GhostWriter16
Deity
If I'm the monopolist, sure!
Does capitalism require resets?
- Thread starter Terxpahseyton
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If I'm the monopolist, sure!
Traitorfish
The Tighnahulish Kid
Two problems with this.
First, why is competition a necessary aspect of capitalism? That isn't something you'll find in any of the major schools of thought on the matter- Marxists say it's about class-relations, Weberians say its about production for market, institutionalists say its about certain legal and economic institutions, etc.- so it can't be taken as self-evident.
Second, how does this square with the problem I raised before, that "capitalism" is generally taken to describe a generalised economic system, but this is a question that pertains only to a specific sector of the economy? It seems counter-intuitive to say that I can move from a capitalist to non-capitalist society simply by turning over a page in a catalogue.
ComradeDavo
Formerly God
Explain how it is Capitalism without any competition.
As I said I see competition to be a vital part of capitalism. If there is no competition...how is it capitalism? I know I am reversing the argument here but I do not understand how you think just one corparation dominating everything would still be capitalism.
Unless you are literally taking capitalism just to mean the buying and selling of services and good for profit. But we live in a more complicated world than that.
It's not like I'm the only person who thinks that competetion is required for capitalism, why else does the UK, EU etc have competition laws/watchdogs?
As for your point about turning a page in a catalogue, well of course there can exist monopolies on certain products within capitalism, which I feel should generally be prevented for the benifit of the consumer using regulation. I mean if there's only one company producing tins of baked beans because they bought out all the other companies, and this results in less product chocie and higher costs for the consumer, then I support government intervention to break this up and create competetion.
Hygro
soundcloud.com/hygro/
capitalism is the accumulation of capital. so long as the mediation of people is price and profit rather than other things, it can be capitalism. total non competition makes maintaining this system hard because what's profit matter when you have total control? But too much competition makes capital accumulation difficult. Capitalism thrives in the middle.
innonimatu
the resident Cassandra
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Simple and to the point! So perhaps that Brad deLong & co are not such bad teachers after all.
Traitorfish
The Tighnahulish Kid
If we don't all have beards, how can it be capitalism? I see beards as being a vital part of capitalism. If we don't all have beards, I just don't understand how it could be capitalism.
This is on the surface as valid an objection as yours: in both cases, an assumption is made and then refutation demanded, rather than a hypothesis being made and justification supplied. We don't have a reason to believe that competition and/or beards might be criteria for capitalism in the first place.
Presumably they have them because they value the results they produce, much the same as any other form of regulation. That hardly requires an idiosyncratic reconstruction of the concept of "capitalism" to explain.
If "monopoly" and "capitalism" are mutually exclusive categories, then how can a monopoly exist within capitalism? It's mixing oil and water. At best you could say that a monopoly is surrounded by capitalism, and by particularising the concept of "capitalism" in this manner, you still leave us with the question of what to call the generalised economic system which you appear to acknowledged both are situated within.
That'd certainly be my view, yeah. You can introduce other factors- the Weberians talk about rationality and the division of labour, the institutionalist about the law, and so on- but I think this is the heart of it. It's capitalism whether you're talking about a thousand petty-masters running provincial workshops, or a monopolistic "socialist" state, because there's no reason to think that capitalism isn't capable of the sort of heterogeneity that suggests.
Even they didn't totally lack competition, it was just relegated to a level "beneath the surface", occurring between industries or firms, which lobbied other planning planning departments or other firms for consumption or (/and thus) investment. In consumer goods it wasn't even obscure, with different firms (originally for different products, but increasingly different brands) openly competing for consumers, and even using a lot of suspiciously Western-looking advertising. There was also continued "competition" between labour and capital, over wages, production-rates, and so on, and this further produces incentives to invest to both increase employer control over the labour process, and to reduce the amount of labour needed in production.
We tend to talk about "competition" as if it was an obvious and transparent phenomenon, but the truth is it's really not.
Even they didn't totally lack competition, it was just relegated to a level "beneath the surface", occurring between industries or firms, which lobbied other planning planning departments or other firms for consumption or (/and thus) investment. In consumer goods it wasn't even obscure, with different firms (originally for different products, but increasingly different brands) openly competing for consumers, and even using a lot of suspiciously Western-looking advertising. There was also continued "competition" between labour and capital, over wages, production-rates, and so on, and this further produces incentives to invest to both increase employer control over the labour process, and to reduce the amount of labour needed in production.
We tend to talk about "competition" as if it was an obvious and transparent phenomenon, but the truth is it's really not.
It's a lot more transparent than you think. Stamping out competition is one of the most important activities to, and by, the rich because they want to take without earning. If you look at many of the less developed nations in the world, monopolies are rampant. And those monopolies are one of the reasons that those nations are less developed. Now sometimes some competition gets past their best efforts to crush it. And in some things monopoly is just naturally harder to do. But the efforts to end any and all competition are endless. And they really are often successful. It is rent seeking. It is the efforts to earn a higher than market return without having to work to earn it. Many of the wealthiest people in the world are monopolists, and that is not an accident.
Hygro
soundcloud.com/hygro/
Thanks andSimple and to the point! So perhaps that Brad deLong & co are not such bad teachers after all.
!You can thank Joseph Lough and Alan Karras (particular one of his grad student instructors) for that. I'm not an economics student, I'm a political economy student! We can't criticize the good and bad in economics if we don't know the discipline itself enough. That's one of the problems when the department hires lecturers who don't know econ but know its' critiques, they don't have enough to stand on and then I can counter their arguments with neoclassical economics, something that I shouldn't even be able to do, let alone feel the need to
But you'd be surprised how sympathetic DeLong and the Romers and to a smaller extent my micro prof Auffhammer are to outside-economics-economy-studies. They know it's not all-inclusive.
Mise
isle of lucy
Too much competition doesn't make capital accumulation difficult. There's no such thing as "too much" competition in the idealistic world of perfect markets. What I think you're saying here is that if sector A is in perfect competition, while sector B is not, companies in sector A will find it more difficult to make a profit (and thus accumulate capital) than companies in sector B. Therefore, the incentives are stacked so that investment is made in sector B to the exclusion of sector A; investors will prefer sector B to sector A, because it is easier to accumulate capital. You conclude, therefore, that competition is detrimental to capital accumulation, because capital is more easily accumulated in the sector without perfect competition than the sector with perfect competition. However, the magic of the idealistic free market view of the world is that the extra investment in sector B will bring about more competition. Investors will chase those extra (abnormal) profits, more businesses will start up in sector B, and thus B becomes more and more competitive. The end result is that, in aggregate, more profit is made after the investors pile in and turn B into a competitive sector than we had to begin with. Thus, more capital accumulates in sector B when it becomes perfectly competitive than when it is not.
Too much competition makes it more difficult for any one single corporation to accumulate capital. That's why there are so many lobby groups funded by oligopolistic entities to preserve their oligopolies. And that's why competition is a good thing -- to prevent capital from accumulating in so few hands. It's why regulators are needed. It's why I love the EU, for busting chops and forcing companies to compete fairly and freely. Capitalism -- the aggregate accumulation of capital -- works best when companies are forced to compete.
I assume what you mean by "middle ground" is the recognition that, moving away from the idealistic world where perfect competition is possible, all sectors will have an "natural" level of competition, and this level is determined by barriers to entry, natural monopolies, rivalry and excludability, and so on. But the basic principle, that more competition would increase total capital accumulation, is still true -- it's just that, in the real world, it's very difficult to have perfectly competitive markets. If we could wave a magic wand and turn fisheries into a perfectly free and competitive market (perhaps by changing the laws of biology), then this would be a good and positive thing.
Hygro
soundcloud.com/hygro/
Where do I even begin.
We could look at historical data and see that highly competitive eras result in poor growth vs higher growth in less competitive areas. We could look at theory and how economic profit at zero converges towards zero accounting profit with theoretically infinite competition. We could examine how technology improvements plus fixed capital costs and ease of entry results in firms making sub-zero economic profit but stuck in the industry as retooling, retraining, and starting a new firm bears too much of its own cost.
We could see the correlation between increasing competition and reducing rates of aggregate manufacturing profit.
There's no unlimited number of profitable Alphabet Sectors in your example. That itself is the lie of capitalism: infinite growth. As defined by its definition of growth, of course, which is consumption of production, and further investment therein.
Basically this: competition allows for the mobility of capital and the prevention of the kind of stagnation and power accumulation that renders its existence obsolete. But competition is not friendly to capital accumulation, except in meta-productive sectors like finance and other speculation, which has been in increasing bubbles since the 1980s. Overly-competitive markets lead to profit seeking via debt and leverage and increasingly risky investments that are self defeating.
We could look at historical data and see that highly competitive eras result in poor growth vs higher growth in less competitive areas. We could look at theory and how economic profit at zero converges towards zero accounting profit with theoretically infinite competition. We could examine how technology improvements plus fixed capital costs and ease of entry results in firms making sub-zero economic profit but stuck in the industry as retooling, retraining, and starting a new firm bears too much of its own cost.
We could see the correlation between increasing competition and reducing rates of aggregate manufacturing profit.
There's no unlimited number of profitable Alphabet Sectors in your example. That itself is the lie of capitalism: infinite growth. As defined by its definition of growth, of course, which is consumption of production, and further investment therein.
Basically this: competition allows for the mobility of capital and the prevention of the kind of stagnation and power accumulation that renders its existence obsolete. But competition is not friendly to capital accumulation, except in meta-productive sectors like finance and other speculation, which has been in increasing bubbles since the 1980s. Overly-competitive markets lead to profit seeking via debt and leverage and increasingly risky investments that are self defeating.
Tahuti
Writing Deity
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Interestingly, less developed nations are much more often burdened with red tape and corruption, limiting business activity to a politically connected few, leading to the monopolies you've been talking about.
That is a problem. But it kind of works in both directions. There's a feedback loop to it. Bad leaders make deals with other powerful people for support so that they can stay in power. This keeps the leader in power, and leads to exceptional wealth and power for their supporters. But wealthy people also work to get bad leaders into power and keep them there, because doing so is a strategy for maximizing their own wealth and power. It really comes from both directions.
innonimatu
the resident Cassandra
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And how is that any different from what happens in wealther countries?
You have drunk this misguided idea that there can be one or a few institutional problems which create poverty. That is a happy thought, as it would make solving the problem of poverty possible and, if there was will, simple. But mostly it's the other way around: poverty creates problems, lots of problems.
I have said it often, and maintain: natural wealth, and having the natural wealth most conductive to development at any given stage of technological progress, has been by far the biggest determinant of which nations became rich and which became (or remained) poor. And the second "cause of poverty" is war, but the poverty that one causes is temporary.
Most of what else gets named as a cause of the poverty/wealth of nations is usually a consequence of poverty. Poor institutions, for example, are a consequence of poverty, because institutions have big costs.
You have drunk this misguided idea that there can be one or a few institutional problems which create poverty. That is a happy thought, as it would make solving the problem of poverty possible and, if there was will, simple. But mostly it's the other way around: poverty creates problems, lots of problems.
I have said it often, and maintain: natural wealth, and having the natural wealth most conductive to development at any given stage of technological progress, has been by far the biggest determinant of which nations became rich and which became (or remained) poor. And the second "cause of poverty" is war, but the poverty that one causes is temporary.
Most of what else gets named as a cause of the poverty/wealth of nations is usually a consequence of poverty. Poor institutions, for example, are a consequence of poverty, because institutions have big costs.
That really doesn't track. It fails to explain those nations that have little natural wealth, and yet are wealthy: The Netherlands, Japan, South Korea.. And those nations that have large natural wealth, and yet are poor: Russia, India, Argentina.
ComradeDavo
Formerly God
So what is Capitalism according to you, then?
Traitorfish
The Tighnahulish Kid
I think Hygro hit on the head when he said that capitalism is the accumulation of capital, which further entails the mediation of social relations by exchange-values (or just by prices, if you don't want to get LTVish about it).
I would like to remind you that the Dutch government has made a 211 billion profit from natural gas since 1960.
ComradeDavo
Formerly God
But you can accumulate capital in Socialism. Even in Communism. Feudalism as well. What makes Capitalism different from these?
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