Capitalism vs. Socialism

[WinePusher]

This thread is inspired by something Haven wrote in another thread:

I used to be a pretty staunch Marxist socialist, but I've been sort of drifting away from that viewpoint. My views on economics and politics are still evolving. http://debatingchristianity.com/forum/v ... 3&start=20

I myself have recently become somewhat more sympathetic towards Marxist ideas. Marx predicted and wanted the end of Capitalism, and he wanted a Socialist society.

1) What is wrong with Capitalism?
2) What is wrong with Socialism?
3) Which system is better? Why?

[100%atheist]

In an entirely free market, you not only have multiple competing companies -- which put enormous pressure on them to drive up salaries and reduce costs of their products -- but you can also form unions to protest working conditions. In a truly free market society, you don't just have the town mill and nothing else. If entrepreneurs want to make a profit, any monopoly that might exist wouldn't last too long before another player stepped in -- and if they offered just a bit more in wages and their products were just a bit cheaper, they'd have the advantage.

You keep going back to problems caused by the current system we have. The reason why you have child labor in corporate factories in China is because their only alternative is child labor in the fields. And that corporation is there because a foreign government supports it financially -- and it's there because the foreign government's tax laws put pressure on it to make profits in other countries that A: have laxer tax laws, and B: outlaw unions. Blame the game, not the player.

Why would corporations voluntarily increase wages? I'd say they should do whatever is possible to reduce compensations.

Also, why wouldn't free market capitalism let capitalists to freely fix prices/compensations? It's freedom, right?

[Darias]

In an entirely free market, you not only have multiple competing companies -- which put enormous pressure on them to drive up salaries and reduce costs of their products -- but you can also form unions to protest working conditions. In a truly free market society, you don't just have the town mill and nothing else. If entrepreneurs want to make a profit, any monopoly that might exist wouldn't last too long before another player stepped in -- and if they offered just a bit more in wages and their products were just a bit cheaper, they'd have the advantage.

You keep going back to problems caused by the current system we have. The reason why you have child labor in corporate factories in China is because their only alternative is child labor in the fields. And that corporation is there because a foreign government supports it financially -- and it's there because the foreign government's tax laws put pressure on it to make profits in other countries that A: have laxer tax laws, and B: outlaw unions. Blame the game, not the player.

Why would corporations voluntarily increase wages? I'd say they should do whatever is possible to reduce compensations.

Also, why wouldn't free market capitalism let capitalists to freely fix prices/compensations? It's freedom, right?

Corporate entities would not exist by definition in a truly free market. Corporations are legal entities that cannot exist in a natural, state-free, market environment.

But this is really economics 101 here... multiple companies that want to have more employees and reign in more customers will be forced to increase their wages and lower their prices in order to compete. If they don't consistently offer quality goods and services at cheaper prices and if their wages aren't reasonable -- they will go out of business.

These pressures aren't very scarey for corporate monopolies today. They're the only businesses in town and the government will bail them out, so they don't have to worry much about quality or affordability. If this is your company's outlook in a free market, your business will go under.

[WinePusher]

Fair enough. The point that is central to this discussion is that under Capitalism workers are free to choose the conditions of their employment. From the neoclassical perspective, workers supply their labor to capitalists who demand it. A worker need not work for a capitalist if he or she doesn't think the wage is good enough. The worker, under a Capitalist system, has inherent bargaining power because the worker gets to choose where to work at. Capitalists must therefore compete with one another to attract labor to their business and firms.

That isn't true at all of how things work in the real world. Under capitalism, workers are often -- in fact, I'd argue almost always -- under extreme pressure to secure employment, especially in this bad economy.

What you say is only true if the economy is in a recession. When the economy is operating at full employment workers have more latitude in deciding who they want to work for and negotiating their wage rates. So workers do have bargaining power under Capitalism when the economy is at full employment. Workers only loose bargaining power when the economy is in a recession, and recessions are not the norm under Capitalism. Most of the time the economy is doing well as opposed to doing poorly. So the claim that Capitalism is exploitive is only partially true. Workers are only exploited when the economy is doing poorly.

Most employers pay around the same wage level for workers, and therefore laborers don't gain an advantage by being selective of their employers (assuming they even have the luxury of multiple job offers, which is by no means a given).

It depends on what job and occupation it is. Again, you condemn inequality throughout this thread. Well, a worker at McDonald's makes less money than a worker at a 5 star restaurant. A pilot makes more than a flight attendent. Doctors make more than nurses. These are all examples of inequality within the system. Do you have a problem with these examples?

When the only options are to take the first job you can get or starve, most people will choose the former. It's no more a "free choice" than the "choice" a person held at gunpoint has to surrender his wallet or get shot in the head.

Yes, I've heard many Marxists and Socialists advance the idea of wage slavery. The idea that workers are slaves to wages is nonsense. I agree that it's true, but I don't agree that it is a bad thing. In order to receive money, wages and income you have to work. You have to contribute to society in some way. If you don't contribute, then you shouldn't receive any money, wages or income, and rightfully so.

Are you saying workers do not have access to the product of their labor under Capitalism? Marx wanted workers to retain the full product of their labor, meaning that all of the income generated from selling a commodity would go directly to pay off the workers in the form of wages. However, under Capitalism a portion of the product also goes to compensate the Capitalist in the form of profits. Marx viewed this as exploitation, and under his ideal society there would be no Capitalists and therefore there would be no profits. Thus, the surplus product would be retained entirely by the working class.

I've already exlained why this Marxian ideal is flawed and impractical.

I agree the Marxian idea is flawed, which is why I'm not a Marxist (anymore). My view of exploitation is an inequality of bargaining power between workers and employers, and that inequality would certainly exist in an unregulated free market.

I've already stated that your view of exploitation is only partially correct. It depends on how the economy is performing. When the economy is performing well the wages for labor rise, along with working conditions in general. When the economy is performing poorly wages fall and unemployment increases.

But to get more specific, you said that you think Capitalists should also be able to retain the product of their labor. So you acknowledge that Capitalists do contribute to the value of a commodity (as opposed to Marx's Labor Theory of Value, which stated that only workers contribute to the value of a commodity)? Also, what do you mean by inequality? Are you speaking about wealth and income inequality?

[WinePusher]

Corporate entities would not exist by definition in a truly free market. Corporations are legal entities that cannot exist in a natural, state-free, market environment.

What are you talking about? A corporation is merely a type of firm. There are sole proprietorships, partnerships and corporations. There is nothing about a corporation that comes into conflict with the free market. In a free market people can do whatever they want, and that includes undergoing incorporation in order to mitigate risks.

[Darias]

Corporate entities would not exist by definition in a truly free market. Corporations are legal entities that cannot exist in a natural, state-free, market environment.

What are you talking about? A corporation is merely a type of firm. There are sole proprietorships, partnerships and corporations. There is nothing about a corporation that comes into conflict with the free market. In a free market people can do whatever they want, and that includes undergoing incorporation in order to mitigate risks.

McCulloch donated 93.97 tokens to WinePusher
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http://debatingchristianity.com/forum/v ... 165#567165

For simply pointing out that personal redefinition of terms is inappropriate.

I don't know what I take issue with more, the fact that WinePusher thinks corporations, as they exist now, are compatible with the free market, or that my argument is "inappropriate" because I wish to define a corporation for what it is.

I am of course employing a voluntarist position in this debate; I am not making up terms as I go along, nor have I changed how I define terms throughout this thread. Just because most of you are apparently unfamiliar with voluntaryism, does not mean that my ideas are dishonest or inappropriate or something I cooked up in my spare time.

Now, I am not surprised when I hear socialists and statists blame the free market for problems perpetuated by the state and crony capitalism -- and I shouldn't be surprised to hear that the same person who thinks that the free market and government control of the money supply are compatible also thinks that corporations are as well.

In my view it is astoundingly inappropriate for someone who is familiar with economics as yourself, and for someone who considers themselves conservative, to redefine a corporation as merely a partnership of businesses.

You should know that corporations are state sanctioned organizations. They have legal personhood, and limited liability means that CEOs don't have to take much personal risk or responsibility for their actions -- and the taxpayer ends up footing the bill when man made corporate disasters happen. I think it's dishonest on your part WinePusher for not acknowledging this; I wouldn't expect anyone else here to know better, but you should.

Corporations, as they exist now, cannot exist without a state. They wouldn't have legal personhood or limited liability or government subsidies or any of that.

And when a state grants legal protections and subsidies to big businesses, and when the state controls the money supply - there can be no free market. All we have now is more or less socialistic. I am growing tired of people blaming the free market for things that result from our current system. And I am especially tired of people falsely labeling what we have now as "free." I cannot debate the benefits of the free market, when everyone insists on sticking with the GOP's definition of free market capitalism. Haven calls it welfare capitalism. I call it state capitalism. But it's socialistic and fascistic and there's no nice way of putting it. The state literally benefits from the productivity of society like a parasite, and corporations eschew the risk of the free market for big brother's protection. It's appalling, and you can call it whatever you want --
just don't call it "free."



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[East of Eden]

In an entirely free market, you not only have multiple competing companies -- which put enormous pressure on them to drive up salaries and reduce costs of their products -- but you can also form unions to protest working conditions. In a truly free market society, you don't just have the town mill and nothing else. If entrepreneurs want to make a profit, any monopoly that might exist wouldn't last too long before another player stepped in -- and if they offered just a bit more in wages and their products were just a bit cheaper, they'd have the advantage.

You keep going back to problems caused by the current system we have. The reason why you have child labor in corporate factories in China is because their only alternative is child labor in the fields. And that corporation is there because a foreign government supports it financially -- and it's there because the foreign government's tax laws put pressure on it to make profits in other countries that A: have laxer tax laws, and B: outlaw unions. Blame the game, not the player.

Why would corporations voluntarily increase wages? I'd say they should do whatever is possible to reduce compensations.

To get the best employees, the same way a MLB team will pay more to a pitcher who wins 20 games than they do to a pitcher who is 2-5.

[WinePusher]

I don't know what I take issue with more, the fact that WinePusher thinks corporations, as they exist now, are compatible with the free market, or that my argument is "inappropriate" because I wish to define a corporation for what it is.

I have read many writers that come out of the Free Market/Austrian tradition and no single writer I've come across claim that corporations are not compatible with the Free Market. No economist I've ever read has argued that corporations are somehow 'anti free market.'

Now, I am not surprised when I hear socialists and statists blame the free market for problems perpetuated by the state and crony capitalism -- and I shouldn't be surprised to hear that the same person who thinks that the free market and government control of the money supply are compatible also thinks that corporations are as well.

I have argued here and elsewhere that I don't think the Federal Reserve should exist. But, unlike you I have thought out my position. If you abolish the Federal Reserve would you send the jurisdiction of the money supply back to Congress? How would you control the money supply?

And the fact of the matter is, what you said about corporations is bizarre. I've never heard anybody say that corporations anti free market, and that in a true free market corporations wouldn't exist.

In my view it is astoundingly inappropriate for someone who is familiar with economics as yourself, and for someone who considers themselves conservative, to redefine a corporation as merely a partnership of businesses.

I never said a corporation is the same thing as a partnership. I said that a corporation is a type of firm/business, just like a sole propriertorship and a partnership are merely a type of firm/business.

You should know that corporations are state sanctioned organizations. They have legal personhood, and limited liability means that CEOs don't have to take much personal risk or responsibility for their actions -- and the taxpayer ends up footing the bill when man made corporate disasters happen. I think it's dishonest on your part WinePusher for not acknowledging this; I wouldn't expect anyone else here to know better, but you should.

Still don't see how any of this is relevant. Just because there are laws that oversee corporations (corporate law) it doesn't mean that corporations are anti free market. Using this extremist view, in order for a true free market to exist you would have to abolish all laws. There are laws that govern interstate commerce, and there are government laws that oversee business partnerships...are these things somehow anti free market?

I'm not sure what McCulloch was specifically referring to when he said you're 'redefining' things, but if he was referring to the term 'free market' than he would be right. You are redefining what a free market actually is. You think that a free market can only exist if there are absolutely no laws whatsoever, and that view is equivalent to anarchy. Free marketers like Friedman and Hayek never advocated anything of the sort. They believed government intervention should be rare, not non existent.

For example, I don't want a bloated welfare system like the one we currently have. But I also don't want no welfare system whatsoever. I want a basic governmental welfare system that takes care of the basic needs of truely disadvantaged people who actually need it and cant make it on their own. And if you disagree with this notion then you really need to take some time and rethink your position.

Corporations, as they exist now, cannot exist without a state. They wouldn't have legal personhood or limited liability or government subsidies or any of that.

Again, you're confused. Corporations are recognized as persons under the law so they can be sued and taxed. The government grants them the right to personhood for these purposes. That is not opposed to free market principles.

But I agree that subsidies and bailouts are against the free market and I would not support those policies.

And when a state grants legal protections and subsidies to big businesses, and when the state controls the money supply - there can be no free market.

How would you control the money supply? Even Ron Paul doesn't want to get rid of the Federal Reserve, only extreme libertarian figures do. The money supply needs to be controlled by something.

[bluethread]

How would you control the money supply? Even Ron Paul doesn't want to get rid of the Federal Reserve, only extreme libertarian figures do. The money supply needs to be controlled by something.

Let's take a few steps further down the rabbit hole. The current digitizing of the "money supply" has made it even clearer what a sham it is. What the (private) Federal Reserve bank has attempted to do is to control the relative value of goods and services by manipulating the unit of measure. The actual supply of federal reserve notes has not changed to any significant degree in decades. The truth is that there is no such thing as a stable currency.

There can be a relatively stable economy, where the perceived value of commonly exchanged goods and services in relation to other goods and services remains basically the same or changes at a gradual and predictable rate. However, the only way a currency can effect that is if the general population accepts the illusion that the currency has an established value. In times past, that illusion was fostered by establishing that value in relation to a given commodity. However, individual commodities can go through times of greater and lesser demand.

The true controlling factor is the establishment of that value over a wide range of goods and services by force of law, ie MSRP, wage and price controls and transfer payments. Governments also use the fear of monopolistic "gouging" to limit the actions of certain areas of the economy. However, as the government enacts more laws and takes more actions to "stabilize" the economy, it moves close to being the monopoly and those invested in that government become the ones doing the "gouging".

Ultimately, the economy can not be "controlled", it can only be manipulated for a short period, for the benefit of the manipulators. Any law enacted and enforced by a government or action taken by a governmental or private entity is eventually absorbed by the markets and the only effect is to create short term countervailing demand.

We have seen this in the implementation of Social Security and food stamps (70 years), Medicare and Welfare (50 years). These programs had minimal short term effect and were then absorbed into the economy, such that they are seen as detrimental to the economy. However, the removal of them would result in a short term manipulation that is politically unpalatable.

In short, manipulation is manipulation regardless of who does it and a stable economy is an illusion. Attempting to control the economy for humanitarian purposes is like trying to pile running water in a sandbox. One can set up barriers, but eventually that valleys will fill in and the mountains will be made low. The effect on the individual grains of sand may be drastically different, but the over all long term effect will be the same.

[100%atheist]

Corporations, as they exist now, cannot exist without a state. They wouldn't have legal personhood or limited liability or government subsidies or any of that.

Can you please give me a clue to what would business look like in your utopian free-market society, which does NOT involve any governments regulations nor protections.

I can only foresee two types of companies: (1) a heavily fortified company with infantry and anti-missile shield, and (2) a very small company of one or several individuals who are artists of changing their identities.

I am a rookie in economics, but you are yet to answer my questions as to:
1) Why would businesses need to increase wages? Your model of increasing wages is based on a perpetual lack of human resources. This might be true when we talk about some 1% or less of the workforce that is HIGHLY specialized and qualified. But for the majority of the workforce, what is it that would make businesses experience such chronic need in lacking workforce that businesses would NEED to increase wages?

2) this one you avoided entirely: what would stop businesses from fixing prices and rules in a truly free-market?

[100%atheist]

In an entirely free market, you not only have multiple competing companies -- which put enormous pressure on them to drive up salaries and reduce costs of their products -- but you can also form unions to protest working conditions. In a truly free market society, you don't just have the town mill and nothing else. If entrepreneurs want to make a profit, any monopoly that might exist wouldn't last too long before another player stepped in -- and if they offered just a bit more in wages and their products were just a bit cheaper, they'd have the advantage.

You keep going back to problems caused by the current system we have. The reason why you have child labor in corporate factories in China is because their only alternative is child labor in the fields. And that corporation is there because a foreign government supports it financially -- and it's there because the foreign government's tax laws put pressure on it to make profits in other countries that A: have laxer tax laws, and B: outlaw unions. Blame the game, not the player.

Why would corporations voluntarily increase wages? I'd say they should do whatever is possible to reduce compensations.

To get the best employees, the same way a MLB team will pay more to a pitcher who wins 20 games than they do to a pitcher who is 2-5.

Well, maybe we have shortage of pitchers. Why is it true for any occupation in general?