The following is the debate that resulted from my answer to the Quora question “Do you think capitalism and socialism need each other to make a sustainable and successful government?“
To make this perfectly clear: The more capitalistic an economy is, the more sustainable and successful it will become. The more socialist the economy is, the less sustainable and successful it will become. Full Socialism can never be sustainable and successful, and needs some capitalistic enterprises to attain revenue from. Full Capitalism is the most sustainable and successful, and doesn’t have any such mutual need for Socialism.
Not true in two senses:
- If you mean society cannot exist without accumulated *capital* then that is manifestly untrue. (Unless of course you include rudimentary tools and shelter as “capital. “ ). Many societies, some dating back tens of thousands of years have operated without advanced technological capital.
- Socially owned and operated “capital-centric” enterprises not only exist but thrive in the forms of SOEs, transportation, infrastructure and if course the popular and ubiquitous Cooperative type ownership structures. Even the Visa cash transfers system was started as a cooperative, funnily enough. Large chunks of our Corporates are largely owned by a wider public either personally or via mutual and pension funds.centric
For good measure I’ll just add that most value is added to human existence by individuals and small groups working by in a non-monetised context. (Brushing teeth, housework, subsistence farming, voluntary cooperation etc). Then there is the important issue of human demands on the biosphere, so the capitalist – socialist axis is not even the most relevant one.
From here, the debate splits into three parts.
One of them was merely semantics, in that I confronted him on his straw-man version of my argument. I won’t show that part of the discussion here, but if you want to read it, here’s the link.
In the second part I shared my book review on Ludwig von Mises’ Profit and Loss, with the hope to get him to understand a crucial concept of the relationship between market freedom and entrepreneurship/innovation. Instead, he pretty much called Mises’ writings outdated and interpreted his points to mean the opposite of Mises’ intention:
Going from the review the man is a hopeless fool in todays terms. Admittedly he was writing at a time when resources were seen as unlimited and he was certainly clever for his time. Without some strong personal and rational recommendation I cant afford time on that. Sure I “shiuld” read it but I “should” read Capital too. And the bible.
Dont misunderstand me; the Labour Theory of Value is just as patchy but at least Marx recognises Use Value. That neither of them foresaw was burgeoning populations based in Fossil energy.
The transition to high Human Welfare / Low Evological Footprint for 10 billion people is something that we have to manage now. Relying on Victorian dogma aint going to cut it. (Mies is an honorary Victorian for the purposes of this comment only!)
I pointed out that Mises most certainly didn’t believe that “resources were unlimited.”:
It appears to me that you’ve seen the opposite in Mises than what he actually says. He’s clearly coming from the perspective that resources are scarce and need to be allocated as efficiently as possible. The profit and loss system in Capitalism is the most efficient system to allocate resources where they are most needed, as is explained in the review if you think it through.
He made a relatively long response, still not addressing my points, but speculating ad hoc that the profit and loss system was the cause of some inefficiency without delineating the causal relationship:
The profit and loss system has led us into some extremely inefficient uses of resources of you close your books and open your eyes. See the Great Plains in the US? Degraded, ruined topsoils which should be vast carbon accumulators according toStrough. Maybe the Profit and Loss boys will invent a Carbon Pricing system which works, but nobody can deny they’ve gone through a number of red lights on the way.
This diversion between fact and theory is why I can’t spend time on a theory which was obviously built to justify a dysfunctional and ideology based system and not on clinical and ruthless observation. Marx had preconceptions but at least he fleshed them out with observations of the real world.
The most dramatic example of this inefficiency is illustrated by an infographic on the UK ecological Footprint vs Human Development. Due to the inefficiency of my capitalist produced Tablet I can’t supply the link right now because changing Windows wipes all the text from my Quora answer. So I’ll post this and come back with a link and explain my reasoning in a few minutes.
Ok – now I am back. Just as Profit and Loss measures efficiency in the capitalist mindset and Miles per Gallon measures fuel efficiency, the ratio of Human Development to Ecological Footprint measures ecological efficiency.
Ecological Efficiency is the salient policymakers yardstick in this point in time because we are approaching peak population in 10 billion. According to some academics (and the ghost of Mies is nodding in vigorous agreement to this in my imagination) we have already overshot carrying capacity.
So – you tell me – how do the most successful capitalist economies do on theindex?
I responded on each point systematically:
“The profit and loss system has led us into some extremely inefficient uses of resources of you close your books and open your eyes. See the Great Plains in the US? …” Where’s the causal connection? You appear to merely speculate that they’re connected.
“This diversion between fact and theory is why I can’t spend time on a theory which was obviously built to justify a dysfunctional and ideology based system and not on clinical and ruthless observation. Marx had preconceptions but at least he fleshed them out with observations of the real world.” And you call me close-minded? It’s clear you haven’t read a word (or at least not attempted to understand) of what the other side actually thinks.
“…because we are approaching peak population in 10 billion.” Ah, you’re a Malthusian. That explains the situation. Malthus’ thesis is easily debunked just by observing that food production has increased along with (or even above) population increase, and that despite the massive population growth since the industrial revolution we have yet to see food shortages being a problem on a global scale. This video explains the matter further:
I didn’t know the methodology behind the Ecological Footprint Index or its significance, so I just provided him some alternative figures to look over in the article The Real Relationship Between Capitalism and the Environment | Daniel Fernández Méndez.
He responded rather presumptuously and dismissively:
Mendez misses the point that “economically free” countries export their ecoligucal footprint.
The guy us either stupid, blinded by his own ideology or a liar, deliberately ignoring something which is blatantly obvious to anyone with an independent mind.
I left that part there. Not likely any new information would even begin to change his mind on the issue there.
In the last part I went into depth about the significance of the profit and loss system, the difference between the public and private sector and the capitalist-socialist axis:
I’m not denying that state owned enterprises may be able to operate or even to a certain degree do well, just that they will tend to use resources less efficiently than private companies would have done. This is for many reasons, like them not being subject to the risk built into the profit and loss system (which I explain in my book review) as they attain tax revenue no matter whether their good or service is horrible or fantastic and that one tends to use other people’s money (taxes) less responsibly than the money you would earn yourself.
The capitalist-socialist axis is definitely the most relevant one. Franz Oppenheimer made the distinction between two kinds of activities: the political and the economical. The economical is the voluntary and the political is the coercive. That’s what distinguishes the public and private sector. The public sector is dependent on stealing money from other people whether they even like or want the good or service at all, and in many countries people are also punished for engaging in activity that’s declared to be in the public sector without acquiring a liscence. The private depends on offering you a good or service that people actually want, offering better customer service than their competitors, etc. With the State, much is taken from you and you hope that some of it will come to good use or even that you yourself may to a certain degree benefit from it. With the market, you get what you pay for (looking away from the State-imposed sales tax, income tax, etc.)
Forgive me if I fail to address some of your points because my usual technique is to cut and paste your text and respond point by point. I can’t do this on my inefficient capitalist designed Tablet!
So the profit chasing Tablet manufacturer has delivered an inefficient item to at what I also have to say is an incredibly low price. From a supply chain point of view that is astonishing efficiency, an absolute triumph of capitalism. You win that point.
Where you lose points big time is:
- Your narrow focus on a single concept of efficiency.
- You but in to an entirely fallacious political-economic dualism.
- The Ecological inefficiency of capitalism has been spectacular – and socialism fails equalky. This is why the capitalist-socialist axis is not the relevant one. If you cannot understand that then I’m frankly wasting my time. I don’t actually have a lot of time to spare, so if you are not open to new ideas please say so.
Your best bet would be to look up Energy Return on Energy Invested. There you have a ready made alternative thought system to determine efficiency which parallels your current accounting paradigm but minus the profit and loss. If you do that you will prove to yourself that other perspectives do exist, and you will be able to build confidence to go out and explore other ideas. That’s how I did it anyway.
You can copy and paste with a tablet. You shouldn’t need to take an instruction manual to figure out how.
But over to your proclaimed points.
1. “Your narrow focus on a single concept of efficiency.” So? What would you prefer I look at?
2. “You but in to an entirely fallacious political-economic dualism.” I used over 160 words explaining why it makes all the difference in the world. And you offer no counter-argument. I don’t care what you think is fallacious when you cannot even address a single argument I’ve presented or are unable to mention what about it is fallacious.
3. Completely false. Here are some resources that dispells that myth:
“If you cannot understand that then I’m frankly wasting my time. I don’t actually have a lot of time to spare, so if you are not open to new ideas please say so.” Talk about projection. You haven’t addressed my arguments in the least.
“There you have a ready made alternative thought system to determine efficiency which parallels your current accounting paradigm but minus the profit and loss.” That’s not an argument.
“If you do that you will prove to yourself that other perspectives do exist, and you will be able to build confidence to go out and explore other ideas. That’s how I did it anyway.” Isn’t it convenient how you can just shame other people into adopting your viewpoint by mocking them for not being open to different perspectives? This is peak irony.
The capitalist-socialist axis is definitely the most relevent one.
I have asserted the contrary and given my reasons why, relating my position to the real world outside. You responded by continuing the same narrative simply using a different persons language ideas. You effectively ignored my point completely, whilst complaining that I misquote you (for example complaining that I introduced the concept of society into a fiscussion about er, society.)
Franz Oppenheimer made the distinction between two kinds of activities: the political and the economical. That is very clearly a semantIc distinction which DOES NOT EXIST IN THE REAL WORLD.
The economical is the voluntary and the political is the coercive. PURE ASSERTION based on subjective criteria. personally my political activity is voluntary and my economic activity is coercive. I have to work to eat, I dont have to spend time diung this or aby other political actuvity.
That’s what distinguishes the public and private sector. The public sector is dependent on stealing money from other people whether they even like or want the good or service at all, and in many countries people are also punished for engaging in activity that’s declared to be in the public sector without acquiring a liscence.Again, pure assertion. One can eqyally logically say that the public are rughtfully taking back unto the community what private individuals have stolen.
The private depends on offering you a good or service that people actually want, offering better customer service than their competitors, etc. Not entirely true. Pruvate interests are constantly peddling unwanted goods vua clever marketing and advertising. They also peddle destructive goods like heroin, crystal meth, tobbacco and akcahol, junk foods, covering up evidence of their harm and advertising their “benefits”.
With the State, much is taken from you and you hope that some of it will come to good use or even that you yourself may to a certain degree benefit from it. Which State? There are hundreds if different midels all of which begave differently. Thus argument us like saying that becayse someone once sold a car euth no brakes, all cars should be banned.
With the market, you get what you pay for (looking away from the State-imposed sales tax, income tax, etc.) WELL…. If THAT is the case there us no need for consumer protection law (or actually any law at all). People not giving a fair deal will get a bad reputation and go out of business very quickly.
Tony Soprano would agree wholeheartedly. Do you?
I left the discussion there, as my points appeared to go straight over his head anyways.
Endnotes: What did you think about this debate? Were there any points that you feel I didn’t address sufficiently? Or do you have any additional points and resources you think would have been relevant if you had ended up in this discussion? Be sure to write them in the comments below or send me a mail at firstname.lastname@example.org.]