Rethinking the Role of Capitalism: State-Led Initiatives and Economic Success

Judaka

I'm interested in trying to answer the question of how critical capitalism has been in shaping the economic prosperity of countries.

A problem as I see it when debating the history, is the nations that we use to talk about capitalism, and of using the West to do this. As the West had dominated the globe well before either the industrial revolution or modern capitalism. Western nations also enjoy a lot of other privileges and succeed in a variety of areas, so it's unfair to compare their progress to non-Western nations, in my view.

Some interesting countries to look at are India, Japan, SK, and China.

Japan had a stable government that implemented reforms over the Meiji Restoration period that included wide-scale industrialisation. However, there was also a process of Westernisation and capitalism was implemented, though it was very different from today, especially when compared to capitalism after neoliberalism.

China's rise has a lot of similarities to Japan, with a stable government that implemented reforms over a long timeframe. Again, the process of industrialisation and capitalism occurred side by side, but the capitalism being practised here is again, quite different from other forms that existed at the time or beforehand. Globalisation and foreign investment played a role that aided in industrialising the country.

South Korea went from being primarily agricultural to a modern economy after the Korean War. Very similarly, a stable government implemented reforms to industrialise with the help of foreign investment.

India is one of the least homogenous countries on the planet but has had a stable government. There have historically been many issues with state-run enterprises with issues of corruption and incompetence that perhaps could've been avoided by a more capitalistic system. The government of India wasn't as centralised and couldn't direct development in the same way as these other nations.

It seems that most of these economic miracles are best characterised as efficient state-led modernisation efforts in a politically stable environment, with overseas investments and assistance also playing critical roles. Singapore, Taiwan and HK can be thrown in as well.

If we take that perspective to the Middle East, while it's a much more complicated situation, the same seems true there. Politically stable nations that have been able to implement a long-term economic plan, paired with critical foreign assistance have become very wealthy and stand out from the rest. Similarly in Africa, I would argue countries have largely succeeded or failed based on the state's stability, corruption levels and state-led reforms.

I do think capitalism has significant advantages over other economic systems in a competitive sense. Perhaps the most important has been that profit within capitalism weeds out inefficiencies, while other systems have struggled with corruption and inefficiencies. Capitalism is dynamic, competition fosters improved practices and a drive for innovation. However, I would argue that cases such as China's rise under state capitalism, under very different legal circumstances than elsewhere, should challenge the narrative of capitalism and the importance of reducing government interference and of the free market.

Many of the world's non-capitalist countries have historically been led by governments characterised by corruption, political instability, mismanagement and repression. They're also isolated from the world economy and receive very little in foreign investment or support, being surrounded by a hostile world.

State planning and state-led initiatives have defined the nations that have been able to succeed and those that haven't. When we talk about capitalism, we've included a very wide range of policies and laws and a variety of approaches that have succeeded. For me, that challenges the idea of how important the various aspects of capitalism really are. Economies can succeed while being largely state-owned, or with state interventionism.

The accelerating upward trend of scientific progress that has been occurring for many centuries did not rely on capitalism, even if it was sped up by it. I'm convinced that our technological and industrial capabilities have been inevitable because it would take something drastic to halt the progress forwards.

My expertise in economics and history is rather limited, I've oversimplified things to make my argument and this topic is too enormous, it's possible that I'm looking at things in the entirely wrong way, but I wonder what others think. What has history shown with regard to the effectiveness of capitalism, and particularly, the elements of capitalism promoted by the West? While acknowledging the oversimplification, does my narrative succeed or are there some significant problems that can be pointed out?

Tom Storm

↪Judaka

I think what you have written here would be generally supported by many people.

Yes - the West began the game ahead of the pack, owing to historic 'advantages' - colonization, empire, slavery, etc.

how critical capitalism has been in shaping the economic prosperity of countries. — Judaka

How helpful has the economic prosperity of a rich country been to its citizens? That's a question I often ponder.

How laudable is economic prosperity? Does economic prosperity even mean the same thing in different countries? Amassing capital is one thing. How it is spent is another. The opposite of capitalism isn't a failed state. There are rich capitalist countries I can think of that seem close to failed states.

There are comparatively poor countries I would prefer to live in over hugely wealthy ones. One thing about economic analysis is that it is like theology - cryptic, mystical, faith based and contested. I studied economics years ago and took a particular interest in Japan. I recall the American thinker Deming and the system he developed as being critical to the post-war Japanese economic miracle of innovation and quality.

Sometimes economic success comes through working smarter, not harder, sometimes it's built on population size, sometimes it's provided by abundant natural resources, sometimes war plays a role. Or all of the above.

universeness

A problem as I see it when debating the history, is the nations that we use to talk about capitalism, and of using the West to do this. As the West had dominated the globe well before either the industrial revolution or modern capitalism. Western nations also enjoy a lot of other privileges and succeed in a variety of areas, so it's unfair to compare their progress to non-Western nations, in my view. — Judaka

Are you suggesting that none of the early city states like Jericho and Uruk, or joined city states such as the Sumerians or the Greeks, ever employed capitalism? Buy cheap and sell dear was employed even under early barter systems. It was always about control and manipulation of supply and demand.
The more you can gain control over supply and the more need for the resources you control that you can promote or cause, the more profit you can make, and the main capitalist approach is to nurture that profit, no matter what the cost is to the well-being of 'other humans.'

I first read about the immorality of the capitalist approach, in the book The Ragged Trousered Philanthropists when I was around 16. I wrote a thread about it on TPF titled The Ragged Trousered Philanthropists and the money trick. I think it was my first thread on TPF
From that OP and that book we have:

The money trick is a chapter in the book. It describes how land first fell into the possession of the few.
The main points would be; The toughest person would beat up all challengers to become the leader of a group. This process continued and grew from gang size to clan/tribe/nation size etc. The reward for the few was always control/ownership of land and its resources, despite the fact it was the majority that fought the battles. This system makes perfect sense if you consider our Darwinian 'law of the jungle' beginnings. Animals will fight other animals to steal their kill or gain access or control over areas of high resource etc. It's also logical that when leaders reach the status of 'Don' or 'Chief' or 'King' etc that they would eventually do less of the fighting themselves and send out subordinates to do it for them and reward them with land and titles such as 'Earl' and 'Duke' etc.
Once the 'few' owned the best land etc. They would employ/force large numbers of 'their subjects,' (named slaves, peasants, serfs etc). To 'work the land.' The produce would then be owned by the landowner and be consumed by them and their nearest and dearest to a gluttonous level. The rest would be stored (warehoused) for the purposes of trade etc and those who produced the material would be 'paid' at a subsistence level only. There would often come times when the warehouses were full or trade was interrupted etc and peasants were thrown off the land by the landowners. They had no storage of resources so would often starve and die or become part of the masses of 'poor'.

This is what capitalism is founded on. The mistake made by humans in the early days, was not uniting together and killing every gangster who would be king and claim personal ownership of land and resources.

Many of the world's non-capitalist countries have historically been led by governments characterised by corruption, political instability, mismanagement and repression. They're also isolated from the world economy and receive very little in foreign investment or support, being surrounded by a hostile world. — Judaka

Corruption, political instability, mismanagement, repression etc exists in all human communities, whether or not they employ the word capitalist or socialist or communist when they describe their political system. Capitalists often rise to power in all such systems, already existing, or historically exemplified.
They use the kind of tactics you mentioned above, to maintain their power and influence.

An aristocrat, a plutocrat, an autocrat, a totalitarian, a pope, a messiah, a king, a televanhellist, etc, etc are all just more extreme examples of the application of capitalism.

More and more people are becoming educated in each generation, to be able to gain a full understanding, of why attempts to create a fairer political system, such as communism (as in the original meaning of commune) or socialism, has failed in the past.
Failure is due to internal corruption via personal greed(capitalism) and narcissistic lust for personal power and external pressure, from powerful elites in control of international, capitalist run, trading markets.

If not strictly controlled, for the safety of all, capitalism will always result in the rule of a small, predominantly nefarious, elite, regardless of the size of the community involved.

There are two main problems with any notion of completely wiping capitalism out, as a way of trading with others.
1. Encouraging entrepreneurialism.
2. Not destroying an individuals sense of personal freedom.

I am socialist, through and through and I remain in my belief that socialism/humanism and a resource based global economy is inevitable. But we need to allow 'small, fair capitalism,' so that we can retain and encourage the very valuable contribution of the entrepreneurial mindset, to any community, including a global sized one, but no ridiculous irrational states, like billionaire or multi-millionaire should ever become possible. Such just leads to nefarious individuals gaining autocratic power like Stalin, Hitler etc did, Putin has done and Trump would love to do.

People must be given as many free choices as is possible within any 'better' political system.
Such a system can only survive if it remains fully democratic and is demonstrably of, for and by the majority of all stakeholders involved.
To me, capitalism is like any really dangerous substance, you can survive it, in small doses but a big dose will kill us all and continue to accelerate our species towards extinction.

T Clark

There are rich capitalist countries I can think of that seem close to failed states. — Tom Storm

Can you give us an example? If you say the USA, I'll stick my tongue out at you.

Sometimes economic success comes through working smarter, not harder, sometimes it's built on population size, sometimes it's provided by abundant natural resources, sometimes war plays a role. Or all of the above. — Tom Storm

Have your read "Guns, Germs, and Steel." It makes the case that geology can also be determinative historically.

Tom Storm

It makes the case that geology can also be determinative historically. — T Clark

Indeed.

Can you give us an example? — T Clark

I'm not going to touch that one. :wink:

T Clark

I'm not going to touch that one. :wink: — Tom Storm

Benkei

Are you suggesting that none of the early city states like Jericho and Uruk, or joined city states such as the Sumerians or the Greeks, ever employed capitalism? Buy cheap and sell dear was employed even under early barter systems. It was always about control and manipulation of supply and demand. — universeness

Markets isn't capitalism. There's a decent thread on this forum on the subject. I think it's called "what capitalism isn't".

universeness

Markets isn't capitalism. There's a decent thread on this forum on the subject. I think it's called "what capitalism isn't". — Benkei

If there are no significant price/profit controls then any commercial market from a black market to a stock market to a bric-a-brac stall, is a capitalist system, which is open to nefarious control that puts personal profit above the well being of people. I can live with the bric-a-brac or small business model or strongly controlled capitalism, as an assist to the two advantages I suggested earlier, but not the black market, stock market, free market economy, capitalist markets that help gangsters to thrive and allow billionaires, multi-millionaires and international/global, privately owned businesses to exist, who often wield such power, that they can directly influence national governments and military/police forces and by doing so, blight the lives of masses of people all over this planet.

Judaka

↪Tom Storm

In terms of the citizen's perspective, capitalism goes against their interests, our productive capacity should produce a much higher standard of living than it does. I wasn't intending for this to be a thread about the ethics of capitalism, but I do think that the moral logic of the system is flawed, I think one part of the logic justifying the system of neoliberal capitalism is its effectiveness, which I am challenging. China, SK, Japan and so on are examples put forward by supporters of capitalism, for why it is necessary and superior to other systems. By challenging this narrative, and exposing its flaws, we can become more open to exploring alternatives.

↪universeness

I think to call a system capitalist, trading doesn't suffice, the key difference is that capitalism involves production and private ownership over the means of production. Buying something from one place and selling it in another doesn't qualify. For the same reason, we can't call a king's ownership of his lands private ownership, since he rules and governs those lands, he is not a private citizen.

The reason why this distinction is important is that capitalism is enriching private citizens, whereas you're comparing it to examples of government-based exploitation. I don't really know what to make of your argument, I kind of agree with many of your conclusions but how you got there confuses me.

universeness

↪Judaka

Personal profit is the main purpose of capitalism. Small profit that earns an individual(s) an inoffensive amount of money that means they can afford to live to a standard that most non-greedy people would find to be 'comfortable,' is defendable.
In the real world, this is not the outcome of capitalism, as it is practiced by private individuals who wish to become an elite.
I have heard such descriptions as:

For the same reason, we can't call a king's ownership of his lands private ownership, since he rules and governs those lands, he is not a private citizen. — Judaka

and:

I think to call a system capitalist, trading doesn't suffice — Judaka

Buying something from one place and selling it in another doesn't qualify. — Judaka

Many many times before, and in many different varieties and flavours, and such are merely unconvincing attempts to excuse and dilute how nefarious, monarchy and capitalism are.
Capitalism is a system that is based on competition. If you observe competition, you will find that only a few win.

I wasn't intending for this to be a thread about the ethics of capitalism, but I do think that the moral logic of the system is flawed, — Judaka

Hard to discuss the merits or flaws of an economic system, without addressing it's ethical standing.
I fully agree with your point about capitalism being morally flawed, but I would choose stronger terms to express the same view.

whereas you're comparing it to examples of government-based exploitation. — Judaka

I did so, because that's where unfettered capitalism, always takes us to.

I kind of agree with many of your conclusions but how you got there confuses me. — Judaka

The path I took was from the beginning of the story of capitalism to how the money trick still works today and onwards to the very destructive effects it continues to have on human civilisation and why it helps to keep all of us on a road to extinction. I apologise if you feel I have been unable to make my reasoning clear to you. Perhaps you can explain to me further why you find my reasoning confusing or incorrect.

Tzeentch

The irony in all of this is that the "evil capitalist corporations" are actually public, and not private. In a similar vein, they owe much of their power to governments.

And governments essentially are nothing other than giant monopoly corporations either.

I would really recommend watching the following video to have a more historically aware sense of what these terms actually mean and where the current confusion stems from:

It's a long video, but well worth watching.

Judaka

↪universeness

Personal profit is the main purpose of capitalism. — universeness

It's a feature of power. The acquisition of ever greater power is assisted by possessing power. This occurs in capitalism, as you've described, but it's not a feature.

Many many times before, and in many different varieties and flavours, and such are merely unconvincing attempts to excuse and dilute how nefarious, monarchy and capitalism are. — universeness

Where little government oversight exists, things naturally play out to create monopolies and billionaires. As it is in the nature of power to go in that direction and there must be intent to prevent that. Many video games show the same process playing out, or just Monopoly is a classic example. When one side wins, the game resets, but what if that didn't happen? Easy enough to say, right?

Hard to discuss the merits or flaws of an economic system, without addressing it's ethical standing. — universeness

The risk is that your view will be dismissed as being unrealistic or impractical, morality is not divorced from convenience and practicality, but tied to it. There is a need to show that economies can succeed without resorting to unethical practices.

Perhaps you can explain to me further why you find my reasoning confusing or incorrect. — universeness

Well, probably the major issue with your argument is that capitalists aren't part of the government. For example, Jack Ma who founded Alibaba is an extremely rich and powerful capitalist, who exploits his workers ruthlessly in pursuit of profit. However, he is still ultimately a private citizen living in a totalitarian dictatorship. If Jack Ma pisses off the wrong people in the government, the laws don't protect him at all, and he can be imprisoned and stripped of his assets.

This highlights the differences between capitalists and the state, they are private citizens who ultimately, aren't priorities for the government. The US government had nothing to do with Mark Zuckerberg founding FB, and they did nothing to stop him from becoming a billionaire or growing larger and acquiring more businesses and power. Their policy is mostly one of inaction, rather than of conspiracy. (Not saying there's zero conspiracy, don't take me out of context).

I can't really see capitalism as a continuation of old systems like you've argued, it is just another system that has failed to control the growth of power. Whether socialism or communism would do a better job, it's possible that an iteration of them could, but so far, they've handled much worse or just as badly.

universeness

There is a need to show that economies can succeed without resorting to unethical practices. — Judaka

I would call such demonstration, socialism / secular humanism / resource based economy.

Well, probably the major issue with your argument is that capitalists aren't part of the government. For example, Jack Ma who founded Alibaba is an extremely rich and powerful capitalist, who exploits his workers ruthlessly in pursuit of profit. However, he is still ultimately a private citizen living in a totalitarian dictatorship. If Jack Ma pisses off the wrong people in the government, the laws don't protect him at all, and he can be imprisoned and stripped of his assets. — Judaka

No offense, but I find this quite naive.

Putin and Trump are capitalists who have both led powerful nations. Putin will make his chosen, or continue to allow his chosen to be, billionaire's (or oligarchs) or at least very very rich, in the exact same way that early monarchies created Earls, Dukes and Counts etc.
Money is the main means of exchange, used by capitalism, and the money trick, is one of the main tools any nefarious individual can use to gain power and influence.
Any Duke or billionaire that does not accept King Putin as their overlord/don/god etc gets disposed of, in one way or another by direct killing, ruining, or by some other method of stealth.
Rich elites can have full control over an elected government or they can influence or even 'fix' an election in the way that has been reported, regarding some elections all over the planet. 'Money talks,' is a well known phrase. On occasion, it's even the King that gets replaced.
But to suggest that capitalists don't also hold government positions or government level power and influence is just plain naive.

I would assume you are familiar with concepts such as 'political lobbying.' Do you think all such 'influencing' is above board? Even modern gangsters in every country will have 'politicians' in their pocket. A gangster makes most of their money using capitalist style manipulation of control over supply and demand. The only main difference is that the gangster does not care at all, what product they make money from.

Judaka

↪universeness

No offense, but I find this quite naive. — universeness

The upside of talking to me is I won't take offence to anything you say, the downside is I'll likely say something to offend you :P.

Rich elites can have full control over an elected government or they can influence or even 'fix' an election in the way that has been reported, regarding some elections all over the planet. — universeness

You've connected things in a very loose way that's not directly related to capitalism. Putin is a corrupt kleptocrat in a capitalist system, but there are corrupt kleptocrats in any economic system, why is this the fault of capitalism? You say rich elites can have full control of the government, but then also say a leader such as Putin has full control over those rich elites. The same thing occurred in feudalism, socialism, and colonialism and you've even said the exact same thing yourself, right?

It'd make more sense for you to say, "Actually, the economic system doesn't matter because the wealthy and powerful will always abuse the poor and powerless".

But to suggest that capitalists don't also hold government positions or government level power and influence is just plain naive. — universeness

I don't think I said or implied that they didn't... My point was completely unrelated to this.

You're introducing a huge topic and including multiple countries, all of human history, and complex political & economic realities on a national and international level. You're making a lot of claims in each comment without really delving into them deeply. I have a superficial understanding of your position, but I don't like trying to weave a grand narrative that simplifies everything so that we can very easily summarise all of human history. It's easy to say how 2000 years of history have been, and disgustingly difficult to add nuance to counter this argument. To analyse just capitalism is hard enough. Probably all I can say is that I agree with you on some things, but I've got no interest in debating such a broad topic.

universeness

why is this the fault of capitalism? — Judaka

Because capitalism provides a well known, easily understood methodology which anyone can use to become individually rich and powerful. Such has even been parodied as the American Dream.
The more narcissistic, ruthless and devious you are, the better your chances of high success in the capitalist world. This is often dramatised in the movie industry:

But the effects of capitalism are better exemplified in the boom (for some) and bust (for most), times they cause, that we all have to pay for, but most of the rich that caused it, pay nothing and in fact, many of them actually get much richer.
Few of those who use capitalism to steal from the majority, get punished for their crimes compared to how many poor folks get punished for their crimes.

The same thing occurred in feudalism, socialism, and colonialism and you've even said the exact same thing yourself, right? — Judaka

No, feudalism is a forerunner to modern capitalism, it was a stage, that started from the scenario I already posted from The Ragged Trousered Philanthropists. A system in which the nobility held lands from the Crown in exchange for military service, and vassals were in turn tenants of the nobles. Lands and resources that were stolen from the masses in the first place.

True Socialism has never been successfully established anywhere in the world, yet!

Colonialism is just exported capitalism. Different words were in vogue at the time but the main methods used by the few to control the many, all still exist within capitalism today. It is only the efforts of those who have fought very hard against unfettered capitalism, that prevent their older practices being in full open use today.

I don't think I said or implied that they didn't... My point was completely unrelated to this. — Judaka

Well, probably the major issue with your argument is that capitalists aren't part of the government. — Judaka

You're introducing a huge topic and including multiple countries, all of human history, and complex political & economic realities on a national and international level. You're making a lot of claims in each comment without really delving into them deeply. I have a superficial understanding of your position, but I don't like trying to weave a grand narrative that simplifies everything so that we can very easily summarise all of human history. It's easy to say how 2000 years of history have been, and disgustingly difficult to add nuance to counter this argument. To analyse just capitalism is hard enough. Probably all I can say is that I agree with you on some things, but I've got no interest in debating such a broad topic. — Judaka

That's ok. The horrific affects and the clear, present and continuing global threat of unfettered capitalism is indeed a very broad topic. I was responding mainly to:

I'm interested in trying to answer the question of how critical capitalism has been in shaping the economic prosperity of countries. — Judaka

Capitalism has been critical in the creation of a tiny nefarious elite gaining power and influence that has global reach and can directly affect the daily lives of billions of people. This to me is far more important than what prosperity it has created for the few in each nation.
Capitalism has meant that the majority of people in each nation are labelled 'have nots' relative to those few who would be called 'haves.'
I will leave it there.

Rethinking the Role of Capitalism: State-Led Initiatives and Economic Success

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