Perhaps "alternative" is the wrong word then

[epiphany]

Very interesting debate on Newsnight tonight about the "alternatives to capitalism" which has got me thinking about the very semantics of the debate in question. If we can't properly define what we have now (in more detail than "it's capitalism") and the specifics of what we want to move away from, then no wonder we can't say what we want to move towards.

 

Both sides of the debate tend to agree that there is close to zero optimism left in a monolithic state controlling and distributing resources. Nobody is suggesting centralised planning is the answer to what are very specific problems with the current system. But then the problems don't even call for such measures.

 

If your computer breaks, you check to see if it's a fault with the software, RAM, CPU, connectors etc. - it may not be the motherboard that has failed, so how can a fix be necessarily considered "an alternative"? Even if everything was working perfectly fine, what's wrong with an upgrade, to make the system operate more efficiently, without any parasitic drain on its full productive potential?

 

For example, if all much of the left advocate today are more co-ops, more mutualistic property rights, more employee control (i.e. similar to Germany's co-determination laws) and more public stakeholdership in our financial institutions, can this really be considered an alternative or a mere tweak to solve the problems caused by the disproportionate concentration of capital and power?

 

Many pro-capitalists are calling for freer markets and less state intervention as a solution to the current crisis. So that suggests to me that this debate is more complex than simply capitalism vs an alternative - it's about whether the ideals of capitalism and the market are being fulfilled through the current application of it.

 

Is it still capitalism if, instead of handing out the traditional corporate charters, the state refines what constitutes a licence to do business and alters the balance between employee/investor stakeholdership rights? There is no more or less state intervention in either, one is not more or less capitalist than the other, just a different model of capital stakeholdership. The market would still operate on the basis of capital and freely from that point.

 

Ultimately, is more public stakeholdership in a market economy really an "alternative" to capitalism or just an alternative to a type of capitalism we have grown up with?

[chem1st]

I saw it, but what we have now is not capitalism.

 

Many are effectively without property rights, face high effective taxes, and are forced to use a means of exchange in which they face rates of effective tax of 100% for accumulating and are taxed via inflation at roughly 3% per year. They have no incentive to work. And things they wish to buy are priced in said medium and propped up/kept artificially high, housing as the primary example.

 

That is not a freemarket.

 

Citizens income and LVT would be one of the alternatives some people are suggesting.

[JFKvsNixon]

I think that the multi-nationals need to realise that there has to be a trickle down of their income, a capitalist society will never prosper when all that wealth is held by a tiny minority at the top.

 

Over the last decade or so, compared to the top echelon of each company the wages of the rest of industry has stagnated, and the rise in living standards was funded by cheep credit instead of wage increases, and we all know where that led.

 

Another way that the wealth was trickled down through society was the payment of taxes, but again the big corporations will avoid meeting these responsibilities through hook and crook.

 

Maybe another issue that has arisen over is the change in ownership of many companies from "family ownership" to shareholders may have ushered in an era of short term-ism where the bottom line is the balance sheets at the end of the year rather than any long term strategic planning.

 

The lack of long term strategic planning is also evident in business investment over the last decade, with all the investment funnelled into the financial sector where quick and safe return were almost guaranteed.

 

People and institutions were making money so what was the problem? The problem was that no wealth was actually being created, nothing was being manufactured and sold, no minerals were being exploited with this investment. This meant that the growth was always going to be unsustainable.

[I1L2T3]

There was a discussion on BBC news earlier about capitalism. One economist arguing for a scenario where profits are taken to the max. Another economist was arguing for a more measured, still very profit focused but responsible form of capitalism. The latter was cogent, very clear and very persuasive. The former almost reduced to a tearful wreck with no other argument other than profits are king.

 

I'm not an economist but 'A' Level economics back in the day (the 80s) and I have a degree specialised in Economic & Business History. One of the core fundamentals, even in an 'A' level syllabus in those days, was a discussion about the role of profits. Should a company maximise profits? Simple question it seems but the answer is not at all simple. The fact is that new companies often need to make a loss, often for a sustained period of years before the business can genuinely establish and grow. Established companies still can't take profits to the absolute maximum - they have to maintain quality, customer service, reputation, keep researching/innovating if they want to be in it for the long run. All the things they need to do to maintain reputation and quality take from short-run profits. A good company will never seek to absolutely maximise profits at the expense of other key supporting elements of their business.

 

Sorry for all that preamble but here is the point. It is wrong to broadly describe all capitalism as irresponsible. A lot of companies/corporations/etc... are reasonably responsibly run but my view is we have three key elements of capitalism we have to deal with:

 

1. The financial sector. Run with a very short-termist view with almost a complete loss of perspective of the braking factors that should reign in capitalist excess. The financial sector has to be radically reformed. It has become the most destabilising element of the global economy and has to be brought under control.

 

2. Gloabalised companies. What we have a system of virtually uncontrolled globalised trade. By international treaty/agreement this has to be carefully managed. This is to prevent exploitation of foreign workers and help the economies they work in grow in a balanced, sustainable way. To even out economic disparities across the globe we also need to forego some of what we have in the West, but in a controlled and gradual way. Imposion in the west coupled with explosive and very uneven grwoth elsewhere is globally destabilising.

 

3. Tax. The network of global tax havens facilitaing activites described in points 1. and 2. needs to be brought under some kind of control. The secrecy and obfuscation that allows highly questionable activities in financial and other globalised companies is devastating to the vast majority of the global population.

 

We don't need to get rid of capitalism. It just needs to work in a way that benefits many more of us.

[Rupert_Baehr]

...

We don't need to get rid of capitalism. It just needs to work in a way that benefits many more of us.

 

I can't argue with that, but if you want to share in the benefits of capitalism, you must share in the risk and share proportionally.

 

It's called (variously) 'cooperative enterprise' or 'put your money where your mouth is.'

 

If it's such a good idea, why are there so few takers?

[epiphany]

I can't argue with that, but if you want to share in the benefits of capitalism, you must share in the risk and share proportionally.

 

Absolutely. And that goes for any business that runs to government/tax payer with its begging bowl. Bad business must be allowed to fail and liquidate. If we are to bail anyone out, it should be the individuals most affected by the repercussions of that failure.

 

It's called (variously) 'cooperative enterprise' or 'put your money where your mouth is.'

 

If it's such a good idea, why are there so few takers?

 

It's only a good idea if the actual rules of how businesses run are changed to include charters based more on profit share and/or increased employee stakeholdership. Again I think Germany's co-determination laws are a good example of this model in action. We're not talking all out employee run business, just more democratic involvement in the company which their labour helps to grow. The recognition of labour as a form of capital investment.

 

One of the government's key roles is to define property rights. When the state hands out corporate charters, they are essentially granting privilege in exchange for adherence to the rules of the marketplace. Those rules can change. That, to me, is the real detail that never gets debated, and where the so-called alternative system can grow from.

 

Redefine, from the moment of its inception, what constitutes a legal business entity, based on the kind of economy we want, and we can still have a thriving market - just with change of stakeholdership and charters that take into account multiple bottom lines.

 

The state needn't be any more involved than it is now - it sets the rules and everything flows from that.

[Alien52]

Eric Hobsbawm.Student bedsit,poster of Marx on the wall,debates about dialectical materialism in the Red Deer.Old man wipes tear from eye.

[fruitisbad]

I've been banging on about ethical capitalism for years. hopefully something will change.

[epiphany]

I've been banging on about ethical capitalism for years. hopefully something will change.

 

It will only change once the division between labour and capital becomes less apparent. Obviously it's unrealistic to expect an economy consisting entirely of John Lewis style employee owned business, but surely we can encourage employee stakeholdership, or at least more democratic remuneration committees through tax breaks or other incentives and small changes to the rules regarding setting up businesses.

 

Let us also not forget that consumer co-ops can play a key role in a new capitalism. The Co-operative Group have shown this model can protect capital more efficiently than traditional top-down businesses and grow even through recession. They think beyond a single bottom line. This is one of the largest and most successful co-ops in the world, yet the stakeholdership is ten fold that of most other large companies.

 

Regardless of whether this model is considered "nicer" or "more ethical", it is far more sustainable than the current model. The age of the single bottom line will inevitably come to an end, as limited resources and other externalities will demand businesses to think more long term and outside the self-interest of a minority of shareholders.

 

Or do we not care about sustainability? Does it all sound a bit too liberal and airy fairy?

[fruitisbad]

It will only change once the division between labour and capital becomes less apparent. Obviously it's unrealistic to expect an economy consisting entirely of John Lewis style employee owned business, but surely we can encourage employee stakeholdership, or at least more democratic remuneration committees through tax breaks or other incentives and small changes to the rules regarding setting up businesses.

 

Let us also not forget that consumer co-ops can play a key role in a new capitalism. The Co-operative Group have shown this model can protect capital more efficiently than traditional top-down businesses and grow even through recession. They think beyond a single bottom line. This is one of the largest and most successful co-ops in the world, yet the stakeholdership is ten fold that of most other companies.

 

Regardless of whether this model is considered "nicer" or "more ethical", it is far more sustainable than the current model. The age of the single bottom line will inevitably come to an end, as limited resources and other externalities will demand businesses to think more long term and outside the interests of a minority of shareholders.

 

Or do we not care about sustainability? Does it all sound a bit too liberal and airy fairy?

 

it sounds good to me.

 

I mean there are great things about capitalism. competition is great, it forces people to up their game. that's what I like about the real ale.scene in sheff. obviously the brewers are competing but It's w lot more friendly. it forces you to do better.

 

currently if someone threatens you, you buy them off, take them to court and grind them down, or you cozy up to politicians to get them to change laws in your favour. that isn't what it should be about