Capitalism and Socialism:

[Nick]

Prove it.

[Shahrazad]

Nick, fyi, I edited my post before I read yours. We must have been posting at the same time.

[Nick]

That's fine. I'm still going to need you to prove that 5% of the population produces 90% of the GNP.

[Shahrazad]

In my country? It's true. And I'm not awfully concerned about how accurate the figures are, because even if it's just 10% of the pop. making 80% of GNP, my argument would still hold.

Are you gonna make me look up the stats? Damn you.

[Nick]

If you don't mind.

[Shahrazad]

A kinda mind, but if that's what it's gonna take to convince you, I'll do it. Give me a few minutes, or hours.

[Shahrazad]

OK, I found something here, page 2: http://74.125.93.104/search?q=cache:b6L ... =firefox-a

. . . . .

Percent of total income earned by the richest
20% of the population: 52.8%
X
X
Percent of total income earned by the poorest
20% of the population: 3.6%
X
X
National Poverty Rate 37.3%
X
X
Poverty Rate, Urban Population 15.3%
X
X
Percent of population living on less than $1 a day 14.0%
X
X
Percent of population living on less than $2 a day 29.0%
X
X

http://74.125.93.104/search?q=cache:b6L ... =firefox-a

Ok, so 20% of the pop. is responsible for 53% of GNP. This is a lot less than I thought (looks like things have changed a lot in the last 30 years, plus I was misinformed). So let's say that 20% quit their jobs. That would leave us with 80% of the pop. making 47% of the money, or $470 million. Less than half of what we had before. Convince me that this would be enough.

[Nick]

What you showed me is that a certain minority makes the majority of the money. This doesn't prove that the minority in question, be it 5, 10, or 20 percent, produces the most goods and services.

[jupta]

Much of the money in circulation today is worthless.

[Shahrazad]

Ok Nick, so what do you think GNP measures, if not goods and services?

What the figures mean is that most wealth is created by a "minority", as you say.

[Nick]

What the figures mean is that most wealth is created by a "minority", as you say.

What the figures show is that a certain minority makes the majority of the money, not that they actually PRODUCE the most goods and services. In fact it didn't even touch on who's producing any amount of goods and services, or "creating the wealth" as you say, if there even is such a thing wealth creation.

You'll have to do better than this if you want to prove what you stated earlier.

[Shahrazad]

I'll come back tomorrow and try to explain it using a different angle.

[vicdan]

What I object to is reckless growth - growth for its own sake. Economic growth should be prioritized below the general well-being of the people - which includes their environmental and social standards. Scandinavian welfare capitalism is a step in this direction.

No, it's not. Scandinavian culture is a step in that direction.

See, if both capitalism and socialism over-prioritize growth, then their combination will similarly over-prioritize growth. You misunderstood what the real problem is, and whence the solution stems.

Growth is moderated by significant tax rates and redistributive measures

Then why isn't growth near zero under socialism?

You misunderstand the problem.

In other words, while a certain degree of economic growth is necessary to maintain a desirable society, growth should not be an overriding goal in and of itself. The goal should be to have just enough growth to achieve humanistic aims, and no more.

Try wearing a hair shirt.

Yeah. Sodium and chlorine will both kill you - but put them together, add an electron, and you've got table salt.

Except that you aren't combining two qualitatively different things. if both capitalism and socialism overprioritize growth, then their combination will as well, because their combination leads not to a qualitatively new system, but to a 'happy medium' between the extremes; i.e. if you want to moderate growth, recombining capitalism and socialism is not the solution.

See what i wrote in the very first paragraph. Note the highlighted word. Think about how it interacts with the economy.

[jupta]

I was just reading vicdan's responses. I don't think I have known anyone to be so hopelessly wrong on almost every count. Anyways, here goes:

yes. one is economically efficient, and thus efficacious at producing growth; the other one isn't. Of course you can side with Unidian and deny the need for economic growth. From the heights of our standing in the developed world, it's an easy thing to do.

History suggests that socialist economies are actually stronger, more stable and more equally distributed than capitalist ones. You only have to look to the economies of the USSR and the former Soviet bloc nations. In fact, many of the former left bloc nations' economies have deteriorated since the fall of USSR.

No, silly. Capitalism works because it utilizes those things, while socialism requires man to be something other than what he is. This was understood way back, by Adam Smith: "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their self-love, and never talk to them of our own necessities but of their advantages."

Adam Smith's model was won over by John Nash about 200 years later. Excessive competition, growth and greed leads to destruction.

Rot is consumption -- by bacteria. Get your wrong-headed metaphors straight.

Yeah, and I meant exactly that. It would be far better if the assets of dissolved or failing firms would be distributed among the populace. The process in which failing firms are consumed by healthier firms, leading to their growth, is ultimately unhealthy for any economy and the people it serves. The process must be restricted, if not completely eliminated.

[Shahrazad]

Nick,

What the figures show is that a certain minority makes the majority of the money, not that they actually PRODUCE the most goods and services. In fact it didn't even touch on who's producing any amount of goods and services, or "creating the wealth" as you say, if there even is such a thing wealth creation.

They do produce the most amount of money in goods, not necessarily the largest unit count of goods.

The country I used as an example has an economy based on free trade, and prices are not fixed; they are set by supply and demand. This means that if I bake and sell bread for $5 a loaf, and another baker sells bread for $0.50 a loaf, people will not buy my bread unless they consider it is much better than the other bread. The fact that I am getting paid $5 a loaf means that some people prefer my bread to the other baker’s bread, and in my market, that is what my bread is worth. Thus, I can measure production by measuring income. It is a one to one proportion. If I add up all income of all the people in the country, I will have total production, or GNP.

Now let’s say I baked and sold 1000 loaves of bread in one month. I have $5000, which I can use to buy other goods and services. The average salary in my city is about $500 a month, so I made ten times the average. This means that I have enough money to buy a lot of goods, not just what I need to stay alive and healthy. Now I, with the help of my customers, have created the demand for more goods, so those goods will find a way of popping up.

Assume that in the elections in May a socialist woman becomes President, and she decides that I don’t deserve to make ten times the national average by making something that anybody can make (bread), and that now I have to pay 60% of my income in the form of taxes. I decide to stop making bread, because I’m not keeping enough money to justify my toil and labor. Now there are $5000 less of demand for goods and services in my economy. All those people who were selling goods to me will be making less money. Some people will lose their jobs. The economy shrinks.

Is this making sense to you?

[vicdan]

History suggests that socialist economies are actually stronger, more stable and more equally distributed than capitalist ones.

Moron, i grew up in USSR. i know what it was like. Soviet economy sucked ass. USSR never posted unusually high growth compared to the rest of Europe, even though it was starting farther back and thus should have been growing faster than the western european countries could have.

USSR economy was a sclerotic mass of stupidity.

Stop lying.

Adam Smith's model was won over by John Nash about 200 years later.

idiot, stop lying. nash's finding, for which he got his economics Nobel, had nothing to do with excessive greed. What he showed is that in some specific cases, local optimization leads to globally suboptimal results. This is accounted for in market economics -- those are the cases of externalities, such as pollution, where it's the government's job to step in and straighten out the economic incentive net.

kid, you haven't the faintest clue what you are getting into.

[jupta]

Moron, i grew up in USSR. i know what it was like. Soviet economy sucked ass. USSR never posted unusually high growth compared to the rest of Europe, even though it was starting farther back and thus should have been growing faster than the western european countries could have.

I don't know what this has anything to do with it being more stable and stronger, or you growing up in USSR.

USSR economy was a sclerotic mass of stupidity.

Many former Soviet citizens would disagree.

What he showed is that in some specific cases, local optimization leads to globally suboptimal results.

In other words - excessive greed.

[Nick]

What the figures show is that a certain minority makes the majority of the money, not that they actually PRODUCE the most goods and services. In fact it didn't even touch on who's producing any amount of goods and services, or "creating the wealth" as you say, if there even is such a thing wealth creation.

They do produce the most amount of money in goods, not necessarily the largest unit count of goods.

First off "they" don't magically produce money, it's earned through market manipulation in the form of profit. Again, I'm not arguing that a small minority does or doesn't earn the most amount of money.

Second, it doesn't even seem like you're trying to prove that a small minority produces the most goods and services within any particular society anymore. Are you conceding that what you said was way off base?

The country I used as an example has an economy based on free trade, and prices are not fixed; they are set by supply and demand. This means that if I bake and sell bread for $5 a loaf, and another baker sells bread for $0.50 a loaf, people will not buy my bread unless they consider it is much better than the other bread. The fact that I am getting paid $5 a loaf means that some people prefer my bread to the other baker’s bread, and in my market, that is what my bread is worth. Thus, I can measure production by measuring income. It is a one to one proportion. If I add up all income of all the people in the country, I will have total production, or GNP.

Now let’s say I baked and sold 1000 loaves of bread in one month. I have $5000, which I can use to buy other goods and services. The average salary in my city is about $500 a month, so I made ten times the average. This means that I have enough money to buy a lot of goods, not just what I need to stay alive and healthy. Now I, with the help of my customers, have created the demand for more goods, so those goods will find a way of popping up.

Assume that in the elections in May a socialist woman becomes President, and she decides that I don’t deserve to make ten times the national average by making something that anybody can make (bread), and that now I have to pay 60% of my income in the form of taxes. I decide to stop making bread, because I’m not keeping enough money to justify my toil and labor. Now there are $5000 less of demand for goods and services in my economy. All those people who were selling goods to me will be making less money. Some people will lose their jobs. The economy shrinks.

Is this making sense to you?

There's plenty of points I can take you up on with what you said here, but the real question is why you even bothered writing these three paragraphs. It has nothing to do with the question I posed to you which was; how on god's green earth does 5% of a particular population produce 90% of the goods and services in their particular society? Surely you must now realize the ridiculousness of such a statement.

[vicdan]

I don't know what this has anything to do with it being more stable and stronger, or you growing up in USSR.

Cretin, USSR was less stable (which is why it fell apart), weaker (which is why it couldn't keep up with the west), and you are a clueless little liar.

Stop making shit up, kid.

Many former Soviet citizens would disagree.

yeah, the ones who wish for Stalin to come back. Many former USSR citizens want their empire back.

Again, whom are you trying to bullshit? i grew up there. i have family there. i visit Ukraine regularly, communicate with the people, read modern press in both russian and ukrainian. What on earth gives you the delusional idea that you can BS me?

What he showed is that in some specific cases, local optimization leads to globally suboptimal results.

In other words - excessive greed.

Wow. Trouble with basic reading comprehension, huh?

You have no idea what Nash actually showed, or how it relates to market economics. :)

What Nash did was put a mathematical formalism under a well-known economic problem, the problem of externalities. He most certainly didn't overturn Smith, or anything else of the sort. Smith, too, knew that some things free market couldn't do well, or at all; it's just that, until Nash and his work in game theory, we didn't understand the mathematical substrate of that fact.

[jupta]

Cretin, USSR was less stable (which is why it fell apart), weaker (which is why it couldn't keep up with the west), and you are a clueless little liar.

You are forgetting that the USSR lost 26 mil. people and much of its industry in WW2. I doubt that a capitalist system could have geared up to the level that the Soviet Union had after suffering devastation on that scale. The collapse of the USSR economy was actually due to its excessive military expenditure after the mid-1970s. The worst part of all this is that because of you, I'm now defending the USSR.

yeah, the ones who wish for Stalin to come back. Many former USSR citizens want their empire back.

Wanting an empire back has nothing to do with pointing out its economic stability.

What Nash did was put a mathematical formalism under a well-known economic problem, the problem of externalities. He most certainly didn't overturn Smith, or anything else of the sort. Smith, too, knew that some things free market couldn't do well, or at all; it's just that, until Nash and his work in game theory, we didn't understand the mathematical substrate of that fact.

I didn't say that Nash overturned Smith. I said that he won him over.

[vicdan]

You are forgetting that the USSR lost 26 mil. people and much of its industry in WW2.

it consciously threw people into the meatgrinder, while evacuating the industry eastward.

You don't know anything about the WWII history either, fool. Stop lying.

BTW, Germany was just as devastated as USSR, perhaps more so, as was Japan. Both recovered to stellar heights, while USSR stagnated. Soviet regime never had the mythical strength or stability lying little assholes like you like to impute to it.

You know who suffered the worst of it? Poland. Yet today Poland is doing way better than Russia. Two and a half decades of freedom made all the difference in the world, economically speaking.

I doubt that a capitalist system could have geared up to the level that the Soviet Union had after suffering devastation on that scale. The collapse of the USSR economy was actually due to its excessive military expenditure after the mid-1970s.

Cretin, USSR ramped up its spendings because USA did; but USA borne its military budget easily, while USSR fell apart under the strain. Capice, moron?

The worst part of all this is that because of you, I'm now defending the USSR.

huh, i guess you are too much of a wimp to even accept responsibility for your own actions. You can't just sayin "i am defending USSR", you have to blame me for your choice to do so!

Pathetic.

Wanting an empire back has nothing to do with pointing out its economic stability.

it had no economic stability. it suffered multiple famines, vast displacements of populace, incredibly inefficient industry, widespread internal dissent, rebellions, etc. Only a demented dimwit like you could call that "stability". Stagnation is not the same as stability, idiot.

I didn't say that Nash overturned Smith. I said that he won him over.

Then you don't know English, because the expression 'to win someone over' can only be applied to the living people -- and Adam Smith has been dead for over two centuries.

[jupta]

BTW, Germany was just as devastated as USSR, perhaps more so, as was Japan. Both recovered to stellar heights, while USSR stagnated. Soviet regime never had the mythical strength or stability lying little assholes like you like to impute to it.

The USSR stagnated after a point of time, before which it was stable and thriving.

Cretin, USSR ramped up its spendings because USA did; but USA borne its military budget easily, while USSR fell apart under the strain. Capice, moron?

USA suffered far more drawbacks in the 70s(the only period I'm talking about btw) than Russia.

huh, i guess you are too much of a wimp to even accept responsibility for your own actions. You can't just sayin "i am defending USSR", you have to blame me for your choice to do so!

I'm defending its economic stability at a certain point of time, which you are foolishly opposing.

Then you don't know English, because the expression 'to win someone over' can only be applied to the living people -- and Adam Smith has been dead for over two centuries.

I should have guessed that this thread would turn out to be a discussion in semantics.

[vicdan]

The USSR stagnated after a point of time, before which it was stable and thriving.

Haven't you fucking gotten it yet, moron? You can't bullshit me.

USSR was never stable and thriving. Ever. not under Stalin, not under Chrushchev, not under Brezhnev, not under Andropov... Ever.

Shall i tell you about the rebellions after WWII? Unrest in the Warsaw pact countries? About the internal strife in the 30ies? About the repressions, famines, involuntary migrations, chaos in the army, fucked-up industrialization, ruined lands, badly devised agricultural policies, horrible living conditions, insane bureaucracy, etc?

You are an ignorant imbecile.

USA suffered far more drawbacks in the 70s(the only period I'm talking about btw) than Russia.

Because Russia had enough of its own oil, cretin. And still it fell apart a mere decade later.

I'm defending its economic stability at a certain point of time, which you are foolishly opposing.

I am opposing it because there never was any such stability. USSR was always a colossus with the feet of clay.

I should have guessed that this thread would turn out to be a discussion in semantics.

Well, if you can't express your thoughts coherently, expect this to be pointed out, moron. If you insist on proffering your incoherent babble, it will get scrutinized.

And of course I am giving you a tremendous benefit of a doubt in assuming that you actually have thoughts cogent enough to be expressible,.

[Shahrazad]

Nick,

First off "they" don't magically produce money, it's earned through market manipulation in the form of profit.

Nobody ever said there’s any magic here. They produce wealth by making goods, marketing and selling them, etc. Calling that manipulation seems short-sighted.

Second, it doesn't even seem like you're trying to prove that a small minority produces the most goods and services within any particular society anymore. Are you conceding that what you said was way off base?

The reason I am no longer trying to prove that is because I already did. I took the time to look up the figures, at your request. And I made them available to you. What more do you want?

There's plenty of points I can take you up on with what you said here, but the real question is why you even bothered writing these three paragraphs.

I bothered because you do not seem to understand that in a free market, a person’s income equals their production and contribution to society. And these three paragraphs were not enough for you to get it. So unless you manage to do a better job of explaining what it is you don’t get, I’m not going to waste any more of my time with you.

It has nothing to do with the question I posed to you which was; how on god's green earth does 5% of a particular population produce 90% of the goods and services in their particular society? Surely you must now realize the ridiculousness of such a statement.

You are being dishonest. I already modified my original 5:90 claim, and replaced it with the 20:53 figures I looked up. The point was that a minority does produce most of the GNP. That has already been established. Please try to keep up.

[jupta]

USSR was never stable and thriving. Ever. not under Stalin, not under Chrushchev, not under Brezhnev, not under Andropov... Ever.

Shall i tell you about the rebellions after WWII? Unrest in the Warsaw pact countries? About the internal strife in the 30ies? About the repressions, famines, involuntary migrations, chaos in the army, fucked-up industrialization, ruined lands, badly devised agricultural policies, horrible living conditions, insane bureaucracy, etc?

And it still managed to stand up to the USA after WW2, suffering many times the damage that the US suffered.

Because Russia had enough of its own oil, cretin. And still it fell apart a mere decade later.

US also had enough of its own oil. In fact, it had more. Oil production in Russia declined after a time, mainly due to its increased military spending.

Well, if you can't express your thoughts coherently, expect this to be pointed out, moron. If you insist on proffering your incoherent babble, it will get scrutinized.

And of course I am giving you a tremendous benefit of a doubt in assuming that you actually have thoughts cogent enough to be expressible.

I expressed my thoughts coherently enough. I blame you for not understanding. And on goes the circular argument.