Why doesn't heavily regulated Capitalism work?

[smk]

Hey
I've run into a problem in my knowledge. Some people ask why I would be against heavily regulated 'capitalism' (I use the word loosely to mean any system with a market) as a good replacement, though not the final solution, to the current capitalism with its huge corporations and political/military/business establishment. By "heavily regulated capitalism" I mean a system where only small businesses (called 'mom and pop' businesses where I'm from, basically just the owner and maybe his family and a few hired employees) are able to flourish.

[Sinister Cultural Marxist]

Well first, it goes against the whole internal logic of Capitalism. Capitalism is designed to be a system which is both fueled by and fuels accumulation of wealth, and regulations go against it. The businesses will never accept such tight regulations without resistance and without trying to undermine it. At the point where the workers can so overpower businesses and capitalists, why would they tolerate such a "regulated market" unless they lack the consciousness of their own power?

As for the whole "mom and pop" store thing ... I hate to break it to you but that arrangement simply lacks the same level of economic productivity than the current model of Capitalism. Such a small scale "ethical capitalism" will never dominate the world again, as once these small community stores get big enough, they need to move into other areas and find more industrialized methods to realize a profit. Its the basic logic of accumulation.

[Brosip Tito]

Honestly, I'm sick of asking people to read "Reform or Revolution (http://www.marxists.org/archive/luxemburg/1900/reform-revolution/index.htm)" by Luxemburg.

But yeah, the capitalist system is one of chaotic function. Whether or not it's regulated. Booms, crashes. It's all a part of it.

[Ostrinski]

The bourgeoisie would never go for anything that contradicted their interests, and since they control the state it's just not an option. The interests of the bourgeoisie and proletariat are ultimately irreconcilable in that proletarian interests consist of abolishing a system that reduces them to a tool in a workshop.

[smk]

Well first, it goes against the whole internal logic of Capitalism. Capitalism is designed to be a system which is both fueled by and fuels accumulation of wealth, and regulations go against it. The businesses will never accept such tight regulations without resistance and without trying to undermine it. At the point where the workers can so overpower businesses and capitalists, why would they tolerate such a "regulated market" unless they lack the consciousness of their own power?

As for the whole "mom and pop" store thing ... I hate to break it to you but that arrangement simply lacks the same level of economic productivity than the current model of Capitalism. Such a small scale "ethical capitalism" will never dominate the world again, as once these small community stores get big enough, they need to move into other areas and find more industrialized methods to realize a profit. Its the basic logic of accumulation.

ya, I get that this is the general idea of how our current brand of industrial capitalism developed, but I'm just asking, assuming that it would be possible to regulate business to such a high extent that they literally aren't able to grow beyond a certain point, would this sort of society still "work"? I'm thinking France-at-the-turn-of-the-century type society: they could have industrialized, they had the power, but decided to stay with slow, but steady growth in small businesses like cheese and whatever else French people make.

EDIT: Maybe even to take it a bit further, what if the small businesses were employee-owned (worker-controlled), but still used the normal local market mechanisms?

[Ostrinski]

ya, I get that this is the general idea of how our current brand of industrial capitalism developed, but I'm just asking, assuming that it would be possible to regulate business to such a high extent that they literally aren't able to grow beyond a certain point, would this sort of society still "work"? I'm thinking France-at-the-turn-of-the-century type society: they could have industrialized, they had the power, but decided to stay with slow, but steady growth in small businesses like cheese and whatever else French people make.Capital needs growth. Stagnation in capital is failure. You're either constantly growing or failing.

[Sinister Cultural Marxist]

ya, I get that this is the general idea of how our current brand of industrial capitalism developed, but I'm just asking, assuming that it would be possible to regulate business to such a high extent that they literally aren't able to grow beyond a certain point, would this sort of society still "work"? I'm thinking France-at-the-turn-of-the-century type society: they could have industrialized, they had the power, but decided to stay with slow, but steady growth in small businesses like cheese and whatever else French people make.

EDIT: Maybe even to take it a bit further, what if the small businesses were employee-owned (worker-controlled), but still used the normal local market mechanisms?


Capital needs growth. Stagnation in capital is failure. You're either constantly growing or failing.

I agree with Brospierre. Highly regulated Capitalism doesn't work because it kills the mechanism by which Capitalism maintains itself and improves productivity while keeping the fundamental flaw of Capitalism, which is that the means of production aren't in the hands of the people who worker on it to make it productive. You'd just have a stagnated version of Capitalism.

As for universally self-managed Capitalism, for an extended period of time it would have many of the flaws of modern capitalism, and it would be in the interests of the workers to abandon it.

[piet11111]

Because from the start the regulators would be faced with financial incentives to break the rules for those that bribe them.

In the beginning the feudal lords kept a very tight leash on the capitalists but they eventually lost control and power to them.
Turning back the clock wont solve that problem any better for us then for the feudal lords.

[Armchair War Criminal]

There are a couple of questions in this general vicinity worth unpacking.

Would restricting the size of firms to a small size help anything? No. On the whole, small businesses are less efficient and treat their workers worse. Restricting the ability of capitals to reinvest past a certain point might eliminate the law of value and thus profitability crises, but at the cost of slowing down accumulation and the development of the means of production to nothing, effectively returning us to earlier forms of class society.

Can demand management end cyclical crises? No; or at any rate, they have not. See Andrew Kliman's Failure of Capitalist Production (http://www.powells.com/biblio/62-9780745332390-1) for an extensive discussion of this.

Can social democratic policies make capitalism wonderful for all? No; or at any rate, they have not. There are countries where social democratic policies have made life pretty good for everyone involved, but they are all small open economies who consciously developed a comparative advantage in high-wage industries - merely extreme examples of the first world as a whole, which depends on labor from other countries remunerated at a subsistence rate.

Can regulations make things better at all? Sure. In any situation there are always clever solutions to do this or that thing better that haven't yet been discovered. But I don't think that's what you or anyone here is really concerned with.

What about worker-managed firms? That depends on the details. I believe that within the right framework generalized commodity production with the law of value regulating allocational efficiency and the separation of the worker from the means of production eliminated would not necessarily have profitability crises, but that's kind of a long story.

I'm also guessing that by "any system with a market" you mean generalized commodity production and not literally "any system with market," which is basically anything.

[Book O'Dead]

Wow, there so much I would comment about in this thread!
I'll limit myself to pointing out that the "regulation" myth relies mainly on another myth: The political state as an impartial, unbiased arbiter of class disputes.

Such is not the case.

Karl Marx pointed out that the state is the political instrument of class rule, he called it the "executive committee of the capitalist class". Any state that attempts to regulate capitalist activity (to the extent the lead post suggests) must be, by definition, a state belonging to the capitalist class as a whole or to one of its sectors.

[Strannik]

Your less regulated capitalist neighbours will be more dynamic economically, raise their living standards more or build bigger armies. And your people leave or your state is swallowed up.

[danyboy27]

Beccause regulating it wont fix capitalism internal contradictions.
there will always be a constant struggle between the capitalist and the workers beccause of the conflict of interest private ownership of the mean of production causes.

Bosses will always try to squeeze more from the worker, and the worker will always try to resist to that.

Regulating capitalism has been done in the past and no matter where it was tried (U.S, UK,France,Germany) It always ended up with the capitalist breaking down the regulation with money.

[aty]

Read this: "The impossibility of reformism" the swedish experience...
http://www.cmsmarx.org/wp-content/uploads/2011/11/CMSrefos.pdf

[Psy]

Regulations over capitalists only works when the surplus value is high enough that the bourgeoisie state can buy off the bourgeoisie like during the long boom and capitalists don't feel constrained by a falling rate of profit.

When capitalists find a scarcity of new surplus value they won't follow regulations, like after the long boom where we saw massive deregulation spearheaded by the bourgeoisie.