Political Theory

Re: Why is capitalism thought of as slavery/satism?

Marko — Wed, 03 Dec 2008 20:42:29 GMT

eliotn:

I don't get it. Why do people thing that capitalism is somehow equivelent to slavery/satism?

I think it has something do with the theory of accumulation of capital. Supposedly unless capitalism is regulated then this "turbo-capitalism" is going to lead all the wealth to becoming more and more concentrated until one man owns all the wealth in the world and everybody else is forced to work for him for 12 cents an hour and be his wage slaves or else they must die of hunger and you can not be free if you are dead from hunger.

Re: Why is capitalism thought of as slavery/satism?

Jon Irenicus — Wed, 03 Dec 2008 18:21:26 GMT

Jon, why are you and I always arguing without disagreeing? I never denied that short-term profits were possible. Yes, perhaps the better way of saying it is that the EQUILIBRIUM state of the market is one without profits from capital investment alone. While the market is still new, before the workers realize just how much value they've added to the product, you will make more money than they demand in pay.

My point is that there are ways of making profit (and not just short-term - the market always is faced with uncertainty) without being either a laborer or a capital-owner (or maybe one of the two) that do involve a contribution to the production process. Keep in mind equilibrium is never reached, it's a tendency of the market to move toward it though. What I do see disappearing on the market are the useless amongst CEOs and managers who arise due to the state's bureaucratization of the firm. Unless they can pull their weight I do not see a part for them in the market.

Of course, interest will continue accruing to owners of capital, whoever that may be. I do not see why you think this will disappear. At best, these will be competed down to the level that is prevalent across the market.

Re: Why is capitalism thought of as slavery/satism?

Nitroadict — Wed, 03 Dec 2008 16:15:56 GMT

JCFolsom:

As I've said, in a true free market, the only way to make money will be to personally add value to something you sell for more than you buy. Not one penny will accrue by virtue of ownership alone, in the long term.

Don't mom & pop alternatives already sort of do this? I do know that many find mom & pop alternatives (as well as buying local for various other things, such as local foods etc.) for similar reasons of added value, versus buying them elsewhere.

I would say this is a prime reason I go to used book stores & specialty vinyl records stores, as they have much more added value to me (atmosphere, conversation, special deals, certain rare stock etc. not found online).

Re: Why is capitalism thought of as slavery/satism?

JCFolsom — Wed, 03 Dec 2008 16:07:37 GMT

eliotn:
If I hear you correctly, does that mean that if I am an entreprenuer that has forcasted future demand and profited, my profits will be nonexistant eventually? Or, will the free market come to a point where profits are impossible, aka ERE?

Well, I've been reading up a little bit on these acronyms y'all've been throwing out there, ERE and DMRP, because I'm not that familiar with the jargon. As it turns out, while Jon's question led me to believe we agreed, we still actually don't. My understanding is that the concept of ERE still allows for rents to accrue to the capital owner for their machinery, and my position is that long-term, they will not, because their clients will outcompeted by owner-operators who have lower overhead.

Profits would basically be the result of repeated gambling. To take advantage, you'd have to hire people at a certain rate, and hope that you will be able to make more money in your initial sales than your costs including labor. It is very easy to lose in this fashion. Particularly if Union consciousness is very prevalent, too, people will figure out that instead of a set amount, they can take a certain percentage of the revenue after material expenses, eventually, as a group, all of the remaining revenue.

As I've said, in a true free market, the only way to make money will be to personally add value to something you sell for more than you buy. Not one penny will accrue by virtue of ownership alone, in the long term.

Re: Why is capitalism thought of as slavery/satism?

eliotn — Wed, 03 Dec 2008 15:14:06 GMT

JCFolsom:
This isn't about an "aversion to capitalists". It isn't about the immorality of profits in and of themelves. It is about the immorality of profits because they are only possible, in the long term, through interventions in the market.

If I hear you correctly, does that mean that if I am an entreprenuer that has forcasted future demand and profited, my profits will be nonexistant eventually? Or, will the free market come to a point where profits are impossible, aka ERE?

Re: Why is capitalism thought of as slavery/satism?

JCFolsom — Wed, 03 Dec 2008 07:12:38 GMT

Jon Irenicus:
Which is to say, undervalued factors will tend to earn their DMVP as the market approaches equilibrium. Yes.

Jon, why are you and I always arguing without disagreeing? I never denied that short-term profits were possible. Yes, perhaps the better way of saying it is that the EQUILIBRIUM state of the market is one without profits from capital investment alone. While the market is still new, before the workers realize just how much value they've added to the product, you will make more money than they demand in pay.

Re: Why is capitalism thought of as slavery/satism?

JCFolsom — Wed, 03 Dec 2008 07:04:50 GMT

This is going to be ridiculously long, but that's okay, I guess...

liberty student:
See, this is where I have a problem too. The aversion to capitalists doesn't account for the fact that some of them squander their capital by hiring the wrong people, going into the wrong market at the wrong time, or misjudging trends in the marketplace. Some might be incompetent as ownership.

This isn't about an "aversion to capitalists". It isn't about the immorality of profits in and of themelves. It is about the immorality of profits because they are only possible, in the long term, through interventions in the market.

liberty student:
Some of the things I read yesterday (Tues) bothered me. I know there is a militancy about organized labour, but I guess I didn't really realize how ideologically committed that segment of the libertarian spectrum is. Because it sounds to me, that coercion over people with capital through group organization is a-ok. Even if that capital was accumulated honestly, and deployed with sincere intentions, somehow, the labourers who did not accumulate that capital, but do use it (as a purpose for their own jobs) somehow have a higher claim on it.

That's a sloppy use of the word "coercion". Coercion would be the union breaking into the capitalist's office and threatening to beat him if they don't get higher pay. This is just people as a group refusing to work unless their requirements for compensation or other conditions are met. There is nothing remotely coercive or immoral about that.

liberty student:
I feel like this is totally wrong. But maybe I am misinterpreting it, or missing some key piece of info. But if we would think it is wrong for people to get together and coerce (through extortion) against say a church that allows gay priests, or a school that teaches {insert race here} children, then I do not see how it is justified doing the same against honest, rightful property owners.

If a church's leadership decides to allow gay priests, and the congregation refuses to go until they reverse that decision, I fail to see how (political opinions aside) they have done anything remotely coercive.

liberty student:
And I use extortion, because there is this notion that one side has leverage, and that the leverage should not be removed (neither of which I can see, so I am having a hard time understanding) but rather the leverage should be given to the group (labour), instead of the individual (capitalist). That through organization (not increased production) they can raise their wages until the capitalist cannot profit from his investment of his savings and capital goods.

Why should they increase production; they only ask for the full value of their production. The owner/manager can still justifiably (if he does it well and the money is there) pay himself a hefty wage for his part in brining their goods to market, he just can't take more than he contributes in labor.

liberty student:
Frankly, it seems a little Marxian, not in the ideological sense, but in the unnatural way it expects people to act in order for the system to work. The motive for generating capital, and undertaking large capital projects, is based on profit. All trades are based on profit, we know this, it's fundamental human action.

Profit and gain are different things based on my usage. All trades are based on gain. I may not be using my terms correctly, though. Certainly, no one will invest capital unless they can gain by it.

liberty student:
Now we admit, we need capital to pay our workers, so they can produce, and then we can sell (consume). Production comes before consumption. But who in their right mind, would take all of the risk of investing their capital to buy capital goods, pay wages during production, plan etc, if the workers (who have been paid prior to the goods going to market (Say's Law) intend to consume the full sales price in production costs?

Only one who, by himself contributing, could make more money thus using his capital than he could otherwise. Remember, if you take part in production, you will be able to claim that part of that value for yourself. It is only when you try to generate a difference between your costs and the sale price that you will be outcompeted and brought low by labor action.

liberty student:
You invest your capital. If the business fails, you lose. If the business succeeds, you get nothing (up and above your own labour, which you could have sold to someone else stupid enough to risk his capital for nothing). Am I misunderstanding this?

No, that's pretty much right. I'm not saying what ought to be because of some subjective preference, but because of what would be if the market were free. Blame God if you want to for the way logic and the world works. Of course, if you work for someone else, you won't be the CEO drawing the largest wage, and you'll have to take orders from someone else. And people will invest capital, because otherwise everyone will starve. I do believe, however, that you are ignoring my statements that large-scale production, such as what I think you envision, will be vastly the minority in a free market. Extreme small-scale, local production, frequently with the owner being the only or one of very few workers, will be the norm.

liberty student:
And one more thing just occurred to me. How do we replace capital goods, if the workers consume all revenue in wages? I mean, I can't understand why a capitalist would even want to start a business under this scenario, but lets say he does. How does he manage the company, if in effect the budget is set by the employees and their organized wage negotiations?

Wage-earners will have to learn to be realistic, too, and an open sharing of accounting info will help them to understand. No worker's group with any foresight will not allow you to spend any revenue on maintenance and improvements.

liberty student:
Remember in Atlas Shrugged

I am not going to argue against a point made from a work of fiction, I'm sorry.

liberty student:
Anyway, I got material for a new blog post, so I am happy. Hopefully future responses here will verify or correct any opinions I have developed. I want to be right, not right wing. When I came here, I was barely a minarchist, and couldn't get down with anarchism. Now I'm the biggest anarchist I know. Maybe I'm slow on the uptake, but this one doesn't reason out as something I can buy into. Unless I don't understand it, or many of my premises need checking.

You've been playing it pretty straight, Lib. I think we are speaking slightly different languages, but I believe we are starting to understand each other. Unfortunately, as you've said, I don't see this understanding leading to agreement just yet, but we'll see.

Re: Why is capitalism thought of as slavery/satism?

Jon Irenicus — Wed, 03 Dec 2008 06:49:00 GMT

Yes, great, but, what do they do to meet that demand? You're talking about it like they're being paid as fortune-tellers. What is it they do to meet the market demand, and how do they make a profit from it?

They acquire resources and employ them in the direction of profit, whatever that may be. If that means putting labour and capital to work on on making widgets the entrepreneur believes will be fashionable, they will do that. If the entrepreneur predicts correctly and is the first to meet this need or one of the first, they will enjoy high profits in virtue of being one of the few suppliers of it. It is a coordinative function. If you're asking who pays them for what, no one but consumers does so. Entrepreneurs risk their own resources on the market. If they anticipate correctly, they are rewarded by high demand for their product. If not, they suffer losses. The entrepreneur and the owner of capital tend to be one and the same person, but that isn't necessarily so (e.g. in the case of rented capital.) At any rate, the point is given the fact of uncertainty profits will continue to exist, and potentially accrue to individuals who are not necessarily laborers or owners of capital.

No, not arbitrary. The businessman will always buy his materials and pay his workers as little as possible, but sell his goods for as much as possible. "Goods", in this circumstance, can stand for any number of things. The markup is based on the market. However, what I'm saying is that the fact that there is any gap between the most he can sell for and the least he can pay is due to distortions in the market from government intervention.

Which is to say, undervalued factors will tend to earn their DMVP as the market approaches equilibrium. Yes.

Re: Why is capitalism thought of as slavery/satism?

JCFolsom — Wed, 03 Dec 2008 06:41:44 GMT

Jon Irenicus:
It would help if you familiarized yourself with Austrian economics. Profits are the rewards entrepreneurs get when they meet a demand they anticipate successfully.

Yes, great, but, what do they do to meet that demand? You're talking about it like they're being paid as fortune-tellers. What is it they do to meet the market demand, and how do they make a profit from it?

Jon Irenicus:
I think you perhaps believe we're speaking of profits as cost plus some arbitrary markup.

No, not arbitrary. The businessman will always buy his materials and pay his workers as little as possible, but sell his goods for as much as possible. "Goods", in this circumstance, can stand for any number of things. The markup is based on the market. However, what I'm saying is that the fact that there is any gap between the most he can sell for and the least he can pay is due to distortions in the market from government intervention.

Re: Why is capitalism thought of as slavery/satism?

liberty student — Wed, 03 Dec 2008 06:35:08 GMT

Nitroadict:

Haha, no worries; I probably should've chosen the embarassed smiley, actually. I seem to be popping up in threads more than usual latley. Darn insomnia.

You shouldn't have to apologize for following discussion.

I'd love to read your opinion on what I have written. You're an intelligent guy, and I respect your thoughts. Am I missing something here?

@ Wombie - As you know more about mutualism than I do, and have shown a sympathy towards labour, I'd also like to hear your thoughts.

Re: Why is capitalism thought of as slavery/satism?

liberty student — Wed, 03 Dec 2008 06:20:28 GMT

JCFolsom:

I don't know what you mean by "the reward an enrepreneur gets for correctly judging market trends". How does he gain the reward for his correct evaluation of the market?

See, this is where I have a problem too. The aversion to capitalists doesn't account for the fact that some of them squander their capital by hiring the wrong people, going into the wrong market at the wrong time, or misjudging trends in the marketplace. Some might be incompetent as ownership.

The anti-capitalist stance seems to be predicated on an aversion to capitalists using capital as a club to order around labour, but we all know that labour for the most part is voluntary. That is, people are not chained to their jobs, and changing employers is not that difficult. In fact, labour faces much less restriction in the marketplace than business does. But that's a tangent...

I think because not all capitalists turn a profit, undermines the argument that capital is the path to "automatic profit without labour (or by purchasing someone else's labour)".

Some of the things I read yesterday (Tues) bothered me. I know there is a militancy about organized labour, but I guess I didn't really realize how ideologically committed that segment of the libertarian spectrum is. Because it sounds to me, that coercion over people with capital through group organization is a-ok. Even if that capital was accumulated honestly, and deployed with sincere intentions, somehow, the labourers who did not accumulate that capital, but do use it (as a purpose for their own jobs) somehow have a higher claim on it.

I feel like this is totally wrong. But maybe I am misinterpreting it, or missing some key piece of info. But if we would think it is wrong for people to get together and coerce (through extortion) against say a church that allows gay priests, or a school that teaches {insert race here} children, then I do not see how it is justified doing the same against honest, rightful property owners.

And I use extortion, because there is this notion that one side has leverage, and that the leverage should not be removed (neither of which I can see, so I am having a hard time understanding) but rather the leverage should be given to the group (labour), instead of the individual (capitalist). That through organization (not increased production) they can raise their wages until the capitalist cannot profit from his investment of his savings and capital goods.

Frankly, it seems a little Marxian, not in the ideological sense, but in the unnatural way it expects people to act in order for the system to work. The motive for generating capital, and undertaking large capital projects, is based on profit. All trades are based on profit, we know this, it's fundamental human action. The first thing (outside my perception of militancy) is that removing profit from economy is a big no-no. Man is wired to work off the profit (material or immaterial) motive.

Now we admit, we need capital to pay our workers, so they can produce, and then we can sell (consume). Production comes before consumption. But who in their right mind, would take all of the risk of investing their capital to buy capital goods, pay wages during production, plan etc, if the workers (who have been paid prior to the goods going to market (Say's Law) intend to consume the full sales price in production costs?

You invest your capital. If the business fails, you lose. If the business succeeds, you get nothing (up and above your own labour, which you could have sold to someone else stupid enough to risk his capital for nothing). Am I misunderstanding this?

And one more thing just occurred to me. How do we replace capital goods, if the workers consume all revenue in wages? I mean, I can't understand why a capitalist would even want to start a business under this scenario, but lets say he does. How does he manage the company, if in effect the budget is set by the employees and their organized wage negotiations?

Remember in Atlas Shrugged, what happened at the auto plant when the workers started deciding their own wages, and who would work overtime and so on and so forth? Disaster. And it wasn't that far fetched, in many of Rand's examples of socialism in that book, they are so tragic because we recognize how human nature acts when property is divorced from decision making. How man acts when everything is common, and a disparate group of people all seek to control it democratically.

Anyway, I got material for a new blog post, so I am happy. Hopefully future responses here will verify or correct any opinions I have developed. I want to be right, not right wing. When I came here, I was barely a minarchist, and couldn't get down with anarchism. Now I'm the biggest anarchist I know. Maybe I'm slow on the uptake, but this one doesn't reason out as something I can buy into. Unless I don't understand it, or many of my premises need checking.

Re: Why is capitalism thought of as slavery/satism?

Jon Irenicus — Wed, 03 Dec 2008 05:58:12 GMT

It would help if you familiarized yourself with Austrian economics. Profits are the rewards entrepreneurs get when they meet a demand they anticipate successfully. This causes an increasing number of profit-oriented individuals to enter the market and also provide the good until the profits gradually dissipate, which puts the market back on the road towards equilibrium. Losses are the other side of the coin, and they're suffered when entrepreneurs incorrectly estimate demand for a good, to the point that they cannot break even, causing them to divert resources to more profitable sectors of the economy.

I think you perhaps believe we're speaking of profits as cost plus some arbitrary markup. Profits and losses will exist so long as uncertainty exists, and are signals that an entrepreneur is either succeeding or failing in serving his consumer base. The long-run trend of course is towards equilibrium, by way of the process described above. Look it up in Economics for Real People, or Man, Economy and State or even Menger's Principles.

Re: Why is capitalism thought of as slavery/satism?

JCFolsom — Wed, 03 Dec 2008 05:41:24 GMT

Jon Irenicus:
Again, how does this imply there will be no profit-seeking? If you mean returns to capital, i.e. interest, that will exist regardless and will accrue to owners of capital. who have the good sense to put capital to this or to that use. If you mean profit, i.e. the reward an entrepreneur gets for correctly judging market trends, then no, again, it will not disappear.

I mean profit in terms of sale prices for goods or services in excess of costs including labor. Interest is different. Again, if you own something that goes up in value over time and then sell it, then you can make money that way. I don't know what you mean by "the reward an enrepreneur gets for correctly judging market trends". How does he gain the reward for his correct evaluation of the market?

Re: Why is capitalism thought of as slavery/satism?

Jon Irenicus — Wed, 03 Dec 2008 04:46:03 GMT

Again, how does this imply there will be no profit-seeking? If you mean returns to capital, i.e. interest, that will exist regardless and will accrue to owners of capital. who have the good sense to put capital to this or to that use. If you mean profit, i.e. the reward an entrepreneur gets for correctly judging market trends, then no, again, it will not disappear.

Re: Why is capitalism thought of as slavery/satism?

JCFolsom — Wed, 03 Dec 2008 04:31:23 GMT

Jon Irenicus:
Oh, just in the sense that all value added to materials is by labor on/through capital, and that therefore the free market and therefore just wage is the exact difference between the initial/maintenance cost of capital and the final price it is sold for, and that there is therefore no room for the capitalist profit-seeking that many anarcho-capitalists seem to think will exist in a free market. With all that stuff I've already written. And stuff.

What on earth makes you believe this?

Simple mathematics. You got your raw materials and machinery for somethng likely pretty close to what you could sell them for. You aren't going to profit that way. You add value to raw materials by making them somehow more useful through labor. Your labor is the source of the difference in value between what you bought and what you sold.