# capitalism is not the problem

Discussion in 'Business & Economics' started by ubermich, Mar 24, 2007.

1. ### ubermichamnesiac . . .Registered Senior Member

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i've seen a lot of arguments against capitalism lately...but i don't think capitalism per se is the problem.

he argues that the problem is not capitalism, but consumerist culture that has shifted use of real assets in the economy away from a "productivist" stance towards a "consumerist" stance.

although capitalism is efficient, we have begun satisfying not real needs but fake ones constructed by corporations.

http://demos.org/page514.cfm

3. ### Baron MaxRegistered Senior Member

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I agree with that. However......

I don't get what that means? In a capitalist economy, it's about making a profit by selling ones' goods and services in a free, competitive market. Why should we give a shit about anything else ....like "shifting real assets"???

Capitalism is about freely selling something to someone else in order to make a profit. If a person is good enough to sell refrigerators to Eskimos, more power to him!

As you can see, I don't understand what you're trying to sell me ....so I ain't buyin' it. (no, I didn't click on the link)

Baron Max

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You agree?

7. ### psikeyhackrLive Long and SufferValued Senior Member

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This is old news and we have been engaging in false arguments about capitalism and socialism and communism for decades. The Hidden Persuaders by Vance Packard came out around 1960 talking about the use of psychological manipulation on consumers. How many Americans had color TVs back then? It has only gotten dumber and more effective.

I think capitalism got phased out around WWI and corporate consumerism became the order of the day. You don't hear anyone saying accounting and personal finance should be mandatory in the schools but the banks send credit cards to college freshmen.

Century of Self 1
Century of Self 2
Century of Self 3
Century of Self 4

A few years ago I saw an article in The Economist saying Vance Packard was wrong but it didn't say what about. What I thought was, "How many people these days know who Vance Packard was?"

The trouble is we have so many dummies that believe in capitalism and socialism and spout the sound bites but understand jack sh!t. The entire economics profession can't tell us how much we lose on depreciation of automobiles each year and when do they ever mention planned obsolescence?

http://discussions.pbs.org/viewtopic.pbs?t=28529

psik

8. ### ubermichamnesiac . . .Registered Senior Member

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235
i respect that you have a healthy skepticism of what economists say and do. but i think you're slightly paranoid. economists DO study production and depreciation in long-run growth theories (e.g. solow model, endogenous growth theory).

that being said, GDP and GNP are not supposed to explain long-term growth, they're just terms that people throw around as proxy (albeit imperfect) indicators the current health of the economy. the "cash flows" of the current economy. there's nothing wrong with studying both long-run growth and current cash flows.

9. ### spuriousmonkeyBannedBanned

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I think fragglerocker calculated it in a thread not too long ago.

10. ### w1z4rdValued Senior Member

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Greed is the problem. Find out what causes greed?

11. ### psikeyhackrLive Long and SufferValued Senior Member

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Yes he did it here and I commented on it.

http://64.15.154.169/showpost.php?p=1325261&postcount=5

We are in agreement on some socio-economic points. But info I found said cars last 12 years not 20 but he still came up with a figure of a quarter of a trillion dollars a year for annual depreciation. That seems a bit much for the economics profession to not talk about for the last 50 years to me, though admittedly it had to be smaller once upon a time. My problem is with the economics profession not mentioning this but is instead emphasizing GDP on a regular basis. It is like the economics profession is encouraging the stupidity.

psik

Last edited: Mar 27, 2007
12. ### spuriousmonkeyBannedBanned

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24,066

Many people also get a loan to buy a car. That should be calculated too.

13. ### ubermichamnesiac . . .Registered Senior Member

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psik why are you obsessed with some plot by economists (*cough* economists *cough*) to mask depreciation.

there are at least two problems with what you are proposing:

to keep ndp constant in a country with as much capital as the united states, we would need exponentially increasing gdp. since gdp would have to be non-linear for ndp to be constant in the US, that puts an unfair strain on the US when comparing it's productivity to other countries with less infrastructure and capital.

first, this is NOT a good way to measure CURRENT productivity because the workers/capitalists of today PAY for the mistakes (i.e. your planned obsolescence) of the past.

second, your proxy measure for productivity creates an unfair advantage for countries with low capital per worker (newer emerging economies) because these countries do not have the same depreciation disadvantages. SO, you are proposing that even if the US and China produce the same amount of goods per year, the US should have a lower productivity because it has a higher capital stock to suffer depreciation? That seems absurd.

third, the jury is still out on planned obsolesence. It may have advantages. and it's more a function of the type of market than of some world-wide conspiracy by economists. it's more likely to function in oligopolies than in competitive environments.

14. ### psikeyhackrLive Long and SufferValued Senior Member

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When did I use the word PLOT? I just pointed out the fact that economists don't talk about depreciation of durable consumer goods. Are you saying I am incorrect about that? I am so worried about falling into the sarCHASM.

When did I say anything about keeping NDP constant? I have just said economists should compute and report depreciation of durable consumer goods and accounting should be mandatory in the schools.

I am not trying to measure current productivity and I haven't said anything about trying to measure it.

Would you provide a link to where I have discussed worker or national productivity? If anything the system seems rigged to force the workers to be productive to serve other people's purposes. A good reason for them to not know accounting, no doubt.

Well I don't know what jury you are waiting for. There are 3 types of planned obsolescence. I repaired audio equipment before I switched to computers and I knew it was going on in cars before I started high school. When a company is developing a true technological advance to replace a current product that is planning to make a product obsolete therefore it is planned obsolescence. Like Intel designing the 8086 while it is selling 8080s and 8085s. Another version of planned obsolescence is changing the style of products while having little or no effect on performance. One year the stereos are silver, the next year they are black, then they are gold, the shape and positions of the knobs are changed. These changes increase cost and created maintenance problems but don't improve the sound. Then there is cheaper construction which reduces reliability and sometimes usability. I remember a Kenwood receiver where they glued the plastic rod of the power button to the switch. I had 5 units come in where the glue had broken loose. One customer said the rod shot across the room.

Usually in complex products all three forms of planned obsolescence occur at once. If 10 changes are made, 2 are technological improvements, 5 are useless variations in styling and 3 are cheaper construction. Those are about reasonable estimates. It's funny I have had one tech respond agreeing with that.

But all this nonsense keeps us working and running on the treadmill. The stockholders are so concerned about productivity. My heart bleeds for them and the economists.

psik

Last edited: Mar 27, 2007
15. ### psikeyhackrLive Long and SufferValued Senior Member

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Thanks, I'm not sure how I screwed the link up.

That loan business presents another interesting factor. Let us just suppose for the sake of argument that auto companies could cut the price of cars in half and double their lifespans. But in order to do that they would have to considerably reduce the number of models and stop changing them annually, only make changes that improve performance, no styling changes. This would mean 1/4th as much depreciation, but the reduced price would mean smaller car loans and therefore less interest payed. Longer lasting cars would mean fewer car loans. Reduced insurance costs and easier maintenance. I have talked to a mechanic who said he could work on 50 cars in a week and not work on the same model twice. As a former repair man I have no trouble imagining how much better jobs they could do if there weren't so many stupid variations in bullsh!t.

Now if this would reduce the profit margins of auto companies you can imagine how eager they would be to implement it. Oh yeah, gotta please the stockholders.

The United States has created a system of automobile slavery but we are supposed to love this junk.

psik

16. ### RoyLenniganRegistered Senior Member

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As with anything in our universe that we deem to cause conflict within the human race, the idea/thing is not the problem. The problem is all the damn humans mucking it up.

17. ### ubermichamnesiac . . .Registered Senior Member

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psik

you are coming at these issues from the p

you didn't. i am simply illustrating one of the reasons why quoting ndp's can be misleading. ASSUMING that ndp is constant (as a lower bound), gdp would have to increase exponentially in a country with large capital infrastructure that is depreciating. i am simply asserting that if a country like the US has the exact same gdp from one year to the next, that the ndp must be decreasing if depreciation is also a constant proportion of all produced goods. that seems absurd because producing the exact same amount from one year to the next should not (at least to me) mean that overall productivity has declined.

that's fine. you are not trying to measure productivity but the reason that we DO measure gdp is to track current productivity in a given economy. tracking ndp instead might solve your depreciation problem but it creates others (like the one i mentioned above).

another important reason to consider gdp as opposed to ndp is that the economy has shifted fundamentally since the 1970s towards more service-based industries (e.g. finance, health). computing the depreciation of dead American industries like autos overemphasizes past industries over new ones, missing a fundamental shift in the allocation of American labor and capital among industries. (it's only a matter of time before the Japanese destroy the American car industry. Toyota surpassed all three big American carmakers in profits combined this year).

i'm fine with some people working to, as you put it, "serve others needs." it's specialization, a technological innovation in the way that we as humans divide up our labor. if we all tried producing everything our own families that would be horribly inefficient. btw, accounting in schools would be great.

on planned obsolescence: as a former repair man, you have opinions that are worth hearing out. but i think you have somewhat of a skewed perception of planned obsolescence. planned obsolescence fuels research and development. without research and development, companies couldn't ensure future profits. why should companies allow their own products to put them out of business?

As far as the stylistic "improvements" that don't do crap, no one is forcing you to buy. competition will ensure that companies whose improvements are not worth purchasing will not survive against companies whose improvements are.

18. ### psikeyhackrLive Long and SufferValued Senior Member

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I also said there was cheap construction which can reduce lifespan. I am forced to buy sooner or later therefore I have to pay for the stupid styling anyway.

I cannot escape the system but I can point out to people that the economists aren't talking about the depreciation and when I bring it up some people are quite shocked. A lot of people are surprised at how easy accounting is when it is explained properly. I say the system is built on keeping people ignorant.

"All warfare is based on deception." - Sun Tzu

psik

19. ### lixlukeRefined ReinventionValued Senior Member

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Claiming that capitalism is not a problem is basically the same thing as communists claiming that communism is not the problem.

If there was no exploitation, and no corruption, would communism work in such an ideal situation? What about capitalism? Unfortunately, such questions are not relevant because we are not dealing with ideal situations.

Capitalism does not work in a real world situation. Take consumerism for example. Well if not for consumerism, capitalism would work. Well if not for X problem or Y problem, capitalism would work. Get real. The root of the problem is not consumerism. The root of the problem is an an ecomic system that is so flawed that it is so easy to exploit. ALL (not some) capitlaist systems collapse in the same way:

Take a game with thousands of players. Money are the points. The objective is to get the most points. Guess what? The best players in the game are going to stockpile their points. Me along with a few other people are going to stockpile money, and keep piling it up until about 5 people out of 100 people have more money than the remaining 95 people combined. And there is nothing anybody can do about it because we have stockpiled all of this money, and we are going to continue to do so until 1 person out of 100 people have more money than the remaining 99 people combined. The end result? COLLAPSE

20. ### psikeyhackrLive Long and SufferValued Senior Member

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The problem is 90% of the people have been trained from childhood to be bad players in the economic wargame. That isn't the problem of capitalism. Capitalism is just used as a rationalization for some people to cheat.

Capitalism existed before consumerism was possible. The capitalist sycophants attribute the credit for technological advance to capitalism. The lovers of money think money is responsible for everything. There are no higher motives. :crazy:

http://www.totse.com/en/politics/economic_documents/economicwargam179613.html

psik

psik

21. ### AbsaneRocket SurgeonValued Senior Member

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The problem with this model is that if only a small hand of people have money and no one else has any money, well then the money isn't worth anything anymore and these "rich" people are holding on to a worthless pile of money. Money has to flow for the rich to stay rich. As this money flows, everyone else has a chance to get a hold of it. If the same people get their money back, what the hell is the point? If it were two people in the system.. both with $10 and I take your$10... I now have $20 and you have$0. What good does it do to me to have all this money if I don't ever use it? Eventually, I will have to give you some of it in exchange for something I want. Then, you have two options: give the money back to me in exchange for something (the cycle) or save it. If I steal the money back from you, well then the money is not worth anything again. Money is only as valuable as everyone makes it.

22. ### psikeyhackrLive Long and SufferValued Senior Member

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Money and WEALTH are two different things. Part of the problem with the analysis is people focus on MONEY too much. Money is just a medium of exchange to play the game with. What really matters is WEALTH. The smart people concentrate on wealth and encourage the dummies to focus on the money.

That is the reason for accounting and emphasizing the acquisition of assets that don't depreciate.

psik

23. ### AbsaneRocket SurgeonValued Senior Member

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Money buys wealth, yes? Weath isn't just given to people.