[sbuttgereit]

A failure of capitalism? I have to question the premise. Capitalism does not have as a goal some social-utilitarian purpose. Capitalism is practiced by individuals for their own self-interest. Sometimes they work together for a shared self-interest (e.g. corporations, investor groups) or they work against each other as needed (competition). But you cannot take self-interest out of the equation and still have capitalism. Every trade (be that stock for cash, or work for cash, etc.) is predicated on each of the parties fulfilling their individual needs and wants to the degree that they can. On it's own terms, capitalism hasn't failed at all.

What you can say is that capitalism has failed to mollify those that seek non-capitalistic goals. This is true of some so-called capitalists who experience guilt in pursuing their self-interest as well. If your view is that capitalists are "greedy, top-hat-wearing" types that fail to meet your social welfare goals, then my bet is your characterization masks a larger purpose. Primarily at bringing them down, probably in favor of the central planners of old (or some degree thereof).

Perhaps the real question should be: why would companies and individuals with captial choose to sit on it, or choose to spend it on relatively worthless start-ups? Why would a capitalist choose to sit on cash or buy-back shares if there are other, more profitable avenues to invest those funds? I think if you take a critical look at it you might find that there's still a fair amount of central planning behind what we'd like to think is a capitalist economy.

[cwyers]

I mean, when Adam Smith says "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest," he's not saying that in support of self-interest, he's saying that in support of OUR DINNER. The point of capitalism as economic system is not that self-interest is inherently good but that self-interest can be yoked to "some social-utilitarian purpose."

Of course, Adam Smith's opinion of corporations was "The directors of such [joint-stock] companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own," and he thought they'd all die out unless they were propped up like the East India Company, so it's not like the Wealth of Nations is much of a guide to what we call capitalism nowadays. But still.

[sbuttgereit]

Adam Smith was wrong with the regard to the moral case for capitalism. He rightfully recognized why people acted, but he failed to recognize any substantive moral basis is such self interested actions; instead he resorted to the precise premise that the post I originally responded to pre-supposed. That argument must fail because one cannot act with self-interest AND altruistic interest consistently. The capitalist must always fail on these terms as there is always someone with a perceived greater need, and perceived greater right, to the capital of the capitalist.

If you consider first and foremost your own happiness and life as a moral value worthy of pursuit, you loose the hang-ups that Adam Smith had with capitalism. There's a whole separate discussion that goes down that path about what constitutes self-interest in the large (and no, defrauding innocents is not your best interests); but that's a bit out of scope to what the original poster stated.

[philwelch]

I think the Ayn Rand viewpoint--that self-interest is intrinsically a moral good and that capitalism is justified by this moral good--is not very widely held as a justification for capitalism.

[eropple]

I think modern American political discourse makes this a harder position to take. Which is not to say it's correct, because it's transparently not, but selfishness-as-Godliness is a firm part of the American right wing, self-styled libertarians included.

Greed's been good since the eighties, didn't you get the memo? =(

[kijin]

Well, modern states do "prop up" corporations with all sorts of perks, such as limited liability and tax benefits. So Adam Smith might not have been altogether wrong about that. How many of us would even consider incorporating if the law did not guarantee limited liability?

[threatofrain]

The discussion on that concept of "rationality" has also moved far beyond that, such as with Daniel Kahneman's two-system theory.

[Retra]

>Capitalism does not have as a goal some social-utilitarian purpose.

Not intrinsically, no, but it is justified by it in the face of alternatives. When you present people with an economic system that does have a social-utilitarian purpose, those people will select capitalism over it on the basis that capitalism is better at fulfilling that purpose.

And most of the time, the argument is "capitalism self-optimizes for that purpose." Except that it self-optimizes in ways that result in central planning, monopolies, and deception. Capitalism is not convergent on social goals, it is divergent, and we have to keep pushing and prodding, regulating and deregulating in order to get anywhere near our goals.

Capitalism fails every day. And we just roll up our sleeves and get to work fixing it because there is no other option.

One wouldn't ague that a hole in the boat is a good thing because it keeps the crew fit trying to bail the water out. Especially when there's a whole world of other skills we'd rather have a crew be proficient at.

[sbuttgereit]

Capitalism requires no further justification than individuals acting to dispose of their time and property in ways that they see fit. I absolutely guarantee you that when I trade my labor and expertise with an employer or client for cash, I have no other objective that maximizing the return I get on that effort. I do not ask if my engaging in such a trade has some greater social good and I need no justification other than the trade being in my self interest. If I go to the store, I don't first ask who needs me to spend money on their products, I first ask, 'What do I need?', 'What do I want?'. I don't consume on anyone else's behave nor do I need some external justification for my own existence. Period.

Capitalism does not converge on monopoly, central planning, or deception any more than any other system, and in fact it does so a lot less. Again the assertion that capitalism is broken is just false; that it doesn't meet your non-capitalist goals is correct. My cable company has monopoly-like powers not because it's run by evil capitalists, but because there's a government agency that gives them a monopoly in my area. That's not capitalism. Microsoft, "a monopoly", wasn't defeated by the government regulators, ultimately, but by better alternatives appearing on the market and their own self-inflicted irrelevance. Same arguably with IBM. That was capitalism dealing with outmoded incumbents. I see a lot of crying in these threads about how VCs or corporations seem like central planners, yet the answer being proposed seems to be engage real central planners with the legal use of force in their tool box. Indeed, the only part that I seem people really dislike about capitalism is that it's voluntary engagement... when they'd really rather force someone to act against their best interests.

[Retra]

Telling me that you make poor, short-sighted decisions isn't an argument that capitalism doesn't require justification. It means you have low standards for an economic system.

You could just as well try to argue that every word out of your mouth doesn't require justification simply because you accept it all as true without it. Well good for you.

>Again the assertion that capitalism is broken is just false; that it doesn't meet your non-capitalist goals is correct

...? Just what the hell do you think I mean by 'broken' if not failing to achieve our collective goals?

Just because it does what it is described to do doesn't mean it's doing what it's supposed to.

[simonh]

> Telling me that you make poor, short-sighted decisions isn't an argument that capitalism doesn't require justification. It means you have low standards for an economic system.

That's pejorative and uncalled for. There's nothing in that post that indicates those choices are either poor or short sighted, just that they are motivated by the exercise of free will. What alternative criteria would you impose on the poster's decisions?

>You could just as well try to argue that every word out of your mouth doesn't require justification simply because you accept it all as true without it. Well good for you.

I'm deeply concerned about your blatant disregard for the freedom of expression of others. Who should the poster be _required_ to justify their words to? You?

Capitalism is only one characteristic of our modern global economy out of many. Typically developed western countries have capitalist corporate structures, regulated markets, centrally planned social welfare systems and the occasional monopoly. Capitalism is justifiable on two premises.

The first is the exercise of freedoms. The freedom to own your own property and invest your own earnings and property as you see fit is a basic right that is widely recognized in the western world. It's hard to see how restricting or curtailing that right can be morally justified. The second premise is that capitalism is overall an efficient way to allocate resources because it engages the creativity and energy of the maximum possible number of people rather than restricting it to a politically selected few. And yes, Capitalism does engage a vast swathe of the population. The local shop owner down the road I buy my milk from is just as much a capitalist as any banker. That doesn't mean capitalism allocates resources perfectly, just that it's more efficient than the other methods that have been tried. As Winston Churchill said of Democracy - it's the worst system, except for all the others.

[dunkelheit]

I think it is more complicated than that. First, the right to invest your own earnings is in fact severely restricted in most countries. It is called taxes and one of the primary justifications for the existence of taxes is moral one. Second, there is vast difference between your milkman and your banker - your banker has so much more power to wreak havoc on your life as compared to milkman.

[simonh]

I called out exactly the sorts of complications you're talking about - those taxes go towards funding the centrally planned welfare state I mentioned (I'm generalizing across western countries here, of course there are exceptions) as well as policing, education, defence, market regulation activities, etc.

Of course there are differences between a milkman and a banker, but fundamentally capitalism is about freedom and individual rights and striking an equitable balance between those and the common good.

My father in law is Chinese. He remembers when his family were cast out on to the street and lost everything, because they owned a few plots of land that they rented out to neighbors in their rural village and were therefore capitalists. So when you start talking about capitalism, let's be clear. We're talking about the basic right to own personal property, and those arguing against capitalism are arguing for taking that away. They've done it before and given the chance will do it again. It's not theory, it's my family history, but is something that is directly relevant to every single one of us.

[kenko]

> When you present people with an economic system that does have a social-utilitarian purpose, those people will select capitalism over it on the basis that capitalism is better at fulfilling that purpose.

No one has ever offered people that choice, as far as I know, certainly not in a way that wouldn't in many cases be confounded by rational or irrational attachment to the present mode of social organization. (And in fact plenty of people seem to like social democracies just fine. And, for that matter, plenty of people seem to want socialist or communist modes of social organization.)

[eru]

> (And in fact plenty of people seem to like social democracies just fine. And, for that matter, plenty of people seem to want socialist or communist modes of social organization.)

Plenty of people seem to want more socialism for the country they live in, but given the choice many move to countries that have less socialism. (Ie richer countries.)

[Daishiman]

This is a non-sequitur. Most wealthy countries have economies that are extremely well regulated, and their effectiveness is much more conditioned to factors beyond regulation. Scandinavia has very high levels of regulation and is one of the wealthies regions in the world and the one with the highest standard of living.

[Retra]

Well, that's why you have to argue against capitalism. If you don't present any alternatives, you won't know that they're worse than the way things are. There are important things that it doesn't do well, and we have enough information to know that.

[ori_b]

> A failure of capitalism? I have to question the premise. Capitalism does not have as a goal some social-utilitarian purpose.

Yes, I think that's the point. Generally, when you evaluate a means of organizing production for a society, you evaluate it on how society will benefit.

[dunkelheit]

Capitalism (i.e. accumulation of resources in private hands with the goal of employing it for generation of profit) should not be conflated with free market (i.e. roughly equal individuals engaging in voluntary transactions). They are in fact antithetical! For capitalism to work some individuals must be entitled for more resources than others so that these individuals can tell others what to do. Of course you can then argue that everybody is still engaging in voluntary transactions. But is it really so when the balance of power is so skewed?

[idlewords]

I think you may have misunderstood my point, which we actually agree on: Our so-called venture capitalists right now are behaving a lot like central planners.