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Odysseus's avatar

Has capitalisim reached it's endgame ?

Asked by Odysseus (2746points) August 21st, 2010

I’m not highly educated when it comes to world economics, however I was pretty good at the game of monopoly and when the gameboard and finances were so heavily in one players favour, then it was inevitible that the game would end soon.
I now have some understanding that the US and many other economies are so in debt that it is almost impossible to recover (with the present system).
Other things like prision privatisation, where the prison owners get so rich that they gain the political strength to change laws in order to get richer, Then elite players such as the Rothschilds who have been in the fortune/power game for centuries.
Am I wrong, isn’t this system like a game of monopoly? If so, there will be only one winner in the end, it cant last forever.

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34 Answers

FireMadeFlesh's avatar

I know very little about economics, but I am sure capitalism will become redundant within the next century or two. Capitalism requires population growth to maintain an injection of new human resources into the economy. The world population is already well past sustainable levels, so capitalist growth cannot be sustained for much longer. A shrinking population will cause massive problems for construction industries, aged care, retirement funding, and productivity.

I am not yet prepared to predict the downfall of the west, but in my humble opinion the US was always headed for such a situation thanks to its hugely deregulated approach to business and industry. Capitalism will fall, it is just a matter of how long technology can keep us going, and how well political science and economics can ease us into a more sustainable system.

Odysseus's avatar

@FireMadeFlesh , Thankyou. Informative answer, the political science part has given me something to think about :)

LuckyGuy's avatar

I like your example but, unlike Monopoly, the rules of the game can change as it is being played.
The Fed can adjust discount rate to increase or decrease the money supply. Countries can change the focus of their economy and recognize that it is manufacturing, construction, mining and farming that add to the wealth of a nation not the service economy. Government can adjust import and export regulations and control the flow of cash.
The consolidation of funds into the hands of a privileged few has proven to be the downfall of every nation that tolerated it. In the US, the monopoly rules that permit this are slowly being rewritten.
Every generation or so there is a technology leap that completely upends the problems of the generation before, for example: automobiles, relativity, nuclear power, integrated circuits, antibiotics, internet, genetic engineering. The previous generation could not have predicted the coming innovation. There is no reason to expect the pace of innovation to stop. I can’t know what will happen but I’ll make some educated guesses. Fusion power will finally work, thus reducing the need for fossil fuel and dropping the cost of energy drastically. DNA testing and stem cell research will correct many diseases and problems we have today. Countries with populations living in squalor and poverty will not be permitted to continue. Birth control will be required and births regulated. The truly surprising ones are beyond my grasp.

The Monopoly game has been around for a long time. With a few rule changes we can expect capitalism to last, too.

FireMadeFlesh's avatar

@Odysseus Glad you found it useful.

Mephistopheles's avatar

Economic systems don’t tend to work on ‘common sense’ principles. For example, even though we are taught that owing money is generally bad, governments have incredibly complex ways of managing immense amounts of sovereign debt. Just because it seems that the USA will have to default on its debt doesn’t mean that it will.

That’s not to say capitalist systems can’t fail. Of course they can – we’ve seen them do only recently. But capitalism’s strength is it’s adaptability. When people say it will fail, what do they expect it to be replaced with. Socialism? Feudalism? Unless civilization collapses (not necessarily impossible, mind you), capitalism is here to stay.

FireMadeFlesh's avatar

@Mephistopheles No other existing political system is as effective or successful as capitalism. However, eventually it will reach its expiry date and we will need a replacement. That is why I think political science research should be heavily funded, so a more sustainable system that retains the good parts of capitalism can be developed – but then no government would invest in their own downfall.

Mephistopheles's avatar

@FireMadeFlesh I get what you’re saying, but I don’t see any basis for capitalism failing in the near future.

Indeed, we’ve already developed a sustainable economic system that retains the good parts of capitalism but modifies the bad. It’s called social democracy – welfare state capitalism. For proof of its effectiveness, just look at Scandinavia. That ability to be constantly modified according to present need is precisely why capitalism has endured.

FireMadeFlesh's avatar

@Mephistopheles You do have a good point that capitalism can modify itself and adapt to circumstances, but I think that there are certain core principles that would render it unrecognisable if they were modified. I do not think capitalism can evolve to the point where it no longer relies on population growth. Capitalism is partially based on the idea of wealth flowing from the bottom up and carrying individuals up with it. If there is no influx of poor people to keep the pyramid from becoming top-heavy, capitalism is helpless. While I cannot place myself on the left-right political spectrum (I have my own esoteric dimension), I think modified socialism holds the most promise, because it largely does away with personal wealth and promotes a broader sense of social responsibility. For a stable population to be successful, I believe it must measure success in ways other than wealth.

Odysseus's avatar

@worriedguy Thankyou Worriedguy. I really want to learn more of how the economy is controlled, I know its not a monopoly board but I find my thought process always likes to simplify.
I am very interested on your views of Fusion power being the next innovative leap to boost the economy.
I did a talk at college a few years ago about the potential of free energy from the hydrogen in H2o. I was immediately shot down by the tutor with the declaration that free or cheap energy would bring the world as we know it ‘back to the dark ages’ as all governments need the wealth generated by fuel to survive, hence if energy was free/cheap then people would be free, government would lose power and anarchy would reign. hehee

FireMadeFlesh's avatar

@Odysseus I disagree with your tutor. Cheap power drove the industrial revolution, and I see no reason why it would not improve our circumstances in the current age. Sure, governments get a great deal of wealth from providing energy, but if that cost is reduced then expenditure on power will also be reduced, and the population will have more disposable income to either spend on the economy and add to the annual turnover or to be taxed. Cheap energy seems like a win-win to me. I have only a scant knowledge in this area, but this is my initial impulse.

Odysseus's avatar

Thank-you Fluther; FireMadeFlesh; Mephistopheles & worriedguy.

I moved to the countryside on the far off side of the world and I’ve been sorely missing intellectual discussion to the point of having delusions of grandeur , thanks to you guys& your thought provoking discussion I’m now balanced and in my place. :)

LuckyGuy's avatar

I, too, disagree with the tutor. Free energy will power and encourage untold advances. Americas strength in the 1920s-70s was fueled by cheap oil. It was not until we began importing manufactured goods in volume that the US began the decline.
Government can always find something else to tax. Based on the number of obese individuals waddling around here in America a food tax might not be inappropriate.

Regarding the use of energy in the H from H2O, as a physicist, I have to respectfully disagree. The energy required to separate the H from the O will always be greater than the energy we get from the recombination. Using the technology we have today H may only be thought of as a storage medium. We can take solar energy, for example, split water into H2 and O by electrolysis and then, upon recombination, release the energy and water vapor. That is how fuel cells work. They do not create any energy. They merely transform it into a form we can use.
Nuclear Fusion, on the other hand, truly uses the H2 as fuel by converting it to He. About 40 km from my home there is a DOE funded research facility that manufactures and ignites (with a laser burst of 6 TW) 1 mm diameter hydrogen pellets held at the triple point. They are effectively igniting a small hydrogen bomb 8 times per day. That lab’s job is to develop the match that lights the fusion fuse. Another lab is working on “containment”. Another works on “conversion”. I have every bit of confidence this problem will be solved in my lifetime.

How we solve the problem of extremism, religious intolerance, and consolidation of wealth is another matter.

Your corner of the world sounds nice. Maybe some day we can sit in a cafe somewhere and help solve the world’s problems.

6 TW means Tera Watts. That is about the same amount of power as the entire US energy grid all instantly firing at that one pellet. They are doing it successfully 8 times per day. As an American, I am proud of that achievement.

plethora's avatar

@Odysseus I’m not highly educated when it comes to world economics
@FireMadeFlesh I know very little about economics

I think @worriedguy has the edge on both of you.

john65pennington's avatar

You cannot “rob peter to pay paul”. old saying, but its as ever true today, more than ever. this is the state of America’s economy. you cannot pay bills, if there is no money in the bank. i am seeing a different America that i have ever known in the past. each day, i see errosion in America’s strength to be the worlds leader. could it be that we really do not have a leader? a person that is not being directed in the right directions for America? i feel my country is slowly fading into the sunset and no positive end in sight. i have a fear that outside sources may takeover America, without a shot being fired. Odysseus, it does not take a blind man to see what is happening. your insight is serving you well. what’s next for America?

mammal's avatar

Capitalism will be looked upon one day as antiquated and as shockingly as we currently regard the Slave based economies. it is hard now to imagine how natural slavery was to the society to which slavery was contemporary. Similarly, people of our society assume, capitalism to be part of the natural order of things like sun rise and sun set, they are mistaken. i’m not saying Utopia is the inevitable successor to capitalism, i’m just saying that people live in slumber-land, sleepy and indifferent to the cruelty that capitalism inflicts, when you try to wake them up they get irritable and irrational like children, they just want to get back to dream land.

jerv's avatar

Capitalism isn’t reaching it’s endgame, but I feel that our current interpretation of it is approaching some sort of singularity where we will either have to change or abandon Capitalism in favor of a more Feudal system of serfs and royalty.

As a child, I saw where our trends were heading, and I am still confident that there will be some massive changes within my lifetime. Probably not a full-on revolution or coup, but a pretty drastic shift nonetheless.

CrankMonkey's avatar

Capitalism is simply a method for organizing commerce. It requires public institutions and the rule of law to support it. Western nations are having problems primarily due to failure of their institutions. Capitalism has created a great deal of wealth in China since the Communist party implemented it under Deng Xiaoping.

jerv's avatar

@CrankMonkey Normally I would agree, but the way we do things here has quite a few elements of Corporocracy, and I think we both agree that Corporations are all about Capitalism. Our finances and our government are intertwined in a way that you really can’t call Socialism or Communism since the balance of power doesn’t favor the government as it does under those two systems.

CrankMonkey's avatar

Corporations are a form of institution sanctioned by the government. The US should be considered a mixed system since it has elements of socialism and elements of capitalism. There are really very few examples of purely capitalist societies.

mowens's avatar

Thanks to Obama, this is socialism.

lloydbird's avatar

” Has Capitalism reached its endgame? ” No. But it (Capitalism) is clumsy, inefficient and nasty. Its basic way of operating is to build it up then knock it down then build it up again and then knock it down again so on. At the moment, we are at a phase where there is a great need, within the system, to knock it down again. But , thanks to the increased scrutiny that has been brought to bear upon the ‘powers that be’, and because of technological advances (i.e. The Internet), there is a great struggle going on to try and find a credible ‘excuse’ to knock it down again (i.e. War). But it is now very difficult to pull off the old trick.
The game is on.
Peace is on the increase. ;-)

Nially_Bob's avatar

You make some valid points Odysseus but I think it improbable that capitalism will become redundant in the coming decades. You mention that such could occur as a result of monopolies but there will always be challengers to these institutions, from entrepreneurs to entire legal systems provoked by public disapproval; there will be humans who see this power and either deem it unfairly distributed or want a part of it and act accordingly. There are also changes which are beyond the control of institutions but may affect them severely, examples being lessening petroleum reserves and stock market bubbles.

Obviously this does not account for what may be in centuries to come but judging by the dominance and seeming preference of capitalist systems worldwide at present I believe it reasonable to assume economic matters won’t change majorly in the distant future.

A major advantage of capitalism is its compatability with human nature, and that is why I believe that even if it should hit on some harsh times people shall likely strive to maintain it.

plethora's avatar

Just curious…..anybody commenting here actually owned and operated a business in a capitalistic system? Or we just talking speculative theory here?

jerv's avatar

@plethora If you are going to go on about the possibilities and ignore the high failure rate of small businesses within the first 1–2 years, I will have to throw something at you. Yes, it is possible, but there are also stories of people falling 33,000 feet without a parachute and living, so you really have to look at the whole story.

(Oh, and to answer your question; Owned, no, operated, yes.)

plethora's avatar

@jerv There would be a vast difference between operating and owning. Owning a startup business is very risky. The rewards when successful are very great. No one is forced to start a business, but everyone has the opportunity. Risk and opportunity would be two key bywords one would want to keep in mind about starting a business.

But we could certainly reduce the risk by removing the opportunity. In fact, instead of allowing Fred Smith the risk of losing hundreds of millions of dollars of his own money starting Fedex, why don’t we shelve that service. No one needs it anyway.

Let’s nix Chik-Fil-A too. That was a crazy idea. And not being open on Sunday? How insane. That won’t work.

Oh, let’s nix McDonald’s too.

Let’s nix Mrs. Fields Cookies as well. Who on earth is going to pay three bucks for one cookie?

Or how about Microsoft?

Or Apple?

The list goes on and on and on. All ideas that would have never occurred, much less gotten off the ground if we depended on the government drones to think them up and implement them.

Yep…. @jerv I’m gonna go on and on and on and on about risk and opportunity. Nevermind speculative theory about whether capitalism works. Just keep your hands off it and those of us who make it work will be fine. While creating most of the well paying jobs in the US at the same time.

jerv's avatar

@plethora Risk is a two-way street. There is always the chance that you mght make more money than you know what to do with.

However, while the odds of success in starting a business are better than making money with lottery tickets, the truth is that the odds are still in favor of failure, and most of the successes will be far more modest than your examples. If that were not so then we would have thousands of Microsofts. Instead, we have a lot of smal business owners barely paying the bills with what is left over after overhead costs if they are lucky.

My objection is that many people (yourself included) make it sound like all it takes is a little hard work to succeed, and that anybody who isn’t a millionaire by age 30 is a fucking slacker. True, you have to try in order to succeed, but do not blow smoke up our asses with your one-in-a-million success stories!

If you ignore the large role that luck plays then I cannot take you seriously.

plethora's avatar

@jerv My apology for intimating my examples are the norm. They are not. The more typical example is modest financial success, but far better than working for someone else, for those who succeed. Many of those who fail go into businesses where they are almost guaranteed to fail. Restaurants, for example. Almost all startup restaurants fail in the first year or two.

Most people who go into business for themselves do it for the freedom and control that it affords over ones life, even if the financial success is modest.

As for luck, maybe, maybe not. I can certainly point to events that have happened to me without which I may not have made it. On the other hand, those of us who do it are prone to say we make our own luck. The harder and smarter we work, the luckier we seem to get. But events outside our control can certainly help or hinder us.

Bottom line, 90% of the new jobs in our economy come from small business owners who create the jobs as a result of their success.

Would you suggest limiting either the risk or the success?

As for capitalism, while there is certainly need for regulation of some very large businesses, capitalism is alive and well and growing for the small business. Ask the Chinese.

jerv's avatar

@plethora Okay, now that I know you are a realist, I can deal with you in a more reasonable/rational manner.

Personally, I would love to be able to work for myself, but as my skills are mostly technical rather than administrative. That would add to both startup and operating costs. Add in the cost of tools required for what I plan… well, we can discuss that in private channels sometime when I feel I actually have a shot at getting the startup capital.

If you re-read my original answer, you will notice that I never denounced Capitalism, merely the way our version of it “works”. Hell, even 20–30 years ago, it was better. And it’d be even better if we could get the big boys to pay more than zero taxes so that the tax rates on the mom-and-pop operations weren’t so ruinous. Of course, that would require reform… or, as I said in my original answer, change.

plethora's avatar

@jerv Agreed. Hope you can make yours work….open to discussion.

Tomfafa's avatar

@jerv Somebody fell 33,000 feet and SURVIVED? Did they wet themselves?

jerv's avatar

@Tomfafa I don’t know, but I guess they did more than that. First you say it, then you do it ;)

Tomfafa's avatar

I would pee in the air and then race it to the ground… hoping I would come in second.

FireMadeFlesh's avatar

@Tomfafa I once heard a story (from someone who was at the hospital) about someone who survived a skydiving accident. I’m not sure if they had a tangled parachute or none at all, but from the state of her body maybe she wished she hadn’t survived.

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