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Capitalism has been given a bad reputation, but fundamentally it just means people engaging in voluntary exchanges - wealth is accumulated, and invested. That's

Capitalism has been given a bad reputation, but fundamentally it just means people engaging in voluntary exchanges - wealth is accumulated, and invested. That's about it. You need to realize that voluntary exchanges are the basis of all economic activity ever. There is no economic system to be "built" - there are only exchanges to be made. Every single one of us is out to benefit from voluntary exchanges, but that's alright because so is whoever you're trading with. If you don't think you'd benefit from a particular exchange, you just won't go through with it. If an exchange happens, it means both parties perceive it to be aligned with their personal interests. In other words, voluntary exchanges are a good thing, and it makes no sense to curtail them. Sure, so-called "crony-capitalism" is a problem, but that doesn't mean Capitalism itself is problematic.

zeteo 13y ago
>that doesn't mean Capitalism itself is problematic I think you've misread my comment: I was condemning the Communist position, not defending it. Capitalism has historically functioned as an economic system only. There are important human activities, with heavy economic impact, that have nowhere been successfully conducted through financial, market-based "voluntary exchanges". Politics would be one (I sure hope the market for Congressional votes is inefficient), and basic scientific research another.
- anoncowherd 13y ago
  Not really, I was mostly just addressing this: >> But that doesn't mean capitalism is good at all; let's abolish it, we can build a much better economic system from scratch. You suggested "building" a "much better" "economic system". I'm suggesting Capitalism is not much of an "economic system", assuming I'm right about it consisting of voluntary exchanges, and that the idea of building an economic system is flawed. There's Freedom, and then there's Coercion. The latter doesn't result in desired outcomes. > Politics would be one (I sure hope the market for Congressional votes is inefficient), and basic scientific research another. Well, political power is clearly up for sale, and eagerly bought all the time, all over the world. That's not really relevant to the economy though, nor is "basic scientific research". Research happens when scientists do what they love doing - some kind of economic incentive for doing that can be arranged somehow, when necessary.
- dredmorbius 13y ago
  Capitalism has historically functioned as an economic system only. I'd suggest you revisit your history, specifically David Ricardo's Political Economy, a theory for which he purchased a seat in England's Parliament in order to spread its precepts (Arnold Toynbee describes this in his Lectures on the Industrial Revolution). Later championed by the banker who purchased his personal papers, as well as The Economist Newspaper, whose founding prospectus declared that "free-trade principles will be most rigidly applied to all the important questions of the day." http://www.economist.com/node/1873493 http://www.economist.com/node/1873493
mrow84 13y ago
The "voluntary" in "voluntary exchange" has always struck me as a bit of a weasel word (I think that's the right terminology?). You wrote "voluntary exchanges are the basis of all economic activity ever", but I think we really must restrict ourselves to say only that "exchanges are the basis of all economic activity ever". The degree to which any exchange can be considered voluntary varies widely, as far as I can tell, and also seems very much to be in the eye of the beholder. For example, if I walk into the local corner shop for a bottle of water, and can only find one brand, not the one I want, is that a voluntary exchange? How about if I am in a desert dying of thirst and a man offers to sell me a bottle of water? Or if under some bizarre regime I am ordered to buy a particular bottle of water to prevent my family being shot? It seems hard to deny that the latter case is coercive, but I think some people might contest the other two. But is the desert water seller coercive if he fails to tell me that he bottles his water from an oasis just over the next dune? And is the shop owner coercive if he doesn't point out the much cheaper bottles tucked away on a shelf in the back of the shop? In pretty much every exchange we make there is an asymmetry of information, and that asymmetry can and is exploited to make 'unnatural' gains. This is most obviously so if you reduce it to the absurd and imagine an entity that controls all information - there is clearly the possibility of coercion, in the sense of convincing you to make exchanges that you wouldn't otherwise. Given the profit-seeking nature of our system, the possibility in the absurd case becomes a near certainty even in the limited case, as people are incentivised to manipulate each other to induce favourable exchanges. I find it very difficult to separate manipulation and coercion, and to see a person under the influence of either as acting voluntarily. Can anyone offer some reasoning to clear it up? I can only see shades of grey.
- jes 13y ago
  Just my thoughts.... "For example, if I walk into the local corner shop for a bottle of water, and can only find one brand, not the one I want, is that a voluntary exchange?" Yes, it's voluntary, you can either buy it or not. The shop owner has no obligation to stock any particular brands. "How about if I am in a desert dying of thirst and a man offers to sell me a bottle of water?" If you are actively dying of thirst, then the shop owner should do what he reasonably can to save your life, on the principle that, absent other considerations, it's rational to extend basic good will to others. If your life is at risk and you cannot pay his price, then you should do whatever you have to do to get the water. At that point, it's either you or him and in such a situation, the concept of rights goes out the window. "Or if under some bizarre regime I am ordered to buy a particular bottle of water to prevent my family being shot?" Again, you do what you have to do to protect yourself and your significant values. So you buy the water. This is obviously coerced, not voluntary. Coercion implies a disregard for your rights, and so there is no obligation for you to extend rights to him.
dredmorbius 13y ago
Capitalism has been given a bad reputation I'd argue that what's generally called (and self-describes itself as) capitalism has largely earned that reputation. fundamentally it just means people engaging in voluntary exchanges Well, that's the free-market aspect of free-market capitalism. Which, as Adam Smith notes, isn't particularly easy to attain. And as many observers since Smith have noted, especially as amended, focuses on efficiency to the sacrifice of equity or sustainability. Markets also, it's become very increasingly apparent, have very substantial externalities, both positive and negative, which lead to increasing distortions of underallocation to behaviors in which positive externalities are prevalent (e.g., free software, public education, universal healthcare) and overallocation to behaviors in which negative externalities are prevalent (e.g., acute pollution, tobacco, addictive drugs, processed foods, greenhouse gas emissions). wealth is accumulated, and invested That is the heart of capitalism: capitalism itself concerns itself with the accumulation and investment of accumulated real wealth. That last is often shaded to include financial wealth accumulation and investment, which need not itself be net productive (see "rent-seeking" and "catabolic collapse"). A problem of capitalism is that the same self-interested motives which can be harnessed for productive activity can equally be harnessed for activities which provide private benefit but social costs (see negative externalities above). voluntary exchanges are the basis of all economic activity ever Written by someone who's either never heard of, or is unable to admit, slavery, coercion, blackmail, forced options, and other circumstances in which decisions are made under duress or lack of any feasible alternative. Flatly false. Every single one of us is out to benefit from voluntary exchanges, but that's alright because so is whoever you're trading with. Not if the game is structured to explicitly benefit one side or the other. E.g., "contracts of adhesion", monopoly provision of communications or broadband services, toll authorities, agribusiness conglomerates structuring "intellectual property" laws to forbid saving and planting of seed grain, eternal copyright extension, etc., etc. that doesn't mean Capitalism itself is problematic Identified problems in one area of a practice doesn't mean a freedom from problems and conflicts elsewhere. So your conclusion is largely moot and void.
- webXL 13y ago
  Just a couple points: Involuntary exchanges also have externalities, both negative and positive. It turns out people prefer voluntary, so the vast majority of externalities occur under capitalism. Are "slavery, coercion, blackmail, forced options" economic activity? Not if the game is structured to explicitly benefit one side or the other. That's not a voluntary exchange, now is it?
coldtea 13y ago
>Capitalism has been given a bad reputation, but fundamentally it just means people engaging in voluntary exchanges - wealth is accumulated, and invested. That's about it. Some imaginary capitalism in books, maybe. In the same way that socialism was perfect in books but not so good in actual the USSR, say. If we are to judge a thing, we should judge it by how it manifests and what it does in real life, not what it's theoritically about. For one, in real life, very few activities are voluntary, because people have to feed themselves, and some have money and jovs to offer, others lack it. We don't all start from the same starting point. Voluntary doesn't mean the same thing for the afluent and the needy guy. One can actually do what he pleases, the other just has the option to weight his limited options and pick one. As for "wealth being accumulated" it sure does. Mostly to a handful of people that take a horribly disproportionate share of the pie.
- acjohnson55 13y ago
  I think what you're trying to say is that there's a huge disparity in individual agency that needs to be recognized when invoking the "voluntary" ideal.
bobwaycott 13y ago
No, people engaging in voluntary exchanges is a market, the building block of an economy. Capitalism has no claim here. Capitalism is, put most basically, a system under which trade and industry are controlled by private owners for profit.
mtdewcmu 13y ago
> Capitalism has been given a bad reputation This is vastly overstated. The ascendancy of the US over the past century is generally considered as proof of the supremacy of capitalism over all manner of controlled economies. Belief in capitalism is the default among people who are considered educated and reasonable. The anti-capitalism consensus often conjured by libertarians is an imaginary straw man.

zeteo 13y ago

>that doesn't mean Capitalism itself is problematic I think you've misread my comment: I was condemning the Communist position, not defending it. Capitalism has historically functioned as an economic system only. There are important human activities, with heavy economic impact, that have nowhere been successfully conducted through financial, market-based "voluntary exchanges". Politics would be one (I sure hope the market for Congressional votes is inefficient), and basic scientific research another.

anoncowherd 13y ago
Not really, I was mostly just addressing this: >> But that doesn't mean capitalism is good at all; let's abolish it, we can build a much better economic system from scratch. You suggested "building" a "much better" "economic system". I'm suggesting Capitalism is not much of an "economic system", assuming I'm right about it consisting of voluntary exchanges, and that the idea of building an economic system is flawed. There's Freedom, and then there's Coercion. The latter doesn't result in desired outcomes. > Politics would be one (I sure hope the market for Congressional votes is inefficient), and basic scientific research another. Well, political power is clearly up for sale, and eagerly bought all the time, all over the world. That's not really relevant to the economy though, nor is "basic scientific research". Research happens when scientists do what they love doing - some kind of economic incentive for doing that can be arranged somehow, when necessary.
dredmorbius 13y ago
Capitalism has historically functioned as an economic system only. I'd suggest you revisit your history, specifically David Ricardo's Political Economy, a theory for which he purchased a seat in England's Parliament in order to spread its precepts (Arnold Toynbee describes this in his Lectures on the Industrial Revolution). Later championed by the banker who purchased his personal papers, as well as The Economist Newspaper, whose founding prospectus declared that "free-trade principles will be most rigidly applied to all the important questions of the day." http://www.economist.com/node/1873493 http://www.economist.com/node/1873493

mrow84 13y ago

The "voluntary" in "voluntary exchange" has always struck me as a bit of a weasel word (I think that's the right terminology?). You wrote "voluntary exchanges are the basis of all economic activity ever", but I think we really must restrict ourselves to say only that "exchanges are the basis of all economic activity ever". The degree to which any exchange can be considered voluntary varies widely, as far as I can tell, and also seems very much to be in the eye of the beholder. For example, if I walk into the local corner shop for a bottle of water, and can only find one brand, not the one I want, is that a voluntary exchange? How about if I am in a desert dying of thirst and a man offers to sell me a bottle of water? Or if under some bizarre regime I am ordered to buy a particular bottle of water to prevent my family being shot? It seems hard to deny that the latter case is coercive, but I think some people might contest the other two. But is the desert water seller coercive if he fails to tell me that he bottles his water from an oasis just over the next dune? And is the shop owner coercive if he doesn't point out the much cheaper bottles tucked away on a shelf in the back of the shop? In pretty much every exchange we make there is an asymmetry of information, and that asymmetry can and is exploited to make 'unnatural' gains. This is most obviously so if you reduce it to the absurd and imagine an entity that controls all information - there is clearly the possibility of coercion, in the sense of convincing you to make exchanges that you wouldn't otherwise. Given the profit-seeking nature of our system, the possibility in the absurd case becomes a near certainty even in the limited case, as people are incentivised to manipulate each other to induce favourable exchanges. I find it very difficult to separate manipulation and coercion, and to see a person under the influence of either as acting voluntarily. Can anyone offer some reasoning to clear it up? I can only see shades of grey.

jes 13y ago
Just my thoughts.... "For example, if I walk into the local corner shop for a bottle of water, and can only find one brand, not the one I want, is that a voluntary exchange?" Yes, it's voluntary, you can either buy it or not. The shop owner has no obligation to stock any particular brands. "How about if I am in a desert dying of thirst and a man offers to sell me a bottle of water?" If you are actively dying of thirst, then the shop owner should do what he reasonably can to save your life, on the principle that, absent other considerations, it's rational to extend basic good will to others. If your life is at risk and you cannot pay his price, then you should do whatever you have to do to get the water. At that point, it's either you or him and in such a situation, the concept of rights goes out the window. "Or if under some bizarre regime I am ordered to buy a particular bottle of water to prevent my family being shot?" Again, you do what you have to do to protect yourself and your significant values. So you buy the water. This is obviously coerced, not voluntary. Coercion implies a disregard for your rights, and so there is no obligation for you to extend rights to him.

dredmorbius 13y ago

Capitalism has been given a bad reputation I'd argue that what's generally called (and self-describes itself as) capitalism has largely earned that reputation. fundamentally it just means people engaging in voluntary exchanges Well, that's the free-market aspect of free-market capitalism. Which, as Adam Smith notes, isn't particularly easy to attain. And as many observers since Smith have noted, especially as amended, focuses on efficiency to the sacrifice of equity or sustainability. Markets also, it's become very increasingly apparent, have very substantial externalities, both positive and negative, which lead to increasing distortions of underallocation to behaviors in which positive externalities are prevalent (e.g., free software, public education, universal healthcare) and overallocation to behaviors in which negative externalities are prevalent (e.g., acute pollution, tobacco, addictive drugs, processed foods, greenhouse gas emissions). wealth is accumulated, and invested That is the heart of capitalism: capitalism itself concerns itself with the accumulation and investment of accumulated real wealth. That last is often shaded to include financial wealth accumulation and investment, which need not itself be net productive (see "rent-seeking" and "catabolic collapse"). A problem of capitalism is that the same self-interested motives which can be harnessed for productive activity can equally be harnessed for activities which provide private benefit but social costs (see negative externalities above). voluntary exchanges are the basis of all economic activity ever Written by someone who's either never heard of, or is unable to admit, slavery, coercion, blackmail, forced options, and other circumstances in which decisions are made under duress or lack of any feasible alternative. Flatly false. Every single one of us is out to benefit from voluntary exchanges, but that's alright because so is whoever you're trading with. Not if the game is structured to explicitly benefit one side or the other. E.g., "contracts of adhesion", monopoly provision of communications or broadband services, toll authorities, agribusiness conglomerates structuring "intellectual property" laws to forbid saving and planting of seed grain, eternal copyright extension, etc., etc. that doesn't mean Capitalism itself is problematic Identified problems in one area of a practice doesn't mean a freedom from problems and conflicts elsewhere. So your conclusion is largely moot and void.

webXL 13y ago
Just a couple points: Involuntary exchanges also have externalities, both negative and positive. It turns out people prefer voluntary, so the vast majority of externalities occur under capitalism. Are "slavery, coercion, blackmail, forced options" economic activity? Not if the game is structured to explicitly benefit one side or the other. That's not a voluntary exchange, now is it?

coldtea 13y ago

>Capitalism has been given a bad reputation, but fundamentally it just means people engaging in voluntary exchanges - wealth is accumulated, and invested. That's about it. Some imaginary capitalism in books, maybe. In the same way that socialism was perfect in books but not so good in actual the USSR, say. If we are to judge a thing, we should judge it by how it manifests and what it does in real life, not what it's theoritically about. For one, in real life, very few activities are voluntary, because people have to feed themselves, and some have money and jovs to offer, others lack it. We don't all start from the same starting point. Voluntary doesn't mean the same thing for the afluent and the needy guy. One can actually do what he pleases, the other just has the option to weight his limited options and pick one. As for "wealth being accumulated" it sure does. Mostly to a handful of people that take a horribly disproportionate share of the pie.

acjohnson55 13y ago
I think what you're trying to say is that there's a huge disparity in individual agency that needs to be recognized when invoking the "voluntary" ideal.

bobwaycott 13y ago

No, people engaging in voluntary exchanges is a market, the building block of an economy. Capitalism has no claim here. Capitalism is, put most basically, a system under which trade and industry are controlled by private owners for profit.

mtdewcmu 13y ago

> Capitalism has been given a bad reputation This is vastly overstated. The ascendancy of the US over the past century is generally considered as proof of the supremacy of capitalism over all manner of controlled economies. Belief in capitalism is the default among people who are considered educated and reasonable. The anti-capitalism consensus often conjured by libertarians is an imaginary straw man.