In Defense of Capitalism

[smoking357]

Personal property rights are endemic to capitalism. If they are not included, we're not talking about capitalism.

Either you're getting sloppy or that was an unctuous change of the subject. Pay attention to the thread progression. Don't get lost in what response goes with its corresponding post. Here's the text which is the genesis for this discursus:

It's perfectly legal in capitalism for me to tell anyone who deals with your fledgling business that if they help you, I will directly stop doing business with them, and I will demand that all my suppliers and vendors stop doing business with anyone who helps you. Any bank that loans to you will face social ostracism of its officers, and all family members of that bank will be unemployable in my empire. If the bank officer's son-in-law works for me, he's out of a job if you loan to someone whom I have not approved. Try me. I'll bury you, and I'll do it all nonviolently.

 

[Fletch]

Or perhaps you'll hide behind this definition of "free market" that exists nowhere in the real world. Further, I notice you have this nasty habit of equating "capitalism" and "free market" and deceptively oscillating between the two concepts.

When cornered on "capitalism," you run to "free market," a concept which, as of yet, you haven't defined.

As I use them, "capitalism" and "free market" are functionally equivalent, as they refer to a system or environment of private, voluntary trade without violent interference by third parties, by which is usually meant "the government". Sorry that wasn't clear.

I'll address the rest, but the barber's ready for me.

 

[Fletch]

You picked two easy examples. Everyone's girlfriend or mother is willing to strip for the camera, and every kid with a computer wants to write shareware for Download.com to pad his resume. Monopolistic impulse aside, it's utterly impossible to stop such an easy and cheap supply of output. There will never be a monopoly on doorstops.

Try oil refining.

My points have been made by talking about sectors where the market is largely free. Since you're obviously not getting what I mean by this, I'll explain.

Imagine a spectrum, a scale of 0 to 100. At the 0 end is complete freedom of trade, with only the protection of property rights stipulated. At the 100 end is the complete ownership and operation by the State. All of the points in between represent increases in government regulation, interference, and manipulation of the market, with fewer such things as you approach 0, and more such things as you approach 100.

(For purposes of discussion, we'll ignore sectors which are completely banned by the State, since the State both oppresses the market and refuses to uphold property rights with regard to it, which violates the stipulation above.)

Another term for the 0 end is "free market". This is where "true capitalism" happens. As we move further along the spectrum, with increasing levels of regulation and interference, the market becomes less free, and capitalism exists only to the extent that State interference is lacking. Put another way, the closer an industry is to the 100 end, the less a competitor in that industry relies on its market prowess to succeed, and the more it relies on its political prowess. Favors and donations and "who you know" become far more important than serving customers.

When we consider a sector of the economy, and I refer to them as "largely free" or "largely un-free", I'm talking about that sector's position on this scale. Porn and software, in America anyway, are "largely free".

Yes, you have to be 18 to be in porn, and yes there are some record-keeping requirements, and yes there are some things you're not allowed to do, but for the most part you can have crazy sex on camera and sell it with nothing more than a cheap camcorder and a website.

Software is even easier. All you have to do is have a computer and a website. There's no age requirements, no record-keeping requirements, and the only regulations which exist largely exist to protect the property rights of others (hacking, virus creation, etc.).

So, just off the top of my head, I'd put the software industry at about a "10" on the "free market" scale, and porn at about a "20". That may or may not be objectively accurate, but I'm just shooting from the hip here.

Oil on the other hand, is somewhere around 75 or 80 on this scale. Government says who can drill for it, who can process it, how much they can process, where they can process it, and so on. I don't think there is a single step of the process, from ground to gas tank, that government does not regulate or control, and that's just with regard to domestic producers. The cost of compliance for any company in the sector is astronomical.

I spent 4 years at a gas pipeline company, in the company of something like 40 or 50 other programmers, doing NOTHING but writing software to stay in compliance with FERC regulations. We're talking about a minimum of $4 million a year just in salaries, to do nothing but keep the company in compliance with the law, and that was only programmers -- we haven't even added the accountants, engineers, and lawyers to the equation. Show me a software or porn company that has this kind of expense.

When you ask why there isn't a thriving competitive market in oil refining, you should be asking how there's any competition at all, because government has done its level best to strangle competition. Sure, it gets "input" from companies in the industry, and it's funny how the regulations that come out of such inputs make it easy for existing players to continue doing business but raise the bar for new entrants into the market, but the entire problem here is that government is preventing innovation and competition.

If you want to call what's left "capitalism" after the government is done jiggering prices, manipulating trades, outlawing innovation, and so forth, that's your right, but it's not capitalism as I understand it. You're handing me an apple core and asking why it isn't as satisfying as a whole apple. I'm saying that it's because it's not a whole apple.

 

[88GT]

snipped a bunch of argumentative stuff

You're complicating the issue. Why, I'm not sure.

It's also an intellectually dishonest approach. Dishonesty isn't inherent in capitalism. Dishonest men take advantage of capitalism. That's not a flaw of capitalism, but of men.

I think you're melding the two unnecessarily. And unfairly.

 

[rambone]

My points have been made by talking about sectors where the market is largely free. Since you're obviously not getting what I mean by this, I'll explain.

Imagine a spectrum, a scale of 0 to 100. At the 0 end is complete freedom of trade, with only the protection of property rights stipulated. At the 100 end is the complete ownership and operation by the State. All of the points in between represent increases in government regulation, interference, and manipulation of the market, with fewer such things as you approach 0, and more such things as you approach 100.

(For purposes of discussion, we'll ignore sectors which are completely banned by the State, since the State both oppresses the market and refuses to uphold property rights with regard to it, which violates the stipulation above.)

Another term for the 0 end is "free market". This is where "true capitalism" happens. As we move further along the spectrum, with increasing levels of regulation and interference, the market becomes less free, and capitalism exists only to the extent that State interference is lacking. Put another way, the closer an industry is to the 100 end, the less a competitor in that industry relies on its market prowess to succeed, and the more it relies on its political prowess. Favors and donations and "who you know" become far more important than serving customers.

When we consider a sector of the economy, and I refer to them as "largely free" or "largely un-free", I'm talking about that sector's position on this scale. Porn and software, in America anyway, are "largely free".

Yes, you have to be 18 to be in porn, and yes there are some record-keeping requirements, and yes there are some things you're not allowed to do, but for the most part you can have crazy sex on camera and sell it with nothing more than a cheap camcorder and a website.

Software is even easier. All you have to do is have a computer and a website. There's no age requirements, no record-keeping requirements, and the only regulations which exist largely exist to protect the property rights of others (hacking, virus creation, etc.).

So, just off the top of my head, I'd put the software industry at about a "10" on the "free market" scale, and porn at about a "20". That may or may not be objectively accurate, but I'm just shooting from the hip here.

Oil on the other hand, is somewhere around 75 or 80 on this scale. Government says who can drill for it, who can process it, how much they can process, where they can process it, and so on. I don't think there is a single step of the process, from ground to gas tank, that government does not regulate or control, and that's just with regard to domestic producers. The cost of compliance for any company in the sector is astronomical.

I spent 4 years at a gas pipeline company, in the company of something like 40 or 50 other programmers, doing NOTHING but writing software to stay in compliance with FERC regulations. We're talking about a minimum of $4 million a year just in salaries, to do nothing but keep the company in compliance with the law, and that was only programmers -- we haven't even added the accountants, engineers, and lawyers to the equation. Show me a software or porn company that has this kind of expense.

When you ask why there isn't a thriving competitive market in oil refining, you should be asking how there's any competition at all, because government has done its level best to strangle competition. Sure, it gets "input" from companies in the industry, and its funny how the regulations that come out of such inputs make it easy for existing players to continue doing business but raise the bar for new entrants into the market, but the entire problem here is that government is preventing innovation and competition.

If you want to call what's left "capitalism" after the government is done jiggering prices, manipulating trades, outlawing innovation, and so forth, that's your right, but it's not capitalism as I understand it. You're handing me an apple core and asking why it isn't as satisfying as a whole apple. I'm saying that it's because it's not a whole apple.

Good analysis Fletch. +1

 

[smoking357]

When you ask why there isn't a thriving competitive market in oil refining, you should be asking how there's any competition at all, because government has done its level best to strangle competition. Sure, it gets "input" from companies in the industry, and its funny how the regulations that come out of such inputs make it easy for existing players to continue doing business but raise the bar for new entrants into the market, but the entire problem here is that government is preventing innovation and competition.
.

Wrong. You spent that $4 million to keep competitors out, just the way the capitalists like it. All the founders of those oil companies are immortalized as the plots to Horatio Alger stories. They knew exactly what they were doing. You're a tax on the company to keep a lot of government employees paid and competitors out - that's the trade.

If you want to call what's left "capitalism" after the government is done jiggering prices, manipulating trades, outlawing innovation, and so forth, that's your right, but it's not capitalism as I understand it.

It's exactly where capitalism ends up. It's time to stop looking at some essential idea of purity and start taking an empirical look at what actually happens.

You're handing me an apple core and asking why it isn't as satisfying as a whole apple. I'm saying that it's because it's not a whole apple

There will never be a whole apple.

It's time to be honest about what capitalism is and isn't.

 

[dross]

My points have been made by talking about sectors where the market is largely free. Since you're obviously not getting what I mean by this, I'll explain.

Imagine a spectrum, a scale of 0 to 100. At the 0 end is complete freedom of trade, with only the protection of property rights stipulated. At the 100 end is the complete ownership and operation by the State. All of the points in between represent increases in government regulation, interference, and manipulation of the market, with fewer such things as you approach 0, and more such things as you approach 100.

(For purposes of discussion, we'll ignore sectors which are completely banned by the State, since the State both oppresses the market and refuses to uphold property rights with regard to it, which violates the stipulation above.)

Another term for the 0 end is "free market". This is where "true capitalism" happens. As we move further along the spectrum, with increasing levels of regulation and interference, the market becomes less free, and capitalism exists only to the extent that State interference is lacking. Put another way, the closer an industry is to the 100 end, the less a competitor in that industry relies on its market prowess to succeed, and the more it relies on its political prowess. Favors and donations and "who you know" become far more important than serving customers.

When we consider a sector of the economy, and I refer to them as "largely free" or "largely un-free", I'm talking about that sector's position on this scale. Porn and software, in America anyway, are "largely free".

Yes, you have to be 18 to be in porn, and yes there are some record-keeping requirements, and yes there are some things you're not allowed to do, but for the most part you can have crazy sex on camera and sell it with nothing more than a cheap camcorder and a website.

Software is even easier. All you have to do is have a computer and a website. There's no age requirements, no record-keeping requirements, and the only regulations which exist largely exist to protect the property rights of others (hacking, virus creation, etc.).

So, just off the top of my head, I'd put the software industry at about a "10" on the "free market" scale, and porn at about a "20". That may or may not be objectively accurate, but I'm just shooting from the hip here.

Oil on the other hand, is somewhere around 75 or 80 on this scale. Government says who can drill for it, who can process it, how much they can process, where they can process it, and so on. I don't think there is a single step of the process, from ground to gas tank, that government does not regulate or control, and that's just with regard to domestic producers. The cost of compliance for any company in the sector is astronomical.

I spent 4 years at a gas pipeline company, in the company of something like 40 or 50 other programmers, doing NOTHING but writing software to stay in compliance with FERC regulations. We're talking about a minimum of $4 million a year just in salaries, to do nothing but keep the company in compliance with the law, and that was only programmers -- we haven't even added the accountants, engineers, and lawyers to the equation. Show me a software or porn company that has this kind of expense.

When you ask why there isn't a thriving competitive market in oil refining, you should be asking how there's any competition at all, because government has done its level best to strangle competition. Sure, it gets "input" from companies in the industry, and it's funny how the regulations that come out of such inputs make it easy for existing players to continue doing business but raise the bar for new entrants into the market, but the entire problem here is that government is preventing innovation and competition.

If you want to call what's left "capitalism" after the government is done jiggering prices, manipulating trades, outlawing innovation, and so forth, that's your right, but it's not capitalism as I understand it. You're handing me an apple core and asking why it isn't as satisfying as a whole apple. I'm saying that it's because it's not a whole apple.

The rep regulators won't let me rep you for this, but excellent post.

 

[Fletch]

Wrong. You spent that $4 million to keep competitors out, just the way the capitalists like it. All the founders of those oil companies are immortalized as the plots to Horatio Alger stories. They knew exactly what they were doing. You're a tax on the company to keep a lot of government employees paid and competitors out - that's the trade.

And the whole point of my posts has been to say that to the extent government is involved, we are not talking about capitalism. It matters not who is pulling the levers. The impetus for regulation comes from random sectors, but the crafting of regulation in big business always involves those being regulated, and they are always sure to exclude as many potential competitors as possible. The fault is not with their self-interest, it is with the government having the power to give them by force what they cannot achieve by trade. The fact that they cannot achieve it by trade is what recommends capitalism, because capitalism is trade.

It's exactly where capitalism ends up. It's time to stop looking at some essential idea of purity and start taking an empirical look at what actually happens.

Capitalism does not "end up" there out of any fault of its own, or from any feature of capitalism itself. It is anti-capitalistic forces that bring industries to this position.

There will never be a whole apple.

This may or may not be true, but it's important to remember, as we discuss various industries, how much of an apple we're talking about before we lay the blame for present conditions on apples themselves. Don't sit here and try to tell me that the oil industry is anti-competitive because of capitalism, when it's plainly obvious that there's relatively little capitalism actually in the oil industry.

It's time to be honest about what capitalism is and isn't.

I certainly wish you would be honest in that regard.

 

[Fletch]

There will never be a whole apple.

It's time to be honest about what capitalism is and isn't.

As my post regarding the spectrum between a free market and central planning has already implied, and which Rand explicitly acknowledged in the title of one of her lesser-known works, Capitalism is an ideal, like Freedom. Indeed, Capitalism is the ideal of Economic Freedom. It is the idea that if two people are willing to trade one another that which they value less in exchange for that which they value more, no one should prevent them from doing so, so long as property rights are respected.

You may believe that freedom in itself is not worth fighting for or defending, or that particular kinds of freedom are not worthwhile, and if so that is certainly your right. I see economic freedom as being even more important than 2nd Amendment freedoms. I agree that gun rights are important in many profound ways, but they pale in comparison to economic freedoms and property rights.

Just as (I assume) most of us on this board oppose the notion that "guns cause crime", I and the other defenders of capitalism oppose the notion that "trade causes poverty/monopoly/plutocracy". Freedom is not the problem, those who would restrict it are. This is the point of this thread, my posts, and Art Carden's talk in the OP.

 

[dross]

The only check on force, is force applied in return.

Force can be used against fraud, and confidence scams, and other misuses of ambition.

Capitalism isn't what breeds the desire of some to gain unfairly what could be gained fairly. That fault exists in human nature, and is prominent in all systems. To blame the desire to get something for nothing on Capitalism is like blaming the sheep for being composed of tasty meat.

If the system is fair, unfair practices will be exposed, and the market will ruthlessly punish the unfairness. This is why those who would practice fraud and other forms of unfairness are the supplicants of those we elect. They seek the government's formalized monopoly on force so they don't have to compete fairly.

The criticisms you level against capitalism (read: freedom) are ironic in the extreme. Capitalism is the victim of what you claim are its faults.

 

[Ogre]

I am pro-capitalism/free market, but I would like other opinions on this... Patent Protection. Is it acceptible to have a capitalistic society with out Patent Protections? Without Govt. intervention in not allowing others to merely copy a product, innovation would suffer greatly. If corporation "A" spends several million in research, and developement, should Corp. "B" be allowed to make an exact duplicate of the product while only using a miniscule fraction of money for their own development of said product? Corp. "B" would then be able to offer this product for significantly less because they would not have to recoup for the initial enormous investment Corp "A" had in the research and developement. This would allow Corp. "B" to excell in the market and unlitmately Corp. "A" would never recover. And thats assuming there is only one other competitor. If there was a price war amongst 2 or 3 Corp. who made copies, this would speed up the demise of Corp. "A".

 

[jsgolfman]

My stance is one against IP.

 

[Ogre]

My stance is one against IP.

IP?

 

[Fletch]

IP?

Intellectual Property. It's a matter of some debate, even among libertarians.

 

[Lex Concord]

Intellectual Property. It's a matter of some debate, even among libertarians.

Yes, and some of the most well-thought-out arguments against can be found at the following location, for those who care to read:

Jeffrey Tucker: Archives

 

[Jeremiah]

Why would you be against intellectual property?
Property rights should extend to all of your labours, possesions, adn your body.


What Is prefferable to free market capitalism?


Socialism is inherently hedonistic. With all of your needs provided why would you do anything buy entertain yourself? And leech?

I don't beleive true communism has ever been practiced, nor would I accept that type of society. I will not be a slave go my neighbor, nor will I ask any man to provide for my life without some form of exchange.


I don't not beleive in government as I have observed it. Corruption is rampant, and democracy is but "civil" mob rule. It detracts from the individual and provides force to continue such heresies as the flat earth mentality.

 

[Fletch]

The entire IP debate is big enough to deserve its own thread, IMO. Just throwing that out there.

 

[Ogre]

The entire IP debate is big enough to deserve its own thread, IMO. Just throwing that out there.

I will cead my question then, so as not to thread jack...

 

[Von Mises]

It's perfectly legal in capitalism for me to tell anyone who deals with your fledgling business that if they help you, I will directly stop doing business with them, and I will demand that all my suppliers and vendors stop doing business with anyone who helps you. Any bank that loans to you will face social ostracism of its officers, and all family members of that bank will be unemployable in my empire. If the bank officer's son-in-law works for me, he's out of a job if you loan to someone whom I have not approved.

Smokin
This could be considered collusion, but only if the other entities play along. If they don't, then it's only intimidation.

But I’m certainly no lawyer.

 

[jsgolfman]

Generally, if you favor IP rights then you concede that person has the right to dictate how you use that IP once you obtain it.