The Fall of Western Civilization

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Capitalism is obsolete. We broke it. Corporations the size of Microsoft or Wal-Mart shouldn't even exist under capitalist theory, and it certainly isn't designed to handle them. Remember, the whole point of capitalism is to keep everything lean: prices down, wages competitive. If you're making enough profit for rapid expansion, that in itself defies capitalist theory. Theoretically, with that kind of profit margin, someone else is supposed to come along and undercut you while paying their workers more and still make a decent (though not as great) profit. Furthermore, when a corporation gets large enough and dominates its market (becomes a monopoly or close to it), it begins to act more like a government than a business in terms of its abilities and effects on the economy. For example, one main argument for capitalism was that of decentralization: that the poor business decisions of individual businesses wouldn't be able to affect the economy the way a poor decision of a controlling government on a large scale might. But we all know from Enron that that's no longer true. I'd go so far as to argue that some corporations could essentially levy taxes in some small way because we're so dependent on them that if they chose to raise their prices a few % we'd have no choice but to all pay a little more. All pay a little more, isn't that what a small tax raise would accomplish as well?

On the flip side, we need SOME institutions on a large scale in order to accomplish many of the things we've accomplished in the past century, but this doesn't take a corporation either. Sure, Microsoft did its part to get us where we are now, but so did NASA. In the end, the real difference between a government and a large corporation, economically, is that the profit a large corporation makes goes primarily to a few rich shareholders, while that which a government makes should be used to help the general population, but usually ends up going to a few rich shareholders who are friends and associates of the president anyway.

f**k "efficiency," these are human beings we are talking about, not machinery. "They are getting payed more then before" is a BS rationalization, everyone should have the right to a living wage, not a wage that makes life just a little less miserable then before. Also, corporate lobbyists often have a hand in writing the laws meant to regulate them and the various regulatory industries are stuffed with corporate cronies from the industries the agencies are supposed to be regulating, economic power is political power, the economically powerful that benefit from the sociopathic behavior of corporations make sure the politicians they own only give the appearance of punishing corporations with fines that do nothing to hurt the bottom line.

Wrong.

Why not? Capitalist theory says nothing on how large corporations should be and capitalism has handled large corporations for over a century now. In fact, every generation has probably talked about some company and whined about it. If this were 30-40 years ago, you would be complaining about car companies being too large and that our capitalist system can't handle it just as JK Galbraith did.

No, it is to keep everything efficient based upon the nature of the market system.

There is not even a single capitalist theory. There are multiple capitalist theories based upon different schools of thought. Technically, entrepreneurship will allow for rapid expansion based upon profit as entrepreneurship is a short run phenomenon reflective in the dynamic nature of the capitalist market. The framework you speak of that doesn't have massive expansionary profits ends up being long-run models rather than the short run models.

Um... yes, in the long run that is what is supposed to happen assuming all else is equal and that the organization can be done more efficiently. This is an oversimplification of course as monopolies and other organizations that have higher than average profit are still theoretically profitable.

Not precisely no. It still operates based upon profit maximization and still must act competitively in order to maintain its advantage. In fact, a few monopolies have ended up making more efficient organizations because of the drive to maintain the competitive edge and economist Joseph Schumpeter actually wrote positively of the economic actions of an aluminum monopoly in increasing efficiency. Not only that, but these organizations are still not saddled with government bureaucratic demands, or government imposed restrictions, or even government subsidies protecting them entirely from the market.

Yeah, completely false. Enron died while a government would not. What Enron did was it diminished our confidence in the economy at a time when our confidence was already low, however, Enron does not compare to the economic disaster seen as the entire Soviet Union.

If they could then why don't they? They are profit maximizers. Not only that, but why do they insist on occasionally cutting prices and other competitive measures? Finally, why do some companies still die if we are past the point of companies dying. I mean, I suppose we can say that Target and Wal-mart are killing all of the dying companies, but both of those companies base their actions upon being incredibly competitive and even then they don't always succeed.


Sure it does, it takes a market mechanism and market mechanisms haven't mysteriously died at all.

Nope, there are more differences than that and if you don't think so then I don't think you have been studying your capitalist theory enough. Btw, who have you even been studying for your capitalist theory? Most capitalist theorists as you would say, have accounted for these arguments and argued against them. There is still a major difference and the difference is profit-seeking. Governments don't do that but corporations do this. According to "capitalist theory", profit seeking pushes corporations to innovate in order to maintain the highest profits they can. Governments don't operate under this need and thus can be more inefficient. Not only that but governments can't be theoretically undercut but corporations must worry about this at least a little, and thus even a monopolist cannot get too sloppy to maintain that monopoly.

Yes, and that is why they have the right to choose. If they weren't machinery then they would not be a part of the decision making process for efficiency, even though in their less developed economy this part may be minor. With time their economy should develop though and improve situations for most people there, so I am not worried until the growth stops. Efficiency is a very important concern though, as efficiency leads to better lives for our human beings in the long run and even better lives in the short run than inefficiency will often lead to.

No, it is completely legitimate. Prove that everyone should have the right to a living wage. Frankly, I think that having free labor markets is a pretty good thing for them to have and even remember reading an article in Yahoo news a year back saying that the Chinese workers were even willing to help break the laws because of the benefits they received from freer labor markets(no more mandated overtime for these workers meant that they could get more hours in and they ended up getting more money for that).

And yet so few people on the left really wise up to this. I find it sort of funny. Really, I think that many of the regulations imposed on corporations are nonsensical already and because of that, I think we should really try to have less government and less laws and make the ones we have count.... either that or I am looking into an anarchist system. Really though, no system will get the laws down perfectly either and guess what? Every special interest groups does this, both on the right and the left, and I don't see any system stopping this considering that a major part of this also involves bad information of the public.

Efficient based on / in terms of what?



There's nothing unique about that. Things can be made efficient without having to be based on profit maximization. In fact, having government interference in this matter could be used to push towards maximizing utility to everyone instead of profits, which often don't accurately represent total utility. Take for instance the tragedy of the commons, or any other scenario in which a corporation could incur "costs" that are not reflected in its profit in any way at all. The only thing profit maximization really accomplishes is to provide motivation for hard work. Now granted, it's possible that some people won't work quite as hard as if they stood to personally share in the profits, but in most companies, most workers already don't, or do very little. All you really need is for people to be held accountable for their work.



I don't study economic theory, I'm in research. So I suppose you're at an advantage on most economic subjects, but I can tell you this: innovations occur all the time outside of the business world and capitalist system. In fact, at the early stages the market doesn't seem to want much to do at all with innovations, even those that it ends up picking up later and making an unthinkable fortune on. Take computers for instance. They're based on nearly a century of computability theory that came before the market wanted anything to do with them, and if the market alone was responsible for new inventions, computers wouldn't exist, due to the fact that there was absolutely no forseeable path from early computability theory to profit. Innovations occur because individuals have an interest in some area, period. People don't take jobs in cutting-edge research for the money; for working that hard they could get paid better doing something else. And at least in the past century, it seems that investors rather than inventors make the big profits from innovations anyway. And last but not least, corporations seem to be putting more emphasis on advertising than development. They don't have to actually make a better product, just convince people they have a better product. So in the end, innovation doesn't even necessarily pay off for a company as much as a good commercial.

The demands of the market which are based upon the subjective desires of participants.


No, actually they do. Without profit maximization and market mechanisms we lack the ability to generate information to meet demands. This all falls into the socialist calculation debate.

You are right, profits are not always going to maximize utility, however, the issue is whether or not government action can improve market circumstances and how effectively it can do so, however, we still are working within the framework of the market.

The tragedy of the commons is typically a matter of poorly defined property rights or poorly defined externality laws. It really is not a massive problem in a society with well defined property rights and well defined externality laws.

Well, not only that but motivation for innovation and risk, as well as proper pricing mechanisms and coordination of the entire economic structure. To ignore that is to ignore the importance of price theory.

Many workers are also expendable. In jobs where the workers are more valued they usually will share a little in the profits if only in some morale booster held by the employer. Not only that, but the motivation still is important for managers in running their business efficiently as even if you are controlling part of the company you still control the right part of it.


Innovations occur everywhere. I don't think anyone denies it, however, that does not have much to do with the organization of society to take advantage of these innovations.

Markets are excellent at applications and find it rational to base their efforts upon improving that which exists. They, by nature, focus upon developments that are going to give them the highest expected gain.

Can you determine what the market would do if things were different? People cannot perfectly forecast the future and everyone knows it. Also, it would not surprise me if your notion of "the market" does not take into account the subjective elements of a market society, which also are a part of the innovation process in ways that most people ignore or consider "nonmarket". The issue you bring up is the same type of issue found from those who want benevolent dictatorship, certainly some innovations would come faster in social relations, but there is also a chance of stifling innovation as seen with the Soviet love affair with Lysenkoism.

Yes, I agree.

That doesn't mean that their actions are completely money neutral. I tend to doubt that innovators completely ignore trade offs and are only driven by innovation.

Ok? Who provides the capital for the inventors to work with? Who makes the invention usable to the common man?

No, they actually do. Advertisement does help companies stay in the minds of those who wish to purchase, but if they don't create anything new then their copyrights die, and new, more innovative companies take over. I think you end up making a fallacy in terms of expenditures. Just because more money is spent in one area does not make it more valuable from the standpoint of use, just take diamonds and water. We may spend a lot of money on diamonds but they aren't more essential than water. Really though, this issue will vary based upon the industry and the regulations of that industry. As Odin pointed out, industries are overregulated in ways that prevent effective competition, which can push for inefficient behaviors. One of the better examples of this would probably be the pharmaceutical industry which has many limitations on the drugs it can effectively create due to overregulation by the FDA, so of course the efforts on drugs made will go down.