Are capitalistic and conservative ideals sinful?

[tqualey]

Hi, WillieWonka,

You really need to lighten up… just a bit… you don’t want to stroke out, do you?

I find it somewhat meaningless to talk about what the Church does. People do things. So, I agree the Church doesn’t dictate what a businesman should do. Officials and followers of the Church do.

That paragraph tells me nothing. I don’t care what the Church teaching says. I am concerned with the damage its followers do trying to implement it in ignorance.

Life is about all kinds of things. Choose whatever you want, but speak for yourself.

You do not make sense to me. I suspect you are ignorant of both business and economics. That’s fine. We are all ignorant about many things, but I have the wisdom not to try to change those things while I remain ignorant.

Seriously, I found Fish90 gave a clear and meaningful explanation…and, in a rather charitable way. Remember, I am one of the few on this thread that has had to meet a payroll every 2-weeks … and did so for 20 years.

I may have missed your response to my question to you about the business practices of “Enron” and if that company ‘made it’ when it came to morality in the business world. This quesiton has to have a time frame - like before the indictments and the bankrupcy filings and convictions. You know, before people knew what they were really doing.

God bless

 

[WillieWonka]

This is an endrun around my point. Enforceable property and contracting rights do indeed exist within capitalism, but the definition of what (or who) constitutes property and who has more power to enforce a particular view of rights can lead to unethical capitalism.

I agree just about anything can happen. We make economic modela all the time to explore what can happen. But where do they really happen? Are you suggesting capitalism works well with flawed property rights?

 

[WillieWonka]

Of course, there are plenty of people who have no truck with organized religion who also do damage by trying to implement their ethics without any understanding of economics. If I had to choose between educating the clergy about economics and educating the folks at NPR about economics, I’d pick the latter, on the grounds that it would probably avert more harm.
.

Of course there are non-religious folks who do great damage. I agree NPR is more influential than Catholic clergy.

 

[WillieWonka]

Hi, WillieWonka,

You really need to lighten up… just a bit… you don’t want to stroke out, do you?

Seriously, I found Fish90 gave a clear and meaningful explanation…and, in a rather charitable way. Remember, I am one of the few on this thread that has had to meet a payroll every 2-weeks … and did so for 20 years.

I may have missed your response to my question to you about the business practices of “Enron” and if that company ‘made it’ when it came to morality in the business world. This quesiton has to have a time frame - like before the indictments and the bankrupcy filings and convictions. You know, before people knew what they were really doing.

God bless

Fish gave a clear and meaningful explanation of what?

Regarding Enron? I never could figure out what laws they broke prior to the investigation. If you know, I’d appreciate learning about it. We heard much about accounting practices, but the Supreme Court threw out the Arthur Anderson conviction after the feds destroyed the company. That doesn’t lend a lot of credence to the accounting accusations.

We also had Bush opponents trying to tie the company to him, and California was feeling the effects of their restrictions on expanding power plants and those folks needed to blame someone else for the demand anomalies they sent into the market.

I would question Skillings fiduciary duty to sharehlders in some of the powerplant transactions, but I also distinguish between poor business judgement and immorality.

One thing that got a lot of attention was the accusation employees couldn’t sell their Enron stock and therefore suffered huge losses. That restriction was from Thursday close to Tuesday open when transfer agents were changed. The stock was about $14 on Thursday, and opened about $13.15 on Tuesday. It had steadily fallen from around $85. So, I tend to dismiss much of the stuff in the complaining as tort attorney posturing.

Mark to market accounting? That was vilified, too, but has been a staple of the commodities markets for 160 years. Maybe it was abused, but I’d like to know exactly what they did that was illegal or contrary to GAAP.

Maybe Enron was the composed of the biggets bunch of crooks to walk the earth. I don’t know, and am not a defender. But, I’d really like to know exactly what they did that was so immoral.

If your general point is a business can act contrary to law and public interest, of course it can. Look at Bernie Maddoff.

(Note special accounting entities like Enron used are the means by which the the governemnt is now circumventing congressional pay retsrictions on banks.)

 

[tqualey]

Hi, WillieWonka,

Sounds like the folks at Enron missed a golden opportunity of not having you on their Defense Team… But, you know, there is this inconvenient reality of the 7th Commandment where things like: setting up completely bogus companies to buy at one price and sell at another so as to deceive investors and regulators would be considered a frank violaiton of law, ethics, morals … and even … dare I say … accounting principles! You know… it really sounds like just old-fashion stealing

I honestly think the majority of people who have any knowledge of Enron, think that Enron was run in a dishonest, unethical and immoral manner years prior to its eventual implosion. I am also sure that there there were honest people who worked for Enron. The trouble is, these honest folks did not successfully influence the dishonest ones to mend their ways. But, enough of this example.

Let’s go to the heart of your question:

Fish gave a clear and meaningful explanation of what?

I think the answer is the social teachings of the Catholic Church. Basically, what is being said in the following items from the CCC is that if you set up money as a god - you will destroy not only your relatinship with the Real God - but, you will destroy your own humanity, too. Allow me to give you some additional examples - and I have taken the opportunity to highlight some words I think most important:

The Church’s social teaching comprises a body of doctrine, which is articulated as the Church interprets events in the course of history, with the assistance of the Holy Spirit, in the light of the whole of what has been revealed by Jesus Christ.202 This teaching can be more easily accepted by men of good will, the more the faithful let themselves be guided by it.

**2423
The Church’s social teaching proposes principles for reflection; it provides criteria for judgment; it gives guidelines for action:

Any system in which social relationships are determined entirely by **economic factors is contrary to the nature of the human person and his acts.203

2424
A theory that makes profit the exclusive norm and ultimate end of economic activity is morally unacceptable. The disordered desire for money cannot but produce perverse effects. It is one of the causes of the many conflicts which disturb the social order.204

A system that “subordinates the basic rights of individuals and of groups to the collective organization of production” is contrary to human dignity.205 Every practice that reduces persons to nothing more than a means of profit enslaves man, leads to idolizing money, and contributes to the spread of atheism. "You cannot serve God and mammon."206

2425
The Church has rejected the totalitarian and atheistic ideologies associated in modern times with “communism” or “socialism.” She has likewise refused to accept, in the practice of “capitalism,” individualism and the absolute primacy of the law of the marketplace over human labor.207 Regulating the economy solely by centralized planning perverts the basis of social bonds; regulating it solely by the law of the marketplace fails social justice, for "there are many human needs which cannot be satisfied by the market.“208 Reasonable regulation of the marketplace and economic initiatives, in keeping with a just hierarchy of values and a view to the common good, is to be commended.”

It isn’t so much asking are the ideals (and, of course this is a generalization) sinful as much as are the ends sinful? While we may be enamored with capitalism, please recall it was the real breeding ground for the profound misery and desloation that Karl Marx re-wrote into his economic rescue package: communism. With misplaced ends (the worship of money) any system quickly degrads humanity and turns their work environoment into something out of the pages written by Dante! Some people really do enter their work cubicle and abandon all hope.

God bless

 

[fish90]

I find it somewhat meaningless to talk about what the Church does. People do things. So, I agree the Church doesn’t dictate what a businesman should do. Officials and followers of the Church do.

That paragraph tells me nothing. I don’t care what the Church teaching says. I am concerned with the damage its followers do trying to implement it in ignorance.

Life is about all kinds of things. Choose whatever you want, but speak for yourself.

You do not make sense to me. I suspect you are ignorant of both business and economics. That’s fine. We are all ignorant about many things, but I have the wisdom not to try to change those things while I remain ignorant.

Respectfully, I tried to argue based upon Church teaching since that seemed to be at the base of your argument. You said “I have an ear for anything of value. I don’t find Church teachings on economics to be of value” and “I have a beef with ignoramt moralists who think their morality is sufficient to direct the management of complex operations. They know nothing about business or economics, so they have no idea how to effectively and efficiently apply their morality.” I assumed your beef was with Church officials. While I do agree that the role of the Church is not to impose every dictation it possibly could, I do believe that the Church looks out for human dignity and the salvation of souls and their statements mean to achieve just that. Their experience is based upon 2,000 years of interpretation about the teachings of the Old and New testaments. The Church is not a political or economic authority but a moral authority. I find that to be considerable experience when trying to make sure human dignity and the salvation of souls are preserved. This is the place of the Church in economics to:
2420
The Church makes a moral judgment about economic and social matters, "when the fundamental rights of the person or the salvation of souls requires it."200 In the moral order she bears a mission distinct from that of political authorities: the Church is concerned with the temporal aspects of the common good because they are ordered to the sovereign Good, our ultimate end. She strives to inspire right attitudes with respect to earthly goods and in socio-economic relationships.

Taken from: usccb.org/catechism/text/…hpt2art7.shtml

Thank you tqualey for your response. WillieWonka, my explanation was about what role the Church has to intervene in economics. To be clear, the Church is not a Milton Friedman, but is kind of like a parent who says when his/her kids are doing wrong. If this statement is wrong, I invite anybody to disagree with it.

God Bless

 

[Langdell]

With apologies for going further afield, and with apologies for the length of this, below is a post I wrote about Enron after reading The Smartest Guys in the Room, for an old blog I used to have:

What did Enron’s management actually do that was wrong? Mainly two things – (1) outright lying to investors and (2) playing games with the books so that Enron’s disclosures to the public made the company seem like something it wasn’t. An example of transgression number 1 was when Jeff Skilling told stock analysts that Enron’s broadband operation was up and running, when that wasn’t even close to being true. Even a 10-year-old could see that that was wrong.

Transgression number 2 was much more devious. A piece of it was management’s incorrect characterization of one-time gains as income from operations. In other words, Enron sold a productive asset (such as a power plant) and then made it appear as if the money from the sale was actually income from Enron’s ongoing day-to-day business instead of a one-time thing. Another piece of transgression number 2 was shifting income from the proper time period to a different one, to give the appearance that Enron’s day-to-day business made money steadily instead of by fits and starts with major ups and downs.

And a final (and huge) piece of transgression number 2 was using sleight of hand to make debts seem like income, so that Enron seemed to be making billions when it was actually borrowing billions. (This was the main purpose of those infamous off-balance-sheet partnerships.) Many of the top guys at Enron seem to have hoped and believed, against the odds, that the company would come up with a big, new, money-making idea before all the billions in loans came due. They were sadly mistaken.

What ethical lessons can we take away from the Enron debacle? The Enron scam lasted from 1996, when Skilling became Enron’s president, until mid-to-late 2001, when the company finally imploded. Hundreds of people worked hard to maintain a massive illusion during that time. They were smart people from average backgrounds. How could they have done this?

Let’s just look at the guys at the top. When it comes to business scams, I think there are basically two types of scammers: First are the guys who set out to rip others off. For whatever reason, they think that their own enrichment is more important than the harm they do to others. Second are the guys who do something wrong (like taking a little money out of the till) because they’ve convinced themselves that they will ultimately make things right. The end result, they think, will be a win-win; they’re just committing a small wrong to stave off a big disaster. (See James Gould Cozzens’s *By Love Possessed *for a fictional example.) But stealing becomes a habit, and ultimately they’re so far in the hole that they drag their business and their creditors down with them.

I think Ken Lay (the chairman and CEO) and Skilling were primarily of the latter type. They believed that Enron had been a great business and would go on being a great business; it just needed a little help now and then in keeping up appearances until they hit the next jackpot. (Indeed, both men did have some good ideas early on that actually added value and made honest money.) But they became addicted to cheating; “now and then” quickly grew into “all the time.” And in the process, they became blinded to the fact that they were deceiving people.

Andy Fastow, on the other hand (the chief financial officer, or CFO), was I think of the former type. He was basically an upscale con man. He saw Enron as just another way to separate investors and lenders from their money, by any means necessary. And he saw his off-balance-sheet partnerships as a way of separating Enron from its money.

Scammers like Lay and Skilling and Fastow have always existed and always will. What made Enron different was the scale of what they were able to pull off . . . for a time.

Thus, the main practical lesson from Enron is not new. It is simply that those of us who are investors (which nowadays means almost everyone in the U.S.) need to be vigilant about what we’re investing in. The old saying is truer now than ever: don’t invest in anything you can’t understand. Too many people who should’ve known better – especially analysts and credit-rating firms – were bamboozled by Enron’s purposely convoluted disclosures and assumed that the rosy picture painted by management was accurate. As we know now, it was a lie. It was fraud.

The larger life lesson, the moral lesson, is to be especially skeptical of hype when the hype is beneficial to us. There are countless ways in which the human mind can make something that’s wrong seem right. (Remember that in Paradise Lost, one of the reasons why Adam agreed to eat the apple was that he felt sorry for Eve.) Just as we need to be on our guard against the fraudsters out in the world, we need to be on our guard against our own, inner sweet talk.

 

[Contarini]

A world without Judeo-Christian ethics? Fine with me. Jews and Christians figured out those ethics, but so did the rest of the world that never heard of Jews or Christians. And they did it before Christianity even existed. The world figured out those ethics without any help from Jews or Christians. China? Japan? India? Europe before Christianity? Taoism? Buddhism? Upanishads? You think those ideas are somehow unique to Christianity?

Which ideas?

You wouldn’t have the capitalism you love so much without Christianity. At least, it’s highly improbable.

Capitalism, modern science, and liberal democracy are all products of Christian civilization. Therefore, Christian moralists have a particular duty to point out when these post-Christian ideas have gotten out of control and become unhinged from the Christian principles that gave rise to them in the first place.

Note that I’m not claiming that secular folks can’t take these ideas and disregard Christianity. Of course they can, if they want to. But it’s our job as Christians to point out why this may be a bad idea.

Edwin

 

[WillieWonka]

(Looks like things are getting confusing. This is a reply to Tqualey #265)

Not good enough. If we are to condemn a company, we need to be able to say what they did. (Perhaps there is something in the CCC about that?) Is the example you gave a spread or fraud? I have found the inability of people to say just what Enron did to be a red flag. They tell us how bad they were, then don’t really know what they did.

Bernie Maddoff took customer money and converted it to his own use. He stole it. Pretty simple. I have no problem condemning that capitalist.

Bernie Ebbers directed a few billion in expenses be capitalized. I have no problem condemning that capitalist.

But Enron? The explanations are all very mushy. The prosecutors couldn’t even articulate it. That usually indicates people are basing their case on agreement with others who are equally in the dark.

Maddoff or Ebbers are much better examples if you need them.

If you want an example of people who knew a great deal about economics and did great harm, use Long Trem Capital. These were the guys who develped the Black Scholes option pricing model and made a total hash of things.

I agree Fish presented Church teaching. He presented them well. He posted them. I’m not sure what more he could do. I don’t dispute that.

In terms of busines and economics I find those teachings to have no value.

I agree there certainly were problems with capitalism at the time of Marx. There were equal or worse problems before that time. I don’t hold any system to the ideal. I hold them up against real alternatives.

But I totally reject the idea that capitalism is responsible for the depredations of communism. Marx’ major works were written in the 1840’s. Communism was imposed on an agrarian soaicety in 1920. The capitalist conditions Marx wrote of didn’t exist in 1920, It was an another example of ignorant idealists trying to improve society.

 

[WillieWonka]

Respectfully, I tried to argue based upon Church teaching since that seemed to be at the base of your argument. You said “I have an ear for anything of value. I don’t find Church teachings on economics to be of value” and “I have a beef with ignoramt moralists who think their morality is sufficient to direct the management of complex operations. They know nothing about business or economics, so they have no idea how to effectively and efficiently apply their morality.” I assumed your beef was with Church officials. While I do agree that the role of the Church is not to impose every dictation it possibly could, I do believe that the Church looks out for human dignity and the salvation of souls and their statements mean to achieve just that. Their experience is based upon 2,000 years of interpretation about the teachings of the Old and New testaments. The Church is not a political or economic authority but a moral authority. I find that to be considerable experience when trying to make sure human dignity and the salvation of souls are preserved. This is the place of the Church in economics to:
2420
The Church makes a moral judgment about economic and social matters, "when the fundamental rights of the person or the salvation of souls requires it."200 In the moral order she bears a mission distinct from that of political authorities: the Church is concerned with the temporal aspects of the common good because they are ordered to the sovereign Good, our ultimate end. She strives to inspire right attitudes with respect to earthly goods and in socio-economic relationships.

Taken from: usccb.org/catechism/text/…hpt2art7.shtml

Thank you tqualey for your response. WillieWonka, my explanation was about what role the Church has to intervene in economics. To be clear, the Church is not a Milton Friedman, but is kind of like a parent who says when his/her kids are doing wrong. If this statement is wrong, I invite anybody to disagree with it.

God Bless

I have no beef with Catholic officials. I don’t see them active in this game.

 

[WillieWonka]

Which ideas?

You wouldn’t have the capitalism you love so much without Christianity. At least, it’s highly improbable.

Capitalism, modern science, and liberal democracy are all products of Christian civilization. Therefore, Christian moralists have a particular duty to point out when these post-Christian ideas have gotten out of control and become unhinged from the Christian principles that gave rise to them in the first place.

Note that I’m not claiming that secular folks can’t take these ideas and disregard Christianity. Of course they can, if they want to. But it’s our job as Christians to point out why this may be a bad idea.

Edwin

Capitalism is a product of Judeo-Christian ethics?

I agree it was a product of a Christian culture, but I note it was very much a product of the Enlightenment which was in may ways a pushback against Christian ideas.

However, If I were a Christian cheerleader, I’d recommend taking credit for both the Enlightemnent and capitalism.

Note that Muslims had the same problems with partnerships that Europe was experiencing, and were searching for a way to get around them. The Chinese also faced the same and were experimenting with different forms. When capitalism hit Europe, its version quickly soerad and was adopted by others.

However, I think it does the rest of the world a disservice to say they would not have solved the same problem everyone was dealing with. I don’t know what ethics Christians had that Chinese didn’t have.

 

[WillieWonka]

With apologies for going further afield, and with apologies for the length of this, below is a post I wrote about Enron after reading The Smartest Guys in the Room, for an old blog I used to have:

Good post.If you have any sources for the Enron actions, I’d be interested.

 

[tqualey]

Hi, WillieWonka,

Please go up to Langdell’s excellent post (#267) specific to the multiple failiures of Enron. You may have posted this before you read these various remakrs on this comany and its shameful executives.

No argument - there are a bunch of crooks out there … Maddoff and Ebbers are just the ones who made the papers when they were caught. And the ones who are caught are just a sample of financial sharks that are swimming in the pool.

And, yes, Marx’s ideas were stolen and misapplied in Russia. No argument there, either - of course I do wonder what would have happened had they been applied in 19th-20th Century England.

Now, on to real business…

In terms of busines and economics I find those teachings to have no value.

Well, Willie, I submit the value is this - if you make making money (under whatever economic banner you want to fly) as the ultimate end - then, you are lost. While not exactly an economic model, do you recall the ‘famous’ Mr. & Mrs Fezziwig …? Here is a link: en.wikipedia.org/wiki/Fezziwig Now, I hope you see this and DO NOT howl too loudly - this is really not a spoof on my part, but a sincere example, albeit, comic one.

There are many small business operators out there who do not have money as their ultimate objective, who treat their employees as mere cogs in an economic wheel, and wo do not simply worship money. They have other objectives - and money is merely a means to do good for others and improve the lot of humanity.

While the Fezziwigs are fictional, the CC’s teachings on money not being the end of everythng - as it was for Scrooge - may simply serve as a illustrative lessons.

God bless

 

[WillieWonka]

Hi, WillieWonka,

Please go up to Langdell’s excellent post (#267) specific to the multiple failiures of Enron. You may have posted this before you read these various remakrs on this comany and its shameful executives.

No argument - there are a bunch of crooks out there … Maddoff and Ebbers are just the ones who made the papers when they were caught. And the ones who are caught are just a sample of financial sharks that are swimming in the pool.

And, yes, Marx’s ideas were stolen and misapplied in Russia. No argument there, either - of course I do wonder what would have happened had they been applied in 19th-20th Century England.

Now, on to real business…

Well, Willie, I submit the value is this - if you make making money (under whatever economic banner you want to fly) as the ultimate end - then, you are lost. While not exactly an economic model, do you recall the ‘famous’ Mr. & Mrs Fezziwig …? Here is a link: en.wikipedia.org/wiki/Fezziwig Now, I hope you see this and DO NOT howl too loudly - this is really not a spoof on my part, but a sincere example, albeit, comic one.

There are many small business operators out there who do not have money as their ultimate objective, who treat their employees as mere cogs in an economic wheel, and wo do not simply worship money. They have other objectives - and money is merely a means to do good for others and improve the lot of humanity.

While the Fezziwigs are fictional, the CC’s teachings on money not being the end of everythng - as it was for Scrooge - may simply serve as a illustrative lessons.

God bless

Many have referenced people who worship money or have money as their only goal. They usually link it with poor treatment of emloyees. OK. Let’s take that model and see how it works.

Suppose my only concern in my business is making money. Does that mean I can cut wages so I make more? If I do, my employees will pack up and move down the street to my competition If I am convinced I am right, and let them go, then I won’t be able to replace them with the same caliber. So, now I have cut wages and have an inferior work force.

With my inferior workforce, my competitor gains market share at my expense. My revenue falls, and I make less money.

So, I am stuck. Even if I want to cut wages and laugh at them while passing out canned Spam at Christmas, I can’t get away with it. I am in the same place as a guy who loves his employees. Neither one of us can control the market.

I maximize profit when I have a motivated workforce. That’s how it works. It works that way for large and small business.

My attitude on money has no bearing on the issue.

 

[Langdell]

Good post.If you have any sources for the Enron actions, I’d be interested.

Everything I posted came from Smartest Guys in the Room (the book, not the documentary, which I haven’t seen). That’s pretty much all I’ve read about Enron, other than the occasional news story.
.

 

[tqualey]

Hi, WillieWonka,

Ah, if it were only that simple…

Many have referenced people who worship money or have money as their only goal. They usually link it with poor treatment of emloyees. OK. Let’s take that model and see how it works.

Suppose my only concern in my business is making money. Does that mean I can cut wages so I make more? If I do, my employees will pack up and move down the street to my competition If I am convinced I am right, and let them go, then I won’t be able to replace them with the same caliber. So, now I have cut wages and have an inferior work force.

With my inferior workforce, my competitor gains market share at my expense. My revenue falls, and I make less money.

So, I am stuck. Even if I want to cut wages and laugh at them while passing out canned Spam at Christmas, I can’t get away with it. I am in the same place as a guy who loves his employees. Neither one of us can control the market.

I maximize profit when I have a motivated workforce. That’s how it works. It works that way for large and small business.

My attitude on money has no bearing on the issue.

You only have to look as far back as the beginnings of the Industrial Revolution - where you essentially had unrestrained capitalism that could pretty much do whatever it wanted. Now, this form of economics was not forced on business by government - rather, this form of economics appeared to be the natural melding of two interesting principles: economies of scale brought on by mass production and self-interest (how ‘enlightened’ it actually was did not appear obvious for quite some time!) Let’s look at one historic example:

Now we can look at overloaded ships - sinking - with loss of cargo and lives and say the merchants and captains would have surely come to better terms with how much to safely load on board. But, you know what - they didn’t! Yep. The British Government had to step in with the help of Sam Plimsoll en.wikipedia.org/wiki/Samuel_Plimsoll.

The scenario you provided is classic Econ 101 material - sounds good … but, implies that all forces are equal. Management is free to set its wages and Labor is free to negotiate its wages. Every now and then we find that there really is a balance … but, just like that old 3-line chemistry scale that we used a long time ago to weigh out our chemicals by counting how many lines up and how many lines down it went (passing “0” each time) we find an economy somewhat like that.

Today, we are in a serious economic depression - while there are those who will debate if we are coming out of it now or not quite yet … the bottom line is not as firm as it once was (evidenced by: more foreclosures, bankrupcies, FDIC take overs of failed banks, and home sales/purchases month-to-month. Oh and don’t forget the State of California issuing its own script a little while ago!) Now, this is the work world that employees enter and management must compete. Cutting wages to maximize the amount the manager takes home (oh, do recall the bonus system at Merril and some of the other financial organizations…) may not be the issue for most - just staying afloat seems to be motivator.

God bliss

 

[fish90]

Hey tqualey, thanks again

Hey WillieWonka,

There also exists in business the personal element. This element is arguably what keeps small business going in face of large corporations.

Real life example for ya
An owner goes and sells his small grocery store. The new owner comes in and fires all the workers and buys cheaper products. The new owner actually lost market share ( loyal customers) due to his/her cost cutting and denial of the personal element.

So tqualey is right there is not one force acting. Pouring money into quality and workers is actually a great idea in the long term. Capitalism is not the end all and be all about economics. It doesn’t at its heart aim to bring about high acceptance of human dignity. The end in your story is based on how good the outcome is for you not others. Sounds like greed if you ask my humble opinion.

God Bless and with respect,
fish90

 

[WillieWonka]

Hi, WillieWonka,

Ah, if it were only that simple…

You only have to look as far back as the beginnings of the Industrial Revolution - where you essentially had unrestrained capitalism that could pretty much do whatever it wanted. Now, this form of economics was not forced on business by government - rather, this form of economics appeared to be the natural melding of two interesting principles: economies of scale brought on by mass production and self-interest (how ‘enlightened’ it actually was did not appear obvious for quite some time!) Let’s look at one historic example:

Now we can look at overloaded ships - sinking - with loss of cargo and lives and say the merchants and captains would have surely come to better terms with how much to safely load on board. But, you know what - they didn’t! Yep. The British Government had to step in with the help of Sam Plimsoll en.wikipedia.org/wiki/Samuel_Plimsoll.

The scenario you provided is classic Econ 101 material - sounds good … but, implies that all forces are equal. Management is free to set its wages and Labor is free to negotiate its wages. Every now and then we find that there really is a balance … but, just like that old 3-line chemistry scale that we used a long time ago to weigh out our chemicals by counting how many lines up and how many lines down it went (passing “0” each time) we find an economy somewhat like that.

Today, we are in a serious economic depression - while there are those who will debate if we are coming out of it now or not quite yet … the bottom line is not as firm as it once was (evidenced by: more foreclosures, bankrupcies, FDIC take overs of failed banks, and home sales/purchases month-to-month. Oh and don’t forget the State of California issuing its own script a little while ago!) Now, this is the work world that employees enter and management must compete. Cutting wages to maximize the amount the manager takes home (oh, do recall the bonus system at Merril and some of the other financial organizations…) may not be the issue for most - just staying afloat seems to be motivator.

God bliss

I agree things at the beginning of the Industrial Revolution were different. Capitalism didn’t jump forth fully formed. It grew and evolved. But I bet those ships had been just as overloaded when owned by partnerships. So, comparing reality to reality, I don’t think capitalism loses.

I imply nothing about equal forces. Forces are never equal, and are always shifting back and forth. Many things are presented in both Econ 101 and Chemistry 101 because they are very fundamental. I hope you’re not denegrating them because of their order of presentation. I also acknowledge we constuct models to understand workings of the economy.

However, even when the forces are unequal, the pressures still exist and nudge the balance back through that equilibrium on your scale.

OK. We are in a recession and everyone faces it. I acknowledge foreclosures, Califonia and the FCIC. I acknowledge staying afloat is a big motivator in managing resources…

 

[WillieWonka]

Hey tqualey, thanks again

Hey WillieWonka,

There also exists in business the personal element. This element is arguably what keeps small business going in face of large corporations.

Real life example for ya
An owner goes and sells his small grocery store. The new owner comes in and fires all the workers and buys cheaper products. The new owner actually lost market share ( loyal customers) due to his/her cost cutting and denial of the personal element.

So tqualey is right there is not one force acting. Pouring money into quality and workers is actually a great idea in the long term. Capitalism is not the end all and be all about economics. It doesn’t at its heart aim to bring about high acceptance of human dignity. The end in your story is based on how good the outcome is for you not others. Sounds like greed if you ask my humble opinion.

God Bless and with respect,
fish90

The grocery store model doesn’t match reality. As a model we can deal with it, but it mainly demonstrates it is stupid to buy something and then destroy its value. Why bother to buy a business and then just destroy it and start over? Get rid of emplyees, inventory, and market share? Better to just buy a vacant building for less money.

Be careful not to assign the characteristics of any model to reality unless it can be demonstarted there is a match.

I agree capitalism doesn’t try to bring about human dignity. But capitalism has allowed for more prosperity and human dignity than any other system in history.

I don’t know what you are trying to say by, “The end in your story is based on how good the outcome is for you not others. Sounds like greed if you ask my humble opinion.” Can you elaborate on oyur humble opinion?

 

[tqualey]

Hi, WillieWonka,

You do realize how a business is legally formed (sole proprietorship, partnership or corporation) has nothing to do with the economic system it finds itself in. There are corporations in Russia.

I agree things at the beginning of the Industrial Revolution were different. Capitalism didn’t jump forth fully formed. It grew and evolved. But I bet those ships had been just as overloaded when owned by partnerships. So, comparing reality to reality, I don’t think capitalism loses.

I imply nothing about equal forces. Forces are never equal, and are always shifting back and forth. Many things are presented in both Econ 101 and Chemistry 101 because they are very fundamental. I hope you’re not denegrating them because of their order of presentation. I also acknowledge we constuct models to understand workings of the economy.

However, even when the forces are unequal, the pressures still exist and nudge the balance back through that equilibrium on your scale.

OK. We are in a recession and everyone faces it. I acknowledge foreclosures, Califonia and the FCIC. I acknowledge staying afloat is a big motivator in managing resources…

Hold on… with all of these concessions … I am getting confused… does this mean that you are agreeing with me… Market forces are never equal (like an algebra equation…) rather they are competing from different aspects - more like a multi-dimensional chess game with more then one player. There really is no ‘winner’ in the sense that the game stops - it is a long and protracted end-game for position. And, don’t forget, the government is playing in this, too. While not necessarily bad … I don’t think anyone last year had thought of Uncle owning GM!

God bless