Overcoming Bias: ‘The Profit’ Socialism Challenge
overcomingbias.com
overcomingbias.com
And, what is the "value" we are increasing? Maybe I want to run a shop that enables my local community members to not have to travel to the next town over for sanitary items - even if they are bulky and don't make a huge profit. Maybe what I value is seeing kids come into my store and purchasing that one icy-pole they like, that I've stocked for years.
Or maybe wanting just a few more dollars, is the only way.
I grew up under socialism and wanted to mention that author "heard" very, very wrong. Under socialism, the Party bosses will decide who will be the managers. The person's qualifications and achievements will be largely taken into consideration, together with their loyalty to the Party, who their parents are, friends in high places who vouched for them, favors that need to be returned, etc... Not that much different from the capitalism.
The process author describes, is what happens when you are thinking to become a socialist society. Everything looks fantastic then. But actual socialism comes with removal of democratic safeguards and somewhat totalitarian government (how else would you confiscate private property from citizens?).
Once the new, socialist, management is in place, they quickly realize that it's nice to be at the top. Next, they turn their attention to the authors like this (who threaten their permanent place at the top) and quickly "dispose" of them. There is a sweet irony in this process, but it is of little consolation for the rest of the population, who will suffer for the next 70 yrs until the country goes back to the capitalism.
I'm not denying your experience, there were lots of terrible regimes calling themselves socialist, but it's wrong to generalize from that.
1. Brutal civil war with lots of people dead and country spitting apart.
2. All individual sub-countries going back to the capitalist system.
All those countries have a lower standard of living now than they did before the breakup of Yugoslavia.
But that's not really engaging with the concepts of capitalism anymore. Sometimes that's perfectly fine. But it's a little lazy to fall back on instead of defending the merits of capitalism as an ideology.
But I think what people do not understand is the Socialism is a totalitarian society to begin with. You can't have one without the other.
All of our leaders were "democratically" elected. We have one choice at the ballot and you can vote Yes or No. You place your "secret" ballot (filled out in a closed booth!) into a separate "Yes" box or "No" box in full public view of election officials, who just signed you in and have pen and paper in their hands. Our leaders enjoyed an overwhelming public support as a result. This is Socialism.
You have the grotesquely evil option and the controlled opposition getting voted in on the platform of not being grotesquely evil. Neither of them gets anything useful done. Meanwhile what little choice is left is getting undermined by gerrymandering and voter suppression.
Yay capitalist democracy?
Now, you could argue that, per this definition, no socialist society is possible. But that's not the argument you're making. You're arguing that what socialists actually want, despite whatever they say, is Soviet-style totalitarianism, because the USSR called itself socialist. Which is not a sound argument.
> All of our leaders were "democratically" elected. We have one choice at the ballot and you can vote Yes or No. You place your "secret" ballot (filled out in a closed booth!) into a separate "Yes" box or "No" box in full public view of election officials, who just signed you in and have pen and paper in their hands. Our leaders enjoyed an overwhelming public support as a result. This is Socialism.
That's not socialism. That's authoritarianism. Look in any dictionary — you won't find any of them say that sham elections are a component of socialism.
Of course, you can make the argument that socialist societies are necessarily authoritarian, but you're not. You're just pointing at an authoritarian society that called itself socialist (and which, incidentally, also called itself a democracy despite not being one) and saying "this is definitionally socialism, and socialism necessarily entails everything we see here."
Regardless of what you actually think of socialism, that's not a sound logical argument.
Bingo.
At a macro level ideology has little to nothing to do with policy decisions compared to protecting the power of those who are already empowered/priveleged.
... which is par for the course given human history really.
One's loyalty to the Party is not often taken into consideration under capitalism.
The flip side is a hard budget constraint leaves resources idle — unemployment. So you get a different kind of inefficiency. Mixed economies direct which inefficiencies they can live with based on actual human needs.
Huh? It's competence he's impressed with. Capitalism ain't got a thing to do with it.
You can have incompetent buffoons hold power in capitalist systems, you can have incompetent buffoons hold power in socialist systems. Feel free to add other political systems, it's competence and alignment among members that matters, nothing else.
You know how you are impressed with a family that gets along and does good things for the community? It's not capitalism, it's competence and alignment.
Repeat after me, competence, alignment.
If people understand this much, politics will fix itself - you don't need to spend any time worrying about the boring details or fill your head with social 'science' (it is not science, it is bullshit).
The first step is to get all workers together to explain their co-ownership status. They need to figure out a new set of governance rules. Working at the firm is ownership of a share of the firm; the share is a vote and an equal claim to profit.
The second step is to ask which goods they are making that benefit the community, and in what ways? If they are making nothing useful, it's time to figure out what can be made with minimal changes to the equipment and materials available.
Now that they know what they are making and how they are governing themselves, they need to have new operating rules. How do they assess the need for new co-workers? How do they assess current productivity? What non-production jobs are necessary, and which ones are largely about enforcing rules that no longer apply?
Then comes the long haul of self-assessment and discussion with the community: are these the right goods? Are they being produced both efficiently and humanely? What changes need to be made? Capitalist firms usually rely on a triplet of marketing, sales-people and consulting. Marketing is a mix of research and pushing opinions; sales tends to be overly-optimistic; many companies don't value feedback from their consultants.
It should come as no surprise that cooperative ventures have more degrees of freedom than capitalism's traditional central-control and fiefdoms; more decision have to be made, and this can be slower.
If he won't tell us his problems with those explanations, how could someone address them?
Apart from that, the rest of the article is just a description of a TV show, the challenge itself, and praise for capitalism. Very shallow IMO.
It probably wouldn't. So what? Is the argument here really "an economic system is only viable if it can accommodate CNBC's The Profit?" A society with a different economic system would have different structures in place for reforming failing businesses. For instance — off the top of my head — conditional grant or loan programs that oblige the recipient to seek professional management counselling, perhaps. They might work better, or they might work worse. But they wouldn't be The Profit.
That said, I don't think that this sort of enterprise reform happens much under capitalism, either. Sure, it happens on one reality TV show, but that's not a real data point. Consider this claim made in the article:
> Another lesson from The Profit is that firm problems are personal problems. The son who can’t step out from the shadow of the father and the father who can’t let go. The two brothers who haven’t gotten over the death of their father and the problems this creates in the firm they have inherited. The siblings who are still fighting to get their parent’s attention.
This is reality TV! The episode where the problem arose from zoning laws or product/market fit didn't get produced. You can't draw conclusions from something which is designed primarily to be dramatic and entertaining, rather than to provide a realistic survey of the problems faced by small businesses. If this kind of investment were especially profitable, lots of people would be doing it, and we'd be able to point at the statistical impact it has on small businesses instead of appealing to a TV narrative about it.
Capitalism vs socialism is a debate that hinges on specifics, not generalities. Are we building a library or a yacht? Socialism works really well for one of those and not the other. Anybody who waxes rhetorical about why one is better than the other in airy abstract terms is pushing an agenda.
It would be fun to take on the challenge of converting the author to socialism, but I'm not sure if the author is making the call at the end of the article in good faith.
Related to what I quoted-- many, perhaps the majority, of reality shows don't rely on offers of capital injections to improve the social problems that plague business owners. Gordon Ramsey usually breaks through because he's loudly yelling his credentials at some stubborn restaurant owner. Or the bar rescue guy is yelling to the entire staff that the bartenders were stealing drinks to the tune of tens of thousands of dollars (as well as yelling his credentials to them). I mean they obviously tie in ads for various products that they give away to the owners, but a) that's never central to the business and b) I don't think they do that on every single show like that.
Human credibility and peer pressure exist in a socialist setting. That in no way is an argument for socialism, but it is at least an argument that one of the author's premises is probably mistaken-- i.e., that the guru needs capital in order to convince a failing owner to turn their business around.
So, would the author care to refine the argument? If so I'd be willing to take the challenge further.
Only religions need converting. The rest should use logic-based arguments.
Conversion talk springs up only when there is a lack of logic or rationality.
wikiepdia is a non-capitalistic entity that seems to work pretty well.
a lot of insurance companies are organized under mutual companies which are "owned" by the members.
I'm curious to see if any crypto utility tokens work out on any kind of scale.
I guess the premise here is that “capitalism better because competent managers rarer than incompetent managers” and “incentives of money alone are better than incentives that include dysfunctional personal relationships”.
Since “socialism” seems ill-defined (or has several different definitions), seems difficult to say whether it would provide better outcomes. Authoritarian “people’s republic of X”-style didn’t provide good outcomes. Seems like that was due to authoritarian politics getting in the way of actual business.
I haven’t seen the show, but why would workers who own a stake in the viability of the company voting on management have not worked? If track records of management outcomes were available like sports statistics, there’d be something better than rhetoric to guide voting.
Are you arguing that the rapid decline in poverty in China due to capitalism is a bad thing?
There are plenty of businesses that run on a more socialist model even within capitalist countries. They are owner operated and share profit amongst the cooperative, are often successful and have motivated employees who work longer tenures than your average employee at a company where they don't see any share of the profit for their hard work.
I believe the idea behind capitalism is exchanging value for value (private property and the ability to exchange it).
Someone sitting back and skimming a tax off the top of others property, without providing value, doesn’t seem to be compatible with the philosophy.
Except, you know, China.
They still maintain the party dictatorship.
Really what matters for dominance is a disciplined party apparatus that seizes power in some kind of coup or revolution and then rules the country with an iron fist.
The party may use a justification of envy -- appealing to people's anger that others have more than they do -- or it may use religion, or moral arguments, or national pride arguments. But those are all instrumental to the underlying aim of power.
Once you are in power, you can impose capitalism or communism or some mix. If communism doesn't work, you can discard it and look for something better.
It's interesting that many on the left just dropped working class issues like a used shirt and refocused on race with extreme ease. For me personally, that's how I distinguish between a group that wants power as opposed to a group that is advocating for some policy profile. If they can switch out the policy profile and replace it with something different, then they were never that interested in policy to begin with.
Let's be clear here -- regardless what you think of the Chinese government, they are far from a "capitalist economic model". Many major industries are nationalized, the state plays an enormous role in the economy. 60% of their economy by market cap is state-owned. It isn't Soviet-style or Mao-era socialism, but it is still a very different system than western capitalism. It's similar to the NEP era in the USSR (1921-1928)
Are you referring to Mao?
You can't just assume the existence of capital. It's not an exogenous variable.
I recommend Sydney Homer's A History of Interest Rates in which he traces interest rates from neolithic period up to the 20th Century. If you want to know what interest rates were charged in the time of ancient Egypt, or early African societies, or Native American tribes, or whatever happened to those French rentes, then this is the book for you.
Here are some excerpts:
- - - - - -
Paleolithic man went out to find his food. Neolithic man produced his own food through agriculture and animal culture. His capital took the form of seeds, improved tools, and especially herds of animals. Capital accumulation led to a great increase in population and the opening up of vast new areas in Asia and Europe. Such capital permitted the further accumulation of possessions, the support of chieftains, and the building of cities.
Cattle breeding has supplied us with many financial terms used in later money economies. For example, there is our own word capital and our term pecuniary, from pecus, meaning a “flock” in Latin. Sumerians used the word mas for calves and for interest. The Egyptian term ms, meaning interest, is derived from the verb msj, which means “to give birth.” Early Greeks, in fact, valued their precious metals in terms of cattle.
[...]
In Namaland, in Southwest Africa, cattle and beads were the original currencies. Debts were incurred in cattle (no rates quoted), and the difficulty of repayment often led to cattle raids into neighboring states.
[...]
In the French Sudan cattle were used until recently as currency for large transactions. Cattle loans were granted free of interest, but if a cow which was lent had a calf, the calf and the cow was claimed by the creditor.
Similarly, in Uganda and French Equatorial Africa cattle and sheep were the bases of credit. In the former the creditor expected every third new birth as interest.
In Northern Siberia, at least until recently, domesticated reindeer served as money. Loans were granted in reindeer. Among the Kirghiz of Siberia, horses and sheep served as money and were loaned out. The usual interest for such loans was 100%.
- - - - - -
Homer, Sidney; Sylla, Richard. A History of Interest Rates (Wiley Finance) (p. 53-58). Wiley. Kindle Edition.
Russia and China were not developed countries prior to communism. They didn't have what we would consider the rule of unarbitrary law.
Marx and Engels saw socialism as the next step a society would move into after capitalism. They predicted this had to rest on the foundation of a society which had already experienced it's 'bourgeois revolution', meaning power had to leave the aristocracy and be in the hands of the capital owning class.
They saw democracy as a necessary step for a society to progress to socialism. There is no great examples of this in the 20th century. If you read even a little Marx, how could you ever expect the kind of society he describes without first having democracy? Socialism is based on one concept: democracy in the work place. If democracy does not exist in the first place, the endeavor will always be doomed.
If we're not there yet, what do we do when we are?
To me socialism is just an inevitability. We will eventually reach post-scarcity. I think if we can examine the current system and find so many ethical problems... It's worth asking ourselves what we could do to get to that ideal star trek society faster.
I could easily cite Chile, Guatemala, Nicaragua, EL Salvador, Argentina, Bolivia, Paraguay, and countless other 20th century totalitarian regimes as instances where "capitalist experiments were doomed by greed and sociopathy." Very easily, given that these regimes were backed by American capitalist business interests. But realistically? When you're strong enough and ruthless enough to take over an entire country, you're probably more interested in power than in ideology, one way or another.
(Yes, I will ignore the difference between oligopoly and monopoly because it does not matter for the point I am making.)
For those corporations being efficient does not matter as much as playing their market advantages right. That is why FAANG can pay tech workers ridiculously high wages. That is why Oracle cares more about its law department than its tech department.
They reality is, you can't build the next Google. There is no way to build a search engine that would be able to compete with it, that would require huge capital. In fact for most start ups the the end game it to be bought by one of the monopolists. Going from your parents garage to international tech company is not realistic anymore, the wild west era of tech is over.
So what is the solution? One might think splitting up the big monopolist and restore the good old free market but honestly yes that might help short term but the reality is, our world is more complex than the 19th century.
Providing a general purpose search engine for the web does require a certain concentration of capital. A social network is only useful if it is used by a critical mass of people. Outside of software it is even more obvious. Tackle the semiconductor shortage in your own backyard? Yeah nah.
We have to accept we don't live in a world of free market capitalism anymore and can't go back. We need to think about how to move forward.