Talk:Capitalism/Archive 27

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Income and wealth distribution

Following up on the discussion above, I‘ve written a new section on Income and wealth distribution, with a short paragraph in the leade. I've tried to take all suggestions aboard and hope it passes muster, in terms of coverage, balance, NPOV , RS, etc. Of course, changes that improve it are welcomed.Plankto (talk) 23:19, 8 December 2011 (UTC)

No, it's still unacceptable on the wife-beating front. It is not a prominent feature of capitalism. It is a prominent feature of feudalism & agrarian societies which (of course) capitalism displaced. It is also a prominent feature of underdeveloped countries in the early stages of growth, before reaching advanced capitalism. What you can say is that simply that some people believe that capitalism has ignored, or insufficiently fixed, or allowed the prolongation of, what they perceive to be as an unacceptable degree of inequality. Walrasiad (talk) 02:33, 9 December 2011 (UTC)
There are RS for this discussion in this article, including views of notable scholars and the President of the USA who think this is an important feature of capitalism. The prominence of this topic is also reflected in extensive articles like Economic inequality, Distribution of wealth, Income inequality in the United States, Equality of outcome, Equal opportunity and Occupy Wall Street. Feudalism no longer really exists and most less developed societies are on the path to development. Capitalism, in one form or another, is an economic model that has spread over the world. Hence, this issue is properly placed in this article. There is however always room for altering the coverage, etc. Other editors are encouraged to contribute to the assessment on the need for any changes.Plankto (talk) 07:50, 9 December 2011 (UTC)

I've reverted the blanking of the section by Bobbrayner. Inequality is an integral manifestation of capitalism, even if it has existed in other societies. Its manifestation in capitalism and evolution is also unique, with implications for social welfare. The presentation of capitalism in this on-line dictionary in an entry "What Is Capitalism?" brings this out. The dictionary defines capitalism as

"an economic system in which all or most of the means of production and distribution, as land, factories, communications, and transportation systems, are privately owned and operated in a relatively competitive environment through the investment of capital to produce profits: it has been characterized by a tendency toward the concentration of wealth, the growth of large corporations, etc. that has led to economic inequality, which has been dealt with usually by increased government action and control. Also known as free market economy or free enterprise economy, capitalism is found in much of the Western world."[1]

There is additional material on the importance of inequality for capitalism. Please note that one of the critical sources identified above, recounted how inequality in China skyrocketed after it liberalised market funtion in the economy. Here is other material supporting the inclusion of this topic in the article.

  • Income Inequality Around the World Is a Failure of Capitalism

By Kentaro Toyama May 13 2011, 11:00 AM ET27 The United States' yawning income gap between the middle class and the top percentile isn't unique. It's part of a global phenomenon. A new OECD report concludes that income inequality is rising in most developed countries. Here's the OECD's graph of Gini coefficients by country. Gini coefficients can theoretically range from 0.0 to 1.0, with higher values indicating greater inequality.[2]

  • Enterra Insights - May 28, 2009

Capitalism and Inequality Opponents of capitalism believe that the system is inherently flawed because it creates enormous inequalities in wealth. Back in March 2004, The Economist published an article that examined that belief ["More or less equal?"]. [3]

  • WAGE INEQUALITY AND VARIETIES OF CAPITALISM By DAVID RUEDA and JONAS PONTUSSON* THE immediate goal of this article is to explore the determinants of wage inequality in advanced capitalist economies. [4]
  • Harvard Students, Citing Economic Inequality, Stage Walkout Posted by: Louis Lavelle on November 8, 2011 Last Wednesday, 70 Harvard students walked out of an introductory economics course, citing a bias that they said “perpetuates problematic and inefficient systems of economic inequality in our society.” [5]

A minimum requirement of editing is to discuss reasons for change not to blank out material based on an editors view.Plankto (talk) 18:18, 9 December 2011 (UTC)]


Sorry, but no. It is not "integral". Bobrayner is right. All this is out of place here. It should be in an article on inequality. Walrasiad (talk) 21:46, 9 December 2011 (UTC)
Capitalism is based on the rich serving as custodians of wealth, amassing savings for investment and growth. It is also claimed that this feature can result in a weakness such that excessive inequality leads to instability. That is why inequality is an integral feature of capitalism.Plankto (talk) 23:06, 9 December 2011 (UTC)
That may be your theory, but it is a fringe one. Moreover, you're not even presenting it as a theory or an opinion, but as a fact. You are professing a centrality which is not there. You're POV-pushing finge theories here. Such a view may have become fashionable in the last three months, but that is not good enough. I'm sorry but I'm going to revert this to the last stable version before you came in. Please don't revert back. If you want to insist on its inclusion, please obtain consensus first here in the talk page. Ask for for a referral comment or put it on the non-neutrality discussion board, if you wish. Walrasiad (talk) 00:08, 10 December 2011 (UTC)

The position of Walrasiad/Bobrayner is as follows:

  • 1) inequality is a stand-alone topic,
  • 2) inequality has nothing to do with capitalism and
  • 3) inequality should not be discussed in the article on capitalism.

Numerous factual statements with RS showing that inequality is a structural feature of capitalism, involving internationally recognised scholars of capitalism like Ludwig von Mises, Kenneth Rogoff, Karl Marx, Robert Heilbroner, Ravi Batra and Joseph Stiglitz are written off as "fringe theory."

The fact that inequality

  • a) is a permanent feature of capitalism,
  • b) has sharply increased in recent decades (richest 1% now hold 40 percent of national wealth (richest 20% have 83%), 40 million Americans live below poverty line in 2011, etc.)
  • c) is associated with a financial crisis,
  • d) has resulted in a nationwide protest movement objecting to the inequality, and
  • e) has been specifically commented on by President Obama,

is being brushed off as some temporary blip.

Meanwhile, no objection is made to a detailed subsection "Advocacy for capitalism" in the article. Something is very wrong here.Plankto (talk) 07:52, 10 December 2011 (UTC)

Plankto, this is an article about capitalism, not about inequality, and not about the American economy or economic policy in the last few years. Capitalism has had nearly two centuries of existence, and taken root in many countries. If you are going to make generalist statements, then make sure you have your ducks in a row on that range. You have to prove that inequality has increased from 1810 until 2010, that all countries which have transformed themselves into capitalist economies in that time period have all become more unequal as a result. I've already referred to theory contrary to your assertions, and it'll take me all of five minutes to prove such a claim not only false, but thoroughly false, empirically. If you want to complain about American economic policy in recent years, if you want to claim that inequality has increased within the United States in the last decade and half, I'll join you. Not only will I join you, I'll explain it to you - for, believe it or not, there are economic explanations for changes in income distribution. It is right there in the textbook under the chapters on factor markets, growth and trade, if you care to look. The explanations are quite straightforward and quite sufficient. Be that as it may, and however sympathetic I might be on your recent policy concerns, it is should not part of an article on capitalism. You may, as I have alluded to earlier, point out that some people believe capitalism hasn't really addressed inequality, and as a result have complained about it on that basis. You may not, however, assert it as an "essential" feature. Walrasiad (talk) 08:48, 10 December 2011 (UTC)
Walrasiad, good for you to offer a cogent response. First, regarding your two-part criteria for inclusion, namely that it needs be shown that a) "inequality has increased from 1810 until 2010," and b) "that all countries which have transformed themselves into capitalist economies in that time period have all become more unequal as a result". Criteria a) is irrelevant. It doesn't matter if inequality existed before capitalism or not. It only matters that it is a structural feature of capitalism, with its institutional forms, such as unlimited private property, etc, and that it has unique dynamics (or evolution over time) due to policy and institutional responses affecting competition, wage bargaining, taxation, regulations, asset price changes, etc. and that inequality itself has all sorts of welfare implications. Inequality is an outcome of an enormous social system of productive organisation, exchange and distribution. It is therefore of critical importance that when during the two times in the past 120 years that this distribution has become highly unequal (see proposed graph) that financial, economic and political revulsion has followed, such that the system has been transformed. Following the 1930s depression, the New Deal, Glass-Stegall, Keynesianism, progressive taxation reforms, and mixed economy resulted in inequality dropping sharply. The pendulum shifted back to a more pure form of capitalism with the supply side revolution, Reagan-to-Bush tax reforms favouring the wealthy, the abolishment of Glass-Stegall, unregulated markets, etc., leading to a surge in inequality - and another crash. There are RS for all of these insights. In fact, it has been shown that different types of capitalism have different types of wealth creation and distribution features. As for b) one study was mentioned above showing that inequality in China shot up after Deng's market liberalisation. To find a study of all such transformations is a tall order. The key for this article is to include a discussion of this central topic, but to word it and present in a manner that all can agree on. We each contribute as we best can. As I see it, I've alerted other editors to this lacunae in the article. I hope you join in to address it in a balanced manner.Plankto (talk) 09:18, 10 December 2011 (UTC)

potential resource

Wall Street is its own worst enemy "Capitalism depends on trust, but Wall Street has blanketed America in a miasma of cynicism" by Robert Reich, guest blogger csmonitor.com December 11, 2011 99.181.141.143 (talk) 00:48, 12 December 2011 (UTC)

Sources, and inequality

Let's be quite clear: Inequality was a severe problem long before the modern capitalist era. For instance:

Even in the modern world, inequality is higher in places with weaker capitalist institutions, lower mobility of capital and other resources, higher transaction costs &c. Look at the list of countries by gini coefficient; at the "more equal" end of the list you get thoroughly capitalist places such as Scandinavian countries, and at the "inequal" end of the list is a series of states with failed markets, poor access to capital, public sectors whose breadth exceeds their competence, and in some cases a rather feudal-looking economy, and so on.
There are plenty more sources out there. Instead of reverting synthesis and pov-pushing back in the article, it might be a good idea to explore some of the many reliable sources in this field. Oops, forgot to sign - bobrayner (talk)

It is irrelevant if inequality is not the "original sin" of capitalism. It finds a unique expression in this social system. It has both pros and cons in theory and practice. It is inequality that has given rise to the greatest challenges this system has faced. Inequality can be influenced through different government policies. In turn, inequality affects the operation of this system. Numerous RS have been included to support these observations. Bobrayner (assuming the unsigned para above is his) has provided no RS for his synthetic claims and relative argument for exclusion. Inequality definitely merits inclusion in this article.Plankto (talk) 23:32, 12 December 2011 (UTC)
Sorry, but no. Inequality is just a statistic, which has little or no implications on the "operation of the system". You won't find it in the vast majority of economics texts. It is hardly of any interest except to those people who decide to worry about inequality in its own right. Poverty is of interest, unemployment is of interest. Those are real things, real human welfare. But inequality? That's just a number, and a relatively meaningless one at that. Walrasiad (talk) 23:57, 12 December 2011 (UTC)
Sorry, but inequality is a fundamental attribute of capitalism, by specifically aggregating a larger share of capital in the hands of the wealthiest, with all kinds of ramifications. I'm sure you can find text books that have left it out, including Paul Samuelson's, Greg Mankiv's textbooks, etc. However, others have not left it out. Inequality has consistently been treated in textbooks on the history of economic thought.

"Classical economists advanced the hypothesis that inequality is beneficial for economic development, the neoclassical paradigm, which subsequently dominated the field of macroeconomics, dismissed the Classical hypothesis and advanced the viewpoint that the study of income distribution has no significance in the understanding of the growth process. A metamorphosis in these perspectives has taken place in the past two decades, and analysis of the role of income distribution in economic development was brought in from the cold.(citing Atkinson, 1997)". Classical approach advanced the hypothesis that inequality is beneficial for economic development in the post-industrialization period (Keynes, 1920, and Kaldor, 1957). It suggested that since the marginal propensity to save increases with wealth, inequality channels resources towards individuals whose marginal propensity to save is higher, increasing aggregate savings, capital accumulation, and economic growth.[1]

In short, the classicals focused on the wealth creating feature of capitalism. Marx then focused his entire body of his influential work on the negative aspect of inequality, coming up with concepts like "labour theory of value" and the "appropriation of surplus value." Ludwig von Mises, the father of the Austrian school (anti-marxist) acknowledged this feature, while considering it as a positive aspect. Economist Ravi Batra is a modern economist who has maintained that this feature of capitalism is not a stationary element and has negative ramifications when it becomes excessive. The Galor overview article states: "Recently, Easterly (2007) has reaffirmed the hypothesis advanced by the modern theories that inequality has an adverse effect on human capital formation and economic development." Following the financial crisis, world renowned economists like Joseph Stiglitz and Kenneth Rogoff have taken up the cause of inequality for economic development. Following the OWS protests, the President of the USA has also acknowledged the harmful nature of excessive inequality. The Harvard student protest in Greg Mankiv's class is an example of the changing views on the absence of this feature in neoclassical economic theory. Inequality is definitely not just a statistic in capitalism. The desire to suppress this information is a pathology of the recent few decades. I proposed the following sentence for the lead, with RS that link inequality and capitalist societies. The RS mentioned just begin to scratch the surface of scholarly coverage of this very topic. In fact, there are 6,400,000 hits when Googling "capitalism & inequality".

"A structural feature of capitalist societies is the unequal distribution of income and wealth although there are substantial variances between countries."[2][3][4]

  1. ^ Oded Galor (2009). "Inequality and Economic Development: An Overview" (PDF).
  2. ^ Gregg M. Olsen (2011). "Power and Inequality A Comparative Introduction". Oxford University Press. Retrieved December 11, 2011.
  3. ^ Erik Olin Wright (1979). "Class Structure and Income Determination". Academic Press. Retrieved December 11, 2011.
  4. ^ Vicki L. Birchfield (2009). "Income inequality in capitalist democracies: the interplay of values and institutions". Pennsylvania State University Press. Retrieved December 11, 2011.

Plankto (talk) 08:04, 13 December 2011 (UTC)

Classical economics is dead as a doornail - has been for over a century. And there's a reason for it: it was wrong. Plain, dead wrong. Look only at the pillars of their argument:

  • (a) all profits were saved (an obvious falsehood),
  • (b) all wages were consumed (another falsehood)

Those can be slightly adjusted for reality. But then comes the worst part:

  • (c) all wages have to be paid for in advance (an absurdity)
  • (d) those waages have to come from a stock past accumulated capital (another absurdity)

thus:

  • (e) the scale of production and extent of employment depends wholly on past accumulated capital, rather than current demand (nonsense)
  • a + b + c + d + e => rate of growth depends on the share of profit income.

Which is why they came to their erroneous conclusion (Marx included) that income distribution mattered. Indeed, they exalted inequality, for only by distributing more "share of income" to profits and capitalists, and less to workers & others, could you have more growth and employment and future happiness. Which is why all the Classicals, down to the man, were heavily opposed to trade unions, income taxes, and any such redistributive schemes.

But a, b, c, d and (e) are all false in a modern economy with a working financial system. Take a look around. Paris Hilton consumes profits, wage-earners plough a good chunk of their wages on 401ks, pensions funds, e-trade, etc., modern firms routinely rely on banks and financial markets to expand production, and the extent of output and employment depends on profit calculations today, which depend on demand today and demand tomorrow (viva Keynes!), not yesterday's saved profits. Classical economics simply does not apply, and has not applied for a century. Now, I will admit that in an agrarian, pre-capitalist society - where there are no banks or financial markets, an agricultural environment where wages between sowing and harvest time have to be paid for from last year's savings "stored in the barn" - essentially, the agrarian analogy by which Smith introduced, and Ricardo & Marx adopted - maybe, maybe, still have some, a little, validity in some very poor parts of the world. But it is certainly not applicable to modern capitalism. And has not been a part of economics for over a hundred years. Walrasiad (talk) 08:50, 13 December 2011 (UTC)

In line with what Bobrayner added above, inequality is a 'structural feature' of all modern non-theoretical systems: "Hence with the possible exception of Barbeuf (1796), no prominent author or movement has demanded strict equality. Since egalitarianism has come to be widely associated with the demand for economic equality, and this in turn with communistic or socialistic ideas, it is important to stress that neither communism nor socialism — despite their protest against poverty and exploitation and their demand for social security for all citizens — calls for absolute economic equality." (http://plato.stanford.edu/entries/equality/) A brief discussion of inequality could have some place in the article, probably in the 'criticisms of capitalism' section, but the 'Reaction' section Plankto has added in particular seems to me to be entirely about the specific political, legal, and economic climate in the US at the present time and has little or nothing to do with inequality being inherent to capitalism. Dialectric (talk) 11:14, 13 December 2011 (UTC)
It seems heavily weighted towards "Occupy Wall Street", and some of the content may belong in an article on that transient event rather than on capitalism in general. bobrayner (talk) 11:32, 13 December 2011 (UTC)

Walrasiad, a few points:

  • 1. You need to add neoclassical economic theory to your "dead as a doornail" category [6][7][8][9]
  • 2. The point about classical economic theory was not to make a statement of its plausibility but to bring out the fact that inequality in capitalism was observed at the outset of capitalism, as being intimately a part of the system.
  • 3. You did not take note of the conclusion by Galor (2009) in her overview article that

    "A metamorphosis in these perspectives has taken place in the past two decades, and analysis of the role of income distribution in economic development was brought in from the cold."[10]

  • 4. William Easterly, a Professor at New York University, published an article "Inequality does cause underdevelopment: Insights from a new instrument" in 2007 in the Journal of Development Economics. He writes

    "Market forces also lead to inequality, but just because success in free markets is always very uneven across different individuals, cities, regions, firms, and industries. So the recent rise in inequality in China is clearly market-based."[11]</ref>

  • 5.Many authors have noted

    "the apparent inability of the neoclassical paradigm to bridge the gap between theory and reality".[12]

    In particular, the financial crisis brought many assumptions of NCT into question, especially relating to the nexus with finance theory, with implications for the linkages to the real economy. Ravi Batra has pioneered the analysis, which Ken Rogoff, Joseph Stiglitz and Robert Reich have echoed, that the wealthy have more access to policy making, removing the restraints (e.g. abolishing Glass-Stegall) such that their speculative fervor is unrestrained in feeding asset price bubbles, adding to their wealth (due to assets being disproportinately held by the rich), adding to the inequality and making a financial crisis all but inevitable and thereby causing suffering for the lower income groups. There are also new theories for growing inequality, the wage-gap theory, associated with international trade. In sum, the inequality-economy link is not only through the standard economic theories of production or trade, but through the political and financial dimension, which NCT is conceptually unable to address.

In short, the theories you cite as not mentioning the role of inequality in capitalism, have themselves been discredited. At the same time, you refuse to note the new economic theory literature that shows such a link, even when RS are provided. In turn you fail to back up your claims with RS. Given this failure by you and Bobrayner, I am going to continue to push for the inclusion of inequality as a normal feature of capitalism in this article. It is not a criticism, it is just a statement of fact, with both pros and cons. Moreover, the inequality varies between countries, for a number of reasons. Importantly, inequality can be managed, by changes to e.g. the progressivity of the tax system. Country specific information was mentioned for the USA due to ready availability of information. However, if the premise is taken as a fact that inequality is an integral part of capitalism, then the debate about the degree of inequality becomes highly relevant from a policy point of view, due to its economic consequences. Of course, I remain willing to work with you. However, just claiming POV pushing and saying "it ain't so" won´t do. If you come up with reasonable arguments backed up with RS I will be the first to take it seriously. Certainly, I would prefer to reach a formulation that is agreeable to all based on WP criteria.Plankto (talk) 21:11, 13 December 2011 (UTC)

  • 1. However much I may raise a glass to its demise, it is a tad premature. It's still in the textbooks.
  • 2. Actually, it's pre-capitalist. It is a feudal agrarian analogy, playing with the same stock archetypes - the landlord, the farmer, the artisan and the rural laborer - as used in 17th & early 18th C. economics, with essentially the same basic mechanisms.
  • 3. Economic development is about poor countries thinking about becoming capitalist (and that article is using the word "inequality" very differently and very unsatisfyingly.)
  • 4. Easterly is a development guy. Saying that inequality is higher in middle income countries is a commonplace since Kuznets. Once it becomes an industrialized capitalist nation, it comes back down again. It is a cute, but not very solid nor interesting, observation, unless you political ideology is interested in such things.
  • 5. Batra is a fringe crank. Give me five minutes, and I'll explain the entire crisis in conventional terms. I would be also happy to explain to you all the patterns of income distribution we've seen over the past 30 years in perfectly conventional terms, without once relying on lazy conspiratorial nonsense. Walrasiad (talk) 01:39, 14 December 2011 (UTC)
Again, there are plenty of assertions coming from you, Walrasiad, but no RS. If you are referring to text books before the crash then you should make that clear. Capitalism has evolved and so has the theory. The criticism of the limits of neoclassical theory have been ongoing for decades. By now, it is a perfected art. The financial crisis, which came out of left field for those following this theory, is the coup de grace. NCT was oblivious to the growing inequality in modern capitalist societies. In recent years, it became great enough for the super wealthy to be able to gain a commanding influence over policy making. They were able to engineer an overheating in the financial system, which then melted down - making the rich victims of their own success. However, they then managed to engineer a rescue of Wall Street - for the "benefit of Main street" (of course) and to re-regulate the financial system so that its essential wealth creating function is retained. I´m sure you understand, but I'll take the recent words of Ken Rogoff, Joseph Stiglitz and Robert Rubin over yours. You can also argue with the evidence I've presented, but I'm afraid you are just scratching the top of the iceberg. You can try to be dismissive and accuse me of pursuing a "political ideology". But be warned, an angry defense of the unconstrained free market theology doesn't carry much weight any more. I doubt you have ever read Batra. Writers for Fortune Magazine and the like were the first to brush off his theories about the mal-effects of excessive inequality. Many were happy to further marginalise him during the global boom - even as financial crises began appearing all over the place. His failed predictions were also used to write him off. However, views on his theories are rapidly changing in the wake of the largest financial crisis in 70 years, which is likely not over yet. He did not stop warning about it, even if 1990 did not see a crash in the USA. While we all hope that modern central banking is up to the task of reflating the financial system of the USA and Europe, there is concern that the rise in sovereign debts, which will entail a significant rise in taxes and drop in benefits, will burden us for a long time to come. I see the OWS protests as an important signal that a change in awareness of this issue has finally arrived in politics. Tea Party politics of 2010 was a brief resurgence of faith in the old order. However, ordinary people, the middle class, are now becoming more aware that something needs to change. Acknowledging inequality as an important element in the stability of capitalism is a big step forward in this regard. Even if it doesn't happen here, it is happening all around us. Plankto (talk) 09:24, 14 December 2011 (UTC)
Read over what you wrote. That's all original POV, opinion. I could easily take each one of your statements and prove the opposite. I have opinions too. Let's go write blogs about our opinions. Walrasiad (talk) 13:27, 14 December 2011 (UTC)
The summary above is backed up with ample RS - so its not just opinion. You have yet to back up your stated opinions with any RS. You have repeatedly said you have a complete set of arguments in reserve to counter the arguments I've made and referenced. That type of bluster is not acceptable. Without presenting arguments backed by RS, you and Bobrayner have combined to revert any changes to protect this idyllic view of capitalism. Hopefully other editors will see the light and start influencing the alteration of the article to better reflect the reality of capitalism - that it has a structural inequality with many social, economic and political ramifications. WP is not just supposed to be a compendium of fairy tales, or is it?Plankto (talk) 19:28, 14 December 2011 (UTC)
What RS? You have provided no RS, except one fringe (Batra). The others are either long discredited (Classical econ) or commenting on unrelated things (e.g. pre-capitalist development, recent American economic policy). The bulk of what you're proposing to insert is just editorial opinions - i.e. ideological POV-pushing. Walrasiad (talk) 22:11, 14 December 2011 (UTC)
Walrasiad, that's just nonsense! But as you and I have begun repeating ourselves, I suggest others weigh in on this issue.Plankto (talk) 22:52, 14 December 2011 (UTC)

I weighed in, over a week ago. Everything I wrote then still holds. I pointed out then that the two of you have been using this page as your own private chat room. Your interactions have just driven other people away from the discussion, and you should have moved this to your own talk pages a week ago as I suggested. Neither of you seem to be very skilled at collaborative editing and obviously have not been able to work out between the two of you any constructive edits to the article. You have simply wasted eight days and more of talk page space. Obviously both of you have gotten some kind of pleasure out of this. No one else has. Slrubenstein | Talk 19:40, 15 December 2011 (UTC)

The discussion is focused on this article and hence appropriately placed here. For your information, Slrubenstein, Wikipedia:Etiquette -- and not e.g. Book of the Civilized Man -- is the relevant guideline for Talk page conduct and effectiveness :) In the hope the foregoing discussion leads to some improvement of this article, editors wishing to weigh in on substantive aspects of this topic of discussion are welcome to do so. In particular, should
  • Inequality be considered a permanent feature of capitalism, albeit it changes over time and countries?
  • Does the degree of inequality affect the economic, financial and political development?
If so, should it be covered in this article?
Plankto (talk) 07:46, 16 December 2011 (UTC)

potential WSJ resource, regarding Sustainability

Other forms of capitalism

Surely it is also worth mentioning the French "dirigiste" model? See the separate article on "Dirigism". The first paragraph of that article could be inserted without change into the article on Capitalism. Or at least, worth a link. Also, what about "Corporatism". See the separate article on that subject, especially "Fascist corporatism" and "Neo-corporatism" in that article. Again, worth a mention, or at least a link. Other examples of Corporatism include the Japanese Keiretsu (see article) and the Korean equivalent (sorry, can't remember what they're called). — Preceding unsigned comment added by 87.228.148.113 (talk) 15:45, 8 November 2011 (UTC)

Comment The short summary of the social market economy in this article, based on the original article about the Social market economy (Germany after World War II), should be carefully rewritten with regard to the workers rights to participate with their elected councils at the management level and at the board of directors of companies. There is little said about the German constitution of 1949 and in particular about article 14, section 2, that private property is only garanteed under social responsibility. --Fox1942 (talk) 11:24, 10 January 2012 (UTC)

Inequality dynamics

Further to the questions raised above, here are two stories. One documents the rise in inequality throughout the capitalist world. The other indicates that this development is beginning to undermine the social acceptance of unconstrained or free market capitalism.

P.S. "Poverty has severely worsened in Greece under a gruelling recession exacerbated by austerity measures, swelling the ranks of the unemployed, the homeless and the destitute, experts said Saturday." Humanitarian crisis simmers in Greece: Experts, AFP, December 17, 2011. This development is noteworthy for the fact that inequality has increased in Greece, like elsewhere (Gini-coefficient at 35 in 2009, compared to 40 in USA). A humanitarian crisis in Greece and growing unemployment elsewhere are likely to undermine further the support for untrammeled capitalism throughout Europe.

Such dynamics involving inequality and financial crisis, which are clearly extant to capitalism, are likely to affect the evolution of capitalism as a social system and thus should be reflected in the article. Plankto (talk) 09:00, 17 December 2011 (UTC)

"But as you and I have begun repeating ourselves, I suggest others weigh in on this issue.Plankto (talk) 22:52, 14 December 2011 (UTC)" Slrubenstein | Talk 18:43, 17 December 2011 (UTC)

Slrubenstein, you evidently don't like this discussion. You've also not contributed anything of substance to it. The comment referred to the debate with Walrasiad. The offer for others to join in is genuine. As the discussion tends to get distracted, let's recall a few quotes, including by respected scholars, on inequality and capitalism:Plankto (talk) 18:58, 17 December 2011 (UTC)

...and some videos:

The issue is not what views we may have on inequality but the fact that it exists in capitalism and has implications for the evolution of the system. The fact that this central fact is not mentioned in the article is a gaping hole in it. — Preceding unsigned comment added by Plankto (talk • contribs) 20:11, 17 December 2011 (UTC)

You're still providing nothing but talk about recent economic events and economic policy, not capitalism per se. Do you want to know why there is inequality within advanced countries in the last couple of decades? Because trade has expanded tremendously within that time. And a first year student in trade theory knows that implies "factor price equalization", i.e. wage-earners in rich countries are being pulled down by competition with poor countries with cheap labor, while conversely wage earners in poor countries are being pulled up. So there is no blanket statement you can make: rich countries become more unequal, poor countries more equal. And overall, globally speaking, more equality, even if that necessitates "inequality" within rich countries. Inequality also gets worse in recessions that have prevailed over the past three years - labor is unemployed, duh, so their bargaining position isn't as great as in booms. A plain cyclical phenemenon.
As for the financial crisis, that is a set of unique circumstances of the US real estate bubble, involving far too much savings being concentrated in chasing assets in only one sector. That neessarily produces a bubble. It has nothing to do with "inequality" but with imbalance in savings flows across countries. This imbalance is not "natural" to capitalism, nor anything to do with "conspiracies" of evil bankers, but a peculiar set of economic circumstances - with Germany and Japan slouching by slumps since the beginning of the 90s, with emerging markets burned by the Asian crisis of 97, the stock market burned by the dot-com bubble, tack on the Chinese devaluation and trade-induced deindustrialization keeping US wages soft and inflation at bay, the Fed kept interest rates too low for too long. In short, there was essentially nowhere else for savings to go in the early 2000s. And there were lots of new savings globally - again, high German and Japanese savings rates coupled with poor yields in Japan and "old Europe" ("new Europe" - the peripheries, now the PIGS - however were attractive options, ergo the bubbles in Ireland and Spain), China (again) having to find some place to park its dollar export earnings abroad to avoid a appreciation of the yuan, and lots of new commodities exporters constructing sovereign wealth funds to avoid the Dutch Disease, etc. In short, too much global savings being channeled to too few places. In such circumstances, an asset price bubble is inevitable, and the attendant bad behavior and resulting crash just as inevitable.
In short, leave your two-cent conspiracy theories at the door. The causes of recent rise in inequality in rich countries and the financial crisis are quite conventionally explainable. And are much bigger, much grander and more inexhorable, than any conspiratorial nonsense about evil bankers or who got elected when. It's petty nonsense by comparison. We're talking a situation constructed by massive changes and massive flows of trade and savings on a global scale. All the kings horses and all the kings men are puny and irrelevant.
Is this a feature of capitalism? Only insofar as capitalism allowed it to happen, or did not have the mechanisms to stop it. But it is not a necessary feature. Capitalism has improved equality in many countries and many periods - even the very "inequality" you lament now is in fact just part of the bigger feature of global equalization. And savings imbalances on the scale that provoked this most recent crisis happen only occasionally, and are attributable more to other specific factors - principally different macroeconomic policies across countries, but also poor information and general human stupidity - that are not necessarily part of capitalism. Walrasiad (talk) 16:12, 18 December 2011 (UTC)
Walrasiad, capitalism wouldn't function without inequality. At the same time, excessive inequality can create significant problems. You are right on one thing, a lot depends on policies that affect inequality as an outcome. However, your analysis falls short on two major points. First, about your globalisation view. Driving down tariffs encourages globalisation and the hollowing out of the manufacturing sector and the shifting of labor to lower paid services jobs. The gains from trade occur, but their unequal distribution to owners of different factors of production is a well established problem. Your "conventional" idea about share prices going up and creating inequality, looks past a massive socio-political mechanism underlying the development. A lot of debt was created, landing on the shoulders of ordinary citizens, the churning of which generaged massive profits for the banks. Aside from that, the degree inequality affects other outcomes. Currently, inequality is not a numerical target of economic policy anywhere. That said, in some countries, like the Nordic countries, inequality appears to be an objective in the sense that tax and benefit policies have kept it lower there than in many other countries, notably in some English speaking countries. But let's move on from such debates. I've recast the issue in the following way: Unequal distribution in capitalism is an undisputed fact and therefore should be included in the article. Further, the focus should be on representing the main views on what unequal distribution means for the operation of the system, based on quality RS. For the sake of balance, the description needs to be brief and this requires distilling the main perspectives. I've attempted to do that in the Rfc request.Plankto (talk) 20:37, 18 December 2011 (UTC)
When you talk about "the hollowing out of the manufacturing sector and the shifting of labor to lower paid services jobs", I presume this is based on some rich-country perspective which does not deem workers in the rest of the world to be worth attention? Sources carry a very different message about the consequences of globalisation in the rest of the world. A Malaysian factory worker is real person with their own interests (and deriving their own benefits from globalisation), not some faceless thief stealing a job from a rightful American factory worker. bobrayner (talk) 21:23, 18 December 2011 (UTC)
Bobrayner, to infer such an attitude of another editor just because welfare enhancing policies across the globe were not discussed is shameless. I expect an apology.Plankto (talk) 21:52, 18 December 2011 (UTC)
  • Capitalism can certainly function without inequality; there's nothing contingent on it. (Second Welfare theorem). Not sure what "significant problems" you mean. (unless you mean inequality is a problem in itself, which is a philosophical position, but self-referencing).
  • As to trade, it has nothing to do with "lower paid" service jobs, it is simply that manufacturing is labor-intensive and American labor is expensive. Meaning in trade-induced sectoral change, more labor is released than is absorbed by new industries. Nobody in their right mind will set up labor-intensive industries in high-wage countries. There will naturally be a decline in wages across the board, and a relative gain in other earnings (rents, profits). And the converse, of course, in countries moving sectorally into manufacturing. C'est natural.
  • I never claimed share prices cause inequality. I said recessions cause inequality. And there is no "socio-political" meaning to this. Its the plain economics of labor markets and the Phillips Curve: whenever unemployment is high, wage rises are suppressed.
  • As for "debt" burden of American homeowners, that sucks, but they were only bit players in this drama. The amount of global savings demanding access to the bubbly American real estate market was at the root of it. Its like the drug problem - where lowly American homeowners cultivating mortgages playing a role similar to lowly opium or coca peasants in the hills of Afghanistan or Colombia, bankers played the dealers (it's what they do), and the cops played, well, the cops. Cry for the peasants, curse the dealers if you want, you can even chide the cops for sleeping on the job, but don't lose sight that the root of the drug problem is demand, the vast amount of rich country kids begging for a high, i.e. imbalanced global savings bearing down narrowly on the real estate market. We've seen this imbalance before - in the emerging markets & dot-com bubbles of the 90s, and will likely see it again soon - probably in commodities (farmland prices already moving into bubbly heights). Not sure what conspiracy theories you plan to cook up for those.
  • Inequality is not a target because inequality doesn't matter. It is not a "real" problem and has no significant consequences, except perhaps stoking up feelings of jealousy and vanity. Poverty is real. Unemployment is real. And those are targeted. Inequality? Nah. At best, it is a symptom of real problems, but in itself, it is not a problem. Which is why you're not likely to find a single chapter on it in any conventional economics book. But I welcome your endeavor. Go ahead and try to find out "what unequal distribution means for the operation" of a capitalist system. You're not likely find much of anything there. Walrasiad (talk) 21:53, 18 December 2011 (UTC)
You are right there is precious little about inequality in most basic text books on economics prior to the crash. The focus was exclusive on the very theories that failed so massively to account for the imbalances and excesses that led to the biggest bust up in capitalism in almost a century, which now threatens the very system. You'd be better off preaching these theories to those few who still believe in their idealised reality. Plankto (talk) 22:00, 18 December 2011 (UTC)
We're talking about an economic phenomenon. At the very least, you should give economics a chance to explain it, before turning to wild political conspiratorial theories or proclaiming the end of the universe. And it does a fine job explaining it, sufficiently and adequately. And maybe even point out some additional things you overlooked in your rush. Walrasiad (talk) 22:22, 18 December 2011 (UTC)
Your rushed arguments are only a mild distraction from the main point that it is important to include mention of inequality in the article and to represent key viewpoints on it. Plankto (talk) 22:39, 18 December 2011 (UTC)

potential resource

Capitalism vs. the Climate; What the right gets - and the left doesn't - about the revolutionary power of climate change. by Naomi Klein November 9, 2011. This article appeared in the November 28, 2011 edition of The Nation (pages 11-21).

141.218.36.56 (talk) 23:43, 22 November 2011 (UTC)

Economics of global warming? 99.181.134.37 (talk) 11:12, 17 December 2011 (UTC)
Seems likes she is using consumerism for capitalism. 99.181.148.11 (talk) 15:39, 30 December 2011 (UTC)
What about State capitalism, her term capitalism isn't clear enough. See Nationalization of oil supplies and coal in her article. 99.181.141.49 (talk) 12:10, 31 December 2011 (UTC)
See Wall Street Journal's January 25, 2012 Capitalism on Trial by Michael Casey, and Talk:Market failure#global warming quotation. 97.87.29.188 (talk) 22:32, 27 January 2012 (UTC)

Inequality in capitalist societies

A central feature of capitalism is the inequality of the system, such that a small section of society holds a disproportionately large share of the total wealth and income. There are numerous reasons cited for this both economic (more growth) and moral (incentives) but also against, both economic (more instability) and moral (reduced opportunity). The debate on the talk page has centered around these points, but no agreement has been reached on whether to include this feature in the article.Plankto (talk) 10:00, 18 December 2011 (UTC)

Comment it is not for WP to declare what is and is not a central feature of capitalism. On the other hand, NPOV demands that we include all significant views. This is the view of karl marx, and as karl marx was one of the most important philosophers of the 19th century and is still required reading in any basic social theory class, I would say this qualifies him as a significant view. As of October 2010, this article included a section on "perspectives" on capitalism, which provided the Marxian view as well as competing views[13]. In my opinion, that was a superb section and essential to the NPOV of the article, as well as its encyclopedicity. User:Financestudent created a new article, Perspectives on capitalism, in order to make room for more views of economists. User:Bobrayner expressed some doubts about this and Financestudent replied that we could always remerge the two [14]. I think Financestudent acted in good faith, but this was a major change to the article and there was no consensus for this change on the talk page. I propose that per Financestudent's comment, we just restore to this article the section on perspectives. This would restore NPOV by including the views Plankto has been arguing for, although it would make it clear that this is only one view of capitalism among many. Each of these perspectives of course is associated with a huge literature and should be linked to additional articles that go into greater depth.

I think it is really important to restore to this article the section on "perspectives on capitalsim" which was removed without consesnus (although in good faith. Slrubenstein | Talk 12:23, 18 December 2011 (UTC)

Slrubenstein, as you are misrepresenting my proposal, let me state it more clearly. It is for the unequal distribution in capitalism, which is an undisputed fact, to be included in the article. However, there are different views on what this unequal distribution means. That part could be discussed from the main perspectives, as suggested in the request for comment.Plankto (talk) 14:55, 18 December 2011 (UTC)
I am not misrepresenting your proposal. You ro someone else made a request for comments, and I left a comment. I think it is a very constructive comment. Talk pages are for discussing improvements to the article. Slrubenstein | Talk 12:21, 19 December 2011 (UTC)
"which is an undisputed fact" - obviously this is not an undisputed fact, as you have been in a dispute with another editor for well over a week. Also, check our content policies. This is not a place to soap box and promote your own views, this is not how collaborative editing works. Slrubenstein | Talk 12:21, 19 December 2011 (UTC)
Easy peasy IMHO. The section should never have been blocked removed, a summary should have been left, and {{main}}-linked. 92.18.148.81 (talk) 14:04, 18 December 2011 (UTC)
Slrubenstein, you misunderstand. Inequality is a fact established by measurement. If you want to challenge the numbers, go ahead, knock yourself out! :) It was the implications of this fact for capitalism that was discussed above.Plankto (talk) 19:01, 19 December 2011 (UTC)
Plankto, you are misrepresenting your proposal. The question is not the fact that there are economic inequalities in various countries, or even between countries. Your proposal is, and I quote, "A central feature of capitalism is the inequality of the system." And it is a fact that this is indeed disputed. otherwise, why would we need an RfC? RfC is a dispute-resolution mechanism, right? So there must be a dispute, right? You cannot say that we need to resolve a dispute over something undisputed, that makes no sense. Slrubenstein | Talk 20:01, 19 December 2011 (UTC)
In the meantime, let's stick to what this page is for: discussing improvements to the article. In my comment I made a proposal that 92.18.148.81 largely agrees with. You seem to disagree but have not yet explained why. Slrubenstein | Talk 20:01, 19 December 2011 (UTC)
Slrubenstein, now you are confused. The debate is about if this feature of capitalism should be included, based on differing views on the implications of inequality. Plankto (talk) 20:09, 19 December 2011 (UTC)

As I said above, I have no problem with including a point about inequality in the criticisms section. It would also fit into the "perspectives" section which Slrubenstein mentions if that section is re-added. Anything more than a few sentences belongs in other articles. This is an overview article, and many topics of major importance are only given a sentence or two.

Mention of inequality does not belong in the lede, because, as I cited above, all modern systems involve inequality, particularly if you are not just discussing economics but also using the nebulous concept 'social inequality' which some of your sources employ. Additionally, capitalism encompasses such formations as state capitalism, which have a different economic distribution framework from the free trade capitalist model you seem to be focused on.

Your 'Mechanisms' belongs in the Income inequality metrics article instead, if anywhere. Dialectric (talk) 15:27, 18 December 2011 (UTC) Unequal distribution may arguably be an outcome, but it is hardly the central feature. I endorse Slrubenstein's suggestion.Nobody Ent (Gerardw) 22:26, 18 December 2011 (UTC)

oppose Besides whatever is being said, above, the premise is false. On the contrary, capitalism is predicated on ever greater consumption and this in turn implies the wherewithal of consumers, en masse to consume. In fact, to the extent that it collapses demand, or even fails to increase it, rather than any moral aspect, inequality, at least that which impinges upon consumption. is deadly for this system. This helps explain why consciousness of it (capitalism), is now being raised from the right. Typically, there's a stupid conflation of the specific economic regime with other elements historical and present of society. Also within actually existing and conceivable capitalist relations, all kinds of distribution arrangements are observed and possible, so it's just wrong to claim that inequality is essential to the concept except when the awareness/conflation/synthesis of an economic regime and a social order is operative. I created the English version of Base and superstructure which treats the connection between Capitalism as an economic regime and as a social order in a principled way. Within Marxism this is a proper and indeed essential synthesis. However that viewpoint is unlikely to prevail here, it's truth value notwithstanding and seems to have become a community consensus to treat it strictly as an economic regime ignoring the entanglement with various historical evils which it may or may not have aggravated or alleviated. 72.228.177.92 (talk) 16:30, 30 December 2011 (UTC)

Plankto, you issued an RfC. Aside from my comment, and people's endorsement of my comment, I do not see any comments yet on your request. I do not see any support or oppose. You isued an RfC. Let's see what comments you receive. Until you have, and we see a consensus for the change you propose, you cannot make any changes to the article. Did you make the RfC in good faith or in bad faith? Slrubenstein | Talk 17:04, 25 December 2011 (UTC)

Slurbenstein, you've misused this Rfc to introduce a separate issue and immediately thereafter reinserted a large section on an unrelated matter. Please spare others a lecture on WP etiquette.Plankto (talk) 17:42, 25 December 2011 (UTC)
Please quote the guidelines for RfC's that you claim I have violated. Otherwise, do not accuse me of anything. You requested comments. I mae a comment, and other people responded to my comment postively. In the meantime, I do not see any comments in support of your proposal. Did you sincerely wish to request comments? If so, let's wait and see what additional comments on your proposal we receive. This has nothing to do with etiquette. I am not lecturing you on etiquette. I am questioning your abuse of the RfC, when you "request" comments, and then continue to edit disruptively before the RfC has been closed. Slrubenstein | Talk 18:57, 25 December 2011 (UTC)
Slrubenstein hijacked the discussion by bringing in an unrelated earlier contentious issue and then proceeded immediately to enter a massive edit change within this Rfc. I'll wait for others to comment on the edit proposal reverted by him.Plankto (talk) 19:13, 25 December 2011 (UTC)

Comment. I don't understand what it is compared to when the proposed section says that capitalism creates inequality. Both the countries with the lowest income inequality, like Sweden and Norway, and the highest, like Bolivia and Brazil, adhere to some form of capitalism. So I think it really isn't that useful to make a sweeping proclamation that "capitalism creates inequality". I think most modern thinkers on the subject are more nuanced than that. I also don't think the chart with the top 1%'s share of income in the United States is that relevant here. Because was the United States really "less capitalist" in the 70's where the share was below 10% than today where it is above 20%? I think by most's definition the US has been a capitalist society throughout the entire period depicted. So the chart really isn't saying anything about the correlation between capitalism and inequality.TheFreeloader (talk) 18:10, 25 December 2011 (UTC)

TheFreeloader, the latest proposed entry is:

A historical featue of capitalist societies, as in many other societies, is an unequal distribution of income and wealth, such that a small section of society holds a disproportionately large share of the total wealth and income.[109] [110] [111] There are numerous arguments associated with this feature of capitalism, both economic and moral. On the supporting side are economic arguments that inequality helps engender more aggregate growth and welfare through savings-driven investment[112] and by ensuring proper incentives.[113]. Arguments against focus on the role of excessive inequality in producing instability[114] and reduced opportunity and misery for the poor.[115] Recently, the global Occupy movement has highlighted this feature of capitalism.

.Plankto (talk) 19:45, 25 December 2011 (UTC)
Yes, I know. And is there any specific part of this entry you would want to bring to my attention, or what?TheFreeloader (talk) 21:55, 25 December 2011 (UTC)
Yes, compare the difference of wording in e.g. "create" vs "feature".Plankto (talk) 22:30, 25 December 2011 (UTC)
Well, that just makes the whole section even less relevant. If you can't even claim that it's the capitalism which creates the inequality, then why should it all be mentioned here. You might just as well mention that capitalist societies have featured crime or disease. Or even domesticated animals. Then afterwards you could have a discussion of the pros and cons of crime, disease or domesticated animals. To me this a clear sign of the article being used as a coatrack, when you can't even claim a causal relationship between the topic of the article and the topics discussed in it.TheFreeloader (talk) 23:24, 25 December 2011 (UTC)
Inequality is actually quite relevant to capitalism, not only for the fact that it exists, but due to the implications for the system, in terms of the views discussed in the proposed paragraph. It would help if editors would at least skim the foregoing discussion.Plankto (talk) 00:10, 26 December 2011 (UTC)
I have looked at the discussion, but I am sure you can point me to any important points if you think I have missed. First of, I don't see why this would need a section of its own, when there is a section for perspectives already. Second I don't think the sources provided really show that this issue is notable enough to mentioned at such length in this very general article on capitalism. Sure if the issue of inequality could be shown to be viewed as notable to the same extent by important thinkers on capitalism as the other things discussed in the Perspectives section, it might be worthy of a paragraph there. But as it is now we might just as well find people who have discuss the relationship between capitalism and crime/disease/domesticated animals/whatever else, I am sure could plenty of sources for that, and make sections for them. That way could probably quickly get ourselves a 1000kb article. Finally, if it were to be included, I think the proposed entry has some problems in the way it presents the issue. It asserts (or at least implies) that in all capitalist societies "a small section of society holds a disproportionately large share of the total wealth and income". That is hardly an uncontested fact, and I doubt very many people would say that that holds true for say the Scandinavian countries. Also, the phrase "a disproportionately large share" could be seen hold the implied judgment that share is inappropriately large. And I think the sentence on the Occupy Wall Street is recentism, as it hardly is notable at all to the complete history and overview of capitalism as a concept. And then there is the chart, which as I remarked above, does not seem to really have anything with the relationship between capitalism as a whole and inequality.TheFreeloader (talk) 01:33, 26 December 2011 (UTC)
As shown above, inequality in capitalism is a central issue that has been the subject of innumerable books and articles. It is easy to improve the references. The debate about a range of inequalities in capitalist societies, e.g. USA and Sweden, has been suggested by others is a secondary issue, as is the issue of economic policies that affect the degree of inequality, e.g. progressive taxation. The mention of the focus of the Occupy movement may be recent but in turn it reflects a build up in theory over several decades, which now interacts with the reality of the financial crisis and evolving political priorities. In my view, it is more a process of coming into prominence than recentism as you suggest. As for the Perspectives section, it seems bloated and in need of considerable scaling down. The focus there also appears to be on the past (the opposite of recentism). As such, it seems to fail to account for recent views of capitalism. There now seems to be some agreement for the inclusion of inequality, but as an aside or a perspective. As before, I disagree with that approach, as inequality is an outstanding feature of the system. Perhaps, most are oblivious to it, much like the air we breath. Accordingly, I still think it merits a separate albeit small section, with the focus on inequality as a fact of all capitalist societies but more importantly on the many different views about its implications for the operation of the capitalist system. I've presented a proposal based on the discussion. Once an editor pulls the discussion together and makes a pronuncement, we can move forward and consider the matter settled.Plankto (talk) 14:42, 26 December 2011 (UTC)
The only thing thzat this discussion reveals is that (1) you continue to use this page as a soapbox, and instead of waiting for a large number of editors to comment, you inssit on dominating this space, (2) practically no editor wants to engage with you and (3) there is certainly no consensus for your proposal. Consensus would require a significant number of people coming here and registering support for your proposal, and very few people registering oppose. So far, not one person has registered support. You can write kilopbytes and kilobytes more of your soapboxing, but none of that counts in the RfC. Is it possible for you sto stop soapboxing, and wait and just let other people comment? Slrubenstein | Talk 12:59, 30 December 2011 (UTC)
If it wasn't for your comments, there would be a whole lot less reason for me to comment in this section. Let's both agree to clam up for the rest of the year. Happy new year! :) Plankto (talk) 17:08, 30 December 2011 (UTC)

Comment. In my view Inequality in capitalist societies is a basic feature of Capitalism, and I agree with user Plankto to implement this feature, even more in detail, as a section in this article. --Fox1942 (talk) 11:15, 10 January 2012 (UTC)

Comment Inequality is a basic and natural feature of any economic system: it was a "basic feature" of hunter-gatherer societies, feudalism, despotism and mercantilism and has existed in practice in every centrally planned economic system too, including to some degree in those that were at least nominally Marxist. It's appropriate to mention in the criticisms and perspectives section but emphasising the inequalities present in capitalism as if other economic systems efficaciously dealt with them would be a POV stance. Dtellett (talk) 19:37, 12 January 2012 (UTC)
Structural or class inequality is most certainly not a feature of hunter-gatherer and horticulturalist societies - this is the clear consensus of all scholarly research. I am curious to know what your source is; I'd be really surprised if it is a notable researcher on hunter-gatherer or horticultural societies. Slrubenstein | Talk 13:10, 14 January 2012 (UTC)
It's an even clearer consensus of scholarly research that structural inequality existed in feudal, despotic, mercantilist and most/all centrally planned societies: this alone should be sufficient to validate my point about it not being an unusual characteristic of capitalism. I make no claims to be an anthropologist nor to refute the widely accepted claim there may have been *less* inequality of distribution in such societies (near-inevitable given their inability to sustain lifestyles above a subsistence level) but if your contention is that the conflict over resources (land) characteristic of structurally unequal access to scarce resources was non-existent, you'd be better off addressing an unsourced statement contradicting that in the hunter-gatherer article. FWIW My (obviously unsuitable for Wikipedia purposes) personal encounters with an [[Orang Asli] hunter-gatherer group which carried out their minimal trade with the outside world exclusively through the chief's family and had a very obvious sexual division of labour carries more weight in my mind than experts' speculation on the lifestyles of Paeolithic peoples.Dtellett (talk) 15:16, 15 January 2012 (UTC)
WADR, "In my view" is totally irrelevant to WP - the only questions we should be asking are: what do the sources say? and Are the sources that make these statements notable enough to be included? Injecting editor opinion is the exact thing that WP:NPOV prohibits. Noformation Talk 00:16, 13 January 2012 (UTC)
Well I know this rule but I made a comment and therefore I used "In my view". --Fox1942 (talk) 08:19, 16 January 2012 (UTC)
  • Comment (oppose) I'm here because of the RfC, not because I am a regular contributor to this article. It's unclear to me if the question is (1) whether the article should state that inequality is "a central feature of capitalism" or (2) whether the article should contain a more extensive discussion of inequality.
As to the first question, it's clear to me that there is no consensus among economists that wealth and inequality are "a central feature of capitalism." With the possible exception of those who approach the question from a expressly Marxist perspective, those who criticize capitalism because of inequality mostly see inequality as a result of capitalism, not a central feature of it. (In other words, if these critics were to define capitalism, inequality would not be part of the definition.) One could argue that Adam Smith, like Karl Marx, saw inequality as intrinsic to the capitalist system, but equality, per se, was not a big concern in his writing. He did write extensively about what he saw as the positive impact of capitalism on real working class wages and standards of living. In short, my view is that the article should not describe inequality of capitalism as a "central feature" of capitalism because that's not how it is seen or described in much of the mainstream literature on capitalism. (Another reason not to make this claim: there are several different definitions/descriptions of "capitalism" described in the article. Is inequality central to all of them?)
Answer to the second form of the question is less clear to me, and doesn't have a definitive answer. Whether or not capitalism inevitably increases inequality is an important question, and worthy of discussion on Wikipedia. That doesn't however, mean that it should be discussed in depth in this overview article on capitalism. It is already referenced in the section on "criticisms" of capitalism and is presumably treated in more depth in that article. If this issue were to be discussed in more depth, should other criticisms/benefits of capitalism receive similar treatment? Reading this article for the first time, there is a slight imbalance between the way "criticism" and "advocacy" are presented, but the criticism section is actually more coherent. I might work to cut down "advocacy" (by condensing and removing section subheadings) rather than expanding criticism. But this is purely subjective. Sjsilverman (talk) 18:24, 17 January 2012 (UTC)

There appears to be an underlying misunderstanding concerning this proposal that crops up time and again. Many equate the mention of inequality in terms of capitalism as a criticism of the system. That is a misunderstanding, perhaps linked to how the proposed text is formulated. Allow me to explain. First, it is a statistical fact that inequality is extant in capitalism. This is undisputed. The numbers bear this out for all capitalist societies. Even if inequality is variable across societies and changes over time, it is there. Second, in itself this feature of capitalism is NOT only a criticism of the system. Many scholars see inequality as a necessary and helpful feature of the system for it to operate properly (creates motives for participation, gathering of saving for investment, guardianship of capital, generates wealth, etc.). Others see it as a feature worthy of criticism (creates misery, reinforces inequality, creates preconditions for financial instability, etc), especially when the inequality becomes extreme. It is for this reason (fact + positive and negative views) that it is being proposed that inequality should be addressed in the overview chapter on capitalism. Accordingly, the proposed statement could be modified.

"A permanent feature of capitalism is the inequality of the system, such that a small section of society holds a disproportionately large share of the total wealth and income. The degree of inequality has been found to differ between countries and change over time.

This statement could then be followed by a brief mention of the main views on inequality. It therefore also does not make sense to include it in the criticism section or as a part of some perspective - as the differing arguments relating to inequality show up in a number of perspectives. Accordingly, it should be mentioned as a separate topic, albeit only briefly. Plankto (talk) 09:28, 22 January 2012 (UTC)

As pointed above, it's a statistical fact that inequality is extant to similarly varying extents in other types of societies, so isolating it as a feature specific to capitalism is inappropriate. Similarly, it would be inappropriate to have entire sections on the relative level of efficiency, freedom, output, environmental-consciousness or any other indicator; the disparities between capitalist societies are as pronounced as the differences from non-capitalist societies. Views on inequality, positive and negative, sit happily with the perspectives of those expressing those views (or the types of capitalism they're specific to).Dtellett (talk) 17:19, 25 January 2012 (UTC)
That is one view on an outline for this article, which can be structured in different ways. A more topic oriented approach to the structure is clearly my preference, as the perspectives tend to cover a range of topics, some explicitly while others are treated more implicitly, with little clarity on important issues, like inequality. Importantly, economic inequality is not extant to all types of societies. It is also argued that inequality is a more important feature of capitalist societies, albeit views on that vary, as some hold it to be a de facto dynamic organising principle of the system while others view it as an accidental outcome. Whatever the different views, the aim is to bring more clarity to this particular aspect of capitalism, which has recently been emphasised by the Occupy protest movement, President Obama in his 2012 State of the Union address yesterday and by Microsoft founder Bill Gates on BBC World Service today. Plankto (talk) 17:52, 25 January 2012 (UTC)
The structure of the article is similar to that of Communism, Anarchism, Socialism and other very broad descriptions of economic arrangements: the article is organised according to history/geography and theories/schools of thought rather than attempting to order by topic. The broadly chronological order within the two major subsections is a neat way of avoiding endless debates about whether "efficiency" or "inequality" are more important or prevalent features in capitalism, and whether "corruption" or "freedom" are relevant characteristics at all. (FWIW I also think the arguments in the "advocacy" section should be rolled into the other sections, and the criticism section might warrant some expansion)
If you wish to assert that economic inequality is not extant to all types of societies please provide a counterexample of a method of economic organization that effectively eliminates economic inequality on a non-trivial scale.
I believe I'm correct in understanding Obama and Gates were speaking about making transfer payments (taxation and foreign aid respectively) entirely compatible with capitalism rather than changing the system of property ownership, and you'll find no shortage of people willing to argue (albeit not necessarily plausibly) that lack of US jobs, tax loopholes and economic underdevelopment overseas are the consequence of not enough capitalism. Besides which, Wikipedia has policies against recentism, particularly when discussing a 200-year old broad system of economic organization.Dtellett (talk) 19:50, 25 January 2012 (UTC)

Actually, I think the existing approach is compatible with a brief topical dimension. A few topics could be added if the existing sections are shortened, also to create more balance between advocacy and criticism. Readers can be directed to the main articles on those topics. The same could be done for a topic like inequality. The main views on it could be mentioned, with the reader then referred to the main article. As for recentism, capitalism has been evolving. The article discussion of economic theories appears dated. The recent developments have exposed gaping holes in these theories. Moreover, the theories described fail to capture the essence of modern capitalism, in terms of recent developments, including such aspects as technological, financial, political and distributional features of the system as well as its global spread. I think Obama was discussing how redistribution through the tax system can improve burden sharing. Meanwhile, others view such policies as undermining the capitalist system. Many get defensive when a topic like inequality is mentioned. That is just a reflex. Let me be clear that the objective of this proposal is not to present a particular POV of capitalism when discussing inequality but to present it in a NPOV way in terms of the many views on it.Plankto (talk) 22:22, 25 January 2012 (UTC)

There's actually a Criticisms of capitalism article structured exactly how you propose, but just looking at how many negative "issues" or "topics" are considered encyclopedic suggests it would be near impossible to achieve in a way that wouldn't appear POV if used as a model for the main article. An article on "capitalism and inequality" might be the best compromise if you feel the notion of inequality in capitalism needs a more balanced and detailed discussion than it gets on a "criticism" page.
Recent developments haven't exposed "gaping holes" in any theories: asset bubbles and recessions are a widely documented phenomenon, as are the "moral hazard" incentive problems of "too big to fail" institutions, the limitations of government policy stimuli, indebtedness and the possibility of increased structural employment. It's also well-established that despite having the theoretical groundings, economists aren't very good at predicting exactly when these events will happen. None of these actually have anything very much to do with inequality, which has been with us since the dawn of civilization: whether you see that as growing or shrinking under present capitalist systems depends on where you focus, and "the US since the Reagan era" is a very bad focus for an article on a topic as broad as this. I agree the "Keynesianism and neoliberalism" heading could use another paragraph on how capitalism (especially in Europe) has evolved since the downfall of the Soviet Union though. But Wikipedia has no shortage of more appropriate articles to discuss Economic inequality, Distribution of wealth, Distribution of income, Late-2000s financial crisis, Late-2000s recession, Subprime mortgage crisis, Unemployment, United States economy and We are the 99% than a generic article about economic systems based on private capital accumulation and markets.Dtellett (talk) 00:07, 26 January 2012 (UTC)
WP is structured on the basic idea that a broad topic is presented in an overview article. In turn, individual sub-topics are a summary of the information that appears in individual main chapters on those sub-topics. There is no contradiction there. As for my mention of the gaping holes that have appeared in theory are being discussed all over the place, it was to suggest more completeness was warranted in this article (a general comment), including through the introduction of sub-topics in the article. I could also note that the recipient of criticism include e.g. the axioms of neoclassical theory (although the WP article on this appears quite deficient) and the micro assumptions of general equilibrium models. The criticism is being leveled by people like Robert Solow, 1987 recipient of the Nobel prize in economics, in a Congressional testimony[15].Plankto (talk) 07:33, 26 January 2012 (UTC)
If you check my edit history you'll note I added comments from that Solow submission to an essentially-all-new "criticism" section of the Econometrics article a couple of days ago. But again, it's a criticism of a particular type of neoclassical general equilibrium model which is of very marginal relevance to the issue of capitalism and isn't even obliquely referenced in the existing article. No "gaping holes" have been discovered in the basic neoclassical axioms summarised in this article, nor would it be appropriate to introduce the debates about more speculative concepts of allocative efficiency and equilibrium models in this particular article Dtellett (talk) 12:41, 26 January 2012 (UTC)
This is going beyond the discussion of the place of inequality in this article, but I would like to quote two quite noteworthy economists on this issue. Robert Solow says:

"There are important gaps in our understanding of the economy, and there are plenty of things we think we know that aren’t true...I do not think that the currently popular DSGE models pass the smell test. They take it for granted that the whole economy can be thought about as if it were a single, consistent person or dynasty carrying out a rationally designed, long-term plan, occasionally disturbed by unexpected shocks, but adapting to them in a rational, consistent way. I do not think that this picture passes the smell test".

Steve Keen, a well known critic, recently has gone so far as to say

"Neoclassical economists don’t understand neoclassical economics.[16]"

Keen wrote about the shortcomings of NC theory well before the financial crisis[17].Plankto (talk) 18:56, 26 January 2012 (UTC)

Socialism and Wikipedia's Liberal Bias

Why is there such a big section on socialism? Shouldn't that be another subject and included on the page for "Socialism?" That is like having a huge section devoted to Rush Limbaugh on Michael Moore's page, but in keeping with wikipedia's liberal bias, I don't think that's going to happen. If wikipedia doesn't address these problems, its reputation for having a liberal bias will unfortunately persist. And why is Karl Marx's section featured higher and more prominently than the Austrian School's section. As if the editors couldn't wait to get in a lick about socialism, and couldn't let this capitalist point of view go uncontested.

Also, what about anarcho-capitalism? No section for that?

75.69.20.8 (talk) 23:37, 31 January 2012 (UTC)

Which section are you referring to? Scott Illini (talk) 02:51, 1 February 2012 (UTC)
See Anarcho-capitalism. 99.181.152.94 (talk) 07:51, 1 February 2012 (UTC)
No 75.69.20.8 why would you think that Wikipedia policy, uniformly applied everywhere would be abrogated here? If Marx is given prominence over the Austrian School that would certainly be appropriate as no other figure, regardless of your opinion has had a greater impact on thinking on the subject. However do agree a concentration here on its defense is not inappropriate although since that opinion is contrary to the just referenced policy it's irrelevant. That's why when an earlier version of the lede used the term "Differentia Specifica", I changed the title of Capitalist mode of productions Defining Characteristics section to match that usage and linked it here. There's probably too much turmoil for a good lede here, but the body of the article looks pretty good and NPOV. A partisan presentation here would enable a refutation, so I'd welcome it but we'll both have to accept the site as it is. 72.228.177.92 (talk) 13:52, 1 February 2012 (UTC)
I could not find any section in this article on socialism. There is a section criticisms of capitalism but it is only four short paragraphs long - about as brief and basic as possible. Slrubenstein | Talk 13:59, 1 February 2012 (UTC)
Right, the "socialism" referred to by the creator of the thread, is the same one Obama is supposed to be, i.e. it's a knee-jerk reaction to an objective assessment of something a conservative mentality has decided to go ballistic on. That combined with the normal conflation/complaint about education/informedness with "liberals". That is the service this layer is providing in this time as the consciousness of the system and its other is largely being driven from the right with the typical weak sauce mention from the so-called left. IP editors presenting such opinions are unlikely to carefully read prior discussions so a more prominent admonition in the talkheader may be in order. 72.228.177.92 (talk) 17:40, 5 February 2012 (UTC)

Invisible Hand

http://en.wikipedia.org/wiki/Talk:Economics#Adam_Smith — Preceding unsigned comment added by Lbertolotti (talk • contribs) 12:51, 9 February 2012 (UTC)

More on state-monopoly capitalism and capitalist mixed economy should be in the intro

A user on the Socialism talk page has raised a concern that state capitalism and capitalist mixed economy is not described enough in the intro and that the intro is assuming that capitalism naturally supports purely independent private enterprise based economy. State-monopoly capitalist economies have state control over the economy and capitalist mixed economies include substantial public enterprise within them.--R-41 (talk) 02:09, 3 April 2012 (UTC)

The lead seems fine to me. TFD (talk) 06:21, 3 April 2012 (UTC)

differentia specifica

Is there any definition of capitalism which does not mention wage labour as an specific characteristic of it?. Is there any other economic system where work (labour power) is a commodity like any other? Sources? -- ClaudioSantos¿? 15:24, 18 April 2012 (UTC)

Slave-labor systems? In slavery, labor is indirectly bought and sold (by buying and selling the laborer). You can say that is commodifying labor, albeit with the distinction that the labor is not owned by the worker but by the master. Worker cooperatives are another example. Labor there is also commodified, albeit it is the residual earner (earns profits, not wages). Walrasiad (talk) 04:13, 19 April 2012 (UTC)
Well, if one can reasonable consider that wage-labour is a sort of wage slavery, at any rate, as any comparison it implies a difference ("...albeit..."), here it means that a slave-labor system is not a wage-labour system. You already noticed the difference within a worker who owns and sells its labor force and a slave who is completely a commodity owned by its master. And it is pretty clear that capitalism is everywhere based on wage labour or wage workers or if you prefer wage slaves but not on slaves. Precisely I am asking for the differentia specifica of capitalism not for its similitudes with other systems. Neverthelss I wonder if you are suggesting that capitalism is a form of slavery and it should be mentioned in the article. --ClaudioSantos¿? 16:03, 19 April 2012 (UTC)
Oh. I am a little confused by what you are asking for. "Wage labor" - narrowly meaning the sale of labor time/power by the laborer in return for a fixed wage - is an essential feature of capitalism, but not a necessary feature for "commodification" of labor. I thought you were asking for examples of non-wage commodification of labor. Slavery and cooperatives "commodify" labor, but without the self-ownership and/or wage element. Indeed they are not wage labor. Which I thought was the point you asked to be illustrated - labor being bought & sold which is not wage labor. Walrasiad (talk) 19:32, 19 April 2012 (UTC)
Yeah, my question was if "wage labour" is a differentia specifica of capitalism, so it should be represented in its definition. Nevertheless, I just want to mention that a laborer do sell its power to work not his work nor his time of work. Exactly as the master does not sell the work of the slave nor is paid for the time this slave will work. Or exactly as the owner of a mule is not paid for the work time this animal will do. Nevertheless thanks for the answer. -- ClaudioSantos¿? 00:46, 20 April 2012 (UTC)

Free Market Capitalism

Free market capitalism ended in the late 19th centura/early 20th century. Capitalism is now in it's imperialist Monopoly stage. There is no going back to Free Market Capitalism, Marx proved that it is inevitable that competition and free markets will develop into Monopolies. The next stage is obvious and historically inevitable: Communism. — Preceding unsigned comment added by 216.183.185.133 (talk) 23:54, 27 March 2012 (UTC)

The only thing marx prooved was that he was a buffoon clearly you dont know any thing about history because every time communism forms it is quickly outcompeted by capitalism, the only thing communism dose is spread poverty and suffering equally, what would you rather have a system in wich some people are rich and some people are poor or a system in wich everyone is poor, and about the monopolies that is what government is for even the founder of lasse fair ecenomics said that some government is neccessary Irishfrisian (talk) 03:21, 21 May 2012 (UTC)

Clearly Irishfrisian is ignorant to what Capitalism or Communism is, and what the implications of the profit driven society actually are: mounting debt and only a tiny part of the population having any significant increase in wealth. The top comment is right, the corporations have monopolized everything we buy. (KingHiggins (talk) 20:23, 10 June 2012 (UTC))

Add Tallest buildings?"

Do you think it would fit to add a link to List of tallest buildings in the world for a new futurist perspective? Catlover98 (talk) 00:07, 1 April 2012 (UTC)

Uhhhh no. — Preceding unsigned comment added by 140.209.104.114 (talk) 19:14, 8 May 2012 (UTC)

Lead sentence should say what the topic is

The lead sentence should tell the user what the article is about. The current lead does not do that. The reader doesn't find out what the article covers until the third sentence. Jojalozzo 15:06, 5 March 2012 (UTC)

The lead sentence says that capitalism requires private property, then gives the example of state capitalism that requires no private property. Explain that one. — Preceding unsigned comment added by Sigiheri (talk • contribs) 10:28, 19 June 2012 (UTC)

"...based on..." is not equal to "require...".--Artoasis (talk) 12:17, 19 June 2012 (UTC)
I'm not sure I follow what you're saying. Here is my question for you: if states can engage in capitalism without private property, how can we say that capitalism is "base on" private property? — Preceding unsigned comment added by Sigiheri (talk • contribs) 13:43, 19 June 2012 (UTC)
I think state capitalism is merely a special form of capitalism. The key mark of capitalism is still "private ownership". Of course, if you could find a more accurate definition of capitalism, you are welcome to add it with a source. I do agree the scope of the concept has been evolving over the years. --Artoasis (talk) 14:47, 19 June 2012 (UTC)
Under state capitalism, theoretically while some or all property is nominally owned by government, it is owned for the benefit of private individuals, rather than the public. I would not put in the lead. TFD (talk) 15:03, 19 June 2012 (UTC)
How can the "key mark" of state capitalism be "private ownership". It is impossible. Regarding the the gov't holds property in trust and is therefore private, that is a stretch. But the point here is is private property necessary for capitalism and the answer is NO, not if the government is making money off its property. OED, correct?

Tell me: How is capitalism an economic SYSTEM? It is not a system, imo. — Preceding unsigned comment added by Sigiheri (talk • contribs) 10:16, 20 June 2012 (UTC)

Sorry, it remains an economic system despite your disagreement. Maybe you could try have a discussion with your econ teacher or professor. Wikipedia is not really a forum. --Artoasis (talk) 15:34, 20 June 2012 (UTC)
My point is that you can define the term, capitalism apart from a system. A system is a "whole compounded of several parts or members, system". I would argue that capitalism is simply the legal ability to make a return on owned property (e.g., money). What other parts are necessary to make up this "economic system"? I suppose you could add that a market is necessary, but that's obvious and it needed be a "free market" for a return on capital to be made. Also, "free market" can arise without capitalism if the market involves farmers taking their produce to the market. Thus, again, I don't know what other parts you need to have capitalism besides the legal ability to accumulate capital.Sigiheri (talk) 17:20, 20 June 2012 (UTC)
Not just produce. You also need a market for labor, a market for land and a market for capital. And you need the owner of capital to be the residual earner and also legally the ultimate controller of the decisions and direction of enterprise. If any of those conditions are missing, you are not in a "capitalist system", but another system. e.g. if farmers are assigned land, or use communal implements, or slaves, or the residual earner is the landlord or laborer or the entrepreneur (!), or final decisions are made by the the workers or the landlords or the government, you are participating in a different system. Not sure what you have against the word "economic system". It is the common term used. There is even a specialization called "Comparative Economic Systems" listed by the AEA. Guess what is researched and taught there? Walrasiad (talk) 19:14, 20 June 2012 (UTC)
I agree with you that the owner of capital must be the residual claimant for capitalism to exist. I am not sure that I agree that anything else is required. For example, in "state capitalism" the owner of the capital assigns workers to production. According to your definition, this is not capitalism, but in the article here, it is given as an example of capitalism. Of course, I am essentially equating capitalism to usury, which is not uncommon. Is it wrong? See http://www.historyworld.net/wrldhis/PlainTextHistories.asp?historyid=aa49 — Preceding unsigned comment added by Sigiheri (talk • contribs) 10:52, 22 June 2012 (UTC)
The owner of capital always assigns workers to production - once they're hired on the market, of course. Whether the owner is private or the State doesn't matter. Equating capitalism to usury? Capital =/= finance. Capital is real means of production - machinery, tools, raw materials, etc. Finance is savings & money stuff, which may or may not be used for the acquisition of capital.Walrasiad (talk) 11:54, 22 June 2012 (UTC)
I agree that the owner of capital always assigns workers to production; however, I am not convinced that the workers are always purchased from a market. Is this how it works in China? I thought the state assigned workers and set wages. If so, how do the Chinese government "hire them in the market?" I am not trying to be difficult. It is important to determine the necessary and sufficient conditions for capitalism. I agree that a market for goods of production is necessary, but I am struggling with the necessity of a labor market. Is it absolutely necessary for capitalism.

Regarding capitalism = usury, I don't think it is that crazy. They both require the ability to make money with money. I posted on article that discusses it. — Preceding unsigned comment added by Sigiheri (talk • contribs) 07:08, 23 June 2012 (UTC)

Assign workers? That is a slave system. Or a communist system. Definitely not capitalist. Parastatal companies don't "get" workers by "assignment", they compete for and hire people on the job market like any other company. To give perhaps a familiar example, many schools and universities here in the US are State corporations. Are people from the community "assigned" to teach, or are teachers hired in the labor market?
How does labor work in "State Capitalism".
As for "capitalism = usury", that is actually rather imaginative stretch. Indeed, if anything, capitalism is precisely the opposite of usury. Usury is defined as the lending money (a debt contract) for a fixed return (interest) - I lend you $100, you pay me back $110. But that is not capitalism. That's moneylending. The crux of capitalism is capital - equity, not debt. It is definitely not usury - it is not a debt contract, capital is never repaid. And it does not earn a fixed return - you get variable dividends, i.e. the distributed profits of the enterprise. If there are no profits, you get nothing. At its core, it is not usury for money lent, but rather a profit-sharing agreement for machinery lent (i.e. capital). In return, the capitalist is entitled to the entire profits of your enterprise (dividends), which are variable and indeterminate. The capitalist shoulders the entire risk of losses (in case of bankruptcy, it is my machines that will be sold off to pay the debts of your company to your creditors). And because I, the capitalist, am the only one of the factor suppliers who risks coming out with less than what they came in with (entreprenurs, workers and landlords don't lose anything but time), at some historical point I demanded and successfully received legal recognition of my complete control of your enterprise.
That's the crux of the capitalism - capital and capitalists. Not moneylending and usury. Usury - and the Medieval ban on usury - was specifically limited to interest-bearing debt contracts. Capital is not debt, and return to capital is not fixed, ergo it is not usury. It is a profit-sharing agreement for use of capital. That has never been regarded as usury. All Medieval popes & bishops, mullahs & imams, regarded capitalist finance as a legitimate - indeed, often the sole legitimate - form of financing. The ban was only on lending at interest (not that that ban was ever respected). Walrasiad (talk) 11:15, 26 June 2012 (UTC)
Hi. I don't think the difference between usury and capitalism is as clear as you make it seem. Did you see See http://www.historyworld.net/wrldhis/PlainTextHistories.asp?historyid=aa49 ?

Here is text from Usury in Wikipedia "A practical argument for usury in welfare economics is that charging interest is essential to guiding the investment process, based on the claim that profits are required to direct investments to their most productive use (solving the economic calculation problem). According to this argument, interest-driven investment is essential to economic growth, and therefore to the very existence of industrial civilization. This practical argument for the utility of usury treats all "unearned" returns to capital as interest; traditionally, guaranteed interest is usurious, whereas dividends from shared ventures are less so. In this tradition, the practical case against usury does not completely apply (although replacing debt market investments with stock market savings may not always be desirable). Officially, this is how capitalist Islamic states solve the calculation problem. An example of the 'moral' difference between dividend income and interest income is found in The Merchant of Venice: Shylock lends Antonio money for trade speculation, demanding repayment in flesh should Antonio's project fail utterly (accepting none of the business risk)." Also, Modigliani and Miller argued that where capital comes from, debt or equity, is irrelevant. Finally, check out kar.kent.ac.uk/185/1/Defending_the_Rentier.pdf This article explains that dividends today is usury.

I am going to take a stab at the lead sentence. My feeling is that it needs to state what is necessary and sufficient for capitalism to exist. I believe that, If someone invests capital to produce goods and service for a financial return, that's all that is needed for capitalism to exist. Of course, you need a market for products and services, and typically a labor market is required (but not for "state capitalism"); thus, you can call it an "economic system". Thus, we could re-write the lead as follows: "Capitalism is an economic system that enables people to invest capital in productive assets for a financial return, which in turn requires a market for goods and services as well as a labor market." Any objections or comments?Sigiheri (talk) 07:34, 26 June 2012 (UTC)

Well, lots of objections. But I'll wait for your reply to my earlier post. For the moment, pardon my brusqueness, but I'd like to know how you're definiing "capital" and "investment". Because in economics, we have a very precise meaning for those terms, but your phrasing doesn't seem to be using it. Walrasiad (talk) 11:02, 26 June 2012 (UTC)
I understand the brusqueness and I haven't been too offended yet, but thanks. Capital = money. Investment is defined in Wikipedia the way I'd define it.
It is not "less so", it is not at all. Mosaic law, Canon law and Islamic law are quite explicit about what usury is - interest on debt. Capitalist finance - "commenda", "musharaka", "mudarabah", etc. - was explicitly authorized and recommended. There is nothing "usurious" about it. It's a profit-sharing contract. That is distinct from "tricks" of other types of financing that were deployed to replicate interest-bearing contracts (e.g. repurchase agreements, delayment fees, cost-plus, hire-purchase leasing), which indeed skirted the beards of the religious jurists. But not capitalist finance. M & M is not relevant here - I am not arguing the production decisions are affected by the form of financing.
As for the definitions, economists have clear definitions of capital = produced means of production (machinery, tools, raw materials), and investment = increase in capital stock (i.e. increase in machinery and tools). Firms "invest", not people. What you seem to be referring to is savers allocating their savings in a portfolio. Savings is not capital, and allocation of savings is not investment, even if newspapers sometimes use the terms that way, that is not the economic definition. Savings is a supply of funds, investment is a demand for funds. Now, savings may be channeled to help a firm invest (i.e. increase capital stock), if that is what the firm plans to do with it. But not necessarily. If the firm uses new funds to finance its wage bill, settle a lawsuit or rollover past debt, it is not investing.
The reason I don't like your definition is it takes attention away from capital - the crux of capitalism - and the relationship of the capitalist (not a moneylender or creditor, but the owner of the machinery), and places it on the generic art of saving. It skips over the distinctive issues of ownership and production direction that distinguish economic systems.
There is nothing distinctive about allocating savings. You can put your savings in commodities (gold, jewelery) and earn value gains from price inflation. That has been done since antiquity. You can put savings in land, and earn rents - feudal lords did that. Or put it in government bonds and earn interest - Renaissance pensions did that. Or lend privately at interest - moneylenders did that and have been doing that since time immemorial. But that is not capital, it is not capitalism. The difference of capitalism is that the owner of capital - not the landlord, not the worker, not the government, not the entrepreneur, and definitely not the moneylender nor banker - seized full control of firms and productive enterprise to the exclusion of everybody else. And that exclusive control translated into direction of all production decisions in a productive enterprise to one and only one goal - the maximization of the residual earnings of the owners of capital, i.e. profit-seeking. Not meeting needs, not rent-seeking, not size-seeking, not employment-seeking, not revenue-hunting, not flag-pushing, but narrowly and exclusively profit-seeking. It is what makes capitalism capitalism. It is what makes capitalism distinct from other economic systems. Whereas allocating savings for earnings - moneylending, landholding, etc. - is prevalent in many pre-capitalist and non-capitalist systems. Walrasiad (talk) 19:57, 26 June 2012 (UTC)
Hi Walrasia. Sorry for the delay. I appreciate all of what you wrote, but I'm still a little unclear. If I loan a person $100,000 for a business with the conditions that I will get a % of the profits for 10 years, then full payment of the $100,000 am I a capitalist? I am trying to understand the this. Thanks. — Preceding unsigned comment added by Sigiheri (talk • contribs) 13:55, 30 June 2012 (UTC)
He pays you back? Then no, you're not a capitalist. You're a lender/banker/creditor. To be a capitalist, you must own the capital the businesss is using. And loans aren't ownership claims.
To give you a concrete example, suppose you are an entrepreneur and want to establish a bakery. You rent space, hire workers. But you also need an oven (i.e. capital). Suppose an industrial bakery oven costs $10,000 - money which you, as a pure entrepreneur, don't have. But your grandmother does - stored away in her savings account. Consider two different ways of going about it:
Case #1: You ask to borrow the $10,000 from your grandmother, promising to pay her back within a year's time (with some usurious gain for her - say 10% interest). She agrees. She is now a moneylender, not a capitalist. Because the oven you buy with her loan is owned by you, and not her. You're the capitalist (the owner of the capital), she is just a creditor.
Case #2: Suppose your grandmama hears your request and refuses to lend you the money. But tells you instead: "Tell you what, sonny. I like you. I want to see you succeed, so I'm actually not going to lend you the money. I'm going to buy that $10,000 industrial bakery oven, and I'll lend you the oven directly. But the oven is mine and will remain mine. But you can use it for as long as you want." Splendid! You don't have to pay her back! BUT grandmama has a trick up her sleeve - because in order for you to use her oven, she demands all the profits of your bakery. All of them grandma? All of them. All the residual earnings. You, the entrepreneur, get none of the profits but just a "managerial wage" (i.e. she reduces you to a mere worker). Moreover, as her oven is on the line, she decides to visit the bakery regularly to make sure the bakery is running properly. And if you make a business decision she disagrees with she'll put her foot down.
e.g. Suppose you had a scheme to produce sweet rolls, whereas she thinks you should produce sourdough rolls. "But grandmama, I am running the bakery! You're just an oven-owner! Don't tell me how to run my business!" Her reply: "Sonny. Exactly. I am the oven-owner. And if your stupid sweet rolls idea goes through, this business will be bankrupt, and the government liquidators will take my oven and sell it to make up for any debts. So my oven is at risk. So I have the right to tell you what to do", You reply: "But the bakery is mine! It was my idea! It is my business that is at risk". Her reply: "No sonny, the bakery is now mine, not yours. If it goes bankrupt, you lose nothing. You're just an entrepreneur - maybe your dreams are shattered, but you walk away as penniless as when you started, no better and no worse. You've lost nothing concrete. But I, as the capitalist, would have lost something conrete - my oven. I will come away with less than I started with. In light of that, I am exerting my right to overrule your baking decision - your sweet rolls are out, you shall make sourdough. If you don't like that, then you can leave and I'll have another grandson manage this bakery, or hire a professional. I am the capitalist. I am in command here."
Does the difference make sense? I'm sorry for sounding so pedantic, but it is a hugely important difference, as you see, in terms of control. In the first case, when she lends you the money, she has no ownership nor control. She is not a capitalist, just a moneylender. In the second case, when she lets you use her capital, she has full ownership and full control. She is a capitalist. The uniqueness of capitalist systems is precisely that capital-ownership translates into ownership and control of production by the capitalist. Walrasiad (talk) 23:27, 30 June 2012 (UTC)
Thank you for the example as it is very help to understand capitalism. The capitalist (1) controls the asset and (2) receives a % of the profit, while a money lender typically does neither. In the case you describe identifying a money lender from a capitalist is easy. Here are 2 hybrid examples.

(1) What if grandma lends her oven to a business with the understanding that the over will only be used to bake donuts. Thus, grandma has exerted control over the means of production. Grandma has also agreed to take a percentage of the profit as payment, agreeing that if the business has no profit, she receives nothing. These are contractual arrangements that are possible. We have a lender who controls the assets and receives profits as payment. Is grandma a capitalist or a money lender? (2) I have a friend who is in this position related to the building he rents from his grandma for a % of the profit of the business. She demanded that the building only be used for baking. Of course, grandma loans the building every month and is paid at the end of the month. Is grandma a capitalist or money lender? (3) Finally, a shareholder buys stock in the secondary market, has no vote as it preferred stock (i.e., no control), and is paid dividends if the board declares it, but not otherwise (i.e., no definite profits). Is this shareholder a capitalist or a money lender? Thanks in advance.Sigiheri (talk) 09:31, 2 July 2012 (UTC)

I am still waiting for a response on the questions above. I think it is clear that a "capitalist" must have control over the productive asset. The capitalist therefore must take an active role in management. If this is not true, then how can a capitalist have control? Also, the capitalist receives a % of the profit. Can we say that the capitalist controls the assets and receive profits from the asset? The only problem is that very few people are actual capitalists and most are simply money lenders. Shareholders do not control the assets of the corporation and are therefore moneylenders. This is the point made by Ireland's article, which I cite above. I am still waiting for comments on this important topic.

Hi. No, capitalists don't take a % of the profits. They take 100% of the profits. All of it. Shareholders are not moneylenders, they are capitalists. They own the machinery and they will never be paid back, so its not a "loan". Shareholders do have an active role in management - they are the only ones entitled to have a voice and vote (proportional to their ownership share) in the general meetings that set the objectives and review the decisions, elect the Board of Directors and hire or fire the management of a company. They completely control the company. True, in this modern day, some shareholders are lazy and not very active, but many are quite active, and all certainly retain the right to exercise the controlling powers their shares entitle them to, whether they bother to use them or not.

As to your specific questions before: (1) Grandma is a capitalist. (2) Grandma is a landlord if she is paid rent; a capitalist if she takes his profits. (3) He is a silent capitalist.

To be a moneylender, it means the loan must be paid back at some point. None of those cases point to them ever being paid back. Walrasiad (talk) 12:04, 5 July 2012 (UTC)

Hi again and thanks for the response.

In (1), you say that Grandma is a capitalist although she is getting only a % of the profit and the working was getting a share. Yet, you also say that capitalist always, by definition, gets 100% of the profits. Could you please explain this apparent contradiction. — Preceding unsigned comment added by Sigiheri (talk • contribs) 12:12, 5 July 2012 (UTC) No contradiction. The capitalist decided to pay the entrepreneur a "wage for management and direction", as a % out of her profits. Grandma can decide whatever she wants to do with the profits. If she change her mind, she can pay him a fixed wage instead, or fire him, or whatever. Walrasiad (talk) 13:40, 5 July 2012 (UTC)

Thanks for responding. I think that you are assuming grandma owns the profit, but why not assume the grandson owns the profits and is giving grandma a %. Otherwise, the argument for why grandma is the capitalist is tautological; that is, grandma owns the profit therefore she's the capitalist and vice versa. Why do you assume grandma owns the profit, when the legal contract does not make it so?

The grandma owns the capital, that's why she gets the profits. The grandson doesn't own the capital. She can fire him, he can't fire her. His claims on the profits are nil - only by the discretion of what grandma agreed to give him. If he doesn't like it, he can leave. If she doesn't like, she can leave too - but she'll be taking the company with her. Walrasiad (talk) 15:39, 5 July 2012 (UTC)

But the grandson could say to grandma, who is not able to operate the machine, if you don't want to give me 60% of the profit for my work, take your bread making machine elsewhere. The grandson will not work for a wage and will not work for less than 60%. Grandma can take it or leave it. Grandma cannot find a better deal on labor, but the grandson can get a better deal on the % of profit. The grandson can also always return the machine to grandma, essentially firing grandma for a better machine. This situation is possible, making the grandson owner of the profit. Where am I wrong?19:24, 5 July 2012 (UTC)Sigiheri (talk)

Um..."firing" the capitalist is better known as "quitting your job". In capitalist systems, the firm - grandma's machine - is still in grandma's hands. All that has happened is that the grandson is now unemployed. He won't be making any profit Walrasiad (talk) 22:56, 5 July 2012 (UTC)

The grandson is using grandma's machine and paying grandma part of the profit and keeping the rest. Grandma can quit the business by taking her machine, but the grandson will only find another machine from another capitalist. Grandma will have to take her old machine home as no labor can be found to work it. If the grandson quits the machine, the grandson can still find employment, but the machine cannot. This scenario is possible. Think about NASCAR. Grandma has a car, but there are many cars. There are only a few good drivers.08:50, 6 July 2012 (UTC)Sigiheri (talk) 08:50, 6 July 2012 (UTC)
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