9 ms·
This article doesn't even answer its own question of "how". For those interested in the topic, I highly recommend Connie Bruick's Predators' Ball and Liar's Po
by snomad 9y ago
This article doesn't even answer its own question of "how".
For those interested in the topic, I highly recommend Connie Bruick's Predators' Ball and Liar's Poker by Michael Lewis.
> Adam Smith, the father of modern capitalism
I hope we can stop conflating free markets for capitalism. Capitalism is to free markets what communism is to socialism. Adam Smith was very much focused on free markets, not capitalism. The author of the article, makes it clear later with
> Adam Smith, who believed that for markets to work, all players must have equal access to information, transparent prices and a shared moral framework
- blfr 9y agoAlso, if we're gonna nitpick, neither the free market nor capitalism were created by Adam Smith.
- jrs235 9y agoAlso, Adam Smith's theories assume rational actors. Humans aren't rational, they are emotional and rationalizing.
- bmmayer1 9y agoWhere in Adam Smith does he assume rational actors?
- jrs235 9y agoSmith’s basic position and teaching posits that though it is not commonly thought in such terms, humans act rationally and thus typically act in their own self-interest. Decisions are generally made based on financial prudence and intrinsic satisfaction. These assumptions are key to economic analysis and commercial success.[1] [1] http://www.investopedia.com/terms/s/self-interest.asp http://www.investopedia.com/terms/s/self-interest.asp
- smokeyj 9y agoDo you have an example of someone not acting in their (voluntary) self interest?
- wpietri 9y agoThe whole field of behavioral economics [1] examines this question. It sees human rationality as sharply bounded [2] with an enormous set of cognitive biases. [3] The field is seen as a direct challenge to the notion of humans as rational actors. If you want examples, they are legion. Addicts, for example, clearly don't act in their own rational self interest. Whether it's substances (e.g., alcohol and other drugs) or experiences (like gambling and gaming), whole industries are built around exploiting people's inability to act in their self interest. Another example is advertising. In economic theory, advertising and PR are about informing people, giving them new facts. But when you look at actual advertising, it's about giving them new feelings, about manipulating their decidedly non-rational behavior. And there are plenty more. If you look the kinds of things consumer protection agencies get up to, you'll find plenty of examples. [1] https://en.wikipedia.org/wiki/Behavioral_economics https://en.wikipedia.org/wiki/Behavioral_economics [2] https://en.wikipedia.org/wiki/Bounded_rationality https://en.wikipedia.org/wiki/Bounded_rationality [3] https://en.wikipedia.org/wiki/Cognitive_bias https://en.wikipedia.org/wiki/Cognitive_bias [4] e.g., https://hbr.org/2009/07/the-end-of-rational-economics https://hbr.org/2009/07/the-end-of-rational-economics
- smokeyj 9y agoMy point is humans have self-interest, and that humans act rationally to satisfy that self-interest. Not that the self-interest is "rational". An alcoholic who buys liquor is acting rationally according to his interest of getting drunk. Being an alcoholic may not be rational (to us). But I'd rather operate in an economic framework that doesn't judge the rationality of my interest, but that I have self interest and act rationally.
- svachalek 9y agoThere are plenty of behaviors like price anchoring that are irrational regardless of the supposed interest. The whole rational actor model is an interesting thought experiment, but naive.
- bsbechtel 9y agoEveryone is rational by their own definition, which differs from person to person. Rationality is just a function of the value an individual places on various factors affecting a decision.
- johndevor 9y ago> Capitalism is to free markets what communism is to socialism Would you explain this a bit more?
- jrs235 9y agoI believe OP is trying to say that capitalism and communism pertain to who owns [the] property while free markets and socialism pertain to who/how/what gets produced.
- chewz 9y agoSocialism is about class solidarity and more equal redistribution of capital gains mostly via democratic process. Communism (or bolshevism and maoism) on the other hand is about exclusive small cadre party pretending to represent entire working class and seeking total control over society using all means including terror. Free market is about leveling play field and equal access to marketplace for all actors big or small. Capitalism on the other hand is about maximizing control over markets and maximizing rent seeking.
- vslira 9y agoThe problem is that none of your definitions reflect how these terms are read in some academic circles. Which is not saying that you're wrong, I'm just pointing out that probably each person/group has a different view on what "Capitalism", "Socialism", "Communism", "Fascism" etc mean.
- _jal 9y ago> The problem is that none of your definitions reflect how these terms are read in some academic circles That can't be helped. There are people who regard anything more collectivist than a volunteer fire department as communism. All you can do is define your terms and try to argue only with intellectually honest people.
- smokeyj 9y agoDefining government is always a fun one. The cognitive dissonance alone makes it worth it.
- JackFr 9y agoCapitalism often means different things to different people and it's often to an authors rhetorical benefit to leave it so. When people say capitalism they typically mean one or more of the following: * Free markets * Free trade * Private ownership of the factors of production * A form of economic organization characterized by tradable claims of ownership, & ownership separate from management. * A form of economic organization where the primary driver of the firm is profit. * A counterpoint to socialism. * A counterpoint to centrally planned/managed economies. By never being clear about what one means, and just saying 'capitalism' a skilled rhetorician can convince you one thing is good (or bad) and then lump others in as part and parcel. As you point out profit seeking businesses do not like free markets.
- dvdhnt 9y ago> Capitalism often means different things to different people and it's often to an authors rhetorical benefit to leave it so. Sure, some, but if every author accepted this as immutable, we can never progress. The issue is that when you have two separate ideals, each with their own qualities, allowing them to become synonymous provides a defense for the lesser ideal in the name of the better. So, it makes it easy for bankers and capitalists to defend their actions in the name of a free market!
- SaltyBackendGuy 9y agoThe real problem is that we don't have a free market. Businesses strategies are too often to lobby for favorable legislation to sink their competition rather than make a better product and let the market decide.
- smallnamespace 9y agoYou can view the political arena as a sort of market as well -- there's horse trading, money, people lobby and and trade for access. Except one part of society (corporations) use this market to the hilt, while the rest of society largely abstains or is unable to participate in this market.
- 9y ago
- triplesec 9y agoFor a really insightful approach to how we got here, read Prof David Graeber's book Debt: the First 5000 Years
- KGIII 9y agoI wonder how long the modern idea of debt has existed? Mainly, that idea of owing someone something, (often) at a later date? The concept of zero isn't even 5000 years old. Negative numbers were still being debated in the 1700s, though I think the first known use was in China's number rod system in 200 BCE. Conceptually, less than nothing is a funny thing and not really well grounded in the physical world. It does make me curious. I'll have to look for the book. I find the history of mathematics to be fascinating, though debt may have originally been more culture and less math.
- triplesec 9y agoThe book should satisfy your curiosity. It's based on anthropological research, but intelligently and coherently argued, and is not just description.
- KGIII 9y agoThanks for the recommendation. I wrote the title down and will see if the bookstore has it. If not, they'll order it for me. They are handy like that.
- ashark 9y agoA TL;DR of the book (still read it!) is that debt was (at least typically, and as best we can tell) around before money, and that early communities operated on debt internally and mostly used barter or money-like things when dealing with dangerous, untrustworthy "others", which turns the usual "first we bartered, that sucked so we invented money, then debt" narrative around. Something really resembling money, it claims, didn't come around until rulers invented it to better fund their armies ("OK, soldiers who will be operating in areas where you don't have social ties, here are five coins. All you civilians, including the ones we just conquered? You're each gonna need one of those coins to pay your taxes next year, or I'll take all your shit. Boom, now the coins have value.") The book advances the idea that barter is most common as a temporary measure among people who are used to using money but, for a time, cannot (during prolonged disasters, in prisons), not as a major feature of the economies of early or primitive societies. It also ties the collision of debt-and-money with social-debt societies to the development of slavery, and covers a bunch of other interesting territory. Again, do read it. As for negative numbers, you can express "owes" without them so I doubt it was a problem. After all, you don't "owe" someone negative one thousand dollars—you just owe them positive one thousand dollars. You hand them a negative-one-thousand dollar bill, they're not gonna be happy. Being able to write negative balances or work formally with negative numbers isn't strictly necessary to work with debt.
- specialist 9y agoDon't conflate corporatism (Freedom Markets™) with capitalism.