Saturday, 10 April 2010

Cause or solution?

Unless i am very much mistaken, the purpose of Capitalism is the use of wealth to create more wealth.
Of course this is most beneficial to the people who have wealth in the first place and a bit more of a struggle if you haven't got the proverbial pot to go in to start with.
The general idea is that the money will trickle down from the top and everyone will benefit, even those at the bottom.
Nice idea in theory but due to human nature which is basically selfish, it would be safe to say this hasn't really been happening and the trickle down has been at the minimum the wealth owners could get away with.
A classic example is the minimum wage here in the United Kingdom which was fought against tooth and nail by the bosses who refused to introduce it voluntarily until forced to by the incoming 1997 Labour Government.
The collapse of industry and wholesale closures that we had been warned would occur if a minimum wage was introduced didn't happen and now it is accepted that bosses can no longer offer insulting wages in the knowledge that they would still fill the vacancy.
What this shows is that we cannot trust businessmen to look out for the best interests of us and they need to be watched. The banks are finally being bought to book after years of treating their customers as cash cows with extortionate fees and the mis-selling of protection plans.
The bottom line is the same as my first line, the purpose is to use their wealth to create more wealth.
At some point there will be a crunch because as more of the money continues to go upwards, there will be less left to go downwards and we are already in a position where people are actually dying because they can't afford to heat their homes in winter and scandalously, we are not rioting in the streets about it, just seem to accept and see where we can trim back to accommodate the hike in our utilities.
Maybe Capitalism has run its course and although it lifted many out of poverty initially, it seems that it now is the cause of more problems than it solves as it chases bigger profits at the expense of those benefiting from Capitalism the least.


Nog said...

"Capitalism"? What is "capitalism"? There's a big difference between a free market society and a mercantilist and/or mixed economy society. Your use of "capitalism" would seem to fit best with the definition of a mercantilist or mixed economy society.

I wholly agree with your objections to capitalism qua mixed economy.

You mention the banks. Modern banks are government institutions which would not exist in a "free market". No bank on a free market with 10% reserves could stay afloat for longer than a week even if the bankers weren't arrested for fraud and breach of contract (by engaging in fractional reserve banking).

Banks get all sorts of special bonus privileges to help governments borrow exorbitant amounts of money that no free market in lending would bear. You are correct in noticing that these special government-granted privileges allow banks to essentially cheat and "use wealth to create more wealth" without facing any kind of risk.

In the free market, (individual) wealth doesn't "grow itself" without risk. The more money you stand to make the more money you stand to lose. Kids who are born rich make dumb investments and lose their money to smart kids who grew up in the poorhouses.

Consumers of regular commodities are merciless. They force entrepreneurs to sell their souls for a few points of market share.

In free markets, individuals may make more or less relative to one another but on the vast majority of everyone in society is slowly but surely becoming wealthier and wealthier.


Falling on a bruise said...

The BBC are reporting that the
a decade ago, a boss earned on average 47 times more than his employee. Today it is averaging 128 times.
The bosses earnings are shooting up and the employees are not going up at the same rate.

I agree, a few people are getting wealthier and wealthier. Just a few though while everyone else's wages stagnates while the prices go up which is in affect a pay cut.

Anonymous said...


in america, being in poverty means you make less thatn $14,000 per year. in the rest of the world it means you make less than $1 per day...

the typical american in poverty has a home (not homeless), is overweight (not under fed or starving), is clothed, has access to free (they dont pay for it) education, has access to free (they dont pay for it) emergency medical care (in spite of what is on the news everyday), has transportation (most have a car), has a color tv, has CABLE TV (wow - poverty conditions - i think not), has a phone, has a stereo. the last census shows that 30% have a trash-compactor (go figure - must be in the government housing projects).

capitalism has worked out pretty good for america's poor... quite a bit has trickled down...


Falling on a bruise said...

I agree that Capitalism did raise the standard for everyone but what i am saying is that by the very nature of capitalism (making more wealth), the top now seems to be sprinting away from the bottom and because the bottom can't keep up, it is suffering and as good as going backwards.