Towards civilising capitalism

As I noted back in 2014, Immanuel Wallerstein, the great sociologist of capitalism in the late 20th century, has been writing about the instability of the ‘world system’ (a term he coined) for over 40 years. He believes that the ‘world system’ of capitalism has been in decline since about 1968, so that we are now in a transition phase. The new system will not necessarily be better for ordinary people. In an intriguing piece from May 2014 – “The center isn’t holding very well” – he says:

    As our existing historical system is in the process of dying, there is a fierce struggle over what kind of new historical system will succeed it. Soon, we may indeed no longer live in a capitalist system, but we could come to live in an even worse system – a “rough beast” seeking to be born? To be sure, this is only one possible collective choice. The alternative choice is a relatively democratic, relatively egalitarian system, also seeking to be born. Which one we shall see at the end of the struggle is up to us, bottom-up.

He thinks the low-level followers are manipulating the elites, rather than the other way around. This may be true in so far as the elites are embracing ‘populism’.

This article tells us Why Amartya Sen remains the century’s great critic of capitalism. It says human beings:

    need more than material things to prosper. Calculating power is only a small part of what makes us who we are. Moral and spiritual relationships are first-order concerns. Material fixes such as a universal basic income will make no difference to societies in which the basic relationships are felt to be unjust.

Alternatively:

    there is the material critique of capitalism. The economists who lead discussions of inequality now are its leading exponents. Homo economicus is the right starting point for social thought.

So they say. Material plenty is a basic requirement on which to build appropriate distribution to resolve inequality.

Sen, they say, embraces both critiques in a unified and seamless way. When egregious inequality becomes a central issue:

    piecemeal modifications to the machinery of production and distribution will not solve it. The relationships between different members of the economy must be put right. Only then will there be enough to go around. (Emphasis added)

While we need to work for reform at individual, local, and intermediate levels, it seems to me that real change must be negotiated on the national and international level

An article What socialism really is—and what it isn’t identifies five forms of political economy that have been conceptualised and to some extent tried:

  • Socialism
  • Democratic socialism
  • Social democracy
  • National socialism
  • Communism

Forget national socialism and communism as such. Forget also a sixth form – unconstrained laissez-faire or free market capitalism

Socialism:

    is an economic system where the means of production are socially owned. The “means of production” being the raw materials, factories, and machines used to make goods.

Democratic socialism is a system where the means of production are socially owned, but incorporates large amounts of democratic management, for example in workers’ cooperatives.

Social democracy:

    is a system that leaves the means of production in private hands but assures that regulations, some public control of the economy, and extensive entitlements exist to keep everybody at a decent standard of living. This is often identified with the Nordic model

That links to a large document I haven’t read.

I don’t see the private ownership of property as a basic human right, but am happy to live in a society with private ownership of property protected by law. Moreover, it seems in practical terms to provide energy and creativity in the economic sphere that is beneficial to society at large.

Within the ‘social democracy’ model co-operatives also sit comfortably as do government-owned trading entities. Management of corporations could also be democratised, for example by mandating worker representation on management boards, or arrangements similar to the works councils and supervisory boards of the German industrial relations system, where workers and customers join a supervisory board that appoints and supervises a management board and senior executives.

In practice the system in Germany operates within a complex industrial relations system. This thorough review paper by Michael Oberfichtner and Claus Schnabe shows a system under strain and one might say decay, especially in small firms, privately-owned firms and multinationals.

Much of this comes down to the role of the corporation, an unwillingness on the part major powers such as the USA to reign in their multinationals, and the gig economy which increasingly applies also in universities and public services. I know Commonwealth employees who have to reapply for their jobs every year. Teaching in universities is almost entirely done via the gig economy. In Australia I like to say It’s all John Howard’s fault.

Internationally the most appropriate forum to address such matters is probably the G20. Yet Phillip Coorey tells us:

    In a year of political upheaval, domestic and international, there were fewer more troubling images than that at the G20 in Argentina when two tyrants, Russia’s Vladimir Putin and Saudi Crown Prince Mohammed bin Salman, openly smiled, laughed and greeted each other with a high five.

Then:

    The mocking defiance in Buenos Aires in early December demonstrated that you could murder journalists and critics, invade your neighbour, shoot down a civilian airliner, back a regime that used chemical weapons, or poison your enemies, perceived or otherwise, on foreign soil – without any real consequence.
Since day one of Donald Trump’s presidency, it has been openly acknowledged that the fellow is quite nuts and to focus on what he does rather than what he says. Andrew Harnik
    Trump’s biggest criticism of the murder of Saudi/American journalist Jamal Khashoggi was that the cover-up was botched. Putin treats Trump like a hapless fool.

He says:

    For years at international gatherings, whether it was foreign ministers meeting on the sidelines of the UN or at some other multilateral forum to discuss a matter of great import, it was always the case that everyone in the room would wait for the US to take a position and then line up relative to that.

    Now, everyone just stands around while China, Russia and others do as they please.

Russia, of course, is run by a ruthless kleptocrat, said to be the richest man in the world at $200 billion, assisted by the KGB and a string of oligarchs. The ABC RN series Russia, if you’re listening is chilling.

Coorey links to Leonid Bershidsky’s Why 2018 was the year of the woeful world leader:

    2018 saw a staggering number of countries woefully misruled by the worst crop of world leaders in recent memory.

He goes through lots of them finding little joy anywhere. That is unlikely to change in the next few years.

Here in Oz this turns the interest to Chapter 5 of the ALP draft National Platform Decent jobs with fair pay and conditions.

It’s not a revolution and should not scare the horses. Labor is looking for a balance between the needs of employers and employees and cracking down on some of the rorts.

Did you hear the one about Hungry Jack’s offering taxpayer-funded internships over Christmas, where the intern can earn as little as $4 per hour? The Chaser reckons it is invaluable experience to be f**ked over by a large corporation as preparation for what to expect in the big wide world.

Finally, I wanted to introduce an excellent session on the value of co-operatives.

Peter Martin outlines what they are and how they operate. He says the old industrial revolution turned out well, as it happened, but history may have been different. There is no reason why the new industrial revolution will turn out well – it may lead to a new serfdom. Co-operatives in Australia are practically invisible at a government level. There are no policies to encourage or support them.

Lieza Dessein, Community & Project Manager Smart Co-operative (SMart, société mutuelle pour artistes), Belgium gives a stunning case history of a co-operative that was originally designed to give stability to performers working in the entertainment industry. They have now broadened their scope and spread to nine countries.

They look after all the financial administration of members. The employer pays the cooperative rather than the artist/performer or other gig worker.

The worker starts getting a salary on the next co-operative pay day whether the client has started paying or not. Of course if the hirer does not pay, they are pursued legally by the co-operative. Fair pay, social security, insurance cover, super contributions etc are all taken care of.

Then Wally Newman, Chair CBH Group, the biggest co-operative in Australia, joined the others at question time. He had undertaken an overseas tour looking at co-operatives. The biggest surprise was the US where there were masses of them, and well-established in government thinking. This had been achieved by lobbying, so when he returned they immediately appointed a couple of lobbyist in Canberra. The group is based on WA grain farmers and has a turnover of $5 billion.

I think there are opportunities to initiate change at all levels, and new ways for workers to unite are emerging. There is hope, rather than just waiting for Sally McManus to become prime minister.

65 thoughts on “Towards civilising capitalism”

  1. A few, sometimes conflicting statements:
    The economy should be made for people, not people for the economy.
    Trade should be about win-win, not win-lose or another form of warfare.
    The economy should be about facilitation. Helping those who want a good or service to obtain that good or service.
    It always struck me as unfair that someone like me who had a generally satisfying job got paid a lot more that many people who had far less satisfying jobs, often in less comfortable environments.
    Throughout my working life I would have preferred to work fewer hours for a reduced annual income. (Would have been a bargain since I did my most profitable thinking while bushwalking, canoeing etc.)
    There is no moral reason why the supplier of capital has much more power than the workers.
    The evidence suggests that a mix of government and privately owned capacity works best. Problem at the moment is that private/government owned is being decided by ideology.
    Some limited resources are being wasted on economic activities that add little to the quality of human life.

  2. Great thread, Brian.

    What I will say is that it is important to understand the nature of the problem. The sixties saw the rise of the plastics injection moulding machines which were the new generation of fully automatic machines that deliver really diverse complete new products at low cost, and that was to everyone’s advantage. But it was those astute business people who understood the advantage who really set the pace for what was to come. Plastics moulding is a very interesting commercial model which highlights the fast track to income and wealth disparity.

    The basic plastics moulding cycle is 20 seconds, 3 shots per minute and the product can be anything. Lets use a plastic cup as an example. The moulding process takes raw plastic pellets which might cost $2 per kg and is roughly the same density as water with a melting point at 170C. The moulding machine loads the pellets via a screw mechanism, heats the pellets while advancing them through the machine then injects the molten plastic into a cooled two part metal block which has a machined cavity in it the shape of the cup. The plastic cools down (cures) in the metal block which opens to release the newly moulded part. The block can have multiple cavities up to the injection capacity of the machine. Lets say that this tool has 4 cavities. So the mathematics of this becomes 4 times 70 grams = 280 divided into $2 cost of plastic 55 cents and the electricity is 10 cents.

    So if the moulder charges 25 cents per cup plus material the price per cup is 90 cents and that cup wil retail for $3.50.

    The revenue calculation for the moulding machine owner for one 6 day week becomes 4320 shots per 24 hour day with a net revenue of $1 per shot giving a revenue for the week of $25920. From that he has to pay wages, lets take the minimum wage of $19 per hour becomes $456 per day or $2736 per week to give the machine owner a revenue for the week of $23,184 to manufacture some 103,680 cups from which Woolworks will gross $363,000 once those cups are sold in their 700 stores nation wide.

    The numbers to take notice of here are the $2736 income for 2 staff working a 60 hour week each for a weekly income of $1368 each. If the moulding machine operator owned two machines he would still only employ 1 person per 12 hour shift.

    Worker $2,736 Capitalist 1 : $23,184 Capitalist 2: $259,320

    Do you see and understand the nature of the multiplication power of commanding capital equipment?

    You say that the machine owner invested in the machine, and a the beginning of the plastic revolution that invest ment was largish, but today you can buy a machine with that capacity for as little a $17,000 and it will take up just 1 car space in your garage. But even if you bought a good quality German machine at say $250,000 the cost of owning that machine and paying it off over a 10 year period $2,490 per month or just ($575 per week) 21% of the labour cost to run it.

    The two numbers that you will heat the LNP arguing are causing business closures due to their astronomically high level is the Labour cost: a ratio of 10:1 against net revenue and the Electricity cost: $6900 for the production run and 1:9 of the gross revenue ie a significant but marginal cost (the moulder incurrs no cost if he does not run his machine conversely earns way more than the cost if he does.)

    But in the 70’s the first personal computer turned up and began to reshape the capabilities of all production machinery especially the machinery that is required to manufacture tools for injection moulding machines.

    Conservatives never want the public to understand the nature of production multipliers. I’ve used the example of 1 moulding machine, any decent small moulding business quickly expands out to 10 working machines 7 of which will be running at any one time. The limit is in the capacity of one business person to communicate wtih the number of customers to keep his machines busy.

    Prior to the 50’s a workshop would have one person per machine operating one cutting point at his speed and ability to personally control it whether it was a lathe or a drill or a saw or a pencil, and the ratio of capital return was miniscule relative to today. The issue for today as the Club of Rome explored 20 years ago was the distribution of productive returns of capital plant and intellectual property.

    I’ve spelt this out here so that you have some means to understand the degree and nature of the problem.

  3. Bilb: When I was a child there were tin mugs and ceramic cups and mugs. Both were expected to last forever.
    Now we have disposable plastic cups that are expected to last for one use only before being added to the garbage.
    Raises a few questions:
    How many man-hrs go into providing my annual cup needs compared to the good old days?
    How do emissions and loss of unsustainable resources compare for my annual cup needs now and the good old days?
    An underlying question is who made the cup decisions that were bad for the planet?
    Customer?
    Shop owner?
    Advertiser?
    Cup maker?
    All of the above?
    Part of the move to improve our economic systems is about making decisions that are not simply driven by what our pocket feels.

  4. JohnD, I think you are missing the forest for the leaves. This thread is not about the type of products, its about the distribution of income. My comment is to demonstrate how that huge disparity in wealth is created, in the manufacturing industry at least.

    Take note of the factors. Production income…$2736, Generates Retail Income of……$363,000. This is why WallMart is so rich and American workers are destitute…..and why the voted for a psychopath as their President. Fools, they thought he cared about them. Go figure…

    Perhaps I should have used a solar power socket panel as the product example.

    As to who makes the product choices? well the consumer does by one theme or the retail chain buyer by another…at least pre internet purchasing.

    The cup in the example was more of the type your wife would buy for the picnic basket or camping backpack.

    To your last sentence, I think the kids are onto this one, at least in spirit. My 20 yo has made me carry around a keeper cup for when I buy a coffee I don’t generate more waste.

  5. Take note of the factors. Production income…$2736, Generates Retail Income of……$363,000.

    Based on your arbitrary sales price with no competition, perhaps you produce one and take market share with a lower RRP.
    Capitalism is the most democratic economic system yet devised, what alternative exist ?
    Co-Ops operate under Capitalism very well until the state decides to regulate them into oblivion at the behest of a ” State/Mate ” lobbyist or 10.

    Name a better economic system based on the past, present or future, be brave enough to nail your colour to the mast mate.

    John

    An underlying question is who made the cup decisions that were bad for the planet?

    Under Capitalism it’s every one of us, if enough vote at the shop for it, it wins, we don’t, it goes away.
    The huge and growing Black Market only exists because anti-Capitalism is growing.

    ( giving CC one last chance for a reasoned discussion that used to be possible

  6. Jumpy, I haven’t proposed or argued any system. I’ve demonstrated how automation creates wealth rapidly the example is totaly realistic except that my guess of resin price was a little high. It makes you wonder why you’re not an injection moulder doesn’t it.

    The answer is knowledge.

    You completely miss the point of Brian’s post. Its not about whether capitalism on its own is a fair system, and the answer is a resounding no, on its own. My example shows just how great the inequity is. One aspect that does not come up in discussions (but it does show up in sme movies) is that where capitalism is fully deployed it leads to massive overproduction and horrific under deployment of capital. The free market cannot self regulate efficiently and this leads to a disasterous level of over exploitation and waste in a resource constrained world. Classic examples are ocean over fishing, animals driven to extinction in many lands, the complete stripping of vegetation in countries such as Haiti for charcoal and soon the Philipines.

    When it comes to markets and business though, Jumpy, the basic tenent for business is that a good business person can be successful regardless of the environment. business does not require a perfect market or a perfect government or a perfect system. As long as every one is equally disadvantaged business works.

    Your problem is that you haven’t figured out that the Libertarian platform is really making the case for maximum expliotation of the most by the least ,ie Pyramidal economic structures. More or less the antithisus of what is reqired for civilisation to survive.

  7. BilB

    One aspect that does not come up in discussions (but it does show up in sme movies) is that where capitalism is fully deployed it leads to massive overproduction and horrific under deployment of capital.

    Where has Capitalism been fully deployed ?
    Your problem may be perhaps you have the wrong perception of what a Libertarian platform is, and Capitalism for that matter.

    This thread looks to me about how much socialism that Capitalism can bear before it goes to shit again.

  8. Bilb: I understand what you are talking about. When you have too much of a product that does not vary in quality between suppliers prices are going to be pushed down to the bare margin if that and the price cutting may be pushed down the chain t the point where workers rejigged as contractors get less than award pay. In the past we have had awards that really did work, milk quotas and other systems that protected people from the tooth and claw of competition.
    But I also understand that the whole system depends on convincing people that they really need stuff that will make no difference to their lives, stuff that may damage the world, communities and individuals as a result of its production, transport and use. Solving these types of problems is the challenge of economic reform.

  9. BilB, the example I used to use was Nike, but now I’ve forgotten some of the figures.

    What I remember is that they used to pay Michael Jordan about $18 million a year to advertise the product, which was more than the entire manufacturing workforce was paid, and the CEO got $31 million pa.

    Jumpy, I don’t know anywhere that is seriously trying socialism, that is the public ownership of the means of production. Certainly there is no significant political party in Australia that espouses socialism.

    Your bifurcation of the field into socialism vs ?? is actually a red herring.

    Capitalism was pretty much unconstrained at the beginning of the industrial revolution.

    I think we achieved a kind of happy balance post WW2 with the welfare state in advanced economies.

    Wallerstien’s view, and in this I think he’s right, is that from about 1968-70 capitalists have tried by various means to shift the balance in their favour, which will again lead to a form of barbarism.

    Policies like Work Choices, the gig economy and the glorification of privatisation and competition have been problematic.

    In Oz, the ALP effectively abandoned the ‘socialist objective’ from about the time of Whitlam. They will, I think, in the next little while officially lay it to rest. Which means that they are free to espouse ‘social democracy’. I would hope that they are thinking carefully about what we need to do to constrain capitalism so that it works in the public interest.

    Gwynne Dyer today said countries tend to go to shit socially when the top 20% earn more than five times as much as the bottom 20%. He said in the US it is now eight times.

    At that level you lose social cohesion and a sense of trust and fairness.

    I believe the Gini coefficient of 33 is held to be a tipping point. The US (old data) is 45.

  10. Brian,

    The gini coefficient seems to say the higher the degree of Liberty (read Lidertarianism) the higher the gini coefficient, and that is entirely what I would have predicted.

    But Jersey with a gini of .3 is bit of a mind blow. That is where we have Aurora Leigh registered. I am going to have to do a full study of that.

  11. The gini coefficient seems to say the higher the degree of Liberty (read Lidertarianism) the higher the gini coefficient

    Really, you see that !?
    That’s amazing.
    Iran, Saudi, China and the US are all basically the same Gini coefficient, around 45.

  12. Jumpy , there is that highly selective reality filter of yours kicking in. I was looking at the countries with small government, user pays education and health care, no social net and maximum liberty. You know the ones, the African nations.

  13. Jumpy Liberty is the ability to do as one pleases. Libertarians apply the rider …”do as one pleases as long as it does not impact on others” …..which is a near impossibility unless one is the only person in an area.

  14. BilB

    It’s not the main point here, but you castigated American voters for supporting a moron as President.

    I still think the available choices in 2016 were terrible. Hillary was actively loathed by huge swathes of voters, Mr Trump should have been laughed out of public life after The Grope Tape emerged; the Green candidate was never considered a serious chance.

    Mr Trump was perhaps the “least worst”?? (Not my circus, not my monkeys); sufficient numbers of voters seemed to believe so.

    The voters faced The Evil of Two Lessers.

    How do they get better candidates (for all Parties) in future???

    ***
    Good to see you back here, Mr J.

  15. sufficient numbers of voters seemed to believe so.

    Correction Ambigulous, it was the vagaries of the Electoral College that gave them Individual 1.
    Most voters (by a margin of around 3 million) thought Hillary was the least worst alternative

  16. Well, that’s an interesting point, zoot.

    Given that they have
    1. non-compulsory voting
    2. an Electoral College procedure

    and several other departures from standard Australian electoral practices, I’d say I prefer the Federal voting system here.

    They might respond “Not my circus, not my kangaroos!”

    But since both 1. and 2. are long established and widely known in the US (by voters and Parties), I’d be inclined to call them both features of that system rather than “vagaries”.

    Personally, I couldn’t have voted for either Rep or Dem Presidential nominee. Not even with nose held tightly.

    Their election system, their result. They have to deal with it, and they are: week by week, Congressional vote by vote, mid-term election, special counsel, free press, …..

    I’m looking forward to any new proposed laws reaching Congress, to reform and improve their voting system. That would be a Democrat priority, si?

    Lest my ramblings suggest I’d rather inspect the entrails of 2016….. no; the future of capitalism, economics and industry are more germane.

  17. The Electoral College thing similar to our Senate in that it reduces the dominance of large States over smaller States.
    Both are essentially un-democratic, for better or worse, I’m not sure.

    BilB, from my link,

    “the ability for the individual to live their lives as they choose, as long as they do not infringe on the rights of others to do the same.”

    That can be done regardless of population density in Ones immediate vicinity.
    If Australia ever does form and incorporate a Bill of Rights in our Constitution that should be No. 1.

    ( note, a Bill of Right is primarily to restrict Governmental authoritarianism, that’s a good thing in my book )

  18. Mr A,

    ….the future of capitalism, economics and industry are more germane.

    True, well said.

    Basically as I see it, Capitalism could be far more beneficial for everyone if corporate welfare was eliminated, all of it.

  19. And regardless of a Bill of Rights, Jumpy, there are already features in our polity inherited from Britain (developed after Magna Carta and many setbacks along the way), designed to protect the individual from arbitrary power,

    e.g. habeus corpus
    Presumption of innocence in a court
    Separation of powers
    Independence of judiciary
    Independence of police and prosecuting bodies

    Press freedom
    Professional privilege (doctor, lawyer**, etc.)
    Review of administrative decisions
    Senate as a House of Review

    Fixed terms for governments
    Independence of the AEC, including redrawing of boundaries of electorates
    “One vote one value” principle within a State; across the commonwealth

    Independence of the RBA

    And, of course, a banking system which at all times acts with integrity, diligence, and in the interests of depositors and borrowers.

    ** the forthcoming Royal Commission in Victoria concerning “informer 3838” will be very instructive. Will the Police, the Judiciary, the legal profession and the politicians come out of it smelling like roses?

    For Quincelanders: it is alleged that a barrister acting for various individuals during our so-called Gangland
    Wars
    was simultaneously informing on clients to police, and even “wearing a wire” to a meeting with a client.

    The High Court was unimpressed.

    ***

    Ummm, “ombudsmen” likely arose in Scandinavia before Britain.
    Other corrections, feel free.

  20. Sorry Mr A, in real life in Australia there is no presumption of innocence.
    We only just had a classic example of a bureaucratic computer generated presumptions of guilt with Centrelink payments, prove your innocence Mate.
    You can be accused, presumed guilty, found guilty and sentenced ( fines generally) by a huge number of “ public servants “, and more recently private traffic fine generators, and nary a Court involved.

  21. I meant in courtrooms, J.

    That Centrelink fiasco was a shocker.

    Brian’s blog pointed out many of its faults very early, partly, as I recall, because one of Brian’s clever sons pointed out certain statistical errors (errors of logic, really) in the calculations the Centrelink robots were relying on.

    Saw a strong article/critique late last year by a QC(?) whose friend was penalised in the robodebt dragnet. It was devastating. One day there should be a public inquiry into that b*stardry.

    Made worse by the fact that many of its targets were among the poorest, and least likely to have an advocate, in our community….

    BTW, J, you do support the “presumption of innocence” as a principle, si?

  22. Absolutely I support the presumption of innocence.

    Which incidentally is being eroded every day and not just by governments, the MSM and social media are as bad or worse, the #metoo thing being a recent prime example.

    But back to Capitalism, do you agree that Capitalism is the most democratic economic system yet devised ?

  23. Oh, well what is ?

    It’s ok, whatever you say you’ll be the first on CC to state a position and I respect that.

    We can discuss and compare, respectfully.

  24. Given Brian’s definitions in his post I would have thought either Democratic Socialism or Social Democracy would be more democratic than Capitalism

  25. Zoot, from a consumer point of view I don’t think so because they both limit choices ( candidates so to speak).
    One limits those that can run and the other limits the successful candidates ability to improve and deliver.
    Economically speaking of course.

    I don’t believe you’ve mentioned your preferred system yet, care to reveal ?

  26. It was the vagaries of the primary system that gave Trump the Republican candidacy, an essential step into being voted in as president. First you have to convince the party extremist that you are their person. Then you have to change your tune to convince the moderate center.

  27. I don’t believe you’ve mentioned your preferred system yet, care to reveal ?

    I think market economies are the best way to manage the exchange of goods and services with the proviso that natural monopolies must remain under the control of the people, and democracies are the best way of selecting who will regulate the markets (as well as give expression to the will of the people).
    Neither of these are in conflict with the principle that the people should own the means of production.

    Now it’s your turn. What characteristics of Capitalism lead you to describe it as democratic?

  28. Back on topic, the nature of government, corporation and private involvement is influenced by the nature of the business.
    For example, it would be ridiculous for governments or large companies to run coffee shops but highly desirable that governments to make sure that the shop meets safety and health requirements, ensures that the employees are treated fairly and pays appropriate taxes.
    On the other hand it makes sense for a government corporation to control power generation and distribution. This doesn’t necessarily mean that the corporation owns and runs all the all of the power generation equipment. It can make sense for private enterprise to own and/or operate many of the things that have to be done to have a working power system.
    The problem in recent years is that many decisions are made on the basis of a “private is best” ideology and a desire for governments to reduce debt by selling things off that they should have retained.

  29. Brian: You can speculate forever re why East German women under socialism had “better sex” than West German women. Maybe:
    East German Women (EGW’S
    Sex was one of the few joys available to EGW’s.
    The decline in the influence of the Catholic Church meant EGW’s were less inhibited.
    One could go on and on.

  30. Zoot,

    Now it’s your turn. What characteristics of Capitalism lead you to describe it as democratic?

    Thank you for asking.
    Under Capitalism every monitory exchange there are a multitude of candidates to freely choose from base on ones own personal values, there is no coercion.
    Or simply choose none of the candidates if none are available that one sees value in and save that vote.

    1) As a customer I have a free choice to vote any way that suits me and mine.

    2) As an employee I had a choice to vote for the employer that offered the most value to me and mine.

    3) As an employee I have a vote for employees and clients that offer value for me and mine.

    At any point I could do some research, weigh up the pros and cons, and change my vote accordingly.
    This has no term limits,

    Under DS and SD economic models there is far less choice in all those areas. Except maybe the non-voting in 2 and 3 is encouraged.

    Now I realise that the better off get more votes but they generally vote in different elections that the less well off in 1 and 2.

    Happy to convers on anything you disagree or anything you agree with in that.

  31. Under Capitalism every monitory exchange there are a multitude of candidates to freely choose from

    But Capitalism has an inbuilt tendency toward monopolies (successful businesses either drive their competitors out of business or take them over, the reason the USA instituted its anti-trust regulations at the end of C19 and beginning of C20) making Capitalism fundamentally undemocratic by this measure.
    FWIW, I don’t think a multitude of choices is actually a defining characteristic of democracy. In my opinion democracy is simply all of us having an equal say in the decisions that are made on our behalf (think Athens pre common era).
    Democracy is unavoidably collectivist.

  32. Good points zoot but if one looks back through history there were very few Capialistic monopolies, could you name a few please ?
    There we’re plenty of Socialist monopolies, I can list a few if you’d like.

    There are plenty of Companies that had massive market share but that was generally though technological, process or operational advances they developed or Government protections, or a combination of some of those.

    In any event, they had their time and newer entities join the free market to replace them all the time if they’re not discouraged by Government.
    Innovate or fade.
    And that’s hugely beneficial for consumers ( that’s everyone )

    Just look at the dominant retail Companies in the US over the last 100 years.

  33. Good points zoot but if one looks back through history there were very few Capialistic monopolies, could you name a few please ?
    There we’re plenty of Socialist monopolies, I can list a few if you’d like.

    The topic we are debating is that democracy is the most democratic economic system yet devised.
    Your argument was that capitalism was democratic because it gave consumers choice. My counter argument is that choice is not a defining characteristic of democracy (additional data point: the T-model Ford came in any color as long as it was black).
    Whether cartels and monopolies are more prevalent under capitalism or socialism has nothing to do with the topic under discussion (keywords capitalism and democracy).

  34. Is capitalism democratic? Only when it fails.

    Capitalists by definition aim to produce goods that are unique and they are the only producers in their area of influence to maximise their return on their investment of capital and time.

    However when the capitalist’s advantage fails and they face competition, then a sequence of protection strategies come into play.

    The head strategy is a patent or to operate in an area devoid of production capacity.

    Tiered strategies are design change, higher volume production, leading edge quality, improved functionality, preferential marketing, and when all else fails buy up the competition.

    Optimal capitalism and its consequences can be studied from the Bolivian Water Crisis.

  35. Zoot,
    Oh, the cartel and collusion stuff is definitely un-capitalistic and corrupts democratic economies, as does corporate bribery for legislation.

    Look, I’m no anarchist like the confused idiot antifart mob with authoritarian hammers and sickles all over me. There should be a stipend willingly payed by private enterprises to Government to stop and punish such un-capitalistic acts.

    The were cars of many colours back then but apparently black was the most affordable paint colour, folk made a value judgment and Ford Capitalised for a short time. Ford never monopolised anything and any market share dominance faded long ago.

    I’m interested in why you think free choice is not the defining feature of democracy, what do you think is ?

  36. I’m interested in why you think free choice is not the defining feature of democracy, what do you think is ?

    Didn’t you see this?

    In my opinion democracy is simply all of us having an equal say in the decisions that are made on our behalf (think Athens pre common era).
    Democracy is unavoidably collectivist.

  37. Oh, sorry, I addressed the bit about Capitalism and monopolies which I’m still waiting for examples.
    Ford wasn’t one.

    That bit I sort of deemed not an economic point but if it were perhaps you may be suggesting there be plebiscites on price settings of everything or some such.

    We’re talking about Democratic economic systems right ?

    I’m trying to stay on track with this line of discussion, please let me know if I wonder off, I have a tendency to stray that I’m working on eliminating.

  38. We’re talking about Democratic economic systems right ?

    Not me.
    It’s you who’s talking about democratic economic systems and I’m arguing that such a thing doesn’t exist (but I can be convinced otherwise).
    Democracy’s etymology is “demos” = common people and “kratos” = rule.
    It’s a system of government and to my mind, it is meaningless when applied to an economic system. You might as well talk about purple economic systems.

  39. Well it looks like we missed engagement to the full extent by a large margin.
    Your first response to me on this thread, I thought, addressed my,

    “ But back to Capitalism, do you agree that Capitalism is the most democratic economic system yet devised ? “

    and you said,

    Given Brian’s definitions in his post I would have thought either Democratic Socialism or Social Democracy would be more democratic than Capitalism

    I missed that you missed the economic bit.
    Oh well, we can always try again tomorrow.
    Have a good night.

  40. My take on capitalists is that they like competition amongst their suppliers and customers but don’t like competition from others who are trying to break into their markets. The are also don’t like awards that stop them screwing their workers and particularly don’t like unions that provide some protection for the workers.

  41. My take on capitalists is that they like competition amongst their suppliers and customers but don’t like competition from others who are trying to break into their markets. The are also don’t like awards that stop them screwing their workers and particularly don’t like unions that provide some protection for the workers.

    I’m a Capitalist that never haggles with suppliers or customers, the price is the price.
    I don’t pay penalties because no one on double time does twice the work, the choice to work or not is theirs.
    Unions tend to protect the lazy folk at the expense of the more industrious in my experience.
    And I’ve assisted quite a few young up and comers in my field with the administration side of thing if I think they’re competent, genuine and honest in the Trades.

    I may be atypical but I got a leg up the same way.

    We Capitalists are humans not aliens.

  42. Jumpy, you might be a capitalist in spirit, but you are technically not a capitalist , unless you are building spec houses for yourself. Are you builbing spec houses? Hand tools are not considered “capital” in the true sense as they have little performance multiplication. Your cement mixer, your vehicle and you employment of others do qualify as capital, but at the basic end of the spectrum.

  43. Jumpy

    I agree with many of the points raised above by zoot and John.

    In the days of Whitlam and Hawke our economy was described as “mixed”, referring to private ownership of most enterprises, and State ownership of some large outfits: John instances power generation (with large equipment often imported from private companies overseas, some other equipment purchased in Australia from private manufacturers); even there inside a Publicly Owned Corporation the capital equipment was “mixed”.

    I agree with zoot that democratic control is the most likely way of gaining optimum outcomes for the majority: reducing the financial power of monopolies, duopolies; efforts towards health/safety/quality/fairness standards; and a free press to assist in exposing scams, profiteering, large-scale theft, corruption, etc.; regulation to reduce instances of such.

    None of that can ever be perfect.

    Some of the government actions are necessarily “reactive” as new circumstances arise [and many observers will say “too little, too late”].

    Examples include:
    * Anti-monopoly laws in USA after a period of economic gigantism

    * Efforts – how effective?? – to prevent tax evasion through off-shore transactions

    * Attempts to keep an eye on “transfer pricing” by multinational empires corporations

    * Laws to curb the “bottom of the harbour” asset-stripping shenanigans in Australia

    * Laws to curb “phoenixing” by dodgy construction firms, and protect the customers of same

    * Laws and amendments responding in 2019 to the report of the Banking Royal Commission – we shall see……

    Social democracies can foster the “animal spirits” of entrepreneurs and innovators, while protecting those others, that majority whose livelihood can rarely come from a radical invention or a wise investment of spare cash.

    Cheers

    “All of us are in the gutter, but some of us are looking at the stars” – Oscar Wilde

    “There is no such thing as society” – Margaret Thatcher

    Thank you, ma’am, for putting your view so concisely and starkly. It’s handy when a prominent figure steps away from obfuscation and dissembling, even if only for a few, brief seconds.

  44. Grateful thanks to Ambigulous for returning us to the theme of this discussion – civilising capitalism.

  45. Thanks Zoot/Ambi. I would prefer to talk about civilizing the economy since the problems we have at the moment are not just about the misdeeds of capitalism. Individuals, government and unions have all contributed to economy related problems from time to time.
    Wish list:
    Private and public companies see their primary objective as providing the goods and services that the country and its trading partners need, (Not adding shareholder value or growing senior staff enumeration packages.)
    Tax levels are high enough for governments to do the things they should be doing properly.
    Organizations and individuals pay the taxes they should be paying and the tax avoidance industry goes into rapid decline.
    Significant political donations should be recognized as corruption and severely restricted.
    The available work should be shared.
    Wages should be adjusted from time to time to ensure that the Australian wages: profit ratio stays above target.
    Min hourly wage:average wage ratio stays above target.
    Award and agreed wages should be the minimum paid, not something that gets paid if the employer feels like it. Ditto other conditions.
    Governments should ensure that private and public companies are conforming to requirements in areas such as safety, the environment, paying wages and taxes etc.
    Protections are in place to ensure that people and organizations with little bargaining power get protection from those with a lot of bargaining power.
    Failing to pay award wages etc. is stealing and the penalties should reflect this. (Stealing from a servant should be seen as a more serious crime than stealing by a servant.)
    Could add to this list with a bit more thinking and some of the items on the above list would need some sorting out of details.
    The Australian economy needs some protection from the effects of sudden changes in the world economy and exchange rates.

  46. How about we civilise Capitalism by forbidding Governments from gifting corporations money and preferential treatment over their competitors and getting rid of Government/Private entities .

    Purchasing goods and services is allowed through a proper tender process that’s fully available online.

    Cost overruns on anything must be no more than 5% of the winning tender.

    Use the money saved to enforce the laws that are already on the books rather than continually inventing more cockamamie bandaid laws that won’t be fully enforced.

  47. (Stealing from a servant should be seen as a more serious crime than stealing by a servant.)

    What ?
    I’m gunna have to have that one explained to me.

  48. Jumpy: Agree with what you say about subsidies and proper tendering processes. Also agree about private/government entities.
    At the moment, “stealing as a servant” gets a harsher sentence because it involves a breaking of trust, and, I suspect that the upper class wanted to be protected.
    There is no equivalent for stealing as an employer and we have seen quite a number of cases in the last year or so where employers underpaying, not making super payments etc. seems to be getting nothing more than a soft slap on the wrist.

  49. Both are equally bad in my opinion.
    Employers that dont pay Super, bankruptcy or not, should have that debt attached to them personally like tax debts.
    If that’s the current law, that I abide, by it put me and my Men at a 10% disadvantage straight up.
    Why the Super isn’t payed compulsorily every quarter is beyond me. I pay it automatically every week.
    Surely the ATO, Super collectors and licensing entities can link computers in this day and age.

    But I also think that if an employee is payed hourly then an hour they claim to have worked but didn’t is stealing too.
    Bludging at work is literally stealing too, forget the material shuff that’s free to them within reason.
    I don’t see a way to prosecute so they’re sacked straight up.
    If I’m taken to “ Fair Work “ for unfair dismissal one day ( touch wood that won’t happen) it’ll make an interesting case.
    I won’t spend a penny on lawyers.
    Any fine, I won’t pay it.

    Let’s be very careful will being lax on employee stealing, it can put all your workmates out of a job.

    That said, how would this wage adjustment tied to profit thing work ? If, business wise, I have a poor year can I cut hourly rates ?
    Sound like it throws supply and demand theory out the window.

  50. John

    I’d like to consider your list more carefully.

    By the way, does anyone think employees should be encouraged to have shares in the company they work for? Shares issued as part of wages (and could be refused by the employee if they wish); or shares purchased.

    Should a govt foster this practice?

    On corporations: one of the worst cases of theft I recall was by Mr Maxwell in London, who contrived to raid the pension funds of his (hundreds of) employees as his companies slipped down the gurgler [apologies for the financial jargon].

    He died under strange circunstances. Not sure if “his” people got their funds back.

    Jumpy, I agree the employees’ entitlements should be banked every pay day, not quarterly. It’s safer for everyone.

  51. Jumpy I think you can take a lead for your staff on that one (bad year reduce wages) from the corporate world where regardless of the business performance executives get their annual increases and their bonusses.

  52. Yes, until very recently, amongst a few Aussie Bank Executives.
    Now, what on earth can have induced them to depart from the standard practice you describe, BilB???

  53. Some CEOs are worth more I recon.
    Look at Alan Joyce, QUANTAS was on the verge of going down the poop shoot but he sorted it miraculously.

    As for bank CEOs pay, perhaps former ALP Premier Anna Bligh ( with zero corporate, economic, business or commercial experience) would be the appropriate person to ask given she’s the CEO of the Australian Banking Association.

    Oh, and BilB, this CEO has earned less than his employees annually before. Hope this year that doesn’t happen.

  54. Jumpy:

    Any fine, I won’t pay it.

    So you will join all the Aborigines who are in jail because they can’t pay their fines?
    There have been times in the past when employees and unions have agreed to temporary reductions in wages and conditions because the employer is struggling. Don’t have a problem with this as long as this remains unusual and there are checks and balances.
    Ambi: Lots of companies have employee share schemes. When I worked for BHP I remember one of the boiler makers who worked for me to get on with increasing the value of his, the boiler maker’s, shares.

  55. So you will join all the Aborigines who are in jail because they can’t pay their fines?

    No no, I will not pay the fine, I can.

    And that boiler maker didn’t work for you.

  56. No no, I will not pay the fine, I can.

    Those who refuse to pay are put in the same cell as those who can’t pay (which I believe was John’s point).

  57. Jumpy:

    Those who refuse to pay are put in the same cell as those who can’t pay (which I believe was John’s point).

    And the good news is that Jumpy would not be able to get on the internet while he is locked up for refusing to pay a fine.

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