Fake Capitalism Is A Bigger Threat Than Socialism

submitted by Mnemonic from forbes.com

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[–]worm 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (9 children)

I would again suggest that this article was flawed from the very beginning? The man who wrote this needs to familiarize himself with a certain Joseph Schumpeter, and either adopt his points or refute them before stating his own grand theories about where the economy is going.

The article argues that since there are barriers to entry, capitalism doesn't work and we need "socialism".

To get to this argument, it takes a very simplistic model of perfect competition from classical economics, the sort which was proposed initially by Smith and Ricardo, and tries to point out how modern America does not have perfect competition due to barriers to entry by the virtue of scale - in other words, "moats", as Warren Buffet might call them.

The problem, of course, is that we know that economic models are not static as Smith and Ricardo assumed. Schumpeter's analysis of economics demonstrated that the economy is constantly changing: real competition is not only between prices, but also between competing methods of production. It is the drive to find better methods of producing the same goods which leads us to the "gales of creative destruction" which will inevitably tear down any monopoly which does not improve its products over time.

Hence, in Schumpeter's view, there is nothing inherently wrong with a monopoly as long as the gales of creative destruction are active. A monopolist who does not innovate will find his monopolistic advantage lost in time as newer and better methods of production destroy his "moat", and the constant shoring up of such moats by research and development into new technologies is what keeps capitalism (as Schumpeter calls it) effective.

I'm not claiming that Schumpeter's arguments about dynamic capitalism is necessarily an unassailable argument - there are probably academics and theorists out there who disagree. The point I'm making is that the man who wrote this article is either too lazy or too misinformed to even address the obvious answer to his presumptions.

[–]Mnemonic[S] 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (8 children)

The article argues that since there are barriers to entry, capitalism doesn't work and we need "socialism".

That's taking the article to a long stretch,

The broader point here is that leading “capitalists” are often nothing of the sort, particularly when they use political influence to carve out monopolies.

That’s neither capitalism nor socialism. It is something completely different: crony capitalism, corporatism, corporate statism—the terms vary. It promotes wealth concentration that leads to economic stagnation, political instability and the current discontent… which might bring real socialism.

So if you fear socialism, the best way to stop it is to clean up capitalism.

That means stop letting government policy favor large, influential companies. Let everyone compete on an equal footing, and give consumers and workers freedom to choose what they want.

Conversely, if you want to bring on socialism, just pretend nothing is wrong and stay on the present course.

I really don't see how the above closing words rhyme with your assumption.

[–]worm 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (7 children)

What do you think is my assumption?

I think this article clearly assumes that monopolies are not natural under capitalism. It also assumes that monopolies are bad for the economy. It is upon these assumptions that it asserts a need for "socialism", whatever that entails.

If you have read that article and come to a different interpretation of it, I'd like to hear your interpretation. From what I can see, the article appears to be written by a man with little interest in economic theory and amounts to little more than political point-scoring.

[–]Mnemonic[S] 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (6 children)

It is upon these assumptions that it asserts a need for "socialism"

This I disagree with, where did you get that from?

[–]worm 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (5 children)

"If you fear socialism, the best way to stop it is to clean up capitalism," proclaims the article at its conclusion.

I think it is fairly clear that this whole article was an exercise in preconcluded reasoning, whereby one finds issues which aren't there and proposes solutions which are not necessary. The whole issue of monopolies, as he describes it, is not economic theory at all.

I certainly didn't find any economic theory in this article. If you have found some, I'd be glad if you'd point out what's so illuminating about it.

[–]Mnemonic[S] 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (4 children)

Conversely, if you want to bring on socialism, just pretend nothing is wrong and stay on the present course.

Fake capitalism isn’t working for most people. Eventually, they’ll demand something else. And they will probably get it too.

Is what it really ends with, but even with your one out-of-context sentence I still can't see your

It is upon these assumptions that it asserts a need for "socialism"

It's clear the author doesn't want socialism and certainly isn't advocating for it in any way. (unless being critical about capitalism equals socialism)

I certainly didn't find any economic theory in this article.

If that was your problem, why not say so instead of making stuff up about this article asserting a need for socialism?

[–]worm 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (3 children)

Truth be told, I don't care for the article's conclusions or what sort of label you would prefer that I use for it. His proposals to "clean up capitalism", combined with his rather lacking and uninspired criticism of monopolies, smacks of interventionist and socialist rhetoric to me. If you would like to call it anything else, then let it be so - I would be willing to call it under any label you would ascribe to it, so long as you accept the fundamental point that this article bears little economic theory at all.

I have continually stated that this writer is either too ignorant or too lazy to argue about economic theory, and indeed have invited you repeatedly to propound on why you thought this was perhaps economic rather than political in nature. Instead of defending his argument or raising issues with mine, you have instead ignored the entirety of the theory and simply decided to attack the label I ascribe to his purely political proposals.

[–]Mnemonic[S] 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (2 children)

Instead of defending his argument or raising issues with mine, you have instead ignored the entirety of the theory and simply decided to attack the label I ascribe to his purely political proposals.

Why would I argue for his arguments?

I read your critique and wondered how you came up with

The article argues that since there are barriers to entry, capitalism doesn't work and we need "socialism".

That's all that happened.

[–]worm 2 insightful - 1 fun2 insightful - 0 fun3 insightful - 1 fun -  (1 child)

Well, I'm sorry for causing the misunderstanding by using that label. As far as I am concerned, this author isn't interested in economics and is purely interested in furthering his socialist political agenda by disassociating himself from that distasteful political label. He avoids using the word socialism or socialist to describe his policies, yet clearly advocates for policies which most people would regard as socialist.

More to the point: If you knew that this article contained no such theory, why on earth did you post this here? Post it to politics or somewhere else.

[–]Mnemonic[S] 1 insightful - 1 fun1 insightful - 0 fun2 insightful - 1 fun -  (0 children)

More to the point: If you knew that this article contained no such theory, why on earth did you post this here? Post it to politics or somewhere else.

Well from how I read the article, and still do, it's not a call to the government to 'go clean up capitalism' but a call out to the market itself.