Capitalism's Core Flaw

MayCaesar

@AlofRI

Greed, in fact, is why unregulated capitalism will not and cannot lead to an oligarchy. Greed of countless wealth owners leads to them competing against each other in a very harsh environment, and for one of them to gain the absolute dominance over the market is only possible in case of a localised technological breakthrough of the scale unheard of. Such as a company developing mind-altering broadcast stations and subduing all of its competitors through mental manipulation.

That same greed is the reason why any system with a strong governmental involvement in the economy IS going to lead to an oligarchy. Because in this case the government is THE oligarchy, the ultimate monopoly - only, unlike the businesses, its actions are not severely restricted by the need to compete with others. It does need to compete with other governments and other political forces on the domestic political landscape, but that is a completely different type of competition, which is not based on the need to survive and thrive, but, rather, on the need to play a bigger role in the political decision-making.

The ideal that people keep the government in check does not happen to be true. You should just look at the number of regulations the federal US government has had over the course of history, to see how the spending has gotten absolutely out of control, how the government has its claws everywhere, and how nobody can oppose it because it controls the entire executive and law-making process.
The Founding Fathers understood this very well, which is why not only did they implement the system of checks and balances (which, as they knew very well and explicitly stated so, is not nearly sufficient for a functional democratic republic), but also went out of they way to assure the extreme decentralisation of the government, with the overwhelming fraction of the power being given to the state and municipal governments, as well as to the local individual cooperatives.
Nowadays the cooperatives have no power, the municipal governments can barely feed themselves, and the state governments are quickly losing their independence as well. The Founding Fathers, if they could look at the modern system, would say, "We have failed".

Look at the nations most successful economically nowadays, excluding those that rely on oil and similar random advantages. Switzerland, Sweden, Ireland... What is common between them? The decentralisation. In Sweden, for example - which, by the way, is easily the favorite country of the majority statists - the municipal tax ANY individual pays is higher than the federal tax ANY individual pays. In Switzerland, small villages have more power over what is happening on their territory, than any other level of the government. In Ireland, the central government barely exists at all, having mostly merely formal functions.
The US is actually already a strong outlier among the most successful nations in terms of the federal government involvement in lives of common people. And that is not enough for some, and they want to return back to those 90% tax rates, when things were so allegedly good, that children had to work starting the age of 8 to make ends meet, and factory workers worked long 20-hour shifts on dangerous jobs with a lot of potentially lethal machinery.

If you do want the government to play a major role in economics, without experiencing the second Great Depression, then you should advocate for strong municipal and state rights, as opposed to the federals taxing everyone into oblivion. The latter does not work, as many of those European countries modern statists like to point at have experienced themselves when they tried that model. Hollande tried this model in France; it failed. Socialists tried it in Sweden in 70-s; it failed. Certain groups tried it in West Germany soon after the World War 2; it failed. The US tried it; it lead to a regular recession turning into the Great Depression. It failed. Let us maybe learn from history and not make the same mistake again.

---

I am also not sure why you keep pointing at Russia as an illustration of your sentiment. Russia has a corporate state market economy, similar to Mussolini's system, with strongly socialist foundation (Mussolini was a socialist - not a common knowledge among those who had not read his works; it is not uncommon nowadays to assume that "socialism" and "fascism" are mutually exclusive systems, while in reality the latter is built on a lot of the principles of the former.). Add to it the rampant corruption which has plagued Russia for the last multiple centuries, and you have a recipe for a disaster.

Ampersand

@piloteer

piloteer said:

Do you believe that a person who works 90 hours a week down a mine deserves to earn less than the owner of the mine who does no work themselves, leaving it in the hands of Directors of the company who work on their behalf, and owns the mine because they received it in their parent's will through any work of their own?

Do you believe someone who works 35 hours a week providing healthcare deserves to earn less than someone else who works 35 hours a week providing healthcare in exactly the same way but happens to be paid 30% less due to different factors impacting the labour market in their area?

I think what would help is if we have a basis for what should determine people's pay. I think people should be paid based on how hard they work, how beneficial their work is and how rare their talents are - not necessarily in that order. Do you agree? If not, on what basis do you think people should be paid?

"@Ampersand
 Yes, I do believe that a person who works 90 hours a week deserve less than the owners. The business is the property of the owner. The workers aren't being forced to work there.

Yes, I do believe someone working 35 hours a week can deserve more than someone else doing the same job, especially in healthcare services which is driven by a system of merit, not by whoever has been doing it longer.

There already is a basis for what determines peoples pay, it's called merit. If someone is more valuable to an employer or business, they probably deserve a better pay. That system is built into capitalism.

Take another look at what you wrote and what you were replying too, because your responses are not consistent.

You conclude that you believe that people should be paid based on merit - yet in the first example you are willing to have merit be completely disregarded and have people be paid based on inherited wealth. That is completely contradictory.

In the second example you make a strawman to avoid having to face the same issue. As I stated the two people are "providing healthcare in exactly the same way" - they are providing exactly the same amount of merit. The difference is in labour market factors, e.g. in one area there is a massive labour surplus so the worker in that area gets paid a lot less because it will be harder for the worker to get a new job and so they can be compensated even lower than the actual value of their work than they normally would. If you had actually responded to the example I provided rather than ignoring it and making up your own, you would have had to deal with a point that again goes completely against your criteria for pay being merit based. 

I suggest you rethink and come back with an answer based on a consistent viewpoint.

AmericanFurryBoy said:

@Ampersand
sorry, I meant to flip the salaries of the miner and the owner

@AmericanFurryBoy

There are options other than "the current system" and "Pay each worker $1,000,000", so that's a false dichotomy.

I'd point out that the idea that the central idea of an economy should be "the one who owns a company should be able to set the salaries" as you stated in your prior post is

a) A random metric with no moral or social value whatsoever.

b) Complete meaningless even on its won terms because in every society the owner will set the salaries. In a Stalinist Dictatorship the state owns the property and sets the salaries. In an syndacalist society the workers own the company and set the salaries. In a feudal system the King owns the land and sets the requisite tithe. Pretty much every single economic system either meets your criteria of the owner of the company setting the salary or can be made to meet it with minor tweaks, so even if this metric was in anyway worthwhile to try and achieve it would still be useful because it doesn't allow for any distinction between other systems.

With something like "It should produce the best overall social outcome without prejudicing people's universal human rights it is clearly valuable and worthwhile trying to achieve that and basing your economic system around it as we and our families and our friends are part of society and we want good outcomes for everyone. It also allows a distinction between different economic ideologies because there you can compare and contrast them with economies that don't produce the best social outcome not being as good.

Ampersand

AlofRI said:

@Nathaniel_B I agree with you, on principle. However, NO political or economic entity has proven to be flawless. I'm NOT a socialist, I'm not a complete capitalist either. I'm pushing to take the best, the least harmful, the most beneficial of democracy AND socialism and put them together to make what we have, better. 
It's hard to argue that capitalism, unregulated, will not lead to an oligarchy. That would be inferring that GREED doesn't exist. It does! 
It's hard to argue that socialism, in its Marxist form, will not lead to an authoritarian government taking advantage of "the workers".

Still, a government OF, BY and FOR the people can use the BEST of BOTH worlds and put together a fair system for everyone. Reasonably free trade, ownership of property, protection of "the people" from oligarchs, affordable health care and education through collective cooperation, and protection from GREED.
There is NO need to have a "small government" if it IS for the people. It HAS to be big enough to take care of a big country, AND keep state governments from "creating their own country".

Just so's ya know, I ain't one of them "everything for free" socialists. Wouldn't it be nice though if we could get together in a single payer health insurance that took the (YUGE) profit motive out of insurance and put it on our costs?? Pressured the drug companies to keep their prices "reasonable" through ACTUAL competition (maybe with other countries). Democratic, paid for socialistic benefits, with "somewhat controlled" capitalism. We ALL want LOWER COSTS, NOT "free". That's kind of the way America WAS, when it was great. Still had problems, but, could work together to save money AND lives.

@AlofRI

I'd have to disagree on a few key points.

Capitalism, even regulated, tends towards Oligarcy
One of the most celebrated economics books of the last few years is Capital in the 21st Century by Thomas Piketty which I'd strongly recommend. One of the issues with economics is that often studies and predictions are highly theoretical and there is no sound model to prove them. People will learn an ideology then seek out the evidence that supports it - with it being very difficult to prove something as you would in physics or chemistry.

Despite the name, Thomas Piketty's book is also very much about the past of Capital and it stands out because before writing it he collated massive amounts of data to see what was actually going on with economies.

His conclusion is that Capitalism is inevitably tending towards a concentration of wealth and greater inequality- oligarchy in other words. Though there were drops in the 20th century, his analysis shows that these were down to outside factors that we wouldn't want to repeat; for instance WW2 saw a massive redistribution of wealth that had a knock on effect for decades but obviously isn't something we want to reoccur.

Any Capitalism system will by definition have an upper class with a disproportionate amount of wealth and power. Their disproportionate amount of wealth and power allow them to have a disproportionate influence on politics and the economy and ability to act selfishly to accumulate even more wealth.

Marxism = Authoritarianism? Nah.
I often find the argument that Marxism is inherently authoritarian fairly baffling. There were certainly a host of Soviet era countries that were authoritarian, but I think any analysis of the situation makes the claim that the authoritarianism was down to Marxism is a little absurd.

There were really only a few independent Marxist countries. You can point to countries like Soviet era Poland, Hungary, Romania, etc but they were Russian satellite states who automatically followed the Russian line. Even with Yugoslavia which we can perhaps classify as independent following the Tito/Stalin split, it become independent after Russia had already instituted an authoritarian government structure. How many countries really had an option about how they developed? Only a tiny  handful, and in all of them there are a lot of other factors that pushed them towards Authoritarianism. look at the USSR as the prime example, which had no history of democracy or democratic institutions, was founded in violent upheaval following a lost war and even now that it's a Capitalist state is not democratic and free. I think we can safely say that there was no chance of Russia going democratic even if the White army won - because the issue was not that socialism is inherently authoritarian but that Russia at that time was incredibly authoritarian and still is. That wouldn't apply to a modern democratic country choosing via popular vote to institute socialist policies while keeping in place all their longstanding institutional protections against authoritarianism.

if I said the following, would you think it's a valid comparison. "I compared the running speed of 5 black men and white men and my results shown that white men are clearly superior runners. I am choosing to assume that the black men being in their 80's, being amputees and having to run through a muddy field has no influence in comparison to the white men in perfect health in their 20's running on a sports track. This is clearly all very scientific and accurate." Of course you wouldn't! You can't ignore every single relevant metric apart from one and then just randomly assume only that metric matters. So why would you do that with Marxism?

Nathaniel_B

AlofRI said:

@Nathaniel_B I agree with you, on principle. However, NO political or economic entity has proven to be flawless. I'm NOT a socialist, I'm not a complete capitalist either. I'm pushing to take the best, the least harmful, the most beneficial of democracy AND socialism and put them together to make what we have, better. 
It's hard to argue that capitalism, unregulated, will not lead to an oligarchy. That would be inferring that GREED doesn't exist. It does! 
It's hard to argue that socialism, in its Marxist form, will not lead to an authoritarian government taking advantage of "the workers".

Still, a government OF, BY and FOR the people can use the BEST of BOTH worlds and put together a fair system for everyone. Reasonably free trade, ownership of property, protection of "the people" from oligarchs, affordable health care and education through collective cooperation, and protection from GREED.
There is NO need to have a "small government" if it IS for the people. It HAS to be big enough to take care of a big country, AND keep state governments from "creating their own country".

Just so's ya know, I ain't one of them "everything for free" socialists. Wouldn't it be nice though if we could get together in a single payer health insurance that took the (YUGE) profit motive out of insurance and put it on our costs?? Pressured the drug companies to keep their prices "reasonable" through ACTUAL competition (maybe with other countries). Democratic, paid for socialistic benefits, with "somewhat controlled" capitalism. We ALL want LOWER COSTS, NOT "free". That's kind of the way America WAS, when it was great. Still had problems, but, could work together to save money AND lives.

The world is different now than it was back then. Lowering prices ain't gonna work, it's just the way the economy is now that an idea like that won't be effective. America ain't never gonna be socialist. 

piloteer

@Ampersand

Merit is mutually exclusive with pay, not with economic status, or ownership status. An even stronger ideal bounds owners to their businesses, which is the right to personal property. I beg to differ, my argument had nothing that contradicts what I'm saying here, and my argument was saturated in consistency. 

Whatever economic law you think may be applied to streamline peoples pay that would be based on a predetermined set of criteria that sets what constitutes merit in stone, will not bring more happiness to all the workers. Some may end up receiving less pay. Others will find there individual bargaining rights trampled on. "Collective bargaining rights" only serve to shudder any concept of being payed based on merit, and instead a system of hierarchy is implemented. That hierarchy isn't necessarily going to be based on merit, but instead based on who has been working there longer. Workers will become frustrated that their individual bargaining rights will be lost, and they can no longer appeal to their bosses for higher pay based on merit. Whatever system you may be arguing for, it's worth pointing out that it's devoid of any concept of individual happiness, and probably devoid of any ideal of happiness at all.

Friedrich Hayek has been able to demonstrate time and time again that implementing rules in the economic system that hope to achieve a determined outcome never works. Either the rule has no effect at all on the system, or it has an adverse effect, it never has the hoped for outcome. This causes a snowball effect where more rules will need to be implemented to try and litigate the damage that past rules have caused. In the end, we may end up with a system that stifles merit based pay, and brings on an economic caste system, where we are entrenched in our respective socioeconomic statuses, and any hope of climbing the economic ladder is lost. We will be working for the "common good" and not for ourselves. This system is devoid of any individual happiness. 

MayCaesar

@piloteer

While I agree with you in spirit, I think you idealise the picture a bit. A meritocratic economy would be the one in which one's merit is defined based on some well thought out metric. A free market economy is different; on a free market economy, merit does not necessarily determine how much you are going to be rewarded for your work.
For example, if you are a very close friend of your boss, then it is very likely that you will be paid off better, than someone with the exact same skill set as you are - despite the merit in terms of the ability to do work at a certain quality level being the same.
Capitalism does better at rewarding people by merit than any other system attempted so far - but in the end, this is not what it is about.

It is another matter that meritocracy is one of those ideals that sound good on paper, but do not work in practice. The most obvious problem with it is that "merit" is a very subjective category. Who has had more merit in music: Bach or Mozart? There is no single answer. But even aside from this problem, meritocracy by definition demolishes freedom of choice, as well as bargaining, as you pointed out. If my merit has been determined, then, no matter what I do, I will be paid the same - and we get into the same problem as in socialism, where eroded incentives lead to the society in which individuals lack ambition and strife for excellence.

To me, capitalism is all about freedom. "Merit", "opportunity", "fairness" - all of these are either derivative of freedom, or not related to it. I do not care if I get paid more or less than I "deserve" (what does the word "deserve" even mean exactly, for that matter?). What I do care about is whether I can play the economical game on my terms, negotiating for myself - or someone hijacks my role in the game and tells me how to live my life. And this is why capitalism is the only system leading to one's ability to achieve true individual happiness; any other system, at best, allows one to achieve "forced happiness", which is not even remotely the same thing. 

It is much like living with your parents forever: they may be loving, they may take a good care for you, they may give you an easier life - but eventually you just want to have your own life, to set off on your own. And only capitalism allows that to happen. Any other system forever puts you in your parents' house, and any attempt to start your own life is harshly persecuted - based on any arbitrary reasoning, it being either "the obligation to the society", or "you do not know what is best for you", or whatever else.

piloteer

@MayCaesar

I wasn't arguing for a meritocracy. I was arguing that employees are payed according for their merit. If someone at your work is getting paid more simply because they're friends with the boss, then you have a right to go elsewhere and be paid according to your value. I was also arguing against rules that would disallow owners from paying their friends more than other workers. Although paying your friends more simply because they're your friends is not a solid business plan, but you should still be allowed to do so. My use of the word "merit" is being used according to its definition, I'm not using it as an argument for an institutionalised ideal. My apologies for the confusion. The word merit is being tossed around a lot lately, and it's kind of taking the merit out of the word merit. I should have probably used the word value instead.

MayCaesar

@piloteer

I understand, just wanted to point it out to make the discussion more concrete. You could say that "merit" refers to how much a given person is deemed needed for the job by the boss, for whatever reason, and then, indeed, everything adds up.

There are exceptions to this as well, of course. Sometimes the boss may believe that your services cost, say, $100,000 a year - but offer you only $80,000 a year, hoping to win the resulting haggle, and you may accept, thinking it a good deal. In this case, you could say that you are paid below what your merit suggests. However, an interesting aspect of this situation is that the worker has not realised how much the boss valued them. The worker's ignorance costed them dearly. The ability to estimate your own market value is one of the essential life skills, and as such I would argue that one who does not know how to do that properly already has lost a fraction of their merit.

But this discussion is probably more about semantics, than the substance of the issue.

piloteer

@MayCaesar

Agreed. I think no one should underestimate their value. If you ask for more than anyone is willing to pay, then you can either accept the job at a lower rate than you feel you deserve, or you can move on, and hopefully find employment somewhere that will give you what you want. But no one can blame you for asking for more.

Ampersand

piloteer said:

@Ampersand

Merit is mutually exclusive with pay, not with economic status, or ownership status. An even stronger ideal bounds owners to their businesses, which is the right to personal property. I beg to differ, my argument had nothing that contradicts what I'm saying here, and my argument was saturated in consistency. 

Whatever economic law you think may be applied to streamline peoples pay that would be based on a predetermined set of criteria that sets what constitutes merit in stone, will not bring more happiness to all the workers. Some may end up receiving less pay. Others will find there individual bargaining rights trampled on. "Collective bargaining rights" only serve to shudder any concept of being payed based on merit, and instead a system of hierarchy is implemented. That hierarchy isn't necessarily going to be based on merit, but instead based on who has been working there longer. Workers will become frustrated that their individual bargaining rights will be lost, and they can no longer appeal to their bosses for higher pay based on merit. Whatever system you may be arguing for, it's worth pointing out that it's devoid of any concept of individual happiness, and probably devoid of any ideal of happiness at all.

Friedrich Hayek has been able to demonstrate time and time again that implementing rules in the economic system that hope to achieve a determined outcome never works. Either the rule has no effect at all on the system, or it has an adverse effect, it never has the hoped for outcome. This causes a snowball effect where more rules will need to be implemented to try and litigate the damage that past rules have caused. In the end, we may end up with a system that stifles merit based pay, and brings on an economic caste system, where we are entrenched in our respective socioeconomic statuses, and any hope of climbing the economic ladder is lost. We will be working for the "common good" and not for ourselves. This system is devoid of any individual happiness. 

Do you understand what "mutually exclusive" means? Because here your very first sentence is "Merit is mutually exclusive with pay" while in your previous post you say "There already is a basis for what determines peoples pay, it's called merit".

Merit being the direct basis for pay is completely contradictory with merit being mutually exclusive with pay, so yes you are very much contradicting yourself. I suggest you work out which of your contradictory statements you actually believe and come back to me so I know which argument I'm meant to be responding to.

I'd also suggest supporting your second and third paragraph with evidence, especially your second which basically relies upon "This is how economics works because I, a random internet poster, say so" which is an invalid argument. In the third paragraph you've at least referenced Hayek, but not only is he a single economist with a heterodox (e.g. non mainstream, non-accepted) economic viewpoint but his viewpoint is also incredibly dated. Look at what he wrote and the time when he wrote it and then compare it today when governments and even businesses have access to masses of tracking data on economics and can even track individual goods with RFID. His critique simply no longer applies because of the advances in technology. Also Hayek's view is based upon economic efficiencies not moral or social outcomes (e.g. he couldn't give a if millions of people starve each year due to Capitalism distribution of wealth as long as GDP growth is an extra 0.1% higher) and even if he were 100% right about every single thing he mentioned he's still be rather irrelevant to this discussion where we're not specifically discussing socialist centrally planned economies and can just as easily look at socialist market economies as an alternative to Capitalism.

John_C_87

A flaw of Capitalism not Incorporation.

Okay so captain obvious said that making faith healing a crime is a great idea. The only problem is even the best doctors have wavers put in writing. Anyone here know what a waver means? All medical treatment is an act of faith.  You need a better method of separation between right and wrong sombieguy1987.

To share a flaw of Capitalism. The exchange and interaction of goods or service in any volume, performed to reduce cost to the public creates an exchange of impartial payment at greater volume as well.  The exchange of greater consolidation of impartial value means temptation to take, as it becomes easer to organize theft or taxation in specific places to attempt to lower the cost of efforts in general.  Legal or illegal.

We then create faster and safer ways to make the payment of good or service to avoid as much risk as possible. Speed and reduced risk themselves also come at a price much like organized production to increase efficiencies. The cost to which is spoken is the process itself is subject to stopping payment on grounds of legality alone and not services or goods rendered.

The outcome of the type of payment is to create laws which may work in directing depts. that a society forms as a whole by use of written laws which are unconstitutional so that they may become easily directed to stop payment of goods and services taken.

John_C_87

Sorry; the beginning of that post was accidental and came from a different forum.

sear

"-The logical end goal of society should be to maximize the prosperity of all its people"

That's utilitarianism.

Nice idea.

But we may not all be utilitarians.

And the topic title is:  Capitalism's Core Flaw

Capitalism and utilitarianism are not synonyms.

MayCaesar

@sear

It is worth noting that maximizing the number of people who prosper, and maximizing the degree of prosperity of people, are very different things, and even, dare I say, mutually exclusive.

For example, we can have a society in which everyone enjoys a mild degree of prosperity, no exceptions (in theory; in practice it is impossible for a large variety of reasons, but that is another matter). Or we can have a society in which a vast majority of people prosper beyond comprehension, while a small minority struggles. We cannot have the best of both worlds, given that the amount of resources humanity possesses is limited. And I do not just mean raw resources; I mean all possible resources, including time, labor, life enjoyment, etc.

Utilitarianism tends to focus on minimising inequality at the expense of achievable prosperity. Capitalism tends to ignore the question of inequality and focuses on maximising the achievable prosperity. In a utilitarian system, those who do not have much to offer to the society enjoy a somewhat comfortable life, and those who do still only enjoy a somewhat comfortable life. In a capitalist system, those who have a lot to offer to the society become very rich, while those who do not struggle.

An extreme example of a utilitarian system would be one in which everyone pays 100% taxes and gets an equal share of resources in return. An extreme example of a capitalist system would be one in which everyone pays 0% taxes and keeps all the owned resources.

I would not say that the former is a "nice idea", but I am an achiever junkie. I would feel strangled in any system that tries to "equalise" me with others and does not let me thrive by applying my skills and energy in the most efficient way. I can see how such a system can be attractive to the people who do not care much about achievements and just want to have a quiet, peaceful, stable life.
And I do not mind it at all. What I do mind is when those people try to force me into their model. But as long as they just keep to themselves, voluntarily form utilitarian communities and so on - all the power to them!

I believe utilitarianism has its uses on a local scale, but on a global scale it is necessarily going to lead to a disaster.

sear

"Exploitation and consent are not mutually exclusive." A&

I don't deny your coercion example. Perhaps it's an exception to the rule. Perhaps that's cooperation without consent.

I can't think of an example of exploitation of a willing participant. Migrant farm workers come to mind. They do for low wage difficult work native U.S. citizens won't do. Is it exploitative?

piloteer

@Ampersand

I will start with your claim that Hayek was "non mainstream, non-accepted' and his economic viewpoint "is also incredibly dated." First off, he was a recipient of the Nobel prize for economics. I find it hard to believe his work was "non-accepted". He was not a fringe economist aimlessly ranting about socialists, his mathmatic research is widely influential on global trade and economic systems today!! One of the reasons "governments and even businesses have access to masses of tracking data on economics and can even track individual goods with RFID", is because Hayek showed us that it's worth while to do that!!! So your claim that "his critique simply no longer applies because of the advances in technology, can be disregarded, because it was his research that influenced the reason for those advances in technology. Now we've come to the matter of your claim that "Hayek's view is based upon economic efficiencies not moral or social outcomes", it is plain and simply wrong!! Hayek is considered one of the leading most philosophers of libertarianism in the 20th century. There was a reason the book that put him on the economic map was called the road to serfdom. It was a scathing critique of collective idealism, but he backed his claims with mathmatic economic data. One of his major themes was avoiding war, it was like a clarion call for him. As far as claiming "he couldn't give a ???? if millions of people starve each year due to Capitalism" seems like a reckless accusation just because he was a capitalist. It sounds like something a random internet poster would say!!!

He was a major influence on Margaret Thatcher and Ronald Reagan, and a list of names of other economists he influenced include Milton Friedman, Murray Rothbbard, Thomas Sowell, Walter E Williams, Ha-Joon Chang, and many many more. He also influenced philosophers, like Robert Nozick and Karl Popper. The list goes on and on. In fact, it would be absurd and rude of me to fill this thread with the names of people he influenced. Consider your character assassination attempt to label Hayek a fringe economist, THWARTED!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

https://www.investopedia.com/terms/f/friedrich-hayek.asp
https://en.m.wikipedia.org/wiki/Friedrich_Hayek

As far as my contradiction goes, that was an obvious case of careless word choice,  and rather embarrassing for that matter. I was arguing that there is already a system that determines peoples pay, which is based on merit. My apologies for the confusion.

Ampersand

piloteer said:

I will start with your claim that Hayek was "non mainstream, non-accepted' and his economic viewpoint "is also incredibly dated." First off, he was a recipient of the Nobel prize for economics. I find it hard to believe his work was "non-accepted".

Ironically Hayek himself specifically said that he didn't like the Nobel Prize for Economics in general because people would just believe something because it comes from a Nobel Prize winner rather than because the arguments supporting the claim were good: https://www.nobelprize.org/prizes/economic-sciences/1974/hayek/speech/

 He was not a fringe economist aimlessly ranting about socialists, his mathmatic research is widely influential on global trade and economic systems today!!

He got his half of an award for his work into price signalling, which is academically interesting and useful but:

a) Is at best only tangentially related to his claims on centralised economies

b) Does not stop him being a non-mainstream economist who ranted about socialists.

Economics falls into two categories - orthodox (Mainstream) and Heterodox (non-mainstream). Orthodox is neoclassical and Keynsian, heterodox is everything else.

https://en.wikipedia.org/wiki/Mainstream_economics
https://en.wikipedia.org/wiki/Heterodox_economics

Hayek was a proponent of the Austrian School of Economics, which has not been part of economic orthodoxy for almost 100 years, or to quote Wikipedia: (which if nothing else I can hope we agree gives solid basic information and definitions) "Since the mid-20th century, mainstream economists have been critical of the modern day Austrian School and consider its rejection of mathematical modelling, econometrics and macroeconomic analysis to be outside mainstream economics, or "heterodox"

I myself am a proponent of Heterodox economics so being heterodox doesn't necessarilly mean that the theory is wrong; but I understand what heterodox economics are and wouldn't pretend an economist I support is mainstream just to try and bolster my argument.

One of the reasons "governments and even businesses have access to masses of tracking data on economics and can even track individual goods with RFID", is because Hayek showed us that it's worth while to do that!!! So your claim that "his critique simply no longer applies because of the advances in technology, can be disregarded, because it was his research that influenced the reason for those advances in technology.

This is a bunch of lies and you have no idea what you're talking about. I'm prepared to apologise and retract this if you care to present evidence to back up your claim, but this claim is so absurd I can't see you ever going this.

If you want someone who is at least in the right ballpark for this kind of claim then look at Kuznets.
 

Now we've come to the matter of your claim that "Hayek's view is based upon economic efficiencies not moral or social outcomes", it is plain and simply wrong!! Hayek is considered one of the leading most philosophers of libertarianism in the 20th century. There was a reason the book that put him on the economic map was called the road to serfdom. It was a scathing critique of collective idealism, but he backed his claims with mathmatic economic data. 

Road to Serfdom barely touched economic data and was more of a sociological tract imo. What about it makes you think it was backed with mathematic economic data to any notable degree? 

He was a major influence on Margaret Thatcher and Ronald Reagan, and a list of names of other economists he influenced include Milton Friedman, Murray Rothbbard, Thomas Sowell, Walter E Williams, Ha-Joon Chang, and many many more. He also influenced philosophers, like Robert Nozick and Karl Popper. The list goes on and on. In fact, it would be absurd and rude of me to fill this thread with the names of people he influenced. Consider your character assassination attempt to label Hayek a fringe economist, THWARTED!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

At this point, as I've continued to reply, it's become clear that you have little to no idea what you're talking about - not only evidenced by you making wild baseless claims but by making them when the actual evidence so clearly shows the opposite.

So let's pick out Ha-Joon Chang from your list, who serves well as he we can then springboard from him into looking at some of your other names. Ha-Joon Chang lists Hayek alongside economists like Karl Marx as influences. How can he possibly list such disparate economists as influences? Because being influenced by someone does not mean that you agree with them or that they are mainstream - in fact Ha-Joon Chang goes out of his way to point out the opposite.

Going further, Ha-Joon Chang has also been heavily critical of the policies supported by Friedman and implemented by Thatcher and Reagan which were more closely linked to Hayek's ideas, arguing that they cut national GDP growth in half (That's from his book 23 Things They Don't Tell You About Capitalism - can't be bothered to find a page reference but can get it if you really need).

As far as my contradiction goes, that was an obvious case of careless word choice,  and rather embarrassing for that matter. I was arguing that there is already a system that determines peoples pay, which is based on merit. My apologies for the confusion.

But I've given examples of pay not determining merit which you haven't been able to address. We know Capitalism doesn't determine pay based on merit, that's not the basis of the system. Unless you're referring to socialism now for some reason?

hce64622

Nah pals the main idea of capitalism centers around free will.  Sure it can be exploitative, but that isn't the point.  The idea is just for people to do whatever they want with their money, and unfortunately some people are just dicks.  But, for every person who will take advantage of the less fortunate, there are people who will use what they have to help others.  The important part is that they are making their own decision to do so.  People need to have control over their own lives.  If even your money is controlled by another force, then what do you have control over?  If nothing in life was up to you, are you really living it?  People can be grownups, they can be trusted to do good with what they have.  There will always be the assholes who do not look twice at other people, but at least they are making their own decisions.  Having no control creates bitterness and resentment.  Just like children with strict parents do not turn out better than those with a laissez-faire parenting style, a country with a strict government taking away personal property will not prosper.  The freedom to make own decisions is important.  Of course the government being completely hands-off is not the solution either, and the government should try to provide an equal basis of opportunity (which has been done with mandatory public education, among other things).  However, people should be free to branch out from there.  If you're old enough and responsible enough to have a job, you are responsible enough to manage your own money.  Capitalism relies on the good that exists in people, and if it some people want to be the actual worst, it sucks but it ain't your business.

MayCaesar

@hce64622

I would not say that capitalism relies on the good in people. Rather, capitalism relies on freedom as a purpose in itself. There is nothing wrong with people who use their freedom in a way that only benefits only them and possibly indirectly harms someone else, as long as everyone is done on the consensual basis. Exploitation is prohibited in a capitalist system, but benefiting at others' expense is not, nor should it - as long as we are talking about doing so on the consensual basis.

I grow apples, and my neighbour grows pears. But it so happens that in our village pears are much more popular than apples. So my neighbour will make much more money than me. And that is okay! I made my choice on what to grow, and my potential customers made their choice on what to buy.

What would be wrong is the government interfering and saying, "We should give a chance to both apple and pear farmers, so we will subsidise the former to even the odds". This is an economical perversion, as it substitutes what people want for some subjective notion of "equality". 
Another perversion would be people wanting pears, but being offered only apples by local farmers - and the government coming in and saying, "Okay, farmers, you have to grow the pears and not the apples." However, this action happens to be easier to sell, because here the government gets to play the role of the champion of the masses. But it is the same thing fundamentally: the government not letting people negotiate their own trades.

Now, of course there will be people employing harsh business practices. As I grow apples, I may have a competitor on the nearby yard who will use a pesticide in his garden that does not harm his pears, but does harm my apples through airborne transfer. These cases are more complicated and may require the involvement of a third party (not necessarily the government) to resolve the conflict - and that also is a part of capitalism: resolution of conflicts by third parties.

But fundamentally capitalism does not do anything to discourage harsh business practices as a whole. In a way, it even encourages them. And that is how it should be: only by using all the resources at their disposal to achieve their goals, can people truly prosper. When the competitive environment is very harsh, then you either come up with a very effective self-enrichment scheme, or you are destroyed. And if everyone is encouraged to come up with such a scheme, then the end result is people prospering as a result of their own hard work, rather than some donations from the Big Brother.

It is not a very intuitive concept, especially given that our societies have done their best to instill the idea in us that being greedy and selfish is a bad thing. But if you think about it carefully and independently, you will see that greediness and selfishness are the best guarantors of the societal success. Only when everyone is greedy and selfish can we have serious technological breakthroughs, innovative ideas, individual happiness and the sense of fulfilment. On the other hand, altruism is an extremely cancerous concept. As Ayn Rand rightly noticed, before helping someone else, you must help yourself. If you have failed to help yourself, then you helping others will be merely your means to justify your failure, rather than a genuine act of kindness. But if you are doing well as a result of being greedy and selfish and pursuing your personal dreams, then you can afford to help others, and that help will be genuine and fulfilling.

So, those d!@#s you mentioned - they may easily be what keeps this society together. Steve Jobs did not plan on sharing his billions with anyone, and his business practices were unforgiving to his competitors - but as a result, he revolutionised the world in many ways. If he cared more about sharing his resources with others than about self-enrichment, do you think he would have developed an iPhone? I do not think so. Selfishness and positive impact on the world go hand-in-hand, however counter-intuitive it may sound.

sear

"the main idea of capitalism centers around free will." h6

"capitalism relies on freedom as a purpose in itself." MC

Capitalism centers on $capital.

Capitalism thrives with the $dollar, where we get the Honda Civic.

Capitalism founders with the ruble, where they got the Trabant.

In our market place, anyone with a $dollar gets a vote. Centralize the decisions in the Kremlin, and ... uh oh.

 BUT !!

China's got a politburo too. And China's communism may be about as successful as communism can be for a billion person population.

John_C_87

@AlofRI ;

2019 – 50 yeas equals 1970’s equals lines for fuel at the gas station pumps blocks long, and your tag number was used to decide which day you could wait get gas. Odd or Even. Minimum wage was around $1.60

A person who gouges pricing is not a capitalist, a capitalist owns the company. Also by basic principle the United States is not the richest Country in the world and never was.

sear

" Pressured the drug companies to keep their prices "reasonable" through ACTUAL competition " AR

I'm confident this comment is benevolently intended.

  BUT !!

It may well have a more severe $down-side than benefit.

  WHY ??

Clearing all the regulatory hurdles to bring a new prescription drug to market ALREADY provided economic back-pressure against pharmacological innovation.

It is the $profit $motive that drives such innovation.

" Pressured the drug companies to keep their prices "reasonable" through ACTUAL competition " AR

We must take care to not strangle the goose that lays the golden eggs.

piloteer

@Ampersand

Whatever examples you've given to demonstrate that pay isn't based on merit in a capitalist system, they weren't addressed to me, I've seen none. I am more than happy to address any examples you may have. 

1. Hayek is a MAJOR influence on modern economics!

I will grant you the argument on the difference between orthodox, and heterodox, and that Hayek was not of the orthodox school of thought. I admit that my argument wasn't addressing those differences, my argument was whether Hayeks work is accepted by mainstream economists. It is widely accepted by mainstream economists. Hayeks argument was that the Keynesian methods of curbing unemployment only causes inflation. That is now a widely accepted view among most mainstream economists. Whether Hayeks work was orthodox or not, is not what I'm arguing, whether his work is now widely accepted by mainstream economists is my argument, and I think your having a tough time dispelling that argument. Hayeks work is a huge driving force in modern economics.

2. Hayek did use mathematical models to demonstrate his economic philosophy!

Hayek and Keynes both argued against using mathematics to determine social behavior, but Hayek more specifically. They both believed that human behavior can't be determined by math, and that social trends are unpredictable, but Hayek applied math to social economic trends to prove its unpredictability. In a number of published back and forth arguments between Hayek and Keynes, Hayek used mathematical models to question the effectiveness of Keynes economics of centralized planning. Road to serfdom was Hayeks philosophical view of those debates. The math came before the book. When the British economists first read Hayek, many complained that his work was difficult to follow because of how much of it was mathematics. 

3. Hayeks views were based on social and moral outcomes!

Hayek also had doctorates in law and psychology, as well as economics. IMO Hayek was a political philosopher with a great knowledge of economics and law. To claim his work had nothing to do with moral or social outcomes couldn't be further from the truth. That is exactly what road to serfdom deals with specifically, which you seem to somewhat agree with because you said it "was more of a sociological tract imo." He was also a professor of social and moral science in Chicago. 

4. Even socialist economists agree with some of Hayeks views!

Hayek was arguing that whatever hopes are invested in centralized planning, it will never relinquish the desired effect. Even many socialist economists now believe this theory. Hence Ha-Joon Chang's inspiration from Hayek. Many socialist economists are realizing that social trends drive the economy, not the other way around. I agree that you can be inspired by someone you would consider to be an ideological adversary, but in the case of Ha-Joon Chang, there are some aspects about Hayeks and Keynes work, that he accepts. It's a modern twist on socialist thought. It's the realization that no matter how hard you try, some aspects of the economy will not be controlled. Hayek taught us that!!!

5. Hayek did inspire the use of modern economic, and tracking data technology!

Hayek was a pioneer in the use of information economics which is the study of economic systems data to "help" determine outcomes or trends. As opposed to the orthodox method which tried drawing parallels from the past, to help determine outcomes. Information economics is the inspiration behind barcodes. The information gathered from barcodes are a more "real time" image of social buying trends. Hayek was indeed the inspiration behind real time economics and REID's. 

6. It's time to give it up Brohan. Your wrong about Hayek!

Leave us not forget, I just made an argument that questioned the validity of centralized planning, and I only mentioned Hayek in passing. It was you who launched a full on assault on his standing in modern economics and philosophy, and so far it's seems you've backed off your claim that Hayek is non mainstream, non-accepted' and his economic viewpoint "is also incredibly dated", what part of your argument are you gonna back off of next? Trust me, I can keep on going with the Hayek arguments, I love his and Keynes work!!!! I will allow you to rescind your comments on Hayek, and we can get back to our original discussion without question. Your welcome!!!!

https://www.econlib.org/library/Enc/bios/Hayek.html
https://www.econlib.org/library/Enc/Information.html

Ampersand

@piloteer

I think at this point it's safe to say you've never read a single book by Hayek, Ha-Joon Chang and possibly a single economist ever. Not only that but you don't even seem to be willing to learn, just repeating your baseless claims even on points I've already rebutted with evidence and not seeming to understand the points that are being discussed (e.g. claiming that I've backed off on Hayek being non-mainstream and non-accepted when in fact that's a point you've already conceded).

I'd also mention your entire argument is inherently superficial and without merit, as you don't seem to be able to examine and defend a single one of Hayek's ideas on its own merits - just saying that other people are influenced by them (without of course providing any evidence for other people influenced them).

At this point I don't see any point responding to you further, though if you want to give another shot at responding to my points in depth and relevantly then I might respond them.

piloteer

@Ampersand

I've made several points to refute your claim that Hayek is non-mainstream and non-exepted. All you could muster was claim I don't know what I'm talking about. The two most leading historical economic figures in modern economics are Keynes and Hayek. I've also refuted your claim that Hayeks work is obsolete because of modern technologies. I pointed out that it was his work that inspired the use of those technologies because of his role in information economics. You didn't even attempt to address that point. I also pointed out that his work was solely directed at social and moral outcomes. Again, you didn't reply. You cherry picked one economist out of the several I mentioned and tried to claim it was erroneous to claim he was inspired by Hayek, so all the rest must be as well. Yet you didn't actually provide any solid evidence to prove Ha-Joon Chang was not influenced by Hayek. You only claimed that since he was influenced by Karl Marx, he couldn't have been influenced by Hayek. There's one point you made that I can't refute. Your point that you won't respond any longer. I can't refute that point, because you shouldn't.

Ampersand

@piloteer

You've made a series of unsubstantiated claimed. Merely giving your opinion about things without evidence refutes nothing. Notice how my prior post when i tried to engage with you is sourced, while in your post above you provide two links: one to a random biography of Hayeks and another to to a page you obviously didn't read because it dismisses his work on information theory as fundamentally incorrect.

Why would I bother to argue with you further if you will just go "Nuh uh, you're wrong because I say so and I'm not going to provide any evidence"?

I also note, rather tellingly, that you don't try and defend yourself against my claim that you haven't actually read any of the economists you mention including Hayek.

piloteer

@Ampersand

Ok. So I've read road to serfdom. It was boring, but that is irrelevant to this discussion. Actually, come to think of it, whether I've read anything by Hayek is irrelevant. It was you who claimed Hayek was non-mainstream and non-accepted. All you've been able to muster as a fortification to your claim was try and dislodge the claim that Hayek influenced Ha-Joon Chang. Note, that you didn't even come up with any solid evidence there, you just said that he was influenced by Marx, so he couldn't be influenced by Hayek as well. 

Hayek was very focused on prices and their use as indicators of the overall picture of the economy. Whether his theories of prices being good indicators actually holds any water is irrelevant. The relevant point is that Hayek was an early proponent of information economics, and he wasn't just a proponent of prices being the sole indicator of the economy. He believed that there was many different things that could be used to get useful data on the publics buying trends. He was indeed a major inspiration for the use of modern technology to get useful economic data. The classical approach was to try and get a good overall picture of the economy based on past patterns. Hayek helped to show that real time information was just as useful, or even more useful than past economic circumstances. Here's another article that shows how Hayek was interested in information economics as a whole, and not just prices being a good indicator. It also points out that Hayeks theory in information economics leaves room for decentralized planning. As far as universal healthcare is concerned, that's one point I myself would differ with Hayek, because I do believe in universal healthcare. But the main point is, Hayek was a maverick when it came to information economics.

https://knowledgeproblem.com/2010/04/04/i-cringe-when-i-see-hayeks-knowledge-problem-wielded-as-a-rhetorical-club/

billbatard

Simple, it is greed .

Ampersand

piloteer said:

@Ampersand

Ok. So I've read road to serfdom. It was boring, but that is irrelevant to this discussion. Actually, come to think of it, whether I've read anything by Hayek is irrelevant. It was you who claimed Hayek was non-mainstream and non-accepted. All you've been able to muster as a fortification to your claim was try and dislodge the claim that Hayek influenced Ha-Joon Chang. Note, that you didn't even come up with any solid evidence there, you just said that he was influenced by Marx, so he couldn't be influenced by Hayek as well. 

Hayek was very focused on prices and their use as indicators of the overall picture of the economy. Whether his theories of prices being good indicators actually holds any water is irrelevant. The relevant point is that Hayek was an early proponent of information economics, and he wasn't just a proponent of prices being the sole indicator of the economy. He believed that there was many different things that could be used to get useful data on the publics buying trends. He was indeed a major inspiration for the use of modern technology to get useful economic data. The classical approach was to try and get a good overall picture of the economy based on past patterns. Hayek helped to show that real time information was just as useful, or even more useful than past economic circumstances. Here's another article that shows how Hayek was interested in information economics as a whole, and not just prices being a good indicator. It also points out that Hayeks theory in information economics leaves room for decentralized planning. As far as universal healthcare is concerned, that's one point I myself would differ with Hayek, because I do believe in universal healthcare. But the main point is, Hayek was a maverick when it came to information economics.

https://knowledgeproblem.com/2010/04/04/i-cringe-when-i-see-hayeks-knowledge-problem-wielded-as-a-rhetorical-club/

No, you actually having a basic understanding of the literature you're trying to defend rather than making wild claims you refuse to defend is very relevant. I notice you still haven't gone back and answered my queries about what specifically in the text made you make some of your earlier unevidenced claims. Perhaps when you actually act like you've read his work I'll take your word for it.

You are trying to argue agaisnt my claim that Hayek is "non mainstream, non-accepted' and his economic viewpoint "is also incredibly dated."

I have provided evidence proving this already:

Economics falls into two categories - orthodox (Mainstream) and Heterodox (non-mainstream). Orthodox is neoclassical and Keynsian, heterodox is everything else.

https://en.wikipedia.org/wiki/Mainstream_economics
https://en.wikipedia.org/wiki/Heterodox_economics

Hayek was a proponent of the Austrian School of Economics, which has not been part of economic orthodoxy for almost 100 years, or to quote Wikipedia: (which if nothing else I can hope we agree gives solid basic information and definitions) "Since the mid-20th century, mainstream economists have been critical of the modern day Austrian School and consider its rejection of mathematical modelling, econometrics and macroeconomic analysis to be outside mainstream economics, or "heterodox"

That his view is non mainstream, not accepted and hasn't been for almost 100 years is just basic fact. That fulfills all conditions of my claim.

If you actually had the slightest understanding of Hayek's arguments you could try and defend them regardless, but note how in all of this you haven't given even a single piece of analysis that touches on his claims and supports the rationale behind his points of view. Instead you're tried to rely on proxy motions, like saying that because Hayek inspired several people that that obviously means he's right - even though I provided evidence (contrary to your claims that I didn't provide anything and your misrepreentation of ym argument) specifically showing that being inspired by Hayek can include disagreeing with his economics theories and so your point of trying to substitute inspiration for actual economic credibility is invalid.

Dee

@Ampersand

You say .....

I would also point out that your claim that you are okay with "our have nots" having food and shelter implicitly implies you're fine with "other have nots" dying of starvation - which seems intrinsically racist.

My reply ....I don’t know anyone who is “fine” with fellow humans dying of starvation, but mostly we talk about it and do very little about it as our lives are taken up by our own needs and that of our families and everything that implies , it’s remarkable we will type our outrage at such injustices on keyboards no doubt made by underpaid malnourished workers in a third world country.

I don’t understand how the posters comments can be deemed “racist” in fairness.

You say...... I  hope you can deny this reading of your post, accept that people everyone have a basic human right to live and that Capitalism is structurally incapable of delivering this.**

I live in a country which is capitalist it’s far from perfect but one is entitled to housing , welfare and medical treatment if one is unemployed or cannot work through illness , disability etc ,etc .
These sort of safety nets are always  claimed to be by socialists what a socialist country should have in place,   a capitalist country and government can still put in place a good system of such practices if the population vote for people who believe in such policies.

Whats truly remarkable about the U S to me is most citizens claim to be Christians yet rabidly resist universal health care , welfare , housing and a host of other policies that would be of comfort and benefit to those that need a hand up