It's ok to be angry about capitalism

Terminal Blue

Elite Member
Legacy
Feb 18, 2010
3,913
1,780
118
Country
United Kingdom
A planned economy is one entity controlling all goods and all supply chains and trying to keep them all running.
In that case, a planned economy has never actually existed. No single entity ever actually controls the entire economy, even leaving aside the practical issue of internal division and internal competition (again, the state-managed sections of the Soviet economy were often highly decentralized and overcompetitive) there are always going to be areas of the economy that are outside of state control, whether formally or informally. A collective is nominally an independent economic entity, a black market dealer is practically an independent economic entity.

A planned economy is exactly what the name suggests, an economy that is run in accordance with large-scale economic plans. It's a relatively clear definition. However, my point here is to illustrate that the actual amount of planning required in a market and planned economy is exactly the same. Someone, somewhere, has to sit down and make the decisions, and they can get it wrong. How likely they are to get it wrong is largely a product of the information available to them and their own incentives.

The problem was that the plans simply didn't work.
Okay, let's take this at face value.

Do you think market economies never suffer from mismanagement due to market failure or bad incentives? Because I lived through 2008. I know that's not true. That one can't even be chalked up to incompetence, it was just willful malice. The people responsible got away with it, there was never even a question of corruption because, in a market economy, what they did is entirely legal.

Like, we're getting into more reasonable territory now in terms of what distinguishes good decision making from bad decision making, as opposed to the market just fixing everything somehow, but this should make it immediately apparent how much this idea of intrinsic market efficiency doesn't make any sense. Even if centralized economic planning weren't happening in market economies, you don't even need centralized economic planning in order for people to make bad decisions. You just need bad incentives. If it is possible for people to make money in a way that is detrimental to the wider economy, then they will, and again, you can't even call it corruption because what they're doing is generally legal.

And all this is based on the fallacious idea that market economies are self-contained and represented only by a handful of wealthy countries. They're not.

Did you know that there was a plant making copper wires that bought copper on the world market and sold the wires there and ended up selling the wires for less than the copper material worth ?
Why is that a problem?

Most developed countries subsidize some relatively unprofitable areas of their economies. When you see small family-owned farms in western Europe or the US, those farms probably wouldn't be profitable on the quote/unquote global market. They can exist because of government subsidies and because their competition is heavily limited by protectionist import tariffs. There are extremely bad examples of this. In the US in particular, a lot of subsidy money goes to large commercial agricultural businesses as a form of corporate welfare. But fundamentally, it's incredibly obvious why these countries subsidize agriculture, agriculture employs a lot of people and it maintains a lot of people's way of life. The social harms left behind if the agricultural sectors suddenly died off would be more expensive than subsidies. More importantly though, the availability of domestically grown agricultural goods protects the availability of food, and food is important.

So let's go back to this copper wire factory, and let's take the story completely at face value. If they were buying copper using imports, then whoever was importing them was paying import duties. That means a significant proportion of the price of that good is being recouped as government revenue. Similarly, if the copper wires are being exported that's another round of export duties. If that factory is state managed, this may mean it is in effect profitable, or at least makes a small enough loss to be worth the cost of maintaining the infrastructure and the livelihood of its employees. Secondly, it means that there is always a degree of surplus capacity in the production of those copper wires. If another factory making copper wires suddenly explodes in a freak copper accident, this factory can simply redirect its products to mitigate the reduced supply.

Now, I don't know what example you're talking about. Maybe it was horrendously mismanaged (there are plenty of examples of similar mismanagement in market economies) but the criticism you've made isn't really a criticism. Sometimes, it is worth more in the long run for an unprofitable business to be allowed to exist.

In the 1980s, the Thatcher government in the UK, which was heavily into this ideology of the free market solving everything, decided to suddenly stop subsidizing the domestic mining industry. From a purely neoliberal market idealogue standpoint, it seems like a good choice. Mining in the UK wasn't profitable so why should it be allowed to continue? But I think most people at this point understand that the way it was handled was terrible. It was needlessly cruel, it was deeply, deeply destructive to a lot of communities and it left behind a social cost, both financial and cultural, which some regions are still paying to this day.

If you go to many areas of Russia today, you can probably find infinitely worse situations. Towns built around an industry that was later deemed insufficiently profitable and shut down, leaving the people there with no livelihood, no means of obtaining self-respect or participating meaningfully in their society, no means of earning enough to escape to a major city and find work or education and nothing to do except kill themselves with alcohol poisoning. Even leaving aside the obvious humanitarian problem, those people cost money. Maintaining them costs money, and fixing their problems costs vastly more. The market cannot resolve social problems like that, because people who don't have money are invisible within the decision making process of a market economy.
 
Last edited:

Seanchaidh

Elite Member
Legacy
Mar 21, 2009
5,368
3,180
118
Country
United States of America
In quality at least, I think it would probably be more accurate to describe it as the American Debenhams. Although contemporary British department stores tended to be clothes and home only, where Sears sold a great deal more.

But companies that fail to adapt and move with the times die. Debenhams, of course, has also gone.
I think Sears is... was pretty comparable to JC Penney or Nordstrom if anyone's familiar with those American brands. Affordable but not, like, ROSS or something. And with a lot more variation in products. Add Home Depot, Bed Bath and Beyond, and a car mechanic.

@ Seanchaidh

Rise and fall of companies is nearly always multicausal. Or would you argue that Amazon got big specifically because integrating horizontally and vertically, not because it was the first to exploit a new market nieche, got a quasi monopoly there and leveraged it (and abuses its workers) ?
Of course it's multi-causal. But what I'm saying is that "collapsed under their own weight" is so vague as to be almost meaningless. It's just: they got big and then they died. Post hoc ergo propter hoc. That's an easy narrative, but there's no causal mechanism there. It's just a mystical 1. They got big 2. ??? 3.💀

But what does it mean that a company is supposedly too big? And how would it help to shatter it into pieces that all interact only through the market? Because yes, sometimes companies are too big. They might overproduce-- invest more money into making their product than they can actually make back by selling it. That is something that one company can do and it is also something an entire industry of companies can do-- and in a perfectly competitive market, if your industry does that you're just screwed. This happens a lot in agriculture, where there is a delay between investment (planting) and realization (harvest) as well as a (not so) nice synchronization of the process over the whole industry (albeit less so with globalization). They might have too many managers. They might have an entrenched bureaucracy that loses touch with the processes they're supposed to be managing. They might even have shareholders and executives who would actually make more money seeing the company get cut into pieces and sold for parts than to continue in profit.

For its part, Amazon began by exploiting a niche. That got it money. It invested that money in a whole host of different ventures and expanded rapidly by pursuing all those different things. It's mainly due to network effects and the inherent tendency toward monopoly implied by them that those ventures have typically been so successful. Also, yes, brutal exploitation of their "associates", of course. And taking full advantage of postal services who deliberately (as they should) deliver packages without necessarily turning a profit-- it's an interaction that is mediated by a market, but one in which one of the participants is backstopped by a government and is choosing its prices by criteria quite apart from what will maximize profit. They would certainly not be as big as they are without vertical and horizontal integration, but also, sure, conglomerate integration too. They certainly aren't collapsing under their own weight, which you would expect if that were actually a real thing and not an inexact way to describe more specific problems that are not even necessarily related to size.

I am not going to endlessly research and discuss specific company histories in detail to win an argument on the internet, sorry.
Alright. I certainly wasn't going to put in that kind of effort either.
 

Satinavian

Elite Member
Legacy
Apr 30, 2016
1,733
683
118
Okay, let's take this at face value.

Do you think market economies never suffer from mismanagement due to market failure or bad incentives?
No, but they clearly seem to do better.

Why is that a problem?
First because there was never a conscious decision to subsidize this factory. It just happened that the costs rose and the renevue shrunk and no production targets were adjusted for the discrepancy.

Second it was bad because it cost not just money like a regular subsidy, it bled foreign money without any benefit. Which was scarce and needed for many other things as well.
The very general lack of foreign money then led to measures during other planning cycles. That is why e.g. our medical equippment was often decads out of date and we only got drugs that we could produce ourself. Or why in many factories everything that could be sold internationally ended up as export to the west while the only the leftovers were market for internal use. Or how various museums were forced to sell off their whole collections to the West.
And, most egregoriously, production targets for companies that had any products for the international market were increased. Like for this copper wire factory. Which obviously only made the problem worse. Because the cost of actually running it was not really considered.

No one would have complained about what amounts to regular subsidy. Everyone knew that e.g. prices for food had nothing to do with the efford to produce it.

That means a significant proportion of the price of that good is being recouped as government revenue. Similarly, if the copper wires are being exported that's another round of export duties.
Nope, i obviously talked about the prices on the world market, without internal tarrifs and duties where the state pays itself.


You probably really need to experience a planned economy to appreciate how horrible it actually is.
 
Last edited:

XsjadoBlaydette

~s•o√r∆rπy°`
May 26, 2022
1,069
1,365
118
Clear 'n Present Danger
Country
Must
Gender
Disappear

Hi. In today's episode, we look at what being rich does to your perception of yourself and others, the eccentricities of the super wealthy, how they use their money to hold influence over our political systems, and the dystopian future they envision for all of us.
 
Last edited:
  • Like
Reactions: TheMysteriousGX

Phoenixmgs

The Muse of Fate
Legacy
Apr 3, 2020
9,106
801
118
w/ M'Kraan Crystal
Gender
Male
Whether or not they are "requirements" isn't the point. It is how a capitalist society is likely to end up if capitalists are left free to run their businesses as they choose.

You keep pointing out that capitalism is basically private ownership of business. Every time the government tells businesses how to operate or taxes them (and so on), this is infringing on the theoretical freedom of business owners to do with their private property as they see fit: it is generally anti-capitalist even by your own definition. Indeed, businesses clearly resent regulations, taxes and so on, hence why they invest so much time and effort into lobbying the government to not tax or regulate them.

That then is the point: what prevents capitalism from mass exploitation and resultant misery is that other forces in society restrict it - which is to say make it less capitalist.
Every system will be exploited if there aren't safeguards put in. Capitalism isn't a fix to bad socialism like socialism isn't a fix to bad capitalism. Taxes aren't anti-capitalist unless the company literally owns all the land and built all the infrastructure that it requires to do business, which no company does. You don't need an economic system to be 100% capitalist or socialist to be capitalism or socialism...
 

ralfy

Elite Member
Legacy
Apr 21, 2008
420
54
33
Yes. It may be worth pointing out, though, that :

1) There are also secondary problems with competitive capitalism. (Like, practical slavery : wealth differentials meaning that, for all intents and purposes, people have life and death power upon others). Just saying, while we're here.

2) The amusing thing is that communism also have them. Gigantism and overproductivity (in intent, even when failed due to various collapses) in total disregard for the ecosystem or any sort of health safety. And also the life-and-death power thing.

Having humans together on a same planet was globally a bad idea.
The wealth differential takes place because more wealth is accumulated by capitalists, who eventually take over:


That can take place in Communism given corruption among those on top, but for competitive capitalism accumulation of wealth among a few takes place even without corruption.

Finally, I've no idea what the last statement means.
 

Seanchaidh

Elite Member
Legacy
Mar 21, 2009
5,368
3,180
118
Country
United States of America
The wealth differential takes place because more wealth is accumulated by capitalists, who eventually take over:


That can take place in Communism given corruption among those on top, but for competitive capitalism accumulation of wealth among a few takes place even without corruption.
If that's going on, then communism by definition has not been achieved, though it can be part of a failed attempt at communism.
 

TheMysteriousGX

Elite Member
Legacy
Sep 16, 2014
8,369
6,884
118
Country
United States
Oh sure, they can storm building with flares but if I tip over a trashcan I'm a terrorist.

I should not be envious of the French
 
  • Like
Reactions: Mister Mumbler

ralfy

Elite Member
Legacy
Apr 21, 2008
420
54
33
If that's going on, then communism by definition has not been achieved, though it can be part of a failed attempt at communism.
Communism, i.e., the abolition of private property, remains in North Korea, Cuba, Vietnam, etc. AFAIK, economic growth in North Korea is middling, around 2 pct ave. per annum, and similar to that of the U.S. That of Cuba looks better, with its economy growing from $25 billion in 1998 to $100 billion in 2018. Vietnam is also doing very well, with around 4-5 pct growth rate, but it plans to allow for foreign investors to achieve even higher growth rates.
 

ralfy

Elite Member
Legacy
Apr 21, 2008
420
54
33
communism requires more than that
Right, which is why China switched in '79 to allowing foreign investors, but with the Communist Party still the leading partner in business.

It's similar to Vietnam, but they started only recently. Before that, they did very well, with 4-5 pct growth, and similar to Malaysia, which isn't Communist.

In contrast, check out the Philippines, which did the opposite of these and mostly followed U.S.-style neoliberalism: its growth rate across decades is even poorer than that of Communist countries, or something like 1.6 pct per annum.
 

Ag3ma

Elite Member
Jan 4, 2023
2,574
2,206
118
In contrast, check out the Philippines, which did the opposite of these and mostly followed U.S.-style neoliberalism: its growth rate across decades is even poorer than that of Communist countries, or something like 1.6 pct per annum.
It's more complex than that, though.

I would suggest that a large part of development is not just economic system, it's societal. China, despite poverty and underdevelopment, has a long tradition of strong societal and legal structure, education, and principles of reliable governance. This provides it with a strong foundation to quickly and effectively implement technological and economic advancement (often perhaps irrespective of the economic system). See also Japan in the 1800s.

The Philippines, by contrast, lack some of this. It had relatively primitive development and states before the Spanish took it over (later the USA), and with the usual lack of interest by the colonial master, was left to languish. Thus at the point it gained independence, it is still wracked by form of underdevelopment. One can look similarly at other states (e.g. Argentina), which should have flourished under almost any economic system, but instead have been bogged down by innumerable problems (e.g. corruption, political instability and bouts of autocracy) that have held them back.
 

Eacaraxe

Elite Member
Legacy
May 28, 2020
1,601
1,234
118
Country
United States
Do the market cap spikes in your examples even correlate with the changed strategies ? Looking at your picture Sears (of which i never heard) had its heyday around 2006 but you claim the divestment strategy started in the 90s.
Lampert took over in '04, and started the "internal free market" transition then. Which dovetails into this:

Well that is a technical error on Eacaraxe's part. [...] Anyway that's actually the market cap of Kmart, which bought Sears in 2003 after Kmart had come out of bankruptcy. A bankrupt company was able to buy Sears after the 90's
The story's significantly more complex than that. ESL Investments bailed out and took over management of Kmart in 2003, following the Chapter 11 filing. ESL acquired Sears under the Kmart label, and reorganized everything as Sears Holdings. Kmart only "bought" Sears on paper, but in reality, both were ESL assets and under ESL management; that's how and why Lampert ended up CEO in the first place.

There's no technical error and no "shame!" there. You just don't know the whole story.

Wouldn't that mean it worked?
No. Sears' stock was inflated by its acquisition and influx of investment capitol, in the middle of the mid-'00s stock market bubble; it was still hemorrhaging cash and eroding its own fundamentals. In other words, ESL pulled a "soft Enron"; when the market bubble burst in '07, reality hit and the bottom fell out. By comparison, Walmart and Amazon which had strong fundamentals took significantly less of a hit thanks to the recession and not just recovered, but continued to grow.

Amazon has a huge peak in 2020/22 and is starting to go down now. Is this related to any chance in integration strategy or manybe completely due to other effects like the epidemic? And Walmart... did Walmart actually change anything relevant to this in the last two decades?
Well, being I work at Amazon I can provide some insight. When the pandemic hit, Amazon came under sudden and intense market pressure it managed to survive because of its integration strategy.

In 2019, net sales revenue was $281b; that was up to $386b for 2020, and $470b by 2021. Its total number of employees (most of whom are tier 1 logistics workers) went from 798k in 2019, to 1.6m in 2021. In other words, sales increased by 67% over two years and its workforce doubled, at a point individual, departmental, and site productivity fell due to social distancing requirements, absenteeism due to Covid leave and Covid-related accommodations, and logistic and transportation shortages.

I can tell you as an example, the target unit rate for the department I supervised fell by 30% and shift goals fell by 40-60% basically overnight. Between inventory not being shipped to us in time (or at all), diminished headcounts, reduced efficiency thanks to Covid restrictions, transshipment restrictions, and T-caps, we went from a situation in which a 500k unit shift was considered no big deal, to 200k shifts being typical and 300k being "well, we're fucked". I work at an TSSL+ site (traditional sortable softlines, no robots and no pods), so we only had to implement a handful of minor process changes and didn't come to a complete operational standstill as some robotics sites did; my site was actually the first in the network to bring ourselves back up to pre-Covid performance while integrating Covid process changes.

Amazon had to change basically everything about its internal processes, and double the size of its fulfillment network, to meet the expanded customer demand -- at a point the fulfillment network was all but crippled. That only worked because of how tightly integrated, coordinated, and redundant our network actually is; otherwise, fulfillment operations would have collapsed completely.

The stock normalized to pre-Covid value, because of one core cause: corporate is one giant, stupid, circle jerk. They lined up around the office to chug the "this is the new normal" Kool-aid like every other tech company, and spent like drunken sailors continuing to expand even after it became clear Covid customer expectation was at best temporary. In the meantime, us vest-monkeys figured out how to do more with less, and that meant once Covid restrictions started to be removed, we bounced back leaner and more efficient than ever. For instance, last peak we pushed pre-Covid volume with 75% projected necessary headcount.

Slowed sales, plus massively-expanded operations, and facilities coming back more efficient than ever, meant we were way over capacity and running bigger deficits than ever before and had to downsize. Being the market hates the D-word and has zero tolerance for anything but sustained or accelerated growth, share price and market cap went back to its 2019 value. That wasn't just ops, mind; that was every Amazon division, including the ones that didn't see increased demand per se but also those corporate figured would be able to seize market share with revenue diverted to it (like Amazon Studios).

Walmart weathered it better, because their bread and butter are the brick and mortar stores opposed to e-commerce.

The problem is more with using companies as examples in the first place. I said that the main difficulty for planned economies is complexity. And no not even Amazon is as complex as a whole economy nor are its elements that interdependent. A single company is just not a proper comparison to what a country with a planned economy would look like.
Considering Amazon has a market cap greater than 92% of all countries' GDP's, and if it were sovereign it would be in the G20? Trust me, it absolutely is a proper comparison.

Actually, "a single country with a planned economy is just not a proper comparison to Amazon" would be a better assertion. "A supranational trade organization of countries with planned economies is just not a proper comparison to Amazon" would be even more accurate.

Better examples than companies for what planned economies would look like would probably be corporate towns. Now those generally are never that huge to begin with nor that independent from basic outside goods or services as a nation would be, but its the closest to "one entity controlls the whole economy" you can get aside from, well, actually looking at real world examples of planned economies in the former Eastern block.
You do understand the tech sector in fact has been trying to do exactly this for over a decade, right? It's why big tech has been abandoning California for Texas and Utah in particular, those states' governments are promising corporations quasi-independence. They're being called "innovation zones" now.

Hell, Disney had been doing this for quite some time, until having pissed off DeSantis last year.

It's more complex than that, though...
I'll see that and raise you Chile. Project Cybersyn was powerful enough to coordinate around US-led economic total war, up to and including a CIA-backed transportation strike and the fallout of the first coup attempt -- and at that point, it was only a proof-of-concept model. Hell, Cybersyn could be said to have been the earliest ancestor of algorithmic resource logistics management systems such as those employed by Walmart and Amazon today.
 
Last edited:
  • Like
Reactions: Terminal Blue

ralfy

Elite Member
Legacy
Apr 21, 2008
420
54
33
It's more complex than that, though.

I would suggest that a large part of development is not just economic system, it's societal. China, despite poverty and underdevelopment, has a long tradition of strong societal and legal structure, education, and principles of reliable governance. This provides it with a strong foundation to quickly and effectively implement technological and economic advancement (often perhaps irrespective of the economic system). See also Japan in the 1800s.

The Philippines, by contrast, lack some of this. It had relatively primitive development and states before the Spanish took it over (later the USA), and with the usual lack of interest by the colonial master, was left to languish. Thus at the point it gained independence, it is still wracked by form of underdevelopment. One can look similarly at other states (e.g. Argentina), which should have flourished under almost any economic system, but instead have been bogged down by innumerable problems (e.g. corruption, political instability and bouts of autocracy) that have held them back.
FWIW, Malaysia has been improving dramatically for several decades, and it has a society similar to that of the Philippines.

Also, the Philippines was actually doing very well until the mid-1980s, when it switched to neoliberalism. From there, it began to de-industrialize.

About corruption, from what I remember, Tony Kwok Wan-Mai, an anti-corruption expert, pointed out that even until the 1990s corruption in places like South Korea and Hong Kong were just as bad, if not worse, than what was taking place in the Philippines.

In addition, some aspects of corruption remain high even in developed countries. For example, one reason why the LDP of Japan has been in power for decades is because of political dynasties, while Singapore is ranked highly in terms of crony capitalism.

Given that, I think the problem isn't so much societal but employing the correct economic policies. In the case of Asia, it was the East Asian Miracle which, ironically, is based on European mercantilism.
 

Ag3ma

Elite Member
Jan 4, 2023
2,574
2,206
118
Given that, I think the problem isn't so much societal but employing the correct economic policies. In the case of Asia, it was the East Asian Miracle which, ironically, is based on European mercantilism.
The wealth of a nation is really in its people - their skills, outlooks, education, institutions. Human development is what counts, and the legal and political systems to support them and help them thrive.

Corruption is harmful, but will not derail a country unless rampant. Autocracy is okay, as long as it keeps a firm eye on the wider good of the populace. Malaysia is successful because it created effective legal and political infrastructure and drove the development, education and wealth of its population. The Philippines much less so, because its elites stuffed their own pockets with massive loans from the international community and left their masses to languish (similar to much of Latin America).

A country can build this foundation for success off pretty much any economic system: capitalism, mercantilism, socialism, communism. Some economic systems may end up a drag and need reform, but the key is getting the foundations right. After that, a country will build itself.