The Hedonistic justification for capitalism

[Thatperson]

As a former socialist and a current "left winger" so to speak, I undrstand the many moral injustices of capitalism, a person earning £100,000,000/year having the equivilent purchasing power, and perhaps just power of a small town, But can it not be justified as a means of "pleasure currency". When musicians create music, they may earn millions, but in return for increasing the pleasure of millions. Does anyone consider this a reasonable justification of capitalism? I understand flaws such as lottery winners, people who get lucky playing the markets and such but generally is it not a good justification? Another thing I notice is a flaw in the ratio of currency value/pleasure value between certain products. Surly assuming you had no means of pirating or whatever, the enjoyment you get from a 79p music track is far greater than that you get from a 79p chocolate bar. So how come music companies don't charge more, like £9.99 per single? I know CD's were about £3 per single but the enjoyment is still more than 3/4 chocolate bars, so surly they could get away with it? Your thoughts.

[Grod]

I think of it this way. You can be from a poor family, you work really hard in school, you get a scholarship to a good college, you get a degree in whatever, you use your degree and make a lot of money. You just rose from poor surroundings and made something of yourself. That is why I like capitalism.

[Descensus]

Before a serious discussion starts I believe we should establish a definition of capitalism to weed out any possible strawmen or false connotations. However, I will reply to the OP's post. As a former socialist and a current "left winger" so to speak, I undrstand the many moral injustices of capitalism, Which form of capitalism are you speaking of, and what are those injustices? a person earning £100,000,000/year having the equivilent purchasing power, and perhaps just power of a small town, Is this one of your examples of injustice? But can it not be justified as a means of "pleasure currency". When musicians create music, they may earn millions, but in return for increasing the pleasure of millions. Does anyone consider this a reasonable justification of capitalism? I understand flaws such as lottery winners, people who get lucky playing the markets and such but generally is it not a good justification? Your so-called "pleasure currency" is merely a business (in this case a musician/group of musicians) satisfying their customers. Another thing I notice is a flaw in the ratio of currency value/pleasure value between certain products. Surly assuming you had no means of pirating or whatever, the enjoyment you get from a 79p music track is far greater than that you get from a 79p chocolate bar. So how come music companies don't charge more, like £9.99 per single? I know CD's were about £3 per single but the enjoyment is still more than 3/4 chocolate bars, so surly they could get away with it? You can't really say "surely you get more enjoyment out of music than a candy bar" because for all we know, a candy bar may be orgasmic to a person while music is something they listen to when bored. Anyway, that aside, the reason companies don't charge $9.99 per single is probably due to the fact that no one would want to spend $10.00 on a single song. They prefer keeping their money to buying the track. Charging almost ten dollars for a single song is a terrible business plan.

[Alric]

Making people happy is a service, and that is a valid way to make money in capitalism. So sure, you can look at it that way. Someone who brings joy and pleasure to others, get paid for it. As for candy vs music, that is an easy one. People normally buy stuff on the spot. So while the music is probably a better deal, a lot of people just buy the candy on impulse.

[Supernova]

I understand what you mean by pleasure currency, however, as the current situation in the US shows you, many of the people at the top got there and/or continue to go higher by screwing over a lot of little people.

[tkdyo]

As a former socialist and a current "left winger" so to speak, I undrstand the many moral injustices of capitalism, This makes you sound like a pompous dimwit. Part of the reason capitalism looks so bad is because we dont really have capitalism. You know those bailouts on the car companies/banks? Yeah, those companies should have had to make changes to attract customers and/or make stop paying their ceos so much in order to not die. But instead, our govt gave them more money. Now the ceos can keep their big paychecks while staying corrupt. that being said there is no such thing as a perfect system. I happen to believe that a mix between left and right policies are the best way for a country to move ahead.

[Descensus]

that being said there is no such thing as a perfect system. I happen to believe that a mix between left and right policies are the best way for a country to move ahead. Wouldn't you say a bailout is an element of a leftist policy?

[Spartiate]

In defense of bailouts... If you let those big companies go down, millions of jobs are lost. Those jobs are usually lost forever to companies outside the country before new local companies can fill the void. Restructuring a company is generally a better option than starting again from scratch.

[Descensus]

In defense of bailouts... If you let those big companies go down, millions of jobs are lost. Those jobs are usually lost forever to companies outside the country before new local companies can fill the void. Restructuring a company is generally a better option than starting again from scratch. In defense of a sound economy...If you let those big companies go down, incompetent managers and businessmen go *poof.* Yes, jobs are lost temporarily, but they may go outside the country because labor/business may be cheaper or more efficient there. It is either the fault of the businessman for running a business into the ground or the government for running businesses into the ground. In most cases, the blame lies with the latter. Stealing people's money via taxes to prop-up companies and delay market corrections due to a vested corporatist interest by the government is generally harmful and unethical.

[Spartiate]

Yes, jobs are lost temporarily, but they may go outside the country because labor/business may be cheaper or more efficient there. Not temporarily... If Ford/GM would have gone down for good, that's several hundreds of thousands of jobs (not just in the US actually) that would have been lost in one go. In the time it would take for an upstart American company to grow the massive infrastructure that would require as many jobs as Ford/GM needed, the American automotive market would have long been gobbled up by Asian manufacturers. The reason business in China is cheaper is because you can get away with paying poverty-level wages there. The reason it's more "efficient" is because standards are iffy at best.

[tkdyo]

Wouldn't you say a bailout is an element of a leftist policy? It is, but I feel it is a wrongly applied one.

[Invader]

The price of chocolate is comparable to that of music because chocolate is a consumable resource... It requires more time, more labor to produce, and once it's gone you are required to produce more if you wish to have more. Music, on the other hand, does not go away after one sitting.

[Alric]

I hate the bailouts, however for the companies that repaid them already, I have a little respect for them. Because at least they are not just sucking money out of the system for waste. As for every other company that either isn't or doesn't have to pay back the money any time soon, well they should just die. It may lose jobs, but nothing is more a drain on the economy than paying people to do nothing, or in this case, paying them to waste money.

[Spartiate]

I hate the bailouts, however for the companies that repaid them already, I have a little respect for them. Because at least they are not just sucking money out of the system for waste. As for every other company that either isn't or doesn't have to pay back the money any time soon, well they should just die. It may lose jobs, but nothing is more a drain on the economy than paying people to do nothing, or in this case, paying them to waste money. So what do you propose to do with a million jobless people? Would you rather pay for their welfare and really have them sitting at home doing nothing?

[Alric]

No you don't give them welfare either. They just go jobless until they find a new job. Eventually they will find work. Bailouts don't actually fix the problem anyway, it just pushes the problem under the rug, and we act like its not a problem. Until 5 years later, when we have to bail them out again. Most of the companies that got in trouble, have received government money in the past. Banks are always getting bailed out. They been getting bailed out since a 100 years ago. If they make stupid mistakes, they need to fail.

[Spartiate]

No you don't give them welfare either. They just go jobless until they find a new job. Eventually they will find work. Bailouts don't actually fix the problem anyway, it just pushes the problem under the rug, and we act like its not a problem. Until 5 years later, when we have to bail them out again. Most of the companies that got in trouble, have received government money in the past. Banks are always getting bailed out. They been getting bailed out since a 100 years ago. If they make stupid mistakes, they need to fail. Do you really think that the 2008-2009 economy was in any shape to accommodate hundreds of thousands of jobless looking for new employment? No, everybody was laying off. Two years later and it's still hard to find a new job. How many people, with houses, spouses and children to take care of, can go 2+ years without any sort of income? I agree bailouts suck, but here there really wasn't any other option. That's the problem with companies that grow that big, the local economy can't afford to lose them. There are entire cities of millions of people built around a few monster companies. I don't know if you've been to Detroit lately, but it's bad enough as is, I can't imagine what would've happened if GM/Ford had ceased to exist. What should happen is that the government (read people) should have an active role in the restructuring of the companies it bails out to prevent the need for future ones.

[Descensus]

It is, but I feel it is a wrongly applied one. What do you think is an example of a correctly applied policy? Not temporarily... If Ford/GM would have gone down for good, that's several hundreds of thousands of jobs (not just in the US actually) that would have been lost in one go. In the time it would take for an upstart American company to grow the massive infrastructure that would require as many jobs as Ford/GM needed, the American automotive market would have long been gobbled up by Asian manufacturers. Unfortunately the nature of bailouts means the government is subsidizing the failure they more than likely caused. I think an important aspect of bailouts is that capital is being kept in incapable hands instead of moving to capable hands. You can assume what happens. The most important question, I think, is: how are the bailouts going to be financed? It's typically through three ways such as inflation, borrowing, or taxation. Yeah, it will hold a recession off for a while, but it will also hold the necessary corrections off, prolonging a downturned economy and thus hurting everyone. At this point there is no way to get out of losing jobs. However, would you rather lose jobs for a short amount of time or a long amount of time? The reason business in China is cheaper is because you can get away with paying poverty-level wages there. The reason it's more "efficient" is because standards are iffy at best. What do you mean "get away with?" In a study of wages and working conditions in developing countries, economists Benjamin Powell and David Skarbek found that the textile sweatshops derided by rich westerners offer higher wages and better working conditions than the alternatives in very poor countries. People in developing countries need more sweatshops rather than fewer. --- Finally, when it comes to a firm's production decisions, wages are not all that matters. Firms will invest in inputs — say "unskilled labor" and "skilled labor" — until the ratio of the marginal products of the factors to the prices of the factors are equal for all inputs. If an American worker earns $30 per hour while a Chinese worker earns $1 per hour, this is not by itself sufficient to show that investing in China is in a firm's best interests. If the American worker can produce 120 units of output in an hour while the Chinese worker can only produce two, then producing the good in the United States is actually cheaper. Each unit produced in the United States costs twenty-five cents, while each unit produced in China costs fifty cents. (I understand this looks like it contradicts my statement that it is cheaper to produce outside of a given country, but I was speaking more towards how capital may be transferred to more capable hands outside of the country, thus making labor/business cheaper and more efficient). -- In a forthcoming article in the Journal of Labor Research Ben Powell and David Skarbek present the results of a survey of "sweatshops" in eleven Third World countries. In nine of the eleven countries, "sweatshop" wages in foreign factories located there were higher than the average. In Honduras, where almost half the working population lives on $2/day, "sweatshops" pay $13.10/day. "Sweatshop" wages are more than double the national average in Cambodia, Haiti, Nicaragua, and Honduras. The implication of this for all those naïve college students (and faculty) who have been duped into becoming anti-sweatshop protesters is that they should support and encourage more direct foreign investment in the Third World if they are at all concerned about the economic wellbeing of the people there. It is never the workers in countries like Honduras who protest the existence of a new factory there built by a Nike or a General Motors. The people there benefit as consumers as well as workers, since there are more (and cheaper) consumer goods manufactured and sold in their country (as well as in other parts of the world). Capital investment of this sort is infinitely superior to the alternative – foreign aid – which always empowers the governmental recipients of the "aid," making things even worse for the private economies of "aid" recipients. Market-based capital investment is always far superior to politicized capital allocation. Moreover, if the foreign investment fails, the economic burden falls on the investors and stockholders, not the poor Third World country. During the socialist calculation debate of the early twentieth century, one of the responses that Ludwig von Mises made to the "market socialists" was that it could never be sufficient to simply read the Wall Street Journal and use the prices for inputs and other goods as revealed in the capitalist countries in order to make socialism work, as they contended. As important as private property and market-driven prices are to capitalism, another necessary ingredient for capitalist success is a culture of entrepreneurship, management, risk taking, marketing, financial know-how, and other skills that have developed over several hundred years in the capitalist countries. Without this, the market socialists could only play at pretend-capitalism. Another virtue of foreign investment in the Third World is that it has the potential of transferring such knowledge to countries where it previously did not exist – or at least was not very prevalent. It is not only technology that the poor countries need, but the culture of capitalism. Without it they will never dig their way out of poverty. The existence of foreign factories in poor countries also creates what economists call "agglomeration economies." The location of a factory will cause many businesses of all types to sprout all around the factory to serve the factory itself as well as all of the employees. Thus, it is not just the factory jobs that are created. Furthermore, a successful investment in a poor country will send a signal to other potential investors that there is a stable environment for investment there, which can lead to even more investment, job creation and prosperity. Capital investment in poor countries will cause wages to rise over time by increasing the marginal productivity of labor. This is what has occurred since the dawn of the industrial revolution and it is occurring today all around the world. Discouraging such investment, which is the objective of the anti-sweatshop movement, will do the opposite and cause wages to stagnate.

[Thatperson]

No you don't give them welfare either. They just go jobless until they find a new job. What about when they don't have enough moeny for food/heating and start stealing? As much as I understand the grievance workers have with those on welfare, I'd rather live in a society where i'm slightly less well off but don't feel the need to sleep with one eye open due to an unstable society with high crime rates.

[Spartiate]

At this point there is no way to get out of losing jobs. However, would you rather lose jobs for a short amount of time or a long amount of time? I don't think the bailouts were meant to delay the recession, but to prevent an unsustainable job loss. Sure there were some layoffs everywhere like in any recession, but had all those big companies gone down, we're talking about hundreds of thousands of jobs lost all at once. That's enough to kill off cities and industries, resulting in more jobs lost and a downwards spiral. Now what are you supposed to do with a million unemployed people and no job openings. Also when you bail out a company, I don't see why it should return to its original, unsuccessful practises. If there's nothing to prevent this, then the system falls short on this point. What do you mean "get away with?" I mean that the wages there are considered both unacceptable and illegal in North America. In other words, there's nothing we can do to compete with the "cheapness" there, unless we roll back the minimum wage to industrial revolution levels. This just illustrates how jobs lost to the third world are lost for good.

[Supernova]

^This. Everyone's gotta be willing to give a little to improve their country (and THAT INCLUDES THE RICH DAMNIT)

[Descensus]

I don't think the bailouts were meant to delay the recession, but to prevent an unsustainable job loss. Well obviously they weren't meant to delay the recession. They were meant to stop job loss which, according to government shills, would cause some massive recession. Therefore they kept bailing everyone out and trying to keep the housing bubble inflated. What they don't realize is that their practices (specifically the Federal Reserve's practices) lead to the bubble via malinvestment, artificial wealth, and inflation, and a recession came about via the market attempting to correct the inequalities. Policy makers always look at the affects on a single group or the short-term consequences without looking at the affects on everyone or the long-term consequences. Sure there were some layoffs everywhere like in any recession, but had all those big companies gone down, we're talking about hundreds of thousands of jobs lost all at once. That's enough to kill off cities and industries, resulting in more jobs lost and a downwards spiral. Now what are you supposed to do with a million unemployed people and no job openings. You have hard times for a bit while the market corrects the inequalities. Unhampered market corrections do not last anywhere near as long as hampered corrections (as in, when the government reacts). Take a look at the 1920-1921 recession, which was worse than the first years of the Great Depression, yet lasted only a year since the government did very little. Then look at the Great Depression which really didn't fully end until around 1946! Also when you bail out a company, I don't see why it should return to its original, unsuccessful practises. If there's nothing to prevent this, then the system falls short on this point. The government is essentially subsidizing the company's failure by giving it money to stay afloat. When you subsidize something, you get more of it. Hence, more poor practices. I mean that the wages there are considered both unacceptable and illegal in North America. In other words, there's nothing we can do to compete with the "cheapness" there, unless we roll back the minimum wage to industrial revolution levels. This just illustrates how jobs lost to the third world are lost for good. Did you read the article snippets I posted? They seem unacceptable to us because our wages are pushed up by inflation and mandated wages (minimum wage), AND because our economy is still relatively privately-owned, which increases the general prosperity and raises wages. That is not so much the case with third-world nations. ^This. Everyone's gotta be willing to give a little to improve their country (and THAT INCLUDES THE RICH DAMNIT) What if they're not willing?

[Universal Mind]

Everyone's gotta be willing to give a little to improve their country (and THAT INCLUDES THE RICH DAMNIT) Is more than 50% of a millionaire's income "a little"? The rich are not the people to bitch at for not giving enough. They are the biggest tax payers and the biggest job creators. There are plenty of people who don't create jobs and don't pay taxes to bitch at.

[Spartiate]

You have hard times for a bit while the market corrects the inequalities. Unhampered market corrections do not last anywhere near as long as hampered corrections (as in, when the government reacts). Take a look at the 1920-1921 recession, which was worse than the first years of the Great Depression, yet lasted only a year since the government did very little. Then look at the Great Depression which really didn't fully end until around 1946! You haven't answerd me though, what are you supposed to do with a million unemployed people. Nobody's hiring so most of them will end up sitting at home. Welfare isn't enough to support a family used to mid-range incomes. Besides, if you pay them welfare, wouldn't it have been a better idea just to have bailed out the company and keep them working? Also I think it's fair to say that the worst (if not all) of the recession is behind us, so all in all it was pretty short. I'm sure government intervention had a part in this. The government is essentially subsidizing the company's failure by giving it money to stay afloat. When you subsidize something, you get more of it. Hence, more poor practices. The government isn't just throwing money at the bankrupt company though, it's taking temporary ownership of it. It should have the power to appoint new executives and guide the company away from its unsuccessful practises. Did you read the article snippets I posted? They seem unacceptable to us because our wages are pushed up by inflation and mandated wages (minimum wage), AND because our economy is still relatively privately-owned, which increases the general prosperity and raises wages. That is not so much the case with third-world nations. Yes I did read the article, but that's not what I'm arguing about. The prices of our products and services are also inflated over time, nobody here can survive on 1$/h wages. Even minimum wage will barely get you by if you can split costs and you don't have anybody to support. So since the price of living is so high here, we will never be able to compete for cheap labour with the third world. What I'm trying to say is that labour in the third world isn't cheaper because we're doing something wrong, unless you're prepared to reduce your standards of living to third world levels. The original point that I was trying to make though was that if a large North American company goes bankrupt, foreign companies will fill in the gap before any upstart local company can grow the infrastructure necessary to recoup all jobs lost. Therefore the net amount of jobs in the country goes down. What if they're not willing? Then they should give up their citizenship and go live a subistence existence in the wilderness. We no longer live in the Stone Age and we have a social contract amongst ourselves to keep society running.

[Descensus]

You haven't answerd me though, what are you supposed to do with a million unemployed people. What are they, small children? What do you mean "what are we supposed to do?" Nobody's hiring so most of them will end up sitting at home. Well to say "nobody is hiring" is a bit erroneous considering some industries flourish in recessions. You also assume they will not get jobs elsewhere. Welfare isn't enough to support a family used to mid-range incomes. Besides, if you pay them welfare, wouldn't it have been a better idea just to have bailed out the company and keep them working? No because then you're prolonging the serious affects and the market corrections. Plus you're using other people's money. I have explained this multiple times. Also I think it's fair to say that the worst (if not all) of the recession is behind us, so all in all it was pretty short. I'm sure government intervention had a part in this. And you would be wrong to say the worse of the recession is behind us. "The coyote catches a tree limb sticking off a cliff and MSNBC celebrates that he is no longer falling." The government isn't just throwing money at the bankrupt company though, it's taking temporary ownership of it. It should have the power to appoint new executives and guide the company away from its unsuccessful practises. So you're advocating socialistic policies now? Yes I did read the article, but that's not what I'm arguing about. The prices of our products and services are also inflated over time, nobody here can survive on 1$/h wages. Even minimum wage will barely get you by if you can split costs and you don't have anybody to support. So since the price of living is so high here, we will never be able to compete for cheap labour with the third world. What I'm trying to say is that labour in the third world isn't cheaper because we're doing something wrong, unless you're prepared to reduce your standards of living to third world levels. Labor in the third world is cheaper because they are typically not developing on the same level as we are, I agree. But I am not only speaking about third world. I believe I said outside the country where better business opportunities may exist, leading to lower costs and efficiency than in the U.S. You are the one talking about the third world. The original point that I was trying to make though was that if a large North American company goes bankrupt, foreign companies will fill in the gap before any upstart local company can grow the infrastructure necessary to recoup all jobs lost. Therefore the net amount of jobs in the country goes down. For the time being yes. After the markets correct, businesses may return if an capital can be efficiently allocated here and the risk is good enough for them. For the time being they may find it better to expand outside the country. What I say to that is: good for the country getting the business. Their economy will be better for it. Then they should give up their citizenship and go live a subistence existence in the wilderness. We no longer live in the Stone Age and we have a social contract amongst ourselves to keep society running. What if they aren't willing to go live in the wilderness? And the social contract argument is so old and so fallacious. I never signed or agreed to any contract, nor did most people. Besides, the most important part of the social contract theory is that if a group or individual is not satisfied with the contract they may exit or abolish it. If you say "oh well that's stupid; they can't leave because they agreed to the social contract by living in our society" then I suggest getting some rest and think about how ridiculous that is.

[Supernova]

Is more than 50% of a millionaire's income "a little"? The rich are not the people to bitch at for not giving enough. They are the biggest tax payers and the biggest job creators. There are plenty of people who don't create jobs and don't pay taxes to bitch at. Don't deny that the top of the top pay a hell of a lot less than they could. I mean, think about it, what's gonna happen if Jerry Seinfeld can only put 10 cars in his garage? (not picking on Jerry, it's just an example). That doesn't apply just to celebreties, either, don't get me wrong. Some are very generous, a lot aren't. Take the situation in NJ, where Christie is making huge cuts to school budgets (my school is one of those, next year we will have to drop freshman sports and nearly all clubs and activities, as well as laying off a considerable number of teachers and other employees). Just today I was told, by someone who would know about the matter, that Christie also decided against a tax on those who make 400k+