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> Capitalism, shareholder or otherwise, is a mechanism to optimize production This has nothing whatsoever to do with capitalism. Capitalism is an economic sys

> Capitalism, shareholder or otherwise, is a mechanism to optimize production This has nothing whatsoever to do with capitalism. Capitalism is an economic system in which those who invest capital rather than labor or ideas are considered to be entitled to the bulk of the profit from the endeavor. This is defended by the claim that the capital-ists are also exposed to more of the risk, and hence deserve more of the reward. There are strong counter-arguments to this position.

nradov 3y ago
You are arguing against a strawman. Capitalism has little to do with entitlement. Capitalism is actually the only practical system which we have found for efficiently allocating resources at scale over extended periods of time in a way that improves living standards. The counter arguments to this position are entirely theoretical and have never been proven to work in the real world. Perhaps there is some non-capitalist economic system out there waiting to be invented which could deliver superior results without eventually devolving into an authoritarian dystopia, but I doubt it.
- deleted 3y ago
  [deleted]
- PaulDavisThe1st 3y ago
  Allocation of resources in capitalism is not a system beyond saying "let the capitalists decide". And how do we let them decide? Because we preferentially allow them to collect profits (over labor and ideas), creating an incentive (though not necessarily a requirement) on their part to maximise profit. So, capitalists will want to see the ventures they invest in generate profit, and the most obvious way to do this is to have the venture make things or provide services that others want to pay for. However, just as there's no ironclad rule that an enterprise in a capitalist system must seek to maximise profits, there's also no ironclad rule that the best or only way to see profits is to do things that other people want to pay for. Increasingly, the financialization of the US (and other) economies means that substantial profits can be obtained by extracting value from transactions, rather than creating value to society. Mariana Mazzucato has discussed this at length in her excellent book "The Value of Everything: Making & Taking in the Global Economy Economics" The point is that capitalism only works well for allocating resources when it happens to follow the goal of producing value for others, and in that sense any economic system that somehow prioritized this would have the same benefits as capitalism. Note that it also needs to take externalities into account, otherwise the short term benefits of value production-driven economic activity become a long term net negative. Capitalism has not proven itself in this regard so far. The thing that is different about capitalism is that beyond (generally) favoring value production, it also favors the owners of capital as the beneficiaries of generated profit. This in turn makes the owners of capital have deeply vested interests in ensuring that this asymmetrical distribution of profit does not change (they will almost certainly lose if it does). That is what defines capitalism, not free markets, not value creation, not entrepeneurial activity.
  - nradov 3y ago
    You haven't actually proposed any viable alternative that would produce superior results.
    - PaulDavisThe1st 3y ago
      Mazzucato is much more qualified and eloquent than I, and she does that quite well. If you held a gun to my head, I'd severely limit the ability to extract value via financial transaction fees (either by directly limiting them or taxing the shit out of them), and I'd require corporate boards to have worker representation, and I'd require some level (25-100%, not sure) of worker ownership of for-profit corporations. The goal of all these is to nudge for-profit corporations towards (a) actual value creation, instead of extracting value (b) increasing the distribution of profits to the labor class.
- cat_plus_plus 3y ago
  Having friends improves my living standards. It's also not a capitalist or socialist concept, it's its own thing. Having parks also improves my living standards, but there are few private parks for whatever reasons. There are many government run parks, but our local parks are actually established through land trusts and maintained by neighbor volunteers. I am sure that over time society will have many different type of needs and each may have different practical systems to address them, or the best system may not yet be discovered, or efficiency may not always be important. If the point is that big central government is not a good solution, you are preaching to the preaching to the choir - I grew up in USSR and don't want a rerun. But remember that current stock markets and corporations are also products of big government that privileges certain arrangements over many others possible.
- deciplex 3y ago
  > eventually devolving into an authoritarian dystopia Plenty of capitalisms do, have done, and are currently doing, exactly this. I should know: I live in one.

nradov 3y ago

You are arguing against a strawman. Capitalism has little to do with entitlement. Capitalism is actually the only practical system which we have found for efficiently allocating resources at scale over extended periods of time in a way that improves living standards. The counter arguments to this position are entirely theoretical and have never been proven to work in the real world. Perhaps there is some non-capitalist economic system out there waiting to be invented which could deliver superior results without eventually devolving into an authoritarian dystopia, but I doubt it.

deleted 3y ago
[deleted]
PaulDavisThe1st 3y ago
Allocation of resources in capitalism is not a system beyond saying "let the capitalists decide". And how do we let them decide? Because we preferentially allow them to collect profits (over labor and ideas), creating an incentive (though not necessarily a requirement) on their part to maximise profit. So, capitalists will want to see the ventures they invest in generate profit, and the most obvious way to do this is to have the venture make things or provide services that others want to pay for. However, just as there's no ironclad rule that an enterprise in a capitalist system must seek to maximise profits, there's also no ironclad rule that the best or only way to see profits is to do things that other people want to pay for. Increasingly, the financialization of the US (and other) economies means that substantial profits can be obtained by extracting value from transactions, rather than creating value to society. Mariana Mazzucato has discussed this at length in her excellent book "The Value of Everything: Making & Taking in the Global Economy Economics" The point is that capitalism only works well for allocating resources when it happens to follow the goal of producing value for others, and in that sense any economic system that somehow prioritized this would have the same benefits as capitalism. Note that it also needs to take externalities into account, otherwise the short term benefits of value production-driven economic activity become a long term net negative. Capitalism has not proven itself in this regard so far. The thing that is different about capitalism is that beyond (generally) favoring value production, it also favors the owners of capital as the beneficiaries of generated profit. This in turn makes the owners of capital have deeply vested interests in ensuring that this asymmetrical distribution of profit does not change (they will almost certainly lose if it does). That is what defines capitalism, not free markets, not value creation, not entrepeneurial activity.
- nradov 3y ago
  You haven't actually proposed any viable alternative that would produce superior results.
  - PaulDavisThe1st 3y ago
    Mazzucato is much more qualified and eloquent than I, and she does that quite well. If you held a gun to my head, I'd severely limit the ability to extract value via financial transaction fees (either by directly limiting them or taxing the shit out of them), and I'd require corporate boards to have worker representation, and I'd require some level (25-100%, not sure) of worker ownership of for-profit corporations. The goal of all these is to nudge for-profit corporations towards (a) actual value creation, instead of extracting value (b) increasing the distribution of profits to the labor class.
cat_plus_plus 3y ago
Having friends improves my living standards. It's also not a capitalist or socialist concept, it's its own thing. Having parks also improves my living standards, but there are few private parks for whatever reasons. There are many government run parks, but our local parks are actually established through land trusts and maintained by neighbor volunteers. I am sure that over time society will have many different type of needs and each may have different practical systems to address them, or the best system may not yet be discovered, or efficiency may not always be important. If the point is that big central government is not a good solution, you are preaching to the preaching to the choir - I grew up in USSR and don't want a rerun. But remember that current stock markets and corporations are also products of big government that privileges certain arrangements over many others possible.
deciplex 3y ago
> eventually devolving into an authoritarian dystopia Plenty of capitalisms do, have done, and are currently doing, exactly this. I should know: I live in one.