Yes or No: If it weren't for the welfare state, capitalism would not survive

What you’ve observed is what Marx predicted happens to capitalism. When capitalism becomes too big, you need social welfare programs because the wealth will concentrate at the top. This ultimately leads to communism as the government becomes very large and controls the economy (US government spending is responsible for almost 1/3 of the economy already and it will continue to grow). At some point US government spending will be over 50% of GDP. By definition this will make us a communist country. Then you end up with the government giving resources based on need, or more accurately, what the government believes you need. Which isn’t really any different than capitalism. The poor will still be dirt poor while the wealthy live extraordinarily lives.

Welcome to the future of America.

troll_69 wrote:

Yes.

Capitalism has a tendency to concentrate wealth and income, and lead to its own destabilization. This is true even in the absence of cronyism or corruption in the public sector permitting the development of monopolies or other market failures in the first place. Throw in some income security and social insurance, and you can continue to reap the wealth-generating effects of capitalism.

In a lot cases, capital survives because it’s truly subsidized capitalism.

Imagine how many “capitalist” airlines would’ve gone out of business during covid. Imagine how many more banks would have gone out of business during the Great Recession. Imagine how many car companies would’ve gone bankrupt without Obama’s car program.

Bailouts the rich.

What's your evidence? What do you mean by "destabilization"? What do you mean by "concentration"?

While I think it's fairly well understood that economic winners tend to use the political process to entrench their position in anticompetitive ways, your exclusion of "cronyism or corruption in the public sector" seems to suggest some other kind of destabilization. Do you mean a Marxist revolution? If so, that's not a hypothesis supported by evidence, as there's never been a proletariat revolution against capital as Marx envisioned. Which of course doesn't mean the hypothesis is wrong, merely that it's unproven. The closest thing is probably the French revolution. That could be called a proletariat revolution, but it was certainly not a revolt against capital.

The term "concentrate" seems to imply a limited supply of wealth and income that is being reallocated to certain individuals or institutions. But capitalist wealth is primarily premised on economic growth, not on redistribution to those at the top. Material standards of living at every strata of society continue to improve.

To the extent that capitalism leaves classes of society behind, it is less about material inequality and more about dignity, autonomy, and finding meaning in one's life. But I think if we expect an economic system to provide meaning to our lives, we're asking too much, and the problem isn't solved by more income. Ask the average lawyer at a top law firm (where depression and alcoholism are rampant) if they fill fulfilled because they're among the highest paid professionals in the world.

Also, even though it's true that capitalism leads to wealth and income inequality, so far in human history, capitalism appears to lead to less inequality than any other system people have ever tried (barring stone-age tribal societies).

None of this is to suggest that we shouldn't redistribute income or have a welfare state. Just that it's questionable whether capitalism requires it.

Why is the failure of a business evidence that capitalism doesn't work? You do understand the entire premise of capitalism is that businesses are constantly failing, right? Bankruptcy is part of that process. The government propping up failing companies is actually interfering with capitalism.

Now, interference might be justified in some instances. For instance, I think it was absolutely the right call to bail out the banks, as failing to do so would've caused far worse economic harm. But I think that afterwards, we should've broken up the banks and imposed a size limit on financial institutions. There is strong evidence that banks can maximize economies of scale at far, far smaller sizes. There is also evidence that the reason banks have merged to such large sizes is specifically so that they can offload their risk to the public. Because their failure would endanger the financial system, they can pursue higher profits at higher risk, knowing that the public will always bail them out. A simple limit on the size of banks would've been a far more effective reform than Dodd-Frank, which in many ways exacerbated the problem. Compliance is so complicated that it requires very highly compensated lawyers, which provides an advantage to the entrenched market leaders. This is commonly misunderstood: Big business LOVES regulation because it protects them from nascent competitors.

We should imitate Russias economic system

Russia's 110 million adults own, on average, $10,976 in assets, but the median wealth is much lower with half of the adult population owning $871. The average wealth per adult in the U.S. is $301,000

https://www.themoscowtimes.com/2013/10/09/wealth-inequality-levels-in-russia-among-highest-worldwide-a28445

Yeah, like 800 said above, a business failing, or even an industry for that matter, isn't evidence that capitalism doesn't work. It's normal for markets to correct, adapt, and then innovate.

"Material standards of living at every strata of society continue to improve."

How are you measuring this?

flyingfrog wrote:

We should imitate Russias economic system

Russia's 110 million adults own, on average, $10,976 in assets, but the median wealth is much lower with half of the adult population owning $871. The average wealth per adult in the U.S. is $301,000

https://www.themoscowtimes.com/2013/10/09/wealth-inequality-levels-in-russia-among-highest-worldwide-a28445

And yet most Americans can't pay an unexpected expense of $400 in cash.

Communism wouldn’t exist without communist governments murdering their own citizens in the tens of millions. Even hundreds of millions.

MelRnr wrote:

Yeah, like 800 said above, a business failing, or even an industry for that matter, isn't evidence that capitalism doesn't work. It's normal for markets to correct, adapt, and then innovate.

I think the idea is that a government bailout is short-circuiting the "industry failing" ... remember ... "too big to fail?"

It was thought, for instance, that allowing the big car companies to crash and burn would have cascading effects to the rest of the economy. That right there is your evidence that capitalism isn't working here. The entire economy is a house of cards waiting to collapse.

But if the common worker has a crisis, well, they aren't too big to fail and can just fail right on down to homelessness and everyone else will tell them that's what they deserve. Personal responsibility and all that.

Another issue, is that capitalism begets publicly traded companies, which now have a responsibility to constantly increase profits and revenue instead of what might be good for the country, economy, or even their own products.

I don't suggest any system is better, I don't have any idea how to be equitable and neither does anyone else. Our basic nature doesn't allow for it I don't think.

Communism simply doesn't work because the economy is global.

hunter wheres the coke wrote:

"Material standards of living at every strata of society continue to improve."

How are you measuring this?

You don't have to answer. The New Yorker has us all covered here:

Many things are getting better. Some things are getting worse. It's a hard question to answer.

I don't think capitalism is the problem. I think the fact that we don't want to take care of our population because we demonize the poor (and often minorities by proxy) is the problem.

MelRnr wrote:

Communism simply doesn't work because the economy is global.

Really? I thought it had something to do with murdering tens if not hundreds of millions of your own citizens.

No, just because the Government decided to bail out the auto industry after 2008 crisis, and the airlines after 9/11, doesn't mean capitalism doesn't work. It just would have been a harsher adjustment at the time, but the markets still would have eventually overcome the disruptions.

If given two simple choices, capitalism or communism, it's a no brainer for capitalism.

The best though, is a mix weighted highly on free market capitalism with a bit of socialism for safety nets thrown in.

800 dude wrote:

the password is password wrote:

In a lot cases, capital survives because it’s truly subsidized capitalism.

Imagine how many “capitalist” airlines would’ve gone out of business during covid. Imagine how many more banks would have gone out of business during the Great Recession. Imagine how many car companies would’ve gone bankrupt without Obama’s car program.

Bailouts the rich.

Why is the failure of a business evidence that capitalism doesn't work? You do understand the entire premise of capitalism is that businesses are constantly failing, right? Bankruptcy is part of that process. The government propping up failing companies is actually interfering with capitalism.

The point is if airlines hadn't been given tax payer money to keep them going through the deeper part of the pandemic then there would not be an airline industry anymore. The effects of that collapse are greater than just airlines - practically every industry is reliant on transport of people or goods at some level.

When they make money it goes to the stock holders but when they lose money we have to help them out to protect ourselves.

THIS

Tatar... wrote:

800 dude wrote:

Why is the failure of a business evidence that capitalism doesn't work? You do understand the entire premise of capitalism is that businesses are constantly failing, right? Bankruptcy is part of that process. The government propping up failing companies is actually interfering with capitalism.

The point is if airlines hadn't been given tax payer money to keep them going through the deeper part of the pandemic then there would not be an airline industry anymore. The effects of that collapse are greater than just airlines - practically every industry is reliant on transport of people or goods at some level.

When they make money it goes to the stock holders but when they lose money we have to help them out to protect ourselves.

Airlines had so little cash saved because they knew they would be bailed out. That's not capitalism.

The New Deal saved capitalism. The US was full of socialist organizations in the 1930s who were quickly gaining power and were aligned with a growing and increasingly militant labor movement. Had Hoover stayed in power and continued with austerity as a response to the Great Depression, there would have been a socialist revolution in the US. Roosevelt knew that the socialist would take over unless he was able to deliver relief. Roosevelt was a blue blood and was able to convince the capitalists to go along in order to save themselves from the mess they made.

Today, the welfare state exists more to the benefit of big business than as an effort to save capitalism. Walmart is able to pay its workers nothing and skip out on benefits because its workers are able to get medicaid and other social benefits to stay afloat. Social security is more a value to the business community by keeping elderly Americans from moving back with their children and requiring a bread winner to stay home or limit work hours.

Josh439 wrote:

Tatar... wrote:

The point is if airlines hadn't been given tax payer money to keep them going through the deeper part of the pandemic then there would not be an airline industry anymore. The effects of that collapse are greater than just airlines - practically every industry is reliant on transport of people or goods at some level.

When they make money it goes to the stock holders but when they lose money we have to help them out to protect ourselves.

Airlines had so little cash saved because they knew they would be bailed out. That's not capitalism.

Yes but they know how reliant the rest of the economy is on them and know the rest of the economy will bail them out because them failing is worse for everyone.

It's like if the private water industry was in trouble for some reason we're obviously going to fund them because the alternative is we don't have clean water.