this post was submitted on 21 Jul 2023
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What is the definition of capitalism? Is it compatible with people owning the things they produce? (reddthat.com)
submitted 1 year ago* (last edited 1 year ago) by [email protected] to c/[email protected]
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@[email protected] asked "why are folks so anti-capitalist?" not long ago. It got quite a few comments. But I noticed a trend: a lot of people there didn't agree on the definition of "capitalism".

And the lack of common definition was hobbling the entire discussion. So I wanted to ask a precursor question. One that needs to be asked before anybody can even start talking about whether capitalism is helpful or good or necessary.

Main Question

  • What is capitalism?
  • Since your answer above likely included the word "capital", what is capital?
  • And either,
    • A) How does capitalism empower people to own what they produce? or, (if you believe the opposite,)
    • B) How does capitalism strip people of their control over what they produce?

Bonus Questions (mix and match or take them all or ignore them altogether)

  1. Say you are an individual who sells something you create. Are you a capitalist?
  2. If you are the above person, can you exist in both capitalist society and one in which private property has been abolished?
  3. Say you create and sell some product regularly (as above), but have more orders than you can fulfill alone. Is there any way to expand your operation and meet demand without using capitalist methods (such as hiring wage workers or selling your recipes / process to local franchisees for a cut of their proceeds, etc)?
  4. Is the distinction between a worker cooperative and a more traditional business important? Why is the distinction important?
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[–] [email protected] 6 points 1 year ago* (last edited 1 year ago) (1 children)

At what price -- to drill and construct an oil rig for example -- would you consider it so prohibitively expensive that "somewhere else" has a hard time existing?

A million dollars? Five million dollars?

Consider that the median bank balance in America is $5,300. That is to say, half of all Americans have less than $5,300 in the bank.

What startup cost makes it difficult for others to compete?

[–] [email protected] 1 points 1 year ago (1 children)

I made sure to say more difficult not just difficult. Building an oil rig is inherently difficult because you need many different types of labor with many different skill sets. As a practical matter it's often easy for one organization to pay for this labor upfront but theoretically they could cooperate to build an oil rig and share in the returns.

If you were going to mention the rights to extract oil then that's a whole other probldm.

[–] [email protected] 3 points 1 year ago* (last edited 1 year ago) (1 children)

Let's say:

  • my bank account reads, "100 thousand"
  • it costs me $5 million to build an oil rig
  • your bank account reads, "$12 million"
  • it costs you to $10 million to build an oil rig
    • and there's a reason: through corruption, backroom deals, and frivolous regulations, I have managed to raise your cost, but not mine

You can still build one. I still can't -- in any reasonable way -- poach whichever oil rig workers you choose to underpay. And this is true despite the fact that it's technically easier for me to build an oil rig. The only advantage you need to be above consequences for inefficient practices... is for your opponents to be too poor to afford startup costs either way.

No uneven playing field is necessary.

theoretically they could cooperate to build an oil rig and share in the returns.

United States tax dollars, in the form of DARPA grants, paid for the development of the internet. So there is precedent for extremely expensive operations to be successfully carried out under democratic control.

Also, since oil deposits are a natural resource, one could argue government ought to be involved in their collection.

[–] [email protected] 2 points 1 year ago* (last edited 1 year ago)

You can still build one. I still can’t – in any reasonable way – poach whichever oil rig workers you choose to underpay.

Lets breakdown what those costs are though.

  1. Some portion is paid to workers to construct the oil rig.
  2. Some may be paid to the government as part of a lease agreement generally to compensate the public for your exclusive use of the well.
  3. Some is paid to previous suppliers.

3 is really a combination of 1 & 2 so lets exclude that. For 2 we could have a government that takes this money later. Often this is the case for a lot of these deals. A lease you can pay later and royalties are paid when you actually produce product. That really just leaves 3. If you were able to compel these workers to work for you without compensation then this "How does capitalism empower people to own what they produce?"wouldn't be true so you'd have to offer some compensation but that compensation could be equity in the form of a workers cooperative.

Is it more difficult for you to compete, sure but that's like saying it's more difficult for me to be an artist. I think we should be talking about where we are stepping on the scales for one or another.

United States tax dollars, in the form of DARPA grants, paid for the development of the internet. So there is precedent for extremely expensive operations to be successfully carried out under democratic control

You could government fund everything if you want. It's usually quite beneficial in things you suggest which are early stage how it would be commercial viable is pretty uncertain. But there are trade offs.

  • In market economies you may need to raise the money with debt. If you are an oil producing economy and suddenly the oil price drops you may no longer be able to pay those debts. If you instead lease it to a private company which you then collect royalties or taxes from you don't have to take that risk. You could fund it with taxes however that limits your growth if you are a smaller economy.
  • With the right incentives companies will compete if you have just a single nationalised producer where bureaucrats don't the same level of incentive as owners they likely will run it less efficient. There is obviously the case though that often private companies push for regulations that limit competition and try to reduce their costs for externalities they impose on others.

Also, since oil deposits are a natural resource, one could argue government ought to be involved in their collection.

I think it's correct to say government should be collecting revenue from the natural resource but I don't think they need to specifically be the ones running it.

I should clarify I think capitalism is great but doesn't mean our implementation is perfect (and an example is privately owned land).