[dragonwriter]

> Capitalism is exceptionally good at solving problems when there is money to be made.

Well, unless the money is to be made by exacerbating the problem, but sure.

> Putting the right price on carbon will solve that.

State intervention to set prices to try to steer the market to make progress on social goals that it would not without State intervention is not capitalism.

[imtringued]

>State intervention to set prices to try to steer the market to make progress on social goals that it would not without State intervention is not capitalism.

I don't understand this comment. Capitalism is about maximizing outcomes within the context of a system. It's not about the rules that govern the system itself. It doesn't actually matter what goal you are optimizing for. There is also no such thing as having no policies. Not having a policy is a policy in itself.

The producer of an externality is actively using the laws of physics to extract value from all other individuals. That's not capitalism either. It's just someone abusing their power. It's like using a gun to rob someone except the harm is spread over more people.

If nothing is done against the externality then the government is implicitly accepting the externality and is effectively subsidizing the producers of the externality.

Now that we have established that government policies can be compatible with capitalism lets talk about the most extreme capitalist policies possible. Well, a capitalist policy would be based around aligning profit incentives with policy goals. Basically what you want is that companies and people that do the right thing make a load of money and those who don't, make a loss.

So what is an extreme example of a non capitalist policy? Rent control. You've just destroyed the ability for "greedy" landlords to make money off of doing the right thing, namely providing housing. Another non capitalist policy? Prop 13. The policy encourages hoarding housing instead of rebuilding and providing more housing. It's even self reinforcing because it lures normal people in and turns them into hoarders. Again, it's because you have destroyed the ability for greedy people to do the right thing.

Now carbon taxes are the extreme opposite, they are so extremely capitalist that they should bring tears to your eyes. The greediest business owner is the one that produces the least CO2 (or any other externality). It's a system for doing the right thing. The only flaw is that carbon taxes have to be global but since they can be enforced through CO2 tariffs an easy fix is available. There are extreme domestic growth opportunities available in green technologies but without the right incentives nobody will do it. It's absurd that we even have to have this discussion. People are begging for profitable domestic investments because the central banks are flooding the markets. It's not like we end up sacrificing anything if we put underemployed people to work.

[dragonwriter]

> Capitalism is about maximizing outcomes within the context of a system.

No, that's rationality (in the social science sense) not capitalism.

Capitalism is a specific politico-economic system that reached its peak of dominance of the developed world in the late 19th and early 20th Centuries that was named and first systematically described and critiqued by its 19th Century opponents.

(The two are connected in that there are popular arguments for the optimality of capitalism grounded in the assumption of rationality.)

[mulmen]

Regulation is an important part of a capitalist system. “Setting the price” is something the market does. Regulation can influence that by manipulating incentives. That does not mean prices are set by the state.

[dragonwriter]

> Regulation is an important part of a capitalist system.

If by “capitalist system” you mean “bourgeois socialist mixed economy that replaced capitalism throughout the developed West generally around the mid-20th Century through the efforts of a broad coalition of people fed up with the horrors of actual capitalism”, that's true.

But that system isn't actually capitalism, and the central role of government regulation aimed at channeling the effort of “private” industry by rearranging incentives to different places than they would be set by the free market is one of the central ways in which it differs from capitalism.

The only reason people pretend otherwise is to maintain the fiction that they are on the opposite side of the global capitalist/socialist struggle that predated general disillusionment with capitalism in the West, because even though actual ideology shifted, ideological tribal identity didn't.

[kortilla]

Property rights is an important part of capitalism and CO2 emissions could be modeled as property damage to everyone else.