Capitalism -What is the End Game?

[Crowbob]

Capitalism is based on an assumption that there will be growth. For there to be growth there has to be consumption. For there to be consumption there has to be demand. Demand is most frequently associated with, and predicated on, population growth which we stipulate to be finite. This association is only partly correct. There can be increasing demand that outpaces population growth. By extension, I think demand can increase even with no increase in population. This is because there currently are billions who consume minute fractions. If those billions consumed more even in tiny increments, demand and thus capitalism can and will perpetuate itself, theoretically indefinitely. We have a long way to go before we run out of potential consumers. Westerners, particularly Americans, have become addicted to disproportionately huge levels of consumption. In general, for there to be global growth (and therefore capitalism) Americans and to a lesser degree Europeans will necessarily have to consume less while Africans and Asians will have to consume more. In this regard, free markets and supply side economics has demonstrated success-at least in the short run. The paradox we are experiencing now is that on this globe we see increasing population and increasing demand with decreasing capitalism. This distortion is self-correcting. Religiosity and imperialism (i.e., politics) notwithstanding (per request of the OP), we are in the bigginning stages of a global economic correction. Reinserting politics and religion into the equation may prompt you to conclude, as I have, that we are on the precipice of global chaos. The sooner we get on with it, the sooner the globe will normalize and settle into the new world order-whatever that may be. I say capitalism will survive and continue as the engine propelling human progress.

[grudk]

Do we have a capitalist system? As the ongoing bailouts and accounting scams in the financial system demonstrate, certainly not. I expect more of the same from wall st and the politicians (and eventually a deflationary depression)

[Crowbob]

IMO, no. I agree that train has left the station. For at least the past few decades or so, we have been operating in a "stop-the-bleeding" system (be careful, grud. OP requested no politics which does make a discussion of economics difficult).

[jyl]

Here is a typical definition of capitalism. It doesn't include "growth".

Economic system characterized by the following: private property ownership exists; individuals and companies are allowed to compete for their own economic gain; and free market forces determine the prices of goods and services. Such a system is based on the premise of separating the state and business activities. Capitalists believe that markets are efficient and should thus function without interference, and the role of the state is to regulate and protect

Some people believe that, in a no-growth economy, companies will compete away all profits such that there will be no economic gain to be capitalist about. I think that is a gross over-simplification.

It is probably true that if there is no change in the economy - no new ideas, no new technology, no new demand or new supply, no innovation, no external forces to adapt to - in other words a completely static and stagnant economy - then it would eventually be hard to have a capitalist system.

If every company becomes equally good at making identical copies of widget X, and no-one ever comes up with a way to make widget X better or cheaper, and widget X never goes in or out of fashion - well, then the price of widget X will decline to the level that produces zero marginal cash flow for the entire industry. Since nothing ever changes, the industry goes on making zero marginal cash flow and negative total cash flow until everyone goes out of business together.

But how realistic is that? What will actually happen is that, even in an economy which overall does not grow, some markets will grow and some markets will shrink, some new products will succeed and some new products will fail, some players will win and some players will lose. So you have capitalism. Even without growth in the overall economy.

What kind of capitalism will it be? Well, it'll be pretty darn tough and competitive capitalism, since everything is a zero-sum game, but it will still be very nice to be the winner and very bad to be the loser, and that's what you need.

As a real-life example, take my industry which is about as capitalist as they come. There are years, even decades, when the stock market doesn't grow in real terms. Does Wall Street disappear, or convert to communism, or start behaving less capitalistically if that is a word? Heck no - investors fight each other harder than ever and the less fit get killed ever faster.

[DARISC]

Originally Posted by Crowbob

...OP requested no politics which does make a discussion of economics difficult).

Difficult perhaps, but, impossible?

Here's a thought; maybe keep this outta PARF by, rather than discussing the politics relating to this topic in terms of named political parties, referring only to "the govt." and what it has done/not done to benefit/hurt capitalism. No mention of a political party, no name calling, just lay out what has been/is being done and discuss how/why it affects capitalism - without front loading it up with partisan ideology.

Is it possible to have such a discussion?

[jyl]

Yes, we can and do have economics threads here. When some PARF crackpot tries to inflame things, if people ignore him, we can continue.