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What is the definition of capitalism? Is it compatible with people owning the things they produce? (reddthat.com)

submitted 1 year ago* (last edited 1 year ago) by [email protected] to c/[email protected]

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@[email protected] asked "why are folks so anti-capitalist?" not long ago. It got quite a few comments. But I noticed a trend: a lot of people there didn't agree on the definition of "capitalism".

And the lack of common definition was hobbling the entire discussion. So I wanted to ask a precursor question. One that needs to be asked before anybody can even start talking about whether capitalism is helpful or good or necessary.

Main Question

What is capitalism?
Since your answer above likely included the word "capital", what is capital?
And either,
- A) How does capitalism empower people to own what they produce? or, (if you believe the opposite,)
- B) How does capitalism strip people of their control over what they produce?

Bonus Questions (mix and match or take them all or ignore them altogether)

Say you are an individual who sells something you create. Are you a capitalist?
If you are the above person, can you exist in both capitalist society and one in which private property has been abolished?
Say you create and sell some product regularly (as above), but have more orders than you can fulfill alone. Is there any way to expand your operation and meet demand without using capitalist methods (such as hiring wage workers or selling your recipes / process to local franchisees for a cut of their proceeds, etc)?
Is the distinction between a worker cooperative and a more traditional business important? Why is the distinction important?

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[–] [email protected] 1 points 1 year ago* (last edited 1 year ago) (1 children)

I think you’ve written a good, neutral summary critique that increases our common ability to debate this. Thank you.

I would argue, however, that your example makes it sound especially egregious as the profit margin in your example is 95%. The advantage of capitalism, according the people who support it (like I do), is that other sprocket making companies exist and together they bring the profit margins down and down and down (due to competition), forcing continual innovation to bring it back up. Thus, not only is the profit margins typically much, much smaller (1-10%), but society collectively advances, which benefits the workers too as the produce they need to acquire increases in quality and lowers in price.

The truth is probably somewhere in the middle.

So I agree with you when arguing against monopolies.

[–] [email protected] 1 points 1 year ago

This is a really good point, and I’m glad that someone who’s got a decent understanding of basic economics is replying to me.

The 95% profit margin was definitely to make a point, as you pointed out. And as you said, according to conventional thinking on capitalism, market forces should push that down to a fair equilibrium.

I think that the issue I was hinting at is that there is a fair amount of contemporary thinking that provides pretty convincing arguments that the nature of capitalism necessarily tends towards consolidation and monopoly over time. The classical model of a baker charging too much on an island, so someone else opens a bakery, doesn’t really work too well when we’re talking about telecom companies and media conglomerates. Once a high-tech segment has consolidated enough, it becomes impossible for anyone other than large companies to enter the market. And when those large companies are actually owned by a larger parent company, we start to see the failures of the classical market forces to produce a ‘fair’ equilibrium due to monopolization.

We definitely aren’t at the point of total failure yet, but in my opinion the trend line isn’t hard to spot. And I think the bigger issue is that due to regulatory capture, there’s not much we can do to patch the sinking ship.