Communism in Civ 4

Lexicus · Aug 11, 2016

Staler87 said:
I think were really talking about the same thing as far as wages go. I'm saying that the perceived value of the employee gives them higher wages. You're saying the power employee gives them higher wages. In reality the power comes from the perceived value of that employee. Although there is something of a wage gap many of the most shocking statistics, at least in Canada, are very exaggerated. You see a chart of health sector employee wages and men get paid more than women, you break it down and see that men merely occupy higher paying positions and get paid more or less the same in these positions. Although this could still be considered a problem it isn't people actively paying men more. Plus this would support either theory as men may have more value to their employers. (I'm not saying the wage gap doesn't exist anywhere just that feminist organizations exaggerate it to shock people which is something most social justice movements do unfortunately)

Again this could be explained with perceived value and in reality we're arguing the same thing here. Someones perceived value to society and their power in society are pretty much equal when the society is their employer.

Power trumps perception. The perceived value of my labor may be very low to my employer, but if I band together in a union I increase my power and my employer will pay me more.
I don't think we are saying the same thing. This is even inherent in what you're saying - the reason that the employer's perception of the employee's value even matters is because the employer has power over the employee. In situations where the employee has more power than the employer, the employer's perception of the employee's value is irrelevant.

I know I went on a rant but surely it wasn't too confusing .

Not confusing, confused.

The bases of capitalism is the ultimate power of the market. Redistributing wealth skews the market and therefore is anti-capitalistic. I do agree that some wealth distribution can be good but you have to be careful. No one really understands exactly how the market works (economic information is too dispersed) so to meddle with it isn't the best idea.

Well see, my response would be that there is no such thing as a "natural" distribution of wealth. There is plenty of redistribution going on in what you would call "the market". Indeed, much US corporate governance the past 40 years or so has functioned to redistribute wealth upward, away from workers (you can see this by googling "wage productivity gap").

Basically my point is that the market is 'meddled with' inherently. There is no such thing as a 'natural' state of income distribution that would happen without any 'meddling' (because there can never be no meddling, ever). Markets are constructed, not natural, and never exist independently of the societies in which they are situated.

My argument can just as easily explain this by saying that the owners believe the slaves are sub-human and have no value. Even if they do have value their perceived value to the employer is zero as otherwise they would be paid.

The mere belief that slaves were subhuman and had no value wouldn't matter if the power relations were not such that masters had absolute power over slaves.

Adam smith was anti-crony capitalism. He invented capitalism. (in essence). I will completely agree with you that his works have been perverted by those claiming to be capitalists for their own ends but to say he is anti-capitalistic is like saying George Washington was against the United States of America. We have basically taken every warning Adam Smith gave us about using his system and thrown it out the window allowing the corporation instead of the consumer to thrive. I would agree that Adam Smith would be taken a back by the system we call 'capitalism' now but saying he is anti-capitalistic is simply ridiculous.

I don't know maybe we're using different definitions of capitalism here. Because my definition is basically the economic system Adam Smith laid out in the Wealth of Nations where the invisible hand guides the market and consumers have the ultimate power.

I suspect you haven't read Wealth of Nations, only read what others have written about it. It is a fundamentally anti-capitalist tract in that it denounces the rent-seeking behavior of contemporary capitalists (such as the people running the East India Company for example).

The invisible hand was never a major part of the arguments in the Wealth of Nations and as I alluded above, Smith admitted the invisible hand was the hand of God. Smith argued in Wealth of Nations and elsewhere for state intervention to redistribute income and to secure basic living standards for people - exactly what you've characterized as "anti-capitalistic." This is why I said your original point here was muddled.

Imp. Knoedel said:
Also Adam Smith didn't invent capitalism. Nobody invented capitalism, it came about as a result of historical development. You could argue that Smith created a scientific theory to describe capitalism, but Marx did the same thing and better.

There's nothing strictly scientific about Marx or Smith's theories. The central bit of what Marx saw as his scientific description of capitalism for example rests on a tautology (Labor Theory of Value), not a falsifiable proposition.

Imp. Knoedel said:
Corporations are a logical consequence of the way capitalism works.

I would say corporations are just a logical consequence of the human propensity to come together to work on things that are bigger than any one person. There's nothing inherently capitalistic about the corporation- the first ancestors of modern business corporations are monasteries and churches in Europe. That was AFAIK the first place that the legal device of interpreting an association as a legal individual was used.

georgjorge said:
I don't really get that argument. "Meddling" with the market might not always produce favourable results, but neither does a market without "meddling". I think that here you have fallen into the trap of viewing a market as something natural which should stay untouched by external forces, like a natural habitat.

Exactly this. Markets and capitalism are hardly synonymous. Capitalism is closer to a system where capitalists rig the market for their own benefit.

georgjorge said:
There would be no wage labor in such a system. Why would owners of capital go to the trouble of hiring workers and paying them exactly what they added, hence making no profit (surplus) at all? Also, how would they acquire their capital in the first place without surplus (though I know about primitive accumulation but that's not sustainable)?

Wage labor doesn't require someone making a profit. NGOs and non-profit organizations (and states for that matter) use wage labor all the time, but don't systemically extract surplus value from the labor of their employees.

Lexicus · Aug 11, 2016

BTW for those interested this is a link to a really good article about how Adam Smith's thought has been almost wholly perverted:
https://www.commonwealmagazine.org/invisible-man

Robo-Star · Aug 11, 2016

georgjorge said:
Why would owners of capital go to the trouble of hiring workers and paying them exactly what they added, hence making no profit (surplus) at all?

To manage the production process - ensuring it adheres to certain standards (religious, environmental, etc.).

georgjorge said:
Also, how would they acquire their capital in the first place without surplus (though I know about primitive accumulation but that's not sustainable)?

Their own labour - they make a spade, then hire someone else to dig (and pay them a wage no less than the value of the digging).

Staler87 · Aug 11, 2016

Lexicus said:
Power trumps perception. The perceived value of my labor may be very low to my employer, but if I band together in a union I increase my power and my employer will pay me more.
I don't think we are saying the same thing. This is even inherent in what you're saying - the reason that the employer's perception of the employee's value even matters is because the employer has power over the employee. In situations where the employee has more power than the employer, the employer's perception of the employee's value is irrelevant.

You've got me here. Yes when he employee has greater power than the employer he essential becomes the employer for the intent of my wage definition. I must concede that your definition is broader, and therefore better than mine.

Lexicus said:
Well see, my response would be that there is no such thing as a "natural" distribution of wealth. There is plenty of redistribution going on in what you would call "the market". Indeed, much US corporate governance the past 40 years or so has functioned to redistribute wealth upward, away from workers (you can see this by googling "wage productivity gap").

The US is not a capitalistic society in my books. They bail out companies that fail, pass laws specifically designed to help certain corporations that pad their parties pockets (among other things). All this crony capitalism does far more to hurt the market and, ultimately, the consumer than any of the 'high taxes' these people claim are hurting capitalism.

Lexicus said:
Basically my point is that the market is 'meddled with' inherently. There is no such thing as a 'natural' state of income distribution that would happen without any 'meddling' (because there can never be no meddling, ever). Markets are constructed, not natural, and never exist independently of the societies in which they are situated.

The market is not meddled with inherently, it is something that has arisen organically after thousands of years of civilization (hey maybe that counts as bringing the thread back on topic). I agree there is no natural state of income distribution because it is essential based on so many different factors. The problem is when you start to tinker around with one part of the economy with an outside force (government) you never know what else is going to be affected. How are markets constructed? When markets popped up in Aztec cities were they engineered? No. People came together to exchange good and services. It is a natural transition for people to specialize in certain tasks and exchange using a currency rather than stay stuck in hunter gatherer societies. The societies give rise to the markets through organic need so I don't think either of us are arguing against the fact that markets are intrinsically linked to the societies that they exist in.

Lexicus said:
The mere belief that slaves were subhuman and had no value wouldn't matter if the power relations were not such that masters had absolute power over slaves.

I've got to again, agree with you on this one.

Lexicus said:
I suspect you haven't read Wealth of Nations, only read what others have written about it. It is a fundamentally anti-capitalist tract in that it denounces the rent-seeking behavior of contemporary capitalists (such as the people running the East India Company for example).

I've got to admit that I've only read parts of it. Although just for the record I have read the entire communist manifesto, which seems ironic given as how I have absolutely no faith in Marxist ideas working and high faith in capitalistic ideas working if properly implemented.

I know it denounced the East Indian Company. It was a brown-nosing government created monopoly that was essentially immune to the market and had everything to do with mercantilism and nothing to do with capitalism.

Lexicus said:
The invisible hand was never a major part of the arguments in the Wealth of Nations and as I alluded above, Smith admitted the invisible hand was the hand of God. Smith argued in Wealth of Nations and elsewhere for state intervention to redistribute income and to secure basic living standards for people - exactly what you've characterized as "anti-capitalistic." This is why I said your original point here was muddled.

As pointed out in the article you yourself provided a link to "The Wealth of Nations rests on exactly the same premises about human values, although its main subject is different. The more famous of the two books is not primarily about the ordering of society or the sources of its happiness; it is a historical explanation of the factors underlying economic growth, and a plea that the eighteenth-century British government abandon its heavy-handed policy of directly manipulating markets through mercantilist trade policies." It was a plea for governments to not interfere in markets for the sake of economic growth. From the portions of the book I've read, and admittedly, from what I've been told about the book from those that have read it is that Adam Smith believed in only three government expenditures:

1. A defensive army

2. Providing services that would be wholly impractical/impossible for the private sector to provide. (eg. Lighthouse)

3. Providing services that, if left to the private sector to provide, could result in the market being skewed and/or crony capitalism (eg. Roads).

Lexicus said:
There's nothing strictly scientific about Marx or Smith's theories. The central bit of what Marx saw as his scientific description of capitalism for example rests on a tautology (Labor Theory of Value), not a falsifiable proposition.

I know there is nothing too scientific about Marx's theories. he himself viewed them as being developed using the scientific method though.

Lexicus said:
I would say corporations are just a logical consequence of the human propensity to come together to work on things that are bigger than any one person. There's nothing inherently capitalistic about the corporation- the first ancestors of modern business corporations are monasteries and churches in Europe. That was AFAIK the first place that the legal device of interpreting an association as a legal individual was used.

I know. But where corporations are capitalistic is when they exist to make money. Which is what the majority of modern corporations exist to do.

Lexicus said:
Exactly this. Markets and capitalism are hardly synonymous. Capitalism is closer to a system where capitalists rig the market for their own benefit.

Yes they are. You have crony-capitalism and capitalism confused. Crony capitalism is about rigging markets. Capitalism is about loss gain and free markets.

Lexicus said:
Wage labor doesn't require someone making a profit. NGOs and non-profit organizations (and states for that matter) use wage labor all the time, but don't systemically extract surplus value from the labor of their employees.

I think we're talking about private sector for-profit jobs here. To bring up not for profit organizations is pedantic and isn't really what the author was talking about.

Imperator Knoedel · Aug 12, 2016

FFS make up your mind already, either it's capitalism or it's not capitalism, but if it's "crony capitalism" it is per definition capitalism as it is just a specific type of capitalism.

georgjorge · Aug 12, 2016

Staler87 said:
The market is not meddled with inherently, it is something that has arisen organically after thousands of years of civilization (hey maybe that counts as bringing the thread back on topic). I agree there is no natural state of income distribution because it is essential based on so many different factors. The problem is when you start to tinker around with one part of the economy with an outside force (government) you never know what else is going to be affected. How are markets constructed? When markets popped up in Aztec cities were they engineered? No. People came together to exchange good and services. It is a natural transition for people to specialize in certain tasks and exchange using a currency rather than stay stuck in hunter gatherer societies. The societies give rise to the markets through organic need so I don't think either of us are arguing against the fact that markets are intrinsically linked to the societies that they exist in.

Even though I would argue that those "natural" markets in Aztec cities were dependent on a number of rules and regulations as well, my main point would be that those "natural" markets don't have very much in common with what we name market today. One is the physical exchange of goods in a specific place, the other an abstract economical concept.

Consider the labour market and whether it "rose organically". For the modern labour market to function, you need the de-appropriation of the means of production from workers (so they are forced to sell their labour to capitalists); the existence of a legal system supporting the validity and scope of labour contracts; money and thus a certain system of producing and circulating it; etc. All those institutions have been put into place by different actors - sometimes forcefully - rather than having developed "naturally". And let's not even go into capital markets and the many institutions involved in them.

I hear what you say about a natural tendency towards exchange and specialization, though I'm not enough of an anthropologist to know whether those are basic human traits. But it's far from given that those traits have to lead to the modern markets we have now. For example, exchange and specialization also occurs in collectivist structures (compared to the individualistic and competitive structures we have now). That one is constantly promoted and enforced while the other is not again tells us a alot about interests and power.

Lexicus said:
Power trumps perception. The perceived value of my labor may be very low to my employer, but if I band together in a union I increase my power and my employer will pay me more.

A good example. However, if an employer pays a worker more than what he perceives as his value because of unions, he will try to use what power he has in order to "correct" that injustice (through political agitation or moving his business to another country). Whereas if he sees the wage of the worker as equivalent to his value (=perception), he will be less inclined to do so (and use his power to increase his profits via other means). So perception (which may well be conceptualized as power) plays into it as well.

Lexicus · Aug 12, 2016

Staler87 said:
The market is not meddled with inherently, it is something that has arisen organically after thousands of years of civilization (hey maybe that counts as bringing the thread back on topic).

This is not true at all - there is nothing 'organic' about the market but it has been around for thousands of years, it did not arise after thousands of years.

Staler87 said:
As pointed out in the article you yourself provided a link to "The Wealth of Nations rests on exactly the same premises about human values, although its main subject is different. The more famous of the two books is not primarily about the ordering of society or the sources of its happiness; it is a historical explanation of the factors underlying economic growth, and a plea that the eighteenth-century British government abandon its heavy-handed policy of directly manipulating markets through mercantilist trade policies." It was a plea for governments to not interfere in markets for the sake of economic growth. From the portions of the book I've read, and admittedly, from what I've been told about the book from those that have read it is that Adam Smith believed in only three government expenditures:

1. A defensive army

2. Providing services that would be wholly impractical/impossible for the private sector to provide. (eg. Lighthouse)

3. Providing services that, if left to the private sector to provide, could result in the market being skewed and/or crony capitalism (eg. Roads).

I would suggest reading the article I posted in full because you are quite simply wrong here. Yes, it was an argument for ending the mercantilist policies of the British government in 1770s- it was not an argument for market fundamentalist policy or for government to be limited in this manner.

Staler87 said:
Yes they are. You have crony-capitalism and capitalism confused. Crony capitalism is about rigging markets. Capitalism is about loss gain and free markets.

Capitalism and markets are not synonymous. There is no debate possible on this point. The conflation of markets with capitalism makes it impossible to intelligibly discuss either.

Staler87 said:
I think we're talking about private sector for-profit jobs here. To bring up not for profit organizations is pedantic and isn't really what the author was talking about.

You should read what I was responding to again.

Staler87 · Aug 12, 2016

Lexicus said:
This is not true at all - there is nothing 'organic' about the market but it has been around for thousands of years, it did not arise after thousands of years.

If the market has been around for thousands of years and humans have been on the earth for tens of thousands of years well then it is simple math that it did arise after thousands of years.

Lexicus said:
I would suggest reading the article I posted in full because you are quite simply wrong here. Yes, it was an argument for ending the mercantilist policies of the British government in 1770s- it was not an argument for market fundamentalist policy or for government to be limited in this manner.

I read the article but I hope you do not expect me to believe some random guy on the internet who, surprisingly, quotes very little of the book in the main points of his articles over people who have read the book, I know personally and find trustworthy, and my own experiences reading select parts of the book. It brings up some good points that I already knew but I think, as with most things, the truth probably lies somewhere in between the articles dogma and the dogma of the modern right-wing political establishment.

Lexicus said:
Capitalism and markets are not synonymous. There is no debate possible on this point. The conflation of markets with capitalism makes it impossible to intelligibly discuss either.

I wasn't saying they were, I was merely saying that capitalism cannot exist without free markets, although I said nothing of the opposite being true (markets can exist without capitalism).

Robo-Star · Aug 13, 2016

Staler87 said:
I wasn't saying they were, I was merely saying that capitalism cannot exist without free markets, although I said nothing of the opposite being true (markets can exist without capitalism).

Historically, as georgjorge alluded to, the market was rigged precisely to secure a return to capital (that, with capital being broadly available to all in society, would otherwise have been competed down to all-but zero).

Staler87 · Aug 14, 2016

Imp. Knoedel said:
FFS make up your mind already, either it's capitalism or it's not capitalism, but if it's "crony capitalism" it is per definition capitalism as it is just a specific type of capitalism.

No it is not capitalism. Crony capitalism is not a 'type' of capitalism. Just because it contains the word capitalism does not mean it is a 'type' of capitalism, to suggest so is very narrow minded. Capitalism is about competition and consumerism, Crony Capitalism is about monopolies/oligopolies and making the rich richer. They are pretty much opposites. To suggest that they are somehow connected is like suggesting that China is a modern day Marxist state. It is both ridiculous and untrue.

Imperator Knoedel · Aug 14, 2016

Staler87 said:
No it is not capitalism. Crony capitalism is not a 'type' of capitalism. Just because it contains the word capitalism does not mean it is a 'type' of capitalism, to suggest so is very narrow minded. Capitalism is about competition and consumerism, Crony Capitalism is about monopolies/oligopolies and making the rich richer. They are pretty much opposites. To suggest that they are somehow connected is like suggesting that China is a modern day Marxist state. It is both ridiculous and untrue.

They are not opposites, "crony capitalism" is just capitalism how it works in actual reality rather than the imaginary ideal you seem to have in your head that never existed anywhere in history. You never even explained what capitalism is according to you, while I gave Marx' (and my own) definition of the term.

Staler87 · Aug 15, 2016

Imp. Knoedel said:
They are not opposites, "crony capitalism" is just capitalism how it works in actual reality rather than the imaginary ideal you seem to have in your head that never existed anywhere in history. You never even explained what capitalism is according to you, while I gave Marx' (and my own) definition of the term.

Alright I will explain how capitalism works (obviously from my personal standpoint), how crony capitalism arises, and why capitalism is an achievable ideal and Marxism is a fantasy. I actually used to be a socialist and then I learned how economics worked.

Capitalism is an economic system in which taxes are low and limited to a non-skewing sources (Property tax being the most obvious example but there are others). A massive amount of various business compete producing similar products for customers. This continual competition drives prices lower, and ultimately serves the consumer. Additionally because of competition among employers for employees wages should naturally rise. It creates a system where in order to increase market share producers must drive down market share. To get top-quality employees and produce top-quality products producers must pay higher prices but in order to maintain market share they must drive prices down. This demands efficiency. Capitalism drives people to become more efficient if they want to survive in a cutthroat market. With continual growth due to increase of production and a slight decrease in cost deflation occurs.

Where this system goes wrong. People are influenced by money and power. In a true free market no one corporation can achieve too great of market share (and therefore money and power), however because people are motivated by money and power the corporation can cheat. All of the sudden a politician looking for re-election is asking for this new regulation to be brought in, this regulation helps the corporation but hurts their competitors. They donate large amounts of money to this politician understanding he will enforce this regulation. Due to his superior fundraising the politician gets in and passes the regulation. Please note I'm not talking about backroom deals or scandals. I don't believe in conspiracy theories or far fetched ideas that government official exist only to serve our corporate overlords. When the regulation passes the corporation gets a competitive advantage. It no longer has to rely on serving the consumer or increasing efficiency it can now rely on getting the things it wants passed into law, passed into law. This is crony capitalism. This is, quite frankly, pretty much the only reason that giant corps exist. Corporations beet each other out, nowadays, by using lawmakers instead of competition.

That is scenario one where capitalism goes wrong and is pretty much what has happened in the USA. The next scenario is when well intending people decide to use three things called monetary, fiscal, and regulatory policy. Many nations have found that if you lower interest rates then economic growth goes up. This is false growth. During the roaring twenties people took out loans to invest in the stock market due to the crazily low interest rates. For a while people invested money at a deficit and then quickly made their money back up. However these deficit financed loans (which are called malinvestments) create a false impression of economic growth that is just a huge bubble. In essence the entire American economy was a gigantic bubble. As soon as confidence dropped, even a minuscule amount the entire system would collapse. When confidence did drop a bit (as it always does with the stock market) the entire system crumbled. If real capital had been invested this capital could have been, and would have been, re-sunk into the economy, re-vitalizing it (just one of the many ways the economy self-corrects) and everything would be fine. But because it was false capital, malinvestments, a huge chunk of the American economy disappeared because it was never really there. It doesn't take a genius to figure out what happens to an economy that suffers from a catastrophic withdrawal of capital. No one has nay money to pay debts, series of bankruptcies occur, more false capital disappears and the cycle continues. Now many people say that Roosevelt 'fixed' the economy using Keynesian economics. This is untrue. He lowered interest rates, and deficit spent his way into another deficit financed mini-boom. False capital flooded the market and it 'grew'. However this was false capital and right before the outbreak of the war the unemployment rate, and the economy had sunk back down to a level during the peak of the great depression.

If you haven't figured it out this is the so called boom and bust cycle that supposed 'capitalist' talk about as an inevitability. After looking at it anyone can see that if you eliminate the false capital you stop the cycle. Booms are in reality just the deficit financed bubble that the government enforces (using fiscal and monetary policy) coming out of a bust. The boom is merely an omen of an oncoming bust. To exuberate this problem the government got rid of the gold standard. In itself this is not a bad thing, although linking a currency to something with intrinsic value is a good way to prevent false capital eliminating it doesn't force there to be false capital. The government that got elected that eliminated the gold standard in America was Reagan who got record donations from big business (funny, what a weird coincidence). Eliminating the gold standard allowed the government to print more bills than there was capital. When there is more bills than there is capital inflation occurs because the market corrects so that the amount of currency equals the amount of capital. When false capital gets generated from both deficits and printing money the economy soars. When the economy soars stocks sky-rocket. If you know when to pull out of the stock market just before it crashes you can make huge gains. Unfortunately this is very hard to predict, unless, of course, you control the regulating industry deciding the security of the major American stock - housing bonds. The regulating businesses were paid for each bond they gave a security rating too. If they didn't give bonds a good security rating then the people selling housing bonds would go elsewhere. A self-regulating industry was probably not the smartest idea. Due to the investment of all this false capital into the American economy the bonds were bound to fail. In fact people were buying bonds on the bonds and then bonds and then bonds on those bonds (it's really quite technical but the result was the investment into a bond could total more than 10x the stated value of the bond. Considering the amount of this that was malinvestment...well you probably get the picture.) Due to the really low interest rates people continually bought new homes using deficits, since the housing market was hot and everyone was buying a new home with false capital home prices continually rose. When people couldn't make their payments then they re-financed their home. Unfortunately the instant housing prices sop going up (I mean there is only so many houses people can buy) no one can re-finance. Because at the level of investors these housing bonds were wrapped up so one bond contained thousands of houses no one really looked at what happened with the actual houses. When tons of them started falling through the big business that invested in these things kept them up at triple A rating due to their 'relationship'with the rating agencies, they then dumped all the housing bonds off to other people and got rich. The economy crashed as the ratings fell and all the false capital was sucked out of the economy through foreclosures and bankruptcies. Of course every major bank went bankrupt from this but luckily the government all paid them lots of money to 'save' the capitalistic system (of course the little guys didn't get bailed out so more competition crossed off the list). Bankers got rich, their companies were bailed out and everyone lived happily ever after. Well except for the little guys of course. Oh and did I mention how in favour of free market economies all these big bankers are. This did start with Reagan's administration (who as a capitalist I dislike) but no government afterward really did anything to fix it. Yes Reagan increased the real capital of the economy, but by tax breaks to attempt trickle down economics (a stupid idea. I mean rich people usually spend maybe 70% of their money and poor people 99%. Tsunami up seems like a much better idea.) and things meant to help producers he really just helped corporations make lots more money and started the increase of the income gap in the USA.

I've spent enough time typing this so I'll do up some Marxist bashing and how capitalism could actually work later.

Lexicus · Aug 15, 2016

Staler87 said:
Capitalism is an economic system in which taxes are low and limited to a non-skewing sources (Property tax being the most obvious example but there are others).

Not a definition of capitalism.

A massive amount of various business compete producing similar products for customers. This continual competition drives prices lower, and ultimately serves the consumer. Additionally because of competition among employers for employees wages should naturally rise.

Neither of these things happens in real life most of the time. In business schools for example you're taught that price competition should be avoided as it's basically giving free money to customers.

Where this system goes wrong. People are influenced by money and power. In a true free market no one corporation can achieve too great of market share (and therefore money and power), however because people are motivated by money and power the corporation can cheat. All of the sudden a politician looking for re-election is asking for this new regulation to be brought in, this regulation helps the corporation but hurts their competitors. They donate large amounts of money to this politician understanding he will enforce this regulation. Due to his superior fundraising the politician gets in and passes the regulation. Please note I'm not talking about backroom deals or scandals. I don't believe in conspiracy theories or far fetched ideas that government official exist only to serve our corporate overlords. When the regulation passes the corporation gets a competitive advantage. It no longer has to rely on serving the consumer or increasing efficiency it can now rely on getting the things it wants passed into law, passed into law. This is crony capitalism. This is, quite frankly, pretty much the only reason that giant corps exist. Corporations beet each other out, nowadays, by using lawmakers instead of competition.

The lack of regulations is precisely why corporations grow so large to begin with. There is a thing called an 'economy of scale.' Look it up. It's the main reason why certain sectors become noncompetitive and dominated by a few large firms.

That is scenario one where capitalism goes wrong and is pretty much what has happened in the USA. The next scenario is when well intending people decide to use three things called monetary, fiscal, and regulatory policy. Many nations have found that if you lower interest rates then economic growth goes up. This is false growth. During the roaring twenties people took out loans to invest in the stock market due to the crazily low interest rates. For a while people invested money at a deficit and then quickly made their money back up. However these deficit financed loans (which are called malinvestments) create a false impression of economic growth that is just a huge bubble. In essence the entire American economy was a gigantic bubble. As soon as confidence dropped, even a minuscule amount the entire system would collapse. When confidence did drop a bit (as it always does with the stock market) the entire system crumbled. If real capital had been invested this capital could have been, and would have been, re-sunk into the economy, re-vitalizing it (just one of the many ways the economy self-corrects) and everything would be fine. But because it was false capital, malinvestments, a huge chunk of the American economy disappeared because it was never really there. It doesn't take a genius to figure out what happens to an economy that suffers from a catastrophic withdrawal of capital. No one has nay money to pay debts, series of bankruptcies occur, more false capital disappears and the cycle continues. Now many people say that Roosevelt 'fixed' the economy using Keynesian economics. This is untrue. He lowered interest rates, and deficit spent his way into another deficit financed mini-boom. False capital flooded the market and it 'grew'. However this was false capital and right before the outbreak of the war the unemployment rate, and the economy had sunk back down to a level during the peak of the great depression.

Difficult to tell exactly what you mean by all this but sounds like you've imbibed a whole bunch of Austrian BS from somewhere or other.
Interest rates have only a peripheral effect on the financial boom-bust cycle, which happens basically because people are stupid.
In 2007 the crisis was caused by banking fraud on a historically unprecedented scale, not by government interest rate policies. The government helped to cause the crisis insofar as it wasn't doing its job and supervising the conduct of the banks.

Staler87 said:
If you haven't figured it out this is the so called boom and bust cycle that supposed 'capitalist' talk about as an inevitability. After looking at it anyone can see that if you eliminate the false capital you stop the cycle.

You should read Minsky, it is pretty much impossible to stop boom and bust cycles (unless you want to get rid of private investment completely) but you can moderate their effects with government spending.

Now many people say that Roosevelt 'fixed' the economy using Keynesian economics. This is untrue. He lowered interest rates, and deficit spent his way into another deficit financed mini-boom. False capital flooded the market and it 'grew'. However this was false capital and right before the outbreak of the war the unemployment rate, and the economy had sunk back down to a level during the peak of the great depression.

The New Deal helped to address the Depression but the spending was nowhere near what was needed. Roosevelt's clumsy attempt to balance budget caused another recession in '37, but it wasn't until WW2 opened the floodgates of government spending that the economy truly got back on track.

To exuberate this problem the government got rid of the gold standard. In itself this is not a bad thing, although linking a currency to something with intrinsic value is a good way to prevent false capital eliminating it doesn't force there to be false capital. The government that got elected that eliminated the gold standard in America was Reagan who got record donations from big business (funny, what a weird coincidence). Eliminating the gold standard allowed the government to print more bills than there was capital.

1 - boom/busts under the gold standard were even worse than they've been since we went off gold
2 - Nixon, not Reagan, took the US off gold (not that there was a functional gold standard anyway, there hadn't been since the '30s when FDR suspended the domestic convertibility of the dollar to gold)
3 - the gold standard does nothing whatever to prevent what you and your Austrian teachers call "malinvestment" and most people call "fraud"
4 - the gold standard is actually bad for economic stability as all it does is introduce the possibility of gold-induced default while bringing no benefits, as it in fact does not act to prevent people from creating more money than can be backed by the existing gold supply (see: the entire history of the international gold standard)

Lexicus · Aug 15, 2016

Staler87 said:
I read the article but I hope you do not expect me to believe some random guy on the internet who, surprisingly, quotes very little of the book in the main points of his articles over people who have read the book, I know personally and find trustworthy, and my own experiences reading select parts of the book. It brings up some good points that I already knew but I think, as with most things, the truth probably lies somewhere in between the articles dogma and the dogma of the modern right-wing political establishment.

He quotes the book extensively. The article is not selling 'dogma' at all, it's giving an interpretation of Smith that is far, far more accurate than your nonsensical statement that Smith "invented capitalism."
I would generally expect you to take the word of scholars who know what they're talking about over the word of laypeople who don't, but whatever floats your boat I guess.

I wasn't saying they were, I was merely saying that capitalism cannot exist without free markets, although I said nothing of the opposite being true (markets can exist without capitalism).

me said:
Markets and capitalism are hardly synonymous.

you said:
Yes they are.

Robo-Star · Aug 15, 2016

Lexicus said:
The lack of regulations is precisely why corporations grow so large to begin with. There is a thing called an 'economy of scale.' Look it up.

Export-Dependent Monopoly Capitalism (with Digression on Economy of Scale)

Staler87 · Aug 16, 2016

Lexicus said:
Not a definition of capitalism.

That's why I wrote paragraph.

Lexicus said:
Neither of these things happens in real life most of the time. In business schools for example you're taught that price competition should be avoided as it's basically giving free money to customers.

Right. That is why it was in my theoretical section, rather than what really has happened. But capitalism is all about the customer so price competition is exactly the point of it.

Lexicus said:
The lack of regulations is precisely why corporations grow so large to begin with. There is a thing called an 'economy of scale.' Look it up. It's the main reason why certain sectors become noncompetitive and dominated by a few large firms.

Please actually refute what I say. I realize as you expand production costs go down. However, to be able to expand significantly you have to have had gained a significant advantage over your competitors. Please don't tell me how many big businesses stay at the top when I'm arguing about how they get there.

Lexicus said:
Difficult to tell exactly what you mean by all this but sounds like you've imbibed a whole bunch of Austrian BS from somewhere or other.
Interest rates have only a peripheral effect on the financial boom-bust cycle, which happens basically because people are stupid.
In 2007 the crisis was caused by banking fraud on a historically unprecedented scale, not by government interest rate policies. The government helped to cause the crisis insofar as it wasn't doing its job and supervising the conduct of the banks.

It was caused by fraud. I explained that. I think you missed the entire section about how I explained that the banking companies were in cahoots with the rating companies. However, the root cause was malinvestments. Without the malinvestments the fraud wouldn't have happened or wouldn't have been noticed.

Lexicus said:
You should read Minsky, it is pretty much impossible to stop boom and bust cycles (unless you want to get rid of private investment completely) but you can moderate their effects with government spending.

No, you can't. You can create an artificial boom that appears to be fixing the problem but you are essentially putting make-up on a pig. Some Rain is going to come and the pig is going to rear its ugly head. I more follow Hayek. Unlike Minsky he actually won a Nobel prize in economics.

Lexicus said:
The New Deal helped to address the Depression but the spending was nowhere near what was needed. Roosevelt's clumsy attempt to balance budget caused another recession in '37, but it wasn't until WW2 opened the floodgates of government spending that the economy truly got back on track.

Apparently, according to you, everyone rations, enlisted in the army, and massive amounts of debt accumulation (both public and private) are all signs of a healthy well functioning economy. Hey at least everyone is employed (in the army getting shot at payed by debt financed government wages). The recession in 37 was the result of Roosevelt ending his spending spree. The false capital dried up and the real state of the economy was revealed. He didn't 'fix' anything it was all the same recession.

Lexicus said:
1 - boom/busts under the gold standard were even worse than they've been since we went off gold
2 - Nixon, not Reagan, took the US off gold (not that there was a functional gold standard anyway, there hadn't been since the '30s when FDR suspended the domestic convertibility of the dollar to gold)
3 - the gold standard does nothing whatever to prevent what you and your Austrian teachers call "malinvestment" and most people call "fraud"
4 - the gold standard is actually bad for economic stability as all it does is introduce the possibility of gold-induced default while bringing no benefits, as it in fact does not act to prevent people from creating more money than can be backed by the existing gold supply (see: the entire history of the international gold standard)

Sorry I made a mistake here, you are correct Nixon did take the US off the gold standard, but Nixon also received massive amounts of corporate donations. I am Canadian so my exact presidential who did what is a bit iffy. You'll have to forgive me.

Umm.... how is malinvestment fraud. Making a bad choice to have deficit financed investments ultimately causes pretty much every boom/bust cycle, but it definitely wouldn't be fraud. I have examined many schools of economic thought and find that the Austrian school makes the most sense. Is it perfect, no, but it is the only economic school to admit that the economy is ultimately too complex for any one group/person to fully analyze.

So you're saying that if you use the gold standard improperly it doesn't do what it's supposed to? I don't think that is exactly an argument. I mean a good argument against chainsaws is not: if someone uses it improperly it won't cut stuff.

So the fact that after the gold standard was ditched the divide between rich and poor grew exponentially in the US means nothing? I admit there were other reasons for this but you do have to admit the correlation is a bit startling.

Again I ask - have you read The Wealth of Nations? Man these scholars all over the world must be pretty vocal. Additionally the guy I knew who read it was my highschool economics teacher so I'm sure he had no idea how to interpret a work about economics...

Please don't misquote me like that after I already explained what I meant.

Imperator Knoedel · Aug 16, 2016

A theory is useless if it doesn't describe reality. Again, you didn't describe reality, and you even admit that! You only doubled down on describing this ideal system that only exists in your fantasy, and then describe a reality that according to you doesn't even have anything to do with your ideal. If this ideal Capitalism doesn't exist anywhere in reality we might as well repurpose the term to describe something that actually is real.

Have you read Das Kapital?

Even your theoretical Capitalism is bound to fail as competition will always create winners and losers. One of the capitalists will eventually outperform the others and create goods cheaper and/or better than anyone else. Customers will prefer these products, causing a runaway effect where that one capitalist acquires more and more money to make production even more efficient and lower prices even more while his competitors struggle to keep up with their sales plummeting until they eventually become bankrupt. Now you have an all powerful monopoly that can just bully and buy start ups out of business before they even start becoming a threat, and since th monopoly is not checked by any rivals it can basically do whatever it wants barring outside (that is state) intervention, and even then there's nothing stopping the monopoly from just bribing politicians. Capitalism is an inherently unstable system, cronyism or not.

Lexicus · Aug 16, 2016

Staler87 said:
Right. That is why it was in my theoretical section, rather than what really has happened. But capitalism is all about the customer so price competition is exactly the point of it.

Then as Imp Knoedel says you're not describing reality, you're describing some ideal ****ooland.

Staler87 said:
Please actually refute what I say. I realize as you expand production costs go down. However, to be able to expand significantly you have to have had gained a significant advantage over your competitors. Please don't tell me how many big businesses stay at the top when I'm arguing about how they get there.

What advantages did, say, Microsoft have over its competitors? The answer is de facto immunity from US anti-trust enforcement.

Staler87 said:
It was caused by fraud. I explained that. I think you missed the entire section about how I explained that the banking companies were in cahoots with the rating companies. However, the root cause was malinvestments. Without the malinvestments the fraud wouldn't have happened or wouldn't have been noticed.

I did not miss that part, but "malinvestments" is a pure fantasy concept invented by Austrian economists.

You'd do well to drop the Austrian BS and learn some real (Keynesian) macro.

Staler87 said:
No, you can't. You can create an artificial boom that appears to be fixing the problem but you are essentially putting make-up on a pig. Some Rain is going to come and the pig is going to rear its ugly head. I more follow Hayek. Unlike Minsky he actually won a Nobel prize in economics.

Puerile appeal to authority. Unlike Hayek's, Minsky's theories actually conform to reality :lol:

Staler87 said:
Apparently, according to you, everyone rations, enlisted in the army, and massive amounts of debt accumulation (both public and private) are all signs of a healthy well functioning economy. Hey at least everyone is employed (in the army getting shot at payed by debt financed government wages). The recession in 37 was the result of Roosevelt ending his spending spree. The false capital dried up and the real state of the economy was revealed. He didn't 'fix' anything it was all the same recession.

Like I said the New Deal's spending programs in the '30s were ludicrously inadequate and by no means was the economy of the mid-30's "healthy" though of course FDR's New Deal pulled us back from the brink.
As I said what actually fixed the economy was that WW2 removed the political constraints on government spending.

Staler87 said:
Is it perfect, no, but it is the only economic school to admit that the economy is ultimately too complex for any one group/person to fully analyze.

This isn't true. Austrian economics is not the only economic school that says this.

Staler87 said:
So you're saying that if you use the gold standard improperly it doesn't do what it's supposed to? I don't think that is exactly an argument. I mean a good argument against chainsaws is not: if someone uses it improperly it won't cut stuff.

Now we come back again to this ideal vs reality crap. The gold standard never functioned 'properly'. It doesn't actually stop more credit from being created than can be backed with gold. This is simply a factual observation and anyone remotely familiar with the history of the gold standard would agree.

Staler87 said:
So the fact that after the gold standard was ditched the divide between rich and poor grew exponentially in the US means nothing? I admit there were other reasons for this but you do have to admit the correlation is a bit startling.

No, I don't, because as I said FDR suspended the domestic convertibility of the dollar in the '30s. That was the real end of the gold standard as far as the US economy was concerned, and that was followed by a period of drastically decreased inequality.
This idea that the gold standard is somehow good for the common man has to be one of the silliest notions in history.
The major reasons for the increased wealth gap are political in nature. Decreased bargaining power for labor brought on by a combination of factors including the turn toward maintaining intentional unemployment in an attempt to control inflation in the early '70s, as well as the vicious attacks on unions, plus economic deregulation and beginning of the global 'race to the bottom'.

Staler87 said:
Again I ask - have you read The Wealth of Nations? Man these scholars all over the world must be pretty vocal. Additionally the guy I knew who read it was my highschool economics teacher so I'm sure he had no idea how to interpret a work about economics...

Yes, though it has been a while. And it's more properly referred to as a work of political economy, not 'economics'. I learned the same BS about Smith in high school as you did. Then I went to college and actually read the book, and read what real scholars had to say about it.

Staler87 · Aug 16, 2016

Lexicus said:
Then as Imp Knoedel says you're not describing reality, you're describing some ideal ****ooland.

Yes, but this cukooland could exist. It requires only two real conditions:
1. People act in their own self interest in the business world (almost a guarantee)
2. The government does not actively meddle in the economy (It's like trying to stop a kid at a candy store. This one, I admit, is unlikely although not immposible)

Lexicus said:
What advantages did, say, Microsoft have over its competitors? The answer is de facto immunity from US anti-trust enforcement.

Who are you arguing for here? I'm the one who's saying the government's policies have largely been the reason for mega-corps.

Lexicus said:
I did not miss that part, but "malinvestments" is a pure fantasy concept invented by Austrian economists.

Noble prize winning Austrian economists, but obviously you know better.

Lexicus said:
You'd do well to drop the Austrian BS and learn some real (Keynesian) macro.

Keynesian economics are complete crap. They have been all but completely refuted by any somewhat accurate theory of modern economics and should hold no weight in any economic argument. The only people who still believe in Keynes's theories are ill-informed social designers and government officials.

Lexicus said:
Puerile appeal to authority. Unlike Hayek's, Minsky's theories actually conform to reality

Lexicus said:
Like I said the New Deal's spending programs in the '30s were ludicrously inadequate and by no means was the economy of the mid-30's "healthy" though of course FDR's New Deal pulled us back from the brink.
As I said what actually fixed the economy was that WW2 removed the political constraints on government spending.

As I said the ww2 economy was not healthy. please explain to me how everyone on rations, enlisted in the army, and massive amounts of debt accumulation (both public and private) are all signs of a healthy well functioning economy. Hey at least everyone is employed (in the army getting shot at payed by debt financed government wages). The recession in 37 was the result of Roosevelt ending his spending spree. The false capital dried up and the real state of the economy was revealed. He didn't 'fix' anything it was all the same recession.

Lexicus said:
This isn't true. Austrian economics is not the only economic school that says this.

I probably don't know every single economic school. So this is very possible.

Lexicus said:
Now we come back again to this ideal vs reality crap. The gold standard never functioned 'properly'. It doesn't actually stop more credit from being created than can be backed with gold. This is simply a factual observation and anyone remotely familiar with the history of the gold standard would agree.

Yes but if used properly it should, in theory, prevent this. I have to admit though getting the government to not print money is really, really hard.

Lexicus said:
No, I don't, because as I said FDR suspended the domestic convertibility of the dollar in the '30s. That was the real end of the gold standard as far as the US economy was concerned, and that was followed by a period of drastically decreased inequality.
This idea that the gold standard is somehow good for the common man has to be one of the silliest notions in history.
The major reasons for the increased wealth gap are political in nature. Decreased bargaining power for labor brought on by a combination of factors including the turn toward maintaining intentional unemployment in an attempt to control inflation in the early '70s, as well as the vicious attacks on unions, plus economic deregulation and beginning of the global 'race to the bottom'.

Please enlighten me as to how economic deregulation is helping cause the increasing wage gap? I will agree though that most of the things that happened to cause the wage gap were actions by the government .

Lexicus said:
Yes, though it has been a while. And it's more properly referred to as a work of political economy, not 'economics'. I learned the same BS about Smith in high school as you did. Then I went to college and actually read the book, and read what real scholars had to say about it.

Okay. I've got to hold my tongue here because you've read the book and I haven't.

Lexicus · Aug 16, 2016

Staler87 said:
Yes, but this cukooland could exist. It requires only two real conditions:
1. People act in their own self interest in the business world (almost a guarantee)
2. The government does not actively meddle in the economy (It's like trying to stop a kid at a candy store. This one, I admit, is unlikely although not immposible)

Of course it could never happen. And it would require many more conditions than this.
The efficient market models require assumptions that even the people who came up with the models readily admit are completely impossible.

Staler87 said:
Noble prize winning Austrian economists, but obviously you know better.

Indeed I do Staler, because I get my information from economists' whose theories actually have something to do with the real world.

Staler87 said:
Keynesian economics are complete crap. They have been all but completely refuted by any somewhat accurate theory of modern economics and should hold no weight in any economic argument. The only people who still believe in Keynes's theories are ill-informed social designers and government officials.

Complete crap eh? Please, elaborate further. What's wrong with Keynesian economics exactly? How do the predictions of Keynesian theory fail to match reality?
This, btw, is the measure of an economic theory's worth, not how many Nobel prizes its proponents have won...Nobel prizes in economics are a complete joke.

Staler87 said:
As I said the ww2 economy was not healthy. please explain to me how everyone on rations, enlisted in the army, and massive amounts of debt accumulation (both public and private) are all signs of a healthy well functioning economy. Hey at least everyone is employed (in the army getting shot at payed by debt financed government wages). The recession in 37 was the result of Roosevelt ending his spending spree. The false capital dried up and the real state of the economy was revealed. He didn't 'fix' anything it was all the same recession.

The World War II economy was immensely healthy by any relevant measure. GDP growth was fantastic, and resources were very close to being fully-utilized. The US produced a tremendous amount of materiel for the war. More importantly for the long-run the government's control over the economy produced an environment in which inequality hit the lowest point in US history, laying the foundation for a mass middle class that has defined American political economy...until now.

Staler87 said:
Yes but if used properly it should, in theory, prevent this. I have to admit though getting the government to not print money is really, really hard.

It's bank loans, not government printing, that is relevant there.

Staler87 said:
Please enlighten me as to how economic deregulation is helping cause the increasing wage gap? I will agree though that most of the things that happened to cause the wage gap were actions by the government .

Well I was talking about economic inequality in broad terms, but deregulation helped to kill the unions in many key sectors including trucking. Deregulation in the trucking industry opened up the field to competition from non-union companies who faced no obstacle to cutting wages as a way of increasing profits. You see similar stories elsewhere. The main contribution of economic deregulation to inequality is more indirect though, and the analysis varies depending on what economic sectors you're talking about. Deregulating the finance industry allowed the banks to run wild over the economy, looting it for profit which has had devastating effects on ledgers of the middle class, since for most people the home is the major source of their wealth.

This is a pretty good article on other ways in which financial deregulation has contributed to inequality:
http://www.msnbc.com/msnbc/piketty-democratize-wealth-inequality

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