Capitalism . . . Is it a failure, or is this just a blip!

Just wondering.

Considering the state intervention in the financial markets does this not mean that capitalism has been a resounding failure, or is capitalism only relevant for the benefits of the rich when things are going well?

Seems to work off the pretence of when times are good, its all about the money for the bigwigs, but when times are bad we all have to muck in to "bail" the country out. Governments hide behind the whole (our country needs the rich) when letting them do business with ridiculous tax breaks, is there any way to address this so our country is not constantly relying on the working class to prop up its finances!

With the U.S. government also bailing out select private industries for the greater good, is it not obvious that there are major flaws that need to be addressed? Will regulation really work or will it just simply be put in place for a year or so until those in "power" (the money men) decide that we are over regulated again!!!

Its not perfect but its better than socialism. At least with capitalism, people have something to aim/work for. Lets face it not all men/women are created equal, some are always more equal than others.

Human nature being what it is though, power corrupts and absolute power corrupts absolutely. If we had good regulation/practice and significant consequences for bad practice then we might have the sort of checks and balances that the American founding fathers dreamed of.

In my opinion the biggest problem is not having severe enough consequences for people doing a bad job, fiddling accounts or cutting corners in the name of profit. Golden parachutes make those in power care less about the consequences of their actions and care more about their next round of golf or what class they are flying (business or first class).

My 2 cents.

i think the big problem is the business model that demands quarter on quarter, year on year profit growth. If a corp make 1Billion profit it's like how on earth are we going to make 1Billion plus 10% next year. what's wrong with making 1billion the next or 900M??? I dont think im being nieve here beacuse look what happened the banks. They exhausted markets, now how do we keep growing they created false markets 100% mortgages, relaxing the requirements, lend to people who have bad credit ratings all because they had maximized profits and had to become unethical just so they could grow. there has to be value in a company that makes a profit and employs x amount of people. Not we need to cut so we can increase 1 billion to 1 billion +, what happens the year after next. Go to low cost economies and sell back into markets where the jobs are being lost?? Eventually they're going to kill the demand for their own products. (Im talking about companies making billions)

I see the boom-bust cycles in capitalism as inevitable as winter & summer.
We've had a very long summer (artifically so in hindsight), which makes the winter harsher.
I think we need 'appropriate' laws and regulation to manage capitalism, but it's foolish to use these to try and eliminate the boom-bust cycles (smooth out maybe). I think this is where Greenspan went wrong.
Winter is good in nature, it kills off the old an weak, and the cycle starts anew in spring. Winter (recession) brings similar benefits.

StevieC, I totally agree with you regarding repurcussions for "dodgy" dealings in capitalist society.

The reason I started this thread is because it just seems like we will be back here in the next 20 years or so discussing the exact same problems that were caused by gradual reductions in regulation.

There is another way of looking at capitalism. It does focus or motivate the mind on personal positive gains (or goals), but this is done (at a corporate level) at the expense of morals , ethics and the vunerable. Capitalism at its heart is simply about greed but masks itself as a competitive open market idea. Yes it may be the best of a bad bunch of ideals but thats not exactly a reason to accept it as our way of life (universally).

If we are all agreed that bad regulation, lack of accountability and greed has gotten us here, then how can we believe that same broken regulation will solve the problem long term!

If money is what makes the world go round, then the moneymen control or influence policies, regulation and governments. This is not accusing anybody in the dail of anything, more making an observation of how the system works in all Western powers under the influence of capitalistic ideals.

dockingtrade said:

i think the big problem is the business model that demands quarter on quarter, year on year profit growth. If a corp make 1Billion profit it's like how on earth are we going to make 1Billion plus 10% next year. what's wrong with making 1billion the next or 900M??? I dont think im being nieve here beacuse look what happened the banks. They exhausted markets, now how do we keep growing they created false markets 100% mortgages, relaxing the requirements, lend to people who have bad credit ratings all because they had maximized profits and had to become unethical just so they could grow. there has to be value in a company that makes a profit and employs x amount of people. Not we need to cut so we can increase 1 billion to 1 billion +, what happens the year after next. Go to low cost economies and sell back into markets where the jobs are being lost?? Eventually they're going to kill the demand for their own products. (Im talking about companies making billions)

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I agree completely. I find it amazing in the current climate that companies who are coming off a boom cycle lasting years seem to have no reserves to fall back on to weather the current downturn ,a few months of a downturn and they are going bust.
It seems to be that they expanded and expanded rather than consolidated and they are driven by market forces to do this
Is it shareholders who demand this,forcing management to pursue aggressive growth strategies ? But even non quoted companies seem to be in this situation

NorthDrum said:

It does focus or motivate the mind on personal positive gains (or goals), but this is done (at a corporate level) at the expense of morals , ethics and the vunerable. Capitalism at its heart is simply about greed but masks itself as a competitive open market idea. Yes it may be the best of a bad bunch of ideals but thats not exactly a reason to accept it as our way of life (universally).

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True, but unfortunately as you know yourself, it is the best of a bad bunch of ideals. Capitalism is always going to be amoral, it's up to governments to regulate in acceptable limits. And we should not let the public off the hook. While companies sometimes wrap themselves in good causes, when they feel it makes more of a buck, mostly they will bring standards of employment and quality of production down to the lowest legal levels, because that is what is demanded by the public buying the products and investors buying shares (and often those investors are pension funds owned to a small extent by members of the public).

So, what to do? Find a proper balance of regulation and commercial freedom. We seem to have leaned too far towards freedom, especially in the financial arena.

Ix.

capall said:

It seems to be that they expanded and expanded rather than consolidated and they are driven by market forces to do this
Is it shareholders who demand this,forcing management to pursue aggressive growth strategies ? But even non quoted companies seem to be in this situation

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Also in agreement here.

Public companies do it through fear of public perception and greed. Private companies do it mostly through greed only. In the case of some private companies they have been bought out (either from a public company, or from an original private owner) and they can be far more ruthless than a public company, as they try to make a big profit on their investment.

Yep, capitalism always has been and always will be unstable. We’ve had regulation and deregulation before and we’re right back where we always end up. In a recession. We can keep trying the same thing or we can figure out why it hasn’t worked so far. You and I don’t control the regulation or deregulation. Those who do control those decisions will make them in their own interests, which are not the same as ours. Take a look at how the US deregulated in the 1980’s and 1990’s. It’s instructive. Capitalism always focuses on the short term because the system is structured to reward short-term planning. Always has been.

Comparing capitalism to a natural system is a fallacy. This is not a natural cycle controlled by the movement of planets, gravity or anything else. It’s a man-made one. In a man-made economic cycle, ‘winter’ doesn’t kill ‘old and weak’ animals. It kills real people, old and weak ones such as we all will be some day. Not in the developed world generally, but capitalism is a global system. In the developed world ‘winter’ doesn’t kill us but it causes depression, suicides, joblessness, hopelessness, homelessness, poverty and deprivation. That’s not a natural disaster. This is the same argument used before the First World War to argue that war was a cleansing and natural thing. We, humanity, created this system just as we chose war. Nobody else. It’s our responsibility.

G.B. Shaw was a socialist by the way. A Fabian. He didn’t always say straight up what he thought but he wasn’t recommending that we retain a capitalist system and simply return to a gold standard. The important point in that quote is his opinion of government. Those who say there is no alternative usually think of socialism as Russia. If we were motivated enough to find an alternative we would do so. And we would question our assumptions and learn about alternatives. Why would we believe that human creativity and intelligence has reached its limits in our ability to organize ourselves? That we can do no better than this? If we truly believe that this is the best we can do then we can be certain that this will be the best we ever do.

I wonder how long this thread will last….

mallow said:

...Comparing capitalism to a natural system is a fallacy. This is not a natural cycle controlled by the movement of planets, gravity or anything else.

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I think capitalism is a natural system, it's driven by greed one of our more primitive urges. Do think we can do better? Yes, but we have to rise above this.
Maybe capitalism will eventually go the way of the death penalty

tiger said:

I think capitalism is a natural system, it's driven by greed one of our more primitive urges. Do think we can do better? Yes, but we have to rise above this.
Maybe capitalism will eventually go the way of the death penalty

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So a system driven by one human emotion above any other is a natural system? Comparable to, say, the movements of the planets? Now why would a system naturally evolve which is based on only one of any number of human emotions? There seems to me to be an obsession with the emotion of greed above any other in current debates. It is at heart a religious way of understanding the world and our place in it. Religion, and morality, can offer tidy and simple explanations. But if you choose to avoid any shades of grey then you're no closer to real understanding. If you read the Bible, or polemics from the Middle Ages or the Reformation you'll find mirror images of that kind of language. They railed regularly against greed and other 'primitive urges'. Those weren't capitalist societies.

If greed is a natural emotion then we cannot 'rise above' it. Any more than we can 'rise above' fear, or anger, or love, or empathy, or jealousy. Individually, yes we can. Collectively, we will continue to experience every human emotion as long as we are human. Yet none of those emotions controls any of the others. So why would they control what economic, political and social systems we create?

If an economy that could be described as socialist (even slightly so) crashed as spectacularly as the capitalist system recently has, many people would be trumpeting the death of socialism.

Yet some believers in capitalism have not had their faith even slightly shaken. I have even encountered the argument that the reason things went so far wrong was that we were not sufficiently capitalist. And that makes me think of the world Charles Dickens described: capitalist utopia.

Capitalism is for carnivores, predatory and aggressive; socialism is for herbivores, passive and usually gregarious; we are omnivores.

I don't think individual greed is the issue here. Capitalism drives collective greed. Profit is the corporations primary objective. People are slaves to capital, hence as a synergetic force, greed is the overriding factor.

Capitalism will reign supreme regardless of the result of this downturn. Governments won't change the status quo due to myopic, short-term agendas.

Capitalism has only been around for circa 350 years. It has a long way to go yet....

Damian85 said:

...Capitalism drives collective greed...

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Wow; just wow.

It has failed but it is our belief system so we can forgive its sins!

The expansion of the middle class since the last world war has cemented a belief that capitalism and democracy are one and the same. This runs deep in the psyche of the west and will not be easily removed as is evidenced by our silence (apart from half-hearted protests) as the economy turns into a train wreck and governments commit our children's future earning to its rescue.

Pension funds down by a third, taxes raised, house prices falling further, more tax rises to come, bank bonuses on the back of tax payers and a political class that was happy to take the credit for the 'boom' but that dodges the blame for the bust.... all of these will shrink the complacency of the majority middle class, so the question is how long will the recession/depression last? And will we keep the faith?

I think capitalism will remain just as strong despite recessionary times and weak protests.

Governments have bailed the capitalists out, locking themselves in and committing too much to change direction. Government support will remain.

For the individual, capitalism presents ambition and hope where he/she can always strive for wealth.

Padraigb said:

Capitalism is for carnivores, predatory and aggressive; socialism is for herbivores, passive and usually gregarious; we are omnivores.

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Who is anarchism for then? There are plenty of socialists who couldn't be described as remotely passive, or indeed gregarious. Why would we design a system as 'omnivores' based on some combination of passivity and aggression?

Damien85, Governments have never changed the status quo. People have, many many times. As to estimating the life of any economic system, I'm not sure even Nostradamus attempted that! If you ask most of those who live under capitalism (by which I mean the developing world and the less well of in the developed world) you'll find that it doesn't present hope or ambition to them. The fact one can strive for wealth doesn't mean one has any statistical likelihood of obtaining it. Those in the developing world don't have as many illusions about things like 'The American dream' as we do.

No, I think capitalism has a long way to go yet. It will survive this recession and many more recessions/depressions in the future. Some features of capitalism may change and receive fine tuning, but it will remain dominant.

Capitalism is one of the factors that adds to the woes of people in developing countries. Of course they can't strive for wealth and abundance. Their main goal is survival. I suppose I should have specified the western world. We do, as a whole, strive for this. Why else would one go through an education process? Why else would one work jobs where they are submissive to immediate management and expect to show unquestionable loyalty to their often meaningless position? Ok, one could argue self achievement or conformity. However, the main reasons are to survive and to give short term sacrifice for potential future wealth. People see the capitalism as a system of survival but also as a system of potential.

As for people overturning capitalism? Ok, it has happened in the past. Most likely again in the future, but people aren't going to leave comfort zones and attempt to overthrow capitalism all of a sudden, or because of this recession. Capitalism has nurtured the growth of two of the most powerful forces in history - the corporation and limited liability. With the corporation, no force has ever had such a global reach and enforced such a dependency upon people.

In the age of the internet, the capitalist protest is still weak and passive. These protestors either lack credibility or potency. People are either not interested or in their comfort zone too much to care. Has our population ever been as materialistic for goods and services or dependent on a capitalist system?

There are some people looking to overthrow the capitalist system. I saw this documentary on a flight a number of months ago. It discusses the advantages of a resource driven equality system. Fairly long, and US focused but maybe worth a watch?
http://www.zeitgeistmovie.com/

Damian85 said:

NWhy else would one go through an education process? Why else would one work jobs where they are submissive to immediate management and expect to show unquestionable loyalty to their often meaningless position? Ok, one could argue self achievement or conformity. However, the main reasons are to survive and to give short term sacrifice for potential future wealth. People see the capitalism as a system of survival but also as a system of potential.

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I don't believe believe work in order to achieve or to conform. They work because it's the only way to earn a living for most of us. They may get a sense of achievement from some particular job or line of work but it's not the reason we work per se. As you say, we are dependent on capitalism for a job. And we are dependent on that income for everything we need or want. As for working for future wealth, if you are on the average industrial wage you can't be under the illusion that that job will make you wealthy some day. You hope you'll have sufficient pension to stop working some day certainly. But I don't think many people are under the illusion that their job in itself will make them wealthy.

I wouldn't be so pessimistic about the potential for change. Very few people foresaw the French Revolution more than a few years in advance. And in 1916 no-one expected that there would be a popularly supported war of independence just a few short years later.