Maybe I'm splitting hairs, but how can capitalism be moral? Only people can be moral, right?
I do think there is a problem with size regardless of the system. "Too big to fail" applies to more than just banks. I think capitalism only works if failure is an possibility and is allowed to happen. The possibility of failure helps to keep immorality in check.*
edit: Jason posted the same idea (only better) as I was posting.
* I think this is true on a personal level as well. If you the know someone (parents/government) will bail you out and won't let you fail, you might take risks you wouldn't take otherwise.
Is Capitalism Moral?
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Spartan_Warrior
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@Chad: Yeah, you're right about the bartering economy. I think my original thought process was that dealing in concrete items on an as-needed basis would reduce the subjectivity of labor pricing, but I didn't really think that one through. It would be more or less the same as what we have.
As for no economy, that's sort of why I threw in the caveat on technological advances. Smithing is too labor and capital intensive right now, but will it be forever? Knowledge is already (mostly) free via the Internet and, by extension, further future advances of a similar nature. The next step would be giving people the technical ability to use that knowledge (e.g. means of production). I don't necessarily think humans would stop advancing technologically without a trade economy. At some point technology will become almost self-replicating. Again I reference 3D printers and things of that nature. Of course, this is all just speculative.
@Jason: "I guess I view/define profit as a zero sum game, and exploitation as ethically objectionable." Exactly, that's why I couldn't reconcile my pleasant fantasy with reality, and also why something seems inherently off ethically about capitalism. I agree with Churchill's comment that capitalism seems like the worst system except for the other ones we have. That's why I'm wondering if there are other possible systems. Hard to wrap my head around it though.
Great points on how to even measure "the good" as well. Self-reported happiness: I bet there are some brainwashed North Koreans who believe they have things pretty good but would the rest of the world agree?
I still think there can be moral aspects to tools and similar constructs. Wouldn't a banana be the most moral fruit to eat if, for example, all the other fruits are grown by workers under inhuman conditions? Similarly, if capitalism involves the exploitation of more people than some other system, wouldn't that other system be morally preferable? And so on.
You and @Jenny are right though, the moral agent in these circumstances is the individual choosing to use the particular tool for certain justifications, not the object.
As for no economy, that's sort of why I threw in the caveat on technological advances. Smithing is too labor and capital intensive right now, but will it be forever? Knowledge is already (mostly) free via the Internet and, by extension, further future advances of a similar nature. The next step would be giving people the technical ability to use that knowledge (e.g. means of production). I don't necessarily think humans would stop advancing technologically without a trade economy. At some point technology will become almost self-replicating. Again I reference 3D printers and things of that nature. Of course, this is all just speculative.
@Jason: "I guess I view/define profit as a zero sum game, and exploitation as ethically objectionable." Exactly, that's why I couldn't reconcile my pleasant fantasy with reality, and also why something seems inherently off ethically about capitalism. I agree with Churchill's comment that capitalism seems like the worst system except for the other ones we have. That's why I'm wondering if there are other possible systems. Hard to wrap my head around it though.
Great points on how to even measure "the good" as well. Self-reported happiness: I bet there are some brainwashed North Koreans who believe they have things pretty good but would the rest of the world agree?
I still think there can be moral aspects to tools and similar constructs. Wouldn't a banana be the most moral fruit to eat if, for example, all the other fruits are grown by workers under inhuman conditions? Similarly, if capitalism involves the exploitation of more people than some other system, wouldn't that other system be morally preferable? And so on.
You and @Jenny are right though, the moral agent in these circumstances is the individual choosing to use the particular tool for certain justifications, not the object.
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jacob
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@Spartan_Warrior - Technically, in capitalism, there are two winners to a transaction. If one side losses in a trade, they wouldn't or shouldn't trade. Losers only appear when a trade is forced, such as, for example, taxation.
In terms of whether "value != price".---That discussion is very old and was resolved about a hundred years ago. The value of something when transacting with other people is whatever they are willing to exchange for it. The transaction defines the price.
Price is objective. Value is subjective. Suppose I have an apple and you have an orange. I value oranges more than apples. You value apples more than orange. If we exchange fruits, we both increase our subjective values. The price is that an apple is worth an orange.
This brings me to labor. There's nothing holy about the compensation of labor as opposed to the compensation of capital (tools). It's just that traditionally, labor takes ZERO risk while capital takes ALL the risk. In short, it's hard to find a company where the employee pay is completely dependent on whether the sales division successfully sells its products. As such it's similar to the difference between bonds and stocks. Bond holders, like labor, get paid regardless and in a fixed pre-agrred-upon sum. They have no risk. Equity and capital gets paid whatever is left which may be a lot more or a lot less.
I think the problem is that it's easy to see the connection between labor and effort, because labor tends to be physical and measured in time. It's hard to see the connection between profit and risk because of all the things that could have happened but didn't.
You can imagine the following situation.
Ann spends 10 hours making a ladder to pick apples. Ann now lends her ladder to Bob. Ann is now the capitalist and Bob is the labor. Bob spends 10 hours picking apples. So what's fair here? How should the apples be shared? By the time they spent on the project. Or should Bob be paid regardless since he was labor. What if there weren't enough apples. Should Bob not be paid since he didn't pick any whereas Ann fulfilled her part of the "contract" of building a ladder? Typically, the arrangement is that Bob gets paid a fixed number of apples regardless and Ann gets all the rest. But that arrangement is really arbitrary as far as morals go.
In terms of whether "value != price".---That discussion is very old and was resolved about a hundred years ago. The value of something when transacting with other people is whatever they are willing to exchange for it. The transaction defines the price.
Price is objective. Value is subjective. Suppose I have an apple and you have an orange. I value oranges more than apples. You value apples more than orange. If we exchange fruits, we both increase our subjective values. The price is that an apple is worth an orange.
This brings me to labor. There's nothing holy about the compensation of labor as opposed to the compensation of capital (tools). It's just that traditionally, labor takes ZERO risk while capital takes ALL the risk. In short, it's hard to find a company where the employee pay is completely dependent on whether the sales division successfully sells its products. As such it's similar to the difference between bonds and stocks. Bond holders, like labor, get paid regardless and in a fixed pre-agrred-upon sum. They have no risk. Equity and capital gets paid whatever is left which may be a lot more or a lot less.
I think the problem is that it's easy to see the connection between labor and effort, because labor tends to be physical and measured in time. It's hard to see the connection between profit and risk because of all the things that could have happened but didn't.
You can imagine the following situation.
Ann spends 10 hours making a ladder to pick apples. Ann now lends her ladder to Bob. Ann is now the capitalist and Bob is the labor. Bob spends 10 hours picking apples. So what's fair here? How should the apples be shared? By the time they spent on the project. Or should Bob be paid regardless since he was labor. What if there weren't enough apples. Should Bob not be paid since he didn't pick any whereas Ann fulfilled her part of the "contract" of building a ladder? Typically, the arrangement is that Bob gets paid a fixed number of apples regardless and Ann gets all the rest. But that arrangement is really arbitrary as far as morals go.
I don't think there's anything wrong with capitalism in itself. I'd suggest a few of the reasons our economic system is so flawed are:
1. Humans are pathologically incapable of understanding the exponential function.
2. Humans are incapable of analysing the consequences of their actions outside their immediate social group of 150.
3. Humans love to transfer responsibility for problems onto others.
1. Humans are pathologically incapable of understanding the exponential function.
2. Humans are incapable of analysing the consequences of their actions outside their immediate social group of 150.
3. Humans love to transfer responsibility for problems onto others.
I grew up in a village with traditional people who accorded respect based on what you gave away rather than what you owned. A great person would feed their whole community. Someone who accumulated wealth and didn't share was shunned. You can see how this system is better for people than the one we have.
An example of how (a particular application of) capitalism is immoral: did you know that according to the WHO like 95% of cancer is caused by environmental factors? That means cancer is 95% preventable if corporations would stop selling us poisons and poisoning our water, dirt, and air. Instead, many people are earning money both creating and attempting to cure cancer.
In short, valuing money over people is not moral and is possibly the only possible result of capitalism.
An example of how (a particular application of) capitalism is immoral: did you know that according to the WHO like 95% of cancer is caused by environmental factors? That means cancer is 95% preventable if corporations would stop selling us poisons and poisoning our water, dirt, and air. Instead, many people are earning money both creating and attempting to cure cancer.
In short, valuing money over people is not moral and is possibly the only possible result of capitalism.
@riparian
Honestly, I don't see how sharing everything I have is a better system.
While, I agree we need to get a handle on our corporations, as they are becoming more powerful than necessary. We also need to understand that without them there would probably be billions of deaths rather quickly and a rather large drop in quality of life (of course quality might rise in other things, but unlikely to make up for the massive drop). While, I will happily jump on the 1% (actually like .1%) are evil and corporations are evil. They are a necessary evil to a certain extent. We just need to curb some of the excesses.
Honestly, I don't see how sharing everything I have is a better system.
While, I agree we need to get a handle on our corporations, as they are becoming more powerful than necessary. We also need to understand that without them there would probably be billions of deaths rather quickly and a rather large drop in quality of life (of course quality might rise in other things, but unlikely to make up for the massive drop). While, I will happily jump on the 1% (actually like .1%) are evil and corporations are evil. They are a necessary evil to a certain extent. We just need to curb some of the excesses.
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secretwealth
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Yep, I agree fully with Chad. There's too much throwing the baby out with the bathwater in anticapitalist ideologies. I would love a post-scarcity communist utopia, but even Marx himself asserted such a thing is only possible after goods are no longer scarce. We're not there yet, and it's debatable if we ever will be.
As for the cancer issue: 100% of people cured of or treated for any disease are only able to receive medical care because of corporations.
Yes, the profit motive sucks, but until we have a better system, it's what we're stuck with.
As for the cancer issue: 100% of people cured of or treated for any disease are only able to receive medical care because of corporations.
Yes, the profit motive sucks, but until we have a better system, it's what we're stuck with.
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Christopherjart
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I would consider our current economy immoral. It doesn't maximize human benefit. It maximizes GDP, which can be achieved to the detriment of the population. It is also progressively concentrating access to resources in a small group of people. It requires consistent exponential growth to evade collapse, wreaking havoc on natural resources (externalities) in the process as it rewards short-sightedness.
But don't ask me for a more moral one. My suggestions would go into a decentralization of power and production. Personally, I also like the experiments with a national dividend. I would like to see more explorations into alternative modes of operation instead of sticking to capitalism (which doesn't exist in a pure form and never did) and communism (likewise) as the two only choices. That's something economists could do instead of not predicting or solving large economic crises. It would help bringing the field beyond a cargo-cult science status.
But don't ask me for a more moral one. My suggestions would go into a decentralization of power and production. Personally, I also like the experiments with a national dividend. I would like to see more explorations into alternative modes of operation instead of sticking to capitalism (which doesn't exist in a pure form and never did) and communism (likewise) as the two only choices. That's something economists could do instead of not predicting or solving large economic crises. It would help bringing the field beyond a cargo-cult science status.
@christopherjart: I agree, but I would say that it devolves to the lowest common denominator without strong regulation. I think that's where we're at right.
@felix: I think the externality piece is the elephant in the room here and everywhere else. I may make a lot of money from very big polluters but may see a time when hard-to-price commodities like Manhattan or polar bears are underwater. All you have to do is look away and enjoy your money.
I think the ability to pigeonhole how you invest from what you personally do are great for making money and saving money. I find it hard to do, but then again I find it easy to take advantage of all of these things as a consumer more or less. Anyway, this is hard to resolve.
@felix: I think the externality piece is the elephant in the room here and everywhere else. I may make a lot of money from very big polluters but may see a time when hard-to-price commodities like Manhattan or polar bears are underwater. All you have to do is look away and enjoy your money.
I think the ability to pigeonhole how you invest from what you personally do are great for making money and saving money. I find it hard to do, but then again I find it easy to take advantage of all of these things as a consumer more or less. Anyway, this is hard to resolve.
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Spartan_Warrior
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@Felix: " I would like to see more explorations into alternative modes of operation instead of sticking to capitalism (which doesn't exist in a pure form and never did) and communism (likewise) as the two only choices."
This is what I was thinking. Neither system seems particularly equipped to maximize "the good" or human benefit as you put it. But I can't even envision what a different model might look like. I agree that it would probably involve decentralization
of power and resources. Thus my "self sufficient producer-based" economy, but that's too theoretical.
Somewhat related to this thread, it occurred to me today while watching the NFL game--via free OTA digital TV, not cable, of course--that the term "to capitalize" in modern parlance typically means to take advantage of an opponent's weakness.
This is what I was thinking. Neither system seems particularly equipped to maximize "the good" or human benefit as you put it. But I can't even envision what a different model might look like. I agree that it would probably involve decentralization
of power and resources. Thus my "self sufficient producer-based" economy, but that's too theoretical.
Somewhat related to this thread, it occurred to me today while watching the NFL game--via free OTA digital TV, not cable, of course--that the term "to capitalize" in modern parlance typically means to take advantage of an opponent's weakness.
I don't think anyone system, even one we haven't thought of yet, will ever be the answer. We will always have to constantly change the system to ensure abuses don't happen, as humans naturally "game" any system. Constantly changing the "game" is the only way to prevent things like the sub-prime mortgage crisis.
Of course, this is extremely difficult to do, as it requires a little foresight, little to no corruption, minimal bias, and a population that operates on facts and not beliefs.
Of course, this is extremely difficult to do, as it requires a little foresight, little to no corruption, minimal bias, and a population that operates on facts and not beliefs.
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BeyondtheWrap
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@Chad: I agree that constantly changing the game would likely be prudent. I'm also guessing that keeping the system stagnant would (in addition to leading to gaming the system as you note) lead to decreased social mobility, as the population would become used to doing things a certain way and patterns would become entrenched.
So how to ensure that the game constantly changes? One suggestion I have for this would be a rapid pace of technology. Since technology has a huge effect on how people do things, constantly changing technology would also cause cultural and economic changes.
Of course, we have a lot of technology now, and things are far from perfect.
But even if we did have a constantly changing system, we wouldn't want it to be chaos. It would still need some kind of guidance in order to make sure that it "maximizes the good."
So how to ensure that the game constantly changes? One suggestion I have for this would be a rapid pace of technology. Since technology has a huge effect on how people do things, constantly changing technology would also cause cultural and economic changes.
Of course, we have a lot of technology now, and things are far from perfect.
But even if we did have a constantly changing system, we wouldn't want it to be chaos. It would still need some kind of guidance in order to make sure that it "maximizes the good."
One way to improve the current system would be to have more social services and more of a distribution from top to bottom and less from bottom to top. The benefits of technological progress in the last 40 years went completely to "the 1%" while real wages for the rest of the population stagnated. Working hours stayed the same despite women joining the workforce, effectively doubling the amount of wage-slaves. We'd probably have more semi-ERE people if this weren't the case. 60% higher productivity since the seventies means 60% more money for the same work or roughly 40% less work for the same money. That's what Keynes prophecized, but all we got from technological progress was the ability to check facebook on our smartphones.
Most money is now made in the financial sector, which serves no real purpose in terms of production of goods and services to benefit people.
Redistribution of wealth and regulation of financial markets would be a good step, which is why I am for a national dividend and a progressive consumption tax and a Tobin tax.
Most money is now made in the financial sector, which serves no real purpose in terms of production of goods and services to benefit people.
Redistribution of wealth and regulation of financial markets would be a good step, which is why I am for a national dividend and a progressive consumption tax and a Tobin tax.