Jed pointed out the economic problem that we are facing. But I think that it is more about semantics than the real problem. If we just change our language, then we can do correct economic policy, because this new-speak will inherently force us to think in terms what we do really want for the economy.
(My reference to Orwell was intended although not in dystopic sense, but to underline the power of semantics at current political discourse.) On 5 October 2012 23:02, OrionWorks - Steven V Johnson < svj.orionwo...@gmail.com> wrote: > > I continue perceive myself as a capitalist at heart. I think that the main problem here is that terms to describe modern society are outdated and they are mostly meaningless. It is just mistake to think society in terms of socialism and capitalism, because both of them are outdated and they do not have had any relevance for the past 30 years. Just have a glance towards modern communist China and see that the divide between socialism and capitalism is silly. And also China is good example, that high corporate taxes seem not to restrain the economic growth, contrarily to some economic theories. Other even more more remarkable contradiction is that Denmark is classified as the most socialistic country in Europe due to highest tax rate in the world, but at the same time it is also the most capitalistic country because market economy is mostly unregulated there. One country cannot be at the same time the most socialistic and the most capitalistic country, because there is a logical inconsistency. Therefore it would be better to redefine term capitalism as an opposite to consumer demand led economy or pure market economy. Market economy on the other hand would mean that capital is distributed mostly for the 99% of people as purchasing power. This is quite useful distinction because it would clarify the discussion. If some country would be purely capitalistic, then it would mean that almost all of the wealth would be in the hands of bankers and venture capitalists and most importantly in the hands of those who own the means of production. And rest of the people, who do not own the means of production, would live in ricardian subsistence level income just like workers live and work at Foxconn's factory while manufacturing iPad's. In ricardian capitalistic economy, workers would not be consumers, but they would in effect be the property of the owners of the factory, although they are not technically slaves, because they can always jump from the roof and hence not to do work like it is too common practice at Foxconn's factory. This classical ricardian definition for pure capitalism would be most clear. The opposite for ricardian capitalism is however consumer demand led market economy, where commodity prices are based on the law of supply and demand. When we have pure market economy, there is hardly any capital available for investments, but entrepreneurs are forced to gain their cash for expansion solely from the sales of goods that they are manufacturing. It goes without saying that both are bad choices in pure form. Pure ricardian capitalism will suffocate the law of supply and demand because all the capital is invested to increase the supply of goods, but as there is no demand for goods, capitalists do not know what they should produce. Hence the housing bubble in Australia and elsewhere, where consumer demand was too weak to direct the investments reliably. And pure demand led market economy is also problematic, because if all the capital is in the hands of consumers, there is not enough capital available to be invested into means of production. And different crowdfunding schemes are ineffective and difficult to direct. But those two contradictory economic forces are not meant to be in existence alone in pure form, but we must find proper level that balances them and gives the best of both contradictory worlds.The whole is infinitely greater than the sum of it's parts. And as Jed pointed out. Robotized manufacturing and especially near future additive manufacturing will have huge effect what is the natural balance between the consumer demand and availability of capital. Because wages are inefficient to distribute the wealth, there must be highly progressive taxation that redistributes the wealth more evenly, because natural state of the economy is drifting towards ricardian capitalism. –Jouni PS. I just started to read Chris Anderson's new book: Makers: The new Industrial Revolution<http://www.amazon.com/Makers-ebook/dp/B008K4JDLA/ref=tmm_kin_title_0>. I cannot say yet that it is good, but it looks interesting.
