How long do you believe capitalism will last?

[Tatar Khan]

It doesn't work since the majority of the world's people are suffering from it. It doesn't work because the system is unstable and contradict the very essence of the human being. Capitalism will inevitably collapse unless all of our technological achievements collapse, are forgotten and completely destroyed (as well as the means to create it).

It doesn't contradict the human behaviour. We competed for resources with the other life forms on the planet, several branches of homonids were unable to survive because they could not compete. Competition is what separates sucessful from unsucsessful. Competition is essential to capitalism without it we get a monopoly - the most inefficient market. The goal of any economic system is to be efficient.

At this point I'll be qiete, because I am sure you are sick of me by now.

[Edric O]

I don't know about hating each other, have not experienced that, there are freaks but most are normall people. Capitalist hate each other only in the movies. However we all compete all the time. That the instinct of survival the sucessful survive the weak die. Darwin put it straight forward. Through competetion for limited resource the mankind improves itself.

Biological evolution only works when the traits that make you "strong" are genetic. If you are "strong" for non-genetic reasons, then the survival of the "strong" does not improve anything, because they will not pass on their "strength" to the next generation. In other words, capitalist competition can only improve mankind if the poor are poor for genetic reasons - which is a frankly insane idea with not a shred of evidence in its favour.

I use the words "strong" and "strength" in quotation marks because there is no such thing as a single definition of "strength" in the biological world. There are only different genetic traits, some of which are useful in certain situations and some of which are bad in certain situations. Whether you are "strong" or "weak" depends on the environment you live in. If you have a body built for speed in open fields, you are "strong" in the grassland but "weak" in the forest.

It doesn't contradict the human behaviour. We competed for resources with the other life forms on the planet, several branches of homonids were unable to survive because they could not compete. Competition is what separates sucessful from unsucsessful.

Actually, the biggest competitive advantage of Homo Sapiens was that we could cooperate well with each other. That is the whole reason we developed language and big brains - for communication, group coordination and cooperation. We could sit around a campfire and plan the next day's hunt with our fellow humans. And during the hunt, we could talk to each other and send complex messages. We were the ultimate pack hunter.

Human intellect was developed as a tool of cooperation. We are, in essence, "the cooperative ape". Do not confuse competition between species with competition between individuals.

Competition is essential to capitalism without it we get a monopoly - the most inefficient market.

I'll let someone else reply to that:

"The trouble with competitions is that somebody wins them. Professor Hayek denies that free capitalism necessarily leads to monopoly, but in practice that is where it has led..."

- George Orwell

[Edric O]

Communism rests on the ideal of "from everybody according to their abilities, to everyone according to their needs". Now I am a person who is living in such society, my reasoning would be to make myself vsibly less able to do work, therefore I work less, and increase my needs as much as I can. Since there is no price system to stop me from needing everything I'll demand for everything. According to rules of demand when Price = 0 quantity demanded is infinity. Since we all want to increase our hapiness that comes as a result of doing something that will make us better off, the work = zero (no waste of our resources) and demand everything (ultimate consumption of resources) makes me better off. It is a basic game theory exercise - analogical to prisoners dilemma.

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Me/Everyone else|They do nothing                                |They work

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I do nothing      |All lose                                              |I win, I abuse everyone else                 

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I work              |I am abused by everyone else, I lose      |Middle state between winning and losing

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The best option is the I do nothing. Even if you tell me that if everone would do that than we would all lose, I would still pick the to do nothing because now I take the choice of everyone else a to work. No matter what i would never want to end up in I work they do nothing situation, therefore I won't work.

You are forgetting one of the key ingredients of prisoner's dilemma. It holds true only if you can avoid work and get away with it (and, of course, you are also assuming that people will be selfish in the extreme, to the point that they would rather see society collapse than help out their neighbors).

I find it rather unlikely that a person could demand everything while doing no work and the other people in this communist society would not notice anything wrong. Communism is indeed based on the principle "from everybody according to their abilities, to everyone according to their needs". But communism is also highly egalitarian, and it assumes that the majority of people have just about the same average abilities and needs. If you have special needs or reduced abilities, they are either due to birth defects or some accident - neither of which can be faked easily (well, I suppose you could avoid work by cutting off your limbs, but that would be a case of exceptional stupidity).

Now, I will be the first to admit that communism is a lot harder to achieve than socialism. The reason for that is because communism requires a number of psychological and sociological mechanisms to take the place of material economic factors. For instance, a communist society needs to encourage curiosity and self-improvement, it needs to have a strong work ethic and it needs to educate people in such a way that they will feel guilty and bored if they don't do anything productive, etc.

The qoal of economy is to efficiently allocate scarce resources.

"Efficiency", by itself, is an empty word. Something is "efficient" when it achieves its goals at the minimum possible cost. Therefore, before you can judge efficiency, you have to define some goals. Then you can say that your system is efficient or inefficient depending on how well it achieves those goals. Efficiency itself cannot be a goal (because that would mean that your goal is to achieve your goals - circular logic).

The real goal of the economy is to produce the greatest possible happiness with a given amount of scarce resources.

Markets in capitalism is what allocates the resources. Not to define the market. Market is any place where goods and services are exchanged.

And before you can exchange things, you have to own them. That is why property is more fundamental than markets.

An interesting aspect of capitalism, which did not exist under previous economic systems, is the fact that you can own (and trade) all sorts of immaterial things - like shares, intellectual property rights, and, very importantly, your labour-power (your ability to work is a commodity).

A pottery maker in ancient times did not eat pottery, sure he grew some of his food and repaired and made some of his cloth but he did have to buy food and clothing still. Even if he goes to his neighbour the farmer and gives him a pot for a piece of clothing it is a market transaction of exchange of goods.

My point was that the vast majority of people were farmers, not potters. And by the way, trade within a village was usually more regulated by custom than by supply and demand (since there was usually only one potter in a village, a free market would have given the potter a monopoly and all the advantages thereof - but, due to custom, potters did not act as you would expect of monopolists).

Feudal serve pays his rent he makes a market transaction of goods for right to use the land.

Feudal lands and titles were not given according to anything even remotely resembling supply and demand.

If those countries would have done right things they would not be poor.

Absurd. That's like saying "look, Bill Gates is a billionaire. So if we all do exactly what Bill Gates did, we will be billionaires too!" It doesn't work that way. For one thing, times change. You can't get rich doing exactly what Bill Gates did because we are long past the days of DOS. Also, markets are not infinite in size. Suppose one country gets rich by producing and exporting computer chips. That doesn't mean that every other country in the world can start doing the same and expect to get rich. As more sellers enter the chip market, the price of chips will drop, and you won't be able to get rich selling chips.

Having a huge exports is good for the country that means it is producing more than it consuming, that is a healthy economy. GDP = Consumption+Investment+Government Spendings-Imports+Exports. If exports are bigger than imports the economy is doing great.

Yes, I know. My point was that if your country relies so much on exports, borders become little more than lines on a map. In a globalized economy, borders don't really exist, and therefore it doesn't make a lot of sense to talk about the economic performance of separate countries. Talking about the economy of Hong Kong is a bit like talking about the economy of Los Angeles. L.A. is not a separate country - and, economically speaking, neither is Hong Kong.

In the age of globalization, it becomes more and more necessary to talk about the global economy rather than the economies of individual countries. Soon, it will make no sense to talk of rich and poor countries - we will only be able to talk of rich and poor people.

[Edric O]

Unstable? Great Depression is the only black mark on its record, since 1950s the economics growth in Western World has continued to rise, there has not been even a strong recession during these years. The oil crisis, the .com crash and etc. brought small set backs in economic growth but these recessions were very small.

The Great Depression is the largest (and most spectacular) black mark on the record of capitalism, but it is by no means the only one. The entire 19th century is a long list of capitalist exploitation and oppression, and all those things go on the same way today in the third world. Even in the first world, the gap between rich and poor is growing, and poverty is getting worse.

Capitalism is opposed more than any other system because we have historical records of opposition, Not all peasant revolts against their feudal lords, or slave revolts have been recorded or records survived. Also the increase in educated people has brought out more critics and mass media allows us to see those critics.

Again, I must point out that feudalism never had to fight a Cold War. And there is no way that any kind of undocumented Cold War could have existed in the past 1000 years.

I would like to point out that the swings have been not between socialism and capitalism but rather pure capitalism and market socialism (the system that distributes the resources through markets but has more planning and invovlment on the behalf of the state).

Of course the swings never got anywhere near socialism. They were swings between different kinds of capitalism (some of which included socialistic elements).

Oh, and "market socialism" is a contradiction in terms. Some small and limited markets may exist under socialism, but, if they grow to the point where they are the primary means of distributing resources, then the economy is no longer socialist.

By perfect socialism I mean the economic system described as socialism, no pure capitalism ever existed, since it is also impossible to implement. The Soviet Bloc did implement different versions of socialism however they were not completely planned to every aspect.

What exactly is your definition of "socialism"? The Soviet Bloc implemented an economic system that may at best be described as half-socialism (socialism means the people control the state and the state controls the economy; in the Soviet Bloc, the state did control the economy, but the people did not control the state).

Even the modern technology won't be able to plan the economy. Markets balance out all the inpurities in the economy through prices. Here people through induvidual choices do that balancing and move economy towards equilibrium. In socialism you have to calculate a lot of things in order to move to that equlibrium. In 1907 Enrico Barone (Italian economist) produced theoretical frame work for planning centrally an economy. For that he created equations that related inputs and outputs to the ratios of equivalence. When solved thy would provide appropriate relative valuations that will determine distribution that will balance supply and demand. He also himself said that that is impossible to do because central planing board needs: 1) perfect computation techniques, 2) induvidual demand schedules/cruves, 3) enterprise production fucntions, 4) existing stock of both producer and consumer goods, 5) all other relevant factors.

A textbook market (known as a perfectly competitive market) needs the following conditions in order to exist:

1. Atomicity (very large numbers of buyers and sellers - large enough that they may be considered infinite).

2. Homogeneity (all goods on this market are absolutely identical).

3. Perfect and complete information (all buyers and sellers know all prices, and everything about the quality of all goods on the market).

4. Equal access (all firms have access to the same production technologies, and resources - including information - are perfectly mobile).

5. Free entry (any buyer or seller may enter or exit the market as it wishes).

Those conditions sound ridiculous when you read them, and in many ways they are ridiculous. They never happen in the real world. Does that mean that markets don't exist? No, it just means that perfect markets don't exist. Supply and demand never work like in textbooks - but they do work in mostly similar ways most of the time.

Likewise, the conditions you have listed for perfect economic planning can never happen in the real world. Does that show that planning is impossible? No, it only shows that perfect planning is impossible. But no one ever expected socialism to involve perfect economic planning.

Problems arise - agency problems a huge one. Plus you have to build a perfect model of economy. Ask any economist and they tell you that idea is suicidal because there are too many factors to account for. You can't gather perfect information about economy.

You seem to believe that socialism has a choice between being perfect and not existing at all. That's a fallacy of the excluded middle. Of course no planning agency will ever have a perfect model of the economy. But all you need is a model that is good enough. And the quality of your model depends on the processing power and speed available to you. Advances in computer science have increased the potential quality of such economic models by many orders of magnitude. We can create more accurate models today than ever before, and we're getting better and better at it every year.

You are right that there are very many factors to account for. And, again, that's where processing power comes in. The more powerful your computers are, the more factors you can account for. Allin Cottrell and Paul Cockshott, in their book "Towards a new socialism", have estimated the processing power necessary to model the current economy of the United Kingdom. We already have computers good enough to do it.

In market capitalism no person has perfect information in the economy, people act on the information that they have at the moment and think is relevant.

And no person has perfect access to all information that pertains to his or her situation. Suppose you want to buy a car. It is very unlikely that you will know the price and technical specifications of each and every car on the market. Because you don't know everything, you might end up making a sub-optimal decision (you will not buy the car with the best cost/benefit ratio - there might be a car out there that is cheaper and better than the one you end up buying). Capitalist markets suffer from imperfections due to incomplete information just as much as socialist planning does.

Barone and yourself are holding socialism up to an unattainable standard of perfection. You also mistake capitalist theory for capitalist reality. Keep in mind that all economic theory is a simplified representation of reality. Markets don't work in practice quite the same way as in theory.

[Caid Ivik]

You're missing the point. Yes, people always had the ability to think different - that is why there are different wings of Christianity for example. But - most of society was controlled by king and church. People did not learn how the world worked, they learned what the church wanted them to learn. What I am trying to say is that people have not only access to wast and different information, but the right to do so too.

I'm missing it consciously, as I find that view infertile. Because there wasn't just "king and church" and "people", but a complicated social structure, tough perhaps not as complex as nowadays. And as I read usually, medieval stereotype of "king and church" is extremely inaccurate, and it wasn't so, that free cities, feudal domains and nomadic tribes were three phenomena without any civilisational relation... Also, let's put a little more foucaltian doubt into it. what makes you think you know how the "world works"? What makes you think, that the swedish education ministry or director of your school had provided you a truly objective description of the world? You believe them?  ;)

Well, the same was ie in 10th century in any peasant village in Sweden. Peasant simply believed, that crop will grow, if he'll do so and so; as well as they won't be harmed, if he'll relate to their lord by a specific way; and that his father will be proud of him, if he'll find a wife and bring forth many children. That was the "system", his "world". Times changed since then, but you can't say it didn't work. Otherwise you wouldn't write me these things. Terms like "work", "ability" or "existence" have a very tightly related meaning. At least, they seem so. Marx and EdricO are presenting a view, what we should do, to make it "work better", but how? What makes an utopian criticism more accurate than topical?

[Dude_Doc]

What makes you think, that the swedish education ministry or director of your school had provided you a truly objective description of the world? You believe them?

Actually, Sweden has a very competent understanding. Or do you suppose that the moon landing never happened? 

Times changed since then, but you can't say it didn't work. Otherwise you wouldn't write me these things.

And you suggest what? That we go back into an undemocratic neo-fascist society with one leader, imposing his and only his will and thinking over the rest of us? I'd rather die.

What makes an utopian criticism more accurate than topical?

Because it offers something to people that no system, to this day, can offer: freedom.

[Tatar Khan]

Biological evolution only works when the traits that make you "strong" are genetic. If you are "strong" for non-genetic reasons, then the survival of the "strong" does not improve anything, because they will not pass on their "strength" to the next generation. In other words, capitalist competition can only improve mankind if the poor are poor for genetic reasons - which is a frankly insane idea with not a shred of evidence in its favour.

But we do pass on on our intellectual "strenght" to others. We teach our children. those who are poor can't afford to teach their children or might not possess the right knowledge that will aid their children. Evolution is never only biological but intellectual too. I think even Darwin made a remarks about the passage of information from successful induviduals to others. Capitalist competition rewards the companies that innovate and invent, who have a lot of knowledge that is useful. Capitalism penalises the companies that lack the needed knowledge to compete. So we have those who are strong not only physically but intellectually surviving. Most poor nations lack a good education system and therefore can not compete succsessfully. Why do you think poor countries often send people abroad? The get the education there and bring back techniques. China is famous for this, they send people to North America into successful companies so that their people can aquire the knowledge. There is the fact that nt all of them come back (brain-drain) but still the strategy works and slowly the country can produce the needed specialists in its educational institutions.

I never suggested anything about genetics tied to poverty. I think I need to be more specific when I state the ideas so not to be missunderstood.

Actually, the biggest competitive advantage of Homo Sapiens was that we could cooperate well with each other. That is the whole reason we developed language and big brains - for communication, group coordination and cooperation. Human intellect was developed as a tool of cooperation. We are, in essence, "the cooperative ape". Do not confuse competition between species with competition between individuals.

Antropologically competition between species and induviduals is very alike. We could be cooperating with others against smebody but we will still compete between each other for the leadership role in that cooperative. Some one has to take charge during the hunt, you can't just call a tribal gathering midway through fighting with a mamamonth. The compettion for a better position within the group is there and always will be there, whether that group a single species, a ecological system, or a planet.

I'll let someone else reply to that:

"The trouble with competitions is that somebody wins them. Professor Hayek denies that free capitalism necessarily leads to monopoly, but in practice that is where it has led..."

- George Orwell

The fact that George Orwell was a writer and a journalist with a little education in economics makes his remarks not heavy in the weight. I read Animal Farm (school's curriculum). It is an interesting peace of work and funny one also at some points.

However his remark about the competition is easily defeated. According to it we should see the rise after rise of monopolies in the world. Well even Karl Marx can rebute he said something along this lines: that even if one compnay develops a technology that let it increase the profits, the competition will quickly follow and soon the equilibrium would be restored.

But the "great" minds asside, the competitive market could become a monopoly but only for a short-run. There has not been a single monopoly in the world that lasted for a long time. The monopoly earns economic profit - a very attractive thing. Economic profit attracts others to come to the market to take a bite at this profit and thus monopoly is no longer a monopoly. If the companies collaborate to create a likeness of monopolic market the government will start kicking them around for that.

[Tatar Khan]

You are forgetting one of the key ingredients of prisoner's dilemma. It holds true only if you can avoid work and get away with it (and, of course, you are also assuming that people will be selfish in the extreme, to the point that they would rather see society collapse than help out their neighbors). I find it rather unlikely that a person could demand everything while doing no work and the other people in this communist society would not notice anything wrong. Communism is indeed based on the principle "from everybody according to their abilities, to everyone according to their needs". But communism is also highly egalitarian, and it assumes that the majority of people have just about the same average abilities and needs. If you have special needs or reduced abilities, they are either due to birth defects or some accident - neither of which can be faked easily (well, I suppose you could avoid work by cutting off your limbs, but that would be a case of exceptional stupidity).

Ok so now lets include a punititve system into our game model and we get the result of me working and so everyone else. But how would they know that I am working to a max of my abilities. Some authority tells me what my abilities are, or I am tested on my abilities and than authrity decides where I best fit. But that is dictatorship i am being told by autority (one person or a group) what is my comparative advantage and my needs. Somebody jsut made decisions for me. In communism ideal people work in the field they are best at, in order for it to be democratic they decide what they best at. But with the punitive system in place somebody makes that decision for you. Without it I can claim that my comparative advantage is being a sleep study assistant (the ones that sleep all day) and my needs are a Poche and a castle by the sea side.Of course, as you said the others will get angry at me and try to penalise me but than they will be dictating me the actions. This is against the principal of communism - freedom of induviduals.

Now, I will be the first to admit that communism is a lot harder to achieve than socialism. The reason for that is because communism requires a number of psychological and sociological mechanisms to take the place of material economic factors. For instance, a communist society needs to encourage curiosity and self-improvement, it needs to have a strong work ethic and it needs to educate people in such a way that they will feel guilty and bored if they don't do anything productive, etc.

Beleive me you not the first, that is statistically improbable. Yes communism requires moral changes in society. The Soviet Union government often pointed out that they need to change the masses in order for communism to work. You should look into confuscanism  it has a lot of values ressembeling the ones you listed. I would also recommend looking at certain villages in Israel that organised in a fashion ressembeling communism a lot. I forgot their name.

The real goal of the economy is to produce the greatest possible happiness with a given amount of scarce resources.

True. But in order to produce the greatest happiness you rsystem has to be efficient in allocation of resources which is a goal in itself. But you are right i should have specified what efficiency i meant.

And before you can exchange things, you have to own them. That is why property is more fundamental than markets.

We always own something. It doesn't matter what type of ownership public or private. Let's get back to Singapore. Singapore has publicly owned companies that participate in the markets and compete the same way the privitely owned do. As long as the public companies do not become monopolies the markets operate with the members in it being both private and public firms. No difference. A village could own a land and sell it (market transaction) land was publicly owned. Same goes for the city, province/region/territory or a country. They all can do market transactions.

My point was that the vast majority of people were farmers, not potters. And by the way, trade within a village was usually more regulated by custom than by supply and demand (since there was usually only one potter in a village, a free market would have given the potter a monopoly and all the advantages thereof - but, due to custom, potters did not act as you would expect of monopolists).

Small villages often operate like extended families (very close to communism) they are communes. You would not charge your sibling for a computer game you would just give it to him/her. The reason is that you know that they will or had helped you out. That is trust. But as the village gets bigger sych relationship can not continue because it is hard to trust people, because you not sure about whether they will help you out in the future. In larger village thre will be more than one potter because if potter starts to become wealthy others will start to learn the art of pottery. Also the people look for a good that will substitute the pottery.

Yes at the start of civilization we have small villages but they start to grow into towns and cities later.

Absurd. That's like saying "look, Bill Gates is a billionaire. So if we all do exactly what Bill Gates did, we will be billionaires too!"

Ok I never suggested such a thing. I said the poor countries did not do right things. I did not say that they have to follow the style of Japan or four Tigers or of Chile or Western Europe. It would be stupid to suggest development of ship repair industry just because that helped out Singapore to a country that doesn't have a port. Or developement of oil drilling just because it worked for Saudi Arabia to a country that have miger reserves of oil. Each country has its own comparative advantages it should exploit. The countries that were unable to find them are poor the ones that found them are on the rise.

Yes, I know. My point was that if your country relies so much on exports, borders become little more than lines on a map. In a globalized economy, borders don't really exist, and therefore it doesn't make a lot of sense to talk about the economic performance of separate countries. In the age of globalization, it becomes more and more necessary to talk about the global economy rather than the economies of individual countries. Soon, it will make no sense to talk of rich and poor countries - we will only be able to talk of rich and poor people.

The global economy is growing all the time. Wealthy nations are getting wealthy because they do things right (exploit their comparative advantage) poor nations don't and so they get poorer. There are more and more nations that are on their way to wealth. Of course for countries to exploit comparative advantage the should be stable (wars that are fought on their soil don't help).

[Tatar Khan]

Oh, and "market socialism" is a contradiction in terms. Some small and limited markets may exist under socialism, but, if they grow to the point where they are the primary means of distributing resources, then the economy is no longer socialist.

Market socialism is an official economic system that tries to get teh best of the two worlds socialims and capitalism. It has its own problems. The system includes indicative planning where firms encouraged to follow the plan through material and moral rewards. However the market allocation of things remain. The system has been used in Europe (closest thing is what france had between 1950s to 1980s) and was used by Japan and Four Tigers to develop and push their economies.

Some economists assign market socialism to modern China, others social market and the third say that they have no idea what kind of system China has. I am with the thrid group because China is still working things out so it is too early for labelling.

What exactly is your definition of "socialism"? The Soviet Bloc implemented an economic system that may at best be described as half-socialism (socialism means the people control the state and the state controls the economy; in the Soviet Bloc, the state did control the economy, but the people did not control the state).

However when you have planners picking the production of goods and services, I don't see much involvment of the people. You can pick planners through voting but that will be a repressentative democracy at best. Ad there is no telling that planners won't entrench themselves.

A textbook market (known as a perfectly competitive market) needs the following conditions in order to exist:

1. Atomicity (very large numbers of buyers and sellers - large enough that they may be considered infinite).

2. Homogeneity (all goods on this market are absolutely identical).

3. Perfect and complete information (all buyers and sellers know all prices, and everything about the quality of all goods on the market).

4. Equal access (all firms have access to the same production technologies, and resources - including information - are perfectly mobile).

5. Free entry (any buyer or seller may enter or exit the market as it wishes).

Those conditions sound ridiculous when you read them, and in many ways they are ridiculous. They never happen in the real world. Does that mean that markets don't exist? No, it just means that perfect markets don't exist. Supply and demand never work like in textbooks - but they do work in mostly similar ways most of the time.

1 we have that --> the whole population of the country or of the world

2. not exactly true --> this is true for perfect competition market but you can have monopolistic competion market (classic example is always for some reason is fast food industry). It is also very efficient.

3. we need info on one market that is relevant at this point --> socialist planners need info on all markets

4. not exactly each firm uses its own mix of labour, kapital and other inputs. Baskin Robbins and Mc Donalds do not share the same technologies or prodcution facilities

5. very few markets exist into which you won't be able to enter due to government controls or due to it being oligopolic. You want to open a garage go ahead other mechanics won't come and bar the door.

You seem to believe that socialism has a choice between being perfect and not existing at all. That's a fallacy of the excluded middle. Of course no planning agency will ever have a perfect model of the economy. But all you need is a model that is good enough. And the quality of your model depends on the processing power and speed available to you. Advances in computer science have increased the potential quality of such economic models by many orders of magnitude. We can create more accurate models today than ever before, and we're getting better and better at it every year. You are right that there are very many factors to account for. And, again, that's where processing power comes in. The more powerful your computers are, the more factors you can account for. Allin Cottrell and Paul Cockshott, in their book "Towards a new socialism", have estimated the processing power necessary to model the current economy of the United Kingdom. We already have computers good enough to do it.

I have a game called Tropico that runs on my computer and i can model an economy of Cuba/Domincan republic/ Taiwan on it. However this model won't be any good for those countries.

Modern economists have models that contradict each other. So you have now imperfect model with imperfect plan that will cause shocks and stresses on the parts of economy. Soviet planners planned only the heavy industry m the ore extraction industries and military production. They let the imperfections in the plan to be balanced out by the service sector, consumer goods producers and light industry.  The last three had no plans for them and had to take on all the shocks and stresses created by the plan. Result is shortages.

Capitalism also has a plan but each plan is created by each person that looks out for his personal maximazation of utility (happiness). We have the whole population being the planners that adjust their plans much easily than the small number of planners in the socialism (here there is the time lag for reaction and adjustment that is huge). 

And no person has perfect access to all information that pertains to his or her situation. Suppose you want to buy a car. It is very unlikely that you will know the price and technical specifications of each and every car on the market. Because you don't know everything, you might end up making a sub-optimal decision (you will not buy the car with the best cost/benefit ratio - there might be a car out there that is cheaper and better than the one you end up buying). Capitalist markets suffer from imperfections due to incomplete information just as much as socialist planning does.

If i want to buy a car i don't care how much it costs in India, i care how much it costs in my area. I would spend time searching for the product and the good price as long as i beleive that the value of time used is worth looking. If i feel i can do something ese more productive with it i'll stop and use the information given to me. To me this is "perfect" information, because it game me all information on the market that is within my reach subject to constraint of value of time.

[Tatar Khan]

Because it offers something to people that no system, to this day, can offer: freedom.

You have freedom in capitalism. You can do nothing and be a homeless person on the street. You can work day and night and have your children inherit a fortune after you die. Nobody is forcing you to do anything in capitalism, what ever makes you happy you can do, just live with the choices.

[Dude_Doc]

You have freedom in capitalism.

Some freedom, but not the kind of freedom people pursue. It is only the rich and powerful who benefit from capitalism.

You can do nothing and be a homeless person on the street.

Or, you simply didn't have the brains or brawns to become anything. Maybe the workplace had too many workers? Too bad for you.

You can work day and night and have your children inherit a fortune after you die.

So?

Nobody is forcing you to do anything in capitalism, what ever makes you happy you can do, just live with the choices.

On the contrary - I can not do what I wish in capitalism. The state and church prohibits people from being homosexual, for example. Sure, maybe I got a better place in society, and sure, I can live like this in "freedom", but this is not the only problem with capitalism.

Capitalism is using other people. Wealth and resources - creates war, poverty.

[Caid Ivik]

Actually, Sweden has a very competent understanding. Or do you suppose that the moon landing never happened? 

And you suggest what? That we go back into an undemocratic neo-fascist society with one leader, imposing his and only his will and thinking over the rest of us? I'd rather die.

Because it offers something to people that no system, to this day, can offer: freedom.

"Sweden has a very competent understanding", lol  ;D  One of your major politicians was stabbed to the death in a bright day, and you think you have competent understanding, for example, of security issues? Knowledge isn't only about history - I'm sure I don't have to describe it further.

The fact is that we don't have to "go back", to have somebody thinking instead of us. State and its institutions do so already. That's danger of any organized society, it creates trends and ideologies, which determine moods and language. In a wider sense, this is a phenomenon, which could be accurately described by a marxist term of alienation. Utopism doesn't bring freedom, but obsession. Cumulation of capital for a future use might become the same problem, but it goes so with many planned activities, not only on the political or economical sphere; watch any movie by Aronofski.

[Egeides]

You really believe Communism to follow Capitalism by default. I think that ideals which do not apply well can then let ultra-pragmatists to enter the scene. I think that such a Communist system loses too much energy ready to be leeched and used to overthrow. Thus "Fascism" can follow (Stalin?). Manichean/Dichotomic to start with, thus the balance moves as swiftly on the other side as market bubble curves.

We can just hope that the fall of a system to be smoother, so that the aftermath gets less of a ideal/pragmatic dichotomy.

Here's what I see as central losses of energy (due to this dystopia that I'm talking about):

You are forgetting one of the key ingredients of prisoner's dilemma. It holds true only if you can avoid work and get away with it (and, of course, you are also assuming that people will be selfish in the extreme, to the point that they would rather see society collapse than help out their neighbors).

You are using an absolute here. People can get away with a great deal, even if not the whole thing. The Soviet case showed some of it.

It does not hold true only with selfishness, but from the moment you are in a situation where you do something for others while they might not reciprocate.

An anecdote was insightful for me: Someone who lived it said to me that some still don't paint/repair their houses, seeing it as "I am owned this" (by the government or whoever). "It's not my job, it's someone else's" - opposite of Kennedy's "ask what you can do for your country". Looks like the opposite of inherent human energy/will permitting self-development.

it assumes that the majority of people have just about the same average abilities and needs. If you have special needs or reduced abilities, they are either due to birth defects or some accident

Do you consider that humans are actually like that? I see a great deal of difference between people I got around me, should it be for "hardwired" or "softwired" reasons.

It seems to have the consequence to not encourage the one who forces himself to have "stronger will". In some areas of society, just getting out of bed is considered hard; this doesn't seem like everyone has the same capacities.

communism requires a number of psychological and sociological mechanisms to take the place of material economic factors. For instance, a communist society needs to encourage curiosity and self-improvement, it needs to have a strong work ethic and it needs to educate people in such a way that they will feel guilty and bored if they don't do anything productive, etc.

There are many cases of societies who've put their hopes on education to change people morally: post-Revolutionary France (Victor Hugo, etc.), contemporary French with immigration (now criticized), Confucean and Christian societies...

It changed certain things on the long haul, but to which extent?

- There were still serious issues with those not following the ideals at any opportunity, thus limiting the system's approach of its ideals.

- It would not bring the existence of Earthly mecanism to zero, like incentives (whattever the economic model).

[Tatar Khan]

Some freedom, but not the kind of freedom people pursue. It is only the rich and powerful who benefit from capitalism.

In capitalism you are free to pursue what ever you want, it is the government's intervention that restricts certain pursuits. And it is good that it is there.

Or, you simply didn't have the brains or brawns to become anything.

Why should we have people who are not productive be sitting on the neck of the rest of society. If you have birth diefects I understand, no problem with helping out here. If you got disability at work -  no problem in helping out either. However if you did not try to get some education, fooled around the whole time, why should society provide for a lazy person. The pure form of capitalism of course would not help out the disabled but it is never have been instituted.

Maybe the workplace had too many workers? Too bad for you.

In the market economy employers hire the workers untill the benefit of hiring another worker will be lower than the cost of hiring - The law of diminishing returns. And why should we employ a resource - labour in the task where it will be unproductive, why not employ it in the area where it will be prodcutive. Capitalism through the markets signals does that automatically. If society is short of accountants the salary of accountant would be high because of the shortage. However if we have too many school teachers their salary would decline because there are plenty.

I understand that person can not retrain in a day however the person should be encouraged or than the shortages of labour in some areas won't be resolved.

On the contrary - I can not do what I wish in capitalism. The state and church prohibits people from being homosexual, for example. Sure, maybe I got a better place in society, and sure, I can live like this in "freedom", but this is not the only problem with capitalism.

Capitalism is economic system not political its concern in politics is reduction of market regulations. Capitalism doesn't care who is the person participating in the market transaction as long as he/she make the transaction.

Classic example given in first year of unversity to all economics major. Let's say we discriminate against women and pay them less than men. That means that hiring women is much cheaper than men, so than we should hire women and fire men. This creates shortage of women causing their salaries to go up and the salaries of men to go down because there is surplus of them.

Capitalism is using other people. Wealth and resources - creates war, poverty.

Actually according to capitalism it is easier to trade with the person than destroy that person because than the both sides benefit since each side has its comaprative advantage. People get paid for their work depending on the value of that work. 

[Edric O]

You have freedom in capitalism.

Philosophers have been debating the meaning of freedom - and its existence or non-existence in various societies - for thousands of years. So, what exactly do you mean by "freedom"? In my experience, talking about "freedom" as a general concept is hopelessly vague at best and pure propaganda at worst. I prefer to talk about specific kinds of freedom that have a well-defined meaning - freedom of speech, for example, or freedom to force other people to shut up; freedom from slavery or freedom to enslave, etc. (as you have noticed, different types of freedom can oppose each other - which is why it is difficult to talk about "freedom" in general)

Most people would agree that you have some freedom in capitalism. But it may well be too little freedom, and not of the right kind.

You can do nothing and be a homeless person on the street.

Or you can be Paris Hilton and do nothing while living in luxury thanks to your rich daddy.

You can work day and night and have your children inherit a fortune after you die.

So they can enjoy money they did not earn.

Nobody is forcing you to do anything in capitalism, what ever makes you happy you can do, just live with the choices.

Really? I can do anything that makes me happy? Cool. Can I kill someone? No? Damn... ::) How about taking over a factory, expelling the owners and organizing a workers' collective? Nope, can't do that either. Can I get a loaf of bread if I don't have any money? No, again, no...

So much for "what ever makes you happy". What you really mean is "nobody is forcing you to do anything in capitalism (except the law), what ever makes you happy you can do (if you have the money)".

In capitalism you are free to pursue what ever you want, it is the government's intervention that restricts certain pursuits.

False. The government plays a role, of course, but the first and biggest restriction on your pursuits is the existence of private property. After all, a property right is a right to exclude other people from using an object. If I own something, that means you're not allowed to use it (without my permission).

Now, material objects are involved in just about every human activity you can imagine. In order to eat you need food; in order to read you need books (or computers, or something with writing on it); in order to walk you need ground to walk on. If you hold no property, that means all material objects in the world are the property of other people. So, before you can do anything, you need other people's permission to use their property. You can do nothing unless other people allow it. You have no freedom.

As long as property exists, if you have no property then you have no freedom. Of course, most people have some property, so they have some freedom - though not much.

As Ambrose Bierce explained it, in relation to land:

"LAND, n. A part of the earth's surface, considered as property. The theory that land is property subject to private ownership and control is the foundation of modern society, and is eminently worthy of the superstructure. Carried to its logical conclusion, it means that some have the right to prevent others from living; for the right to own implies the right exclusively to occupy; and in fact laws of trespass are enacted wherever property in land is recognized. It follows that if the whole area of terra firma is owned by A, B and C, there will be no place for D, E, F and G to be born, or, born as trespassers, to exist."

- Ambrose Bierce, The Devil's Dictionary

This applies equally well to every material object necessary for human life, not just land.

Why should we have people who are not productive be sitting on the neck of the rest of society.

We shouldn't. And, under socialism, we wouldn't. Socialism is not a welfare state. A socialist economy guarantees everyone a job, not welfare. Naturally, something like welfare would be given to people with disabilities, but everyone else would be given a job, not free money.

A similar principle applies under communism, except that the state is replaced by the community and a strong work ethic.

In the market economy employers hire the workers untill the benefit of hiring another worker will be lower than the cost of hiring - The law of diminishing returns. And why should we employ a resource - labour in the task where it will be unproductive, why not employ it in the area where it will be prodcutive. Capitalism through the markets signals does that automatically. If society is short of accountants the salary of accountant would be high because of the shortage. However if we have too many school teachers their salary would decline because there are plenty.

I understand that person can not retrain in a day however the person should be encouraged or than the shortages of labour in some areas won't be resolved.

True, but that's not the whole story. In order to make a profit, the employer must always pay his employees less than the actual value of the products they make. Profit comes from the difference between what the worker rightfully earns and the salary he gets. This is how capitalism exploits the worker.

To put it another way, an employer will keep hiring employees as long as marginal returns are greater than marginal cost (MR > MC). So you only get employed if you produce more money for your boss than you get back in the form of your wage. It's what drives capitalism. It's also unjust.

Classic example given in first year of unversity to all economics major. Let's say we discriminate against women and pay them less than men. That means that hiring women is much cheaper than men, so than we should hire women and fire men. This creates shortage of women causing their salaries to go up and the salaries of men to go down because there is surplus of them.

Yes, I remember that one. It's a strange example. It assumes a kind of society where women are being discriminated against - but, at the same time, employers are willing to hire women and fire men. Am I the only one seeing the contradiction here?

Actually according to capitalism it is easier to trade with the person than destroy that person because than the both sides benefit since each side has its comaprative advantage.

Uh, no. The law of comparative advantage only shows that trading is better than staying isolated. It does not say anything about war.

In general, trading is better than war if your partner has a military strength close to yours. In that case war is not worth the cost. But if your partner is weaker than you, it becomes very profitable to conquer him and plunder his lands. Afterwards, you can go back to trading - under terms that are ridiculously biased in your favour. This describes perfectly the behaviour of Western colonial empires, by the way.

People get paid for their work depending on the value of that work.

No, they don't. You are contradicting yourself. As you explained further above in your example with accountants and school teachers, capitalism pays people depending on how many others are willing to take their job. If lots of people want to be school teachers, then the salary of a teacher goes down because there are many people willing to take his/her job.

Notice something interesting here: Your salary depends on what other people do. If there is an increasing number of other people willing to take your job, then your salary goes down even if you're working as hard as before. So you don't get paid depending on how hard you work.

[Dude_Doc]

"Sweden has a very competent understanding", 'lol' One of your major politicians was stabbed to the death in a bright day, and you think you have competent understanding, for example, of security issues?

I never said we know everything, I'm talking about the understanding of how the world works. We know that we live in a universe, in a galaxy, on a planet - not in a dome where water rains down through holes. That was my meaning. We can learn about other ideologies - nazims, fascism, stalinism even capitalism. We can learn about other religions. We are much more enlightened than we were 1000 years ago. This is what is different from ancient systems of absolute kings.

[Tatar Khan]

Paris Hilton is enjoying her father's money because that makes here father happy. However that won't continue after daddy's death. Ussually the management and advisors tend to leace when the heir is an idiot because that often could mean downfall or low performance for the company. However, I think that Paris Hilton's siblings will prove to be more intellegent and owuld keep the frim together, however the Paris Hilton's benefit will diminish over time. Paris Hilton is also seems to be capable of raising money herself, since she doesn't ahve brains, she uses her body.

Now about freedom arguments.

Now, material objects are involved in just about every human activity you can imagine. In order to eat you need food; in order to read you need books (or computers, or something with writing on it); in order to walk you need ground to walk on. If you hold no property, that means all material objects in the world are the property of other people. So, before you can do anything, you need other people's permission to use their property. You can do nothing unless other people allow it. You have no freedom.

I can use your property if I choose too. Who will stop me? You would have to enforce your giths to the property and defend it. If you can't overpower me than you turn to the goverment for help to defend you property so in the end it is the government intervention that restricts the freedom of using someone's elses property.

Really? I can do anything that makes me happy? Cool. Can I kill someone? No? Damn... ::) How about taking over a factory, expelling the owners and organizing a workers' collective? Nope, can't do that either. Can I get a loaf of bread if I don't have any money? No, again, no...

You can kill some one you free to do that. You can take over a fatory you free to do that, you can steal that loaf of bread you free to do that,. But as I said you ahve to live with the consequences of your choices. For most of the actions above you will go to jail. So government restricts or rather provides incentives against exercise of those freedoms. You do cost-beenfit analysis and decide whetehr exercisisng that freedom is beneficial to you. Criminals are there they exercise those freedoms because thy beleive that the benefit is greater and that the cost might not be there.

We shouldn't. And, under socialism, we wouldn't. Socialism is not a welfare state. A socialist economy guarantees everyone a job, not welfare. Naturally, something like welfare would be given to people with disabilities, but everyone else would be given a job, not free money.

If you gurantee a job for everyone (besdies removing an incentive for retraining and reeducation) you also creating a "welfare" for people. I don't have to work hard I can be hardly working because I can't lose a job since it is guranteed. You need a punitive system to force me to work harder, or reward system. However such rewards would go against ideal of socialism --> equality between all the workers in terms of salaries.

True, but that's not the whole story. In order to make a profit, the employer must always pay his employees less than the actual value of the products they make. Profit comes from the difference between what the worker rightfully earns and the salary he gets. This is how capitalism exploits the worker. To put it another way, an employer will keep hiring employees as long as marginal returns are greater than marginal cost (MR > MC). So you only get employed if you produce more money for your boss than you get back in the form of your wage. It's what drives capitalism. It's also unjust.

Profits of the company are the salary fo the boss, he has to get paid for his works of hiring people, looking for suppliers, looking for clients, promoting and etc (Only actual for a small business). MR doesn;t automatically equal the value added. Part of the MR of the worker is due to investment into capital (machinery, technology, software, etc.) that capital increases the productivity of the worker. The owner bought that capital he should get paid for that productivity that capital produces since it belongs to him.

Back to the profits. Profits of the company ussually paid out to the shareholders as the dividends --> payment to the shareholders for taking a risk with their money. They do work too, they research and consider investment opportunities and they through board of directors overlook the hiring of seneiro staff into the company. This is also work. Finally they can choose to reinvest their money back into the firm because they beleive it si valuabel investment. Without profits there won't be any dividends, without dividends the shares of the company = 0 in price. This means that equity of the company is 0 which means that the firm is bankrupt and seizes to operate.

Uh, no. The law of comparative advantage only shows that trading is better than staying isolated. It does not say anything about war.

Conquest of trading partner would be dissastrous because as you conquer that coutnry you will destroy the people who posses comparative advantage and the comparative advantage of the country could be destroyed by the conqueror due to ravages of war on the country. Imperialist economies after conquests destroyed specific comparative advantages, however they managed to extract beenfit through  extensive growth (growth due to finding new resources). 

No, they don't. You are contradicting yourself. As you explained further above in your example with accountants and school teachers, capitalism pays people depending on how many others are willing to take their job. If lots of people want to be school teachers, then the salary of a teacher goes down because there are many people willing to take his/her job. Notice something interesting here: Your salary depends on what other people do. If there is an increasing number of other people willing to take your job, then your salary goes down even if you're working as hard as before. So you don't get paid depending on how hard you work.

Careful. I stated value of the work. I never stated that the value of the work = how hard you work. It is often is the case when you are competing among the same workers that perform same tasks as you. However, outside that market the value of the work is governed by how unique it is. If you the only one who knows how to make a pointy stick than that work is valuable, if everyone else does than you work is almost worthless. My personal example. In English class we had to write a poem. I spend a whole week sweating over making a good poem in accordance with that specific rytheme, and other suff. My friend (very good with literature, he took Writer's Craft later) took one hour to make a poeme. He got and A i got a C+. According to the reasoning of how much hard work you put into soemthing the more it is worth I should have got an A+. But i am no good at poetry so my poem was less valuable (marks or money doesn't matter) than my friend's. For him writing is not a hard work it just comes naturally.

[nemafakei]

"You can kill some one you free to do that. etc"

Look at it that way and socialism is no less free than capitalism - in fact, using your logic, feudalism, Stalinism, and Nazism were all as free as capitalism.

"(besdies removing an incentive for retraining and reeducation)"

These would likely be paid.

"You need a punitive system to force me to work harder, or reward system."

That's possible, if we exclude the usual misconceptions about equality. The idea is that everyone should be able to earn the same wage - if they choose to put in the time and effort. Egalitarian pay, rather than identical pay.

"This is also work"

So is lifting and dropping a plank of wood for 8 hours a day. The question is: is is useful work? The short answer is no, and the long answer is that what investors acheive is a highly inefficient planning system which prioritises individual convenience over wider interest and requires an undue number of grossly overpaid people to do it.

"as you conquer that coutnry you will destroy the people who posses comparative advantage"

Not necessarily. You'll kill some, but if the advantages of conquest outweigh the deaths of a few, then invaion goes ahead. Plus, the greater the difference in power, the greater the chance of outright surrender. Note that even if it does drop due to population loss, comparative advantage also increases (from the conqueror's point of view) because the subjugate population can be forced to work longer hours for less pay.

[Caid Ivik]

I never said we know everything, I'm talking about the understanding of how the world works. We know that we live in a universe, in a galaxy, on a planet - not in a dome where water rains down through holes. That was my meaning. We can learn about other ideologies - nazims, fascism, stalinism even capitalism. We can learn about other religions. We are much more enlightened than we were 1000 years ago. This is what is different from ancient systems of absolute kings.

But you know, you are always bound in certain incertainties. Define 'galaxy'. Then, define 'freedom'. Terms with fully different meanings by Hawking and by Newton, bzw.by Spinoza and by Kant. Or easier task (?), define 'understanding'.

A guy would come and say: 'Between 1939-1945 there was a war started by a political group called Nazis. These fought to conquer the world and kill all Jews.' 'Understanding' is then, if I memorize this statement? If some government would add, that the Nazi movement was created ie by a group of zionist mystics, trying to purge the jewish race, it would seem as a 'deeper' understanding, in similar way as the difference between the 'hole-rain' and 'cloud-rain' theories.  As that was again just history, let's look at future, who knows, a todays society, which would embrace nazist values may evolve differently than Germany in 1930s. Again I have to mention, that this argument is not mine, originally. Mine would be, many nations today still retains many aspects and values of various religions and ideologies (yes, even those of fascism and communism), while they simply didn't raise the specific symbolics, so they seem not to in positivist view...

[gunner154]

The problem with the assumptions of a Perfect Market:

1.) This is only attainable with a completely globalised economy. Some markets like Singapore's (yeah, I know) are too small, which is why Singapore is that reliant on export. But even if we do attain this completely globalised economy, the thing about Perfect Market is that no firm has the ability to control the price. Everybody is a price-taker. However, as we can observe in the world today, there are a large number of goods which have producers who are not price-takers. Even if you can satisfy the conditions of a very large number of buyers, you cannot do the same for sellers, and thus we cannot achieve a Perfect Market.

2.) You've admitted it, we cannot go into Perfect Markets. So why force us to fight for Perfect Communism? Besides, Monopolistically Competitive Markets are not all that efficient, which I will address later..

3.) The issue here is not about how many markets you can obtain information about, but rather how much information you can obtain from a particular market. It's not about quantity, but quality. Besides, as Edric O had pointed out, computers are good enough to do all the calculations to simulate a particular market. Logically, if more markets are to be evaluated, just get more computers! Besides, even if socialist planners cannot obtain perfect information for all markets, neither can capitalists on their particular market. If capitalists could obtain all the information on their markets, there would be no such thing as "going out of business". Subnormal profits won't even be possible.

4.) You can use your own mix of factors of production, but at the end of the day your factors of production are not infinite, even if they are of your own type. You might only need a certain type of worker and another company dealing with the same market/good might need a different type of worker (if this difference even exists), but how much? It is for this reason that we have the middle range when we draw the Aggregate Supply curve. Competition for factors of production pushes prices up. Besides, it is rather erroneous to compare MacDonalds with something else like Baskin Robbins. Okay, I don't really know what Baskin Robbins is, but if it's not dealing with fastfood, or even food in general, there is little room for comparison because of the lack of a common measuring yardstick.

5.) Yes, and how exactly do government-run industries work? Singapore's Public Utilities aren't inefficient, mind you. :P

Having dealt with this, we know that Perfect Competition is rather impossible. The classic examples of Perfectly Competitive Markets that exist in the world today are that of agriculture in a small, local market and the stock exchange. When the former is expanded, you no longer get perfect competition. It doesn't matter if the latter is expanded because stocks only deal with ownership of financial assets. No capital is involved, and thus there is no real benefit to society. Since we have established that capitalists cannot really argue for Perfectly Competitive Markets, we can conclude that neither is it fair for capitalists for force communists to fight for Perfect Socialism or Perfect Communism.

Besides, on the point of Monopolistically Competitive Firms, if you draw the graphs and everything, according to theory, you will not attain Allocative Efficiency. It's quite interesting that you wish to argue the point of the Law of Diminishing Returns, because that law cannot be used to show how you obtain any form of efficiency in Monopolistic Competition. Granted, you can re-allocate your workers to other industries when market conditions change, but you cannot reflect society's needs accurately at any one point in time because even Monopolistically Competitive firms have their own inaccuracy with reflecting society's needs. What then gives you ground to seek the same from Socialist planners?

[Tatar Khan]

"You can kill some one you free to do that. etc"

Look at it that way and socialism is no less free than capitalism - in fact, using your logic, feudalism, Stalinism, and Nazism were all as free as capitalism.

Ok on the basis that we are talking economics not politics we will look only at how much freedom is permitted by the government in capitalism and in socialims. It was established that we are free completely but restrict ourself due to presence of government intervention tat makes the exercise of freedom cost more than benefit. The idea behind the socialism is to regulate and control the economy. In other words the maximum governmental intervention in the economy. Which means not a lot of economic freedom. The idea behind the capitalism is as less of government control over the economy as possible, in other wards as less as possible of government intervention. So much more economic freedom than socialism.

"(besdies removing an incentive for retraining and reeducation)"

These would likely be paid.

Soviet Block countries had incentives in terms of monetary rewards and promotions that were given to people for innovations and inventions. However not too many choose to because the incentive was not exact worth of spending time on innovations and invention and because with guaranteed job, people had no fear of loosing it if they don't innovate or invent. In market economy if you don't improve you could be kicked out very quickly out of the market and a job.

"This is also work"

So is lifting and dropping a plank of wood for 8 hours a day. The question is: is is useful work? The short answer is no, and the long answer is that what investors acheive is a highly inefficient planning system which prioritises individual convenience over wider interest and requires an undue number of grossly overpaid people to do it.

I heard Russians often say a proverb or a saying: "If you can't work with your head, work with your hands". So if you could not educate yourself enough to work mentally, you would be stuck with physical labour work. AOnce again the point is made on how hard people work. The person who is lifting wood works harder than the guy in the office. Well I already answered that point with an example of me and my friend writing a poeme for and Eglish class.

I beleive that the financial section of the firms is least understood than any other sections, because the work of R&D and assembly plants are easily seen and people have an immage of it. Well the work of the finance people is as hard as any other and they are under tremendous pressures mentally. Accoutnants look after daily transactions of the compnay (what is so hard in that?) the huge number of ways to do inventory is one of them. Accoutnats must not only punch in transactions but to analyse them, look after the costs that are rising and in which sectors, they often analyse the data of the other companies to see if that the same case with competition. Report to the controller, so that he reports to Cheif  Financial Officer and he start to look for solution to the problem.

Financists would be the people who evaluate the projects, they decide through analysis if whethere to take the project, analysis of risk, analysis of future events on the market, analysis on how to handle and controll the amount of risk, what would be the cost of raising money (interest rate, dividend rate), how to get the money, sell stocks, sell bonds or create an new financial security and sell that one. At the same time you ahve to make sure that this doesn't hurt the shareholders or they will not provide the money for the project or they will fire you.

Economists identify potential markets, identify the demand curves for new products and than supply curve and the price than they look if the should be raised or lowered to punch throug into the market easily or to aquire profit. Whether they are going to be leaders or followers on the market and if so what price they should set up there.

The mistakes this people make would have a serious impact on the whole company. The higher they are the more resposabiltiy they ahve and reputation they have to keep. Nobody wants a CEO of the firm that went bankrupt. There won't be too many offers to the higher level management of that company either.

Shareholders don't want to pay their management high salaries becasue that means less of the profits will go to them in terms of dividends, so management is mostly paid exactly its worth.

But if those jobs are overpaid more people will go into those jobs and create a surplus of labour in the sector forcing the salaries to go down.

"as you conquer that coutnry you will destroy the people who posses comparative advantage"

Not necessarily. You'll kill some, but if the advantages of conquest outweigh the deaths of a few, then invaion goes ahead. Plus, the greater the difference in power, the greater the chance of outright surrender. Note that even if it does drop due to population loss, comparative advantage also increases (from the conqueror's point of view) because the subjugate population can be forced to work longer hours for less pay.

Ussually the conquered countries destroy their advanced technology from falling to the enemy. Also conquered countires often unsatable with partisan activities. The forced labour also has a trend of having a lower productivity than non forced labour. In other words it is often easier to trade with a country and let it deal with its own problems than to take those problems on your own neck. 

[nemafakei]

"The idea behind the socialism is to regulate and control the economy."

No. The idea behind socialism is to ensure the economy is responsible to the populace as a whole. With socialism, the economy is managed in identifiable ways. Under capitalism, the economy is subject to control - but not by an identifiable (never mind transparent) body.

Freedom is not merely the absence of government - it is people's ability to make choices. On an individual level, I would be able and free to do pretty much anything under socialism that I could under capitalism (and possibly more). Unless you can suggest something?

"However not too many choose to because the incentive was not exact worth of spending time on innovations and invention and because with guaranteed job, people had no fear of loosing it if they don't innovate or invent."

Then the incentive was not representative of the labour time. I'm not going to defend any idiots in the USSR, nor do I need to.

"In market economy if you don't improve you could be kicked out very quickly out of the market and a job."

Depends. If you've got a big enough market share or you have other benefits that you can exclude from your competitors, you can keep going for a long time without improving.

Oh, I'm aware people underestimate how much goes into managerial and economic stuff. However, my point is that a lot of this effort is compensation for the inherent inefficiencies of capitalism, and that without capitalism, a lot (not all, of course, but a lot) of this work would not be needed. Managerial and financial infrastructures, for example, are horribly messy. Essentially, for every company out there, they've got to pay the overheads of these structures: there are hundreds of them working in parallel. Socialism would eliminate the need for all but one such infrastructure.

"Ussually the conquered countries destroy their advanced technology from falling to the enemy. Also conquered countires often unsatable with partisan activities. The forced labour also has a trend of having a lower productivity than non forced labour. In other words it is often easier to trade with a country and let it deal with its own problems than to take those problems on your own neck. "

Generally, the countries conquered are those with lower technologies anyway - when countries do attack others with comparable technologies, the goal is usually to eliminate opposition rather than subjugate partners. I'd agree that productivity does drop, but I'd disagree that this is always going to be a big enough drop that it won't provide value for money. And who says you've got to take responsibility for conquered countries?

Actually, reconstruction efforts are also a good way of redistributing wealth upwards and securing political cash from . The process is:

Populace pays government X through taxation

Government X hires Company A to provide arms to destroy government Y

Government X hires Company B to reconstruct country formerly ruled by Y

Companies A and B are grateful to Government X, and fund Party X. Not anything like the amount of money that went from Government to Companies, but still a lot of money for a political party.

Party X is now better placed to win another election and repeat.

But that's state capitalism rather than laissezz-faire. The fact that the latter leads to the former may or may not be irrelevant, depending on what terms we're debating on.

[Tatar Khan]

The problem with the assumptions of a Perfect Market:

1.) This is only attainable with a completely globalised economy. Some markets like Singapore's (yeah, I know) are too small, which is why Singapore is that reliant on export. But even if we do attain this completely globalised economy, the thing about Perfect Market is that no firm has the ability to control the price. Everybody is a price-taker. However, as we can observe in the world today, there are a large number of goods which have producers who are not price-takers. Even if you can satisfy the conditions of a very large number of buyers, you cannot do the same for sellers, and thus we cannot achieve a Perfect Market.

The perfecly competitive market is the model towards all the markets tend to move but never reach. Like equilibrium point is the point towards which the market moves but never reaches.

2.) You've admitted it, we cannot go into Perfect Markets. So why force us to fight for Perfect Communism? Besides, Monopolistically Competitive Markets are not all that efficient, which I will address later..

I am aware of the inefficientcies of monopolistic competitive markets. And they do have even economic profits because of those inefficiencies. I did say that we can not go into pure capitalism, however the opposition to me on the forum has not made that same statement. Edric O did reject the idea of market socialism (middle point betweent the two systems). The statement was that if it has market in it, it is not socialism. Correct me if I am wrong by opposition has been willingly defending socialism in its pure form.

3.) The issue here is not about how many markets you can obtain information about, but rather how much information you can obtain from a particular market. It's not about quantity, but quality. Besides, as Edric O had pointed out, computers are good enough to do all the calculations to simulate a particular market. Logically, if more markets are to be evaluated, just get more computers! Besides, even if socialist planners cannot obtain perfect information for all markets, neither can capitalists on their particular market. If capitalists could obtain all the information on their markets, there would be no such thing as "going out of business". Subnormal profits won't even be possible.

As I already stated that there is too many things to program and too many things to input in order to try to create a model of the economy. This is not just a number of computers, some one has to make you a program for those computers to run and interact as the carry over effects transfer from market to market to market. Since no market is completely isolated from the other one. I stated Barone as the economist who created the formulas for that planning but he saw this task as huge and the result to be the same exactly to allocation of the capitalism system.

In capitalism I stated the firms and induviduals decide ont he information that is appropriate to their decision according to their beleives and constraints of gathering the information. This of course creates certain inefficiencies but do to flexibility of the market the inefficiencies could be absorbed easily. Socialism without market structure would be inflexible its adjustment to inefficiencies would require remaking the plan which will take a long time to do. Capitalism with everyone being their own personal planner allows the adjustment process to be carried out by everyone which is way faster than a limited number of planners.

5.) Yes, and how exactly do government-run industries work? Singapore's Public Utilities aren't inefficient, mind you. :P

The government run monopolies are not ineficient if they act ont eh basis of the MC=D instead of MC=MR (at this point it is inefficient). However as any economist knows MC is very difficult number to calculate because it not only includes explicit costs (ex. cost calauclated by accoutants) but also implicit costs (ex. opportunity cost).

Besides, on the point of Monopolistically Competitive Firms, if you draw the graphs and everything, according to theory, you will not attain Allocative Efficiency. It's quite interesting that you wish to argue the point of the Law of Diminishing Returns, because that law cannot be used to show how you obtain any form of efficiency in Monopolistic Competition. Granted, you can re-allocate your workers to other industries when market conditions change, but you cannot reflect society's needs accurately at any one point in time because even Monopolistically Competitive firms have their own inaccuracy with reflecting society's needs. What then gives you ground to seek the same from Socialist planners?

Flexibility of capitalism is the flexibiluty that allows faster corrections to be done through market than through recreation of the plan to correct for every stress that suddenly occurs and makes the plan inefficient.

[Tatar Khan]

"The idea behind the socialism is to regulate and control the economy."

No. The idea behind socialism is to ensure the economy is responsible to the populace as a whole. With socialism, the economy is managed in identifiable ways. Under capitalism, the economy is subject to control - but not by an identifiable (never mind transparent) body.

Freedom is not merely the absence of government - it is people's ability to make choices. On an individual level, I would be able and free to do pretty much anything under socialism that I could under capitalism (and possibly more). Unless you can suggest something?

Management ussualy equals control so the more economy is managed the more it is controlled. Since socialism outputs the plan that tells exactly the firms what to do they are they are controlled. In socialism a firm is told exactly the quantity and price for production. Firm won't be able to respond by increasing or decreasing its quantity or price if its costs sudenly change or its suppliers failed. In capitalism the firm would be free to respond to that changes, while in socialism the firm would have to wait for the adjustment of the plan to fix problem. The time difference is that socialist planners would have to adjust the plan and calcualte the effects of change in uantity and price of this firm on the market it is in and the other markets that connected to it. The capitalist management would only have to adjust their own firm in the market, the adjustment n otehr markets would be carried out by management there when the effect of changes would hit them.

"However not too many choose to because the incentive was not exact worth of spending time on innovations and invention and because with guaranteed job, people had no fear of loosing it if they don't innovate or invent."

Then the incentive was not representative of the labour time. I'm not going to defend any idiots in the USSR, nor do I need to.

Ok, I'll refrase my point. Without fear of losing a job people are not motivated enough to act or to improve themselves. The idea is why work hard and improve things while you can have a good enough life without doing much. This is often refered to free rider problem. This problem exist in all social programs.

"In market economy if you don't improve you could be kicked out very quickly out of the market and a job."

Depends. If you've got a big enough market share or you have other benefits that you can exclude from your competitors, you can keep going for a long time without improving.

I already said that no monopoly in history was able to last for a long time. You might have succsess in keeping competition out in the short run but in the end it will get in. If you are a company in the socialism you can just go to the government and ask them for the money required for you to stay in business despite inefficiencies and losses.

Oh, I'm aware people underestimate how much goes into managerial and economic stuff. However, my point is that a lot of this effort is compensation for the inherent inefficiencies of capitalism, and that without capitalism, a lot (not all, of course, but a lot) of this work would not be needed. Managerial and financial infrastructures, for example, are horribly messy. Essentially, for every company out there, they've got to pay the overheads of these structures: there are hundreds of them working in parallel. Socialism would eliminate the need for all but one such infrastructure.

The fact that this infrastructure exist in each firm gives the ability to firms to react quickly to the changes in the economy. Centralise this infrastructure and you get less flexibilit and slower reaction time.

"Ussually the conquered countries destroy their advanced technology from falling to the enemy. Also conquered countires often unsatable with partisan activities. The forced labour also has a trend of having a lower productivity than non forced labour. In other words it is often easier to trade with a country and let it deal with its own problems than to take those problems on your own neck. "

Generally, the countries conquered are those with lower technologies anyway - when countries do attack others with comparable technologies, the goal is usually to eliminate opposition rather than subjugate partners. I'd agree that productivity does drop, but I'd disagree that this is always going to be a big enough drop that it won't provide value for money. And who says you've got to take responsibility for conquered countries?

Actually, reconstruction efforts are also a good way of redistributing wealth upwards and securing political cash from . The process is:

Populace pays government X through taxation

Government X hires Company A to provide arms to destroy government Y

Government X hires Company B to reconstruct country formerly ruled by Y

Companies A and B are grateful to Government X, and fund Party X. Not anything like the amount of money that went from Government to Companies, but still a lot of money for a political party.

Party X is now better placed to win another election and repeat.

You jsut accumilated a large national debt (money ahd to come from somewhere, the taxes that governemnt collects were already distributed (hopefuly efficiently) into programs that government has. So in order to get additional expenses (your war) paid you need to aquire debt or raise taxes. Both don't sit well with people.

Forced labour does not exercise intensive growth so as soon as extensive growth is doen that is it. While non forced labour exercising both types of growth which is more beneficial.

[nemafakei]

"Management ussualy equals control so the more economy is managed the more it is controlled."

And the economy is managed in capitalism, as you go to great lengths to observe. What's your point?

"firm won't be able to respond by increasing or decreasing its quantity or price if its costs sudenly change or its suppliers failed."

Why not? There's absolutely no reason it can't make an interim decision while awaiting for the revised figures to arrive in a few hours' time (if that). In fact, chances are, a socialist society would know faster, since if there are changes further up or down the line, there's no immediate way for a capitalist firm to realise except by a process of osmosis.

"As I already stated that there is too many things to program and too many things to input in order to try to create a model of the economy."

Cockshott & Cottrill 'Towards a New Socialism' gives the equations used and calculates "a computer with a speed of one billion instructions per second could do the job in 2