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> the fact that capitalism, voluntary exchange, and the free market is the _only_ system that is capable of rationally allocating resources in a society Wow.

• RickHull 9y ago
  Rationally can be understood to mean something like: * Put goods to their highest use * Allocate capital to those who can produce more rather than consume it In general, nothing is given to anyone. Increasing capital (i.e. by a single individual or within a single firm) is quite difficult and getting moreso every day. If 1% of the population is a super-producer, 9% are regular producers, and 90% are largely consumers, then the consumers are best off when the 10% producers have most of the capital. Allocating capital to consumers starts fun and ends poorly.
  • aninhumer 9y ago
    >* Put goods to their highest use That's just dodging the question. What is the "highest use"? >* Allocate capital to those who can produce more rather than consume it And thus the optimally rational world as conceived based on this premise is one where no one ever consumes anything.
    • RickHull 9y ago
      Everyone consumes. It's the basis of the economy. The producers produce that which is consumed. The best thing for consumers is for producers to produce more goods at lower cost. If one of those goods is a bicycle, then the highest use might be for a nominal consumer to use it to kickstart a delivery service and join the ranks of net producers. The revenue generated by his service, or credit extended on the expectation of future revenue, can allow him to outbid a pure consumer from purchasing the bicycle as a leisure device, leisure being a lower use than that of delivery.
      • aninhumer 9y ago
        >Everyone consumes. It's the basis of the economy. Yes that's my point. You can't just say production is a better use of resources than consumption, because people need to consume. The real question is what's the best trade-off between expanding productive capacity, and producing consumer goods? Given that we seem to have vast productive capacity, and yet many people in the world seem to still live in poverty, perhaps we're not making the best trade-offs there?
        • RickHull 9y ago
          > You can't just say production is a better use of resources than consumption We're not talking about resources though -- capital is "the means of production". It's not the final good which is consumed. Capital, in the case of an Iowa corn farm, is neither the corn itself nor a choice about how to distribute the corn. Capital would be the land underlying the farm, the "seed corn", the farming implements, and the funding (liquid capital, e.g. money, credit, debt) for the operation. The farm employees and owners are ostensibly human capital but are usually considered separate from "capital" in general. One way to allocate this capital is Zimbabwe or South Africa style, which says give it to the needy. Or Venezuela style which says give it to the public (i.e. government). Again, the question of capital allocation is distinct from the question of consumption good allocation, though the answers tend to be highly correlated. > The real question is what's the best trade-off between expanding productive capacity, and producing consumer goods? In general, expanding productive capacity results in producing more consumer goods. Any "lag" concerns are trivial, which would be the only tradeoff here. The best thing for people lacking in consumer goods is to produce more goods by expanding productive capacity. What's the real alternative? How would you propose to allocate capital towards people in poverty? When we get to free nanoreplicators, that will be great in terms of raising living standards for everyone, and this entirely consistent with capital theory, particularly in terms of maximizing consumer welfare. It will be hard to "make a living" as a producer in such an economy, but no one needs to "make a living" beyond pushing the button on their nanoreplicator.
        • crankylinuxuser 9y ago
          > Yes that's my point. You can't just say production is a better use of resources than consumption, because people need to consume. Exactly. We'll put a cost on how much it is to live per day, and if you fail to exceed that, capitalism will slowly kill you. And for a great many people, it does. It kills by pollution in communities that don't have enough to fight the corporations. It kills by depriving basic health care. It kills by malnutrition. It kills by subsidization of refined carbohydrates and sugars. It slowly kills by locking people in jobs in which the upkeep for their bodies is higher than what they make. It further injures the future generations by depriving education to those in impoverished areas. "But hey, we made a killing on the markets. And stock prices went up for the next quarter. And those low wagers we employ, well, ehh, turnover's a thing. It's just another externalization we don't have to care about!"
  • erikb 9y ago
    It might be correct if that would be what happens. However people who create more are usually at the bottom end of the food chain in our current system. People who don't do much more than play political games usually end up at the top, sometimes earning 5 times of what the actual creators earn.
• Qasaur 9y ago
  "giving more to those who already have too much" who are you to say what quantity or quality of goods people should have? That by itself isn't a "rational" allocation but a highly subjective one. When I say rational I mean that objectively, capitalism and markets reward agents who make the right market choices, and that in my book is allocating resources efficiently.
  • erikb 9y ago
    Well if I sit in a meeting with 2 programmers who work 80h+ to produce value for the company, 2 consultants, 2 managers, 2 architects, each of them earning 3x-10x of what the programmers earn, but all living off of what the programmers produce, then I think it's quite clear that this is not sustainable. I think that's good enough as an explanation of why it's not rational. There doesn't need to be a known truth about what's rational to see that this is not rational. And now don't come to me with "each of them does different tasks". I can distinguish between architects who design systems and architects who happen to come to 10 biweekly meetings in a row without having designed anything. Also please note that I'm not blaming anybody. The programmers are just as responsible in my eyes, sometimes even supporting the other people in their parasitic positions. Last but not least there's also literature out there showing that nearly all systems in their early stages contain huge amounts of people willing to sacrifice their own good for the community, thereby creating public goods, and later stages societies more and more focussing on stealing and centralizing the goods in a private manner. Capitalism is simply a system in its later stage and will be overcome by a just-as-flawed system at some point.
  • dredmorbius 9y ago
    You'll find extensive discussion, and defence, of just this position from Adam Smith and John Stuart Mill, amongst many, many, many others.