I promised myself I wouldn’t do this… (not because debate isn’t good, but that I should be doing several other things right now)…
[the previous poster said...]“The assumptions of basic capitalism are simply not met by the modern economy.”
Modern mixed economy? Diluted semi-state-run economy? What do you mean by ‘Modern Economy’?
Sorry, I should’ve been more precise. Capitalistic economic theory, liberal economic theory, is based on premises not borne out by reality, and I failed to adequately list them (my post wandered far more than I meant it to): perfect knowledge, [buzzer: ehhhhh!] Sorry, no. While there have been, to my knowledge, proofs that near perfect knowledge on the part of the consumer works out well enough, the fact is that perfect knowledge is actively prevented in our marketplace in the US, and would be only moreso without state intervention (cf. The Gilded Age, or the numerous companies who try to avoid disclosure of vital information, such as safety) — it is unlikely in the extreme that, for instance, pharmaceutical safety and clinical efficacy would be freely provided by companies without state intervention. And of course, environmental externalities are thoroughly mis-measured and not commonly known to their estimated extent (i.e. $300 billion/year in ecosystem services in the US that are common pool and not internalized economically, and therefore seen as costless when they are lost). Perfect competition — we are surrounded by oligopolies, many of which surpass or far surpass the economic “market concentration” rules of thumb, with sometimes 4 or fewer companies controlling 80% of the market. Monopolies are no more, if not less efficient when run by private industry than by the government (there is some scientific reason to think that government can effectively manage some monopolies, i.e. on common pool resources, while private industry will not, see Elinor Ostrom, Arun Agarwal, Bina Agrawal, Herman Daly, Thomas Prugh, Bob Costanza, Amartya Sen, and others). And, as already referenced, efficient markets require properly accounted externalities — and if you survey economists, most by far will say this is not properly done today, some saying as much as 50% or more of the economic effects of the US (and world) markets are unaccounted-for externalities.
[the previous poster said...]“Capitalism is based on several premises simply not borne out by reality”
Capitalism is the only moral system of governance due to its requirements. It is based on reality and the requirements one must meet if one is to be free to operate on your own volition and have the potential to be happy in your own life. Basically answer this: Do you as an individual have a right to exist for your own sake? The answer to that will determine your future and which side you take on this issue.
Ayn Rand much? Morality in this case, and freedom, are not independent entities, existing “out there” for us to discover (despite what Libertarians may assert). I have the right to exist for my own sake — but in the Libertarian sense, taking reality into account, this means I must: purify my own water, recycle/use only the water I personally own, purify/recycle/use air I personally own, raise sufficient food on my own property and buy all inputs and pay for all outputs, including purfiying and recycling my own waste. IF you want to argue we already do this (i.e. by paying for water and sewage), the costs of these services are established as under their real costs. And being truly independent - doing your own thing on your own land, i.e. — has been shown to be beyond our present capabilities; we cannot create an ecosystem that won’t collapse in very short order without maintaining contact with the rest of the biosphere — the very atoms that you are made of earlier belonged to other people, organisms, minerals, etc. — and you did not pay for the complete process to provide you with these components, as in a very real sense, the complete process has required interaction with common property spread the world over.
But I got distracted — your assumptions of freedom and morality are claimedly based on reality — yet you cannot prove them. Your premise depends on your conclusion. Capitalism is the only moral system because it allows the individual to exist for him/herself. Why is existing for yourself the moral basis? Because it is the only way to be free and exist for your own voilition and happiness. How do you prove that? Because capitalism is the system that best provides for people should they all look out for themselves.
What makes your system of beliefs better than mine? Ayn Rand/Libertarian views presume their definitions to be self-evident; the fact that others disagree means they are delusioned, and there is no good basis to argue their presumptions to a logical conclusion, any more so than the presumption “All morality must come from God, and that which is against God is immoral.” Possibly true — but not provable.
Faith in capitalism cannot be a presumptive basis for rational government.
You point out the ‘flaws’ with Capitalism:
“that people are rational actors”
Some are more rational than others…
“they don’t adequately analyze trade-offs in complex situations”
Sadly this is too often the case. …
“they value non-economic commodities which may be contingently valued”
True. (side note — you cut out the part where I explained contingent valuation can lead to flawed and/or irrational results)
Here you acknowledge my points and use them to back up the need for more capitalism. Huh? If you are arguing, like many do, that capitalism is preferable because it leads to the most efficient outcomes for society, these requisites must be met, and you acknowledge they are not. “Relief” from government intervention would do little to change these mismatches. So presumably again you are arguing that capitalism is inherently moral, which, fine, go ahead, but there’s no point in arguing it. You can’t prove morality, or that human self-serving will is the only true freedom, and I can’t prove that humanism best represents the moral solution to a world nearly totally composed of common goods and uneconomic commodities.
Let me point out two more things:
One is that recent theory shows even purely rational actors can make decisions leading to inefficient or sub-pareto optimal results; that means without cooperation and/or intervention, unfettered rational beings may be worse off than they were with a little (assumedly voluntary i.e. democratic) fettering.
Second Much of modern capitalist theory is based on Ricardo, and to a lesser extent, (at least paralells the work of) Malthus. However, both of these men acknowledged that the rules they “derived” would not serve without an elite/rich capitalist class that would disproportionately consume to keep the economy going; this class also must be wise enough not to reproduce above the replacement rate or to consume too much, but rather just enough. Ricardo, additionally, thought land owners were useless and thus did not account for them — only industrial capitalists fit into his analysis. They based their rules on the good sense of the rich and the uncontrolable reproduction of the poor/laborer class. Adam Smith, himself, wrote a book on morals to go along with The Wealth of Nations that proclaimed the importance of caring for each other (”fellow feeling and propriety” — Theory of Moral Sentiments) for a properly constituted society. These theories all assumed out the idea that classes were not/should not be static — an economic capitalist/libertarian must either reformulate them in order to adjust them around the assumptions of a permanent underclass, or to argue with them that a permanent underclass is a requisite condition of humanity (which is itself an unfounded assumption that then must be proved). That, or make their argument in some world inpendent of the idea that capitalism has any socio-moral basis in equality of people (a permanent underclass cannot be said to provide equality even in the limited US individualistic equal-under-the-law context if their very permanence is formulated as a condition for the society), that is, make their argument outside of classic, liberal/neoliberal economic context. It seems to me your only argument here then is - it’s good cuz it is.
I don’t believe in this conception of deus ex machina and I don’t believe you have a base or a right to make me or anyone else in society believe or follow your faith, not your reason.
Repost of the Rumble, Part Next of Some, to come.