Greek Default Ahoy!

[Stark]

So long as politics is for sale, of course this is 'normal'. If regulatory activity was driven by things like benefit or safety or any of the other things its supposed to be about, it wouldn't matter who it was putting out of business.

If people stop listening when giant companies run ad campaigns talking about how xyz law will RUIN TEH EKONOMYS, you'll still have to deal with politicians being idiots and the politicial process largely involving idiots.

[cosmicalstorm]

Yes, that's what I said, but you missed out the part where large US banks also paid off the SEC to specifically go after hedge funds that were using trading strategies that cut into bank profit margins. The fact that all parties involved are evil assholes doesn't excuse the corruption. Much worse is Monsanto and Kraft using the FDA as a club to put small food producers out of business. As I said, giant companies will block any regulation that specifically targets them, but they will encourage any regulation that they can easily comply with but which destroys smaller competitors. The EU is a perfect vehicle for this due to its massive output of pointless regulations and the low visibility and accountability of its legislators.

What capitalist systems have avoided this kind of regulatory capture? I think people are entitled to doubt whether this is anything but the normal practice of capitalism.

In the early stages, capitalist economies will be polyopolistic*, there will be intense and hopefully healthy competition, yes. But once an industry is dominated by a handful of big players who fought their way to the top, what happens next? Is the result of that any less "capitalism" than what came before it?

Capitalism runs on the profit motive- everything beneficial that large corporations are supposed to do under capitalism, they do because it makes them money. Why should we expect them to refrain from altering the rules of the game to their own advantage, if that makes them money too?

You can have a healthy capitalist economy- but it will only remain healthy as long as the tendency of large companies to start breaking the rules for profit is kept in check.
_____________________

*Maybe that's not a word, but I think you understand my meaning.

Isn't it quite possible that capitalism is no more workable than communism in the longer run?

I suspect that if we had one hundred Earths, where everything was similar up until a century ago, and then we watched the societal developments on them as they unfolded; we might find that the only difference is that in an average western style capitalist economy the inevitable breakdown will come x decades later than in the average "Hey let's have a glorious communist revolution"-society.

I'm certainly hoping that we will come through in the end (some nice version of a transhumanist singularity would be fine by me ).
But it might just be that the human specie is incapable of leaving it's infancy because our primate brain is optimized to survive and thrive in a small patch of rainforest along with at most a hundred or so other humans, a place where all kinds of egoistical and shortsighted planning tendencies, which are currently paving the way for massive economic and environmental disaster, will pay off in some ways.

[Sea Skimmer]

Isn't it quite possible that capitalism is no more workable than communism in the longer run?

Possible, maybe. But unlikely considering that in its modern form its over 400 years old, and forms of capitalism existed at least 2,500 years ago. Meanwhile communism fell apart after barely 70 years despite huge shifts in the world balance of power that on the whole favored the communist states and swept away the old world order. Capitalism has already survived numerous debt crisis before, some bad enough to turn into revolutions, and corruption has always been high. The fact is capitalism is fairly close to human nature, even if details will vary, and that’s why we use it and are going to keep using it unless something else radical happens to economics, like totally robot driven industry.

[Simon_Jester]

Capitalism is workable, it's not inherently irretrievably flawed. But I think many in the western world are too quick to sing paeans of praise to it. At most, it's a useful tool for organizing our resources; used stupidly or with a fanatical devotion it becomes worse than useless.

When we come to a situation like this, where natural capitalist forces lead to economic chaos, the idolization of capitalism becomes very destructive because it prevents us from looking at our situation objectively and saying "here we have a situation where common bloody sense should override the free market."

[Starglider]

Possible, maybe. But unlikely considering that in its modern form its over 400 years old, and forms of capitalism existed at least 2,500 years ago. Meanwhile communism fell apart after barely 70 years despite huge shifts in the world balance of power that on the whole favored the communist states and swept away the old world order. Capitalism has already survived numerous debt crisis before, some bad enough to turn into revolutions, and corruption has always been high. The fact is capitalism is fairly close to human nature, even if details will vary, and that’s why we use it and are going to keep using it unless something else radical happens to economics, like totally robot driven industry.

Exactly. There is a natural human tendency towards authoritarian, totalitarian government. Elites always work to protect and expand their privilidges, concentrations of wealth and power work to further and magnify themselves, and the burden of government almost always increases, almost never decreasing. However with capitalism this takes a long time and people have a good standard of living in the mean time. Capitalism works by harnessing selfishness; its basic flaw is that the biggest winners can (and do) use their winnings to cheat by corrupting government. Free speech at least makes it possible to discuss the problems and sometimes it is possible to roll things back from a crisis without violence. The productivity and liberties enjoyed by free socities stand as an example to totalitarian ones and motivate those populations to break free.

Communism on the other hand is automatically an bloated totalitarian monster from day one. Massive corruption is inherent to the design and completely unavoidable due to the stark mismatch of communist ideals with actual human psychology. The system can only survive by constant oppression of all competitors, maintaing state monopolies by imprisonment and murder of all opponents. Decline sets in very quickly and collapse is inevitable.

[Starglider]

You can have a healthy capitalist economy- but it will only remain healthy as long as the tendency of large companies to start breaking the rules for profit is kept in check.

Large companies are inherently dangerous. In my opinion virtually all regulation should be tiered, such that small companies are lightly regulated, medium companies have sensible regulation and large companies get hit with the full EU regulation / IRS tax code nonsense. We have progressive income tax for individuals, but corporation tax is flat, why? Obviously a workable implementation would need appropriate group earnings provisions to prevent technical fragmentation of business entities from getting around the limits, but IMHO a progressive corporation tax favouring smaller companies would do a lot to fight large company abuses. Global corporations also find it much easier to outsource, send jobs to sweatshops and hide environmental destruction than smaller companies. They are managed by an elite class of largely sociopathic CEOs who live to please the stock market's 1-year planning horizons, rather than entrepreneurs who start and build businesses from scratch.

Unfortunately socialists love large companies, possibly because they feel more like governments, and do the exact opposite; bailing out only the 'too big to fail' firms and enacting oppressive regulation that only large companies have the beurecracy to deal with. We are seeing this in both the US and the UK at present. If I have one hope for the next iteration of global capitalism it is that there is a strong prejudice against giant companies. Sadly the chances of that are slim.

[Teebs]

Large companies are inherently dangerous. In my opinion virtually all regulation should be tiered, such that small companies are lightly regulated, medium companies have sensible regulation and large companies get hit with the full EU regulation / IRS tax code nonsense. We have progressive income tax for individuals, but corporation tax is flat, why? Obviously a workable implementation would need appropriate group earnings provisions to prevent technical fragmentation of business entities from getting around the limits, but IMHO a progressive corporation tax favouring smaller companies would do a lot to fight large company abuses. Global corporations also find it much easier to outsource, send jobs to sweatshops and hide environmental destruction than smaller companies. They are managed by an elite class of largely sociopathic CEOs who live to please the stock market's 1-year planning horizons, rather than entrepreneurs who start and build businesses from scratch.

The UK does have a progressive corporation tax, athough it's less progressive than income tax. There are also differing levels of company law regulation for private, public and listed companies. I don't know about all UK regulatory regimes but it's worth noting that in the ones that I do know about there are often exemptions for small companies too. For example, in the Disability Discrimination Act there is an exemption for companies employing fewer than 15 people.

I have the impression that similar 'banding' of obligations exists in most rich countries, although obviously that's just an impression.

[Starglider]

The UK does have a progressive corporation tax, athough it's less progressive than income tax.

I am reasonably familiar with UK corporation tax because we have recently been reviewing tax strategy for my company. The measures the UK has in place are better than average, but are primarily concerned with personal contracting companies and encouraging sole traders to incorporate instead of operating outside of the registered company system. There is a small incentive (6%) which functions mainly to encourage investment in start-ups and reinvestment in marginal small companies. The tax rate actually peaks for a 100-employee small manufacturing company. It then declines as the company size expands - to zero in some cases - due to increased ability to use offshore tax dodges.

There are also differing levels of company law regulation for private, public and listed companies.

This isn't a size issue. A friend of mine has a public company with four employees; in that case the reason for being public is just that it's easier to get contracts from local government if you are publicly listed (because of perceived size; yet more government discrimination against small companies). Additional accounting requirements on companies with freely traded stock exist for solely for shareholder protection and are frankly not that significant for a company with relatively simple accounts.

For example, in the Disability Discrimination Act there is an exemption for companies employing fewer than 15 people.

A rare case of government acknowledging when legislation is unenforceable. For a company with fewer than fifteen employees, how are you going to prove that there is a systematic discrimination against disabled people when the fraction of disabled people applying is less than 10%? The sample size is too small for any degree of confidence, or rather the chances of a valid personality conflict or skills mismatch are too high to say that discrimination is the problem.

Making things easier for start-ups with ten people is great, but it's about encouraging new company formation and preventing people from going to the informal economy (aka VAT-free black market) instead. It doesn't address the skewed balance of power between local companies with a couple of hundred people and global corporations with tens of thousands, and it doesn't get anywhere near the level of the 'too big to fail' companies that can influence national politicians.

[Teebs]

The UK does have a progressive corporation tax, athough it's less progressive than income tax.

I am reasonably familiar with UK corporation tax because we have recently been reviewing tax strategy for my company. The measures the UK has in place are better than average, but are primarily concerned with personal contracting companies and encouraging sole traders to incorporate instead of operating outside of the registered company system. There is a small incentive (6%) which functions mainly to encourage investment in start-ups and reinvestment in marginal small companies. The tax rate actually peaks for a 100-employee small manufacturing company. It then declines as the company size expands - to zero in some cases - due to increased ability to use offshore tax dodges.

Fair enough it could be more progressive, but I think offshore tax dodges are a different issue to tax banding. Increasing marginal tax rates for larger companies is not going to have much of an impact if they'll just dodge it anyway. Not that I'm saying we should just give up, closing loopholes holds a certain attraction after all.

There are also differing levels of company law regulation for private, public and listed companies.

This isn't a size issue. A friend of mine has a public company with four employees; in that case the reason for being public is just that it's easier to get contracts from local government if you are publicly listed (because of perceived size; yet more government discrimination against small companies). Additional accounting requirements on companies with freely traded stock exist for solely for shareholder protection and are frankly not that significant for a company with relatively simple accounts.

I think it's a little disingenuous to say it's not a size issue. Sure you can have tiny public companies and very large private companies, but as a general rule the statuses do correlate with size.

I take your point about shareholder protection, but I'm not sure you can just dismiss it as some insignificant area of regulation. It's worth nothing too that the additional requirements for listed companies go beyond just accounting and into various corporate governance areas too. Not much use if you think the whole system is a corrupt morass I suppose, but otherwise useful.

A rare case of government acknowledging when legislation is unenforceable. For a company with fewer than fifteen employees, how are you going to prove that there is a systematic discrimination against disabled people when the fraction of disabled people applying is less than 10%? The sample size is too small for any degree of confidence, or rather the chances of a valid personality conflict or skills mismatch are too high to say that discrimination is the problem.

Making things easier for start-ups with ten people is great, but it's about encouraging new company formation and preventing people from going to the informal economy (aka VAT-free black market) instead. It doesn't address the skewed balance of power between local companies with a couple of hundred people and global corporations with tens of thousands, and it doesn't get anywhere near the level of the 'too big to fail' companies that can influence national politicians.

I'm not sure I disagree with you overall. I do wonder about the practicality of different regulatory regimes in areas such as environmental protection though. For example, in the case of some kind of chemical factory, I suppose the choice would be between a medium sized company having one factory or some multinational having lots. However, I don't particularly see why the single factory should have lighter environmental regulations.

Basically in certain areas I'd agree with you about different levels of regulation for medium and large companies. In others maybe not but I'd need to think about it more for many specific areas. Tax codes do seem like an area that particularly lend themselves to differential levels of regulation.

Edited due to messed up quotes.

[Simon_Jester]

Unfortunately socialists love large companies, possibly because they feel more like governments, and do the exact opposite; bailing out only the 'too big to fail' firms and enacting oppressive regulation that only large companies have the beurecracy to deal with. We are seeing this in both the US and the UK at present. If I have one hope for the next iteration of global capitalism it is that there is a strong prejudice against giant companies. Sadly the chances of that are slim.

Bailouts in the US were first conceived under the Bush administration; if they're socialists, who isn't?

[Fingolfin_Noldor]

Unfortunately socialists love large companies, possibly because they feel more like governments, and do the exact opposite; bailing out only the 'too big to fail' firms and enacting oppressive regulation that only large companies have the beurecracy to deal with. We are seeing this in both the US and the UK at present. If I have one hope for the next iteration of global capitalism it is that there is a strong prejudice against giant companies. Sadly the chances of that are slim.

Bailouts in the US were first conceived under the Bush administration; if they're socialists, who isn't?

More to the point, the big corporations are a product of free market "free for all, the small get eaten" capitalism dating back from the beginning. To suggest otherwise would actually demand greater regulation, which conservatives loathe to have and many administrations have shown varying vigour in applying the anti-competition law, especially conservative governments.

This strikes me as intrisincally contradictory and is an extraordinary double think. The real problem is not so much that regulation has failed, the real problem is that companies are allowed to use their money to lobby the government in exchange for favours. It is this form of legalized corruption that has produced a festering cess pool of problems, something many conservatives refuse to acknowledge because they benefit from it.

[Starglider]

I think offshore tax dodges are a different issue to tax banding.

In theory but not in practice, because maintaining low or [url=http://www.dailymail.co.uk/news/article ... tives.html even negative corporation tax rates[/quote] requires lots of expensive accountants, offshore shell companies and frequently lobbying that is out of the reach of smaller companies.

Increasing marginal tax rates for larger companies is not going to have much of an impact if they'll just dodge it anyway.

True. This doesn't even require unprecedented international co-operation, individual countries have complete power over whether corporations are allowed to do business there.

Sure you can have tiny public companies and very large private companies, but as a general rule the statuses do correlate with size.

This is because being publicly held is generally more useful as size increases. Tacking corrective measures for corruption onto public listing status would be indirect and hence distorting.

I take your point about shareholder protection, but I'm not sure you can just dismiss it as some insignificant area of regulation. It's worth nothing too that the additional requirements for listed companies go beyond just accounting and into various corporate governance areas too.

I was actually somewhat surprised myself when I found out about this, but actually these requirements scale with company size very well. Large corporations have massive audits and huge earnings reports full of legalese, but the fraction of company revenues expended on compliance is quite close to what (for example) my friend's small company spends on their half-day audit and two page shareholder's report. So no, public listing requirements are not an effective brake on company scaling.

For example, in the case of some kind of chemical factory, I suppose the choice would be between a medium sized company having one factory or some multinational having lots. However, I don't particularly see why the single factory should have lighter environmental regulations.

With environmental regulation the critical difference is that breach and the subsequent fines are an existential threat for smaller companies. This motivates people to take actual care in avoiding accidents in the most effective ways for their company. The key problem with excessive regulation is the front-loaded overhead it imposes that prevents companies from even starting up, and then interferes with their operation through one-size-fits-all proscribed government beurecracy. Large companies can and do buy off the inspectors, trash the environment and then if and when they do get caught laugh off the fines. At the high end this goes up to Union Carbide killing thousands and getting a slap on the wrist. Industrial accidents happen, but at least a smaller company would have been forced into bankrupcy and made an example to others (and if local to the country, less able to escape the full legal consequences).

Bailouts in the US were first conceived under the Bush administration; if they're socialists, who isn't?

At risk of invoking Goodwin's Law, they are socialists in the same sense that the National Socialist German Workers' Party were socialists. Under the most general (and not very useful) definition, anyone who isn't an anarcho-capitalist is a socialist.

More to the point, the big corporations are a product of free market "free for all, the small get eaten" capitalism dating back from the beginning.

Correct, capitalism favours monoplies when they can create barriers to entry, because that makes them highly possible. Leveraging government to errect artificial barriers to entry is the most corrupt, and increasingly common form of this. Since wishing for an inherently incorruptible government is a ridiculous pipe dream, limiting the power of companies to buy off goverments is an important way to reduce corruption.

[Simon_Jester]

Bailouts in the US were first conceived under the Bush administration; if they're socialists, who isn't?

At risk of invoking Goodwin's Law, they are socialists in the same sense that the National Socialist German Workers' Party were socialists. Under the most general (and not very useful) definition, anyone who isn't an anarcho-capitalist is a socialist.

By your own argument, though, this definition is useless. Practically any political opinion possible becomes 'socialism,' which makes 'socialism' a perfectly viable, acceptable political standpoint by default.

I would argue that capitalism as political ideology rapidly grows into "corporatism," the idea that the same arguments which promote the free market apply to monopoly companies run by sociopathic CEOs, as if there was no moral difference, no difference in utility to society, between that and the average startup.

I mean, even shit like Randism wouldn't be so dangerous if the people who promoted it were able to grasp that captains of industry are just as good at oppressing the masses as Big Government, subject only to the limit of their ability to do so.

And I think it's ridiculous to call a corporatist government or party (like US Republicans) "socialist" because it refuses to allow market forces to destroy large corporations. Because it's doing all this in the name of the market, and with the blessing of nominally pro-market economists. "Socialism," at a bare minimum, should refer to acts done in the name of society, or of the people, or the race, or some collective identity.

[Starglider]

And I think it's ridiculous to call a corporatist government or party (like US Republicans) "socialist" because it refuses to allow market forces to destroy large corporations.

I personally agree with this; I only use 'socialism' when the issue is government ownership of companies, i.e. both the profits and the losses are socialised. Clawbacks from the recent bailouts have been pretty token, so only the 'losses' part of socialism is implemented. And yes I would (under duress ) agree that while classic socialism is worse than capitalism for most sectors of the economy, it is still better than the outright kleptocracy of the recent bailout binge. That said my earlier comment to Thanas was not completely in jest; a population accustomed to socialism makes these sorts of subsidies politically easier. When the population is already accustomed to 'socialised losses' all you have to do is hide the 'privatised profits' part, whereas selling the US on 'socialised losses' was politically difficult and a significant factor in the genesis of the Tea Party.

Because it's doing all this in the name of the market, and with the blessing of nominally pro-market economists. "Socialism," at a bare minimum, should refer to acts done in the name of society, or of the people, or the race, or some collective identity.

On the contrary, it is very much done in the name of 'the people' ('for society' is not a popular term in the US). Certainly the actual reason it is done is for the benefit of financial insitutions and major bond and share owners, but the propaganda all focuses on the damage that letting banks fail or governments default would do to ordinary citizens.

[K. A. Pital]

Under the most general (and not very useful) definition, anyone who isn't an anarcho-capitalist is a socialist.

That's fucked up. Even on boards with an intellectual capacity of Ayn Rand you'd be laughed out for that piece of stupid, Starglider. This is SDN. Being a capitalist does not require being an anarchist, although the two are not mutually exclusive (but the overlap between two ideologies is actually very small; anarcho-capitalists are a fringe minority, not least because enforcing necessary private property rights in anarchy is very hard). It is even funnier when one remembers that the most powerful capitalist nations also have the greatest degree of government intervention. This is state-monopolistic (well, rather, state-oligopolistic) capitalism.

And no, there's no way back to your small-bourgeois idiotic utopia where you destroy all the large corporations and governments and start anew, sorry. Large corporations and governments that follow their whims are natural products of capitalism. Trying to erect a dam in the face of natural development of a certain system will just malform it and in the end, the dam will simply break. Anti-monopoly commitees were created at the behest of small bourgeois lobbies in many advanced nations. They utterly failed to prevent the rise of oligopolies and corresponding oligarchies as power structures. You just can't. In capitalism, money is power and money is the ultimate power, which can corrupt any government. No matter what sort of anti-monopoly laws you devise, once some company gets big and powerful enough, they'll be either circumvented or outright repelled.

Zentei is a more consistent capitalist than you. He at least understands that you can't roll back what happens naturally and try to put some sort of block on it. The process of such destruction will effectively kill capitalism itself: once you destroy or bankrupt large companies and governments, massive economies of scale that we are all used to present in mega-huge TNCs (cheap food at McDonalds, cheap wares at IKEA, and many, many other things - automotive industry, aviation building, etc. - almost all the high-tech products that are relevant to keep the industrial world running) will evaporate and you'll be left with a system where companies are fundamentally unable to grow beyond a certain barrier. Not to say that's realistic, but even if you succeed, you'll just put a huge chain on the development of capitalism and kill it.

When the population is already accustomed to 'socialised losses' all you have to do is hide the 'privatised profits' part, whereas selling the US on 'socialised losses' was politically difficult and a significant factor in the genesis of the Tea Party.

Tea Party being "evidence" of something? How about we look at the actual action records? The US was the first nation to write out the bailout checks. Europe actually tried to resist (for a while). Thanas can even claim some small high ground here - Merkel was resisting the bank bailout for quite a while (unlike Europe's favorite right-wing Putin-wannabe, Nicolas Sarkozy).

[Illuminatus Primus]

Ah yes, the "human nature" argument: capitalism's answer to feudalism's "God said so." One should be suspicious of mission creep: capitalism in the 1950s and 1960 in the West was the best supposedly because it had the highest and rising standard of living in the world, across the board. They've retreated considerably from that high-water mark of apologetics, just like the single-paycheck family in the West has given way to the 2, 3-paycheck family, and skyrocketing commitments to housing and other essentials, with short-term credit provisions (thanks to highly 'competitive', 'private', 'free' central banking institutions) just barely keeping up the difference, until 2007-8.

It is totally arbitrary to group together some set of characteristics and call "modern capitalism" "400 years old". First of all, in 1611, it certainly was not true that a money-and-commodity-based society, based around production employing wage labor, and characterized by free capacity for investment was the dominant feature of the entire human world. Now if capitalism leads us down the rabbit hole of massive CO2 emissions well over 650 ppm, or uses up all the fossil fuels at anything like consumer-economical value, or the like, will it still be said to have 'survived' or 'succeeded'?

What does it mean to 'survive'? In most people's imagination, I think this would imply anything like a recognizable society with a significant percentage of the population having access to medical care, education, some smidgen of social mobility, comfort, security, and consumer durables. Capitalism might 'survive' like Russia 'survives', in the sense there's are human, there is some rulers, and some stuff gets produced while not in total terminal catastrophe. I don't think for most people piddling around on their personal computers reading this, that that qualifies as much like 'survival' for them. That's a failed society.

As for the idea of the Tea Party being some sort of organic ground-up popular response to "socialized losses": give me a fucking break. The entire 'movement' is organized by professional career Republican political operatives, employing massive influxes of corporate money from the Kochs in particular (who, it is ironic to note, made their fortunes on blood money Stalin made robbing grain out of peasant children's mouths, after Daddy Koch got locked out by anti-competitive law suits from oil majors from the market in the "pro-property rights" U.S.), that has no problem continuing to leave the Defense, Treasury, etc. complex untouched, and has no problem whatsoever with all kinds of social-cultural collectivism like jingoism, the church, the army, ad nauseum. The average Tea Partier is a member of the white shopkeeper and managerial class who grew up when women cooked and cleaned as that's what people with vaginas did, and gays got their head kicked in. What a surprise. What they have a problem with is the historically "excessive" slice of the pie diverted to the laboring classes since the New Deal, since profitability based on real economic development has been in decline for decades.

As always, capitalist society (and its ideologists) will always play the bait-and-switch. What was imposed globally by the greatest bloodlettings of world history, and the most extensive imperial systems ever is simply written into our DNA. The systemic malfeasance and greed of those with both by far the most power to exercise decision-making in the world system, and those who have gained most from it, is also due to yours and mine's bad character traits.

[Sea Skimmer]

Ah yes, the "human nature" argument: capitalism's answer to feudalism's "God said so." One should be suspicious of mission creep: capitalism in the 1950s and 1960 in the West was the best supposedly because it had the highest and rising standard of living in the world, across the board.

And it did, and now we set standard of living measures all the higher so low and behold, life is a lot more expensive and it’s difficult to push it higher. People in the 1950s and 60s didn’t fill houses with expensive, but ultimately unnecessary gadgets like cell phones, computers and multiple TV sets or cars for children. Nobody at all had the devices we now require just to use this damn webforum. Of course even in Feudalism you had major capitalist underpinnings.

They've retreated considerably from that high-water mark of apologetics, just like the single-paycheck family in the West has given way to the 2, 3-paycheck family, and skyrocketing commitments to housing and other essentials, with short-term credit provisions (thanks to highly 'competitive', 'private', 'free' central banking institutions) just barely keeping up the difference, until 2007-8.

So, which non capitalist societies now have higher standards of living then the capitalist ones again? I’d love to see BTW a graph of housing costs vs. the average size of houses and land plots from 1950 to 2011, as well as costs vs. population. I’d expect the costs have gone up more then size, but it’s not a question that the size and quality of dwellings have risen considerably. How many people have air conditioning now vs. 1965? It might not have changed so much in cooler Europe but it certain has in the US. When my dad was a kid in that era he lived in a house heated by a shovelful of coal thrown in a boiler every twelve hours, and this was very common. No air conditioning, and actually the building had no electrical power until his father put it in as the building is over 100 years old, it had been built with gas lighting which itself was a new thing at the time. Phasing stuff like that out in favor of natural gas, electricity, cleaner air ect... made life more expensive, and it would no matter what economic system was in place.

It is totally arbitrary to group together some set of characteristics and call "modern capitalism" "400 years old". First of all, in 1611, it certainly was not true that a money-and-commodity-based society, based around production employing wage labor, and characterized by free capacity for investment was the dominant feature of the entire human world.

In 1611 a fair portion of the world had nothing but subsistence farming with only tiny surpluses for trade, so yeah of course it’s not dominate across the entire world, just a wide swath of the highly developed parts which went on to take over most of the rest of the world in a way nobody else ever has.

Now if capitalism leads us down the rabbit hole of massive CO2 emissions well over 650 ppm, or uses up all the fossil fuels at anything like consumer-economical value, or the like, will it still be said to have 'survived' or 'succeeded'?

In my book will survive as long as people use it; capitalism doesn’t set any specific standards for how people live, just how they govern economics and anyone setting specific standards is making his own specific argument. As seen in the world a pretty wide degree of variation already exists in capitalist states, and that makes it clear some radical changes could happen from state to state without totally abandoning capitalist ways. And of course, saying the capitalism is doomed to what or what have you, still leaves open the question of, well then what would be able to replace it that would handle the situation better? Not much from the looks of it. Even the USSR effectively did allow some capitalism by allowing private plots on collective farms and various backroom cottage industries and would have never lasted as long as it did without a vast wealth of raw materials it could throw around. I certainly don't expect unlimited free market capitalism to survive forever, nor does it exist now as it might, but that is but a subset of the issue.

[K. A. Pital]

And it did, and now we set standard of living measures all the higher so low and behold, life is a lot more expensive and it’s difficult to push it higher. People in the 1950s and 60s didn’t fill houses with expensive, but ultimately unnecessary gadgets like cell phones, computers and multiple TV sets or cars for children. Nobody at all had the devices we now require just to use this damn webforum. Of course even in Feudalism you had major capitalist underpinnings.

Overconsumption is a direct consequence of capitalist imbalances in economic development. And of course feudalism was just capitalism in disguise, sure. Those Great Bourgeois Revolutions and great private property and rule of law reforms, as well as land losing its status as prime means of production, were just a figment of my imagination. Capitalism encourages spending on "non-necessary luxuries" as you said it yourself.

In 1611 a fair portion of the world had nothing but subsistence farming with only tiny surpluses for trade, so yeah of course it’s not dominate across the entire world, just a wide swath of the highly developed parts which went on to take over most of the rest of the world in a way nobody else ever has.

So you admit that modern capitalism has been the product of imperialism, conquest and opression on a scale hitherto unseen? Excellent.

Even the USSR effectively did allow some capitalism by allowing private plots on collective farms and various backroom cottage industries and would have never lasted as long as it did without a vast wealth of raw materials it could throw around.

Hint - no non-capitalist society is going to survive a fucking minute without having either lots of materials or some relevant domestic industry to keep it afloat. Another hint - private plots and backroom cottage industries were not "some capitalism", since they did not include wage-labour for hire. Even the strictest communist regime did not consider self-employment in your backyard "capitalism".

I certainly don't expect unlimited free market capitalism to survive forever, nor does it exist now as it might, but that is but a subset of the issue.

It is pretty limited as it is now already, and even with useful limitations and state redistribution, safety nets and a lot of state aid it is struggling to survive. Without state limitations and merger of the oligopoly and oligarchy with the nation-state, "unlimited free market capitalism" would've eaten itself like the mythical Uroboros a very long time ago.

[Sea Skimmer]

Overconsumption is a direct consequence of capitalist imbalances in economic development.

Humanity has been destroying and warping the earth, causing mass extinctions ect... since before we had major civilizations, so no, not a new thing. Humans over consume, period. We may just wipe ourselves out from that, but that could, and given industrial pollution in the USSR vs US vs China, all horrible, almost certainly would happen under many different systems. Capitalism however provides a mechanism that basically would provide a built in means to just starve off a lot of people and leave the others with sufficient resources. That might cause it to totally fall apart anyway, but its not an innate result.

And of course feudalism was just capitalism in disguise, sure. Those Great Bourgeois Revolutions and great private property and rule of law reforms, as well as land losing its status as prime means of production, were just a figment of my imagination.

The merchant and craftsmen classes certainly employed capitalism. Where do you fucking think it came out of in the first place? Those elements of society just steadily gained power until they ran the place and then WW1 was nice enough to help knock over a bunch of monarchs who had long since become totally dependent on these classes for a power base instead of legions of loyal death knights.

Capitalism encourages spending on "non-necessary luxuries" as you said it yourself.

Sure, and communist states ended up having to spend more on luxuries as well. I don't believe the standard of living in the USSR was no higher in 1991 then in 1921 now was it? Any society that seeks to become more advanced will have to spend more per capita, so the point being that simply blaming families becoming duel income in the west when they also have higher standards of living as being some horrible flaw of capitalism is not an honest approach to a very complicated issue.

Hint - no non-capitalist society is going to survive a fucking minute without having either lots of materials or some relevant domestic industry to keep it afloat. Another hint - private plots and backroom cottage industries were not "some capitalism", since they did not include wage-labour for hire. Even the strictest communist regime did not consider self-employment in your backyard "capitalism".

Did they not allow that stuff to be sold?

It is pretty limited as it is now already, and even with useful limitations and state redistribution, safety nets and a lot of state aid it is struggling to survive. Without state limitations and merger of the oligopoly and oligarchy with the nation-state, "unlimited free market capitalism" would've eaten itself like the mythical Uroboros a very long time ago.

Just like true communism has never existed and almost certainly never will; so what? Meanwhile for the moment the last bastions of communism, even in North Korea are moving towards more capitalism, never mind its massive black market which is the only reason the place hasn't totally imploded. Guess it must have something too it hun?

[K. A. Pital]

We may just wipe ourselves out from that, but that could, and given industrial pollution in the USSR vs US vs China, all horrible, almost certainly would happen under many different systems. Capitalism however provides a mechanism that basically would provide a built in means to just starve off a lot of people and leave the others with sufficient resources. That might cause it to totally fall apart anyway, but its not an innate result

How is it not an innate result when the development of the system has produced such a result? As for "all systems doing the same", gee. In the USSR, socialist politicians had to do capitalism's job, in fact - destroy remnants of feudalism (like barriers to employment, land redistribution) and build up an industry - something capitalist nations like US and UK did 100 years ago. The USSR in 1950 barely reached US GDP/capita in 1830. Sure enough it had to do the same shit. Actually, most of its existence was spend on building up a necessary capitalist production base.

The merchant and craftsmen classes certainly employed capitalism. Where do you fucking think it came out of in the first place?

Yeah, and open-source developers often employ communism. And so did primeval communities. In fact, many communes exist throughout the world now. I guess that means communism was "there from whatever date I say". Economic order does not work that way. It is "there" when it is dominant. Capitalism is the dominant form of economic relations today. It was not in 1600. End of discussion. The fact that a prior existing order bears inside itself the elements of a future order does not mean that future order is "already there". Am I clear?

Sure, and communist states ended up having to spend more on luxuries as well. I don't believe the standard of living in the USSR was no higher in 1991 then in 1921 now was it? Any society that seeks to become more advanced will have to spend more per capita, so the point being that simply blaming families becoming duel income in the west when they also have higher standards of living as being some horrible flaw of capitalism is not an honest approach to a very complicated issue.

I am not saying it is a "horrible flaw", it is a natural result of capitalist development. And yes, it is a complex matter.

Did they not allow that stuff to be sold?

At times you could. At other times, you couldn't. Also, since Marxism defined exploitation as workers having no control over profits ("surplus value"), a self-employed person had full control over any "profit" he could gain and thus wasn't subject to "exploitation".

Just like true communism has never existed and almost certainly never will; so what? Meanwhile for the moment the last bastions of communism, even in North Korea are moving towards more capitalism, never mind its massive black market which is the only reason the place hasn't totally imploded. Guess it must have something too it hun?

North Korea was a crap place even when the USSR was still uberpowerful. Communism "never existed", because it was not even supposed to exist unless it replaces capitalism in entirety.

[Sea Skimmer]

Yeah, and open-source developers often employ communism. And so did primeval communities. In fact, many communes exist throughout the world now. I guess that means communism was "there from whatever date I say". Economic order does not work that way. It is "there" when it is dominant. Capitalism is the dominant form of economic relations today. It was not in 1600. End of discussion. The fact that a prior existing order bears inside itself the elements of a future order does not mean that future order is "already there". Am I clear?

No that is just your choice for a narrow definition, and I consider the original question loaded in any case for related reasons, while communism failed in the 20th century in the states that took it up I don't think that means nobody could ever sustain it in any context. On the smaller scale it has an actual chance just like consensus voting and a few other things hopeless with 300 million people or more in a country. Other then that unless someone is going to make a argument for how another system is going to replace capitalism this is all fucking pointless because until this point, history favors capitalism and that's all we have to go on. A damn lot of different systems all have died in favor of it in a wide range of cultures and places to do this.

At times you could. At other times, you couldn't. Also, since Marxism defined exploitation as workers having no control over profits ("surplus value"), a self-employed person had full control over any "profit" he could gain and thus wasn't subject to "exploitation".

That sounds like shifty logic; Marx raved and awful lot about any time a worker did not get full value for his labor, not just profit, as being exploitation.

[Simon_Jester]

Does Marx's concept of exploitation even apply in cases where there is no person who can be pointed to as the exploiter? It's not as if you can exploit yourself.

[K. A. Pital]

That's not shitty logic. A worker who is in full controlover the entirety of the value he gets for his labour (which is commodified value) can't be exploited. The very concept of exploitation is someone controlling a share of what you made. In case of making shit you grow yourself in the backyard, nobody is controlling or taking any share of this product/value except you.

A damn lot of different systems all have died in favor of it in a wide range of cultures and places to do this.

Violence with advanced technology over more primitive economic systems = automatic win.

[derp vader]

Since the issue of the earliest economies was brought up, what does the forum make of this summary of ancient Mediterranean (give or take) economic history:

...

Materialist approaches to history both by Marxist and by business-oriented writers have assumed that a timeless impulse toward gain-seeking determined status and political power. There was little room for Max Weber’s idea that a drive for social status might dominate economic motives and be the key to the evolution of enterprise and wealth. There also was little idea of temples and palaces playing a catalytic role in production or provisioning commercial ventures. Yet it was these semi-public institutions, not individuals on their own, that innovated the basic building blocks of enterprise long were assumed to be timeless: money, account-keeping to calculate gains, credit and basic contractual formalities.

...

If a colloquium on early entrepreneurs had been convened a century ago, most participants would have viewed traders as operating on their own, bartering at prices that settled at a market equilibrium established spontaneously, in response to fluctuating supply and demand. According to the Austrian economist Carl Menger, money emerged as individuals and merchants involved in barter came to prefer silver and copper as convenient means of payment, stores of value and standards by which to measure other prices.

But instead of supporting the Austrian School’s individualistic scenario for how commercial practices developed – trade, money and credit, interest and pricing – history shows that these are not found emerging spontaneously among individuals “trucking and bartering.” Rather, investment for the purpose of creating profits, the charging of interest, creation of a property market and even a proto-bond market (for temple prebends) first emerged in the temples and palaces of Sumer and Babylonia.

It now has been established that from third-millennium Mesopotamia through classical antiquity the minting of precious metal of specified purity occurred under the aegis of temples or other public agencies, not private suppliers. The word “money” itself derives from Rome’s temple of Juno Moneta where it was coined in early times. Silver money was part of the pricing system, developed by the large institutions to establish stable ratios for their account-keeping and forward planning. Major price ratios (including the rate of interest) initially were administered in round numbers for ease of calculation (Renger 2000 and 2002, and Hudson and Wunsch 2004).

Rather than deterring enterprise, administered prices provided a stable context for it to flourish. The palace estimated a normal return for the fields and other properties it leased out, and left managers to make a profit – or suffer a loss when the weather was bad or other risks materialized. In such cases shortfalls became debts. However, when the losses became so great as to threaten this system, the palace let the arrears go, enabling entrepreneurs to start again with a clean slate (Renger 2002). The aim was to keep them in business, not to destroy them.

More flexible pricing seems to have occurred in the quay areas along the canals. Rather than a conflict existing between the large public institutions administering prices and mercantile enterprise, there was a symbiotic and complementary relationship. Liverani (2005:53f.) points out that administered pricing by the temples and palaces vis-à-vis tamkarum merchants engaged in foreign trade “was limited to the starting move and the closing move: trade agents got silver and/or processed materials (that is, mainly metals and textiles) from the central agency and had to bring back after six months or a year the equivalent in exotic products or raw materials.

The economic balance between central agency and trade agents could not but be regulated by fixed exchange values. But the merchants’ activity once they left the palace was completely different: They could freely trade, playing on the different prices of the various items in various countries, even using their money in financial activities (such as loans) in the time span at their disposal, and making the maximum possible personal profit.”

A century ago it would have been assumed that the state’s economic role could only have taken the form of oppressive taxation and over-regulation of markets, and hence would have thwarted commercial enterprise. This is how Rostovtzeff (1926) depicted the imperial Roman economy stifling the middle class. But Jones (1964) has pointed out that this was how antiquity ended, not how it began. Merchants and entrepreneurs first emerged in conjunction with the public temples and palaces of Mesopotamia.

Rather than being despotic and economically oppressive, Mesopotamian religious values sanctioned the commercial take-off that ended up being thwarted in Greece and Rome. Archaeology has confirmed that “modern” elements of enterprise were present and even dominant already in Mesopotamia in the third millennium BC, and that the institutional context was conducive to long-term growth. Commerce expanded and fortunes were made as populations grew and the material conditions of life rose. What has surprised many observers is how much more successful, fluid and also stable these arrangements are seen to be as we move back in time.

...

http://michael-hudson.com/2010/07/entre ... -collapse/

tl;dr version:

In ancient Mesopotamian cities, the temple-state emerged as the main engine of the economy, accruing surpluses from temple-owned production workshops, animal herding and transportation. These surpluses were then sold or leased to private merchants to trade as they saw fit, in effect creating a mixed economy with a dominant state sector. The temple-state leased land to private entrepreneurs and advanced credit, which allowed it to routinely engage in debt forgiveness; this, in turn, ensured the solvency of merchants and that there could be a viable citizenry to conscript from in times of war.

When advanced commercial practices came to Greece and Rome in the 700sBC, a few wealthy families gained control of the economy and essentially monopolized its choke-points, bypassing the centralized authority that, in any case, was weak owing to the social collapse of 1200BC. He argues that this system of oligarchy, left unchecked by god-king prerogative, devolved into rent-seeking as wealthy oligarchs would prefer gaining wealth via usury, land foreclosure, military conquest, extortion through government offices and dealing in slaves vs. productive trade. Roman aristocrats favored large, self-sufficient estates, and the Roman aristocratic attitude balked at the notion of generating surpluses for trade with others (any dealing in money was mainly done as an underground activity, officially because it was the domain of the "vulgus").

This is primarily what distinguishes the Greek and Roman oligarchies from the Near Eastern mixed economies. It proved much easier to cancel debts owed to the palace and its collectors in Mesopotamia than to annul debts owed to individual creditors acting on their own in classical times. (Even Roman emperors occasionally cancelled tax arrears in order to alleviate widespread debt distress.)

Debt was the lever that made the land transferable in traditional societies, which usually had restrictions to prevent self-support land from being alienated outside of the family or clan. (Hudson and Levine 1999 gives examples.) By holding that the essence of private property is its ability to be sold or forfeited irreversibly, Roman law removed the archaic checks to foreclosure that prevented property from being concentrated in the hands of the few. In practice, this Roman concept of property is essentially creditor-oriented, and quickly became predatory. But as in the Near East, commercial law freed sea captains from debt liability in the case of shipwreck or piracy.

I got curious about heterodox economic theories and his name turned up. The author self-identifies as Post-Keyenesian and his main gripes seem to be rent-seeking and private debt.

Also, hi! First Post.

[Zinegata]

So has Greece actually defaulted yet?