Monday 28 June 2010

Why we need another system

From Wikipedia: Capitalism is an economic system in which the means of production are privately owned; supply, demand, price, distribution, and investments are determined mainly by private decisions in the free market, rather than through a planned economy; and profit is distributed to owners who invest in businesses.

Capitalism has obviously pushed us on a long way and it is hard to argue that society has not benefited from it, the poor of our grandparents day were many times worse off than the poor today.
What seems to have happened though is that Capitalism has run its course. We have the infrastructure in place for law and order, health, education, employment and welfare. All we seem to be doing now is rearranging the furniture and tinkering with the edges. Capitalism has run its course and now it just seems to be turning in on itself.
As the description states, the system is privately owned and what this means is that making a profit is the driving force. As we have seen in the recent banking crisis, the need to make larger profits drives people to take bigger risks which results in ever bigger crashes. The utility firms, well aware that people are struggling to pay their bills, continue to raise their prices. No sympathy if you cannot afford to pay, they just cut you off or have you up in a court of law threatening prison in the case of the tv license.
The case in America where a privately run youth prison was paying a judge to incarcerate young offenders was a stunning example of how the rush to make a profit precedes any thought of doing what is right for the people it is supposedly being run for. An extreme example granted but an example of the ruthlessness of a company and a judge that had no consideration for the lives they ruined.
The main criticism of Communism is that people wouldn't share or do their part
but is what we have now, where companies can ride roughshod over what is best for society, any better? No sharing there, if you can't pay for it then you go without no matter if its electric, food or water.
BP is much in the news recently and they are serial offenders in bad business practises bought about by trying to cut corners to raise their profits.
The recession has led to mass unemployment through no fault of there own who now find themselves at the welfare office while the public face huge cuts and the financial markets that caused them, get handed billions to prop them up and are back to making huge profits and paying themselves obscene bonuses.
Capitalism was a force for good but it has outlived it usefulness.
There are people literally dying because they cannot afford to buy medicine or the health system is having to ration drugs because the pharmaceutical companies charge such hefty prices.
I don't know what we can replace it with, that is for the politicians to work out, but we need a new system to sustain what we have because we have moved into a phase where profit trumps everything, including lives, and that's not a good place to be.

14 comments:

Anonymous said...

hanz,

"mass unemployment thru no fault of their own".

news flash: employment is not the intent of capitalism. it is the entry point. in capitalism you are supposed to progress into owning your own business.

western governments interceeded in capitalism to discourage private businesses. why? in order to help large manufacturing companies staff their factories so they could build weapons to fend off other nations (germans and japanese) that were building war machines

"people are dying because they can't afford drugs".

some of us have bad luck or make bad choices in our lives. what has that got to do with capitalism? don't confuse the economic system by inserting human flaws that can never be eliminated. if everything, including health care and drugs, was free some people would still commit crimes, some would still not go get their free drugs, some would not take their free drugs if they were handed to them...

you can't fix people...

q

Cody Bones said...

Just a quick question. What are my options for leaving the workers paradise? If I decide that I don't want to be a part of this grand future, will I be allowed to leave, or will I be forced to stay for the good of the system? I'm sorry to say this Hanz, but capitalism is the only system that is compatible with freedom.

Cody Bones said...

Sorry, just a few more comments

1. "As we have seen in the recent banking crisis, the need to make larger profits drives people to take bigger risks which results in ever bigger crashes."

When profits are privatised, and losses are socialized, that's not capitalism.

2. "The utility firms, well aware that people are struggling to pay their bills, continue to raise their prices."

which utilities are these? My telephone/cable/internet prices for base service has actually fallen the last few years. My home is heated by Natural gas, and my bills have been declining over the last few years. Most utilities are given a franchise (at least here in the states) So I would argue that there is no free market at work here either.

3. "The case in America where a privately run youth prison was paying a judge to incarcerate young offenders was a stunning example of how the rush to make a profit precedes any thought of doing what is right for the people it is supposedly being run for."

PLEEASE. This Judge was a crook who broke the law, please don't tell me that laws don't get broken in a socialist or a communist country. People will break laws regardless of the system, that's like me getting down on communism for the tainted dog food from China. Bad people are bad people Hanz, you will NEVER change that fact.

4. "the pharmaceutical companies charge such hefty prices".

Interesting premise, considering Pfizers ROA is 4.1% (Google's is 18.4%, almost 5 times higher) Someone has to pay to develop these drugs. There are MANY inefficiencies in the pricing of drugs that can be examined, but I don't think that a better way to develop drugs has been thought of yet.

Cheezy said...

"When profits are privatised, and losses are socialized, that's not capitalism. "

Yeah it is. It's called 'crony capitalism', and it's the only form we've ever known! (granted it's become more extreme of late)

Funnily enough I read a quote this morning from the ethicist Pete Singer which kinda sums up my feelings on this issue:

"Capitalism is very far from a perfect system, but so far we have yet to find anything that clearly does a better job of meeting human needs than a regulated capitalist economy coupled with a welfare and health care system that meets the basic needs of those who do not thrive in the capitalist economy. If we ever do find a better system, I'll be happy to call myself an anti-capitalist."

It sounds like Pete's sceptical about ever finding this 'better' system though... As am I.

Cody Bones said...

Your absolutely right Cheezy. When the "Moral Hazard" is removed from an institution, very bad things happen, regardless of the type of business it is in.

Cheezy said...

Exactly right. And the proof of that, tragically, is still pouring into the Gulf of Mexico as we speak.

Falling on a bruise said...

I think you missed my point. I am saying that Capitalism has reached a point where it has given society all it needs (health, education etc) and has now reached the point where it's only usefulness is making more and more money at the harm of everyone else. The only way to make a larger profit is to dangerously cut corners to save money or continue to raise prices.

I never said Communism was the alternative. I said we need a system to sustain what we have and for the politicians to work it out.

Cody Bones said...

"I am saying that Capitalism has reached a point where it has given society all it needs"

Hogwash!!! Capitalism begets innovation, and I don't think that we are at a point in time where everything that can be invented, has been invented (apologies to Charles Duell)

"Everything that can be invented has been invented."
Charles H. Duell, Commissioner, U.S. patent office, 1899 (attributed)

Cheezy said...

Capitalism may have given the first world all of what it needs to survive, but the 1.5 billion people in the developing world who are on less than $1.25 a day (which is the current definition of absolute poverty) sure don't have all that they need, much less all that they want (and economics is driven by wants just as much as needs). How they get out of poverty (which a few do, but the vast majority don't) is a challenge for any economic system. It's mainly this phenomenon I'm thinking of when I say "capitalism may not be perfect but...etc. etc".

Cody- That quote is a keeper! Was Duell the first Francis ('The End of History') Fukuyama?!

Cheezy said...

There's an amusing comment by someone in the Guardian this morning. The main story's about how the austerity measures proposed by European economies (including the UK's) are hindering growth and adversely affective investor confidence, so much so that the banking system is again being considered 'on a cliff edge'.

One wag's response reminded me of this thread:

"Now that capitalism is about to be flushed down the toilet bowl of history like the results of last nights vinadaloo..
What do we intend to replace it with?
1. Marxism (country run by overly opinonated apparachiks)
2. Fascism (country run by the overly egotistical)
3. National Socialism (country run by people with a very poor taste in music)
4. Anarchism (country run by nobody)
5. Plutocracy (we were there already and didn't enjoy it)
6. Buddhism (country run on the basis of karma)
7. Monarchy (country run by Germans)"

Anonymous said...

cheezy,

most of the developing nations with the bulk of the world's poor are recent democracies and are not under capitalism...

- india: recent democracy, a very weak capitalistic system, only recently out from under the exploitive rule of another nation
- china: do i have to elaborate?
- indonesia: ditto
- russia: ditto
- south american nations: little or no democracy, more corrupt than chicago, cultural clash with the principles of capitalism

japan, taiwan, s. korea on the other hand are strong democracies and much closer to the american style of capitalism

i agree that any type of economy would struggle getting the mass poor out of poverty

i don't think that capitalism will work in all cultures

the usa's unique geography gives it an advantage over all others (largest continguous farmland, natural & free transporation system via the mississippi, ohio, and tennessee rivers...) which gives capitalism an advantage in the usa

q

Cody Bones said...

Cheezy, one more quote related to this topic.

"Capitalism without failure is like religion without sin. It doesn't work."

Alan Meltzer

Falling on a bruise said...

I'm not making my point very well here. All the building blocks of society are in place. There won't be any more major social building blocks. With everything paid for, capitalism has nowhere else to go except to keep making money. The 3rd world can only catch up to where we are now. Like a snake with us as the head and the rest catching up behind us, at some point the tail will be where the head once was only the head isn't going to move forward anymore as it has nowhere else to forward to.

Anonymous said...

hanzie,

every major civilization has had the necessary building blocks. at the very least the egyptian, roman, chinese, indians, and british empires had the building blocks.

cody is right about capitalism forcing innovation, and societies need continued innovation.

example: in 1950 public health care was rare. now it is a standard of all developed nations. we might have that standard without capitalism, but it would be archaic compared to what we have today because capitalism accelerated medical advancements.

example: we've had educational systems for hundreds of years, but capitalism accelerated education. without capitalism oxford, harvard, MIT, Cal-Tech, yale, etc. would not be the resarch institutions that they are today.

example: where would space exploration be without american and european capitalism? well, just look at the russian program - even though it is amazing, it is way behind.

q