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hardcore_gamer

When does capitalism fail?

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I swore not to create another politicla thread after my last one but I will just do it anyway.

As a right-winger, I believe that capitalism is mostly good. But I understand that it isn't 100% perect. So I was wondering, what you think are examples of capitalism failing to do as intended?

Please note that when I talk about failure, I mean failing as in failing to offer lower prices and/or better service than the state would.

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Capitalism can never fail. People will always want to do what they want. Businesses kill each other off, but capitalism lives on. People might feel it fails when 1% of the population have 100% of the wealth, but capitalism lives on.

I've been playing a lot of Tropico 3.

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Any private company being "too big to fail", having its losses socialised or being bailed out by the state are all perfect examples of capitalism failing, which is why the UK is not a capitalist state at all.

The concept of endless growth seems necessary for capitalism to work, otherwise it becomes a monopoly when one company finally captures a market and has nowhere left to expand to. So, in that sense, all capitalism is doomed to fail from the start.

Oh and any cartel would break the concept of competition producing the best deal for the customer too... So the British energy market is also failed capitalism.

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It works without monopolies. While it may not be perfect and may die eventually, it'll at least survive a bit longer than commie-ism. Better Dead than Red, eh?

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I know this example probably doesn't really apply outside my country, but I am of the view that retailing is a good example of capitalism not working as intended at least in my country.

The problem with retailing in Iceland is that Iceland is very isolated from the rest of the world and has a tiny population of only 300k or so people. This means that there is very limited room for retail competing with each other, and thus prices like food prices are amongst the highest in the world. Convetional attempts at fixing this like lowering tarrifs or the VAT (value added tax/basically a sale tax) which would probably work elsewhere in the world have simply resulted in the stores raising their prices to steal the savings and make even more money than before.

Things are so bad that many angry Icelandic customers have pointed out insane examples where products made in Iceland actually cost less in mainland Europe than they do in Iceland, and this is in spite of wages here typically being lower!

And all the while, the nation's alcohol stores which are all run by the state (private parties aren't allowed to sell it except for bars and places serving food) typically have more staff, don't charge as much for their products as the private stores typically do (though booze is stil expensive as fuck because of alcohol taxes), sell only one kind of good (alcohol produts), and yet are still able to make a profit for the state.

The reason for why I feel this matters is because it shows that while competition can make things better thanks to capitalism, capitalism does not in and of itself create more competition. It needs the correct circumstances.

I know this heavily violates my view of economic liberalism, but I would actually go as far as to say the state should pretty much just take over and run my nation's supermarkets because this problem is so bad.

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I would say capitalism fails in the realm of healthcare. I'll ignore insurance for the moment, because that complicates matters. In healthcare, you have a situation where the cost is simply far too great for the average consumer, and at any rate, competition is rather difficult because when you're sick, you really have few options. I mean, if you need life-saving surgery or whatever, you (a) don't really have time to shop around, and (b) it's not something you can simply skip in the hopes of getting a better deal anyway. It's also, unlike most purchases, mandatory, more or less (I mean, you can opt to not get treatment, but if that leads to you dying, that's not much of a choice). So pure capitalism can't work in that setting.

And that's where insurance comes in - it's basically privatized socialism, more or less. Everyone pays in to the pot, and the money in the pot is then distributed based on need. However, there are attempts to introduce capitalism even within that system - always find the cheapest option, try to find loopholes that will exclude certain people from being able to take from the pot they paid into. I mean, because we're still in a capitalist society, capitalism still drives the healthcare industry, and so there are incentives to avoid paying for treatments if at all possible. At the same time, because the money comes from the insurance companies, hospitals are motivated to jack up the bill as much as possible, knowing that there's basically an endless piggy-bank for well-insured patients. Because insurance companies know this, there is even further incentive to limit treatments to the bare necessities and find ways to deny payments.

In the end, this means that basically no one in the healthcare system, either the hospitals or the insurance companies, really has any incentive to maximize healthcare for the individual. Both seek to cut corners whenever possible to grab on to a piece of the insurance pot - two competing sides, but neither really competing for the welfare of the patient.

Don't misunderstand. I'm not saying that doctors themselves are necessarily part of this - there are plenty of doctors out there who are dedicated to their profession and to saving lives. However, their approach is basically dictated by the insurance companies and the hospitals. They're not really in a position to make the decision based on what ultimately is best for the patient, they have to settle for what the hospital and insurance company agree is the solution that best lines their pockets.

Obviously, healthcare is expensive, and so it's this way out of necessity. It can't be run as a charity or whatever, because the money simply isn't there for that. However, in an ideal world, I would think that doctor decisions would be completely removed from the financial motivations of hospitals and insurance companies. I would think it'd work better if the doctor decided treatment based on what he thought was best for the patient, not nudged and encouraged to take the cheaper route because it'll save money, or the needlessly expensive route because the hospital can cash in on that.

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geekmarine said:

snip


I feel that your argument is only half-correct. I agree that the problem with private healthcare is that not everyone can afford it, but I do not agree that it is worse or that it is expensive only because people don't get to choose. For example, people have to eat, and yet private enterprize in most countires (though this doesn't appear to include my own :( ) has made sure food isn't too expensive for most people. The true reason healthcare costs a lot is that healthcare is by nature expensive. The doctors, the expensive medicine and machines used to treat people, are all very expensive. This is the true reason for the cost. If simply needing something automatically made things more expensive, then the food and the cloth everyone needs should cost vast amounts. But it doesn't.

Another thing to note, is that something not being affordable to everyone is not the same thing as something being worse. Is high-end healthcare affordable to the poor? Nope, but that doesn't make the actual service worse.

I believe that the ideal is some kind of a middle-ground, where the state takes care of and/or subsidises private healthcare to some degree to make sure that healthcare is affordable to everyone. While a fully capitalist healthcare system may not be ideal, neither is a state-only healthcare system.

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I wasn't trying to argue that simply needing it is what makes it expensive. I was simply stating that it is part of the problem. No matter what you do, for instance, bypass surgery or cancer treatment is gonna be hella expensive - however, it's compounded by the fact that there's no real way around it unless you're just willing to accept that you're gonna die. And there's really not a lot you can do if you don't have the money or the insurance. And if you do have the insurance, the insurance company is going to do everything in their power to make sure you only get the bare minimum of treatment.

The point I was more trying to get at was that between the expense and the necessity, healthcare doesn't really work well within a capitalist system, because generally, attempting to maximize profits will come at the expense of patients. I guess I just really didn't do a good job explaining.

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Hmm... I see where geekmarine is coming from - if you price people out of healthcare, you're likely to lose parts of the overall market in a very literal sense, so rather than competing for demand, you have a situation like customers competing for supply, but with the added issue of there being less customers overall in extreme situations. I suppose you could look at it in the sense of healthcare being the kind of premium good that doesn't have a cheaper equivalent, although I'm really struggling to think of an example there :\

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Despite all its flaws capitalism is FAAAR better than the communism that buttfucked my country. The commies came in my country and took the lands of my grandparents from my mother's side and lived in poverty for a while, they sent one of my uncles to prison and another to work on the Danube canals which was basically a death sentence (he survived though) and the grandfather on my father's side had two textile factories that were taken by the commies. FUCK THEM and their hypocritical beliefs. They call capitalists thieves but steal from honest farmers and citizens.

Oh and during Ceausescu's rule he imposed an austerity measure to pay off the debts he made. This meant that most of the food was rationed and it was never plentiful. If you wanted chocolate, meat and oranges you had to have connections. Water and electricity was also rationed and there were only a few TV channels that always spouted propaganda with a movie and a cartoon every now and then. My country started to recover during the mid 2000s and despite what the average romanian would tell you, life isn't that bad around here, I am quite happy and I live in a pleasant and safe place. Nothing fancy but my life is pretty comfortable by romanian standards and I am quite grateful for that. I eat good food, have a good gaming PC, can wear nice clothes, can do whatever I want whenever I want. None of this would have been possible under the communist rule unless I had connections. You needed connections for everything back then. Of course it could be better but I'm not complaining. You westerners have no idea how fortunate you are.

So yeah, I love the decadent lifestyle of capitalism and I would never want to go through what my grandparents did.

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Capitalism fails all the time.


Pure capitalism is an intrinsically unstable system which will necessarily end in a complete collapse. Which is why pure capitalism isn't implemented anywhere in the world, not even in the USA.

However, ever since the fall of the Berlin Wall, we have constantly moved towards purer capitalism, with for results a bunch of financial crises and a steady increase in inequalities. This shows no real sign of changing anytime so maybe one day we'll get to real pure capitalism. And then mankind will remove itself from the world.

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DooM_RO said:

They call capitalists thieves but steal from honest farmers and citizens.


I think the official term was "prolatarian expropriation", komrade.

And, political systems are pretty much like mothers:

All women are whores except my mother: she was a saint.


You'll find people praising anything from Ceaucescu, to Hitler, to Pinochet, to Papadopoulos, to G.W. Bush, to Pol Pot, to Saddam, to Gheddafi, and even the Kims, if those governments/figures represented a period where they personally led a good life (and even the worst regimes, no matter the orientation, always have a "hard core" of 10-20% of the populations made up by supporters, police and army members, various officials, people who obtained power and favors under them, etc. who have every reason to side with the regime).

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To stay OT: I think that capitalism fails when it starts resembling the worst kind of bureucratic, byzantine, partisan, heavily interventionist, elephantine, and "egalitarian" (in the sense that everybody not part of the elite/nomenklatura/1% is treated exactly the same) kind of Communism .

Examples? Too many too mention. If you live in a nominally "capitalist" country take a look around, you'll find plenty of examples.

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I recall my old professor explaining this: Ultimately, capitalism, and communism want to accomplish the same thing; a society run by common people in the interest of common people. However, they use a different means to accomplish this. One relies heavily on equality, the other heavily on freedom; which are different ideas but not mutually exclusive. Originally, the U.S. was built on two competing forms of capitalism. The federalists wanted to maintain a capitalist system, where the elites were buttressed with government support. It was supposed to be much like the British system, but without having to pay the King. The Democratic-Republicans wanted to build an empire of self-sufficient farmers that relied on Farmer's Market capitalism. They would produce what they needed, and owned their own land; while selling surplus to the market. The type of aggressive monopolistic capitalism that is considered to be the bane of the common man, emerged in the gilded era. The true watershed moment was when the Republicans had established that corporations are people. I would consider this era to be a failure of capitalism to work for the common good; it had become increasingly exploitative. No longer could you really buy the best quality goods for the best price. Because when all of the wealth and power is concentrated in the hand of the few, they will obviously work only for their own interests. Therefore, as history has shown, in order for capitalism to survive, it had to become quasi-socialist. Regulation to some degree is required for capitalism to maintain itself.

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Capitalism fails because businesses deliberately destroy it. No anti globalization protester or left wing campaigner has ever been as determined or effective at disrupting and curtailing the free market as the management of large companies. Microsoft are the classic example in IT - their entire strategy in the 90s was based not just on beating the competition, but using all means available to ensure competition was impossible. But they're hardly alone, there is a massive, constant and concerted effort on the part of dominant businesses in every industry to manipulate the market, the supply chain and the legislative regime such that the free market breaks down and their dominant position is enshrined forever.

It's amazing to me that business leaders in the west are so flagrantly, aggressively determined to destroy western capitalism by undermining the systems that underpin it. It's such an extraordinarily short sighted approach, and it plays directly into the hands of state capitalist regimes like Russia and China. They don't seem to realize that they're not playing by cold war rules anymore, and the economic ineptitude of non-western states is no longer a given. In order to succeed, they should be working to foster the market, to reduce corruption and improve democratic representation, because these are the advantages that regimes like China can't match. Becoming just as inefficient, uncompetitive and corrupt as them, but without even the strong, single purpose state directing economic development towards national goals, will only lead to their doom, and the decline of liberal western nations in general.

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Hmm...so, Capitalism is really yet another transition stage towards the ideal Perfect Communism, just like "existing Socialism" was?

After all, what's the difference between having a single private monopoly which totally controls the state, versus having a single-party state's monopoly? (Other than being brazen about it).

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The concept of endless growth seems necessary for capitalism to work

This is exactly where capitalism is guaranteed to fail at some point. The same way every other civilization with booming economies have fallen before us.

That said, it's hard to come up with an alternative that really works, as the discussion in this thread proves. No matter what system of government in employed, you're always going to have the corrupt leeches that skew things to favor them and abuse the loopholes. I doubt people will be able to move beyond that at any point, though I hope I'm proven wrong some distant day in the future.

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No need to wait: you can surrender all your belongings, rights and powers to me, and I promise I will take care of everyone under my firm -but benevolent- rule.

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hardcore_gamer said:

Please note that when I talk about failure, I mean failing as in failing to offer lower prices and/or better service than the state would.

Oh ok, so you want the argument framed to fit perfectly into this? Is it not reasonable to say that 'successful' capitalism in certain things can be failures in other regards? Exploitation of voiceless third world labor really springs to mind.



Successful capitalism requires seeing human beings and their labor as a means to and end and nothing more.

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Doomkid said:

This is exactly where capitalism is guaranteed to fail at some point. The same way every other civilization with booming economies have fallen before us.

That said, it's hard to come up with an alternative that really works, as the discussion in this thread proves. No matter what system of government in employed, you're always going to have the corrupt leeches that skew things to favor them and abuse the loopholes. I doubt people will be able to move beyond that at any point, though I hope I'm proven wrong some distant day in the future.


I know this is going to sound terrible, but I think fascism actually created a fairly good and a realistic view towards how society should be organized from an economic standpoint.

When people hear the word fascism their mental image is that of Hitler and World war 2 and probably also the holocaust. What most people understand less about is the view that fascists took towards economical matters and materialism.

Fascism basically rejected both liberal capitalism as well as communism and instead avocated this mix of capitalism and collectivism where private property and for profit enterprize still existed, but at the same time the kind of modern super materialism/consumerism that is now common today was rejected in favor of a more modest lifestyle based on the view that the people and society should not live beyond it's means and reject superficial materialism. The state was then to protect this system by enforcing social disipline and order.

Because world war 2 destroyed fascism, it did not last long enough for the long term economic affects of fascism to become obvious, so we don't know how well the system would have worked in the long term, but it's hard to deny that this sounds very logical when compared to the unsubstainable modern capitalist system.

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As Zizek once said, it's easier to imagine an apocalypse than the fall of capitalism. Anyway, IMO regulated capitalism > unregulated capitalism.

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Capitalism fails when people seek to profit from the misery and suffering of others.

hardcore_gamer said:

For example, people have to eat, and yet private enterprize in most countires (though this doesn't appear to include my own :( ) has made sure food isn't too expensive for most people.

That's supply and demand at work. The dead don't need to buy groceries and raising prices to maintain profits while the customer base progressively starves to death can only be done for so long before the law of diminishing returns kicks in, so it makes sense to keep food affordable. There's also the small matter of food riots, which tend to scare off tourists.

I believe that the ideal is some kind of a middle-ground, where the state takes care of and/or subsidises private healthcare to some degree to make sure that healthcare is affordable to everyone.

We're already doing that in Australia and there's still a lot of people who can't afford health insurance.

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The other thing to keep in mind, GreyGhost, is that food is so plentiful and so easy to make that if any one person starts charging too much for it, someone else will see an opportunity and offer their food at a lower price, filling that niche in the market. With healthcare, you don't really have that option - the equipment, the staff, etc. all cost way too much for simple competition to bring it down to prices that are affordable for the average individual. I'm not exactly against the idea of any competition in healthcare, though, simply pointing out that it's a case where I think the best solution does involve some form of us all pitching in for the common good - we can't pay for it ourselves as individuals, but if we pool resources, we can take care of each other.

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Maes said:

I think the official term was "prolatarian expropriation", komrade.

And, political systems are pretty much like mothers:



You'll find people praising anything from Ceaucescu, to Hitler, to Pinochet, to Papadopoulos, to G.W. Bush, to Pol Pot, to Saddam, to Gheddafi, and even the Kims, if those governments/figures represented a period where they personally led a good life (and even the worst regimes, no matter the orientation, always have a "hard core" of 10-20% of the populations made up by supporters, police and army members, various officials, people who obtained power and favors under them, etc. who have every reason to side with the regime).


That's actually quite true. Even my grandparents say that "it was better back then" and when I ask why they say it was better because they were young and not old and sick and after a few years they had a relatively comfortable life.

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When capatilists spy on me and impose their decision on me no matter what; especially when it comes to taking a shit in the bathroom or getting a job.

If it steals my freedom then it utterly fails.

To greyghost:
You don't always have to be suffering or miserable, though that certainly wouldn't be the right position to be in.

What if you wanted to marry but it wasn't allowed because a female president had made it illegal for men to choose their partner? What if men were considered brutish, and not as smart?

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hardcore_gamer said:

Because world war 2 destroyed fascism, it did not last long enough for the long term economic affects of fascism to become obvious


Uhm....are you certain?

Spain - Francoist dictatorship

Portugal - Estado Novo

Greek Junta (this one nominally lasted only 7 years, but even before it Greek society and politics were -and still are- heavily anti-communist, very conservative and authoritarian, quasi-fascist you could say. The Junta was just the climax of a long, troublesome, "soft fascism" period).

Interestingly enough, all those countries which once had fascist regimes (no matter how "soft" or "hard" they are perceived to be) are now in dire economic straits. Italy could also go in this list, even though the Fascist party didn't survive WW2, but it managed to leave its mark nonetheless, with similar results in a depth of time.

Yeah, during the years of fascism there was a kind of state-imposed control on enterprises, some economic reforms that worked, some categories of people that really did see their lives improve etc. etc. but they also ALL created, invariably, a culture of mistrust for the state, widespread corruption, inefficient state structures, and a "hard core" of people whose lives and livelihood were now co-dependent on the State. And the results in the long run were less than ideal.

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Maes said:

Hmm...so, Capitalism is really yet another transition stage towards the ideal Perfect Communism, just like "existing Socialism" was?

After all, what's the difference between having a single private monopoly which totally controls the state, versus having a single-party state's monopoly? (Other than being brazen about it).


You want to know the difference?

The corporation that buys the state is a for-profit organization. Its raison d'être is to make profit, at the expense of everything else if needed.

The state, on the other hand, is supposed to serve the common interests of its citizens.

So in both cases we end up with a single entity able to control everything about its citizens/consumers' lives. But in one case, the entity is meant to be selfish, and in the other, it is meant to be altruistic.

This is all very theoretical of course. States being granted power without oversight tend to end up being selfish.

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Gez said:

So in both cases we end up with a single entity able to control everything about its citizens/consumers' lives. But in one case, the entity is meant to be selfish, and in the other, it is meant to be altruistic.


But the final result is the same: the communist states' nomenklaturas ended up being as selfish (if not more) as any corrupt corporate executive. At the same time, there are virtually no corporations today that don't claim to be working for a common good cause, be it environmental, creating jobs, boosting the local economies indirectly etc. through PR campaigns that are not really all that different from state propaganda claiming it's all roses and flowers for everyone.

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