So how is globalization of capitalism good for the world?

[BasketCase]

By more im guessing judging by the market price? That seems arbitrary to me.

Not at all. When you go to the grocery store (or JCPenney or Home Depot or Saks Fifth Avenue, for that matter) how many price tags do you see on each product?

ONE. Haggling the price is unheard of these days, unless you're buying a house or a car. Even then, the price stays within a certain range--nobody is ever going to haggle the price of a car down to six bucks unless it's a Matchbox.

Seems pretty not-arbitrary to me. Naturally the system isn't perfect, but any instances of arbitrary-osity you find are exceptions.

 

[Masada]

Or economists...

I like the first option myself, the second is to depressing!

If people have been saying much more credible things than the invisible hand stuff he wrote, then I guess I'm not catching it.

I would suggest there are substantial differences between modern economics and what went before. I like what Samuelson had to say on the subject: Like Tobacco Road, the old economics was strewn with rusty monstrosities of logic inherited from the past, its soil generated few stalks of vigorous new science, and the correspondence between the terrain of the real world and the maps of the economic textbook and treatises was neither smooth nor even one-to-one. I think the tone of that statement may hold true for today's economics but the specifics are not in the least bit similar. For starters, Nash.

 

[aelf]

Did Adam Smith have anything to say about comparative (not absolute) advantage, for instance?

Well, a little context might be helpful:

I think a lot of what you're going to get by way of response here can be summed up by reading a few pages of Adam Smith's Wealth of Nations. There's probably a bit more on globalisation, which is a more modern topic, but it wouldn't be far off the mark to say that a lot of the arguments are likely to be confined to 18th-century wisdom.

I don't think free trade (as we know it) is necessarily connected to capitalism. Rather, it has more to do with globalisation.

Did Adam Smith include externalities (and the black-market or completely unregulated market that these reside in) and how best to regulate those so as to bring the ENTIRE market into the equation?

As an apology for capitalism?

I would suggest there are substantial differences between modern economics and what went before. I like what Samuelson had to say on the subject: Like Tobacco Road, the old economics was strewn with rusty monstrosities of logic inherited from the past, its soil generated few stalks of vigorous new science, and the correspondence between the terrain of the real world and the maps of the economic textbook and treatises was neither smooth nor even one-to-one. I think the tone of that statement may hold true for today's economics but the specifics are not in the least bit similar. For starters, Nash.

Yeah, I know that the theory has developed far beyond that of course. But here people are supposed to defend capitalism (and globalisation, but I'm isolating capitalism as per my original comment) conceptually as a scheme for social relations of production. And I'm guessing that for this express purpose they wouldn't be saying anything newer.

 

[Cutlass]

If people have been saying much more credible things than the invisible hand stuff he wrote, then I guess I'm not catching it.

The 'invisible hand' is right. The problem is not the hand, but people who fail to understand what Smith meant. He did not mean some divine force that comes down from above and makes all things work. Although the extreme capitalism worshipers these days appear to believe that. Just the opposite, really. What he meant was that each person, free to make their own decisions, apply first hand knowledge of the problems that they face. And so are the best informed to make the best decisions. Bottom up decision process, not top down.

It breaks down with externalities and commons problems, but holds up pretty well where government policy takes care of those.

 

[aelf]

The 'invisible hand' is right. The problem is not the hand, but people who fail to understand what Smith meant. He did not mean some divine force that comes down from above and makes all things work. Although the extreme capitalism worshipers these days appear to believe that. Just the opposite, really. What he meant was that each person, free to make their own decisions, apply first hand knowledge of the problems that they face. And so are the best informed to make the best decisions. Bottom up decision process, not top down.

I don't know if I agree with your interpretation (not that it's completely wrong, just that I'd say the emphasis is more on something like self-interest and the necessity associated with it are the parents of prosperity and invention, and therefore everything will turn out for the better if people are allowed to act on them freely). But, in any case, what I meant was that, given the assumptions, he makes a lot of sense, so much so that a few hundred years later what he said is still the main source for what people say in a discussion on capitalism like this one.

 

[Cutlass]

But a problem with that is that what he said can easily be taken out of context. And the Invisible Hand concept is a clear indication of that. As many people take it for a justification of things that Smith very clearly never meant.

 

[BasketCase]

Someone wanted to sell good a at price b. Another guy bought it at those terms. THat is an arbitrary price.

Not at all. If the price is too high, nobody buys it. If the price is too low, somebody else buys it before you get a chance. Prices are never arbitrary; they are forced to specific points by the collective buying habits of everybody within traveling distance of the store.

Prices are never arbitrary. Market forces are never arbitrary. Though they are frequently difficult to predict.

Edit: getting back to our original point, which has now been lost like that watch Belloch buried in the sand for a thousand years: a good non-arbitrary definition of "greed" (which, again, I do not accept but other people do) is having more than those around you. The system by which the value of those goods are measured does not have to be perfect.

 

[Agarwaen]

For critics of globalization we can look at the "other world is possible" (outro mundo é possivel) guys of the World Social Forum.

The aim is not to isolate the societies or to return to some pre-capitalist way of living, but to create something new, that deal with all those problems identified in our current world. Hey, even Marx preferred capitalism to feudalism or those systems of the Asian empires.

 

[Narz]

I just don't get it. I don't see how a system literally based on greed can be expected to have the interests of others at heart. I don't see how it can help the developing world at all, when in the interests of profits they actually have an incentive to pay amounts that provide no increase in quality of life.

I hear things like capitalism allows for the greatest innovation which increases quality of life for all. It may lead to the greatest innovation, but I don't see it benefiting anyone significantly beyond those who already have power, money, and quality of life. As far as I can tell, all globalization allows is lower priced goods for the rich, as well as allowing international corporations to control the economies of developing nations. Local business/vendors can't compete with these corporations, and they lose all autonomy

This is true. Even in the still wealthy United States most small business fail. Big corporations like Walmart literally go out of their way to squash competition (opening two stores at once just to close the less profitable one once all the local competition is crushed).

 

[amadeus]

This is true. Even in the still wealthy United States most small business fail.

Ever once consider it might have something to do with the way they run their businesses? Also, I'm not sure how bright a person would be to enter in direct competition with Wal-Mart unless they had something to compete against them with.

Big corporations like Walmart literally go out of their way to squash competition (opening two stores at once just to close the less profitable one once all the local competition is crushed).

Citation needed. Why would a company throw away its money just to spite people?

 

[El_Machinae]

To maintain a monopoly? To create a monopoly? It's not short-term maximization of profits, it's long-term. The goal is to create a large customer base within the radius of each store. If this requires using another (temporary) location to expand influence, then it's worth it.

 

[Masada]

Honestly, life in Australia is miserable without Walmart. I shouldn't have to pay huge markups to the normal supermarkets and large retailers who do more or less the same things, without any benefit to me whatsoever. At least you can make the case that Walmart drives down prices. Our retailers don't pass on savings, there simply isn't the competition. So, hurry up Walmart.

I guess the moral of the story is this: even without the big-box stores like Walmart here, there has been a decisive shift in Australian tastes away from main-street towards the larger retailers here. Frankly, I know why, prices are higher, selection is smaller and quality can be highly variable -- I mean, sure there are great delicatessens, but for every good one there is typically a number of bad ones -- in the smaller retailers. It's easier for me to waltz into a larger retailer, get the selection I want, pay a reasonable price and saunter out with a known quality product.

Some people don't like it. That's fine. I don't really care. Shop wherever you want. Just don't impugn on my desire to shop where I want for what I want, please?

To maintain a monopoly? To create a monopoly? It's not short-term maximization of profits, it's long-term. The goal is to create a large customer base within the radius of each store. If this requires using another (temporary) location to expand influence, then it's worth it.

I think that's more or less achieved with the massive economies of scale. Most of the rest is just window-dressing.

Yeah, I know that the theory has developed far beyond that of course. But here people are supposed to defend capitalism (and globalisation, but I'm isolating capitalism as per my original comment) conceptually as a scheme for social relations of production. And I'm guessing that for this express purpose they wouldn't be saying anything newer.

*Shrug* I think both sides are more or less stuck on the 'trot out the same old tropes' argument.

 

[Arwon]

Ever once consider it might have something to do with the way they run their businesses? Also, I'm not sure how bright a person would be to enter in direct competition with Wal-Mart unless they had something to compete against them with.


Citation needed. Why would a company throw away its money just to spite people?

It's called 'dumping' and, whether or not it's practised in this case, it's a really really basic concept.

 

[Masada]

It's called 'dumping' and, whether or not it's practised in this case, it's a really really basic concept.

That isn't dumping. It would only be dumping if the stores sold below the cost of production.

 

[holy king]

Citation needed. Why would a company throw away its money just to spite people?

the price of constructing a monopoly is practically bound to amortize.

 

[Arwon]

Masada: Yes, and isn't that what he's suggesting Wal-Mart does in a particular location in order to drive out competition there?

 

[Masada]

Masada: Yes, and isn't that what he's suggesting Wal-Mart does in a particular location in order to drive out competition there?

No. It isn't dumping if your operating above your cost of production. Walmart doesn't need to dump because it already such massive economies of scale.

 

[JerichoHill]

No it isnt, look at all the suicides. People who commit suicide value the perceived implications of killing themselves .

Only if you believe the assumption of rationality holds at that time, which isn't correct.

The world is NOT full of homo econimus, Mises.

 

[JerichoHill]

A way of acting that is nonrational is not even imaginable to human. A system of logic in contradiction to teleology and causality cannot be understood by man, far less used.

So, basically, at every moment we are perfectly rational even if we live in an incomplete information environment thus completely removing the possibly of acting rationally based on complete information?

Dude, put down the Mises.

 

[Racsoviale]

to the OP:

As a side effect of globalization and the continuing blend of the worlds economies, you get more stability in the world as a whole. Since the biggest economies are getting so tied up in one another the prospect of war between two nations decline. Think about the relationeship between China and the USA at the moment, all rambling paranoia aside it is very unlikely that these two world powers will ever get involved in at war.
Both sides depend heavily on the other, the same can be said about the love/hate relationship between the EU and Russia. They may be competing about influence in eastern europe, but their economies are so tied up on each other that they wouldnt be able to afford a war with each other.
It is in a way simple supply and demand that keeps the biggest world powers friendly, only on a global scale. Russia has huge supplies of energy, the EU has huge demands for energy, thus an economic partnership is born out of mutual benefit.

Well this is my take on what globalization leads to.
(and all you other people shall keep your filthy Realpolitics out of my utopia)