
Can Capitalism Be Redeemed? - juanplusjuan
https://hbr.org/2016/07/can-capitalism-be-redeemed
======
dragonwriter
No, we figured that out decades ago, which is why capitalism was generally
abandoned in the developed world in favor of the modern mixed economy.
"Capitalism" is now, though, used in at least three conflicting ways:

(1) To refer to actual capitalism (the real system dominant in the developed
world in the late 19th and early 20th century, described and named
"capitalism" by its socialist critics),

(2) To refer to modern mixed economies as opposed to forms further from
capitalism, such as Leninism and its derivatives,

(3) To refer to a utopian realization of Econ 101 ideal markets, whose
adherents seen to believe is actually a plausible economics system rather than
a useful simplification in the same way as a friction-free model in physics.

The former, as mentioned above, cannot be redeemed, though a synthesis with
other ideas is possible (and now dominant) that mitigates some of its worst
elements.

The second may be improvable while still recognizably remaining a form of the
modern mixed economy.

The third isn't realistic, much less redeemable.

~~~
ArkyBeagle
w.r.t 2), I think of the peak of that as roughly the time in which John
Kenneth Galbraith wrote "The New Industrial State". We didn't exactly conspire
to kill it, either - it sorta just happened.

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WalterBright
What the free market rules should be are fairly clear. When corporations
influence government to favor those corporations and blunt competition, that
is not a failure of the free market, it is a failure of the government.

~~~
cassowary
But can you have free markets if corporations are permitted to influence the
government? It seems impossible; humans will be influenced by those with whom
they have contact.

So the alternative is to prohibit corporations from lobbying government, but
that would be tantamount to removing legal personality from corporations and
it is questionable whether the result is a free market system. You would also
need to remove the right of people to lobby on behalf of groups of other
people, and it is questionable whether the resulting system is free at all, or
in any ways desirable.

The system that we have approaches free market capitalism as well as a liberal
system can.

~~~
WalterBright
You can never have a perfect free market, nothing that humans craft is ever
perfect. But you can get pretty close. As I've posted here before, the
software development industry is fairly close to a free market.

Besides, just because we cannot reach perfection is not justification to run
the other way. The government is run by people, and people are subject to
imperfection, incompetence, and corruption. The more power added to that means
the more temptation there is to use that power for personal agendas.

Remember that county clerk who was using her government power to deny marriage
licenses to gay couples?

~~~
AstralStorm
Software development close to free market?

Since when you have become a venture capitalist?

Only a select few win big and often their products are way overvalued. The
road to billion valuation is littered with dead startups doing almost the same
thing.

~~~
WalterBright
How is that not part of the free market? There are other paths to funding than
VCs. None of my businesses got a dollar from VCs.

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alistoriv
The question is whether capitalism should be redeemed, no?

~~~
ArkyBeagle
There's a big increase in the exponent of global GDP growth starting about the
time of capitalism - 1790 or 1820 or so.

~~~
alistoriv
thank you that has nothing to do with my comment

~~~
ArkyBeagle
Oh yeah it does.

~~~
alistoriv
No one can deny that there has been a great period of growth under capitalism,
but it's also ridiculous to deny the fact that along with said growth there
have also been many crises. That's what this article is about. So, the
question that I originally posed was asking not whether GDPs are bigger now
than they were in the Middle Ages, but whether or not we should move on from
capitalism to something better. Your comment did absolutely nothing to answer
that question.

~~~
ArkyBeagle
Thanks for clarifying.

Which "something better"? Does "something better" still contain all the
salient characteristics of what we call capitalism such that we keep the
advantages? We're pretty sure that many things are entangled here; it's not
clear that we have the means to _dis_ entangle them

I'll put up with a lot to see freedom from food insecurity, basic clean water
and good abatement of public disease vectors. If we break the system in
certain ways, we may lose the ability to do even that. Don't say this doesn't
happen; look at some of the South American countries.

I try to sidestep all the ideology by thinking that the things we don't like
about the Rubric Currently Known as Capitalism probably involve the use of
economic rents to enrich certain people and not enrich other people.

If that tool works ( and I can't defend it beyond a rudimentary level, frankly
) then the things you're talking about that you don't like aren't actually
part of capitalism.

And i think we're really talking about "why is growth slow?" Well, good
question but my biases lead me to think that this is a lot demographic and the
rest is bad monetary policy grounded in a basic lack of understanding of
things like the proper role of central banks and public debt.

I don't know that if we had 4% {rN}GDP growth we'd even be talking about this.

In that case, "replacing" capitalism might just make it worse.

------
ksec
Slightly Off Topic: What is the term for a socialist that support free market?
Or is that a contradiction?

~~~
jomamaxx
'Democratic Socialism' and 'Social Democracy'.

'Democratic Socialism' is almost like communism: 'Social ownership of the
means of production' \- no real private enterprise, but not quite centrally
planned.

'Social Democracy' is socialism + free markets/private enterprise, meaning
socialization of some things (i.e. possibly healthcare) and government
intervention for the 'wellbeing' of people.

The former is basically far-far left wing, the later not quite as left ... is
the political basis for most left wing parties in Europe, especially
Scandinavian and somewhat continental as well. Canada's NDP party is basically
Social Democracy. Bernie Sanders would probably be described as Social
Democracy.

~~~
ksec
Thanks. May be next time I should describe myself as Social Democracy then.

Most people hate socialist. Which I describe myself as being one. I am all for
national healthcare and education. If it wasn't Obama I would not have known
there are countries without healthcare. Same goes to education. Although
tuition fees for university is debatable.

I could not understand why even healthcare is on socilist side. May be
capitalist should also get rid of Police, fireman etc these kind of public
services?

But I am all for free market with hopefully minimum restrictions.

what exactly is left, what exactly is right?

~~~
jomamaxx
" I am all for national healthcare and education. If it wasn't Obama I would
not have known there are countries without healthcare."

?

You must be living in a bubble if you did not know other countries had
socialized medicine. In fact, almost all modern nations do.

You should also be weary: I live in a country with socialized medicine, and
it's not very good. If I pay a doctor to help my I go to jail.

It's a paradox: America has the best healthcare, but it's very expensive, and
not everyone has it.

Most nations have 'parallel systems' and it works out ok, like Germany and the
Netherlands.

~~~
ksec
I was speaking from Non-US citizen prospective. Never knew US dont have
National Healthcare until this ObamaCare thing.

------
awt
Any system in which there is a monopoly on the creation of currency can hardly
be called capitalism.

~~~
poof131
You nailed the point I think is the most critical: that artificially low
interest rates (along with massive government debt) have resulted in an
incredible misallocation of capital. Working in Silicon Valley I see (and
benefit) from this first hand. Pensions, endowments, and all the other Limited
Partners need 7-8% returns. Most directly access or are one to two steps
removed from the free government money. With few “reasonable” investments that
can return the required numbers, they are forced to chase returns. This leads
to an abundance of capital in SV, one of the few places still believed to
offer these returns (this is changing as this cycle comes to an end).

Others with first access to capital are doing great in this climate too: hedge
funds, investment banks, government contractors, big companies. The rich get
richer while the economy stagnates for the majority. Raising rates and stoping
the bailouts of failed private institutions I believe will go a long way
toward fixing this growing inequality. How we get leaders who can enact these
policies is another thing since conventional wisdom (and much of academia)
says dropping rates grows the economy. Amazes me that the world didn’t learn
from Japan’s never ending stagnation. We hit the end of a 20 year credit
expansion cycle in 2000 and there still is no will to let asset prices and
credit deflate, instead we got the government “put” [1], not to mention the
2008 bailouts, and continued credit expansion.

The sad part is that instead of fixing the problem, micromanaged economic
policy and money creation from on high, we will get jingoistic nationalism.
While I do agree that some of our “free trade” has been anything but fair, the
numbers, including those in the article, seem to indicate that it has helped
large numbers of people throughout the world escape from poverty. I believe
free and fair trade is a boon for all. These gains, unfortunately, will likely
evaporate as fed-up, disenfranchised electorates in developed countries try
anything to stop their slide backwards. It’s tough to sell a “help the world”
argument to people who are hurting when those on the top are doing so well.

1\.
[http://www.investopedia.com/terms/g/greenspanput.asp](http://www.investopedia.com/terms/g/greenspanput.asp)

~~~
awt
Indeed. SV has become just another government program. The sad irony for me
personally is that I long ago quit a job working for the government to come
here.

------
socialist_coder
Any hope for US capitalism redeeming itself in the next 4 years went out the
window with Bernie Sanders's campaign.

~~~
WalterBright
The more power the government accretes over the market, the more potential
there is for corrupt use of that power.

~~~
MawNicker
That's bullshit. The government at least owes you a song and dance about how
it's working for you. Even if you're too poor to pay taxes. Corporations don't
owe you anything. When the masses have been squeezed dry they will have
nothing to protect themselves from the externalities of corporations. The
failure of this government is that it no longer exists. It's a corporation
now. Sort of an inter-corporate security/insurance firm. What we actually need
is a working government. I can't believe we still have the electoral college.
Has no one heard of instant runoff voting? Or what happened in 2000 with Nader
and Gore. The problem isn't just government period. It's this pretension of
one.

~~~
AnthonyMouse
> Has no one heard of instant runoff voting?

Approval voting. You want approval voting. Range voting is actually better but
approval voting is almost as good and is a lot simpler for people to
understand, and both are better than IRV.

~~~
MawNicker
I agree that approval voting is simpler conceptually. I like that IRV lets me
prioratize my vote. It's not that much more complicated. Counting the vote is
a lot harder but the voters don't have to do that. If 60% prefer Gore to Bush
and 90% of them prefer Nader to Gore then you don't get the "correct" result.
You'd have Gore beating Nader with 60% vs 54% approval when 54% (the majority)
of the population actually prefered Nader to Gore. They can't risk leaving
Gore unapproved because then Bush might win. IRV solves this.

~~~
AnthonyMouse
You're only getting that result by having 100% of the voters who prefer Nader
to Gore approve of both while 100% of the voters who prefer Gore to Nader only
approve of Gore. In which case approval voting does what it's supposed to do
and gives the election to the candidate with the highest approval.

Moreover, the problem you're trying to solve is Arrow's Impossibility Theorem,
which is provably impossible to do. You could have a third of voters prefer
each candidate but majorities prefer Nader to Gore, Gore to Bush _and_ Bush to
Nader.

~~~
MawNicker
I see what you're saying about Arrow's Impossibility Theorem. I don't think I
was specific enough. You're right in the general case and IRV doesn't solve
_that_ problem. What I mean is that 54% could prefer Nader outright. But since
they also prefer Gore to Bush they have to approve of Gore or else Bush may
win. This causes Gore to have the highest approval even though he wasn't the
majority's _most_ desired candidate. It wouldn't fix the bias towards those
expected to win.

~~~
AnthonyMouse
> But since they also prefer Gore to Bush they have to approve of Gore or else
> Bush may win.

Only the Gore voters have to do the same thing, and then Nader wins if he has
more support. Because a small percentage of people will vote only for their
preferred candidate and risk Bush, which will be proportional to the support
that candidate has and thus give Nader the win if he actually has more
support.

The thing you're really objecting to is why range voting is better than
approval voting. With range voting the Nader supporters can give Nader 10,
Gore 9 and Bush 0, the Gore voters swap Gore and Nader and then there is less
brinkmanship necessary to get the right outcome. But that's the cost of using
the one which is easier to explain. And range voting is more complicated than
approval voting, but it's simpler than IRV, so you're really just making the
argument for range voting over approval voting.

I feel like the trap you're falling into is to grade approval voting based on
whether it does what IRV does.

The problem with IRV is that it tends to do crazy things. So for example,
imagine everybody expects that in a runoff between Bush and Nader, Bush wins.
But between Bush and Gore, Gore wins. So then people who would vote for Nader
can't vote for him because it would give the election to Bush again. But even
weirder, Bush voters _can_ vote for Nader _in order_ to give the election to
Bush. So IRV doesn't solve the most important problem, because people will
still be clamoring for third parties not to run and for people not to vote for
them for fear that they'll harm the major party most similar to them.

~~~
MawNicker
Ok I think I'm with you. Thank you for this actually. I really appreciate it.
Range voting doesn't seem that bad. People are used to taking surveys. I have
failed many times to explain IRV and this does seem to have the same benefit.
Also brinkmanship is an awesome word that I did not know.

