I have some convincing reasons, mostly based on the idea that competition in a free-market is a rivalrous, dynamic, and entrepreneurial process. Basically, markets lead to specialization rather than centralization, and just one technological innovation can radically switch the distribution of wealth and make certain products and services completely obsolete.
But besides that, my argument is kinda bare. Any help would be appreciated, as I'm currently in a debate with my professor and some students.
Oh, and one more thing. I said that, even if wealth centralization did occur, giving a ton of power to another centralized monopoly doesn't exactly seem like a solution to that problem. Sounds like a fair point, right?
Thanks, guys.
Private armies just for the hell of it?
Check this out:
100 * (40000 + 300) + 10*500*2 + 2*2000 + 5 * (40000 + 200) = $4.25 million
Break it down:
100 soldiers at $40,000 per year whose weapons, armor, and ammo cost 300 per year for upkeep.
10 vehicles which drive 500 miles at $2/gallon.
Two vehicles need upkeep per year
5 support units in base handling stuff at $40,000 per year and $200 upkeep of equipment
Total of $4.25 million per year
Rough calculations that likely underestimate costs.
That's really expensive!
I don't know what their argument is, but one could argue that capitalist markets necessarily lead to the centralization of capital. Standard business cycle, actually.
An employer hires people at a wage or salary less than that the employer receives for the product (meaning they make a profit). As this continues, employers begin producing until there is less demand than there is supply, lowering prices, wages, and number of employees (the bust part of the cycle), leading capitalists to hold on to the capital they have rather than exchange it at a lower value. Keep it going for a minute and you've got a class that's held onto a lot of capital and a class that has not, that is if wage labor is still the predominant mode of employment.
employers begin producing until there is less demand than there is supply
And why would they do this?
lowering prices, wages
I thought the problem was sticky wages...
Aaaand we ignore ABCT...
"And why would they do this?"
Because no one has a crystal ball that tells them prices are about to fall. You produce, and you keep producing until you quit profiting from producing. When profits fall, you change stuff or risk over-production. Regardless, this generally leads to lower wages and capital investments, meaning people are holding onto the capital they have.
Wrong. You produce in accordance to the information gleaned from your balance sheet and also what you determine to be the future of the market.
The Anarch is to the Anarchist what the Monarch is to the Monarchist. -Ernst Jünger
And there would be a coordinated overproduction at the same exact time?
This is pretty basic and general stuff, ya'll. Overproduction was the wrong word to use. It's a technical word that means a very specific thing, and that was my bad. But seriously, it goes like this:
Employer pays an employee less than the yield for the product they make. That's the way profit works. When they stop making enough profit, or think they will, from whatever they're producing, they cut wages, investments, whatever to maintain profits or protect themselves against whatever drop will happen. This leads to less investment not only in capital, but in labor, meaning laborers have less money in their pockets for commodities or capital and capitalists have a bunch of capital they're not moving around.
When your economy's main mode of production is wage labor this is bound to happen. When there's not enough people willing to work for less than the yield of the product they're making, then employment becomes less important or non-existant. There needs to be some centralization of capital in order for capitalism to function.
You're correct in that it's the way that profit works. Yet employers can't just cut wages. Those have a supply and demand as well. If the employer could cut wages, why didn't he do it in the first place?
Birthday Pony:Employer pays an employee less than the yield for the product they make. That's the way profit works.
Profit doesn't require employees. It occurs any time a business' revenues exceed its costs.
Birthday Pony:When they stop making enough profit, or think they will, from whatever they're producing, they cut wages, investments, whatever to maintain profits or protect themselves against whatever drop will happen. This leads to less investment not only in capital, but in labor, meaning laborers have less money in their pockets for commodities or capital and capitalists have a bunch of capital they're not moving around.
And? You don't think resources - including capital - will be reallocated to other, presumably more profitable, areas?
Birthday Pony:When your economy's main mode of production is wage labor this is bound to happen. When there's not enough people willing to work for less than the yield of the product they're making, then employment becomes less important or non-existant. There needs to be some centralization of capital in order for capitalism to function.
Something tells me that you're using your own definition of "capitalism" in a thread where nearly everyone else is using another, different definition. Do you think this is wise?
The keyboard is mightier than the gun.
Non parit potestas ipsius auctoritatem.
Voluntaryism Forum
Wheylous,
"Yet employers can't just cut wages. Those have a supply and demand as well. If the employer could cut wages, why didn't he do it in the first place?"
That's one of the most bizarre things you've ever said. Who then cuts wages?
When demand for a product goes down, so does the demand for the labor needed to make it. Or is this all executed by a magical invisible hand?
Autolykos,
"Something tells me that you're using your own definition of "capitalism" in a thread where nearly everyone else is using another, different definition. Do you think this is wise?"
I think it's clear enough that I'm using capitalism to mean "an economy in which wage labor is the predominant mode of employment." If you or anyone else are confused, I'm more than willing to clarify. If the OP does not think that wage labor will be the predominant mode of employment in capitalism, I'd love to hear why. I do not intend to obscure or derail the thread by using an obtuse definition. If anyone needs clarification, please, just ask.
"And? You don't think resources - including capital - will be reallocated to other, presumably more profitable, areas?"
Yes, it's quite possible that it will. However there's little reason to believe that class structure, by which I mean a very basic division between employers and employees and nothing more, will be done away with, meaning its very hard to imagine that laborers or anyone other than other employers will be able to invest in capital. My concern is not with the concentration of wealth in X's hands, but the concentration of wealth generally amongst groups, enough so to see a general division where there's a group that tends to own the workable capital and a group that tends to sell their time for a living.
demand for a product goes down
I'm sorry, when did we say there was a demand shock?
And again, you failed to say how there is a massive, coordinated overproduction of goods. If an employer happens to overproduce that doesn't mean that everyone does so at the same time (unless, of course, there are monetary issues which in that case affect everyone).
*face palm*
You just don't listen, huh? Try again and if the economics of the situation still confuse you I can hold your hand through it.
I'm trying to understand the Austrian position. Are you saying that recessions don't occur? Aggregate demand doesn't fall? The average rate of profit doesn't fall?
Please do, then
Are you saying that recessions don't occur?
Economy-wide busts do not happen in a market without manipulation of th emoney supply to cause interpemporal miscoordination. I assume you've read the ABCT?