The system will fall

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Thank you! Glad to see someone talking sense here!

None of this is capitalism. Capitalism requires a complete separation of state and economy. That means that corporations have zero political influence and gov'ts have zero economic influence.

The situations explained within Economic Hitman do not take place within the framework of a capitalist economy; therefore are not relevant to any criticism of capitalism.

Crony Capitalism is NOT Capitalism.

You know better than that.

I go out for a few hours (I was down at the Occupy Edinburgh camp, as it happens), and this turns into a slanging match.

I'm still mostly with Sweetleaf. Just because Capitalism is the only game in town doesn't make it the only game available. Come on people, we are the creative ones. If we don't like it, let's work out something that will work for everyone.

It took me under a minute, by the way, to find out the wealth disparity in the United States (not my country, and this is a global problem, not just an American one, regardless of what some Americans think).

According to the Institute for Policy Studies, the most wealthy 1% of Americans own 33.8% of the wealth. The 90th to the 99th percentle combined own another 37.7% of it. The bottom 50% own 2.5% (the decimal point is in the correct place) of the wealth. http://www.businessinsider.com/15-chart ... 010-4?op=1 That comes from the Institute for Policy Studies, via Business Insider: hardly the most liberal (I know this is a bad word in much of the US) of publications.

The trouble is, capitalism is based on a series of false assumptions. Actually, they're so obviously false assumptions one might go as far as to call them lies. Those lies are designed to work in the best interests of a few people with money to begin with, and not in the best interests of the less well off or the global commons (the environment and natural resources). That system is now falling apart under the weight of its own contradictions, taking the rest of us with it.

I see one solution to this - work out something better, based on evidence, not lies.

Anyway, I'm off back to trying to work out how a postcapitalist society might function, based on evidence.

i am looking forward to your conclusion. it may be hilarious or it may be compelling.
but for now i am off to sleep. i could not care less about the matter at this point in time.

Yes it is. Crony capitalism is a capitalistic system and in the USA it has become the model of capitalism. It is clearly imperfect of course.

Yes, it has become what most people think of when they think of capitalism; but the use of gov't influence to make yourself more competitive in the market is in direct conflict with the principles that capitalism is based upon. Which is why it is called crony capitalism, not just capitalism.

Yes, but capitalism, crony or otherwise, is still based on false premises hiding behind fancy mathematics that bears no resemblance to the real world.

In effect, they're basing a socio-economic system on an act of faith, not reason, which is just as idiotic as the people wanting to base it on some old religious text.

Either way, it's not fit for purpose! In such a case, it makes most sense to me to work out a socio-economic system designed for long-term sustainability in the interests of everyone. Free, unfettered markets, with or without government connivance, cannot deliver that, for the simple reason that the whole notion is based on demonstrably false premises, such as the free movement of the means of production.

More colloquially, capitalism is bunk.

What is this fancy mathematics you speak of?

Capital is great. Private interests are the best way to reach public goals.

Capital drives technology, letting the new and better fill the market.

The other choice is Government and Laws, which have to say everyone eats and lives somewhere, and then trys to direct an economy with no idea what they are doing.

Government did it by the Grant of Crown Monopolies, thereby picking winners, who would see everyone had salt, by havng total control of salt.

Capital can do the same, at a low market price.

As an Economic tool it is the best, as long as the purpose, Public Goals, direct it.

Buying up all of the wheat produced next year to drive up the price is not Capitalism. This does not serve the Public Purpose,

Futures markets should be restricted to those who take delivery, speculators who would corner the market, drive up prices, are doing the same as setting fire to the fields. Putting their self interest before the public good.

Taxes are an after the fact Permit Fee, adjusted based on profit and loss, and set to provide for the Public Good, Roads, Schools, support of the old.

Those who would bribe elected officials to avoid paying for the system that allows them to make a profit, are stealing from the public.

Those who ship the means of production off shore should pay an import fee equal to what all workers and profits would have paid into the public till. They are stealing the means of livelyhood from the Public. They should also pay to support and retrain the displaced workers.

The current system is based on theft.

An example. A few years ago, The Economist magazine published information on a paper. This paper posited a continuum of traders. Now, a continuum, for those unfamiliar with the term outside of Star Trek, boils down to infinity plus one. So, to get a continuum, you have to keep adding one to infinity until, well, permanantly. The mathematician behind this notion then went on to prove that if you had a continuum of traders then certain things would happen in the economy. I forget what. It hardly matters. Everybody applauds.

Except any idiot can see that you can't have a continuum in the real universe.

Scientists usually call this something like an unsubstantiated premise.

Colloquially, we call it bullSh!t.

Of course, economists and traders are so used to believing all kinds of bizarre things, like a planet full of infinite resources that are universally movable and exchangable, they can actually believe this as well.

Most of the rest of us have been persuaded that they're really smart (in the face of evidence to the contrary), that we have been going along with it for years, in the hope that we as individuals might one day make the big time.

Go and read J.K Galbraith.

Then come back to me and tell me it all makes sense.

Then I will laugh in your face at your naivety.

The emperor wears no clothes!!

None of that has anything to do with the basis of Capitalism. You'll have to do better than give an example of one economist who may or may not be credible. You will need to give an example of something fundamental to the principles of Capitalism to back up your statement that it is "...based on false premises hiding behind fancy mathematics...", not an example of a single situation.

Ok Asp-Z

You defend the current system by saying competition is good because it forces the uncompetitive out of business. You make mistakes, you go bust and the businesses that made the correct choices thrive.

Would you broadly agree with that this is your view?


Well lets see what actually happened shall we?

Because short term interest is locked into the way the system works in reality a few banks lowered the cost of borrowing, predictable the flood of cheap money chasing the same number of goods meant rocketing inflation in the housing market.

To avoid losing market share, profits and investment the other banks are forced to also lower the cost of borrowing in order to avoid going out of business. this feeds back into the bubble, more cheap money flooding into the system chasing the same number of properties, more rocketing inflation in the housing market.

Any sane person looking at the situation in 2002/2003 spotted a bubble forming, myself included. Many economists pointed this out and were ignored. Many websites devoted to the insanity of a local and then global property bubbles sprang up to discuss it and watch aghast.

Inevitably, the business decision of offering NINJA loans was shown to be a foolish one.


What happened next is the problem you seem desperate to ignore to preserve your fantasy of free market supremacy.

Banks started to collapse.

Instead of one bank collapsing and good sensible banks moving into that market space and becoming more profitable, what happened was a domino effect, more loans went bad more banks became technically bankrupt and we reached the point where immediate intervention was necessary to prevent the collapse of the entire global system of finance.

Instead of the feckless being punished for their poor decision making skills they were rewarded. Instead the sensible and prudent savers who sat the bubble out are being robbed to bail out those who caused the bubble.

The system is rewarding stupid and destructive behaviour and punishing sensible constructive behaviour.

Allowing banks to get 'too big to fail' and then requiring them to compete is only ever going to lead to the same result, the concentration of wealth to the point where competition drives the system to implode.

This is not a new problem, Karl Marx demonstrated the inevitable result of unfettered capitalism in Das Kapital...

That is utterly incorrect.

There will always services that benefit everyone, but that are not in anyone's direct commercial interest to provide. Those are properly the sphere of government. Administration of law, provision of universal acces to primary and secondary education free at the point of delivery (even if the delivery agent has a commercial interest), the provision of universal access to health care (again, even if the delivery agent has a commercial interest), etc. are all economic activities that are properly within the sphere of government.

Similarly, holders of capital must always be free to advocate for their interests. Consider an economy in which politicians are free from influence by capital interests. Politicians would be free to tax those interests disproportionately.

The fact that your country has turned the relationship between capital and government on its head does not mean that no such relationship should exist at all.

Separation of state economy means that politicians would have no power to tax anyone.

I'm not talking about what should exist, I'm talking about what pure capitalism is and how most criticisms of capitalism are actually criticisms of actions not supported by the principles of capitalism.

Yes, the banks made bad economic decisions and they suffered for them, that's how free markets work. Of course, banks being banks, the government bailed them out (and they had little choice).

The way I see it, three factors are to blame here: lack of regulation, banks, and consumers.

Lack of regulation speaks for itself, and I'm not in favour of extreme capitalism - it does need some regulation to keep the market free and the economy efficient.

The banks played their part by lending money to people without the assets to pay the money back. This was obviously a stupid thing for the banks to do, and they were too focused on short term profit to care that it'd all come to a sticky end until it was too late. And yes, some outside economists and investors saw this coming and the smartest of those made a tidy profit from their predictions.

Finally, consumers borrowed more than they could pay back. They let go of any common sense and trusted the banks to know what was best for them. This includes those who got into subprime mortgages without researching them properly and making sure they'd be able to keep up with payments after the first few years of frozen interest.

Last edited by Asp-Z on 15 Nov 2011, 4:31 pm, edited 1 time in total.