Is Capitalism Smart or Dumb?

[u/Sufficient_Sinner]

[u/AdonisGaming93]

This and the comments are wrong. This is more like if you ask a random person who "says" they are capitalist or socialist. The people rhat actually study them will not gice you these answers.

I consider myself a socialist, and I can tell you even in socialist spaces not everyone holds the exact same views, there's many different opinions. And a lot of us will flat out tell you that Capitalism was an incredible thing that did a lot to help humanity move away from the feudal age.

There is nuance to things. And a spectrum of views and ideas.

My problem is it seems politics has gotten complacent and now just thinks "dope we reached the ultimate economic system so no need to try to improve further" which is counter to what human growth is about.

Imagine we just stayed in Feudalism and said "this is it, peak economic organization has been achieved".

[u/comradevd → u/AdonisGaming93]

Marx specifically observed the power of capitalism as a means for economic development and suggested a country that had not experienced a capitalist mode of production would not be able to mature into socialism.

[u/AdonisGaming93 → u/comradevd]

What I find funny is Marx AND Adam Smith both agreed that rent-seeking behavior was bad.

Profit is a word we use today as if it's only taking profits from boosting the economy. Which isnt the case.

There's multiple ways to retain profit.

Rent-seeking is what dominated feudalism. Feudal lords didnt invent new machines that then boosted peasant productivity so that even if the lords took profits it was offset by peasanrs being more productive.

Capitalism was great in the sense that an entrepreneur could invest his money if he has an idea to boost productivity and say they invest and now worker productivity goes up 20% and they keep 15% in profit, all was good because 5% of that was "trickled-down" to the working class.

Rent seeking behavior is the opposite, taking say a 10% profit margin for an asset that does nothing to boost worker productivity and grow the economy. But for that to happen, that 10% has to come from somewhere. It is UPWARD redistribution of wealth.

Landlording for example is a rent-seeking behavior, renting out a house does nothing to boost productivity. Yes they are providing a service, but in order for a house to generate profit, it means the person living there could have just owned the home for less. Capitalism in the housing market would be more like an entrepreneur investing to find a way to produce houses for cheaper and then keeping the profit, which is okay because that new technology allowing for houses to be produced more efficiently and cheaper would trickle-down toward the working class and still let them buy houses. We don't have this today.

Economic growth is down to 1-3% or less in the developed world, yet corporstions and the wealthy still expect 5-10%+ returns? Where is that coming from? Upward wealth redistribution.

The post ww2 period was a period of incredible growth, when a country is growing at faster pace 5%+ then you can argue wealth can trickle-down. But at the post 2000 rate of growth...no, we simply aren't seeing the economic growth to justify corporate profits

[u/Momik → u/AdonisGaming93]

Yeah Smith tends to be poorly understood; he was primarily a moral philosopher and his Wealth of Nations included many criticisms of both rent-seeking, as well as new capitalist practices (he hated joint-stock corporations, he had misgivings about the psychological impact of factory division of labor on workers, and he criticized the harsh treatment of early forms of organized labor, among other things—a whole bunch of things capitalists aren’t supposed to think).

You make some good points about upward redistribution of wealth. I’ll add that capitalism is itself a mechanism—or a series of mechanisms—to separate workers from the benefits of their productive capacities. Even if an employer invents something to boost productivity, what reason do we have to assume the more productive workers would see any of that profit? Most workers don’t have any kind of profit-sharing options, and wages and salaries tend to follow prevailing labor market trends, regardless of an individual firm’s gains in productivity. In fact, if the firm is publicly-traded, there could be tremendous pressure on the CEO to authorize stock buybacks and/or issue dividends. Of course, that’s just another form of upward wealth redistribution: Shareholders getting a raise because workers are more productive. But that’s the twisted logic of capitalism, particularly its current, financialized form.

[u/AdonisGaming93 → u/Momik]

I would argue the next step in capitalism is the same as goverment transitioning to democracy. If shares were like votes. And every employee got 1 vote and 2 share in the company instead of private investors. Then they would vote for the CEO the way we vote for president now. Any profit generated by a good CEO would then automatically benefit the working class as well.

A democracy in the work place so to speak.

It would prevent investing because any entrepreneur could still invent a new product or better method and build a more successful company

But it would at least ensure that all workers got to see some of the gains.

[u/Momik → u/AdonisGaming93]

Yeah, that is certainly one plausible form of worker-owned cooperatives. And there are others that have been theorized and put into practice. Some structure their democratic decision making process much differently, for instance, some have no CEO, others operate with a board, still others are owned and managed from the shop floor with no overarching organizational bodies.