Why Capitalism Fails

Eh, predicting a dramatic economic downturn for decades doesn’t strike me as all that prescient.

Now, there was definitely a growing contingent that believed in the rational market, and many financial instruments over the past twenty-five years seem more like risk obfuscation than diversification, but people have been predicting the end of capitalism for well over a hundred years, using this as proof for such a hypothesis is nothing more than hyperbole.

I mean, damn, what would these people have thought about the boom and bust roller coaster that was the United States’ economy in the 19th century?

To be fair, the Austrian school did the same thing. A lot of different folks predicted what would happen and how it would come to pass. Obviously the "what" is self-explanatory, but the "how" is what is going to always be up for debate.

While I see the merit in Minsky's theory, I personally dont agree that the Federal Reserve is part of the solution as opposed to part of the problem.

Heh, economists don’t even agree over what got us out of the Great Depression.

Capitalism fails because Jared Melton isn't trying hard enough.

In the interest of disclosure, I'm a leftist. Not a liberal, a leftist. I wish to Christ that Obama was the socialist he's accused of being by opposition party members who are angling for his job.

From that perspective, I don't see Capitalism failing. It's working precisely as designed and funneling wealth from working class people upward to a handful at the top of the pyramid. What's failed is the system of law enforcement put in place to prevent the worst abuses. We've seen leaders here in the States successfully chip away at the social contract since the early 80's without much in the way of resistance.

I just watched this trailer and now want to shoot myself. Capitalism would be a great system if it didn't leave so *&^%^ many people out, or allow a select few to live in the lap of luxury by stealing all the vital resources from the rest of the world. The fact that--at least in the US--many of those rarefied few call themselves Christians is even more vomit-inducing.

ps. Rheoku, I agree with you 100%.

Capitalism is the worst economic system, except for all those other forms that have been tried from time to time.

Yeah, Fuck, Capitalism.

What we need is to have a system where I determine how many and what kind of goods everyone should get. Of course with 6 billion people on the planet it will take me a while to get around to you, but I'll commit to giving priority to Chewers

Capitalism was fine during the archaic industrial revolution...but it has no place in a technologically advanced society, which is where we're pretty much headed in the next decade or so.

We live in a time where efficiency, abundance and sustainability are realities and very easily put to use...but those are the enemy of profit...capitalism. So yes, capitalism is a ridiculous system at the moment and the extreme plummets will continue to get worse the longer people continue to latch onto it.

Since the powers that be aren't about to change anything (they're making too much money), I think what you'll start to see happen is holistic groups forming, little pockets of communities that use energy and technology to sustain themselves.

Capitalism is all well and good; it's the taking economists seriously that bothers me.

Capitalism is simply part of what a happens if a society produces more than is necessary for survival; since base needs are met, we have a surplus to squander on pyramids or stock markets or whatever.

I think you have it a bit backwards, pre-industrial revolution, people were—often—prevented from producing more than what was necessary for survival. Capitalism is what causes people to produce more than what is necessary for survival, as it incentivizes that sort of behavior. Before that we had master/apprentice systems with guilds that actively sought to prevent any sort of technological advancement, or competition, as they determined who could make what, how and for how much.

^ Exactly!

And life in that system was worse in every conceivable way than life under capitalism.

My problem with just saying "fuck Capitalism" is there is nothing viable to replace it. Communism has been tried with truly horrific results. Religious and Military based systems of distributing wealth are just as bad.

So what's left/ a Gene Roddenberry future where goods are abundant and free, and knowledge and achievements are currency? Where does that leave the majority of people who are content with watching TV and eating Doritos?

Or has it?

Nobody actually tried communism. They attempted socialism, but with a few incredibly huge problems:

1. They tried to create socialism out of chaotic semi-feudal underdeveloped countries... and it bit them on the ass. The Russian empire was this enormous, undeveloped, chaotic place, most of it still firmly in the medieval era in those first decades of XX century. China was the same, only with greater masses of people, violated by wars and attrocities.

2. The rest of the world was against the idea of communism. Violently against it. In fact, the entire west spent most of the 20th century doing anything to destroy socialist countries - which made a great impact on those countries, pushing them into poverty, promoting dictators like Stalin, Castro, who then did everything to hold on.

Today's most socialist countries are these great peaceful places in Scandinavia, or idylic central Europe.

...and yet you've named yourself after the man who did communism the least amount of favours outside of Mao. Interesting.

So? Am I him, or is it just a play on mustached characters of Super Mario and Stalin?

You might never know, my wet canine friend.

So Capitalism, Socialism and Communism are all out.

Fuck it, I'm going back to the barter system.

I prefer the Dagobah System.

I was at a Stag in the woods last weekend and we bartered some weed for some logs we'd already cut with another crowd of party-goers in the forest. It was an incredibly rewarding experience. I'm with you.

I say we give Mutualism a try and see what happens.

Capitalism seems to be doing just fine to me.

Seriously, I'm not terribly fluent in economic theory, but is this how it's supposed to work?

They also pay 40% of the taxes. I'd say that is way more than a "fair share."

Under Clinton the number was around 14% at its lowest and 21% at its highest and around 2004 it was 19%. The rich got less rich under Bush. The taxes on the super rich actually went up around 2% under the "Bush tax cuts" as well.

This figure is for income tax only which is only a part of the taxes collected each year.

Also 1000$-40%=600$. 1000000$-40%=600000. Is that fair according to you?

What drives me crazy is that people talk about "Capitalism" and "Socialism" as all-or-nothing propositions, when pretty much everyone here lives in a country that has a bit of both. Some lean a little more one way or the other, but the only "pure capitalist" society that's ever existed is something like the wild west--a civilization that inevitably had to evolve into something else--and "pure socialist" societies, on a large scale, are either impossible or indistinguishable from communist dictatorships, depending.

If you're American, you live in a partly socialist society. There's just no getting away from it. Far from interfering with capitalism, socialism reinforces capitalism in numerous ways, mostly by providing a healthy, happy work force, whereas capitalism, applied correctly, keeps socialism from sliding into despotism and/or runaway bureaucracy. The two ought to act as parallel systems, socialism providing the safety net and capitalism providing the opportunity. Making socialism into a bogeyman is obviously stupid, but talking about the abolition of capitalism is equally so.

As a few people have pointed out, the free market can't really sustain itself without strong government support in the form of regulation. Without it, you get a few huge corporations gaining so much power that they're able to unfairly crush potential competition, and the benefits of capitalism, free enterprise and innovation, are strangled. You just end up with a borderline feudal system, which is what we're sliding towards now.

This is absolutely right.

Capitalism will always survive because socialism will always be there to bail it out.

We have barely any labor movement in existence. Of course people are beginning to lose power from the 'big guy'. There hasn't been a wide-reaching, powerful form of dissent on labor in decades. Most people I've ever spoken to are against unionization (and I mean unions unlike the crippled, impotent and competitive form they've taken in recent times, thanks to the government), and no major change will be caused by the actions of merely yourself.

Fighting global warming is still a joke - we merely buy products, advertised to suit the individual, from different companies to "do our part" but it makes no difference at all. You can't use consumerism and capitalism against itself, and we are still thinking on too small a scale.

The base studies for this article can be found here.
I really dislike the use of stats in that article as it doesn't correlate the proportion of wealth (income and capital) for each population segment with its corresponding proportion of taxes paid, i.e., its more honest to report how much of each dollar of gross "income" is taken by taxes for each segment as opposed to what proportion of the population pays what proportion of taxes.

Most of us live in State Capitalist countries. Most of the innovations of the last 50 years, things we take for granted like cell phones or the internet now, are the direct result of state direction and intervention. No markets created these products, no invisible hands guided them-the markets for these products were created much later and to some extreme consternation to some of the companies that eventually came to profit immensely by them.

Frontline's documentary "The Warning" brilliantly chronicles CFTC head Brooksley Born's dramatic and tragic attempts to regulate derivatives back in the '90s. You can watch it online here. I thought it was really well done, but bizarrely makes no mention of Phil Gramm's major role in deregulating the financial services industry, though it depicts him interrogating Born as she testifies in Congress. Strong recommend!

Nicely said.

And Vice Versa.
We have seen what happens when you have total socialism..complete government control of an economy, and it ain't pretty.
Prankster hit it right on the head. You need a balance. The problem is that what exact balance is needed between Capitalism and Socialism seems to change as time goes one.

Actually, no. Its not really the balance that isnt working, cause there are plenty of ways to balance it. The problem is that the system, no matter the balance, is inherently unstable, thus you keep rocking the boat back and forth between the extremes currently possible in your society.

See, the system never balances out, because at any time, there are forces pulling said balance attempt into their own direction. Constant change, constant adjustments, constant attempts at getting out a favorable balance means there is this everlasting tugging from all sides.

IMO, those nations have it best that are not tied, by constitution or otherwise, to a narrow spectrum along this hypothetical balance scale of socialism and capitalism. They can move the most, and have the least baggage to consider. A nation such as the USA has to deal with much more rhethoric, outrage and in general pro-capitalism ideology, no matter what the current state of balance is, than almost any european country, or many others for that matter.
On the other side, countries such as china, russia, the ukraine or other eastern european countries are still tied down by an overreliance on government and socialistic solutions to problems that just dont work out that way.
I think right now the USA are in need of a relatively drastic move into a more socialist direction when it comes to regulation of the economy, and basic civic stuff like health care. But unfortunately, a long while ago the forces now opposed to these plans managed to get the "Capitalism" badge for their side.

That way, they gain a lot of support from people just thinking in terms of black/white, full capitalism vs. full socialism, who come down on the capitalism side as a matter of principle. If you manage to free the term "capitalism" from this narrow-minded, agenda-driven interpretation, you have won half the battle.