On capitalism

[lux]

I'm a newish follower of FDR, mostly interested in the call-in shows.  Stefan is right on about a lot of things, but his economic position is problematic.  I've tried to express one reason why I think so... looking forward to the community's comments.

 

The other problem with capitalism, and the point at which I think it represents a contradiction in Stefan's thinking, is that capitalism by its nature precludes any win-win situation.  Stefan speaks very lucidly on the importance of negotiation and win-win thinking in parenting, relationships, and so on.  He also holds (rightly) that broad social relationships are writ large re-creations of familial relationships.  The abusive state is a direct reflection of abusive parenting and abusive education.  (Of course, it works both ways--the abusive state incentivizes the re-creation of abusive familial relationships in order to defend its own existence.)  So as we promote win-win peaceful parenting and relationships, we ought to expect social relationships to eventually become more peaceful. 

 

But capitalist competition is a win-lose principle.  More importantly, there will always be rich people and poor people under capitalism because labor is treated as a commodity subject to exchange value.  So, for example, assembly-line workers will be paid (roughly) the same amount regardless of whether they are assembling $5 plastic toys or $500 Prada purses.  Even if there are slight variation, the workers on the purse assembly line will not be making 100x the hourly wage of the people in the toy factory.  The owner of the factory, however, will always make more than the laborers.  This is obvious stuff, but the upshot is that under classical capitalism there will always be income inequality, so there will always be people who can't afford the things they are taught by society to want.

 

When you have poor people who want to buy things (as society instructs them) but have no way of buying what they want, they become violent.  Just as children become violent and "misbehave" when they are held to impossible standards, the poor will always have a violent impulse toward the rich under capitalism.  The violent impulse will often be supressed under Stockholm syndrome and Nietzschean ressentiment, but it will continue to leak out into family relations and social violence.

 

The above could definitely be expressed more coherently, but I'll stop there so it doesn't get too long to read.  There are other huge problems with capitalism that I could get into, but I think this one is the most relevant to FDR.  The last thing I want to mention (before I get accused of being a Stalinist or something) is that I don't "subscribe" to any alternative economic principle or propose to have a perfect solution to these problems.

 

Edited to add: Stefan frequently refers to nature and evolution as a way of justifying capitalist violence and win-lose tendencies.  To this I would simply inquire why this principle escapes the mandate--to which SM also often refers--to overcome our baser natures.  We overcame slavery, we want to overcome violent parenting, etc.  Shouldn't we also strive to overcome social structures that are founded on violent principles?

[sahadda]

Capitalism is comprised of two things: property rights and voluntary exchange. Where is the violence in that?

[lux]

Capitalism is comprised of two things: property rights and voluntary exchange. Where is the violence in that?

The violence is what happens when you combine those two things.  Here's an easy example: land.  If there are property rights, then everything either is currently owned or has the potential to be owned, including land.  Now, suppose I don't want to participate in the system of voluntary exchange.  Since it's voluntary, I should be able to opt out, right?

 

So I'll need a few things, principally food and water.  The easiest way I can get those things without participating in the system is by going into the wilderness and growing some food and collecting water from streams, rain, etc.  But who owns the patch of land that I'm on?  It can't be me, since I opted out.  If no one owns it, then anyone could come along and claim it (finders keepers), but that won't be me either, since I'm not participating.  So whenever someone comes along and claims the land I'm on, suddenly I'm stealing from them, according to a system which was supposed to be voluntary.

 

I can't be economically ostracized for stealing, since I'm not participating in the economy, so what will happen?  The only solutions I see are these: either someone could so something violent to me to get me to stop using "their" land, or I could be registered as part of the system against my will in order to keep my "right" to use the land.  And then there are water rights... what will the capitalist famers downstream do when they find out I am using some of their water?  Of course, it's possible that all the capitalists could leave me [and all the others who, like me, prefer not to participate] alone out of sympathy, but extremely unlikely.  So in any case, capitalism forces everyone to take part.  It's voluntary only for the people who have already agreed to it.  There is no opting out.

I also wanted to add two things.  First, although it seems likely I'll get downvoted to oblivion for this whole thread, I promise I'm not trying to be a troll.  I've been listening to the call in show for a while now and I really enjoy it... just wanted to start a discussion with everyone about this issue.

 

Second, I would add to your list of the two things capitalism entails.  Capitalism also entails capital, i.e., some basis of exchange other than direct bartering.  So, instead of just trading one chicken for 3 pounds of rice, I can sell my chicken for something (beans, fiat currency, gold nuggets, whatever), and then give you the something in exchange for the rice.  This is a pretty important distinction between capitalism and bartering, so I just wanted to point that out.

[Kevin Beal]

You reference a moral principle regarding property and then in order to explain how that principle is invalid you give an example of how it's inconsistently applied. You are actually arguing for property rights and voluntary exchange, presumably, without realizing it, because if the principle were applied consistently, you would not be violently removed from that land.

 

Also, just nitpicking, but your definition of "capital" is incorrect. Capital is money / assets used for investment (esp. for starting a company). And the way that "capitalism" is used within the context of the show, it does actually include bartering. Sahadda's definition is actually how it's used when Stef uses the word. He offers a nearly identical definition throughout the series.

[cynicist]

But capitalist competition is a win-lose principle.

 

How is that the case? Is that what you meant with your factory example?

[greekredemption]

Capitalism is comprised of two things: property rights and voluntary exchange. Where is the violence in that?

I think lux means the assertion of a right to property is in itself conducive to violence. Which does seem to be the case; the only distinction between property and non-property is the self-proclaimed owner's willingness to use violence to demarcate his property. If a person claims ownership, and you have chosen not to participate, according to liberal theory the property owner has every right to violently expel you from his property.

[dsayers]

capitalism by its nature precludes any win-win situation

 

Could you explain what you mean by capitalism? I think sahadda nailed it.

 

You speak of opting out, but you own your body. It is your capital. I do not see how you can opt out of that. As for win win, voluntary trade is by definition win-win. If somebody wouldn't get what they wanted out of a transaction, they wouldn't consent to it.

[Kevin Beal]

I think lux means the assertion of a right to property is in itself conducive to violence. Which does seem to be the case; the only distinction between property and non-property is the self-proclaimed owner's willingness to use violence to demarcate his property. If a person claims ownership, and you have chosen not to participate, according to liberal theory the property owner has every right to violently expel you from his property.

Resisting rape then is violence. It's the exact same logic.

[Alan C.]

How do you define capitalism?What is the difference between capitalist competition and other kinds of competition?What is wrong with income inequality? What is income inequality, anyway?Why is it a problem that people can't afford things that they're 'taught by society to want.'

 

When you have poor people who want to buy things (as society instructs them) but have no way of buying what they want, they become violent.

 

You mean that they throw tantrums because other people won't give them stuff? Are the rest of us expected to placate people like that?

 

Stefan frequently refers to nature and evolution as a way of justifying capitalist violence and win-lose tendencies.

 

Can you provide a source for this claim?

[LovePrevails]

 

But capitalist competition is a win-lose principle. 

 

 

the defining component of the market is not competition but choice between suppliers of services 

you could just as well say choosing which friend's house to visit on a friday night is win-lose principle

it's just propaganda from the left

[lux]

Thanks for all the responses, you all make good points.  Let me try to clear some of it up.  This will be pretty sketchy since I don't have a lot of time to spend on it now.

 

First, it looks like we need to get more specific about the term "capitalism."  As technically defined, capital is anything that has value because it contributes to further production.  So cash is obviously capital because I can use it to buy labor or supplies.  A factory is capital because it allows me to make products.  Grapes can be capital if I use them to produce raisins.  If I eat the grapes, though, they are not capital.  So the goal of capitalism is to generate capital, in other words, to maximize the potential to make more stuff.  Property rights and voluntary exchange are definitely involved, but they aren't sufficient.  If I own 500 calories worth of cheddar cheese and you own 500 calories worth of feta and we swap, that's not capitalism unless I'm using the cheese to make something that I will sell to someone else for more than 500 calories worth of something.  If I make an omelette and sell it to you for $5, and if $5 will buy me 700 calories worth of food, that's capitalism because I ended up with more than I put in.  I'm using calories here as an extremely simplistic metaphor for "use value," which is how economists talk about the value of something independent of whether it's traded.

 

So if Stef has some other definition of capitalism than that, I guess my argument is a little pointless, but it would also be quite irresponsible on his part to play up something under the name of something else, and I don't think that's what he's doing.  The above is consistent with what I've heard him say about capitalism, which is admittedly a lot less than many of you have heard.

 

Okay, on to some of the more specific points.

 

"Capitalist competition is a win-lose principle." - This follows logically from the definition of capitalism I gave unless the basis of exchange is infinite.  So let's say we all play a game where we start out with 10 beans and try to maximize our capital (the beans we can use to grow plants) by swapping beans for other stuff.  We have a finite number of beans, and we all want to get the most beans possible, so unless we decide beforehand to share the beans equally (in which case we are no longer capitalists because we are no longer trying to maximize our capital), we will end up with an unequal bean share.  If there are infinite beans, the situation changes, and this is exactly why fiat currency is bad.  Fiat currency (money with no tangible basis of value) can be produced ad infinitum, and when there is infinite money (or infinite beans), everyone could theoretically have as many as they wanted, but then there is no way to make truffles cost more than peanuts.  On an infinite scale, 1 is approximately the same as 1 million.  This is how hyperinflation works.

 

So why is it bad that some people have more beans than others?  It's not automatically bad.  It's only bad if two things are true:

1. Getting beans is required for survival.

2. You believe, due to your upbringing and culture, that you are inferior to people who have more beans than you.

 

These are two different point, I want to be clear about that.  My first post in this thread dealt with (2), the second post was more about (1).

 

@Kevin Beal, resisting rape is not quite the same logic as the example I gave.  I assume you are thinking of rape like this: an event where someone steals something from the victim in the sense that the victim owns his or her body and ought to control what happens to that body.  The difference with the example I gave is this: the "victim" (in this case the person who claims to own the land) may not previously have owned the land.  If you wanted to give an accurate analogy, you would have to say something like this: imagine a blow-up sex doll suddenly comes to life while you are using it and then claims you are raping it.  When you started having sex (or living on the land), the doll wasn't alive (no one owned that land), so when the doll comes alive (someone shows up and claims the land) and starts to resist rape (kicks you off the land), you are SOL.  Of course, that analogy is already ridiculous enough, so let me state it in more general terms: Capitalism is like consensual sex in a world where everyone is required to have sex.  If you suddenly say, "Oh no, I'm being raped!!" the people in that world will say, "that's impossible, you are required to consent to sex by the economic system."  Not sure if that makes it clear or more muddled, I'm guessing the latter.

 

@Alan Chapman - I think I answered most of your questions in the above, so I'll just address the unanswered ones here.

1. "What's the difference between capitalist competition and other kinds of competition."  The difference is that, in other kinds of competition, I don't have to play.  If I don't want to lose the football match, I just stay home.  Can't do that with capitalism.  This is really crucial, emboldening there so skimmers will see.  If I said, "Slaves are always free to leave the plantation" or "Prisoners are always free to try to escape," you would think I was crazy.  But if you say, "You are always free not to participate in the economy," the argument is the same.  If I don't participate in the economy, my basic survival is threatened.  I can't buy food because I have no money, and if I try to grow or hunt my own food, someone will step in and say I can't do that because I don't have the right to because I don't own the land.

2. "Why is it a problem that people can't afford things that they're 'taught by society to want.'" I think I already addressed this, but briefly: if your parents teach you that you should be successful and make lots of money, but they never teach you how, you'll go crazy.  Similarly, in a system where some people necessarily have fewer beans than others and all people are necessarily striving to maximize the number of beans, there will always be some people who simply cannot get what they are taught to want, so there will always be people who go crazy (looting, rioting, terrorism, etc.... not that all looting and terrorism are a product of capitalism, but they are to some extent necessitated by capitalism).

3. "You mean that they throw tantrums because other people won't give them stuff?" Yeah similar to that, like how toddlers throw tantrums when their parents treat them abusively.  And yes, I expect society to help create an environment where toddlers will not be subject to such abuses.  (And before you say "toddlers can't work for what they want," remember that capitalism in this analogy is the abusive parent because it creates inequality by definition, at least so I've been claiming in this thread.)

4. "Can you provide a source for this claim?" There was a call-in show recently where he was talking about "male energy" in the world, framing the issue as one of live-or-die, hunt-or-be-hunted, etc.  I don't have time to find it now, or time to find other examples, but that's the most recent one I can remember.  I can come back and find links later.

 

@Love Prevails - You said, "you could just as well say choosing which friend's house to visit on a friday night is win-lose principle."  That would be true if all the other friends whose houses weren't chosen didn't have the option of leaving their houses to get the benefit of the chosen house.  If I buy an Apple instead of a Dell, the people from Dell can't show up with their party hats at Apple HQ and get part of the benefit (the profit).  In your house example, the non-chosen friends can always just lock up for the night and come party (i.e. get the benefit) at the house I chose.

 

If anyone isn't bored to tears by this already, this discussion has been extremely useful and interesting for me, I'd love to keep it up.  I'm sorry for the absurd length of my posts-- it would take me 3 times as long to cut them down.  Thanks for reading!

[Kevin Beal]

@Kevin Beal, resisting rape is not quite the same logic as the example I gave.

I wasn't addressing you. I was addressing GreekRedemption whose characterization of your argument was directly analogous to saying that resisting rape is violence, since I own my body (we can quibble on the word "own" in that sentence, but you get what I mean).

 

As far as I can tell, you and I both value property rights and voluntary exchange, so that's what I care about

[cynicist]

"Capitalist competition is a win-lose principle." - This follows logically from the definition of capitalism I gave unless the basis of exchange is infinite.  So let's say we all play a game where we start out with 10 beans and try to maximize our capital (the beans we can use to grow plants) by swapping beans for other stuff.  We have a finite number of beans, and we all want to get the most beans possible, so unless we decide beforehand to share the beans equally (in which case we are no longer capitalists because we are no longer trying to maximize our capital), we will end up with an unequal bean share.  If there are infinite beans, the situation changes, and this is exactly why fiat currency is bad.  Fiat currency (money with no tangible basis of value) can be produced ad infinitum, and when there is infinite money (or infinite beans), everyone could theoretically have as many as they wanted, but then there is no way to make truffles cost more than peanuts.  On an infinite scale, 1 is approximately the same as 1 million.  This is how hyperinflation works.

 

So why is it bad that some people have more beans than others?  It's not automatically bad.  It's only bad if two things are true:

1. Getting beans is required for survival.

2. You believe, due to your upbringing and culture, that you are inferior to people who have more beans than you.

 

The depth of your responses is refreshing. I just want to challenge this one point since I know you are getting swarmed by us hehe. I read your definition of capitalism and maybe I just missed it but I'm not seeing how it logically follows that it is win-lose. There are indeed a finite amount of beans at any given moment, but remember that the way people earn more beans is by providing value to others. So the people who provide the most value get the most beans. The inequality is actually a good thing, since it reflects the fact that people contribute different amounts relative to others. (not everyone wants to devote their life to building a company vs something like raising a family)

 

This obviously gets distorted through government intervention through patents and various other forms of coercive monopoly as well as tax law that the rich can use lawyers to find loopholes for, while everyone else carries the burden. (you already mentioned fiat currency, which disproportionately harms the poor) Without government intervention you could actually have a level playing field, a meritocracy.

[TheRobin]

Correct me if I'm wrong, but the way you define Capitalism, it basically means, that people get stuff, so that they can get more stuff with that stuff. And since all the stuff is finite at some point there will necessarily be shortages and people will have to fight over stuff, therefore getting stuff just to constantly get more stuff will lead to violence and is therefore bad.

 

Is that a good summary of your argument?

[square4]

"Capitalist competition is a win-lose principle." - This follows logically from the definition of capitalism I gave unless the basis of exchange is infinite.  So let's say we all play a game where we start out with 10 beans and try to maximize our capital (the beans we can use to grow plants) by swapping beans for other stuff.  We have a finite number of beans, and we all want to get the most beans possible, so unless we decide beforehand to share the beans equally (in which case we are no longer capitalists because we are no longer trying to maximize our capital), we will end up with an unequal bean share.

 

The mutual benefit of free exchange is to a large degree because of division of labor. One person grows beans, and has so many beans, that the last 1000 beans have little marginal value to him. Another person makes cloths, and has so many cloths, that the last 10 cloths he made have little marginal value to him. When they exchange beans for cloths, they both profit, so it is a win-win situation. At the end of the day, it could even be that everyone has the same amount of beans on the table (probably not, but it could happen). And yet in the mean time a lot of beneficial exchanges have taken place, and everyone is better of.

 

If I don't participate in the economy, my basic survival is threatened.  I can't buy food because I have no money, and if I try to grow or hunt my own food, someone will step in and say I can't do that because I don't have the right to because I don't own the land.

 

If you are the first user of a piece of land, and you grow food, and improve the land, then you own it, according to libertarian homesteading theory. You might object, but suppose that there are no suitable unoccupied unowned pieces of lands available. You could try to save some money to buy it. But is it preferable to live outside the market exchange system? Self-sufficiency is really hard, especially if you start from zero, only using things you have made or gathered yourself. So maybe it is rather the harsh reality of life on this planet, and not capitalism, that is forcing us to cooperate in an economy, or else live near subsistence level.

[greekredemption]

Resisting rape then is violence. It's the exact same logic.

Not exactly the same. Your understanding of 'own' allows the logic to appear similar.

[Brentb]

Property rights and voluntary exchange are definitely involved, but they aren't sufficient.  If I own 500 calories worth of cheddar cheese and you own 500 calories worth of feta and we swap, that's not capitalism unless I'm using the cheese to make something that I will sell to someone else for more than 500 calories worth of something. 

 

What are the incentives in this transaction? Presumably, each person valued the other person's cheese as higher than his own cheese. In which case they each gained something of a higher value by trading.

 

Suppose that a starving man has a delicious piece of cheese that has 0 calories, and an obese man has an okay-tasting piece of cheese that has 1000 calories. They happily trade. Is the starving man bilking the obese man when they trade since he has acquired 1000 calories of capital? 

 

Value is not objective. Profit is the consequence of differing subjective values. 

[Kevin Beal]

Not exactly the same. Your understanding of 'own' allows the logic to appear similar.

I honestly don't mean to come off as snarky, but it's not my understanding of "own" that "allows" this, but rather my understanding of logic.

 

I could care less that you understand a word differently than I do. I've made exhaustive arguments which I believe demonstrate the point in threads you've read and participated in. 

[dsayers]

Grapes can be capital if I use them to produce raisins.  If I eat the grapes, though, they are not capital.

 

Sure they are. To morally eat a grape, you must own the grape. Meaning you invested the capital of your body, time, and labor to either grow the grapes yourself or voluntarily trade for them. You then invest the capital of your grapes by eating them and nourishing/maintaining the capital that is your body.

 

So the goal of capitalism

 

I think this is why it is important to define terms. I read this as you saying "the goal of 2+2=4..." It's merely a statement of fact. It cannot have a goal.

[GRosado]

You reference a moral principle regarding property and then in order to explain how that principle is invalid you give an example of how it's inconsistently applied. You are actually arguing for property rights and voluntary exchange, presumably, without realizing it, because if the principle were applied consistently, you would not be violently removed from that land.Also, just nitpicking, but your definition of "capital" is incorrect. Capital is money / assets used for investment (esp. for starting a company). And the way that "capitalism" is used within the context of the show, it does actually include bartering. Sahadda's definition is actually how it's used when Stef uses the word. He offers a nearly identical definition throughout the series.

Your definition of Capital is applicable in certain circumstances not all.

[Kevin Beal]

Your definition of Capital is applicable in certain circumstances not all.

[insert snarky response] (I'm too tired right now to deal with this)

[GRosado]

Sure they are. To morally eat a grape, you must own the grape. Meaning you invested the capital of your body, time, and labor to either grow the grapes yourself or voluntarily trade for them. You then invest the capital of your grapes by eating them and nourishing/maintaining the capital that is your body.

I think your taking it to the extremes, the grape is not a capital good it is a final good however the human body can be considered a capital good.

[lux]

Just a quick note to say thank you for all the responses, and I am planning to get back to this soon!  I've been busy selling my labor and other stuff.  Sorry for the long delay!