If Capitalism is Immoral what System of Economics is Moral?

[Ser Scot A Ellison]

Shryke,

Irrelevant in the sense that once the business makes a profit the owners may do with that profit whatever they want. As long as creditors get paid it's theirs to do with as they please.

[Lord Mord]

Ser Scot,

Brick,

No, it would not be immoral. It's their stuff to do with as they please. They are free to choose the business model that works for them.

Okay. So artificial interference in natural markets is not immoral. So, socialized programs are not in of themselves immoral either, is that correct?

[Ser Scot A Ellison]

Brick,

Yes. I think socalism is amoral as well. It's goals can be moral or immoral.

[tzanth]

Shryke,

Irrelevant in the sense that once the business makes a profit the owners may do with that profit whatever they want. As long as creditors get paid it's theirs to do with as they please.

If the individual chooses to share his profits that's all well and good, but it nothing to do with the morality of capitalism as a system. In fact, the individual who shares his profits is not being very capitalistic at all.

I agree with you that no economic system can be inherently moral or immoral; there is no such thing as inherent morality. The point is that when judged by a moral system that holds selfishness to be an inherent bad, then capitalism would be seen as immoral under that system. Of course, if your POV is a system which sees selfishness as inherently good (say objectivism) then capitalism would be perceived as moral.

[Ser Scot A Ellison]

Tzanth,

The owner absolutely is a captalist. The owner made, marketed, and sold a product on the private market. What the owner chooses to do with the profits he/she makes is up to him or her.

[Stalker]

Reinvesting profit back into the business instead of paying out dividends doesn't make it less profitable.

So some kind passerby will pay out the dividends instead in your model?

I get the impression that you're both trying to have your cake and eat it.

[ljkeane]

Yeah, I thought so.

So efficiency then is all about maximizing output and not about actual outcomes.

Of course it is about maximising output, that's the only objective measure of efficiency in an economy. The goal of communist economies is also to maximise output. There might be debate about how that ouput is to be distributed but I think it's pretty clear that the goal of pretty much every economy is to maximise output.

[felice]

Maximising the rate of output with respect to the input of effort and raw materials, perhaps. Maximising total output, not so much. And maximising leisure time, good working conditions, protecting the environment, etc are other goals a sane economic system should take into account. It's better to make fewer better quality, long lasting units than more shoddy units that will need to be replaced regularly.

[Ser Scot A Ellison]

Felice,

And what are environmental conditions like in formerly communist states or current communist states like North Korea?

[felice]

Those states are virtually nothing like any kind of socialist system I'd support, and I doubt there's anyone participating in this thread who does support them.

[Ser Scot A Ellison]

Felice,

I'm not saying you or anyone here would support those regimes. That said they are the only practical examples we have of socalism in action. Their environmental records are abominable.

[arteliad]

. In a system in which all goods and services are shared equally, what would be the point of competing widget makers? No one would start a widget making company when widgets are already being provided to those in need, knowing that he would get nothing out of it.

What about people that think widgets are really cool. They use widgets a lot, and come up with a bunch of ways to make widgets even better and more useful. So they decided that they want to go into the widget making business so that these super widgets will come into existence and other people can use them.

Honestly, I've always found the argument that profit must be the primary motivation of entrepreneurs kind of silly. Don't most people (that have the means) pick their profession based on their interests. I certainly appreciate doctors who just like helping people a lot more than the ones who went into the trade because it makes a lot of money.

So, in a system which has eliminated both the risk and reward aspect of making new things, it seems like the people who end up being the creators are the people for whom it's a passion. And that just seems to make more sense.

[TerraPrime]

Re: Tormund

The question was, is this more efficient than the price system? I submit that it is not, and the evidence of history is behind me.

I think central planning as a political system for sure does not have successful historical data to support it. However, I think certain large corporations run in a very similar model, where planning is centralized and individual units do not have the autonomy to run its own ideas. Imagine, say, Ford. The department that design and make car doors found a new way of manufacturing that will improve yield and reduce waste. But to make the new door, the frame for the car would have to be re-tooled and the electricals need to be redone. So does the door department get to implement this, or do you think it'll have to wait for some sort of "central" planning committee to approve and implement? Which one would be more efficient?

Yes, it's argument by analogy, so the analogy will not be perfect. My point is that I am not getting a lot of argument against the scenario I proposed. It certainly isn't an outrageous or unrealistic scenario, imo. If we can assume rational consumer behaviors and expect mysterious self-correcting market forces, I think it's only fair to assume a rational central planning committee. The examples used to discredit central planning almost always rely on the assumption the central planning committee is out of touch with the need and resources of the situation. I just don't see why that must be a valid assumption. And I also see that if we put a rational committee in place that can use reasonable tools to assess need and demand, that they can act just as well as the market forces.

Re: Ser Scot

Their environmental records are abominable.

So is the record of almost every capitalistic country, until 20 or so years ago. I suggest that comparing the pollution output of, say, China of today to the U.S. of today is not entirely valid. It'd be more appropriate to compare it to China of today to the U.S. of the late 70s, since that's about where the two countries of rate of industrialization is comparable.

I'll also point out that today, as per capita consumption of energy (i.e. carbon footprint), the U.S. is still 4 times higher than that of China.

[felice]

I'm not saying you or anyone here would support those regimes. That said they are the only practical examples we have of socalism in action.

A couple of hundred years ago, the only practical examples we had of medical treatment involved large numbers of leeches. Should we have concluded that useful medicine was therefore impossible?

[Dharma]

People who need plywood the most are precisely the people who can afford to pay the most for it. Why? Because people who live on or near the beach are all wealthy people. The example I used is perfect, but only for reasonable, intelligent people. As you've shown, it isn't idiot proof.

The example is rigged. Of course rich people who are conveniently allocated in your example as those in the most dangerous position will be the best able to afford the protection that they justly deserve. That isn't a defence of capitalism, its a picture of a dream scenario where the inherent defaults of the system happen not to apply. A similiar but much better example would be HIV medicine in Africa. In a scenario (which probably isn't totally unrealistic) where the poorest people are those that need the medicine the most how is it exactly that capitalism ensures that they get what they deserve instead of the medicine going to people who have a lesser need for it but who happen to have the wealth to buy it? And how then is capitalism the most just system?

Yes, to a large extent morals are personal ideals. Which, in a system like captialism which makes no moral representations, means that personal morals are what are applied to people working in captialist economies.

This simply isn't true. Capital maximization is precisely the main intrinsic feature and aim of capitalism, and as such personal morals are corrupted for the benefit of money. Capitalism is inherently immoral, as is any system where justice is not the goal.

In the capitalist scenario you play out, you have to convince your investors that people will buy your widgets, hence justifying their investment. You will then see the price system dictate how many widgets you should make, of what quality, and for what amount to sell them.

In the communist scenario, certainly the decision by committee you present seems similar, it is directly afterward that if falls apart. How many widgets should they make? No one is going to buy them, they are going to be distributed to the people, supposedly based on need. What quality of widget should it be? Where should the widget factory be located? These are answers your committee has to guess at, and will often as not be wrong.

The aim of capitalism is to maximize capital, the products they inevitably make will be of inferior quality so that the consumers will soon have to replace them. They will be dangerous to the environment, as using cheaper hazardous materials will save costs. Eventually the products will turn to waste which will not be re-used, as there is further profit in selling this waste to poor countries who then become dumping grounds for rich countries.

In a communist scenario the product would be of the best sustainable re-usable material, built to last as long as possible. This would save the need of having to plunder the earth to produce unneccesary products. The amount of products made will depend on the purpose; if it is vitally important widget, such as a vaccine, then these will be made available to everyone. If it is a luxury item then it will be made available to all who request it. Via, for example, the internet.

Or why not at least assume it might work like that?

I find it unconvincing when your example of a communist comitte is apparently a collective of lackwits unable to make logical and moral assumptions based on whats good for the people, nor apparently able to compute simple logistics or math problems. I can't understand why fictional capitalist actors should have the benefit of the doubt when it comes to general sanity when communist leaders tend to be made out as if they were dressed in motley and juggled geese for its recreational value.

There is a reason why extremes generally don't work well, but if we are debating the inherent morality of a given system, it seems like idealized systems are what we should be judging.

If people would listen to this advice there would be a deal less confusion in this thread. To discuss the morals of economical and political systems it is first necessary to distinguish the overall moral aim of the system. These can then be compared if we look at ideal versions, and logical conclusions should then show which system is "best". It really shouldn't be that hard.

__

Efficiancy is whatever best enables you to reach your goal. If capital maximization is your goal then efficiancy dictates that we fuck over the world as we have done. I don't believe that communism is an ideal system, nor even the best available system. I will say that I think it has the potential to be alot better than capitalism though, and that the oft touted argument that all communists countries have failed, all though it might be true, doesn't really mean shit as all capitalist countries have failed monumentally at providing anything connected with a coherent moral system. Profit maximization has lead the world to this crippled dying state the earth is in today.

[tzanth]

Efficiancy is whatever best enables you to reach your goal. If capital maximization is your goal then efficiancy dictates that we fuck over the world as we have done. I don't believe that communism is an ideal system, nor even the best available system. I will say that I think it has the potential to be alot better than capitalism though, and that the oft touted argument that all communists countries have failed, all though it might be true, doesn't really mean shit as all capitalist countries have failed monumentally at providing anything connected with a coherent moral system. Profit maximization has lead the world to this crippled dying state the earth is in today.

Excellent post

[Mentat]

The examples used to discredit central planning almost always rely on the assumption the central planning committee is out of touch with the need and resources of the situation. I just don't see why that must be a valid assumption. And I also see that if we put a rational committee in place that can use reasonable tools to assess need and demand, that they can act just as well as the market forces.

While I'm no expert, I think the problem is that the information they'd get would be flawed. Tim Harford expresses it saying that when you spend a dollar on a cup of coffee that unequivocally means that you'd rather have a cup of coffee than keep a dollar in your pocket (which seems fair enough as far as assumptions go). Now, if there was someone giving out free cups of coffee to promote their new coffee business, you might feel more inclined to just pick one up, even if you wouldn't pay a dollar for it.

This is why, what you're ready to pay for is a very good indicator of what you want and (if you're rational) what you need.

I think the fact that certain basic commodities (which would include food, shelter, education and healthcare) should be made available to everyone is not incompatible with this. Once the basic is available it becomes increasingly difficult to determine who needs what without a capitalist economy, though. Think colour TVs. Most everyone would want one, with as big a screen and as high a definition as possible. It wouldn't really be fair to give Joe A a big TV and Joe B a small one, so you'd just produce lots of TVs of the same model and give one to every citizen. This may be fair, but it leads to serious technological stagnation and underdevelopment (if that's a word...) through lack of competition. If you actually have to spend money on a TV then we get a much better idea of who wants what. Some people will pay lots of money for a big TV because they really like watching TV, and others will buy smaller TVs and spend their money on other things they like better.

Thus capitalism is much better at allocating resources in an efficient way in theory. Of course in practice people who like watching the TV a lot might not be able to afford a nice one and people who have lots of money might be able to buy dozens of TVs and not really watch them at all. The fact that resources are very unequally distributed is, as many have pointed out, very unfair. Capitalism doesn't do well at all at creating an equalitarian society. It prizes a lot of things, some of them fair (people who work hard) but some of them very unfair (people who are born into wealthy families or in wealthy parts of the world).

What capitalism does very well is provide an incentive for people to earn money, so they can buy fancy colour TVs and stuff. So people study a lot, put in a lot of overtime, try to be the best at what they do, etc. They try to earn money, because money gives access to social status and the endless amount of material commodities capitalist societies produce. There's really no upper limit to what you can buy. In an equalitarian society you need to find an incentive to make people work more than the laziest, most ineffective sod that works and gets payed. Some people will incentive themselves because they're professional or they love their job, or something, but that definitely won't be a majority.

Capitalism also does something very well, which is to feed off its own success. People who make it in capitalism will also generate wealth for others as they create jobs within their succesful companies and buy lots of fancy stuff that other people can produce and sell.

What a mixed system should do is redistribute wealth and create economic incentives for people to do things we as a society consider positive (like protect the environment). Tim Harford argues that a capitalist society can actually do this very well if it sets its mind to it.

[Shryke]

Tim Harford argues that a capitalist society can actually do this very well if it sets its mind to it.

And how would that be?

[Mentat]

And how would that be?

For instance, consider making a screw in an enviromentaly friendly way costs 1,5 dollars and doing it in a way that is polluting costs only 1 dollar. Left to their own resorts companies will choose to produce screws and pollute so they can offer cheaper screws and out-sell their competitors. Now, if you offer an economic incentive (in the form of a 55 cents tax rebate per screw to companies who produce them in an enviromentaly friendly way, or a 55 cents fine per screw to those who do it in a polluting way) suddendly the economicaly rational decision for those companies is to be environmentaly friendly. Capitalism would force them to stop polluting or have a competitive disadvantage over enviromentaly friendly companies.

Of course, many governments would rather screw the environment (don't miss the clever pun!) and have a more efficient industry, but this would be equally true in a communist regime.

[Shryke]

For instance, consider making a screw in an enviromentaly friendly way costs 1,5 dollars and doing it in a way that is polluting costs only 1 dollar. Left to their own resorts companies will choose to produce screws and pollute so they can offer cheaper screws and out-sell their competitors. Now, if you offer an economic incentive (in the form of a 55 cents tax rebate per screw to companies who produce them in an enviromentaly friendly way, or a 55 cents fine per screw to those who do it in a polluting way) suddendly the economicaly rational decision for those companies is to be environmentaly friendly. Capitalism would force them to stop polluting or have a competitive disadvantage over enviromentaly friendly companies.

Of course, many governments would rather screw the environment (don't miss the clever pun!) and have a more efficient industry, but this would be equally true in a communist regime.

Isn't that just an example of how a mixed system works though?