Free Market Capitalism, Moral Character And Doing Good All Work Hand In Hand
from the can-we-get-over-this-already? dept
I've never quite understood the complaints of some that free market capitalism somehow goes against morality or good deeds. As we've discussed in the past, moral questions shouldn't even come up at all in scenarios where everyone is better off. Moral questions only arise in scenarios where some are worse off and some are better off, and a decision needs to be made about who is worse off and who is better off. The nice thing about free market capitalism is that it tends to increase the overall pie, allowing a much larger number of people to be better off, and tends to do so in a more efficient manner than other systems.Yet, then we have odd stories about people complaining about for-profit charitable organizations even when those charitable organization end up raising significantly more money for charities than their non-profit "competitors." There's nothing inherently evil about profit -- and if you look at much of the important charitable giving out there today, it was created because of profit. The Bill and Melinda Gates Foundation -- which is based on this very idea of doing good through capitalism is built off of the vast profits earned by Gates and Warren Buffet. Google's charitable wing, Google.org, is also designed as a for-profit enterprise, recognizing that if it can make everyone better off while making itself better off, there's no moral dilemma at all.
But, still, there are some who suddenly question whether or not the free market takes away a moral backbone -- but the only situations in which that would clearly be true are in cases of either outright fraud, or where you're dealing with a zero-sum game. In an economy that has the potential for growth, then one should encourage more growth to increase opportunities for everyone. There may be additional moral questions later concerning overall allocation, but increasing the wider opportunity, which is exactly what free market capitalism does, seems ridiculous to question.
In the end, it seems that some have this odd guilt associated with money -- as if because one person has made a lot of it that it somehow takes away from others. That's simply not true. Adam Smith, who wrote the original book on free market capitalism, The Wealth of Nations, only did so after first writing a book on morality, called The Theory of Moral Sentiment. Free market economics and morality go hand in hand. To think that they're mutually exclusive shows both a misunderstanding of morality and economics.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: capitalism, free markets, morality
Reader Comments
Subscribe: RSS
View by: Time | Thread
Very well put!
[ link to this | view in chronology ]
Free market economics and morality go hand in hand??
Free enterprises in this country have opposed and suppressed every social advancements this country has ever made. Even today free market is responsible for enslavement of millions of people in China and Europe.
Yes. There are a few examples of charity. But most of the people and companies are not.
I am not a opponent of capitalism. But there should some moral safeguards imposed by the society/government.
[ link to this | view in chronology ]
Re: Free market economics and morality go hand in hand??
Government intervention under the guise of "social advancement" gets in the way.
Government interference in the free market accomplishes a few things.
First, keeps business from making more money, and that in turn keeps its employees from making more money.
That leads to business giving less, and individuals giving less. Because they have less money, and it takes the responsibility off of them and gives it to our inept government..
The government does a piss poor job of implementing the social advancements.. do no real change happens.
And finally the politicians get rich and powerful.
And about the free market enslaving people.. that is just not true. The system of oppression and lack of freedoms are responsible for that. This is why our constitution is so very important!
[ link to this | view in chronology ]
Re: Free market economics and morality go hand in hand??
Look at what Google stood for and look what Microsoft did initially. Google stood for internet truth and justice and Microsoft has probably made more jobs here than most other companies (not including the trickle down of people like me who fix windows).
Then look at what people like the RIAA have done. They screwed their clients and their customers, and at this point are probably only opening jobs for lawyers. And even then there are so many other opportunists opening for someone to step forward and provide what the customer wants.
[ link to this | view in chronology ]
Re: Re: Free market economics and morality go hand in hand??
[ link to this | view in chronology ]
Re: Re: Re: Free market economics and morality go hand in hand??
[ link to this | view in chronology ]
Re: Free market economics and morality go hand in hand??
Sources, please.
Or at least an explanation.
[ link to this | view in chronology ]
What about fairness?
I interpret this to mean that so long as I get a penny, it doesn't matter to me or anyone else that someone else gets a dollar. The pie is getting bigger and that is what matters. Everybody wins.
Experiment has proven that many folks will deny themselves the penny to deny the capitalist the dollar, because the arrangement isn't fair.
I say the issue of "allocation", which Masnick raises as an aside, is the key issue. Capitalism has no monopoly on non-zero-sum outcomes -- it is ridiculous to even question that. People have cooperated in non-zero-sum social arrangements since long before markets and governments arose. The allocation of resources is the key issue and it is entirely a moral issue.
The last paragraph is a non-sequitur.
[ link to this | view in chronology ]
Free market and ethics
The zero-sum game meme has corrupted our society and almost killed our self-esteem. When was the last time you remember seeing a business person as the good guy/gal in a movie or on a TV show? As a result people in businesses who earn a profit are made to feel guilty as if they are stealing from others. The reality is the other way around. Those who feed at the trough of government are steal from us.
Ayn Rand was not right about everything, but she nailed this one!
[ link to this | view in chronology ]
LOL
[ link to this | view in chronology ]
Re: LOL
- New technology
- Increased efficiency, especially in key areas like agriculture and manufacturing
- Dramatically increased innovation
- Jobs. Without those wealthy corporations you so demonize, where, exactly, would jobs come from for the many millions that they employ?
- Consumer protection. One major anti-consumer mis-step can royally screw over a corporation, provided there is competition, which is a key element of a free-market economy. Funny this is, those companies with the most power to screw over consumers are those where the government has stepped in with protectionist measures (ex RIAA corporations)
- Credit/financing. Yes, credit has been drastically overused by many Americans, but it still remains a vital part of a healthy economy. Without those wealthy corporations you so demonize, who is lending money?
That's a short list. I could go on and on. No system can be perfect because people aren't perfect. Pure socialism does not work because of laziness. Pure capitalism does not work because of greed. Most moderate systems don't work because of corruption in the government that enforces regulation.
The advantage, however, goes to free-market capitalism (or as close as we can realistically get) because it places power in the hands of the people instead of the government. No one is too big to fail. Just look at the last year. If the government hadn't stepped in with their silly bailout money, giants would have toppled, and been replaced by newer, better companies. Take a look at Sears, the retail hegemon of yesteryear that is now near bankruptcy. Don't think that the Wal-Marts, Microsofts, and Googles of the world are immune. The free marker has wonderful corrective power when the government does not interfere unnecessarily.
[ link to this | view in chronology ]
Re: LOL
[ link to this | view in chronology ]
Not at my expense? I am a wage slave like most of the people here... So I believe that means they get rich at my expense.
[ link to this | view in chronology ]
"Mind the Gap" (Paul Graham)
[ link to this | view in chronology ]
I See No Understanding
I would suggest a few primers along with
Adam Smith The Wealth of Nations
John Locke Two Treatises of Government and
Ludwig von Mises The Theory of Money and Credit and Human Action: A Treatise on Economics.
Currently, many actions of government inhibit a free market through taxes and regulation. I would say that the world has been under corporate socialism for the last 60 years or so.
No one has become rich at my expense, I am not a wage slave, I have been paid for my services throughout most of my life. Never as chattel. Except when I had to mow the lawn when I was growing up.
[ link to this | view in chronology ]
Interest
Thus, in my humble opinion, capitalism is morally flawed. That being said, it's still the best form of economics we have.
[ link to this | view in chronology ]
Re: Interest
Wow. You fundamentally do not understand either interest nor capitalism.
Interest is not morally flawed at all. And it's not about getting money just sitting on it. It's the opposite actually. Interest is based on giving the money up so that it can be put to use -- creating more overall value. In exchange for that, you gain interest. It's a fair trade where both parties are better off.
How is that not morally sound?
[ link to this | view in chronology ]
Re: Re: Interest
Interest is morally unsound because is makes specific distinction between the "haves" and the "have-nots". It grants those who have the money, power over those who do not(at least, more power that they would have otherwise).
Weather you have the money in your bank, or a contract saying someone owes you the money, you ARE still just sitting on it. You are NOT performing labor to increase your wealth, or the global weatlth.
I think that is sufficient to make immoral.
I am making a very specific distinctiion between the very similar concenpts of investment (putting the money to use), and interest here. A home mortgage for examle, does NOT create more "overall value".
(Please Dont tell me about the labor to approve the loan, we both know that does not create wealth in anyway for anyone.)
According to the Koran (I am not islamic), interest is a sin. I only mention this because such a large population of the world agree's with the fact that interest is morally flawed.
I do NOT have any idea's for a better system. So, I guess I should just shut up :)
p.s. Please dont tell people they dont understand somthing based on a short paragraph they wrote, kinda rude.
[ link to this | view in chronology ]
Re: Re: Re: Interest
No, that is not true at all. Interest doesn't make any distinction at all. The nature of ownership makes that distinction, which is one of its BENEFITS.
If "interest" is morally unsound, then ANY trade is morally unsound. Interest is merely me trading you some money today for more money in the future. That's no different than me trading you a horse for two cows. It's a fair trade agreed on by two parties. I cannot fathom how anyone could possibly consider that morally unsound.
It actually troubles me greatly that anyone in this day and age would so misinterpret interest.
It grants those who have the money, power over those who do not(at least, more power that they would have otherwise).
Uh, no. It's not the interest that does that. It's the money.
Weather you have the money in your bank, or a contract saying someone owes you the money, you ARE still just sitting on it.
No, you are not sitting on it. You are lending it out to put it to work increasing the economy. And for that you get paid. There is a risk in lending it out. The interest is the payment on that risk.
You are NOT performing labor to increase your wealth, or the global weatlth.
I think that is sufficient to make immoral.
Ok. Let's go look up some basic economics before you make absolutely ridiculous statements like the ones above.
Lending money to put it to good use IS INCREASING GLOBAL WEALTH. To claim otherwise is pure ignorance.
Also, you might want to learn what creates economic growth. Labor is only a small part of it. Your economics seem to be based on the economic teachings of someone from about 200 years ago. You might want to update your education.
I am making a very specific distinctiion between the very similar concenpts of investment (putting the money to use), and interest here.
Um. WHAT? Try again, please. The only way you get interest is to invest that money. So that distinction you are making does not exist.
A home mortgage for examle, does NOT create more "overall value".
Uh, wow. I'm trying to keep an open mind because you got upset about me for claiming you are ignorant, but the statement above is beyond ignorant. It's just flat out, wrong.
A home mortgage allows cash to be invested in more economically feasible investments which does, in fact, create more overall value
Please, please, please learn some basic economics.
p.s. Please dont tell people they dont understand somthing based on a short paragraph they wrote, kinda rude.
If what they write is 100% ignorant, then it is not rude, but necessary to tell people they don't understand something. Having you go around ignorant is dangerous.
[ link to this | view in chronology ]
Capitalism v.s. Free Market
Capitalism is investment and shared risk, in any venture.
Free enterprise is freedom to do business without interference (imho). The two are somewhat exclusive, but not totally.
BTW, people, what do you think these rich people do when it's time to pay taxes? No, they don't hide it, to do so would bring the IRS after them with an axe. They usually wind up writing off their taxes, by giving nearly the same amount to deserving CHARITIES.
To say capitalism is without it's virtues, is very short sighted, and shows a lack of education...
But to say we have free enterprise in this country is a little misleading too. In a free enterprise system, businesses sink or swim on their own. In a true free enterprise system, the big 3 automakers would all be history years ago, same goes for most airlines, Amtrak, general rapid transit districts from coast to coast, post office, federal reserve bank (which is a private corporation with federal charter, same as USPO), etc.
How do these companies manage to stay in business? Simple, goverment payola in the form of subsidies, tax breaks, incentives, (I could go on, but I would be writing an article). What is this sort of support? Not socialism, no, it's communism! Entities kept alive for the sake of the common good, by the leeching of the common man. How do you like it now that those communist entities in our society are failing?
Zap!
[ link to this | view in chronology ]
The Pyramid Scheme Called Capitalism
Author... you DO see the pyramid scheme symbol on the back of the USA one dollar bill, right? You DO see the servitude infestation in capitalism, right? And do you see the "pay up or lose your wellbeing" Chicago mob-like felony extortion widespread within capitalism? Do you see the "join or starve" felony extortion done to the 18 year olds... by this ugly competer's church called capitalism? See how forcing competer's religions onto 18 year olds... kills membership in the cooperator's church (Christianity/socialism)?? Do you understand that AmWay (American Way) (New World Order) got "the exclusive" (legal tender) on the TYPE of survival coupons (money) accepted in supply depots (stores) and leverages 18 years olds into the organization via that felony activity as well? (It puts AmWay-coupon slaving requirements called price tags... on all the survival goods). Do you understand how farmyard pyramids work... from your childhood?? Remember?? Upper 1/3 are "heads in the clouds" while the kids on the bottom ALWAYS GET HURT from the weight of the world's knees in their backs? Still with me? Do you see anything illegal, immoral, or just plain sick... in any of this pyramid scheme's activities? Do you see how capitalism "somehow goes against morality"? Geez, lets hope so. Time to wakey wakey.
Us American Christian socialists are still patiently awaiting the natural fall of the pyramid-o-servitude, or the busting of the free marketeers felony... by the USA Dept of Justice. Us Christians are VERY CLOSE to issuing a cease and desist order until the servitude and inequality goes away... which means it turns into a commune. Commune is a word we LOVE when used in the word "community"... but its one the caps HATE when used in the term "commune-ism". Go fig. PROGRAMMED!!
Time to level the felony pyramid scheme called capitalism. Abolish economies and ownershipism worldwide, and hurry. Economies just cause rat-racing, and rat-racing causes felony pyramiding. BUST IT, America! Look to the USA military supply/survival system... (and the USA public library system) for socialism and morals done right. Equal, owner-less, money-less, bill-less, timecard-less, and concerned with growth of value-criteria OTHER THAN money-value. Quit doing monetary discrimination immediately, and make it illegal. There are MANY measurement criteria of "value"... not just dollars. Try morals, efficiency, discrimination-levels, repairability, etc etc. Economies are cancerous tumors, and to cheer for their growth... is just insane. Profiting causes inflation, so if caps LIKE inflation, and if they LIKE a terrible time in afterlife when they meet the planet's ORIGINAL OWNER before caps tried to squat it all with ownershipism, then keep it up with the felony pyramiding. I dare you. While us Christians are finally bulldozing that pyramid scheme back to level, lets make servitude and "join or starve" (get a job or die) illegal in the USA, and lets level the architecture seen in USA courtrooms, too. Right now, USA courtrooms are church simulators or "fear chambers", by special design. Sick.
Larry "Wingnut" Wendlandt
MaStars - Mothers Against Stuff That Ain't Right
(anti-capitalism-ists)
Bessemer MI USA
[ link to this | view in chronology ]
We do NOT live in a free market society
Let me show you how I have come to that conclusion.
There can be no argument that competition, particularly industrial and commercial competition; is seen as the fundamental foundation stone of a free society. My dictionary says competition is: “The action of competing with another or others for profit, prize, position or the necessities of life; rivalry – The rivalry between two or more businesses striving for the same customer or market: Competition tends to keep prices down”
Competition is a natural, honest, human concept; that lifts the most successful to the top of society and makes others strive and those that strive win and by winning, lead us all towards success. It is that fundamental rivalry that also keeps anyone from being in a position of too much power or influence. So it is this simple competitive mechanism that keeps us free, keeps us from falling into a feudal society where the free marketplace does not operate and where the accumulation of wealth or power has no checks or balances; where rivalry can be suppressed and competition is excluded. Feudal nations prevent the naturally successful from rising to the top and thus the best in the human society are prevented from leading their communities with their honest enterprise.
In such a feudal society, and here I also include communist, socialist as well as aristocratic and autocratic models, we always see a small group taking control of the many who in turn, are restricted by onerous rules and other mechanisms that exclude anyone outside of that group from competing. Lack of competition tends to mediocrity. Uncompetitive nations will always fail eventually.
So this is not simply a matter of an argument about profit; this is a matter that will profoundly affect the vitality of any nation, large or small. Once an uncompetitive business environment is established you will see visible signs of arrogance towards those less fortunate who in turn have to pay the over inflated fees and costs of a distorted market. Companies and individuals trading within an uncompetitive market are able to pay themselves grossly inflated fees and the basic costs of traded commodities go through the roof; become unstable.
Let us see a simple free market in action.
A free market is open to anyone. Naturally depresses the potential for excess. Always has change occurring as prices rise and fall according to demand. Never stops evolving as the natural competitive rivalry swings the balance of opportunity to and fro. Today’s winner is often tomorrow’s loser and vice versa.
A free market in anything demands that the seller can always get the best price of the day, most usually via an auction, where goods and services are sold in lots at the fall of a hammer. That sale price is determined by creating an opportunity for the maximum number of potential buyers to immediately bid based upon the perceived worth, (of their purchase), to them downstream from that purchase. We call that a marketplace. The moment the bid is accepted the sale takes place; payment is made and immediately the ownership of what is being sold changes.
This is important. If the seller retained ownership, the free market would not work as there would be an obligation upon the buyer that transferred value created by the buyer back to the seller beyond the power of the market to adjust.
The immediate transfer of ownership is thus a fundamental aspect of a free market.
The seller has to accept the price the market will deliver that day for the concept of the free market to work. The price paid must be the market price of that day. The buyer has priced his bid based upon their knowledge of the cost of whatever onward process they have in mind. The price to the final consumer is adjusted accordingly. If that buyer fails to sell on at their final market price, then they cannot afford to go back and buy more at that price and must adjust their bid accordingly.
This is the essential element. Paying too much to the original producer may secure the supply, but suppresses the onward sale of the finished product at the end marketplace. It is this natural check and balance that keeps the whole process of rivalry competitive. The only way to win over the long term is to keep your margins to the minimum that will secure a steady income. Raise prices too far and you are automatically excluded by another that prices below you. Reduce prices too much and you cannot continue to pay your way. Your money runs out before you can replace the original deal with another.
It is the decisions made at the time of purchase that make for viability downstream. You cannot gain an unfair advantage.
I charge that government has an absolute duty to see that at all times; a fully competitive marketplace is maintained for anything and everything that is traded in society. We all know the rules for a democracy but what is a free market? What should the rules say? Have you ever seen them writ large on a wall? I cannot find them so let us create some here and now.
1. A free market is any place where anything may be legitimately bought or sold.
2. No one who is a legitimate producer of product or service for sale, nor, anyone who is a legitimate user of the product or service, downstream of the sale; can be prevented from buying or selling goods or services.
There are very specific reasons for my delineation of the legitimate producer or user. If you take a look at the simple street marketplace selling food to the local community you will see that if say, a hundred thousand others stood between the seller of the product and the final purchaser and traded the same product between themselves without any intention of actually taking delivery as a legitimate user; that marketplace would not, ever, reflect the true free market conditions, but would instead, reflect the speculative power of the other thousands to drive the price in whichever direction they wished. Today we see many trading speculatively and such practices are so widespread, they are frequently bragged about.
“Sept. 3 (Bloomberg) -- Dot-coms? Done that. Property? Oil? Corn? Been there, got the T-shirt and nursed the losses, as well. One thing we know for sure about today's global economy is that there is always an investment bubble somewhere. If you get in early enough, you can make a fortune riding the boom.” Five Places to Look for Next Investment Bubble: Matthew Lynn http://www.bloomberg.com/apps/news?pid=20601039&sid=a6HMtlVh5Rhk&refer=home
I believe this aspect of the misuse of a free marketplace is of particular interest. Today, speculative trades of financial instruments have reached astronomical levels and have deeply destabilised money markets. Similarly; the same applies to commodities such as food and oil. Non legitimate speculators make a mockery of a free marketplace and constantly drive the formation of new price bubbles in otherwise free markets.
3. All sales and purchases must be to the highest bid at the moment of sale.
4. Ownership must immediately pass to the purchaser.
5. No seller can be permitted to influence any transaction beyond the sale.
6. You cannot deal against the market outside of the market.
7. It is the duty of everyone associated with the creation of free markets to see that there are as many as possible independent producers of all goods and services provided to society.
8. Any restriction upon the number of independent producers of goods and services acts against the interests of a free society.
So, for example, if we want to purchase a ton of potatoes, we proceed to the fruit and vegetable market, walk through the door, make our selection and pay the going price for that market that day. The ownership of the potatoes immediately passes to the purchaser upon the seller receiving their price.
The seller has no further lien upon the potatoes. This is very significant.
We all know about such transactions. They repeat in our everyday lives. But it is important to recognise the basic principles. For a true free market to operate the legitimate seller of the goods must not:
• At the same time control the legitimate purchaser and thus be able to exert undue influence upon that purchase; the price paid at the auction.
• Retain ownership of that which was sold.
• Be able to in any other way influence the progress of the competitive process downstream of the original purchase.
The free marketplace must be a true marketplace, where the original producer sells to the final user. Once you permit anyone else, outside of the true marketplace to come between the two legitimate parties to the trade to speculate simply for profit made in the trade itself, rather than as a primary producer or user, you open the door to the compete abuse of the free market; where a trade is not made to purchase for actual use, but simply as a way of influencing the price to the final user. Rules 5 and 6 must be firmly applied.
A farmer buying a contract to supply corn, say, in a years time makes a trade where, ultimately, he is the supplier to a user who will manufacture a product, such as bread, also in that next year. But if you permit perhaps millions of trades by anyone who is not either the farmer or the final user, you introduce complex distortions to the final market price that are not predicated by the decisions of either the farmer or the final user. The market is thus distorted by speculation.
Another good example of where these rules must apply is to money loans termed for less than repayment. By that I mean to describe a loan where it will take, say, 30 years to repay the loan in full, but the rate of interest paid changes downstream of the instant of the sale of the loan. After say, three or five years, the rate of interest changes to a higher rate; increasing the cost of the money loaned.
Changing the interest rate downstream of the sale of the loan denies all the precepts of a free market by permitting the seller to change the deal to suit their market conditions downstream of the sale. Thus the seller exerts undue influence downstream of the sale to control the market against the interests of the wider society, in particular, introducing financial instability.
I firmly believe that it is this specific action, changing the interest rate downstream of the sale of the loan; that lies at the very heart of most of our monetary problems today.
The practice distorts the free market, making it impossible for any purchaser to control their costs for the long term while at the same time permitting the seller of the loan to draw additional profit and income from the users’ legitimate use of the money.
This is no different to a car dealer asking for more money for the purchase of the car several years after the car was sold. This is not legitimate competition. Not a free market.
Competition, real, legitimate competition, not artificial speculation, not being able to change the deal against the interests of legitimate competition must be seen as being the fundamental foundation stone; the principle purpose of a free society. For that to occur you have to have as many as possible legitimately competing in that market; any market, all markets. The more you artificially swamp legitimate competition with speculation, the more you eventually reduce the natural quality of your nation. The less competitive you become and the opportunity for anyone, from whatever background, to rise to the top and succeed consequentially reduces. Failure will become endemic. In such an uncompetitive environment, it is an easy illusion to believe that the few that are succeeding are all that can succeed. This is the great delusion created by any feudal society designed specifically to keep the group at the top exclusively their own.
Feudalism is an economic system where the most powerful use their economic power to swamp and distort the legitimate free marketplace by false trades, speculation. Feudalism naturally excludes success for the majority. Keeps control of the marketplace in the hands of a few.
Now I show how a lack of a free marketplace effects the creation of new industry.
So what is it that has got me so engaged with the process of and the people involved with the creation of new industry and commerce?
It is that I believe that the way the process operates today serves to completely suppress rather than increase competition and in so doing is not acting in the best interests of a free competitive society. Job creators, inventors and the like simply do not have access to a free market for capital; particularly equity capital.
Taken from a Thread I placed on www.itulip.com titled: Adventure and Essential Freedom - the missing elements of a rich cultural life in a successful economy
http://www.itulip.com/forums/showthread.php?t=5166
[ link to this | view in chronology ]
Capitalism
What we need now is a new economic system and a new world order. I think the mixed economy of capitalism and socialism will solve many problems.
If capitalism is going to survive then a new version of capitalism with rules and regulations need to be applied
[ link to this | view in chronology ]
Neither Good Nor Evil
[ link to this | view in chronology ]
Free markets
A truly democratic free market would be regulated but transparent - abuse of the regulatory system would be made apparent and dealt with; at least, with time, when people realized the need for involvement.
Unregulated free markets lead to a stifling of true freedom!
[ link to this | view in chronology ]
I liked your take on the moral angle to interest.
"Interest is morally unsound because is makes specific distinction between the "haves" and the "have-nots". It grants those who have the money, power over those who do not(at least, more power that they would have otherwise)."
But once the interest is paid, the power ceases to exist, doesn't it? And if the principal has been put to good use, it leaves the borrower in a much better position than earlier. For all you know, the borrower could increase his wealth and maybe even become a lender over time.
However, if he's unable to repay in time, the interest multiplies, often topping the principal, ensuring that the borrower is enslaved in a vicious circle of debt.
The Koran is against interest precisely for this reason. And that's why the Islamic world puts more stock in the concept of profit-sharing: it takes a load off the borrower's mind because he doesn't have to worry about covering interest payments but can remain focused on advancing the enterprise to generate profit. And the lender also has a greater stake in the whole deal: the success of the borrower's venture is pivotal to his ROI. Quite like venture capitalists.
"Weather you have the money in your bank, or a contract saying someone owes you the money, you ARE still just sitting on it. You are NOT performing labor to increase your wealth, or the global weatlth."
So why not let someone do that labor and put the money to good use and increase the global wealth? Of course we all want something in return, which is why we get interest (sometimes disguised as dividend).
What is the way out? I would say the co-operative system is one that people ought to start considering seriously.
[ link to this | view in chronology ]
"Free Market" just like Santa.
[ link to this | view in chronology ]
Free Market
[ link to this | view in chronology ]
Happy New Year?
"The nice thing about free market capitalism is that it tends to increase the overall pie, allowing a much larger number of people to be better off, and tends to do so in a more efficient manner than other systems."
There is nothing nice about an economy which places people into classes. Capitalism creates exaggerated value on every good obtainable, and it's this value which does more harm than good.
When a laborer can not survive on an established minimum wage, there is something seriously wrong with capitalism. Every human should be afforded the three basic needs (housing, clothing, and food) but capitalism makes it such these basic needs are difficult to obtain within the bounds of wages.
During the economic crisis, it was often said "middle class" was evaporating. The crisis only placed the focus on the class which has been withering for years all thanks to capitalism.
Housing has become atrocious in this country. Whether you rent or buy, you know sending that monthly payment takes a good percentage from your salary. I see no reason why a house costing $50k to build should sell for $150k. But capitalism does.
Food has also become difficult to obtain and is now the second largest "paycheck taker" with the average 4 person household spending $176/wk to eat. This is damn near what a mortgage used to be 20 years ago.
Anyone raising kids knows the cost of clothing. Setting aside "name brand" for a second, the cost of clothing increases every year. What makes this more difficult is knowing the clothing is manufactured in countries having a much less hourly wage, but costs continue to skyrocket. Again, capitalism is to blame.
I'm only addressing the three basic needs as every year, more people are having difficulty trying to maintain these basics, and capitalism is to blame.
"it tends to increase the overall pie"
If this is true, then why do so many people have this difficulty? It is because, as it always has with capitalism, that those who have only give to those who need with strings attached.
The majority of workers in this country can not just go out and buy a new house or car without a loan. In a capitalistic society, this borrowing comes with a price, often very steep for those who don't have substantial income. As more people continue to struggle to pay their bills, their punishment is often higher interest rates.
This past economic crisis shows just how vulnerable the capitalistic society is. If anything, it shows just how exaggerated housing has become and how difficult it has become for people to obtain one of the basic needs in life. As housing prices continue to fall, those with capital will buy up these properties, knowing the value will increase in time, starting the whole chain all over again.
A capitalistic society also places depreciating value on a human's labor. There is more value placed on a professional sports player than there is on someone who cleans an office every day. The value placed on the CEO is often extremely exaggerated than that of the worker under the CEO.
Techdirt wrote about the comments made by Bank of America regarding the "demands" of Americans in the workplace. It stunned me to see how many people objected to the comment without first realizing just how true it is.
Many Americans demand a better salary, especially if the company they work for is very successful at generating net revenue. This is the very foundation of capitalism at work, placing exaggerated value on a good. The employee feels they should be making more given they've helped make the business successful.
Capitalism does create opportunities. I won't argue this. However, due to its ability to exaggerate value, it is also very risky, placing millions at risk when the value suddenly collapses.
"more efficient manner than other systems."
Well, of course it is! This is because those other systems failed. What strikes me as odd is how new systems are never tried! But this would be wishful thinking, as capitalism is here to stay.
I'm a strong believer in capped salaries, revenue, and the destruction of exaggerated value. It's the first step towards a society not living on the definition of value, so there would be no need for money.
Because there's something wrong with an economic system in which a loaf of bread costs, scrap that, is valued at more than a dollar.
[ link to this | view in chronology ]
Free Market Pyramid scheme
[ link to this | view in chronology ]