There will always be elite people. At least in capitalism you become rich by providing value to other people. In socialism you become elite by stealing from your comrades and forcefully eliminating the competition.
Unfortunately I don't think it really stands scrutiny.
First of all, there's no proper idea of what value is. It's a super deep conversation so I'll just leave that headline for now.
Second, even without a clear explanation of what value is, we can distinguish between value created and value captured. You can easily come up with cases where multiple people have done more or less the same thing but one guy gets more out of it than others. Is that the system we want?
Third, even without an explanation of what value is, we can see that there are people who provide no value but get paid a heck of a lot. Heirs, scam artists of various sorts. Not just straight give-you-nothing for something thieves, but also plenty of way overpaid people who live in the space between totally honest trading and totally dishonest thievery.
The value of a society is the weighted sum of values based on individual power.
Amazon is creating a lot of small value to a lot of people by delivering goods next day.
People on wall street are creating a lot of value for wealthy and powerful people.
An engineer can automate a lot of value creation that was previously done by a large number of people, allowing companies to have a shot at making a lot of money, hence why they're paid more.
Some of those powerful and wealthy people got rich by providing value, some of them got rich by exploiting the government's centralised power, its corruption and the possibility of stealing value from all the taxpayers.
A scam is a crime on par with stealing or charging taxes. Stealing doesn't create value, it just transfer wealth.
For a "win-win" transaction (which is the case if everyone is free to choose) you need:
(Value to buyer) > (value of sale price to buyer) And: (Value of Sale price to seller) > (Cost to the seller)
If I buy a computer for $1000, the computer is worth more to me than the $1000. To the seller, the $1000 is worth more to them than the computer. Value has been created for both parties.
In a transaction, Value defined for the buyer based on the expectation of personal utility and a seller based on their expectation of the market and their personal utility. The actual cost and actual value to buyer are largely irrelevant.
Basically, buyers lack complete information so they will make purchases where (Value to buyer) < (value of sale price to buyer) etc, and of course sellers have the same issue.
It’s never been particularly expensive compared to gold, silver, etc.
Perfect is the enemy of good, we wan't a system we can change and improve, communism failed because of the great stagnation the leaders in change had no interest in change or improving and the workers underneath them had no means to affect change.
Worker parties offer the optics of democracy that the workers have a say in their work but in reality that didn't happen the workers worked for their boss or starved. Under capitalism you have the same options work or starve but you also get a third option, you can compete against your boss it was ultimately this competition that allowed capitalism to change and improve where communism stagnated.
Does capitalism guarantee success 100% of the time? nope, but it does provide a mechanism to affect change from the bottom up, other systems don't do that.
> At least in capitalism you become rich by providing value to other people.
One could easily find examples that counter these points. I doubt pyramid schemes (think Madoff's schemes) or crypto scams are the only counter-examples possible.
These more often than not come from an imbalance of information. People (or the market) could make better decisions with all information being accessible at the time of the decision. But all too often one side has more information than the other. Giving this side an edge.
> In socialism you become elite by stealing from your comrades and forcefully eliminating the competition.
In capitalism it is basically the same as long as you can get away with it. I know it isn't a popular opinion, but without regulation capitalism is in now way better than other systems.
Their excesses would all need to be reigned in. Because no unregulated system would be acting in the common good. The system may be organized in a way to slightly enable more or less perdonsl freedom. Or more or less societal freedom. But in the end - for average Joe - uncontrolled capitalism boils down to the working and living conditions of the early industrialisation or (in case of socialism) towards the living and working conditions of late soviet times.
Pyramid schemes steal a great amount of wealth, and should be regulated. Regulated capitalism is the good thing. The thing is, pyramid schemes aren't run by the state (or shouldn't be) and you don't have a gun to your head forcing you to participate.
I almost feel like "unregulated capitalism" is just a straw man argument that others get tricked into trying to defend.
The "shouldn't" isn't very relevant here though. People shouldn't do that under a communist system either, and yet it happens under both.
> I almost feel like "unregulated capitalism" is just a straw man argument that others get tricked into trying to defend.
I wish it was a strawman, unfortunately libertarians who promote this kind of capitalism (which to be clear isn't all libertarians) are a prominent political group whose members include many elected officials!
Without a government, companies made of people with guns would emerge punishing scammers and criminals in general, advising companies and reputation systems would emerge protecting people from scams.
Due to the nature of entrepreneurship, all these companies could be held in check by competitors. Without regulation slowing down new competitors, if a cartel emerges, there would be a great incentive for a better alternative coming up and making money.
You may argue the systems of companies providing these services would make a sort of government - and you would be right. It would just be more decentralised and therefore there would be less space for corruption. You also wouldn't force people to pay you a part of their profit or they go to jail and you wouldn't force people to avoid certain substances or limit what activities thay may be doing.
You can at best say: "If you don't pay a protecion agency, you won't have protection against criminals / foreign invaders", "You may take this drug but this recommendation company suggest it's bad for you".
I'd rather live in a free society, a society where I'm free to even damage myself, than in the regulated prison we live in today.
it would be more convincing if you could come up with counterexamples that aren't illegal.
Tho, after USSR fell, inequality in Russia went up by a lot. And it gave rise to what are now oligarch - the mix of very powerful mafia and business with very little constraints on them at the time. And that situation made Russians appreciate Putin, going full circle back to authoritarianism and imperialism.
You become rich by capturing value. Often times, as Silicon Valley and its investors like to remind the world, a lot of value is also being provided so it is indeed a win-win. But you don't become rich by providing value.
1. The purpose of many laws and regulations that support capitalism is to make it very difficult to capture value without creating it. (When compared to a world without these laws.) 2. It's generally much easier to capture value that you create than to capture value that others create.
The result is that there's a massive incentive to create value for others, and a great deal of rich people and organizations are creating value, even if it's not all of them.
IMO this is under-appreciated and taken for granted in the modern era, as if it couldn't be any other way.
I think that's probably true in general, but that over the course of ~100 years of capitalism the edge cases where this isn't true have been exploited sufficiently that it's starting to become a big problem. The clearest illustration of this being real estate. There are a lot of people getting rich by doing nothing other than buying and holding onto to real estate, often at the expense of others being able to make use of that resource.
Arguably, every time something is bought in the physical world, it comes at the expense of others being able to make use of that resource, not just homes. So I wouldn't say this is relevant to what makes the housing market exploitative. For example, if I buy a standing desk, I've taken it off the market and you can't buy that exact desk I bought anymore, until I want it sell it.
And just like I use my desk most of the time, most property that's purchased is either lived in or rented out. Sure, some properties sit empty, but I think it's the vast minority, I'd guess < 15%. The owners don't get rich by merely holding. They have to actually sell before they make money, which means others are making use of the resource both before the sale (via renting) and at the point of the sale (via becoming the new owners).
Plus, many owners do create value via renovations, which makes the property better. But at the very least, you're on the hook as an owner to repair and maintain the quality of the property so it doesn't lose value. You're a steward. That's expensive, and it does create/preserve value. When it comes time to sell, the vast majority of the sale price is just recouping the original amount you paid, anyway.
Still, when we look at the profits on top of that, it is true that much of it doesn't come from people working to create value. Houses tend to appreciate in value due to demand outstripping supply, because more people are moving to (or being born into) a location than there are houses being built there. However, I wouldn't call this exploitation. When this dynamic is at hand, everyone sells their homes for a profit by default, no nefarious or exploitative deeds required. Even if you're buying up properties for the express purpose of selling them later, you're not selling them for any more than they would've eventually been sold by the people you bought from.
Sure, people are creating rich here without creating value, but they're not doing nefarious things. If there's any villain here, imo it's restricting the housing supply, which fucks with the market's ability to provide more supply and keep prices affordable.
IMO there are better examples of nefarious things happening under capitalism. Usually they're monopolistic and anti-competitive: unfair practices to limit supply, to keep competitors out of the market, etc. Buying up patents (artificial monopolies) and then jacking up prices on a drug, for example. Non-competes or unethical collusion between companies to not hire each other's employees. Stuff like that. But it's worth noting that all of this is decided uncapitalistic, because it's anti-competitive. So even these aren't great examples.
I'd say the worst aspects of capitalism that are actually capitalistic are…
1. Creating negative public externalities, e.g. polluting rivers to create your products, then reaping the profits privately but making the costs public. There is always incentive to minimize costs in a capitalistic system, and so it's a natural challenge for governments to identify these externalities and make companies pay.
2. Accruing too much power as a result of having money. Basically, the influence of money on the political and legal system. More money should get you a better life in terms of access to more goods and services, but it shouldn't allow you to lobby for laws, win elections, or win court cases. This is a hard problem to solve, however, and therefore a natural disadvantage of capitalism.
3. Serving the rich. It generally pays more to create products and services for rich people, because they have more money to spend. That's just how the physics of capitalism work out. The result is that poor neighborhoods, cities, and countries have worse infrastructure, fewer stores, etc. Innovative companies simply have less incentive to sell there. I think this is intrinsic to capitalism, and it's a problem, because it means the rich get richer.
> Walton cofounded the Children's Scholarship Fund, providing tuition scholarships for disadvantaged youth.
Plus knowing rich people, he evaded/avoided taxes (probably hundreds of millions, if not billions) that regular Joes making $36.4k a year would never be able to.
This provides a definition of a market distortions:
https://en.wikipedia.org/wiki/Market_distortion
This may help understand why it is defined this particular way and why it excludes inheritance and other wealth transfers:
https://en.wikipedia.org/wiki/Fundamental_theorems_of_welfar...
If someone doesn't expect to live much longer but can still provide a significant amount of value to others, their incentive to do it is that they can decide how the money gets used, i.e. they can give it to their kids or otherwise choose who gets it after they're not around to use it anymore.
Take that away and you take away their incentive to earn money they soon won't be alive to use themselves, which is a huge distortion.
Meanwhile people starting off with money allows them to use it, but that doesn't imply inefficiency. They don't lack the incentive to use it for something productive.
If we want any sort of system even approaching a meritocracy then you should not be able to will away such vast estates that people can control entire companies or never work again a day in their life solely off the inherited assets
personally I find it pretty reasonable that I get to decide who gets the lion's share of assets I have worked for my whole life. at the same time, it seems bad when enormous amounts of wealth are passed down over generations (and having known a couple people in this situation, it seems bad for them too). the question is, where do we strike the balance?
Suppose you have more money than you need and want to be charitable, so you set up some terms under which you'll give some away. A scholarship fund, a shelter, whatever you like. You can set whatever criteria you want, because it's your money.
But then you could also use the criteria "the people who get this free tuition money and housing are your kids." Being able to do this, benefit their kids, is a primary motivator for parents to work to make more money.
And if you can give away the money to anyone you want three seconds before death, it makes no sense to say you can't sign a piece of paper to that effect at any point prior either.
John T. Walton became rich through inheritance.
Ergo, there are ways of getting rich other than providing value.
Ergo, looking at someone who is rich doesn't tell you that they provided value.
Just the facts.
And if Sam Walton were taxed at 100% for all wealth over $100 million, so John Walton were only worth $20 million, then would John have provided less value to his parents?
My parents spend several $100,000 on my upbringing. Does that represent my value to my parents?
The children from the world's poorest families also provide value to their parents.
From this I conclude that "obvious value" of evolution and capitalism's "monetary value" aren't the same.
Gaining wealth by being the child of a wealthy person is not something specific to capitalism, certainly happened in feudal monarchies, and almost certainly also happened with the children of high level apparatchiks in the Soviet Union.
Or you inherit your wealth and politicians. Or you break the rules to get to the top and then pay a small fine if you get caught.