h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

>>what do we call pre-industrial capitalists in that case? Merchants?

Possibly. They were certainly the precursor of (what Marx called) the bourgeoisie.


>> I define capitalism as the "creation" of wealth via profit by individuals or corporate bodies.

nnn...not quite. The *creators* of wealth are workers. The *accumulators* of wealth are Capitalists. Surely?

>nnn...not quite. The *creators* of wealth are workers. The *accumulators* of wealth are Capitalists. Surely?

I'm talking about the entire system rather than the individuals in it. For example, if I say "a capitalist system produces wealth" that could mean a bloke who grows his own veg and flogs it or it could be a corporation of 1000 people. There are varients on this system such as employee-owned (or, I suppose, "stakeholder") companies, "publically" (ie state) owned companies, traditional 19th-century style companies with an owner and a workforce where the capital belongs to the owner who then uses it to pay the workforce etc etc; each of these varients brings a different relationship between the owner(s) of the company and their workforce. For example, in the traditional set-up the workforce's interest in the capital doesn't extend beyond that there's enough of it to keep paying their wages whilst in the "stakeholder" system each employee owns a small part of the company via shares and so they have an interest in the company well beyond the payment of wages.

<> Ed

If that's the case, why did it take entrepreneurs and capitalists to generate the wealth then? Sounds like rubbish to me. I think Marx's theory of value is basically wrong. If their 'surplus value' is getting stolen, what does the capitalist lose out on in getting them work in the first place? I don't think a single non-Marxist would entertain it as more than a historical curiousity.


<> Zagreb

But what would the system include?

To repeat - <>

Or maybe, which things could you take away and still have a capitalist system?

Zargreb said: -

"That's baloney anyway, what about state-owned enterprises? Capitalism is a system, what the owner of the means of wealth-creation calls themselves isn't really all that relevant. If a company creates wealth and is owned by a conglomerate later falls into government hands it doesn't stop generating capital."

In a Capitalist system the State occupies a special position but is not prevented from behaving as a Capitalist owner of the means of production. Where industries are nationalised the wealth created can be channelled into other state functions and mitigate taxation (in theory). The State can and does also step in to provide where Capital will not do so because there is no profit to be had (think lighthouses).

The bloke who grows more veg than he can eat and sells the surplus is not really a capitalist but an example of what came before where the labourer provided (owned his own labour) for himself and paid taxes to the feudal land owner.

In a Capitalist system the labourer owns his own labour and sells it in the market for the best price he can get. This is generally for less than it is worth unless his skill is rare. If you are the only person in town that can make spinning widgets you can dictate your price. If you are one of 300 with a shovel you are going to be poor.

The John Lewis Partnership is an example of a worker/shareholder co-operative. It is still a capitalist company though.

t.

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But how d'you decide what labour *is* worth? I'd say the capitalist idea is that the market decides (and that anything else is a moral position which isn't justified by the economics of it all). Obviously, the actual figure would vary according to whether unions or businesses were strong (say the 1960/70s vs now/1930s), but the principle is the same.

That's just it pedro, the market sets the price for labour but consistently undervalues it in order to extract surplus value (profit) from it. The labour process is the great unknown for capitalism and the one that has the most immediate effect on costs and profit.

Capital knows the value of everything else that goes into the production process and therefore the non-labour costs of production. It also knows the market value of the product and can calculate the cost of labour and the profit margin. If the cost of materials goes up then the price of the product should follow. If society does not accept the higher value of the product then the only solution is to cut costs by either finding cheaper inputs or cutting wages or staff.

t.

<>

Ok, but how do you work out what the proper value actually is? If someone gets paid £10 an hour, is he not exploited at £12? Is he actually exploiting his boss at £15?

I suppose my point is that it's a some kind of moral judgement rather than an economic one (which may be the point?).


<>

And, sometimes, even the evil capitalists take a cut in profits.

Me:
<> Ed
pedro:
>>If that's the case, why did it take entrepreneurs and capitalists to generate the wealth then? Sounds like rubbish to me. I think Marx's theory of value is basically wrong. If their 'surplus value' is getting stolen, what does the capitalist lose out on in getting them work in the first place? I don't think a single non-Marxist would entertain it as more than a historical curiousity.

Yeah - but you know me. I was being provocative. Not *entirely* rubbish, I suggest. Marx was right to offer the inversion that the workers are the engines of wealth. It's looking at the same process from a different perspective. The reality is that it's the productive relationship between workers and Capitalsts that, collectively, generates wealth. (undeniably, surely?) But the distribution of wealth is skewed.

Yes, Marx (or certainly Proudhon) would think of the surplus value of being stolen. That's open to debate. 'Stolen' is perhaps a little emotive for an impersonal, competitive market force. I guess the debate is over the extent to which we believe that pay should be left to the market or whether we think there is a socially just distribution of wealth. (Or, as you pointed out recently, as socially useful one).

I do like this debate, though. As I;ve said before, pedro - you give good thread.

>>I suppose my point is that it's a some kind of moral judgement rather than an economic one (which may be the point?).

That's what I meant by my 'social justice' thing.

<>



<< It's looking at the same process from a different perspective. The reality is that it's the productive relationship between workers and Capitalsts that, collectively, generates wealth. (undeniably, surely?) >>

Yep.

<>

And you know that how? This seems to me to be the central flaw in Marx's theory. How do you work out what's 'fair', without having some pre-conceived moral framework? Economists (since the marginal revolution of the 1870s) have tried to explain it in terms of market forces, which are completely impersonal and amoral/objective.

<>

Meh. See above. Any other social thinker would have been thanked for his contribution and otherwise forgotten by now. We've moved on, dude.


<>

Which is a debate totally defined within capitalism..

Sorry, I realise i ignored a fair bit of what you were saying, but Marxists are just secular fundies*. And you always seem to insist one guy out of millions has the whole truth.








*

Me:
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pedro:
And you know that how? This seems to me to be the central flaw in Marx's theory.

Nunno. Ricardo. Maybe rather than skewed I should have said 'flows in a particular direction'.


>>Sorry, I realise i ignored a fair bit of what you were saying, but Marxists are just secular fundies

Well, yes. But I'm not *that* kind of Marxist. As I'm sure you know. 'Das Kapital' should not be treated like the Qur'an. Marx the philosopher, not Marx the prophet. If you can get over Lenin etc...actually, there's an intersting worldview in there.

(And anyway - mostly it's a pose. Pour épater la bourgeoisie. )

I rather liked Booker T's cover of 'Hey Ya' on Jools.

Booker T rocked, and it's not over yet.

<<Me:
<>
pedro:
And you know that how? This seems to me to be the central flaw in Marx's theory.

Nunno. Ricardo. Maybe rather than skewed I should have said 'flows in a particular direction'>>

But how much does the (evil) capitalist have to take to turn a fair wage into exploitation? I don't think Marx (or Ricarod, or anyone eles) has an answer to this.

I don't know if it's a question of management (ie within a capitalist framework) or a question of values (ie a question of fairness). But I'm not sure anyone else does either..

>>I don't know if it's a question of management (ie within a capitalist framework)

Well possibly it is. I'll happily accept a pragmatic answer - just so long as it delivers a system that promotes overall human happiness. Are the economically successful yet socially utopian Scandiwegian economies Capitalist? Undoubtedly! Although the Marxist Hobsbawm regards them as a Third Way between Free Markets and Soviet-style planned ecomomies.

(Gawd! I'm in my over-praising Sweden mode again. Just because it looks like I'm working there in a couple of weeks again. And my views are bound to be somewhat coloured by the fact that the Glasgow-Copenhagen-Sweden flights allow ample time for a side-trip to Christiania. )

imho anyone who looks to Marx for *solutions* is an idiot. He was a philosopher. An explainer. As regards Communism as the ideal...well, he was a utopian from the German Romantic tradition.

>>But how much does the (evil) capitalist

See...this word 'evil'. I fully accept that from the capitalists' point of view...they *have* to exploit labort to put dinner on the table. Nothing personal. OK...so they end up with *big* dinners - but the alternative is going bust and nobody - they or the workers - having *any* dinner. (This is bog standard Marxism-Leninism, btw: Critique of the structures rather than of the personalities. Capitalism cannot be reformed by making Capitalists nice.).

But the questions are:
a) Can any overall political control be exerted so that *everyone* gets a decent dinner?
b) Are there alternative systems to Capitalism that would allow wealth generation and technological progress?

I think you've missed the key point about your alternative systems. The advantage of capitalism is that it it adapts to changing conditions. It does this through competition.

Building a successful planned economy once is not enough - it needs to be constantly redesigned to keep up. There's no way any coordinated planning body can keep track of all the inventors and entrepreneurs out there, so your economy really needs to somehow piggyback upon those people to keep reinventing itself.

So you've either got to think up some rules for your economy which really are timeless, or you've got to start with capitalism and then tweak the underlying assumptions about how people do business here and there to get closer to the effect you want.

<> Ed

But given that wealth generation is a combination of labour and capital, how do you work out the difference between exploitation and a fair wage?


But the questions are:
a) Can any overall political control be exerted so that *everyone* gets a decent dinner?

I'd say yeah. Seems like Sweden et al are pretty much on the right path.

b) Are there alternative systems to Capitalism that would allow wealth generation and technological progress?

Dunno. Is there any need for one?

Well - that's kinda what I was getting at. Unless we have a sound alternative for a wealth generating, technological progress promoting economic system, then maybe our focus should be on ameliorating the negative social impacts of unbridled Capitalism.

(I told you I wasn't *that* kind of Marxist. )

Bouncy:

Oh, I'm far from advocating a centrally-planned economy. Indeed... economies are far too complex and dynamic for that. *On the other hand*...it does seem, does it not, that we need to give *some* centralised attention to the regulation of society (which amounts to the regulation of economy). Countries in which things like policing, health and welfare are left to the market do not appear to do awfully well. To say little of education on which technological progress and therefore economic growth depend.


Where did we get to on Capitalism and the Industrial Revolution, btw? Did I manage to make a case that they were, indeed, co-dependent?

>>But given that wealth generation is a combination of labour and capital, how do you work out the difference between exploitation and a fair wage

for now ()...but I guess it's something to do with the accumulation of *excessive* wealth which is not ploughed back into overall wealth generation.