The answer is pretty simple: "Capitalizm". It doesn't fix all the problems. It fixes them for creating profit, and not every serious problem promises profit when solved.
This distinction has enormous explanatory power for why the market focuses on some things and not others, especially when there is so much low hanging fruit among the "others."
So Coca-Cola is only made because people with money think it's worthwhile?
other problems, such as with providing universal healthcare, ending homelessness, poverty, etc, are inherently non-profitable, so moneyed people won't invest in it, so those problems don't get solved by capitalism.
These are also problems that have no real solution outside of a general economic improvement.
Universal healthcare is a black hole for money. You can literally spend all of the money in the world on it and you'd still be lacking in funding. It's a problem space that expands the more we learn about it requiring even more funding to actually help people. Gene therapies are so expensive that if universal healthcare offered them the governments would go bankrupt. Yet the hope is that as we improve our understanding we can improve the price. Antibiotics cost next to nothing in developed countries. 200 years ago you could've been the richest person on Earth and you still couldn't get them.
Homelessness is a multifaceted problem. If you look at it from the perspective of trying to build more homes to offer it to people then you run into regulation issues. Everybody is in favor of it, as long as it's not in their backyard. On the other hand, if you try to focus on the homeless themselves, then it's largely a lack of self-help issue that ended up spiraling out of control. It's very difficult to help them, because many of them have different issues. The lack of a home is (usually) just a symptom of another issue. This makes it difficult to scale any actual solution.
Dealing with poverty is an interesting issue. When you look at developed countries, then you're almost always dealing with relative poverty. It is impossible to get rid of it, because relative poverty is simply the bottom X% of the population. The US (relative) poverty line is $12,760 a year for a single person. The average income in Poland is $16,052 (~$12,000 after taxes). Are the Polish poor?
There's also absolute poverty. This is set at around $2.2 a day or roughly $500-600 a year. We have been quite successful at improving the conditions for a lot of people in countries with large amounts is abject poverty. China is the poster child of this. China went from 88% of the population in 1981 living in absolute poverty to 0.7% in 2015. One of the main ways this happens is through sweatshops. Contrary to popular belief, sweatshops tend to be better than alternatives for the locals. That's why they work in them. It's not easy, but they've certainly lifted countries out of poverty.
All in all, I don't think the problems you mentioned are solvable by capitalism, because they're not really "solvable" by any economic system (other than abject poverty). These problems largely improve when we improve our economies. Capitalism seems to be the best at that.
In essence, I can answer all of your challenges with this: yes, every problem is multifaceted, but that doesn't change the fact that EVERY problem can be improved by giving people more money and services, and usually the problems can't really be improved without it. And instead of giving more and more profits to the people who happen to already own the capital to invest, we should be using those profits to take care of our people. If the economy improves but wages are stagnant (as they have been for years), then a rising tide doesn't lift all boats, because some people are hoarding all the...tide (bear with me).
I come across this argument about relative poverty sometimes and I just don't get it. There's nothing relative about working 2 jobs, having less than 8 hours literally in the day left for sleep, having no leisure time, living paycheck to paycheck, not being able to afford nutritious food or having time to cook it, not having any power at work, having food or housing insecurity, not being able to afford to live in a good area, etc. I wouldn't say any one of these is the definition of poverty, per se, but my point is that these are objective factors of misery, it has nothing to do with percentile. Saying eliminating poverty is impossible because its defined as the bottom 10% is - sorry to be snarky - Ben Shapiro-level strawmanning and pedantry.
It also implies that millions of Coca Cola's customers have absolutely no impact on the 'demand for new cars' and absolutely no four wheeled vehicles targeted at them because the cost of making cars vastly exceeds their purchasing power, whereas the weight of a few hundred rich people's money creates enough 'demand for business jets' to sustain competing products.
Often our critiques of capitalism are not critiques of capitalism at all. In fact they’re criticisms of monopolies and oligopolies in our modern society, which are antithetic to capitalism.
The American economy is an aristocracy. VCs, the big ones at least, are members of that aristocracy. Many of which are filled with smart good hearted people. But there are some incentives baked into their position of power that we need to be cognizant of.
Edit: “free-market capitalism” would probably have been a better term. Clearly that was not the point I was making.
While this is superficially true, the structure of capitalism arguably makes such concentration of wealth and power inevitable, so the phenomena of monopoly and oligarchy are intrinsic features of capitalism. Not free markets, but capitalism, i.e. the system where individual, private citizens own the means of production.
I'm not sure yet whether I think that capitalism can ever be made work for the people (including the underclass that our society currently consumes as human fuel to keep the status quo). I think it's quite possible that it will foil all attempts to reform it. But we'll see.
I agree that your definition inevitably leads to income inequality.
Either way, I think we agree on the nature of these problems.
The definition relies on the assumption the distribution of capital is sufficiently unequal for workers to need/want to work for capitalists to earn wages and the market sufficiently free for it to be possible for capitalists to hire workers to generate returns. But both the Marxist arguments that capital must inevitably become so concentrated that capitalists won't need to pay workers above subsistence levels [until it leads to revolutions] and the free market economist argument that competition will resolve this [and pesky social democrats will ruin it] are firmly in the 'squishy' parts of the definition.
('Communism', which had competing definitions before Marx started writing about it, has always been a bit squishy...)
The term “free-market capitalism” is used often by politicians and economists, but apparently that term is conflating two distinct concepts by your definition.
That illustrates my point that the term’s meaning has morphed since it’s coining. Even the Wikipedia page’s disagrees with both of us!
> The initial use of the term "capitalism" in its modern sense is attributed to Louis Blanc in 1850
> Marx did not extensively use the form capitalism, but instead capitalist and capitalist mode of production, which appear more than 2,600 times in the trilogy Capital
https://en.m.wikipedia.org/wiki/Capitalism
What a rabbit hole! We’re officially lost in the minutia of term definitions. Time to log off of HN for the weekend haha
The reason is pretty simple - the larger a company gets, the more bureaucratic and inefficient it becomes, until a smaller, nimbler company eats it for lunch.
However, we're not just talking about market dynamics of monopoly, we're talking about concentration of power in a society. Billionaires control enough wealth to influence or even effectively buy politicians, who then make rules that benefit them. They use their money to control media narratives. They hamstring labor power and increase their own leverage without limit. You can't write this off as a consequence of government interference into an otherwise self-regulating system - government interference, and interference by other centers of power, on behalf of the super-rich is an essential feature of concentration of wealth and power in a society.
Isn't it interesting that the huge companies today are newish companies? How does that fit into your theory? What happened to IBM, Sears, RCA, the unstoppable juggernauts of yesteryear?
> You can't write this off as "government interference"
That's exactly what it is. And isn't it ironic that people who want to replace free markets want to replace it with a far more powerful government? Wouldn't that imply far more corruption?
I don't want to replace free markets or have a totally planned economy because I agree with you that excessive power centralization is a problem, including when it goes to the government. I am just saying that the system of capitalism (which, again, doesn't just mean free markets, it means that individual citizens can own essential means of production) has power concentration as an inevitable consequence. Government interference on behalf of the super rich, which leads to more concentration of power, is a consequence of capitalism, not a foil to it.
To be clear, I don't know what the best alternative is. But it looks something like more democratic control and accountability over the essential means of production. I'm not convinced government ownership would always accomplish this. But letting individual citizens own it and use it as leverage to increase their own personal wealth and power, virtually without limit, at the expense of those who depend on it and labor on it, is unacceptable.
Name one that isn't. If your theory is correct, there should be free market monopolies everywhere.
> But letting individual citizens own it and use it as leverage to increase their own personal wealth and power, virtually without limit, at the expense of those who depend on it and labor on it, is unacceptable.
Who do you think sits in power in the government? Individual citizens.
> virtually without limit
Bill Gates, Jeff Bezos, etc., cannot order you arrested. But the rookiest cop can arrest you.
Amazon tried to influence the Seattle City Council election buy funding opposition candidates. This became a campaign issue, and Amazon failed badly at it.
Hilary Clinton outspent Trump 2:1 and still lost the election.
Bloomberg got trounced.
Wealth buying power in America is not nearly as effective as you suggest.
- As I said in my answer (are you reading?), I'm not sure that giving control to government is always the answer. Maybe a syndicalist approach, maybe community ownership, more power in the workplace, more accountability in the community, etc. But the current situation is untenable.
- Don't be pedantic. I didn't literally mean that every wealthy person has every possible power. Further, an example of wealth failing in one case doesn't disprove the 10 cases where it succeeded. For example, yes sometimes people lose in elections even when they outspend their opponents. This has no bearing on the fact that billionaires and their interest groups completely succeed at influencing politicians through lobbying, and even writing legislation for them to push.
I'm going to bow out of this conversation now because I don't feel you are engaging charitably and in good faith. I think you are ideologically determined not to recognize how wealth and power function. I would still have engaged for the sake of argument, but I can't do that with someone who's not showing efforts to represent my argument faithfully and charitably. Bye.
Oligopolies are not monopolies.
> an example of wealth failing in one case doesn't disprove the 10 cases where it succeeded
I gave several examples off the top of my head. There are many more. What wealth does is enable one to get one's message out - it does NOT buy the election. Voters still have to like the message and the messenger.
> completely succeed at
I can point you to any number of huge government spending programs aimed at the not-wealthy. Social Security, for one.
The term for imperfect information is "risk" and pricing risk is very much an integral part of free markets.