Regarding Debates About Capitalism and Economics

[Adrian Dore]

It's an interesting proposition. I glanced at your site, and I'll look at it some more, but I think that may cut to the core of what the problem may be. The standard of measurement used in capitalist economies is money (in terms of wages, salaries, prices, etc.), but that's where things become so vague and nebulous.

Capitalists often argue from the point of view that this is somehow the result of "natural law," that prices and wages are set by some "unseen hand" and that it all happens automatically, without any human intervention or thought. Certain misguided individuals (a few of them here in this forum, although I won't name any names) seem to believe "well, that's just how markets work" and leave it a that. I don't accept that. Human beings are making the decisions, not God or Nature.

You raise two issues.

1) You said “the standard of measurement used in a capitalist economy is money”

It is true that our current measurement standard functions on a monetary basis (profit), but that’s because we are Profiteers, not Capitalists. A new measurement standard needs to be based on value creation as value creation is the common denominator of business. Value creation means different things to different constituents. For Shareholders its profit and reduced risk. To Staff, it means security, reward, acknowledgement, training etc. To the Environment it means protection, nurturing, growth, etc. To Community, it means investment, support, protection, etc. Our new measurement standard needs to rank and score each constituents value creation needs and then combine them based on the value creation causal model. This represents a paradigm shift in thinking and measurement, but the only way to bring balance and allow us to follow the principles of free enterprise (Capitalism.)

2) You said the “unseen hand” is the work of man, not God.

The “unseen hand” refers to market dynamics, which are supposed to provide balance. While the premise of this argument holds merit, it assumes the markets are operating in a fair and balanced way. This assumption is entirely incorrect. The markets are skewed in favour of Capital over all others. Therefore, the “unseen hand” - or market dynamics, are not dynamic but stilted. The “unseen hand” keeps favouring Capital (profit) because of the imbalance in our inadequate and inappropriate business measurement standard. The needs of other constituents are not heard nor seen. As our measurement standard distorts results, the “unseen hand” is definitely not the workings of God.

 

[Adrian Dore]

If you would like to read an article which puts capitalism and profiteering in perspective, then please read my article “Generation Profiteers” at We need a new business measurement standard : Generation Profiteers.

 

[Stevicus]

You raise two issues.

1) You said “the standard of measurement used in a capitalist economy is money”

It is true that our current measurement standard functions on a monetary basis (profit), but that’s because we are Profiteers, not Capitalists. A new measurement standard needs to be based on value creation as value creation is the common denominator of business. Value creation means different things to different constituents. For Shareholders its profit and reduced risk. To Staff, it means security, reward, acknowledgement, training etc. To the Environment it means protection, nurturing, growth, etc. To Community, it means investment, support, protection, etc. Our new measurement standard needs to rank and score each constituents value creation needs and then combine them based on the value creation causal model. This represents a paradigm shift in thinking and measurement, but the only way to bring balance and allow us to follow the principles of free enterprise (Capitalism.)

Some of this might also require some changes in our culture and values system in this country. For many, money is the bottom line, and it doesn't even matter anymore how people actually earn it. With the rise of mobsterism and the glorification of such, people can lie, cheat, steal - even kill - and as long as they don't get caught and have a lot of money to show off, they will be considered "heroic" in many people's eyes. Some may also justify such an attitude by citing our past and mention how early capitalists gained their wealth through exploitation, slavery, conquest, colonialism, etc. Likewise, at a time when banks were considered "the enemy" (such as during the early days of the Depression), bank robbers like Bonnie and Clyde gained a certain level of popularity among the people.

Mario Puzo once wrote that a single lawyer with a briefcase can steal more than a hundred men armed with machine guns.

2) You said the “unseen hand” is the work of man, not God.

The “unseen hand” refers to market dynamics, which are supposed to provide balance. While the premise of this argument holds merit, it assumes the markets are operating in a fair and balanced way. This assumption is entirely incorrect. The markets are skewed in favour of Capital over all others. Therefore, the “unseen hand” - or market dynamics, are not dynamic but stilted. The “unseen hand” keeps favouring Capital (profit) because of the imbalance in our inadequate and inappropriate business measurement standard. The needs of other constituents are not heard nor seen. As our measurement standard distorts results, the “unseen hand” is definitely not the workings of God.

Some might compare it to democracy, since consumers in the marketplace "vote" with their dollars. But that's where it can get all the more skewed, since humans are rather fickle creatures and have been described as having a "sucker born every minute." But if money is the measurement used to determine "value" or "worth," then that's also a reflection upon the culture and our overall societal values.

What I would like to see (and it will probably never happen) is that value (and income) be coherently tied in with their true practical value to society as a whole. I think of celebrities, athletes, entertainers, pop stars; I would submit that they actually provide less intrinsic, practical value to society than, say, scientists or doctors working to find cures or treatments for various maladies. Entertainment is nice, but it's not that valuable. I think it was Stalin who said that music's only real purpose is for workers to have something to whistle to while they work.

Likewise, I would say that teachers provide more value to society than lawyers, so the salaries should be adjusted to reflect that. The average doctor provides more value to society than the CEO of a health insurance company, so again, the salaries need to be adjusted to reflect that.

I'm a big believer in wage/price controls. I don't think anyone should earn more than they're worth. Likewise, I don't think anyone should be allowed to charge more for a product than it's worth. The fact that some people try to pass off this ridiculous notion that "I'm worth it" is just shameless manipulation and outright cheating. And the only reason they can get away with it is because it's a truism that "there's a sucker born every minute."

But there's also the question of how long an economy can sustain itself depending solely on the existence of "suckers."

 

[Adrian Dore]

Some of this might also require some changes in our culture and values system in this country. For many, money is the bottom line, and it doesn't even matter anymore how people actually earn it. With the rise of mobsterism and the glorification of such, people can lie, cheat, steal - even kill - and as long as they don't get caught and have a lot of money to show off, they will be considered "heroic" in many people's eyes. Some may also justify such an attitude by citing our past and mention how early capitalists gained their wealth through exploitation, slavery, conquest, colonialism, etc. Likewise, at a time when banks were considered "the enemy" (such as during the early days of the Depression), bank robbers like Bonnie and Clyde gained a certain level of popularity among the people.

Mario Puzo once wrote that a single lawyer with a briefcase can steal more than a hundred men armed with machine guns.



Some might compare it to democracy, since consumers in the marketplace "vote" with their dollars. But that's where it can get all the more skewed, since humans are rather fickle creatures and have been described as having a "sucker born every minute." But if money is the measurement used to determine "value" or "worth," then that's also a reflection upon the culture and our overall societal values.

What I would like to see (and it will probably never happen) is that value (and income) be coherently tied in with their true practical value to society as a whole. I think of celebrities, athletes, entertainers, pop stars; I would submit that they actually provide less intrinsic, practical value to society than, say, scientists or doctors working to find cures or treatments for various maladies. Entertainment is nice, but it's not that valuable. I think it was Stalin who said that music's only real purpose is for workers to have something to whistle to while they work.

Likewise, I would say that teachers provide more value to society than lawyers, so the salaries should be adjusted to reflect that. The average doctor provides more value to society than the CEO of a health insurance company, so again, the salaries need to be adjusted to reflect that.

I'm a big believer in wage/price controls. I don't think anyone should earn more than they're worth. Likewise, I don't think anyone should be allowed to charge more for a product than it's worth. The fact that some people try to pass off this ridiculous notion that "I'm worth it" is just shameless manipulation and outright cheating. And the only reason they can get away with it is because it's a truism that "there's a sucker born every minute."

But there's also the question of how long an economy can sustain itself depending solely on the existence of "suckers."

I am in total agreement with you regarding the need for our value system to change to facilitate wider societal change. There needs to be a paradigm shift in thinking, where business plays its role as a societal tool. A tool for the benefit and upliftment of all. We can no longer see business as a means for enriching a few at the expense of others. This has to go further where we as consumers change our perspective and responsibilities. Unbridled consumerism has to change as it’s part of our problem. Therefore, it has to be part of the solution. Please read my article “Inclusive Theory” on the matter
We need a new business measurement standard : Inclusive Theory


I also agree on your comments about equating rewards based on societal benefits rather than a warped sense of self-worth. I believe a new business measurement standard will play a major role in returning business to normality in terms of rewards, as a balance must be struck between competing resources. Certainly “the end is nigh” for excessive executive pay. Business talks about participative management and promotes its merits, yet on the other hand they pay a CEO exorbitant salaries/benefits. How is this justifiable if they believe in participative management as the decisions have surely been arrived at through a process of consensus/participation? Once internal remuneration is normalised and a fairer distribution of value acknowledged as a core principle of society, then we will see a return to rewards based on societal benefits, because that will be the underlying principle of society, not one based on “self”.