Marx May Have Had a Point 1271
Hitting the mainpage for the first time, Black Sabbath writes "While communism has been declared dead and buried (with a few stubborn exceptions), Karl Marx's diagnosis of capitalism's ills seem quite bang on the money. Harvard Business Review blogger Umair Haque lists where Marx may have been right."
It's a pretty good read once you get past the author's three paragraph disclaimer that he is not a communist. The MIT news also ran a short interview discussing the economic trends in August this morning.
Of course he had a point (Score:5, Insightful)
While he never outwardly admitted it, he likely realized on some level that an idealistic approach such as his communism would not be able to stand up to the crushing weight of human want and corruption in a large country. Which is, of course, exactly what happened in Russia and China; neither of which ever accomplished true communism on a national scale.
NOT Capitalism (Score:1, Insightful)
What we have in the US is NOT capitalism or free market economics. Come on people -- we're talking about the most expensive, most powerful government in world history. Free market economics is dependent on the exact opposite: a government strictly limited in power and revenue.
What we have in the US is much closer to corporatism [wikipedia.org] or even fascism [wikipedia.org].
Re:Nothing to surprising (Score:5, Insightful)
I don't think everyone agreed that they were acceptable, I think that the wealthy agreed that it was more profitable.
Evidence Throughout the Ages of This (Score:5, Insightful)
Capitalism isn't in itself flawed... (Score:5, Insightful)
But there needs to be some way to prevent capital from influencing politics, especially in a democracy. Our representatives are owned wholly by the people that give them the most money, and until we definitively block money from being a driving force in politics we will be ruled by the richest.
Barring direct financial contribution to political candidates and forcing them to run on equal funds would help. Barring the movement between high public office and private business, especially government contractors, would help as well. Good luck on any of this every coming to pass. Our elected representatives directly benefit off the system the way it is now, and as they're the only ones who can legally change it, we're pretty much effed...at least, until the general public breaks out the torches and pitchforks and goes all French Revolution on their asses.
Re:Of course he had a point (Score:3, Insightful)
The fundamental flaw in Communism is human nature. Humans are corrupted by money and power. True communism can never be free from that corruption no matter what the scale. Even a small community eventually sees the inequities build and the exploitation start.
Then again, pure capitalism suffers that fatal flaw as well. The corruption of money and power allow capitalists to exploit people just the same.
And, of course, this problem of money and power going hand-in-hand with corruption is the fatal flaw of just about every political and economic system. There's really no way to solve it. You can expose it. You can fight it. But in the end, the golden rule always wins through. "He who has the gold makes the rules".
Re:Wrong (Score:5, Insightful)
For sure Marx had a point (Score:4, Insightful)
But identifying a problem is not identical to finding the correct solution.
Re:Nothing to surprising (Score:5, Insightful)
And yet under communist rule there are still wealthy power brokers who know how to game the system for their own profit.
Re:Wrong (Score:5, Insightful)
Lehman Brothers was allowed to fail which resulted in making the financial crisis much worst. It was a test of pure capitalism that failed.
Re:Nothing to surprising (Score:5, Insightful)
In Capitalism, Man exploits Man.
In Communism, it's the other way around.
Re:Nothing to surprising (Score:5, Insightful)
That's because communism has never been tried. A communist regime in the model that Marx was pushing hasn't ever been implemented. Marx wanted a state like the US, except where the people owned all of the shares of the companies they worked for rather than random investors. And where there was only one class.
To date there has been precisely zero countries where they did away with class and where the workers truly owned the means of production.
The level of ignorance that people express about how it's been tried and failed just boggles my mind, when it hasn't even been tried once.
Re:Nothing to surprising (Score:4, Insightful)
Who was "we"?
Wealthy capitalists pretty much spent the first half of the twentieth century indoctrinating every western culture they could into believing communism and socialism are capital-E Evil. Some places the propaganda took better than others.
This is a direct factor in why the healthcare debate in the states is so broken. When a good portion of your culture genuinely believes that socialism is absolutely Evil, trying to build a modern system to help them is difficult.
The silly thing is, is that there are huge sections of the US that are entirely funded by tax dollars (and they aren't necessarily what you think [partialobjects.com]), but to ever acknowledge that in public, and to try and make it better, given that it is what it is, is heretical.
Re:Long-Term or Short-Term Trends? (Score:4, Insightful)
I don't know. Going hungry is about the same no matter what era it is in. Freezing to death under a bridge or in your unheated home isn't really any better in 2011 than it was in the middle ages. Dying from the flu or some other easily treated ailment seems to be just as much of a downer today as it was 40 years ago when such things weren't so easily treated.
Re:Nothing to surprising (Score:5, Insightful)
Marx was indeed, partly correct (Score:4, Insightful)
Communism, nor socialism did not exist in the USSR. The USSR was a state capitalist country where a wealthy elite controlled and owned all resources. Communism is a stateless society where there is no elite at all and no central planning or authority. Socialism is a system where there is a democratic system whereby the people elect those who will make economic decisions and everyone has an equal voice in economic issues.
The Economy of the USSR is actually pretty similar to that of the USA, with a wealthy, powerful elite that controls all of the resources (capitalism). There is very little difference between state capitalism and corporate capitalism, both lead to massive consolidation of wealth and capital. In the US, the corporations maintain their dominance by controlling resources and capital people depend on, and controlling markets, this is maintained by factors such as size advantages, economy of scale, and other monopolistic-oligarchistic practices. The Corporations also have their own security forces which could even protect and assert their control over these resources. The only limit on corporate, unelected power is a democratic government, corporations would vastly expand their power in the case that democratic government is weakened or abolished, and that is the goal of the Republican party, to overthrow democratic government in the US and usher in the Corporations as absolute unelected economic royalty.
Communism as i said is a stateless, anarchic system. It is the opposite of corporate capitalism or state capitalistm found in the USSR, or today in North Korea. I do not sure Communism would work as, while most people are really wonderful, eventually an evil few would try to consolidate resources and begin to build up aggregations of resources, along with a security force to maintain such control, these things usually lead to the formation of a absolute monarchy. Free market mom and pop type capitalism in absense of a democratic government is almost exactly the same as communism, and would fail for the same reason that communism can often fail, that out of the decentralisation some evil individuals will try to decentralise and consolidate power.
A democratic state is necessary to guard against the antidemocratic consolidation of power by such evil, power hungry people. Democratic states rarely form spontaneously, the trend in centralisation by a want-to-be elite is to get power and keep it. Creating a democratic state by filling the power void can pre-empt the formation of monarchies however. And the more democratic government is weakened, the more the non democratic capitalist systems will take its place. In the US today, we have an already established anti democratic agalmation of power and the more the democratic government is weakened, the more of democracy itself that we lose as the corporations become even less regulated and their powers become more boundless.
Marx was properly correct in his diagnosis of the problems of capitalism, in that it is utterly repressive and seeks to exploit common workers to enrich an elite. Capitalism also seeks to manipulate or totally destroy democratic government, as democratic government limits corporate power, eliminating democratic government would infinite expand corporate power and turn corporations into economic monarchies. We have the fact that is the fact that capitalism is an emerging economic monarchy that often fights a war with or totally defeats or pre-empts formation of democratic states. Despite what people in the US believe, our capitalist system is not associated with democracy, it is a anti-democratic system where a few control many via vast control of resources. Power corrupts people and therefore it is wise through democracy to distribute power authority, both politically and economically, this means higher income taxes on the wealthy and limits to resource ownership that assures resource and income distribution are more equal.
Marx however, was overly optimistic and believed that capitaists could be easily defeated o
Re:Long-Term or Short-Term Trends? (Score:5, Insightful)
Pardon my french, but that's horseshit. Look at housing prices compared to household incomes (which considers that many more households have two wage-earners in them than in the past). Even for modest, smaller homes the cost is several times higher than it was 30 years ago (in terms of wages).
That's part of the problem -- it feeds into the exploitation issue. But in many ways, it's an excuse given for profit-taking by capital. The workers have been conditioned to lick capital's boots, for fear of losing their jobs. Household debt plays into this, since it's one of the anchors that keeps people from rejecting low wages.
Re:Nothing to surprising (Score:5, Insightful)
I wish I could mod you up right now...
I'm so sick and fucking tired of the Communist bashing that goes on even to this damn day in the US. Communism hasn't failed mankind, mankind has always failed Communism. The true question is whether or not a society will mature enough that it's people do not constantly want to posses more of whatever goddamn thing they see than their neighbor. As long as there is that one selfish dickface that just has to hoard bread, or money, or whatever else he gets his hands on, Communism fails. It depends on people acting honorably.
I have faith in humanity that eventually we will get to that point, but I'm not gonna sit here and say it will never happen as a justification for my own greed. We get enough of that as it is. Enough with the Randian bullshit. Just say "I want more than your neighbor because fuck him" and be honest with yourself and others. At least we'll know who not to piss on when they're on fire...
Re:Of course he had a point (Score:5, Insightful)
Yes, but capitalism glorifies it, lionizes, and justifies it. It puts greed at the top of human motivators and forbids us to censure the greediest amongst us. I'm sorry, but when you create a system built on the notion of competition, "every man for himself", and self-involvement, youmetaprogramming are pandering to the worst in human nature. You are saying the bullies aren't just usually going to win, but that it is right that they win. How can we expect any other outcome than the one we have gotten? We made sociopaths into heroes and now lament that they run the show? Seems a bit disingenuous to me.
Re:Nothing to surprising (Score:1, Insightful)
You can talk about theoretical models that can never be implemented in the real world all you want. That and $10 will get you a cup of coffee in the coffee houses where people talk about that kind of drivel.
Here in the real world, we talk about the reality of actually doing things. And that means that we have to deal with the realities of human nature. We don't waste time talking about "what if" scenarios that wouldn't last 2 seconds in the real world.
Re:Long-Term or Short-Term Trends? (Score:3, Insightful)
Except that poor people don't do that as much now.
Assuming you are talking about the civilized world of course, you know Australia/New Zealand/Canada/Germany/etc and not the USA where they have made the expicit choice to screw the poor.
Re:Nothing to surprising (Score:4, Insightful)
The flaw is central planning is NP hard! (Score:5, Insightful)
The flaws in Marxism were all figured out in the 1920s. Here, let me explain:
If you have goods that are directly consumable like bread or cheese you can divide them up among people evenly. That works. What doesn't work and is essentially an NP hard problem without money is how goods that are used to make other goods are used. Let's take an example of a freight railroad. What do you ship on the railroad? Shoes, fuel, tiny sub-assemblies of combine harvesters? If you have a piece of construction equipment, what do you build with it? A school, a factory, a playground, a road? In a modern economy all this creates an astonishing amount of complexity that is intractable from a central planning point of view.
How does this work in a capitalist system? Simple : Prices. The price of everything determines what the railroad ships, what the construction equipment builds, etc. In a complex investment decision, such as where to build a factory and what to produce in it, the managers use estimations based on prices of the factors of production and how much they can get for the goods produced to determine whether to build a factory, and where to build it. Prices are a distributed highly multi-threaded information system that tells people what is scarce and what is plentiful from moment to moment and thus directs production.
Prices are somewhat distorted by bank credit money creation and the associated credit cycles, which is what causes the booms and busts in capitalism. That can be fixed, but that's a topic for another day.
The history of the Soviet Union is full of massive planning errors. They built many towns in the middle of Siberia that they abandoned once the Soviet Union fell because the production output was minimal, they cost an enormous amount to heat and deliver supplies to and nobody wanted to live there. They didn't know this until they knew the real prices for running these cities. No communist government, except for the psychopathic regieme of Pol Pot ever dared to completely get rid of money, and even he admitted it was his biggest mistake!
If you want to dig into the theory of the planning problem in capitalism, I'd recommend Mises "Economic Calculation in the Socialist Commonwealth"
http://mises.org/resources.aspx?Id=71e20725-ee72-4adb-ade2-34dfdabf7755 [mises.org]
Re:Nothing to surprising (Score:5, Insightful)
I wish I could mod you up right now...
I'm so sick and fucking tired of the Communist bashing that goes on even to this damn day in the US. Communism hasn't failed mankind, mankind has always failed Communism. The true question is whether or not a society will mature enough that it's people do not constantly want to posses more of whatever goddamn thing they see than their neighbor. As long as there is that one selfish dickface that just has to hoard bread, or money, or whatever else he gets his hands on, Communism fails. It depends on people acting honorably.
An economic system that only works if every person acts ideally at all times is a recipe for mass graves.
Capitalism, for all its imperfections, is built on self-interest. It expects people to be people, not ants. So it works.
Communism doesn't; never has, never will.
Re:Nothing to surprising (Score:4, Insightful)
That's true as well. A truly free market degenerates to a monopoly every time. And that's not a free market. Again, it happens for the same reason true communism can never be implemented. Human greed.
Re:Nothing to surprising (Score:5, Insightful)
There is no class structure in America
There may not be a codified class structure, but if you're making the assertion that the United States is a lovely fairly-land filled with elves and unicorns that live without any class whatsoever then you are woefully incorrect. There is a massive differential in income between the haves and the have-nots with the bottom 50% controlling 2% of the wealth. We may not have the same rigid caste rules that India used to (for example only) but class mobility is becoming more and more difficult and wealth is becoming more of a legacy passed from generation to generation (new technology notwithstanding).
Re:Nothing to surprising (Score:5, Insightful)
I wouldn't go so far as to say that. The problem in Marx's case was that none of the states he thought were ready for a Communist revolution did in fact tip over. There were failed revolutions in some European countries, but the rulers got smart and began instituting relatively liberal constitutions, increasing worker protections and other various cries from classical 19th century Liberals and Socialists. The industrialized nations all got the hint pretty fast that if they didn't at least increase standards of living and rebalance the social equation, they would end up with revolutions.
The places that actually fell to Communism, at least in the first wave, were countries that Marx distinctly said were not ready, and that was the largely agrarian societies of Russia and China. In both cases, the revolutionaries literally had to lift up their economies and carry them through to industrialization, which was what the capitalist epoch in classical Marxism was supposed to be for. In essence, Marxism is an industrialized political and economic theory.
There are other problems with Marxism, but I think Marx himself was proven to be a pretty smart guy, even if there were some substantial flaws in his theory. Certainly the Marxist view of history as class struggles has a lot of adherents in the historical and scholarly community, and it's very clear that he did a rather good job of dissecting Capitalism's major flaws. I wouldn't go out and suggest we all adopt Marxist Communism, I don't think it would work at all, but at the same time I think we can take the warnings of out of control capitalism and see the truth in them.
I don't think any particular political or economic theory should exist solely for its means. The idea that we should pursue Capitalism simply for Capitalism's sake is absurd, and I think underlies the flaws in tossing out pragmatism. In certain circles, Capitalism seems almost a religion, much as Leninist Communism and its descendants did in their day. But clearly by allowing vast sums of money, and almost more importantly, vast amounts of economic influence, to accrue to large commercial and corporate interests has lead us down a dark dark path. The whole notion of too big to fail suggests to me that the time has come to perhaps put caps on just how big any given commercial interest, whether it be a corporation, consortium, co-operative or whatever formulation you can imagine can get. Maybe we shouldn't consider mergers or buy-outs beyond a certain size, maybe when companies reach whatever size seems dangerous they should be cut into pieces, in part to foster competition, but also to assure that the collapse of any one entity doesn't become so dangerous as to threaten the underlying economy.
The success of post-War Capitalism was in no small part due to the embedding of what could only be called socialist principles. Yes, we would allow free enterprise, but with controls, and just as importantly we would create a welfare apparatus to assure that those who would inevitably be harmed by the economic system could at least be guaranteed a certain minimum lifestyle. Different nations took this mix in different degrees; in Europe the welfare state took on a larger role, whereas in the United States, it was less overarching, though I would argue every bit as present, though implementation much less even due to constitutional and political constraints. Regardless of how it was instituted, the goal was to create a balance.
What I think we've seen from the wave of deregulation beginning in the late 1980s and early 1990s is a tipping of that balance. We've allowed commercial interests to accrue a vast amount of economic influence, to the point where their success or failure substantially impacts the success or failure of whole economies, even the global economy. Suddenly we've been plunged into a whole new form of welfare, nations literally printing or borrowing vast amounts of money just to keep these sputtering engines from dying and taking everything with them. Now we
Witch hunt (Score:2, Insightful)
Re:Nothing to surprising (Score:4, Insightful)
Capitalism, on the other hand, has been tried. It is not working, and never have (I know it's great for growth and accumulation of wealth - it just sucks at liberty, life and the pursuit of happiness).
Bogus claim. If you're going to define Communism is purist theoretical terms and claim it's a system that's never been implemented, then you have to acknowledge that that pure capitalism, as in totally free market, has never really been tried, either.
Even in the nearest implementations of capitalist systems, here have always been government and institutional interventions into the markets in forms like tariffs, product-specific taxes, regional trade restrictions, etc., etc. The last 40 years have seen an ever-increasing amount of interventionist policies, and these have accelerated in the last 10-15 years.
Claiming that this system is evidence of a "failure" of "free markets" is like cutting the legs off of a frog and then claiming "See, look! Frogs can't jump!"
Re:Nothing to surprising (Score:4, Insightful)
In the same way that capitalism has been tried and failed because you can't remove greed from the human condition.
No, that's totally wrong. Capitalism (free markets in their most-free form) actually recognizes and utilizes greed to promote the system. It's greed and profit motive that drives and motivates the producers in the system. The winners are the ones that can satisfy the needs of consumers expending the least resources to do so.
Re:Nothing to surprising (Score:4, Insightful)
> It's possible to set up a company structure that is, by definition of the company bylaws, owned by its workers.
> They would own a "share" of the company in a definitional sense, but not in the sense of a stock certificate
> that they can sell or take with them when they quit the company.
That would suck ass if you bothered to actually THINK about the implications. Lets imagine an attempt to do this.
We begin with 100 unemployed workers who happen to have a bit of capital saved up. Each contributes $10,000US into an account and a corporation is chartered along the lines you suggest. Each investor receives one share with a special condition that they must be an employee to maintain possession of their share. They invest in a small abandoned factory and begin bringing it up to make the infamous 'unspecified widget.' At the first meeting the duly elect a board of directors and a CEO from among their number to meet the legal requirements of incorporation and elect the rest of the initial management.
Problems set in almost instantly when one of the peeps wants to buy a house and finds that no bank will accept their stock as collateral because of the special restriction on the ownership. Out of a hundred people the odds are quite good that one will die in the first year. How to deal with inheritence? Does the next of kin have to take the job to inherit? Does the company buy out the share? When a new employee is hired does he have to buy a share as a condition of employment?
Now imagine that the company has somehow survived the above problems for a few years and prospered. How does an employee reap the benefit of his invested capital short of retiring? In light of this, why would anyone invest in such a venture in the first place vs investing in the more liquid traditional market?
RTFA, Anyone? (Score:4, Insightful)
For those who have even glanced at a history of economics, Marx takes on a rather different appearance. Along with John Stuart Mill and a few others, Marx was one of the founders of analyzing the stability of market economies in the wake of early-19th century boom/bust cycles -- which according to prevailing theory were impossible.
Later, Ricardo was so thoroughly embraced (for reasons not relevant here) that most of that prior work was swept under the rug until the Great Depression. Then we had Keynes, Hicks, and others (who disinterred the works of the economists of a century earlier). They in turn were swept under the rug by the 70s until the current depression -- which the prevailing theories of the last 30+ years tell us is impossible.
And so it goes.
Re:Is it Capitalism you despise, or Freedom? (Score:2, Insightful)
Please mount for critiques of capitalism in terms that don't also apply to personal liberty.
Uh, that's because communists hate both. You're free to set up a communist community in a capitalist society, but you'll be sent to the Gulag if you try to set up a capitalist community in a communist society.
I'm still amazed that anyone outside academia could take communism seriously after a century of Marxists demonstrating what a disaster it is.
Re:Nothing to surprising (Score:5, Insightful)
In the same way that capitalism has been tried and failed because you can't remove greed from the human condition.
In capitalism the greed is meant to be used as a balancing factor. Sure one man is a greedy fucker who will abuse all of his workers to death ... but ... there are 1000 greedy workers with less 'power' but just as much greed, and they'll do things to balance it out ... like vote.
Communism pretends humans aren't humans.
Capitalism uses human nature against human nature as a moderator.
Re:Nothing to surprising (Score:4, Insightful)
Blaming greed on the collapse of a system is like blaming gravity on the collapse of a bridge. In both cases they are permanent conditions they have to be factored into the design of the system.
Re:Nothing to surprising (Score:5, Insightful)
Yeah right. The US is one of the most classist states remaining in the world. If you doubt it, run down to Martha's Vinyard sometime.
The only difference is that class in the US is based on money, and how long your family has had it instead of strict hereditity as it was in the old world.
Re:Nothing to surprising (Score:5, Insightful)
Actually, capitalism, in the laissez-faire austrian school, has never been tried either. Everything we have today that approximates or is considered capitalist is actually the bastard child mixed economy with both socialist and capitalist features. I posit that either extreme is complete fantasy and the fanboys of both have elevated their respective economic hypothesis' to religion.
Re:Nothing to surprising (Score:5, Insightful)
Yes, the law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.
And the law, in its majestic equality, allows the poor as well as the rich to pay lower taxes on stock income vs.a paycheck, deduct the use of any business jet, and have the police show up and actually investigate when a $100,000 piece of art is stolen.
We are all equal under the law.
Re:Nothing to surprising (Score:5, Insightful)
Sounds like some kind of cult.
Yep. In fact many modern intentional communities [ic.org] work this way. It can work because you aren't going to screw your neighbors when you live, work and sleep all within a few blocks. Many of these communities are also run by consensus instead of having a hierarchy or authority figure. The problems you see with "communism" at the state level don't emerge until you have a community large enough so that there are "strangers". People will willingly screw a stranger. I've heard that this starts to happen when you get 150 people in the community. In other words, communism doesn't scale.
Re:Nothing to surprising (Score:2, Insightful)
Which is why the guy said "A Republic, if you can keep it" walking out of the Convention. The Founders, unlike today's products of government education, understood the difference and knew Democracy always ends the same way, the plebs figure out they can vote themselves bread and circuses from the public treasury.
I really, really wish that people who say this would actually - actually! - read the Federalist Papers, and not just say they did. Franklin knew the definition of a republic, and also understood the difference between a direct democracy and a representative democracy. He knew that what had been created was a republic - a form of government where the head of government is not an inherited position - and he also knew that a direct democracy was not going to work in a country the size of the US. Hence why the US was founded as a representative democracy with some quirks thrown in about who can vote for what.
And as an FYI, the battle cry "Rule of Law" is favored by dictators of all stripes. Because the legislative process and the content and legitimacy of the laws becomes a side story, with blind adherence coming to the fore front.
I love all the right-wing loonies denouncing democracy for the benefit of a country ruled by The Law. It shows them to be the wannabe jack-booted thugs they are deep in their hearts.
Re:Nothing to surprising (Score:3, Insightful)
> Yeah, I sure they how they built that giant house of cards out of selling bogus mortgages and then blew up the economy.
No, that was the government. Who put regulations on the banks subjecting them to punishment if they failed to meet government quotas for issuing loans to people who had little hope of repaying them in the name of 'affordable housing? Why that would be people like a certain lawyer for ACORN Housing by the name of Barack H. Obama. That would be certain influential Congressmen like Barney Frank. And just to share the blame for the stupid widely I remember a certain recent President flogging universal home ownership as the one stop solution to every social ill. He was a Harvard MBA named Bush. When the banks still wouldn't obey the government's wish that they commit suicide in the name of 'social justice' they had Freddie and Fannie (Cong. Franks' gay lover just happened to be a high official, no conflict there with the Banking Cmte having oversight... nothing to see here, move along ya stupid bigots and homophobes) start buying the toxic debt so the banks would write the loans safe in the knowledge they only had to hold the paper a year before they could offload it.
Of course Freddie and Fannie couldn't actually hold that much paper without anyone getting wise so they packaged it up along with good paper into securities and spread the poison far and wide in the financial community. Bankers not being stupid, well at least the smarter ones (grin), saw what was happening and tried to spread the pain away with the invention of the whole derivitives industry trying to keep the toxic paper away from themselves. In the end it just ensured that everyone dies.
Re:Long-Term or Short-Term Trends? (Score:5, Insightful)
Some notes on Marx and capitalism (Score:5, Insightful)
Marx's analysis of the flaws of capitalism is generally considered to be reasonable. His solutions are now known not to work too well. (On the other hand, in the last century Russia has tried monarchy, democratic communism, dictatorial communism, democratic anarchy, capitalist oligarchy, and the current capitalist semi-dictatorship. None worked all that well for them.)
Marx was quite right about a key point - if capitalism is allowed to use competition between workers to drive wages down, buying power drops and the system stalls, or stabilizes with most people just above some minimum survival level. That's where we are now. (Wal-Mart has a useful way to measure this. [cnn.com] They look at weekly store-to-store sales over each month, and observe that their customer base is presently running out of money before the end of each month, and they then stop buying until their next paycheck.)
Unions were developed to beat that problem. The purpose of unions is to force employers to pay employees more than they are economically worth. This helps both union and non-union workers; in a society where a sizable fraction of workers belong to unions, non-union employers have to pay wages competitive with union shops to avoid unionization. This was well understood in the 1930s through the 1970s. The phrase used back then was "labour should not be regarded merely as a commodity or article of commerce." That sounds strange today. Which is part of the problem.
After a slow decade in the 1970s, we got Reagan, the "great communicator", who sold America on "unfettered" capitalism. US median per-capita real income hasn't gone up much since, after a huge rise in the 1940s, 1950s, and 1960s. The US peak was in 1973.
Government is not neutral in this. Deregulation, free trade, weak antitrust and labor law enforcement, anti-union state policies, and tax cuts for the rich all helped to reduce US wages.
The point here is that the economy has more than one stable state. One stable state looks like a third-world country - wages are at poverty levels, a few people have most of the money, disposable income is low, and production is limited by available disposable income. Another stable state has much higher wages and consumption levels. The US has seen both, and has chosen the former.
Re:Nothing to surprising (Score:3, Insightful)
> I really, really wish that people who say this would actually - actually! - read the Federalist Papers, and not just say they did.
I really did read most of them years ago. Rereading the modernized version inspired by a comment by Glenn Beck and find them very helpful. Wish he had went ahead and made all of them available even if it didn't make sense to publish them all. Apparently the kid did rework all of them, Beck only printed about half though.
> And as an FYI, the battle cry "Rule of Law" is favored by dictators of all stripes.
They may hide behind the words but the defining characteristic of a dictator is the Rule of Men vs the Rule of Law. The Rule of Law binds even Kings where it hold sway and Bad Things(tm) happen if that is violated. That was one of the core lessons of the Arthurian legends, which was why the stories had staying power. The same themes recur in most of the works of the Western literary canon because the idea is at the very core of our civilization.
If you are to actually have the Rule of Law you have to have knowable laws that bind everyone. We don't even approach that standard anymore. Nobody knows the law. You can ask two lawyers and get two answers and both will tell you they might be wrong, the only way to know for sure is to wait for a judge to rule. And that doesn't actually settle the matter for the next case because another judge is free to rule differently with no reason or rhyme until the Supremes rule and guessing which way they will go is a popular spectator sport these days because NOBODY knows. You can make educated guesses and set up point spreads, but again, that is sports book not law. In other words there is no Law other than the Word of powerful men in robes.
Re:Nothing to surprising (Score:4, Insightful)
Bullshit. Banks loaned to everyone because they sold the mortgages at AAA+ (rated by the agencies paid for them) to somewhere else who were the ones who took the risk, without knowing it.
Found a good article a few years ago at www.csmonitor.com (could not locate it more precisely, sorry) from mortgage agents. They were forced to accept whatever proof of "liquidity" by appliants, if they did not sell enough mortgages to whoever was coming they were just fired. In one story, a man went with a photo in front of a store and just claimed that the store was his, to get his mortgage approved.
BTW, if someone has a link to the article it would be very informative.
Re:Nothing to surprising (Score:4, Insightful)
No, that was the government
No, it was the banks. They were the ones who lobbied for regulations to be removed, and they were the ones that performed every fucking action that led to the collapse. They did it with full independence and completely knowing what they were doing. To blame that on government is fucking crazy.
Of course, then I read the rest of your post and realize you're just another one of the extreme crazy right wingers who hates anything on the left, has a completely irrational hatred of government, and has a religious like belief in the "free market".
Re:Nothing to surprising (Score:5, Insightful)
That blog post has one rather glaring flaw: it fails to analyse why there are debtors and savers in the first place and who actually gets the opportunity to become a saver. In particular, it fails to account for some quite significant economic reasons why some people would be financially unable to save money. TFA has, in my opinion, a better explanation of why debt explosions are inevitable.
Re:Nothing to surprising (Score:5, Insightful)
This is technically true, but scale matters. A lot. For someone earning minimum wage, how long will it take them to save enough money to, say, open their own business? Compare that to someone who is earning millions each year.
Even your examples of how to save money reveal your flaws. You mention living with your parents, but what about people whose parents are absent from their lives? You mention giving up some free time to collect cans, but what about those who are already working multiple, minimum wage jobs and don't have any free time to give up? From the sounds of it, you come from a place of privilege (as do I - my family helped pay for college, among other things), and I think that it would do you well to remember that there are some places in the US where people live in abject poverty and have very minimal options.
The blog that you reference makes some interesting points about the merits of spending vs. saving, but trying to cram all of history and economics into this simple divide is naive at best and dangerously foolish at worst. The danger comes from the inherent assumption that all people in poverty are there through their own laziness and "debtor" mentality.
Re:Nothing to surprising (Score:5, Insightful)
BS. Anyone who has cash flow can save money. Or they are dying of starvation. The likelihood of someone having literally only exactly enough to "survive" is practically zero. One can ALWAYS sacrifice current consumption for future gain. Whether that means eating rice instead of bread, or living with your parents instead of your own apartment, or making extra effort to pick up discarded cans for recycling (sacrificing leisure time).
Do a little experiment. Get the minimum wage figures, and figure out how much you get per month. Assume you pay no taxes, since theoretically you're getting all of that back anyway at the end of the year. Find out what it costs to rent a really, really cheap place in your area. In a horrible neighborhood. I'm talking about what it requires for you to have basic shelter, where the only requirements are electricity (need to store food in a refrigerator), and indoor plumbing (you can't hold a job if you can't shower). Determine how much it would cost to pay for that electricity and water. Assume bare minimums here, just take a non-zero value. Determine how much food costs, and for the sake of argument, this person lives on ramen alone. Eats nothing else. You may also assume that this person lives within walking distance of where they work, so they will have no transportation costs. This person never spends any money on entertainment, they will never become unemployed, they will never become sick (otherwise we'd have to factor in health insurance, and that'd definitely break the budget).
Turns out that depending on where you live, minimum wage won't even cover the rent for that shack in a bad neighborhood. In other places, you might be able to determine that there's some money left over after my minimum living requirements stated above. If that's the case, I want you to calculate how much they will have saved after 50 years of working (you can assume their salary follows inflation, so keep all costs the same for all 50 years). That means they started working at 20 and retired at 70. Assume they've invested in the stock market and got a steady 10% growth every single year. You might be surprised to find that investments [xkcd.com] don't yield as much as you think they do.
Even assuming these ideal conditions, I guarantee you that the result will be that they won't have enough money saved over to last them and 20 years of life, living in the same poor conditions. I know this from experience. I'm not a debtor, but I lived my childhood as one. My parents weren't skilled enough to get high paying jobs, and there wasn't enough left over to save. We weren't starving, but that doesn't mean that sometimes we wouldn't have to do that 1-2 day fast until payday came along and we could buy food again. My parents were, however, smart enough to explain to me the value of an education, so that I wouldn't be in the same situation. With what I earn today, I find that it's rather easy to save for retirement, even as I send my parents some extra money every month to help out since they had a grand total of 20k saved in a 401k and social security isn't enough to fill in the gap.
I find that people who believe what you do have always been in the same situation as I am, where it's always easy to save some extra money by not buying that new iPad thingy. You see other people who earn the same as you do being financially irresponsible and you assume that's the reason EVERYONE has for not doing as well as you do. Financial irresponsibility can ruin you regardless of your income, I agree. However, a minimum income is required before financial responsibility is even an option.
Re:Nothing to surprising (Score:5, Insightful)
The thing is, if you read Marx's Das Kapital (which it certainly sounds like you haven't) you'll discover that the major thrust of Marx's argument is that under a capitalist economy with completely unfettered markets, wealth gets concentrated in the hands of a few capitalists by effectively stealing value from workers. The reason for this is that if a worker has no money and nothing of value to sell except their own labor, then that worker has 2 choices:
1. Work at a wage that is below the true value of their labor, but no less than the minimum amount needed to keep that worker alive, or
2. Die of starvation, illness, or exposure.
Now, here's the question: Is the worker making the choice to take that below-value wage really making a free choice?
Globalization distorts both socialism and capitali (Score:4, Insightful)
After a slow decade in the 1970s, we got Reagan, the "great communicator", who sold America on "unfettered" capitalism. US median per-capita real income hasn't gone up much since, after a huge rise in the 1940s, 1950s, and 1960s. The US peak was in 1973.
After WW2, the US stood essentially alone as an industrial power. Japan and Europe were in ruins. It took decades for foreign competition to return in a major way. When it did, in the 1970's, the results were catostrophic. The steel and auto industries were nearly wiped out.
Reagan thought that loosening controls on capitalism would restore American competitiveness. Union wages aren't of any use if the factory shuts down.
Whether it really worked for the economy as a whole is debatable but, at least for a time, it did seem improve the competivness of American businesses.
Socialism seemed to be failing against foreign competition so policy became more laissez faire.
Unfortunately, the economy is now even more complicated. American goods don't just compete with foreign goods. American labor competes with foreign labor in service of American based companies.
American companies thrive but employees and the wider society no longer benefit.
Capitalism is supposed to harness monetary greed for the greater good of society. Unfortunately, deregulation and globalisation has permited the engine of capitlism to slip its harness.
Socialism is still not competive so I think we are stuck with some sort of capitalism. Further loosening the reigns is a non-starter. Release the horse from the wagon and it may indeed run faster but the wagon won't move at all. We need a new harness. I wish I knew what it was.