Capitalism is fundamentally Flawed(Logically?) Discussion with Rob Huesdens

 

Welcome to the forums Rob, our newest Marxist member. 

It seems strange to me that people continue to expouse this notion that capitalism has an intrinsic flaw which is this supposed class struggle.  The capitalists obtain profits by exploiting the workers, and the workers slowly lose their piece of the pie.  Not only does this fly in the face of all pre-World War II (pre-modern welfare state, in other words) empirical evidence on real wages, but it's difficult to see how one can simply ignore how vastly more wealthy capitalism has actually made the lowest income quintiles.  Not only has health generally improved by several magnitudes (health expectancy, for example, grew by at least a half by the Second World War, compared  to that of the late-19th century), but the sheer amount of economic goods a low-income worker can afford compared to a similar worker one hundred years ago is truly outstanding.  The wealth of today is directly attributable to capitalism, and as such without capitalism the worker would not be nearly as wealthy as he is today.

Can someone post me data of pre-WWII real wages and poverty?And post wwII consumption

Someone tried to tell me that LBJs great society programs helped with poverty and looking at the data its too easy to draw that conclusion.

Pentahedron,

I am working on a compilation of data on real wages and productivity between 1870 and 1894, and so this will be made available somewhere and soon.  Also, I recall finding information on real wages during the 1920s in Tom DiLorenzo's book, How Capitalism Saved America, but I don't have time to look through it now.  What I remember is that the rate at which worker's wages were rising at the time was many times higher than that of capitalist profits.  In fact, the longest period (or, at least, one of the longest periods) of a sustained fall in real wages has occurred over the past forty years.

The logical error in your argument is that you attribute the wealth of the lower incomes to the system of capitalism, while at the same time you argue that in fundament the post-www2 government is socialst, so that these benefits of workers can (and which can be historically proven) only be attributed to socialism. If it were for capitalism, we would still have 6day work weeks with 12 hour workdays for both men, women and children. The capitalists, as we now, did nothing to abolish that, and acted and voted against any such progressive labor laws.

The logical error in your argument is that you attribute the wealth of the lower incomes to the system of capitalism, while at the same time you argue that in fundament the post-www2 government is socialst, so that these benefits of workers can (and which can be historically proven) only be attributed to socialism. If it were for capitalism, we would still have 6day work weeks with 12 hour workdays for both men, women and children. The capitalists, as we now, did nothing to abolish that, and acted and voted against any such progressive labor laws.

So you think banning people from being able to work long hours if they want to is doing them a favor?  Did you ever think that maybe people don't work as long anymore because they don't need to, because their productivity is higher (thanks to that damnable accumumated capital structure)?

Rob Heusdens:

If it were for capitalism, we would still have 6day work weeks with 12 hour workdays for both men, women and children. The capitalists, as we now, did nothing to abolish that, and acted and voted against any such progressive labor laws.

Who are the "capitalists" and who are the "workers"? Pls make this distinction in the following cases: (1) An employee of corp XYZ owning 2% of all XYZ shares in his portfolio, (2) The CEO of corp XYZ owning 0.5% of all XYZ shares, (3) An employee of XYZ owning 1% of shares in ten other companies,  (4) An unemployed person owning 1% shares in ten companies, and (5) an unemployed person owning no shares. Pls go by the numbers and mark each by either "capitalist" or "worker". 

Finally, if being a "capitalist" was such a sweet gig, how about you stop whining and start saving up from your paycheck or borrowing and starting the gig for yourself? The more brutal and exploitative the other capitalists are, the larger the window of opportunity for you to jump in and attract/steal the most talented employees from them by offering them less "exploitative" terms. Everybody wins: The brutal and greedy capitalists go bust, while the decent ones (like yourself) would prosper, and employees would become better treated and richer allowing them to save up and enter the "capitalist" gig for themselves, thus furthering this positive feedback cycle. 

Waidaminit! I think this is exactly what's already going on. Sorry we weren't the first ones on this. 

It certainly was a progression that labour laws were in place, and it is a fundamental misunderstanding to claim that people worked that long days because they wanted too. They had nothing to choose, either accept an underpayed job for long hours, or face miserable poverty, hunger, etc. What choice did they have? It can be attested that in the early days of capitalism (when there still was a "pure" capitalist system, without interventions from the governent) wage labour was even worse as slave labour.

Socialism as a movement emerged as the opposition against such capitalist exploitation and repression, and the succesfullness of that struggle we benefit from still today, because there is the right to vote for men and women, there are labour laws that protect the labourer against inhumane working conditions and brutal exploitation, etc. Nothing of that, what we now commonly attribute to human rights, existed at the emerge of capitalism, and if it had been for the capitalists themselves, there would have never be such labor laws and human conditions, since they acted and voted against all such rights and benefits for laborers.

Your question is nonsensical, the 12 hour workday is a thing of the past, in which there WAS a clear distinction between worker and capitalist. Workers had for certaion no shares in corporations in those days. All they got was their labour force, and they could only rent themselves to the capitalist and accept the miserable  working conditions, or die in the street. That were the choices.

Things are different now, but that is beside the topic.

Rob Heusdens:

Things are different now, but that is beside the topic.

What's the topic, then? What's your problem today? Or do you propose that we discuss/solve the "problems" of the past?

<<< What's the topic, then? What's your problem today? Or do you propose that we discuss/solve the "problems" of the past? >>>

We were not discussing solution, you just made a remark about workers and capitalist in the early days of capitalism, which was out of context, since at that time there was a clear distinction between the two. The only thing to be solved was your misunderstanding of that.

[edit] You can quote users with [$quote user="NAME"$] without the $ signs.

Rob Heusdens:

They had nothing to choose, either accept an underpayed job for long hours, or face miserable poverty, hunger, etc. What choice did they have? It can be attested that in the early days of capitalism (when there still was a "pure" capitalist system, without interventions from the governent) wage labour was even worse as slave labour.

This is empty fear mongering. It flies of evidence and theory. The iron law of wages has been disproven for so long its ridiculous.

If you actually look at the statistics, real wages double from 1819 to 1850, and the working week falls across the board continously even before government intervention into the economy. Despite what is commonly assumed, coal miners worked around 40hrs/week. This confirms that there IS competition between greedy capitalists for laborers. You have to offer workers better working conditions than what they already have, so we should expect a systematic increase in the standard of living for everyone.

Regardless, even if labor conditions never improved, it was not a controlled experiment. We had millions of immigrants flooding the market with cheap labor. No modern nanny-states open their borders to millions fleeing poverty and war. Capitalism clothed and fed this many refugees, more than any government has ever done. The socialist countries idealized by leftists have closed borders and ethnically homogenous populations. They are de facto racist good old boy clubs. See here for more analysis.

Rob Heusdens:

Socialism as a movement emerged as the opposition against such capitalist exploitation and repression,

No it arose because people don't understand economics or political philosophy. Its also a response to MERCANTILISM, not true capitalism, which is characterized by self ownership and homesteading rights.

Moreover, there is no direct conflict between socialism and capitalism. You can form organizations and co ops voluntarily with your socialist buddies. You just can't go and attack everyone else because you think you own their means of production. Socialism is a very sorry system indeed if it cannot persist peacefully.

Rob Heusdens:

because there is the right to vote for men and women

Democracy is a spectacular failure. This is simply more pandering the proletariat masses who, in a democracy, do not bear the costs of having bad political opinions.

Rob Heusdens:

there are labour laws that protect the labourer against inhumane working conditions and brutal exploitation, etc.

And you conveinently ignore all the other ways in which workers are exploited BY laws. Basically every major industry in the United States is in partnership with the government to keep competition out so they can have government granted monopolies in their industries. Tobacco, medicine, defense services, education, insurance, steel, agriculture. If you can find a good industry, like technology, it is good because there is international competition inhibiting the effectiveness of a partnership between corporation and state.

Rob Heusdens:

Nothing of that, what we now commonly attribute to human rights, existed at the emerge of capitalism

Empty statement. Provide statistics showing that there were no "human rights" and that this condition would persist. You are guilty of pessimistic anti market bias in assuming that things can't get better over time. Above I cited evidence that things DID in fact get better over time...

Just a question to probe your knowledge of US economic history, how did health insurance come to be a service provided by employers?

Rob Heusdens:

and if it had been for the capitalists themselves, there would have never be such labor laws and human conditions, since they acted and voted against all such rights and benefits for laborers.

Capitalist exploiters do not vote at the polls :P. If they did it would be pointless because they do not have the numbers to advance their class interest by voting. Instead they simply bribe democratic governments to make rules in their favor.

Democracy is especially susceptible to special interest groups. If there's a policy that will cost every american $1 but put $10,000,000 in the pockets of a few executives, who is going to fight it? If the average voter spends one hour trying to organize and fight the policy, he is working for $1/hr. The execs are going to work much much harder to try and get the bill passed. It is a collective action problem that repeatedly fails to be solved because it is so easy to co opt democratic governments.

I can't even tell you where to start on political theory though... government has got to be about the worst way to oragnize society because you are making whichever group has political power (majority, king, etc) judge in its own case. There can never be any check against government power. A bill of rights or constitution is unenforcable because the government will not rule against itself systematically.

If your ideal system, maybe it is democratic socialism, cannot persist peacefully on a free market, it is pretty pathetic. People have a choice between forming democratic co ops and working for the capitalist "exploiters", and still choose the latter. If you have to use aggression to get what your system, its probably not what people want...

ABCT = Association for Behavioral and Cognitive Therapies?

Austrian Theory of the Business Cycle.

Rob,

The logical error in your argument is that you attribute the wealth of the lower incomes to the system of capitalism, while at the same time you argue that in fundament the post-www2 government is socialst, so that these benefits of workers can (and which can be historically proven) only be attributed to socialism.

You misread my post.  Since the beginning of the modern welfare state real wages for workers have decreased.  As such, a decrease in real wealth is also attributable to interventionism (I wouldn't go as far as to call it socialism).

If it were for capitalism, we would still have 6day work weeks with 12 hour workdays for both men, women and children. The capitalists, as we now, did nothing to abolish that, and acted and voted against any such progressive labor laws.

This is absolutely untrue, for the most part.  While a number of labor laws did make life more convinient, to some degree, unfortunately introducing these laws early made the costs high.  For example, laws against child labor limited a family's ability to earn extra income.  Children worked not because they were forced to, but because given the relatively low incomes of the early U.S. industrial revolution families usually needed their children to add to it.

However, as I write in something I'm working on, high economy growth during the final thirty years of the 19th century lowered the opportunity cost of leisure.  This allowed the literacy rate of not only the white population, but the black population, to rise meteorically.  Furthermore, it allowed the division of labor to further specialize, which directly led to the beginning of the medicinal field (which would lead to the ability to cure innumerable diseases which have plagued mankind for centuries, but now are no longer even relevant to our daily lives).  The period between 1879 and 1893 represents the greatest increase in real wages the United States worker has ever seen.  A second period of mass industrialization during the mid-1950s and early-1960s may have also contributed to a rise in real wages, but since the early-1970s the standard of living has actually fallen (of course, counteracted by a facinating increase in technology, including the computer-sector... no one can deny the value of that).

So, I would go as far as to claim that the  "logical error" in your argument is that you have absolutely no idea on the source of wealth.  You cite the 12-hour workday.  This is not a source of wealth.  This is a contribution of wealth, which allowed the marginal utility of extra wages to fall far enough to allow individuals to forego work for leisure.

@John

Oh cool can't wait to see them. In the mean time I heard Gordon Fishers "Estimates of the Poverty Population under the Current Official Definition for Years before 1959" could help with getting a good grasp on the situation since the census bureaus information start only at 1959 IIRC.

Karl Marx and the Close of His System

Rob Heusdens:

The logical error in your argument is that you attribute the wealth of the lower incomes to the system of capitalism,

Can you explain the logical fallacy I am commiting in my logical error?

Rob Heusdens:

If it were for capitalism, we would still have 6day work weeks with 12 hour workdays for both men, women and children.

Can you back up that assertion? Logically it does not follow, if "capitalists" over-work their employers they will leave and work elsewhere. Can you prove to us that employee's will not leave their place of employment to more attractive opportunities?

"ABCT = Association for Behavioral and Cognitive Therapies?"

When this is what you have as a comeback to a thorough response after throwing out half a dozen cliches and a few sentences of actual argumentation then you know that you've just been owned.

Rob Heusdens:

We were not discussing solution, you just made a remark about workers and capitalist in the early days of capitalism, which was out of context, since at that time there was a clear distinction between the two.

If the distinction is not clear today, what is your point?

 

 

<<< f the distinction is not clear today, what is your point? ???

I might ask as well what is your point? I mentioned workers/capitalist in the early days of capitalism when both are clearly distinct. The distinction still exist today but is less distinct.

Rob, no point. Have a nice day. 

Rob, no point. Have a nice day.

It's going to take at least a couple hundred years, but the Marxists will finally come to on the whole free market thing.

I might ask as well what is your point? I mentioned workers/capitalist in the early days of capitalism when both are clearly distinct. The distinction still exist today but is less distinct.

Im not sure the distinction between capitalists and workers in the past is as clear as you would like it to be.  For example farmers are capitalists.  Then and now.  They own their land and equipment.  They are also workers.  They provide most of their own labor.  In the 1800's most people in the US made a living farming.

For some reason I think you picture the past a highly urbanized world, where everyone lived in a city and worked in a factory and lived in filth.  While a few lucky ones stayed on the farms and lived a peaceful idealized life.  This is not the case.  For most of our history the US has been very, very rural. and most lived and worked on farms.  Farm life was hard.  You worked all day in the heat and cold.  The work was tedious, backbreaking, dirty, just all around miserable.

This is why people left the farms to work in factories.  Factories with all their short comings were better than working on the farm.  Capitalism in action.  People left the jobs they found distasteful and lacking (farming) and took jobs that were marginally better (factories).

<<< Im not sure the distinction between capitalists and workers in the past is as clear as you would like it to be. For example farmers are capitalists. Then and now. They own their land and equipment. They are also workers. They provide most of their own labor. In the 1800's most people in the US made a living farming.

For some reason I think you picture the past a highly urbanized world, where everyone lived in a city and worked in a factory and lived in filth. While a few lucky ones stayed on the farms and lived a peaceful idealized life. This is not the case. For most of our history the US has been very, very rural. and most lived and worked on farms. Farm life was hard. You worked all day in the heat and cold. The work was tedious, backbreaking, dirty, just all around miserable.

This is why people left the farms to work in factories. Factories with all their short comings were better than working on the farm. Capitalism in action. People left the jobs they found distasteful and lacking (farming) and took jobs that were marginally better (factories). >>>

This is not true as there were many places were the work on the farm was done by workers who didn't own the farm.

 

[EDIT: nvm, confused by the lack of quotes.]

<<< You misread my post. Since the beginning of the modern welfare state real wages for workers have decreased. As such, a decrease in real wealth is also attributable to interventionism (I wouldn't go as far as to call it socialism). >>>

This is true for USA since the 70-ies, indeed. I would that sort of intervention not attribute as a kind of socialist measure, it clearly is a state intervention that would only benefit the capitalist system.

See this video's by professor Wolff (Marxist economist).

http://vimeo.com/1962208

http://fora.tv/2010/03/03/Richard_Wolff_Capitalism_Hits_the_Fan

Rob,

This is true for USA since the 70-ies, indeed. I would that sort of intervention not attribute as a kind of socialist measure, it clearly is a state intervention that would only benefit the capitalist system.

Err, you mean the growing social safety net?  Although, I agree that there has also been a lot of corporatism (this is not the capitalist system, mind you).

I'm still waiting on an actual logical critique of the "capitalist" system as previously promised. So far I've only seen interpretations of events by marxists and limited by their self-induced limited understanding of economics. The biased empirical evidence provided is then easily easily countered by other empirical evidence. But this is true of all empirical evidence isn't it. 

Most notably, the video Rob provided by David Harvey. An explanation of economics coming from a position of sheer economic ignorance. Perhaps the most comical part of the whole discussion is Rob fumbling over ABCT. On an Austrian forum he couldn't even be bothered to wiki. :(

Rob at what point are you actually going to attack the logic of capitalism as promised?

filc wrote

<<< We are in a credit crises simply because our central bank created one. Many here are adherence of the ABCT, and we in general believe it is the cause of our current financial problems. >>>

You mean the FED? Isn't that a privatized institution and despite it's name, not controlled by the federal government?

Would perhaps Federal control of the FED be a good idea?

huhu

Maybe it is the case that the LACK of STATE INTERVENTION here was the cause of this happening???

Oh no! 

Rob Heusdens:

You mean the FED? Isn't that a privatized institution and despite it's name, not controlled by the federal government?

Would perhaps Federal control of the FED be a good idea?

Use a little common sense. Is the Federal Reserve "Private" like Microsoft or Walmart is "Private"? Or has there been a conflation in understanding somewhere. :)

Does the Fed mimic the structure and behavior of a private institution of voluntary exchange/trade? Or does it mimic the coersive framework based off it's sponsoring big brother. 

You'll find that most people here consider the Fed as being a government in and of itself, or a branch of the US Gov just with limited transparency. It doesn't meet the definition of "private" in any way. If the Fed is "Private" then so is the military branch of the US Government.

<<< It's going to take at least a couple hundred years, but the Marxists will finally come to on the whole free market thing. >>>

I think the exact opposite happens and is already happening.

You mean the FED? Isn't that a privatized institution and despite it's name, not controlled by the federal government?

Yes, the same private institution who's monopoly on money and banking is guaranteed through Federal law.  The same private institution which actively colludes with government to finance public debt.  The same private institution which colludes with government to maintain inflation and employment targets.

I think the exact opposite happens and is already happening.

Mmm... NO.

 

Rob Heusdens:

You mean the FED? Isn't that a privatized institution and despite it's name, not controlled by the federal government?

Would perhaps Federal control of the FED be a good idea?

"Use a little common sense. Is the Federal Reserve "Private" like Microsoft or Walmart is "Private"? Or has there been a conflation in understanding somewhere. :)"

 Privatize the bureaucracy in formality only, then blame the private sector for the ills of socialism.  

It's amazing that a piece of paper that says "Private" and issued by the State is all that is required to fool nearly everybody.

Hitler made the grave mistake in not "privatizing" his death camps.  We'd have historians everywhere ranting about how the free market murdered 6 million Jews.

You mean the FED? Isn't that a privatized institution and despite it's name, not controlled by the federal government?

Would perhaps Federal control of the FED be a good idea?

huhu

Maybe it is the case that the LACK of STATE INTERVENTION here was the cause of this happening???

Oh no!

That is a strawman. In case you haven't noticed, I'd say nearly 100% of people who understand Austrian Economics are 100% against abolishing monopolies on money, such as the government protected federal reserve.

Instead of erecting a strawman, you could have just left it at a question.

I think the exact opposite happens and is already happening.

From what I understand of Marx, he said that there would be a larger and more distinct divide between capitalists and laborers as time went on. The opposite has happened, and there is now more of a continuum than ever. Was Marx wrong or right? Did capitalism make capital available to more people, or did it not? Why didn't this seperation and distinction intensify? Why is it that we didn't experience a proletariat revolution? How is it that most people own some forms of capital?

What is there to Marxist analysis other than a simple "good vs. evil" G.I. Joe narrative with a focus on materialism or distinction by material ownership? Every analysis that I've ever seen which uses his method points out the obvious and then introduces fallacies, and comes to a conclusion that we never see materialize.

Open question: Has Marx been right on anything?

P.S. I'm a worker who owns capital... or a capitalist, maybe. No, wait. I'm an intellectual like Marx, and transcend that whole distinction because I feel like it.

Felipe wrote:

<<< Mmm... NO. >>>

It certainly is. There isn't anywhere a form of unregulated capilism anymore, anywhere it happened, it was a big mess.

The current crisis will for sure cause more state control , not less.

'I think the exact opposite happens and is already happening.'

What is happening today is the continuation of 20th century social democracy. The intellectual advancement of Marxism is a floundering fish especially with the death of G.A. Cohen.