[Someone5]

Yes that is true. But you are missing the point, it is terribly inefficient to work that way.
That is like saying digging holes and filling them back up again leads to better shovels and digging methods.

Because it very clearly would do so. And given that such a society has established hole digging as a priority, it would make such developments obviously useful.

Or deciding to create a black hole in a lab, that will also have other tech spin offs, which may or may not be useful to anyone
Whats the point?

If making a black hole was established as a social priority, then obviously developments that lead to "better" (or, at least, more efficiently created) black holes would be useful in their own right.

Companies are in competition with each other, which means they get better and better at doing things, they have to otherwise they will fail (unless the govt is helping them, which doesn't count)

I find it continually fascinating to find capitalists who refuse to believe anything but the idealistic perfect competition model of firm interaction. Really, the evidence shows a remarkable capacity for and tendency towards collusion when it is allowed. The rationale should be obvious enough given the fundamental nature of capitalism; in a system designed to empower the rent-seekers, competition is an inefficiency because the system itself can simply distribute greater plunder to the capitalists through collusion and cooperation.

If the state runs something it almost always costs more and takes way longer than what private industry would manage.

There is absolutely no evidence whatsoever to back up that assertion. But even if so, how would that matter? The state is a capitalist institution as much as any corporation. It serves the capitalist class.

Again, missed the point. If everything is only done half assed with no real requirements from paying customers, it is inconceivable that technology would advance anywhere near as fast as in a consumer driven market.

You're assuming that customers set rational requirements and are capable of judging quality better than the manufacturer. You're relying on an assumption of perfect information, which is not a rational assumption to make when analyzing real economic relationships. If you do software engineering, it should be obvious enough that customers do not necessarily know what is best. They set irrational requirements for software all the time, and introduce an immense amount of inefficiency by changing their requirements after development has already started--thereby requiring the project to start over again.

We don't make things because we ourselves want them, if we did that we would still be living in grass huts fighting for life.

The origins of agriculture are something of a mystery for that very reason; from studies of contemporary hunter-gatherer societies, they performed far less actual work to maintain themselves. They also lived longer and ate better than early agriculturalists (as evidenced by skeletal problems in early agricultural human remains). Why anyone thought agriculture was a good idea is a problem no one has been able to solve. Why would someone think it was a good idea to go toil away for someone else just so you can be malnourished and work a hell of a lot harder? There's no obvious reason for it other than perhaps because one group forced another to do it.

Thats the whole idea behind the division of labour, it is more efficient if we do what we are good at, and do only that. Hence the customers.

It's only efficient if we ignore the consequences of the division of labor. Dividing labor causes a lot of problems as well (like creating inherently alienating work).

That is up to the business to manage, all the companies I have worked for make sure they are not taken for a free ride, and vice versa. Good companies will do this well, bad ones will get weeded out. This creates more "efficiency"

It's not about being taken for a ride; it's a matter of defining objectives. This is perhaps more of a problem for software development than other fields, but it is not uncommon for customers to revise specifications after development work has already started.

But it doesn't drive innovation and quality like private industry does.

It's not a matter of public vs. private there; it's just as true in "private industry" as "public industry." Producers drive more innovation than consumers ever have. Especially if we consider innovations in back-end manufacturing that consumers never see or care about; to use more computer examples, consider the innovations that have been driven by companies looking to consolidate chips to reduce manufacturing costs. A lot of time that consolidation doesn't result in lower costs for the customer, nor any additional features--in short, the customers do not care about it at all, and had no hand in driving it. I would go so far as to say that customer demand is less often the source of innovation than producer preference is. Can you think of very many examples of new technologies that have been developed because consumers went out and demanded it, rather than having that demand being created among consumers by a manufacturer who already developed a product?

In other words, did customer demand create the tablet computer, or did the customer demand for tablet computers only exist because companies developed the product then created the demand? I would suggest to you that more often it is the case that manufacturers develop demand among consumers than consumers demand innovations from manufacturers.

It is unbelievably obvious if you compare say electronics hobbyists to electronics design companies. The difference in quality and innovation is so incredibly vast I can't believe I'm actually debating this point.

What's that supposed to prove? We are not organized to produce quality items in cottage industries; technology has not developed along the lines that would enable high-quality hobby production. If society had structured itself to support such industrial forms, we would simply be better equipped to engage in small-scale personal manufacturing. If half the effort that has been spent creating advanced central manufacturing facilities had instead been spent developing small scale personal manufacturing tools, we would probably have extremely inexpensive CNC machines, 3d prototyping machines, 3d printers, and other such tools commonly available in most household garages. They would probably be as common as, say, power screwdrivers are today--if society had developed along those lines rather than central manufacturing.

Society has made choices, those choices have directed our technological development, and as a society we haven't spent very much time or effort empowering the individual personal laborer. It's not that it's impossible for an individual to produce like twenty people--obviously not, since it's done every day in factories all over the world--it's just that we've developed that technologies in ways that favor control of such equipment by capital rather than control by individuals.

You are totally wrong. "Private ownership of the means of production" and "for creating goods and services for a profit" I think you will find that is probably the main meaning of capitalism.

In what way is the US government not controlled by private interests?

So if the US Govt owns and runs NASA that means it is not privately owned and it is not run for profit and so is not capitalist, in any sense of the word. wtf?

So you would deny that private interests basically control the goals and policies of the US government? Think for a moment on what the word "own" means. I would say that is is largely a synonym for the word "control."

No. They are not, at all. A libertarian world would mean little or no government.

Capitalism can't exist without a central authority granting property privilege, adjudicating property disputes, and enforcing property claims. Call that a "rights management agency" if you wish, it's still a government. A society cannot even have property without a government protecting your "property rights." The alternative--everyone shooting everyone else upon approach--is not by any measure a society.

Pre 1913 America had a significantly smaller government, are you saying they had significantly less capitalism?

A) Your assertion about the "size of government" doesn't really mean very much. It's conservative boilerplate, not much more.
B) Sure, they had a lot less capitalism back then. The guilded age has nothing on the modern age. Back then the capitalists were still having to fight for their control.

Communism is only government and there is zero capitalism there...

Communism is a rather nebulous concept. It means different things for different people; for anarchists it means no governments or capitalists (because they are both two sides of the same system). For orthodox Marxists, it means the stage after the dictatorship of the proletariat, etc. But I'll grant you that for everyone it does mean no capitalists. Whether that also involves governments is very much dependent on the communist in question.

Compared to the inefficiencies, poverty and sheer waste of every example of any other system, its the best humans have ever come up with (not including some hypothetical utopia that can't exist without mandatory lobotomies)

There are many alternatives that are preferential to capitalism; none of them have yet been implemented, but this shouldn't really be a surprise. It took many centuries for the capitalists to develop a workable formula, why shouldn't we expect it to take just as long to develop a working socialism?

I'll point out that you're basically parroting the same arguments made by feudalists centuries ago. "It's the only way society can be rationally organized." "Of course some people deserve to rule over others, how could it be any other way?" and best of all, "No one has come up with a more just or godly society." It's no more true of capitalism than it was of feudalism.

Profit provides the motivation that allows everyone to (in their own self serving) serve the needs of the community. Isn't that great, by serving youself you are actually serving everyone else! Its brilliant!

That's the lie, sure.

[Eran]

There are many alternatives that are preferential to capitalism; none of them have yet been implemented, but this shouldn't really be a surprise.

I picked this sentence to start my response, because it signals ground rules for a conversation I am looking forward to. Someone5 clearly prefers an alternative to "capitalism" (his version - more on that later) that has not yet been implemented.

So do I.

And since we are both advocating a system that is yet to be implemented, we can dispense with historic example and use logic and reasoning to argue the relative merits of our respective systems. Some people look down at the use of logic, but I trust you won't.

To start with, you have a very clear notion of capitalism. This notion is not far removed from the historic understanding of the term, but is very different from what mum, for example, is likely to have in mind when he defends capitalism. To be clear, I have no interest in defending capitalism as you understand it.

The system I would like to propose for your comment is market anarchism, a system in which property rights are well defined and protected, albeit not by a monopoly organisation (i.e. government). Individuals and groups are free to produce economic goods under any form of organisation, whether sole-proprietorship, partnership, co-op, worker-owned syndicate or corporate employment.

I think we can both agree that government works hand-in-hand with business in current developed nations. It would be astonishing, wouldn't it then, if corporations didn't owe much of their economic success and proliferation to that cooperation. Without that cooperation, it stands to reason, corporate economic organisation would be just one of many forms of organisation, and not necessarily the most common one.

While it is true that free market producers tend to want to try and form syndicates and otherwise collude, historic evidence clearly shows that such attempts (absent government assistance) is highly vulnerable to defectors or outside competitors. In other words, we don't need government to protect us from monopolies. We need government to stop assisting monopolies.

I really like your insight into the degree to which capitalists (in your sense - I would call them "crony capitalists") wish to avoid competition. Competition is hard. It means you can never rest. You have to wake up every morning and adopt a paranoid state-of-mind, thinking about what ways your competitors might adopt to steal your customers. No enterprise is ever guaranteed profit, no matter how successful. Profit has to be re-earned every day in the marketplace.


Unfortunately, you misunderstand the term "consumer demand". I don't blame you - it is misleading. It suggests (wrongly) that consumer demand is chronologically and causally prior to production. It isn't. When I use the term, I typically prefer "consumer preference". Consumers rarely demand things, but they always express their preference. Consumers didn't demand an iPad. But once they saw it, they expressed clear preference to having it over many alternatives.

In a free market, successful producers always aim at satisfying consumer preferences. In the process, they might attempt to "create demand". In the free market, unsuccessful producers disappear. Not so, unfortunately, in the less-than-free market of today, not to mention in the public sector, where failure is typically rewarded with more power and budgets (what happened to financial regulatory authorities after their utter failure?).

I won't systematically respond to all your claims. However, I would be amiss if I didn't support mum's apt point regarding profit. In a free market (as opposed to what we have today), profit can only be made by satisfying consumer preferences. In general, one can only profit by benefiting others. The genius of the free market is that it channels unavoidable and ever-present human greed into purely productive channels.

[Someone5]

The system I would like to propose for your comment is market anarchism, a system in which property rights are well defined and protected, albeit not by a monopoly organisation (i.e. government). Individuals and groups are free to produce economic goods under any form of organisation, whether sole-proprietorship, partnership, co-op, worker-owned syndicate or corporate employment.

Property and anarchism cannot coexist. Property is inherently exploitative; it is based on domination and coercion. You cannot have property if you cannot establish and exercise exclusive durable claims to land, resources, or ideas. Exclusive control requires force to prevent unauthorized use; it requires domination and coercion. Property will always create hierarchies; because someone will always be the owner, and that in itself provides a natural foundation for hierarchies.

Market anarchism is a contradiction in terms.

I think we can both agree that government works hand-in-hand with business in current developed nations. It would be astonishing, wouldn't it then, if corporations didn't owe much of their economic success and proliferation to that cooperation. Without that cooperation, it stands to reason, corporate economic organisation would be just one of many forms of organisation, and not necessarily the most common one.

In a society built around the property privilege, it would have to be. Either corporate ownership or sole proprietorships.

While it is true that free market producers tend to want to try and form syndicates and otherwise collude, historic evidence clearly shows that such attempts (absent government assistance) is highly vulnerable to defectors or outside competitors. In other words, we don't need government to protect us from monopolies. We need government to stop assisting monopolies.

Nonsense; absent government assistance they are simply limited to majority control of a market, rather than absolute domination of it by law. Collusion is almost always preferable to defection from a pure profit standpoint. It is always better to exploit the customer half again as much and distribute the loot between two would-be competitors than it is for both of them to enter into a competitive fight over market share.

Defection from a true cartel can't happen without government protection; because the cartel will simply use their combined resources to buy you out and maintain the cooperative relationship.

I really like your insight into the degree to which capitalists (in your sense - I would call them "crony capitalists") wish to avoid competition. Competition is hard. It means you can never rest. You have to wake up every morning and adopt a paranoid state-of-mind, thinking about what ways your competitors might adopt to steal your customers. No enterprise is ever guaranteed profit, no matter how successful. Profit has to be re-earned every day in the marketplace.

Unfortunately, you misunderstand the term "consumer demand". I don't blame you - it is misleading. It suggests (wrongly) that consumer demand is chronologically and causally prior to production. It isn't. When I use the term, I typically prefer "consumer preference". Consumers rarely demand things, but they always express their preference. Consumers didn't demand an iPad. But once they saw it, they expressed clear preference to having it over many alternatives.

You are underestimating the degree to which corporations build demand for their own products. Consumers are expressing a "clear preference" only because Apple has built the perceptions that lead to the preference among the customers. That's the basic function of marketing--creating demand. And it is really the source of most demand for things other than "essentials."

In a free market, successful producers always aim at satisfying consumer preferences. In the process, they might attempt to "create demand". In the free market, unsuccessful producers disappear. Not so, unfortunately, in the less-than-free market of today, not to mention in the public sector, where failure is typically rewarded with more power and budgets (what happened to financial regulatory authorities after their utter failure?).

In a free market, the only demand that ever exists for non-essential goods is artificial demand. Consumer demand is shaped at a very basic level by pervasive marketing. Anyone who's ever watched a computer illiterate trying to buy any sort of gadget can see clearly the role of marketing in creating demand where there was none. Why would anyone ever express a demand for something they don't know how to use? The only motive that makes sense is that someone else (in this case, the capitalist) has convinced them that they need to want it.

I won't systematically respond to all your claims. However, I would be amiss if I didn't support mum's apt point regarding profit. In a free market (as opposed to what we have today), profit can only be made by satisfying consumer preferences. In general, one can only profit by benefiting others. The genius of the free market is that it channels unavoidable and ever-present human greed into purely productive channels.

Your assertions about human nature are unfounded and unsupportable. That said, profit is nothing but economic rent given another name, and in no way benefits others. It is the most base and low form of rent-seeking, worse even than usury.

[Eran]

Property and anarchism cannot coexist.

That's a definitional matter. Anarchism (for me) merely means lack of government, with government defined as a territorial monopoly over the ultimate legitimised use of force. Property is historically prior to governments.

Property is inherently exploitative; it is based on domination and coercion. You cannot have property if you cannot establish and exercise exclusive durable claims to land, resources, or ideas. Exclusive control requires force to prevent unauthorized use; it requires domination and coercion. Property will always create hierarchies; because someone will always be the owner, and that in itself provides a natural foundation for hierarchies.

First, let's set aside Intellectual Property. I (and most market anarchists) oppose it as an artificial scarcity caused by governments.

Second, while exclusive control indeed requires force to prevent unauthorised use, it is impossible to imagine any society (past the hunter-gatherer stage) in which force isn't occasionally used to prevent unauthorised use. Any society requires agriculture. Agriculture requires investment of effort into growing crops, which crops could be damaged by unauthorised use.

Your objection to property, I believe, is based on an intuition regarding property that was built on centuries during which governments used their power to arbitrarily assign property rights, or to back forced acquisition of property. What market anarchists have in mind when speaking of "property" is ownership based on either (1) homesteading of resources that haven't been put to economic use in the past, or (2) peaceful and voluntary transfer of property previously acquired.

By definition, this process of acquiring property is not exploitative. It is peaceful, and conducive to economic development. It naturally rewards people who (1) put the effort and risk of homesteading unused resources, and (2) peacefully cooperate with other people.

absent government assistance they are simply limited to majority control of a market, rather than absolute domination of it by law. Collusion is almost always preferable to defection from a pure profit standpoint.

You are wrong, both based on historic experience and pure logic. Collusion is an agreement to limit supply and raise prices beyond the level at which individual producers maximise their profits. By definition, individual producers stand to increase their profits through defection. If existing producers somehow maintain their agreement, they open a door to new competitors.

Defection from a true cartel can't happen without government protection; because the cartel will simply use their combined resources to buy you out and maintain the cooperative relationship.

That doesn't work. If it is economically profitable to compete with the cartel, the cartel would have to waste all its resources buying up competitors, only to see new one popping up. That cost will quickly wipe any potential gain from limiting production. Whenever production is limited artificially, and prices exceed the cost of production, a profit opportunity exists. Entrepreneurs are alert to such opportunities, continually seeking them out. Governments, even using fairly draconian measures, are unable to root out economically-profitable activities they disapprove of. Without the coercive means available to government, a cartel would stand no hope.

A good historic example is Standard Oil. Despite desperate attempts to buy out competition, new competitors kept popping up. And oil price to the end-user kept going down.

There is no historic example of a cartel, trust or monopoly, unbacked by government decree, which raised prices to consumers.

You are underestimating the degree to which corporations build demand for their own products. Consumers are expressing a "clear preference" only because Apple has built the perceptions that lead to the preference among the customers. That's the basic function of marketing--creating demand. And it is really the source of most demand for things other than "essentials."

It doesn't matter. In a democracy, politicians can just as easily be said to "build demand" for their policies. We all, in these forums, try to "build demand" for our respective positions.

The point is that (1) corporations and others are each free to promote the consumption (or lack of consumption) of whatever it is they wish, and (2) the ultimate choice belongs to the consumer.

And while consumers make mistakes, it is an important truth that people are generally much less likely to make mistakes with respect to their own lives and their own choices than are strangers. Any alternative to free markets substitute strangers (typically government policy-makers and bureaucrats) for consumers in making those decisions. By the decision-makers are just as susceptible to influence as are consumers, except that decision-makers inevitably make their decision based on (1) their personal preferences and interests, and (2) less information than that which is available to end-consumers.

Your assertions about human nature are unfounded and unsupportable.

Which assertions specifically?

That said, profit is nothing but economic rent given another name, and in no way benefits others.

This is where understanding of economics would have come very handy.

Profit doesn't benefit others - it isn't meant to. My point was that profit is typically associated with activities that help others. Take the simplest kind of profit - one unassociated with any "productive" activity. Take trade. A trader buys apples in market A (say for $2.00/lb.) , and then sells them at a higher price in market B (say for $3,00/lb.). He makes a profit without producing anything.

Yet my claim is that he is still helping others. Because if it weren't for the trader's demand for apples in market A, those selling there would have had to sell for a slightly lower price. And if it weren't for the trader's supply of apples to market B, those buying apples in that market would have had to pay a higher price. Hence the trader was able to help both the sellers in market A and the buyers in market B.

In what way is this wrong?