Post #13,064
10/11/01 10:36:01 PM
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Something of a pity
I don't consider myself in any way a "leftist" -- more an old-fashioned "liberal", defined as someone who at least tries to be tolerant and thinks that more, rather than less, freedom to operate for individuals is a good thing.
But there are two features of capitalism, as practiced today, that we really need to look at hard.
One is the failure to monetize labor. By which I mean, the experience and skills of the work force don't appear anywhere on the balance sheet. This is what makes mass layoffs, best-compensated first, possible -- since labor is a cost, and a cost only, it makes sense to minimize the cost.
Second is the casino element of the stock exchange. Not one red cent of the money spent on the NYSE goes to capitalize the companies whose stock is being traded; it all goes back and forth between speculators in the stocks. Yes, I know, it reflects the company's "quality" in some ways, but in the end it has little or nothing to do with the profitability or otherwise of the company. That leads to bubbles and dotcoms on the one hand, and encouragement of pointyheadedism on the other.
I'm not offering any solutions here. I'm just bitching :-)
Regards, Ric
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Post #13,095
10/12/01 8:17:41 AM
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Capitalism is inefficient but scaleable
Capitalism is a distributed protocol for management of an economy. In it decision making is distributed to everyone, with many glaring inefficiencies. One of the most obvious is the fact that everyone has to constantly double-check the bargains they are being offered. Another well-known one is built-in obsolecence. (Which typically is not so much intent as it is just that people don't prioritize figuring out how to make things last.)
However a capitalist market manages to scale to very complex structures. It forms sort of a fractal decision making structure that starts with large scale macro-economic decisions on the part of governments and scales down to people figuring out that it is time to buy more detergent.
You can't easily drive the capitalist engine towards any particular goal. But it keeps the Levis in the store. It meets the needs of the public. And when you skim a little off the top you get tremendous excess capacity for the kind of public works that capitalism won't do on its own. (People differ on what kind of public works are worthwhile and on how to do that skimming...)
I don't know of another economic system that does that as efficiently.
Cheers, Ben
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Post #13,201
10/12/01 9:06:45 PM
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Seems close.. save for the need for some
"correction constants" (Even Einstein wasn't happy with the choice of His 'constant' ;-) - these in order to ameliorate the absurdities of scale, such as you alluded to.
So a 'working capitalism' can only be an adequately patched-, hyphenated- capitalism. The gross generalization of the one word is IMO about as meaningless as (now have become) such other words as, liberal and conservative, for any utility in communication.
As one Wm. Inge observed, Democracy is only an experiment in government, and it has the obvious disadvantage of counting the votes instead of weighing them. I don't think 'capitalism' is understood any better.
I'd say that we are only in the early stages of eliminating $50B'aires as well as people with a net worth of 0, ie. creating a livable world - which can sustain itself without periodic wars for the most concentration of spoils (and the toleration of obscene disparities in, "what a human is 'worth'").
Maybe for a next start, we need some new words whose referents are actually universally agreed.
A.
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Post #13,208
10/12/01 9:49:24 PM
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Scaleable, yes...
The scaleability aspect comes, as you state, from the non-controlled nature of capitalism [note small c].
Do you like Pratchett?
"I'm sure we can pull together, sir."
Lord Vetinari raised his eyebrows. "Oh, I do hope not, I really do hope not. Pulling together is the aim of despotism and tyranny. Free men pull in all kinds of directions." He smiled. "It's the only way to make progress. That, and, of course, moving with the times."
(from The Truth)
I remain convinced that the two aspects I described are problems. We (here, especially) know that experience and loyalty are valuable, but there's no place on the balance sheet to write down a number for that value. The result is a distortion... and, equally distorting, the stock exchanges don't make any contribution to the actual capital of the companies involved -- it's all third-party action. What to do about all that? I dunno.
Regards, Ric
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Post #13,216
10/13/01 10:29:59 PM
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As to examining our shibboleths Too closely..
A Frank & Ernest cartoon of some years ago:
Frank (I guess): sitting at greasy-spoon counter.. Notices a sign over large soup cauldron,
DO NOT STIR THE SOUP
Asks the cook, "why not?"
Cook: "Because you would not like what you would see, sir."
:-\ufffd
(Stock market - giant me-too insider lottery with mere vestiges of ritual 'valuation')
Boycott Walmart..
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Post #13,289
10/15/01 8:20:47 AM
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One question and a comment
Owning stock in a company is owning a piece of that company. Why should people's valuation of a company affect that company's bottom line?
When we get into the principle of a companies valuation affecting the real value of the company, you get the material behind speculative stock bubbles. If anything, capitalism should in my books be accused of going too far that way (what with the ability of companies to issue stocks and options). The system works best when people are keeping in mind that a stock's value is theoretically your expectation of its future returns. Nothing more, and nothing less.
As for failing to value labour, agreed. Companies tend to plan ahead only a few months to a couple of years. The long-term return from treating labour right aren't obvious on that scale. However I submit that labour is, as a whole, better off after capitalism has been around a while than it was before.
In fact capitalism is inherently unfair. Some people get more. They get more for semi-random reasons. That may strike our sensibilities the wrong way, but it is the very engine behind the process. The desire for more, and the knowledge that it is possible to get it motivates people to work.
Cheers, Ben
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Post #13,479
10/15/01 11:48:00 PM
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Re: One question and a comment
"...Why should people's valuation of a company affect that company's bottom line?"
Well, of course, in fact it doesn't, except to the extent that the company owns stock in itself -- a remarkable concept. The glitch comes with the definition of "shareholder value". This is by modern definition the goal of a corporation -- to produce value for its shareholders. If the company can manipulate the stock market so as to increase the value of its stock, that brings shareholder value -- and, as you say, creates bubbles and slumps. One abstraction too many.
My own modest proposal :-) is to (1) allow corporations to deduct dividends from gross income for tax purposes, and (2) institute a "churning surtax" to make up for the revenue loss from #1. This would in fact be a tax increase, since the recipients of the said dividends would be paying income tax on them, but some sop to the Left-Liberals is called for. The churning surtax would be a stamp tax on exchanges of securities of all types; a very small percentage, multiplied by the maturity of the security, divided by the time held. Common stocks would be considered to have a synthetic maturity of either five or ten years, depending on the age of the corporation. Both times would be calculated in days; thus, if the base percentage was 0.1% of the transaction, the tax on a day trade would be 0.1% x (5 x 360) / 1 = 180% of the transaction amount... direct sale or other transfer of the security by the issuer would be exempt, and all securities held by an individual would be assumed to have reached maturity at the death of the owner.
As for employees -- how about capitalizing training? Then depreciating it? A sizeable percentage of a new-hire's salary would be totted up in the capital account, as when you buy a new machine. This would continue, with a decreasing percentage, over say the first ten (?) years of employment. Beginning then, the corporation could depreciate the training. Depreciation, as a decrease in the capital account, counts as income... Hey, lots of the "capital" of many corporations is the ethereal "goodwill". Why not "Employee training" as a capital, depreciable asset?
Regards, Ric
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