General Question

lloydbird's avatar

Capitalism operates in an essentially competetive field,the winner wins - the loser loses.Does anyone know of any better ways, or is this it?

Asked by lloydbird (8735points) June 24th, 2009

Just gettin by.

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40 Answers

peyton_farquhar's avatar

What could be better than survival of the fittest?

whitenoise's avatar

With total capitalism (free market ecomics) the sole guideline is money as a coordinating mechanism. That will by design lead to suboptimal equilibria, since many effects of production and consumption do not translate into pricing in the free market.

I would prefer guided free market situations such as we see them now more and more, for instance in Europe Economic Zone.

In this situation, the principal guideline is free market economics, but the government plays an active role in pricing negative external effects of consumption/production through targeted taxation.

On top governments should through taxation redistribute means to certain unsought for products, such as roads, care for the needy, and health insurance.

I also see a great role for having governments regulate and inspect big institutions that would otherwise spinb out of control such as banks and electricity plants.

So, the hybrid model we have in Europe seems to me a better, be it not yet optimal alternative.

whitenoise's avatar

@peyton_farquhar You do not truly believe that statement, right?

Survival of the fittest is a very poor guideline to live by on an individual level. It is what drives evolution and has shaped our species.

On a historic, nihilist scale, it may seem a good system. Living by it as an individual is denying your human nature. You’re a social animal. Social Darwinism is scary.

ragingloli's avatar

The social market.
Restrictions and regulations protect the weaker participants of the economy, create stability and lead to innovations and improved products, like energy saving light bulbs, cleaner, more economic engines, etc.

mammal's avatar

@peyton_farquhar esprit de corp, a team ethic, a higher sense of moral duty, humanitarianism, a categorical imperative etc etc etc etc

WhatEvil's avatar

Capitalist markets operate with a degree of freedom. As @whitenoise said, the government plays an active role in making sure that things which could potentially be harmful to the economy don’t happen. As an example, the merging of 2 large companies could create a monopoly on certain product/industry which would mean that they would be free to hold the market to ransom, charge what they want, push small businesses under, etc. which would be bad for everybody except those who own the monopoly.

Strictly speaking communism would be a better model, if only it worked in practice. Communism should promote equality, common ownership and a classless society, but in reality leads to corruption, and the population as a whole becoming deprived of freedom, or starved, or worse.

There is also the problem that even if communism were properly implemented, what incentive is there for people to rise above and put the effort into inventing novel, useful ideas, or going through the hardship of starting a business. If you put more effort in than anybody else, you’d get no special reward. Your efforts go to help the general populace, but this is small motivation when there’s phenominal effort involved in something like developing life-saving pharmaceuticals or medical techniques, or designing a jet engine, or something of the like. Why bother when you get just as much food, shelter etc. as somebody who works as a street sweeper?

It would be nice if everybody worked to further their nation, or humanity as a whole just for the sake of making life better, but ultimately we are selfish creatures. The fact that you’re reading this now means that your ancestors were selfish enough, in some way or another, to ensure that your genetic line was continued. This selfishness is to some extent what drives people to start business, and invest time in inventing and devloping things which then go on to make life better for everybody, since if you make a product everybody wants or needs, there’s a direct reward.

It would be nice, I suppose, if everybody could “win”, but in reality life isn’t like that, and why should it be? Why should somebody who is jobless through lazyness live with the same means as somebody who works 70 hours a week running their own business and keeping 20 other people employed? The answer is that in truth, they shouldn’t.

Let’s go back to my example of pharmaceutical companies. They charge a lot of money for certain drugs, which makes the owners of the companies very rich, but it also means that they can then put lots of money into research of new drugs, which they’re driven to do because new, better drugs means more profit in the future. This benefits everybody because obviously better drugs means better health for everybody (broadly speaking).

Capitalism may not be perfect, but I’ve yet to hear of any better ideas, and there’s certainly a reason why capitalist countries are the leading superpowers in the world, and why generally the standard of living in capitalist countries is better than countries with different economic models.

ragingloli's avatar

@WhatEvil “what incentive is there for people to rise above and put the effort into inventing novel, useful ideas”
fame, general recognition, the pleasant feeling of achievement when exceeding your own limitations, enriching and bettering yourself and your society.
I don’t think that there are many scientists who strive to excel in their field simply because of money.
I don’t think that there are many artists who strive to be one the best because they can sell their works for a lot of money.
I think for most of them, that is just a pleasant side effect.

WhatEvil's avatar

@ragingloli I realise that there are other incentives, but broadly speaking these aren’t enough. You’re right that most scientists don’t do what they do for money, but their research is generally funded by people who do. Again, artists may not care about the money, but they still need to make enough money to survive. This actually brings up another problem with communism. What if the communist government doesn’t deem art to be important? Surely it’s not beyond the realms of imagination to think of a communist government who would think that all of the artists in the country would be helping everybody out more by farming, or manufacturing, or building houses.

ragingloli's avatar

telling others to do their best usually does not take much effort and thus not much incentive to do.
You say that non-monetary incentives are not enough, but at the same time you admit that for scientist, they are enough.
It is true that survival and maybe an adequate/good standard of living is a primary concern, but once you have achieved that, monetary concerns become secondary for someone who really loves their profession.
A last point, even in the failed attempts at pseudo-communism, the ruling regimes recognized the need for artists and entertainers for the well-being of their population, thus they existed.

WhatEvil's avatar

@ragingloli Telling others to do their best doesn’t take much effort, for the people you’ve told, it probably does take a lot of effort to do their best. I said “broadly speaking” non-monetary incentives are not enough, and you’ve completely ignored my point about scientific research being mostly funded by people who are driven by monetary gains.

How many people do you think really, thoroughly love their jobs?
Communist goverments may have recognised the importance of art, but my point is again, a broader one, that if you have a government who decides what’s best, you inherently lose some freedom. In a capitalist society you have the freedom to pursue what you’d like to do. That’s not a guarantee that your venture, chosen profession, etc. will be successful, but you have the right to try, and that’s the difference.

ragingloli's avatar

“scientific research being mostly funded by people who are driven by monetary gains”
In a capitalist society, yes.
In a communist society, they would be funded by the public. As you know, the Soviets were the first to put an object into orbit, the first to put a human into space and the first to have a space station.
Scientifically and technologically, they were on par with the capitalist west.
Apparently they didn’t lack motivation for all this.

WhatEvil's avatar

@ragingloli Sure, the Russians were the first to put a man into space, but this was at the expense of the living conditions of the populace. Read this and then come back to me with a persuasive argument:

I’d like you to pay particular attention to this line: Finally, malaise had firmly taken root among the Soviet people, resulting in lax conditions, shoddy standards and general disinterest in doing real work for real results.

I haven’t denied that there are some benefits to a communist state if it’s done correctly (the article I’ve linked above states that in Cold War era USSR hunger and homelessness were virtually unknown, in fact), but overall capitalism just works better, for all of the reasons I’ve already outlined.

ragingloli's avatar

That is certainly true.
But it was not really my intention to claim that communism in its attempted form would somehow be perfect.
My point was to show that it does not necessarily require monetary incentives to make someone excel in their field.
Sure capitalism works better in some areas, but it also fails miserably in others, such as hunger and homelessness.

lloydbird's avatar

@ragingloli @WhatEvil So is it a two horse race?

whitenoise's avatar

Capitalism is a point of view that is not necessarily the same as free market economics. It also puts a relatively high value on ownership of production assets versus that of labour and societal capital.

I know of no successful country in the world that fully sticks to capitalist free market principles as the sole way of market alignment. There are just too many things that free markets do not address by nature, as is clearly illustrated in the discussions above.

There is another more “ethical” view on the capitalistic ideology as well. I strongly doubt that ownership of production factors should necessarily be more valued than contribution through labour. I personally feel very sad when I see people contribute their lives to an employer to just be fired in times of economic downturn. The same holds true for natural resources that are being used by the producers and that are owned by society, or rather the world.

Many European countries and American states recognize this dilemma as well and have put regulations in place. Firing people isn’t that easy and taxation redistributes wealth accumulation. Just as, for instance, anti pollution laws are in place.

I am saying that there are many better alternatives to pure capitalism and they can be observed all around you in Europe, Asia-Pacific and The Americas. Pure capitalism is just as big a failure as the planned economies of the communists were.

whitenoise's avatar

Are you aware there is research available that shows intrinsic motivation may be hurt by being paid? A group of students were invited to participate in test sessions. In the waiting room there were various puzzle games available. A hidden observation team measured the time spent at playing these games.

Consequently the students were subjected to a ‘test session’ in which a part of the group was offered money to solve puzzles that highly resembled the games in the waiting room, while the control group did the same but was not paid.
After returning to the waiting room, students that had been paid stopped playing the puzzles in the waiting room, or played significantly less.

ragingloli's avatar

I was not aware of such research, no. But interesting to know.

Blondesjon's avatar

Money is based on an idea of worth. This means any economic system, that is currency based, is also based on nothing more than an idea.

This is the same logic that we base religion, Santa Claus, and celebrity on.

I can think of no better way to fool ourselves.

walterallenhaxton's avatar

There are no better ways but you only have it half right. The looser only looses the job. He also is paid. He learns one more way that does not work for him. It is all about discovering the way that does work. It could be as simple and going to work for the winner. After all. He has won and needs help to keep winning and who knows more about the business than you do.

You see it is really not that abstract. It is all about people and how they trade with each other when they are free to do so.

walterallenhaxton's avatar

@Blondesjon Without the human mind we would have no humans. You take away the idea you take away life.

walterallenhaxton's avatar

@whitenoise Tell a trucker that before you dispatch him. Don’t hold your breath waiting for the freight to arrive.

Blondesjon's avatar

@walterallenhaxton . . .I don’t have to belive that I am alive to be alive.

walterallenhaxton's avatar

@whitenoise There is no such thing as a natural resource. Resources are a combination of natural stuff and the labor/capital that has been used to develop them. All resources are somebodies property.
Raw stuff is stuff that has not entered into the economic equation. So you are mixing categories when you assume that some ore or plant that nobody has done anything with and probably knows nothing about is some kind of economic resource.
Economics is the science of human action with the world and with humans. A pure gold asteroid traveling around Neptune is not a resource neither is one in your backyard that you don’t know about.

The argument about natural resources is the one used by governments to steal other peoples property when they find out that it exists in an aria that they control.

walterallenhaxton's avatar

@WhatEvil They would have a pricing problem with such a monopoly. If you are the only player in a market you can’t price your product correctly. You find yourself always making either too much of the product to sell or too little. You have to shut down production or you have everybody looking for and creating substitute products.

Only commodities can be monopolized that way and even if they are, undiscovered commodities can be found that are outside of the monopoly because it doesn’t know about them. Money will come in from the capital market to exploit them when discovered and the monopoly goes away. Of course without property rights that are rigoriously enforced it won’t work that way.

First to have a monopoly on the product they would need to have government to force other people from making it or they would have to make it so good that there would be no problem with there being a monopoly. Does Apple have such a monopoly on the Ipod? There doesn’t seem to be a problem with there not being competing products.
The government creates monopolies all of the time and spends a lot of time discovering competing products and seeing that they are not sold.
That is about the one thing that government is good at. Shutting down production.

ragingloli's avatar

“Does Apple have such a monopoly on the Ipod?”
No, they don’t. There is competition. Archos, Creative Labs, e.Digital, Philips, and RCA

Does Microsoft have a monopoly in the pc market?
Kind of. Apple is to expensive, Linux is too complicated. The result is that the vast majority of private and corporate Computers are run with windows.
Does the quality suffer from the monopoly? definitely.

“First to have a monopoly on the product they would need to have government to force other people from making it or they would have to make it so good that there would be no problem with there being a monopoly”
or they buy out the competition
or they form cartels with the competition

“The government creates monopolies all of the time and spends a lot of time discovering competing products and seeing that they are not sold.”
The EU recently placed another fine on Microsoft for MS’s anticompetitive policies.
Most governments have institutions that work to prevent corporations from forming cartels or buying out competition when that would compromise a competitive market.

So the opposite is the case. The government works to enable competitive products to have a chance against the big players.

mass_pike4's avatar

Capitalism, yes. Socialism, no. Democratic Socialism, no. Communism, no.

Less govt. control please. Let the people do most the work. It is why we are so great. The creative minds are what lead the way and made this country so great. Capitalism ftw. More govt. = more choas. And thank you to everyone for not bringing up past presidents and/or current.

walterallenhaxton's avatar

@ragingloli It doesn’t in my country or in my state or town. There are thousands of restrictions against competition. My house was condemned for the last 8 months because the government had legislated away so much of the competition there was no way to raise enough money to fix it.
I don’t know what country you live in but it might be worth my while to move there.

mammal's avatar

@mass_pike4 put the girls down…switch off the news network, stop living off mommy and daddy, do a little hard work with ordinary hardworking folks for minimum wage and if you’re not too tired in the evenings read a book of some intellectual merit, do a little travelling preferably outside USA and try to formulate an opinion that stands up to scrutiny from your betters.

jackfright's avatar

i see capitalism as the lesser evil.
so no, i dont see a better alternative currently.

whitenoise's avatar

LOL I don’t hold my breath for anything on american trucks to arrive, anyway. That is…. undamaged.

Anyways… I see capitalism is your religion. You remind me of my grandfather, he was the same way. He was a fantastic person, nevertheless. ;-)

walterallenhaxton's avatar

@whitenoise I prefer living at my own expense to stealing from others.

ragingloli's avatar

then I suggest you stop using public roads, highways, public schools, the sewage system, bridges.

whitenoise's avatar

@walterallenhaxton This was a tile in my gradfather’s bathroom (from memory):

Nazism: You have two cows, then the government takes the cows and shoots you.
Communism: You have two cows, then the government takes both and sells you some milk.
Socialism: You have two cows, then the government makes you give one to your neighbor.
Capitalism: You have two cows. You sell one and buy a bull.

Thought you’d like that one ;-)

ragingloli's avatar

i’d say:
Capitalism: You have two cows. You sell both to pay your rent and then starve to death because you can’t afford food.

whitenoise's avatar

@ragingloli Whenever in Holland, come by and I’ll buy you a coffee and feed you. My neigbor is taking care of me. (Gave him a cow, a couple of years ago)

ragingloli's avatar

i think the only reasons i would go to holland are the drugs. and maybe gay marriage

whitenoise's avatar

There is more… trust me.

mass_pike4's avatar

@ mammal: hahaha well put, unfortunately you do not no me and actually i work full time as a vineyard worker receiving $8 an hour, do not live with my parents, i went to Ireland, England, and Scotland last summer and i do not watch the news because it is all bias bullshit. But good try, and capitalism is the only way that successfully works.

ragingloli's avatar

“But good try, and capitalism is the only way that successfully works.”
es evidenced by the current economic crisis it caused

walterallenhaxton's avatar

@ragingloli ”“But good try, and capitalism is the only way that successfully works.”
es evidenced by the current economic crisis it caused” tHIS IS THE BIGGEST LIE ON THE PLANNET. The government central bank gave the market false signals with it’s artificially low interest rates and the market did exactly what it was paid to do. Also the government made laws forcing the banks to loan money to people who could not afford it.

This crises is one of the few things that government can do. It is very good at ruining the economy.

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