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    (Original post by Annoying-Mouse)
    Lol, what third world country has capitalism by your definition?
    Most of Africa for a start. They're not socialist are they? Half of them don't even have governments. That's the free market. No taxes, no trade regulations, etc...

    https://www.youtube.com/watch?v=RxPUvQZ3rcQ
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    (Original post by Harmonic Minor)
    Nobody can deny that the moral imperatives of socialism are noble. In fact, they embody mankind's deepest hopes and aspirations. But this moral force itself doesn't make socialism correct. Socialism proposes a planned economy, and central planning has proved itself thus far to be less efficient than a market system. Economic relations in capitalism may be inherently unequal but they are now mitigated somewhat by wealth redistribution and the welfare state.

    One of the major problems with central planning is the lack of the objective price system. On this basis, Richard M. Ebeling calls socialism 'impossible':

    http://www.thefreemanonline.org/feat...is-impossible/
    What controls whether it is correct or not though? Surely it's 'moral force' makes a strong argument that it is in fact correct?
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    (Original post by Mysteries)
    Einstein was a socialist. So was Tesla. So was Da Vinci. So are most smart people.

    I used to be a capitalist though...

    I won't bother arguing with capitalists over the internet.

    I'll just leave this here:

    https://www.youtube.com/watch?v=HFxYyXGMfZM
    Only it's a crappy argument.

    A) Capitalism is an economic system. It's function is to increase economic output. To reject economic output as a relevant measure in the desirability of an economic system is to, ipso facto, reject not only capitalism but any kind of economic system for which the justification is increasing standards of living. That includes socialism or anarchism.

    B) Chomsky's analogy is false unless we atribute raising living standards to slavery. I.e. slaves were better off because of slavery. He hasn't shown that to be the case at all - he simply assumed that correlation = causation. Capitalists will argue that slavery has existed since... forever yet standards of living have only (yes only) been increasing at the rate they did under capitalism.

    Which, I think, brings out the most important point. Capitalism probably has made life better and the question for Chomsky (and me and everyone else involved) is to discuss whether a different kind of system would be better. Not whether the fact that an economic system which raises average income by a factor of 15 (i.e. 1500%) is relevant to the justification of that system. "Who cares about getting a 1500% increase in his income?!?!!?" is not a serious argument.

    Also, I don't think most people argue for laissez-faire capitalism. I don't, for instance. I am a social democrat but I am not dogmatically in favour of markets. I'd happily throw them away for a freer, more productive, more innovative, and more humane system. Really, I would.
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    (Original post by Torrresss)
    What controls whether it is correct or not though? Surely it's 'moral force' makes a strong argument that it is in fact correct?
    Whether it works... ?

    For me, Von Mises and Hayek's criticisms of socialism seem about right. The lack of a real price system means rational economic decisions cannot be made:

    On the free market, private entrepreneurs express their demand through the prices they are willing to pay for land, capital, resources, and labor. The entrepreneurs’ bid-ding is guided by their anticipation of the demand and prices consumers may be willing to pay for the goods and services that can be produced with those factors of production. The resulting market prices encapsulate the estimates of millions of consumers and producers concerning the value and opportunity costs of finished goods and the scarce resources, capital, and labor of the society.

    But under comprehensive socialist central planning, there would be no institutional mechanism to discover these values and opportunity costs. With the abolition of private ownership in the means of production, no resources could be purchased or hired. There would be no bids and offers expressing what the members of society thought the resources were worth in their alternative employments. And without bids and offers, there would be no exchanges, out of which emerges the market structure of relative prices. Thus socialist planning meant the end of all economic rationality, Mises said—if by rationality we mean an economically efficient use of the means of production to produce the goods and services desired by the members of society.
    Obviously there are numerous other objections (many of them political), but this ones seems the most important.
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    (Original post by Classical Liberal)
    No. You would have to define what you mean by capitalism or laissez faire. Then explain why all the Third World countries are ''laissez faire'' and then explain why that is the reaon they are underdeveloped.

    (Just a little note : You might find your line of reasoning falls apart on property rights )
    How so? Would you care to elaborate?

    I don't believe that EVERYTHING should be socialized. Example: Ice Cream? No reason for it to be socialized. But housing? Water and electricity? Basic food? Healthcare? Police and the fire dept? These are industries where privatization is detrimental to the consumer.
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    (Original post by Rhadamanthus)
    You've not heard a single alternative proposal at all? Have you actually researched this topic? The earliest and most devastating critique was offered by Eugene Boehm-Bawerk about a hundred years ago.
    A critique is not the same as an alternative proposal. There are lots of critiques but they don't provide an alternative source of value. They claim (though as I said, they often talk past the theory) to provide an alternative way of working out what the value is, but never an alternative to where the value comes from.

    Spoiler:
    Show
    (An excerpt of a book offering a critique of Marx' theory of value.)

    "Marx meant something entirely different by exploitation. He uses the term to designate a situation in which workers do not receive the full value of the products their labor creates. The surplus is the source of rent, interest, and profit. The details of Marx's claim will be addressed immediately below. But even on the basis of this very rough sketch, it is apparent that Marx's claim does not by itself show that something is wrong with capitalism. Unless there is something objectionable about Marxist exploitation, it does not follow that workers exploited in Marx's sense will find in their circumstances a reason for change. A more detailed account of Marxist exploitation will clarify this contention. In Marx's view, the socially necessary labor time required to produce a commodity is the basis of its exchange value. If, e.g., one house exchanges on the market for two cars, then the labor needed to produce one house will be twice the labor needed to produce two cars. By 'socially necessary,' Marx means roughly speaking, the 'average amount' of labor required to make something.1 Marx does not maintain that prices on the capitalist market are the exact equivalent of labor values. Rather, in a complicated and disputed way, labor values underlie market prices. Fortunately, for the purposes of this essay we can avoid this arid and arcane sector of Marxist scholasticism. A 'bare bones' account of Marx's economics is all that we need.

    The labor theory of value applies to labor. Like other commodities, the price of labor, i.e., the wages laborers receive, is determined by the labor-value of labor. This at first sounds like an impossible expression, just as the 'length in feet of one foot' has no meaning. How can the standard of value itself have a value? But, in Marx's view, appearances are deceiving. We can find a labor value for the laborer: this is the labor time required to produce him. Put more simply, the value of labor is the laborer's cost of living, determined by whatever a society regards as needed for living. Here precisely, Marx thinks, lies the key to the riddle of profit. A capitalist employer pays labor its price, i.e., its labor value, computed in the way just explained. For this price he gets whatever the laborer can produce during the time he works. In Marx's formula, the capitalist buys labor power but pays only for labor. The difference between the two quantities is surplus value, the source of rent, interest, and profit. The rate of surplus value Marx also terms the rate of exploitation. Marx attached great value to his proof of exploitation, since he believed that with it he had laid bare the secret of capitalism. The driving force of a capitalist economy is profit; without it, the economy would grind to a halt. Yet how is profit possible, if everything exchanges for its true labor value? Precisely in the purchase of labor, as Marx conceived of it, the answer lies at hand. The capitalist does not pay the laborer less than his value. The laborer's wages are determined by the value of the commodities required to produce him, and in equilibrium he does not receive less than this. But because of surplus value, the capitalist can still secure his profit. In Marx's analysis, therefore, the entire capitalist system rests on the exploitation of labor. No exploitation, no surplus value; no surplus value, no profit; no profit, no capitalism. Marx's ingenious argument has not at all withstood the test of critical analysis. Most importantly, it rests on the discredited labor theory of value. Marxists have never been adequately able to reply to the devastating analysis by Eugen von Bohm-Bawerk.

    Marx could show that market prices can be derived from labor values, by using a formula that gives the 'correct' results. In what way would this prove that labor values are the explanation of price? Marx's assumption that labor value was 'ultimate' would remain just that-an assumption. Given these and other difficulties, it is small wonder that most of the recent 'analytical Marxists,' a group which has attempted to revivify Marxism by applying to it the techniques of analytic philosophy and modern economics, dispense altogether with the labor theory. But what of Marx's much vaunted explanation of profit? This too fails, even if one grants Marx the labor theory of value. Sometimes, first thoughts are best; and the phrase "the labor value of labour" is indeed unmeaning. Labor is the measure of value: if so, it cannot at the same time have a value. Marx quite correctly noted that one can on his theory obtain the labor value of a laborer. But laborers are not for sale on the capitalist market: this, on the contrary, is the situation that obtains in a slave society. The laborer sells exactly what the capitalist buys-his labor power. Marx's explanation of profit through labor exploitation goes wrong at its first step. This brief excursion into Marxist economics enables us to grasp a principal weakness of Marx's argument that the arrival of socialism is inevitable. Part of his claim rests on showing that workers are exploited. Their exploitation in his view increases as capitalism develops. Eventually, they find conditions intolerable and revolt. "The death-knell of the old order sounds." As we have just seen, however, Marx has failed to demonstrate that workers under capitalism are exploited at all. To the extent that his case for the collapse of capitalism depends on proletarian dissatisfaction owing to exploitation, it at once collapses. The problems with Marx's view of exploitation go even deeper. As already mentioned, he uses a term, 'exploitation,' which suggests that something is wrong with the state of affairs so designated. But why should workers receive the full value of the products their labor helps to produce? Presumably workers, like everyone else, would like to increase their earnings; but why is the capitalist wage system one they will find intolerable?

    Of course one can take the line that capitalists are not the rightful possessors of their capital assets: their wrongful possession enable them to obtain a share of production to which they are not properly entitled. But this is a separate problem from the one Marx attempted to solve in his exploitation theory. Marx endeavored to show that workers suffered from exploitation stemming from the manner in which the market determines wages. This argument does not work and would not show anything wrong with capitalism if its conclusion were true."

    (Source - Requiem For Marx, pages 34-38)
    To summarise a few responses;
    - Confusion of labour and labour-power (though they later appear to change their tune on this when it suits them).
    - Of course labour can be both a measure of value and have value.
    - That the worker sells and the capitalist buys labour power does not mean that the worker is not exploited.
    And basically the rest, typically of a Mises Institute writing, simply consists of proclaiming Marx to be wrong and them to be correct, without explanation of why.

    'll offer a critique now then, but I'd recommend reading this paper and the links I've given to let you see a more in-depth view of the argument.
    Seen it. Talking past mostly, with a few strawmen thrown in for good measure.

    Take, for instance, the diamond and water paradox proposed by Adam Smith, who was an unfortunate proponent of a labour theory of value. Water is absolutely essential for human life whereas diamonds are mere attractive stones which come from the ground and serve little purpose other than to look good. So why is it that a single diamond can cost such a large amount of money whereas we can easily walk into a restaurant and ask for a glass of water for free? It is not, as Marx would have you believe, that the amount of labour invested in the diamond was so incredibly large, and that in the water so incredibly little. Instead it is, according to Carl Menger, due to the fact that water is in general abundance whereas diamonds are scarce.
    And why are they scarce? Because they take so much labour and energy to produce. We have not exhausted the world's diamond mines, have we? There are still more to be dug up. As Marx said, if diamonds could be mass produced (i.e. not require much labour), they'd be worth less than bricks.


    Thus, one single diamond represents a much larger percentage of the overall stock of diamonds than a glass of water does the overall stock of water.
    And this falls down quite easily. You could pick plenty of pairings where the less abundant of the two is by far the cheaper.

    Marx thinks that the workers' wealth decreases due to an increase in profits by the capitalists.
    In relative terms to the capitalists, not absolute.

    What Hoppe is saying is that the time preferences of the capitalist and the labourer are obviously different, so a trade-off is involved whereby the labourer is rewarded a smaller amount of guaranteed goods in return for the capitalist being entitled to a larger amount of possible goods some time in the future.
    This would not indicate that workers are not exploited, in fact it would reflect Marx's analysis of the cost of labour-power - the amount it costs to keep the labourer working, i.e. what Marx described as one of capitalism's contradictions.

    Also, there's the obvious problem that workers aren't paid in advance, they're paid periodically and their wages and job security are subject to their employer's fortunes.

    The real irony of the theory of exploitation is that it seems to contradict itself on the most basic reality: the supposed 'exploitation' of the workers is exactly what allows the workers to gain economic goods. Capitalists and their profits are what make employment possible.
    This only occurs because capitalists own the means of production, as enforced by the state. You're talking about a problem with capitalism rather than the theory.
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    (Original post by Rhadamanthus)
    If the vast majority of people have no use for 18 miles of track then they won't buy it. The small minority who will pay the money for the track obviously do value it, or else they wouldn't be buying it.
    Exactly. So apart from that there must be a utility to someone, utility as irrelevant. People who don't have uses for things don't buy them, and only things that are bought have exchange-values.
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    A year ago I would've said I was a social democrat, but the more I read the more marxist I feel.
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    But I still think this is an important debate, it is just framed incorrectly. To me it's not about 'capitalism versus socialism' at all. It's really about whether the government should intervene more or less in economic and social processes (but we're not going to do away with the market or private property any time soon). I think that there are cases to be made here. I'm no economist, but it strikes me that certain individuals and groups are paid grossly disproportionate to what they actually 'put in' to the system. It seems that numerous individuals and groups pursue economically worthless ventures - if we determine economic worth by their contribution to the common good - and whose labours would be better put to use elsewhere.

    Of course, if they can exist on the market, that means there is a demand and they are 'needed'. But perhaps the consumers 'needs' are not really needs at all? Why do we 'need' thousands of different types of sweets or chocolates, toys or video games, television programs or films, clothes and accessories? Do we need these when people are not receiving adequate medical or dental care, or who live in poor housing and suffer malnutrition, or lack of heating? Surely there are thousands - no - millions of people making a living from economically worthless activities? I'm just intuiting this - as I say I am no economist - but it seems to me that the government could theoretically direct economic activity to more efficient uses, by bettering the populations material lot overall, which would in turn increase efficiency, equality and happiness. But a word of warning - by determining the people's 'needs' for them, such a program necessary entails, to some degree, the subordination of the individual to the collective.
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    (Original post by PAPAdawg)
    My view as an economics student, shared by the vast majority of fellow students i know, is that the overwhelming majority of socialists are totally economically uneducated and most people tend to become more capitalist the more they learn about economics. So, sorry but i honestly think that, although they might not be thick, the majority of socialists, when it comes to economics, are totally flawed
    This. Economies work better when they are capitalist. However i don't believe in total capitalism as we should sacrifice some economic power to help those less well off. I think this country strikes a good balance compared with others (Sweden - taxes too high and toio much nannying , US, - too much inequality and poverty)
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    (Original post by Mysteries)
    How so? Would you care to elaborate?
    The essence of capitalism is private ownership of the means of production. That means you need to have laws, police and courts to enforce private property.

    These third world contries have very little in the way of well defined property rights. They are more like anarchy than capitalism.
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    (Original post by Harmonic Minor)
    For me, Von Mises and Hayek's criticisms of socialism seem about right. The lack of a real price system means rational economic decisions cannot be made:
    And some forms of socialism do have a price system, e.g. mutualism.
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    (Original post by Classical Liberal)
    That is because somebody else will buy it at the given price.

    Notice how things are valued completely differently by different people. There are no intrinsic properties of things that give them value. Whether it be gold. Or labour time. The only determinant of value is marginal utility.
    Marginal utility determines whether an individual is willing to pay the price, not what the value is. As you acknowledged in your first sentence, someone else will buy at that price.
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    A socialist, for the purpose of the argument. Although that name is, rightfully so, tarnished by the dictatorships that have tried to implement policies with the name of socialism, such as Stalin et al.

    The people saying socialism is more morally conscientious than capitalism must not forget that the idea of capitalism is as romantic as they come. The idea that if somebody works hard they will become more successful is fantastic. Of course, it doesn't work like that. Capitalism's failure lies in the fact that people do not start at the same point. It is unfair that somebody with rich parents who have time to educate them from a young age with the best resources available, as well as the opportunity to go to private school and then inevitably Oxbridge, is part of the same 'race to wealth' as somebody with a working single mum who goes to a terrible school in a rough area and is surrounded by poverty. Capitalism in addition obsesses people with wealth and this means that companies do not provide the best service, but the service that will make them the most money. I hope that one day the best of the human minds will be working together to create the best services for everybody, not for individual people's money as capitalism dictates.
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    (Original post by Classical Liberal)
    The essence of capitalism is private ownership of the means of production. That means you need to have laws, police and courts to enforce private property.

    These third world countries have very little in the way of well defined property rights. They are more like anarchy than capitalism.
    I disagree. The rich business owners have the means to protect their property. The "police" is itself privatised (i.e. they are hired thugs with guns). They have completely deregulated markets etc...

    The end result is even more extreme division between rich and poor than we see in developed countries.
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    (Original post by Mysteries)
    Most of Africa for a start. They're not socialist are they? Half of them don't even have governments. That's the free market. No taxes, no trade regulations, etc...

    https://www.youtube.com/watch?v=RxPUvQZ3rcQ
    Ignorant alert! Ignorant alert! Ignorant alert! The only country that comes close to being stateless in Africa is Somalia and Somalia's case there's an on going civil war and there's still taxes and regulations because there's a government that has control of the capital.
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    (Original post by PAPAdawg)
    simple question i'm sure. Are you a poverty creator or a wealth creator?

    I'm a capitalist. A real liberal not like the crap namby pamby imitations we have today who mistook liberalism for populism. IMO socialists are outright idiots and almost always peasants.
    Wealth is relative. For the thousands in Africa without enough food to eat: socialism would put them in a much, much wealthier position. Just because your rich British middle class economics class would all become worse off and thus see it as flawed doesn't mean anything. You are incredibly short sited if you don't realise that the rich are outnumbered extremely heavily and that more people would be comparatively wealthy in socialism.

    I'm actually a capitalist as well but its pretty hard to stomach any affiliation with idiots like you who make stupid generalisations and don't know what they are talking about.
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    Neither. I support a mixed economy like everyone else in this thread.
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    Champion of the social - voluntary - means of exchange, against the political - coercive - means. So, 'capitalist', although I much prefer the term voluntarist.

    (Original post by Danibaldi)
    Capitalism in addition obsesses people with wealth and this means that companies do not provide the best service, but the service that will make them the most money. I hope that one day the best of the human minds will be working together to create the best services for everybody, not for individual people's money as capitalism dictates.
    The service that 'makes the most money' is precisely the service that people are willing to pay for (i.e. the best service available among alternatives). The process of competition ensures that companies, constantly competing for customers, must aim to provide better services than their rivals. The profit/loss system rewards those companies who are efficient in satisfying consumer needs, and punishes those which are inefficient at doing so. Companies make large profits by providing better services at cheaper prices than their competitors (in the absence of government intervention).
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    (Original post by bulgy)
    as someone wise once told me
    'if you weren't a socialist when you were young, then you had no heart. if you're not a capitalist in your older years then you have no head'
    I would agree with this.
 
 
 
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