Capitalism: Is it Working?

[Something completely different]

My apologies. I confess I had the USA too much in mind in my thinking.

Oh no! My appologies! I completly forgot to think about the united states. I can see how the american political class was in the early days also a small landowning bunch, I can also see how private interpreneurship and buisness did create widespread wealth for everyone there throughout the 19th century.

Except for the natives, slaves and the new migrants.

But honestly, I have to confess that my knowlege of US history is very limited. But I am convinced that one cannot compare those two continents demographic developments concerning the creation of wealth throughout history. It is even hard to compare European nations concerning their developments.

Workers participate in capitalist systems, as well, selling their labor, knowledge, and services. I'm not getting what this has to do with economic systems not providing ethics. Ethical systems provide ethics.

I wouldnt say that workers in 19th century factories were "selling" ideas, most of them did monoton uncreative factory work. Only in todays modern economy it is possible for workers to bring their own knowlege more actively into the buisness (at least that`s why the german economy is so successfull).

Yeah, but ethics systems will create limitations for economic systems which most liberterians systematicaly neglect as if economic systems create ethic systems.

I don't understand the question.

I misunderstood one of your previous statements.

I don't know. I don't recall claiming that capitalism is the central theme which defines a society. I've claimed that it's an effective system for maximizing economic growth, and I would modify that with the caveat that this is in comparison to other systems we've tried. It's easy to imagine technological advancements that could replace it with something more efficient. It's harder to imagine a better economic method with current technology, because if I could I'd be backing that horse. And I don't think capitalism is a marvelous system some genius came up with, I think it's what happens when people have a convenient medium of exchange and a certain amount of freedom to exchange goods and services and invest in future productivity. It's what happens when central planning goes below a certain level. It's like science in that it can help you get what you value, but it can't legitimately tell you what to value.

I think it is a overloaded word, since it oncludes so many aspekts. Everyone will define something completly diffrent as capitalism. For a American buisnessowner it probably means least goverment intervention in the market, for the german buisnessowner it means having the social responsibility of ensuring the companies workers wellbeing, for a danish buisnessowner it means being a part in a closely conected complex of institutions in which everyone has to work together yet as an individual, for the Russian oligarch it means having political power, for the chinese buisnessowner it means contributing to the wellbeing of the greater collective, a french buisnessowner will see it as a patriotic duty to provide jobs for the country no matter how profitable (the french are notorious for simply subsidizing anything that keeps jobs alive).

Here we generaly refer to our economic system as "Soziale Marktwirtschaft" which means social economics - and as the word says - puts the weight of some social responsiblities upon buisnessowners.

Not true. Wealth inequality stayed widespread well up to the 1950s

Wealth inequality isn't the same as lack of wealth. If my income goes up 10% and my boss's income has gone up 90%, I am not less wealthy than before. I'm not saying that extreme wealth inequality is fair, just that it doesn't mean poor people's standards of living aren't improving.

lol well, from a European perspective it all looks a bit different. Wealthy magnates in the 19th century industry got outrageously rich on a level which is unimaginable today, whilest sponsoring the building of churches and golf courses for their workers - which might improve living conditions (not really) but keeps most of the wealth in the tight grip of that rich class, so wealth inequality can create the lack of wealth when the wealthy are capable of keeping their wealth circulating amongst the wealthy without any of it trickeling down.

I tend to agree. It helps to have a lot of wealth in your country when you're ready to do that, though.

I dont think one has to be ready to do that. I think one is always ready.

And in my opinion I see myself proven in my claim that democracy causes wealth when looking at the recent emerging economies in South American and Africa. In contrast to which India, which has been a democracy for 60 years and olny recently opened it`s markets has hardly created widespread wealth but simply a small middle class.

Cheap labor is a major part of what drove industrialization, just as it is today in developing countries. In combination with stable politics it attracts investment. Cheap labor and rule of law is far more likely to kickstart a poor nation's economy than rich natural resources, to the point I consider particularly precious resources like oil, gems, and gold to be an economic curse for an undeveloped economy, as they encourage economic reliance on the resources rather than on the people.

What has that got to do with your theory that the first workers rights movements would have destroyed their countries economies?

I agree that the right to vote couldn't come too soon, and it's shameful that it didn't; but historically, only more power makes the powerful share theirs. And capitalism played a role in workers having more power. A peasant can always be replaced by the next peasant over from a feudal lord's point of view; but skilled workers can wreck you by not showing up for work because it can take months or years to train their replacements. Violence was done to force them to work, but it couldn't overcome their will and power in the long run. It could have happened differently, the people have more power than they often think they do, and rulers are always riding a tiger they hope won't realize it's a tiger.

?

The only example in history I am aware of in which the powerfull decided to give political power to the public was the South Korean dictatorship which disolved that way voluntarily in 1989.

Other than that, it almoust happened everywhere through uprisings and with blood being spilled.

Wrong, our economic system depends on sweatshops and cheap labor - which is why companies in Bangladesh and China have an interest in the politics of labor there. It is the bigger profit that counts in economics and not social change. Proof of which can be seen all throughout the third world: It was Reagan and Tatcher who proposed the idea that through economic liberties will come social liberties - and see today - the same countries which opened to the free market then are still not offering social liberties.

I regulary read articles on African economics - and most economists from which I read articles agree on one point: Africa will not be a base for sweatshops. Africa is going into a completly different direction by not simply producing the products designed and developed in the West. It is creating it`s own stuff.

Anyway, what has that to do with my argument that the free market did not create democracy as predicted in the 80s by conservatives?

Africa actualy proves my point that it is democracies which create free markets and not the other way arround.

Yes, as the country develops, sweat shops become obsolete for the very reasons you outline. As I said before, China's government is wise in implementing capitalism slowly, not only does it smooth out the transition, it allows them to retain their power longer. It won't remain at it's current level indefinitely, although I don't expect China to become an open democratic republic similar to Western ones in my lifetime...with or without capitalism. I don't mind that we disagree, history will tell, eventually. China is certainly likely to remain severely authoritarian longer than Pinochet's Chile after he enacted market reforms.

It wasnt Pinochet`s market reforms that ended his dictatorship - it was he himslef, who through his horrific brutality made him more and more unbareable for his people and became a very bad smalling stain on the list of allies to the west. It is a bit cynical to believe that market reforms ended Pinochets reign. The main reason for it`s end was the collapse of the soviet union which made it obsolete as a western ally. Also, the catholic church finaly started being critical about the South American regimes in the late 1980s and that church still has alot of power there.
The free market didnt add anything significant to the collapse of the regime - Chile was simply a great place to produce cheap stuff in factories because people who protested conditions would disapear with a bullet in the head in some jungle.

Sorry, I was using a USA-centric expression. Not actual barons, but 'tycoons'. A certain breed in America before the turn of the previous century were often referred to as 'robber barons'. I regret any confusion.

I mentioned above - I forgot about the US - which can be definatly seen as a society in which the free market created wealth and democratic liberties - especialy under Jefferson and Jackson. But the free market did not create the democracy itself.

In America we had great tracts of land that the government gave to railroad tycoons who greased the wheels of congress sufficiently. History would have been kinder if workers' rights were provided sooner.

As far as I know the railroads were built mainly by chinese imported labor which could be more easily exploited since they were considered to be an "infirior race"

That policy seemed to be entirely at the whim of those willing to pay politicians for special privileges. I can't speak to India, but factors in the Irish famine included Catholics having been prevented by the government from owning land until the late 1700s, and Catholics were most of the population. Ireland was a conquered country with a landlord tenant system where most of the landlords didn't even live in Ireland, and this set up the preconditions for disaster. I hate to say it, but England's attitude toward the Irish during the famine smacks more of malice than of laissez faire market beliefs that might have been beneficial if they had been acted on before there was a famine instead of being used to justify halting government relief. Their actions are consistent with a significant faction of the English government wanting as many Irish as possible dead, or at lest a pervasive malevolent incompetence. Given British involvment in India, I wonder if they contributed similarly to the famine there. At any rate, I'm not against government intervention in principle, particularly during a disaster. I'm for anticipating possible unintended consequences of government acton or inaction.

Actualy in the first years of the famine, the English goverment did help by making inferstructure investments like the building of roads. Dont forget that the famine didnt just hit Ireland but all of Europe - and these actions were undertaken in all of Europe - yet in the UK they were stopped because they were considered to be too much intervention by goverment in the free market. The same was not only done in Ireland but in all of the UK - including Scotland were there were also people starving to death.
The Indian famine of 1876 was caused through a drought and the implementation of plantations which werent capable of creating enought food but a bigger profit for the companies which ran them. When the famine kicked in the governor of Bengal had to stop importing aid from Burma since it was considered to be a too high expence for the goverment.
The Indian Vice Royal of that time actualy believed that this was a natural process in which through implementing these new more profitable plantations the starving of millions would create a better base for a more profitable and wealthier society - even the most conservative estemates are that 50 million people died as a result.

Of course communism caused the probably worst famines of the 20th century in the Ukrain and communist China, which also proves their incompetence for providing security.

But to get back to the point, the common policies during the 19th century concerning economics in Europe was one of non goverment intervention and it often resulted in disaster - especialy in a society in which the wealthy have absolutly no boundries set to their actions.

No, I am not. Wikipedia isn't always our friend in normal conversation. Corporatism also refers to the control of government by large special interest groups, such a large corporations and powerful lobbies.

A democracie needs interest groups - without interest groups it wouldnt even survive - the very thing that defines democracy is that the people are represented, and without interest groups representing their concerns a goverment would simply be out of touch with reality.
We may debate the way in which those concerns are brought forward ( I am also not a big friend of powerfull buisness lobbys and unions) but I do not see a democracy working in touch with reality without interestgroups.

I find that idea curious, too. Capitalism as it is usually conceived can't exist without rule of law and some degree of political stability. I wouldn't build cell towers in a country with no legal infrastructure to ensure that I can collect the charges for my services, for instance. There's a balance: N. Korea is actively hostile to capitalism, I wouldn't want to invest there. Somalia doesn't have the legal structure or stability, too risky. Botswana: just right.

But it can exist without democracy. and to be fair - so can every single political ideology or social and economic system. I simply wanted to mention that because you left oppressive regimes out of that list which had opened to the free market.

Anyway, my previous point was that believing in a magic capitalism which will solve each problem is just like believing in a magic marxism which will solve all problems.

The ernest politician who is concerned with his countries state will not use a ideological dogma in his work, but carefull analyse the situation in order to apply the solution, through calculating, which will provide the best possible outcome to that situation.

If you catch me saying 'that isn't real capitalism', please correct me. I might point out that blame for evil usually belongs to the crafter rather than the tool.

You never did.

I simply wanted to point out that it is a phrase often used by liberterians who cannot argue their way out of a bad situation caused through the policies implemented by them.

I haven't been mentioning one of the most important aspects of capitalism: incentive. It's effective at efficient allocation of resources because it rewards those who do it well. Governments and charities are in a unique position to tap that quality in a variety of ways by offering incentives for coming up with solutions to achieve desired goals one might not ordinarily think of as captialistic, such as hiring a firm to figure out the most effective way to distribute mosquito nets in Mali within a certain budget, with a substantial reward if the method is truly effective. You just have to be careful to know for sure what you're actually incentivizing and have a good way to measure success. That firm will bust its hump trying to figure out how to get mosquito nets to villagers in Mali.

Incentive doesnt nececerely bring wealth or democracy. In the Germany of the 1930s it produced tanks.

Incentive through capitalism will only bring more wealth when it applied in a country which already is a democracy, if not - it will be abused.