Socialism vs Capitalism is a stupid Dichotomy

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  • Theweakeredge
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    Why do people continuously insist: "Either Capitalism or Socialism", clearly both economic systems have their faults. Why is it that in other regards can we see that there are middle grounds, third options, etcetera, but in this specific field I've overwhelmingly seen support in one or the other way. I think that the faults of either are inescapable in their purest forms. In a capitalist society any short term loss for long term profit, in a Socialistic one the way it can be set below the minimum standard. Now, Capitalism does not solve the problems of Socialism, not in a long term anyways; the same is true of Socialism on Capitalism. It is true, of what I've studied, that devaluing the work actually done to obtain, manufacture, create, etc, the product will do nothing but harm in the long run. 

    Therefore should their not be some new considerations here? I'm obviously not very equipped to try something like this, still not very educated on the more fine details of economics, and so I wouldn't attempt to claim I could at all. Instead I would just propose an idea, could there not be a mix of the two? Either keeping some elements of both, or mixing them to a point of making something new? Is that not attainable? If it is attainable, is it something that could benefit people economically? If it is attainable and could benefit people, would we want to do that system? If all of these things are true, how long would you propose a transfer of systems? Perhaps all of this is off base, if so, explain why: This isn't actually a popular dichotomy, or: This dichotomy is reasonable for x,y, & z.
  • Sum1hugme
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    --> @Theweakeredge
    Capitalism vs socialism is definitely a spectrum. And people's stance towards each will vary depending on the issue. (Like, should healthcare be socialized or privatized? What about roads?) But a totality of either on every single issue is patent extremism. 
  • Conway
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    A market economy is the natural result of autonomy, property, and specialization.

    Instead I would just propose an idea, could there not be a mix of the two? 
    Profit may be a necessary and healthy priority for survival, but it is not necessarily the primary motivation of individual contributions to the economy.

    Socialism vs Capitalism is a stupid Dichotomy
    Karl Marx coined the term, capitalism. 


  • Theweakeredge
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    Okaaay? So what? I made it clear that I find neither particularly valid on their own. Also, its not like we didn't pick the term up. Its been use for decades by us, to describe a free market. 

    primary motivation of individual contributions to the economy.
    Well, they want to thrive in a system of economics no? So in the long run they make more profit, though this applies more to corporations than it does individuals. I don't see what your objection is precisely.

    Is this you saying that we should only have a free market system? Because if that's the case I can tell you that I disagree very much
  • Athias
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    --> @Theweakeredge
    Why do people continuously insist: "Either Capitalism or Socialism", clearly both economic systems have their faults
    What are the faults with Capitalism?

    Why is it that in other regards can we see that there are middle grounds, third options, etcetera, but in this specific field I've overwhelmingly seen support in one or the other way.
    To presume that the "solution" is found on middle ground is fallacious reasoning (argumentum ad temperantiam.)

    I think that the faults of either are inescapable in their purest forms. In a capitalist society any short term loss for long term profit, in a Socialistic one the way it can be set below the minimum standard. Now, Capitalism does not solve the problems of Socialism, not in a long term anyways; the same is true of Socialism on Capitalism. It is true, of what I've studied, that devaluing the work actually done to obtain, manufacture, create, etc, the product will do nothing but harm in the long run. 
    This doesn't necessarily lists the faults with either Capitalism or Socialism.

    Instead I would just propose an idea, could there not be a mix of the two? Either keeping some elements of both, or mixing them to a point of making something new? Is that not attainable?
    You'd first have to understand Capitalism and Socialism. Capitalism is the production and dissemination of goods and services by private entities. Socialism is the regulation of production and dissemination of the aforementioned by a collective (typically a State.) Next, you'd have to elucidate the ends any economic system is to meet, and determine which of the two, and how each of those two, would meet those ends. Last, you'd have to determine the deficiencies, if any, of either economic system and determine how adopting some mechanisms from the other could sustain the adopted mechanisms of the system currently in use. As it happens, Capitalism and Socialism are diametrically opposed.

  • Athias
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    --> @Sum1hugme
    Capitalism vs socialism is definitely a spectrum. And people's stance towards each will vary depending on the issue. (Like, should healthcare be socialized or privatized? What about roads?) But a totality of either on every single issue is patent extremism. 
    Actually, they're not. One's feelings on the two may be nuanced, but the systems as they relate to each other aren't.
  • Athias
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    A market economy is the natural result of autonomy, property, and specialization.
    Yes.

    Profit may be a necessary and healthy priority for survival, but it is not necessarily the primary motivation of individual contributions to the economy.
    There are no "necessary" motivations in economics. Only motivations. The profit-motive is a logically consistent aspect of economics.

    Karl Marx coined the term, capitalism. 
    No he didn't. Capitalism has roots in Mercantilism and French Physiocracy. Etienne Clavier and David Riccardo used the term before Marx did, not to mention Proudhon and Louis Blanc.
  • Conway
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    David Riccardo is associated with capitalism today, and certainly capitalists have been referred to since the 1700's in the original context of investment, but I haven't come across evidence pointing to a Marxist conception of laissez-faire from him.



  • Theweakeredge
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    Except I didn't assume that was the only solution, I said it is a possible solution. I also suggested mixing and coming up with something new, awfully selective reading you have there.

    If I were to say: "Because it is not either of them the answer must lay in the middle" You would be justified in saying that, but A) The fact that we already kind of do that, and B) That isn't what I said, your fallacy is an example of the fallacy fallacy. 

    As for the problems of either? 

    Capitalism 

    I could list them out, but I think this source does it much better than I could explain it currently: (GEH)
    "In short, capitalism can cause – inequality, market failure, damage to the environment, short-termism, excess materialism and boom and bust economic cycles." 
    "Contemporary capitalism is under growing fire, with a rising chorus of critics making four main points: first, that the current incarnation of capitalism produces too much inequality; second, that it is too unstable and prone to crisis; third, that capitalism in its current form is at odds with the planet's ecology; and fourth, that capital has hijacked government, subverting democracy and winning too many special favors. "

  • Theweakeredge
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    As for socialism? I think people are much more familar with it's failings, I'll go with one of the most apparent: Its lack of incentives. 

  • Athias
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    David Riccardo is associated with capitalism today, and certainly capitalists have been referred to since the 1700's in the original context of investment, but I haven't come across evidence pointing to a Marxist conception of laissez-faire from him.
    "Laissez-faire" comes from Physiocracy; hence, the term is French (as Physiocracy was a school of thought originated in France.) It would be peculiar to associate "laissez-faire" with Marx given that he was German, and moved to Britain ironically under the auspices of his wealthy Capitalist friends to write about political economy. Marx in no way or form "coined" the term "Capitalism." Marx did however make reference to State Capitalism.
  • Athias
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    Except I didn't assume that was the only solution, I said it is a possible solution.
    You presented a dichotomy for which you claimed either in its purest form is inescapably at fault, and questioned the overwhelming support for one or the other in contrast to middle ground. Where were you suggesting that middle ground was just a "possible" solution?

    I also suggested mixing and coming up with something new
    I know.

    awfully selective reading you have there.
    I read what's in front of me.

    If I were to say: "Because it is not either of them the answer must lay in the middle" You would be justified in saying that,
    That is essentially the nature of your argument. Here let's reexamine:

    Why do people continuously insist: "Either Capitalism or Socialism", clearly both economic systems have their faults. Why is it that in other regards can we see that there are middle grounds, third options, etcetera, but in this specific field I've overwhelmingly seen support in one or the other way. I think that the faults of either are inescapable in their purest forms.
    There are no third options, or etcetera. Capitalism is diametrically opposed to socialism. And your suggestion of "purest form" would indicate their functions at their extremities. Even if you were to suggest mixing both, that is middle ground because you're negating their extremities and functions for a compromise. This is not like, for example, political ideologies where one can claim a third option to being either Democrat or Republican in the form of Libertarian. Either the economic system facilitates the production and dissemination of goods services being regulated by private individuals or entities or not. If it's the former, it's Capitalism; if it's the latter, it's Socialism.

    A) The fact that we already kind of do that,
    Yes, we do. Except this middle ground is a farce. It's socialism--or to be more technical, it's communism.

    B) That isn't what I said, your fallacy is an example of the fallacy fallacy. 
    Then what did you state? Or what did you intend to state?

    Capitalism 

    I could list them out, but I think this source does it much better than I could explain it currently: (GEH)
    Okay, let's go these supposed faults:

    1. Inequality
    The benefits of capitalism are rarely equitably distributed. Wealth tends to accrue to a small % of the population. This means that demand for luxury goods is often limited to a small % of the workforce. The nature of capitalism can cause this inequality to keep increasing. This occurs for a few reasons
    • Inherited wealth. Capitalists can pass on their assets to their children. Therefore, capitalism doesn’t cause equality of opportunity, but those born in privilege are much more likely to do well because of better education, upbringing and inherited wealth.
    • Interest from assets. If capitalists are able to purchase assets – bonds, house prices, shares, they gain interest, rent and dividends. They can use these proceeds to buy more assets and wealth – creating a wealth multiplier effect. Those without wealth get left behind and may see house prices rise faster than inflation.
    • The economist Thomas Piketty wrote an influential book Capital in the Twenty-First Century, which emphasised this element of capitalism to increase inequality. As a general rule, Picketty argues wealth grows faster than economic output. He uses expression r > g (where r is the rate of return to wealth and g is the economic growth rate.)
    First, "inequality" is not a fault. Inequality is inevitable among a population of varying skills and talents, let alone subjective values. If I did not make as much as a currency trader for example, the system would not have faulted me. Rich and poor are relative concepts; therefore, in order to be "rich" there would necessarily need to be one who's "poor" or at the very least, "poorer." The premise of this argument is that it's "faulty" to not have wealth.

    Capitalism relies on financial markets – shares, bonds and money markets but financial markets have a tendency to cause booms and busts. In a boom period, lending and confidence rise, but frequently markets get carried away by ‘irrational exuberance‘ causing assets to the spike in value. But, this boom can quickly turn to a crash when market sentiment changes. These market crashes can cause economic downturns, recession and unemployment. At various times, capitalism has suffered prolonged recessions (the 1930s), periods of mass unemployment and a decline in living standards.
    Capitalism does not "rely" on financial markets. It relies on commerce generated by private entities. The booms and busts of the securities market, which is referenced in this quotation, is a consequence of the credit cycle regulated and sanctioned by the government and its affiliates. That has nothing to do with Capitalism in and of itself.


    In a free market, successful firms can gain monopoly power. This enables them to charge higher prices to consumers. Supporters of capitalism argue only capitalism enables economic freedom. But, the freedom of a monopoly can be abused and consumers lose out because they have no choice. For example, in industries like tap water or electricity supply, which are a natural monopoly, consumers have no alternative but to pay the prices charged by consumers. In the Nineteenth Century, monopolies like Standard Oil bought our rivals (often with unfair competitive practices) and then became very profitable.
    No, firms don't gain monopoly power in Capitalism. Even the case against Standard Oil was a farce. Standard Oil before its dissolution had over 150 competitors. How was it a monopoly? The only monopolies are state-sanctioned monopolies which take form in patents, copyrights, and trademarks--and lythoronine tablets, the subject of this reference's case for "monopoly" has a U.S. patent.

    Monopsony is market power in employing factors of production. For example, firms can have monopsony power in employing workers and paying lower wages. This enables firms to be more profitable but can mean workers don’t share from the same level of proceeds as the owners of capital. It explains why with increasing monopsony power we have seen periods of stagnant real wage growth while firms profitability has increased (2007-17 in UK and US)
    No it's not. Whoever wrote this knows little about the subject. A monopsony is a single buyer controlling a market, very much in the same way that a "monopoly" is a single seller doing the same. Even when applying the concept of monopsony to the labor market, his description would be inept.

    In a free market, factors of production are supposed to be able to easily move from an unprofitable sector to a new profitable industry. However, in practice, this is much more difficult. E.g. a farmworker who is made unemployed cannot just fly off to a big city and find a new job. He has geographical ties to his birthplace; he may not have the right skills for the job. Therefore, in capitalist societies, we often see long periods of structural unemployment.
    Once again, not a fault of capitalism in and of itself. Structural unemployment usually occurs in often revolutionary shifts in the focus of generated commerce, i.e. primary sector (raw materials,) secondary sector (manufacturing,) and tertiary sector (intangible goods.) This is in fact necessary. The computer from which you type and likely generate some income is a result from monumental shifts in skills.

    In capitalist economies, there is limited government intervention and reliance on free markets. However, market forces ignore external costs and external benefits. Therefore, we may get over-production and over-consumption of goods that cause harmful effects to third parties. This can lead to serious economic costs – pollution, global warming, acid rain, loss of rare species; external costs that damage future generations.
    Where's the substantiation of this argument?

    The nature of capitalism is to reward profit. The capitalist system can create incentives for managers to pursue profit over decisions which would maximise social welfare. For example, firms are using theories of price discrimination to charge higher prices to consumers who want to jump the queue. This makes sense from the perspective of maximising profit. However, if we have a society, where the rich can pay to jump a queue at a Fairground – or pay to see Congressman quicker – it erodes social norms and a sense of ‘fair-play’
    The pursuit of the profit motive has encouraged some law firms to aggressively pursue litigation claims. This has created a society where we devote resources to protecting ourselves from being sued.  Further reading – “Moral Limits of Markets” by Michael Sanders
    Once again, none of these arguments are substantiated in the slightest. It merely presumes that Capitalism is detrimental to "social welfare" and "fair-play."

    Theweakeredge, you can provide better arguments for the alleged faults of Capitalism. This itemized list is thoughtless and lacks an appreciation for economic analysis.
  • Athias
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    As for socialism? I think people are much more familar with it's failings, I'll go with one of the most apparent: Its lack of incentives. 


    Socialism's primary fault is in the elimination of a free-flowing price system. Unregulated prices are the best index of value. If I'm willing to sell you something, and you're willing to buy it, what is a better indicator of value than our mutually agreed transaction? When this is regulated by a State or a collective, it injects the values of the State in place of the involved parties and coerces their transaction. This of course, like your reference mentions, can create a lack of incentives.
  • zedvictor4
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    The system is inadvertently self perpetuating ..... People with varying abilities create and perpetuate the  system....Hierarchy.

    The embellishment of the system and how we refer to it, is largely irrelevant....Capitalism and Socialism are just labels we apply to variations of a theme.

    I would suggest, that how individuals fair within the system, depends a lot on whether it is  the pen or the sword that maintains the system.
  • Sum1hugme
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    The systems of market regulators determine socialist and capitalist policies in different markets. So as pure extremes they are juxtaposed, but in practice systems display aspects of each idea. Pretty much everything is a mixed economy in practice
  • Dr.Franklin
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    interesting thread and I agree with the premise but I am wondering what other economic system is preferable
  • Conway
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    If you were so interested you can look up definitions for socialism and communism, but you won't find capitalism in an American dictionary prior to the Civil War. 

    David Riccardo is associated with capitalism today, and certainly capitalists have been referred to since the 1700's in the original context of investment, but I haven't come across evidence pointing to a Marxist conception of laissez-faire from him.
    "Laissez-faire" comes from Physiocracy; hence, the term is French (as Physiocracy was a school of thought originated in France.) It would be peculiar to associate "laissez-faire" with Marx given that he was German, and moved to Britain ironically under the auspices of his wealthy capitalist friends to write about political economy. Marx in no way or form "coined" the term "Capitalism." Marx did however make reference to State Capitalism.
  • Athias
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    The systems of market regulators determine socialist and capitalist policies in different markets. So as pure extremes they are juxtaposed, but in practice systems display aspects of each idea. Pretty much everything is a mixed economy in practice
    I somewhat agree with you. My only contention would be that a "mixed" economy is essentially socialism. In practice, there aren't any "true" private entities. Citizens and their properties and resources are subject to regulations of the State.

  • Athias
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    If you were so interested you can look up definitions for socialism and communism, but you won't find capitalism in an American dictionary prior to the Civil War.

    How does this pertain to Karl Marx's allegedly coining the term, "Capitalism"? Karl Marx did not coin the term. Confirm it for yourself.
  • Sum1hugme
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    .
    My only contention would be that a "mixed" economy is essentially socialism. In practice, there aren't any "true" private entities. Citizens and their properties and resources are subject to regulations of the State.
    .
    Well pure socialism and pure capitalism are poles on the left to right aspect of the political spectrum. So an economy can have socialist aspects, but remain mostly capitalist. So it's not completely accurate to say that an economy is socialist because it entails some regulations. That really just means that it is pulled a little left.

  • Theweakeredge
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    Me tooo, which is why I asked
  • Theweakeredge
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    Honestly, I could try to rebut you, but I definitely feel ill-prepared to speak purely economics, lol, so I took a step back and saw what other people thought. From my perspective, its as simple as making some systems or markets owned by the state and others not. I don't know if there something beyond the obvious, "how would we pay for that" that makes that some kind of problem. Some things shouldn't be treated as a business, certainly not healthcare, insurance, or education. That's my views though.
  • Athias
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    Well pure socialism and pure capitalism are poles on the left to right aspect of the political spectrum. So an economy can have socialist aspects, but remain mostly capitalist. So it's not completely accurate to say that an economy is socialist because it entails some regulations. That really just means that it is pulled a little left.
    Everything is regulated, not just some. Any one's property or resource can be subjected to seizure, not just some. Saying mostly Capitalist is like stating "mostly free." It either is, or it isn't.


  • Athias
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    Honestly, I could try to rebut you, but I definitely feel ill-prepared to speak purely economics, lol, so I took a step back and saw what other people thought. From my perspective, its as simple as making some systems or markets owned by the state and others not. I don't know if there something beyond the obvious, "how would we pay for that" that makes that some kind of problem. Some things shouldn't be treated as a business, certainly not healthcare, insurance, or education. That's my views though.
    What are the reasons you believe that healthcare, insurance, or education shouldn't be treated as a business?
  • Theweakeredge
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    Except... you can be partially free... You can be regulated to the laws of physics and technically not be "free". You can have the right to do as is with the law and technically be "free". Clearly, there is more nuance to freedom that you do not include, to look at it binarily is like to look at lots of things through a binary, that simply isn't. It is simplistic and not the case. I could be a criminal that is allowed out of prison, but with an ankle monitor, I am "more" free than I was before unless you're saying there is no difference? Clearly, freedom is relative to your experience.