Does capitalism require resets?

[dutchfire]

Without that, the Marshall Plan, and the fact that everything going into and out of Germany has to go through Rotterdam, I think we would be quite a bit poorer. Portugal level probably.

 

[Tahuti]

Without that, the Marshall Plan, and the fact that everything going into and out of Germany has to go through Rotterdam, I think we would be quite a bit poorer. Portugal level probably.

Actually, the natural gas discovery in Drenthe in the 1970s turned out quite bad for us, despite it made the government less burdened with debts. In fact, the term "Dutch disease" so many developing countries suffering is derived from this.

Also, the Marshall Plan is overrated: Germany received as good as nothing and quickly enjoyed an economic miracle thanks to Ludwig Ehrhard's policies.

Anyway, if we didn't had Rotterdam, we probably would've survived as a financial hub or purposefully depressed our wages to become an manufacturing power.

 

[Hygro]

But you can accumulate capital in Socialism. Even in Communism. Feudalism as well. What makes Capitalism different from these?

Because there's a difference between wealth and capital, and more so there's a difference between increasing personal and public capital, it that capital being the tool of, again, social mediation.

Compare Republican Rome to Renaissance Italy. In Rome, there were a few weirdo merchants looked down upon who made vast fortunes through trade. They accumulated capital. But once they had enough, they'd buy a plot of land, build a house, staff it with slaves, and become a subsistence farmer. Subsistence with a decent standard of living, but they would trade their wealth and means to radically increase wealth for land and title. The social mediation, the thing that brought you power and respect was not directly the wealth.

In Renaissance Italy things were different. With competing political power structures everywhere (Church, princes, nearby rival princes, foreign "heathens and infidels") there was a motive for these stale-mated but never relaxed princes and barons to need an edge. Money. Loans. Mercenaries. Trade. And it was basically never ending. European merchants and bankers went from being a bit of socio-financial lube being run by basically only Jews because the religion forbade it (because by allowing interest based loans, religion gets supplanted by capital) to letting the most Catholic of Catholics, the Italians, run the show.

This was the moment, arguably combined with the mechanical clock that allowed for easily dividable wages rather than output, that capital started becoming the dominant social mediator. It's when in the known world of the time, merchants could stay merchants and be at the top of society like it is today. It was a very specific historical situation.

Gotta run, no time to edit.

 

[ComradeDavo]

Because there's a difference between wealth and capital, and more so there's a difference between increasing personal and public capital, it that capital being the tool of, again, social mediation.

Compare Republican Rome to Renaissance Italy. In Rome, there were a few weirdo merchants looked down upon who made vast fortunes through trade. They accumulated capital. But once they had enough, they'd buy a plot of land, build a house, staff it with slaves, and become a subsistence farmer. Subsistence with a decent standard of living, but they would trade their wealth and means to radically increase wealth for land and title. The social mediation, the thing that brought you power and respect was not directly the wealth.

In Renaissance Italy things were different. With competing political power structures everywhere (Church, princes, nearby rival princes, foreign "heathens and infidels") there was a motive for these stale-mated but never relaxed princes and barons to need an edge. Money. Loans. Mercenaries. Trade. And it was basically never ending. European merchants and bankers went from being a bit of socio-financial lube being run by basically only Jews because the religion forbade it (because by allowing interest based loans, religion gets supplanted by capital) to letting the most Catholic of Catholics, the Italians, run the show.

This was the moment, arguably combined with the mechanical clock that allowed for easily dividable wages rather than output, that capital started becoming the dominant social mediator. It's when in the known world of the time, merchants could stay merchants and be at the top of society like it is today. It was a very specific historical situation.

Gotta run, no time to edit.

So what your saying is that it used to be only a few elite who make big money, but then it got opened up for others to have a go. Sounds like competition to me

 

[GinandTonic]

Does it really matter if money is the means or the end? Sure merchants may have cashed in their winnings into land to join a feudal elite, but given ownership conveys almost indistinguishable rights and privileges does it make any real difference to keep hold of the cash?

If the fudal tax and tythe to the lord and church was two days work a week there are plenty of people who would tear your arm of for a 28% tax and rent rate. Most of my life I've paid more than that in tax and then more than that in rent from the remainder.

 

[Hygro]

So what your saying is that it used to be only a few elite who make big money, but then it got opened up for others to have a go. Sounds like competition to me

har har.

No and yes. No, because the difference is that power in capitalism is abstract wealth. Power in other systems is other things. Yes, because as capitalism continues, more people are in a position to compete, which both furthers and undermines the system.

 

[Terxpahseyton]

I'll see how I manage to get on foot with this thread.
For now - look what I got there!
Some - as it is my habit - shamefully belated responses.
Enjoy!

But since, and I'm just really repeating my first post, equality is not what capitalism even pretends to offer, to criticize it for not providing it seems strange. Instead, an argument against capitalism centered around it's major failing being no attempt to address inequality seems far more reasonable.

While capitalism is never claimed to offer equality, it IS claimed - repeatedly, since like ever - to offer a kind of justice. Merit, success to those that deserve it etc. Which is what I was referring to. And every time this presumed justice becomes so detached from reality that many enough people feel left behind by capitalism, it also always was an important criticism of capitalism.
But it is by farn ot just a question of morality but also wealth itself (I hope you will at least accept this as the purpose of capitalism...). Cutless likes to tirelessly point out that if wealth is too unequally distributed it hurts the economy as a whole as consumption power is harmed.
The point of this thread surely was not to whine about inequality as such. But its main point also wasn't even to whine about too much inequality (though that is an important side-point). It was to talk about the possibility of a fundamental build-in flaw of capitalism and weather periodic resets was - to get a little dramatic - the only or - to be a little more demure - one effective means to battle this flaw. Flaw not in the sense of "It is soo unfair!" but in the sense of "This seriously hurts wealth creation".

Well, lets say for the sake of the argument that under a certain arrangement everybody has their basic necessities met; that there is reasonable social mobility (note that social mobility does not prevent inequality) and that everyone get richer over time. And yet, at least during some periods, the rich get richer faster than the poor, so inequality increases. Do you see a big problem? I don't.

You don't seem very inclined to see one to begin with, so I am not surprised. And I think that is because you a) employ a very narrow meaning of "problem" and b) don't account for different states of an economy.
a) Because based on what criteria do you not see a problem? That things somehow improve? Is that really all which can be asked? Or are there rather different qualities of improvement and does a constant rise of inequality constitute/accompany the best quality feasible? Does it have to if we make use of innovative management techniques, like resets? Those are all questions you seem to ignore when you ask yourself "Is there a problem". But this thread wanted to raise them.
b) In some nations, things don't improve. At least in crucial ways they don't. In Brazil they do. Resources, the development gap - Brazil is a dynamic economy where overall everyone gets better. But how about the developed economies? Stagnating real wages. Which is the reason that people talk of a new area of wealth distribution clashes. Because in contrast to medium real wages, inequality still is ever-changing - towards more inequality. This can be witnessed through-out the Western world from what I know. And in such a stagnating environment, inequality plays a whole new role. Not the role of a sorry side-effect of making in the end everyone better as you portray it. If real wages don't grow, it may be argued to play the role of keeping it so, because in absolute terms constant and in relative terms less wealth for the lower income brackets means also increasingly less opportunity for them to grow (the consumption-production-wage-cycle).

As a side note, the forces that drove up inequality in most of the world since the 80's won't keep increasing inequality for ever. As more and more people have college education, the wage differential between college educated people and non college educated people tends to fall.

That is statistically correct without a doubt. But such can be explained by more and more college educated people doing the work of those who once had no college degree just fine. While fewer college educated people actually get college jobs. I don't see how that actually means that overall inequality is hampered. It just means that a college education becomes a less useful criteria to draw the line.

As less people take on labor-intensive jobs, the wages there tend to rise.

So we got an army of over-qualified college graduates who do cheap service work to get by, but we have better paid labor-intensive jobs.. I am not seeing the clear trend towards less inequality you seem to do. I am also not convinced at all that labor actually will get paid better. That seems a bold projection. Why would you even think that less people take on those jobs despite relatively increasing demand?

In the rich countries, the poor were exposed to the competition of low wage immigrants while the middle and upper income people were pretty much sheltered by numerous barriers (an engineering or medicine diploma from a third world country is frequently invalid at a rich country, you frequently need some social networking to get a and better of people from poor countries are less likely to immigrate anyway). Now as wages rise in former mass exporters of labor such as China and India there will be a smaller supply of unskilled immigrants, and rich countries are making it easier for skilled immigrants to get visas, thus placing a downward pressure on the wages of college educated folks.

That may all be, but I am very skeptical how important the effect of immigrants actually is, though I am sure this also strongly varies from nation to nation.

Such as what worked between the 1940s and 1970s

Perhaps the 40s were their own version of a reset, ever considered that?

The only other way to contain inequality would be a replacement of captialism with a whole new economic system, which would badly hurt our potential for growth.

Why not make a sweeping correction of the dynamics unfolded by capitalism? A reset? Is this idea so unfeasible? It sure would mean some kind of trouble at first, but perhaps it would be worth it within 15 years or so? Just a thought....