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Capitalism: Awesome or Deplorable?


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This first post will just be a quick brain-dump in outline form, intended to serve as a jumping-off point for discussion. Feel free to discuss any points raised here, or to raise new ones.

Is capitalism good or bad?

Wikipedia provides an excellent one-sentence description of capitalism: "Capitalism is an economic system based on the private ownership of the means of production and their operation for profit." In a capitalist society, most property, including most business assets, are privately owned. Supply and demand interact to generate prices that help everyone coordinate what to produce, how, and how much, so that people can have access to stuff they want, like houses, cars, and trousers. There are no purely capitalist countries. In the United States, for example, the federal government controls the means of producing mail delivery. But we're more capitalist than not.

Some initial questions.

1. Is capitalism good or bad ... compared to what? Compared to hunting and gathering, subsistence agriculture, feudalism, mercantilism, socialism...? Should we be comparing it mainly to other economic systems that have already been tried, or also to idealized systems that have not yet been tried?

2. How do we measure the goodness or badness of an economic system? What should a society be trying to maximize -- happiness, standard of living, freedom, national security, economic equality, other stuff?

Why capitalism seems good.

Historically, compared to non-capitalist societies, capitalist societies appear to be great at (a) generating material wealth and high standards of living, and (b) at least in the context of democracies, preserving personal freedoms. Compare North Korea to South Korea. Compare former East Germany to former West Germany (or more broadly, Eastern Europe to Western Europe during the Soviet era). Compare Hong Kong to mainland China. Etc.

Capitalism seems to excel at wealth and freedom because it emphasizes voluntary relationships. Generating wealth depends on allowing people to seek out positive-sum transactions, and voluntariness is a sign of positive-sumness. Voluntariness and freedom also go hand-in-hand.

Material wealth isn't important only because yachts are awesome. It also funds and incentivizes scientific progress. (There's a positive feedback loop here: wealth drives scientific progress, and scientific progress promotes wealth.) Ultimately, wealth and scientific progress are what allow for a strong national defense, which is absolutely essential to ... basically everything.

Why capitalism seems bad.

Some people think capitalism is bad because it results in economic inequality. I mostly think that criticism is misguided. (For one thing, poverty is a bigger problem than inequality per se, and capitalist countries generally have less poverty than non-capitalist countries. For another thing, it's poverty or inequality after taxation and redistribution that matter, and there's no contradiction between capitalism and ample redistribution.) But there's a sense in which this criticism can be valid if wealth results in political power (through lobbying, etc.), and political power results in the ability to veto redistributive programs. In that situation, capitalism can allow inequality to perpetuate itself.

Moreover, capitalism provides incentives for businesses to rig the political system to their advantage in other ways as well. The denial of climate science by a major political party in the United States, for example, is driven by an industry motivated by profit.

Another criticism is that capitalism doesn't necessarily seem to make people all that happy. Capitalism can rope people into stressful jobs and contribute to a preoccupation with wealth-based status. I suspect that the median hunter-gatherer may have been happier, in many ways, than the median 21st-century American. We're materially better off, but we smile less (and commit suicide a lot more).

On a related note, while capitalism is good at providing people with what they want, what we want is often bad for us. Capitalism is great at producing and marketing guns, cigarettes, alcohol, fried food, and cake, and it's great at empowering us to sit around all day in comfortable chairs. As a result, modern Americans have significant chronic health problems. (Physical and mental.)

In addition, as a powerful tool, capitalism can exacerbate wrongs the same way any other powerful tool can. Physics and chemistry made warfare more terrible. In the same vein, capitalism made the slave trade more terrible.

Finally, in capitalism, there's no all-powerful czar, so when markets fail to successfully coordinate some beneficial activity, we get stuck. This has probably contributed to a pretty screwed up university system and a pretty screwed up healthcare system in the U.S. 

Where I stand.

An important aspect of happiness is avoiding misery. Worldwide, the two leading bearers of misery have been poverty and tyranny. The greatest defense against poverty has been capitalism. The greatest defense against domestic tyranny has been self-government -- that is, something like a constitutional democracy. Combining capitalism with democracy seems to work pretty well compared to the alternatives.

Perhaps more important than the threat of domestic tyranny is the threat of foreign tyranny. Maybe the two most important things the United States has ever done were defeating the Nazis in WW2 and defeating the Commies in the Cold War. We pulled it off because we were rich enough to fund lots of awesome scientific research and to build up a super-elite upper-tier military.

Maybe we'd be happier as hunter-gatherers, but only for about five minutes until a foreign dictator conquers and persecutes us.

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Because maybe the goal in life should be to NOT work very hard, 7 days per week.

If I were going to argue against capitalism (in favor of central planning), it would be along these lines.  In particular, I would point to how capitalism deals with environmental issues as its primar

At some point I'd like to go back and discuss the two Yglesias essays I posted (and fatguy's comments on them) as well as the social benefits of price discrimination. For now, I have a random tho

IMO for all it warts, Capitalism is the only acceptable overall system and the closest aligned to human nature. 
In any society you will naturally those who choose to do more and those who choose to do less. You will have some who are better at one thing vs others at another thing. 

At its highest levels, yes, the bad points you made about capitalism are true, but at least capitalism as a whole allows (in theory) for those who are ambitious to improve their situation and be in some level of control of their own value to the system. Or not. 

In any other system, you still have "ruling" vs "non-ruling" citizens but the path to such is rarely awarded though hard work, but by birth or existing family status. 

I think the overall problem with any system is that humans are inherently flawed creatures who when given power or riches will do anything they can to remain in power and or grow it. But if at least you have worked for that wealth and status, falling into those flaws of it are more understandable than someone who was just born into it and has no other differentiation than the man ordered to farm the fields for his living. 

But overall, this is in a bubble and no there is not enough room on this board to compare and contrast systems fully 

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I've been really excited about this thread since Maurile mentioned he was going to start it, but I must confess it's pretty overwhelming.  I have a ton of stuff to say but I want to keep my posts pretty short otherwise it'll feel like work and I'll get tired of it.

Anyway, I'll start with Maurile's initial questions:

6 hours ago, Maurile Tremblay said:

1. Is capitalism good or bad ... compared to what? Compared to hunting and gathering, subsistence agriculture, feudalism, mercantilism, socialism...? Should we be comparing it mainly to other economic systems that have already been tried, or also to idealized systems that have not yet been tried?

2. How do we measure the goodness or badness of an economic system? What should a society be trying to maximize -- happiness, standard of living, freedom, national security, economic equality, other stuff?

To directly answer the questions, my feeling is that if we're talking about capitalism in some idealized form, then it should be compared to other economic systems similarly idealized.  If we want to talk about American capitalism, that can fairly be compared to economic systems in practice in other places or times.  But any time you compare an idealized form of one economic system with a real-world example of a different economic system, the real-world example is going to be at a severe disadvantage.  With respect to question 2, I think we should be trying to maximize happiness.  The other stuff mentioned just seems like subsidiary goals that help us to be happy.  The reason we want a higher standard of living is because we believe it will increase our happiness.   

Anyway, instead of asking whether capitalism is good or bad in comparison to other economic systems, I'd rather start with the fundamental question of "is the very idea of capitalism immoral?"  I personally think the answer is yes.  Imagine I were a parent with ten children.  I think it would be wrong if I neglected nine of the children while lavishing material gifts, travel, education, and opportunities upon the one kid that I perceived as smartest or best looking.  But that's what capitalism is, at least the way it seems to be practiced in the real world.  The marketplace routinely rewards people that are born into desirable situations or who were born with specific genetic gifts. That seems to me to be the very opposite of fairness.  "You already have a bunch of advantages over other people, so because you do, I'm going give you even more advantages over them!"

I have some ideas about how capitalism lovers will respond but I don't want to put words in anyone's mouths.  I'd be interested to hear someone make a "capitalism is moral" or at least a "capitalism is neither moral nor immoral" argument.  Hopefully someone will. 

Eventually I'll be ready to move on to a discussion about whether capitalism is the way to go despite its moral shortcomings, and I'm happy to continue to discuss that for the rest of the thread.  But my preference would be for us to first have at least some discussion about what I view as capitalism's obvious moral shortcomings before we move on.  Because I think that we're all so accustomed to capitalism as the natural state of the world that we rarely stop to think about just how unfair it is.

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9 hours ago, Maurile Tremblay said:

Finally, in capitalism, there's no all-powerful czar, so when markets fail to successfully coordinate some beneficial activity, we get stuck. This has probably contributed to a pretty screwed up university system and a pretty screwed up healthcare system in the U.S. 

If I were going to argue against capitalism (in favor of central planning), it would be along these lines.  In particular, I would point to how capitalism deals with environmental issues as its primary drawback.

Central planning is generally a really bad of coordinating economic activity.  In normal situations, markets operate efficiently without needing anybody to specifically try for that outcome.  So there isn't a whole lot for planners to do.  Their optimal course of action is usually just to mimic whatever outcome the market would have produced on its own, in which case why bother with planning in first place -- you might as well just have a free market and cut out the middleman.  Any production or pricing decisions they make that differ from the market equilibrium just introduce waste in the system and drag down economic performance.  

When you introduce externalities into the mix, that changes.  Suppose I own an electric plant.  I have to pay for all the coal I burn, all the workers I hire, all the office supplies I buy, all the electric grid equipment (?) I use, etc.  If those various input markets are functioning well, the price I have to pay for coal should equal its marginal cost to society, so my interests and society's interests in using coal efficiently are aligned.  They're not just sort-of vaguely pointing in the same direction -- they're exactly the same.  That's great, and that's why markets normally work so well in terms of producing stuff as efficiently as possible and generating wealth.  

But when I burn coal to produce electricity, I also emit carbon into the atmosphere and contribute to global warming.  You can think of this as me "using" the atmosphere as an input.  Society places a value on having a clean, low-CO2 atmosphere, but I place no value on that all because there's no price attached to it.  So my interests and society's interests are now totally unaligned in a completely predictable direction.  "The atmosphere" is valuable to society but I can use it for free, so I'll systematically pollute too much.  Multiply that by a bunch of firms, and you end up with way too much carbon in the atmosphere.  It's not that I'm evil and I chose to emit a bunch of carbon just to be a jerk.  I got nudged strongly in that direction by the prices that the market presented to me.  

Now, historically centrally planned economies have also been pretty bad on environmental issues.  I remember reading somewhere that the Soviet Union had arguably a worse environmental record than the US, and China has also been terrible.  But those planned economies were bad on the environment because the people in charge chose to prioritize manufacturing and industrial capacity over the environment, and they could have chosen otherwise.  With capitalism, it's not a choice.  Unregulated markets systematically push you toward bad environmental outcomes.  If that were just a case of dirty river or smoggy air, that would be one thing.  But considering the potential consequences of global warming, this is a big deal.   

[Edit: To put in fatguy's terms, capitalism in its idealized form produces global warming.  Planning in its idealized form doesn't.  So this is an apples-to-apples comparison.]

I'm a big fan of capitalism so obviously I don't consider this a deal-breaker.  There are good ECON 101 level solutions to this problem that for whatever reason we've been incredibly reluctant to implement.  (A person could point back to the previous paragraph and say well, the fact that we don't have carbon taxes is a political choice so how is this really different from Soviet central planners choosing industry over the environment, but these kinds of choices are inherently more difficult in a market-based economy where the default is to let the market do its own thing and government intervention is the exception not the rule).  

There are other problematic forms of market failure, but I see things like "adverse selection screws up the market for healthcare" as relatively small potatoes in comparison to global warming.  

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2 hours ago, fatguyinalittlecoat said:

To directly answer the questions, my feeling is that if we're talking about capitalism in some idealized form, then it should be compared to other economic systems similarly idealized.  If we want to talk about American capitalism, that can fairly be compared to economic systems in practice in other places or times.  But any time you compare an idealized form of one economic system with a real-world example of a different economic system, the real-world example is going to be at a severe disadvantage. 

Going to see how this thread plays out before investing in it for this very reason.  Are we going to talk about capitalism as an IDEAL or are we going to talk about it is it's implemented around the world?  Then, when doing comparisons, we need to make sure we do the same with the other approaches.  This could be a REALLY good thread, depending on who participates.  

I'm officially at stage :popcorn: 

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Capitalism with safety valves is awesome.  To me, the frontier was always a safety valve that enabled those who didn't quite want to adhere/fall in line to the status quo to have their own go about it.  With that gone....I think more people wither in an establishment that they don't 100% fit into.  Now, the safety valves are controlled by the established society....and there are those uncomfortable with that. 

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4 hours ago, fatguyinalittlecoat said:

I've been really excited about this thread since Maurile mentioned he was going to start it, but I must confess it's pretty overwhelming.  I have a ton of stuff to say but I want to keep my posts pretty short otherwise it'll feel like work and I'll get tired of it.

Anyway, I'll start with Maurile's initial questions:

I definitely didn't expect anyone to respond to the whole thing all at once. Each paragraph in my original post was just raising an issue for possible discussion -- a menu to choose one item from per visit, not a 34-course meal you're supposed to eat in one sitting.

I agree with your two answers. Some comments:

1. My bias is in favor of capitalism and against socialism. So when somebody mentions something good about an idealized form of socialism, my natural reaction is to point out that it doesn't work that way in practice. And when somebody mentions something bad about capitalism, my natural reaction is to point out that the criticism isn't about capitalism per se, just some imperfect implementations of it. So in my head I'm comparing the actual Soviet Union to an idealized form of capitalism with a hefty Basic Income Guarantee, which isn't apples to apples. I'll have to consciously avoid that tendency to remain consistent.

2. I agree that happiness should be society's goal. But long-term happiness, not just happiness in the current generation. How would the humans of 12,000 years ago best contributed to our current happiness? I think technological progress is a big part of the answer -- in their case, figuring out agriculture may have been an important step (or a terrible mistake, depending on whom you ask). In our case, thinking 12,000+ years ahead probably means working on robotics, artificial intelligence, nanotech, space travel, terraforming, etc. I want a system in which scientific progress thrives.

Also, society's goal (long-term happiness) can be broader than what it uses an economic system for. Maybe the best way for society to promote happiness is to pick rules of baseball that do not try to maximize long-term happiness directly, but instead have a sub-goal relating just to creating a fun, exciting diversion. And maybe the sub-goal of an economic system should be something narrower than happiness broadly conceived. Maybe an economic system should focus primarily on economic stuff, playing its defined role and staying in its lane. (Though obviously a specific domain's sub-goals should be consistent with society's overall goal.)

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Society is never really one thing all the time forever. It's always in a constant state of give and take. We can start out in a pure capitalistic society and gradually add laws to help protect citizens from the highly predator end of capitalism. However, eventually we'll add too many laws that bring us back to the opposite end of the spectrum when the state runs everything for us and the consumer has no choice in the matter. When that happens, society usually overthrows the system and returns to anarchy (pure capitalism) and starts again. 

Capitalism is the system that provides the most individual freedom and responsibility to people but it does need some checks and balances to prevent it from collapsing into monopoly or communism.

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3 hours ago, fatguyinalittlecoat said:

Imagine I were a parent with ten children.  I think it would be wrong if I neglected nine of the children while lavishing material gifts, travel, education, and opportunities upon the one kid that I perceived as smartest or best looking.  But that's what capitalism is, at least the way it seems to be practiced in the real world. 

I will save a response to this for later because I want to think about it for a bit.

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10 hours ago, Maurile Tremblay said:

Some people think capitalism is bad because it results in economic inequality. I mostly think that criticism is misguided. (For one thing, poverty is a bigger problem than inequality per se, and capitalist countries generally have less poverty than non-capitalist countries. For another thing, it's poverty or inequality after taxation and redistribution that matter, and there's no contradiction between capitalism and ample redistribution.) But there's a sense in which this criticism can be valid if wealth results in political power (through lobbying, etc.), and political power results in the ability to veto redistributive programs. In that situation, capitalism can allow inequality to perpetuate itself.

Moreover, capitalism provides incentives for businesses to rig the political system to their advantage in other ways as well. The denial of climate science by a major political party in the United States, for example, is driven by an industry motivated by profit.

Another criticism is that capitalism doesn't necessarily seem to make people all that happy. Capitalism can rope people into stressful jobs and contribute to a preoccupation with wealth-based status. I suspect that the median hunter-gatherer may have been happier, in many ways, than the median 21st-century American. We're materially better off, but we smile less (and commit suicide a lot more).

On a related note, while capitalism is good at providing people with what they want, what we want is often bad for us. Capitalism is great at producing and marketing guns, cigarettes, alcohol, fried food, and cake, and it's great at empowering us to sit around all day in comfortable chairs. As a result, modern Americans have significant chronic health problems. (Physical and mental.)

I'm not sure if there's data to back this up, but I'd guess inequality is linked with unhappiness. It's hard to keep up with the Jones' when you are so far away from the Jones'. Personally, I should never be unhappy with my material situation, yet I fall into the trap of looking around at those in a better material position and that can make me unhappy until I slap myself out of that type of thinking.

Materially, we compare ourselves to those above us. Morally, we compare ourselves to those below us.

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Capitalism isn't the problem, but what we have is - Unchecked Capitalism.

 

 

 

 

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Until humanity is guided by an ethic which values what a person gives over what they have, we are not going to have a new abiding system. What troubles me about capitalism is the basic lie about free markets, which are indeed the true indicator of value. No such thing. Markets rig themselves for things to go the way of those who created them beyond the point where they're contributing to those markets as naturally as capital seeks to flow in one direction. Next to fighting wars and building roads, government's primary job should be to referee business. Unfortunately, sharers of wealth become as much a problem at this point as hoarders of wealth and the only things i can think of that would help economies thru this juncture is to limit size of institutions, eliminate as much "finance" (money for money's sake) as possible, use algorithms in aid of currency flow like they've been used to create personal wealth and make CEO the highest-paid but most legally-dangerous - liable for all that happens under their watch - job in the land.

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2 hours ago, Maurile Tremblay said:

Also, society's goal (long-term happiness) can be broader than what it uses an economic system for. Maybe the best way for society to promote happiness is to pick rules of baseball that do not try to maximize long-term happiness directly, but instead have a sub-goal relating just to creating a fun, exciting diversion. And maybe the sub-goal of an economic system should be something narrower than happiness broadly conceived. Maybe an economic system should focus primarily on economic stuff, playing its defined role and staying in its lane. (Though obviously a specific domain's sub-goals should be consistent with society's overall goal.)

I am very skeptical that a society's economic system can inhabit only a defined role that stays in its lane.  An economic system is as fundamental to a society as its form of government.  It's not some diversion like baseball in your example.

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1 hour ago, dgreen said:

I'm not sure if there's data to back this up, but I'd guess inequality is linked with unhappiness.

Citizens of Scandanavian countries where there is less inequality generally report being happier.  I don't know if it's possible to make a causation argument there or not.

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3 minutes ago, quick-hands said:

This is so wrong 

How so is it wrong?  Are you saying the statement is wrong in that we do not have unchecked capitalism.  Or are you saying unchecked capitalism is not a problem.   

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6 hours ago, fatguyinalittlecoat said:

Imagine I were a parent with ten children.  I think it would be wrong if I neglected nine of the children while lavishing material gifts, travel, education, and opportunities upon the one kid that I perceived as smartest or best looking.  But that's what capitalism is, at least the way it seems to be practiced in the real world.  The marketplace routinely rewards people that are born into desirable situations or who were born with specific genetic gifts. That seems to me to be the very opposite of fairness.  "You already have a bunch of advantages over other people, so because you do, I'm going give you even more advantages over them!"

My first reaction is that family dynamics differ from broader social dynamics in important ways, but that's boring and probably misses the point, so let's skip ahead.

My next reaction is that "promoting happiness should be the goal, but creating incentives for people to promote happiness is immoral" might not be entirely consistent.

I have a friend who's an aspiring professional singer-songwriter. She has a few albums, does a bunch of local gigs, occasionally tours around. I don't know what percentage of her income is from music, but it's not enough to pay the bills, so she has a side gig driving for Uber.

Stevie Wonder has gotten immensely rich using his musical talent.

Is that fair? I think my friend is very talented and has worked hard at her music, but Stevie Wonder is way more talented (with much of his talented probably being innate, though he's obviously worked his butt off as well).

The upshot is that more people have voluntarily paid for Stevie Wonder's albums than for my friend's because his music is better. That's another way of saying that Stevie Wonder, through his music, has made a lot more people happy than my friend has. Every voluntary transaction involves consumer surplus and producer surplus, at least in terms of expectation. (Sometimes people accidentally make bad deals.) To say that Stevie Wonder got rich through his music is to say that he made a lot of people happy. That shouldn't be viewed as a bad thing.

As a society, we are much better off, happiness-wise, having Stevie Wonder make albums while my friend drives for Uber rather than the other way around. Capitalism seems like a good way of getting that to happen. Stevie Wonder should make more than my friend when it comes to music. (And she should make more than him driving cars.)

If everyone made the same amount no matter what they did, they wouldn't have an incentive to find the best ways for them to make people happy.

So the mere fact of wealth inequality shouldn't be troubling. It is necessary. The amount of wealth inequality, however, may be troubling. Given that Stevie Wonder has brought more consumer surplus to the world than my friend has, it doesn't seem unfair that he should end up with more producer surplus as well. But should it really be many thousands of times more?

I'd say no, but (a) at that point we're just haggling over price, and anyway (b) that's where taxing-and-redistributing comes in. Capitalism (specifically the labor market) is for organizing society so that people are sorted sensibly into the right professions, and fiscal policy is for making sure everyone is financially taken care of. (This is what I was getting at with keeping capitalism in its lane. It's also where I'll start telling you about my idealized form of capitalism rather than exalting the specific version observed in the United States.)

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We have a pretty good example of what happens when we creep to "pure capitalism" and it's recent and everything.  Reality is, very few in this country would really like "pure capitalism".  It's on the same level as "free trade"....wouldn't like that either.  The truth is, the solution is almost always a limited version of the pure sense...and that's true in almost all things we'll ever discuss here.  Why?  Because we are pretty selfish.

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1 hour ago, Hov34 said:

Capitalism isn't the problem, but what we have is - Unchecked Capitalism.

Yep.  It's the difference between a road system with stoplights and stop signs and lane dividers and speed limits, and bunch of blacktop everyone can use as they see fit. 

Both are "driving" but one works a lot better for everyone involved and keeps accidents from happening.

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11 minutes ago, Maurile Tremblay said:

Stevie Wonder should make more than my friend when it comes to music. (And she should make more than him driving cars.)

:lmao:

 

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9 minutes ago, Maurile Tremblay said:

Capitalism is for organizing society so that people are sorted sensibly into the right professions, and fiscal policy is for making sure everyone is financially taken care of. 

Like this a lot MT.  Capitalism is a (fantastic) form of creating wealth.  Not a kind of government.  If you create a system and an infrastructure and widespread support for a society that, by design, is going to have massive winners and massive losers, there should be an imperative to have the government do what it can (imperfectly for sure) to make sure that the winners pay back into the system to keep it healthy for the future.

It's the societal equivalent of @IvanKaramazov's pollution argument.  Inequality and job-loss and dying industries are a by-product of a successful capitalist society.  The people benefitting from the "pollution" should pay a price back into the system to cover it. 

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1 hour ago, fatguyinalittlecoat said:
3 hours ago, dgreen said:

I'm not sure if there's data to back this up, but I'd guess inequality is linked with unhappiness.

Citizens of Scandanavian countries where there is less inequality generally report being happier.  I don't know if it's possible to make a causation argument there or not.

I am compelled to point out just how capitalistic the Scandinavian countries have become.

I was also going to point out, based on a vague memory, that suicide rates are kind of high in Scandinavian countries. But after googling it for a second, I find that (a) the higher suicide rates were from the 1960s, back when the Scandinavian countries were socialist, and anyway (b) the higher suicide rates appear to be an artifact of how they were measured, not necessarily a real phenomenon.

To address dgreen's point...

Consider two universes. In Universe #1, Alice has two apples while Bob has three. in Universe #2, Alice has three apples while Bob has eight.

I've already stipulated that we should be maximizing happiness. And here I acknowledge that it is theoretically possible that total happiness is greater in Universe #1 than in Universe #2 if Alice's distaste for relative poverty is sufficiently greater than her distaste for absolute poverty. Even though it rationally shouldn't be. (When I get done telling you about my idealized version of capitalism, remind me to tell you about my idealized version of human nature.)

Part of me wants to reject her negative utility from jealousy as not counting. Similarly, in a society where some extremely racist people enjoy discriminating, I'd ignore whatever happiness their discrimination provides them in my utilitarian calculus. I'm a big fan, philosophically, of finding beneficial positive feedback loops (and avoiding detrimental ones). If people can take pleasure in each other's good fortunes, that's a recipe for spiraling happiness. I'm happy that you're happy, which causes you to be happy that I'm happy, and we both just sit there getting happier and happier. Awesome. But the happiness of racists is kind of the opposite of that. Likewise, if Alice is happier in Universe #1, her happiness is not the kind that will contribute to a blissful spiral. Maybe it shouldn't count.

I prefer a reframing, though. It's not that Alice's greater happiness in Universe #1 doesn't count: it's that her happiness is too local to outweigh the greater eventual happiness that more apples in general can provide in the long run. Universe #2, with eleven apples, can support more growth, more people. Even if Universe #1 seems happier right now, I think Universe #2 will be happier over the course of eternity.

Also, in a universe where people can figure out how to increase apple production from 5 to 11, people should also be able to figure out how to redistribute a couple apples from Bob to Alice. That way both Bob and Alice should be happier in Universe #2 (unless Bob is very resentful about the redistribution, which maybe shouldn't count for the same reasons that jealousy shouldn't count).

Step one: maximize apple production. Step two: get the distribution right.

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1 hour ago, jon_mx said:

How so is it wrong?  Are you saying the statement is wrong in that we do not have unchecked capitalism.  Or are you saying unchecked capitalism is not a problem.   

I'm saying we do not have unchecked Capitalism.    Capitalism  is a Marxist term.   

Market economy  is accurate 

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1 hour ago, Maurile Tremblay said:

Capitalism (specifically the labor market) is for organizing society so that people are sorted sensibly into the right professions, and fiscal policy is for making sure everyone is financially taken care of. (This is what I was getting at with keeping capitalism in its lane. It's also where I'll start telling you about my idealized form of capitalism rather than exalting the specific version observed in the United States.)

When you say the "right" professions, do you mean the right professions to maximize societal happiness?  Because I don't think that capitalism does that very well at all.  But maybe you mean something else.

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6 minutes ago, fatguyinalittlecoat said:

When you say the "right" professions, do you mean the right professions to maximize societal happiness?  Because I don't think that capitalism does that very well at all.  But maybe you mean something else.

Yes, I mean to maximize long-term universal happiness.

Capitalism is pretty bad at it (the BS Jobs thread is relevant here), but less bad than any other system I can think of.

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6 minutes ago, Maurile Tremblay said:

Yes, I mean to maximize long-term universal happiness.

Capitalism is pretty bad at it (the BS Jobs thread is relevant here), but less bad than any other system I can think of.

Well, if we're in the theoretical world, it seems to me like a system where the objective is actually to maximize happiness of society at large could work a lot better.

Under a capitalist system, people don't work to maximize the happiness of society at large.  They work to maximize the happiness of their employer, who often has interests that conflict with the interests of society at large.  Maybe this is just the jaded lawyer in me talking but for every Stevie Wonder example there are thousands of smart people working very hard in finance and law to benefit their wealthy employers at the expense of the public at large. 

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41 minutes ago, Maurile Tremblay said:

IAlso, in a universe where people can figure out how to increase apple production from 5 to 11, people should also be able to figure out how to redistribute a couple apples from Bob to Alice. That way both Bob and Alice should be happier in Universe #2 (unless Bob is very resentful about the redistribution, which maybe shouldn't count for the same reasons that jealousy shouldn't count).

Step one: maximize apple production. Step two: get the distribution right.

It seems to me that the problem with redistribution isn't "figuring it out."  It's that Bob doesn't want to share.  And let's say, for example, that Bob owns the apple orchard.  And his great economic power as the guy with all the apples translates to great power in other areas, including politics.  And so by the time you've completed your step one of maximizing apple production, Bob has the tools and the interest in doing everything possible to stop you from doing step 2.  So step 2 never happens.

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28 minutes ago, fatguyinalittlecoat said:

It seems to me that the problem with redistribution isn't "figuring it out."  It's that Bob doesn't want to share.  And let's say, for example, that Bob owns the apple orchard.  And his great economic power as the guy with all the apples translates to great power in other areas, including politics.  And so by the time you've completed your step one of maximizing apple production, Bob has the tools and the interest in doing everything possible to stop you from doing step 2.  So step 2 never happens.

Yes, that's definitely an issue with current incarnations of capitalism.

Next time we start a country from scratch, I have some ideas about what the constitution should say to deal with that.

For now, I agree with this criticism and I think the problem is hard to fix in the U.S.

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14 minutes ago, Maurile Tremblay said:

Yes, that's definitely an issue with current incarnations of capitalism.

Next time we start a country from scratch, I have some ideas about what the constitution should say to deal with that.

For now, I agree with this criticism and I think the problem is hard to fix in the U.S.

I think what I described is a natural consequence of capitalism so I’d be interested in what your solution would be if starting from scratch.

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Just to recap - capitalism has no ethics nor morals.  Capitalism does not serve the populace.  Capitalism serves those who can wield it strongest.

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Interesting topic, and glad to see there is some good discussion going.  There is a lot to unpack, but my basic stance is that capitalism is a very good thing and should be encouraged, but that it comes with very negative and IMHO immoral consequences.  Healthcare and environmental issues are the two most obvious examples.

I've said on these forums in the past that I would much rather us measure our success not in terms of GDP or GDP growth, but in terms of happiness.  If there is shown to be some correlation between GDP growth and happiness then I will pay more attention to GDP statistics.

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1 hour ago, JAA said:

Regulated capitalism good

Unregulated capitalism bad

I think we need to go through some terminology here.  As far as I know "capitalism" is where the private market has control over trade and industry.  If the private sector doesn't have control over it because their are pieces out of they aren't controlling, then it's not capitalism.  It's something else....no?  Not asking to be a smartass by any stretch, but the last thing I want is a hijacking of terms like what's happened with "socialism".

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Just now, The Commish said:
1 hour ago, JAA said:

Regulated capitalism good

Unregulated capitalism bad

I think we need to go through some terminology here.  As far as I know "capitalism" is where the private market has control over trade and industry.  If the private sector doesn't have control over it because their are pieces out of they aren't controlling, then it's not capitalism.  It's something else....no?  Not asking to be a smartass by any stretch, but the last thing I want is a hijacking of terms like what's happened with "socialism".

Unregulated capitalism gets you Monopolies and industry owning the workforce.  Think railroads and indentured servitude.  That's the far end of the spectrum.  Unregulated socialism is at the other end of the spectrum, think Cold War USSR.  Both suck.

IMHO social issues should not be for profit (environment, health, defense, social security, etc).  Everything else is fair game for the most part, though we have to be careful of those railroad ... I mean tech ... barons.

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5 hours ago, Maurile Tremblay said:

My first reaction is that family dynamics differ from broader social dynamics in important ways, but that's boring and probably misses the point, so let's skip ahead.

My next reaction is that "promoting happiness should be the goal, but creating incentives for people to promote happiness is immoral" might not be entirely consistent.

I have a friend who's an aspiring professional singer-songwriter. She has a few albums, does a bunch of local gigs, occasionally tours around. I don't know what percentage of her income is from music, but it's not enough to pay the bills, so she has a side gig driving for Uber.

Stevie Wonder has gotten immensely rich using his musical talent.

Is that fair? I think my friend is very talented and has worked hard at her music, but Stevie Wonder is way more talented (with much of his talented probably being innate, though he's obviously worked his butt off as well).

The upshot is that more people have voluntarily paid for Stevie Wonder's albums than for my friend's because his music is better. That's another way of saying that Stevie Wonder, through his music, has made a lot more people happy than my friend has. Every voluntary transaction involves consumer surplus and producer surplus, at least in terms of expectation. (Sometimes people accidentally make bad deals.) To say that Stevie Wonder got rich through his music is to say that he made a lot of people happy. That shouldn't be viewed as a bad thing.

As a society, we are much better off, happiness-wise, having Stevie Wonder make albums while my friend drives for Uber rather than the other way around. Capitalism seems like a good way of getting that to happen. Stevie Wonder should make more than my friend when it comes to music. (And she should make more than him driving cars.)

If everyone made the same amount no matter what they did, they wouldn't have an incentive to find the best ways for them to make people happy.

So the mere fact of wealth inequality shouldn't be troubling. It is necessary. The amount of wealth inequality, however, may be troubling. Given that Stevie Wonder has brought more consumer surplus to the world than my friend has, it doesn't seem unfair that he should end up with more producer surplus as well. But should it really be many thousands of times more?

I'd say no, but (a) at that point we're just haggling over price, and anyway (b) that's where taxing-and-redistributing comes in. Capitalism (specifically the labor market) is for organizing society so that people are sorted sensibly into the right professions, and fiscal policy is for making sure everyone is financially taken care of. (This is what I was getting at with keeping capitalism in its lane. It's also where I'll start telling you about my idealized form of capitalism rather than exalting the specific version observed in the United States.)

Nozick said this much better when he used Wil Chamberlain as his example. ;) 

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6 hours ago, Dinsy Ejotuz said:

Yep.  It's the difference between a road system with stoplights and stop signs and lane dividers and speed limits, and bunch of blacktop everyone can use as they see fit. 

Both are "driving" but one works a lot better for everyone involved and keeps accidents from happening.

We do not have unchecked capitalism in this country.  Not even close.

We have so many laws around our markets that to even bring that up is absurd.

Edited by BladeRunner
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1 hour ago, BladeRunner said:

We do not have unchecked capitalism in this country.  Not even close.

We have so many laws around our markets that to even bring that up is absurd.

Unchecked is certainly not an accurate statement as one law or regulation immediately defines it as no longer unchecked.  The question becomes largely in how much “checking” we have or need to find the optimal balance.  We are not there.... 

Edited by dkp993
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Interesting thread. Of course, it being the internet, I have a quibble to an otherwise really good start. I'd posit that you can't really separate market functions from redistribution. I don't know why, and I should be able to answer this right away, but it would seem supply and demand curves are affected by the level of redistribution that goes on. I would imagine that an accurate look into how taxation levels can affect one's labor to leisure preference ratio would be instructive, a preference which would have ripple effects in markets writ large.

Something tells me that markets and redistribution are not that neat of a division. Yeah, just watched a Hayek video on Firing Line. His arguments are that people will not be as productive when taxed at higher rates, and therefore economic production decreases, affecting markets in the first place.

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1 hour ago, dkp993 said:

Unchecked is certainly not an accurate statement as one law or regulation immediately defines it as no longer unchecked.  The question becomes largely in how much “checking” we have or need to find the optimal balance.  We are not there.... 

We certainly have more than one law/regulation, that's for sure.  In fact, I would say we probably have tens of thousands of them from Federal, state and local levels.

"We are not there" implies that you think that aren't enough?  is that true?  I believe we probably have too many.

But to call it "unchecked capitalism"?  oy vey.  :doh:  That's a statement that someone makes when they are reading talking points.

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4 hours ago, JAA said:

Unregulated capitalism gets you Monopolies and industry owning the workforce.  Think railroads and indentured servitude.  That's the far end of the spectrum.  Unregulated socialism is at the other end of the spectrum, think Cold War USSR.  Both suck.

IMHO social issues should not be for profit (environment, health, defense, social security, etc).  Everything else is fair game for the most part, though we have to be careful of those railroad ... I mean tech ... barons.

Capitalism gets you those things and socialism gets you things on the other end.  If we "regulate" then we're not really letting capitalism do it's thing.  I think this shines a light on where capitalism can have issues.  If what we are really asking for is bits and pieces of capitalism then we should say that, no?  That's certainly an option.  Just like we can pick bits and pieces of socialism that work for us.

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3 hours ago, BladeRunner said:
8 hours ago, Dinsy Ejotuz said:

Yep.  It's the difference between a road system with stoplights and stop signs and lane dividers and speed limits, and bunch of blacktop everyone can use as they see fit. 

Both are "driving" but one works a lot better for everyone involved and keeps accidents from happening.

We do not have unchecked capitalism in this country.  Not even close.

We have so many laws around our markets that to even bring that up is absurd.

:confused:  That's his point.  Pure capitalism would be blacktop everywhere with no rules and people out doing what serves them best.

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36 minutes ago, BladeRunner said:

"We are not there" implies that you think that aren't enough?  is that true?  I believe we probably have too many.

No, doesn’t imply that at all. Was speaking to balance. Don’t believe we have, or likely ever will, achieved it.  We are simultaneously over regulated and under regulated depending on the business subset. 

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31 minutes ago, BladeRunner said:

We certainly have more than one law/regulation, that's for sure.  In fact, I would say we probably have tens of thousands of them from Federal, state and local levels.

"We are not there" implies that you think that aren't enough?  is that truecI believe we probably have too many.

Isn't the most likely case that we have too many regulations and other factors that interfere with the functioning of our market while at the same time we don't have enough checks on them?  That in some form you are both correct, but if you dig in with absolutes you are both wrong.  That we need to be careful that our regulations are protecting the vulnerable rather than the entrenched.

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