Wednesday, October 5, 2011

Wall Street Protests

I listened to a radio piece about the recent Wall Street protests that are spreading primarily around the U.S. and somewhat in other countries as well. One speaker repeatedly made reference to “global capitalism” and the problems it causes. I suspect that I agree to some degree with the speaker, but he and I have different definitions of “capitalism”.

A key part of capitalism is competition. We have capitalism when a market has many producers and consumers and no one participant or colluding group of participants dominates the market. This definition automatically precludes anything that is too big to fail.

Just because a company is in the private sector doesn’t mean that its actions are automatically capitalistic. In fact, the goal of most companies is to grow to dominate their markets and manipulate prices to destroy competitors and undermine real capitalism.

If we really had capitalism worldwide with governments setting sensible rules concerning product safety and other public concerns, we’d be much better off than we are right now. I’d like to see the current wave of protests make some positive changes. However, rather than eliminate capitalism, I like to see it restored.

3 comments:

  1. Your definition of "capitalism" is probably better described as "ideal capitalism" or "pure/utopian capitalism". These ideals rarely (perhaps never) exist in the imperfect world. We can hope for, or preach reform, but we will never get to Nirvanah.

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  2. @Dale: Very true. But it is important to understand degrees. Many commentators complain that government restrictions on business are anti-capitalistic. Sometimes they are right. But when the restrictions prevent dominant companies from unfairly crushing competition, the rules are actually supporting capitalism.

    The very existence of businesses that are too big to fail is bad for capitalism. Government should consider anti-trust measures in such cases.

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  3. I would say that global capitalism has lead to the loss of most of our good middle class manufacturing jobs. I'm sure that plays into people getting angry at wallstreet. It all started going downhill when we entered 'free trade'. A nation that produces nothing can't survive. Where would Canada be if we weren't resource rich?

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