What's the misean criticism of the falling rate of profit theory?

[Rafiq]

Come on, let's hear it. I'm interested.

[RGacky3]

Don't hold your breath, I've been trying to get a response on this for a while.

Even discussing it without Marxist lingo.

[Comrade Auldnik]

It's the standard Misean-Randian criticism of anything: it's "immoral" because I say so.

[Ostrinski]

It's the standard Misean-Randian criticism of anything: it's "immoral" because I say so.I don't think you know what's being discussed. The falling rate of profit theory is based on an observation of an actual phenomenon, not a proposition for an action.

[Comrade Auldnik]

I don't think you know what's being discussed. The falling rate of profit theory is based on an observation of an actual phenomenon, not a proposition for an action.

I think you need to be a little less presumptuous. The comment was an attack on Misean-Randian tendencies, not on the falling rate of profit theory.

[RGacky3]

I've never heard a Nisean-Randian use an appeal to morality when it comes to that.

[PC LOAD LETTER]

From what I gather, they acknowledge the phenomenon, yet view it as something to be worked around.

http://mises.org/misesreview_detail.aspx?control=214

Desai does not contend that Marx fully committed himself to the indefinite expansion model. Elsewhere, Marx suggests that a long-term tendency for the rate of profit to fall may eventually bring capitalism to an end. Even here, though, this tendency takes effect only after a very long time. Capitalists have several resources to delay the fall.

One of these is to seek out foreign markets, where the rate of profit may at least temporarily be high. Readers will of course see here the germ of Lenin's theory of imperialism. But what is less well known is Marx's attitude toward this phenomenon. According to Desai, Marx not only supported capitalism: he was an imperialist as well.

[RGacky3]

But what is less well known is Marx's attitude toward this phenomenon. According to Desai, Marx not only supported capitalism: he was an imperialist as well.

I love that, they don't deny it, they just attack Marx personally.


Marx suggests that a long-term tendency for the rate of profit to fall may eventually bring capitalism to an end. Even here, though, this tendency takes effect only after a very long time. Capitalists have several resources to delay the fall.

ALthough that is'nt the case, you can see this tendancy going in industrialized countries since WW2, going pretty fast, now your even starting to see it begin in China.

The foreign markets has been the solution since the late 1970s, and that delays the the problem, but barely.

The problem with Capitalism and the problem with the apologists notion of captialism is that they assume a steady state, it is'nt a steady state its always accellerating, its always going faster, growth happens exponencially, so do problems of excess capacity and the tendancy for the rate of profit to fall.

[Revolutionair]

I think 'long term marginal costs = long term price' is a well accepted theory even in pro-capitalist circles.

[RGacky3]

Its funny that once you take the Marxist language out of it, and you give all the premises of Marxism in neo-classical terms, they are so obvious capitalist-apologists will agree with them without knowing what they are doing, then once they realize you've gotten them to the Marxist conclusions they're in a hole.

[bugsbunny]

What is the "falling rate of profit theory"?

[REVLEFT'S BIEGGST MATSER TROL]

to play devil's advocate, absolutely no reason for profit to fall as far as i can see since in misean scheme it isn't derrived from labour but time preferences.

[Revolutionair]

What is the "falling rate of profit theory"?

This:


I think 'long term marginal costs = long term price' is a well accepted theory even in pro-capitalist circles.

[RGacky3]

http://www.revleft.com/vb/rate-profit-fall-t160824/index.html

There is a very easy non-marxian non-economist explination.

[Rafiq]

How pathetic of them. Of course capitalists find ways to delay this, as was pointed out by Marx. The question is, for how long?

[Misanthrope]

I've never heard a Nisean-Randian use an appeal to morality when it comes to that.

I've never head a Misean appeal to morality ever, except when defending the poor capitalists against the greedy vulture workers.

[Comrade Auldnik]

I've never heard a Nisean-Randian use an appeal to morality when it comes to that.

Is there something about posting here that makes people unable to process satire?

[bugsbunny]

Originally Posted by bugsbunny
What is the "falling rate of profit theory"
?



This:

Originally Posted by Revolutionair
I think 'long term marginal costs = long term price' is a well accepted theory even in pro-capitalist circles.


Oh I see. I think I can guess what you guys are driving at. You are saying that in the long run capitalism is doomed because according to this theory profits must shrink to zero because in the long run, marginal cost = selling price.

This is false. What this theory in fact is trying to say is that the people (or consumers) are well served by capitalism. That's because in the free market the profits will get lower and lower as more and more firms enter the market so long as profits can be made.

As more firms enter the market to produce the same good or service profits will be driven down by competition as firms are forced to cut prices till there is no profit left to be made.

When that happens, no more new firms enter the market or some may even leave the market and redoploy their capital elsewhere where the profits are higher. This does not mean that capitalism will collapse. It just shows how dynamic capitalism is and how much it benefits the people (consumers).

This is theory of course which is normal in an economics text book. The theory assumes that prices are held constant to illustrate its point that profits will be driven down to zero in the long run. In practice things are more complicated. The selling price fluctuates with changes in supply and demand.

So firms will find themselves making lots of money one year when prices go up and lose money in another year when prices go down. The owner (your hated capitalist) of a firm is taking a big risk with his capital which he could have spent on women, wine and song.

Don't you think he should be rewarded? The profits he earns is his reward for risking his capital. So there is no surplus value that he stole from his workers who gets paid even if the firms loses money. Forget what Marx said. He was wrong. Don't forget that Marx was a lazy bum who never worked. So how could he understand how the economy works?

[bugsbunny]

I love that, they don't deny it, they just attack Marx personally.



ALthough that is'nt the case, you can see this tendancy going in industrialized countries since WW2, going pretty fast, now your even starting to see it begin in China.

The foreign markets has been the solution since the late 1970s, and that delays the the problem, but barely.

The problem with Capitalism and the problem with the apologists notion of captialism is that they assume a steady state, it is'nt a steady state its always accellerating, its always going faster, growth happens exponencially, so do problems of excess capacity and the tendancy for the rate of profit to fall.

The rate of profit will fall for some industries but grow for others. That's because of new technologies and population growth. Shumpeter calls it creative destruction. The car replaced the horse and carriage for example. So capitalism will be around for thousands of years.

[RGacky3]

I've never head a Misean appeal to morality ever, except when defending the poor capitalists against the greedy vulture workers.

OH sure, but thats a moral issue anyway, generally speaking.


You are saying that in the long run capitalism is doomed because according to this theory profits must shrink to zero because in the long run, marginal cost = selling price.


Not at all, its that growth slows down, which leads to all sorts of problems, capitalist requires exponential growth otherwise you have excess capacity.


This is false. What this theory in fact is trying to say is that the people (or consumers) are well served by capitalism. That's because in the free market the profits will get lower and lower as more and more firms enter the market so long as profits can be made.


Not really, actually empirically thats not the case, manufacturing has been consolidated, and agriculture is gone that way too.

Infact an example of this phenomenon is agriculture, which CANNOT survive without state subsidies.


As more firms enter the market to produce the same good or service profits will be driven down by competition as firms are forced to cut prices till there is no profit left to be made.


Its not ocmpetition, thats driving down the profits, its competition PLUS the capital/labor ratio (read my link).


When that happens, no more new firms enter the market or some may even leave the market and redoploy their capital elsewhere where the profits are higher. This does not mean that capitalism will collapse. It just shows how dynamic capitalism is and how much it benefits the people (consumers).


this is industry wide, first in agriculture (which has ceased to function without state subsidies), next manufacturing.

So where does the market redeploy? Finance. Where profits are higher, but has 0 social benefit.

This all when we have tons of social need, however fullfilling that need juts is'nt profitabile anymore, at least not as much as financial games.


The theory assumes that prices are held constant to illustrate its point that profits will be driven down to zero in the long run. In practice things are more complicated. The selling price fluctuates with changes in supply and demand.


The theory is based on supply and demand being at equilibrium, but in practice it has empirically happened.

And it does'nt assume a steady price.


So firms will find themselves making lots of money one year when prices go up and lose money in another year when prices go down. The owner (your hated capitalist) of a firm is taking a big risk with his capital which he could have spent on women, wine and song.


Nowerdays the capitalist (board of directors) risks mostly other peoples money.

Anyway the point is overtime, dispite supply and demand fluctuaitons the profit rate will drop.

capitalism requires CONSTANT growth to work, so you don't even need the profit rate to drop to 0, you just need it to significantly slow down.


Don't you think he should be rewarded? The profits he earns is his reward for risking his capital. So there is no surplus value that he stole from his workers who gets paid even if the firms loses money. Forget what Marx said. He was wrong. Don't forget that Marx was a lazy bum who never worked. So how could he understand how the economy works?

No arguments at all there.

Ther is surplus value BY DEFINITION.

Obviously marx was'nt wrong, since his theory of capitalism has never been dissproved and empirically its obvious.


The rate of profit will fall for some industries but grow for others. That's because of new technologies and population growth. Shumpeter calls it creative destruction. The car replaced the horse and carriage for example. So capitalism will be around for thousands of years.

Yes, you have new technologies, but that is partially what CAUSES the rate of profit to fall.

Read my link man, when you have more technology productivity increases, which changes the capital/labor ratio.

Again, read the link and make sure you KNOW what your arguing against.

[bugsbunny]

Not at all, its that growth slows down, which leads to all sorts of problems, capitalist requires exponential growth otherwise you have excess capacity.
.

No you don't need exponential growth. The developed countries like the USA has been growing slowly for the past 100 years. There will always be excess capacity (leading to losses for capitalists or business owners) or shortage of capacity (leading to higher prices and fantastic profits for business owners).

What will happen is the capital will be redeployed to areas where profits are high from areas where firms are making losses. Its very dynamic. Of course, in the process some people will lose their jobs and some owners will go broke. But that is part of capitalism.




Not really, actually empirically thats not the case, manufacturing has been consolidated, and agriculture is gone that way too.

Infact an example of this phenomenon is agriculture, which CANNOT survive without state subsidies.


I am against state subsidies because its against the free market principle. Subsidies are given for political reasons. Farmers demand it and will vote for the politician who promises it.

It can survive. What that means is that lousy farmers will go broke and leave the industry. Those that survive have the best techniques and work the hardest.

In New Zealand, state subsidies for agriculture was scrapped in 1984. Their farm industry is now better for it.



Its not ocmpetition, thats driving down the profits, its competition PLUS the capital/labor ratio (read my link).


Competition driving down profits, I can understand. But what do you mean by capital/labor ratio driving down profits?




this is industry wide, first in agriculture (which has ceased to function without state subsidies), next manufacturing.


Scrap whatever subsidies the government is giving farmers and manufacturing. Its a waste of tax payers' money.



So where does the market redeploy? Finance. Where profits are higher, but has 0 social benefit.


I don't think finance has zero social benefit. Businesses need to borrow money. Farmers need to hedge the price of their crops. Entrepreneurs need to raise capital from the stock market.



This all when we have tons of social need, however fullfilling that need juts is'nt profitabile anymore, at least not as much as financial games.


Social needs are best taken care of by strong economic growth and free markets will give more rapid growth.




The theory is based on supply and demand being at equilibrium, but in practice it has empirically happened.

And it does'nt assume a steady price.


I agree on this and have said so. Theories always make assumptions in order to illustrate a point.




Nowerdays the capitalist (board of directors) risks mostly other peoples money.


I agree with you that the board of directors and their management take risks with other people's money. But these guys should not be equated with the capitalists. Capitalists are the owners of the company. They are the shareholders. The directors and managers may or may not own shares.

In large companies, the owners (capitalists) have lost control of the company because there are so many of them. Each owner only owns a small part of the company and thus cannot influence the board. So the board and the managers end up doing stuff that are good for themselves but bad for the capitalists.

They, as you say, take risk with other people's money - the owners' money. If the company makes, they give themselves a big bonus. If the firm goes bust, they just walk away leaving the capitalist to lose their money.

So the solution is to let them go bust. Don't bail them out. That is the free market way. When companies no longer can make profits for whatever reason, they should die.




Anyway the point is overtime, dispite supply and demand fluctuaitons the profit rate will drop.

capitalism requires CONSTANT growth to work, so you don't even need the profit rate to drop to 0, you just need it to significantly slow down.


When you talk about constant growth are you refering to the GDP growth of a country. Or are you talking about profit growth of a company? I don't understand the logic behind your statement. I don't see why capitalism needs constant growth to work. In my view, capitalism will always have booms and busts but in the long run, there will be growth.

[bugsbunny]

No arguments at all there.

Ther is surplus value BY DEFINITION.

Obviously marx was'nt wrong, since his theory of capitalism has never been dissproved and empirically its obvious..

The surplus value as you call it is the rightful profit due to the owner of the firm and not to the workers as Marx claimed. To Marx the surplus value belongs to the workers. My argument proves that it does not belong to the worker but to the owner (your hated capitalist) who risked his capital.

Marx has been proven wrong because all attempts to implement his philosophy has failed. The soviet union, Cuba, Red China, East Europe etc.




Yes, you have new technologies, but that is partially what CAUSES the rate of profit to fall.


Generally speaking those investments in areas with new tech usually have high profits.

[bugsbunny]

There is a very easy non-marxian non-economist explination.

Is this the link you were talking about? :



Yes, you have new technologies, but that is partially what CAUSES the rate of profit to fall.

Read my link man, when you have more technology productivity increases, which changes the capital/labor ratio.

Again, read the link and make sure you KNOW what your arguing against.


No, I don't think your example proves that rate of profits must fall. Here's why.

In your example, there are only two shoe factories. In such circumstances, its easy for the two owners to collude on prices. They can say, "let's cut our production by half and at the same time raise prices. Why are we undercutting each other?"

But let's say they don't have the smarts to do that. Let's assume that these are dumb capitalists. So they compete and go all out. They both make losses. The weaker one who cannot stand the losses will go broke first. The survivor can then raise prices since he is the only one left!

This is in fact a technique where big strong companies kill the weaker ones. They don't mind taking losses for a year or two to drive out weaker opponents. Then they raise prices!

[RGacky3]

No you don't need exponential growth. The developed countries like the USA has been growing slowly for the past 100 years.

3% growth each ear is still exponential, in other words its 3% growth, then next year 3% of the NEW GDP growth, its exponential.


There will always be excess capacity (leading to losses for capitalists or business owners) or shortage of capacity (leading to higher prices and fantastic profits for business owners).


Except as capitalism develops you'll have major excess capacity being a systemic problem.

Thats the point, my argument is that its NOT balanced, excess capacity grows as capitalism grows.


What will happen is the capital will be redeployed to areas where profits are high from areas where firms are making losses. Its very dynamic. Of course, in the process some people will lose their jobs and some owners will go broke. But that is part of capitalism.


Except you'll have less and less places to move those profits, what happens when there is simply less place to grow? I'll tell you what, financialization.


I am against state subsidies because its against the free market principle. Subsidies are given for political reasons. Farmers demand it and will vote for the politician who promises it.


You really think the farmer vote is that big? Its economic reasons.


It can survive. What that means is that lousy farmers will go broke and leave the industry. Those that survive have the best techniques and work the hardest.


No, heres what will happen. Tons of farms would become unprofitable, because the cost of capital is higher than the revenue from food prices, and they'll drop out until the food price is high enough to turn a profit, give the capital costs, and then millions and millions more people will starve to death. Except excess capacity will make sure that profit will either be impossible or hard, because as soon as anyone turns a profit you have the threat of being undercut.

This is what happens

http://www.revleft.com/vb/agriculture-now-future-t165608/index.html?t=165608&highlight=agriculture

http://www.revleft.com/vb/next-step-collapse-t165720/index.html?t=165720&highlight=agriculture

Theres a reason they're introducing slavery again in some states (inmates), and they NEED illigal immigrants.


In New Zealand, state subsidies for agriculture was scrapped in 1984. Their farm industry is now better for it.

With tons of tarriffs.

Keep in mind New Zealands economy was built up with keynsian economics.

But either way, even a broken clock is right twice a day.


Competition driving down profits, I can understand. But what do you mean by capital/labor ratio driving down profits?


PLEASE read this

http://www.revleft.com/vb/rate-profit-fall-t160824/index.html

You have to understand what we mean, I can't just teach you this stuff in a couple sentances.


Scrap whatever subsidies the government is giving farmers and manufacturing. Its a waste of tax payers' money.


Sure :), and then down goes capitalism and the economy.


I don't think finance has zero social benefit. Businesses need to borrow money. Farmers need to hedge the price of their crops. Entrepreneurs need to raise capital from the stock market.


Again, no social benefit, You get rid of the industry, leave their capital behind, everything works fine.


Social needs are best taken care of by strong economic growth and free markets will give more rapid growth.


Obviously now, look around.

Again, you need MAJOR growth to have some social benefits, and that just proves my point, capitalism needs to grow exponentially.


I agree with you that the board of directors and their management take risks with other people's money. But these guys should not be equated with the capitalists. Capitalists are the owners of the company. They are the shareholders. The directors and managers may or may not own shares.


No ... By definition they are not, capitalists are those that contorl the capital, stock "ownership" is nothing more than formal without actual control.

Its like saying the queen of england "rules" england.


In large companies, the owners (capitalists) have lost control of the company because there are so many of them. Each owner only owns a small part of the company and thus cannot influence the board. So the board and the managers end up doing stuff that are good for themselves but bad for the capitalists.


Except the stockowners (NOT CAPITALISTS, I don't care who formally has ownership, I care who controls what), are extremely liquid, giving their stake in the company a very limited nature.

Whereas other peoples stake is MUCH larger.

lAvn6omrb5g


They, as you say, take risk with other people's money - the owners' money. If the company makes, they give themselves a big bonus. If the firm goes bust, they just walk away leaving the capitalist to lose their money.

So the solution is to let them go bust. Don't bail them out. That is the free market way. When companies no longer can make profits for whatever reason, they should die.


Sure, and the board of directors walk away pretty and do it to another company. Stockholders don't care because stocks are traded every day, and the chances your the unlucky one that takes the hit is small.

Also when major companies go bust you have major major externalities.

My solution is nationalize companies who's externalities would have national impact.


When you talk about constant growth are you refering to the GDP growth of a country. Or are you talking about profit growth of a company? I don't understand the logic behind your statement. I don't see why capitalism needs constant growth to work. In my view, capitalism will always have booms and busts but in the long run, there will be growth.

Overall, macro growth.

As it grows though the boom and busts get larger and larger until it simply collapses.

Capitalism basically collapsed in 1930, it took a world war and major keynsian policies to keep it on life support.

That life support was unplugged in the 1980s and it took 20 or so years for it to collapse again.


The surplus value as you call it is the rightful profit due to the owner of the firm and not to the workers as Marx claimed. To Marx the surplus value belongs to the workers. My argument proves that it does not belong to the worker but to the owner (your hated capitalist) who risked his capital.


Whether or not its "rightfully" someones is not the issue.

If it really is rightfully his, lets put compensation to a vote, 1 man one vote, if the capitalist really deserves it I'm sure the workers would recognize that.

Thats what I want, economic democracy, if the manegement "deserves" it as you say, then fine.


Marx has been proven wrong because all attempts to implement his philosophy has failed. The soviet union, Cuba, Red China, East Europe etc.


None of them implimented workers control of the workplace and economic democracy.

State-capitalism is'nt socialism.


Generally speaking those investments in areas with new tech usually have high profits.

In the short term yes, new industries always have high profits, yet as productivity goes up they go down.

Also when you have manufacturing, and productivity goes up IN that industry due to new technology, thats when the tendancy kicks in.



Is this the link you were talking about? :



http://www.revleft.com/vb/rate-profit-fall-t160824/index.html

THIS IS THE LINK, KNOW WHAT YOU ARE ARGUING AGAINST!!!


In your example, there are only two shoe factories. In such circumstances, its easy for the two owners to collude on prices. They can say, "let's cut our production by half and at the same time raise prices. Why are we undercutting each other?"


they COULD do that, sure, then you'd have an OPEC situation, which would undercut the tendancy, but thats not free market capitalism is it.


But let's say they don't have the smarts to do that. Let's assume that these are dumb capitalists. So they compete and go all out. They both make losses. The weaker one who cannot stand the losses will go broke first. The survivor can then raise prices since he is the only one left!


No he can't, because there is excess capacity, the productive capacity is there, even if it is not used.

Also chaces are neither will go bust.

EVEN if one of them does, the overall profit for the industry has dropped.


This is in fact a technique where big strong companies kill the weaker ones. They don't mind taking losses for a year or two to drive out weaker opponents. Then they raise prices!

Empricially that has'nt happened.

http://www.isj.org.uk/images/115/115harpro2.jpg

(manufacturing)

http://www.isj.org.uk/images/125/husson4.jpg

(Includes finance) US.

Now all of this flies in the face of austrian/neo-liberal theory.

http://www.isj.org.uk/images/125/husson5.jpg

US again.

[RGacky3]

BTW, you wanna know what happens when the tendancy for the rate of profit to fall actualizes???

http://upload.wikimedia.org/wikipedia/commons/thumb/9/92/NYUGDPFinancialShare.jpg/800px-NYUGDPFinancialShare.jpg (http://upload.wikimedia.org/wikipedia/commons/9/92/NYUGDPFinancialShare.jpg)

That.

Is that just happendstance?

http://www.ritholtz.com/blog/wp-content/uploads/2011/02/fire-economy.jpg (http://www.ritholtz.com/blog/wp-content/uploads/2011/02/fire-economy.jpg)

Face it, Marx was right.

[bugsbunny]

3% growth each ear is still exponential, in other words its 3% growth, then next year 3% of the NEW GDP growth, its exponential.

3% is hardly exponential. I think average growth rate is more like 2%.




Except as capitalism develops you'll have major excess capacity being a systemic problem.

Thats the point, my argument is that its NOT balanced, excess capacity grows as capitalism grows.It does not grow. If there is excess capacity, some businesses will close down and the owners (ie the capitalists) will invest elsewhere.




Except you'll have less and less places to move those profits, what happens when there is simply less place to grow? I'll tell you what, financialization.There will always be places to invest. Firstly population is growing and so there will be more business opportunities. Secondly, there will be new technology and so new areas to invest in. If you are interested in investing in new growth areas, you can do so.

I can help you get rich by advising you on which stocks to invest in. Google is a good investment. I have that stock. The future is in cloud computing and Google will be a big winner.


You really think the farmer vote is that big? Its economic reasons.The farm vote is big enough for politicians to cater to them.




No, heres what will happen. Tons of farms would become unprofitable, because the cost of capital is higher than the revenue from food prices, and they'll drop out until the food price is high enough to turn a profit, give the capital costs, and then millions and millions more people will starve to death. Except excess capacity will make sure that profit will either be impossible or hard, because as soon as anyone turns a profit you have the threat of being undercut.I agree that if you withdraw subsidies some farmers will go bust and leave the industry. This means that food prices will go up. I don't think people will starve as a result of this - at least not in the rich countries. People in poor countries are already starving anyway especially in N Korea.




Theres a reason they're introducing slavery again in some states (inmates), and they NEED illigal immigrants.I think its the Democrats (America's equivalent of Socialist party) that encourages illegal immigrants.




With tons of tarriffs.

Keep in mind New Zealands economy was built up with keynsian economics.

But either way, even a broken clock is right twice a day.New Zealand has little tarrifs.


Sure :), and then down goes capitalism and the economy.
No. The opposite will happen. It will strengthen the economy and capitalism. Scarp all subsidies. Its against free markets and distorts the economy. Subsides are bad.


Again, no social benefit, You get rid of the industry, leave their capital behind, everything works fine.




Obviously now, look around.

Again, you need MAJOR growth to have some social benefits, and that just proves my point, capitalism needs to grow exponentially.It does not. 1 to 3% GDP growth per year is good enough.




No ... By definition they are not, capitalists are those that contorl the capital, stock "ownership" is nothing more than formal without actual control.Capitalists are owners of the business. They are the ones who risk their capital (ie money) in a business. They are the ones entitled to the profits, if any and suffer the losses if any.

They may or may not control the company. They are free to hire a manager to do it for them. Here is the defination (http://www.thefreedictionary.com/capitalist):

1. A supporter of capitalism.
2. An investor of capital in business, especially one having a major financial interest in an important enterprise.
3. A person of great wealth.

I go by the the second defination. Notice it do not say that he must control the business. So if you own one stock in Microsoft or Walt Disney or McDonald etc, you are a capitalist, albeit a small one.

Here is another definatio (http://www.yourdictionary.com/capitalist)n:



a person who has capital; owner of wealth used in business
an upholder of capitalism
loosely a wealthy person

See, its about the same. There are the same three meanings. The one I use is the first - owner of a business. Even if you own one share in Exxon, you still are an owner of Exxon, making you a capitalist.







Its like saying the queen of england "rules" england.That is my complaint about big business. The owners have lost control of the big business because his shareholding is too small. Its the employees or workers if you like who control it. Even if you are a highly paid CEO, you are still an employee. (In most cases, CEOs also own stocks in the company and he too is an owner. But he does not have to be. He can choose not to buy or to sell off all his stocks. It is not a requirement for him to be an owner. )



Except the stockowners (NOT CAPITALISTS, I don't care who formally has ownership, I care who controls what), are extremely liquid, giving their stake in the company a very limited nature.By defination, stockholders are capitalists. A capitalist is the owner of a business. In a large company there are many owners, each of whom owns small part of the company.



Sure, and the board of directors walk away pretty and do it to another company. Stockholders don't care because stocks are traded every day, and the chances your the unlucky one that takes the hit is small. You seem to have this idea that stocks are traded every day. That is not the way to invest. The investor who gets rich is the one who has the patience to stay invested for years. The world's greates investor warren buffet bought coca cola 30 years ago and is still keeping it.


Also when major companies go bust you have major major externalities.

My solution is nationalize companies who's externalities would have national impact.Nationalization will result in what you earlier called state capitalism. That's what Lenin did. That is why I consider the USSR as a socialist country. But you do not because you say it practiced state capitalism. I prefer to call it state socialism. Its more apt.




Overall, macro growth.

As it grows though the boom and busts get larger and larger until it simply collapses.That's the very old marxist theory and capitalism is believed to ultimately collapse. It has not happened yet and never will.


Capitalism basically collapsed in 1930, it took a world war and major keynsian policies to keep it on life support.Nonsense. It would have recovered much earlier except that the idiot Roosevelt threw away lasseiz faire economics ideas and tried more state intervention. Keynesian economics is what prolonged the Depression. Lasseiz faire means "leave it alone". Keynesian means government must interfere in the economy. Its government interference that causes most of the problems.


That life support was unplugged in the 1980s and it took 20 or so years for it to collapse again.
It collapsed again because of wrong government policies. Once again its the government interference in the economy that caused the problem.



Whether or not its "rightfully" someones is not the issue.

If it really is rightfully his, lets put compensation to a vote, 1 man one vote, if the capitalist really deserves it I'm sure the workers would recognize that.

Thats what I want, economic democracy, if the manegement "deserves" it as you say, then fine.
Everybody will vote to pay themselves more. It won't work. "Leave it alone" is the best economic policy ie lasseiz faire. If A is willing to pay someone $X per hour and B is will to work for that, then that is the right compensation. This is freedom because all contracts are voluntary and not force.



None of them implimented workers control of the workplace and economic democracy.

State-capitalism is'nt socialism.
You earlier recommended nationalization. That is state capitalism. I prefer to call it state socialim.



In the short term yes, new industries always have high profits, yet as productivity goes up they go down.

Also when you have manufacturing, and productivity goes up IN that industry due to new technology, thats when the tendancy kicks in.Of course. That's because high profits attract new competitors that will push down profits. That is good for the consumer because it means prices will got down. This is the beautfy of capitalism. Things get better for people.

[RGacky3]

3% is hardly exponential. I think average growth rate is more like 2%.

Look up exponential in the dictionary. Most economists claim you need 3% for a healthy economy.


It does not grow. If there is excess capacity, some businesses will close down and the owners (ie the capitalists) will invest elsewhere.


No, you'll have permantent excess capacity.

I'm sorry your showing a terrible ignorance of economics here.

Even if the capacity is'nt used its still there (i.e. EXCESS capacity). The excess capacity is on the MACRO levle, so it does'nt matter if buisinesses close dowon and invest elsewhere. You still have the cronic excess capacity.


There will always be places to invest. Firstly population is growing and so there will be more business opportunities. Secondly, there will be new technology and so new areas to invest in. If you are interested in investing in new growth areas, you can do so.

I can help you get rich by advising you on which stocks to invest in. Google is a good investment. I have that stock. The future is in cloud computing and Google will be a big winner.


Population growth is just one tiny thing, but remember population growth does'nt cut it, you need a population with disposable income.

Also new technology is part of the problem (in capitalism), because it leads to excess capacity, especially when the technology increases productivity. But also new technology coming out requires a consumer base, when you have excess capacity and a downward pressure of wages that technology does'n take up the slack.

THats why consumer products and services become less and less profitable and financialization happens. EXACTLY as marxists say they would (the freaking data is up there).


The farm vote is big enough for politicians to cater to them.

0.5% of the population ... and yet

http://upload.wikimedia.org/wikipedia/commons/thumb/5/58/United_States_farm_subsidies_%28source_Congression al_Budget_Office%29.svg/540px-United_States_farm_subsidies_%28source_Congression al_Budget_Office%29.svg.png (http://upload.wikimedia.org/wikipedia/commons/5/58/United_States_farm_subsidies_%28source_Congression al_Budget_Office%29.svg)

Common now, your not being serious.


I agree that if you withdraw subsidies some farmers will go bust and leave the industry. This means that food prices will go up. I don't think people will starve as a result of this - at least not in the rich countries. People in poor countries are already starving anyway especially in N Korea.


YOu already have major food insecurity growth in the US, 1/5 children under nourished in the US. Food prices go up signifiacntly, yes people will starve.

ANd they WILL go up significantly.

Agriculture CANNOT work under capitalism any more, the capital/labor ratio is too high and the cost to price is too high also.


I think its the Democrats (America's equivalent of Socialist party) that encourages illegal immigrants.

I lived in the US and the democrats are NOT a socialist party, compared to europe they are center right.

Also tell me which policy thats up that encourages illigal immigrants.


New Zealand has little tarrifs.



Source? Also they grew their economy with keynsian policies.


No. The opposite will happen. It will strengthen the economy and capitalism. Scarp all subsidies. Its against free markets and distorts the economy. Subsides are bad.


No it won't, and I've shown why.


It does not. 1 to 3% GDP growth per year is good enough.

Not according to all economists, you need 3 or more.


Capitalists are owners of the business. They are the ones who risk their capital (ie money) in a business. They are the ones entitled to the profits, if any and suffer the losses if any.

They may or may not control the company. They are free to hire a manager to do it for them. Here is the defination (http://www.thefreedictionary.com/capitalist):

1. A supporter of capitalism.
2. An investor of capital in business, especially one having a major financial interest in an important enterprise.
3. A person of great wealth.

I go by the the second defination. Notice it do not say that he must control the business. So if you own one stock in Microsoft or Walt Disney or McDonald etc, you are a capitalist, albeit a small one.

Here is another definatio (http://www.yourdictionary.com/capitalist)n:



a person who has capital; owner of wealth used in business
an upholder of capitalism
loosely a wealthy person
See, its about the same. There are the same three meanings. The one I use is the first - owner of a business. Even if you own one share in Exxon, you still are an owner of Exxon, making you a capitalist.

Well your on a leftist website, so we'll use the Marxist definition. I'm not interested in semantics arguments?


at is my complaint about big business. The owners have lost control of the big business because his shareholding is too small. Its the employees or workers if you like who control it. Even if you are a highly paid CEO, you are still an employee. (In most cases, CEOs also own stocks in the company and he too is an owner. But he does not have to be. He can choose not to buy or to sell off all his stocks. It is not a requirement for him to be an owner. )

But thats the natural outcome of capitalism, as Marx predicted, and it turned out that way.

Capitalism is necessarily gonna turn out an ologarchy of large buisiness.


By defination, stockholders are capitalists. A capitalist is the owner of a business. In a large company there are many owners, each of whom owns small part of the company.


Ok, but we are gonna use the Marxist definition here, i.e. the controlers of capital.


You seem to have this idea that stocks are traded every day. That is not the way to invest. The investor who gets rich is the one who has the patience to stay invested for years. The world's greates investor warren buffet bought coca cola 30 years ago and is still keeping it.


Except Warren Buffet made msot of his money the traditional way, derivatives. The richest people in finance are the hedge fund guys.

Stocks ARE traded every day.

Also even if you keep the stocks it does'nt make it any less liquid (look it up).


Nationalization will result in what you earlier called state capitalism. That's what Lenin did. That is why I consider the USSR as a socialist country. But you do not because you say it practiced state capitalism. I prefer to call it state socialism. Its more apt.


Oh sure, its state capitalsm, but you'd have (unlike the USSR) democratic accountability (which would add the socialist part to it).


That's the very old marxist theory and capitalism is believed to ultimately collapse. It has not happened yet and never will.

It did collapse in the 1930s, and capitalism NEVER recovered, you needed HUGE government spending, a world war, and tons of keynsian programs.

Now its collapsing again, and capitalism (on its own) is'nt gonna come out.


verybody will vote to pay themselves more. It won't work. "Leave it alone" is the best economic policy ie lasseiz faire. If A is willing to pay someone $X per hour and B is will to work for that, then that is the right compensation. This is freedom because all contracts are voluntary and not force.

Except economic democracy DOES work in cooperatives all over the world, and these imaginary problems (like people always voting themselves higher pay) somehow don't happen, it turns out people are capable of doing things democratically.

THe lasseiz faire economic policy was tried ... In Argentina pre 2001, in Iceland pre 2007, in Spain pre 2007, in Chile in the 1970s, we all know the outcome, (it did'nt work).


Nonsense. It would have recovered much earlier except that the idiot Roosevelt threw away lasseiz faire economics ideas and tried more state intervention. Keynesian economics is what prolonged the Depression. Lasseiz faire means "leave it alone". Keynesian means government must interfere in the economy. Its government interference that causes most of the problems.

Lasseiz faire was Herburt Hoovers policy, it NEVER worked, not once in the history of the world post industrial revolution.

Every capitalist country thats followed a social-democratic coarse has done better htan the lasseiz faire market fundementatlist countries.

Its just empirical evidence.

Roosevelt threw away market fundemnetalism because they DID'NT WORK under hoover.


It collapsed again because of wrong government policies. Once again its the government interference in the economy that caused the problem.


Funny, because we had tons of intervention in the 40s-70s, and no collapse, yet 80s they liberalize and you have problems.

Its empirical data buddy, the collapse idd'nt happen after socializing or democratizing or even putting in keynsian policies, they happened after implimenting market policies.


You earlier recommended nationalization. That is state capitalism. I prefer to call it state socialim.


nationalization is ONLY socialist if you have a funtioning democracy in the country.


Of course. That's because high profits attract new competitors that will push down profits. That is good for the consumer because it means prices will got down. This is the beautfy of capitalism. Things get better for people.

Although empirically thats not true, this year prices have gone up while wages flatline, also profit growth is not in the "consumer" industries (manufacturing, distribution and so on), they are in financialization.

competition (and the tendancy of the rate of profit to fall, and excess capacity on the macro scale) means pofits down, but it drives wages FURTHER down, and adds to unemployment.

Anyway, I'm the only guy here showing.
1. Economic data
2. Actual economic analysis.

[DinodudeEpic]

I agree RGacky, but I think laissez-faire market policies actually work very well....if we are dealing a socialist economy of democratic cooperatives.

Capitalism can be solved in three ways, artificially controlling it through the state (Keynesian policies.), have the government centrally plan the economy, or do the so horribly disgusting idea that the workers should take over the economy. (/sarcasm)

[RGacky3]

I agree RGacky, but I think laissez-faire market policies actually work very well....if we are dealing a socialist economy of democratic cooperatives.


Pure conjecture, we have no empirical evidence or historical precident.

I think if you get rid of capital and labor markets (and thus profit) commodity markets could work, and I think they would work well. But thats a theoretical problem that still needs to be dealt with (I tend to think that commodity markets would work very well). But if you leave capital markets and labor markets in place you hav'nt solved the problem.

[Black_Rose]

Is that just happendstance?

http://www.ritholtz.com/blog/wp-content/uploads/2011/02/fire-economy.jpg (http://www.ritholtz.com/blog/wp-content/uploads/2011/02/fire-economy.jpg)

Face it, Marx was right.

This will be my last day of posting here in a while.

BTW, could you reconcile that graph with this:

http://www.clevelandfed.org/research/trends/2007/0307/02ecoact_021507-3.gif

http://www.clevelandfed.org/research/trends/2007/0307/02ecoact.cfm

[RGacky3]

It makes total sense. Thanks for the article.

Its a classic case of the tendacy of the rate of profit to fall.

The output is relatively steady (we've lost a lot of china, but we still ahve a lot of manufacturing and other manufacturing).

But productivity goes up, and on the macro scale that leads to the tendancy. Consumption has'nt gone up (majorly), but capital/labor ration HAS gone up. When productivity goes up labor costs go down, the capital/labor ratio goes up, now under naive capitalist apologist economics that SHOULD mean that profit goes up, but Marx pointed out the contradictions coming from value (price at supply and demand equilibrium) dropping, which neo-classical economists don't take into account.

So you basically have continually droping profits and thus a mad dash to somehow keep profits rising, causing all sorts of more problems.

That article is basically what I wrote a while ago about manufacturing (and soon services) http://www.revleft.com/vb/agriculture-now-future-t165608/index.html?t=165608&highlight=manufacturing+agriculture

[bugsbunny]

Look up exponential in the dictionary. Most economists claim you need 3% for a healthy economy.


Well, according to this dictionary (http://www.thefreedictionary.com/exponential), exponential is defined as:




1. Of or relating to an exponent.
2. Mathematics a. Containing, involving, or expressed as an exponent.
b. Expressed in terms of a designated power of e, the base of natural logarithms.



This defination is not much help to us. To me, when someone talks about "exponential growth", it means "ever increasing growth". This is of course not possible.

I don't know of any economist who says you need 3% for healthy growth. In fact, for a developed country, 3% would be considered very good. For a developing country like China they get something like 10% in a good year.




No, you'll have permantent excess capacity.

I'm sorry your showing a terrible ignorance of economics here.

Even if the capacity is'nt used its still there (i.e. EXCESS capacity). The excess capacity is on the MACRO levle, so it does'nt matter if buisinesses close dowon and invest elsewhere. You still have the cronic excess capacity.


I am afraid its you who are ignorant of economics. You are too brainwashed by Marxist economics which is mostly false.




Population growth is just one tiny thing, but remember population growth does'nt cut it, you need a population with disposable income.


With education, new technologies, rule of law and free markets, disposal income will grow. If there is excess capacity, then factories or businesses will shut down. The owners would sell off their assets and re-invest their capital in other more profitable businesses.

Don't forget that most of the world is still poor. They can invest outside the rich OECD countries.



Also new technology is part of the problem (in capitalism), because it leads to excess capacity, especially when the technology increases productivity. But also new technology coming out requires a consumer base, when you have excess capacity and a downward pressure of wages that technology does'n take up the slack.


Techonology is the solution. It improves our standard of living (on the average). I admit that there will be some who lose out. Those older workers who find it hard to cope with new techonologies will be left out. Maybe that's why some people see technology as a problem. These are they guys who lost their jobs. They are the "excess capacity" - idle hands made redundant by new technology. But in the bigger picture it helps more than it hurts.

This idea that new techonology is bad is not new. In the 19th century, when the industrial revolution was at its full swing, there were a bunch of people called the luddites (http://en.wikipedia.org/wiki/Luddite)who attached factories.




THats why consumer products and services become less and less profitable and financialization happens. EXACTLY as marxists say they would (the freaking data is up there).


All products and hence the businesses that produced them go through a cycle like a human body - rapid growth in the initial stage, then slower growth, then a plateau, then finally decline. Think about it. The horse carriage was big business at one time. But its today replaced by the car.

Its normal and what capitalist economist, Shumpeter called "creative destruction". Life gets better - on the average. Of course if you are one of those who are made redundant, then it feels like there is excess capacity - those unemployed workers.




0.5% of the population ... and yet

http://upload.wikimedia.org/wikipedia/commons/thumb/5/58/United_States_farm_subsidies_%28source_Congression al_Budget_Office%29.svg/540px-United_States_farm_subsidies_%28source_Congression al_Budget_Office%29.svg.png (http://upload.wikimedia.org/wikipedia/commons/5/58/United_States_farm_subsidies_%28source_Congression al_Budget_Office%29.svg)

Common now, your not being serious.


Just a little nit-pick here. According to Wiki, the % of US population working in agriculture (http://en.wikipedia.org/wiki/Agriculture_in_the_United_States)is 2 to 3 % and not 0.5%. Firstly, US elections are usually pretty close. Obuma beat McCain by about 5% of the vote. So every percent counts.

Secondly, if the small 2 to 3% is well organized they influence goes beyond their raw numbers. What happens in the US (and probably elsewere) is that farmers form a lobby group that will donate money to politicians that promise to help them. So, though small their power is significant.

Thirdly, democracies have this perverse problem. Politicians often find it better to pander to determined minority groups like the 3% farmer population than to think about the welfare of the 97% of the population that are not farmers.

That's because farm subsidies come out of taxpayers' money. The cost in extra taxes is spread amongst 97% of the population and is so tiny per head that they don't notice it. But appeasing the farming minority of the population will win their votes. So they end up making the minority happy at the expense of the majority who don't notice they harm done to them.




YOu already have major food insecurity growth in the US, 1/5 children under nourished in the US. Food prices go up signifiacntly, yes people will starve.


Obesity is a serious problem in the US. If they are under nourished its because they eat junk food.



ANd they WILL go up significantly.

Agriculture CANNOT work under capitalism any more, the capital/labor ratio is too high and the cost to price is too high also.


Of course, it can work. I would favor a "leave it alone" policy (ie lassiez faire). Stop subsidizing farmers. Save taxpayers' money.




I lived in the US and the democrats are NOT a socialist party, compared to europe they are center right.

Also tell me which policy thats up that encourages illigal immigrants.


To me the Democrats are centre left. The Democrats want to give them amnesty. This will encourage more illegals.





Source? Also they grew their economy with keynsian policies.


Source? Here is an article by the New Zealand (http://www.mfat.govt.nz/posts/pdf/paris-nztariffs.pdf)government. I will quote:





New Zealand has one of the lowest tariff profiles in the developed world. Very few sectors of the New Zealand economy are offered protection by tariffs.








Not according to all economists, you need 3 or more.


Which economist? For a developed country 3% is considered as very good. For a developing country like China, 10% is considered as good.




Well your on a leftist website, so we'll use the Marxist definition. I'm not interested in semantics arguments?


For those who just joined us we were debating on the defination of 'capitalist'. According to the dictionary, a capitalist is an owner of a business. Gacky's defination is that a capitalist is the one who controlls the business.

So if we go by Gacky's defination, in the case of large companies, the workers are the capitalists. That's because in large companies like say Exxon, the shareholderes are so many that they have lost control over the company. The ones who call the shots are the top executives who at the end of the day are simply employees, albeit highly paid ones. Therefore the workers are the capitalists, if we go by Gacky's defination.




But thats the natural outcome of capitalism, as Marx predicted, and it turned out that way.


Marx was wrong on most things. He predicted the demise of capitalism in the middle of the 19th centry and it has not happened.



Capitalism is necessarily gonna turn out an ologarchy of large buisiness.


Not nessarily. In some businesses which requires large capital, like say cars, you tend to get that because it is more efficient that way. But in the baby sitting industy, i don't see a few large companies doing the job.




Ok, but we are gonna use the Marxist definition here, i.e. the controlers of capital.


OK. Then it means that the workers are the capitalists for large comanies.




Except Warren Buffet made msot of his money the traditional way, derivatives. The richest people in finance are the hedge fund guys.


Nope. Warren made his money the old fashioned capitalist way. Buying good businesses and sitting on them while they grow.



Stocks ARE traded every day.


True. but you don't have to buy and sell everyday.



Also even if you keep the stocks it does'nt make it any less liquid (look it up).


True. But Warren Buffet has proved that sitting on your stocks is how to get rich. Someone asked him, "How long should you hold on to your stocks?" He said:

Our favorite holding period is forever. (http://www.brainyquote.com/quotes/quotes/w/warrenbuff129835.html)






Oh sure, its state capitalsm, but you'd have (unlike the USSR) democratic accountability (which would add the socialist part to it).


I called it State Socialism. The USSR was practicing state socialism.



It did collapse in the 1930s, and capitalism NEVER recovered, you needed HUGE government spending, a world war, and tons of keynsian programs.

It recovered despite what the government did. it would have recovered earlier if the governments left things alone. Huge spending, wars and keynesian programs are more interference in the free market. Laissez faire means "leave it alone (http://en.wikipedia.org/wiki/Laissez-faire)". I quote:



The phrase laissez-faire is French (http://en.wikipedia.org/wiki/French_language) and literally means "let do", but it broadly implies "let it be", or "leave it alone." A laissez-faire state and completely free market has never existed.


Yes. i agree. I must remind all that a completely laissez faire economy like a completely Socialist one has never existed.



Now its collapsing again, and capitalism (on its own) is'nt gonna come out.


You Marxists are forever waiting for capitalism to collapse.




Except economic democracy DOES work in cooperatives all over the world, and these imaginary problems (like people always voting themselves higher pay) somehow don't happen, it turns out people are capable of doing things democratically.


In that case, form your co-ops. If people are happier working for co-ops then there will be more and more of them. Eventually the conventional businesses will die away.

You must ask why this has not happened. Could it be because there are limits? You can't grow beyond a certain size? They are not as efficient as a capitalistic business firm?



THe lasseiz faire economic policy was tried ... In Argentina pre 2001, in Iceland pre 2007, in Spain pre 2007, in Chile in the 1970s, we all know the outcome, (it did'nt work).


Chile is an interesting example. It followed a lasseiz faire policy under Pinochet and today, its South America's richest country. Compare that with Hugo Chavez's Venezuela which is more Socialist. Spain capitalist? I think its more to the left. That's why its going bust.




Lasseiz faire was Herburt Hoovers policy, it NEVER worked, not once in the history of the world post industrial revolution.


Hoover was starting to move away from it. It was more the policy of Calvin Coolidge and previous Presidents.



Every capitalist country thats followed a social-democratic coarse has done better htan the lasseiz faire market fundementatlist countries.


Going by empirical evidence, Greece, italy, Spain and Portugal are more Socialistic and they are going bust.




Roosevelt threw away market fundemnetalism because they DID'NT WORK under hoover.


Roosevelt was responsibly for prolonging the Depression because his Socialistic policies and government intervention did not work. Had he "left things alone'", the Depression would have been over more quickly.




Funny, because we had tons of intervention in the 40s-70s, and no collapse, yet 80s they liberalize and you have problems.


The US economy grew rapidly under Reagan because he adopted a more free market (ie Leave it alone) policies.

Things started collapsing in the USA because under Clinton's Democrats they started interfering in the market to provide housing to the lower income people - his voters.

He passed the Community Reinvestment Act to prod banks to make loans to people to buy housing when these people could not afford to buy.




Its empirical data buddy, the collapse idd'nt happen after socializing or democratizing or even putting in keynsian policies, they happened after implimenting market policies.


America's crisis was caused because the government failed to leave the housing market alone and started intervening so that the lower income could buy housing even when they don't have money for a down-payment. There mortgages were sold to Fannie Mae and Freddie Mac, two Congress sponsored companies, who repackaged them into Mortgaged Backed securities. This caused a housing bubble which collapsed.

Once again, they forgot to "leave it alone" and let the free market decide.




nationalization is ONLY socialist if you have a funtioning democracy in the country.


Nationalizatin is Socialist whether you have a functioning democracy or not. In either case, the government is not leaving the economy alone. They are interfering in the free markets. I want freedom from government disturbance. A free market capitalist is to some extent a anarchist who distrusts government.



Although empirically thats not true, this year prices have gone up while wages flatline, also profit growth is not in the "consumer" industries (manufacturing, distribution and so on), they are in financialization.

The main reason why wages are stagnant and have been for 30 years is because the Chinese are taking over the jobs even though profits are increasing.



competition (and the tendancy of the rate of profit to fall, and excess capacity on the macro scale) means pofits down, but it drives wages FURTHER down, and adds to unemployment.


That's Marx's theory why he thinks capitalism is doomed to collapse. He was wrong. Profits will go down in old industries and rise in new ones.




Anyway, I'm the only guy here showing.
1. Economic data
2. Actual economic analysis.


Except that some data is wrong eg 0.5% are farmers when correct number is 2 to 3%; and analysis of data is wrong.

[RGacky3]

This defination is not much help to us. To me, when someone talks about "exponential growth", it means "ever increasing growth". This is of course not possible.

I don't know of any economist who says you need 3% for healthy growth. In fact, for a developed country, 3% would be considered very good. For a developing country like China they get something like 10% in a good year.


You don't know any economist? Read an economist textbook. They ALL say that.

Ok let me explain exponential.

100 + (100*0.03)= year 1.
year 1 + (year 1*0.03)=year 2
year 2 + (year 2*0.03)=year 3.

Thats exponential.

3% is not only GOOD for a developed country, its necessary, to deal with productivity hikes, capacity growth, capital investment and so on.

for a 3rd world country, yeah 10% is good, but China right now has a problem, (cheap labor drives their growth, which in turn severely limits domestic consumption however their cheap labor hurts consumption overseas by driving down wages, so they depend on exports).


I am afraid its you who are ignorant of economics. You are too brainwashed by Marxist economics which is mostly false.


Explain to me how its false. Knowing you don't understand basic terms nad concepts from classical economics (not even marxist), its pretty obvious your out of your league.


With education, new technologies, rule of law and free markets, disposal income will grow. If there is excess capacity, then factories or businesses will shut down. The owners would sell off their assets and re-invest their capital in other more profitable businesses.

Don't forget that most of the world is still poor. They can invest outside the rich OECD countries.


New technologies don't grow disposable income, not at all (infact many times it lessens them when you see the effect on productivity on the macro level), education only increases disposable income if it comes with a job with a higher income.

You already said that responce to ecess capacity, but again ITS ON THE MACRO LEVEL (READ THAT AGAIN), so its excess capacity nationwide and even worldwide.

Also the profitable industries, (for the last 30 years), have been finance, which does nothing more than skim off the top of productive industry (once you get past all the semantics).

Also investing in poor countries is great for buisiness, but you still need a consumer base.


Techonology is the solution. It improves our standard of living (on the average). I admit that there will be some who lose out. Those older workers who find it hard to cope with new techonologies will be left out. Maybe that's why some people see technology as a problem. These are they guys who lost their jobs. They are the "excess capacity" - idle hands made redundant by new technology. But in the bigger picture it helps more than it hurts.


You don't know what excess capacity means. I cna't believe I'm having a debate with someone ignorant of economics 101.

Excess capacity= excess productive capability through capital (i.e. excess machines, and so on), in other words, you can produce more than people can consume.

Its not unemployed people.

So what you have is THIS problem, I'll spell it out for you since you obviously don't get what excess capacity means.

Productivity goes up all over the plae through new technology. Prices drop, profits go down, people get laid off and thus wages get suppressed.

As people get laid off and wages get suppresssed they buy less stuff, leading to LESS profits. Leading to it being necessary to decrease costs MORE.


This idea that new techonology is bad is not new. In the 19th century, when the industrial revolution was at its full swing, there were a bunch of people called the luddites (http://en.wikipedia.org/wiki/Luddite)who attached factories.


Oh I'm FOR technology, but capitalism can't handle it, socialism would use technology much more efficiently.


All products and hence the businesses that produced them go through a cycle like a human body - rapid growth in the initial stage, then slower growth, then a plateau, then finally decline. Think about it. The horse carriage was big business at one time. But its today replaced by the car.


Again, I'm talking macro, MACRO (so enough with the strawmen).


Its normal and what capitalist economist, Shumpeter called "creative destruction". Life gets better - on the average. Of course if you are one of those who are made redundant, then it feels like there is excess capacity - those unemployed workers.


creative destruction works at a certain level, but after a while you simply don't have the consumer base and the excess productivity is too high to turn a profit

Also excess capacity is not unemployed workers, its excess capital. (if you don't know economics don't debate it).


Just a little nit-pick here. According to Wiki, the % of US population working in agriculture (http://en.wikipedia.org/wiki/Agriculture_in_the_United_States)is 2 to 3 % and not 0.5%. Firstly, US elections are usually pretty close. Obuma beat McCain by about 5% of the vote. So every percent counts.


If elections were about votes unemployed people would be tended too way way more than the rich, its not about votes.


Secondly, if the small 2 to 3% is well organized they influence goes beyond their raw numbers. What happens in the US (and probably elsewere) is that farmers form a lobby group that will donate money to politicians that promise to help them. So, though small their power is significant.

Thirdly, democracies have this perverse problem. Politicians often find it better to pander to determined minority groups like the 3% farmer population than to think about the welfare of the 97% of the population that are not farmers.

Your right, if agriculture had serious economic power, it does'nt (not compared to actual economic power).

Politicians pander to money.


That's because farm subsidies come out of taxpayers' money. The cost in extra taxes is spread amongst 97% of the population and is so tiny per head that they don't notice it. But appeasing the farming minority of the population will win their votes. So they end up making the minority happy at the expense of the majority who don't notice they harm done to them.


And if they did'nt subsidies farming it would'nt exist as an industry in capitalism, cost would cause major starvation, you'd basically need the government to take it over completely or juts have mass starvation.


Obesity is a serious problem in the US. If they are under nourished its because they eat junk food.


I suggest you read the studies, people go hungry in the US, poverty is real.


Of course, it can work. I would favor a "leave it alone" policy (ie lassiez faire). Stop subsidizing farmers. Save taxpayers' money.


I gave economic arguments why it cannot, we have empirical proof it cannot, you hav'nt given anything but your religious market fundementalist faith.


To me the Democrats are centre left. The Democrats want to give them amnesty. This will encourage more illegals.


You mean like Ronald Reagen?


Which economist? For a developed country 3% is considered as very good. For a developing country like China, 10% is considered as good.


Joseph Stiglitz, Nouriell Roubini ... ALL OF THEM.

3% is necessary, not good. below 3% you have growing unemployment and a slowdown.


Source? Here is an article by the New Zealand (http://www.mfat.govt.nz/posts/pdf/paris-nztariffs.pdf)government. I will quote:


New Zealand built its economy with keynsian policies (strong keynsian) pre 1984, and New Zealand had serious economic problems after that (9% inflation, 11% unemployment).

But anyway, New Zealand is one tiny countyr, a broken clock is right twice a day.


For those who just joined us we were debating on the defination of 'capitalist'. According to the dictionary, a capitalist is an owner of a business. Gacky's defination is that a capitalist is the one who controlls the business.

So if we go by Gacky's defination, in the case of large companies, the workers are the capitalists. That's because in large companies like say Exxon, the shareholderes are so many that they have lost control over the company. The ones who call the shots are the top executives who at the end of the day are simply employees, albeit highly paid ones. Therefore the workers are the capitalists, if we go by Gacky's defination.



Worker=labor with no control over output of production
Capitalist=Controler of output of productoin.

Actually if we go by your definition, basically only the banks are capitalists, since most buisinesses are highly geared. "ownership" is meaningless unless it entails control, control over the profits is what matters here.

So we are going by my defintion, I have no interst in semantics games with you.

(someone totally ignorant of economics).


Marx was wrong on most things. He predicted the demise of capitalism in the middle of the 19th centry and it has not happened.


It did happen in the 1930s, Capitalism never recovered, the only reason its still going is MAJOR MAJOR government intervention and MAJOR MAJOR military keynsianism, in the 80s they tried to go a little bit back to capitalism and it almost immediately collapsed again.


Not nessarily. In some businesses which requires large capital, like say cars, you tend to get that because it is more efficient that way. But in the baby sitting industy, i don't see a few large companies doing the job.


Baby sitting is'nt a large prat of the GDP, lets be serious.


OK. Then it means that the workers are the capitalists for large comanies.


The board of directors are the capitalists.

Like I said, I have no interest in semantics games.


Nope. Warren made his money the old fashioned capitalist way. Buying good businesses and sitting on them while they grow.


The old fashioned way was getting government land and building railroads or oil refineries, or building factories and kicking peasents off land so they had to work for low wages. Anyway.

http://www.topstockanalysts.com/index.php/2012/02/15/how-warren-buffett-really-got-rich-in-stocks/
Also buffet made even more money from charging investment fees

Anyway, if your gonna look up to Buffet, that guy is FAR from a free market libertarian.


True. but you don't have to buy and sell everyday.


ok .... They are still liquid.


True. But Warren Buffet has proved that sitting on your stocks is how to get rich. Someone asked him, "How long should you hold on to your stocks?" He said:

Our favorite holding period is forever. (http://www.brainyquote.com/quotes/quotes/w/warrenbuff129835.html)


Does'nt make it not liquid, thats the important thing, liquidity.

Anyway, The hedgefunds of today are the new masters of the universe.


I called it State Socialism. The USSR was practicing state socialism.


Semantics games, I have no intrest in them.


It recovered despite what the government did. it would have recovered earlier if the governments left things alone. Huge spending, wars and keynesian programs are more interference in the free market. Laissez faire means "leave it alone (http://en.wikipedia.org/wiki/Laissez-faire)". I quote:


Except it did'nt, it had a good 15 or so years of laissez fiar and it was getting worse.

BTW if you are truely Laissez faire, you'll be against corporations, entitites entirely created by the state.


You Marxists are forever waiting for capitalism to collapse.


Allready did buddy.


In that case, form your co-ops. If people are happier working for co-ops then there will be more and more of them. Eventually the conventional businesses will die away.

You must ask why this has not happened. Could it be because there are limits? You can't grow beyond a certain size? They are not as efficient as a capitalistic business firm?


It has'nt happened because you lack investment, and you lack investment because they are not for profit. Its a capitalist system.


Chile is an interesting example. It followed a lasseiz faire policy under Pinochet and today, its South America's richest country. Compare that with Hugo Chavez's Venezuela which is more Socialist. Spain capitalist? I think its more to the left. That's why its going bust.


Unde Pinochet the economy plummited, it was destroyed. Only when the policies were refuted and social programs started up again in the 90s did Chile recover somwewhat.

BTW, one of the largest industry there, Mining, is nationalized.

Hugo Chaves' Venezuela has dramatically cut poverty and increased living standards.

Spain had its problems AFTER the liberalizations of the 90s and 2000s, especially of financial markets.


Hoover was starting to move away from it. It was more the policy of Calvin Coolidge and previous Presidents.


Coolidge was far from laissez fair, he had tons of tarrifs and subsidies. Hoover was just as capitalist.

BTW, capitalism could work in the US in the 1800s and such, because the US had major room to grow naturally without any excess capacity.


Going by empirical evidence, Greece, italy, Spain and Portugal are more Socialistic and they are going bust.


Socialistic by what standad?

Certainly not compared to Germany, Norway, Denmark and so on.

Italy is extremely right wing, Greece Spain AND protugal significantly liberalized their financial systems and basically handed them over to banks.

Icaland also liberalized, after the crash they went back to social democracy, greece is going after austerity, compare the 2 countries now.


Roosevelt was responsibly for prolonging the Depression because his Socialistic policies and government intervention did not work. Had he "left things alone'", the Depression would have been over more quickly.


Based on what??? Other than your fantasy dream land.

Guess what, leaving things alone did'nt work.


The US economy grew rapidly under Reagan because he adopted a more free market (ie Leave it alone) policies.

Things started collapsing in the USA because under Clinton's Democrats they started interfering in the market to provide housing to the lower income people - his voters.

He passed the Community Reinvestment Act to prod banks to make loans to people to buy housing when these people could not afford to buy.


The community renivnestment act did one thing, ban redlining, where did they prod banks to make these loans??? Show me one example.

They did'nt, no bank had to make a loan they did'nt want to make, but they did make the loans because after the securitization of mortgages laons became EXTREMELY profitable (just look at the numbers), it wa'nst government intervntion, it was free markets.

Reagens policies were the cause of the crash today, Clinton for the most part followed the same trend as Reagen.


America's crisis was caused because the government failed to leave the housing market alone and started intervening so that the lower income could buy housing even when they don't have money for a down-payment. There mortgages were sold to Fannie Mae and Freddie Mac, two Congress sponsored companies, who repackaged them into Mortgaged Backed securities. This caused a housing bubble which collapsed.

Once again, they forgot to "leave it alone" and let the free market decide.


Fannie and freddie Mac were privatized well before the crash.

The state only banned redlining, it did'nt force anyone to laon to anyone.

Fannie and Freddie were only a tiny party of the financial buisinesses involved in repackaging, it was a boom for every other financial buisiness too.


Nationalizatin is Socialist whether you have a functioning democracy or not. In either case, the government is not leaving the economy alone. They are interfering in the free markets. I want freedom from government disturbance. A free market capitalist is to some extent a anarchist who distrusts government.


By definition its NOT socialist, again I'm not intersted in semantics games, but monarchies are not socialist.

YOu need a functioning democracy (based on every definition of socialism that socialists hold).

There is no such thing as a "free" market, you need heavy government protection of property and capital, and government support of encorporation.

There never has been and ever will be a "free" market.


The main reason why wages are stagnant and have been for 30 years is because the Chinese are taking over the jobs even though profits are increasing.


Not at all the case, the Chinese hav'nt been taking over jobs for 30 years.

Much of it has to do with the decline of unions and simply capitalisms internal problems itself.


That's Marx's theory why he thinks capitalism is doomed to collapse. He was wrong. Profits will go down in old industries and rise in new ones.


Yes, they will drop in productive industry and go up in finance, which is marx's prediction.

He obviousl was'nt wrong, look at the data.

I'm a little tired of debating someone who has'nt got the slightest grasp of basic economics beyond tired old tea-party rhetoric.

[bugsbunny]

You don't know any economist? Read an economist textbook. They ALL say that.

Ok let me explain exponential.

100 + (100*0.03)= year 1.
year 1 + (year 1*0.03)=year 2
year 2 + (year 2*0.03)=year 3.

Thats exponential.

3% is not only GOOD for a developed country, its necessary, to deal with productivity hikes, capacity growth, capital investment and so on.

3% is not necessary to deal with productivity hikes, capacity growth and capital investment. That's all Marxist nonsense. Show me on reputable economists who say we need 3% growth.



for a 3rd world country, yeah 10% is good, but China right now has a problem, (cheap labor drives their growth, which in turn severely limits domestic consumption however their cheap labor hurts consumption overseas by driving down wages, so they depend on exports).


Wrong. Chinese consumption is growing as wages rise.




Explain to me how its false. Knowing you don't understand basic terms nad concepts from classical economics (not even marxist), its pretty obvious your out of your league.


I think its you who do not understand economics. You are spouting Marxist economics which is nonsense. Go read a proper economics text book.




New technologies don't grow disposable income, not at all (infact many times it lessens them when you see the effect on productivity on the macro level), education only increases disposable income if it comes with a job with a higher income.


Of course, new technologies and education would increase disposable income. That's because these things tend to improve productivity. But I must qualify something. You must be educated in something useful and not nonsense stuff.



You already said that responce to ecess capacity, but again ITS ON THE MACRO LEVEL (READ THAT AGAIN), so its excess capacity nationwide and even worldwide.


I was referring to on the marco level. Companies that have excess capacity will shut down some of their production facilities. when all factories with excess capacity shut down, it becomes a macro matter.



Also the profitable industries, (for the last 30 years), have been finance, which does nothing more than skim off the top of productive industry (once you get past all the semantics).


There were so many companies not in the financial sector that were profitable in the last 30 years. See your link on Warren Buffet. He bought Coca cola 30 years ago and its profitable.



Also investing in poor countries is great for buisiness, but you still need a consumer base.


When you start a factory in a third world country, you are increasing the consumer base. That's the workers there will now have higher wages.




You don't know what excess capacity means. I cna't believe I'm having a debate with someone ignorant of economics 101.

Excess capacity= excess productive capability through capital (i.e. excess machines, and so on), in other words, you can produce more than people can consume.


Excess capacity does not deal only with excess capital goods. It also refers to excess labor. An unused machine and an unemployed worker are both excess capacity in the economy.




So what you have is THIS problem, I'll spell it out for you since you obviously don't get what excess capacity means.

Productivity goes up all over the plae through new technology. Prices drop, profits go down, people get laid off and thus wages get suppressed.


I can agree that people get laid off for obsolete industries that new industries replace. Prices for obsolete products will go down but prices for new products will start out high. But it will gradually come down.

For example, I remember when the first hand phones came on the market they were very expensive. But the prices gradually decline as you say. The companies however increased their profits because now more and more people can afford to buy!

As phone production goes up, more and more new jobs were created.



As people get laid off and wages get suppresssed they buy less stuff, leading to LESS profits. Leading to it being necessary to decrease costs MORE.


Some people will get layed off. But new jobs will also be created.




Oh I'm FOR technology, but capitalism can't handle it, socialism would use technology much more efficiently.


No. Capitalism uses technology more efficiently.




Again, I'm talking macro, MACRO (so enough with the strawmen).


So am I.




creative destruction works at a certain level, but after a while you simply don't have the consumer base and the excess productivity is too high to turn a profit


I keep telling you that excess capacity will be redeployed elsewhere. Under used equipment, factories, land etc will be sold. The money raised will be invested in new businesses that are more profitable. Laid off workers will be retrained and sent to work in new industries - assuming that they can be retrained. Unfortunately, not all workers can adapt to a new job.



Also excess capacity is not unemployed workers, its excess capital. (if you don't know economics don't debate it).


Its both. Excess capacity is both unused capital goods and unemployed workers.




If elections were about votes unemployed people would be tended too way way more than the rich, its not about votes.


Not sure what you mean. But I believe the subsidies is about votes. Small groups like farmers association can not only deliver votes but also donate money which expands their influence beyond their raw numbers.




Your right, if agriculture had serious economic power, it does'nt (not compared to actual economic power).


Not sure what you mean.



Politicians pander to money.


We finally found something to agree about.




And if they did'nt subsidies farming it would'nt exist as an industry in capitalism, cost would cause major starvation, you'd basically need the government to take it over completely or juts have mass starvation.


This is absolute nonsense. If you don't subsidize farmers in rich countries production will drop but African farmers will get to sell more. They can't sell as much as they would like because they have to compete with farmers in rich countries who get subsidies from their governments.




I suggest you read the studies, people go hungry in the US, poverty is real.


The poor in the USA are rich compared to Third World poor. Very few go hungry in the US.




I gave economic arguments why it cannot, we have empirical proof it cannot, you hav'nt given anything but your religious market fundementalist faith.


I have given economic arguments why I am right and posted links to support my arguments. But all I get from you is your religious Marxist fundamentalist faith.







Joseph Stiglitz, Nouriell Roubini ... ALL OF THEM.

3% is necessary, not good. below 3% you have growing unemployment and a slowdown.


Show me a link where Nouriell Roubini said that 3% is necessary to prevent unemployment and a slowdown.




New Zealand built its economy with keynsian policies (strong keynsian) pre 1984, and New Zealand had serious economic problems after that (9% inflation, 11% unemployment).


Its the opposite. New Zealand had serious problems by 1984 but replacing Socialist policies with more free market oriented ones greatly improved the economy. Unemployment went down, growth restored etc.





Worker=labor with no control over output of production
Capitalist=Controler of output of productoin.


That's your defination and not the dictionary defination. By your defination, it follows that in large companies its the workers who are the capitalists since the owners have lost control of the companies.




Actually if we go by your definition, basically only the banks are capitalists, since most buisinesses are highly geared. "ownership" is meaningless unless it entails control, control over the profits is what matters here.


What nonsense. Banks may lend money to a business but that does not make them owners of those busineses. Its the owners who are the capitalists by my defination which is the dictionary defination.



So we are going by my defintion, I have no interst in semantics games with you.


Your defination is not the dictionary defination of 'capitalist'. its you who are playing semantic games.





It did happen in the 1930s, Capitalism never recovered, the only reason its still going is MAJOR MAJOR government intervention and MAJOR MAJOR military keynsianism, in the 80s they tried to go a little bit back to capitalism and it almost immediately collapsed again.


YOur understanding of capitalism is wrong. Major government intervention is a threat to capitalism and not its savior. The more the government "leave it alone", the safer capitalism is.




Baby sitting is'nt a large prat of the GDP, lets be serious.


It may not be but I was using it to illustrate a point to refute you. You were saying that all industries end up as oligarchies. Baby sitting did not.




The board of directors are the capitalists.


Only if they also own stocks of the company. Evem going by your defination, the may not be capitalists because they do not have much control of the business. They meet maybe 4 times a year to review things. The day to day running of the company is done by the employees of the company starting from the CEO downwards. Everyone from the CEO downwards are workers. Thus its the workers that control the company.



Like I said, I have no interest in semantics games.


You are the one playing the semantic games by coming up with your own defination. I was only using dictionary defination.




The old fashioned way was getting government land and building railroads or oil refineries, or building factories and kicking peasents off land so they had to work for low wages. Anyway.

http://www.topstockanalysts.com/index.php/2012/02/15/how-warren-buffett-really-got-rich-in-stocks/
Also buffet made even more money from charging investment fees


No he does not charge investment fees. The last time he did that was more than 40 years ago when he was in his twenties. After he quit as a fund manager, he bought over a textile company called Berkshire Hathaway which today owns stocks and companies.

Your link supports what I said. He made money by sitting on his stocks like Coca Cola. He held coca cola for more than 30 years.



Anyway, if your gonna look up to Buffet, that guy is FAR from a free market libertarian.


Only when it suits him. Since we got a Socialist in the White House, Buffet decided to be a crony capitalist by currying favor from Obuma. That's what happens when governments interfere in the markets. All the big businessmen find it more profitable to butter up government officials than to come up with a better product for the people. If the government practice lassiez faire (ie leave the economy alone), Buffet won't have to do that. Socialism always lead to crony capitalism.






ok .... They are still liquid.



Does'nt make it not liquid, thats the important thing, liquidity.

Anyway, The hedgefunds of today are the new masters of the universe.


Hardly. They are just one industry, that's all. They don't control the universe.







Except it did'nt, it had a good 15 or so years of laissez fiar and it was getting worse.

BTW if you are truely Laissez faire, you'll be against corporations, entitites entirely created by the state.


Not sure what you mean. I am against big corporations because it interefers with lassiez faire. An industry that is dominated by a few big business is not efficient. Far better to have a thousand smaller companies competing for our dollars.






It has'nt happened because you lack investment, and you lack investment because they are not for profit. Its a capitalist system.


That means, co-ops are a failure. They do not work except for small ones.




Unde Pinochet the economy plummited, it was destroyed. Only when the policies were refuted and social programs started up again in the 90s did Chile recover somwewhat.


Under Pinochet, the economy recovered. The reforms he made are kept to this day and that is why Chile is the richest country in S America.



BTW, one of the largest industry there, Mining, is nationalized.


I know. Its the exception. The others were privatized.



Hugo Chaves' Venezuela has dramatically cut poverty and increased living standards.


Its the reverse. Poverty increased because of him. They even have an energy shortage. Only a Socialist country can produce an energy shortage in a place like Venezuela which has abundant oil and hydro energy.






The community renivnestment act did one thing, ban redlining, where did they prod banks to make these loans??? Show me one example.


Read this (http://spectator.org/archives/2009/02/06/the-true-origins-of-this-finan) and this (http://online.wsj.com/article/SB10001424052970204464404577117091015102330.html).

In a nutshell I will explain what happened. Clinton amended the Community Reinvestment Act in 1995. After that date, banks who do not lend to lower income people (Clinton's voters) will not be allowed to expand. So banks lent money out but quickly sold these mortgages to Fannie Mae and Freddie Mac. These two are GSEs overseen by Congress.

Congress pressed them to lower their standards so that more money can be lent to the lower income people to buy housing. That's what caused the bubble. When the bubble burst, many could not afford to pay and that was how you got the sub prime crisis.

Once again, the government should not interfere. Leave the economy alone. Don't push bankers to lend to people with no money.





Reagens policies were the cause of the crash today, Clinton for the most part followed the same trend as Reagen.


Clinton was the main cause.




Fannie and freddie Mac were privatized well before the crash.


But they were Government Sponsored Enterprises overseen by Congress.



The state only banned redlining, it did'nt force anyone to laon to anyone.


It pressured the banks.

[RGacky3]

3% is not necessary to deal with productivity hikes, capacity growth and capital investment. That's all Marxist nonsense. Show me on reputable economists who say we need 3% growth.


Show me a link where Nouriell Roubini said that 3% is necessary to prevent unemployment and a slowdown.

p4AtfaohXNA

http://economistsview.typepad.com/economistsview/2007/01/what_output_gro.html


Wrong. Chinese consumption is growing as wages rise.


Not nearly enoiugh to hold the production, not even close, nor is the consumption rising as fast as the productivity. Also wages are not rising across the board, the average may be, but the mean is'nt that much at all. (also if you include disspossession, and the amount that used to function ok outside the economy joining the economy as low wage workers you find something even worse).


Of course, new technologies and education would increase disposable income. That's because these things tend to improve productivity. But I must qualify something. You must be educated in something useful and not nonsense stuff.


Except I juts explained why it would'nt and you totally ignored it.


I was referring to on the marco level. Companies that have excess capacity will shut down some of their production facilities. when all factories with excess capacity shut down, it becomes a macro matter.

not if you still have excess capacity on a macro level, even if factories shut down you still have the excess capacity there (PLEASE LEARN ECONOMIC TERMS, these are not Marxist terms they are mainstream economics 101 terms).


There were so many companies not in the financial sector that were profitable in the last 30 years. See your link on Warren Buffet. He bought Coca cola 30 years ago and its profitable.

Sure there were, but over all .... well look at the graphs, I posted the data.


When you start a factory in a third world country, you are increasing the consumer base. That's the workers there will now have higher wages.

No there won't be, those workers are being paid much less than the previos workers, thus a lower consumer base, chances are they are only being paid sustinance wages, hense they are barely consumers at all.


Excess capacity does not deal only with excess capital goods. It also refers to excess labor. An unused machine and an unemployed worker are both excess capacity in the economy.

I'm refering to capital (what did I say about semantics games).

Anyway unemployment is also a problem since it pushes down wages and thus the consumer base.

But excess capital capacity has totally different problems, i.e. the tendancy for the rate of profit to fall (which you hav'nt refuted yet, and which you've been shown empirical data for).


I can agree that people get laid off for obsolete industries that new industries replace. Prices for obsolete products will go down but prices for new products will start out high. But it will gradually come down.

For example, I remember when the first hand phones came on the market they were very expensive. But the prices gradually decline as you say. The companies however increased their profits because now more and more people can afford to buy!

As phone production goes up, more and more new jobs were created.


One industry does'nt mean shit.

But overall, on the macro level, we still have the rate of profit declining.

As phone production goes up more jobes were created, then productivity went up and those jobs wen't, then the rate of profit fell, and now manufacturing ACCROSS THE BOARD is falling, not only in the US, but all industrialized countries.


I keep telling you that excess capacity will be redeployed elsewhere. Under used equipment, factories, land etc will be sold. The money raised will be invested in new businesses that are more profitable. Laid off workers will be retrained and sent to work in new industries - assuming that they can be retrained. Unfortunately, not all workers can adapt to a new job.

Except empirically it does'nt happen, excess capacity on a macro level means it CANNOT be redeployed (unless your selling to aliens).

Excess capacity means there is capacity for 500 units but only a market for 300, for ALL Productive industry.

Thats what I mean by macro.

What your saying is as stupid as me saying "population growth is too much worldwide" then you respond saying "naw, people can just move...."


Not sure what you mean. But I believe the subsidies is about votes. Small groups like farmers association can not only deliver votes but also donate money which expands their influence beyond their raw numbers.

Given they require massiave subsidies their money clout is'nt that much, check the farmers association donations compared to other groups, it ain't that much.


YOur understanding of capitalism is wrong. Major government intervention is a threat to capitalism and not its savior. The more the government "leave it alone", the safer capitalism is.


Well, the data say otherwise. Iceland is doing fine, Norway is doing fine ....

if government left capitalism alone, you would'nt have corporations, capitalism would have ended a long long time ago.


You are the one playing the semantic games by coming up with your own defination. I was only using dictionary defination.

Well then lets use different words :rolleyes:.

But you know what I mean.


This is absolute nonsense. If you don't subsidize farmers in rich countries production will drop but African farmers will get to sell more. They can't sell as much as they would like because they have to compete with farmers in rich countries who get subsidies from their governments.

Nope, because the cost of capital would be way way to high for african farmers, the excess capital would be way way to much to increase prices enough to make the cost of capital worth it.


Only if they also own stocks of the company. Evem going by your defination, the may not be capitalists because they do not have much control of the business. They meet maybe 4 times a year to review things. The day to day running of the company is done by the employees of the company starting from the CEO downwards. Everyone from the CEO downwards are workers. Thus its the workers that control the company.

Almost all the time the CEO, CFO, and COO are on the board, also the board has the last say over what happens to the profits.

If you really want to place semantics then yes, 2 or 3 "workers" control the company. But your just being a child here.


Its the reverse. Poverty increased because of him. They even have an energy shortage. Only a Socialist country can produce an energy shortage in a place like Venezuela which has abundant oil and hydro energy.


Poverty has increased???

Would you like to put money on that???


Only when it suits him. Since we got a Socialist in the White House, Buffet decided to be a crony capitalist by currying favor from Obuma. That's what happens when governments interfere in the markets. All the big businessmen find it more profitable to butter up government officials than to come up with a better product for the people. If the government practice lassiez faire (ie leave the economy alone), Buffet won't have to do that. Socialism always lead to crony capitalism.

If Obama is a socialist then so was Reagan.

Btw the buisinessmen are lobbying to enact YOUR policies (I wonder why).


Hardly. They are just one industry, that's all. They don't control the universe.


The financial industry basically does.


Not sure what you mean. I am against big corporations because it interefers with lassiez faire. An industry that is dominated by a few big business is not efficient. Far better to have a thousand smaller companies competing for our dollars.


Big corporations are the natural outcome of capitalism.

My point is that encoropration is a government entity, but I don't see any libertarians railing against encorporation.


In a nutshell I will explain what happened. Clinton amended the Community Reinvestment Act in 1995. After that date, banks who do not lend to lower income people (Clinton's voters) will not be allowed to expand. So banks lent money out but quickly sold these mortgages to Fannie Mae and Freddie Mac. These two are GSEs overseen by Congress.

Congress pressed them to lower their standards so that more money can be lent to the lower income people to buy housing. That's what caused the bubble. When the bubble burst, many could not afford to pay and that was how you got the sub prime crisis.

Once again, the government should not interfere. Leave the economy alone. Don't push bankers to lend to people with no money.

I suggest you read freefall by Joseph Stiglits (a real economist).

Actually most of the mortgages were sold to other banks who repackaged them and sold them to investors. the thing was HIGHLY profitable.

If you got rid of fannie and freddy you'd have had the same problem.

Congress did'nt press them to lower standards, READ THE BILL, it banned redlining, no bank was forced to lend to anyone, the lending did'nt happen after the bill was passed, it happened after securitization happened (a totally private free market thing).


But they were Government Sponsored Enterprises overseen by Congress.


Congress had no functional control over it, it was basically a private corporation.

BTW Capitalism is a government sponsered enterprise.



But when it comes to the rate of profit to fall.

I've shown you the data, it has fallen, and you can't blame it on china because it was happening way way before then.

[bugsbunny]

p4AtfaohXNA

http://economistsview.typepad.com/economistsview/2007/01/what_output_gro.html



I watched the Stiglitz interview. He said that normally the economy grows around 1% and productivity grows about 2%. (He is right.That's why I said 3% would be considered as very good for a developed economy.)

He did say that the economy should grow at 3% to bring down unemployment. But he did not say that 3% is necessary to deal with productivity hikes, capacity growth and capital investment.

This was what I said which you distorted deliberately. I said:


3% is not necessary to deal with productivity hikes, capacity growth and capital investment. That's all Marxist nonsense. Show me one reputable economists who say we need 3% growth. You added the words " to prevent unemployment and a slowdown" to what I said. Go back and look.

Your Marxist brainwashing has filled your thinking with economic nonsense. For example, you talk about productivity growth as if its a bad thing. Actually, its a good thing. Marxian economics is so determined to prove that capitalism is going to collapse that it has come up with a lot of garbage which you believe in.

Although the last 30 years was exceptional, productivity growth generally leads to greater profitability for capitalists (ie owners of businesses) and workers.

Unfortunately, for reasons I told you before, workers have not gained wage increases despite productivity growth in the last 30 years. That is a very unusual trend caused by China's entry into the capitalist world.

[bugsbunny]

not if you still have excess capacity on a macro level, even if factories shut down you still have the excess capacity there (PLEASE LEARN ECONOMIC TERMS, these are not Marxist terms they are mainstream economics 101 terms).I have done courses in Economics and have a passing familiarity with it.




Sure there were, but over all .... well look at the graphs, I posted the data.I assume you are referring to the FIRE graph? This shows that the US is moving away from manufacturing to services and real estate. That's all. FIRE = finance, insurance, real estate. The manufacturing companies have shifted to China because wages there are lower.


No there won't be, those workers are being paid much less than the previos workers, thus a lower consumer base, chances are they are only being paid sustinance wages, hense they are barely consumers at all.
The workers in the third world will have higher wages than before. Thus they can spend more. Goods become cheaper for people in rich countries. So they save money and now have more money to spend on other stuff. They too are better off provided its not your job that got outsourced to the Third World.





I'm refering to capital (what did I say about semantics games).

Anyway unemployment is also a problem since it pushes down wages and thus the consumer base.

But excess capital capacity has totally different problems, i.e. the tendancy for the rate of profit to fall (which you hav'nt refuted yet, and which you've been shown empirical data for).



One industry does'nt mean shit.



But overall, on the macro level, we still have the rate of profit declining.

As phone production goes up more jobes were created, then productivity went up and those jobs wen't, then the rate of profit fell, and now manufacturing ACCROSS THE BOARD is falling, not only in the US, but all industrialized countries.

Its very difficult to make you understand because you were educated/brainwashed into believing in Marxist economics. I have a very different education and ended up believing in free markets. The only way to settle this is to make a prediction. According to Marx, capitalism is going to collapse. So all this Marxist economics that you learnt is to prove that capitalism is going to collapse. Stuff like excess capacity, declining rate of profits etc has been around for a long time.

So your prediction is that capitalism will eventually collapse and whenever you see signs of economic distress, you see evidence that its a failure of capitalism - like the current economics crisis for example.

In my case, I believe that Socialism is going to collapse and has in fact collapsed in places like the East Europe and China which are going more and more towards free markets aka capitalism.

So my prediction is that Cuba is going to collapse. There will be a People's revolution that will topple the Cuban government because Socialism does not work. I also see that the current economics crisis as caused by Socialist policies in the advanced countries. They spent too much money on welfare systems put into place by Democratic Socialist parties. Greece is a good example. In the US, the Democrats (US leftist party) amended the Community Reinvestment Act in order to give lower income people housing by pushing reluctant banks to lend money to them.




Except empirically it does'nt happen, excess capacity on a macro level means it CANNOT be redeployed (unless your selling to aliens).

Excess capacity means there is capacity for 500 units but only a market for 300, for ALL Productive industry.

Thats what I mean by macro.Yes. I know. And I keep telling you what will happen is that some companies will cut down production. they will sell out their equipment or factories or retrench their workers thus reducing their overcapacity. In practice the total capacity will not drop all the way to 300 but it would be more like say 360 because there will always be hope in a pick up in demand. These things are unpredictable.






Given they require massiave subsidies their money clout is'nt that much, check the farmers association donations compared to other groups, it ain't that much.Its enough to make a difference.




Well, the data say otherwise. Iceland is doing fine, Norway is doing fine ....

if government left capitalism alone, you would'nt have corporations, capitalism would have ended a long long time ago.I don't know much about Iceland or Norway. I am not sure what you mean by "if government left capitalism alone ... long time ago. "

Are you saying that we need government to ensure rule of law? If that's what you mean, then I agree. Beyond that, the government should not interfere in the economy by telling businessmen what to do.






Almost all the time the CEO, CFO, and COO are on the board, also the board has the last say over what happens to the profits.Where do you get that? Do you have a link? My impression is that CEO, CFO and COO rarely are on the board. I have come across cases where the CEO is the Chairman and hence on the board. But that does not happen too often as far as I know. It usually happens when the CEO is also a large shareholder. the company is relatively small and often he is the founder.

The board is supposed to represent the owners (ie the capitalists) of the company. The day to day running is done by the CEO and other workers downwards. They get paid even if the company makes a loss. The owners get whats left after everybody else gets paid. This is called profit.

[bugsbunny]

not if you still have excess capacity on a macro level, even if factories shut down you still have the excess capacity there (PLEASE LEARN ECONOMIC TERMS, these are not Marxist terms they are mainstream economics 101 terms).I have done courses in Economics and have a passing familiarity with it.




Sure there were, but over all .... well look at the graphs, I posted the data.I assume you are referring to the FIRE graph? This shows that the US is moving away from manufacturing to services and real estate. That's all. FIRE = finance, insurance, real estate. The manufacturing companies have shifted to China because wages there are lower.


No there won't be, those workers are being paid much less than the previos workers, thus a lower consumer base, chances are they are only being paid sustinance wages, hense they are barely consumers at all.
The workers in the third world will have higher wages than before. Thus they can spend more. Goods become cheaper for people in rich countries. So they save money and now have more money to spend on other stuff. People in rich countries too are better off provided its not their job that got outsourced to the Third World.





I'm refering to capital (what did I say about semantics games).

Anyway unemployment is also a problem since it pushes down wages and thus the consumer base.

But excess capital capacity has totally different problems, i.e. the tendancy for the rate of profit to fall (which you hav'nt refuted yet, and which you've been shown empirical data for).



One industry does'nt mean shit.



But overall, on the macro level, we still have the rate of profit declining.

As phone production goes up more jobes were created, then productivity went up and those jobs wen't, then the rate of profit fell, and now manufacturing ACCROSS THE BOARD is falling, not only in the US, but all industrialized countries.

Its very difficult to make you understand because you were educated/brainwashed into believing in Marxist economics. I have a very different education and ended up believing in free markets. The only way to settle this is to make a prediction. According to Marx, capitalism is going to collapse. So all this Marxist economics that you learnt is to prove that capitalism is going to collapse. Stuff like excess capacity, declining rate of profits etc has been around for a long time.

So your prediction is that capitalism will eventually collapse and whenever you see signs of economic distress, you see evidence that its a failure of capitalism - like the current economics crisis for example.

In my case, I believe that Socialism is going to collapse and has in fact collapsed in places like the East Europe and China which are going more and more towards free markets aka capitalism.

So my prediction is that Cuba is going to collapse. There will be a People's revolution that will topple the Cuban government because Socialism does not work. I also see that the current economics crisis as caused by Socialist policies in the advanced countries. They spent too much money on welfare systems put into place by Democratic Socialist parties. Greece is a good example. In the US, the Democrats (US leftist party) amended the Community Reinvestment Act in order to give lower income people housing by pushing reluctant banks to lend money to them.




Except empirically it does'nt happen, excess capacity on a macro level means it CANNOT be redeployed (unless your selling to aliens).

Excess capacity means there is capacity for 500 units but only a market for 300, for ALL Productive industry.

Thats what I mean by macro.Yes. I know. And I keep telling you what will happen is that some companies will cut down production. they will sell out their equipment or factories or retrench their workers thus reducing their overcapacity. In practice the total capacity will not drop all the way to 300 but it would be more like say 360 because there will always be hope in a pick up in demand. These things are unpredictable.






Given they require massiave subsidies their money clout is'nt that much, check the farmers association donations compared to other groups, it ain't that much.Its enough to make a difference.




Well, the data say otherwise. Iceland is doing fine, Norway is doing fine ....

if government left capitalism alone, you would'nt have corporations, capitalism would have ended a long long time ago.I don't know much about Iceland or Norway. I am not sure what you mean by "if government left capitalism alone ... long time ago. "

Are you saying that we need government to ensure rule of law? If that's what you mean, then I agree. Beyond that, the government should not interfere in the economy by telling businessmen what to do.






Almost all the time the CEO, CFO, and COO are on the board, also the board has the last say over what happens to the profits.Where do you get that? Do you have a link? My impression is that CEO, CFO and COO rarely are on the board. I have come across cases where the CEO is the Chairman and hence on the board. But that does not happen too often as far as I know. It usually happens when the CEO is also a large shareholder. the company is relatively small and often he is the founder.

The board is supposed to represent the owners (ie the capitalists) of the company. The day to day running is done by the CEO and other workers downwards. They get paid even if the company makes a loss. The owners get whats left after everybody else gets paid. This is called profit.

[RGacky3]

I assume you are referring to the FIRE graph? This shows that the US is moving away from manufacturing to services and real estate. That's all. FIRE = finance, insurance, real estate. The manufacturing companies have shifted to China because wages there are lower.

Exactly, from productive industry to finance.

Also you can't blame it on china because the tendancy started WAY before China opened up, and also because this tendancy applies to all industrial countries, and happened in the UK, Japan AND germany.


The workers in the third world will have higher wages than before. Thus they can spend more. Goods become cheaper for people in rich countries. So they save money and now have more money to spend on other stuff. People in rich countries too are better off provided its not their job that got outsourced to the Third World.


Except people in rich countries don't have jobs, and your wrong, because prices go up overtime for necessary goods (food, housing and so on) i.e. the things that cound for poor people.

In the third world wages don't go up, infact poverty increases with neoliberalization, and all the resources and profits get taken FROM the country.

Neoliberal theory was a terrible failure.


Its very difficult to make you understand because you were educated/brainwashed into believing in Marxist economics. I have a very different education and ended up believing in free markets.

The only economics courses I attended were in the United States where they tought basically neo-classical dogma.


According to Marx, capitalism is going to collapse. So all this Marxist economics that you learnt is to prove that capitalism is going to collapse. Stuff like excess capacity, declining rate of profits etc has been around for a long time.

So your prediction is that capitalism will eventually collapse and whenever you see signs of economic distress, you see evidence that its a failure of capitalism - like the current economics crisis for example.


The pridictions DID happen.

You say a fall in the rate of profit, you see now massiave excess capacity (all over), you see growing unemployment, and you see growing crisis in capitalism, every crisis starting in the 1980s got worse and worse until today.

The 1930s would have been the end of capitalism had it not been for a HUGE world war and HUGE government spending, and all that did was postpone whats going on now. Now you say laissez fair would have worked it out magically, but it did'nt happen.


In my case, I believe that Socialism is going to collapse and has in fact collapsed in places like the East Europe and China which are going more and more towards free markets aka capitalism.

So my prediction is that Cuba is going to collapse. There will be a People's revolution that will topple the Cuban government because Socialism does not work. I also see that the current economics crisis as caused by Socialist policies in the advanced countries. They spent too much money on welfare systems put into place by Democratic Socialist parties. Greece is a good example. In the US, the Democrats (US leftist party) amended the Community Reinvestment Act in order to give lower income people housing by pushing reluctant banks to lend money to them.


BTW, I predict that Cuba will collapse too, and get major economic growth (ala China), but that bu no means is a problem for socialism.

Socialism = Economic democracy, which is not what Cuba was.

Greece collapsed AFTER liberalizing their financial markets and lowering taxes and so on.

Germany, with co-determination laws (look it up), heavy social control, Norway, with a strong social-democratic government all are doing fine.

Iceland wen't the opposite way from Greece and returned to social-democracy, and they are fine.

Again, show me WHERE in the community re-investment act banks were forced to lend to people they did'nt want to lend to ... There is nothing there forcing banks to lend to anyone.


Yes. I know. And I keep telling you what will happen is that some companies will cut down production. they will sell out their equipment or factories or retrench their workers thus reducing their overcapacity. In practice the total capacity will not drop all the way to 300 but it would be more like say 360 because there will always be hope in a pick up in demand. These things are unpredictable.


Even if you sell the equipment you still have excess capacity unless it can be used, you also have excess capacity in money capital.

You keep bringing up "some companies will sell to other companies," but I'm talking about MACRO, all companies together, have excess capacity.

This is empirically evident, there IS excesss capacity now, and its growing.

Without the military industrial complex it would be rediculously worse.


I don't know much about Iceland or Norway. I am not sure what you mean by "if government left capitalism alone ... long time ago. "

Are you saying that we need government to ensure rule of law? If that's what you mean, then I agree. Beyond that, the government should not interfere in the economy by telling businessmen what to do.


The "rule of law" is meaningless, socialized energy and healthcare could be the "rule of law" if it actually is the law that they are part of the commons.

If government left capitalism alone you'd have no corporations, meaning a huge huge slowdown in investment and basically a collapse of capitalism, you'd also lose the military industrial complex with a huge fall of used capacity, you'd lack necessary property enforcement to have proper capitalism. You need the military to make sure governments overseas don't nationalize stuff.

You can't seperate the government and capitalism, capitalism has always been an institution of the state.


Where do you get that? Do you have a link? My impression is that CEO, CFO and COO rarely are on the board. I have come across cases where the CEO is the Chairman and hence on the board. But that does not happen too often as far as I know. It usually happens when the CEO is also a large shareholder. the company is relatively small and often he is the founder.

The board is supposed to represent the owners (ie the capitalists) of the company. The day to day running is done by the CEO and other workers downwards. They get paid even if the company makes a loss. The owners get whats left after everybody else gets paid. This is called profit.

I don't have a link, but its generally the case.

Also Now the owners don't get whats left over, not unless the board gives it to them in a dividend. The board is selected by the CEO who is selected by the board.

Also since shareholders are extremely liquid you have the problem of requiring purpetual quarterly growth becuase you have to worry about the liquid shraeholders even if it hurts the other stakeholders, meaning you make short term profits maximise externalities, and include in the externality the long term.

Anyway from now on lets get clear what we are talking about.

Capitalists: Bosses, bourgeouis: The people that control the profits, executive, boards, extermely large shareholders (enough for power).

Workers: People that create value for the company without say in what happens with it.

That is what I am talking about.

limited liability is a very intersting subject, which has caused rediculous growth in capitalism but at the same time make its crisis worse and its collapse faster (funny enough Adam smith and Ricardo were against limited liability, marx was pro limited liability).

[RGacky3]

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A little education for you.

(Robert Reich is a Keynsian btw, he's faaar from a Marxist, a Keynsian is someone who is smart enough to recognise the internal contradictions of capitalism, but to cowardly to question the underlying cause.)

[RGacky3]

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Ha-Joon Chan IS'NT a marxist, he's an institutionalist economist, (someone that recognizes capitalism as a series of institutions and studies capitalism that way).

Its a really good book btw 23 things you did'nt know about capitalism,

if you want a longer explination (there are 8 parts.)

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[RGacky3]

http://online.wsj.com/video/nouriel-roubini-karl-marx-was-right/68EE8F89-EC24-42F8-9B9D-47B510E473B0.html

And here is my (presumed) mutually respected economist, agreeing with me.

This is Roubini beautifully saying what I've been saying this whole thread.

(Btw, he's not a Marxist either.)