Capitalism is good

Discussion in 'Markets & Economies' started by mmm....shiney!, Jul 21, 2015.

  1. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    They are, and because it is impossible to effectively plan centrally I argue for the abolition of States.

    Edit to add: or at the minimum, the abolition of central planning in States.

    Capital investment is critical to increasing productivity, by devaluing capital you destroy the capacity that is necessary to increase productivity and wealth.

    If by appreciation of people you mean enhancing their productivity and their wealth, then without capital investment that will not occur. Your system confines the worker to a life of drudgery and mediocrity for without the input of entrpreneurs investing their savings and or their talents, workers would be forced into relying on their own skills, abilities and wealth in order to gain any economic benefit. In the main they would not have the capacity to invest in new technologies to innovate because in your world they would not be allowed to borrow funds, sell shares, rent or partner with an equity provider to access or reduce the risk of buying new costly equipment.

    By restricting an individual's capacity to make their own choices about how they engage in meaningful economic relationships, you dehumanise the individual.

    Using the power of the State to impose your values on another. :rolleyes:

    Edited for grammar.
     
  2. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    For a start, under Phransisku's plan it's goodbye Hitachi and all it's products and services.

    http://hitachi.com.au/products/product-categories/index.html

    The workers will have to assume responsibility for the capital expenditure and research and development. Hopefully the workers will have deep pockets. Of course, this will take some time, in the meantime, the workers can use shovels and wheelbarrows to move the 2.8 million tonnes of coal and 38 million cubic meters of overburden per year at Middlemount, or the government can just appropriate the machinery and give it to the workers.
     
  3. Phransisku

    Phransisku Member

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    That's your opinion. Mine is different. Let's agree to disagree.


    I devalue the power of capital (what you can get from owning it), I do not destroy the capital itself.


    But with capital it will occur.
    You still don't get it. Just because I'm not capitalist, it doesn't mean that under my system capital wouldn't exist and entrepreneurs wouldn't be allowed to invest their savings and talents. After all, an entrepreneur creating his own company is a worker. Shocking?
    Borrowing funds would not be forbidden. It just wouldn't happen because, without interest rates, no one would be willing to loan any money.
    The entrepreneur could partner with an equity provider as long as the latter was willing to work. He would be a co-founder with a share not proportionate to his capital but to his work on the company.
    Entrepreneurship would flourish just like it happens nowadays. The only difference is that firms would grow slower and organically. They would not have any liabilities and their business would be much more sustainable. There would be no bubbles, no crashes, no toxic issues, no leechers, no scams, nothing to cause injustice or instability to the world economy.


    That is so beautiful... but untrue.
    An individual's capacity to make his own choices it called individual's freedom. And to maximize all individuals' freedoms you must restrict some liberty. For example, restricting the liberty to kill enhances the overall freedom of individuals. In the same way, retricting the liberty to rent houses will make everybody to be able to buy them. Absolute freedom (Anarchy) tends to maximize the freedom of some over the others. The end result is not pretty.


    Of course. For example, I want to forbid serial killers and sadists to kill people. I don't care whether they like it or not. I will impose that value on them. Maybe you don't care, but I do.


    How so?


    Under Capitalism, some big corporation is owned by thousands (if not millions) of stockholders, many of them with 500$ (or less) in shares. Do they need to assume responsibility for the capital expenditure and R&D? In a way, yes. But they don't need to put more money into the company, even if it's sunk in debt. The company has resources managed by the board of directors, who are responsible for those important matters. Do the shareholders need to have deep pockets? Absolutely not.
    If that's so, why would it be different if it were the (thousands of) workers owning the company instead of people that don't even know how to get to the facilities? It wouldn't. You're imagining problems to my system that don't exist. It's like if we were in Communism and you were describing a system called Capitalism where anyone could own some company through the buying of shares and I was criticing your system through such false claims (that shareholders would have to assume responsibility for the capital expenditure and R&D, that they would need deep pockets, that it wouldn't be feasible, etc.). With one difference: if we were in Communism (where all companies are owned by the State), Capitalism would be really hard to imagine and being feasible (such claims could actually make some sense, although they would be proven wrong) ; but Worksim, in this particular issue we're discussing, is very similar to Capitalism (neither the claims are true nor they make sense to be raised).
     
  4. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Your philosophy is a mish-mash of socialism and the imposition of your own values upon others. Further, there is no economic credibility to any of your propositions as they have no basis in sound economic theory, they are just back of the envelope musings.

    Folk economics.
     
  5. Stoic Phoenix

    Stoic Phoenix Well-Known Member Silver Stacker

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    Yeah, I think I will pass on that horrible pipe dream
     
  6. Phransisku

    Phransisku Member

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    Not at all. It's Capitalism and Communism that are made from the same erroneous principle that people not working should be allowed to receive money, which is not only immoral but also harmful to the economy.
    In a sense, Capitalism and Communism come from the same place. They are like brothers fighting for small differences. Workism is a totally diferent perspective and without false principles.


    Because you know all economic theory, right? Let me tell you one economic principle: if you gain wealth without working, you are not being incentivized to work.
     
  7. Phransisku

    Phransisku Member

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    Ok, you have a different opinion and you're entitled to that. But now you see that the system I stand for, whether you like it or not, could be implemented with incremantal (rather than disruptive) change.
     
  8. Golightly

    Golightly Well-Known Member Silver Stacker

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    Capitalism, what a novel idea, In an age where central banks buy stocks.
     
  9. Stoic Phoenix

    Stoic Phoenix Well-Known Member Silver Stacker

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    Incremental does not equal non disruptive.
    Your concept as a whole is disruptive (and destructive to such simple notions as incentive) and even done incrementally just means its disruptive for a longer period of time.
     
  10. Phransisku

    Phransisku Member

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    You're just playing with words and semantics. You know perfectly well what I mean.
    And when you say my concept is destructive to simple notions as incentive, I don't even know what you mean. Please explain and elaborate on that.
     
  11. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    That's wrong.

    Capitalism is the private ownership of the means of production. Anything else you attribute to capitalism is just stuff you've made up.
     
  12. Stoic Phoenix

    Stoic Phoenix Well-Known Member Silver Stacker

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    I know what you mean and I mean what I said - there is no semantics about it.
    To be clear I feel your concept if rolled out at once or incrementally is disruptive (you claim it wouldnt be) and destructive.
    Most change causes disruption and dismantling of anything is destructive - they are clear definitions....not semantics as you incorrectly put it.
    A centralised system is a bad concept in my mind as the further away from the body a system is the less likely it is to act in its best interest. (simplified - 1 looking after 5 is more likely to be able to attend to the needs of all better than 1 looking after 1000)

    As for explaining incentive I thought it was self evident how the concepts you present reduce incentive to invest in future growth of pretty much anything but I will try to explain my concerns on 2 of your points.

    the end of all credit and rents. . - where is the incentive for anyone to provide any mass housing in the future(read as property development)....you will need more sometime

    Then, the end of all bequests. . where is the incentive to build a legacy if you have no say in who it goes to. You do not factor in a lot of business' have family working for them. Why should they learn the entire business and potentially expand it if they only get the same x% as the janitor?, where does further investment come from to expand? How do you get x number of employees to agree to it and invest an equal share?
     
  13. Phransisku

    Phransisku Member

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    In that sense, any different plan is destructive regarding the former plan. So, if my plan is disruptive and destructive, as you say, it only means one thing: it's different from what we have nowadays. I agree with you on that.
    Like slavery was destructed in the past in order to create a society with more justice and freedom, I intend to destruct today's model (changing it to a different one) in order to enhance even further justice and freedom on our society.


    The incentive to invest in future growth is there. If you invest, you grow. If you grow, you earn more. I think it's self evident that the incentive exists.


    Do you think that only investors buy houses? What about consumers? The ones that will actually use those houses. It's like any other business. Where is the incentive to produce smartphones once there are no phonelords or phone credit loans? The incentive is in the demand for those products and the opportunity for suppliers to make money. It's that simple.


    You build a legacy for yourself (in a more selfish view), or the world (in a more altruistic view), or (through both views) for vanity... or whatever makes you happy. What is the incentive for someone to become a physician if he has no say in who the vacancy goes when he retires? Again, for himself (in a more selfish view), or for helping others (in a more altruistic view), or (through both views) for vanity... or whatever makes him happy.


    Of course I do factor in that. If they are working, they are workers. So, they will get a piece of it, proportionate to their work. They will not get more or less just because of their bloodlines.


    No, they don't. This is not Communism, it's Workism. They get more if the accumulated value-added to the company is greater than the one generated by the janitor.
    The problem with incentive is in today's Capitalism, where a son has no incentive to learn the entire business and work for it. He will collect the entire business anyway.


    From profits and its accumulation (the company's equity).


    The employess don't need to contribute with anything out of their pockets. It's the company's equity that is used to make investments, and those decisions are made by top management. No need to convince anyone about anything.
     
  14. Phransisku

    Phransisku Member

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    If that's the case, then Workism is a type of Capitalism and you should not worry about my ideas ;)
     
  15. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    It's not, it's a type of socialism, so I'm worried.
     
  16. Phransisku

    Phransisku Member

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    In Workism, the means of production are privately owned (which is the only attribute of Capitalism, according to what you say), so it's a type of Capitalism. In Communism (or Socialism, as you say) the means of production are owned by the State).

    Now I got you. You can't have it both ways. Either you admit that Capitalism is about something else, or you'll have to accept that Workism is a type of Capitalism.
     
  17. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Your kind of right, but it's not capitalism. Workism is more like Marxism. It's a class struggle where a supposedly dominant class of capitalists are overthrown, in your case via State legislation, to be replaced by the proletariat who have collective ownership of the means of production.
     
  18. Phransisku

    Phransisku Member

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    I'm neither kind of right nor kind of wrong. Either I'm right or I'm wrong. And, in this case, it's clear that I'm right. You said "Capitalism is the private ownership of the means of production." and nothing more. You said. Not me, you.
    And in Workism the means of production are privately owned. So, there is no discussion. Through your perspective, Workism is a type of Capitalism.

    In Workism, there are no classes of capitalists being overthrown and no collective ownership of the means of production. You're confusing everything.
    Any founder of a company will hold his share until he dies. He will never be overthrown. After he dies, his share will not be "overthrown" (to use your language) by his sons. Instead, it will go to the people (still alive) most responsible for the company's existance. If there are other founders, it will go to them. If there aren't, it will go to the workers according to their contribution (the accumulated value-added generated by each). There is no collective ownership. Each founder or worker has his own share. Just like in today's stock market, there is no such thing as collective ownership. Each investor has his own share.

    To give you an example:
    1 - A company is founded by 4 people, each owning 25% of it.
    2 - The company grows and starts hiring people (each founder still owns 25% of the enterprise).
    3 - One founder dies. His 25% share will not go to his sons (who did nothing for the creation and growth of the firm). Each other founder now owns 33% of the whole enterprise.
    4 - Two other founders die. The only founder still alive now owns 100% of the company.
    5 - This last founder dies and the company has 80 workers: 10 working for 20 years at an annual salary of 4000$ ; 50 working for 10 years at an annual salary of 1000$ ; 20 working for 2 years at an annual salary of 3000$.
    6 - At this stage, the 100% share will be distributed as follows: the first 10 workers will have 5.63% each (accounting for 56.34% of the whole company) ; the next 50 workers will have 0.70% each (accounting for 35.21%) ; the last 20 workers will have 0.42% each (accounting for 8.45%).
    7 - These shares are not static. As the last 20 workers continue to generate value for the company, their share will increase in comparison to the ones from the 50 workers that generate less each year.
    8 - Even if a worker leaves the company, he will not lose his share. However, as the years pass by and the remaining workers continue to increase their accumulated value-added to the company, the former worker will get his share diluted.
    9 - This worker can go work at another company, where he will get a share of it that will increase as his accumulated value-added grows. So, being always at the same company or rotating companies will be equivalent.
    10 - When some worker dies, his share will not go to his sons (who did nothing for the growth of the firm). The other workers will see their share inflated (just like what happened with the founders).
     
  19. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    Collectivism is not capitalism.

    While a group of individuals may collectively own a company ie they privately own it, in your scenario it is only with the permission of the State. If that collective wishes to expand it's production, purchase capital goods to enhance productivity, or if one of the partners chooses to sell a portion of his holdings to another, the capacity of those private owners to do as they choose with their own property is limited as to both their own available resources and by government legislation. The first instance is par for the course in all economies ie an individuals's ability to fund any expansion to his potential revenue is limited by his own talents and availability of funds. But under your proposed model, the individual cannot access any funding from an outsider because the State has deemed it not permissable. Therefore, the individual cannot dispose or use his property as he sees fit, this is private ownership only to a point, it is not capitalism because it comes with State imposed restrictions.*

    What is even more abhorrent about your philosophy is that it is not based on any sound economic models, but solely upon morality. It outlaws the opportunity for private owners to pass their wealth on to their offspring simply because you believe inheritance to be immoral without any economic justification, it makes renting capital goods illegal simply because you find charging a fee for renting any goods immoral without any economic justification and it is entirely contradictory as you consider inheriting anything to be undeserved ie immoral but it's okay for another worker to inherit that wealth though, possibly ignoring whatever the wishes of the original owner were.

    Your solution has no merit, no credibility, is based upon erroneous assumptions about wealth creation and inequality, is socialism dressed as guided capitalism, will destroy opportunity and wealth creation for all and is nothing more than a misguided stroll through the farcity that the debate on wealth inequality has taken over the past few years.

    My advice to you is firstly to throw your copy of Capital in the Twenty-first Century in the bin, it's only value is landfill or mulch. Then go out and learn what capitalism is really about. But don't read what socialist economists think it's about they lie, cheat and misconstrue the truth to enhance their own positions without needing to risk anything except their credibility, learn from free-market thinkers, learn about how wealth is actually created, why there are rich people in the world, why inherited wealth is no guarantee that you will remain wealthy, learn how globalisation has both increased the living standards for billions yet at the same time why it threatens the traditional labour market in Western nations, learn why value is subjective and therefore why it is undesirable for one person to make decisions on behalf of another, learn what a capital good is and its value to both the capitalist and the worker, learn about interest rates and why they exist and how they should operate and learn about the function of money.

    There are countless other things to learn about, but from what I've read of your misninformed ramblings, these look like a good start.

    *And before you raise any red herrings about how we all face State imposed restrictions on how we can dispose or use our property, in the main, those restrictions exist to protect ourselves or others from dangerous or unwelcome outcomes. If they don't then they are examples of the State overstepping it's functions eg I don't have a problem in being told where I can and can't use a gun, but I do have a problem being told what type of gun I can use.
     
  20. Newtosilver

    Newtosilver Well-Known Member Silver Stacker

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    Shiney - should be minister of propoganda
     

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