Wouldn’t your comment equally apply to being a small business owner (let’s say blacksmith) under feudalism? As a good blacksmith, you will earn more clients and prestige, while poor blacksmiths won’t get repeat business. You might be able to expand your forge and hire more people to do the tedious work of making chainmail or whatever.
I don’t know that anyone can ever provide an “objective” source on capitalism. Anyone who writes on the topic has inherent biases. Here are a few: https://www.amazon.com/Democracy-at-Work-Cure-Capitalism/dp/1608462471
https://www.amazon.com/Slow-Down-Manifesto-KOHEI-SAITO/dp/1662602723
https://www.chelseagreen.com/product/doughnut-economics-paperback/
https://www.amazon.com/What-Wrong-Capitalism-Ruchir-Sharma/dp/1668008262
https://www.amazon.com/There-Are-No-Accidents-Disaster_Who/dp/1982129689
https://www.amazon.com/Deaths-Despair-Future-Capitalism-Anne/dp/0691217076
Yup. “Capitalism” has become a punching bag for people who are frustrated about some form of government protectionism or lack of interventionism. If you ask someone to define it, you’ll get wildly different answers based on whatever they’re frustrated by. The real problem is cronyism, where the “haves” get special treatment from those in power so both sides benefit.
Example w/ Musk and Trump
As an example, look at Elon Musk buddying up to Trump. There are two explanations (probably more) here:
- Musk actually thinks Trump is the best thing since sliced bread
- Musk wants protectionism in the form of more EV tariffs, which will absolutely benefit his cash cow, Tesla
This all happens under “capitalism” because Musk is motivated to get more capital, but it’s happening through government, which ends up essentially as a government subsidy of Tesla (and other domestic EVs) using taxpayer dollars (in this case tariffs). It’s not a direct handover of cash, but when your foreign competition needs to charge twice as much as they normally would, there’s less motivation for your company to drop prices.
Capitalism is intended to be a system where the market is largely separate from the government, but everything is co-mingled and people point to the knotted mess as “capitalism,” when really it’s a mess of different political ideologies all messing with market forces. What we actually need is for more capitalism, as in less government interference w/ the market, so market forces can actually fix things.
Potential solutions to better use market forces
This means:
- less protection for corporations - rich people using tactical bankruptcies indicates a broken system
- fewer regulations, but higher penalties - regulations reduce the penalties for bad action to a fine, we need lawsuits and jail time
- fairer tax system - we currently reward capital gains far more than earned income, we exclude a significant amount of inheritance from taxation, and we have structures (trusts and whatnot) to further protect money from taxation; the tax system should be drastically simplified to reduce abuse
- enforce anti-trust more consistently and frequently
There’s certainly more we could do, but the above should significantly help correct the major problems we see today. Right now, it takes a massive scandal for a wealthy person or very large business to fail, and the above would dramatically reduce the scandal needed to cause one to fail.
“More capitalism” doesn’t mean screwing over the poor either. In fact, if you look at the Nordic countries, they’re actually more capitalist than the US ins many ways, and they have solid social programs. The difference is that there are clearer boundaries between government and the market, so you don’t end up with as much weird “collaboration” between companies and the government.
I personally believe in UBI/NIT (Universal Basic Income/Negative Income Tax) instead of most welfare programs (perhaps keep Medicare/Medicaid, but replace Social Security, food/housing assistance, etc) to minimize the disruption of natural market forces. That would be a very capitalist-friendly solution where the government and the market stay in their own lanes.
First time hearing negative income tax but sounds like an idea i had after a nice walk after the edible kicked in lol
It’s basically UBI, but with income caps. So if you make above a certain threshold, your benefits reduce and completely disappear by a second threshold.
You seem to be a bit confused about what exactly capitalism is. Capitalism is the ideology of private ownership, specifically with regards to the means of production. It is contrasted with socialism, which is the ideology of public ownership of the means of production.
Capitalism is the ideology that allows for someone to own a factory, for example. It allows for them to possess it, in some nebulous way, and to therefore be entitled to the fruits of labor produced there. Even if they themselves did not work to produce those products. Capitalism is the ideology of private wealth accumulation and the ideology of class. It is the ideology of wealth inequality (as opposed to wealth equality where capital is shared equally among all). It is the ideology that creates markets out of supply and demand, specifically designed to collect as much capital as possible from people seeking products. Capitalism is protected by the state, which creates justifications for its existence and prevents the working class from uprising against capitalists. The state colludes with capitalists. They exchange political power for capitalists’ labor power. In this way, any party that is not explicitly anti-capitalist is necessarily pro-capitalist. To allow capitalism to exist is to protect it. In this way, capitalism is not just private ownership itself, but it is also the politics that protects such ownership and the states that choose to allow it.
Contrasted with socialism, the ideology of public ownership. Socialism is the classless ideology. Socialism is social welfare, including ideas like social assistance or UBI. Socialism allows for means of production, like factories, to be publicly and equally owned by all. It allows the fruits of labor produced in those factories to be shared by all. Like capitalism, socialism produces its own political ideologies. Socialism as a state of being requires some form of protection (much of the debate on the left can essentially be seen as “how should we protect an established state of socialism?”). As socialism is classless, and as its production is communal, it is open to encroachment by capitalists who will seek to establish private ownership and markets there. Most agree, some state or state-like entity must be established to protect the socialist society. In this way, any politics that are explicitly anti-capitalist must be socialist.
Capitalism is protected by the state
That’s how it often ends up, sure, but that’s not its defining feature. If you strip away all government (i.e. leave a bunch of people on a desert island), you’d end up with a capitalist system. It’s just the natural way of things. It starts with a market economy, and eventually market participants find they can pay others to grow their goods faster than trading/earning it directly, and some people would prefer to take the steady income of working for someone else over starting their own venture. If a venture fails, the owner loses everything, whereas the workers just move on to someone else’s venture.
When a government gets involved, it takes a monopoly on force in order to protect market participants from each other. Since it has that monopoly on force, there’s a lot of potential upside for market participants to get the government on their side. That’s why we see so much cronyism, because it’s a lot more profitable to get the guy with the gun on your side than compete in a fair market. But once you allow that to happen, capitalism becomes corrupted because you introduce ways to eliminate the inherent risk of market participation. It’s a lot harder to fail when you can get the government to make rules to prevent competition, letting you keep charging high prices for lower quality products and services.
Socialism as a state of being requires some form of protection
Exactly, and if that form of protection gets corrupted, the entire system is screwed. Look at what happened to pretty much every socialist state, the elites find they can get a ton of gain through treating their people unequally, and resort to heavy-handed measures to keep them in line.
The most successful “socialist” states (e.g. Nordic countries) aren’t socialist at all, they’re capitalist societies (and in many ways have a more free market than the US) with a hefty social safety net. Sweden has a high number of billionaires relative to their population. Why? Because they’re capitalist, not socialist. They do have a high tax rate, but they abolished their wealth and inheritance taxes in the 2000s, probably because they tend to scare away wealthy people and therefore local investment.
And I really don’t think socialism is actually classless, at least not when there’s a strong governing body. It just exchanges the capitalist “owner vs worker” class for “ruling vs worker” class, because there’s no way those in control will settle for the same living conditions as the workers. So it basically just trades someone who gained ownership through investment for someone who gained control (essentially ownership) through moving up in the party. To me, that means the owner is likely better equipped to run things than someone who “inherited” it through political maneuvering. Why would a socialist leader want to actually improve the living conditions of the people if they could just maintain power by killing off rivals?
So no, I largely reject socialism as a governing system because it’s way too easy to corrupt, and instead seek to borrow socialist ideas for how to operate an economy. Instead of governments owning the means of production, let’s instead look at co-ops. Instead of production and consumption quotas, let’s do cash redistribution from the wealthy to the poor so everyone can participate in the market economy (and a worker w/ a steady base income can take more risks and try to become an owner, or at least leave awful employers). A system like that can better weather bad leadership than one where the leadership has significant control over the economy.
Your reforms sound good, but aren’t pragmatic. Today’s system requires you to have lobbyists to push an agenda through. Who is going to fund the lobbyists to make these reforms happen.
Also, even in an ideal capitalism, there is still an injustice at the heart of the system. The employer-employee contract violates the tenet of legal and de facto responsibility matching. The workers are jointly de facto responsible for production, but employer is held solely legally responsible.
My issue with this line of reasoning is that it largely ignores risk. The risk an employee takes is the risk of missing future wages if the venture fails, but they have no risk of losing past wages. The risk an employer takes is loss of invested capital and thus loss of past wages and the ability to continue the venture.
The problem, IMO, is that we’ve overly protected the employer so their risk is mitigated, but we have done little to protect the employee. Likewise, wages can become uncompetitive because our legal system tends to benefit larger companies over smaller companies, so it becomes incredibly difficult to unseat a dominant company, even if your product is better (large company can waste smaller companies’ capital with frivolous lawsuits and unnecessary red tape).
That said, if employees want to take on the risk an employer takes on, they can either become an employer themselves (i.e. start a business) or form a co-op with other workers. However, many are uncomfortable with taking on that risk, so they apply for jobs instead of creating their own.
If we go with a socialist system, we’ll still have employers and employees, but we’ll just socialize the risk and dilute the profit motive, which I think will stifle productivity. Why work hard if the potential upside to you for outperformance is small? Let’s say you’re in a co-op with 9 other people with equal split of profits and you’re twice as productive, you’ll only see 1/10 of that come back to you. Why do that when you could be the employer and see a much larger share of the profits?
The issue here isn’t with capitalism as an idea, but that we’ve allowed such a disparity between productive work and profits, and I think the reason for that is government protectionism, not capitalism.
Today’s system requires you to have lobbyists
Exactly, the problem isn’t capitalism, but government. If we swap capitalism for socialism but leave the government structure in place, we’ll have the same problem. If you think shareholders are bad, you won’t want to see what happens when politicians run businesses…
Thats a pretty thorough reply which gives some further insight into the issues we’re facing. While the ideas certainly makes sense in a vacuum (especially with governments and markets staying in their lane), there is a major issue in that the very politicians managing the government would have a pretty big conflict of interest which would prevent the sort of reforms necessary, as most politicians would fall under one or more of the following:
- They own/run businesses from prior to running for a political position- there’s always going to be a subconscious bias towards playing favours especially as they can go back to said business if they don’t last a term
- They have a stake in the businesses that are in the free market
- They could be receiving gifts and/or contributions from businesses that have a vested interest in having a politician that aligns with the business’ political agenda, including having a position for a politician if they lose a re-election bid
It’s really difficult to see how the government can be separated from the free market if the politicians are closely involved with the businesses, which can later be deemed as “too big to fail”.
Yeah, we need a lot of reforms to fix underlying problems that get in the way of progress. Some things that I think can help:
- voting reform - STAR, approval, or even ranked choice voting to better reflect the will of the people
- electoral reform - some solution to gerrymandering, either algorithmic redistricting or (my preference) proportional representation
- reduce obstructionism - in the US, I’d prefer for the House to pass laws, and for the Senate to ratify them with a high vote tally (say, 60% to block a piece of legislation)
These are large shifts in how governments are organized, and potentially could be passed through large-scale public protests, like the Civil Rights Movement in the US. The public is incredibly hard to motivate, so organizers need to be really careful about which causes they push for. My preference is the second, because I think it has the best chance of creating positive, long-term change, and it’s something that’s pretty hard for politicians to competently argue against.
