Why Capitalism Is Failing

[bone]

 

[MAESTRO]

It has nothing to do with capitalism, socialism, feudalism etc. It has everything to do with the objective and universal law of accumulation and distribution of wealth! All other words are just made up motives, fake conclusions and emotions!

This is why we have what we have now! It is the same process that brought down the Roman Empire and other well-built wealth re-distribution/accumulation systems. Nothing more nothing less!

http://terpconnect.umd.edu/~yakovenk/econophysics/

http://terpconnect.umd.edu/~yakovenk/econophysics/animation-2.avi

http://terpconnect.umd.edu/~yakovenk/econophysics/animation-1.avi

Cheers,
MAESTRO

P.S. Besides, I know what is going to happen next!

 

[MKTrader]

Quote from piezoe:

Because of human nature, these are the unseemly forms that capitalism will take if left to its own devices, such as for example under what is referred to as "laissez faire capitalism" which becomes dominated by cartels and monopolies.

Nope, monopolies and cartels are almost always the result of regulatory capture, not laissez faire capitalism. Sometimes it's Big Ag, Big Pharma or banks using their influence to create new laws and regs to crowd out smaller firms. At other times, it's a local group of merchants who team up with bureaucrats to disallow new competitors. This is especially true of taxis and moving services. In some places, they basically require new businesses to get the approval of all existing services before they can open shop.

We haven't had anything like laissez faire since the pre-Fed, pre-income tax, pre-regulations-gone-wild days of the late 1800s. That's when we had unprecedented growth and deflation was rightfully understood as a good thing.

 

[MKTrader]

Quote from Random.Capital:

Capitalism, in the modern sense of the word, was never more than a mirage created by the discovery of cheap energy.

As that slowly ebbs away, so do the "inherent" advantages of "capitalism".

Wow, the ignorance around here is chilling sometimes.

 

[Renegen]

Quote from MKTrader:

Nope, monopolies and cartels are almost always the result of regulatory capture, not laissez faire capitalism. Sometimes it's Big Ag, Big Pharma or banks using their influence to create new laws and regs to crowd out smaller firms. At other times, it's a local group of merchants who team up with bureaucrats to disallow new competitors. This is especially true of taxis and moving services. In some places, they basically require new businesses to get the approval of all existing services before they can open shop.

We haven't had anything like laissez faire since the pre-Fed, pre-income tax, pre-regulations-gone-wild days of the late 1800s. That's when we had unprecedented growth and deflation was rightfully understood as a good thing.

Oh hi, another libertarian. I bet you think that railroads or steel plants being very profitable and holding a lot of power in the market, or even Standard Oil, are all things that didn't happen in that golden era of yours. If you're going to call others ignorant, you might first want to understand the basic concept of a business being "capital intensive" and how that creates a natural moat.

 

[MKTrader]

Quote from Renegen:

Oh hi, another libertarian. I bet you think that railroads or steel plants being very profitable and holding a lot of power in the market, or even Standard Oil, are all things that didn't happen in that golden era of yours. If you're going to call others ignorant, you might first want to understand the basic concept of a business being "capital intensive" and how that creates a natural moat.

Yes, Union Pacific, the Central Pacific and Northern Pacific were predictable failures given how they were subsidized and had no incentive to operate efficiently. Thanks for bringing that up.

Keep believing the comic book version of history if you want, though. It's easier to buy into the public school/PBS documentary version of history than actually engage your brain and think critically.

 

[piezoe]

Quote from StarDust9182:

"I would strongly disagree with this if you are referring to the U.SA. In the US., capitalism has been perfected to a greater extent then in any other country in the history of the world. If there is a failure, it is the failure of democracy, not of capitalism. The U.S. is a thoroughly capitalist nation. Perhaps it is not the form of capitalism you had hoped for."

Odd comment since we said the same thing. Perhaps I didn't word it well.

One thing that should trouble people is the thought that this has not all happened before. In fact, it has happened before in the US circa 1873 and similar other events before that date.

Pride goeth before a fall. This time is (almost) never different. One problem is that 100 years (about a generation) is too short a timescale to look at repeating lessons. I am hoping voters wake up while there is still time to change the path they are on.

America is a great country with wonderful people that have done many great things, but if voters fail to learn from the lessons of the past, then most likely they will repeat those lessons until they understand. That is simply how this world works IMO.

I read your interesting original post once more, and yes, we are essentially in agreement, but there is a fine point which on reflection I would think you might also agree with.

I made the observation that we are not suffering a failure of capitalism but a failure of democracy, because in fact capitalism has succeeded marvelously in the United States. It has succeeded so well in fact that the capitalists are now in charge of government. It is common knowledge that they achieved this primarily through five actions: (1) direct monetary contributions to political campaigns; (2) Virtually unfettered financing of political action groups; (3) Ownership and hence control of the mainstream media; (4) Hiring of former legislators as lobbyists, who actually draft some of the legislation that eventually gets passed; (5) A relentless campaign extolling the virtues of capitalism and the evils of socialism.

All of the foregoing actions are natural to capitalists and capitalism, but none are essential. The only thing essential, by definition, is that capital and the means of production be in private hands. In that latter respect the U.S. is a shining example. In the U.S. virtually everything that can be privitized is, even the issuing of passports! Those few things not yet privitized, e.g., Social Security, are under constant attack from those who believe they too should be privitized. Even medicare is almost entirely privitized, only a small part of it, mainly the collection, regulation, and payment of fees, is in government hands. Those delivering care are virtually all in the private sector.

The U.S. is not a very democratic society compared to say India. Only the legislative branch of government is elected democratically. (The Senate wasn't always such) The other two branches, the executive and the judicial, are not democratically elected.

So my point is this, it is simply incorrect to say that capitalism has failed in the United States. Just the opposite is true! What people perceive as a failure of capitalism is nothing of the sort, rather it is a failure of government to hold the capitalists in check and prevent them from taking over the government. That is what I meant when I said it's not a failure of capitalism, but perhaps a failure of democracy, or better put "a failure of our democratic institutions".

 

[nitro]

I am often encouraged to read a book based on someones recommendation. This one does just that:

By Etienne ROLLAND-PIEGUE (Tokyo, Japan) - See all my reviews
(REAL NAME)
This review is from: Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity (Paperback)

This book will be many things to many people at the same time. Economists can use it as a primer in empirical finance that will provide an overview of the field by two scholars who greatly contributed to its expansion. Business school students will appreciate the many case studies that illustrate the theoretical points and provide models for business ventures. More politically inclined readers will find a political tract in the tradition of Friedrich Hayek's Road to Serfdom, only with a different twist: the enemies that capitalism needs to be warded off against are not well-intentioned promoters of the welfare state - in fact the authors have kind words for European-style social protection - but the capitalists themselves, who may abuse their position of power to stifle competition and shackle markets. The book is also as essay in comparative economic history, shedding light on the fate of the Templars in early fourteenth century Europe, the transformation of the English monarchy under the Tudors and the Stuarts, or industrial development in Mexico and Brazil at the turn of the twentieth century. It is, above all, a paean to unbridled financial markets and an apology of their contribution to wealth generation.

Rajan and Zingales see the main threat to capitalism as coming from an unholy alliance between incumbent elites, bent on protecting their rents against competition, and distressed workers who suffer from the process of creative destruction. To those who might object that this alliance seems highly unlikely, the authors object that it has happened before, and that it had long-lasting results, explaining in effect the contrasting trajectories of Europe and the United States in the twentieth century. They begin by remarking that equity markets before the First World War were much more developed in England, Belgium and France than in the United States: so much for those who see in Anglo-Saxon culture or in the common law tradition the key to financial development!

They then describe what they call the Great Reversal that marked the fallback of financial markets from 1930 until well into the 1980s. This half century when financial markets shrank in size and cross-border capital flows were reduced to a trickle was in direct consequence to the Great Depression and the measures taken by governments to protect their markets and impose financial repression. The privileges obtained by incumbent monopolists in the guise of protecting workers from unruly markets long survived the politicians that were persuaded to put them in place.

One may not agree with all the ideas expressed by the authors and in particular put into question their blind faith in the levelling power of financial markets, which they describe as giving a fair chance to every individual, thereby "making power redundant." It may also seem overly alarmist to worry about the future of free markets at a time when formerly state-controlled economies have made great strides toward a market-based system. But Rajan and Zingales are right to remind us that free markets depend on political goodwill for their existence and that, because they have powerful political enemies but no natural constituency, their continued survival cannot be taken for granted.

So many words in this text that must be understood deeply, perhaps the most important being "creative destruction" and its consequences. It is the price we [society] pay for progress, and specifically technology.

[Some] Corporations no longer have natural predators [due to strong allegiance with government/politicians], hence the [economic] ecosystem grows way out of whack.

http://www.amazon.com/Saving-Capitalism-Capitalists-Unleashing-Opportunity/dp/0609610708

Great questions await. For example, the title of the first chapter is

"Does finance benefit only the rich?"

 

[Grandluxe]

It has nothing to do with capitalism but the failure of liberal democracy. This is what happens when individual freedom takes primacy over communal interests. It is the tyranny of the individual now and this fixation on individual freedom has evolved to an extremist state where everything which is consumable is now a "human right." The line between productivity and what is a human right has been increasingly blurred.

East Asia is thriving under capitalism and will overtake the West. It's a simple function of culture, attitude and political systems. East Asia has orderly societies, and its people are well disciplined, personally and financially. The West is anarchic. Western countries are increasingly impossible to govern as they do not understand that sometimes individual rights must be subsumed to communitarian rights.

Look at the West today, we have a "democracy" in shambles where extremists of the political spectrum hold the country to ransom.

The US is descending into all-out civil strife, led by hate-mongering demagogues in the media and in government. The direction that America needs to take to remain relevant in a rapidly changing world economy is obvious - infrastructure, renewable energy, education - but they cannot be implemented because you will never get consensus from 300 million quarrelsome individuals spending billions every two years waging crippling political battles - money much better spent on just anything other than conflict creation.

The political stability and social harmony of East Asia are conditions necessary for thriving economies - they are all but impossible to achieve in modern Western states.

 

[EMRGLOBAL]

Capitalism is failing because the people have figured out it was all a game.
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WRONG. Capitalism is failing because the US moved away from Capitalism a long time ago.

Many think they know capitalism but they have zero clue.

The basic building blocks of CAPITALISM, Land, Labor (The ability to work) and Capital Goods applied to production. ALL THESE PRIMARY FACTORS (STOCKS= Land & Labor) are to create PRODUCTION! Entrepreneurship is sometimes considered a factor of Production.

You can not build a Capitalistic Society if you do not build on these solid principles. THE US HAS DESTROYED THESE VERY PRINCIPLES!!!!!!!!!!!!!!

NO FUCKING WAY a nation that produces DEBT and very little product is a Capitalist Nation. Nor is a nation a Capitalist Nation when their GDP is 70% consumer spending ie:

BANKING SYSTEM, WALL STREET, FED all anti-capitalistic in by nature now a days. These three "Industries" have grown to be SOCIALISTIC BY NATURE!

I happen to be involved in the very last stand in the name of Capitalism-

The Oil Industry
"Manufacturing/Infrastructure

I am on the Capital end of the equation.

The rest of the shit out there is smoke and mirrors and is coming crashing down.

I was just on the phone with one of our Shipping Lines that we funded out of Spain. I was talking to the owner...he said SPAIN has 25% unemployment right now!!!!! that is about 4 Million unemployed Spaniards. SPAIN is a Debtor nation and a Consumer Nation. We are heading down the same path because the FOOLS in this country do not understand the basic building blocks for Capitalism.