🇳🇱
Truth.
Though I'd say this represents moderate capitalism vs extremist socialism. So not a fair comparison if you want to get technical. But valid all the same.
@freemo Graphic counterpoint? [ tongue firmly in cheek, be noted ]
Actually @freemo I think that @design_RG is much more accurate.
An even more accurate #infographic would show death by #famine, #starvation and #disease in the #poor histogram of "How #Capitalism actually works"
Well, to be fair one should even observe both graphs lack at least one dimension.
The percentage of riches is a tiny fraction of the percentage of poor people. So the number of people that both fit the classification and die because of the system is very different. And this is something rich people know very well:
https://onezero.medium.com/survival-of-the-richest-9ef6cddd0cc1?gi=f65c3188ea37
It should also be noted that most of times riches do not directly drain resources from the poor, but from the middle-class.
https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/
Furthermore, it's increasingly difficult to locate #China into this scheme.
The y-axis is more likely a representation of each classes wealth not the number of people in that class.
The failing in your logic is the idea that for one class to have money they must drain it from the poor. Thats not how money works, it isnt a pie where one person having more means another person must have less. It isnt a zero sum game.
Wealth is generated, as well as acquired. So a person can be rich and have most of their wealth generated without depriving any class of any portion of money to do so.
Capitalism is about wealth distribution, not creation: a system that favour the creation of dams to wealth flows by few riches (long)
Sure, the y-axis is the class wealth. That's why I said that, to be fair, one should also consider the cardinality of the underling sets.
As for the "failing in my logic": sure #wealth can be generated, but only through technological progress. There is no problem with this and it's a good thing that we can improve human quality of life through #technology.
But then, wealth is distributed.
Wealth distribution is where the inequality issues arise.
The rich class hooks the wealth distribution process to concentrate it in its own hand.
This happens for new wealth AND for existing one.
But even if we don't consider how the rich class drain resources from the poor (think of #Bezos and his employees, for an obvious example), and only focus on the flow of newly created wealth, hooking its distribution so that it can be concentrated by few people IS literally draining wealth from others.
Is like building a dam at the river head: you can argue that you are not going to each of the people down the river to take their water (and in fact, some would argue that it's not their water, after all) but you are taking the water they would have received if you had not built the dyke.
Capitalism is about wealth distribution, not creation: a system that favour the creation of dams to wealth flows by few riches (long)
The idea that wealth is only generated through technological advancement is patently false.
Aside from the fact that we know wealth generation occurred historically prior to technology being a major factor it only takes a bit of common sense to understand why.
If I own a bunch of cows and have no feed, and someone else has a bunch of feed and has no cows. If we do nothing my cows will die and your feed will rot. Leaving us with less wealth than we have now. However if I trade you some cows for some feed now we both have well fed cows. Our cows will have babies and grow fat and as such we will collectively have more wealth than we did previously.
So it should be clear that anytime there is trade that is fueled by each parties personal needs that that will generate wealth, this has nothing to do with technology.
Actually animal husbandry is (one of) the #technology that enabled the #Neolithic #Revolution.
If your going to call that technology then literally everything is technology. At that point the phrase becomes useless.
I think it should be obvious by now that what generates wealth is any trade of goods or services where both parties get what they need.
Wether its cows and cow feed or labour as a cashier traded to buy lumber I can use to build an addition to my home. Its all the same, capitalism generates wealth so long as both parties are engaging in capitalism with their own self-interests in mind in the trade.
"By now" Adam Smith's model of Capitalism is at least as misunderstood as it's widespreadly (mis)quoted. (long)
Unfortunately it's not that "obvious". Nor actually true.
For example, if you define wealth generation that way, you should ban marketing and ads, since they nudge people to buy things they don't really need.
The model of #Capitalism of #AdamSmith (that you are mis-quoting) has been designed in an economy of small villages and had a prerequisite that is _always_ overlooked: #trust due to very short #feedback loops and near perfect #information.
If I remember correctly (it has been a while from my studies) Smith gave an example: your #brewer won't put too much water in your beer, because otherwise you would make your own beer instead of buying his own. He needs your trust, that's why you can trust him despite both of you pursue your self-interest in each trade.
Now, replace "beer" with "smartphone": can you build your own smartphone if you don't trust any vendor?
"By now" the #Smith idea that trading generates wealth is widespread, but it's actually totally misunderstood.
The invisible hand is possible in a very small, mostly autonomous, rural village where everybody knows everything about everybody else.
____
As for technology being "literally everything", it's not what I mean.
Technology is NOT everything.
Technology is what humans build: http://www.tesio.it/2018/10/11/math-science-and-technology.html
However, in this economical context, beyond technology (human artefacts) there are earth's raw resources, that are finite. That's why, ultimately, beyond technology advancement, economy is just a way to distribute such resources.
"By now" Adam Smith's model of Capitalism is at least as misunderstood as it's widespreadly (mis)quoted. (long)
Depends, sometimes marketing ads push people to buy things they dont need. Othertimes it makes them aware of products that suit a need, particularly when the product was unknown to the buyer.
With that said I never claimed all capitalistic actions will always generate wealth. Obviously an irresponsible buyer who buys things they dont need will generate far less wealth than a responsible buyer who buys the things they do.
The point is only that wealth is not fixed, or anywhere near fixed. It is constantly being generated in large portions and thus any model that assumes one class deprives another of wealth simply based on the fact that they have a lot of wealth is, fundementally, flawed as an ideology. Which seems to be the basis of much of your argument.
Furthermore I did not quote anyone, not Adam Smith, nor am I representing any one model. There are however hundreds of models out there, all of which rely on the same principles I am describing. In fact there isnt a single model that has been demonstrated to be accurate that doesnt accept the truths I've asserted.
Smith just happens to be one among many people who have tried to describe the same thing many others have.
As for building your own smartphone. Yes, there are many small time people who have sourced out their own parts and built their own smartphone (funded initial with their own money they earned through wages) and now represents an actual phone for sale. Or in rarer cases ony for personal use. In most cases this results in a new company with a new product that hopefully offers something new to the market that wasnt there before, and thus **generating** wealth as a result.
> irresponsible buyer who
> buys things they dont need
This is victim blaming. 😉
In the age of #SurveillanceCapitalism, arguing that #Ads exist to merely inform people about products they might ignore sounds very naive.
As for the rest, there are tons of model that justify pretty much anything. All wrong.
Adam Smith's model of liberal market become one of fundamental building blocks of #Capitalism as an ideology (but not the only one, as #Webber shown).
Sure, we have plenty of options if we want a model to justify the growing inequality or blame the victims for it.
But still these models do not account for obvious "externalities" (as economist dismiss them) that basically throw costs and risks out of the balance sheets.
#Inequality IS one of this overlooked externalities. #Pollution is another.
Still such externalities are not the point of my argument. It's not because of the damage they do to most of people that I cannot accept the models that link Wealth to Capitalism.
It's just that such models do not explain so many observations (those externalities, ads, addictions, workers' exploitations, political lobbying...) that they are easy to dismiss to anybody that is open to their discussion.
A more interesting issue is: what are the alternatives?
Here's one: https://www.nomadelfia.it
It isnt victim blaming, it has nothing to do with blame. I never said who is to blame for their irresponsible buying habits and largely I dont think blame is useful so much as being awae of the irresponsibility and changing those habits anyway.
In fact everything you keep saying seems to fail to understand what i keep saying. Take for example "arguing that #Ads exist to merely inform people about products they might ignore " is completely contrary to what I said. While that may be one element of ads I never said that was "merely" what ads were for or even that it was the majority of cases.
With that said I use an adblocker and refuse to use sights that require me to turn it off. So the power to see ads or not is largely a choice I can and do make for the majority of ads in my life.
Capitalism doesnt do damage, greed and corruption does damage. Those are pervasive in different forms regardless of the form of government. With that said pure capitalism with no restrictions is unhealthy too, capitalism is the default of a free society but there are certainly areas where non-capitalistic strategies are preferable.
<WARNING>
I'm enjoining this conversation as I see we look at these things from very different perspectives. I hope it's the same for you. I'm sorry if I misunderstood your statements, so if I go back to them it's not (always) to confute them, but to clarify them better.
</WARNING>
The term "irresponsible" is, by itself, quite blaming.
It means they cannot explain ("responsibility" is from Latin "responsum abilem" that means "able to answer" to any question about an act).
Let's put aside the fact that, infact, Capitalism avoid to clearly define such "responsibility" because it would mean to choose someone who has the authority to ask and clearly defined rules to judge the answers as appropriate or not. To most champions of Capitalism, even the State should avoid to design rules that restrict free market, and you can easily see how its ideology is often very well expressed by people who actually workaround (if not break) the #Law (see Holmes' #Theranos for an example).
People can be irresponsible because they are not in charge, because they are "mad" (unable to intend and will) or because they are evil.
The ideology of #Capitalism assumes rational agents that can freely act in the market for their own interest: so they are in charge of the use they do of their own resources.
So, according to such model, if their behaviour is irresponsible it can only be because they are "mad" (irrational) or evil.
In fact, most of consumers are #irrational: otherwise advertising would just describe the experimentally verified qualities of a product.
Please, tell me any verifiable property of the product advertised here: https://www.youtube.com/watch?v=LwzzvEcYA6k
On the production/competition side, instead, Capitalism push for an extreme rationality but optimize a single dimension: #profit. So it inherently favour #greed and corruption.
Yeah, greed and corruption exist in all economical systems, but afaik #Capitalism is the only one that looks designed (or "evolved", if you prefer) to favour and _maximize_ them.
Definition of responsibly: in a sensible or trustworthy manner.
While I could see the confusion because of the close relationship to the word responsible that isnt what responsibly means. IT refers to if an action is "sensible" or not.
If you are buying things you dont need then it isnt sensible, it isnt dont responsibly. As to who is to blame, wel its never one person and largely a useless mental exercise to answer that. It certainly is partly (in many cases even mostly) the blame of the consumer, but that isnt to say those running the ads dont have some blame as well. But it wont get you anywhere useful to focus on blame anyway. It makes more sense to change the aspects you have control of, the part of the problem you can and do effect.
It seems immature if someone is buying stuff they dont need to try to blame it on the ads or something external rather than just not buying what they dont need.
Your going to have a really hard time convincing me (or most people) that a person isnt in charge of what they buy or dont buy. Advertising, for example, doesnt take away the fact that they, in most cases, get final say on what they are buying.
Probably I've not been clear enough: I argued that people _are_ "in charge", but "mad" (irrational) in their choice.
And while Capitalism assume a #FreeMarket where #rational people trading to pursue their own interests, #advertising assumes people behaviour can be programmed through their irrational bias (and trade such #BehaviouralFutures, as Shoshana Zuboff call them).
Since the two model of the same people are in direct logical contradiction, they cannot be both correct.
Pick one:
- people are rational
- people are irrational
The first is a prerequisite of Capitalism model, it's the only way it could work to describe and predict its evolution, but it means that advertising does NOT work.
The second is a prerequisite for Advertising to work, but it means that Capitalism cannot work (at least as usually described by capitalists).
Now, afaik Advertising works so much that the most powerful multinational corporations in the world bid in behavioural futures.
Thus, Capitalism can NOT work as one of its main pre-requisite are not met in real world.
Having said that, I'm surprised to see that you have no objections about the irrational behaviour of corporations due to the maximization of a single scalar value (profit).
I agree they are mad.
While capitalism doesnt necceseraly assume that the market is exclusively rational actors you'd be correct in stating that when the actors are irrational then their engagement in free trade is less likely to generate wealth. The more rational people will be the ones generating wealth while the irrational ones will be unable to either generate or obtain such wealth.
To some extent I am fine with that, people have the freedom to act responsibly or irresponsibly, it isnt our goal to save people from themselves. But I also am not one to try to sell the idea of capitalism in its extream. While it should be the default there are areas where non-capitalistic ideals make sense, at least in part.
Healthcare is a good example where I dont support capitalism (or full on socialist) views, largely because the madness you suggest is inherent. Most people would happily give up everything they own for 5 more minutes of life. But, at the same time, the free market pressures are critical to driving quality in healthcare (something I have witnessed first hand as someone who has lived and traveled around the world). So int he case of healthcare the solutions (which are a seperate topic) would be something outside of the capitalist-socialist spectrum
Good points on healthcare.
As for
> people have the freedom to act responsibly or irresponsibly
that's plain wrong.
Not just because of context and cultural pressure: people always lack informations to do rational choices.
What you call "responsibility" is plain impossible, so much that, actually, my professor of Economics at the University explained us the concept of "Information Asymmetry" as a fundamental marketing tool: as long as you maximize the difference between what people know about a product and what vendors know about that same people, you can more easily rise the price (everything else unchanged) without reducing sells.
Indeed, now that I think about this, I recall that another way to state the fundamental assumptions of Capitalism is that information spread instantly.
Without perfect and symmetric information, you need to redefine "rational decision" to include (and factor out) growing amount of irrationality.
You made a lot of claims here with little backing. Peer pressure is derived from individual contributions to the whole and to imply that we cant resist it is just incorrect. It may take a lot of integrity but its easy to do.
The idea of regulation to save people from themselves leaves a very bad taste in my mouth.
You dont solve these problems by controlling people, you solve it by educating and empowering them.
Where did I talk about regulation?
Actually, I think Capitalism could work reasonably if we had a simple regulation world wide: an Universal Maximum Wealth defined within a finite ratio of the minimum actual wealth that the poorest person in the planet hold.
A 3x or 5x should do.
I mean: as greed as #Bezos can be, with such regultation, the only way to raise his own wealth would be to raise the poorest person wealth too.
Sure, #education is important.
Fundamental!
But I don't think we should just educate people to resist to external systematic pressure: we should educate them to design and build system that remove such pressure at all. 😉
If Capitalism was the default, you'd find it among apes. Instead Capitalism is a recent invention and it's always evolving towards stronger concentration of wealth.
But let's recap.
By now we know that wealth generation (by technology) doesn't prevent its concentration during distribution and how such concentration subtracts such wealth from being distributed (by definition).
Just like a dam at the river head, people concentrating wealth subtract to those who would get down the flow (think of Bezos and #Amazon employees).
Furthermore you accept that people are not rational agent: they are continuously manipulated through their biases (the "behavioral futures" that #Surveillance capitalist trade) to buy products they don't need (thus NOT generating wealth, but giving away their own wealth).
Also (as far as I can see in this thread) you don't contest the fact that corporation aren't rational either as they optimize one single scalar dimension, profit: the net wealth built by corporation that maximize profits is negative as soon as you take the externalities into account.
Now the point of a #UMW (Universal Maximum Wealth) is not to punish anyone for harming anyone else. And it's not even a way to turn irrational people into rational one! (for that we need education, with a strong focus on #History and #Informatics, see http://www.tesio.it/2019/06/03/what-is-informatics.html)
UMW is just a way to build a simple and effective incentive system designed balance #collaboration and #competition.
One the drive to accumulate more wealth is balanced by the need to increase the wealth of everybody else, corporations will have fewer and fewer reasons to fool people through #marketing.
So while people will stay as irrational as they already are, there will be no advantage to exploit their bias.
In that context, #AdamSmith's #trust would be possible again, raising the probability of actual wealth creation by rational trades.
Basically, in such framework Capitalism could probably work.
Now, you see all this is flawed, but you didn't explain (or I didn't understood) how.
I dont have the time to continue with this conversation, but thank you for your thoughts. I will end with this.
You do find it among apes, as well as birds. Anytime you have an exchange of resources you have capitalism.
If you can only have one possible state, you can't call it as "default".
By that definition, everything is capitalism because everything continuously exchanges resources.
No it ceases being capitalism once you have collective rules that prevent free-trade. Just because it is the default doesn't make it ubiquitous.
Interesting: given this addendum to such definition, I cannot think of any Nation implementing Capitalism.
It's an interesting argument, though.
It means that Capitalism is something that some animal do, but humans do not. 😉
No nation implements anything in its pure rarified form, there are no pure socialisms either. In reality most countries are a mix of these principles and many others. Some lean stronger towards capitalism, others lean closer towards socialization or communism (depending on the time period and country).
@Shamar
It is not possible to talk about systems outside of capitalism without regulation. Anarchy is capitalism, the default is capitalism. Capitalism only stops being capitalism when government regulation prevents free trade between individuals.
So it is implied.
The idea of a universal maximum wealth goes back to where we started. People having more money does NOT mean others have less. As we covered wealth is not a pie where one having more means others have less. Wealth is constantly generated so to assume there must be harm from anyone having a lot of money is fundementally flawed.
@design_RG