Can the ills of capitalism be explained in terms of monopolization of fiat currency?

by kir Posted 2012/07/25 17:48:58

Related Topics: Evolution, Capitalism, Led, Discussion, Evil, Property, Negative, Creation, Economic, 2012, Currency

18 votes
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	Monopolization and creation of fiat currency are to blame.	8 votes	44%
	Capitalism itself is to blame.	5 votes	28%
	Undecided	5 votes	28%

While trying to figure out why Capitalism gets blamed for so many
negatives in the world, and discussing the topic with people who simply
think of Capitalism as an evil economic system, I started thinking about
the basic properties of currency in an economic system and how currency likely evolved.
It led me to hypothesize on the basic properties of a stable currency
and I came up with what I thought were some decent requirements.
Unfortunately someone else beat me to most of these requirements by
about 2,000 years.

Read the rest here: http://politicoid.blogspot.com/2012/07/discussion-on-currency...

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jcadla 2012/07/25 21:55:54

Undecided

+3
moderated...
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More polls by kir

FeedFwd 2012/07/27 19:30:34

Undecided

+1
Fiat currency is one part of the problem. Partially unfree markets are another. Immorality and tolerance of corruption is another. There are probably more. Fiat currency, market interference, and corruption are certainly 3 of the main contributors to the "problems" observed in capitalism.

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Charles R. Anderson 2012/07/26 07:50:21

Undecided

I am not undecided, but no suitable answer was available.

Our system is not entirely Capitalist. The government and the Federal Reserve interfere with our economy far too much for it to be anything but a mix of Capitalism and Socialism. The problems in our system are due to the Socialist element, not the Capitalist element.

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kir to Charles... 2012/07/27 15:06:04

My opinion is that it has to do with the government interfering with the system and in terms of currency the monopolization of production and creation of a fiat currency.

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burning... to kir 2012/07/28 11:09:11 (edited)

"Capitalism" brought us milk saturated in dangerous growth hormones. "Capitalism" brought us models that look like 12 year old girls on heroin. "Capitalism" brought us jobs being shipped overseas so that businessmen don't have to give their workers luxuries like bathroom breaks or dollar wages. "Capitalism" brought us people that are billionaires that haven't worked a day in their lives. "Capitalism" brought us people dying of cancer and 100% preventable illness because they didn't have insurance.. I'd consider myself right-wing and I know socialism has obvious flaws, just like central banking does (the libertarians certainly have a point). But I'd never, ever call myself a "capitalist" in a million years.

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kir to burning... 2012/07/28 13:13:53

Nope. The government brought us most of that. Mega corporations survive with poor business practices because the government allows them to survive.

Did you know that almost all major corporations are backed at least in some way by the government?

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Greg 2012/07/26 05:01:22

Monopolization and creation of fiat currency are to blame.

+2
We haven't had true capitalism in this country since before I was born. It is crony corporatism. Monetary policy isn't the only thing to blame, but it is an important part of why our free country and our free markets aren't really free.

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jcadla 2012/07/25 21:55:54
jcadla to jcadla 2012/07/25 22:08:35
cynsity to jcadla 2012/07/26 14:57:01

+1
THE other thing which kills capitism is the theory of "social justic and FAIRNESS". The idea that states everyone should have the same stuff even if not everyone has the same talents or work ethics.
I dislike the word fair completely and when you ask people what would be fair the answer is often a most UNfair one.
There are two things everyone needs to consider when they consider making everything FAIR...
1. Fair isn't decided by who has the MOST but by who has the least. In otherwords it would be FAIR if every single person had a TV but not everyone can have a 100in flat screen bling riddled TV becasue not everyone has the room for such a thing so we take it down to the smallest element and that TV fairness becomes no one having a TV because there are some who do not want a TV and FAIR means no one has what anyone else doesn't.
2. Fair ALSO means taht if a dollar can be taxed at 99% then ALL dollars can be so taxed and now not only are those who make millions of dollars to be taxed at 99% so too are those who only make a few hundren to be so taxed because that is FAIR.

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jcadla to cynsity 2012/07/27 18:19:08
Kane Fe... to jcadla 2012/07/25 23:50:39

+1
Very well said. Socialism kills incentive by killing competition. They don't like a level playing field they need a nanny to take care of them.

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Warren ... to Kane Fe... 2012/07/27 14:35:44

Capitalism kills competition. Nobody invests in competitive markets because you can only have profits in the absence of competition.

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kir to Warren ... 2012/07/27 14:37:15

+2
Capitalism is competition. Alternative economic systems lack competition. It is the government intervention in a capitalist market that destroys competition.

http://politicoid.blogspot.co...

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Warren ... to kir 2012/07/27 14:54:08

No. Capitalism is the opposite of competition. What you have been taught is wrong. Profit does not exist in competitive markets. Capital is invested to gain advantage and eliminate competition, thats how you make money.

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kir to Warren ... 2012/07/27 15:07:18

+1
Profit does indeed exist in a competitive world. Take a look at all the competitors and how much profit they can still make. Competition does not exist in a world of government ownership. Don't believe me? Ask Cuba, North Korea, China, et al.

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Warren ... to kir 2012/07/27 17:32:14

In Communist countries, the party elites profit by state monopoly of the means of production. In capitalist countries, the capitalists profit by monopoly and oligopoly. With purely competitive markets, nobody profits because price pressure drives prices down to the point where marginal profits are zero.

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kir to Warren ... 2012/07/27 17:36:39

+1
Tell that to all the small business owners who are making a living through the capitalist system. The only reason there is any issue with the capitalist system is because of government interference.

The government supports corrupt mega corporations and messes with monetary policy.

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Warren ... to kir 2012/07/27 17:47:49

You might as well believe in the Easter Bunny or the Tooth Fairy as to believe such nonsense with zero evidence. Without government interference, the whole system would collapse in a month.

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kir to Warren ... 2012/07/27 18:42:08

+1
Incorrect. I have evidence. Look at Hong Kong for example. It's a free market paradise and is thriving. Now look at the situation here in America where the government picks winners and losers; the economy is collapsing.

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Warren ... to kir 2012/07/27 18:52:03

Hong Kong is part of the Peoples Republic of China. All land is owned by the government of Hong Kong and leased to private users.

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kir to Warren ... 2012/07/27 19:10:24

+1
Hong Kong was under free rule for 99 years. The People's Republic of China didn't get in the way of the free market and that's why it's prospering while the People's Republic of China is not.

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FeedFwd to Warren ... 2012/07/27 19:38:45

+1
That is not exactly true. Prices are neither good nor bad. They are information. and that is information not available in a non-competitive market. If the price for something falls so low that profits evaporate, it is a signal that some resources ought to be diverted to making something else of value to generate profits. Capitalists, specifically entrepreneurs recognize this and reinvest in places where profits can be made. They take risks. They get paid to take risks. sometimes the risks pan out and sometimes they don't. Prices also tell consumers about the relative value of goods. When things are cheap, it means they are plentiful relative to demand. we don't need to worry so much about conserving them and may even use them as substitutes for things that are more expensive. Higher prices tell us to conserve and not waste what we have and look for cheaper alternatives. Both the signal to producers and consumers tend to drive the market toward the market clearing level of sales. That is a good thing... it avoids long lines for toilet paper and bread like they had in the old USSR.

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Warren ... to FeedFwd 2012/07/27 19:42:27

Exactly. Capital seeks noncompetitive markets. With purely competitive markets, there is no profit to be made. Profit is the excess value firms are able to extract from the consumer by the inefficiency of the market they are in. Efficient markets drive profits to zero.

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FeedFwd to Warren ... 2012/07/27 19:54:01

+1
Drive toward zero, but never getting there. That is OK. That is actually good. There will always be profits. If there were no profits, then there would be no production or wealth creation. Inefficient producers are driven from the market first. As they exit, prices rise again or at least stabilize so the remaining consumers remain profitable. If somebody discovers a better mousetrap or better way of producing something, then the market will react once a gain by driving the less efficient from the market. This happens minute by minute every day, but the realities of capital investment mean that dynamics of business move more slowly. In a government run economy without competition, there is no reason for intervention and no way to tell if resources are being directed in the correct manner.

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Warren ... to FeedFwd 2012/07/27 20:03:03

Yes, I agree. Firms seeking profit benefit the consumer by driving out inefficient firms, but as a side effect, the competition reduces prices and profits. In a perfectly free market, nobody makes any profit, because otherwise there will always be a competitor who can bid the price down and still make a profit at your expense.

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FeedFwd to Warren ... 2012/07/27 20:17:51

That is not true. Innovation is what drives costs down and innovation is good. Even in the absence of innovation, every firm that produces something makes it a bit differently and has different costs. Ford and Chevy compete not just on price, but on style (and who can get the government handout). They may have different cost structures depending on the age of their factories and the age/skill of their employees. One may have invested more in automation than another or may have a better contract with an energy supplier or any number of advantages/disadvantages relative to the other. One may simply have better quality processes or better engineering than another. Costs for 2 suppliers or even 2 factories owned by the same supplier are never exactly the same. At the margin, if one factory shuts down, there will be less supply and with no change in demand, the prices will rise.

Then there is always the concept of the spread between buy and sell. When something is heavily traded and all of the items making up the volume are essentially identical, there is a well defined price and the spread becomes very thin. That defines a commodity. But not everything is a commodity. Hand-crafted goods, in particular, are often very thinly traded and it is hard to establish a market price. If a...

That is not true. Innovation is what drives costs down and innovation is good. Even in the absence of innovation, every firm that produces something makes it a bit differently and has different costs. Ford and Chevy compete not just on price, but on style (and who can get the government handout). They may have different cost structures depending on the age of their factories and the age/skill of their employees. One may have invested more in automation than another or may have a better contract with an energy supplier or any number of advantages/disadvantages relative to the other. One may simply have better quality processes or better engineering than another. Costs for 2 suppliers or even 2 factories owned by the same supplier are never exactly the same. At the margin, if one factory shuts down, there will be less supply and with no change in demand, the prices will rise.

Then there is always the concept of the spread between buy and sell. When something is heavily traded and all of the items making up the volume are essentially identical, there is a well defined price and the spread becomes very thin. That defines a commodity. But not everything is a commodity. Hand-crafted goods, in particular, are often very thinly traded and it is hard to establish a market price. If a buyer is willing to pay more than a supplier wants to sell it, there will be a deal. But the spread may be wide and the sales price could vary greatly depending on who is buying and selling. Of course if the buyer was unwilling the pay the minimum asking price of the seller, there will be no deal. But in these low volume kinds of transactions, there may be quite a good profit for sellers. Of course if every Tom Dick and Harry try to jump on the gravy train, the spread will narrow until we find the market clearing price. Services that are not collectively bargained are also something that will vary widely for essentially the same service. You may be willing to pay more for a doctor with a good reputation than one with a poor reputation, even if they both provide essentially the same service.
(more)

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Warren ... to FeedFwd 2012/07/27 20:30:57

+1
Innovation drives costs down and profits up by making a competitive market noncompetitive. These are called "disruptive" technologies. I think we are in agreement. I am just pointing out that from an individual firms point of view, competion is a negative attribute to market economies, and in a perfectly competitive market (i.e. commodities) profit tends to zero.

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FeedFwd to Warren ... 2012/07/27 20:39:43 (edited)

Not all technology is disruptive. Some is incremental. But there is the business strategy... with a commodity, you cannot differentiate except by being the more efficient, lower cost producer, so you make smaller margins on larger volumes. You can still become wealthy. Often economy of scale drives the market to support a few large producers, but sometimes there will be many small producers. Government usually interferes on behalf of the large producers who can n afford to lobby the politicians. On things that are not commoditized, you differentiate yourself and make larger margins on smaller volumes. Nobody operates at zero or negative margins, at least not for long. It is not a viable business strategy, although it may be a temporary tactic to gain market share. It is also the idea behind selling loss leaders. Business is very dynamic and so are free markets in capitalist economies. Things change all the time and in general, the consumer wins.

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Kane Fe... to Warren ... 2012/07/27 15:46:42

+1
That is the dumbest thing I've ever heard. Communist China was just a Communist country until they adopted Capitalism.

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Warren ... to Kane Fe... 2012/07/27 17:33:07

It might be too difficult for you to understand.

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Kane Fe... to Warren ... 2012/07/27 18:07:41

+1
Obviously. Free market Capitalism runs on competition. With socialism everyone is equal, you may be the best producer and hardest worker but you get paid the same as the laziest least productive person on the job. That's why unions make everything cost more. Why should the hardest worker work his hardest? Free market Capitalism makes efficiency a priority. The private business can do any job faster cheaper and better than any social organization.

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Warren ... to Kane Fe... 2012/07/27 18:39:37

Capitalism detests competition. You have been misled.

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Kane Fe... to Warren ... 2012/07/27 18:43:39

How?

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kir to Kane Fe... 2012/07/27 18:45:19

+1
Forget it; this person talks out of his ass. He'll just repeat the same thing over and over again without actually coming up with an argument.

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Warren ... to kir 2012/07/27 20:04:34

Basic economics. It is hard for libertarians to understand.

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kir to Warren ... 2012/07/27 20:34:43

More like it's hard for authoritarians to understand.

1. Economies have been thriving far longer then any kind of large government has.

2. Markets that have less government intervention perform better. Again I point to situations like Hong Kong et al. I also point to Cuba's cigar industry which has lost a massive amount of quality since production was taken over by the government.

3. When government gets involved it picks winners and losers; the winners selected are corrupt mega corporations and the losers are small businesses. If you don't believe me ask the roughly 1,500 small businesses that Obama murdered a couple weeks ago.

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Warren ... to kir 2012/07/27 20:37:20 (edited)

You've addressed precisely zero of my points. But it is easy to rehash soundbites.

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kir to Warren ... 2012/07/27 20:38:42

+1
Capitalism does not detest competition. Capitalism doesn't detest anything since it is a system and not an entity. Individual firms may lose profit in competition but competition is also necessary for capitalism to function. Monopolization of an industry, which requires the help the government, is not free market capitalism.

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Warren ... to kir 2012/07/27 20:40:57

There is no such thing as a free market. It is as fictional as unicorns.

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kir to Warren ... 2012/07/27 20:41:42

There is no such thing as an ideal but we work with approximations of an ideal all the time. The more free the market the better it functions.

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