Human social structures concentrate power, not capitalism. It's all still there under socialism.
Capital has power over society because society is reliant on material production. Being able to grant someone enough money that they no longer ever need to work (or merely enough for them to have a decent livelihood) is significant power over them and motivates them to do what you want. You can then use this kind of power over the media, politicians, etc..., and you can struggle to have the rules be to your benefit.
There is no making new capital, except when governments do it. What you're citing isn't an iron law that forces capital to compound. Investment portfolios compound on average, because smart people pick companies that are doing really useful things (i.e. things people want to pay for) to invest in. But production doesn't stop when that doesn't happen for a company. It also doesn't happen for every investor.
> Capital has power over society because society is reliant on material production. Being able to grant someone enough money that they no longer ever need to work (or merely enough for them to have a decent livelihood) is significant power over them and motivates them to do what you want. You can then use this kind of power over the media, politicians, etc..., and you can struggle to have the rules be to your benefit.
There are far more direct and bad ways to have power and grant people easy lives. Being a noble in a 14th century court, or being in the PolitBuro living the easy life while millions starve in a socialist country are far worse outcomes. Yes, politicians are bribeable (that's why putting less power into government is a good idea) and media is bribeable (that's why working hard on instilling critical thinking into their children is one of the most important duties of a parent), and it all will be far from perfect.
But - as is often the case with such discussions - comparing a system like capitalism with a perfect world that magically has no power and infinite progress is just a fantasy. In reality, rewarding people who do things we want them to do is a good idea. If Netflix has stuff I don't want to watch any more, or breaks for a month, I unsubscribe. If my local government does a terrible job for a year, I keep paying or go to prison. Which of these involves more power, and which involves continued excellent service in exchange for a reward?
Every actor is looking for a way to avoid market competition. Every time you hear a company discuss building a moat, that is a company that doesn't want to compete in a market and is actively working against the benefits of capitalism. Every time you see a monopoly, it is again a marketplace working against the benefits of capitalism (i.e. market competition).
At all times the government must strongly and actively maintain market competition or capitalism simply eats itself.
I understand the argument you're making, but I don't think these are the words to use to do it, makes it more confusing, and you're glossing over some thorny issues. One could just as easily and more accurately say "power is inherently power centralizing".
I assume you are equating "free-markets" with "laissez-faire" markets which I don't think is accurate, else why would we separate the two concepts? Better to use the term "perfect market capitalism" (essentially markets where no player has the power to affect prices) and then specify market imperfections and failures as the cause of "inherent flaws" and worthy of regulation.
markets don't eat themselves, participants with power eat them.
But we also need to understand the difficulty of regulation. Keeping this brief thru a lot of hand waving and overgeneralization, Microsoft monopolized the personal computer market in the 1990's, and made buckets of money doing it, but they were not able to then leverage that into enduring monopolies in (the internet and) cell phones and cloud services, which together supplanted the personal computer as "what was popular" for personal information and communication. Would an evolving government regulatory regime applied to Microsoft have been able to create a better outcome in the same time frame without stifling industry than did what Schumpeter called the "creative destruction" of progress through free market forces? (yes I could word that more and better, but I want to hit reply and be done, so hopefully my point is not lost.)
When you talk about "free markets" failing, you feed the idea that socialism is a good idea, which is a serious baby/bathwater problem. Better that people learn more about perfect markets.
"Power is inherently power centralizing" - we both agree that that is the fundamental issue.
"Laissez-faire" in any practical sense is worthless. No-one should reasonably in this day an age be advocating for essentially anarcho-capitalism or an adjacent laissez-faire derivative thereof. People do, I think it's incredibly naive - but you appear to be in agreement so we'll move on. We expect any form of state sponsored capitalism to enforce it's main benefits (of which I argue one of the most important keys is actual market competition).
> market's don't eat themselves, participants with power eat them.
Yes and the default state of any market is for there to be power imbalances. (it's almost impossible to have markets without them). And since power imbalances are in practice inherent in markets, and participants are what constitute a market, it is correct to say that "markets eat themselves". To contradict this is to either find a market without power imbalances (essentially only exists in theory), or find a market without participants (clearly a market not relevant for our purposes).
Since participants in markets are continuously trying to consume the market there must be a continuous countervailing force to prevent this. That is my thesis.
> When you talk about "free markets" failing, you feed the idea that socialism is a good idea, which is a serious baby/bathwater problem.
This is a terrible line of reasoning. It is essentially a head-in-the-sand defense. Essentially saying we shouldn't talk about the failure of free markets because by acknowledging their shortcomings when people look at all the different possible ways to improve it and one of the says they run across might be socialism. As a result we shouldn't discuss the failures of free markets. The rest of our post is well reasoned even though I disagree - this is not, so I won't spent much more time on it. In no point did I mention socialism, and avoiding discussing failings of a system because people might look to others is a weak way of defending its merits.
> Better that people learn more about perfect markets.
Perfect markets generally are not the state of markets. "Perfect Market Capitalism" is like the "Efficient Market Hypothesis" - its a simplification that makes reasoning much easier, and there are cases where you can apply it. But in practice there is clear, continuous evidence that it does not hold, and ignoring the messy bits is where the system falls apart.
Finally, regarding your PC example I'll saying the following: Ensuring companies are forced to engage in "fair market competition" (avoiding the no true scotsman of perfect market capitalism) by preventing the societal marketplace harming impacts of monopolies, oligopolies, network lock-ins and similar is essential for a healthy society. Any market with power imbalances will tend towards solidification.
We cannot avoid imperfect markets, there will always be transaction costs, barriers to entry, natural network effects. And when there aren't, participants in a market will find ways to introduce them for their benefit. Imperfect markets get more imperfect over time due to the actions of their participants. It is inherent in markets.
So we have two options, immediately address the most imbalanced cases. Or ignore them and hope that the market will become less relevant before the leader has a chance to leverage their position of power. The latter approach is wrong. "Tech" is the only field that moves fast enough for this to even be possible, and you can see from how centralized tech is that even in tech it more often fails than succeeds. Or put another way about regulation: yes you want term limits even if it means a great politician can only have two terms in office instead five, even if they could've done great things in those 5 terms. Because the risks of no term limits is much worse for society. Same reason you want to regulate market dominating companies, even if they could've done great things in that market dominating position, because the risks it brings to a net negative on society are to large.
A simple start is break up market dominant companies and prevent market capturing merges. But fundamentally society must always be vigilant in preventing markets from centralizing power, or from preventing any system from centralizing power. Capitalism (and most systems) centralize power by default. So society must always have a counterbalancing force to get the most benefit from capitalism. Free purely unregulated markets are bad because they centralize power to avoid competition. The goal of society should not be free markets. The main benefit of free markets are market competition. The goal of society should be to maximize market competition (which is different than striving for the impossible goal of perfect markets). And external force needs to act to balance to consolidating nature of free markets to maximize market competition and maximize benefit to society.
I said (perhaps confusingly) we absolutely should talk about sources of market failure, but that we should not take ourselves into the weeds by calling them "free market failures" because market failures are the parts that are not free-as-in-freedom, they are on "free" as in "freedom"-to-coerce,-kidnap,-rip-off etc.
properly functioning markets require honest/symmetric information and choice, and that no player can control prices (that's off the top of my head, not writing a treatise here): then, show people that what markets do after that is precisely solve the thorniest of problems that socialists are trying to solve, allocation of resources.
Again, this is wrong. This is fantasy that people like to believe, but it is not the case. The failures on in the "free-as-in-freedom" parts. And that's the part I'm explicitly calling out because it is naive.
Communists arguing that the main thing required for communism is we get everyone to give up their own self-interest and work just as hard for no financial reward is wrong and devoid of reality. Saying that this is a requirement for successful socialism is absurd and ridiculous.
Free market capitalists arguing that people will just give up their own self-interest and not behave selfishly to maximize their profits, by explicitly avoiding and inhibiting perfect competition to their direct benefit, is also just as absurd and ridiculous. It's not because of a devolvement into laisse-faire or anarcho-capitalism (or due to 'extra-market coercion' or kidnapping as you list). It is inherent in free-as-in-freedom "free market capitalism". Selfishness drives profit motive. Profit motive in markets that are imbalanced create inequal power. Power imbalances in any human system (like a marketplace) centralize power. Centralized power prevents competition. That is the key point. And thinking that people won't be selfish and prevent legitimate market competition, or ignoring that power imbalances always centralize in systems, or believing that just giving people freedom to act will not devolve into centralized power is barely less naive than the "communists" view I wrote above. Free markets naturally lead to centralized power and eliminate market competition. That is the fundamental problem.
The essential force that free-as-in-freedom "free market capitalism" needs is a countervailing force that enforces market competition. Without it capitalism eats itself due to human nature. Just the same as communism eats itself due to human nature.
"Free market" does not have a clear or set definition. It is not a term used by economists except as a catchall in the context where the audience knows what the economist is talking about. It comes from the time of "classical liberalism" when the liberalizing was "freeing" markets from the control of the aristocracy, but today we also need to keep them free of collectivism, even though collectivism in modern parlance fits the thinking that we now call liberalism, so I don't think it's a great idea to use those terms either.
To keep out of that linguistic morass, stop slurring the term "free market".
Markets always exist, because people will always trade, even if it's a spoonful of my prison rations for a spoonful of your prison rations. If we as prisoners make a trade, are you calling that a freedom? So just talk about markets. The little description I just gave is a clear thought, and the word free doesn't add anything. Black markets are the truest free markets, they entail free trade of all items. Everything not free about a black market is exogenous.
Learn the terminology of markets; economics studies "perfect markets", and then identifies sources of "market failures" and "market inefficiencies". The type of unregulated free market that devolves into cartels and monopolies and caveat emptor is better known as laissez faire. Markets that are regulated within western democracies are free markets that don't devolve.
on the surface you're just throwing words around on top of however many layers of more complex thought goes into your arguments.
Free markets are a good thing. If you want to talk about market failures, don't use the word free. Free does not mean "unregulated".
We are seeing it happen in real time. Our president is a crook. We have plenty of evidence that he influenced-peddled to foreign countries for millions. Our media lie to us constantly. Most of the government, including the DOJ, FBI, and CIA, are run by corrupt, partisan, and evil people who are largely unaccountable to the public. Our judicial benches are filled with partisan activists who largely ignore the law and the constitution as they make whatever rulings they can to promote their ideologies or world views. Capitalism will not save us from any of this, especially as long as so much of the public keep voting into office people who actively support this kind of corruption.
Give me a break.
With a federally insured bank, securities, or other regulated financial products there's a watchdog ensuring compliance and regulations, transactions are largely traceable and auditable, and if someone finds a way to game the system there's a legal entity with a massive presence that will come down on you anyway.
There are advantages to both, and centralized finance is certainly 'gameable' in ways also, but I definitely wouldn't say that it's more gameable than decentralized finance.
Contrast this to something like China where there is a single party and a single government with no checks or balances. And such as there is some free enterprise, it is not a universal protected right and even the richest citizens have no ability to affect politics. It does not seem like a favorable alternative.
Theoretically at least you could join the party and become politically active in your local branch, no?
Capitalism tends to edge towards maximality through high margin, high volume. Followed closely by low margin, high volume. And small ventures at low margin, low volume. All can coexist to improve the society.
Often, capitalism is discussed in the context of cronyism.
The inevitable concentration of power should be out in the open, broadly consented to, and held accountable. We could call it "government".
Instead, in the most "anarchic" corners of capitalism we have "shadow governments" where power is tightly concentrated and undemocratic, but it's okay because "if you can't see it, it doesn't exist". Insurance giants, tech giants, finance giants, etc.
Edward Bernays was writing about this exact phenomenon 100 years ago (Propaganda).
There are no actual -isms in the world.* These are utopian fantasies supported as tribal, jingoist footballs not worth arguing about. Governments are varying degrees of:
1. Influence corruption of the rich directing elected (or military junta) officials
2. Proportion of embezzlement-adjacent and actual embezzlement corruption of officials spending money on their own needs and wants
3. Overall functionality and responsiveness of police and justice extending protections or harm balancing individual and collective interests, including positive and negative rights to liberties, property, trade, and taxation
4. Distribution of competency across government departments
The problem in the US specifically is that money concentrates power because elected officials are beholding to campaign financing. As a consequent, primarily celebrities and public figures are the only ones who are "electable" in 2 flavors of corporate-owned, tribal factions. As John McCain discovered, there is absolutely no will to fix it from within the system. As such, it can only be resolved outside of it through applying great, sustained pressure in a nonviolent manner.
* Communism was attempted but never implemented anywhere because it's either a utopian delusion or was sidetracked by totalitarianism and/or inadequate leadership. Capitalism doesn't exist anywhere except in a libertarian's mind. There is no "pure" "socialism" anywhere. Every political jurisdiction implements a special snowflake blend of regulations, corruption, freedoms, autonomy, and force.
Unions are a solution but they also have power concentration problems. IDK whats a good solution but perhaps a state administered sustenance UBI that indexes to inflation & always comes out preferentially (like SS/medicare) from tax revenue. and slowly over time we grow the definition of baseline human necessities as economy advances.
For me, the word means that I can trade what I own to other people who want it and are offering me something I want in return. It means that, if I scrape and save, I'm allowed to turn around and invest those savings in another endeavor of my own and that whatever profits I make from it are mine to keep.
I know it's not a very eloquent definition, but I think it's rather objective, and I think it describes the western world today, more or less. Is this what you mean by it? Do you mean something else?
I don't see how it concentrates power. There are people who do capitalism poorly, and then they whine about how it was unfair to them.
Most generally: "A socio-economic system based on private ownership of resources or capital."
https://en.wiktionary.org/wiki/capitalism#English
As for the unfairness:
Capital accumulates capital, debt accumulates debt. When you accumulate capital, you can own resources (land). This means those with capital will accumulate power.
You can talk about being "bad at capitalism" but the implies you assume everyone starts with equal opportunity (capital, land, power).
Most people just stay on the waiting list for years.
That's circular and moronic.
Even the big about "private ownership of resources" is couched in terms that make it sound as if the person saying it is being excluded and treated unfairly. Do you know which resources capitalism lets a person own, or which person might own it?
Your money in your savings account, and you.
> You can talk about being "bad at capitalism" but the implies you assume everyone starts with equal opportunity (
It doesn't. It does assume they're adults that don't whhine about not everyone ending with inequal outcomes.
"Private" in this case distinguishes the system from other where, say, only the state can own capital.
"Capital" is my savings, or my toolbox. Or any number of things which are mine.
Pretending that it's $30 billion of investor financing, so that you can goad others into stealing it is disingenuous.
And the fact that you (and others) can't see how it inherently concentrates power is exactly what's wrong with the current views of pure free-market proponents.
Free markets are bad. Market competition is good. It's that simple and people still don't seem to be able to distinguish them.
The only way to have market competition is to soundly enforce it. Any free market left alone eliminates market competition and consolidates power - that consolidated power then eliminates any efficiency gained from capitalism.
One of the single most important roles of government is to eliminate heavily unbalanced concentrations of power un order to maintain competition.
In the marketplace that means swift eliminating monopolies, in individuals it means maintaining some tempers inequality, and in democracy it means ensuring any concentrated power cannot perform regulatory capture. But you cannot do the latter without ensuring the former two. Everyone seems to recognize regulatory capture and the imbalance of power it involves in democracy, but some how cannot see the exact same issues in the individual or the marketplace. All three require market competition to be healthy and thrive - and aid concentration of power.
Which is why NYC taxis are so cheap. All the market competition cultivated by their sale of taxi medallions for $1mil+.
> One of the single most important roles of government is to eliminate heavily unbalanced concentrations of power
I've seen no historical evidence that any government, ever, has even attempted this "role". It would be a little weird if they could manage to do it considering that they are heavily unbalanced concentrations of power themselves.
It is normal where I am from. We have an entity that govern the competition and its role is to enforce competition whenever a company gains to much market share. That way us, the consumers can avoid monopolies where we would otherwise not have the voting-power within our wallets.
Why do such claims never come with any details?
> I've seen no historical evidence that any government, ever, has even attempted this "role".
With all due respect, you may not be very familiar with the topic being discussed at all.
But I thought we were discussing reality, and not whatever weird fiction you've imagined about those things. That was lip service to the idea, little more. Do you prefer Standard Oil, or Ma Bell where they broke up the national monopoly into a bunch of regional ones with no competition?
No offense, but your definition (as distinguishing capitalism from socialism) isn't very good either. Your first sentence is merely the definition of a market, which can still exist just fine under socialism (even the authoritarian varieties extant today feature markets).
As for the second part, that's the exact thing that proponents of socialism assert you are not free to do under capitalism. Your average worker has no hope of saving up to be able to "start an endeavor", and even well-off ones often are beholden to investors, which forces you to part with a substantial part of your profits you made to people who contributed no work to your endeavor. Likewise, if your business does become profitable, it is usually going to be as a result of work others did, not profits "you" made.
The key part of capitalism is that any profits in excess of the bare minimum go to the owners of capital, not the workers. Unless you have capital yourself, you either have no access to the means of production, or are forced to give up a substantial part of the value you produce.
Theoretically, it's claimed.
Where are the markets in Venezuela? Which bakery could you go to in the Soviet Union when the bread line was long and the shelves empty at the state store?
Why is it that such places always end up using some sort of ration ticket instead of real currency?
> As for the second part, that's the exact thing that proponents of socialism assert you are not free to do under capitalism. Your average worker has no hope of saving up to be able to "start an endeavor",
No, they're just lazy losers. I read somewhere once that you can buy the hotdog cart at Costco for $400 or $450 like that.
But I suppose the ones that whine that they can't start an endeavor want to skip to the end of the game, where they own $500 million in McDonald's stock and a few dozen franchise stores... so my example doesn't count.
There exist opportunities for people at all levels of capital.
I'm not an entrepreneur myself, don't have any knack for it. But it's nice to know that the commies are always there, hiding in the shadows ready to swoop in and confiscate, if say, I did buy a food truck and put my brother-in-law to work running it.
> The key part of capitalism is that any profits in excess of the bare minimum go to the owners of capital,
You mean, the owners of the business. Sure. Why should it be otherwise.
No one with capital would trust the sorts of people who do minimum wage scutwork to be the sorts of partners who should be cut in on the profit. Go read r/antiwork and tell me those are the people who you'd trust with your life-savings. All they bring to the table is talentless meniality and a bad attitude.
> you either have no access to the means of production, o
What is a "means of production"? Are you lusting after some billionaire's water-powered Jacquard loom?
We're on Hacker News, if I'm not mistaken. The means of production for most of us is a laptop, and internet connection, and our brains. But maybe you're right, most people don't have access to that last one.
It's funny that you're mad about taxes when every step of the hot dog cart business requires public infrastructure. Contract law, credit cards, the highways to deliver hot dog carts to Costco, the streets to take you to Costco, "stupid traffic safety laws" that mean your car doesn't explode on the way, the public areas you plan to sell hot dogs from, "stupid flammable gas safety laws" that let you cook them without exploding, "stupid food safety laws" that mean you can buy known edible hot dog materials, currency, a legal system that prevents people from taking your money after the sale. There is a lot.
Or were you going to run your cart using whatever you can hunt out in an unpaved woods and cook it on gathered firewood?
Capitalism is independent of the operation of markets. Its definining characteristic is that the investment of capital in a human venture is treated preferentially to the investment of labor. Specifically, claims on the profit made by the venture first and foremost reside in invested capital, not invested labor.
It's pretty trivial to imagine how capitalism could retain this characteristic even in the presence of planned economies and/or highly regulated markets.
Same faulty logic affected the communists too.
People trade things at scale all the time. Some trades are apparently valued in the millions and billions of dollars. Some people have savings that are large fortunes, and they often invest them.
You must be talking about something I am not, but it's difficult to figure out what the words even mean to you.
You’ve made a no true scotsman argument because all these other capitalist systems with their wage labour grievances and their accelerating inequalities tearing at the coherence of societies’ fabric are not _really_ what’s at the core of capitalism and if they just did it better then it’d be awesome.
The scale part comes in because what you describe - capitalism without wage labour - exists all over the world today, but only in the small. You cannot grow it to a country sized system.
Other people aren't bothering to define it at all. I could work with their definitions, if they ever bothered to speak them. Hell, if they ever bothered to even hint at what those might be.
This isn't about a difference in definition, but the other side not defining it at all. And all the waffling here, by you and others, suggests that this might not just be some oversight, but the same sort of strategic fallaciousness the left is infamous for.
The rest of your comment is as incoherent as the first. I'm not sure what "no true scotsman" argument you think I'm making. My definition applies, in varying, to most nations in western civilization. But most especially to those the leftists are most critical of. Take your pick.