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From: egs@ulysses.UUCP
Newsgroups: net.flame
Subject: Re: Some thoughts on Capitalism
Message-ID: <618@ulysses.UUCP>
Date: Mon, 26-Sep-83 04:17:36 EDT
Article-I.D.: ulysses.618
Posted: Mon Sep 26 04:17:36 1983
Date-Received: Thu, 29-Sep-83 02:30:19 EDT
Organization: Bell Labs, Murray Hill
Lines: 92


	Larry Welsch has argued that "Pure capitalism is self-defeating".
There are, however, several statements in his argument which I find
specious at best.

1) In his definition of capitalism:

	the profits derived from production are governed by the
	supply/demand model of the marketplace

Profits are not governed by *any* model of the marketplace, they are
determined by many individual transactions within the market. The
supply/demand model is only an asymptotic approximation of a marketplace
in which there are an infinite number of infinitely small participants.
It may be the best we do to model the real market, but it doesn't
govern anything.

2) With regard to the way individuals act in a free market:

	and individuals act in such a way as to maximize profit

Says who? I know a number of people who don't (myself included). One
cannot generalize easily about the motivations of a large number
of people.

3) With regard to currency:

	In order for capitalism to survive there must necessarily be
	a common currency for people to deal in

This is clearly incorrect. After all, there is no single world-wide
currency and the world marketplace still functions. If you will amend
"survive" to "function most efficiently" and stipulate that the supply
of the common currency not vary wildly, I might almost buy it.

4) With regard to a production of currency:

	The only way one can have a common currency is to have the
	means of the production of currency controlled by a government.

I presume you mean by a *central* government. Again, says who? I can
easily imagine a situation in which several currencies are manufactured
by many sources that still yields a stable situation.

5) The high cost of protection:

	The point is the demand for protection is so high that if
	protection were left to private enterprise no one could
	afford the price.

You offer the perfect counterexample to this statement by mentioning the
insurance companies. I would claim that these companies do provide
protection at a reasonable price. Those cases in which prices are
generally considered too high (auto insurance for example) are only
examples of government interference (specifying minimum auto insurance
coverage, etc.). You're other example of the "mafia" extorting
protection money is a poor one since such behavior is antithetical to the
spirit of a free and competitive marketplace. Also, the military does
not generally provide protection for private enterprises. This is
amply illustrated by the numerous examples of other countries nationalizing
American owned factories, etc., without military reprisals.

6) Maximizing profits:

	Unless the economy is expanding this path [investing past
	profits in profitable ventures] leads to a few people who
	have large profits who cannot invest any more.

The only way I can interpret this statement meaningfully is to assume
that by "non-expanding" you really mean "totally static" (i.e.
absolutely no market transactions). I would claim this is a very,
*very* unlikely situation. In any other situation, there is always
some profitable venture available. For example, during our most recent
recessionary period, emerging high-tech industries performed far better
than most of the older industries even though total economic activity
was on the decline. Here, many medium sized investors made and are
continuing to make quite a large profit.

7) Surviving tough times:

	It is interesting to note that the way capitalism traditionally
	survives tough times is through "socialist" reforms.

Actually, it is the way in which a *nation* survives, not capitalism.
Capitalism cannot undergo "socialist" reforms and remain capitalism,
this is a contradictory statement. Furthermore, it is generally large,
well-established industries (big business, big labor) that agitate for
socialist reforms. After all, what better way to eliminate competition
than by making it illegal.

						Ed Sheppard
						BTL @ MH