Which capitalistic system can grant full employment?


#1

Which capitalistic system can grant permanent full employment?

A common argument of socialists is that capitalism always would cause problems like poverty and unemployment. How would you counter?

Recently I thought about this problem and I realized that it IS possible to create a capitalistic system without unemployment – at least at a theoretical level. Momentarily I can’t say if my solution would work only on a theoretical level or on a practical level too.

Before I outline me considerations: How would you reply to the question above?


#2

I have to say that “theoretical” is the only way it could happen. There will always be issues and special cases that will fall through the cracks.

Also, as others have pointed out on RO in the past, capitalism itself is not in fact a system; capitalism is what happens in the absence of a system.


#3

Lets get a few things on the table:

There is NO such thing as “permanent full employment”, it does not exist under any system. So the far left statement is false (lie) and a false flag at the same time, no system will give it.

Capitalism is an ORGANIC system to all people and its the ONLY organic system. If you tinker with it, change it then it ceases to be capitalism anymore.

The govt has a rather small role in it, but its a critical role and one our govt did very well for most of the past 200+ years. Yes the govt should have not allowed the collapse of the stock market which led to the Great Depression (along with the Dust Bowl which affected food stocks). I am NOT sure the govt has the knowledge to control the stock market at that time. It was something new that had never occurred her or anywhere in history.

The number 1 role the govt can and should play is that of managing results. First step in that is not allowing ANY company to become to large to fail. GM and Chrysler should have never been bailed out. All that did was hurt the economy and do so for 10 years, albeit Obama who stole $10 TRILLION dollars from the taxpayer and we are not sure where it is or went…


#4

Capitalism does not cause poverty and unemployment, Capitalism causes opportunity so that poverty and unemployment are only issues for the individuals who choose not to utilize the opportunities.

Governments use force to limit opportunity, which creates poverty and unemployment for those who would otherwise embrace opportunities.


#5

No, because a capitalistic system demands that an employee offer a service that has economic value. If someone can’t offer any value to anyone(and there are plenty of these people) then they will never be employed.


#6

Speaking as one of “these people,” not really. We’re a vast minority, and genuine charity can do much better for us than government pseudocharity.


#7

Agreed, 17Oaks. Most economists deem an unemployment rate of about 4% as “full employment.” In ANY large population, there are ALWAYS people transitioning from one job to another, in school PREPARING for a job, or so seriously disabled that they CANNOT work.


#8

But there is at least one scenario that is capitalistic – but without unemployment.

The answer is: A land that enables very easy access to of means of production. A land were everyone could start his own business (e.g. a farm) easily. Although this isn’t practically realized today, it would be possible.
Imaging every new born citizen would get his own piece of land. He could cultivate it or let it out on lease. But he would not be allowed to sell it. When he dies, the piece of land returns to the state.

I do not promote to realize this scenario today. I want to find out if the basic idea could be adapted to other fields than farming.

Should government regulate anything or as less as possible (e.g. prevent monopolys)?

Would this mean a general limitation of the size of companies?


#9

Limitation on size of companies? Relatively speaking, YES. That said market dominance could be a small company in revunue vs a Global level company.

Lets say I make DoHicky’s and last year I sold $20 Billion worth and I control 52% of the $ market which is worth almost $40B, but my market size in units sold is only 30% of the market since my DoHicky is a gold model and not silver. I neither control the market nor do I dominate it as the market.

Someone else sells a drug as part of their line up of products. They sold over $10B worth of drugs to include Aspirin, but only $100M of a product for men called HardOn. In the male market which is only about $120M deep they control pricing and dominate the market space. In addition they own the patent and there are only 2 other companies that make a similar product, one called BrokeRichard and the other is BentRod which account for they other $20M in sales.

The big company calls the shots.

Its complex but it comes down to not just size but rather the ability to control the market, pricing and if their failure would result in a long delay in other companies being able to meet the demand in a reasonable length of time.

Lets look at a recent bail out: GM. Had GM failed what would have been the result? IMO

Chevy and Corvette would have survived, the others would have been sold off, any loss of sales would have been mostly absorbed by Ford and Chrysler and others. Workers at worst would have seen temp unemployment, less than had they gone on strike in many cases. The new car sales market is around 3 million units per year IIRC, so that is the demand curve and some one will step in to fill it as there is that much competition in the space. NO NEED to have ever bailed out GM, but it sure make Obama’s buddies RICH!


#10

That’s the last thing the government should do. The economy will not be managed at any point. It is what it is, and if we try, it will reduce opportunity and increase poverty – as well as enrich the parasites and politicians on their payroll. The government’s only role is to set rules about not killing each other, beating each other, taking each other’s stuff and lying about what we’re trading.


#11

The number 1 role the govt can and should play is that of managing results. INSOFAR as:

Insuring competition

and

NO company gets to big to fail

and

To give the GOAL and NOT the process to meet the goal


#12

There is NO such thing as “permanent full employment”, it does not exist under any system. So the far left statement is false (lie) and a false flag at the same time, no system will give it.

Capitalism is an ORGANIC system to all people and its the ONLY organic system. If you tinker with it, change it then it ceases to be capitalism anymore.

The govt has a rather small role in it, but its a critical role and one our govt did very well for most of the past 200+ years. Yes the govt should have not allowed the collapse of the stock market [/quote]
That wasn’t the problem.

The economy was ready to bounce back by 1930— it only continued in recession due to Government intervention, and monetary policy set by the Federal Reserve.

Ben Bernanke, of all people, copped to responsibility on this point to Milton Friedman. He also said “we won’t do it again”, but I wouldn’t hold my breath.


#13

Isn’t the “no (economic) rules at all ideology" one-sided? In general I appreciate the stance that government should regulate as few as possible. But what speaks against rules, which could increase opportunity and reduce poverty?

I’m not familiar with the US-American cartel law but at least I think there is an antitrust legislation or there are anti-monopoly legislations. Would you remove them? And do you think an elimination of such regulations would INCREAS opportunity? I do not.


#14

The economy was ready to bounce back by 1930— it only continued in recession due to Government intervention, and monetary policy set by the Federal Reserve.

As I look back over our ebbs and flows of our economy, there appears to be a correlation between the resulting ebb and govt intervention. The bigger/more the intervention the bigger/longer the ebb…just take note of the $11 Trillion we pumped into the economy over 11 years of Bush-Obama and the results scream at you…EPIC FAIL!


#15

Full steam ahead, Katy bar the door capitalism has bad results, we and you don’t want it. The result is always the same: The biger companies get bigger, we have fewer and fewer small companies and you end up with a hand full of companies running everything and crushing the little guy. This becomes a society of the rich and the poor and no middle class.

Thus the Govt has a role and with out it capitalism become disasterISM! We saw this with AT&T. They got so large they controlled the market, controlled prices and stopped innovation completely. As posted we could have had cell fones years before we did.

Govt MUST over see results TO:

Insure competition

and

NO company gets to big to fail

and

To give the GOAL and NOT the process to meet the goal

I own a small company and the calls for me to ‘go big’ I hear constantly…I do not want to go big because if I do I feel my quality will suffer. We support a niche market in the US, the products we make are of the highest quality we can produce and we believe we manuf the highest quality products in our market space in the US. And in a HIGHY Competitive market, we are the quality leader and I am proud of that, BUT under unbridled capitalism I would be completely pushed out of the market.


#16

Thus the Govt has a role and with out it capitalism become disasterISM! We saw this with AT&T. They got so large they controlled the market, controlled prices and stopped innovation completely. As posted we could have had cell fones years before we did.

Govt MUST over see results TO:

Insure competition

and

NO company gets to big to fail

Which has basically always been the result of poorly written Government regulation that punishes companies who try to enter the market.

Hence, attacking a company is attacking the symptom, not the root cause, and you’re giving the market a cluster **** to sort through.

It’s easy to talk in the abstract, when you get to functional examples, like the banks comprising the Federal Reserve, the Legacy Airlines, or companies who “represent” monopoly like Microsoft or Standard Oil, you realize it’s either the fault of regulation, or it’s temporary circumstance the market has already moved to undo.


#17

Monopoly is created by government regulations, usually at the request of politically connected business owners Regulations are designed to eliminate competition. AT&T faced massive competition early in its history. Gas companies, the same. It holds time and time again. Licensing requirements raise barriers to entry into markets in myriad fields, ensuring that no new competitors enter the market, decreasing competition and increasing prices for consumers.

One example is appraisers where I live. They require a certain level of schooling followed by 2- or 3-year apprenticeship. The appraisers are not required to take on an apprentice, and few do it very often. Those apprentices will be competitors. As a result, our appraisers are aging, with many retiring. Fewer appraisers are available at a time the housing market is booming. In the space of five years, the price of an appraisal increased from $300 (on edit: Maybe was $500). I don’t remember as I don’t use this service very often) to $800, requiring appointments set six to eight weeks in advance instead of two to three weeks. There simply aren’t enough appraisers.Those prices signal opportunity to would-be appraisers, but the process is very long and depends on your future competitors, who are pulling down exceptional profits.

Government created the situation and eliminated opportunity.

Continuing the discussion I started above this quote: The government creates monopolies and oligopolies. The consequences of regulation may be deliberate or unforeseen. Yes, government has to be involved. It has to fix what it did. More often than not, the solution is the equivalent of Obamacare, more of the same crap that got us there in the first place. The government’s job is to stop and reverse what it did.

The government and “the people” might think it wise to mandate that appraisers provide apprenticeship a certain amount of time. That’s one possible “Obamacare” in the mix.

What the government ought to do is repeal its regulations. The talented will succeed. The untalented will fail. Someone who wishes to succeed may want to take the appropriate classes and perhaps apprentice himself by offering value-added services to a professional appraiser to gain an edge on another appraiser. The possibilities are endless.

Of course, the opposing argument is that the talentless will run amok in the industry and provide bad information to customers. Hmm. Interesting. Isn’t that a self-correcting long-term solution?

Maybe. I don’t know anything about your business. I do know there’s a good chance you don’t have an even playing field created by regulations, and it limits your opportunity by comparison. No doubt, you have much better insight into that than I do. Most likely, we do not know whether you would be pushed out of a real free market – one that maintains laws against murder, theft and fraud, the things also prohibit free markets from functioning.

That said, sometimes businesses need to be completely pushed out of the market. I don’t know when that should happen, and neither does a government bureaucrat. No one knows. But in a free market, we can find out by looking at what happens as millions and billions of freely acting economic agents make their choices. In a free market, demand for quality product ought to keep you in business if it’s a business where quality matters to consumers.


#18

Licensing requirements might not be the best instances for governmental influence.

Not only. Monopolies can occur as a result of different reasons. It is especially problematic if you have it to do with limited resources. If a hypothetical super-concern would by buy up all oil resources around the world. What would happen? It would control the market and determine the prices. Admittedly, this example couldn’t come true because there is still too much oil. But what if this would happen in a field were recourses are rare?

The following is not an economic problem but I see one additional problem if certain companies get too large: A loss of diversity.
In the past (decades ago) there had been much more smaller companies and each of them had a slightly different offer. When few companies get giant or fuse together you will loose this diversity. Think of Starbucks for example. Decades ago there had been several (different) coffee-shops in a city. Then many closed but now: Wow, fife Starbucks a street – what a diversity!
You talked about a loss of opportunities. The diversity problem doesn’t only exist respectively the offer of products but also the jobs they could offer. The more companies the more different opportunities the people would have.

What speaks against a limit of size of companies? It could be thoroughly high, but I think a single company should not be allowed to dominate let’s say more then 50% of the whole market.


#19

It hasn’t happened, and oil is hardly free market. But imagine if someone did try to buy all the oil. What would the value of the oil become? What would the value of a share of the oil become? The price would rise (correction: as it becomes more monopolistic), which is an increasingly strong incentive to sell. One the other hand, the buyer receives decreasing amounts of marginal utility from the next unit of oil resources he buys up. (Those are kind of the free market brakes on it.)

I live in a very small town that is currently supporting three independent drive-throug coffee shops, a Dutch Bros. drive-through, a Starbucks and eight convenience stores that also sell coffee.

If Starbucks is your example of the problem, then you haven’t described a real problem. Coffee is a highly diverse industry. The nearby large cities have many, many different ways for me to buy coffee, and I live in the Northwest, the region where Starbucks originated. I don’t know what’s going on where you live, but perhaps regulations make it easier for Starbucks to dominate the market,.

Lack of diversity is an opportunity for a wise entrepreneur. If it actually occurred in a place where diversity is preferred by consumers, in a free market, that demand will draw interest from entrepreneurs who will begin supplying what the dominant company fails to provide. It is only when some bureaucrat, politician and the public as voters begin clamoring for some outcome that they implement stifling regulations and create non-diverse companies such as AT&T of the 20th century. That’s an example of real-world lack of diversity. Starbucks is not – not on its home turf anyway.

You don’t need to prohibit a company from owning 50 percent or 60 percent. A free market will handle that, exemplified by coffee. In the examples in this post, the government caused dominance in one case, exemplified by AT&T.

Let’s discuss that 50 percent too. Why 50 percent? Why not 40 or 30 or 70? It’s an arbitrary number that underscores how little expertise goes into determining what the ideal market should look. We just can’t know. You cannot know everything I need and want, what I’m willing to trade for and how much. I’m on the other side of the world from you, yet, you, like politicians, bureaucrats and voters when they aren’t spending their own money, can simply determine what arbitrary figure is best used to regulate an economy. It’s a meaningless number just thrown onto a post, but no politician, economist, bureaucrat or voters has any better grasp of what that number ought to be than you do. I don’t have any better idea either. Yet we act as if we do, and we constantly and forcefully deny our fellow citizens their own rights to make their own choices based on their own needs and desires, to trade freely as they desire, simply because we believe that as a collective we know what’s better, that Starbucks should be capped at 50 percent of the market, when 80 percent of the market prefers Starbucks – which of course, ensures that the price of a cup of Starbucks coffee increases while 30 percent of the market goes unsatisfied. See what I’m saying?

Do not deny people the freedom to trade with each other as they will, and you will have the most preferred market possible. Socialism, the public control over the means of production, is miserable because it does not supply the things people actually want. Not one organizer in socialist systems, including the politicians, bureaucrats, voters or me or Oaks, can decide what your most preferred basket of goods and services. Only you can.


#20

It’s a number that pretty commonly defines ownership. If you’re receiving 50+% of all revenue in a market, you effectively “own” that market.

As a dominant force in the market, a monopoly can often put up highly effective barriers of entry, preventing any serious competition.

You often like to blame the government for all the ills in the market, but the way our government works is actually dictated by the biggest players in the market. The government isn’t legislating on behalf of the American voter - they’re writing laws to benefit their financiers. The government we have is the direct result of big business.