What is Capitalism?
Tuesday October 28, 2008
Capitalism was meant to be an observed phenomenon within the study of economics, somehow it has become the scripture of economics, politics and religion. Capitalism is nothing more than a theory of how trade occurs. It is a scientific theory based on the movement of people, goods and money. Not surprisingly, two predominate theories of capitalism have emerged. Both are based on the assumption of 'fixing' capitalism, which is a clear indicator that we are not observing economics anymore, but acting out of beliefs.
The first theory is based on competition. If people all compete, then the marketplace will automatically self-regulate. This survival-of-the-fittest approach magically guarantees the best of all possible worlds. The smart win, the losers lose. This theory is regularly promoted by those who are winning, or feel they can win. It is the entrepreneurial mantra, and makes the economy akin to a sporting match. It is emotionally immature, and is based on an economy of limitations. In a zero-sum game belief; anything that somebody has can only come at the expense of somebody else.
The second theory is based on monetary flow. This is a more refined version of the first theory, and is the predominate view of today. This belief is that if the money will flow, then the goods and people will flow in a harmonious way, too. The bailout, the printing of more money, the complaints against the Fed's fiat ability to create money, are all related to this theory that monetary flow is the key modifier to regulating the economy. This is a slightly more mature view, in the sense that cause and effect are actually related to the actions of men, rather than to an invisible hand. Also, there is assumption that what is good for everyone is the goal, whereas the former is more self-centered.
This monetary is touted by the Chamber of Commerce and government, who encourage development through tax breaks, loan guarantees, etc. The claim here is that if the money flows, the money will regenerate itself over and over again in a ripple effect. A rising tide that will lift all boats.
Both views have some truth to them, but by becoming a belief, rather than an observation, they fail to be useful at actually fixing anything. The solution to every new problem is always to reapply the previous solution, which only stimulates a repeat of the problem. Any new problems are not being regarded as new data, which need to be included in an updated theory, but as part of the 'natural' rhythm, and are intellectually dismissed.
The biggest failure of the monetary approach is that it fails to consider the importance or the consequence of what happens in regard to the goods or the people. The belief is that if the numbers are okay, based on the confirmation of a randomly self-prophesized expectation, then everybody and everything is okay, too. It is the numbers that count, not people. Numbers are happy or sad, not people, and the press reports on their health daily, like the temperature of an ailing patient. This view is also immature, and politically it is a psuedo-scientific rationalization of indifference. It is currently being challenged by thoughts regarding the condition of the environment.
The new 'green' economic belief system suggests that waste is economically inefficient. We cannot harvest what we waste. This is not a new theory of economics, but a continuation of established beliefs. The primary awakening is that the factory walls have come down, and there is a sense that where things come from is also related to where things go. The battle for supremacy between numbers versus the environment has found fusion in the oft-repeated claim that a green economy will create jobs and spur new industries. Reducing waste will be the new industrial revolution, and it will create jobs and wealth for everyone. These pronouncements are based on hope, not reason. It is however a compassionate attempt to include people, numbers and the environment
belief are desia of the In effect, there is an attempt to rebalance the monetary view with a more mature and inclusive regard to people and the the Earth.
Concern for the poor and environmental stewardship are not new, of course. But, with the advance of technology and the population boom, they take on an even more greater urgency. In effect, the planet is getting smaller as our understanding is getting greater. Unfortunately, there remains a belief in the marketplace as self-regulating that will not die. We see it expressed by environmentalists who want to create a pollution marketplace of carbon credits that can be sold and traded.
The first theory is based on competition. If people all compete, then the marketplace will automatically self-regulate. This survival-of-the-fittest approach magically guarantees the best of all possible worlds. The smart win, the losers lose. This theory is regularly promoted by those who are winning, or feel they can win. It is the entrepreneurial mantra, and makes the economy akin to a sporting match. It is emotionally immature, and is based on an economy of limitations. In a zero-sum game belief; anything that somebody has can only come at the expense of somebody else.
The second theory is based on monetary flow. This is a more refined version of the first theory, and is the predominate view of today. This belief is that if the money will flow, then the goods and people will flow in a harmonious way, too. The bailout, the printing of more money, the complaints against the Fed's fiat ability to create money, are all related to this theory that monetary flow is the key modifier to regulating the economy. This is a slightly more mature view, in the sense that cause and effect are actually related to the actions of men, rather than to an invisible hand. Also, there is assumption that what is good for everyone is the goal, whereas the former is more self-centered.
This monetary is touted by the Chamber of Commerce and government, who encourage development through tax breaks, loan guarantees, etc. The claim here is that if the money flows, the money will regenerate itself over and over again in a ripple effect. A rising tide that will lift all boats.
Both views have some truth to them, but by becoming a belief, rather than an observation, they fail to be useful at actually fixing anything. The solution to every new problem is always to reapply the previous solution, which only stimulates a repeat of the problem. Any new problems are not being regarded as new data, which need to be included in an updated theory, but as part of the 'natural' rhythm, and are intellectually dismissed.
The biggest failure of the monetary approach is that it fails to consider the importance or the consequence of what happens in regard to the goods or the people. The belief is that if the numbers are okay, based on the confirmation of a randomly self-prophesized expectation, then everybody and everything is okay, too. It is the numbers that count, not people. Numbers are happy or sad, not people, and the press reports on their health daily, like the temperature of an ailing patient. This view is also immature, and politically it is a psuedo-scientific rationalization of indifference. It is currently being challenged by thoughts regarding the condition of the environment.
The new 'green' economic belief system suggests that waste is economically inefficient. We cannot harvest what we waste. This is not a new theory of economics, but a continuation of established beliefs. The primary awakening is that the factory walls have come down, and there is a sense that where things come from is also related to where things go. The battle for supremacy between numbers versus the environment has found fusion in the oft-repeated claim that a green economy will create jobs and spur new industries. Reducing waste will be the new industrial revolution, and it will create jobs and wealth for everyone. These pronouncements are based on hope, not reason. It is however a compassionate attempt to include people, numbers and the environment
belief are desia of the In effect, there is an attempt to rebalance the monetary view with a more mature and inclusive regard to people and the the Earth.
Concern for the poor and environmental stewardship are not new, of course. But, with the advance of technology and the population boom, they take on an even more greater urgency. In effect, the planet is getting smaller as our understanding is getting greater. Unfortunately, there remains a belief in the marketplace as self-regulating that will not die. We see it expressed by environmentalists who want to create a pollution marketplace of carbon credits that can be sold and traded.
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