Comments (29)

• Deacon Elurby

  There are very dangerous, negative aspects to capitalism, which aspects result from lack of ETHICS/MORALS among capitalists ((by the way, this scribbler is a staunch booster of ETHICAL CAPITALISM, not this filthy NWO corporatism destroying national sovereignties across the West)):

  Corporate America: What Went Wrong?
  http://corporateamericawhatwentwrong.blogspot.com/

  Planned Destruction of America
  http://planneddestructionofamerica.blogspot.com/

  Published: March 24, 2008 9:56 AM

• Keith

  What is "ethical capitalism"?

  Published: March 24, 2008 10:29 AM

• Inquisitor

  Apparently some people don't even read the articles on this site.

  Published: March 24, 2008 10:48 AM

• fundamentalist

  Deacon: “There are very dangerous, negative aspects to capitalism, which aspects result from lack of ETHICS/MORALS among capitalists ((by the way, this scribbler is a staunch booster of ETHICAL CAPITALISM, not this filthy NWO corporatism destroying national sovereignties across the West)):
  Capitalism is the only moral economic system that exists or has ever existed. You don’t attack capitalism; you attack corporate collusion with government, which is just corruption and has nothing to do with capitalism. You might be interested to know that the definition of capitalism you fight against was invented by socialists. In the socialist dictionary, capitalism is large corporations bribing government officials to get advantages in the market place. This demonstrates another way in which socialists are dishonest. And it makes discussion like this much, much more difficult because everyone has to lay their cards on the table by defining almost every single word they use.
  The corruption of governments by corporations is a product of socialism. The US is not a capitalist society; it’s mostly socialist with a few elements of capitalism mixed in to appease the masses. Socialism insists on governmental control of economic activities. When politicians control the market, then corporations can bribe politicians to give them an advantage, such as when Archer Daniel Midland bribes congressmen to subsidize ethanol production.
  Real capitalism would eliminate that by eliminating government control over the market. Socialists think the solution is more government control over the market, but that would do nothing but give corporations more opportunities in which to bribe politicians.
  

  Published: March 24, 2008 10:49 AM

• fundamentalist

  Deacon: “There are very dangerous, negative aspects to capitalism, which aspects result from lack of ETHICS/MORALS among capitalists ((by the way, this scribbler is a staunch booster of ETHICAL CAPITALISM, not this filthy NWO corporatism destroying national sovereignties across the West))"

  Capitalism is the only moral economic system that exists or has ever existed. You don’t attack capitalism; you attack corporate collusion with government, which is just corruption and has nothing to do with capitalism. You might be interested to know that the definition of capitalism you fight against was invented by socialists. In the socialist dictionary, capitalism is large corporations bribing government officials to get advantages in the market place. This demonstrates another way in which socialists are dishonest. And it makes discussion like this much, much more difficult because everyone has to lay their cards on the table by defining almost every single word they use.
  The corruption of governments by corporations is a product of socialism. The US is not a capitalist society; it’s mostly socialist with a few elements of capitalism mixed in to appease the masses. Socialism insists on governmental control of economic activities. When politicians control the market, then corporations can bribe politicians to give them an advantage, such as when Archer Daniel Midland bribes congressmen to subsidize ethanol production.
  Real capitalism would eliminate that by eliminating government control over the market. Socialists think the solution is more government control over the market, but that would do nothing but give corporations more opportunities in which to bribe politicians.
  

  Published: March 24, 2008 10:50 AM

• Forrest

  "Every person who finds his current occupation (or life) boring or unfulfilling is, unless bolstered by sound philosophical and economic principles, likely to drift toward alienation as an explanatory device, one which soothes as much as it miseducates"

  I find our obsessive consumerist society boring in the extreme. We are supposed to tolerate our country filling up with hordes of physically repulsive asians and mestizos in the name of capitalism and free trade? Bah! I really see no need whatsoever for additional refinement of the sound system of Blu-ray capable HD televisions if it comes (as it does) with the further degradation of the environment. What I do value is plenty of open space and wilderness to which I can repair at will. If this necessitates stern government restrictions upon property rights and elimination of millions of immigrants then I say more power to coercion! And Ludwig von Mises be damned.

  Published: March 24, 2008 12:32 PM

• Inquisitor

  Damn that greedy Jew indeed! :p

  Published: March 24, 2008 1:33 PM

• Question

  How do you justify Capitolism in the face of the American Slave trade? After all, wasn't it the desire for profit by way of cheap labor that fueled the enslavement of over 400 million Africans?

  I would not call the proliferation of this morally degrading institution an example of "the only moral economic system"

  Published: March 24, 2008 2:37 PM

• George Gaskell

  How do you justify Capitolism [sic] in the face of the American Slave trade?

  1. Why do the the African, Asian and European slave trades get a pass?

  2. "Justifying" capitalism in the face of slavery is easy -- slavery was not and could never be a legitimate form of capitalism because forcibly-abducted human beings are not a legitimate form of property.

  In contrast, houses, cars, clothes, factories, refrigerators, telephones, cable lines, shoes and food are all legitimate forms of property.

  Published: March 24, 2008 3:18 PM

• Inquisitor

  Wow, talk about a strawman...

  Published: March 24, 2008 3:20 PM

• fundamentalist

  Forrest: “What I do value is plenty of open space and wilderness to which I can repair at will.”

  Why do you value that? At what cost? Would you still want it if billions must die to achieve it?

  Question: “How do you justify Capitolism in the face of the American Slave trade?”

  You’ll have to enlighten me. I don’t see what slavery has to do with capitalism. Since the Dutch invented it in the 17th century, capitalism has stood for equality under the law and property, both of which would exclude slavery. You may be confusing the actions of business people with the economic system. Adam Smith warned against conflating the two. Business people frequently are enemies of capitalism. Many businessmen prefer socialism because then they can bribe government officials to provide them a monopoly, or at least give them an advantage in the market.
  

  Published: March 24, 2008 3:21 PM

• Inquisitor

  Oh, and by the way, capitalism helped end slavery... but that is not something most public school graduates would know, because it'd mean the government would have to be like... honest.

  Published: March 24, 2008 3:22 PM

• fundamentalist

  Some posters appear to believe that an economy is either socialist or capitalist. That is simplistic. No pure capitalist society, or pure socialist, has ever existed. All are mixed. The Dutch Republic and the American and British in the 19th century came the closest to pure capitalism. In the 20th century, and today, the US is mostly socialist, even though socialists call it capitalist. Ironically, the things socialists detest about American “capitalism” actually result from its socialist traits—government control of the economy. To rid the nation of the evils that socialists rail against, we need more capitalism and less socialism.

  Published: March 24, 2008 3:29 PM

• Forrest

  Why do I value wilderness? Why do you value Walmart? 6.5 billion people is too much. I certainly favor reduction of the population by numbers in the billions. It only logically follows that people have to die in order that the total number be reduced.

  Published: March 24, 2008 3:53 PM

• TLWP Sam

  I beg to differ - a basic no-frills definition of Capitalism is simply defined that of private ownership, freedom from external regulation and raising capital from investors to turn over a profit. To say Capitalism doesn't/shouldn't hurt any one (or at least innocent people) in the process is to add a moral dimension that technically doesn't exist in the world of survival. Even worse, to say when people use force and fraud to get what they want it becomes Socialism. Socialism, is generally defined as the public ownership of the means of production and justifies itself on the wealth being shared to everyone in an equal(-ish) manner.

  Wealth doesn't come so much from freedom but production. A slave-owning could be rather wealthy if it uses slaves in highly productive endeavours whereas a free society could be rather mediocre if people only engage themselves in low productive work, e.g. the Amish.

  Still I don't get the part where Capitalism ended slavery. Was it because free people supposedly outperformed slaves? Maybe it me or in some parts of the world slaves must be more productive as it still exists?

  Published: March 24, 2008 4:48 PM

• Oil Shock

  Forrest,

  Why don't you kill yourself first? That will be one small step in the direction where you want to go :)

  Published: March 24, 2008 4:49 PM

• Inquisitor

  To the extent that force violates private ownership (including over oneself) and contractual transfers, the market has been disrupted. No market economy can handle such disruptions for long without falling apart. That is why it is ruled out as being part of the definition of the term.

  Slave ownership is far more costly to maintain than free labour. Whatever the moral arguments against it, that alone makes it unlikely in a market order.

  Published: March 24, 2008 5:05 PM

• fundamentalist

  TLWP: "I beg to differ - a basic no-frills definition of Capitalism is simply defined that of private ownership, freedom from external regulation and raising capital from investors to turn over a profit."

  Of course, everyone is free to invent their own definition of capitalism. I was working from the way it worked in the Dutch Republic and Adam Smith's ideas on it.

  TLWP: "To say Capitalism doesn't/shouldn't hurt any one (or at least innocent people) in the process is to add a moral dimension that technically doesn't exist in the world of survival."

  How are you going to protect property if you don't protect the weak and innocent from the rich and powerful?

  TLWP: "Even worse, to say when people use force and fraud to get what they want it becomes Socialism."

  I'm not sure what you're referring to. Force and fraud violate property and therefore violate principles of capitalism, but don't necessarily equate with socialism. Socialism comes in when it gives control of the market to the government and thereby sets up the members of government to be bribed by corporations and wealthy individuals.

  Published: March 24, 2008 5:09 PM

• Kevin B

  fundamentalist: "Force and fraud violate property and therefore violate principles of capitalism, but don't necessarily equate with socialism. Socialism comes in when it gives control of the market to the government..."

  Aren't force and fraud identifying characteristics of government? Whether one man or a thousand wishes to govern others, domination of the allocation of the scarce resources of others appears to be socialistic action.

  Published: March 24, 2008 5:40 PM

• Forrest

  Just because a implies b it does not hold that the reverse is true.

  Published: March 24, 2008 7:44 PM

• Inquisitor

  Or in other words: what I say does not apply to me. :D

  Published: March 24, 2008 7:52 PM

• Forrest

  Are you saying then that you are not greedy or that you are not Jewish?

  Published: March 24, 2008 9:42 PM

• Vanmind

  Forrest, I think they're all trying to get you to realize that you're conflating capitalism and socialism and thereby confusing yourself into a misguided rage.

  Hate government. Government is your enemy.

  Published: March 25, 2008 1:46 AM

• TLWP Sam

  I don't know why a few people got offended by my two cents. I don't really see why private individuals need a government organisation to enslave and exploit other people. Still, I see the 'force & fraud' part as a moral utilitarian assertion. Yessirbob, more often that not, a society that condones such 'force and fraud' tends to be poorer than societies that don't. Maybe I'm a l'il bummed out in the way there was plenty of 'force & fraud' in history yet certain society did flourish to a certain extent (a.k.a. mercantilism) or that slavery lasted for so long (and in many places still exists in certain forms). Unfortunately, people who do bad things don't necessarily always get bad repercussions and in their corner of their world that would dissuade from doing so. :(

  Published: March 25, 2008 6:08 AM

• Matt

  This was an excellent article.
  
  Unfortunately many readers assume that the United States is a Capitalist country, it is not, it is a mixture
  of Capitalism and a lot of Socialism and going more and more in the direction of Socialism every day.
  However, it should be understood the more Capitalism the more prosperity over all even the poorest gain.

  Unfortunately the economic pains created by socialist movements is blamed on capitalism.

  There can be many natural and man made disasters that can impede progress, many irrationally blame that on Capitalism as a way of identifying the cause and crave more Socialism as the cure then wonder why the problem is even worse.

  The educational system in force dictated by the socialistic thrust especially since F.D.Roosevelt has created masses of people who are unable to comprehend a way out of the trap they find themselves in. Once you understand what Capitalism is capable of you will also understand that it offers the most benevolent system possible.
  

  Published: March 25, 2008 10:45 PM

• Francisco Torres

  Why do I value wilderness? Why do you value Walmart? 6.5 billion people is too much.

  Too much compared to what?

  I certainly favor reduction of the population by numbers in the billions. It only logically follows that people have to die in order that the total number be reduced.

  "Logically follows"... nope. Your argument begs the question - you accept a priory that there are too many people in order to conclude many have to die.

  There is no reason to think that there are too many people, unless you *know* which is the number of people that must exist, or an optimal level. By the way, when there were much less people, there was certainly more wilderness, but also more destruction of wilderness due to a Tragedy of the Commons situation. Does "slash and burn" farming ring a bell?

  Published: March 26, 2008 7:12 PM

• Joseph Huang

  yeah, lets kill people. you happen to be a member of the illuminati or the new world order? thank the government for genocide. good hitler, he created more breathing space for the jews. good stalin, killing off those extra people. good atom bomb, we dont need no japanese.

  Published: March 27, 2008 7:56 PM

• Ican C. Clearly

  The final endgame of capitalism is slavery. When the bottom line is to buy low and sell high is to pay the labor the lowest wage and sell that product at the highest price the market will allow. The cost of production is limited by the cost of labor at zero while the profit is unlimited by market conditions. Our current conditions of credit meltdown was born in the credit trough of the early 90's, where any living soul, regardeless of creditworthiness, was given an unsecured line of credit (credit card). When these people (victims) couldn't pay off the high balances, a miracle from above (Wall Street) arrived: The Real Estate Bubble. Instantly, the average homeowner had thousands (or hundreds of thousands) of equity in the home they owned. Instantly, these debtors had an instant credit reprieve in refinancing their home and erasing their unsecured, high interest debt. Now, these people had a false sense of security in the fact that they had equity in their home. Now here we are, the bubble has burst, those credit cards are maxed out again and their house is worth one third less than they owe. So, following the debt (money), this situation we are in now, is the end result of the prostitution of unsecured debt in the past 2 decades. So, who is at fault? The lemmings who were programmed from birth to buy by mass media or by the finacial institutions who KNOWINGLY granted unsecured credit lines to anyone with a social security number. I could go on, but I really don't think anyone will read this...

  Published: October 9, 2008 11:51 PM

• Stanley Pinchak

  Ican C. Clearly,
  you came to the right place. let me see if I can shed a little light on the subject for you. You say that the final end game of capitalism is slavery. I think that study of the matter would show that capitalism is a system of exchange which permits private ownership of the means of production and negligible interference from the state in mutually beneficial exchange. Since all legitimate exchange in capitalism is between willing participants it is clear that slavery is an inconceivable outcome.

  You then imply that labor costs will be driven to zero and that profits are unlimited. These are interrelated subjects in economic analysis, but further consideration would indicate a different conclusion. Since exchanges are made in a matter mutually beneficial to the participants (i.e. sellers can not force buyer to purchase at any price higher than the buyers are willing to pay), and the demand for goods determines the price of a particular good (at a given supply, not to say that price doesn't influence entrepreneurs to increase production, but that takes time), this means that there is most certainly a finite price and thus a finite profit.

  The labor that the entrepreneur employs in the production of goods are paid in advance of sale and in proportion to their contribution to the revenue of the good in question, discounted by the interest rate and the time required in the production process. This means that the final good's cost is made up of wages and rents to labor and land, outlays for higher order goods, the interest that the entrepreneur earns for fronting the cash, and since we live in a world of uncertainty and are not in a state of final equilibrium, some amount of profit or loss attributable to entrepreneurial judgment of future market conditions.

  Sometimes the latter component is called pure profit, but it certainly can also manifest as a loss. It is the entrepreneur's incentive and his risk. It tends to dampen in magnitude as a particular field matures, but this is certainly not to say that mature industries are free of the need for entrepreneurial judgment, think of the whip makers at the beginning of the automobile revolution, those who saw the writing on the wall and acted accordingly made a smoother transition to the new conditions.

  You then shift topics to the causes of the present business cycle. You list several symptoms including cheap consumer credit and asset bubbles capable of being tapped for cash. You also point out some of the fallout of this most recent business cycle, the mounds of debt and people upside down in mortgages. The root cause of the cheap credit that the banks and credit card companies were so eager to loan out is the Federal Reserve and the federal government.

  The government loves to run a deficit and the Federal Reserve helps them out by keeping interest rates lower than the market would determine. This makes repayment by the state seem more plausible and keeps the guns and butter flowing. Unfortunately this is not the only detrimental effect of the Federal Reserve's manipulation of the interest rates. A much more sinister effect of the lower interest rates and the concomitant increase in credit available from banks is to entice entrepreneurs to undertake investments which they would not have attempted were the interest rate at the natural level.

  This manifested itself in the most recent events predominantly in residential and commercial construction. The easier availability of credit allowed a particular individual to purchase more house, and fueled an upward spiral in home prices (this is sometimes referred to as the wealth effect). The mass of the public seeing the low interest rates available from the bank as depressed by the actions of the Federal Reserve were dissuaded from saving and encouraged by the direct and secondary effects of the same to increase their debt for the purposes of consumption.

  The party had to end as interest rates rise and the beginnings of the discovery phase kicks in. The malinvestment of the boom in undesired and unaffordable properties and other capital goods is the current state of the business cycle that we are in. The government wants to delay the reallocation of these resources, which will only delay recovery. It is sad that house prices are down and may still fall to 50%, or even less of their peak value, but the dizzying heights were achieved by the interventions of the Federal Reserve into the capitalist free market.

  However, any attempts to stop the inexorable fall in prices can only fail outright, or should they succeed temporarily, be of such a nature as to have many negative side effects, perhaps going as far as pushing the economy into a period of Japanese style stagflation, or even outright depression. Unfortunately the policy makers and their court economists seem to be intent on following the playbook of the Great Depression and the Japanese stagflation to the "T". For me personally it is like watching a slow motion train wreck, unable to overcome the inertia, impotent to prevent certain and unmistakable calamity. Personal and collective attempts at altering the government response have been rebuffed.

  Published: October 10, 2008 2:39 AM