Is capitalism exploiting you?

[Argentum]

I suggest reading 'Atlas Shrugged'. Abjectly boring for roughly the first third of its ~1,000 pages, but absolutely riviting and enlightening for the final two thirds. If read in its entirety it should give any inspiring socialist or Marxist a new perspective on capitalism.

It took me a couple months to trudge through the first third, and only about a week or so to plow through the last two thirds. An awe inspiring moment of enlightenment awaits at the end of the first third.

I personally find it amusing that those who bash Atlas Shrugged resort to the age old adage of "if you can't kill the message, kill the messenger". The very same people who will totally ignore the deeply demented character flaws of the messengers of the likes of socialism, Marxism, and fascism whereby to willingly read these peoples works for inspiration will assure you that the message of Atlas Shrugged itself is and literally must be demented because of specifically the character flaws they find within the life of its author.

 

[simon12]

Cheers for all the replies especially those that disagree with me. I would add that avoiding tax legally or otherwise not only has nothing to do with this video but also has nothing to do with capitalism. McDonalds is an interesting structure as its mainly (possibly 100% I don't know) franchised so its a company that takes some of your capital to help your capitalism, its also not a business that people are passionate about so its one people start for a pure profit motive. It will pay nearly everyone minimum wage and even managers are not earning a fortune so its hard to say even if all the employees in 1 branch clubbed together they could start there own franchise or other restaurant. But despite all this its hard to say they are exploiting there employees as its an easy to get job for students, people wanting part time work or as a stop gap for anyone struggling to find work, no one has to work there and despite the poor quality of the food and everything else consumers vote for it with there money.

 

[Argentum]

An employee with marketable skills will not apply for a job at McDonald's unless there is no current market demand for said skills.

One moral of this story is to pursue the acquisition of viably marketable skills.

Another moral of this story is: Don't pursue a degree in some obscurely unmarketable major and then pout about not being able to readily find a waiting job that suits your exemplary skill set.

 

[The Baron]

An employee with marketable skills will not apply for a job at McDonald's unless there is no current market demand for said skills.

One moral of this story is to pursue the acquisition of viably marketable skills.

Another moral of this story is: Don't pursue a degree in some obscurely unmarketable major and then pout about not being able to readily find a waiting job that suits your exemplary skill set.

I am not going to be very popular but to go off at a tangent I totally agree in so many people taking degree's in something that they are not going to use.
I have come across many people with degree's on their CV that are not relevant to what they are wanting to do in life it is as if some and I am saying some are looking for the easiest degree to pass so they can declare a degree.
I once interviewed a newly passed person with a degree and when I asked them why they wanted the job and why I should invest in them which was my time and approx £10.000 of company money and the answer was I want to get sales on my CV so that I can then progress to other jobs that may be sales linked
I do not need to tell you what happened
Sorry to the OP for going off the topic

 

[Argentum]

Taking flak is never popular, but (as has been staited many times and in many ways): "If you're not taking flak, you're not over the target.".

 

[Oneflewover]

I have a huge amount of time and respect for Prof Wolff and I have been following his Economic Update podcast for a few years now. I don't expect many in this forum to agree especially given some of the debates there have been recently but my 2 cents anyway!

The problem with the (very reasonable sounding) argument that the burger restaurant's capital investment and risk and that the employee is actually the one who has the job security is twofold.

Firstly, the more money you have, the more likely you are to be able to take a risk, and the more you will be able to throw at a failing venture to turn it around:

Wealth begets wealth. If I inherit a million pounds and decide to open a burger restaurant I can seed it with more capital, spend more on marketing and influencers, and critically, I can keep investing in it if it has not been profitable for much longer than my friend who has an equally good (or better) idea and has to borrow in order to start his, or invest everything he has in the hope. How often have we read 'success' stories on news sites where the (now) multi-million/billion dollar business was within days of folding before they got the break they needed ... and "the rest is history". The more capital a business can attract the more likely it is to succeed. This is before we even start thinking about chain restaurants. The likes of McDonalds operate such tight supply chains with such economies of scale they they only need to make a few pence on the pound in profit in order to be able to be successful. Most cannot compete. That's not because McDonalds burgers are better than others, they are about the worst you can buy, but they have the wealth behind them that it's easy to open more and more restaurants and squeeze everyone else out. Opening a new restaurant is simply not a meaningful risk to them anymore, and hasn't been for a very long time.

What this means in reality is that my friend who works for someone else for not very much money who has the great idea for a restaurant of his own doesn't even bother to open one. He knows the chances of success are so low and the startup costs so low that he can't afford to put himself and his family at that much risk. This traps people in the employment of others as a whole (of course individuals can break out of the cycle, but few do and it's getting harder) and we know that real world wages are shrinking. Today’s average hourly wage in the USA has just about the same purchasing power it did in 1978 despite the economy increasing in size many times over. This simply isn't sustainable. Less real-world money in the pocket coupled with rising house prices, shrinking pensions and less job security traps people in crap jobs which pay nothing because they can't take the risk of missing even a month's pay because it may only be that pay between them and their family becoming homeless. For the same reason, very few people can afford to simply 'walk away' from a job.

Secondly, and relatedly, job security to many is hardly a luxury. If my burger restaurant is struggling, I have many levers I can pull to try to improve profitability. I can raise prices, negotiate better wholesaler or rent rates, freeze salaries. I can take out a loan to invest to hopefully improve profits in the future... or I can make redundancies. Quite simply, I can put people out a job in order to keep my own business going. That's perfectly legal in our society, but you can't argue that the risks of my business are falling on me alone. The meaningful risks inherent (loss of income) in my business model are much more likely to hit my employees and their earnings before they ever hit mine.

Excellent post

 

[micklupulo]

And the very rich spend their money on accountants who come up with clever wheezes to avoid paying their taxes.

You are correct but one of the best examples was the one pulled off by no less than Alan Rusbridger and the Guardian Media Group on the sale of its share in Autotrader which had greatly increased in value since acquisition. The sale was conducted via a shell company in the Cayman Islands saving many millions in tax.

 

[marshbrewer]

I think it was actually achieved by use of a trust - the Scott Trust IIRC, rather than a tax haven, but I get your point.

 

[DCBC]

There have been some interesting posts in this thread in the last 24 hours so I thought I would post a few follow-up things:

Regarding the idea that all the stands between the 'sheep' who have to work for others and the brave visionaries who go out on their own is a little courage and imagination:

Firstly if you secure a business loan using your house as collateral, that's brave but it's still the equivalent of capital investment. If you don't have the house with at least a deposit paid and/or X many years paid off then you can't do this. Having assets themselves give you a headstart. I'm not saying that most homeowners who started a business didn't earn that money for the house and then take sensible business risks to get where they are, but if I start off with a house I got for free (or a bunch of houses) then I have a massive headstart over you, and you, as a homeowner, have a massive headstart over someone who doesn't own a house to use as collateral and has no immediate prospect of one.

And there are nuances even within this - house prices were so much lower as a proportion of earnings in the 70s and 80s, for example, than they are now. Households with one worker earning a moderate wage could afford to buy houses. Now you need to have two of you earning decent money for this to be possible. In the (near) future it will be harder still. So the business set-up costs and risks for someone of my parents' generation were so much lower than they are now. There is a trend for later-middle-aged people to point at millennials and younger living 'at home' for longer and requiring financial assistance from their parents as if young people are the problem. This isn't some universal failing of an entire generation, like there was a systemic contamination of baby formula in the 80s and 90s, this is a problem created by the system. Wealth is locked up in the hands of older people and when it does get spent it finds its way in increasing amounts into the pockets of the fantastically wealthy.

The richest three Americans own more than the poorest half of the American population (some 165 MILLION people) the richest 15 families own more than the poorest half of the world's population (3.8 BILLION) people. Jeff Bezos is on track to be worth a TRILLION dollars in five years' time. Those gains may be legally gotten but this isn't sustainable and something absolutely has to give.

Not everyone can be a business owner, some people don't have the skills, attitude or, frankly, the desire to be their own boss with the stress and responsibility that comes with it. Society needs people willing and able to work for others. What workers do need as part of the bargain is enough money to live off, decent accommodation which isn't covered in, for example, lethal cladding, nutritious affordable food and adequate healthcare. There is enough money in the system to be able to give that to everyone not just in the US and the UK but across the world. There is just no appetite to do that - we are locked into a race to the bottom, tragedy of the commons, vanity project operated by just a handful of the world's greediest narcissists.

On the subject of getting degrees and qualifications that directly lead to earnings and employability - great, yes, but we can't have an entire society of network engineers and investment bankers. We need people to do the other jobs (all of a sudden we have a shortage of fruit pickers and HGV drivers and it turns out we need them .. who knew?). There are reasons why you would want to earn more that aren't down to money too - I would find a job as a vet, for example, more interesting than working on a till at TESCO and I would like to think I would choose 'vet' if both were paid a similar amount.

And if we were to manage to operate a society comprised entirely of engineers and doctors, would our lives be any better as a result? We might have amazing GDP but without people with a love of literature, which new novels would we read. Without people passionate about filmmaking and media, what would we watch in the cinema? Would we have craft beer if it would be a waste of someone's immense wealth of corporate/technical skills and qualifications to earn very little by brewing for a living?

Sorry, it's another very long one!

 

[Oneflewover]

There have been some interesting posts in this thread in the last 24 hours so I thought I would post a few follow-up things:

Regarding the idea that all the stands between the 'sheep' who have to work for others and the brave visionaries who go out on their own is a little courage and imagination:

Firstly if you secure a business loan using your house as collateral, that's brave but it's still the equivalent of a capital investment. If you don't have the house with at least a deposit paid and/or X many years paid off then you can't do this. Having assets themselves give you a headstart. I'm not saying that most homeowners who started a business didn't earn that money for the house and then take sensible business risks to get where they are, but if I start off with a house I got for free (or a bunch of houses) then I have a massive headstart over you, and you, as a homeowner, have a massive headstart over someone who doesn't own a house to use as collateral and has no immediate prospect of one.

And there are nuances even within this - house prices were so much lower as a proportion of earnings in the 70s and 80s, for example, than they are now. Households with one worker earning a moderate wage could afford to buy houses. Now you need to have two of you earning decent money for this to be possible. In the (near) future it will be harder still. So the business set-up costs and risks for someone of my parents' generation were so much lower than they are now. There is a trend for later-middle-aged people to point at millennials and younger living 'at home' for longer and requiring financial assistance from their parents as if young people are the problem. This isn't some universal failing of an entire generation, like there was a systemic contamination of baby formula in the 80s and 90s, this is a problem created by the system. Wealth is locked up in the hands of older people and when it does get spent it finds its way in increasing amounts into the pockets of the fantastically wealthy.

The richest three Americans own more than the poorest half of the American population (some 165 MILLION people) the richest 15 families own more than the poorest half of the world's population (3.8 BILLION) people. Jeff Bezos is on track to be worth a TRILLION dollars in five years' time. Those gains may be legally gotten but this isn't sustainable and something absolutely has to give.

Not everyone can be a business owner, some people don't have the skills, attitude or, frankly, the desire to be their own boss with the stress and responsibility that comes with it. Society needs people willing and able to work for others. What workers do need as part of the bargain is enough money to live off, decent accommodation which isn't covered in, for example, lethal cladding, nutritious affordable food and adequate healthcare. There is enough money in the system to be able to give that to everyone not just in the US and the UK but across the world. There is just not appetite to do that - we are locked into a race to the bottom, tragedy of the commons vanity project operated by just a handful of the world's greediest narcissists.

On the subject of getting degrees and qualifications that directly lead to earnings and employability - great, yes, but we can't have an entire society of network engineers and investment bankers. We need people to do the other jobs (all of a sudden we have a shortage of fruit pickers and HGV drivers and it turns out we need them .. who knew?). There are reasons why you would want to earn more that aren't down to money too - I would find a job as a vet, for example, more interesting than working on a till at TESCO and I would like to think I would choose 'vet' if both were paid a similar amount.

And if we were to manage to operate a society comprised entirely of engineers and doctors, would our lives be any better as a result? We might have amazing GDP but without people with a love of literature, which new novels would we read. Without people passionate about filmmaking and media, what would we watch in the cinema? Would we have craft beer if it would be a waste of someone's immense wealth of corporate/technical skills and qualifications to earn very little by brewing for a living?

Sorry, it's another very long one!

Yes another long one, but also another brilliant post.

 

[Argentum]

There is simply no means whereby to practice honest capitalism (or for that matter, honest anything) when money itself is so dishonest as to be fabricated at will from thin air by so-called central banks. Only money that has it's value correlated directly to the labor required to bring it into being and distribution can stand at the foundation of capitalism, or any other intended to be honest and just 'ism'. Therefore, whatever we perceive to be capitalism today is a mixed bag of socialism, fascism, quasi-capitalism, and corruption commensurate with the corruption found within the very foundation and distribution of modern money itself.

There is a reason why I identify on this forum as Argentum.

A good working definition of the fundamental root core essence of fascism is "the fusion of corporate and state". We may be being led to believe that the modern world is trending toward some derivation of socialism, but in my opinion the elite of both the corporate and government classes are fabricating the fusion of corporate and state, while at the very same time disseminating to the masses the ruse of their motivation being an abject rejection of fascism.

 

[darlacat]

The short answer to the question is: yes, capitalism exploits everyone who isn't a capitalist.

The capitalist is not forcing you to work for a given wage. You do that voluntarily. There is no theft or exploitation.

Not true: no-one works voluntarily, they are forced to for economic reasons. If you do not work you will live in abject poverty, or be destitute. If you choose not to work, there is an army of reserve labour who will work instead of you, and who are in constant competition with you for a finite number of jobs. If you are lucky enough to have a job, your employer makes more money off your labour than you do. Your employer has this advantage by owning the means of production (the organisation, industry, etc) - inevitably an ingrained advantage due to (often inherited) wealth, social class, etc. While you have to pay tax and national insurance, the capitalist will often have the advantage of being able to engage in tax avoidance schemes, securing greater personal wealth based on your labour. Thus, capitalism and all labour is inherently explotative - even with checks in place such as minimum wage, labour legislation, and so on. You can see this in housing, also: a landlord or housing investor earns an income and profit over the application of zero labour - the profit develops from having capital to purchase property, and the ability to charge inflated rents on those who are economically disadvantaged to as not be able to afford to purchase their own property. Exploitation is inherent to capitalism.*

*Caveat: this is not to say that all employers are exploitative, but that the relationship of capital-labour is one based on exploitation.

The capitalist does not rob the bank accounts and/or property or life of employees when a business loss is suffered.

Again, untrue: in the UK, when Philip Green took over BHS his company pillaged the pension funds of its employees - only reneging, to a degree, after huge public outcry. In a broader sense, when the state bailed out capitalism after it collapsed in 2008, it then initiated austerity to pay for it - effectively a transfer of wealth from workers to capital. And in a much broader historical sense, the development of capitalism is tied to imperialism, which robbed the wealth and exploited peoples around the globe.

without capitalists there wouldn't be jobs

Well, that depends on your idea of work, what an economy is, and for whom it should function.

IMHO a lot of the best reflections on this whole question of the wants and needs of individuals versus the power of employees and the State, come from the early days back when many European nations were struggling with the evolution from monarchies founded on feudal agrarian systems. This was the time of the early industrial revolution, where vast numbers of people were migrating from the land to work in the factories. This caused some fundamental re-alignments in the dynamics between state, society and the church that are still playing out. There are some cracking books and essays dating from that time - I'd particularly recommend Leviathon by Thomas Hobbes and On Liberty by John Stewart Mills - or even just a quick scan of their Wikipedia entries (linked).

Excellent comment, and good reading suggestions! This will likely create some outrage, but if you want the best understanding of the development of capitalism, Marx is the place to go. Most people have a negative view of Marx, based not on actually reading any Marx, but a wider negative cultural connotation, and how Marxism is (wrongly) conflated with Stalinism, Maoism, etc. - it's really not the same thing. Marx's work has two elements: one is an idea of the development of history based on class relations, the other is an anlysis of the development of industrial capitalism in the eighteenth and nineteenth century, the creation of a new working class in the period, labour relations, the development and function of money, etc. Not an easy read, but it remains an incredible analysis of how capitalism and the modern world developed.

For the development of capitalism in our times, I highly recommend David Harvey's Brief History of Neoliberalism, which is also a very accesible read. All of Harvey's work is excellent, in my opinion.

 

[Argentum]

I offer this in reply to post #32. Please listen to all three parts:

 

[micklupulo]

If capitalism were abolished tomorrow where would the income of governments come from in the absence of profit-derived tax?

 

[micklupulo]

I think it was actually achieved by use of a trust - the Scott Trust IIRC, rather than a tax haven, but I get your point.

The orginal Scott Trust was dissolved in 2008 and superseded by the Scott Trust Limited which is a company. The profit of over £300m was not taxed due to the shell company operating in the Cayman Islands and that was the crucial element. The Graun described all this as "smart" at the time as opposed to evil legal tax avoidance perpetrated by others.

 

[marshbrewer]

The orginal Scott Trust was dissolved in 2008 and superseded by the Scott Trust Limited which is a company. The profit of over £300m was not taxed due to the shell company operating in the Cayman Islands and that was the crucial element. The Graun described all this as "smart" at the time as opposed to evil legal tax avoidance perpetrated by others.

Indeed rank hypocrisy. See also Dame Margret Hodge et al.

 

[darlacat]

I offer this in reply to post #32. Please listen to all three parts:

Thanks. I have a PhD in history, specialising in the twentieth century, so am familiar with modern history. :hat:

In all seriousness, I'd take Ayn Rand with 25kg of salt: Atlas Shrugged is a dreadful novel, and Rand was also an ideologue whose writings paved the way for the political, economic, and social problems we are dealing with today.

If you want a good overview of twentieth century global history, I'd recommend something like Eric Hobsbawm's Age of Extremes. Mark Mazower's Dark Continent and Tony Judt's Post-war are also good, but deal with Europe only. All are very accessible, enjoyable reads.

 

[darlacat]

If capitalism were abolished tomorrow where would the income of governments come from in the absence of profit-derived tax?

If capitalism were abolished tomorrow, would there be need for a government? At least in terms of the current notion of the state, which is a very modern idea of governance - i.e. the nation state, and which developed alongside, is linked to, and is central to upholding and managing capitalism?

The more important question is, in my eyes, if you eradicate capitalism, what system would you develop to replace it? Some would argue that you wouldn't need a government in the form of a nation state, and instead have localised, non-hierarchical, more co-operative forms of organisation and work - i.e. a radical departure from how we currently understand economy and governance, but less so in terms of everyday social relations.

Massive question.

 

[Argentum]

In order to abolish capitalism, all would be forcibly required to sacrifice greatly for some ideal such as the "common good" or the "greater good". But do consider that wherever there is compelled sacrifice, there is inevitably someone or some organization collecting the requisite sacrificial offerings (with even taxes included here). And this same lot is most likely going to be the arbiter of such as what is the "common good" or the "greater good".

 

[Argentum]

Thanks. I have a PhD in history, specialising in the twentieth century, so am familiar with modern history. :hat:

In all seriousness, I'd take Ayn Rand with 25kg of salt: Atlas Shrugged is a dreadful novel, and Rand was also an ideologue whose writings paved the way for the political, economic, and social problems we are dealing with today.

If you want a good overview of twentieth century global history, I'd recommend something like Eric Hobsbawm's Age of Extremes. Mark Mazower's Dark Continent and Tony Judt's Post-war are also good, but deal with Europe only. All are very accessible, enjoyable reads.

So I take it that either you did not watch the videos, or that in your dream of a utopia for mankind (as derived specifically and directly from your superior education in history as implied from your response) you reject their outcome.

Perhaps due to your PhD in History you will be one of those lucky enough to be chosen to collect the sacrificial offerings, and to determine what is the "common good" or "greater good". Or perhaps not... Perhaps your ultimate fate will be to make motorcars for the good of all.