The inherent flaw of capitalism

[RichUSA]

Is an unintended consequence of capitalism the realization of the socialist goal? The constant drive to compete reduces the exchange of goods and sevices to the slimest possible margins. Therefore all providers of goods and services would always move tward solely mutual beneficial exchange of those goods and services with absolute minimal profit (just enough to live) i.e. Socialism.

Capitalism is about maximising profits, not minimising them.[/quote]

Yes, capitalism is about maximising profits. However, profits are under constant pressure in a truly competitive market place. The competitive market place causes profits to become slimmer and slimmer until only the lowest cost providers of goods and services remain.

[RichUSA]

Is an unintended consequence of capitalism the realization of the socialist goal? The constant drive to compete reduces the exchange of goods and sevices to the slimest possible margins. Therefore all providers of goods and services would always move tward solely mutual beneficial exchange of those goods and services with absolute minimal profit (just enough to live) i.e. Socialism.

There's no sign of this having happened. At the point where slimmest possible margins take hold, the competitors form cartels and/or buy each other out.

In the end, capitalists want money and power, and if it ever looks as though their system might be failing, they work with politicians to institute a new system. At the current point in time, the background work for this new system has already been done.

Yes, my comments are idealistic. Economic systems only work as good as the people that control the economic system. When people in our republic make bad choices when they vote they end up with bad government.

[emordnilap]

Is an unintended consequence of capitalism the realization of the socialist goal? The constant drive to compete reduces the exchange of goods and sevices to the slimest possible margins. Therefore all providers of goods and services would always move tward solely mutual beneficial exchange of those goods and services with absolute minimal profit (just enough to live) i.e. Socialism.

Whatever the unintended consequences, the intended consequence of capitalism is monopoly, where the profit margin is maximised.

Welcome to PS, RichUSA.

[RichUSA]

Is an unintended consequence of capitalism the realization of the socialist goal? The constant drive to compete reduces the exchange of goods and sevices to the slimest possible margins. Therefore all providers of goods and services would always move tward solely mutual beneficial exchange of those goods and services with absolute minimal profit (just enough to live) i.e. Socialism.

Whatever the unintended consequences, the intended consequence of capitalism is monopoly, where the profit margin is maximised.

Welcome to PS, RichUSA.

Thanks for the welcome.

I beleive we have a global marketplace today. For that reason I think it would be a very low possibility that one company or country could dictate the price of any good or service. It is getting to the point that any company can produce anything anywhere and sell the product anywhere.
That in my view makes it almost impossible to have a monopoly. So there will always be pricing pressure. The global markets make pricing pressure more likely not less likely.

[UndercoverElephant]

Is an unintended consequence of capitalism the realization of the socialist goal? The constant drive to compete reduces the exchange of goods and sevices to the slimest possible margins. Therefore all providers of goods and services would always move tward solely mutual beneficial exchange of those goods and services with absolute minimal profit (just enough to live) i.e. Socialism.

Whatever the unintended consequences, the intended consequence of capitalism is monopoly, where the profit margin is maximised.

Welcome to PS, RichUSA.

Thanks for the welcome.

I beleive we have a global marketplace today. For that reason I think it would be a very low possibility that one company or country could dictate the price of any good or service. It is getting to the point that any company can produce anything anywhere and sell the product anywhere.
That in my view makes it almost impossible to have a monopoly. So there will always be pricing pressure. The global markets make pricing pressure more likely not less likely.

That's nice in theory, but it doesn't work in practice. Two perfect examples from the UK are the rail industry and the energy industry, both of which were the subject of idealism-driven privatisations in the 1980s. This has not delivered good value or efficient companies. Instead, money is being diverted from the companies to shareholders and the public is being systematically ripped off. In reality, introducing competition and shareholders into those environments produced no benefits for the end customers, but plenty for the shareholders. In both cases we would have been better off with the nationalised industries that existed beforehand.

Also, you aren't really talking about socialism. Socialism isn't really to do with minimising profits of private companies. It is about protecting the weaker members of society from the hard realities of the free market, and that includes a free market which is working as well as it possibly could.

I agree with you that free competition is better the monopolies, but I don't agree that it is better than nationalised industries. It all depends on the specific situation.

[kenneal - lagger]

Two perfect examples from the UK are the rail industry and the energy industry, both of which were the subject of idealism-driven privatisations in the 1980s.

Oh no they weren't!!

They were driven by the fact that the country was broke after a spell of Old Labour (Socialist fro our friends across the pond) government. Where have I heard that before? Oh! after every spell of Labour government. We had just been to the IMF for a bail out (sounds like Greece, doesn't it) and the coffers were bare. So, just like Greece now, we had to sell off the family silver. Only this silver was very tarnished.

This has not delivered good value or efficient companies. Instead, money is being diverted from the companies to shareholders and the public is being systematically ripped off. In reality, introducing competition and shareholders into those environments produced no benefits for the end customers, but plenty for the shareholders.

If you care to do any research you would find that those nationalised companies cost the British taxpayer millions of pounds every year in subsidies. I'm a shareholder in those companies as are most people with insurance or a pension and I get more benefit from them than I did when a good proportion of my taxes went on subsidising them.

In both cases we would have been better off with the nationalised industries that existed beforehand.

Oh no we wouldn't!! For the reasons above. Some people have very short memories about what life was like in the Socialist Almost-Republic of Not So Great Britain in the sixties and seventies. It didn't work, neither did the employees of nationalised industries, which is why they required huge subsidies from those who did work. So no more observations of recent history from behind red tinted specs please.

And Labour haven't even learned from their last spell in power only a few months ago. let alone from the previous Wilson and Callaghan governments. They are still trying to borrow and spend their way out of trouble, or they would if they were in power. A Balls up takes on a new meaning.

[Totally_Baffled]

Two perfect examples from the UK are the rail industry and the energy industry, both of which were the subject of idealism-driven privatisations in the 1980s.

Oh no they weren't!!

They were driven by the fact that the country was broke after a spell of Old Labour (Socialist fro our friends across the pond) government. Where have I heard that before? Oh! after every spell of Labour government. We had just been to the IMF for a bail out (sounds like Greece, doesn't it) and the coffers were bare. So, just like Greece now, we had to sell off the family silver. Only this silver was very tarnished.

This has not delivered good value or efficient companies. Instead, money is being diverted from the companies to shareholders and the public is being systematically ripped off. In reality, introducing competition and shareholders into those environments produced no benefits for the end customers, but plenty for the shareholders.

If you care to do any research you would find that those nationalised companies cost the British taxpayer millions of pounds every year in subsidies. I'm a shareholder in those companies as are most people with insurance or a pension and I get more benefit from them than I did when a good proportion of my taxes went on subsidising them.

In both cases we would have been better off with the nationalised industries that existed beforehand.

Oh no we wouldn't!! For the reasons above. Some people have very short memories about what life was like in the Socialist Almost-Republic of Not So Great Britain in the sixties and seventies. It didn't work, neither did the employees of nationalised industries, which is why they required huge subsidies from those who did work. So no more observations of recent history from behind red tinted specs please.

And Labour haven't even learned from their last spell in power only a few months ago. let alone from the previous Wilson and Callaghan governments. They are still trying to borrow and spend their way out of trouble, or they would if they were in power. A Balls up takes on a new meaning.

+1

[woodpecker]

Is an unintended consequence of capitalism the realization of the socialist goal? The constant drive to compete reduces the exchange of goods and sevices to the slimest possible margins. Therefore all providers of goods and services would always move tward solely mutual beneficial exchange of those goods and services with absolute minimal profit (just enough to live) i.e. Socialism.

Whatever the unintended consequences, the intended consequence of capitalism is monopoly, where the profit margin is maximised.

+1.

I revisited 'Enron: The Smartest Guys in the Room' last night. The way those Enron traders made hay out of the de-regulated Californian energy market was astonishing. Prices sky-rocketed, blackouts everywhere, and a bunch of traders held the entire state to ransom. It was all about attaining control of the market and so being able to milk the absolute maximum from the situation, ruthlessly, and everyone else - ordinary citizens of California - could go to hell. (Enron were assisted in being able to do this by the fact that the Federal authorities and regulators refused to do anything, owing perhaps to the extremely friendly relations between Bush and Kenneth Lay and co. - such relationships/lobbying also being a recurrent 'feature' of capitalism.)

You can watch the movie online, if you haven't seen it.
http://topdocumentaryfilms.com/enron-th ... -the-room/

[UndercoverElephant]

Two perfect examples from the UK are the rail industry and the energy industry, both of which were the subject of idealism-driven privatisations in the 1980s.

Oh no they weren't!!

They were driven by the fact that the country was broke after a spell of Old Labour (Socialist fro our friends across the pond) government. Where have I heard that before? Oh! after every spell of Labour government. We had just been to the IMF for a bail out (sounds like Greece, doesn't it) and the coffers were bare.

The coffers were NOT bare. That's when the north sea oil was flowing, and that money was going to make a few people in the city obscenely rich.

So, just like Greece now, we had to sell off the family silver. Only this silver was very tarnished.

British Rail wasn't the family silver. It was a state-run railway system. Rail systems do not make a profit...anywhere. They have to be run as public services. Privatising the rail industry in the UK achieved nothing. It did not save money (we are still subsidising it, even though large profits are now paid to shareholders...how is that capitalism working properly?)

If you care to do any research you would find that those nationalised companies cost the British taxpayer millions of pounds every year in subsidies. I'm a shareholder in those companies as are most people with insurance or a pension and I get more benefit from them than I did when a good proportion of my taxes went on subsidising them.

Ah....so everybody, including the poor, pay taxes to support the rail industry, and this is OK because rich people like you are getting some of that money back because you are a shareholder?

How is that fair? How is that an improvement on a publicly-owned rail system?

You are the first person I have encountered in a long time (ever maybe) who thinks the privatisation of British Rail was a good idea.

[emordnilap]

Rail systems do not make a profit...anywhere.

Indeed, public transport does not make a profit. Why should it? It is a characteristic. It is not the point.

[emordnilap]

Free trade is simply one of the mechanisms of empire in the age of industrialism, one part of the wealth pump that concentrated the wealth of the globe in Britain during the years of its imperial dominion and does the same thing for the benefit of the United States today. Choose any other mechanism of empire, from the web of military treaties that lock allies and subject nations into a condition of dependence on the imperial center, through the immense benefits that accrue to whatever nation issues the currency in which international trade is carried out, to the way that the charitable organizations of the imperial center—missionary churches in Victoria’s time, for example, or humanitarian NGOs in ours—further the agenda of empire with such weary predictability: in every case, you’ll find a haze of doubletalk surrounding a straightforward exercise of imperial domination.

From here.

[RichUSA]

Whatever the unintended consequences, the intended consequence of capitalism is monopoly, where the profit margin is maximised.

Welcome to PS, RichUSA.

Thanks for the welcome.

I beleive we have a global marketplace today. For that reason I think it would be a very low possibility that one company or country could dictate the price of any good or service. It is getting to the point that any company can produce anything anywhere and sell the product anywhere.
That in my view makes it almost impossible to have a monopoly. So there will always be pricing pressure. The global markets make pricing pressure more likely not less likely.

That's nice in theory, but it doesn't work in practice. Two perfect examples from the UK are the rail industry and the energy industry, both of which were the subject of idealism-driven privatisations in the 1980s. This has not delivered good value or efficient companies. Instead, money is being diverted from the companies to shareholders and the public is being systematically ripped off. In reality, introducing competition and shareholders into those environments produced no benefits for the end customers, but plenty for the shareholders. In both cases we would have been better off with the nationalised industries that existed beforehand.

Also, you aren't really talking about socialism. Socialism isn't really to do with minimising profits of private companies. It is about protecting the weaker members of society from the hard realities of the free market, and that includes a free market which is working as well as it possibly could.

I agree with you that free competition is better the monopolies, but I don't agree that it is better than nationalised industries. It all depends on the specific situation.

Two yeses. First I wasn't really talking about socialism. I just thought freemarket captalism was a way to reach equitable exchange of goods and services. I also thought equitable exchange of goods and services should be a goal of any economic system. Second, I agree with you that some things should be nationalised. Also the weakest link in any system is the human element. So whether it is socialism or capitalism there should be constant monitoring of all participants. So we need a good referee. That is why we need the government. Also, we need a good citizenry that is free to keep an eye on the government. That's the hard part.

[nexus]

I guess this could be the right thread for this:

Emma Harrison, the head of the A4e welfare-to-work group, has stepped down from her role as David Cameron's personal adviser on problem families in the wake of her firm being investigated over allegations of multiple fraud.

Harrison has been struggling to combat the claims of fraud, as well as questions about the size of the dividends she has been handing herself, largely funded by government contracts to help the unemployed find work

(I must declare a personal interest and not some inconsiderable schadenfreude, having been stuck on one of her early schemes in Sheffield)

Why does this system produce such endemic corruption and fraud?
Why does the private sector get unbelievable amounts of taxpayers money that could be used for the creation of REAL jobs?
How was this company able to operate for so long?
Why is there so little accountability?

[kenneal - lagger]

Oh no they weren't!!

They were driven by the fact that the country was broke after a spell of Old Labour (Socialist fro our friends across the pond) government. Where have I heard that before? Oh! after every spell of Labour government. We had just been to the IMF for a bail out (sounds like Greece, doesn't it) and the coffers were bare.

The coffers were NOT bare. That's when the north sea oil was flowing, and that money was going to make a few people in the city obscenely rich.

From Wikipedia

.... in 1976 the British Government led by James Callaghan faced a Sterling crisis during which the value of the pound tumbled and the government found it difficult to raise sufficient funds to maintain its spending commitments. The Prime Minister was forced to apply to the International Monetary Fund for a £2.3 billion rescue package; the largest-ever call on IMF resources up to that point.[10] In November 1976 the IMF announced its conditions for a loan, including deep cuts in public expenditure, in effect taking control of UK domestic policy.[11] The crisis was seen as a national humiliation, with Callaghan being forced to go "cap in hand" to the IMF. (My emphasis)

Britain was the "Greece" of the time.

If all that North Sea oil money was going to City Gents it was through the usual incompetence of a Labour Government which had negotiated the contracts.

So, just like Greece now, we had to sell off the family silver. Only this silver was very tarnished.

British Rail wasn't the family silver. It was a state-run railway system. Rail systems do not make a profit...anywhere. They have to be run as public services. Privatising the rail industry in the UK achieved nothing. It did not save money (we are still subsidising it, even though large profits are now paid to shareholders...how is that capitalism working properly?)

If you care to do any research you would find that those nationalised companies cost the British taxpayer millions of pounds every year in subsidies. I'm a shareholder in those companies as are most people with insurance or a pension and I get more benefit from them than I did when a good proportion of my taxes went on subsidising them.

Ah....so everybody, including the poor, pay taxes to support the rail industry, and this is OK because rich people like you are getting some of that money back because you are a shareholder?

I'm not rich, I only hold shares to the extent that I have a private pension which pays out because the shares they hold on my behalf earn a dividend. How long that will last, I don't know. Hundreds of thousands of people bought shares in privatised industries on the cheap but instead of holding them and taking a dividend every year they chose the "get rich quick" option and sold them for a profit as soon as they could. That was their decision.

How is that fair? How is that an improvement on a publicly-owned rail system?

You are the first person I have encountered in a long time (ever maybe) who thinks the privatisation of British Rail was a good idea.

You weren't old enough in the sixties and seventies to have experienced and remembered the "joys" of the Socialist Almost Republic. I was and it didn't work. I was commuting to London in the early seventies and it was not fun so I got a job locally as soon as I could. It isn't fun now either but at least the trains are cleaner and the railway staff are civil to passengers if you are civil to them. That's a great change.

[kenneal - lagger]

Why does this system produce such endemic corruption and fraud?
Why does the private sector get unbelievable amounts of taxpayers money that could be used for the creation of REAL jobs?
How was this company able to operate for so long?
Why is there so little accountability?

It's not just this system. Most systems are used by those at the top to further their own ends to some extent. Just look at the fiddles that went on in the last government with dodgy loans for house purchases by ministers among the least offensive. How many times was Mandelson chucked out only to be reinstated as quickly as possible.

All the communist regimes of the last century had feather bedded luxury for the people at the top no matter how poor the people at the bottom were. The regimes that still survive into this century are all the same. Just look at the podgy Kim Jong Un and his senior military figures and compare them to the average North Korean.

If you look at it from the point of view that we have one of the least corrupt systems in the world that might make you a little happier. If there is something going on our much denigrated press usually blows the whistle.