What is wrong with capitalism?

[carn]

Before trying to answer the thread question, please take a look at the following “code of conduct” for a government:

Protect the rights of everybody and respect the rule of law with basic human rights forming the foundation of the law. This includes property rights and therefore any interference into property rights is like the interference into any other human right (e.g. life,liberty) is only possible according to laws and such laws are only valid and may be passed if there is sufficient reason for the interference, which can only arise from the protection of human rights (e.g. poor people should not starve, so non-poor may be forced to provide the food/means for food if a voluntary solution does not work, voluntary solution preferable because then no interference into rights necessary).

However i look at this, i cannot see any evil in this, except that maybe having a government at all is risky because governments are powerful and power can corrupt.

The problem is, if a government would act accordingly, its country would be what a lot of people would name wild-west capitalism because people would mostly be free to use their property as they want to. And such a country would probably be far more capitalistic than nearly any country today and the ones today are deemed to be far too capitalistic by many.

So how does the wrongness get into capitalism, if even a moral government would have capitalism all over the place, and what exactly is wrong about capitalism?

Greed is of course a problem, but greed is a problem for any system just like other vices.

 

[RPRPsych]

Before trying to answer the thread question, please take a look at the following “code of conduct” for a government:

Protect the rights of everybody and respect the rule of law with basic human rights forming the foundation of the law. This includes property rights and therefore any interference into property rights is like the interference into any other human right (e.g. life,liberty) is only possible according to laws and such laws are only valid and may be passed if there is sufficient reason for the interference, which can only arise from the protection of human rights (e.g. poor people should not starve, so non-poor may be forced to provide the food/means for food if a voluntary solution does not work, voluntary solution preferable because then no interference into rights necessary).

However i look at this, i cannot see any evil in this, except that maybe having a government at all is risky because governments are powerful and power can corrupt.

The problem is, if a government would act accordingly, its country would be what a lot of people would name wild-west capitalism because people would mostly be free to use their property as they want to. And such a country would probably be far more capitalistic than nearly any country today and the ones today are deemed to be far too capitalistic by many.

So how does the wrongness get into capitalism, if even a moral government would have capitalism all over the place, and what exactly is wrong about capitalism?

Greed is of course a problem, but greed is a problem for any system just like other vices.

I don’t think there is anything intrisincally “wrong” with capitalism per se, as opposed to say Socialism or Communism, which the Church condemns as wrong in themselves, because they generally lead to atheism or totalitarian rule (as in Soviet Russia, but we also have contemporary examples such as China or Cuba.)

However, the Church also teaches us that, when speaking of capitalism, we are not to turn it into dog-eat-dog “individualism” (with an attendant callous unconcern for the rights or welfare of others), or to appeal to the “law of the marketplace” as some form of higher authority. In other words, she echoes the words of the Prophets and of Our Lord Himself, who condemned extortion, corruption, greed, covetousness, injustice, and a disordered attachment to wealth in itself. “You cannot serve God and mammon”.

In other words, if one steers clear of the sorts of “excesses” we often see around us today, it is quite possible to be Catholic and a capitalist (though it is impossible to be Catholic and Communist). It’s just that it’s hard to do in practice, because of our fallen nature and desires (Sirach 31: 1-11; 26:28 - 27:2)

 

[odile53]

If we try to remember that money is a medium for the exchange of goods, services, and charity, and not an end in itself, nothing is wrong with capitalism. It’s when we make money our master and not our servant that things tend to go south morally.

 

[Robert_Sock]

Capitalism leads to corporatism, which is not bad because corporatism lends itself to socialism/communism. Neither socialism or communism needs to be anti-religious.

Look at all the products produced by corporations! Corporations will control the world some day. Anybody who thinks that corporations do not do great things should consider how to efficiently mass produce simple boxes of toothpicks (its much harder than one thinks). When I look at all the products that come from corporations, I marvel.

 

[JRKH]

I agree with the others. There is nothing wrong with capitalism - or the other economic forms mentioned, socialism or communism - in theory. In practice it is another matter.

In practice, individuals will try to work things to their own advantage. Many, perhaps most, individuals will seek to work honestly within the system. Some will try to push, twist, skirt change and/or subvert the system to their own sinful goals (Greed and Avarice and Gluttony).
If such individuals are successful in their greed - and - if these people are held up as “successful” examples to be respected and emulated, then greater and greater numbers of individuals begin to go down this pathway and eventually chaos follows.

Ben Franklin put it best in his speech at the close of the Constitutional convention. He said:
…there is no form of Government but what may be a blessing to the people if well administered, and believe farther that this is likely to be well administered for a course of years, and can only end in Despotism, as other forms have done before it, when the people shall become so corrupted as to need despotic Government, being incapable of any other…
(Full text HERE)
The same sentiment and principle can be applied to economic systems as to governmental forms.

Peace
James

 

[centurionguard]

It’s not so much Capitalism that’s wrong its Crony Capitalism which has taken root in the Western World today. en.wikipedia.org/wiki/Crony_capitalism

What Does Crony Capitalism Mean?
A description of capitalist society as being based on the close relationships between businessmen and the state. Instead of success being determined by a free market and the rule of law, the success of a business is dependent on the favoritism that is shown to it by the ruling government in the form of tax breaks, government grants and other incentives.

Both socialists and capitalists have been at odds with each other over assigning blame to the opposite group for the rise of crony capitalism. Socialists believe that crony capitalism is the inevitable result of pure capitalism. This belief is supported by their claims that people in power, whether business or government, look to stay in power and the only way to do this is to create networks between government and business that support each other.

On the other hand, capitalists believe that crony capitalism arises from the need of socialist governments to control the state. This requires businesses to operate closely with the government to acheive the greatest success.

 

[carn]

I agree with the others. There is nothing wrong with capitalism - or the other economic forms mentioned, socialism or communism - in theory.

How can communism in theory be morally justified?

For a communistic government the above “rules” would have to be changed into:
Protect the rights of everybody and respect the rule of law with basic human rights forming the foundation of the law. This excludes property rights in respect to means of production any non-interference into ownership of means of production must be avoided. Unlike the interference into any other human right (e.g. life,liberty) interference into property rights regarding means of production is total, needing no reason on individual basis as all property rights of means of production is permanently without need for justification forfeited and ownership always criminal.

I can come up with lots of ideas,why that is immoral.
E.g. if i am lousy at baking cakes but great at peeling and cooking potatoes and its reverse with my neighbor and we decide to exchange, our kitchen, the oven and the tools used have become means of production and my neighbor and i lose lacking state permission any right to use those and are criminals, as both me and my neighbor produce and exchange goods. The state might not notice this, but that doesn’t change it.

And extensive black markets are something every communistic government had to fight,knowing full well that the black market is an attempt to avoid the blessings of communism.

If such individuals are successful in their greed - and - if these people are held up as “successful” examples to be respected and emulated, then greater and greater numbers of individuals begin to go down this pathway and eventually chaos follows.

Good point.
But there are in general only two possibilities. The exchange partners customers of the greedy capitalists profited materially from the exchange. Then it would be still immoral to hail his greed, but his overall accomplishment is positive for society and should be respected.
Or his exchange partners were harmed materially due to the exchange, then likely he is a criminal.

Question is, could someone solely acting on greed and respecting every written law (especially the ones about accounting) but no moral laws get rich by mostly harming others?
Such people would be a problem, they would look great for their money, would not be prosecuted for anything, although they would be despicable.

The best medicine against CronyCapitalism would be, if politicians had little to decide. When due to a 24-hour news cycle politicians might any day decide to change laws in a way that costs or wins billions, it wóuld always be worthwhile to invest millions in lobbyist even if these lobbyists would just talk and bribe nobody.

When politicians decide seldom, not much and reliably those millions would be waste of money.

 

[Monte_RCMS]

One of the many benefits from capitalism is that it offers the average person an opportunity to invest their savings in “the corporation” by purchasing of shares of stock in one or many corporations.

It allows the “little guy” to invest in fractional ownership in large corporations.

There is a sort of hierarchy of vehicles for saving your money … in a tin can buried in your back yard, for example. But there are risks … in this case, papermoney may rot or get wet or you may forget where you put it. Or your dog may dig it up and run off with it.

Or in a bank account. But, now you are into a bureaucracy with paperwork and the interest rate may be very low. But there is an element of security.

Or in a CD. A higher interest rate, but you tie up the money for a longish period of time.

Or in a government bond. There are different types of government bonds … but you tie up your money for a really LONG period of time. [You can invest in a shorter term note, but then you need to start keeping detailed records of when to reinvest and get into sophisticated things like “laddering”.]

Or in real estate. But you really need to know the market well. And getting out may take a long time when you want to sell. And there are commissions and taxes.

Orrrr … in the stock market … which is … buying shares in one or more corporations … the very essence of capitalism … private sector individuals pooling their money for future returns. Not risk-free. But there are tons of books, courses, on-line courses, correspondence courses. And you can get in and get out in minutes. No waiting around for a real estate broker to spend months or years trying to find a buyer.

And, of course, selling a stock or a bond is a taxable event, unless you do it within a tax-deferred account, such as an IRA or a Roth IRA. The tax booklet on how to do an IRA is now more than 100 pages thick.

And if you want to reduce risk, you can buy mutual funds of varying types ranging from commission funds to no-load funds to ETF’s, which invest as a pool … so you can reduce your risks [and also reduce your rewards].

AND, through the miracle of modern competition, there are an increasingly large number of vehicles so that you don’t need to have mega-millions to get involved; you can start very small.

And some employers even offer vehicles such as “401(k)” plans [tax-deferred plans] so employees can invest part of their paycheck in mutual funds, of which there are thousands to choose from.

AND, there are publications available for purchase or at the library to learn more.

And all of it is part of capitalism.

 

[JRKH]

How can communism in theory be morally justified?

Wikipedia provides this description of communism:
In Marxist theory, communism is a specific stage of historical development that inevitably emerges from the development of the productive forces that leads to a superabundance of material wealth, allowing for distribution based on need and social relations based on freely associated individuals.

Communism, like any other economic system can be perfectly moral if the people themselves are moral.

Consider the Christian position on Charity - It fits in very nicely with distribution of wealth based on need.
Consider the Christian position on Society - It fits in nicely with the free association of individuals.

Look at Acts 4:32-37 and see a wonderful example of this in action. The people are freely associating, and are distributing based on need.
Of course we see in chapters 5 and 6 that problems came up in the application of the system and the community needed to address this.

The key in all of this though is the opening verse, Acts 4:32…“Now the company of those who believed were of one heart and soul…”. Of one heart and soul (with a single morality). In such a circumstance ANY economic system can work.
It is only when a system that is built on a given morality is corrupted by the immoral that problems occur.

I will not deny that Communism is not terribly practical in anything resembling a large scale but the theory itself is morally neutral.

Peace
James

 

[Jonatello]

different people have different definitions of capitalism, but

any system which allows for the resources that everybody needs to be gobbled up and controlled by a small number of the strongest/greediest/most-ambitious people whose actions can’t be monitored and refereed by the community is a recipe for tyranny

pure capitalism naturally becomes crony capitalism which becomes oligarchy.

This is very simplistic, but it illustrates the basics:

God gives 10 people on a desert island 100 fruit trees.

Communism: we all get the same amount of fruit, no matter who cares for the trees and picks the fruit…so, uh, whose up for getting that fruit for us?

Capitalism: there’s more than enough fruit for everyone to easily pick from, but haha we the most virtuous 2 have beat you with our clever clever wits and hard hard work, and have built a moat around 99 of them. You can all fight over the last tree, and since we control your food source, we call the shots around here. Do our bidding and be nice to us and we’ll share some of the 98th tree’s fruit with our favorites out of the charity of our wonderful God-fearing hearts.

Better Option: we have voted 9 to 1 in favor of letting everyone take no more than 10 trees and they can use their creativity, gifts, and work ethic to make the best use of them as they see fit.

 

[JRKH]

different people have different definitions of capitalism, but

any system which allows for the resources that everybody needs to be gobbled up and controlled by a small number of the strongest/greediest/most-ambitious people whose actions can’t be monitored and refereed by the community is a recipe for tyranny

pure capitalism naturally becomes crony capitalism which becomes oligarchy.

This is very simplistic, but it illustrates the basics:

God gives 10 people on a desert island 100 fruit trees.

Communism: we all get the same amount of fruit, no matter who cares for the trees and picks the fruit…so, uh, whose up for getting that fruit for us?

Capitalism: there’s more than enough fruit for everyone to easily pick from, but haha we the most virtuous 2 have beat you with our clever clever wits and hard hard work, and have built a moat around 99 of them. You can all fight over the last tree, and since we control your food source, we call the shots around here. Do our bidding and be nice to us and we’ll share some of the 98th tree’s fruit with our favorites out of the charity of our wonderful God-fearing hearts.

Better Option: we have voted 9 to 1 in favor of letting everyone take no more than 10 trees and they can use their creativity, gifts, and work ethic to make the best use of them as they see fit.

How about this:

God gives 10 people on a desert island 100 fruit trees.
And God tells them to “Love your neighbor as yourself”

As a result of this, the ten people vote 9-1 to hold the trees in common, for the common good, That everyone will participate, to the best of their abilities, in the planting, care, harvesting, processing and eating of the produce. No one “lords it over” any other, though certain trusted individuals are selected to act as leaders to see that all is properly coordinated.

Sounds like the best solution to me…

Peace
James

 

[Jonatello]

How about this:

God gives 10 people on a desert island 100 fruit trees.
And God tells them to “Love your neighbor as yourself”

As a result of this, the ten people vote 9-1 to hold the trees in common, for the common good, That everyone will participate, to the best of their abilities, in the planting, care, harvesting, processing and eating of the produce. No one “lords it over” any other, though certain trusted individuals are selected to act as leaders to see that all is properly coordinated.

Sounds like the best solution to me…

Peace
James

which is why i believe democratic communism is more moral -in theory- than a greed-based everyone-for-self capitalism…especially in small-scale numbers like 10 people (it could possibly work)

but the problem (assuming you’re successfully able to get everyone to contribute) is that everybody’s labor and work is dictated to them by the group. A man is not in charge of his own efforts. Someone may have an idea to use one of the trees for a unique purpose, and may not feel the need to take anything from this other tree, but if the group is controlling his every choice and move, then there’s no room for his own gifts and inspirations to take form.

 

[Ridgerunner]

different people have different definitions of capitalism, but

any system which allows for the resources that everybody needs to be gobbled up and controlled by a small number of the strongest/greediest/most-ambitious people whose actions can’t be monitored and refereed by the community is a recipe for tyranny

pure capitalism naturally becomes crony capitalism which becomes oligarchy.

This is very simplistic, but it illustrates the basics:

God gives 10 people on a desert island 100 fruit trees.

Communism: we all get the same amount of fruit, no matter who cares for the trees and picks the fruit…so, uh, whose up for getting that fruit for us?

Capitalism: there’s more than enough fruit for everyone to easily pick from, but haha we the most virtuous 2 have beat you with our clever clever wits and hard hard work, and have built a moat around 99 of them. You can all fight over the last tree, and since we control your food source, we call the shots around here. Do our bidding and be nice to us and we’ll share some of the 98th tree’s fruit with our favorites out of the charity of our wonderful God-fearing hearts.

Better Option: we have voted 9 to 1 in favor of letting everyone take no more than 10 trees and they can use their creativity, gifts, and work ethic to make the best use of them as they see fit.

I would certainly agree that capitalsim CAN turn into crony capitalism and oligarchy, and there is a natural tendency for capitalists who can’t “make it on their own” to do that. Those who don’t need government favoritism don’t seek it.

It is true that the top 5% of people in the US own something like 65% of the wealth. But of those, most are “little rich”; people who own businesses or service firms of fairly limited size. And most of the wealth is in the business itself. Most of them did not inherit their wealth.

It’s not an insurmountable task to gain wealth in this economy. Most people actually do have wealth, but it’s locked into their homes, their businesses, their retirement accounts, and so forth. Unfortunately, a lot of it goes into consumer goods that produce nothing and depreciate rapidly. One of the fundamental features of the “little rich” mentioned above is that they live below their means. There is no significant correllation between earnings and wealth.

So, I don’t know that your fruit tree analysis quite works. I think it would be more like the people find coconuts on the shore. Some eat theirs right away. Some go hungry and plant theirs. Of the latter, some trees survive and bear fruit, and some don’t. Ultimately, those whose trees bear fruit hire those who ate their coconuts, to tend the trees that survived, in exchange for coconuts. Maybe some of those who ate their coconuts right away learn from the events and keep back a few to plant themselves. Maybe they don’t.

But when it comes to a high level of consumerism, I will agree that corporations do their very best to get us to spend what might otherwise be our wealth on their products; some of which (like a skid steer) might produce wealth, and some of which (like a BMW) don’t.

 

[Jonatello]

I would certainly agree that capitalsim CAN turn into crony capitalism and oligarchy, and there is a natural tendency for capitalists who can’t “make it on their own” to do that. Those who don’t need government favoritism don’t seek it.

by controlling the resources, one automatically gains control over society, whether or not their methods of exercising that control fit a more narrow concept of crony.

So, I don’t know that your fruit tree analysis quite works. I think it would be more like the people find coconuts on the shore. Some eat theirs right away. Some go hungry and plant theirs. Of the latter, some trees survive and bear fruit, and some don’t. Ultimately, those whose trees bear fruit hire those who ate their coconuts, to tend the trees that survived, in exchange for coconuts. Maybe some of those who ate their coconuts right away learn from the events and keep back a few to plant themselves. Maybe they don’t.

what i’m talking about is control over the productive property and resources necessary to collect and plant coconuts.

another way to put it would be everyone doesn’t gain access to the necessary means to plant the coconuts, because all the fertile land is gobbled up and controlled by the few who, through hard work, clever whatever, were able to snatch it all for themselves.

 

[carn]

Better Option: we have voted 9 to 1 in favor of letting everyone take no more than 10 trees and they can use their creativity, gifts, and work ethic to make the best use of them as they see fit.

20 years later through voluntariy trading 5 still own 10 trees, 1 owns zero trees (turned alcoholic, survives on alms), 2 own 5 trees (treated them lazily and more died than grew sold the space to the richest, receive some alms), 1 owns 20 trees and knows how to treat them so that they produce as 40 trees and 1 not only owns the remaining but managed to raise an additional 50 on his land, for a total of 150 trees producing for 170.

And now?

The average person has the fruit of 17 normal producing trees, so 3 poor people, 5 middle class 1 rich (40) and 1 very rich (70).

The rich suggest to the very rich that he gives him 10 trees and he shares the skills and knowledge how to double production. the rich now produces fruit of equivalent 60 normal
trees and the very rich for 120, total production is now 240. “Average” 24. Poverty line is 12.

So now through voluntary trading and especially through a deal between the rich and the very rich, which included no harm for anyone else, we now have 8 poor people and 2 rich and the social justice people will be howling for government redistribution because its so injust.

And we got there from a just society with only voluntary exchange and differences in tree handling skills.

What a communist will do is obvious, he will kill the rich and the very rich, as they are evil oppresors with the sole proof that they own more. Then production will drop to 150 because double production skill will be lost. The 8 survivors might get 150/8=18 trees each (some are lost to have stakes to burn the rich and the very rich on). As the knowledge how to grow more trees on the same space was lost, some time later it will be only 100 trees left, or 12.5 each. Then the alcoholic and the 2 lazy will fail again to work properly and 25 trees will be lost, the alcoholic will lose all the lazy half.

Now our society has 8 members and 75 trees, so its poorer than it started and a lot poorer compared to the situation where instead of killing the rich one convinced the rich to share something, they could even have paid the lazy with fruit for some other tasks they are more suited than tree growing.

So whats the moral plan, when God arrives 20 years later and its 1 0 trees, 2 5 trees, 5 10 trees, 1 60 tree equivalents and the last 120 tree equivalents?
What would a moral government do?

 

[estesbob]

Nothing.

 

[estesbob]

Better Option: we have voted 9 to 1 in favor of letting everyone take no more than 10 trees and they can use their creativity, gifts, and work ethic to make the best use of them as they see fit.

My favorite:

Socialism: You have two cows. The government takes one and gives it to your neighbor.
Communism: You have two cows. You give them to the Government, and the Government then gives you some milk.
Fascism: You have two cows. You give them to the Government, and the Government then sells you some milk.
Capitalism: You have two cows. You sell one and buy a bull.
Naziism: You have two cows. The Government shoots you and takes the cows.
Bureaucracy: You have two cows. You give them to the Government, they shoot one and milk the other then pour the milk down the drain.

 

[Jonatello]

20 years later through voluntariy trading 5 still own 10 trees, 1 owns zero trees (turned alcoholic, survives on alms), 2 own 5 trees (treated them lazily and more died than grew sold the space to the richest, receive some alms), 1 owns 20

stop right here…1 can’t own 20 with my third model. 1 can’t own more than 10. Civilization’s resources cannot be monopolized. That’s the whole point.

So now through voluntary trading and especially through a deal between the rich and the very rich, which included no harm for anyone else

the monopolization over resources is harmful to the common good.

What a communist will do is obvious, he will kill the rich and the very rich, as they are evil oppresors with the sole proof that they own more.

how is it obvious that he would kill people?

Now our society has 8 members and 75 trees, so its poorer than it started and a lot poorer compared to the situation where instead of killing the rich one convinced the rich to share something, they could even have paid the lazy with fruit for some other tasks they are more suited than tree growing.

once again, almost like clockwork, capitalism is defended with a presumption that wealth and poverty is a measure of virtue.

 

[Birdpreacher]

Nothing is wrong with capitalism, however like every other institution created by man, it is vulnerable to abuse.

*“The end of democracy and the defeat of the American Revolution will occur when government falls into the hands of lending institutions and moneyed incorporations.” *

http://sc94.ameslab.gov/TOUR/tjefferson.gif

 

[Ridgerunner]

any system which allows for the resources that everybody needs to be gobbled up and controlled by a small number of the strongest/greediest/most-ambitious people whose actions can’t be monitored and refereed by the community is a recipe for tyranny

pure capitalism naturally becomes crony capitalism which becomes oligarchy.

I don’t think anybody can question that in some places, essentially all resources are owned or controlled by a tiny oligarchy. That’s very typical of crony capitalism and crony socialism and crony communism. But to say that it’s somehow peculiar to capitalism is just incorrect. It is, in fact, the more capitalist economies that are less that way than the others.

And while some industries are near-oligopolies, most of those are busy tearing each other apart. I pay some attention to the stocks of meat producers. Among poultry producers, there are essentially only four major players. But it’s a fact that the competition among them very frequently brings all of them to within a hair of unprofitability, and sometimes below it, precisely because they fight for market share with price, among other things, and they overproduce. Not good for them. Good for the consumer. It’s just a fact that nobody can produce chicken or eggs anywhere nearly as cheaply as they can. You can’t raise your own laying hens in your back yard and get eggs anywhere near as cheaply as you can buy them in the store, no matter what you do.

But can you own a piece of one of those companies? Sure. They’re on the market every single day. If one had invested in a particular one of them as little as a year and a half ago, he would have made several times what he invested.

So, how is this such an awful thing? Sure, if they got together and manipulated pricing jointly, it would be bad for consumers. But they can’t, by law, and they don’t. Quite the contrary, they fight tooth and nail all the time.

But, as big as they are, they do not own most of the resources. The big meat producers can’t even do it in poultry, let alone beef. The poultry producers contract with the growers, individual farmers, who own the growout facilities. Why? Because they couldn’t begin to afford all the poultry houses it would take to own all the resources. And it’s even more impossible with beef. Not all of the meat producers together could possibly buy enough land to own all the beef resources. They would have to own half the U.S. to do that…an impossible proposition.

And why do the “bigs” not own all the resources in the U.S.? Precisely because nobody can force the owners of the resources to divest themselves of them for nothing or at a price well below their value like a socialist or communist government can. Capitalism, if regulated by reasonable laws, isn’t perfect and has lots of flaws. But total concentration of resources into the hands of the few is not one of them.