Economics Questions

Re: Why communism will work, and capitalism won’t.

AJ — Thu, 09 Jul 2009 07:05:50 GMT

Peter Schiff posted this on Tuesday. I found it a nice illustration of the fallacies aired in this thread.

http://www.youtube.com/watch?v=30qMDVd8z0E#t=2m40s

Re: Why communism will work, and capitalism won’t.

Spideynw — Wed, 08 Jul 2009 20:45:00 GMT

Truthisnonexistent:
The capitalists are out to exploit the working class.

As if there is a difference between a capitalist and a worker.

Re: Why communism will work, and capitalism won’t.

ladyattis — Wed, 08 Jul 2009 20:13:19 GMT

Truthisnonexistent:
I say the workers are more important because a market cannot survive without labor.

Yet, labor without coordination and cooperation cannot yield anything close to the civilization that we both exist in. The PC you type on wasn't created by some raw grunt work, but by a complex series of exchanges, discoveries, and gambles. Whether it's one mining company selling raw silica to a refining company, or whether it's an engineer or physicist that figures out how to compact circuitry into an ever smaller space with lower power requirements, or even if it's some wise cracking entrepreneur that figures out that a given smaller, more compact circuitry design could yield amazing parallel processors for .h 264 decoding on your LCD TV. These have to happen both in parallel and in interdependent manners. Parallel in the sense that the same circuitry design can be used to make better ignition computers. Interdependent in that labor cannot yield the final product without the entrepreneur to gamble on the idea of the use of the circuitry in LCD TVs (and to convince investors that it's a good idea too).

It's a manner that the market is a living system or ecology, full of many different creatures (firms, consumers, entrepreneurs, inventors, and etc) which fulfill different ends or act as different means. But no where along the way can one prove that it is exploitation as that implies a single absolute moral standard for all social situations (this is clearly only a fool's conception as context always counts in all situations, social or otherwise). Thus to assert labor is ever exploited is to assume that all participants are not free to seek alternatives in their functions, ends, and intents (this applies to all social situations, outside of economies).

Re: Why communism will work, and capitalism won’t.

Taras Smereka — Wed, 08 Jul 2009 19:58:12 GMT

Labor is what it is, it is what keeps a market surviving. Wages are not a reflection of value added, if that was the case then there would be no need for labor movements. If a union wins the workers a higher wage but the product is still being sold for the same value, there is no differentiation in the value added by the worker but they are still paid a higher wage because there is a lot of breathing room, the wages can increase dramatically and the business can still function fine because the owner reaps so much profit.

There is no need for labor movements. People form unions to exploit other workers, they are monopolies. Thats why the unionized store down the street gets less productivity from its workers, and GM went bankrupt, the unions formed a monopoly (with government support) so they could raise prices while doing a shitty job.

Self-managed workplaces have increased productivity than capitalist businesses.

What evidence do you base this off of? And in this case the worker is both a worker and a capitalist. The capitalist hasnt gone away, his role is merely absorbed by the worker (and there are costs and benefits that go with that)

'm not a Marxist but isn't anarcho-capitalism a religion as well? Religion is basically just a set of beliefs.

a religion is based on bullshit stories not evidence. Example would be crap like "Honor thy father and thy mother", "Money is the root of all evil", "Profits are exploitation" etc

Maybe I was wording my accusation wrong. You see the capitalists contribution to society more important than the workers. Social classes are determined by capital, land ownership and relation to means of production primarily. If you see the worker and capitalist as equals, what are you judging upon? Because it is silly to judge a contributor to the market's value by anything other than capital because the system is a profit (capital) based system.

The capitalists are out to exploit the working class. The capitalists are out to make profit, through lowering their wages and the like.

There is no such thing as classes or a class struggle. My wage is going up but the company still makes a profit because it serves consumer demands. Markets arent about "exploitation" they are about servicing customers.

Re: Why communism will work, and capitalism won’t.

ladyattis — Wed, 08 Jul 2009 19:40:06 GMT

Truthisnonexistent:
I'm not a Marxist but isn't anarcho-capitalism a religion as well? Religion is basically just a set of beliefs.

Re: Why communism will work, and capitalism won’t.

Dondoolee — Wed, 08 Jul 2009 19:28:07 GMT

Truthisnonexistent:

Taras Smereka:

Yes someone makes the capital, the workers! The market cannot survive without labor.

No one can survive without labor. If you dont labor, you just lie on the couch and starve to death. Labor isnt a magic deity, it is what it is.

Besides the fact that free markets tend to monopolize, wages, historically have not been determined by the market. They have been won by collective struggle against the capitalist, against the market process.

Free markets do not tend to monopolize. Wages and normal profits are a reflection of value added. I have gotten a 13% raise over two years since I started this job. I am not a member of a union, management has given me better wages because I have improved my productivity. The unionized store down the street has lower average worker productivity than the nonunionized store that I work at, and the union is actually making workers less productive and preventing their wages from rising. Regardless of what Karl Marx, Father of the People (I was born in the soviet union, and I drank the same Kool Aid), tells you, these claims are not true as there is no evidence for them. Marxism is a RELIGION not a thoery.

Clearly you see the capitalist as more important than the worker. Seeing as the capitalist reaps so much reward and you see that as justified. The workers, in my opinion, are more important because their labor keeps the market functioning. I'm sounding like a broken record.

Again, I am saying that in a free market people are compensated according to their value added. You are pretending that there is a "class struggle" and I "see the capitalist as more important than the worker", which I do not. The capitalists arent out to "exploit" you, its all in your head. If you want to be worried, be worried about the government, criminals, and monopolists, they are the ones doing the exploitation.

Labor is what it is, it is what keeps a market surviving. Wages are not a reflection of value added, if that was the case then there would be no need for labor movements. If a union wins the workers a higher wage but the product is still being sold for the same value, there is no differentiation in the value added by the worker but they are still paid a higher wage because there is a lot of breathing room, the wages can increase dramatically and the business can still function fine because the owner reaps so much profit.

Self-managed workplaces have increased productivity than capitalist businesses.

I'm not a Marxist but isn't anarcho-capitalism a religion as well? Religion is basically just a set of beliefs.

Maybe I was wording my accusation wrong. You see the capitalists contribution to society more important than the workers. Social classes are determined by capital, land ownership and relation to means of production primarily. If you see the worker and capitalist as equals, what are you judging upon? Because it is silly to judge a contributor to the market's value by anything other than capital because the system is a profit (capital) based system.

The capitalists are out to exploit the working class. The capitalists are out to make profit, through lowering their wages and the like.

1) Social Class is determined by you and only you. You can freely judge and value people which ever way you want. If you want to divide it up by money fine, that's your perogative and value system. I think though that when people wish to enforce a value system unwillingly on others it tends to cause various degrees of tension

2) Labor is just a means to an end. Production is key. Labor for the sake of labor does nothing useful to society, hence why most people wouldn't naturally dig holes and fill them back up and expect something from society to give them something in return. I also think the very definition of the word "labor" has a bit of a negative conotation to it. We "labor" to get our desired end. Laboring is not something people want to do by the very definition of the word, it is there to achieve a desired end. Labor is not the ends it is the means.

What is the desired end? What ever motivates the labor. What motivates the labor? As far as interacting peacfully with other people is concerned, an outside demand. Who creates this outside demand? Anyone with a want or need.

Production is what is valued, focus on that. By it's very definition production is what people want. Take your division of "Worker" and "Capitalist" for example. The "worker" doesn't dig ditches for the giggles of it, he does it now because he has a valued end. He most likley gets money, hence he has now produced. Why did he produce? What caused him to produce? Why was this digging of the hole considerd production and not the hole I used in my previous example considerd production?

Likewise though, the "capitalist "labors as well, it is just a labor on your value set you consider improper. You are making arbitrary divisions, value is subjective. Even the "capitalist" who does nothing more than put his money (a symbol of past production accumulated somehow) in a business to invest in. The labor is the investment. But we don't care about his labor for the sake of his labor, we only care about the production.

And I suspect you don't care about labor, you care about hierarchies. And more specificaly put I bet you detest hierarchies done by private individuals, you value a majoritarian body deciding what is to be valued over individual transaction/goals, the "greater good", the "good cause", or "your greater good cause".

3) Self Managed workplaces: A free market welcomes any business model. If a certain business model is so vastly superior to another one, it most likley will be a triumph in the market if given a chance. The only thing that would could absolutly not allow a business model not to have a chance is government regulation, or some other form of force.

4) The consumer exploits the consumer. The bee exploits the flower, the flower exploits the bee. We can go on doing this for awhile, it doesn't really mean anything. Creating arbitrary divisions is easy. Anytime we interact with society with some purpose in mind, we are all trying to exploit some situation. If you think that is bad, fine, that is your value system.

5) Anachro Capitalism as a Relgion: depends on the person

Re: Why communism will work, and capitalism won’t.

FreedomIsYellow — Wed, 08 Jul 2009 12:05:14 GMT

The mistake I see commieboppers like truthisnonexistant make time and time again is that they don't understand the concept of subjective value.

In a market scenario, there are two exchanges happening:

1) The worker exchanges, voluntarily, his labour for money with the entrepreneur because he values the money more than he values his labour.

2) The entrepreneur exchanges, voluntarily, his product for money from a customer because the customer values the product more than he values the money.

Every party is exploiting each other, so to speak. The worker exploits the entrepreneur, as he doesn't have to raise capital and try risky ventures which might fail - he can just turn up and exchange labour for money. The entrepreneur exploits the worker because he can possibly sell a product for more than the monetary value of the labour and raw material input. The customer exploits the entrepreneur because he can buy a product which would take vastly more time to make than the time taken to earn the money for the product.

Each party values what he gives LESS than what he receives. This is the crux of the subjective theory of value.

So given this, a worker can:

-Create products himself and sell directly to customers (i.e he is acting as entrepreneur AND worker, taking the full burden of capital risk),
-Get together with other workers and form a co-operative to sell their products directly to customers (sharing capital risk),
-Forgo the capital risk and sell his labour to an entrepreneur.

All three scenarios described above are completely compatible with free markets.

Re: Why communism will work, and capitalism won’t.

Torsten — Wed, 08 Jul 2009 10:41:46 GMT

you12:

"National socialism as practiced in Germany in the 3rd reich worked like a charm because there was a high level of homogeneity, a strong sense of nationhood, and simply because the northern European/Germanic temperament is ideally suited to socialist society. Even today's anti-nazi documentaries with emotive titles about "the rise of evil" and so on admit that national socialist Germany was a paradise - as long as you were not one of those being hauled away to a concentration camp."

I don't know whether to laugh or ask you for a joint?

Why. National Socialism is perhaps not really good wording for that ideology and movement.

Maybe National Capitalism would have been a far better name. Just imagine then the "Nazis" would have been called "Napis"

Anyway, If Communism is that great, why not simply practice it? Even in the theoretical construct of a libertarian society, people would be free to form communistic associations and practice communism there. Or am I wrong on this?

Re: Why communism will work, and capitalism won’t.

AJ — Wed, 08 Jul 2009 10:35:41 GMT

BarleyLegal:

Truthisnonexistent:

You can't compare the complexity of the modern market to you and your friend trading fruit.

Why not? It's the same thing.

Because she heard that somewhere.

Re: Why communism will work, and capitalism won’t.

BarleyLegal — Wed, 08 Jul 2009 09:09:51 GMT

Truthisnonexistent:

You can't compare the complexity of the modern market to you and your friend trading fruit.

Why not? It's the same thing.

You are also not taking into account the social experience of the worker.

Which worker?

Re: Why communism will work, and capitalism won’t.

AJ — Wed, 08 Jul 2009 08:09:50 GMT

http://freedom-school.com/money/ (first link at the top)

Re: Why communism will work, and capitalism won’t.

filc — Wed, 08 Jul 2009 07:17:41 GMT

AJ:

You assume labor movements are helpful or rational on the part of workers. And of course, no, wages are ALWAYS a reflection of the value added, or else some other company would spring up to better reflect the value added, and the workers would change jobs. You sorely need to read this comic book, at least the first few pages:

http://home.earthlink.net/~schiffeconomics/01.htm

Or else we cannot continue our discussion. There would be no point, as you yet don't understand the dynamics of free exchange.

Man thats a great link, i've never seen it. I own a few of Irwins books. I consider it a personal attack for what the gov did to him. thanks!

Errm.. does anyone have this in PDF format? I'd like to send it to my Kindle.

Re: Why communism will work, and capitalism won’t.

AJ — Wed, 08 Jul 2009 06:41:08 GMT

Truthisnonexistent:
"If the worker agrees to work for less than the "full value" of the good, how is that a violation of the worker's rights?"

Because there is no non-exploitative, practical alternative. Not everyone can be an owner or self-employed.

You say that because, apparently, you believe all market interactions - all trade where one tries to maximize one's own benefit - are exploitative. Think about the implications of that.

Truthisnonexistent:
Government intervention tends to monopolize, can we agree? Monopolies mean that the capitalist can charge insane prices ect which increases their profit, capitalists like that.

They sure do, we agree on this. If you are against monopoly, you are our friend and ally (even if misguided about economics).

Truthisnonexistent:
Markets do not meet the needs of society as a whole.

History utterly disagrees.

Truthisnonexistent:
Wages are not a reflection of value added, if that was the case then there would be no need for labor movements.

You assume labor movement increase wages, but they do not - on average. They increase wages for some, but make others unable to be employed, thereby reducing their wages to zero. In the free market, labor unions are not necessary, let alone why they have done in the current system.

Truthisnonexistent:
The capitalists are out to exploit the working class. The capitalists are out to make profit, through lowering their wages and the like.

Workers are out to "exploit" business owners as well! Workers are out to make a profit for themselves as well, by increasing their wages. By your logic, a worker should not shop around for the highest wage, as he would be "exploiting" the employer.

Truthisnonexistent:
The capitalist wants the wages as low as possible, social struggle forces the capitalist to higher the wages. Now, if the wages were made higher by a process separate from aspects of the market (to some extent) why did they raise the wages? If the workers are not that important to the business or market.

Wages rise when profits and/or productivity rise. There is logically no other way, because if there are no additional profits where are the increased wages going to come from? You may say the owner's cut will be reduced, but then the owner has less ability go start more businesses and help more people. You do realize that starting a new, successful business in, say, shirts makes shirts less expensive for everyone, don' t you? Not to mention offering them jobs.

If workers want to raise their wages, they shop around or increase their own ability to produce. They can only shop around to the extent that there's a free market and a lot of business activity.

Truthisnonexistent:
The "voluntary" agreement is invalid because there are no other non-exploitative, practical alternatives.

If you're dying of thirst in the desert and I offer you a gallon of water for $100, I am surely exploiting you, and surely there are no other non-exploitative, practical alternatives, but the real question here is, have I helped you or hurt you? I have helped you, even to the point of saving your life. Furthermore, would you be able to get more or less water if there were more businesses selling water than just me? The more there are, the cheaper it becomes and the longer you can live. Of course, in reality I myself would give you my water if I could spare it, but what if I couldn't? What if giving you my water would leave me no water to sell for food to feed my family? You have money, I have water. We both have legitimate needs - you your life, me my family's life. We make a trade. How do you know that big capitalists are not making their profits because they think - ney, KNOW - that they are making everyone in the world better off through their profit-seeking. Just because there is a happy coincidence of interests doesn't mean there is anything bad happening. You simply cannot say that a trade is exploitative in any important way unless there is deception involved.

Truthisnonexistent:
The current economic system practiced is not an ideal capitalist system but it is an ideal system for capitalists.

For SOME capitalists - the ones who don't participate in the free market, but use government instead. For all other capitalists, it's a pretty bad system. This is an argument against government, not against the free market.

Truthisnonexistent:
Not all of us benefit from the market. If that were to be true then there would be no starvation in the world. To say everyone benefits from the market or that the market meets everyone's needs is purely utopianism.

Free exchange makes both parties better off. If I trade you apples for oranges, because you want apples more and I want oranges more, we are both better off. If I trade my labor for wages, both I and the employer are better off - or else we wouldn't have done the trade.

Truthisnonexistent:
Besides the fact that free markets tend to monopolize, wages, historically have not been determined by the market.

Whoah there, free markets do NOT tend to monopolize! If there is a monopoly in a free market, and that monopoly is charging high prices that are exorbitant, competition will come in and undercut it. Basic economics. AND, wages are always determined by the market - in a free market. It can't but be the case, since the interactions are voluntary.

Truthisnonexistent:
They have been won by collective struggle against the capitalist, against the market process.

No, they have increase their wages by shopping around, just like business owners lower their wages by shopping around for employees. It's no surpise that owners are trying to pay as little as possible, and workers are trying to get as much as possible. Welcome to reality.

Truthisnonexistent:
The workers, in my opinion, are more important because their labor keeps the market functioning. I'm sounding like a broken record.

They are both important. Without workers, you're right, there's no market. But without organization, there is no marginal efficiency that yielded the extreme wealth and technology we enjoy today. Now you'll say that workers can self-organize. Sure, they can, and that was a nifty idea. If it were a viable option, you would see many such groups with their own companies and such, but in fact the normal firms of the world are overwhelmingly more successful. So it was a nice idea, but it hasn't worked. If you want to continue arguing for it, the burden should be on you to explain in detail why it would work.

Truthisnonexistent:
The selling price of a product is determined by the laws of supply and demand (the market) while the wages of the worker are not.

Yes they are. To see this, imagine Jenny works at a shirt factory tie-dying shirts, and Mike buys shirts from the factory, tie-dyes them, and sells them back. Jenny gets paid $10 per shirt. Joe buys the shirts for $1 and sells them back for $10, so he gets $9 per shirt (maybe he's not as smart as Jenny, or maybe he enjoys not having a boss). Let's say both Jenny's and Mike's tie-dye shirts end up selling for $50 each at the store.

In this situation, if Jenny is being exploited, then so is Mike. I trust you're with me so far. Now, your theory says that Jenny should get paid something closer to $50 for her labor, and it follows by the same logic that Mike should also get close to $50 for his labor. Mike bought a shirt, improved on it, and sold it back for $9 more. The product was then sold for much more than that. To be consistent, you must argue that the company didn't pay Mike enough for the shirt. By extension, you must argue that it's possible to pay too low a price for something.

If so, I hope you realize that you do not even believe in simple free trade of goods. To be consistent, you would have to argue that you are exploiting me if you buy apples from me for $0.10 apiece, even if I want to sell you apples for that price because no one else wants to pay anything for them and I can't eat them all myself. Try as you might, you cannot get around the fact that all free-market interactions are voluntary. The workers "exploit" the business owner just as much as the business owner "exploits" the worker, and in the same way the buyer and the seller of every interaction, insofar as they negotiate for the best price, aim to "exploit" each other.

Truthisnonexistent:
When I speak of capitalists, I speak of the owners of the means of production.

A worker is an owner of means of production - you said so yourself, in effect, why you said that workers produce things. They aren't a factor in production, then they can't produce anything.

Truthisnonexistent:
When I criticize capitalism, I criticize the current economic system.

Then your whole criticism is based on a fallacy.

Truthisnonexistent:
Like I said, the contract is invalid because there are no other non-exploitative, practical alternatives, this is getting pointless..

See above.

Truthisnonexistent:
The owner's capital is the worker's labor.

"When I speak of capitalists, I speak of the owners of the means of production." <-- You said this. Now which is it? Are the means of production the workers or the equipment and raw materials? And if in our current system capitalists own the workers' labor in the same way they own the material resources, how come the law protects his right to the material resources but does not protect his "right" to force a worker not to quit?

By using the term "owner's capital" you imply ownership (hence the apostrophe). The worker is not a slave. To say there are no viable alternatives to working is silly, because before capitalism there were even less alternatives. The worker is free to try to start his own business, or his own cooperative, or be self-employed, or beg from others if he thinks that will work. Throughout history, most people have been poor and starving, and it was only when capitalism came along that this started to change. Now it has changed in a big way, and we have entire countries where the poor people have TVs and cellphones, things the kings of old could scarcely imagine. They may not be living well, but without capitalism they would in all likelihood not be living better, they would be starving to death - as history shows. The only other chance is if there's a better system, but then why hasn't that system ever been tried or worked on a large scale? History is a natural vetting process for systems, and free markets are winning out as the most successful, regardless of the fact that we have yet to get totally free markets.

Truthisnonexistent:
The owners of the means of production which receive beneficial treatment from the state. The CEO of company A which receives beneficial treatment from the state also benefits from the workers of his company. Large corporations produce the most jobs and large corporations receive the most beneficial state treatment.

Yeah, that's an argument against the state, not against the free market.

Truthisnonexistent:
Wages are not a reflection of value added, if that was the case then there would be no need for labor movements.

You assume labor movements are helpful or rational on the part of workers. And of course, no, wages are ALWAYS a reflection of the value added, or else some other company would spring up to better reflect the value added, and the workers would change jobs. You sorely need to read this comic book, at least the first few pages:

http://home.earthlink.net/~schiffeconomics/01.htm

Or else we cannot continue our discussion. There would be no point, as you yet don't understand the dynamics of free exchange.

Re: Why communism will work, and capitalism won’t.

Conza88 — Wed, 08 Jul 2009 05:58:16 GMT

banned:

Truthisnonexistent:
Capital, which isn't necessary to the markets survival.

Bzzt, wrong.

Capital is entirely necessary. Labor cannot be realized absent of capital. Try again.

Truthisnonexistent:
Capital comes from labor.

Bzzt, wrong again.

Capital comes from savings. While labor is necessary in some way to it'

This may help...

(Please visit the site to view this media)

Re: Why communism will work, and capitalism won’t.

banned — Wed, 08 Jul 2009 05:27:43 GMT

Truthisnonexistent:
Capital, which isn't necessary to the markets survival.

Bzzt, wrong.

Capital is entirely necessary. Labor cannot be realized absent of capital. Try again.

Truthisnonexistent:
Capital comes from labor.

Bzzt, wrong again.

Capital comes from savings. While labor is necessary in some way to it's creation (and with a division of labor market, it's not always by direct involvement). Savings is the antecedent to capital production, whithout which you will be unable to develop capital.

Truthisnonexistent:
The capitalist wants the wages as low as possible, social struggle forces the capitalist to higher the wages.

Bzzt, three strikes, you're outta here!

Wages rise naturally as production allows savings, the creation of new capital, and economic growth, which in turn, decreases the costs of production.

I am, of course, speaking in terms of "real wages".

They also rise as a result of firms competing over more experienced and more productive workers through offering greater incentives for workers working at their firm than other firms.