Posted on 12/28/2010 7:14:11 AM PST by verdugo
From Toward A Truly Free Market, by John C. Medaille:
G.K Chesterton put the problem like this:
Capitalism is contradictory as soon as it is complete. For the master is always trying to cut down what his servant demands, and in doing so is cutting down on what his customer can spend. He is wanting to treat the same man in contradictory ways: He wants to pay him like a pauper but expects him to spend like a prince.
And this, sir, is the beauty of capitalism.
That’s what makes it work
For the past 12 years or so, the Capitalist monopolist corporations have been living in their perfect “utopia”, of actually living in a world where they have pauper labor, mainly China products, and prince customers (USA buyers, which still had money from the days when they had good salaries). But that is now coming to an end, the USA workers are running out of savings.
What happens now?
Chesterton had some good insights but his pronouncements on economics are not among them.
The manufacturer pays the worker because the dollars in his pocket are worth less to him than the amount of value he expects the worker to add to his products.
The worker buys the manufacturer’s product because the dollars in his pocket are worth less to him than the enjoyment or utility he expects to get from its use.
Both transactions are completely transparent, independent, and free of coercion, if capitalism is working properly. To the extent it does not, it is usually the fault of meddling government.
Explain yourself please. What Chesterton wrote of capitlsm contains no beauty, a country of many paupers and few rich, is not a place where any free man would choose to live in.
Redefine and conquer, great!! OK, here goes:
Free enterprise posits that people should embrace their humanity rather than merely live like roaches eating their young (distributism).
widespread ownership of the means of production comes from small businesses.
However, statism/corporatism squeezes out the entreprenuer’s motivation. The main incentive is wealth or earned success (being relative)
This downturn has exposed our societies’ laziness and downright lack of intelligence.
re: To the extent it does not (work), it is usually the fault of meddling government.
Very accurate! BUT, is there such a captialism in the USA? Monopolizing corporate America exists only because of “government meddling”.
Are you sure they are still capitalist corporations?
The capitalists (those who supply capital, assume risk and hope for profit) are now largely pension-fund beneficiaries and small investors investing indirectly through mutual funds. The people running the corporations are, in theory, fiduciaries for the shareholders, but in practice act in their own interests and the interests of their fellow-managers. The “golden parachute” that lets a manager walk off with a bundle of money even if he ran the corporation into the ground in terms of shareholder value along with the egregious examples where such managerial behavior strayed into actual illegality like Enron and WorldCom illustrate my point. Professional managers vote each other fat bonuses even in bad times, even against the interests of the shareholders, who would doubtless prefer that bonuses only be given to managers who increased shareholder value and the rest of the money reinvested or paid in dividends.
And guess what: the professional managerial class in the corporate world is very cozy with the professional managerial class in government and academe and the non-profit sector. As a class professional managers tend to vote and donate Democrat.
There is a reason Gov. Palin’s favorite Chicago-school economist makes a distinction between pro-market and pro-business. In the present circumstances, with corporate governance so out of whack, with the interests of large corporate managers at odds with the interests of both shareholders and small businessmen, it is reasonable for American Conservatives to attack “Wall Street”, but the conservative attack is pro-market, pro-shareholder (and pro-laborer, though that is incidental), not pro-government.
I would not blame the people all together. The government has made it so only big corporations can afford to pay for all the regulations, and laws that have been establish to, as it appears to me, to stop individual entrepreneurship, individual inventiveness. As an example, I could build for myself a shopping center at 1/3 the cost of what it costs in the present system of government inspections. The shopping center would be identical to the one approved by the same inspectors. It's my shopping center. The rents would be much cheaper for my tenants. When I go to sell it, the buyer knows that i built it without inspections, he can pay less if he wants or pay more if he sees that i built it better than code. I could build a Shopping center at 1/3 of what it costs me. BUT THE GOVERNMENT DOES NOT LET ME. I'm stifled. All I can do is move to Tennessee, where they don't have this system.
Great addition to the discussion!
I’m rather surprised at all the excellent responses. It is good to hear that there are others out there who understand what is going on. Keep talking.
Great addition to the discussion!
I’m rather surprised at all the excellent responses. It is good to hear that there are others out there who understand what is going on. Keep talking.
G.K Chesterton is pretty ignorant then.
The objective of a capitalist is to maximize profit. You accomplish that by maximizing efficiency, not by minimizing expenses.
When you plot expenses vs profit, you get a parabola. At zero expenses, the profit is also zero. At some high level of expenses, the profit is also zero. The objective is to hit the point where the parabola turns from going up to going down (called the vertex of the parabola). This is the point of maximum profit/loss.
The more productive the worker, the higher the expense level at the point of the vertex.
If an employer fails to understand this concept and underpays his employees, his more productive employees will move to a company that pays the proper amount.
If an employee errs on the other side and overpays then he is at a competitive disadvantage as well. He gets good employees, but begins losing profit margin and will be unable to sustain it over time.
What happens now?
In the free market system, the customer holds all the power. They either choose to buy or not. This holds true whether the customer is someone looking to “buy” labor, or someone looking to buy a product. The employer wants to find the best bargain just as the consumer does. The employer has to provide the best bargain when selling his goods and so must the employee offer the best bargain when trying to “sell” his labor.
This really isn't that difficult.
This congruently applies to how our government conducts the people's business.
You’re exactly right. Capitalism when working in a free society is a win-win situation.
Change. Equilibrium.
In capitalism there are no “masters.”
IF the capitalist pays his labor like a pauper, then they can take their skills elsewhere, or band together in a Union to negotiate better wages.
Hard to believe, but Unions actually served a useful function, once upon a time.
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