What Capitalism needs

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In previous times I have had sporadic thoughts on how would it ever be possible to reach a utopic society through a system such as Capitalism. I just couldn’t fathom how such a thing could occur.

My classic thought example was that we develop machinery that is capable or creating enough food to feed the whole populace of the earth 5 times over. This would be obviously be a good thing for everyone as nobody would ever have to starve again but I couldn’t just see how our current society would work with it.

The recent Quote of the Day gave me the insight, or rather the mental push I needed. Capitalism just cannot work with such concepts. While things like infinite goods (food & shelter included) would seem as something positive for any humans, for the concept of Capitalism they are anathema. When you have infinite food, automatically the value of it must approach zero. When you have enough place to shelter everyone on earth, by necessity, the cost of residence must approach zero.

Thus, there is absolutely no way for a capitalist to ever want to invest in a technology which would produce any kind of infinite good unless they can act as the monopoly or they can insert artificial scarcity. And indeed, we already see these kind of limitations used where much more good would be done without them.

A good example is genetically engineered food-producing plants which are much more resistant to disease and produce a higher wield. The companies that created these seeds have also made them produce sterile plants, the seeds of which will just not grow. Thus farmers are forced to buy seeds from the company every year, instead of using part of their crop to sow the next year.

Artificial Scarcity.

My biggest revelation however was not that. It was that Capitalism needs two very specific things in order to be able to exist. These two things incidentally, are the ones that prevent the world from ever approaching Utopia. Misery and Greed.

Why Capitalism requires misery

Can there ever be a Capitalistic society in which work is not required in order to be fed and sheltered? I can’t see how it can. If this happened, it means that the cost of food & shelter would have become zero. But if the cost of food is zero, then there is no profit to be had, thus nobody would care for producing food and shelter, which means there will be a shortage and thus the price will rise above zero due to supply and demand. Thus it’s impossible. (unless we can make the aforementioned machinery somehow)

It does not stop only there but this is the basic idea. Capitalism requires people to be in some degree of misery so that it will be able to sell them something to alleviate it. A healthy human does not need medicine. A fed human does not need food. A warm human does not need shelter etc.

Misery is the driving force that makes humans take the worst, but necessary jobs. Without misery you would not have people willing to be abused at McDonalds or a Nike sweatshop. It is the acid which turns humans into the necessary grease for the economic gears.

Without people being in some state of misery, all those industries which exist to prevent or stop it must cease to exist. Without it, nobody would be willing to put humiliate or punish himself for the thankless benefit of others. And finally, without misery, the only other thing left to keep Capitalism going is greed.

Why Capitalism requires greed

Although greed is very closely tied to misery (one who does not have the object of his greed becomes miserable) it plays such a big role in a Capitalistic society that I believe it deserves special analysis.

Greed is arguably the basic driving force of capitalism. When misery has been vanquished for an individual, it is greed that takes the baton and drives them to continue playing the capitalist game.

A content human is the true enemy of Capitalism.

Having a society where work is not required for basic food and shelter would mean that there would be a significant amount of humans stopping working in order to do the activities they really enjoy. Perhaps these activities would simply be a waste of time, or perhaps they would be some of those activities that are not considered valuable enough to sustain someone (notably the arts). These people would thus not be productive member of society as defined by “what people will pay for”.

Capitalism requires people to be greedy and greed demands capitalism. It is a vicious circle that a society cannot break away from without a significant shift in beliefs and desires which will lead humanity to ditching both of them together.

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11 thoughts on “What Capitalism needs

  1. This is sort of like saying that Doctors don't really exist, because in seeking to cure disease they would be destroying their own livelihoods. Markets don't require abject misery, they simply require desire. Desire can be for luxury items as well as sustenance, so a world where everybody was happily fed and clothed could nevertheless support markets in luxuries, travel, and art.

  2. Where is the contradiction between our two definitions of capitalism? And how does your definition exclude the exchange of a back rub for a hair weave?

    Well, first of all, Capitalism needs money to work.
    Without it, you are only exchanging items of equal value to fulfil our own desires. Thus, nobody profits unless by miscalculation.
    In your example, we are tradin a Commodity for a Commodity. Simply C – C.
    When you put money in the equation, your example becomes C – M – C. Thus you trade you commodity for an equal value of money and use those money to buy my commodity.
    A Capitalist works in this equation. M – C – Mi, or Money – Commodity – More Money.

    His objective is not to get an item of equal value but to get more money.

  3. Since value is subjective, how does the opinion of other people matter? This is an issue of social status or prestige, not value.

  4. This conversation is going to the fundamentals, which is exactly where it must!

    A free market is a market comprised of voluntary exchanges. A voluntary exchange only requires two people, who may use money or not, as they choose.

    I have already shown that prices do not reflect any objective value, because the price is whatever the buyer will pay, which is purely subjective.

    What is the price of a sack of corn to a farmer? I take an example from:

    The farmer needs the first sack just to survive until the next harvest. The second sack will ensure he eats well. The third sack he would use to feed poultry to provide variety in his diet. The fourth sack he would use to make whiskey. The fifth sack he would use to feed pet birds.

    In these circumstances, the value of the fifth sack of corn is low to the farmer (although not to the birds). If he lost it, he wouldn't pay much to replace it, if at all. He would just stop the use that provides him with the least value–feeding his pet birds.

    As the farmer loses each successive sack of corn, the value rises.

  5. No it doesn't. Since Free Markets and Capitalism are mutually exclusive then you simply cannot merge them. You're simply trying to preserve the name "Free Markets" while the actual result is not "Free" at all.

  6. The doctor/researcher who eventually develops the universal Panacea will have a few options at his disposal:

    1. He can sell his invention to insurers a make a handsome trillion dollars, a small price to pay I suppose for the eternal alleviation of human suffering.
    2. He can give his invention to the world and live off of his goodwill and reputation (probably not a bad life, either)

    Most likely, he'll be assassinated by a cabal of other doctors.

  7. "Without it, you are only exchanging items of equal value to fulfil our own desires. Thus, nobody profits unless by miscalculation."

    I respectfully disagree. It is precisely because both traders place different values on the items being exchange, that trade *ever* occurs. It's nonsense to suggest that I would trade X for something that I valued exactly the same as X (or that someone else would be the counterparty). Mutually beneficial trade occurs when I trade my X (which I value less than your Y) for your Y (which you value less than my X). Sometimes, of course, our estimations turn out to be mistaken, but this is by no means a requisite part of "exchange".

    1. Barring external coercion (almost impossible but lets take a theoretical situation) humans generally exchange items of equal objective value. That is why you don't see people exchanging cars for toasters. Their objective value is very different. While both parties put a different subjective value on their items, this is simply what facilitates the trade, not what denotes their worth.

      See my musing on objective and subjective value for more on this subject

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