Brother Laz,Aug 21 2005, 10:37 AM
At the other end is unbridled capitalism, which leads to increasingly widespread poverty. Due to unavoidable positive scale effects [which get more and more noticeable due to the increasing level of technology] there is no way to stop the larger companies from pushing the smaller companies off the market, decreasing the amount of jobs on offer and forcing more and more people into poverty. In the limit, you get a small group of very rich shareholders and everyone else lives in a cardboard box.
One of the benefits of Capitalism is that if you have marketable skills or products you can make some money and buy a few shares of that company. Capitalism does not, by definition, include extorsion, that is injected by the unscrupulous. Elimination due to not being competitive is addressed by my first point. ;)
......
Modern technology makes people redundant.
What about the people that design, build, sell, service, and operate those machines? Some people will still pay a premium for 'Old World Craftsmanship' also. The workforce may need to change it's skillset and companies may need to change thier product lines to survive.
According to the theory, this causes the workers' wages to drop until it is more cost-efficient to employ more people than to use machines to do it, which would theoretically insure full employment. The problem is that machines are so much faster and better than workers that in order to reach this equilibrium, the workers' wages have to drop way below living wage.
I've never heard that theory before... And on part 2 if the machines become that efficient the goods produced would remain near what the targeted consumer could afford - otherwise the manufacturer loses sales and becomes less competitive.
Example: a newspaper printing machine can crank out thousands of newspapers in one hour for virtually free after the initial cost of purchase, there is no way human worker can compete with that. Those are lost jobs that will never come back.
Without the mechanical printing press the newspaper industry would not exist to start with...
Additionally, machines give their owners an advantage on the market, but are only affordable by the large companies. This is why economists are opposed to anti-trust laws, but they conveniently ignore the fact that less companies = less jobs. One newspaper company that prints 200K newspapers does not equal ten newspaper companies that print 20K newspapers a day.
Take computers for example: Early computers were only available to the largest companies due to supply, price, and demand. Now you will rarely find any business without at least one. Efficiency of scale is an important factor to consider in your argument also. And just because someone wants to be a reporter doesn't mean the market will bear it. He either needs to be a better reporter than the other guy, diversify his skill set, or move to a new market.
And due to the low cost of operation of most technology, no matter how low the wages drop, this will generate hardly any new jobs, so the economy will drop below full employment, and the employment rate gets worse and worse as technology advances.
As technology advances the labor force's skill set will advance with it, jobs will be created in new fields... How many wagonwrights are employed in your town today? How many auto mechanics?
The worst example of positive scale effects is Amazon.com. Just how many employees does Amazon have, 500? 1000? Including truckers and forklift drivers. Yet Amazon, if the delivery time is reduced even more, could easily replace the majority of bookstores in the world. This equals millions of jobs lost. E-books? Even more jobs lost.
How many other booksellers have developed online retail outlets? To remain competitive companies must diversify, grow, and change.
......
And not only do smaller companies stand no chance in the long term due to positive scale effects, but poorer civilians are also excluded. The way the economy works, a company will decide on a price and output that yields maximum profit or efficiency, then sell the output at the determined price. Very often, this does not fully saturate the market, but the cost of additional units outweighs the profits.
If the product's price is set too high the manufacturer will not sell his complete production (lose money). If supply is not equal to demand from one source then consumers will go elsewhere (the smaller company) or pay a premium for the available supply. Also, many consumers that feel they need something may not actually require it...
According to the theory, those left out are those for whom the product is not worth the price. However, sometimes those people do want the product but it is so expensive to them that they simply cannot afford it. The company could lower its prices to saturate the market, but this would cause its profits to drop and make the shareholders angry.
Welcome to a market economy. :) Profit is not a bad word. Profit at the expense of all else on the other hand...
Example: medical aid in the US. Lowering the prices of prescription drugs would make them affordable to the very poor, but would cause an efficiency loss for the companies that produce them. So, they keep the prices high, avoidable deaths be damned.
The costs of researching, developing, testing, manufacturing, distributing, selling, and insuring prescription drugs and the companies that make them is quite high. Name brand Rx may have a premium attached to the price (Is it an ethical amount? Probably not all the time. ;) ) to help the manufacturer recoup the total costs of production in a timely manner - before many of the generic and store brands start selling the drug after all the hard/expensive work is done by the developing company.
Conclusion...
There are many forms of Capitalism. Laissez faire will probably lead to the gloom and doom scenario you paint for Capitalism due to the lack of checks and balances on the greedy and unscrupulous.
Idealy, Capitalism rewards hard work, innovation, invention, employee care, and customer service. We don't live in an ideal world so the government must step in and give a nudge here and there. For an example take a look at Henry Ford's treatment of employees compared to accepted norms today.
EDIT: Crap! Not sure where my quote tags broke. Use of color attempted...
Also it is not the function of Capitalism to provide jobs. And in a Capitalist system personal responisibility of both the consumer and manufacturer is required in order for it to funtion without greater and greater Government intervention.
At the other end is unbridled capitalism, which leads to increasingly widespread poverty. Due to unavoidable positive scale effects [which get more and more noticeable due to the increasing level of technology] there is no way to stop the larger companies from pushing the smaller companies off the market, decreasing the amount of jobs on offer and forcing more and more people into poverty. In the limit, you get a small group of very rich shareholders and everyone else lives in a cardboard box.
One of the benefits of Capitalism is that if you have marketable skills or products you can make some money and buy a few shares of that company. Capitalism does not, by definition, include extorsion, that is injected by the unscrupulous. Elimination due to not being competitive is addressed by my first point. ;)
......
Modern technology makes people redundant.
What about the people that design, build, sell, service, and operate those machines? Some people will still pay a premium for 'Old World Craftsmanship' also. The workforce may need to change it's skillset and companies may need to change thier product lines to survive.
According to the theory, this causes the workers' wages to drop until it is more cost-efficient to employ more people than to use machines to do it, which would theoretically insure full employment. The problem is that machines are so much faster and better than workers that in order to reach this equilibrium, the workers' wages have to drop way below living wage.
I've never heard that theory before... And on part 2 if the machines become that efficient the goods produced would remain near what the targeted consumer could afford - otherwise the manufacturer loses sales and becomes less competitive.
Example: a newspaper printing machine can crank out thousands of newspapers in one hour for virtually free after the initial cost of purchase, there is no way human worker can compete with that. Those are lost jobs that will never come back.
Without the mechanical printing press the newspaper industry would not exist to start with...
Additionally, machines give their owners an advantage on the market, but are only affordable by the large companies. This is why economists are opposed to anti-trust laws, but they conveniently ignore the fact that less companies = less jobs. One newspaper company that prints 200K newspapers does not equal ten newspaper companies that print 20K newspapers a day.
Take computers for example: Early computers were only available to the largest companies due to supply, price, and demand. Now you will rarely find any business without at least one. Efficiency of scale is an important factor to consider in your argument also. And just because someone wants to be a reporter doesn't mean the market will bear it. He either needs to be a better reporter than the other guy, diversify his skill set, or move to a new market.
And due to the low cost of operation of most technology, no matter how low the wages drop, this will generate hardly any new jobs, so the economy will drop below full employment, and the employment rate gets worse and worse as technology advances.
As technology advances the labor force's skill set will advance with it, jobs will be created in new fields... How many wagonwrights are employed in your town today? How many auto mechanics?
The worst example of positive scale effects is Amazon.com. Just how many employees does Amazon have, 500? 1000? Including truckers and forklift drivers. Yet Amazon, if the delivery time is reduced even more, could easily replace the majority of bookstores in the world. This equals millions of jobs lost. E-books? Even more jobs lost.
How many other booksellers have developed online retail outlets? To remain competitive companies must diversify, grow, and change.
......
And not only do smaller companies stand no chance in the long term due to positive scale effects, but poorer civilians are also excluded. The way the economy works, a company will decide on a price and output that yields maximum profit or efficiency, then sell the output at the determined price. Very often, this does not fully saturate the market, but the cost of additional units outweighs the profits.
If the product's price is set too high the manufacturer will not sell his complete production (lose money). If supply is not equal to demand from one source then consumers will go elsewhere (the smaller company) or pay a premium for the available supply. Also, many consumers that feel they need something may not actually require it...
According to the theory, those left out are those for whom the product is not worth the price. However, sometimes those people do want the product but it is so expensive to them that they simply cannot afford it. The company could lower its prices to saturate the market, but this would cause its profits to drop and make the shareholders angry.
Welcome to a market economy. :) Profit is not a bad word. Profit at the expense of all else on the other hand...
Example: medical aid in the US. Lowering the prices of prescription drugs would make them affordable to the very poor, but would cause an efficiency loss for the companies that produce them. So, they keep the prices high, avoidable deaths be damned.
The costs of researching, developing, testing, manufacturing, distributing, selling, and insuring prescription drugs and the companies that make them is quite high. Name brand Rx may have a premium attached to the price (Is it an ethical amount? Probably not all the time. ;) ) to help the manufacturer recoup the total costs of production in a timely manner - before many of the generic and store brands start selling the drug after all the hard/expensive work is done by the developing company.
Conclusion...
There are many forms of Capitalism. Laissez faire will probably lead to the gloom and doom scenario you paint for Capitalism due to the lack of checks and balances on the greedy and unscrupulous.
Idealy, Capitalism rewards hard work, innovation, invention, employee care, and customer service. We don't live in an ideal world so the government must step in and give a nudge here and there. For an example take a look at Henry Ford's treatment of employees compared to accepted norms today.
EDIT: Crap! Not sure where my quote tags broke. Use of color attempted...
Also it is not the function of Capitalism to provide jobs. And in a Capitalist system personal responisibility of both the consumer and manufacturer is required in order for it to funtion without greater and greater Government intervention.
The Bill of No Rights
The United States has become a place where entertainers and professional athletes are mistaken for people of importance. Robert A. Heinlein
The United States has become a place where entertainers and professional athletes are mistaken for people of importance. Robert A. Heinlein
