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Yes. Many of the problems today have nothing to with capitalism but with government policies that are largely aimed at making those with the gold happy. Capita

Yes. Many of the problems today have nothing to with capitalism but with government policies that are largely aimed at making those with the gold happy. Capitalism is mainly about having markets that have competition. NO organization is suppose to have market power. This isn't really possible, but that is the concept. And we are so hugely away from it we can't call what is going on now capitalism. We have allowed people to convert what is called capitalism into an extreme political view that believes government is bad and huge corporations are good. That isn't capitalism, it isn't even an economic belief, it is a political belief. A capitalist country has to be focused on maintaining a fair marketplace where companies can compete for business and consumers (including companies buying from each other) have the freedom to buy in a competitive market (not a market dominated by trusts, monopolies and oligopolies that break the function of markets to advantage themselves). http://investing.curiouscatblog.net/2008/06/10/monopolies-and-oligopolies-do-not-a-free-market-make/ http://investing.curiouscatblog.net/2008/06/10/monopolies-an...

simonh 12y ago
I agree with your point that capitalism is about markets, technically markets for capital, but markets for goods and services are also very important for a high functioning economy. We have those. To demonstrate this, let's looks at some alternative models such as those in Russia and the Chinese domestic markets, and contrats those with the west. The Chinese and Russian ssytems are very corporatist. In both cases huge corporations completely dominate the domestic economy. In Russia's case these are technically privately held, but the oligrachs are so closely tied to the political ruling elite that this realy is just a technicality. In China the major corporations are owned by the government and explicity run by government place-men. In both cases these corporations enjoy economic, financial and political patronage and privillege that makes it functionally impossible fror 'independent' corporations, companies or individuals to effectively compete with them. You might argue we have a similar ssytem in the west, but we realy don't. es there are instances of political patronage. Yes there are cases of undue political influence by corporations through lobbying. However the scale of such cases is absolutely riny and marginal compared to the standard order of business in Russia and China. There just isn't any reasonable comparrison. The rule of law, vita to the funcitoning of viable markets, it'sn just weak in China and Russia, it's functionally nonexistent. No matter what weaknesses and flaws you can pick at in the rule of law in the US or Europe, the difference compared to China and Russia is several orders of magnitude. Could our system(s) be better? Yes, of course. Is the situation gettign worse? In some ways yes. Are we in the same boat as Russia and China? No, not by any reasonable measure.
- curiouscats 12y ago
  I would say it is true in most places in human history, those with power consolidate their power and use that power to take advantage of those without power (or very little power). That is the current system in the USA. I would agree in the USA it is less than in many other countries today. So I agree the USA is less bad. But it is bad. And it is getting worse the last 20 years. And it is getting less and less capitalistic with relatively free markets (not the political extreme, might-make-right-markets, but actual economic markets that are free of monopolistic pricing power). The USA has many advantages and does some things well (like having a marketplace where businesses can indeed grow quickly and prosper - even if it is far from perfect). This has given us great economic advantages. The huge amount of wealth we had and built up after world war two is a huge part of why the USA is where it is today. The USA mainly did well enough not to squander too much of that wealth advantage - it certainly could have done much worse. It could also have done much better. The USA's health system is by far the worst in the rich world (double the cost and no better results - and this is the most expensive area of economics so being twice as bad as everyone else - and much more than twice as bad as the good health care system - is very bad). This problem is very much tied to the non-capitalist pro cronyist policies that are in general bad for the USA. Health care is just far worse here than anywhere (maybe some tiny, nearly insignificant markets are as badly broken relatively in the USA - say sugar quotas or something but economically it is just giving billions to a few people and costing everyone very small amounts of money). Health care is hugely broken and massively costly to the economy. In most other areas the USA is mediocre or comparatively good but there are numerous where there are problems (and many are getting worse in the last 15 years). Other than health care I don't so much see that the USA needs to turn to other examples of countries doing a better job of using capitalism to improve results to society (though there are examples such as new Zealand for farm policy…). But the USA is creating great loss to our people by not taking advantage of capitalism (letting markets work - which is not what political talking heads mean, letting big business distort markets with monopolistic power). I want the USA to stop throwing away the benefits capitalism would allow us to gain. There are many individual facets of society we could benefit from improving (and have lots of examples of countries doing much better - education, policing, foreign policy…). But I would agree with your point that most other countries are even worse at taking advantage of the gains possible with a capitalist economic system. In fact the USA is often responsible for making those other countries worse. The huge damage done by the copyright cartel (and associated patent messes) is the worst in the USA and the USA uses its political and military might to demand that its vassal states in Europe, Japan, Australia, etc. (I know they don't think of themselves as basal state but they really just bow down to whatever the USA actually demands only given token resistance where the USA allows it) allow such pitiful policies to flourish. The constitution of the USA had an appropriate understanding of the government GRANTING rights to private citizens/companies that DON"T exist WITHOUT government granting them (copyrights and patents). The economic theory is to balance the benefit to society from encouraging innovation through government granted monopolies with the cost of the GOVERNMENT taking from society to give to the private entity. The current USA policy is purely about supporting big business and allowing markets to be broken with extremely bad policy and no evidence they even have the vaguest understanding of capitalist or any economic theory on how the government should be acting in taking from society and giving to individuals. Ah well, I doubt anyone will actually read this far. Obviously I am emotional on this topic. Which I know is odd. I just have seen how many people across the globe suffer because we don't get nearly the benefits from capitalism we could if we didn't allow the idiotic ides that capitalism means those with the power make the rules to break markets and direct the benefits to their own pockets.
pacala 12y ago
> NO organization is suppose to have market power. This is naive wishful thinking. It's popular to create simplistic models to explain basic economic principles, models that assume perfect markets. However, reality does not (have to) comply to such models. Analytically, the principle of economies of scale (1) strongly favors, through market mechanisms, the development of large entities. A large corporation, dividing its marketing and R&D costs over a large market share, has significantly lower costs than upstart small competitors. This enables it to out compete smaller upstarts, and serves as a natural barrier of entry to a specific market. Upstarts are either relegated to a small niche, or, having stumbled upon an entirely new market with no dominant players yet, grow to be a large dominating player in their respective market. Empirically, every single market is dominated by a handful of large actors. This pattern is observed in local markets, national markets and global markets. Quick example for the HN crowd, the cloud hosting market. Amazon, Microsoft, Google, Rackspace account for more than half the market share (2). In a young market, with little regulation, where a lot of people on this site have plenty of technological skills to engineer an IAAS service from scratch. But few have the business skill, capital and timing to actually enter the market successfully. (1) http://en.wikipedia.org/wiki/Economies_of_scale http://en.wikipedia.org/wiki/Economies_of_scale (2) http://www.businessinsider.com/amazon-web-services-market-share-2014-6 http://www.businessinsider.com/amazon-web-services-market-sh...

simonh 12y ago

I agree with your point that capitalism is about markets, technically markets for capital, but markets for goods and services are also very important for a high functioning economy. We have those. To demonstrate this, let's looks at some alternative models such as those in Russia and the Chinese domestic markets, and contrats those with the west. The Chinese and Russian ssytems are very corporatist. In both cases huge corporations completely dominate the domestic economy. In Russia's case these are technically privately held, but the oligrachs are so closely tied to the political ruling elite that this realy is just a technicality. In China the major corporations are owned by the government and explicity run by government place-men. In both cases these corporations enjoy economic, financial and political patronage and privillege that makes it functionally impossible fror 'independent' corporations, companies or individuals to effectively compete with them. You might argue we have a similar ssytem in the west, but we realy don't. es there are instances of political patronage. Yes there are cases of undue political influence by corporations through lobbying. However the scale of such cases is absolutely riny and marginal compared to the standard order of business in Russia and China. There just isn't any reasonable comparrison. The rule of law, vita to the funcitoning of viable markets, it'sn just weak in China and Russia, it's functionally nonexistent. No matter what weaknesses and flaws you can pick at in the rule of law in the US or Europe, the difference compared to China and Russia is several orders of magnitude. Could our system(s) be better? Yes, of course. Is the situation gettign worse? In some ways yes. Are we in the same boat as Russia and China? No, not by any reasonable measure.

curiouscats 12y ago
I would say it is true in most places in human history, those with power consolidate their power and use that power to take advantage of those without power (or very little power). That is the current system in the USA. I would agree in the USA it is less than in many other countries today. So I agree the USA is less bad. But it is bad. And it is getting worse the last 20 years. And it is getting less and less capitalistic with relatively free markets (not the political extreme, might-make-right-markets, but actual economic markets that are free of monopolistic pricing power). The USA has many advantages and does some things well (like having a marketplace where businesses can indeed grow quickly and prosper - even if it is far from perfect). This has given us great economic advantages. The huge amount of wealth we had and built up after world war two is a huge part of why the USA is where it is today. The USA mainly did well enough not to squander too much of that wealth advantage - it certainly could have done much worse. It could also have done much better. The USA's health system is by far the worst in the rich world (double the cost and no better results - and this is the most expensive area of economics so being twice as bad as everyone else - and much more than twice as bad as the good health care system - is very bad). This problem is very much tied to the non-capitalist pro cronyist policies that are in general bad for the USA. Health care is just far worse here than anywhere (maybe some tiny, nearly insignificant markets are as badly broken relatively in the USA - say sugar quotas or something but economically it is just giving billions to a few people and costing everyone very small amounts of money). Health care is hugely broken and massively costly to the economy. In most other areas the USA is mediocre or comparatively good but there are numerous where there are problems (and many are getting worse in the last 15 years). Other than health care I don't so much see that the USA needs to turn to other examples of countries doing a better job of using capitalism to improve results to society (though there are examples such as new Zealand for farm policy…). But the USA is creating great loss to our people by not taking advantage of capitalism (letting markets work - which is not what political talking heads mean, letting big business distort markets with monopolistic power). I want the USA to stop throwing away the benefits capitalism would allow us to gain. There are many individual facets of society we could benefit from improving (and have lots of examples of countries doing much better - education, policing, foreign policy…). But I would agree with your point that most other countries are even worse at taking advantage of the gains possible with a capitalist economic system. In fact the USA is often responsible for making those other countries worse. The huge damage done by the copyright cartel (and associated patent messes) is the worst in the USA and the USA uses its political and military might to demand that its vassal states in Europe, Japan, Australia, etc. (I know they don't think of themselves as basal state but they really just bow down to whatever the USA actually demands only given token resistance where the USA allows it) allow such pitiful policies to flourish. The constitution of the USA had an appropriate understanding of the government GRANTING rights to private citizens/companies that DON"T exist WITHOUT government granting them (copyrights and patents). The economic theory is to balance the benefit to society from encouraging innovation through government granted monopolies with the cost of the GOVERNMENT taking from society to give to the private entity. The current USA policy is purely about supporting big business and allowing markets to be broken with extremely bad policy and no evidence they even have the vaguest understanding of capitalist or any economic theory on how the government should be acting in taking from society and giving to individuals. Ah well, I doubt anyone will actually read this far. Obviously I am emotional on this topic. Which I know is odd. I just have seen how many people across the globe suffer because we don't get nearly the benefits from capitalism we could if we didn't allow the idiotic ides that capitalism means those with the power make the rules to break markets and direct the benefits to their own pockets.

pacala 12y ago

> NO organization is suppose to have market power. This is naive wishful thinking. It's popular to create simplistic models to explain basic economic principles, models that assume perfect markets. However, reality does not (have to) comply to such models. Analytically, the principle of economies of scale (1) strongly favors, through market mechanisms, the development of large entities. A large corporation, dividing its marketing and R&D costs over a large market share, has significantly lower costs than upstart small competitors. This enables it to out compete smaller upstarts, and serves as a natural barrier of entry to a specific market. Upstarts are either relegated to a small niche, or, having stumbled upon an entirely new market with no dominant players yet, grow to be a large dominating player in their respective market. Empirically, every single market is dominated by a handful of large actors. This pattern is observed in local markets, national markets and global markets. Quick example for the HN crowd, the cloud hosting market. Amazon, Microsoft, Google, Rackspace account for more than half the market share (2). In a young market, with little regulation, where a lot of people on this site have plenty of technological skills to engineer an IAAS service from scratch. But few have the business skill, capital and timing to actually enter the market successfully. (1) http://en.wikipedia.org/wiki/Economies_of_scale http://en.wikipedia.org/wiki/Economies_of_scale (2) http://www.businessinsider.com/amazon-web-services-market-share-2014-6 http://www.businessinsider.com/amazon-web-services-market-sh...