Forum Post: In Defense of Capitalism
Posted 13 years ago on Oct. 7, 2011, 11:10 a.m. EST by ForTheWinnebago
(143)
This content is user submitted and not an official statement
I am writing to defend capitalism and am requesting that one of the primary pillars of capitalism, create destruction, be re-implemented.
//In the Anglo-Saxon world, the expression "creative destruction" was popularized by and is most associated with Joseph Schumpeter, particularly in his book Capitalism, Socialism and Democracy, first published in 1942. In it, Schumpeter popularized and used the term to describe the process of transformation that accompanies radical innovation.[16] In Schumpeter's vision of capitalism, innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies and laborers that enjoyed some degree of monopoly power derived from previous technological, organizational, regulatory, and economic paradigms.//
What the government does, through offering subsidies and bailouts, serves to mitigate the process of the transformation of the economy by blocking the process of creative destruction. Much as after a forest fire occurs, biodiversity increases and species emerge stronger, yet the government does not allow this process to occur because power and wealth are sticky - they want to remain where they are, and will use the political system to achieve these ends.
The banks claim they want "free markets" yet not for themselves it seems. When the market tanked, there should have been a minimal government response. That was the market functioning correctly, it was attempting to tell us that leveraged finance was too high a percentage of GDP. At that point, the banks should have realized their losses, the banks should have been bought up by investors, and then split into smaller and more manageable pieces. Instead the government supported these entities, put trillions of dollars of tax payer money at risk, encouraged consolidation, and, by doing so, increased systemic risk. Now we have subsidies to this system such as QE and artificially low interest rates.
I'm not saying the banks here are where this policy should end. We should repeal all subsidies to all industries, companies should not be able subsidize their risk taking on the backs of the tax payer, and further, companies should not be able to lower their cost of financing by obtaining cheaper than market rates through government loan programs.
"The market must clean itself out by taking resources away from the losers, so it creatively destroys the losing companies and reallocates resources"
Let this process occur freely, take the government out of the game of picking politically well-connected and well-financed winners.
Let the chips fall
It takes two to screw us! Politicians to hold us down, so then the Corporations can do the screwing!!! Politicians need better rules to follow to prevent lobbying! We tax payers should fund important elections, so the best person wins and not the one with the most money!!! The movement needs at least these demands!!!!!!!!!!! Pass The Word!!! Lets Get It Together!!!
Speaking of pensions:
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/10/6_Madoff_Whistleblower_Tells_KWN_Banks_Stealing_From_Pensions.html
"Give me control of a nations money supply, and I care not who makes it’s laws." --Amschel Rothchilds
By the way, we have not had a free market for some time, the game has been rigged since the establishment of the FED. Read Creature from Jekyll Island. The privately owned FED is comprised of private banks, such as Lehman, Goldman, JP Morgan, as well as three foreign banks, owned by members of the Rothschild family. When the Fed was created in 1913 (passed by 5 congressmen on Dec 23, when the congress was unofficially out of session for xmas) it gave the banks the ability to borrow and create money in the people's names and to issue credit, thereby charging interest to you and me. Who controls our govt?
"We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilized world. We are no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominate men. I have unwittingly betrayed my country." — President Woodrow Wilson, 1916
I don't think the movement is about crashing capitalism at all...in fact I'm willing to bet my left one that most do not want capitalism destroyed.
Just unbridled crooked capitalism that has no rules or ethics....capitalism that gambles and loses and gets bailed out by tax payers because their enterprises are too big to fail...that is what I believe most Americans want to see eliminated.
The U.S. is the Most Overworked Developed Nation in the World – When do we Draw the Line? THAT'S CAPITALISM... work work work no time to enjoy LIFE.
I agree! Get rid of corporate welfare... not capitalism.
We need to stay on target,
End Corruption!
Exactly, very well said, but we need is a comprehensive strategy, and related candidate, that implements all our demands at the same time, and although I'm all in favor of taking down today's ineffective and inefficient Top 10% Management System of Business & Government, there's only one way to do it – by fighting bankers as bankers ourselves. Consequently, I have posted a 1-page Summary of the Strategic Legal Policies, Organizational Operating Structures, and Tactical Investment Procedures necessary to do this at:
http://getsatisfaction.com/americanselect/topics/on_strategic_legal_policy_organizational_operational_structures_tactical_investment_procedures
Join
http://finance.groups.yahoo.com/group/StrategicInternationalSystems/
if you want to be 1 of 100,000 people needed to support a Presidential Candidate – such as myself – at AmericansElect.org in support of the above bank-focused platform.
"Let the chips fall", and screw all the small investors, that's what happened in 1929, and the depression lasted over 10 years. Got any other ideas? And, besides, the corporations themselves have been dismantling the manufacturing industry without any help from the "free market". I guess they are "free" to do that, no matter how many lives they ruin. What we need is more oversight, not less.
I don't think we have a problem with capitalism as an ECONOMIC SYSTEM. The problem is that the merger of corporate power with political power has destroyed our Republican Democracy and replaced it with a Corporatocracy which Mussolini defined as the purest form of Facism. The merger of capitalism and republican democracy over the past 20 years has created a society that has 1% of the country controlling both the economy and the government without any checks and balances. In effect the corporations have used up the credit of the United States to run up a debt of 14 trillion dollars and taken that money for themselves in the form of deregulation, federal contracts and legislation that has made them incredibly wealthy. The problem is not capitalism as an economic system, the problem is capitalism as a political system that has given us politicians completely controlled by corporations.
Great post
thanks but we need an action plan like this:
https://sites.google.com/site/the99percentdeclaration/
The electoral system has to change. We need to vote on the president for health and separately on the president for tax for health. We need to vote on the president for education and separately for the president for education tax . And so on and in every state and regions from the bottom up. A supreme president Obama is a king. The supreme president is archaic. We should have got rid of supreme presidents when Britain's Oliver Cromwell won against King Charles. Cromwells mistake was making prime ministers who are temporary kings. The principle is Separation of Powers. All powers must be separated. That is the fundamental policy to get behind. But it is best that voters get to vote for an electoral college which in turn votes for the president of health, etc. That way, we avoid the tyranny of the majority. All the best. Miles from North Shore Auckland New Zealand
New Zealand is an amazing place, I went two summers ago (we went from Auckland to Queenstown).
Couldn't agree more.....
No, no. That's exactly playing into the hands of the global elite. Don't be a fool.
I agree.
In pure capitalism, money is simply a symbol of service rendered. Some tangible good or service was provided by you as an individual in exchange for that symbol -be it gold or paper. As long as everyone accepts that symbol for the goods and services they provide, life is good.
Now go beyond individuals and imagine you lead a company manufacturing cotton cloth. You need a steady supply of cotton at a stable price through some period -let say a year in the future. To protect yourself from a price rise, you are willing to pay for an "option" to buy the cotton at the current market price a year from now.
Technically, the person selling you the option has enough cotton in a warehouse to sell to you at the option's "strike price" in a year. If the price stays the same or drops, you simply write off the premium you paid as a cost of doing business and buy the cotton at the current price. If the price rises, the person selling you the cotton loses only virtually -since presumably the strike price was a fair market price for cotton they already own, and they got a premium from you for the option in the first place. So life is good for both corporations and individuals.
Somewhere along the way, someone got the idea to use options as a means of pure market speculation -basically a form of gambling using the market price as the focal point.
I would call market speculation "anti-capitalistic" for two reasons: 1) there is no intention to produce new goods or render services with the commodity being sold at the market 2) at least one person in the exchange is hoping for a loss of value
In fact, when practicing the original form of "short selling" you need not ever have possession of the commodity for which you sell an option as long as the price stays below the strike price until the option expires" After the market crash that led to the Great Depression, it became "illegal" to sell short without putting up enough money to buy the good or service at the strike price. However, this does not change the fact that selling what you don't have or buying what you don't need in hopes that the market price goes your way is nothing more than gambling.
A complicating factor is that the repeal of Glass-Stegal made it easier for banks to gamble with your savings and loans by removing the barriers between investment banking and commercial banks. To some extent, the commercial banks needed to do this to compete with other forms of investments, such as 401Ks -where we have been encouraged to put every spare nickel rather than into our neighborhood banks.
And the real estate bubble provided another speculative market -people were encouraged to buy houses they could not afford. They were told "they can always sell the house at a profit if things don't work out". Some were even told they could borrow the "equity" that was building up as the prices rose (not the equity they achieved by paying down the loan). Bundling these mortgages provided yet another market upon which both commercial and investment bankers could speculate.
With no real goods being produced or services being rendered, the bubble had to burst at some point (maybe a house of cards collapsing is a better analogy) . And unfortunately, we are right in the middle of it.
To sum up, Diogenes got it right when he said "the love of money [not money itself] is the root of evil" Pure market speculation is the love of money for money's sake since there is no service being rendered.
If I could make one "demand" it would be to regulate market speculation beyond its pure capitalistic purpose as insurance for those (often collectives) who own a surplus to provide insurance for those who need the commodity as part of their business. Net: you have to put the full amount of the option strike price in escrow until the expiration date; further, reinstate Glass-Stegal to again separate commercial banking from investment banking so that bankers cannot gamble with our savings.
Of course, this regulation will have its biggest impact on stock options since no one can argue that the stock (a symbol of equity in a company) is needed as part of manufacture or rendering the service of a company. Those 'selling short" would have to put the full amount in escrow. It would have the side effect that most people buying stocks will do it because they believe in the goods and services being produced by the company -or that they really like the dividends provided from the profits. If the company grows and they sell it to take a profit from the growth, the problem is self limiting because they no longer own the stock.
great post, the reenactment of Glas Stegall is part of this proposed 99% platform: https://sites.google.com/site/the99percentdeclaration/
And this is why I never understood how the free market got away with it and failed to follow their own motto, "Sink or Swim." It should being resting on an ocean's floor by now. It would have motivated these extreme rich to create new opportunities that would have trickled down into the job market.
*creative
Capitalism rocks.
Corporatism sucks.
Government and business should be as divorced as government and religion.
While I don’t totally agree with Obama’s bailout policies, letting these institutions fail was not an option. You seem to disregard all of the “little people” who had their lifetime savings tied up in these banks, along with municipal pension plans and the like. What would you do about the increased misery that would be created by this lack of action? Are you that callous to suggest it would all somehow be self-corrected by Adam Smith’s “invisible hand”? Don’t be ridiculous.
Either be corrected by the "invisible hand" or be fucked by the "invisible fist" which is happening right now.
Letting these institutions fail WAS an option, anytime they tell you there is not an option, PAY ATTENTION, because choosing the "non-option" places the power-wealth complex under duress. Also not an option they told us, was not invading the ME after 9/11. The banks should have been nationalized (like Iceland) then sold off. BTW The "little" people are protected by the FDIC for deposits up to $250,000, and not bailing out the banks would NOT have affected that.
Take pain sooner, or take A LOT of pain later. My generation (I'm 26) is the one that is going to have to deal with the economic fall-out from all of this bullshit and resource misallocation, the babyboomers are just concerned about getting what they put into the system.
I'm with you all the way with the exception of nationalizing the banks. They should have been allowed to go into chapter 11 reorg and assets would have been sold off that way. As you said the little guys investments were protected so only the big gamblers would have taken a big hit. That's what gambling is about though.
I guess there were two ways to do it, nationalize and then re-privatize, or go into chapter 11, which, both would have lead to preferable outcomes than what we have now.
Not all investments were in FDIC plans. Many municipal pension accounts that were run by political comptrollers were placed in higher risk categories, out of the control of the individual worker. That is why places like New York City are complaining about meeting their pension obligations. I can see right now that all of us baby boomers are going to get screwed. I told everyone I know that the younger people are not going to fulfill their obligations, and that we would be cut loose to fend for ourselves. I guess we'll be placed in hospital-like wards, with a bowl of gruel every day, if we are lucky. Good luck with your retirement too, because those who follow you will have your precedent to guide them.
The way things are looking, I'll be retiring at 95, so I will need all the luck I can get, thanks! Good luck to you too, the last generation that will get out from the system what they put in, although some of that has to do with the shape of our population pyramid which is becoming more rectangular. These "pay-as-you-go" programs will not function correctly when the pyramid shifts from a pyramid to a rectangle.
//Many municipal pension accounts that were run by political comptrollers, were placed in higher risk categories//
Why are pensions being put in high-risk categories? Pensions should be focused on capital preservation, not capital gains. I'm curious as to why you think that pension money is being invested in such a way?
Because much of it was either borrowed on or pilfered, to get through other economic downturns. And, for your information, I am not getting out what I put in. None of my employers provided a pension, only 401 (k)s, which I have had to pilfer myself to keep going through this long period of unemployment. It is obvious that the SS age will continually creep up, so I will be lucky, first of all, to make it to that age, (financially or health-wise). If it wasn't for my wife's job, I would have no healthcare at all.
"Because much of it was either borrowed on or pilfered, to get through other economic downturns" Not the fault of wall st. that's the fault of government.
If you are a worker, whether it be for the government, (not a dirty word by the way), or private enterprise, you expect your retirement money to be there when you leave the workforce, that is all I was saying. And, to let the system fail as a "corrective" measure to punish some misguided corporate hack and his enterprise, does nothing for the poor schmucks who got suckered into the investment. The problem is that many of these people will wind up on the public roles anyway, later on when they are totally destitute and old. http://sibob.org/wordpress/
I don't think government is a dirty word but there is nothing dirtier than bad government. I am a worker in the private sector as well as a part time government employee. I do expect both of my retirement plans to be there when I retire provided they are managed correctly. Now as far as a market correction being a punishment well that is and is not the case. All investments are a risk you can either win or lose some are safer than others but there are no guarantees just like anything else in life. As far as being suckered into an investment who's fault is that? Cavet emptor my friend. As far as old and destitute well that has to be blamed on government as well for creating a system that allows for the degradation of the family unit. What I mean by that is that programs like social security and welfare have taken the responsibility out of the hands of an individuals family to take care of them (kids to give back to parents for all the years of providing) in their old age. Now there are other atmospheres that are also the fault of government that have made that very difficult as well. The bottom line is that government more often than not has become the crux of the problem rather than the solution.
So now you are for sending the aging parents back into their older children's homes. Are you insane? Is this what the boomers have to look forward to, getting our legs kicked out from under us? I guess we should forget about the class war, this is turning into a generational war.
So who should be responsible for taking care of you? Should I take care of you? The government is not some nameless, faceless, entity. When it comes down to it we are the government, or at least we are still the funding for the government, would you have the 55 year old who still has to work to support himself pay for your care when you are 65 simply because you are 10 years older? What do you propose? What are your solutions? You offer plenty of problems that everyone knows already exist. I always lean to the side of freedom for everyone economically and socially. To ask government to take anyone's money from them to give it to you or anyone else is advocating slavery upon someone else. Weather or not you like them is irrelevant. I served in the Marines for 6 years and I had not choice but to serve for everyone. I could not pick and choose who I would defend. I served to defend freedom for all. I act now because I still believe in freedom for all.
Freedom to die , I guess, for both soldiers and old people.
Or freedom to succeed or fail on your own and of your own merits. If you are a failure you have no one to blame but yourself in a truly free society. Why are you looking for someone to blame or take care of you? Who told you the world owed you anything? All you are owed is what you put in nothing more my man. Stop crying and get on with getting on. If you want to complain about the government and business colluding to steal from us then I hear you it's legit but to claim that the world should support you to the grave, man you really need a reality check.
So those who wind up old and destitute don't deserve to live, is that what you are saying?
How many times do you want me to say it? What happened to the family unit? Community? These are the first places we should look. The places we have been a part of and contributed directly to all of our lives. The people that know and love us. Why is the first look always to government to force the burden onto someone else?
That's a nice ideal, but the Cleaver family doesn't really exist anymore. Sorry to burst your bubble. http://sibob.org/wordpress/
Yeah no kidding sure doesn't but who's fault is that?
I guess Ward was a little rough on the Beaver last night. (Misguided didn't get the joke. Sheesh, you can never take a break around here. All politics and no fun makes Misguided a dull {fill in the blank}.) http://sibob.org/wordpress/
Maybe we need a governmental and familial revolution as well. Community and family taking care of each other again. That would be great. I blame government for that not being the case anymore. They have created an atmosphere of animosity and "Safety Net" comfort that turns into entitlement and anger. People don't give a shit about people anymore. That needs to change. Free people tend to help each other, oppression causes division.
Corporate ruthlessness leads to depravity, and exploitation leads to poverty. Poverty leads to a breakdown in the family. http://sibob.org/wordpress/
The root cause is government. Corporations cannot take anything from you that you don't willfully give them without the help of government.
What does government have to do with the corporate employment process? Is it always government that crushes unionism? Does government lead the way in paying exploitative wages? Does government dump their money in Cayman Island bank accounts? Does government design faulty oil rigs? Does government throw millions of factory workers on the bricks and contract out production to Chinese factories? Is it government that designed the credit default fiasco? Man, do I need to go on? I think not. http://sibob.org/wordpress/
No they do not directly do those things but if you look at the reasons for many of those things occurring you will find that government usually has a significant role in causing them. And I believe Cayman Island accounts are a specialty of Charlie Rangle's.
Rangel has been called out for it, and censured. What he did was not a good thing. How about we go after Bush and Cheney, for the Iraq War lies, or Scott Walker in Wisconsin, for his newly developing scandal. A recall would be great. Let's get real here, many politicians of both parties are in cahoots with the corporations. The answer is not less government, it is getting the bad apples out, and reforming the campaign finance laws. And, making the whole process, both public and private, accountable to the people. If a system does not serve all of its citizens by providing opportunities to thrive, what good is it? If we don't regulate the process, we get screwed, more often than not. http://sibob.org/wordpress/
I agree lets go after all the criminals in government. unfortunately there are no angles to take there place so the only answer to less corruption in government is less government.
I don't agree, we need more government, more regulation, and more civil service union jobs.
All paid for by whom?
By the rich elites who have been keeping us under their thumb. It's time to send the pendulum back in the other direction. We need a New New Deal.
So it's ok to steal so long as it's for something you like?
We are the victims of the theft. Our jobs have been sent out of the country. Our tax money has been stolen by the bailed-out corporations. The full value of our labor is stolen by nickel-and-diming bosses,etc.
You have now said something I can wholeheartedly agree with. We have been the victims of theft. Our tax money was not stolen by the bailed out companies it was stolen by our government and given to those companies. Our jobs were not stolen they were ours through a free association and they can be taken back and given to anyone by those who require that work done. The value of our labor has been diminished but not by bosses by government who claims to own a percentage of it. I think we agree on the problem but the root cause of the problem is without question government involvement in business.
I disagree with everything you said. The government has the right to tax, and they have the right to tax in a progressive fashion, and that is what they should do, go after the money where it has been stashed. This whole idea of "free association" in a country where the labor supply, both legal and illegal, outstrips the demand, only allows the exploiters to underpay employees who are desperately in need of work. You are way off base, and the day of corporate prominence is nearing an end. http://sibob.org/wordpress/
Can I get in on this? I love a good fight..
ONE.. IF you don;t like the way the government coddles to Big business, than change Government.
TWO... Which big business was it that screwed you over?
This is not personal, it is systemic, and, if the street protests continue, we may indeed see a migration over to the left for some of our tepid Democrats, which will allow us to "change government". Don't worry we are working on it. And we all know how much corporate cash is flowing to both parties. And, another thing, bring on the battle, your fight is my fight. It seems that the wimpy Tea Party is about to get eclipsed.
Pensions are non-existent for my generation, they never even existed to begin with, so I don't have much sympathy for you there. And yes, SS age will continually creep up, you may be 70 when you retire, but I will be 85.
I do agree that much of it was borrowed on or pilfered, we have to stop that cycle!
No sympathy? I wouldn't say the same thing regarding your problem, what's with you? Is this how it is going to be? What are you heartless? I didn't create this problem. I didn't vote for Reagan and all of his followers, who believed in all that trickle-down nonsense. Have a little compassion, you might need it yourself someday.
My apologies, I didn't mean to come off like that. Both of our generations are fucked, so let's not be divisive with each other, rather, let's find commonality in placing blame where it is due, not in the individuals born into the systems, but rather those that manage and profit from them at the expense of the tax payers.
I can agree with that. Thank you for the apology. I wish you well too.
I used to have comments in this thread, but they disappeared, weird.
Where oh where could they be?
I don't know, where does digital data go when it is erased? I've always wondered that myself. Since, according to the quantum no-hiding theorem, information cannot be created or destroyed, it must be existing in another form of information somewhere, although in an unrecognizable form, one which my computer cannot display to what we would construe as language.
The only thing I can think of is a black hole, or George W. Bush's brain.
ACTUALLY, it WAS an option. They've just convinced everyone that it's "not an option." Anything is possible, unless you've got a brain the size of a pea. Whether it's a good or bad option is discussion, but to dismiss as possible just shows how weak-minded you are.
Unregulated economic collapse, dumbass, was tried in 1929, it didn't work out so well, as Hoover watched the market take care of itself. Read your history, if you can read.
You sound like a government shill.
I'll save you the trouble of reading http://www.youtube.com/watch?v=czcUmnsprQI
You sound like a Tea Party hack.
I am not affiliated with any group at all. Better luck next time. Also, the video isn't a tea party video. The guy in the video is an anarchist, also with a PHD from Harvard. But not watching it is much easier than learning anything.
I'll choose my own material, thank you, and judging from what you have been saying, I can't go wrong with that.
Reality is the great equalizer. You deciding not to learn anything doesn't make anything untrue, it just makes you ignorant. Good luck learning anything from all the people who are going to tell you what you think you already know.
You assume that you are the fountain of knowledge, what a joke that is. And, I think you are pretty stupid too.
Let's recap, for all the folks watching.
SIBob made an asinine statement.
I told him it was narrow minded..
SIBob attempted to refute with facts.
I directed him to a video of a Harvard educated PHD writer talking about related facts.
SIBob refuses to watch it
I'm the stupid one.
Oooooh, a Harvard Phd, wow. How could I not be impressed? Do you know real life professors? Man, I am so humbled.
You can have the last word.
Ba-bye!
Keep dreaming friendo never ever going to happen. The 1% like it the way it is. They've won and they see no reason to allow an actual free market from upsetting the feudal order they're building. You Libertarians don't seem to get it do you?
The game isn't over yet. The game isn't over until human society comes to an end.
If that is the case then what are you fighting for, it's all lost already according to you.
What's lost is any notion of a free market. People who come here dreaming that dream are delusional.
Well that is true. The free market has been gone from here for a long time. That being the case we can only point at government for creating a system of crony capitalism (not true capitalism).