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Capitalism Vs. Socialism


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#1 Impact Strafe

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Posted 17 September 2011 - 04:02 PM - 051281

What are the benefits to each? Should we have a free market economy? Should we have a mixed economy? Which works better? People's thoughts, please.
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#2 Dark Wizard

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Posted 17 September 2011 - 04:06 PM - 051282

There has to be government regulation, otherwise it would be total chaos, but then again to much can also cause chaos, there is a delicate line and it is easily broken. To be honest I think that big cooperations should be taxed more but given more leniency to do other things. I'm not saying allow monopolies to occur, but let them have some slack, small businesses are not going to jump start the economy, the big boys will, if they have a chance. They have the money now, but they are either not allowed to use it or are refusing to use it because it would not benefit them.
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#3 United Martini

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Posted 17 September 2011 - 06:25 PM - 051283

Capitalism sucks but socialism sucks more :)

There has to be government regulation, otherwise it would be total chaos, but then again to much can also cause chaos, there is a delicate line and it is easily broken. To be honest I think that big cooperations should be taxed more but given more leniency to do other things. I'm not saying allow monopolies to occur, but let them have some slack, small businesses are not going to jump start the economy, the big boys will, if they have a chance. They have the money now, but they are either not allowed to use it or are refusing to use it because it would not benefit them.


I believe quite the opposite - tax business less and make sure we don't lose them to overseas markets. Big corporations believe they can do the samething in India for cheaper than what they do it for in the good ol' U.S. That's wrong. But rather than regulate them, reward them for doing the right thing. And as far as small businesses not jump starting the economy, they do a lot and they're holding our economy together in this rough time. Remember that they can be the big corporations of tomorrow.
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#4 WilliamFrancisLouis

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Posted 17 September 2011 - 06:25 PM - 051284

Both definitely have their problems and this is due to the fact that nobody really understands economics fully. There is a lot of theory in economics that can't really be proven and there's a ton of assumptions made when economic theories are made. These assumptions sometimes are subject to thought experiments because you can't really prove much in economics until it happens, then you can analyse what happened. Personally, I believe in the free market, however the free market needs to be controlled a bit from time to time as it creates some very disturbing results sometimes.
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#5 WilliamFrancisLouis

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Posted 17 September 2011 - 06:28 PM - 051285

Capitalism sucks but socialism sucks more :)



I believe quite the opposite - tax business less and make sure we don't lose them to overseas markets. Big corporations believe they can do the samething in India for cheaper than what they do it for in the good ol' U.S. That's wrong. But rather than regulate them, reward them for doing the right thing. And as far as small businesses not jump starting the economy, they do a lot and they're holding our economy together in this rough time. Remember that they can be the big corporations of tomorrow.


Due to the current tax structure in the US, large corporations can often get off with paying very little in taxes or none in some cases(e.g. GE). It's very hard to compete with overseas labor since the standard of living in places like China and India is low enough so that wages stay low. However, this is very short sighted as that will keep unemployment high in the US making it more difficult to sell these goods domestically.
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#6 Impact Strafe

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Posted 17 September 2011 - 06:42 PM - 051286

Something to consider DW, is that small businesses actually do jump start the economy. Micro Finance, heard of it? Yeah, it works in every country. With out fail.
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#7 WilliamFrancisLouis

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Posted 17 September 2011 - 06:47 PM - 051287

Something to consider DW, is that small businesses actually do jump start the economy. Micro Finance, heard of it? Yeah, it works in every country. With out fail.


Small businesses are great for jobs, but it's very difficult for a small business take on a major corporation. It's often cheaper to do things on a mass scale and it's tough to compete with companies like WalMart.
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#8 Dark Wizard

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Posted 17 September 2011 - 10:54 PM - 051288

When i say small businesses will not jump start the economy its true, it starts with the job market and small businesses will not do much for that, we need to get unemployment down by making it easier for companies to make money, therefore employing more money. I also think that there should be a regulation so you actually talk to a representative. I know it would be contriversial, but it would help not only unemployment but the fact that people spend hours on the phone waiting and trying to navigate machines.
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#9 WilliamFrancisLouis

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Posted 23 September 2011 - 06:25 PM - 051289

When i say small businesses will not jump start the economy its true, it starts with the job market and small businesses will not do much for that, we need to get unemployment down by making it easier for companies to make money, therefore employing more money. I also think that there should be a regulation so you actually talk to a representative. I know it would be contriversial, but it would help not only unemployment but the fact that people spend hours on the phone waiting and trying to navigate machines.


Thing is, big businesses are making a ton of money amid the recession, some are even earning record profits! Technically the recession ended a long time ago since the economy as a whole is growing. Problem is that the housing and labor market didn't really recover although the labor market tends to lag behind other economic indicators. Even so, unemployment is still really high in the US despite a lot of businesses doing rather well.
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#10 ef9boy88

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Posted 24 September 2011 - 12:43 AM - 0512810

That's because while people are starting to spend again many businesses are still not hiring because they are sitting on the money and waiting to see what happens, also the UI numbers aren't entirely accurate because they don't take into concideration the people who have exhausted their benefits. Also when speaking of deregulation be careful becuase what you have to think about here is the fact that a lot of what happened was a result of lose regulations. It's tough because the credit market is still tight and therefore the housing market is still slowly moving. It will take time to get better just like it did in the 80's-90's, it just takes time.
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#11 Rock Professor

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Posted 11 November 2012 - 08:06 PM - 0512811

I still believe in the dream. The possibility of making a success in life which is all but impossible under socialism. I remember my uncle in Scotland being amazed at me complaining about my low wages many moons ago. "But what do you need money for? You don't have to pay for Doctors or hospitals (not quite true), you don't have to worry about a pension because the state will give you one (many have that hope), Your children can go to school and get an education for nothing (not true any more) and you can apply for a cheap subsidised home.

Well, to me, life is what happens after you have already secured those things. Where is the sense of achievement if all these things are handed to you on a plate too.

At the same time, I also think it's important to have a kind of 'safety net' in life for those who do not do so well, or who are so poor that they can't afford things that many take for granted.

I guess I believe in a mixed system leaning heavily towards capitalism.

Socialism is nice, but it takes capitalism to pay for it.
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#12 Mandystalin

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Posted 12 November 2012 - 08:41 AM - 0512812

If you have just one or the other, then you have problems.

Pure Socialism results in relative stagnation and a tricky time trying to pay for everything

Pure Capitalism results in a society where most of the population are shat on from a great height. Repeatedly.


The best option is a blend of both, where the excesses of one is curbed by other, and that blend is not really a fixed ratio IMO. Some countries lean towards a greater level of Socialism, while some have a greater ratio of Capitalism. Both systems broadly work.

It depends on whether you view it as a compromise (neither system really getting its way so you get a situation where nobody really gets what they want) or an alloy (where two separate things are combined to make one stronger thing)
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#13 Dark Wizard

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Posted 16 November 2012 - 12:35 AM - 0512813

I have always been a fan of mostly capitalism with socialists policies here and there. I think there needs to be something to fund some things, but not TOO much.
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#14 Lebensmittelgeschft

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Posted 29 January 2013 - 07:00 AM - 0512814

Capitalism has provided the greatest standard of living in the history of the world. Since Capitalism is based on competition, innovation thrives and producers and consumers alike all benefit from Capitalistic principles. When government intervenes in the free market, innovation and competition is discouraged. Most government regulations today (at least in the United States) are actually lobbied for by big corporations to suppress their competition and increase their own profits. When government stays out of the mix, people are allowed to trade freely and produce at greater standards.

 

Now, you might argue that laissez-faire policies hurt consumers. This is nonsense. Since Capitalism is based on competition, consumers are able to choose what goods and services are best for them, and they are able to choose who they will buy from (typically based on what is most affordable). The goal for consumers in a Capitalistic society is to purchase the best product at the cheapest price.

 

If a company wants to sell bananas for $50 each, you might think they're being unfair or unreasonable. Lucky for you, most people think alike, and consumers will instead purchase bananas from a different company that sells them at a more affordable price. But what if someone buys up all of the banana companies, forming a monopoly, and raises their price of bananas to $50? You might be thinking that government ought to step in and change something because the only way you can get a banana is to pay an incredibly high price. But rather than looking toward government to artificially lower the price (which discourages all other producers who might want to start selling bananas at affordable prices), the free market will actually solve the issue better because suddenly people will stop buying bananas. As a result, it will be in the monopolist's best interest to lower the price of their bananas if they ever want to turn a profit.

 

Capitalism does not exploit workers by giving them low wages. Workers decide what work they wish to do and how much money they wish to exchange their labor for. If a factory wants to pay a worker $1 an hour to sort bananas, the worker might decide to work at the other factory down the street that pays $2 to sort bananas. Since Capitalism is based on competition, companies are unable to artificially lower their wages beyond a certain point. Think of it as an auction house: each company is in competition with the other, and all of them need workers to be able to produce. If one company doesn't pay enough for a specific job, a worker will likely seek another company that pays them a better price. While this means that labor will likely go to the highest bidder, you can't expect companies to be willing to offer a much higher wage than certain labor is worth; somebody sorting bananas isn't going to be making a six-figure salary, because banana sorting requires very little skill, so the company will inevitably find somebody who isn't expecting to make an incredibly high wage.

 

As for Socialism, it simply cannot survive on its own. Socialism is the equal sharing of misery amongst citizens. You might be saying, "Well, it's working just fine for countries like Sweden, where everyone is guaranteed health care, work, education, etc." While this is true, you must consider a few things. First, Sweden has a relatively low population, so it is affordable for government to provide these services to its citizens. Secondly, Sweden makes the majority of its income from trading its oil with other nations. Sweden funds its socialistic domestic services with income earned from Capitalistic foreign policies. 

 

Socialism also requires big government which must restrict citizens of their liberty. This is due because people are unable to pursue their own happiness and become innovators. For anyone who disagrees, simply look at the 20th century and realize that Socialism took the lives of over 100 million people who fought for liberty in their countries. Millions starved, were executed or imprisoned, and ultimately died in the Soviet Union, Maoist China, Nazi Germany, North Korea, and in Cuba as a result of Socialism.


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#15 legend

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Posted 29 January 2013 - 01:45 PM - 0512815

If a company wants to sell bananas for $50 each, you might think they're being unfair or unreasonable. Lucky for you, most people think alike, and consumers will instead purchase bananas from a different company that sells them at a more affordable price. But what if someone buys up all of the banana companies, forming a monopoly, and raises their price of bananas to $50? You might be thinking that government ought to step in and change something because the only way you can get a banana is to pay an incredibly high price. But rather than looking toward government to artificially lower the price (which discourages all other producers who might want to start selling bananas at affordable prices), the free market will actually solve the issue better because suddenly people will stop buying bananas. As a result, it will be in the monopolist's best interest to lower the price of their bananas if they ever want to turn a profit.

 

This analogy only works if the good in question is not a necessity. If it was something like petrol, and we leave everything to a monopoly without government intervention, we would all be held ransom by the oil companies (not to say we aren't now...).

 

Capitalism does not exploit workers by giving them low wages. Workers decide what work they wish to do and how much money they wish to exchange their labor for. If a factory wants to pay a worker $1 an hour to sort bananas, the worker might decide to work at the other factory down the street that pays $2 to sort bananas. Since Capitalism is based on competition, companies are unable to artificially lower their wages beyond a certain point. Think of it as an auction house: each company is in competition with the other, and all of them need workers to be able to produce. If one company doesn't pay enough for a specific job, a worker will likely seek another company that pays them a better price. While this means that labor will likely go to the highest bidder, you can't expect companies to be willing to offer a much higher wage than certain labor is worth; somebody sorting bananas isn't going to be making a six-figure salary, because banana sorting requires very little skill, so the company will inevitably find somebody who isn't expecting to make an incredibly high wage.

 

What if all the factories band together and refuse to pay more than $1 an hour to sort bananas? If the government doesn't intervene, the people would be forced to work at $1/hour. If they don't, they starve. A choice between a rock and a hard place, is not a choice.

 

What about market failures? For example, a factory may produce goods at a low cost, but at the same time pollutes the environment. Based on your theory, simply because they're selling it cheaply, consumers will flock to them. However, one needs to take into account the external costs to the environment, and this is where the government steps in with regulations, fines, taxes and etc to internalise the said externalities.

 

Am I a proponent of communism/socialism? No, but to say that laissez faire is the answer to everything would be an oversimplification of the whole field of Economics. Keynesian economics is once again back in the vogue, and I believe that government intervention IS needed to maximise economic growth.


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#16 Mandystalin

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Posted 30 January 2013 - 12:16 PM - 0512816

Capitalism has provided the greatest standard of living in the history of the world.

 

...

 

Capitalism does not exploit workers by giving them low wages.

Tell that to the Industrial Revolution.

 

Why do you think Trade Unions started?

Why do you think Governments began to intervene in the first place?

 

It was not until Capitalism was blended with elements of Socialism that either of your statements became true.

 

 

 

 

 

For anyone who disagrees, simply look at the 20th century and realize that Socialism took the lives of over 100 million people who fought for liberty in their countries. Millions starved, were executed or imprisoned, and ultimately died in the Soviet Union, Maoist China, Nazi Germany, North Korea, and in Cuba as a result of Socialism.

Well, firstly none of those were/are Socialist countries...

 

Nazi Germany was a variety of Fascism, which is as opposite as can be from Socialism

The others were/are followers of the Marxist/Leninist political model, a perversion of 'true' Communism which itself is an extreme form of Socialism.

 

Rampant Capitalism, however, has caused the enslavement of entire people groups, the growth of Empires, wars by the dozen, the creation of wealth for a few by exploitation of the many...


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#17 Lebensmittelgeschft

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Posted 30 January 2013 - 07:53 PM - 0512817

This analogy only works if the good in question is not a necessity. If it was something like petrol, and we leave everything to a monopoly without government intervention, we would all be held ransom by the oil companies (not to say we aren't now...).

 

Nonsense. If oil were monopolized and the price driven artificially too high, people would seek out other sources of energy that are more affordable. The reason the price of oil is so high today is due in part to incredible government regulations that oil companies are forced to comply with. Oil companies make less than $0.10 on every gallon of gasoline they sell (that's not to say they don't make incredibly high profits) and governments (California, most notably) make incredibly more on every gallon of gasoline. In California, government makes upwards of $0.60 on every gallon of gasoline due to incredibly high gasoline taxes. The price of oil and gasoline is currently artificially high due to government regulation.

 

 

 

What if all the factories band together and refuse to pay more than $1 an hour to sort bananas? If the government doesn't intervene, the people would be forced to work at $1/hour. If they don't, they starve. A choice between a rock and a hard place, is not a choice.

 

What about market failures? For example, a factory may produce goods at a low cost, but at the same time pollutes the environment. Based on your theory, simply because they're selling it cheaply, consumers will flock to them. However, one needs to take into account the external costs to the environment, and this is where the government steps in with regulations, fines, taxes and etc to internalise the said externalities.

 

Am I a proponent of communism/socialism? No, but to say that laissez faire is the answer to everything would be an oversimplification of the whole field of Economics. Keynesian economics is once again back in the vogue, and I believe that government intervention IS needed to maximise economic growth.

 

The factories don't band together to make wages artificially low. They are all in competition with each other, so they are all trying to get workers to boost their own profits. It would not be in their interests to conspire together. Even so, if workers are unwilling to work for such a low wage, the companies will be forced to raise their wages. Wages are set based on mutual consent between a company and its workers.

 

Now, I'm not saying polluting the environment is good, but when government begins regulating, taxing, and fining, prices become artificially inflated. When government regulates an industry, the industry does not suffer; the consumer does, because the industry will pass on their costs of doing business on to the consumers.

 

Keynesianism is the great economic fallacy that government can somehow create economic growth by taking money OUT of the economy through taxes, and then putting it back into the economy and taxing it again. It serves the market much better to allow people to keep the fruit of their labors and spend it as they please. Taxes and regulations simply cause the economy to shrink. To use an example, when the economic stimulus bill was signed by President Obama in 2009, it put nearly $800 billion into the economy in the form of government spending, yet there was almost no change in economic growth, and the economy continued to decline.

 

 

 

Tell that to the Industrial Revolution.

Why do you think Trade Unions started?

Why do you think Governments began to intervene in the first place?

 

It was not until Capitalism was blended with elements of Socialism that either of your statements became true.

 

A great myth of the Industrial Revolution was that it took place during a laissez-faire economic model. The Industrial Revolution is one of the greatest examples of Corporatism, often confused with Capitalism. Corporatism simply allows the highest bidder (typically large corporations) to buy politicians to promote policies that allow them to exploit workers.

 

 

Well, firstly none of those were/are Socialist countries...

 

Nazi Germany was a variety of Fascism, which is as opposite as can be from Socialism

The others were/are followers of the Marxist/Leninist political model, a perversion of 'true' Communism which itself is an extreme form of Socialism.

 

Rampant Capitalism, however, has caused the enslavement of entire people groups, the growth of Empires, wars by the dozen, the creation of wealth for a few by exploitation of the many...

 

Nazi Germany was a National Socialist government. Even so, if you look at where Fascism stands on the political spectrum, it is slightly to the left of Socialism. In no way was Nazi Germany the "opposite" of Socialism.

Marxism/Leninism is not a perversion of 'true' Communism. If you read the Communist Manifesto, you'll discover that Communism is attained through two stages. The first stage is Socialism. Although you're right, no country has ever been successful in establishing 'true' Communism, which is why I referred to them as Socialist states.

And again, Capitalism is often confused with and blamed for the failures of Corporatism. Corporatism is the system which allows exploitation for the benefit of few at the expense of many.

 

(By the way, I apologize; I messed up the quotes a bit.)


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#18 Mandystalin

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Posted 31 January 2013 - 03:29 PM - 0512818

Nonsense. If oil were monopolized and the price driven artificially too high, people would seek out other sources of energy that are more affordable. The reason the price of oil is so high today is due in part to incredible government regulations that oil companies are forced to comply with. Oil companies make less than $0.10 on every gallon of gasoline they sell (that's not to say they don't make incredibly high profits) and governments (California, most notably) make incredibly more on every gallon of gasoline. In California, government makes upwards of $0.60 on every gallon of gasoline due to incredibly high gasoline taxes. The price of oil and gasoline is currently artificially high due to government regulation.

 

Yes, because we’ve all developed our own cheaper energy sources now that petrol is £1.30 a litre.

Oil is too ubiquitous to ignore, too much of our infrastructure is based around it - it heats our homes, it provides electricity, it powers all our vehicles (which means it is the key ingredient in ensuring trade and the movement of goods). Any other energy source would need to have massive reserves, a global reach and the ability to hit the ground running now. Not practical for us individuals to do...

We’re stuck using whatever the companies give us

 

 

The factories don't band together to make wages artificially low. They are all in competition with each other, so they are all trying to get workers to boost their own profits. It would not be in their interests to conspire together.

 

It is not in their interest to artificially raise wages either. Witness the amount of outsourcing that goes on.

 

Even so, if workers are unwilling to work for such a low wage, the companies will be forced to raise their wages. Wages are set based on mutual consent between a company and its workers.

 

Not in the real world. Workers tend to need wages to pay for things like food and houses. With no safety net (Socialism...) they can either work for crappy pay or starve. One person not bringing in enough money? Send out the wife to work. Two people not bringing in enough money? Send out the kids to work.

Nowadays we lucky First-Worlders have minimum wages, child labour laws, the whole works.

The only time companies ever voluntarily raise wages is during a labour shortage. Labour shortages only tend to happen when the economy is booming or there has been some form of natural disaster.

 

 

A great myth of the Industrial Revolution was that it took place during a laissez-faire economic model. The Industrial Revolution is one of the greatest examples of Corporatism, often confused with Capitalism. Corporatism simply allows the highest bidder (typically large corporations) to buy politicians to promote policies that allow them to exploit workers.

 

First up  – you may be confusing Corporatism (which involves keeping everything in discreet groups) with Corporatocracy (economic or political systems controlled by corporations)

Incidentally, it is close enough to the typical outcome of Capitalism to mean that if you don’t accept Communism and Socialism as distinct, you can’t accept Capitalism and Corporatocracy as separate. :)

 

 The Industrial Revolution began in the UK because the economy was effectively laissez-faire capitalist. There were no real restrictions on businesses, and I can’t think (offhand) of any major legislation that was designed to allow corporations to exploit workers. The total lack of any protective legislation did that for them.

As an aside... industrialists didn’t need to buy the government, because the MPs were the industrialists. Scary times.

 

 

Nazi Germany was a National Socialist government. Even so, if you look at where Fascism stands on the political spectrum, it is slightly to the left of Socialism. In no way was Nazi Germany the "opposite" of Socialism.

 

...and the ‘Socialist’ bit was kept in to sway the voters. Their definition of Socialism was based upon a commitment of an individual to a community, which is a description that could apply to any number of economic/political theories, including Corporatism, but not Socialism

While there is some debate (because it was formed by a mixture of right & left wing politicians), Fascism is rather a right-wing theory. And if I’m being terribly pedantic, National Socialism (Nazism) is not the same as Fascism, and is even more right-wing, politically and economically.

 

Marxism/Leninism is not a perversion of 'true' Communism.

 

Well, technically you are right here, it is essentially a more militant form rather than a political divergence (although I’m sure die-hard communists could and did argue on this point for years! ;) ).

What I think I was trying to mean is that the countries that followed Marxism/Leninism didn’t follow it for very long. The USSR wasn’t even following it when Lenin was in charge, and it was quickly replaced (in reality) by Stalinism (and in other nations by a similar equivalent).

 

If you read the Communist Manifesto, you'll discover that Communism is attained through two stages. The first stage is Socialism.

 

Which logically means Communism =/= Socialism.

 

 

Although you're right, no country has ever been successful in establishing 'true' Communism, which is why I referred to them as Socialist states.

 

Just because they don’t become truly Communist does not mean they are Socialist. All the ‘Communist’ states have essentially become dictatorships. In Socialism, the people own the means of production and control the economy. In the ‘Communist’ states we have the State controls the means of production and the economy... and the State is definitely not controlled by the people.

 

 

And again, Capitalism is often confused with and blamed for the failures of Corporatism. Corporatism is the system which allows exploitation for the benefit of few at the expense of many.

 

And this is different from Capitalism how?  ;)

 

 

(By the way, I apologize; I messed up the quotes a bit.)

 

Not a problem – this forum has an odd method of doing quotes. It took me several goes to get it right in my post above.


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#19 bgorre1013

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Posted 01 February 2013 - 01:49 AM - 0512819

btw oil prices in United States are extremely low compare to the rest of the world because the US governments subsides oil. (just wanted to through that out there) oil prices are getting expensive because of supply and demand the world has already reach maximun production.

 

 

 

 

>And again, Capitalism is often confused with and blamed for the failures of Corporatism. Corporatism is the system which allows exploitation for the benefit of few at the expense of many.

 

And this is different from Capitalism how? ;)

 

.

 

 

Corporations may exploit workers but it benefits the many not the few by keeping prices of goods and services low.


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#20 legend

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Posted 01 February 2013 - 10:01 AM - 0512820

Nonsense. If oil were monopolized and the price driven artificially too high, people would seek out other sources of energy that are more affordable. The reason the price of oil is so high today is due in part to incredible government regulations that oil companies are forced to comply with. Oil companies make less than $0.10 on every gallon of gasoline they sell (that's not to say they don't make incredibly high profits) and governments (California, most notably) make incredibly more on every gallon of gasoline. In California, government makes upwards of $0.60 on every gallon of gasoline due to incredibly high gasoline taxes. The price of oil and gasoline is currently artificially high due to government regulation.

 

You've got to be joking here. In an ideal world, yes, if it is practical, yes, we will move off oil if it becomes too expensive, but in the short term, no. There is no other alternative that is as easily used that can replace oil.

 

Oil IS monopolized by OPEC, a cartel of oil producing countries. They pretty much decides how much to produce at what price. As to your local petrol stations, they are essentially an oligopoly operating in a kinked supply/demand curve. There's absolutely NO incentive for them to put their prices low, in fact, the government anti-competition/collusion laws are the only thing stopping them from banding together and deciding that the price of oil should be 10 dollars per gallon.

 

As to why petrol prices are high, I refer you to this link:
http://www.energytre...on-of-gasoline/

 

From that link, 


Figure 3 suggests that lowering gas taxes — as we often hear some state and federal officials proposing to the delight of their constituents — will not do as much to lower gas prices as people think. The taxes share of gas prices have gone down from 30% in 2000 to just 12% by the end of 2011.

 
As you can read, taxes only form 12% of the overall petrol price! Certainly not the root cause behind high oil prices. What about the oil shocks of the 70's? 
 
And while I'm not usually the proponent of government regulations, I think in the oil production sector, it is very much needed. Who is to make sure that the environment isn't destroyed while oil companies drill their way to the banks? Surely, the government has the duty to step in and ensure that the oil companies don't completely screw over nature.
 

The factories don't band together to make wages artificially low. They are all in competition with each other, so they are all trying to get workers to boost their own profits. It would not be in their interests to conspire together. Even so, if workers are unwilling to work for such a low wage, the companies will be forced to raise their wages. Wages are set based on mutual consent between a company and its workers.

 
They are all in competition with each other for SKILLED workers. But for labourers who don't need to be highly skilled, there is an excess in supply, so the factories CAN band together and decide to pay them butt low wages...just look at how most MNCs have outsourced to China due to cheap labour costs. That's what you get in a country with no minimum wage laws and lax labour laws, leading to a widening gap between the rich and poor.
 
And, no, wages are not set based on mutual consent if the alternative to a really low salary for a worker, is to starve to death. Either they work, or they don't get food and die. Being caught between a rock and a hard place is not exactly free choice.

 

Now, I'm not saying polluting the environment is good, but when government begins regulating, taxing, and fining, prices become artificially inflated. When government regulates an industry, the industry does not suffer; the consumer does, because the industry will pass on their costs of doing business on to the consumers.

 

It depends on which industries you're looking at. If it's in an industry that produces luxury goods, then the incidence of tax normally fall more on the producer than the consumer as an increase in price would lead to a more than proportionate decrease in quantity demanded. 

 

Keynesianism is the great economic fallacy that government can somehow create economic growth by taking money OUT of the economy through taxes, and then putting it back into the economy and taxing it again. It serves the market much better to allow people to keep the fruit of their labors and spend it as they please. Taxes and regulations simply cause the economy to shrink. To use an example, when the economic stimulus bill was signed by President Obama in 2009, it put nearly $800 billion into the economy in the form of government spending, yet there was almost no change in economic growth, and the economy continued to decline.

 

Alright, let's just assume TARP didn't happen. It is widely agreed that if TARP did not pass, the economy would have been in further doldrums. Just look at the Great Depression of 1930s. Hoover did exactly what you said,and took the laissez faire approach. Guess where that ended him up in. If Bush/Obama did not initiate TARP, 2008 would be a repeat of the Great Depression. 


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