Can anyone define "Capitalism"

Laguna, I understand that such questions may not be of relevance to the "science" of economics. However, I disagree with the notion that these questions are not of importance when discussing the relative merits of which economic system to implement because any question of "does it work?" presupposes that we've answered the question "what are we working towards?" Both questions must be settled before determining which economic system to implement. To attempt to answer the first question without knowing the answer to the second question is silly, to presume that the answer to the second question is obvious to everyone is ignorant at best. The question of what works can only be answered once the objectives are known.

Drew, the only alternative to a capitalist system is some form of authoritative regime... however, it need not be limited to authoritative redistribution. In either case, the problem that most people have with alternatives to capitalism is the authoritative-ness not the redistributive-ness. It just happens that most justification for authoritativeness comes from redistribution schemes. I made this argument in the previous post.

Of course, I think it worth mentioning that I like the current system of the US mostly and I would much like to see the system being improved by becoming more capitalist.

In any case, I think it important to point out that the observation that people need things to live is trivial. There seems to be an assumption that, somehow, I'm denying this... which is not the case. Of course people need things to live. It would be downright silly of me to refute this and it would be silly of you to think that I don't understand this.

My point on this issue is that while people need things to live, people also need to produce the things that people need to live. Both statements are obviously true. I don't think you would even attempt to deny my additional observation... but what do these things prove? Nothing. These will be true in any system. Whatever the system is there must be producers for there to be consumers.

The thing that we're arguing about is whether anyone's need provides sufficient justification for the use of government power to provide it.

I'm not sure you understand the difference in the nature of control within the capitalist system as opposed to outside it. Within the capitalist system, you may be thinking "I don't have control", but this is technically true of everyone. From producers to consumers, nobody has full control of anything. That's kind of the idea. The price itself is a reflection of a huge variety of factors... the most important of which at this juncture is the relationship between the needs of people and the available resources. The reason the price elasticity of demand behaves the way it does is because everyone needs these things. Of course, I think you've blinded yourself about what happens on the supply end when the price rises. The increase in price is what drives investment in developing new resources, infrastructure, and methods that previously were not profitable to respond to the increased demand. Every great profit represents a great need for new resources to be developed.

Price controls prevent this from manifesting and retards the growth of sectors that need to grow to fill demand. In other words, this is not a viable solution to any problem of shortage (the root problem of rising prices) as it greatly keeps down the ability of specifically new competitors and even existing competitors to spend the money developing new infrastructure and forging new methods. The price itself is a manifestation of deeper issues in the overall market, to ignore this is to break from reality.

To put it another way, a car costs so much because people value it so much. The cost to produce is irrelevant... I'm sure it'll seem silly, but it is worth mentioning that people are fully capable of valuing things at less than the cost to produce is, people just aren't in the habit of wasting resources producing these things (well, unless it's like valuable in other ways, but that's why there are non-profits).

Now, let me address your "lack of freedom" again... the lack of freedom imposed by a capitalist system is the lack of the ability of any one person to name the price. Just because I don't feel a car is worth $20,000 doesn't mean the guy next to me agrees. Of course the seller is going to sell to the guy willing to pay more. And it is right that he does. It would be selfish and irrational of me to expect that people producing the thing should trade it to the person willing to pay more than me. It would be equally selfish and irrational of me to believe that the people making bread, cars, and other necessities DO SO FOR MY SAKE. The world doesn't revolve around any one person.

The thing you need to understand is that those "market value" represent the "social value" of a product: the relative value assigned by all producers and consumers competing, negotiating, trading, etc. The value something has within the society. The fact that the cost to produce isn't much compared to the value of the final product just goes to show the value of actually producing the good. The "fairness" of the capitalist system is that the "market value" of everything I put into the system as a producer corresponds to the "market value" of everything I take out as a consumer. Can everyone add a value equivalent to the value of everything they need to live? History shows this isn't always the case.

Now, I'll take your argument on people experiencing life as they want as a hyperbole... the society at large is better off if those kind of people who expect other to provide their life and comfort for them to be ignored. Essentially, there is little reason to keep such parasites around. That's not the meat of the issue though.

For those who are unable to provide for their own needs, I wouldn't use such harsh language, but the sentiment isn't all that different if they expect that others provide for them. This brings me back to the compassion point. I don't think you truly get the picture of compassion. It is easy to just say, we should pass laws to feed the poor and leave that responsibility to the government... which while I don't think it is justified, there is a deeper thing that I take offense to. That is the notion that the fulfillment of your personal values is somehow is not your personal responsibility. To say that the government should provide the necessities for people is one thing... to actually provide the necessities for people is another thing. I think you can see where I'm saying it's only compassion if you earned the money you're giving to others. I heard a slogan once that "Profit precedes Philanthropy", in other words, the idea I'm trying to get across is that you need to actually create the value that you give to other people. I think it shouldn't be too surprising that I accuse you of being more concerned about depriving the wealthy of their money than providing for the poor. You don't want to actually be inconvenienced to help the poor, you just want to feel smug by ordering others to do it for you. That is essentially what it means to say, "the government should provide for people." Everyone knows that we all can help each other out our own damn selves and we don't need the government to do it for us.

@Laguna: "Plus, the definition of capitalism belongs more to Law than to Economics" Agreed.

"The main question we should ask is does it work? That is to say proposals should be judged on their own merits to the objectives they are assigned; which implies ideology ought to bear no weight in that judgement." Agreed, and disagreed. To the extent that an ideology corresponds to reality, a proposal that accords with that ideology will work. With the qualification that not only the primary, first order effects of the proposal be considered, but also the secondary and tertiary effects, which can sometimes be quite long lasting and of great consequence.

OK you touched the point, but ignored some facts.

Capitalism only works because society as a whole gets to determine the value by a choice of whether or not to purchase. If people refuse to purchase then the price goes down. The cycle continues until a new profit maximization point is hit. THIS IS IMPOSSIBLE with items necessary for survival. This is the whole food point, you don't eat ya die! No one can wait the time it takes to readjust sales figures too buy at a lower price point. There are goods with indefinite price elasticity it is immune to "capitalism." I'm not merely saying an individual has no control, I'm saying the society, the majority, the mob has no control. So it's not a complicated idea of people need certain things, but what I fail to see is your inability to connect those dots. Absolute capitalism also supports a monopoly which would take prices to a whole other level of servitude to the dollar. Smart Phones could sell for 2000$, I believe they would sell smaller volume but still. The point in that is the depravity of it all, only 2 companies actually make profits on smart phones ALL others lose but to change the price point society stops progressing and everyone becomes a servant to those with the supply. But I don't want to get sidetracked from this they aren't NEEDED but are accustomed to. With no suitable replacement to the cost we lose control. There is a reason inflation has hit necessity items harder than anything else, because a few people make the rules and the others abide by them, there is no freedom. Ignore the corn shortage, food still inflates faster, house prices decreased rent actually went up despite the increase in supply volume. Car prices are up, with interest rates down. The whole situaton is completely opposite to what should be happening. Why? because society as a whole can not influence this. And you are right in the system cost to produce has no relevance. So why? The cost to produce food is down, supply should rise, the prices of homes are down the supply of rental property is down, automobile production is up so supply is up and prices are climbing in all three of those areas. If the cost of heat, water, and electricity are up. All of these areas are things people can't live without and inproportionality target certain individuals. So you want to throw class warfare into the mix, well it is justified. You know I do my own taxes just so I can skip over some of the built in deductions because those scum of people you make my income and more don't pay their fair amount. The agricultural revolution was 250 years ago since then food is practically free and is not a luxury but a necessity of life that has been monopolized and exploits people all in the name of capitalism, all to be enslaved by capitalism.

I don't know this argument doesn't seem to work with you, it is an obvious and concrete anti-freedom due to capitalism approach but you don't see the lack of influence society has in the most important markets, so whatever.

Price controls eh? Price Controls ensure 2 things. One is that the market can ensure a buying base (very important because of a shrinking buying base due to wealth inequality) and the other to ensure availability to certain firms that innovate (as it is rare for consumer goods to have price controls, and it is much more severe in industrial goods, as there has been commercial freezes due to stockpiling many times in the past). You bring up price controls but you ignore corporate price controls, or capitalist price controls? Price floors get created between competitors much more frequently then government price controls. Why? To go against capitalism of course, it is a paradox. A capitalist approach to maximize profits is to get all your competitors to raise profits for everyone, yet at the same time the people lose the alternative and society no longer has any control to dictate their prices. Ahem... Slavery once more.

Authoritative Regime is the only alternative to capitalism? That's right the Greeks never existed. The Indian Oligarchies of the BCE times in which the leader had 2 years to prove his leadership and the people decided whether he lived or not after that is completely made up. The Navajo that had leaders based on situations was completely ensnared with a single all ruling being. That's just dumb. Facsism or Capitalism, there are about a thousand other options, and trillions yet to be thought of. Also don't forget pre-capitalist societies also had leaders though in absolute power still did things for the will of the people, that isn't authoritative that is efficiency.

As for compassion and philanthropy though off topic you are just simply wrong. You have knowledge of your own being through your own experiences, you do not no how I think, or anyone other than yourself. If you are stranded in the desert you have a canteen that will get you to the other side comfortably and pass a wanderer with bad luck and hydration problems will you give him water? You might. If you know that you will make it anyways but will have an uncomfortable trip, you still might, but maybe less likely. There are people who will give him water no matter what. So to downplay charity is something outside your realm of understanding, because people do not like to see others struggle, people make sacrifices without any gain. You do not need any benefit any profit to do the right thing. This is a difference in character between the two of us, I'm a good person, I don't know if you are but if I see someone who needs something that I want, need exceeds want. Money is wanted, Food is needed. Food is practically free so it should be given. The government's entire reason for being is to ensure the rights and liberties of all of its constichuents. You seem to align yourself to a foolish now common idealogy that you live your life to make money and seek out pleasures. While I understand that money can only buy simple pleasures that addict the soul to frivalous things. You downplayed my attachment to John Stuart Mill before but the truth is I know true happiness and I can't buy it.

It comes down to this though, a capitalist society can not evolve because this Society Value has no consideration to the societies benefit.

<!-Quote-!>Quote:

<!-Quote-!>Quote:

Quote:

I apologize for using economic terms. But they are basic concepts I'm sorry many of you don't understand.<!-/Quote-!>

Conceited little jerk. Dont you be condescending to me pal.<!-/Quote-!>

Haha, I'm not the only one rankled by the "expert" tone. Drew, the reason people upthread complain about not being able to understand what you're saying is not that you're talking above them. It's that you write as though English is your second language.

I don't mean to pick on you. You have a few good insights, I think. So much of what you write isn't clear enough to even engage with, though.

<!-Quote-!>Quote:

if you don't have money you don't have accessibility to the things that the world has to offer.<!-/Quote-!>

That's insightful.

Drew, when you say "the things that the world has to offer" are you talking about natural resources, or are you talking about goods and services that people produce? The people who produce the goods and services are real people, who have their own motivations. If not offering them money, which they can exchange for other goods and services, what incentive will you offer them to produce things for you?

Thanks jojo you put that in a better way for me to clarify. I'm not trying to say there shouldn't be a way to earn things, I'm merely trying to point out that not all things can be evaluated fairly with extremely capitalist means. An IPhone can easily be adapted into the free market, but there are things that can't. If all food prices increased by a factor of 100 all at once people will begin to try to make preparations to produce their own, but they would be forced to buy them in the mean time. So my point or at least the point I'm forced to defend is that for items that do not have the option to say no to cannot be subjected to the free market. If you can say no, then its fine. But not all items are luxury items you can do without. Now this can be construed as a small section of commerce, but it is easily 90% of the products that poverty consumes. This is not okay. People will always be put in poverty because something that is essentially free elevates to a point that actually has the power to keep the lower class from ever having the freedom to have any extra money whatsoever. On that point when has anyone lately had the ability to go to a gas station and say I will buy your gas but only if they lower the price to 2.00$. Then when does a person have the ability to say fine I won't buy your gas? This doesn't happen because people don't have the right to denial, only products with a right of denial can function properly in a capitalist system.

And regarding my linguistic ability, hmmm all I can say is that on simple things usually I write very well. But the topics often brought up in SC are complex and complicated I often get swept away in too many directions I agree it could be hard to follow. I didn't mean to be offensive, it's usually obvious when I get frustrated with a person. So I'm sorry If you also took offense to my language.

Capitalism is a monetary system and thats it. But when adopted as a way of life its becomes a legitimate way to rob someone under the guise of profit and intelligence.

I take it you have all heard of the Petro-Dollar? LOL

Who robbed all the Gold!......Who robbed all the Gold!......You Fat Bas'#rds!......You Fat Bas'#rds!......You robbed all the Gold!

Capitalism was created by the Zionists so they could tap into the Worlds wealth and resources to create the Worlds biggest Army (USA) with the aim of re-taking Jerusalem.

Simple ;)

Lord Lee: You are proving my point.
Nix: I reserve comment on your idea of capitalism until I am sure you are not joking.

<!-Quote-!>Quote:

If all food prices increased by a factor of 100 all at once people will begin to try to make preparations to produce their own, but they would be forced to buy them in the mean time. So my point or at least the point I'm forced to defend is that for items that do not have the option to say no to cannot be subjected to the free market.<!-/Quote-!>

But to a large extent the price of food is determined by the free market, and over the long term the price of food has steadily fallen, not risen (in real terms, adjusting for inflation). In free, capitalist countries you just don't have the situation you are describing.

Food Inflation
2008 4.5%/2009 6.3%/2010 -.6%/2011 1.8%/2012 5%

Inflation Rate
2008 2%/2009 0%/2010 0%/2011 1.5%/2012 1.3%

I think you are wrong. And it is the no course for deniability there is no FREE market. Like I said before I understand the use of the free market for everything other than things required for survival but those items that are needed for survival have a positive correlation with the approximate buying power of those in poverty, and do not with the general inflation rate.

This is interesting.

As Share of Income, Americans Have the Cheapest Food in History, and Cheapest Food on the Planet

<!-Quote-!>Quote:

The USDA recently updated its data on "Food expenditures as a share of disposable personal income," and reported that in 2009, Americans spent 9.47% of their disposable income on food (5.55% on food at home and 3.93% on food away from home). The share of income spent on food last year was just slightly higher than the 9.42% in 2008, which is the all-time record low (see top chart above).<!-/Quote-!>

We'll thats because your all being fed GM food. Did you know Monsantano spend millions to make sure the health risks of eating GM crops are not labeled? Mmmmmmm wonder if there will soon be a 'tobacco moment' for your food soon?

That quote has outside variables. It doesn't account for changes in income. <-Minor, but my figures represent only the figures in the beginning of the year, and if you at my numbers with that information then the day day 2009 ended food was in deflation. So you are using out of date figures with too small of a scale. That quote was perfect to explain your point however it is an outlyer to the long term effect.

Also I try the link and it sends me SC, so I can't trust a quote until I can realize the significance of the biased spin the journalist takes. I'm merely attempting to say I'm right and your wrong but I've already seen this 1 period and it is inconsistent with the larger trend.

While econometrics did develop as a way to help prove or disprove a particular hypothesis (theory), it is somewhat amusing to see it applied to the case of Weber's The Protestant Ethic and the Spirit of Capitalism. While I would use it in this case as well, I would treat it as a mere curiosity. I imagine so would many economists. Econometrics has its failings, and, in this particular case, we could be seeing poorly chosen regressors or just plain crappy data.

I do have to stress, that Weber did say that his answer was only probable. As probable as it may be, it still has traction to this day, because it remains one of the best explanations to date. The number of times I see Weber mentioned in a topic about capitalism in the ecosphere is rather impressing. We should have a Godwin's Law version for Weber and capitalism.

When Weber proposed that protestant ethic was one of the factors that enabled the rise of Capitalism, he had to take into serious consideration this question: what was so different then that allowed Capitalism to appear at that time and not before? And this change in behaviour, fruit of a new religion, is what he found.

Maybe it wasn't "sufficient", perhaps not even a necessary "condition", but I believe it helped. To assume a more "durkheimian" view that greater population density is the origin of capitalism is a poorer explanation, that leads me to ask why it didn't appear in China centuries before. Although, I do think that population density (urbanization) played a relevant role as well.


Mizore,
I hope that only your first paragraph is directed at me. I agree with you and I believe I was very specific in what I wrote:

<!-Quote-!>Quote:

The main question we should ask is does it work? That is to say proposals should be judged on their own merits to the objectives they are assigned;<!-/Quote-!>

In other words, objectives are defined before, and the instruments are chosen based on their efficiency.

As objectives are chosen is up to Society as a whole.


Laguna