What are the flaws in capitalism?
Let’s start with some good news. The Industrial Age and free-market capitalism, for all of its bumps and warts, has lifted more people out of poverty and extended more lives than has any other single development. In 1820 some 94% of the world’s population lived in extreme poverty. By 1990 the figure was 35%, and in 2015 it was just 9.6%. Forty percent of those who remain impoverished live in just two countries, Nigeria and India, both of which are growing rapidly and will see their extreme poverty significantly decrease in the next 20 years. There is research to show that, on a global basis, the poor are getting richer faster than any other group. However, if you look around the US or Europe, you will not come to that conclusion. But in Africa or Asia, absolutely.Capitalism’s fatal flaw, IMHO, is that it is amoral. Capitalism will take the fastest route, the route of least resistance, to profit, and it doesn’t care who or what is diminished, damaged, or destroyed in the process. Capitalism is not inherently evil nor inherently divine, and any time you find someone who worships at the alter of either end, you should run fast and you should run far. Capitalism simply doesn’t care about good or evil. The remedy isn’t a different system, the remedy is regulation.For example, I was raised with the belief that one’s rights are, with one exception, essentially unlimited; that exception is when they begin to interfere with the rights of someone else. When my practice of my rights interferes with the practice of someone else’s rights, then that is a boundary condition. That such boundaries are gray and fuzzy is one reason why we have laws, regulations, and courts. For this reason, I would advocate for some regulations that outright prevent some behaviors. For example, I don’t think an individual or a business—any legal entity—should be allowed to take a financial risk whose adverse consequences would do damage to anyone or anything beyond themselves.Another belief with which I was raised is that without information, a person cannot take responsibility; and with information, a person cannot avoid responsibility. So, I do believe in caveat emptor, but only if the buyer is properly informed. This is why I think we need regulations to guard against unscrupulous sellers providing information that is inaccurate or insufficiently complete. However, once properly informed, I then think that a buyer gets to live with the natural consequences of their decision.
Are there any inherent negative effects of capitalism?
Are there any inherent negative effects of capitalism?In the reality of the empirical history of man, the greatest inherent negative, is the word of some concept…much as real as J.K Rowling’s ‘Harry Potter…in identifying the actions of commerce, and enterprise.Lacking any concept of how the enterprise of commerce works, or the idea that investors put in, many things for the beginning of any institute, Marx attempted to do some inductive reasoning, lacking any knowledge, and identifying if there are errors. What is remarkable is that even at this late date, remember written before the War of Northern Aggression in America, is still on the plate and given consideration.Commerce, and enterprise, in reality is the most productive known society of market society known to the empirical history of mankind. Yet even it has, and has had, since the first government known to mankind, had an attack upon this enterprise of the commerce of nations. The first and most obvious known reality, TAXES.Once that Pandora box of malignant cancer was placed on society, then as man, in politics, is indoctrinated that man is god, little (g) on earth…and using the destructive power of civil rights, confirming man is god little (g) on earth…the commerce of a nation is a likely victim.The concept, as the word capitalism…illusions of Marx…that theft, even when the government is the agent to do so, and you are the recipient of the stolen goods, is not a good design. As Marx had no concept of what commerce required, investment, enterprise, or for that matter, even the concept of work, he certainly wasn’t, and isn’t, the best design for any commerce of any society.The negative effects of commerce, and enterprise, are not the fault of the design, they are the fault of the insatiable appetite of government to partake of the efforts of those who do participate, or work, making goods and services for each other.My conclusion the error, corporations…an entity made by government…and the financial institutes…banks and holding companies, corrupting the tax laws, and government communist fiscal and monetary policy, as the design of John Maynard Keynes, is the negative effect on America’s economic foundation.
What are some of the inherent flaws of capitalism?
The allocation of wealth and resources is a big inf, they all follow the money, and the money quickly gravitates towards the top. 50% of the owners of the world's wealth could fit on a bus, although they prefer to travel by helicopter. This might not seem like a problem if you lack empathy, but it leads to a huge divide in society, and every time that's happened in history, someone's come out of it with a bloody nose. It also means efficiency of resources can't be achieved, because those with money (and I'm talking about most of us now, if you're reading this) will take precedence. On countless occasions, countries with famines have been exporting food to richer countries, and in return because instability hampers the markets, food hasn't been freely traded in return.Another problem, and it's a big one, is that it presumes infinite growth. “If this thing carries on basically the same but better, good things happen” is a great, positive mindset, but it's also nonsense. Such an assumption was made about fossil fuels, and that's something that'll bite us on the bum, they'll run out and choke us while they do it. Such an assumption was made in the dust bowl or the Dot-com, and will soon be realised in housing. This childish thought is what drives the boom and bust, capitalism is not about smart people thinking and making clever decisions, it's a game of roulette played by people who convince themselves they have a system. Of course, human stupidity can be argued as a flaw in every system.
Is capitalism fundamentally flawed?
Yes. Karl Marx in his book Capital, Volume I explains this flaw and arrives to inevitability of class war and revolution of the working class against the elites. The basic idea is that capitalists don't spend the profits (the capital), but instead re invest it. The new investment increases productivity by increased automation. This decreases the need in human labor, causing wages to drop and the buying power. This cases recession which destroys the capital. See this explained by Yanis Varoufakis : Yanis Varoufakis: Confessions of an Erratic Marxist /// 14th May 2013 There's another book - Capital in the Twenty-First Century . It explains the issue in even more condensed form by single equation: R > GWhich means that if the rate of return on the capital (R) is bigger than the growth rate of the economy (G) or the GDP, then the wealth inequality increases. Eventually the inequality becomes so extreme - that no society can hold. This is what happened in the last 30 years, taking extreme form since the start of this century. For example, the GDP in US was growing at rate about 2.5 % per year, while the NASDAQ/S&P etc grew by about x3 times of that.For example, there are states in USA, where the wealth of the 20 most rich people is greater that the wealth of poorest 50% of the whole state combined. This is extreme wealth inequality...In summary, capitalism works by maximizing profits by means of automation but in the process destroys the value of the products it produces. The danger is in capitalism ability to self disintegrate without ability get itself together on it's own and thus make societies descend into perpetual pessimism.Now, capitalism is a flawed system, but all other systems are even more flawed. Are we doomed? I think not. The solution will come from technological advancements - as always.
What are some flaws in India's model of state capitalism?
India's state capitalism is largely lacking the fuel required for high growth due to various reasons-1.One model fits all approach of centre without giving due consideration to ground realities of this diverse nation.This requires major reshuffle in our age old palnning system something that current govt. Is already working on whether they are able to bring some required changes like , greater autonomy to states and local bodies with constant economic and technical support from centre and greater involvement of people and civil society in this field,remains to be seen.2.As it is often said, good econimcs is not good politics, same is true for india too populist policies overshadow economically sound one's leading to huge subsidy budgets leaving less scope for capital intensive expenditure budget which could truly enable the people and also recent undue controversies over the land acquisition bill by the opposition whose soul aim seems to be maligning the image of government.3.Lack of pragmatism in bueraucracy and the whole executive branch of state's government which is not changing fast enough to incorporate the new ideals of business world which would attract people to invest here.4.Remnants of the old licence raj still remain which need to be cleared and obsolete laws need immediate change.5.Government should take up the role of enabler along with being the biggest investor increasingly making it more attractive for people to save and invest and making it easier for businesses to access these funds. These and many other issues are stopping india from getting into its best shape for the much needed growth mode to utilise it's demographic advantage before the sane starts to turn into a liability from an asset.
Is Adam Smith's capitalism a good economic system for nations to follow? Why?
Adam Smith was the first to identify clearly the mechanism by which free markets will allocate resources most efficiently, and produce the highest economic growth IF monopoly interests are constrained. The largest and most powerful economy in the world is the US economy, and it is modeled after the kind of capitalism Smith envisioned. There are many problems with pure capitalism, and it does not exist in the major countries around the world. It's too volitile and too brutal for the temperment of humans at this point in history. But something close to it is viewed by some as the best mechanism to allocate resources to the best and most profitable investments
What are the flaws of democracy and capitalism?
Democracy:Democracy is majority rule, plain and simple. Theoretically under democracy rule in a society of 3 people it would be legal to steal from the 3rd if the first two agreed. Any and all specific flaws one can sight stem from this obvious breach of ethics inherent in the design.Capitalism:Capitalism is another word for trade, plain and simple. Any possible flaws in this system are simply the flaws inherent in human action and subsequently human desire. Trade is what happens when you want something someone else has but will not steal or murder to get it: you must entice them with something you have and make a deal. Some would say the flaw in capitalism is self-interest. Inherent in the ethic of capitalism is the idea that the individual knows what's best for them. If you engage in the system thinking other people are going to take care of you out of the goodness of their hearts you may be "taken advantage of." You need to know the rules people play by. However self-interest often provides very good motivation to do right by other people. If I sell food I'll throw out moldy food incase people buy it and I get a bad reputation. Even though I lose money in the short run I'm going to watch out for others because of my long term self-interest. I personally wouldn't call it a flaw for this reason.