Human nature and the leftist assumption

[Mr. Jaggers]

Capitalism requires the free flow of capital, viz. a market system based on capital investment, and a government system committed to capital expenditure and tax incentives to prime the pump. Once the capital starts flowing, the capitalists take your capital and convert it into their capital. Capitalism, at least from the economic perspective of the capitalist, is a capital idea!

[Technosoul]

Quote by: Mr. Jaggers Capitalism requires the free flow of capital, viz. a market system based on capital investment, and a government system committed to capital expenditure and tax incentives to prime the pump. Once the capital starts flowing, the capitalists take your capital and convert it into their capital. Capitalism, at least from the economic perspective of the capitalist, is a capital idea!

I think the system should work like things do in nature.

The money needs to keep moving in a circular manner. Recycle.

In other words, we spend money to buy stuff, the rich guy makes a profit from our buying his products, he in turn buys a house from someone else, or he uses the money to create more jobs by expanding his business, so the profit goes back to the public in the form of paychecks. Creating a cirular momentum for the cash flow.

But what happens if the rich guy just keeps the money and sticks it into a bank account where it sits there and does nothing? That blocks the cash flow from flowing, and become like blockage in the heart and zapp - the economy has an heart attack.

We spend money on taxes, if the government returns the cash with new roads, health care, or whatever that is useable by the people who pay taxes, then fine. But instead they burn the money with a match called "war". Poof, no money left to recycle back into the system. So they print more money - which has no real value because no one earned it nor gave it to them in taxes. They might as well just tell us to use money from a Monopoly Game. You must recycle the same money for the system (called cash flow) to remain self-sustaining.

[grandpa]

Quote by: Technosoul I think the system should work like things do in nature. The money needs to keep moving in a circular manner.

But the point of capitalism is for capitalists to limit circulation of money, to horde it. It is quantitative, not qualitative.

The government does create much money, but it doesn't solve the fundamental issue of quantitative versus qualitative.

Grandpa h.

[Technosoul]

Methinks Mr. Big is a poor man because he cannot afford the time to respond to everyone.. who robbed him of all his time which he is running short on?

Oh yeah, he is converting time into money. Therefore time spent here is worthless relative to that purpose.

That is the big problem when selfishness, self-interest, and greed is all directed at making big bucks. You loose perspective of what is of the most of value in life... " time ". Time to relax, time to talk to friends in a social arena, time for the wife and family, time for your self to reflect about the meanings of life.

The greater the greed the less time you have so you speed up your acitivies, rush rush rush, instant this and that, fast food, and a total lack of patience for the slow pokes in the fast lane.

The Rat race.

Constantly looking at your watch, at the timeclock, ticking ticking away... as you wind down and the old ticker stops... and your shrink says " sorry, your time has expired, see ya in your next life".

Next life? How much will that cost me?

[Zeebadee]

Quote by: Technosoul But what happens if the rich guy just keeps the money and sticks it into a bank account where it sits there and does nothing? That blocks the cash flow from flowing, and become like blockage in the heart and zapp - the economy has an heart attack.

Nope, the bank doesn't keep the money, it loans it out to people that put it to work.

[grandpa]

Quote by: Zeebadee Nope, the bank doesn't keep the money, it loans it out to people that put it to work.

The money may circulate, but the bank maintains the control. And, of course, most of the biggets capitalists maintain control of money through control of banking, property and legal contract (which, again, tend to be quantitative arrangements, not qualitative).

Grandpa h.

[Mr. Big]

Quote by: Thanatos Believe me, people are quite capable of turning off compassion for strangers. Some even manage to turn it off for those closest to them.

Fair enough, I'll accept that point.

Quote by: Thanatos Consider the benefits of vertical integration and a monopoly. The more things you own the more you can buy up and the better you are at strangling potential competition. Without antitrust laws the invisible hand of capitalism itself will be crushed.

Actually, vertical integration does not really provide much benefit to a firm with regards to profit. Unless the acquired company is able to make above average profits, the same return could be made off of bonds, or a stock index. As for controlling the supply chain to cut off supplies to your competitors... that tactic would have the effect of competitors starting to produce their own raw materials, or other companies stepping in to fill the gap.

Its interesting that you bring up monopolies into this argument; they do have power, but maybe not as much as you think; one can always choose not to buy.

Also, as a firm gets bigger (and monopolies are a good example of the following), they get more bureaucratic. This makes them less able to respond to changes in their environment, including consumer taste and covering niche markets. Leaving these opportunities open plants the seeds for the monopoly's own downfall.

Another issue is that the competition in many industries is structured in a way that prevents a monopoly from forming; many industries already have numerous players who are very skilled at running a business. Give a competitor enough of a market share and the dominant company's economics of scale no longer become a large weapon to use against others.

You may also want to look at the history of large/dominant companies in American business. Most of the largest American companies did not get much larger than a market cap of $100 billion, with profits of $10-15 (see "Mosaic: Perspectives on Investing" by Mohnish Pabrai). You can consider this a kind of natural law. These companies stayed this size despite the numerous opportunities in the American and world economy. Out of the list provided by Mohinish, only Microsoft had an antitrust suit. Most companies also have a type of lifespan, not many leading companies from the early 1900s are still with us.

Quote by: Thanatos The end result is an asymptotic approach to absolute economic power. The only time this has ever been approached in U.S. history is Standard Oil and the other great gilded age monopolies, but sanity prevailed and the trusts were broken. Earlier examples of oligarchies and hydraulic empires abound. You yourself have decried examples where a few held absolute economic power in modern times such as the Soviets, although they skipped the capitalistic approach to establishing monopoly and used force of arms instead.

Oligopolies have a much easier time being formed. They are also much more likely to compete in a way that hurts themselves, while benefiting the consumer.

Quote by: Thanatos I think you'd also agree with me that we need some laws, such as basic environmental protection laws and protection from debt slavery.

Environmental concerns can be handled by the public; if they care about the environment enough, they will buy environmentally friendly goods.

Thank you for your post, but I don't see how your argument got to the heart of what I argued in the first post.

Oh... and Technosoul,

In case you were wondering, I don't have a lot of time because I am working full time for a charity right now, and its campaign season.

As for rush-rush, take a look at Warren Buffett; he is the second richest man, and has gotten that way while keeping his schedule nearly empty so he can play 10-20 hrs of bridge online per week.

[Mr. Big]

No rebuttal? looks like I win...

[SoylentGreen]

Mr. Big Its interesting that you bring up monopolies into this argument; they do have power, but maybe not as much as you think; one can always choose not to buy. Also, as a firm gets bigger (and monopolies are a good example of the following), they get more bureaucratic. This makes them less able to respond to changes in their environment, including consumer taste and covering niche markets. Leaving these opportunities open plants the seeds for the monopoly's own downfall.

A silly comment on your part really, considering monopolies are not made from variable products but fixed assets.
Such as complete control of communication or transport.
When one company owns the rail lines they have complete control of what goes on them. When one company owns the telephone lines they control who uses them. That is a real monopoly .

The answers you give like competition, being able to run a business or niche markets only show ignorance on monopolies not answers to them.

And as for them getting bureaucratic. well so what being a monopoly means they get to control consumer demand not the other way around. And as they control the means of production then there is no competition for them to compete with.

Suggest you take a close look at the Mexican phone company and actually seeing how a real monopoly works instead of giving a piece of nonsense theory on how you would like them to work.

[Century 25]

Quote by: Mr. Big No rebuttal? looks like I win...

lol..

Essentially.. we live under a plutocracy.. combined with despotism. You could stir in a dose of feudalism too.

Our "government" -- heh-heh.. despots.. bigots.. anti-women.. if ya ain't a wasp.. make that a male wasp.. you are surely a second class.. dare I say "citizen"..??

We live in a velvet cage. McMansionville..

[Mr. Big]

Quote by: SoylentGreen A silly comment on your part really, considering monopolies are not made from variable products but fixed assets. Such as complete control of communication or transport. When one company owns the rail lines they have complete control of what goes on them. When one company owns the telephone lines they control who uses them. That is a real monopoly .

Oh yeah? So my university economics proffs have been wrong all this time? Sorry, my bad... I just assumed that a monopoly was a company who has complete control of supply in an industry. I didn't know they had to have control of hard assets to be monopolies and get dealt with by antitrust regulators, as Microsoft had ...being the only company to have the equipment needed ("hard assets" which couldn't be replicated by others) to make operating systems and office software.

Quote by: SoylentGreen The answers you give like competition, being able to run a business or niche markets only show ignorance on monopolies not answers to them.

Again sorry... I'll have to write to Bruce Greenwald (economics and finance proff at Columbia school of Business in NY, NY, money manager at Hummingbird Value Fund, directer of First Eagle Funds), and tell him that his book on competitive strategy ("Competition Demystified: A Radically Simplified Guide to Competitive Strategy") which has looked at the historic actions of firms, including monopolies and oligopolies, is wrong. Don't worry, I'll let him know.

Quote by: SoylentGreen And as for them getting bureaucratic. well so what being a monopoly means they get to control consumer demand not the other way around. And as they control the means of production then there is no competition for them to compete with.

I hate to be rude, but you started it.... this comment shows your misunderstanding of basic economics (I would suggest picking up a book...), and your inability to use the English language (Its customary to begin your sentences with a capital, and most sentences also include a subject as well as a predicate.). A monopoly does not control consumer demand, consumers control consumer demand. A monopoly only has control over the quantity or the price that the goods are traded at. This basically means that it has control over market supply.

Quote by: SoylentGreen Suggest you take a close look at the Mexican phone company and actually seeing how a real monopoly works instead of giving a piece of nonsense theory on how you would like them to work.

Thank you, I will toss out my economics texts, and take a look at your phone company. (I'm sure that monopolies can own all fixed assets, but a monopoly doesn't have to do this to be a monopoly... it only has to dominate a market alone.)

[Mr. Big]

Quote by: Zeebadee Nope. You said communism cannot exist because it runs counter to human nature. The you said even if force was involved, it would have to agree with human nature. Yet N. Korea has a communist system, though perhaps not strictly as defined by Marx, it runs counter to human nature (at least to it's subjects), and yet it endures. Perhaps I misunderstand you, if so, my apologies.

Thanks for your post Zeebadee,

I wouldn't consider NK truly communist; I would consider it a socialist dictatorship. I suppose that those can continue for a while, but I wouldn't call them our best option.

Have a good one!

Mr. Big

[Mr. Big]

Quote by: SoylentGreen Gee isn't it just fantastic that capitalism is such a complex, well thought out, intergrated system of social and economic ideas, that when put together form the most perfect of systems. Where as simplistic Marxism can be summed up in one simple sentence "Everybody works for the good of the whole. Your goal is your collective advancement." Because you know capitalism took years and years of very clever peoples lives to figure out , while communism was probably just a thought some one wrote down on the back of a cigarette packet while sitting on the toilet. Please feel free to insert a :rolleyes: anywhere you like in there.

SoylentGreen,

I'm sorry that you don't understand what a working definition is.

[Mr. Big]

SoylentGreen,

I have some citations for you on the definition of a monopoly:

“A pure monopoly is an industry in which there is only one supplier of a product for which there are no close substitutes and in which is very difficult or impossible for another firm to coexist”

From:

Blinder, Alan S; William J Baumol and Colton L Gale (June 2001). "11: Monopoly", Microeconomics: Principles and Policy (paperback) (in English), Thomson South-Western, 212.

...and one link about monopolies from dictionary.com, for the hell of it:

monopoly - Definitions from Dictionary.com

[SoylentGreen]

Mr. Big being the only company to have the equipment needed (which couldn't be replicated by others) to make operating systems and office software.

Software can always be replicated and sold by overseas countries on the local market. Not a real monopoly.

. I just assumed that a monopoly was a company who has complete control of supply in an industry. I didn't know they had to have control of hard assets to be monopolies and get dealt with by antitrust regulators, as Microsoft had ..

And how do they get complete control of supply. Through complete control of assets, or did you think it happened by magic.
Good of you to notice how anti trusts can be used to break up a monopolies but irrelevant to the point of how monopolies are formed.

Again sorry

No need to apologies, your only looking at American systems which are legislated enough to prevent monopolies. Try looking outside your country and into the countries where American and other first world countries use there money and influence to corrupt poorer governments to allow them to form the same monopolies that your country has laws against.

I hate to be rude, but you started it.... this comment shows your misunderstanding of basic economics (I would suggest picking up a book), and your inability to use the English language (Its customary to begin your sentences with a capital, and most sentences also include a subject as well as a predicate.).

Then why be rude?
If you want to start english lessons then open another thread. If the best you can do to come up with a sound rebuttal is to point out spelling errors then you really don't have much to offer here.

A monopoly only has control over the quantity or the price that the goods are traded at. This basically means that it has control over market supply.

Fine if they control something inconsequential as ice cream supply.
But when they hold the telephone lines it kind of leaves the consumer with the choice of pay what they demand or don't use the phone.

Thank you, I will toss out my economics texts, and take a look at your phone company. (I'm sure that monopolies can own all fixed assets, but a monopoly doesn't have to do this to be a monopoly... it only has to dominate a market alone.)

And as you so rightly pointed out that diversity and competition makes that proposition extremely difficult. And yei monopolies exist. But how could that be if your theory is so correct?

[SoylentGreen]

Mr. Big “A pure monopoly is an industry in which there is only one supplier of a product for which there are no close substitutes and in which is very difficult or impossible for another firm to coexist”

A dictionary definition does not adequately cover the meaning of what actions or effects monopolies have.
Your offering a far to simplistic view.

[SoylentGreen]

Quote by: Mr. Big SoylentGreen, I'm sorry that you don't understand what a working definition is.

And I am sorry that you don't understand that trying to sum up communism in one sentence is not a working definition. In fact it doesn't work at all.

[Mr. Big]

Hi Again SoylentGreen,

Quote by: SoylentGreen A dictionary definition does not adequately cover the meaning of what actions or effects monopolies have. Your offering a far to simplistic view.

Try reading my post next time. That definition is from an economics textbook. The link to the online dictionary was there for your pleasure.

Quote by: SoylentGreen Software can always be replicated and sold by overseas countries on the local market. Not a real monopoly.

1. We are talking about capitalism as it relates to within a single country.
2. Copyright laws deal with this within that country.

Quote by: SoylentGreen And how do they get complete control of supply. Through complete control of assets, or did you think it happened by magic.

Good question. Its called a natural monopoly. If you have high fixed costs, and very little marginal ("variable") costs, the greater number of units you can push through those fixed costs reduces the cost of production... so you can lower the price to a point which other firms cannot match. This leaves you the only producer. Companies have an opportunity to do this if they are the first mover within an industry, or if they just get a jump on selling a lot more units then their next competitor. This is the case of Microsoft.

Microsoft is also helped by how standardized their product is within the workplace; it works with all PCs, it does not require people take training to know how to use it, etc.

Quote by: SoylentGreen Good of you to notice how anti trusts can be used to break up a monopolies but irrelevant to the point of how monopolies are formed.

This did not speak to how monopolies were formed, and did not mean to. This only worked to point out that Microsoft was a monopoly (and in some respects still is).

Quote by: SoylentGreen No need to apologies, your only looking at American systems which are legislated enough to prevent monopolies. Try looking outside your country and into the countries where American and other first world countries use there money and influence to corrupt poorer governments to allow them to form the same monopolies that your country has laws against.

Thanks for assuming I am American. We are talking about capitalism within a single country, not economic imperialism.

Quote by: SoylentGreen Fine if they control something inconsequential as ice cream supply. But when they hold the telephone lines it kind of leaves the consumer with the choice of pay what they demand or don't use the phone.

But my point is they still have that choice. If they have the choice, the company doesn't control demand. You forget that market demand is the number of consumers who who are WILLING and ABLE to purchase at each price point. For the monopoly to control demand, it would have to 1. control what people are willing to pay, and 2. enable them to pay at all price points. How necessary the service is really doesn't have anything to do with whether a monopoly controls market demand or not. See any number of economics texts books for an explanation.

Quote by: SoylentGreen And as you so rightly pointed out that diversity and competition makes that proposition extremely difficult. And yei monopolies exist. But how could that be if your theory is so correct?

There are thousands of companies in the USA alone (roughly 20 000 non-farm companies). Given this number, even if the chance of forming a monopoly is slim, some monopolies will still be formed. Firms also have an average lifespan. For companies on the S&P500, made of the 500 most successful companies in the USA, their average lifespan is roughly 40-50 years (see Mohnish Pabrai's "Mosaic: Perspectives on Investing". He quotes a nice study in there...). Thats one reason that a monopoly can come to an end. I have explained another (see post #31).

All this being said, I have provided a number of citations for my "theories" (citations of studies which have looked back through time at actual behaviour of industries and firms), so perhaps you could provide some for your arguments?

[Mr. Big]

Quote by: SoylentGreen And I am sorry that you don't understand that trying to sum up communism in one sentence is not a working definition. In fact it doesn't work at all.

I believe I made reference to a person's lifetime work for my working definition of communism. Thats far different from what you are alluding to.

[SoylentGreen]

Mr. Big We are talking about capitalism as it relates to within a single country.

Why do that. Capitalism does not confine itself to a single country. Import / export plays a major part in the flow of capital.
To try and confine this capitalist is good theory you must take into account its effects on overseas economies.
Otherwise your building an incomplete and unrealistic picture of capitalism.
And the effects of first world capitalism on third world economies is the dark side of capitalism, so I can understand why you do not want to include it.

Try reading my post next time. That definition is from an economics textbook.

I saw that and again economy description of only one country without taking into account the effects on other countries is useless.
That definition only applies to first world economies where laws and regulations and the freedom of the press top report illegal activities can take place.
Without those safeguards monopolies can be created quite easily. It just takes a few bribes and a corrupt government.

All this being said, I have provided a number of citations for my "theories" (citations of studies which have looked back through time at actual behaviour of industries and firms), so perhaps you could provide some for your arguments?

I have no problem with your citations except that they build a false view of capitalism. Should America decide to build a wall around its country and stop interfering with world economies then your text books would give a correct picture.
But until then all you are doing is presenting a theory with no basis in reality. The Utopian capitalist model.

I believe I made reference to a person's lifetime work for my working definition of communism. That's far different from what you are alluding to.

Which is based on what? And still gives a narrow and incomplete view of communism.
Do you really expect communist theory to be debunked based on the experience of one worker?