Adam Smith Capitalism: The Best Form of Capitalism?

[Cutlass]

Then strike "unlimited", and come back with something more than a petty semantic argument.

Not really. You are talking apples and oranges when you drop the "wants" part.

Oh, well, seeing as you've told me that I'm wrong, I suppose I'll just accept it. I'd hate to be so uncouth as to request some further explanation; sneering is quite enough for me!

Why are you taking it personal? Start with the basics: Not all wants can be filled. Therefor using "wants" as part of a definition of efficient allocation simply does not work. And so in order to find a definition of "efficient allocation" you need to start with something that does not rely on "wants". You can call that semantics if you want, but you aren't above semantic criticisms yourself.

I don't follow. You can only critique one something if you have a foolproof alternative worked out? Then how is anyone ever going to work out an alternative if they're not allowed to communicate a critical perspective to begin with?

It doesn't have to be a foolproof alternative. But you need at least a plausible one. There are problems with the allocative efficiency of capitalism. However, these problems are known, and can be compensated for. Of course not everyone will agree with the problems or the programs to compensate.

The problem with the alternatives is not that they are not perfect, but that they are exceptionally vague. Kind of an "it will fall into place on its own" vibe. Which isn't really. in and of itself, trustworthy. The current system fell into place on its own, after all. And so if leaving things to do that, you would more or less expect them to go the way the current system has gone, rather than a dramatically different direction.

 

[Traitorfish]

Why are you taking it personal?

Oh, sorry, I didn't mean it to come across that way! Sarcky-British-bastardness doesn't always translate well into text!

Not really. You are talking apples and oranges when you drop the "wants" part.
...
Start with the basics: Not all wants can be filled. Therefor using "wants" as part of a definition of efficient allocation simply does not work. And so in order to find a definition of "efficient allocation" you need to start with something that does not rely on "wants". You can call that semantics if you want, but you aren't above semantic criticisms yourself.

Ok, that's a viable line of reasoning. But where does it take you? If you abandon a human measure of efficiency, then what do you have left? You can't look for one in the market itself, that would just leave you with a tautology, so where?

Now, the way I see it, human production has its roots in human consumption. The impetus to production was the desire for production; human wants. So, to present it in basic if slightly simplistic terms, the point of (generic) human production is to fulfil human wants. It may not fulfil them all, but it can fulfil some, and that would appear to be sufficient to get us out of bed in the morning.
Over time, we can develop more effective ways of producing, and thus of fulfilling our wants. The forms of development that we generally pursue are those that more effectively fulfil our wants, that is, those that give us more for less That's what it means to be "efficient". It's possible to build machines that are more complicated and more expensive to produce the same output, but we don't. We could come up with elaborate, ritualised ways to do simple tasks, for more effort and no more benefit, but that's stupid. That's inefficient.
So if the efficiency production in any given instance is measured by how effectively it can facilitate the satisfaction of human wants to the greatest degree for the least effort expended, then why is this not true of the mode of production? Why do we need different measures for how we produce as individuals and for how we produce together? Why do we use a different measure for how one man feeds himself, and for how a nation feeds itself? Where does the break come?

It doesn't have to be a foolproof alternative. But you need at least a plausible one. There are problems with the allocative efficiency of capitalism. However, these problems are known, and can be compensated for. Of course not everyone will agree with the problems or the programs to compensate.

The problem with the alternatives is not that they are not perfect, but that they are exceptionally vague. Kind of an "it will fall into place on its own" vibe. Which isn't really. in and of itself, trustworthy. The current system fell into place on its own, after all. And so if leaving things to do that, you would more or less expect them to go the way the current system has gone, rather than a dramatically different direction.

But again, critique necessarily precedes innovation. That's Design 101. So while you might be able to say "yeah, but it's all we've got for now", that doesn't mean that the criticisms can be ignored. It just means that they need still require some development, just like everything else. It's not a choice between saying "capitalism is awesome!" and going off into the hills with a Bible and a cow.

 

[Tahuti]

That's exactly the critique of capitalism: capitalism produces not for consumption, but for exchange. The purpose of production is not to satisfy human wants, but to accumulate capital. The satisfaction of human wants is, in the very strictest sense, a side-effect. Look at how much money is ploughed into advertising, package design, etc.- none of it fulfils any kind of human want, but can be useful in diverting consumers one way or the other. (Incidentally, this was also true of the Soviet Union. So let's keep than in mind before we start trying to use it as an example of non-market economies.)

That is absolutely true. But on the other hand, there is a reason why people accept the current status quo: Who would want to buy a parcel of land to grow crops for self-suffiency when it is much easier to shop for food? After all, the best - and probably only - way to ensure production is only used to satisfy your needs is to produce it yourself.

 

[Cutlass]

Oh, sorry, I didn't mean it to come across that way! Sarcky-British-bastardness doesn't always translate well into text!

Yeah, well, that happens to all of us

Ok, that's a viable line of reasoning. But where does it take you? If you abandon a human measure of efficiency, then what do you have left? You can't look for one in the market itself, that would just leave you with a tautology, so where?

Now, the way I see it, human production has its roots in human consumption. The impetus to production was the desire for production; human wants. So, to present it in basic if slightly simplistic terms, the point of (generic) human production is to fulfil human wants. It may not fulfil them all, but it can fulfil some, and that would appear to be sufficient to get us out of bed in the morning.
Over time, we can develop more effective ways of producing, and thus of fulfilling our wants. The forms of development that we generally pursue are those that more effectively fulfil our wants, that is, those that give us more for less That's what it means to be "efficient". It's possible to build machines that are more complicated and more expensive to produce the same output, but we don't. We could come up with elaborate, ritualised ways to do simple tasks, for more effort and no more benefit, but that's stupid. That's inefficient.
So if the efficiency production in any given instance is measured by how effectively it can facilitate the satisfaction of human wants to the greatest degree for the least effort expended, then why is this not true of the mode of production? Why do we need different measures for how we produce as individuals and for how we produce together? Why do we use a different measure for how one man feeds himself, and for how a nation feeds itself? Where does the break come?

I'm not sure I'm following you (again )

First, "efficient" is in and of itself a somewhat objective term. As in many people will disagree on whether or not something is efficient. And even on how to measure it. So without a common frame of reference, you just move from arguing from one semantic point to the next semantic point.

What the market mechanism does for allocation is that each individual says "That is worth X to me. If the price is X or lower I will buy it. If it is higher than X, I will not buy it." This tells the producer whether or not it is worth his time and effort to produce it. If the producer can not sell it for X or less, then he will not make it. If the price of that product is going up, the producer has an incentive to increase production. If it is going down, he knows that he has to cut his costs. Or produce less.

This is the signaling that takes place constantly in the market economy that determines what is produced and what is purchased, and who does the producing and purchasing. The aggregate of millions and billions of individual tiny decisions. This is what Adam Smith referred to as the Invisible Hand.

Now because this is a constant and ongoing process, it adjusts constantly to changing conditions. And so it is efficient, in that it gives the most people the best information for making current choices.

The criticism of all central planning models is that you lose that signaling when you start dictating prices and outputs. You cannot, you really can not, interfere with that without introducing an inefficiency into the market someplace.

Now, of course, markets are not perfect. But you have to understand how vastly many of these little decisions are going on all of the time that add up to the macro outcomes that you see. And most of those have little to no government interference in them.

But again, critique necessarily precedes innovation. That's Design 101. So while you might be able to say "yeah, but it's all we've got for now", that doesn't mean that the criticisms can be ignored. It just means that they need still require some development, just like everything else. It's not a choice between saying "capitalism is awesome!" and going off into the hills with a Bible and a cow.

What do you think I've been doing all this time? The entire liberal-progressive movement for mixed and regulated capitalism is about criticizing the system where it fails and looking to fix or mitigate the failures. This is what we do.

 

[Traitorfish]

That is absolutely true. But on the other hand, there is a reason why people accept the current status quo: Who would want to buy a parcel of land to grow crops for self-suffiency when it is much easier to shop for food? After all, the best - and probably only - way to ensure production is only used to satisfy your needs is to produce it yourself.

Those are hardly our only options. In fact, the self-sufficient household represents a historical development away from the primitive commune. (And even then it was inevitably paired with a measure of common ownership for use in grazing, hunting, wood-gathering, etc.) It's an historically specific mode of production, not the inevitable alternative to capitalism.

 

[Tahuti]

Those are hardly our only options. In fact, the self-sufficient household represents a historical development away from the primitive commune. (And even then it was inevitably paired with a measure of common ownership for use in grazing, hunting, wood-gathering, etc.) It's an historically specific mode of production, not the inevitable alternative to capitalism.

But wasn't the primitive commune self-sufficient as well? Since Communism is about getting rid of market relations, isn't any form self-suffiency a positive development from a Communist point of view?

EDIT: This should be in the ask a red thread, but I think this is too valuable for this dicussion not to have such a question.

 

[Traitorfish]

But wasn't the primitive commune self-sufficient as well?

It was self-sufficient, yes, but it was also a commune, which is to say a collective. That's quite different than a number of self-sufficient individuals (or, historically, households).

Since Communism is about getting rid of market relations, isn't any form self-suffiency a positive development from a Communist point of view?

It depends on how you understand communism as coming about. For those adhering to a historical materialist position (Marxists, post-Marxists and those influenced by Marx), that's something that emerges from the contradictions within capitalist society, as the supersession of capitalist society. That means that is something that must happen across society, as part of an historical process, rather than being something that you can just bring into being through a force of will.