The Manifest Idiocy of Capitalism

[redstar2000]

In this particular forum, it's all too common to see threads entitled "The Folly of Socialism" or "Why Communism Can't Work", etc.

So I thought I'd try my hand at such a thread: The Manifest Idiocy of Capitalism.

In bourgeois economic theory, capitalism allocates resources in an efficient manner to supply people's needs and wants in abundance and at affordable prices.

In the real world, it never works that way.

Here's why: in the real world, if a capitalist makes "too much" of something, the price he and his competitors can charge falls to such a low level that he can no longer make a profit...or, at least, a profit that he finds "acceptable".

Therefore, it is greatly to his advantage if there is a real "shortage" of his product...if not from extraneous causes, then from his own decision to "produce less". The worse thing he can do is actually try to "meet the demand" for his product. Only if he has a near or actual monopoly for his product can he produce "as much as people want" and still keep prices at stratospheric levels.

Thus it is that every spring in North America--the beginning of the "driving season"--the oil companies shut down some of their refineries to create a "shortage" of gasoline...duly followed by price increases "at the pump" of 20% or even more.

Every fall, the same thing happens with natural gas--widely used for winter heating in North America. Some natural gas wells are "taken off line" and we have a "shortage"--the price jumps dramatically.

As a result, profits grow by selling less.

This is, in practice, a "delicate" scam, requiring considerable finesse. If you produce "too little", consumers will seek out reasonably acceptable lower-priced substitutes for your product (if they exist). But that is a "small risk" compared to the risk of "over-producing" and ending up actually losing money.

In neither socialist or communist economies can this kind of idiocy take place. If shortages exist, they are real ones...not the contrivance of some greedy bastards.

The Soviet Union, for all its numerous shortcomings, made very low cost energy supplies available to consumers in unlimited amounts. Now, under capitalism, much of Russia "freezes in the dark" every winter. (What they actually do, of course, is install a wood-burning or oil-burning stove in their kitchens and live and sleep there throughout the long winter months. In the spring, they can start using the rest of the rooms in their apartments again.)

A particularly sad story comes from Vietnam. When that formerly socialist country decided to go back to capitalism, they asked the advice of the World Bank (run by the U.S., of course) on the best way to "break into" the global economy. The bankers suggested that they grow coffee for export (the highlands of Vietnam are extremely suitable for the coffee plant).

The Vietnamese, hard working people that they are, took the advice of the bankers and planted many thousands of acres in coffee. The world market price of coffee plunged.

The Vietnamese ended up having to rip up and destroy much of what they had planted...so that the price of coffee would rise high enough to make it profitable to keep the rest.

Welcome, Vietnam, to the manifest idiocy of capitalism.

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[Anarchist Freedom]

very well said RS2k

:che:



shove it up your ass sam adams you fucktard.

[Sora]

Since it's pointless to argue with you about beliefs, since I have mine and you have yours, I'll only point out a couple of things:

1. You criticize capitalism for not working as the theory describes it. Many of you have pointed out to me and others that a true communist "society" has not existed. Therefore, you are arguing on the basis of theory, not on fact. Capitalist theory is more successful than communist theory (again, an opinion that you can't change, and I can't change your opinion either), yet the arguments on this board are stemming from communist theory against capitalist reality. These arguments always end up as shouting matches because it is difficult to compare theory to reality. Who knows if communism would work exactly as the theory states, since it has never been tried properly before?

2. Please show some documented sources for your claims that oil companies and gas companies purposely cut lines to increase demand.

3. The Vietnamese should have had someone tell them that growing too much coffee would make the price plummet, but they didn't search for that little tidbit of information, did they?

[conspirologist]

Therefore, it is greatly to his advantage if there is a real "shortage" of his product...if not from extraneous causes, then from his own decision to "produce less". The worse thing he can do is actually try to "meet the demand" for his product. Only if he has a near or actual monopoly for his product can he produce "as much as people want" and still keep prices at stratospheric levels.

There are a couple of problems with this, one of them is that the way the 'shortage' works is simply a function of willingness to pay. Each consumer has a different willingness to pay for a particular service or good, and also like a corporation has what economists call consumber surpluss. This is my willingness to pay less the cost.

Shortage might increase the willingness to pay of some consumers, but not all. We have to remember that the firm's ultimate goal will be to maximize profit. Given that, we can figure ways at which the firm makes decisions in a free market. One is that the price will be set in a competitive market at the point where it reaches equilibrium. This results in the maximum profit for a given price.

How does the firm decide what to produce? By thinking at the margin. When the marginal cost of producing one more unit of the product is exceeded by marginal gain.

This is the way capatalist theory attempts to meet demand. It doesn't attempt to allocate goods to everyone who wants a good in the quantity that they want it, because that is not doable with goods for which there is a limited supply.

Of course, that's the theoretical response. Sora is right to point out the difference between theory and practice, but I'm not certain it's necessarily clear that the practice of capitalism leads necessarily to the conclusion that we should reject it.

[redstar2000]

...yet the arguments on this board are stemming from communist theory against capitalist reality. These arguments always end up as shouting matches because it is difficult to compare theory to reality. Who knows if communism would work exactly as the theory states, since it has never been tried properly before?

Agreed.

Still, many of the "shouting matches" concern the actual performance of capitalism in the real world.

How many people come to this particular forum for the purpose of "justifying" U.S. imperialism, globalization, the immiseration of the "third world", "getting rich" by "working hard", and even America's fake presidential "election" of 2000?

Suppose there were no socialist or communist theory at all? Suppose all we had to go on was how capitalism has actually panned out in practice?

Those who are "winners" or who think they will be "winners" by "working hard" will concentrate on the "advantages" of capitalism--it gives you the "chance" to be a "winner". They are just as "unbiased" as lottery winners on the subject of lotteries.

Those who take a closer look develop different views. If socialist and communist theory didn't exist, it would be invented by people now to explain what's really going on.

And what to do about it.


Please show some documented sources for your claims that oil companies and gas companies purposely cut lines to increase demand.

Sorry, you must have mistaken me for your "research assistant". This phenomenon is "common knowledge" and is reported in the bourgeois media in North America every spring and every fall with regularity. Much verbal fuss is raised...nothing changes.


The Vietnamese should have had someone tell them that growing too much coffee would make the price plummet, but they didn't search for that little tidbit of information, did they?

No, they believed they could "get rich" by "working hard". Poor naive bastards.


...the way the 'shortage' works is simply a function of willingness to pay.

"Willingness to pay" is a bourgeois economist fiction. I can be "willing" to pay any price, but if I don't have the money, my "willingness to pay" is meaningless.

I am more than willing to pay for a small cottage in Tahiti or even a beach-front condo in Honolulu...but I don't have the money.

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[Sam Adams]

Therefore, it is greatly to his advantage if there is a real "shortage"


if there is enough of a shortage, and prices rise high enough, that field becomes rather attractive and competitors beging to build more, eliminating the shortage.

Thus you can see how market forces naturally gravitate towards fair prices.

Thus, capitalism works, where communism fails.

[redstar2000]

if there is enough of a shortage, and prices rise high enough, that field becomes rather attractive and competitors begin to build more, eliminating the shortage.

Yes, that is what is "supposed" to happen, in theory.

Why doesn't it?

Look around, for example, for a new personal computer. Check prices on Dell, Gateway, Hewlett-Packard-Compaq, IBM, etc. All about the same. Features? All about the same. Customer Service? All about the same. Even "weird brands" that you never heard of...prices and features are all about the same and there's no way of learning about their customer service at all.

How can this be? Why isn't someone making a $200 home pc? Maybe it wouldn't have all the features, maybe it wouldn't be quite as fast or have quite as much memory...but it would open up a market of millions of people who can't afford $600 or $800 or more for a pc.

Why doesn't this happen?

Or consider the annual "spring shortage" of gasoline and "fall shortage" of natural gas...how is it that not one of the producers of gasoline or natural gas doesn't seize this opportunity to lower prices and gain market share?

What's going on?


Thus you can see how market forces naturally gravitate towards fair prices.

No, I don't "see". I don't actually see that happening at all. I see artificial shortages and artificially elevated prices--occasionally, as was the case recently in California--to the point of near catastrophe.

What are these idiots doing...besides getting rich?

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[Vinny Rafarino]

if there is enough of a shortage, and prices rise high enough, that field becomes rather attractive and competitors beging to build more, eliminating the shortage.

Thus you can see how market forces naturally gravitate towards fair prices.




Good grief....it's gonna be another charlie brown christmas this year......

[conspirologist]

How can this be? Why isn't someone making a $200 home pc? Maybe it wouldn't have all the features, maybe it wouldn't be quite as fast or have quite as much memory...but it would open up a market of millions of people who can't afford $600 or $800 or more for a pc.

Why doesn't this happen?


I'm betting a combination of things, one of them being that Dell, Gateway, et al exist to turn a profit. But more importantly is equilibrium - when I'm a firm and I set prices, I want to set my price at a level which will maximize profit, and there does come a point in lowering price of an item where more units are sold but overall profit falls.

Consider the following case: Dell decides to put out a new computer and charge $1,000 for it. Let's suppose for the sake of simplicity they sell 100 units at this price. Dell's revenue will $100,000. Let's also suppose that at $1,100 for price they sell 80 units - making $88,000. Under this situation, Dell does not want to raise the price.

The converse is also true in the market. If I'm Dell and pricing my computer at $800 sells 120 units, that means I make $96,000. In the great scheme of things, that represents a loss of $4,000 in profit.


What are these idiots doing...besides getting rich?


Turning a profit, providing jobs for people employed in the firm, and providing a service the consumer wants at a price the market is willing to bear.

What's wrong with that?

[Vinny Rafarino]

I do believe that once again my IQ has been lowered by that last post.




Let's look at this from a real economic perspective shall we....



Let's say I'm dell and I develop a brand new technology in regards to...let's say processors....


The rate of constant capital to produce one working unit we will set (for the sake of our simple minded friends) at $100.00 (if you have no idea what I am talking about then please stop posting drivel like the piece above....) the variable capital rate we will set at an equal rate as that of constant capital....or also $100.00.

To extract profit from this item, we will need to set the surplus value rate at at least a bit over double the rate of constant and variable capital rates combined. As this technology is new, it is safe to say that at least 300% profitability would be an acceptable market inflation for technological goods. This piece of equipment now has a market value of $600.00...or a surplus value of $400.00.

Considering the trends in technology, within the first 3 months of marketing, 1000% of existing tech companies will have developed and implemented a similar product for 50% of the existing Dell rate of surplus value for the same product.

Not to be undersold, Dell then will have to decrease it's rate of profit by 75% to maintain their current market share as well as create "new market shares" from the "less than desireable population" of poor infidels that could not afford to buy a 12 pack of Top Ramen much less a new piece of technology.

To offset this severe cut in the rate of profit, large cutbacks in variable capital will be necessary to produce enough revenue to cover the following cycle's constant capital as well as maintain "temporary profitability".
Production is ceased once variable capital is dropped to a level that can maintain "necessary operations" without actually producing anything. The remaining surplus of products is sold at a fraction above the combined total of constant and variable capital....or in laymans terms.....just enough cash to produce another piece of "new and improved" technology that will be sold at a 300% rate of surplus value......


Oh what a tangled web we weave......

[Valishin]

The worse thing he can do is actually try to "meet the demand" for his product.
No the worse thing he can do is not meet demand. Doing so opens up the industry to further competition.

Now you give examples of oil and natural gas and those are good examples to show that even capitalism in its real world practice requires a small degree of control to ensure monopolistic positioning doesn't become a problem. The reason being because these are not industries that are open for entry of new competition. It is downright impossible to have a startup oil or natural gas company. However this is not the case for the major majority of industries.


No, they believed they could "get rich" by "working hard". Poor naive bastards.
Then they should have sent someone to learn economics. You "get rich" by being productive. Productivity requires producing a product or service that people desire and providing it at a price they are willing to pay. They destroyed their own productivity by over producing a single product. Basicly they got bit on the butt by the law of supply and demand. BTW, this and to appease environmentalist is why US farmers are often paid not to cultivate some of their land.


Willingness to pay" is a bourgeois economist fiction. I can be "willing" to pay any price, but if I don't have the money, my "willingness to pay" is meaningless
Then your not willing to pay. If you were you would sell everything else you own and work double shifts to get the money to buy it. "Willingness to pay" is a balancing act consumers must go through to decide if the product or services is worth the cost. Cost being what will be required from that individual to purchase the product.


How can this be? Why isn't someone making a $200 home pc? Maybe it wouldn't have all the features, maybe it wouldn't be quite as fast or have quite as much memory...but it would open up a market of millions of people who can't afford $600 or $800 or more for a pc.
What makes you think people aren't?
www.pricewatch.com or you could buy a used on on ebay
But this market is a good example. Review the pricing for the major retailers again. If you look hard enough there is almost always one of them offering "special deals" at reduced prices.

[SonofRage]

It's pretty amusing that when of the new cappies that has come here has chosen the name "Sam Adams." It made me think of quote by Samuel Adams that doesn't exactly fit well with defending capitalist greed. It may something for you cappies to consider:


Originally posted by "Sam Adams"

If ye love wealth greater than liberty, the tranquility of servitude greater than the animating contest for freedom, go home from us in peace. We seek not your counsel, nor your arms. Crouch down and lick the hand that feeds you; May your chains set lightly upon you, and may posterity forget that ye were our countrymen.

[redstar2000]

Now you give examples of oil and natural gas and those are good examples to show that even capitalism in its real world practice requires a small degree of control to ensure monopolistic positioning doesn't become a problem. The reason being because these are not industries that are open for entry of new competition. It is downright impossible to have a startup oil or natural gas company. However this is not the case for the major majority of industries.

What do you mean "doesn't become a problem"? Every spring and every fall (in North America) it is a problem.

There are regulatory bodies in place at both the state and federal levels...yet it just "keeps happening"--in total defiance of bourgeois economic theory.

One of those oil or gas companies "should" lower their prices to gain market share...but none of them do it.

Yes, I'm well aware of the matter of "entry costs"...which is another gaping hole in classical economics. If a firm creates an artificial shortage to keep prices up, then capital is supposed to flow out of other, less profitable, markets and into this highly-profitable market...both relieving the shortage and driving prices down to a more affordable level.

That doesn't happen either. Entry level costs are so high that it is prohibitively expensive for all but the very largest and wealthiest corporations to enter the market...except for "trash commodities". The market for Adam Smith's famous pins may indeed function according to free market theory. Who knows or cares who makes pins? How many do you buy in your whole life?

It's the "big stuff" that works entirely differently. Energy, housing, durable goods, autos, health care, higher education, etc....and even consumer electronics, though the latter may be a partially free market.

The largest and wealthiest corporations can afford the "entry costs", but why should they do it? They know, from experience, that as soon as they enter that market, prices will fall and so will potential and actual profitability. They can never be as profitable as the corporation which presently dominates the market for that particular good or service. That doesn't stop it from happening, but it makes it a fairly rare event.

Only on those unusual occasions when they have or believe they have a genuinely superior product is it really "worth the risk".

My experience has been that genuinely superior products are in very short supply. The latest marketing strategy of major corporations appears to be "branding" and "known quality". McDonald's may serve shitburgers, but you know when you walk into a McDonald's that it will be a certain level of shit, no worse and no better. You can "count on it". In the long run, this is a far less costly strategy than actually trying to develop superior products; research & development is expensive and may pay off zilch.


Basically, they [the Vietnamese coffee-growers] got bit on the butt by the law of supply and demand.

And their esteemed and respectable advisers from the World Bank didn't warn them of this outcome?

Gee, if you can't trust the World Bank, who can you trust? :lol:


Then you're not willing to pay. If you were, you would sell everything else you own and work double shifts to get the money to buy it. "Willingness to pay" is a balancing act consumers must go through to decide if the product or services is worth the cost. Cost being what will be required from that individual to purchase the product.

Yes, if I quit eating for a couple of years and slept on the sidewalk, I could accumulate the down-payment for that cottage in Tahiti. :o

You are hiding behind words...using "detached" terminology to disguise the painful economic reality that most people face in their lives.

I can understand why you find it necessary to do that...a "naked" description of capitalist reality is kind of uncomfortable, isn't it?

It could make you "feel bad" about yourself...and you certainly don't want that. Who does?

Keep in mind that make-up on a corpse does not really change anything...or make it smell any better.


But this market [computers] is a good example. Review the pricing for the major retailers again. If you look hard enough, there is almost always one of them offering "special deals" at reduced prices.

Yes, that does happen. The discounts are normally not significant ($100 or less) except on "re-built" or "re-conditioned" units...where you really have very little idea of what you're buying.

I did purchase my computer used...for $300. But it cost another $135 to get it to work properly.

But speaking of computers reminds me of another example of the "free market". Have you priced broadband in your area? There are two providers where I live (DSL and cable)...and, by sheer chance, they both charge $49.95 a month.

What a coincidence. :lol:

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[JustSoul]

Redstar do you ever get out of your home? It seems you don't know basic economical principles and therefor all your assumptions are wrong.

If you think you can sell a computer cheaper then dell then go ahead and do it. You will be earning lots of cash. Same in any other industry with some rare exceptions. It doesn't work in the areas with monopolies and that's exactly why there are anti monopoly laws.

[Monty Cantsin]

Originally posted by [email protected] 10 2004, 04:15 PM


If you think you can sell a computer cheaper then dell then go ahead and do it. You will be earning lots of cash. Same in any other industry with some rare exceptions. It doesn't work in the areas with monopolies and that's exactly why there are anti monopoly laws.
But in capitalism which is what we are talking about there are no government interventions in markets meaning monopolies can come into play. So read up on the economic principles of capitalism before you run around making a fool out of yourself.

[John Galt]

Originally posted by euripidies+Jan 10 2004, 10:56 PM--></span><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (euripidies @ Jan 10 2004, 10:56 PM)
[email protected] 10 2004, 04:15 PM


If you think you can sell a computer cheaper then dell then go ahead and do it. You will be earning lots of cash. Same in any other industry with some rare exceptions. It doesn&#39;t work in the areas with monopolies and that&#39;s exactly why there are anti monopoly laws.
But in capitalism which is what we are talking about there are no government interventions in markets meaning monopolies can come into play. So read up on the economic principles of capitalism before you run around making a fool out of yourself. [/b]
That is unregulated capitalism.


If you wish to make no distinction between forms of capitalism, then we will do the same to communism.

[Vinny Rafarino]

Originally posted by [email protected] 10 2004, 04:15 PM
Redstar do you ever get out of your home? It seems you don&#39;t know basic economical principles and therefor all your assumptions are wrong.

If you think you can sell a computer cheaper then dell then go ahead and do it. You will be earning lots of cash. Same in any other industry with some rare exceptions. It doesn&#39;t work in the areas with monopolies and that&#39;s exactly why there are anti monopoly laws.
Juat to lend RS a hand here, not that he needs it around the likes of you laddies....I reckon you yourself do not know the basic principles of economics...otherwise you would have already known that due to market competition, no one production facilities have any specific advantage in regards to overall surplus value...large companies that have the ability to globalise must use their lower variable capital rates to offset domestic variable capital rates. No one company&#39;s constant capital rates are any lower than another&#39;s because domestic market rates are the same for each company.

eventually all companies extract the same amount of surplus value from a product that all their competitors do. Feel lucky that is the case sonny as that is what drives the market to make advances in technology. It is the condition that both drives capitalist advancement as well as predict it&#39;s finite life span.

Do you even understand WHY their are laws against monopolies??? Under a monopoly environment, there is never an incentive for technology to advance any further than it is as surplus value is constantly extracted from the same product. This is the principle that drives the free market economy.

Feel free to ask questions...don&#39;t be shy esse.

[redstar2000]

It seems you don&#39;t know basic economical principles and therefor all your assumptions are wrong.

It seems to me that you think all that&#39;s required to respond to an argument is simply to say "all your assumptions are wrong".

In what specific "assumption" am I "wrong"? Once again, I have described capitalism as it really works and, once again, all you have to say is "you&#39;re wrong".

Go back to the post that I started this thread with...read carefully the section on Vietnam at the end.

It completely shatters your fantasy of "getting rich" through "hard work".

Let me say here that some of our new defenders of capitalism have actual arguments and evidence to offer; it is a waste of my time to respond to those who have nothing to offer but fantasy and invective.

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[LuZhiming]

I would strongly disagree that Capitalism is in any way idiotic. It is a quite cleverly thought out system of corruption, ruthlessness, and control. It is those three characsteristics that I have against Capitalism, not a supposed idiocy in the idea.

[synthesis]

Originally posted by John [email protected] 10 2004, 10:58 PM
That is unregulated capitalism.


If you wish to make no distinction between forms of capitalism, then we will do the same to communism.
Are you in favor of regulated capitalism?

If so, why would you take your name out of an Ayn Rand novel? :blink:

[RevolucioN NoW]

I would strongly disagree that Capitalism is in any way idiotic. It is a quite cleverly thought out system of corruption, ruthlessness, and control. It is those three characsteristics that I have against Capitalism, not a supposed idiocy in the idea.

Indeed, for those who benifit capitalism is a fantastic system, very well thought out by the ruling class (at least for the time being).

But what RS was pointing out was that those at the bottom, the coffee growers for instance are being screwed over royally.

that is what our capitalist &#39;friends&#39; ignore, they live in a dream world where everyone can become rich if they only "worked harder". They ignore economic conditions and seem to ignore the class based system of capitalism entirely

It is easy to understand that they all come from utopia politics forums, as all their ideas are indeed fantasies.

[JustSoul]

Do you even fecking know what have caused the great depression? One of the big factors was overproducing and then you come with your stupid claims.

I don&#39;t care what you think. You always run from a debate when you get proved wrong. Its just not worth spending my time arguing with you.

[RevolucioN NoW]

Do you even fecking know what have caused the great depression? One of the big factors was overproducing and then you come with your stupid claims.

You will find that the two primary causes of the great depression were uneven distribution of wealth and stock market speculation.

Nothing to do with overproduction (as far as i was taught).

[Urban Rubble]

RedStar and RAF, have I told you guys how much I love you today ? :lol:

Keep up the good work.