today should be allowed to write on economics without degrees in fuzzy logic and chaos theory anyway.

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