Talk:Capitalism/Archive 9

Slrubenstein, you put in the statement that "Most proponents and opponents agree that capitalism provides the conditions for, and promotes, economic growth." I demand a source for this statement. According to you, editors are required by Wikipedia policy to present one when asked. What's your source? RJII 21:00, 1 Apr 2005 (UTC)

The above show academic research showing that economic growth started with the industrial revolution and is faster in more capitalist countries. Please give some sources that disagree. Ultramarine 21:03, 1 Apr 2005 (UTC)

It's not up to me to do that. The burden is on whoever makes the statement. I demand a source that says most opponents of capitalism agree that it's good for economic growth. RJII 21:05, 1 Apr 2005 (UTC)

You have a point and it is good if you finally start arguing for academic research instead of dictionaries. The statement could be changed to some thing like "opponents have not argued against". Then it is up to you to find a source that do argue against. Ultramarine 21:18, 1 Apr 2005 (UTC)

Bad editing

RJII, you are editing irresponsibly. When you delete material, you often don't rewrite the sentence to ensure it's still grammatically correct. For example, you just left the following mess: "Most theories of capitalism developed in the 18th century, in the context of the industrial revolution, and 20th century, in the context of the Cold War. ; that it valorizes a particular conception of a "free market" and a market mentality ..." SlimVirgin ^(talk) 20:52, Apr 1, 2005 (UTC)

oops. RJII 21:00, 1 Apr 2005 (UTC)

And again! Luis has just left: "Most theories of capitalism developed in the 19th century, in the context of the industrial revolution, and 20th century." Come on, guys, let's at least have some decent English. SlimVirgin ^(talk) 21:11, Apr 1, 2005 (UTC)

Sorry. I noticed it just after having hit the save button... Luis rib 21:30, 1 Apr 2005 (UTC)

The sentence is pretty incoherent anyway. RJII 21:36, 1 Apr 2005 (UTC)

Historical context

Historical context is always important. European Imperialism was a very important context for the development of these theories. Keynes served in the India office, and was very much concerned with and informed by the economic competition and tension between European imperialist powers. John Locke, whose theories of property were important for the development of theories of capitalism, served on the board of the East India company and of course studied British colonialism in the Americas. Milton Friedman was not only an expert in econometrics and monetary policy, he was deeply concerned with debates about capitalism vs. communism. Add context, don't subtract it. Slrubenstein | Talk 21:22, 1 Apr 2005 (UTC)

I'm not in favour of adding for adding's sake. Keynes might have worked in the India office, his major contributio to economics is mostly linked to the Depresseion and the New Deal. Friedman was, like Hayek, an extremist. Locke may be considered a philosophical influence, but did not do any economics himself. What happened to Pareto, who lived in non-imperialist Switzerland? My point is that theories on capitalism were developped since Adam Smith, in all times, before and after the Cold war, before and after imperialism. Luis rib 21:29, 1 Apr 2005 (UTC)

Luis, I respect your views here but you are being too narrow. The sentence says "most" and "in the context," so of course there are exceptions. Moreover, "in the context" does not mean "directly influenced." You say that Locke was not an economist -- do you think "capitalism" is only of interest to, or has been influenced by, or has been studied by economists? Capitalism is not just an economic system, it is a cultural order. Locke may not directly influence economists, but he played a signal role in the development of the culture within which said economists operate. Similarly, "in the context of" does not mean that the cold war or imperialism had a direct influence on such theorists. Historical and cultural context almost never operates so directly. It can operate by influencing the funding priorities of governments and foundations, which guides who gets funding for dissertation research, or for post-doctoral research, and can influence who gets positions at research universities. It can influence the way a more general public takes interest in, or does not take interest in, a particular theory. Many economists study actual economic behavior (of non-economists) which has often been influenced in direct and in indirect ways by imperialism or the cold war. I don't want to exclude your view, but you can't exclude other views. Slrubenstein | Talk 21:50, 1 Apr 2005 (UTC)

I still don't completely agree with it, but ok. I nuanced phrasing and added examples of economists that lived in those contexts. Replaced imperialism by great depression, which, I think, was bigger influence since it was the first major problem capitalism had to face. Luis rib 21:57, 1 Apr 2005 (UTC)

I like what you did. However, I do think that "Imperialism" has to be added -- people think globalization is something new, but it is new only when defined very narrowly, the development of capitalism in Europe was linked to the imperialist search for raw material and later new markets outside of Euorope and (in the case of European theorists) this was an importan context for their developing understanding of what capitalism is. Slrubenstein | Talk 22:03, 1 Apr 2005 (UTC)

Imperialism is a strong word. Wouldn't colonialism be a more neutral term? Luis rib 22:30, 1 Apr 2005 (UTC)

Imperialism is neither a strong nor weak word -- it is a precise and accurate word that historians as well as social scientists use to describe the policies and activities of that era. It links the the appropriate article on the topic, New Imperialsim. What one thinks, morally, about imperialism is not my concern; some people abhor it, others celebrate it. That isn't relevant to this discussion. Slrubenstein | Talk 17:44, 2 Apr 2005 (UTC)

European imperialism and Cold War

Could someone (e.g. Slrubenstein) explain to me how European imperialism and the Cold war have influenced theories on capitalism?. Hayek, ok, but that's just one theoretician. What about Keynes? Where does he fit in? What about Stiglitz and Sen, more recently, who criticised neoliberalism while remaining attached to capitalism? I think the refence to imperialism and Cold war should be deleted, since they are meaningless and POV. Luis rib 21:23, 1 Apr 2005 (UTC)

Definition dispute comment and questions

I came upon the apparent edit war in this article over defining the word capitalism, there was a similar situation in the Terrorism article. I think a succinct Oxford English Dictionary definition of a word certainly should be acceptable anywhere on Wikipedia though I also see the potential need to caveat it with something to the effect of it's "potentially archaic usage". Is someone actually claiming that an OED's definition of a word is unacceptable for wikipedia? Either way, since I likely don't know all the details about the dispute here, what is the current edit war about exactly (summarize succintly please)? zen master T 23:11, 1 Apr 2005 (UTC)

I suggest you read definitions of capitalism and the ongoing arbitration case against RJII. OED is a good dictionary but is not appropriate for finding the true definition of capitalism in the same way it is not a good source for finding the true definition of "race", "intelligence", or "time". These things are studied in ongoing academic research and that is what should be cited, not dictionaries- Ultramarine 23:20, 1 Apr 2005 (UTC)

I actually came across the exclusion of the OED as a source on RJII's arbitration evidence page but I was only skimming that page (that dispute discussion goes on and on and it was entirely unclear to me what the essence of the dispute was, if it's simple definition content dispute why the length?). Anyway, my high level criticism is shouldn't wikipedia include all definitions? (that are notable/relevant, if it's in OED then it's arguably notable, right?) What do you think, are you saying the OED's definition is not relevant for all time? I think this conflict can be avoided if the alternative definition is included much less verbosely and caveats can be added that state it is perhaps not a modern definition or the article should indicate exactly who defined the term that way. What specifically is wrong with this alternative definition of capitalism? zen master T 23:46, 1 Apr 2005 (UTC)

Regarding the conflict with RJII, it is stated in the arbitration case. I am all for trying to find a statement that accommodate all or the mainstream ones and have proposed several that has been rejected by those wanting a specific view. I oppose stating that the OED definition is the correct definition of capitalism. One objection being that it does not mention the important role of the state in protecting property rights, something considered essential by many researchers. One other is that the statement "The condition of possessing capital; the position of a capitalist; a system which favours the existence of capitalists." contains obsolete elements. Stating that "his capitalism increased due to the bull market" is obsolete use. A third that it avoids the issue by refering to capitalists. A fourth is that dictionaries define common usage (or arguably not in this case) and popular opinion is not necessarily always correct. For example, should an article about "Hydrogen" state that this is an energy source since many people believe this? Ultramarine 00:42, 2 Apr 2005 (UTC)

Ok, are there parts of the OED definition that you don't have an issue with? That should be added to the article (neutrally) then? I competely agree that this article should not use the OED definition exclusively, but on the flip side that doesn't mean to say that the OED definition should be excluded entirely from this article, does it? How exactly does the OED compare and contrast with the definition of capitalism used in this article/elsewhere on wikipedia? zen master T 00:51, 2 Apr 2005 (UTC)

I have never stated that OED should be excluded. I have already stated my objections to declaring that the OED defintion is the true definition of capitalism. Ultramarine 00:57, 2 Apr 2005 (UTC)

Ok, just making sure, wasn't accusing you of anything, I admit I don't know enough/any of the details of the overall dispute about this article. Would it make sense for someone to try to salvage something of the OED definition of capitalism for neutral inclusion as an alternative definition in this article then? (I'd do it myself but I am completely unknowledgeable about this subject) zen master T 01:06, 2 Apr 2005 (UTC)

Take what you hear with a grain of salt. This guy is involved in a bogus arbitration case against me to prevent the OED definition from being there and has deleted it several times. I just put it back in. Let's see if it stays. RJII 16:20, 2 Apr 2005 (UTC)

I am all for trying and have tried to find a statement that accomodates all or the major definitions. This is probably not possible until the arbitration case against RJII if finished. Ultramarine 01:19, 2 Apr 2005 (UTC)

If people want to look up a word in a dictionary, they go to a dictionary. If they want to read a sophisticated article on a topic, they go to an encyclopedia. Wikipedia is an encyclopedia, not a dictionary. Slrubenstein | Talk 17:53, 2 Apr 2005 (UTC)

I have put the statement that most theorists agree that capitalism is the most productive economic system. For starts, I cite two sources typically considered as opposing: Adam Smith The Wealth of Nations book four chapter two, and Marx and Engels' The Communist Manifesto part one. Slrubenstein | Talk 17:53, 2 Apr 2005 (UTC)

The Communist Manifesto considers capitalism the most productive economic system implemented thus far; certainly not the most productive of all possible economic systems! Marxists agree that no system was more productive than capitalism up to the date when the Manifesto was published (1848), but many would argue that the Soviet Union, for example, was more productive than capitalism in the 20th century.

On the other hand, if you're trying to say that pro-capitalist theorists believe capitalism to be the most productive (and overall best) economic system, then you're just stating the obvious. Of course pro-capitalists think capitalism is best. -- Mihnea Tudoreanu 19:04, 2 Apr 2005 (UTC)

You are right about the "thus far," Paul Baran argues socialism would be more productive. But you are mistaken to think "most productive" = "best." Critics of capitalism can and do consider it the most productive. For Marxists, it is its great productivity that inevitably lead to crises of overproduction. For Greens, it's great productivity destroys the environment by consuming too many natural resources and producing too much waste. Slrubenstein | Talk 19:15, 2 Apr 2005 (UTC)

Please note that "overproduction" is actually a misnomer. A crisis of overproduction doesn't mean that there is something wrong with production itself. It means that the general public doesn't have enough buying power to buy all the things that are produced. Consumption (or rather, the ability to consume) doesn't keep up with production. Thus, some things don't get bought even though there are many people who want to buy them, and you get absurd situations like farmers throwing away their crops while thousands of people starve. From a Marxist perspective, it's easy to see why crises of overproduction happen: The capitalists exploit the workers too much, in the sense that they pay the workers such a small portion of the true value of their labour that the workers are unable to consume enough to drive the economy forward. -- Mihnea Tudoreanu 22:10, 2 Apr 2005 (UTC)

Ignoring the Capitalist vs Marxist debate for a momment, what of the theory that Capitalism (the requirement of economic growth over time) requires a limitless supply of resources such as fossil fuels which may already be running out? We need more info on steady state economic theory and the impact of population explosion on capitalism/unchecked growth. I agree wikipedia is not a dictionary but the OED definition of capitalism should only be excluded from wikipedia if it's 100% irrelevant or non-notable, which I don't see how that could logically be true here. Again, what is specifically wrong with including the OED definition as an alternative definition? The article should compare and contrast the competing definitions anyway since that would be the most relevant and informative thing to do. zen master T 19:24, 2 Apr 2005 (UTC)

Let's Be Sparing in Use of Scare Quotes

"capitalism valorizes a particular conception of a free market and a market mentality" 

says what it means in a perfectly NPOV way. It doesn't say that the particular conception is right or wrong, good or bad, ought to be valorized or ought to be forgotten! And it does make clear that it is a particular conception, i.e. leaves room open for other conceptions. To then put quotation marks around the phrase "free market" is to tilt the passage toward a suspicious attitude toward that particular conception and the valuation thereof. Is there any other reason for the quote marks there? Heck, why not write, "valorizes a bourgeois false consciousness of the 'free' so-called 'market'" if we're going to play that game? --Christofurio 20:08, Apr 2, 2005 (UTC)

I don't think anyone challenged your removal of the quotation marks, Christofurio. -- Mihnea Tudoreanu 22:18, 2 Apr 2005 (UTC)

And I didn't expect a challenge to it. I think this is a paradigm case, though, for a more general phenomenon and editors ought to be on their guard for such quotes. That's all. --Christofurio 22:26, Apr 2, 2005 (UTC)

Towards a better intro

IMO, the current intro is long, disorganized and confusing. I propose we work towards a better intro, structured on the following 4 points:

1. While we can't give a precise definition of capitalism (because there is no consensus on such a definition), we should begin with a list of the things that are seen by all sides as key elements of capitalism (for example, all sides agree that the majority of the means of production - or "productive capital", if you prefer - are privately owned in a capitalist economy).
2. A brief overview of the history of capitalism; essentially a summary of the current intro.
3. The most general, typical opinions held by the advocates of capitalism.
4. The most general, typical opinions held by the critics of capitalism.

Your thoughts? -- Mihnea Tudoreanu 22:31, 2 Apr 2005 (UTC)

What makes you think a history needs to be in the intro? It is POV to suggest that merely means of production are privately own. Capitalism makes no distinction, some people choose to own means of production, others choose other priorities. Capitalism does allow the exchange of private property rights to goods and services. The marxists and socialists are not granting the courtesy of allowing the idea of capitalism to be presented first before strawman perspectives. It is this courtesy that has allowed other articles like communism and socialism to not have these battles over the intro. Everybody will get their say later on. The strange thing is this discourtesy is occurring in the face of an overwelming academic literature and discipline devoted to the study of micro-economics and markets. It is easy to indentify those bare bones elements of capitalism.--Silverback 22:42, 2 Apr 2005 (UTC)

You're being unnecessarely confrontational and inflexible, as usual. The "bare bones elements of capitalism" are exactly the things I'm proposing to include in the first part of the intro. You will also notice that the word "merely" (as in "merely means of production are privately own"), or any of its synonyms, does not appear in my proposal. That the means of production are privately own doesn't mean that other things aren't privately own as well. Indeed, nearly all economic systems - including socialism - allow private ownership of certain things in a certain form. How is it a strawman to suggest that, among other things, capitalism involves private ownership over the means of production? It does, doesn't it? We all do agree on that point, don't we? Good. Let's find the other elements of capitalism that we all agree on, and list them in the intro. Rule of law would be a good next candidate... -- Mihnea Tudoreanu 22:59, 2 Apr 2005 (UTC)

Why clutter the definition? The Alchien and Allen definition is all that is needed, my alternative intro allows anarcho-captalism to be wikilinked off and even introduces history.--Silverback 23:24, 2 Apr 2005 (UTC)

Silverback, can you say please where you took this from:

Capitalism is an economic system where private property rights are exchanged in markets that under conditions of relative freedom exhibit spontanous order, an equilibriating of price, supply and demand. The abstraction of unrestricted markets serves as an analytic tool in which real world markets are modeled as perturbations of that abstract ideal behavior. Various levels of information costs, transaction costs and other restrictions are imposed upon the ideal behavior in an attempt to replicate the behavior of real world markets. Anarcho-captitalists aspire to realize the low restriction abstract market as an ideal. During the Industrial Revolution, mercantilism was recognized as hampering economic growth and efficiency, and was replaced by less restrained market conditions exhibiting much of the spontanous order of capitalism. Economies throughout history and in various parts of the world exhibiting this market behavior are generally called capitalist or mixed economies depending on the extent of government intervention beyond mere protection of property and contractual rights. SlimVirgin ^(talk) 23:12, Apr 2, 2005 (UTC)

It is a descriptive summary, based mainly on the field of micro-economics. I've been surprised at how seminal noble prize winner von Hayek was in that field. He emphasized the information processing ability of markets that gets reflected in prices. Prices end up being a marker of both production and demand in the market, that individual decision makers can use based on their own values and local knowledge of their resources. See my discussion above about how capitalism does not valorize prices. How did that get into the text. My proposed into summaries something, where does the one that summaries nothing come from?--Silverback 23:21, 2 Apr 2005 (UTC)

Thanks. I meant which textbook(s) does it come from? SlimVirgin ^(talk) 23:24, Apr 2, 2005 (UTC)

Why should Hayek view dominate the introduction? Why not deSoto or someone else? Why should anarcho-capitalism be mentioned? Ultramarine 23:25, 2 Apr 2005 (UTC)

I like Silverback's intro. It needs some work, of course, like most first drafts do, but it hits on some important points and shows more of an understanding of economics than the intro that's there. For example equating value with price? It's ridiculous. RJII 23:34, 2 Apr 2005 (UTC)

Anarcho capitalism is mentioned because it fits right in with the idealization of the market abstraction, and it can be wikilinked off. There is not further reason to discuss anarcho capitalism in the article, so it is economical. As for Slims request for a source. "I do not have to provide one source for this. Since it is not making an analytical or synthetic statement (it is just a descriptive summary), it does not count as original research. However, it is verifiable" Alchien & Allen and Frederick von Hayek are both sources. There is nothing controversial in the summary, it is about as basic a summary of micro-economic theory as one can get. It is the foundation that all sides assume in their discussions, critics of capitalism will discuss problems related to transaction and information costs and externalities, tragedy of the commons, etc, and whether markets really process information and "optimize" the way micro-economists theorize they do.--Silverback 23:35, 2 Apr 2005 (UTC)

A descriptive summary can certainly be analytic and this is. Please give a source. Why not mention minarchism or marxism in the first paragraph of the intro? Ultramarine 23:45, 2 Apr 2005 (UTC)

To clarify. Give citation that support this definitin and that it is the correct defintion for capitalism. Your dictionary state nothing similar to this definition. Ultramarine 23:51, 2 Apr 2005 (UTC)

Courtesy is the reason marxism isn't mentioned. It is my understanding that it isn't a form of capitalism. Marxist perspective on capitalism can be mentioned in a subsequent paragraph of the intro, and elabororated later in the article. Perhaps wordsmithing can get minarchism included. If I have misrepresented anything in the intro please point it out.--Silverback 23:52, 2 Apr 2005 (UTC)

Please give citation supporting this definition and further that this it correct one. Otherwise I will remove as original research. Ultramarine 23:57, 2 Apr 2005 (UTC)

Anarcho-capitalism is certainly not significant enough to be mentioned in the intro - liberalism (both classical and social), marxism, conservatism, socialism and a host of other ideologies would be far more deserving of a mention. Please stop trying to push your narrow POV, Silverback. -- Mihnea Tudoreanu 23:55, 2 Apr 2005 (UTC)

By what standard is it not significant enough? It has its own article, and is easily capsulized there without wasting any further space. Liberalism is not as capitalism specific as anarcho capitalism, and would take several articles to summarize.--Silverback 00:07, 3 Apr 2005 (UTC)

Silverback, perhaps you didn't see my question. Your version of the intro looks as though it has been directly lifted from one or more textbooks. Without a citation, that is plagiarism, which is why I reverted, so could you please say where you took it from. Many thanks, SlimVirgin ^(talk) 23:59, Apr 2, 2005 (UTC)

The summary contains concepts not quotes. Rest assured I wrote the text myself. show good faith by searching google on:

• "spontaneous order" Hayek
• "transaction costs" "information costs" externalities

Or looking in any micro-economics or price theory text.--Silverback 00:04, 3 Apr 2005 (UTC)

Sigh... working with Silverback seems to be a lost cause... I'll have to finish looking through some of the other articles on my watchlist before I can afford to engage in what looks like a long uphill struggle against Silverback's POV-pushing. But let me make one thing clear: If any ideology should be mentioned in the intro, that ideology is Liberalism. NOT anarcho-capitalism or any other such ideological sect. -- Mihnea Tudoreanu 00:05, 3 Apr 2005 (UTC)

Courtesy, not dismissive sighs. Consider how courteous the discourse was on the Socialism page where National Socialism was allowed to be kept out of the introduction, shoved off to "Other ideologies including the word "Socialism"" and minimalized, even though there are strong arguments that outcomes like it are not an anamolie. Consider these two sites discussing von Hayek's analysis [1] [2]. Similarly, courtesy works by taking turns. Capitalism should be allowed to be summarized first, and the other perspectives should get their turn.--Silverback 00:28, 3 Apr 2005 (UTC)

No. Your claim, you give the sources. Not we. Give also the reliable source showing that research has shown that this is correct definition that should be mentioned in preference to all other definitions. Ultramarine 00:07, 3 Apr 2005 (UTC)

Let's not confuse definitions with summaries, as the term is used by Srubinstein and myself. The Alchien & Allen definitionis already quoted in the last (premature) archive. Search on it. I don't think you have been following the discussion here for long.--Silverback 00:10, 3 Apr 2005 (UTC)

I searched and there was no definition, only a "subset" that are nothing at all like what your wrote. Please give the citation supporting the text. Your claim, you give the citation. Otherwise it is original research. Ultramarine 00:17, 3 Apr 2005 (UTC)

Sorry, it was further back than I thought, archive 6. I will repeat the definition here:

• Capitalism is a system of exchangable private-property rights in goods and services, with the central government, protecting and enforcing these rights. Private-property rights, in turn, can be defined as the rights of owners to choose the use of their goods and resources (including labor and time) as they see fit. -- "Exchange and Production" by Alchian & Allen.

--Silverback 00:35, 3 Apr 2005 (UTC)

Silverback's intro

Silverback, I've asked this twice but you're ignoring the question. Your version of the intro looks as though it has been directly lifted from one or more textbooks, which is why I reverted, so could you please say where you took it from. SlimVirgin ^(talk) 00:20, Apr 3, 2005 (UTC)

Is it so hard to believe that someone might have somewhat of a coherent understanding of the economic principles behind capitalism that he's able to put it in his own words? Does everything have to be so badly written and devoid of coherence, as the other paragraph that's in there, before you will believe a fellow editor wrote it? Some of us actually have a decent understanding of capitalist economics. The guy didn't plagiarize anything. Back off. RJII 00:25, 3 Apr 2005 (UTC)

Silverback should answer for himself. SlimVirgin ^(talk) 00:28, Apr 3, 2005 (UTC)

I appreciate the complement, however, I wrote it myself, but we all rest on the shoulders of geniuses. There is nothing novel or original, although the concepts are strung together to serve our purposes here. I make it available to wikipedia. There is nothing POV about it, and it is not original research, as Slrubinstein and I view it, the correct view I think. I quoted his position above.--Silverback 00:39, 3 Apr 2005 (UTC)

Silverback, the problem is that you have a distinctive writing style, and that isn't it. It's only plagiarism if there are no citations, so I'd appreciate it if you could say which textbooks you took it from, then these can be added to the references section and perhaps also as inline citations. Many thanks, SlimVirgin ^(talk) 00:42, Apr 3, 2005 (UTC)

Also, I meant to add: I'm not sure which definition of original research you're using, but the correct one is here: Wikipedia:No original research. SlimVirgin ^(talk) 00:43, Apr 3, 2005 (UTC)

I agree. Probably the best statement of intent is expressed by Jimbo, "The phrase "original research" originated primarily as a practical means to deal with physics cranks". The summary does not present my theory, it is a fair representation of the most scientific part of capitalism theory, the part used to model and make predictions of the behavior of the system.--Silverback 01:18, 3 Apr 2005 (UTC)

source request made to SlimVirgin

Ok, you're the one that put this back in after I took it out requesting a source in the comment line. "in which value is recognized in the form of price which is determined by the intersection of supply and demand" What is your source? This shows a lack of understanding of value versus price. (If you don't provide a source then you're in violation of Wikipedia policy apparently and I may have to launch an arbitration case against you) RJII 00:35, 3 Apr 2005 (UTC)

I tried to figure out where this value=price notion came from. The only thing I could think of is Thomas Hobbes, who equated the "value" of a man with his "price" in Leviathon, but I know of no relation of this concept to capitalism.--Silverback 00:43, 3 Apr 2005 (UTC)

This does not need a source. The notion that value = price is well established. This is wehre we get the expression "market value" or "fair market value", both of which mean market price. It is ok to think that a market price does not inherently reflect true value, but in a capitalist system it is most certainly thought that price = value. It may also depend on what you mean by value. If you believe that value is whatever someone is willing to pay for something, then market price is certainly value. If, on the other hand, you mean value as in some inherent, independent worth, then value does not have to equal price. But it is fair to say that in a capitalist economy price is thought to reflect value. Mgw 02:12, 3 Apr 2005 (UTC)

Yes it does need a source. The problem is that if value is the same thing as price then what's the point of saying that value is reflected in price? It would be redundant --price is reflected in price? Saying that value is reflected in price implies that value is something different than price. So, how is it different? Value, in ordinary usage, is akin to "worth." Whereas, price is a quantity of money given for something. For example, we've all heard of inflation. In an inflationaty environment, a commodity can have the same value to someone even though the price of that commodity increases. Value and price do not have a direct relationship. RJII 02:24, 3 Apr 2005 (UTC)

You're right that it reduces to tautology, but that is the point of including it: to say that, in a capitalist economy, value is defined by, or is defined as, price; and that price in turn is determined by supply and demand, so that value is determined by supply and demand. A hospital doctor might earn x a year, and a cleaner one-tenth of x, but if the hospital is dirty, the doctor's patients will die of infection. But capitalism does not recognize the infection-fighting value of the cleaner's work. It is one of capitalism's conundrums. SlimVirgin ^(talk) 02:37, Apr 3, 2005 (UTC)

Its an interesting dispute, which echoes many other disputes over the question: what is (or isn't) a tautology? In debates over Darwinism, for example, opponents of the theory of evolution by natural selection sometimes complain that it's tautological, if "fitness" means "ability to survive" then the statement, "the fittest survive" is a tautology. If fitness means anything more specific, (the anti-Darwin argument goes) the statement is probably false. In the context of theology, for another example, one encounters arguments over whether it is a tautology to say that God always wills that which is good. If a theologian defines goodness as the will of God, then it is tautological. Most theologians would resist that description of their own position, but some are happy to use it to characterize the position of their rivals! Among free marketers, an analogous debate rages. Do we believe that (in free market conditions) price will equal value because that is how we understand value, or do we believe that price will equal value in the way that an arrow shot by a great archer can be confidently predicted to hit the (independently defined) target? My own POV is the latter, but the task of NPOV word-smithing here is tricky. --Christofurio 14:49, Apr 3, 2005 (UTC)

I'd say that survival of the fittest means survival of the survivors; I'm not sure what else Darwin could have meant, because his was not a teleological argument. I'd say the will of God argument is also a tautology. If you can see a way to make the price/value issue more nuanced, feel free to have a go. SlimVirgin ^(talk) 22:32, Apr 3, 2005 (UTC)

I think the tautological view of the phrase survival of the fittest is misguided, and the tautological view of the market conception of price is likewise, and for similar reasons (I'll leave the theologians to their own devices.) What Darwin (and Herbert Spencer, who actually coined the phrase, though CD adopted it) meant was that there is some set of characteristics at any time that will aid an individual organism to survive and reproduce, that an observer/biologist can't know the whole of these characteristics in advance, but that the subsequent course of development of that species sheds a sort of rearview light on what they were or would have been. Likewise, when one says that in a market price comes to equal value, one means that there is an optimal use of any specific resource in a specific context, that observers/economists can't figure out what that will be, but that in the course of bargaining and higgle-haggle the resource will move to that use, at its given price, and that optimal price is its value. The target isn't defined by the spot the arrow hits, but the arrow will reliably hit the target because the archer (unforgiving nature on the one hand, the spontaneous equilibrium of the marketplace on the other) is so good. --Christofurio 13:40, Apr 5, 2005 (UTC)

Cite a source or learn the difference between "real" and "nominal" in economics. RJII 02:44, 3 Apr 2005 (UTC)

Perhaps you ought to learn it yourself as it has nothing to do with this issue. And please stop being so pompous. SlimVirgin ^(talk) 02:58, Apr 3, 2005 (UTC)

Has nothing to do with the issue??? It has everything to do with the issue. The amount of money (nominal price) you pay for a commodity says absolutely nothing, in itself, of your judgement on the value of that commodity to you. Let's say the government doubles the money supply tommorow. In that case what may cost one pound sterling today will cost 2 tommorow. That commodity is worth the same to you tommorow as it is today. The commodity has not increased in value, but rather money has decreased in value. The price of the commodity will change but the value of that commodity to you remains the same. Changes in price are not necessarily reflective of value, unless the "real price" of money remains constant. This is basic capitalist economics. RJII 03:33, 3 Apr 2005 (UTC)

Actually RJII is right to point out the value/price issue. Value is not equal to price, since if it was, you couldn't say expressions like that you got good value for your money. Value is an a concept of the individual. Each good and service has a different evaluation of goods and services. Hairdressing may be extremely valuable for a media star and completely devoid of value for a bald man. The price results both of the sum of these evaluations, combined with the budgets of the different people (both together give you the demand curve) and the of the production possibilities of the producers (in our example, the number of hairdressers and their costs). So value is NOT equal to price. As anyone who has any recollection of the dotcom bubble will notice, price can sometimes be completely cut off from any notion of value. Luis rib 22:19, 3 Apr 2005 (UTC)

MGW is confusing two different meanings of value when he refers to market value. In microeconomics, if value=price, no exchanges would take place, because information and transaction costs would raise the purchasers cost above the value to him. For purchasers, value is greater than price, otherwise why pay the price and transaction and information costs. When the price goes down, more people value the good or service more than the price, and when it goes up fewer people value it more than the price. "Market value" often does relate to price, because of course a seller, even if they value the product or service less than the current market price, are likely to value it at the market price, since it would not be in their interest to sell if for less than what the market says they can get. For instance, I, Silverback, put very little value on gold or diamonds, and would probably rather have a pizza instead of a ton of either, even though the pizza is a consumable that would disappear (or at least be transformed) in less than 20 minutes. However, the rediculous market price for these items, informs me that tons of gold and diamonds are exchangable for many things that I value much more than a Pizza, like for instance, two or more pizzas, so knowing this I would have a tendency to regard gold and diamonds as a store of value at their market price.

In any case, it is difficult to know what Slim means by capitalism valorizing price, so perhaps a citation could explain what she means, even if she can't. It is not a technical term of art in the study of capitalism as far as I can tell.--Silverback 04:49, 4 Apr 2005 (UTC)

I believe what I meant to say above was misunderstood. Let me try again. Here is the important part: If by value you mean whatever someone is willing to pay for something, then market price is certainly value. If, on the other hand, you mean value as in some inherent worth, then value does not have to equal price. But it is fair to say that in a capitalist economy price is thought to reflect value. I would also like to respond to the examples you have given.

Silverback: take your example of diamonds and pizza. Suppose I, like you, value pizza more than diamonds. And suppose that I am offered 1 oz of diamonds or 1 pizza. Clearly, I would take the diamonds, because, as you point out, they are worth many pizzas. Personally, I might value diamonds very little. But since they have a high market value, they have a higher value to me than 1 pizza: I can simply trade them for a number of pizzas. Your example illustrates that personal valuation is irrelevant, and a high market price will translate into a high value for me. If you still think I am “confusing two different meanings of value”, let me know what the two meanings are.

RJII: the money example you use deals with real vs. nominal prices. Real price (the rate of exchange between different goods) is thought to reflect value, not nominal price (which everyone can see is always changing). If everything doubles in price after a change to a money supply, a house still costs 5 times more than a car, even if the numbers have changed.

It's pretty common in capitalist economics, as Silverback points out, to regard that people value what they get more than the price (nominal or real) they pay for it or they would not make the trade. Adam Smith notes this pretty extensively. This equating of value with price is not standard. RJII 13:54, 4 Apr 2005 (UTC)

Luis Rib: take your hairdresser example. Suppose I am a hairdresser. Lets say a haircut takes me an hour, and goes for $40. It makes no difference to me if the bald man wants it or the movie star wants it. The haircut I can produce in 1 hour has a value to me of $40, because I can sell it on the market for a price of $40. The different value it has for different individuals is irrelevant to me as a hairdresser, because that haircut, that 1 hour of my time, have the same value to me, the same market price. Mgw 08:14, 4 Apr 2005 (UTC)

MGW, You state "If by value you mean whatever someone is willing to pay for something, then market price is certainly value." The market is often able to supply goods and services for far LESS than what someone is willing to pay for them, so market price is NOT value. Of course, all the excess of the value over price goes to the purchaser. However, there are pricing schemes that allow monopolies to try to capture some of this value. But the real issue here, is what the valorizing of price text means. It looks like it is either wrong or meaningless. Why is it in there? Does some academic have a term of art definition for value under which this makes sense?--Silverback 08:37, 4 Apr 2005 (UTC)

MGW, the price I could ask for as a hairdresser would not reflect the value it represents for me, but my costs plus the profit I wish to make. This potential profit depends on the number of competitors and of consumers (and their value profiles). Luis rib 18:39, 4 Apr 2005 (UTC)

Standard definitions of value would be marginal utility (value of nth unit to consumer x) or labour theory of value (value of product is labour time embedded in it, including usage of capital goods which themselves embody labour, etc). Value equals price only on average, if that (externalities, consumer surplus). Rd232 14:11, 4 Apr 2005 (UTC)

"If that" is right. Value equals price only if you're talking about "real price" and only if that price someone pays for a commodity is that price where he receives no value over that which he pays the seller. His valuation of what he's paying for a commodity would have to be exactly equal to his valuation of that commodity. And, if that were the case, he would not make the trade. He only makes the trade if he values what he's getting more than the price he's paying. So, when trades are made, price does not equal value. This idea is central in the concept of mutually beneficial trade. It's standard in capitalist economics to regard that both sides benefit --boths sides of a trade value what they get more than what they pay. RJII 14:35, 4 Apr 2005 (UTC)

=capitalism valorizes a free market?

What on Earth is this trying to say? It seems to me it takes a conscious action to "valorize" something. I don't see how capitalism could valorize anything --it's just an economic system. People valorize things. I keep changing it to "theorists valorize a free market" but someone keeps putting it back. (Not to mention it's also an awkward use of the word, since to valorize typically means to set the price on something by subeverting the free market, as cartels or governments would do). RJII 17:31, 4 Apr 2005 (UTC)

What do you mean "people valorize things?" People do not grow up in a vacuum. They are born into a world not of their own making, and learn values from their culture. If capitalism is their culture, they learn capitalist values. Capitalist values are those things a capitalist system valorizes. In any event, it is not the theorists who valorize a free markte. theorists are trying to understand and explain the capitalist system, it is that system that valorizes the market. Unless you are referring not to theorists but to ideologues ...Slrubenstein | Talk 17:33, 4 Apr 2005 (UTC)

The "system" *is* a "free market." What do you mean the system valorizes a free market? It's a very strange statement. RJII 19:22, 4 Apr 2005 (UTC)

No matter how many times you claim that capitalism "is" a free market it isn't going to make the claim true. Capitalists can claim to desire a free market, but whether or not they actually do, and whether or not their form of "free market" is the only one, is a question that is open for debate. Yes, even after people try to shut down debate by refering to definitions proscriptively rather than descriptively. Kev 17:57, 5 Apr 2005 (UTC)

Capitalism is not just a market place and a set of laws or customs governing its operation. It is a cultural order. Source: Marchal Sahlins, "Cosmologies of Capitalism," see also Sahlins Culture and Practical Reason. Slrubenstein | Talk 20:31, 4 Apr 2005 (UTC)

I need a source. Can you cite something that says capitalism valorizes a free market, or something to that effect? Otherwise I may have to file an arbitration case against you. RJII 21:38, 4 Apr 2005 (UTC)

It is such a strange wording that it is probably from a poor translation, by someone who was not a native english speaker. Perhaps it is not even the right root word, or if it is an old text, it may be a rare or obsolete usage.--Silverback 23:22, 4 Apr 2005 (UTC)

It is absolutely beyond me how, immediately after I provide two sources, RJII demands a source. However, here is one other: Scott Cook (1968) "The Obsolete Anti-Market Mentality: A Critique Of The Substantive Approach To Economic Anthropology." in American Anthropologist" 68(2) 323-345. Slrubenstein | Talk

Ok, so where is a quote from that source? I don't see anything like that in that article. If you keep this up, I'm taking you to arbitration. RJII 18:00, 5 Apr 2005 (UTC)

Why wait? Take me to arbitration now if you want. Slrubenstein | Talk 19:42, 5 Apr 2005 (UTC)

We are already in arbitration, the committee doesn't restrict its deliberations to the accused. RJII should feel free to present evidence against any other participants. I don't have access to the Cook sources you mention, is there a URL? The language is still unclear, such strange language should probably come in as a quote later in the article rather than in the introduction, if enough context can be provided to allow it to make sense.--Silverback 19:52, 5 Apr 2005 (UTC)

I'm not so petty as to initiate an arbitration case. It was said in jest in reference to your bogus arbitration case against me. But, as Silverback points out, I can use this. I can use this of evidence of hypocrisy. RJII 19:55, 5 Apr 2005 (UTC)

Far from price=value

The Alchian & Allen "Exchange and Production" (pg22) explanation of the relationship between price and value is:

• the value of a good to a person is the exchange rate ... at which he is indifferent whether the exchange is made. ... Value is not measured in terms of some psychic, psychological, or moral goodness or satisfaction.

It should be clear, despite the disclaimer of non-subjectivity, that value is individual, and not the market price. By defining it this way they don't have to guess what is in somebody's head, they just observe the behavior in response to variation in prices.--Silverback 20:03, 5 Apr 2005 (UTC)

I put the term "price" back in -- but without the clause on "value." This should end the debate for now. I do think the article needs -- in the body -- more detail on pricing and value. Slrubenstein | Talk 20:25, 5 Apr 2005 (UTC)

Yes, better.--Silverback 20:32, 5 Apr 2005 (UTC)

It is better, because it doesn't equate value and price, but it's very vague and doesn't mean much. Though, it sounds like it means something to the untrained observer. Prices are determined by the intersection of supply and demand ..duh. Sounds like someone trying to BS his way through a school essay. I'll work on it. RJII 03:29, 6 Apr 2005 (UTC)

The reason I introduced a graf on this subject at the end of the property rights section in the first place was that capitalism encourages a sense of value involving market allocative efficiency. This doesn't (primarily) involve consumer goods such as haircuts, or diamonds considered as ornaments. It concerns elements of production -- such as industrial diamonds. The idea is that if I'm sitting on a cache of diamonds and they don't mean much to me, I'll find somebody to whom they do mean something, and sell them. In this way, diamonds will work their way toward their highest-use allocation, and once they reach that allocation, value = price, not as an identity but as a reliable empirical fact. That, at least, is a bit of economic theory crucial IMHO to understanding the phenomenon of world capitalism. --Christofurio 21:57, Apr 5, 2005 (UTC)

I'm astonished you exclude haircuts and ornamental diamonds since those are exactly those examples that invalidate your conclusion that price=value. The rest of your explanation may be correct, but not the conclusion that in the end value=price. A price is simply the amount of money at which both seller and buyer agree to trade - the result of a negociation. The intrinsic value may be very different from that. Take a luxury handbag: its material is just plain leather, but it is sold at many times its production price. Thus price > seller's valuation (indeed, if necessary, the seller would agree to sell it a much lower price). But buyers put value in the brand, the rarity, the possibilty to show off. For them, price < buyer's value (indeed, some people don't mind waiting for hours in front of a Parisian shop to get one).

The same applies in the intermediate stages of the production process. A firm needs certain inputs, and puts a value on them. It will buy these inputs from the supplier that offers the lowest prices. The supplier, on the other hand, puts much less value on the good (since he does not have the capacities to develop it further, the end product is not of much use to him) but still wants to sell it at the highest price. In the end, an average price will emerge (that's the invisible hand thing), which will delight those buyers for whom value is above the average price, as well as those sellers for whom selling value is below the average price. Luis rib 22:17, 5 Apr 2005 (UTC)

Its that "in the end" of the start of your final sentence that I'm interested in. Another word for "end" there is "equilibrium." The point of much of mainstream microeconomic theory is simply that: price and quantity reach an equilibrium at a situation of allocative efficiency greater than that achievable by any planners. That isn't subjective, although it is in part the result of subjective decisions. But the fact that one party is better able to make use of industrial diamonds (or a patent on a method of using them, etc.) is itself not a subjective fact. So lets not make the capitalist notion of value to be entirely about consumer goods, where subjectivity does in fact dominate. --Christofurio 00:49, Apr 6, 2005 (UTC)

"But the fact that one party is better able to make use of industrial diamonds (or a patent on a method of using them, etc.) is itself not a subjective fact." It isn't? Maybe you mean something more specific that you aren't listing here, cause it sure sounds subjective. Kev 01:15, 6 Apr 2005 (UTC)

SFAIK, the word "subjective" means that the phenomena so described has one privileged observer. In other words, there is only one person with direct access to my level of interest in wearing a diamond ring ... me. The rest of you can infer my interest by my behavior, but even then the question of whether I would have paid more is one that may remain a mystery to you. Its true that such subjective preferences sum up to price in the marketplace. But wen we're talking about the process of production, allocative efficiency is an objective fact. Joe is a factory manager. His factory includes a machine that uses diamonds as a cutting edge. The needs of that machine, the fact that it will need a new supply of diamonds every X days, say, is not something to which Joe has privileged access. --Christofurio 13:19, Apr 6, 2005 (UTC)

It depends. With the progress of technology, laser cutters may become more efficient and cheaper. At some point Joe will value the diamond cutter as inferior in value to the laser cutter. At that point, diamonds will become worthless for him. The valuation of both cutters is subjective, however, since many things apart from price can influence Joe on which machine to use. For instance, the laser cutter supplier can offer guarantees and free maintenance of the laser cutter to convince Joe. Luis rib 13:25, 6 Apr 2005 (UTC)

The greater efficiency of laser cutters would be an objective fact, independent of the observer. Joe could gain a competitive advantage in the marketplace by taking advantage of this efficiency first -- which is one of the ways in which free markets promote the highest-value use of resources. In an ultimate sense, subjectivity does get involved -- if, for example, these machines are used to produce a consumer product, which might itself be a passing fad, they and all their components lose value as consumers cease to (subjectively) value that product, when the next fad comes along. But within that context, there are objective facts about allocative efficiency to consider, and value has an objective meaning which the article as now written neglects. --Christofurio 13:47, Apr 7, 2005 (UTC)

This discussion, while interesting, seems to go way beyond what is necessary for this article. First of all, I think it should be discussed onvalue. Anyone interested in that theme could see it there. Second of all, the value for Joe is partly subjective since it will depend on what he expects about the future development of his business. If he believes, as you say, that it is a fad, that value will be quite low. In more financial terms, he will calculate the net present value (NPV) of the investment (i.e. the discounted potential revenue that this investment will bring). The NPV will be the highest price he will be willing to pay for the laser cutter. It is partly objective (i.e. by using data such as interest rates, that are easily available) and subjective (since he will have to estimate the future revenues - can be done on with a probabilistic approach). However, NPV is a financial term, and I have not come accross it in "economics". In economics, I think value is usually used in a more subjective manner, but again I think that discussion should go to value. Luis rib 14:14, 7 Apr 2005 (UTC)

Okay, I've just added a paragraph on allocative efficiency in the article on value, as well as an external link to support the point. --Christofurio 18:14, Apr 10, 2005 (UTC)

Democratization?

Ultramarine, you put in this statement: "The strong economic growth during capitalism may be a necessary precondition for democratization." I added "or as more commonly asserted, vice versa --that protection of individual liberty provided the conditions that allowed wealth to be created." But, you deleted my addition. Can you explain exactly what you mean by democratization? Also you said in your edit comment "Capitalism and democracy are not identical." I agree that they're not, but I don't see the point of saying that. How does this relate? RJII 01:57, 6 Apr 2005 (UTC)

Read the link the learn what democratization is. Are you trying to say that democracy increases growth? This is disputed. Please give a link to authorative acadmic research supporting this. Ultramarine 10:58, 6 Apr 2005 (UTC)

I agree with Ultramarine on this one: India has been democratic for over 50 years, but only capitalist for 15. China, on the other hand, is not democratic, but has much higher economic growth. The general evidence points to a very weak link between democracy and economic growth. Luis rib 11:04, 6 Apr 2005 (UTC)

No, I want to know what you mean by democracy? Are you talking about ability to vote or what? What exactly do you mean? Democratization is vague. If you're talking about expansion of individual freedom, it's thought by many that individual rights are responsible for wealth creation, and that hence, those countries that have the most liberty tend produce the most wealth. RJII 17:27, 6 Apr 2005 (UTC)

From the democratization article: "Wealth. It has been claimed that countries with a higher GDP are more likely to be democratic. There is debate about whether democracy is a consequence of this wealth, a cause of it, or completely unrelated to it. Some campaigners for democracy believe that as economic development progresses, democratisation will become inevitable." It seems like you only want to allow one side of this. RJII 17:31, 6 Apr 2005 (UTC)

Associating capitalism with democracy is pro-capitalist POV. You cannot state that as a fact, because it is based on a subjective definition of both capitalism and democracy. --Tothebarricades.tk 19:54, 6 Apr 2005 (UTC)

New Section - Free market

The Characteristics of Capitalism section listed "free market" as a characteristic in the intro of that section but there was no subsection about that, so I made one. I wrote a quick and dirty paragraph explaining it. I'm sure it needs work. Hopefully it's something else we can argue over as well. RJII 04:42, 6 Apr 2005 (UTC)

I added critique and now suddenly the section should be deleted? This critique of the concept of the "free market" is not present anywhere else in the article. Ultramarine 13:32, 6 Apr 2005 (UTC)

I think it is in the section called Size of government, taxes, regulations, market failures. That's where the discussion on the role of the state should belong. Indeed, it already discusses your criticisms, but feel free to modify it. Luis rib 13:34, 6 Apr 2005 (UTC)

Monopoly and that markets exists in other economic systems is not mentioned anywhere in the article. Ultramarine 13:37, 6 Apr 2005 (UTC)

That's true, but they should be added to the section I mentioned. An alternative would be to go back to RJII's version on Free Markets and add it there. What I don't like with your version is that it explains nothing, not even the workings of a free market, or what a monopoly is. RJII's version at least did that. Luis rib 13:39, 6 Apr 2005 (UTC)

RJII version was a long way of saying that the price is determined by supply and demand. Note that many Libertarians seems to think that concept of the "free market" is the very holy core of their ideas, justifying eliminating or sharply reducing the state. This does not mean that it cannot not be criticzed. Ultramarine 13:44, 6 Apr 2005 (UTC)

The intro already says that prices are set by supply and demand. Repeating the same sentence is therefore useless. Free market has its own page, so criticism to it can be put there. Your critiques are valid and should be mentioned, but I think that putting them into the other section is better (actually the other section could be renamed into "Role of the State and Market Failures", or something similar). I simply don't see the point in creating a new section to insert stuff that could easily fit into another section. Luis rib 13:52, 6 Apr 2005 (UTC)

Moved section to size government section. Note that things are introduced in the introduction and discussed in more depth in the body. Nothing prevents them being mentioned in both. Ultramarine 13:57, 6 Apr 2005 (UTC)

I modified the section. Added a paragraph just on monopolies. Also, removed some stuff that was POV libertarian and thus a minority view. Someone has added back the free market section; should it be deleted? Also: you are right that stuff that appears in the intro should be expanded in the main text, but your previous text didn't expand on formation of prices. Luis rib 14:16, 6 Apr 2005 (UTC)

If there are two characteristics most commonly regarded as being essential to capitalism they are the private ownership the means of production and a free market to guide that production and other economic decisions such as prices. Private property and free market are both listed in the Intro to the Characteristics of Capitalist Economies section, as they should be. Private property has a section at the top, as it should. Free market also needs one. I put back in the section, sans the explanation about supply affecting price --too involved and supply and demand has it's own article apparently. I also took out the comments about governemnt intervention possibly reducing the amount of capitalism. This is covered in Which Economomies are Capitalist section. Maybe some of that, if there is anything new, can be added there. RJII 14:18, 6 Apr 2005 (UTC)

The statement in this section about governments stepping in to stop coercive monopolies is misguided. No free market advocate is for allowing coercive monopolies --a coercive monopoly is one that is in violation of free market principles by definition. This action by government cannot properly be construed as interference in a free market or diminishing economic freedom but preserving it. RJII 14:48, 6 Apr 2005 (UTC)

Some argue that the government should not regulate monopolies and that such attempts harm the free market. Other disagree. NPOV prevents censoring either one untill definitve scientific evidence arrives. Ultramarine 14:57, 6 Apr 2005 (UTC)

First of all that sentence doesn't belong in a paragraph that's about pricing. It's misplaced. Secondly, all free market advocates think that "coervice monopolies" should be prevented. A coercive monopoly *is* a monopoly that's using coercion ..subverting the free market. Yes, not everyone thinks monopolies should be regulated, but ALL free market advocates think coercive monopolies should be regulated, prevented, or not exist. RJII 15:00, 6 Apr 2005 (UTC)

There IS scientific evidence in the huge number of economists that think that the state should regulate monopolies. Actually, I've never heard of any economist that would not claim for regulation! NPOV policy does not say that minority views with no academic status should be granted equal treatment! Luis rib 15:02, 6 Apr 2005 (UTC)

Right. They would regulate coercive monopolies, but not other kinds of monopolies. Free market advocates, that is. For example Milton Friedman says that antitrust laws should not exist. But of course he would be the first one to advocate that government steps in if a monopoly began using coercion to prevent competitors from coming in. RJII 15:09, 6 Apr 2005 (UTC)

Luis, a free market isn't necessarily a perfectly competitive market. That's a separate concept. A free market doesn't require perfect information to be a free market. It just requires a lack of coercion --that all trades are voluntary. There is such an abstraction as a "perfectly competitive free market" but that is the joining of those two concepts. RJII 15:23, 6 Apr 2005 (UTC)

Yep, I know that as well, but it would explain why the role of government can be called for even when there is no coercion. Luis rib 15:26, 6 Apr 2005 (UTC)

Yes that's a good point. RJII 15:28, 6 Apr 2005 (UTC)

Good work Luis! (Refering to this snapshot [3]). Ultramarine 15:49, 6 Apr 2005 (UTC)

Thanks a lot! Turns out all those economics classes were useful after all. Concerning hunter-gatherers and feudalism, what was your thought?

I would propose something like this:

Markets have, of course, existed thoughout human history. Hunter-gatherers used to exchange their goods in barter. The appearance of money facilitated exchanges, permitting the flowering of trade fairs in the Middle Ages. Nevertheless, many regulations persisted, and the influence of the guilds prevented truly free markets. Therefore, free markets are usually associated with the rise of capitalism.

Comments? Luis rib 15:55, 6 Apr 2005 (UTC)

Sounds good. Although money and trade existed before the Middle Ages. Ultramarine 15:59, 6 Apr 2005 (UTC)

Luis, you removed this: "Influential on the prices buyers are willing to pay, and the prices at which sellers are willing to part with their goods, is the supply and demand of the commodity in question" with the comment "there's nothing "influential" on supply and demand; it's just how it works." That's not "just how it works." It may look like that's just how it works when you look at a supply and demand chart but there is more to it. When supplies of a commodity increase it lowers the value of that commodity relative to every other commodity (including money). In turn, that is an influence on what price a buyer is willing to pay for a commodity and what price a seller is willing to part with his commodity. Of course supply and demand is influential on bids and offers. Supply and demand do not directly control prices ..what ultimately controls prices is decisions made by traders whose value judgements are affected by supply and demand issues. RJII 16:40, 6 Apr 2005 (UTC)

I deleted the sentence because it was almost identical to the following one. Also, it did not explain how this "influence" was exerted. Also, your example is slightly confusing. When supply of a good increases, price drops BECAUSE there is a new intersection point with the demand curve (as can easily be seen on the supply and demand page. The demand curve per se does not change - i.e. the preferences of consumers are not influenced by the existing quantities of a good. Only their willingness to pay changes, since the equilibrium point moves to another part of the demand curve. Finally, in economic theory, supply and demand DO control prices, since they are the expressions of the values and beliefs of traders. Luis rib 16:48, 6 Apr 2005 (UTC)

No, prices do not "drop because there is a new intersection point with the demand curve". Prices drop because individuals are willing to pay less than they were before. It comes down to decisions of individuals, not the fact of a line on a chart moving. You're thinking too abstractly in terms of charts. But, yes I agree with when you say "The demand curve per se does not change - i.e. the preferences of consumers are not influenced by the existing quantities of a good. Only their willingness to pay changes." That's exactly what I'm saying. The price at which they are willing to pay for or sell a commodity is influenced by, among other things, "the existing quantities of a good." To say, as you said above, that supply and demand are not influential on this is just not true. This all should be explainable in an intuitive sense, as Adam Smith does for example. Reference to charts and intersections and such are fine but without an intution behind it, it's pretty vapid. RJII 17:03, 6 Apr 2005 (UTC)

You say that

prices do not "drop because there is a new intersection point with the demand curve". Prices drop because individuals are willing to pay less than they were before.

That's not the case with the example you cited before! If supply of a good increases, sellers are willing to sell it for less! That's why the demand curve is unchanged. The opposite case is when preferences of consumers change. That's the case you cite now. In this case, the supply curve doesn't change, but the demand curve drops (moves to the left). You may not like charts, but at least they prevent you from mixing up two different situations. Luis rib 17:10, 6 Apr 2005 (UTC)

What exactly is wrong with this statement: "Influential on the prices buyers are willing to pay, and the prices at which sellers are willing to part with their goods, is the supply and demand of the commodity in question." RJII 17:20, 6 Apr 2005 (UTC)

The sentence is pretty much identical to the following one, except that it is less precise. The sentence is not wrong per se, it's just unnecessary. Luis rib 17:36, 6 Apr 2005 (UTC)

I agree it's not necessary, but I think it improves the article and assists in understanding. It leads in to your abstract economics discussion about supply and demand. RJII 17:44, 6 Apr 2005 (UTC)

Ok, just rephrase it so that it doesn't resemble the following one so much. This is just a stylistic issue for me, not an issue on principles. Luis rib 17:48, 6 Apr 2005 (UTC)

Luis, you said that "the milton friedman page says he was a laissez-faire capitalist. Also, capitalism is not necessarily laissez-faire" Well, Adam Smith is widely-regarded as being an advocate of laissez-faire. And it's commonly regarded that Smith describes capitalism. Encarta Encyclopedia says "the individual who comes closest to being the originator of contemporary capitalism is the Scottish philosopher Adam Smith." I think capitalism is generally regarded to be a laissez-faire system. So whether you are as extreme as Milton Friedman or not, if you are pro-capitalism as it is commonly defined, you are an advocate of laissez-faire. It's just a matter of how extreme of a laissez-faire position you take. RJII 17:16, 6 Apr 2005 (UTC)

Adam Smith is pretty old. Economics have evolved since. Luis rib 17:21, 6 Apr 2005 (UTC)

Are you saying that modern pro-capitalist economists are more laissez-faire than Adam Smith was?

Milton Friedman certainly is, but people like Amarty Sen is much less laissez-faire. In general, any economist analysing development economics sees the limits of laissez-faire. Luis rib 17:30, 6 Apr 2005 (UTC)

Ok, it's no bid deal to me. RJII 17:32, 6 Apr 2005 (UTC)

Ultramarine: you requested a source: Amartya Sen is one. He says that democracy promotes prosperity, rather than the other way around. I can't find his original writings off hand. But here is something about him that I found (next to last paragraph): [4]

Hearsay. Cannot be verified or examined. Cite your sources. Ultramarine 19:09, 6 Apr 2005 (UTC)

Secondary sources are permitted, besides, that's an original source in itself. The writer has the same opinion. Here's another source: "Siegle, Weinstein and Halperin puncture the myth that democracy works only in rich nations. In fact, many poor countries have freely elected governments (think India, Poland and Brazil)while some rich ones (think Saudi Arabia and Singapore) do not. Far from economic development being necessary for democracy, they argue that democracy promotes economic development." [5] I can't believe you're oblivious to this position. It's exteremely common. RJII 19:15, 6 Apr 2005 (UTC)

RJII was right about Amartya Sen. I have his book lying around somewhere, and his point is indeed that freedom (economic, politic, etc.) promotes development. Luis rib 19:16, 6 Apr 2005 (UTC)

That may be his opinion. If he has published any papers with statisical research, cite them. Ultramarine 19:19, 6 Apr 2005 (UTC)

That's not necessary. If the statement is that some assert that economic growth is a result of democracy then all that's necessary are published papers of people who say that. I don't need statistics to prove that that is the case unless I'm asserting that is the case. RJII 19:24, 6 Apr 2005 (UTC)

It is certainly necessary. Here is paper showing a negative effect on growth [6]. This is facts, not opinions. Ultramarine 19:26, 6 Apr 2005 (UTC)

It is not necessary to show that what a source says is true if one is only pointing out that that source asserts that something is true. If one goes beyond that and asserts that what that source says is indeed true, then that's when one would have to provide studies. Come on. You should know this. Or are you just trying to cause problems as usual? RJII 19:30, 6 Apr 2005 (UTC)

You are stating that Wikipedia should state views even if scientific evidence shows that they have been proven false? Ultramarine 19:37, 6 Apr 2005 (UTC)

Your article, Ultramarine, is not that negative on democracy. Here's the conclusion, so that everyone can read it:

We "nd that the overall e!ect of democracy on growth is negative and moderate, con"rming results from previous studies. However, our methodology allows us to go beyond previous research and describe what drives this overall result: We found evidence that democracy increases human capital accumulation and decreases physical investment rates. These e!ects are robust to most changes in speci"cation, estimation method and sample coverage. We also uncover evidence of less robust e!ects of democracy on growth working through income inequality (more democracy/less inequality/higher growth) and through government consumption (more democracy/more government consumption/ lower growth). Finally, we uncovered no strong evidence that democracy impacts growth through government-induced distortions, political instability, trade openness or macroeconomic instability.

Our interpretation of the results is that democratic institutions are responsive to the demands of the poorer fractions of society by increasing access to education and lowering income inequality, but do so at the expense of physical capital accumulation. When summing up the e!ects of democracy on growth,the negative e!ect through physical investment dominates. However, the higher level of human capital and a more equitable society in democracies are valued in themselves, beyond their impact on income levels. The resulting view is that democratic institutions entail a trade-o! between measurable economic costs and social bene"ts which are harder to evaluate.

You see that they show a net negative effect, but also show that this negative effect comes from an emphasis on social programs. Amartya Sen argues that these social programs have a longer term effect (i.e. better health, better education), that will allow stronger growth in the long term. Luis rib 19:41, 6 Apr 2005 (UTC)

Here is another source who has lots of tables and statistics for you: In Search of Prosperity by Dani Rodrik. He argues that democracy promotes economic growth. RJII 19:36, 6 Apr 2005 (UTC)

More sources: "Evidence that democracy promotes growth is found in a number of studies (Durham 1999; Przeworski and Limongi 1993; Bardhan 1997; Rodrik 1997, 2000). Rodrik ( 2000, 3) argues that “participatory and decentralized political systems enable higher-quality growth: they allow greater predictability and stability, are more resilient to shocks, and deliver superior distributional outcomes." [7] RJII 19:42, 6 Apr 2005 (UTC)

He argues that institutions promote growth. I see nothing about democrarcy. However, I agree that there are sources both for and against. But no conclusive evidence. Ultramarine 19:44, 6 Apr 2005 (UTC)

Dude, it's not our place to assert whether POV's are correct or not. If you think that one of these guys is wrong in their assertion that democracy promotes growth, that's fine. But they have this view and it is noteable, whether you believ e it or not. RJII 19:47, 6 Apr 2005 (UTC)

You have point regarding your article even if you could have selected a better quote. I changed to statement to reflect uncertainty. Ultramarine 19:56, 6 Apr 2005 (UTC)

Duh! RJII 20:10, 6 Apr 2005 (UTC)

Human rights violation section

What does this have to do with capitalism and why is it there?: "Strong evidence exists that capitalist democracies never or almost never make war against each other (see Democratic peace theory) and have a low level of internal violence committed by state against its own citizens (see Rummel's Law)." RJII 20:12, 6 Apr 2005 (UTC)

I agree, this section should be taken out. The tone is POV, and the subject is not really relevant to the main article on capitalism. Mgw 20:54, 6 Apr 2005 (UTC)

I added an explanation to the text in the article. Ultramarine 20:59, 6 Apr 2005 (UTC)

Human rights, capitalism and democracy relevance

The article still seems to and that sub section use to make the general unbalanced claim that democracy and freedom are pre-requisites for capitalism. The amnesty internation statement points out that alleged democracies may actually be the biggest violators of humman rights (arguably in the name of capitalism/imperialism), which is an important and general rebuttal to the overall tone of the article. That section seemed to be the most appropriate place to put such info. All that remains of that sub section now doesn't make much sense in isolation. Please explain why such info is not relevant to the article? Unless you convince me otherwise I plan to return it to the article soon. zen master T 22:24, 6 Apr 2005 (UTC)

Well, I do not doubt the veracity of the Amnesty International link, but how does that constitute a criticism or even a comment on capitalism? Democracy and capitalism are not necessarily linked (I'll modify the section to reflect that). E.g. India was democratic but had a statist economic system; Chile was capitalist but a dictatorship under Pinochet. Any criticism on democracy clearly belongs to the democracy page, not here. If you find an article that clearly blames capitalism as economic system for human rights violations, or other problems, I'm ok with that. But Iraqi war? I don't see the connection there (at least no NPOV connection). Luis rib 22:32, 6 Apr 2005 (UTC)

Ok, then we are agreed that info on democracy necessarily leading to freedom because of capitalism also are irrelevant? The sentence I added was meant to balance recent changes that I noticed, if both are excluded then I suppose that is ok, though I think it is important if we add some generic mention of the theory and counter theory that an economic system such as capitalism will lead to an increase in support for human rights, freedom, and democracy. zen master T 22:40, 6 Apr 2005 (UTC)

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Funny, it looks like the socialism editors have decided to follow our lead and take the bullet points out of the intro, and are working on putting a definition there. RJII 03:25, 8 Apr 2005 (UTC)

Economic-Capital v. Private Property, definition

I added, as part of the definition, a contrast between defining capitalism as the ownership of private property, or the use of economic capital by businesses (which happens to be the result of the ownership of private property).D prime 05:29, 10 Apr 2005 (UTC)

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"These theorists claim that capitalism valorizes a state of affairs where prices are determined in a free market"...There must be a better way of saying this.Mgw 08:29, 10 Apr 2005 (UTC)

I'm glad someone else can't make any sense of it. It's bizarre. I've tried fixing it but it keeps getting changed back. RJII 01:46, 11 Apr 2005 (UTC)

private property section

Ultramarine, you revert, saying that "Private ownerships of the means of production also exists in feudalism and some hunter-gather societies. Strong poperty rights is what is essential." So what if private ownership of the MOP existed before capitalism? Why would that mean that private ownership of MOP is not essential in capitalism? It's absolutely essential. You are going to have a hard time finding a definition of capitalism that doesn't say indicate that this is privately owned. Also, you need to be aware that some support private property rights but not a right to private ownership of the means of production -such as some individualist anarchists. RJII 16:48, 18 Apr 2005 (UTC)

Well, Sweden is one of the most capitalistic country according to most objective evaluations. But the state takes 50% GDP in taxes and owns much of the land and energy production systems. But I agree that some private ownership of the MOP exists in all capitalist societies. But one could then also say that humans or breathable air is essential for capitalism. Strong private property rights is one essential thing different from earlier social systems. But let us mention that private property of the MOP is essential but also that it is also essential for other system such as the feudal system and is not unique for capitalism. Ultramarine 16:56, 18 Apr 2005 (UTC)

The reason why it's included in almost all, if not all, definitions of capitalism that the means of production are privately owned is that the system is in direct philosophical contrast to socialism on this subject. This distinction needs to be made in this section. RJII 17:14, 18 Apr 2005 (UTC)

Other systems are also in direct contrast with socialism on this subject. We can include partial private ownership of MOP as a characteristic but we should also mention that this is not something unique for capitalism. Note also that in feudal states the state was often very small and much more of the MOP was privately owned. Ultramarine 17:18, 18 Apr 2005 (UTC)

What other system is in direct contrast with socialism on this subject? RJII 17:22, 18 Apr 2005 (UTC)

The feudal system is one example. Ultramarine 17:24, 18 Apr 2005 (UTC)

What are you saying? Private property existed in feudalism as well. Does that mean an essential characteristic of capitalism is not private property? Private ownership of the means of production is private property, but it denotes personal possessions from capital. RJII 17:30, 18 Apr 2005 (UTC)

Read again what I said. "We can include partial private ownership of MOP as a characteristic but we should also mention that this is not something unique for capitalism. Note also that in feudal states the state was often very small and much more of the MOP was privately owned." Ultramarine 17:37, 18 Apr 2005 (UTC)

I already put in there that an essential characteristic of capitalism was private ownership of the means of production. You took it out. RJII 17:40, 18 Apr 2005 (UTC)

Private ownership of MOP is already mentioned in several of the definitions. You removed that strong property rights was an important difference to earlier social systems which I restored. Ultramarine 17:45, 18 Apr 2005 (UTC)

No I didn't. I just said it in different wording and included MOP in the sentence. I said this: "An essential characteristic of capitalism is the institution of rule of law in establishing and protecting private property including private ownership of the means of production." "Rule of law in establishing and protecting private property" is the same thing as saying "property rights" but it's more descriptive. That's what property rights are. They're political rights that exist because law establishes and protects them. RJII 17:50, 18 Apr 2005 (UTC)

Again, read what I said. You removed the comparision the earlier social systems. Ultramarine 17:55, 18 Apr 2005 (UTC)

I see. So, include it. No big deal. RJII 17:58, 18 Apr 2005 (UTC)

Ultramarine, I'd like a source for your claim: "Private property and private ownership of the means of production occurs in other systems, like feudalism." RJII 18:45, 18 Apr 2005 (UTC)

Take any history book. Are you claiming that the states of medieval ages practised some form of socialism? Ultramarine 18:51, 18 Apr 2005 (UTC)

I'm not claiming anything. I'm asking for a source to back up your claim that feudalism includes private ownership of the means of production. RJII 18:53, 18 Apr 2005 (UTC)

All of the land was owned privately by different families. Are you disputing this?Ultramarine 19:03, 18 Apr 2005 (UTC)

"Private" means not affiliated with government. RJII 19:06, 18 Apr 2005 (UTC)

Are you arguing that modern nations are not capitalistic since the land is affliated with a particular nation? Ultramarine 19:11, 18 Apr 2005 (UTC)

I'm not arguing anything. I'm requesting a source for your claim. Are you refusing to provide one? RJII 19:13, 18 Apr 2005 (UTC)

Here is one. In this example all land was owned by the King. [8].

Dude, a King is a government. There is a difference between government-owned property, and privately-owned property. RJII 19:17, 18 Apr 2005 (UTC)

It was owned by the King personally and his family. Ultramarine 19:21, 18 Apr 2005 (UTC)

That is not a normal conception of private property, at all. The source you gave does not say that feudalism includes "private property" or "private ownership of the means of production."

That should be obvious. Anyhow, seens you seems to be asking for technalities, what is your source that proves that capitalism must include privately owned means of production? Not a dictionary, I am asking for a scientific papers that proves this. Ultramarine 19:39, 18 Apr 2005 (UTC)

It's not "obvious" at all. It's just plain wrong. About private ownership of MOP, what do you mean "proves it?" It's not a matter of anyone proving it. It's just a matter of them saying that capitalism includes private ownership of the means of production. What are you asking for? RJII 19:47, 18 Apr 2005 (UTC)

What is your source that proves that capitalism includes private ownership of the means of production? I want a scientific paper since the definitions disagree. Ultramarine 19:50, 18 Apr 2005 (UTC)

Well, I just threw a dart at your definitions of capitalism article and this came up: "Economist, George Reisman: "Capitalism is a social system based on private ownership of the means of production. It is characterized by the pursuit of material self-interest under freedom and it rests on a foundation of the cultural influence of reason." (Capitalism: A Treatise on Economics)" RJII 19:52, 18 Apr 2005 (UTC)

But other definitions do not. Since you seem to asking for technalities, I demand that you provide proof that capitalism inlcude that means of production are privately owned in the form of a scientific papers. Note also that in most nations, capitalist or not, do the state own some of the means of production. Ultramarine 19:55, 18 Apr 2005 (UTC)

Are you blind? Look at your own definitions of capitalism article. How can you say that capitalism does not include private ownership of the means of production? Everything from dictionaries to encyclopedias, to theorists say it does. No one is saying that the state can't own SOME of the means of production. It's just saying that capitalism includes private ownership of the means of production. RJII 19:58, 18 Apr 2005 (UTC)

But again, other definitions do not. You have no proof. Maybee you are saying that common sense says that capitalism includes some private ownership of MOP. Well, I argue similarly that feodalism include private ownership of the MOP. Ultramarine 20:02, 18 Apr 2005 (UTC)

I'm not saying "common sense." I'm saying that a characteristic that is commonly regarded to be part of capitalism is the private ownership of the means or production ..the private ownership of capital. If you aren't aware of this, you should not be involved in editing this article. The difference between my claim in yours is that there is a multitude of sources, while you have zero sources. RJII 20:06, 18 Apr 2005 (UTC)

You have a point that it seems to be disputed if the MOP were privately owned as in capitalism. I disagree that they were owned by the government which would be a form of socialism. Ultramarine 20:16, 18 Apr 2005 (UTC)

Oh really? Where is this dispute? You're the only one that's disputing it. Everyone knows regards capitalism as including private ownership of the means of production. It's about time you learned this. RJII 20:19, 18 Apr 2005 (UTC)

This section needs a complete overhaul. RJII 16:48, 18 Apr 2005 (UTC)

Concerning feudalism: my view is that property belonged to the king, who donated it to vassals, who again donated it to other vassals. Though most of those vassals inherited the property from their parents, the king theoretically had the possibility to seize their goods and give them to some other vassal. In a sense, property was not private in the sense that it could be sold to anyone (the vassals had to keep it). Only in the cities which had acquired some liberty did property emerge apart from the aristocratic and ecclesiastic classes - i.e. when the "bourgeoisie" emerged. That's why the earliest traces of capitalism can be traced to Italian (and other) city-states. As this system spread to other countries, and feudalism was progressively undermined, capitalism fully emerged. Even before the Industrial Revolution you had the Dutch East Indian company, which was fully financed by early capitalist merchants (though the state became involved too). The first bubble was the tulip craze in the Netherlands. Then came the South Sea bubble in England. All that was before the Industrial Revolution took hold. So for long time feudalism and capitalism co-existed, but the last one was on the rise. Saying that private property did or did not exist in feudalism is a question of interpretation. I would say that it did not - after all peasants weren't allowed to do anything or to own almost anything (a situation that lasted in Russia until the 19th century). And the peasants were the wast majority of population... But it wasn't socialism either. Property was owned by a few noblemen on hereditary or religious principles, but had to pay for that by being loyal to the state and by paying taxes (that they took from the peasants). In socialism, the party doesn't have to pay taxes to the state since both are one. So there is a difference. ...Well, this became rather long. Sorry. Luis rib 20:03, 18 Apr 2005 (UTC)

Private property certainly existed in the form of personal belongings and money. But I agree that private ownership of the MOP may be somewhat questionable. Ultramarine 20:08, 18 Apr 2005 (UTC)

You are right, of course, but we should not forget that even personal belongings were very restricted in the darkest ages of feudalism, since the feudal lord could theoretically take whatever he wanted (and later on just tax it away from them). The means of production belonged to the feudal lord: the land, of course, but also labour (in French it's called corvées - the peasants had to work for free on the lord's land) and capital, since they printed money. Luis rib 20:23, 18 Apr 2005 (UTC)

Ultramarine seems to think that if a person merely possesses something that that constitutes private property. But private property is more than that ..as you indicated. It is a framework of law or morality that protects these possessions from being taken forcibly by others, among other things. RJII 20:34, 18 Apr 2005 (UTC)

Seems like another convoluted debate. It is true that private ownership of the means of production is a feature of capitalism. But it is also a fact that the capitalist system develops in part through the destruction of private property -- not necessarily through coercion but by creating an environment in which small shops and family farms cannot survive. Moreover, at least some people in the Middle Ages privately owned the means of production -- artisans typically owned their own tools. Finally -- and I think this is the point that Ultramarine made that began this whole debate -- yes there are non-capitalist societies in which people enjoy private ownership of the means of production. Source: Property Relations ed. by C.M. Hann, Cambridge University Press. Slrubenstein | Talk 20:28, 18 Apr 2005 (UTC)

"Private ownership" in the sense of private property or in the sense of mere possession? "Ownership" usually implies property rights --something that goes beyond mere possession. RJII 20:40, 18 Apr 2005 (UTC)

In my opinion (which might be wrong, BTW), the artisans you mention were actually the very first capitalists (or rather proto-capitalists, since other necessary conditions for capitalism did not yet exist). When I talk about darkest feudalism, it's more like ~900 AD. On the other hand, you say that capitalism works also by the destruction of private property. Though I don't necessarily agree with your following comment (family owned enterprises still constitue more than 90% of all companies in all Western countries), it is true that capitalism progress via the failure of its least successful entreprises (in some cases, big companies use their market power for that - which is why anti-trust laws are needed). Schumpeter (famous economist from the early 20th century) called that the entrepreneurial spirit: new companies innovate, create new and better products, and kill off the old dinosaurs. Just think how Verizon and others killed off AT&T. Or, historically, how car companies killed the train companies (which were among the biggest American companies in the 20ies, I think). Luis rib 20:37, 18 Apr 2005 (UTC)