Capitalism

From Unfocusgroup.org

So, the problem with capitalism in a nutshell:

• In a laissez-faire free trade, profit depends on “value-addedness”, which is measured in financial terms.
• The highest value-added jobs tend to be in the financial sector, as these offer the highest potential rewards for the least physical work.
• However, a) this is analagous to the bureacracy inherent in socialist systems, whereby the upper tiers control the rest of the system whilst sucking up the fruits of their efforts. The tail wags the dog!
• b) Financial services tend to be a form of gambling, where things can as easily go very wrong as they can go right
• In theory, private companies should be allowed to fail. However, as the financial services industry has become the mainstay of most capitalist economies, governments feel that the only option is to bail out the financial sector. Otherwise, not only would a key industry collapse, but seemingly, the system itself.
• However, the bailout is only a stay of execution. The best option is to allow things to collapse and for the economic cycle to continue. Government should really be there as a safety net for individuals and businesses. Financial sector bailouts only serve to keep prices high and currencies strong, neither of which are desirable during a recession.

Problems with capitalism tend to remain hidden for a long time, because the definition of success is measured in terms of wealth. In fact, most of the key performance indicators of the capitalist system are self-referential, in that wealth is defined in financial terms, and that the financial system is based around the generation of wealth. This has led to the massive financialisation of the economy, and the demise of industries that provide meaningful social benefit. There is very little payoff for actually doing a proper job.

Notes

• Employees are at a "local maximum" - i.e. any movement in any direction will cause a drop in living standards. The "troughs" are bad - so most don't try to escape.
• The result is a form of serfdom.

Developmental advantage: in any case, employees in more developed countries are more productive, because they don't need to worry about basic amenities. E.g. poorer people have to worry about growing their own food, so this wastes valuable time. Also, richer people already have more equipment (plant & machinery).

So, gap between rich and poor has a tendency to grow anyway, because the rich have an intrinsic advantage anyway - as well, of course, as holding all of the cards in terms of how they use their capital.

Is this a bad thing?