The problem of Capitalism

Discussion in 'Economics & Trade' started by stan1990, Mar 13, 2019.

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Do you agree that the main problem of Capitalism is of moral nature?

Poll closed Apr 12, 2019.
  1. Yes

    33.3%
  2. No

    50.0%
  3. Maybe

    16.7%
  1. bringiton

    bringiton Well-Known Member

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    If you define rent as market power.
     
  2. Reiver

    Reiver Well-Known Member

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    Market power creates rent opportunity. A firm merely needs to adopt a profit maximisation objective and it will guarantee rent.
     
  3. bringiton

    bringiton Well-Known Member

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    When you define rent as a return obtained through market power.
    When you define rent as a return to market power. Such a claim is a self-supporting tautology, mere question begging, with no real-world meaning or implications.
     
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  4. Reiver

    Reiver Well-Known Member

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    Me? I didn't invent modern economics. Its really not fault that you don't know any ;)
     
  5. bringiton

    bringiton Well-Known Member

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    At least you agree that "modern" mainstream neoclassical economics is mostly self-referential tautology, mere accounting identities with no real-world meaning or implications.
    I meant "you" in the modern impersonal sense of "one," not you personally.
     
  6. Reiver

    Reiver Well-Known Member

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    You're not saying anything again. But heck, we've just got another example-like discrimination- where you ignore the sources of rent. You do love to make yourself sound irrelevant.
     
  7. bringiton

    bringiton Well-Known Member

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    Unless discrimination is by law, it's not a source of rent. It's just the idiosyncratic preference of a market participant. Is it rent if someone prefers rice to potatoes?
     
  8. Reiver

    Reiver Well-Known Member

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    That discrimination occurs must mean two things. First, there is market power such that bigotry is enabled. Second, firms must be profiteering at the expense of the discriminated. Rent by definition. You ignore these crimes as you don't really give two hoots about rent. Georgist crackpottery, nothing more.
     
  9. bringiton

    bringiton Well-Known Member

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    Your claims continue to be reliably false. Bigots who have no market power can discriminate. You are again just flat, outright, provably wrong as a matter of objective, physical fact.
    No, your claims continue to be outright false. A firm or individual that discriminates can lose money thereby.
    No, your claims are all just objectively false, and your definition of rent is invalid, absurd, and disingenuous anti-economic trash.
    Discrimination not instantiated in law is not a crime, as it does not deprive anyone of anything they would otherwise have, and it is not a source of rent unless instantiated in law. You merely seek to rationalize, justify and excuse rentier parasitism by expanding the definition of "rent" into meaninglessness. If every return is rent, one can't reasonably object to it.
    Why do you stick so religiously to your "Georgist" script? It only cruelly exposes you as an obsessive monomaniac.
     
  10. Reiver

    Reiver Well-Known Member

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    No content again. It amuses me, but also sickens me, how you ignore rent-seeking from discrimination. Gosh, its as if justice really doesn't matter to you.
     
  11. bringiton

    bringiton Well-Known Member

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    I don't call discrimination a source of rent because liberty and truth matter to me as much as justice. Truth obviously does not matter to you, which is why you want the definition of rent to be so broad as to make the word uninformative. Rent -- a return obtained by legally depriving others of access to economic opportunity that would otherwise be accessible -- comes from privilege, which is legal. If discrimination is instantiated in law, then it can be a source of rent. Not if it's just some bigot acting on his personal preference.
     
  12. Reiver

    Reiver Well-Known Member

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    There has not been a broadening of economic rent, except of course with the Georgists scrambling for relevance ;)

    We have the standard outcome. A profit, created by inefficient redistribution, that is enabled by market power. None of this is new. It only shows one truth: given you haven't bothered to understand modern economics, you're really not in a position to understand capitalism.
     
  13. gottzilla

    gottzilla Banned

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    Stopped reading at "profit". Considering that a defining characteristic of rent seems very silly, Reiver. You are sowing confusion in people's heads.

    Profit cannot and should not be a defining characteristic of rent. If one buys a patent or copyright but its value crashes, then that doesn't mean that the unexpectedly low inflow one gets is not rent. It means that the rentier gets less rent than expected.

    And it doesn't make much difference to the victim with regards to the fact that their rights are being violated. If one buys a slave and he unexpectedly loses an arm and becomes a much less efficient worker, how does that change that he's a slave?
     
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  14. bringiton

    bringiton Well-Known Member

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    Clearly false. You seek to broaden the meaning to encompass the rewards of competitive success.
    You again obsessively chant your "Georgist" script.
    No, that's just typically false and absurd garbage from you. Profit is an accounting concept -- revenue less expenses -- that has no economic meaning whatever. A landowner who manages his affairs so incompetently as to not make a profit does not thereby cease to collect economic rent.
    Or correct.
    Modern mainstream neoclassical economics was created to prevent understanding of capitalism, and it has obviously succeeded, at least in your case.
     
  15. Reiver

    Reiver Well-Known Member

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    No content, just attempt at conspiracy theory. Why do you think the rest of the world acknowledges that market power creates economic rent? Why do you think the Georgists even agree with me that capital gains is rent? Why is your monism 'you and another bloke who hasn't read much either'?
     
  16. TedintheShed

    TedintheShed Banned

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    Reiver attempts to position very narrowly accepted economics definition that fits his worldview as broadly accepted economics definitions and makes the assumption that no one knows any better. It's his SOP.

     
  17. Reiver

    Reiver Well-Known Member

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    Crikey, there's a lot of trolling in this thread. Talk to me directly if you have something to say. Flamebaiting is such a cliche.
     
  18. Reiver

    Reiver Well-Known Member

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    You're showing an innocence of modern economics here. Profit can be separated into normal and abnormal profit. The latter refers to economic rent (i.e. profits created by market power which destroys economic activity through deadweight loss).

    There's nothing relevant here to what I've said. I've not referred to patents, so that's a red herring. I have referred though to discrimination and underpayment/exploitation. Do you agree with bringiton that these rent sources can be ignored? Economic history would point to how slavery isn't necessarily the best way to maintain profit. Look at today, for example, with zero hour contracts. These workers have no bargaining power. Just in the same way as predicted in classical economics, workers will automatically find that wages and productivity increasingly deviate. The rent opportunities can be very attractive. Employment without offering any labour rights at rates below the living wage.
     
    Last edited: Apr 15, 2020
  19. gottzilla

    gottzilla Banned

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    So, no profit = no rent?

    There is.

    If no profit = no rent, then a patent holder or copyright holder who makes no profit gets no rent. So, if somebody bought a patent or copyright for $100,000,000 but its value crashes to $30,000,000 due to a superior invention or because someone cracked the copyright protection, then according to your definition, none of what he still makes from the patent or copyright can be classified as "rent" because he personally does not make a profit from it. But he's still taking money. Just less than expected. How does that change that whatever he's still taking is still a result of violating other people's rights? Sorry, but rent is and should be considered independent from whether or not the individual who happens to take it makes a profit, a loss, or breaks even. It's not a defining characteristic.

    Whether or not discrimination can lead to rent depends on how it comes about / how it is done. Just in case you would decide to make a straw man: No, I'm not in favor of mean and nasty forms of discrimination. "Underpayment"...under what / according to what? If there are unjust laws that violate the workers' rights and depress their wages below what they would otherwise be then certainly those who financially benefit from this exploitation would be taking rent.
     
    Last edited: Apr 18, 2020
  20. Reiver

    Reiver Well-Known Member

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    Rent is inefficient profit. Market power delivers rent. In capitalism it necessarily follows that market power is the main source of rent.

    If a firm makes no profit then it will die. Its not an issue, even if it did want to rent seek.

    Rambling on about patents really isn't going to wash. I haven't referred to that at all. Now you could refer to how patents create temporary monopoly. However, the bulk of market power has nothing to do with patents. Capitalism, by its very nature, leads to market concentration.

    So you're going to be as hypocritical as the other fellow? Discrimination creates rent. It is abhorrent. Monopsonistic power creates rent. Indeed, the underpayment it creates (as any labour supply elasticity experienced by the firm will drive a wedge between wage and productivity) is arguably the most important source of rent within Anglo Saxon capitalism. We see that with how neoliberalism, under the bogus umbrella of 'labour market flexibility', creates zero hour contract labour where wages stagnate (and are often supported by corporate welfare by government).
     
  21. gottzilla

    gottzilla Banned

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    I just realized that while you have mostly implied the way you write that profit is a defining characteristic of rent, this one time it almost looks as if you could merely be to talking of profit that happens to consist of rent:

    You: "Profit can be separated into normal and abnormal profit. The latter refers to economic rent (i.e. profits created by market power which destroys economic activity through deadweight loss)."

    Perhaps you're making a causal relationship mistake again: You assume that because profit can consist of rent that it therefore must be a defining characteristic of rent.
     
    Last edited: Apr 18, 2020
  22. Reiver

    Reiver Well-Known Member

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    The problem is that you haven't grasped the nature of basic economics. I've referred to how rent is understood: it is necessarily inefficient and it is destructive. A very basic understanding of the theory of the firm highlights how that is used to demonstrate the problems created by market power. Now you can use all sorts of language (e.g. profit versus profiteering), but what I've said is perfectly correct.

    Are we just back to the standard conclusion? Georgism isn't economics friendly ;)
     
  23. gottzilla

    gottzilla Banned

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    More accurately, if profit happens to consist of rent rather than gain that incentivizes and rewards productive contribution then rent happens to have lead lead to profit for that particular individual/company. That doesn't make profit a defining characteristic of rent.

    So, if somebody is an ancestor of an extraordinarily talented artist whose paintings happen to drastically increase in value, then that person is a rentier because he has market power? You don't see the absurdity in that? What unjust harm is inflicted?

    No. In general, there is probably a correlation between market power and rent, but that doesn't mean that market power itself creates rent.

    You are just defining what you want into existence without actually giving any valid underlying reasons for it.


    If a firm is rent seeking, then it is rent seeking whether or not it makes a profit. You're focusing on what supposed parasites gain rather than the unjust harm they inflict on others which can happen whether or not profit is made. Interestingly, with regards to this focus on the possible gain rather than the unjust harm inflicted on others in the process, you sound eerily similar to the "risk earns its reward" type capitalists, just the other way around: "risk earns its reward" (no matter the unjust harm done in the process) vs "no reward no rent" (no matter the unjust harm done in the process).

    That irrational focus probably not only leads to gains that do not actually consist of rent being falsely considered in the same category/character as rent by people of the general public (think of the stupid fixation some people have on inheritance), but it also distracts from what is done to the victims whether or not a particular perpetrator happened to make a profit from the underlying injustice.

    Capitalists and socialists/Marxists truly need each other and people like bringiton or I who point out the truth are confronted with insults, lies, etc. by both sides.

    I'm not "rambling".

    I pointed out a logical implication of your posts and showed that what you wrote is incorrect and absurd.

    I don't know the exact numbers, but belittling the impact of intellectual property like patents and copyrights on market power is absurd. Look at a list of the richest companies in the world, and tell me which ones don't gain a **** ton of market power from from intellectual property privileges.

    But it's not inherently market power that is the problem. It's the intellectual property privileges that happen in those cases to also lead to market power -- or at least significantly contribute to it -- that are the problem.

    Market concentration could be a symptom of an underlying problem, of course.

    A hypocritical person would be a person that behaves in a way that goes against what he touts. This is not the case here.

    The following reeks of typical defines-itself-into-existence Marxist rant from you:
    How?

    Discrimination can certainly be abhorrent. That's not what's in question here. What's in question is if it inherently creates rent.

    :lol: According to you, asymmetric information and worker heterogeneity is sufficient to create "monopsonistic power" and thus rent:

    "Asymmetric information on job opportunities is the norm. Worker heterogeneity is the norm. Monopsonistic power is therefore the norm."

    So, one could have monopsonistic power even if one is not a monopsonist. What a bunch of defines-itself-into-existence Marxist nonsense. Marxist rant waves a magic wand and gives us rent where there is none. (Hey, that last sentence actually rhymed a bit!)

    "Under"payment. Under what? Defines-itself-into-existence pseudo intellectual Marxist rant?

    Most of what a firm can gain through "labour supply elasticity" is probably not actually kept by the firm but taken by the landowner, as the landowner is able to demand full market value from the firm for permission to access the labor market -- unless the firm also happens to be the landowner, that is, in which case it would get the benefit as a landowner.

    The best solution we have is probably to just collect what the landowner currently pockets for doing nothing and devote it to the benefit of the public that contributes it.

    What do you propose we do? An artificial restriction of labor supply by rent seeking unions to blackmail firms into submission and cause unjust harm to both firms and the non-union the non-union worker?


    I do not doubt that government often interferes in the market in a way that is beneficial for rich, privileged interests, but can't comment on that specific issue.
     
    Last edited: Apr 20, 2020
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  24. Reiver

    Reiver Well-Known Member

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    Profit which is associated with market power is rent. No need for ramble. Its pretty bleedin obvious.

    You only describe that you don't understand market power. It is the case, mind you, that art is used for capital gains. Given that derives no economic value, it can certainly be taxed without distortion. Teach the Georgist some Georgism? ;)

    Market power creates rent, by definition. The only debate is between the schools of thought over the stability of that rent. Marxists, for example, would refer to market concentration as the norm in capitalism. Evolutionary economists would see it more as a cycle.

    Nothing to do with me. I'm merely referring to modern economics correctly. Are you like the other fellow who thinks modern economics is some conspiracy?

    A firm that doesn't make profit dies.

    No, I'm referring to the source of rent and using the definition correctly: it refers to an inefficiency which is destructive and which can be taxed without creating market distortion. You fellows ramble on about justice, but then you cower when true injustice in the labour market is mentioned.

    Inheritance is an important issue. It generates inequality of opportunity, generating negative spillovers such as labour outcomes which do not reflect innate ability. Class conflict.

    You fellows can't help but go for a conspiracy. I love how the Internet Georgist operates: minimise knowledge and then blame others for their folly in refusing to follow suit.

    If you're going to start rambling about not rambling, you might want to try a quizzical eyebrow.

    No content, as usual.

    I laughed at this. I haven't referred to patents. You have. But you don't actually have any evidence to refer to? Crikey, not even a Georgist article (like the one that confirmed that capital gains was rent)?

    Market power is the most important issue in the economic paradigm. That's accepted by both orthodox and heterodox approaches. You could go all Schumpeterian on us I suppose. Have a pop!

    Says nothing.

    Says nothing.

    Says nothing.

    Ooo, you broke your pattern here. Well done. Discrimination refers to a particularly aggressive form of underpayment. Paying below worth is an inefficient redistribution from employee to employer. Rent.

    Discrimination 'can' be abhorrent? Crikey, the justice superhero pants have ridden up.

    This neatly sums up how your position is based on knowledge deficiency. Monopsony has naff all to do with Marxism. It simply refers to wage making power. Any such power, assuming profit is pursued, will generate underpayment. This is based only on the laws of supply and demand. Whilst we should acknowledge that underpayment is created by other sources, it is also the case that empirical evidence into the distribution of underpayment supports the job search framework (e.g. analysis using stochastic frontier to measure the rent inefficiency).

    More knowledge deficiency. Read up on neoclassical labour demand and how, assuming the law of one price holds, wages will reflect productivity criteria. Get back to me when you have just a level of knowledge of labour markets.

    Utter drivel! The whole reason why Georgism failed is because the nature of the economy evolved (as shown how LVT became increasingly irrelevant). Unfortunately internet Georgists insist on giving the same ole drivel endlessly. Other folk evolved. Anarchists, for example, aren't peddling the same stuff as the Diggers.

    Nationalise land. Sorted. That would only dent rent mind you!

    More ignorance! The union cannot rent seek. They can only reduce underpayment. I suppose you could try and corrupt the 'efficient bargain', but that's only an understanding of how unions can generate overemployment through their preferences.

    Georgist deficient understanding includes a lack of knowledge of classical economics?

    I referred to how neoliberalism impacts on the labour market. As shown by the 'quality' of your posts, you're not in a position to make any relevant comment on such issue.
     
    Last edited: Apr 20, 2020
  25. gottzilla

    gottzilla Banned

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    Adjustment: If the above looks as if it can be interpreted in a way that I claim that monospony would in and of itself mean rent if it did exist, then that wasn't my intention. All that I meant to say was that those claims of "monopsonistic power" seem to be a tool fabricate rent when it doesn't actually exist, not that monopsony would in and of itself mean rent.
     

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