Is capitalism working?

Lord Myners, announced his resignation as an independent director of the Co-op Group last week. How much has he and other directors and top ranking managers taken from the Co-Op bank? They should give at least 50% of their salaries back. They give capitalism a bad name. Other high earners should do the same, capitalism is not working, not unless you call rewarding failure as the right thing to do.

Are todays poor better off than 30 years ago, the rich certainly are.

I'm but a lowly surf, I know my place.

Capitalism as a system works just fine. Like all systems, left to its own devices to run unchecked, it develops faults and excesses. They just need addressing, in real and effective terms rather than vocally-only through lobbied lip service.

Same symptoms exhibited by communism at the time, with select few party members vastly 'more equal' than lowly comrades, tbh.

Next whack-a-banker thread, please.

Capitalism as a system works just fine. Like all systems, left to its own devices to run unchecked, it develops faults and excesses. They just need addressing, in real and effective terms rather than through lobbied lip service.

 

Next whack-a-banker thread, please.

The bankers just worked in a system that allowed them to earn loads o money, and then things went pear shaped, not their fault, just the system. I work in a system whereby if I do my job poorly, I get sacked.

But how about todays poor, the chavs, the drug addicts and the gambling addicts and the alcoholics; are todays underclass happier than 100 years ago, are there fewer of them?

Capitalism needs low paid workers to produce the goods or services to generate a profit for investors. Socialism is a nice idea but human nature gets in the way making it unworkable. Either way, it's the workers who get shafted. No-one ever gives up power voluntarily. I think the whole concept of wealth generation whilst half the planet is hungry is criminal.

The bankers just worked in a system that allowed them to earn loads o money, and then things went pear shaped, not their fault, just the system.

The system they worked in, and still do, is not capitalism per se. It is the financial sector of a capitalist economy. There is much more to a capitalist economy than finance. Unless there are goods and services (other than financial) being produced and traded, the financial sector itself cannot function/operate/exist.

That said, because of the margins and sums involved, it is a sector which should have been more regulated than most, or at least more scrutinised by a hands-on regulator with teeth. A fundamental aspect of the 2008 crisis is that the financial sector was allowed to increasingly disconnect and isolate itself from the rest of the economy, by creating and trading products and generating paper-only profits which had were ever less based on real life economical activity. It became an international money-printing press in all but name, operated by unregulated, borderless, greed-driven faceless institutions unaccountable to anyone but their shareholders. That wasn't a failing of capitalism as an economical model, it was a system(ic, i.e. implementation) failing.

That's why, way-back-when, I (amongst others discussing the issue) was all for allowing failing banks to go to the wall (deservedly), and/or for G20(and more) heads of state to agree a global 'day zero' bankrupcy, wipe everyone's slate and reset the counters (and let the risk takers take the hit), and reboot global trade on a Monday morning on that basis. With a statutory interdiction on basing share value and similar financial products on anything other than real-life-assets-you-can-hold-in-your-hand (basically, what the original stock markets were all about). It wouldn't have been half-as-painful as the last 6 years.

The problem with the financial sector is as much political as economical, tbh.

I work in a system whereby if I do my job poorly, I get sacked.

But how about todays poor, the chavs, the drug addicts and the gambling addicts and the alcoholics; are todays underclass happier than 100 years ago, are there fewer of them?

I can't say whether they are happier or not than a 100 years ago: they should at least be healthier and more comfortable, as there is a safety net system (paid for by taxes levied from the profits generated by the capitalist economy) which was not there 100 years ago.

That's not a "let them eat cake" comment, it's just common sense with a bit of economics 101 thrown in for good measure.

 

The problem with the financial sector is as much political as economical, tbh.

Under all but the stratospherically-high steps of the ladder, most people do. Even bankers.

There has always been , and always will be, poor people. To believe otherwise is to believe in Utopia.

 

But it would be nice, just once, for bankers who eff up and lose millions to be treated like normal folk when they eff up. Sacked rather than paid millions in severance.

But it would be nice, just once, for bankers who eff up and lose millions to be treated like normal folk when they eff up. Sacked rather than paid millions in severance.

Believe it or not, many of these have copped for hard time, or are still lined up for it. Particularly in the US.

Many boards and influential shareholders have also wised up to the public mood and used it as negotiation leverage to kick out the top level early (and end pre-crisis "generous" contractual engagements at 'least' cost) and appoint a new top level on substantially less generous terms. Don't get me wrong, that's not out of empathy, altruism or equity: it's simply cost cutting in operation, with public opinion a good help.

I haven't got a link handy but the news archives are littered with instances of the above, as I've read it often enough in the FT these past 2 years or so.

Capitalism needs low paid workers to produce the goods or services to generate a profit for investors. Socialism is a nice idea but human nature gets in the way making it unworkable. Either way, it's the workers who get shafted. No-one ever gives up power voluntarily. I think the whole concept of wealth generation whilst half the planet is hungry is criminal.

Once there was a dream - of swift personal transportation so we could easily visit nearby towns, without having to walk there. It was realised; many of us "own" cars (or are paying them off!), and there are trains and buses, much more affordable relative to average pay than the stagecoaches of yore.

Another dream was of technology increasing production so that each of us could receive a fair week's pay, and the work would be done by the machine allocated to us. Alas, this fell down when one person owned most of the machines, and received all the pay from their production, paying out the least he could to each of the fewest workers he could employ.

We need capitalism with everyone having a fair share of the means of production, and freedom for innovators to bring their ideas to market without established organisations smothering their innovations at birth.

First of all, forgive my naivety but this is how I see it. A capitalist society in it barest form =A,B and C need goods;D,E and F produce goods and sell to A,B and C. There is healthy competition here and everyone chugs along nicely.

Then the banks/ financial sector come along and encourage A,B and C to borrow to purchase more goods.

D,E and F then approach bank to borrow to increase production. Bank agrees but gives more favourable terms to D.Now, D can produce the goods in larger numbers and at a better price. Bank then buys all that D can produce and is now the middleman (futures) whilst foreclosing on E and F. Bank/financial sector now controls supply and demand by adjusting terms to all involved. Checkmate.Bank profits from all concerned and everyone pays extra for the privelige.

First of all, forgive my naivety but this is how I see it. A capitalist society in it barest form =A,B and C need goods;D,E and F produce goods and sell to A,B and C. There is healthy competition here and everyone chugs along nicely.

 

Then the banks/ financial sector come along and encourage A,B and C to borrow to purchase more goods.

 

D,E and F then approach bank to borrow to increase production. Bank agrees but gives more favourable terms to D.Now, D can produce the goods in larger numbers and at a better price. Bank then buys all that D can produce and is now the middleman (futures) whilst foreclosing on E and F. Bank/financial sector now controls supply and demand by adjusting terms to all involved. Checkmate.Bank profits from all concerned.

That is a pretty accurate description of the key-failing in capitalist thinking. The problem is that the banks lost their moral compass and decided to profit at the expense of others. In its purest form capitalism works fine, but it requires law to remain in its purest form and the law has been struggling to keep up with unscrupulous developments.

Capitalism as a system works just fine. Like all systems, left to its own devices to run unchecked, it develops faults and excesses. They just need addressing, in real and effective terms rather than vocally-only through lobbied lip service.

 

Same symptoms exhibited by communism at the time, with select few party members vastly 'more equal' than lowly comrades, tbh.

 

Next whack-a-banker thread, please.

How is it possible to contrast capitalism with communism?