[ralfy]

However, while trade has existed since early in human history, it was not capitalism.

Come on Strum, you have to stick with your own argument which was

And in turn, that revenue depends on your customers' ability to pay. And that ability again depends on someone else's costs.

The customer's ability to pay doesn't come from some "outside source" as you previously argued, it comes from his production.

But as far as the latest wiki quote, of course trade was not always capitalism. Capitalism presupposes a need for productive assets such as machinery, etc. But as mentioned before they need private property protection and laws to protect them from oligarchs, monopolies, etc.

Actually, it does, because he can't earn unless he sells what he produces.

Also, productive assets lead to more production, and these assets are used because investors expect more sales from what is produced. From more production and sales, those who invest in productive assets expect to earn more. The earnings are eventually used to buy more productive assets or to spend more, which in turn involves other businesses buying more productive assets to meet more spending.

Finally, some types of capitalist systems involve state ownership of business while others involve the opposite of more regulations. In some cases, lack of regulation leads to something resembling monopolies.

[ralfy]

I think semantics is a big part, Kub. But as well is the belief that capitalism is bad. That i the entertaining part of the discussion.

If you ask Pete and Ralfy I think they would say capitalism is the mother of all evils and it's destruction is an existential priority, hece their unwavering belief that it will.

But behind the veneer and semantics, how much do you guys actually disagree with the meat and potatoes of a no growth economic system?

Basic value add:
1. Baker owns ovens.
2. Baker buys flour.
3. Baker turns flour into bread.
4. Baker sells bread in market.
5. Baker trades proceeds of sale for butter and other essential goods.
6. Baker uses some proceeds for oven maintenance.

Is this basic value add phase controversial? What about an expansion phase?

Expansion:
7. Baker uses sale proceeds to buy cow.
8. Baker uses milk from cow to make butter.
9. Baker now sells both bread and butter.
10. Baker puts former butter maker out of business.
11. Total GDP does not change. But individual businesses rose and fell.

Anyway, can you post some historic examples of capitalist economies which were not based on a rapidly expanding supply of natural resources or rapid population growth or exploitation of workforce outside the system? I don't think there are any.

Recessions?

In capitalist systems, the value added to the bread is the profit. Where does the buyer get the money to pay for the value added? What does the buyer do with the value added?

For the expansion phase, if the one who buys bread from the bread maker is the butter maker, then how will the butter maker buy bread when he is now out of business?

Finally, a recession is not an example of a capitalist system that doesn't require expansion. Rather, it is the effect of a capitalist system as it engages in rapid expansion, etc.

[ralfy]

The ability to *trade* comes from surplus.

The ability to *pay enough to actually create a profit* comes from the outside.

No, you just made that up.

In the simplest, the capitalist uses capital and the labor of one or several or a million wage earners (who work part of the day for themselves) to make a profit.

Marx pointed out that the true basis of capitalism is labor's willingness to work for a wage less than his total output. That I know we can all see everywhere around us in our co-workers and maybe even in ourselves. The capitalist risks loss, frets the pennies and sometimes comes out on top. The worker by and large punches the clock and goes home.

--About historical capitalist economies
I don't know one right off the bat, but then there are not a lot of examples of democracies with private property rights who weren't mercantilist either.

Where does the profit come from? Where is it used?

The "true basis of capitalism" is not simply wage labor but using the total output minus wage labor and other expenses and either spent or re-invested in the system. In short, capital accumulation.

Also, the worker does not simply work and go home. If the capitalist loses, then workers may be laid off. And because his wage is lower in value than what is produced, then he also loses because he is ultimately the buyer of what he produces.

Finally, even if we assume that all of these problems are resolved through some state capitalist scheme, the system will still eventually experience problems involving environmental damage, peak oil, etc., if human population and energy and material resource needs per capita increases.

[ralfy]

I think that trade in a no growth world and in a de-growth world is not only possible but the only way to not go through life eating grubs and wearing skins. Specialized work improves efficiency making greater surplus possible, surplus traded improves life. No big secret.

Greater surplus is growth.

"No Growth" per se is improbable simply because there will always be ups and downs of population, resources, etc.

It is also improbable in capitalist systems because they involve profits, which are either spent or invested.

The only thing capitalism adds is additional efficiency through scale.

Business do that because they want to make more profits. Otherwise, they would not bother.

More production, more sales, and more profits generated from such is growth.

It could be syndicalism, which achieves the same thing with worker ownership but we come back to the pretty obvious fact that not everyone wants to be an owner.

That's why, as explained to you earlier, there are different types of capitalism, and in several cases the type of owner does not matter. In all cases, there is profit and capital accumulation.

[ralfy]

But behind the veneer and semantics, how much do you guys actually disagree with the meat and potatoes of a no growth economic system?

I'd question you back kub, do you believe there is a possibility of a voluntary no-growth system?

The eternal undercurrent at PO.com has always been the sorta evilness of the human race, it's stupidity, greed etcetera. My "belief" on that question is not that we are inherently evil (Eve was a Babe and Adam just did what came natural) but that we have simply adapted our specific skills way to fast to know when to stop. I'm certain we have the capability and even the moral fibre to stop growth tomorrow, reverse CO2 and whatever other GHG emissions, pollutants in general, overpopulation and all the rest if we simply were to become convinced it was an existential crisis.

I'm also pretty sure we will not see that happen any time soon. I see lots of monster shouting but very few threads talking about drastic measures taken on an individual - any individual - level.

Such a system is possible, but it requires significant levels of education about peak oil, global warming, etc., coordination and cooperation, compassion, and even regulation among the global population.

The current global economy, which is capitalist, runs contrary to these.

[Pops]

It is funny, I think I first read the term Gish Gallop was in a post of yours. But that seems to have become your style. You make a point to disagree with every statement I make even when your argument agrees with my statement.

I said "When "invest" profit in a productive asset.. it [depreciates] "

You argue: "profits are not used for depreciation. Rather, profits are [reduced] by depreciation"

LOL, I assume you have no actual arguments left.

A product doesn't depreciate when you invest in it. It depreciates when you use it.

So if I have never switched on my 1985 IBM PC it has lost no value? Good to know.

anyway, thanks for the discussion ralfy it is humbling to know that I every word I have typed here is wrong.

[kublikhan]

In capitalist systems, the value added to the bread is the profit. Where does the buyer get the money to pay for the value added? What does the buyer do with the value added?

Let's say he inherited the capital(ovens or money to buy the ovens). And pays for ongoing expenses like energy and maintenance out of revenue. As for what he does with it, buys everything else he needs to live and run a business.

For the expansion phase, if the one who buys bread from the bread maker is the butter maker, then how will the butter maker buy bread when he is now out of business?

Perhaps the butter maker now goes to work for the bread maker as wage labor. I was just talking to a guy who used to own a business making equipment. He was put out of business by competition. He then went to work for one of his former customers as wage labor.

[Pops]

Pops, It's why you haven't heard a thing I have said,

Sorry, Pete, conversing with ralfy is like trying to out-shout microphone feedback, LOL.

Anyway, I turned down the mic gain and looked back at your posts.
I agree, our main problem is population and overconsumption, both abetted by FFs.

I also agree the last few years of slow/no growth and free money look a lot like deflation - especially if you take out the all the central bank printing and Chinese hoarding (that would be "prepping" to you). You said in deflation money value grows and there are no loans and free money (QE) is just stuck in a drawer somewhere because it earns more sitting that "working" in an economy that is shrinking.

Just to expand that, if money is growing in value because real productive assets are shrinking in value, interest rates should be negative, Or another way, instead of interest being the incentive for the lender to not spend his money today but lend it, negative interest is the incentive to sit on it and wait for it to become more valuable on its own.

Or instead of discounting the future value of money there is a premium on its future vale. Right?


As far as misinterpreting your POV, I did a OF2 and looked back at your other posts about capitalism. Here is one you wrote in 2011 that sums up my view of your view:

We are all parasites upon the Green Earth, slaves to our automation, high-technology, and an innate genetic need to consume. Inexpensive petroleum and several centuries of accumulated industrial design have destroyed our natural relationship with the Ecology of the Earth and thus we are in Overshoot. Until we come to terms with our predatory predisposition and genetic proclivity to breed and devour, we will remain incapable of creating a steady-state green economy based on the 3-R's. But that would be our only salvation.

Except for the parasitic part, which seems the wrong way to look at terraforming humans, I agree completely.

I on the other hand argue both sides of the fence regularly, here from just lat year ...

As for elites, as long as there is organization there will always be elites - shamen, priests, kings Grand Poohbah, etc, the Iron Law of Oligarchy is immutable! Socialism has no advantage over any other ism in that respect.

Big time corporate capitalism as we know it will of course be pruned back severely, perhaps until it eventually disappears. Perhaps the revolution will come about after all and all land and whatever production is left will be appropriated and distributed among the cubical refugees to squander . . . not looking forward to that

There have always been pooling of "capital" but without virtually unlimited labor (and no wages to pay like we've had in the FF era) it won't look like today. That is unless dystopian mega-mergers bring about [Skynet or Omni Consumer Products or of course, Soylent Corp] and then who knows but that seems at least as likely as global socialism.

I've argued forever that private property will probably last a long time yet, but I don't know...

[radon1]

He was put out of business by competition. He then went to work for one of his former customers as wage labor.

He is in a non-static system (no equilibrium yet), presumably even open one (eg. cheap Vietnamese competition).

[kublikhan]

He is in a non-static system (no equilibrium yet), presumably even open one (eg. cheap Vietnamese competition).

I am not sure the word static would ever be a good word to described the global economy, under any system. Too many variables in flux. Instead there would be good periods and bad periods. Total GDP growth over a decade or two might be described as static. But there could still be significant fluctuations with individual players in the economy.

[radon1]

He is in a non-static system (no equilibrium yet), presumably even open one (eg. cheap Vietnamese competition).

I am not sure the word static would ever be a good word to described the global economy, under any system. Too many variables in flux. Instead there would be good periods and bad periods. Total GDP growth over a decade or two might be described as static. But there could still be significant fluctuations with individual players in the economy.

Static - in a state of equilibrium, not changing with time.

[kublikhan]

I was considering an economy with no net growth in the long run. However it would still go through periods of growth and contraction. Even pre-capitalist economies went through rough patches where their economies would shrink and rebound.

[Pops]

Total GDP growth over a decade or two might be described as static. But there could still be significant fluctuations with individual players in the economy.

I think this is what throws a lot of folks. Capitalism is all about competition, and even more the outright destruction of capital. Rather than an ever growing "More," Marx wrote that capital must periodically be destroyed before business can return to profitability, I'm sure that was a critique of capitalism but it is nonetheless true that there are business cycles with periodic over investment where productive capacity needs to be reduced before anyone can make a profit. There is no rule that says that the return to productivity will cause growth. In fact in a static or shrinking economy (lacking fossil fueled surpluses) it likely won't.

Here from a short paper at http://akliman.squarespace.com/crisis-intervention/

This is because the destruction of capital restores profitability; without enough destruction of it, profitability will remain too low. Yet policymakers, unwilling to allow capital to be destroyed to a sufficient degree, have repeatedly chosen to “manage” the relative stagnation by encouraging excessive expansion of debt. This artificially boosts profitability and economic growth, but in an unsustainable manner, and it leads to repeated debt crises. The present crisis is the most serious and acute of these. Policymakers are responding to the crisis by once again papering over bad debts with more debt, this time to an unprecedented degree.

We also tend to think that creative destruction means the newer, faster, more autonomous, processor-controled item, or lately the killer app. My thought is that situation may reverse and the newest, latest may be slower, manual, human controlled instead and paving the way for a different kind of creativity.

[radon1]

Capitalism is all about competition, and even more the outright destruction of capital. Rather than an ever growing "More," Marx wrote that capital must periodically be destroyed before business can return to profitability, I'm sure that was a critique of capitalism but it is nonetheless true that there are business cycles with periodic over investment where productive capacity needs to be reduced before anyone can make a profit. There is no rule that says that the return to productivity will cause growth. In fact in a static or shrinking economy (lacking fossil fueled surpluses) it likely won't.

After a bit of oscillation and fluctuation, a closed economy will inevitably arrive to a static state. And the "oscillation" will not be pleasant.

[ralfy]

So if I have never switched on my 1985 IBM PC it has lost no value? Good to know.

anyway, thanks for the discussion ralfy it is humbling to know that I every word I have typed here is wrong.

Machines or tools like computers will obviously depreciate whether or not they are used, but others (there are many examples from previous centuries) may last much longer if they are not.

My point is that depreciation is usually an expense and paid for using revenues. From what I remember, it is calculated by getting the price of the machine divided by its expected life span given regular use. Thus, there is a depreciation expense in the income statement whether or not the machines are used. Sometimes, it is seen as a maintenance cost.

Finally, it is not my intention to point out that everything you say is wrong. What I want to show is that your examples which are supposed to prove that capitalism doesn't require growth does the opposite.

[ralfy]

Let's say he inherited the capital(ovens or money to buy the ovens). And pays for ongoing expenses like energy and maintenance out of revenue. As for what he does with it, buys everything else he needs to live and run a business.

We have to assume that most businesses involve inherited capital, that no new businesses are formed (i.e., ovens manufactured), that no business owners are interested in doing more than just paying for their needs and business operations (such as making a profit), etc. Again, we go back to the idea of some static economy, where factors such as overpopulation, environmental damage, etc., do not take place.

For the expansion phase, if the one who buys bread from the bread maker is the butter maker, then how will the butter maker buy bread when he is now out of business?

Perhaps the butter maker now goes to work for the bread maker as wage labor. I was just talking to a guy who used to own a business making equipment. He was put out of business by competition. He then went to work for one of his former customers as wage labor.

This looks like a monopoly, and it will surely go on as long as the butter maker has no plans to do what the bread maker did (such as getting financial support from backers, re-opening the butter making business, and then taking over the bread maker's business).

Again, as long as examples are kept simple, then one can always come up with some favorable view of capitalism. Throw in money, some natural disaster that makes needed materials difficult to obtain, etc., and problems take place.

Which is what we're now seeing.

[ralfy]

Pops, It's why you haven't heard a thing I have said,

Sorry, Pete, conversing with ralfy is like trying to out-shout microphone feedback, LOL.

I have been very civil in my posts, and I've provided as much detail as possible for my arguments. Given that, I don't understand why what I shared is labeled as such.

My guess is that there are other reasons why you do not want to understand what Pstarr is saying.

Anyway, I turned down the mic gain and looked back at your posts.
I agree, our main problem is population and overconsumption, both abetted by FFs.

Some points to consider regarding that: likely the population boom was brought about by the use of FFs which enabled extensive manufacturing and food production, both of which also ensured proper sanitation, greater availability of health care, etc. At the same time, it led to more profits for manufacturers and food producers, and required ever-increasing need for FFs, copper, fresh water, etc. That need became greater as more business (due to competition) engaged in overproduction while more of the human population engaged in overconsumption as part of middle class lifestyles.

In short, all of these point to the argument that capitalism not only enables growth but requires it.

I also agree the last few years of slow/no growth and free money look a lot like deflation - especially if you take out the all the central bank printing and Chinese hoarding (that would be "prepping" to you). You said in deflation money value grows and there are no loans and free money (QE) is just stuck in a drawer somewhere because it earns more sitting that "working" in an economy that is shrinking.

But this does not prove that capitalism does not require growth, unless one can show that capitalists are happy that deflation is taking place and should continue.

In addition, financial speculation is also the result of capitalism: as some realize that they can make more money from financing rather than from manufacturing and food production, they do so. And what we are experiencing now is fallout from such.

Just to expand that, if money is growing in value because real productive assets are shrinking in value, interest rates should be negative, Or another way, instead of interest being the incentive for the lender to not spend his money today but lend it, negative interest is the incentive to sit on it and wait for it to become more valuable on its own.

Or instead of discounting the future value of money there is a premium on its future vale. Right?

I think it is not so much as assets decreasing in value as the opposite (due to peak oil and physical limits), with an increase in money propping up the illusion that these resources can be accessed as easily.

Ultimately, one realizes that capitalism relies on increasing energy and material resource use to prop up the value of money.

As far as misinterpreting your POV, I did a OF2 and looked back at your other posts about capitalism. Here is one you wrote in 2011 that sums up my view of your view:

We are all parasites upon the Green Earth, slaves to our automation, high-technology, and an innate genetic need to consume. Inexpensive petroleum and several centuries of accumulated industrial design have destroyed our natural relationship with the Ecology of the Earth and thus we are in Overshoot. Until we come to terms with our predatory predisposition and genetic proclivity to breed and devour, we will remain incapable of creating a steady-state green economy based on the 3-R's. But that would be our only salvation.

Except for the parasitic part, which seems the wrong way to look at terraforming humans, I agree completely.

All of the points given refer to growth, which is what capitalism is about. A steady-state situation is the opposite.

I on the other hand argue both sides of the fence regularly, here from just lat year ...

As for elites, as long as there is organization there will always be elites - shamen, priests, kings Grand Poohbah, etc, the Iron Law of Oligarchy is immutable! Socialism has no advantage over any other ism in that respect.

Big time corporate capitalism as we know it will of course be pruned back severely, perhaps until it eventually disappears. Perhaps the revolution will come about after all and all land and whatever production is left will be appropriated and distributed among the cubical refugees to squander . . . not looking forward to that

Ironically, what you hope will not happen is what happened, and has led to the current situation. That is, the economy started with farming, then that and manufacturing, then service industries while manufacturing was outsourced and farming mechanized. Thus, descendants of farmers and manual laborers moved to offices and better-paying white-collar jobs.

Guess what many farmers and factory workers in developing nations want?

There have always been pooling of "capital" but without virtually unlimited labor (and no wages to pay like we've had in the FF era) it won't look like today. That is unless dystopian mega-mergers bring about [Skynet or Omni Consumer Products or of course, Soylent Corp] and then who knows but that seems at least as likely as global socialism.

It's possible that such a world already exists. For example, from what I remember, only a few mega-corporations generally control much of food processing and mechanized agriculture worldwide while several dozen control much of financing.

Welcome to capitalism.

I've argued forever that private property will probably last a long time yet, but I don't know...

It will last for a long time only as long as governments exist to legalize it. Very likely, the same governments will support those who want to use it for profit, then use the profit to obtain more private property to make more profit, and so on. Obviously, the profit will come in the form of money (made possible thanks to the same governments), and eventually the move to profit from profit will take place.

In short, capitalism.

[ralfy]

He is in a non-static system (no equilibrium yet), presumably even open one (eg. cheap Vietnamese competition).

I am not sure the word static would ever be a good word to described the global economy, under any system. Too many variables in flux. Instead there would be good periods and bad periods. Total GDP growth over a decade or two might be described as static. But there could still be significant fluctuations with individual players in the economy.

I think it's the rate of increase that's static. Global GDP continues to grow.