Originally Posted by Mikebert

This same problem exists currently. I fail to see how under this socialist scheme it would be worse.

Because it's a petty fundamental problem with baseline capitalism that should be addressed because socialism's entire point is to address the inadequacies of capitalism.

Originally Posted by Mikebert

But an employee-owned corporation.

All this means is that we'd rearrange who the 1% is a bit. It might move to the 5% and the 20% to the 30%... for a while. Over time though, we'll still be uptrending cash, and therefore all that stock will find it self bought out from under most employees at under value to service the elite in the next 3T.

Originally Posted by Mikebert

Whay exactly is the problem with the 3% inflation rate we have averaged since 1933?

Because it compounds over time. Think long game. As you increase money supply its going to get spent unevenly (not everyone will get the same amount), even if you tax heavily (90 percentiles) if I'm a top earner for 5 years, I'm still going to eventually accrue enough wealth to buy something else which makes me more wealth at an accelerated rate, so on and so forth. The federal reserve system is nothing more than an inflation machine, which is nothing more than an inequality generator.

Originally Posted by Mikebert

We had inflationary policy for half a century without destructive bubbles. Whether we have destructive bubbles is a choice. You want to avoid bubbles? Raise taxes on the rich. You don’t want to raise taxes on the rich? Then accept occasional bubbles. I think it is clear which choice we have made since 1986 and which choice we had made over 1933-1980.

Again, long game. When measuring long term wealth acquisition, social inequality has been increasing since the 1950's. Even without the severe income disparities of the 80's and beyond, the wealth desparity was increasing. The policies of the 80's and beyond accelerated the problem, but it did not create it. Why do you think this 4T is a reverse of the last? Because we didn't fix the problem, we just took away the systemic features that allow depressions, so we're continually finding ourselves in recessions which only help to further wealth inequality, and which will eventually lead to permanent recession as our debt ratio will ultimately eclipse our ability to spend outright. *

Originally Posted by Mikebert

They aren’t paid any more. They are paid exactly the same salary as younger folks if they do the same job. They get more income because they have accumulated more shares in their 401K and the dividends from those shares gives then additional income. Dividends are the benefits one obtains for ownership.

Again, long game. This way of doing things means that over time a certain portion of people will be able to accelerate their wealth acquisition over others. This money will snowball and eventually we'll find ourselves in the same position as now because these people will buy power, and do whatever their system's equivalent of deregulation and lowering taxes is (which might be deregulation and lowering taxes).

Originally Posted by Mikebert

I’l be more specific. A newly started worker has zero shares in his account and so gets zero dividends. He earns a salary of S dollars per month and receives 80% of that in his paycheck. The other 20% is used to buy shares that go into his 401K.

A 30-year man has paid 20% of 30 years worth of salary to buy shares. He now owns shares worth six times his salary. Assuming a 4% dividend, he receives dividend income equal to 24% of S. Each month he gets paid 80% of S as his wage (just like the younger worker) plus his dividends (24% of S). As the younger worker accumulates shares in his 401K he will get more and more dividend. Thius will look like getting raises simply for getting older. It actual is the return he receives from past investments of salary in company stock. In other words the worker is gains the fruits of capital because he owns the means of production (which is the definition of socialism),

I get it, I just don't think this addresses long term inequality issues, which again, is a long game fix. This isn't socialism in Marxist terms, as the public doesn't own the means of production... It's more capitalism in a way that temporarily creates more players. Over time though, it will degenerate back to the way it is now.

Originally Posted by Mikebert

You don’t. You sell your pie through a LBO to the new employee-owned corporation.

Why would I? Why wouldn't I just keep my company small enough to where I don't have to, them go start another company doing exactly the same thing a few miles down the road instead?

Originally Posted by Kepi

Because it's a petty fundamental problem with baseline capitalism that should be addressed because socialism's entire point is to address the inadequacies of capitalism.

Socialist and capitalist are descriptors for different ways of organizing economies. They do not have purposes.

...all that stock will find it self bought out from under most employees.

There is no mechanism by which an employee can sell shares in his 401K. Were this to happen the company would cease to be a corporation and lose limited liability protections. If the law were changed so this didn't happen then the economy would become capalist. The assumption of the example was socialist America. I have not suggested any way in which Americans like yourself could ever accept socialism. This is an example of why this would be difficult. Even though you would probably profess that you have no attachment to our current capitalist way of life, your beliefs as stated above and about money supply are indirectly supportive of the current order.

As you increase money supply it is going to get spent unevenly (not everyone will get the same amount)..

Money is not wealth. If you increase the amount of money in circulation you don't increase anyone's wealth. Where did you get this idea?

...even if you tax heavily (90 percentiles) if I'm a top earner for 5 years, I'm still going to eventually accrue enough wealth to buy something else which makes me more wealth at an accelerated rate, so on and so forth.

Do you have empirical support for this assertion? My data and the analysis I have done shows that high taxes are quite effective at preventing the accumulation of massive amounts of private wealth (see Figure 7).

When measuring long term wealth acquisition, social inequality has been increasing since the 1950's.

Thats not what the data I have seen shows. That data shows a sharp drop in income and wealth inequality in the 1940's and a slow drift downward to the laye 1960's. Statistical measurements like Gini ratio show the least unequal US in 1968. Anecedotally it matches up. When I was a kid in the 1960's the richest Americans were billionaires like J Paul Getty and Howard Hughes. There had been American billionaires since Rockefeller in the 1930's. By the late 1970's these old billionaires had died and there were no American billionairies. Today there are more than 400 of em. Even when you adjust for inflation anybody with more then $5 billion today would have been a billionaire with late 1970's dollars. There are 68 such people today, compared to none in the late 1970's and several in the 1950's and 1960's.

Even without the severe income disparities of the 80's and beyond, the wealth desparity was increasing.

Evidence?

This way of doing things means that over time a certain portion of people will be able to accelerate their wealth acquisition over others.

So you are saying people should not be allowed to save for retirement?

This isn't socialism in Marxist terms, as the public doesn't own the means of production

I believe Marxism calls for workers to own the means of production, not the public (whatever that is).

It's more capitalism in a way that temporarily creates more players.

You cannot have capitalism without a capital market (i.e. a stock market). It's what makes capitalism capitalism.

Why would I? Why wouldn't I just keep my company small enough to where I don't have to

Well of course you have that option. In fact most businesses do exactly that. These bunsinesses are not really capitalist even today because they do not grow. Capitalism is a system in which capital allocation is performed in such a way as to maximize return on capital (growth rate of capital). A family restaurant could have a goal of earning a good living for the family and maintaining an enjoyable relationship with one's regular customers. If the goal is not to grow the capital (i.e. expand the business/go into other lines etc) it is not really a capitalist business. Without market on which to sell capital, a major incentive to grow capital for its own sake is removed. With no stock market there are so stock price quotes. Without a stock market there is no shareholder pressure on management to make the stock price go up. Without these things there is no capitalism, that is, no belief that capital growth for the sake of capital growth is virtuous.

them go start another company doing exactly the same thing a few miles down the road instead?

What do you do with the old one? Who is going to buy your business if you are going to open a competitor a few miles down the road?

A better question might be why would you want to start another company in the first place? If it because you want to be a big shot, then why not grow the existing business larger? It makes sense to incorporate simply as a measns to raise cash. By going employee-owned you suddenly gain increase in cash flow. At first most of this cash flow will be required to repay the LBO debt (the money paid to you when you sold your business to the new coporation. Since the new owners (your former employees) want you to to stck around, you get to run the company as you used to. In fact as long as you still have what it takes, you will probably get to run the business as long as you want to. As CEO you are an employee and so will accumlate shares, but your comfortable retirement was assured when you sold the business.

Look at it this way. Under socialism, the entrepreneur sells to people he's worked with for years. With capitalism, he sells to faceless investors who don't give a shit about him or his company, just the return he can squeeze from the assets/people he manages. Ony one of these systems alienates the entrepreneur and his workers from their humanity, in effect, brutalizing them. I believe Marx's initial focus was on this alienation. Kinser would probably know more about this.

Originally Posted by Einzige

I've never understood this assumption, shared by both more-educated conservatives and genuine leftists alike (only American-type liberals, ironically, picture capitalism as something enduring and which consequentially must be ameliorated).

Do you mean small-scale cottage industries or do you mean the new bureaucratic-capitalist order? Small-scale, market-based and competitive capitalism is a good model for equity. The current bureaucratic-capitalist order implies the rigidity of Soviet-style socialism with the inequity of fascism. The inequity in what we now have makes a travesty of such potential as we have.

Capitalism as the dominant mode of production in America has not even, well, dominated for fully two centuries. Whither the assumption that it's going anywhere anytime soon? The farthest back one can possibly date the final eclipse of the feudal order in America is 1865; I go back and forth whether one ought to take 1865 or 1896 as the 'start-date' for a fully-developed capitalist order completely independent of the social framework of feudalism/mercantilism.

Mercantilism died in America in 1789 or so. The first joint-stock corporation in America started as a giant enterprise was DuPont Corporation, founded in 1802. Any older corporation now really large has grown large in the last two hundred or so years.

Slavery was the essence of feudalism in the English colonies (although the Dutch tried a feudal order in the Hudson Valley and that failed; the French in Quebec tried a feudal order and it is no more). After slavery ended the planter elites still owned the means of production and effectively took away choices of African-Americans who got no '40 acres and a mule' that they needed for establishing the basis for economic independence. Losing economic independence quickly, Southern blacks quickly lost their personal freedom as well.

If we look at the previous modes of production, we see each lasted in turn many thousands of years. It's impossible to say "this is when x replaced y" in sociological terms, but, ignoring the proto-feudalist latifundia in the late Roman Empire, we may very well date Feudalism Proper as having existed in some form or fashion from the deposition of Romulus Augustulus in 476 to the abolition of serfdom in Eastern Europe in the late nineteenth - and, occasionally, even the early twentieth(!) - century.

Don't accept Marx' economic theory at face value. The latifundia of Imperial Rome were feudal. The Germanic tribes who overthrew the Roman Empire destroyed the authority behind the peonage that had become the norm in Roman days. The common man of Rome saw the barbarians as liberators. Know well, of course, that the highwaymen quickly took over the roads that nobody was going to repair anyway.

Feudalism came into existence as the common man sought defense from barbarian invaders of the middle years of the Middle Ages. There was no cash, so people who wanted some safety had to subject themselves to a prince who took on the functions of defense but at the cost of the freedom of the peasants.

I share the basically Marxist view that capitalism will some day pass from the historical playing field. But I think it's far more likely we've only really just begun the capitalist era. Capitalism still has a vast amount of work to do: Christianity, that relic of Feudal Europe, has not disappeared. Man has not become completely atomized. "Tradition" still matters to the conservators of capitalism; it will cease to matter when the moorings of feudalism have been completely obliterated.

There has been no revolutionary break between feudalism and capitalism. Many of the investors in the earliest capitalist enterprises in manufacturing (and I discount such businesses as taverns, inns, and craftsman shops because they did not manufacture) were themselves big landowners who wanted bigger profits than ownership of farmland (and effectively those who worked it) offered. England had farmers in peonage long after the start of the Industrial Revolution, and France (which formally ended feudalism during its Revolution) was slow to industrialize. Peasant-like conditions remained for some Southern blacks as late as the 1960s.

It may be that the vastly increased rapidity of technological and social change under the thrall of Das Kapital may speed up the process, but I strongly doubt we're in anything but Early Modern Capitalism as of yet. And those seeds which replace it will sprout naturally: we will see forms and functions of its replacement centuries before it is actually replaced, just as modern capitalism had precursors in, for instance, the Florentine Republic.

Technological change has transmuted early capitalism into later variants. Some of the late-19th century inventions (recorded music, electric lighting, telephones, automobiles, motion pictures) required new markets if they were to have economic viability. Economic elites needed none of these because they had live entertainment available cheaply, fine carriages with a servant to drive and maintain the horses, whale-oil lamps, and low-cost use of messengers. The true middle class was too small and still too poor by standards of our time to be a large and willing market. The capitalist class would have to make a market out of a proletariat that Karl Marx described accurately as seething with resentment at its exploitation toward the end of his life.

Hence my belief that the next epoch will be a Megaunraveling in Generational terms. Capitalism is just getting started; feudalism still exists within relatively recent memory; the old bonds must be fully broken - Christianity buried under, familial collectivism disintegrated, Westphalian nation-states replaced by transnational corporations and institutions completely - before anything new can occur.

Capitalism has transformed itself many times. Capitalism can survive social democracy but it cannot survive Marxist-Leninist revolution. In recent years capitalism has taken on the worst features of feudalism (inequality) and socialism (bureaucratic domineering and exploitation), and those characteristics likely die in this Turning. Capitalism abandons those or gets burned badly.

If people need work fewer hours to get the basics of life, then maybe they won't buy the consumer schlock known as 'status symbols'. Doing better on less is real progress, and such even implies lesser degradation of the environment. Christianity and other religions can survive. The family is still a good idea, and it is best that people have some moral compass. The Seven Deadly Sins may not be as deadly as they used to be, but they can still make life miserable.

It's also worth pointing out that slavery was on the way out until the invention of the cotton gin, which enabled the profitable production of a monocrop on a vast scale to feed the burgeoning cotton mills in Britain and later the NorthEast, that slaves were in fact a sizable portion of the 19th century US capital stock on whole value the planters borrowed lavishly, or that NYC threatened to secede because of its dependence on the capital flows from the cotton and slave trades, if not the slaves themselves. That is to say, slavery was a capitalist, proto industrial institution dressed up in pretty feudal clothes for the benefit of a wealthy elite.

Neo-Mercantilism is the next stage.

We've been in a corrupted form of Socialism now for 100 years. The main corruption was that the means of production were not directly owned by the workers. The means of production were manipulated, taxed and otherwise indirectly managed by the government, mainly via regulatory and taxation policies. It has been a situation of too many cooks and is now failing.

The neo-mercantilist formation may well be a form of monarchy in the arena of political format.

If resource scarcity really starts to bite things like mercantilism and "spheres of influence" might become much more of a thing.

Originally Posted by XYMOX_4AD_84

Neo-Mercantilism is the next stage.

We've been in a corrupted form of Socialism now for 100 years. The main corruption was that the means of production were not directly owned by the workers. The means of production were manipulated, taxed and otherwise indirectly managed by the government, mainly via regulatory and taxation policies. It has been a situation of too many cooks and is now failing.

The neo-mercantilist formation may well be a form of monarchy in the arena of political format.

No chance of that. My hope is for more coops and small business, and the worker-owned industry you spoke of. Failing that, I suspect we'll muddle along with our current corporatism for quite some time, maybe with some government reform. But it is not government management that corrupts socialism; that is necessary as long as free enterprise exists. What we have is a socialism that never occurred, except for that government management and regulation, and government safety nets. That's all the socialism that ever existed in the USA. The corruption is that capitalism has been allowed to pursue its course, mostly, with its wealth and power allowing it to extort favors from the government. So what we have is rampant corporate control, dominating the market and the economy, inadequately regulated and managed.

Okay, the Gini index is a great starting point, so let's start there. The Gini starts going up in the mid50's spikes in the early 60's and then declines beginning in 64ish. So what happened there? Taxes were among the highest they've ever been, but there's this very significant spike regardless. So what happened? Well, the wealthy were getting wealthier at a faster rate than everyone else. So then why did it drop? The war on poverty was started, which didn't stem the trend, but it masked it by raising the lowest 20% up off total destitution to a minimal level of survivability. They're fighting the symptoms, the disease appears in remission, but in actuality the wealthy are still outpacing the middle class in purchasing power and here's where money comes in.

You are correct in saying that money is not an outright indicator of wealth, but it is how wealth is aquired. So when the middle class Silent 25 year old is buying his first house, the middle class Silent 25 year old is buying bonds, and the wealthy one just bought 10% interest in a medium sized company.

Why wouldn't, for example a 90% tax rate for income over $1m fix this? If a person is making $1m/yr, has a overhead of $100,000, blows $200k because why not, saves $200k, and spends $500k on investments that return value + 25% per year next year (by the way, I know this is an excessive return, its just for example), next year he can spend 62500 more on investments, even though his return was nerfed by 90%, and that means that the next year he has 70312.5. This is why republicans are wrong about raising taxes stifling business. More is always more, and there's absolutely no way the wealthy will stop wanting more.

So then why can't the middle class catch up? The earning potential of the wealthy is nerfed more the more they earn. Well, the middle class folks have a much higher overhead in terms of proportion. They cannot spend the same percentage of their income investing I'm wealth building, which means their returns will be proportionally lower every time. It's about pacing. The middle class can't outpace the wealthy under any conditions, because 10% accelleration is still acceleration.

So why do I have a problem with inflation? Because inevitably that 3% goes right into the hands of the wealthy. First it goes there as a bank note, but one it gets circulated, prices increase, and that increase represents an increase in income for the wealthy per transaction (so it's not like 3% more of the pie per year, but this is a pacing issue) which serves to deplete the classes without significant resources devoted to wealth acquisition to accellerate the growth of those that do.

I used to have a lot of great books that explained this better than I do, with good graphs plotting the data, but I did those back for end of semester beer.

Now add for theoretical considerations, capitalism isn't hallmarked by investment, its hallmarked by profiting by virtue of ownership. Marxism used alienation to criticize capitalism, but socialism was never intended to alleviate alienation via transferring ownership of the means of production to private citizens, because Marx understood full well that acquisition of wealth was a competition, and so it would only be resolved by collective ownership of the means of production, not just you and I owning particular pieces of the pie.

As for saving for retirement, I think that should be handled by a welfare/taxation system. Saving and investing are too unpredictable to be reasonable.

Originally Posted by Kepi

Okay, the Gini index is a great starting point, so let's start there. The Gini starts going up in the mid50's spikes in the early 60's and then declines beginning in 64ish. So what happened there? Taxes were among the highest they've ever been, but there's this very significant spike regardless. So what happened? Well, the wealthy were getting wealthier at a faster rate than everyone else. So then why did it drop?

You are ignoring business cycle effects, which are important. Check out figure 3 here. The top 1% got 15-23% of all income over the 1913-1940 period. You will see peaks in 1918, 1928 and 1937 corresponding to the ends of economic expansions. You will see troughs in the early 1920'a and 1930's corresponding to recession bottoms. The thing to focus are secular trends, what you would see if you smoothing the data over a business cycle length. You can see a downwards secular trend through the 1940's and into the early 1950's. The trend is flat over the 1950's and 1960's and then falls a bit more in the 1970's, reaching 8% of income in the late 1970's. In the late 1970's a new rising trend developed which has continued to this day. Study that figure, it gives you the raw idea.

As to why this happens you can see this in Figure 7 of the article I referenced. The black line in that figure is the total value of an investment of $1.50 made in 1800 and carried down to the present. The money is invested in bonds and stocks. Actual returns over time are taken, each year taxes paid on the returns, and the whole thing put into constant dollar terms. Now in the postwar period the interest rate on bonds was around 4%. Applying a 90% tax to that yields and after tax return of 0.4%. Subtracting and average inflation of 2.5% gives total bond return of minus 2%. That is rich people who held bonds lost money. During the post-war bull market (1949-1968) stocks produced (IIRC) about 11%, 4-5% from dividends and the rest for capital gains. Capital gains were taxed at 25% and dividends at 90% (before 1965) and 70% after. This would leave after tax stock returns around 5.5%, subtracting 2.5% inflation and you get 3% return from stocks and -2% form bonds. Average the stocks and bonds together and you get +0.5%. Thus rich folks barely hung on while the bull market was in session. During the 1970 when stocks performed poorly, rich people lost ground. Although interest rate and dividends went up inflation rose more and the position of the 1% reached its nadir.

Inflation is not good for wealth. It has never been good for wealth--and wealthy people know this. This is why up until 1980 Republicans supported extremely high tax rates on the rich when necessary to prevent inflation which is their greatest enemy. Top tax rates were raised from 25% to 70% in the early 1930's by a Republican-controlled government because they feared inflation resulting from the budget deficits that appeared with the economic downturn. When FDR proposed top tax rates of 91% for WW II Republicans were very much in support because they knew what inflation did to them in the previous war. (look at Figure 7, the upwards trend in largest fortune and in the black line ended at WW I, only to be resumed when Reagan came 60 years later.).

When Kennedy proposed supply-side tax cuts in the 1960's that would lower top rates from 91% to 70% Republicans were dead set against this. Again the fear was inflation. A fear that came true in the next decade and again the 1% took it on the chin (look at the 1% graph and the black line).

The in 1979 came the "October Revolution in Fed Reserve policy" and it all changed. By hiking interest rates through the roof and throwing millions of workers into the unemployment line and ending wages gains for the foreseeable future, the Fed was able to prevent inflation while running big deficits. The connection between high taxes and inflation suppression was lost. The 1% could have low inflation AND low taxes.

All this became possible because Democrats were now reluctantly willing to throw their constituents under the bus in order to stop inflation which had become a big political liability for them (e.g. "the misery index"). Right then any support from Republicans for higher taxes, ever evaporated. Inflation went down, taxes on the 1% went down, the black line headed up, inequality headed up. This nirvana for the 1% was all made possible by sacrificing wage gains for working stiff who now abandoned the Democrats who had abandoned them. It has led to someone like you becoming an ally of the 1% on monetary policy.

Why wouldn't, for example a 90% tax rate for income over $1m fix this? If a person is making $1m/yr, has a overhead of $100,000, blows $200k because why not, saves $200k, and spends $500k on investments that return value + 25% per year next year (by the way, I know this is an excessive return, it’s just for example), next year he can spend 62500 more on investments, even though his return was nerfed by 90%, and that means that the next year he has 70312.5.

This example is confused. Say a CEO with %5 million in investments earns a $1 million bonus. His $5 million in investments yields a 5% return for $250 K in investment income for a total of $1.25 million. He pays 90% of this in taxes so he is left with 125K which added to his total investment value to give him 5.125 million. But during this year inflation reduced the value of a dollar by 3%to that his assets are 4.97 million in constant dollar terms. That is, despite his bonus he is slightly poorer than he was at the beginning of the year.

Now consider a self-employed contractor. He has 50K in investments. Last year he had excess income of $10K (over and above what he needs to maintain a basic standard of living). This year he charges 3% more reflecting inflation and nests an excess income of 10.3 K. His investments also earn 5% so he gets 2.5 K from that. Altogether he has before tax extra income of 12.8 K. He pays 20% in taxes and so nets $10.2 K. Adding it on to his 50K he now had 60.2 K. Adjusting for inflation gives 58.4 K. He is now 8.4 K richer than he was.

You see, investments all based on nominal dollar. You borrow money at a fixed rate, you have to pay it back with nominal dollars, NOT inflation-adjusted dollars. If inflation increases after you borrowed the money, your debt service costs actually fall in real terms. On the other side, the guy who owns the loan and getting less and less real income from you. Inflation hurts lenders and helps debtors. This is what free silver was all. It was what the Greenback party was all about.

There has been a multi-century battle over inflation. On one side as those whose principal asset is are financial assets prices in dollars. Call them "the rich". They favor lower or negative inflation, because it maintains (or increases) the real value of dollars, which is their strong suit. They favored gold standards, right Fed policy. In the modern iteration of this battle it is those who support austerity. They represent the 1%.

On the other side are those whose principal asset is a real thing. That is anyone whose principal asset is their ability to produce something tangible or perform some service. Labor, as measured in hours worked, is a real thing. For example, try as I may I will not find anyone who will mow my lawn for what I used to charge when I was a kid. They will all want more than quintuple what I was happy with. On the other hand, someone who had $1 million invested at 5% back them and who paid 90% tax rate on the interest would have after 40 years would have only 22% more, not 5 times. Of course taxes were reduced. And to fight inflation interest rates were increased. So 1 million 35 years ago actually earned 8% and they paid 35% in taxes so that $1 million has grown to $7.6 million. The dollar investment has gained more value than has the lawn-mowing labor. Hence the guy with the dollars has gained relative to the guy pushing the lawn mower. During the post war era it was the other way around. It changed, in part, because we started thinking about inflation like you do, which helped out the 1% big time.

Originally Posted by Kepi

Now add for theoretical considerations, capitalism isn't hallmarked by investment, its hallmarked by profiting by virtue of ownership.

Ownership of what? The means of production, which are business firms. When you own a business what exactly do you own? The capital (or equity) tied up in the business. For converience this equity is split into equal-sized portions (shares) which can be bought or sold in a market that deals in the buying an selling fo capital, which is the stock market.

...but socialism was never intended to alleviate alienation via transferring ownership of the means of production to private citizens..

Huh? Capitalism involves private ownership of the means of production by capitalists. A capitalist is someone who owns capital, issues new capital (invests) and exchanges capital with other capitalists. Their role is the allocation of capital (i.e. investments). Socialism puts ownerhsip in the hands of those doing the producing, the workers. Capital allocation is then performed by the workers (owners) or their elected representatives.

Originally Posted by JordanGoodspeed

That is to say, slavery was a capitalist, proto industrial institution dressed up in pretty feudal clothes for the benefit of a wealthy elite.

Precisely. Amercian slavery was primarly an economic relation between owner and possession. Slaves could be bought and sold. Wage laborers could be hired or fired. Neither could be done with serfs. Plantation onwers controlled the economic acitivties on their plantations. Feudal lords did not. A good example is the cotton gin versus the three-field system. Both boosted the productivity of the land.

The cotton gin was rapidly adopted; the three field system was not. It was not a matter of slow tranmisison of new technology, gunpowder took decades to spread thousands of miles compared to centuries to spread hundreds of miles for the three-field system. On the feudal manor, economic acitvity was governed by tradition, not by economics. The lord was entitled (by tradition) to recieve a share of output. He was entitled to obtain free labor at specific times for specific purposes. He was not entitled to tell the serfs how to farm. Going from the traditonal two-field to a three field system meant signficant changes to the serf's traditional way of life. There was no incentive for the serfs to change and even if the lord saw that he could benefit, he did not have the right to change the traditonal ways. It was only after serfs began to be converted into wage labor and nobles into landlords did the social relation of serf and lord change to an economic one of employee and employer. And when this happened, employers could start to manage their land as a business, like American planation owners did later on.

Originally Posted by JordanGoodspeed

It's also worth pointing out that slavery was on the way out until the invention of the cotton gin, which enabled the profitable production of a monocrop on a vast scale to feed the burgeoning cotton mills in Britain and later the NorthEast, that slaves were in fact a sizable portion of the 19th century US capital stock on whole value the planters borrowed lavishly, or that NYC threatened to secede because of its dependence on the capital flows from the cotton and slave trades, if not the slaves themselves. That is to say, slavery was a capitalist, proto industrial institution dressed up in pretty feudal clothes for the benefit of a wealthy elite.

True. Slavery was financialized in pre-Civil War America. Slaves fetched huge cash payments to sellers. Had slavery existed to the modern day there would be GPS units on slaves and computers monitoring the movements of slaves, and there would be elaborate accounting for slaves even down to formal depreciation of slaves as they aged and upward valuations of child slaves as they were fed and trained to become 'prime field hands' or industrial workers.

We need to remember that much of the 'value' of slaves was the denial of personal freedom of slaves. Much is said about planters losing huge value as slaves were emancipated -- but that ignores that slaves received the immeasurable value of freedom.

Originally Posted by pbrower2a

True. Slavery was financialized in pre-Civil War America. Slaves fetched huge cash payments to sellers. Had slavery existed to the modern day there would be GPS units on slaves and computers monitoring the movements of slaves, and there would be elaborate accounting for slaves even down to formal depreciation of slaves as they aged and upward valuations of child slaves as they were fed and trained to become 'prime field hands' or industrial workers.

We need to remember that much of the 'value' of slaves was the denial of personal freedom of slaves. Much is said about planters losing huge value as slaves were emancipated -- but that ignores that slaves received the immeasurable value of freedom.

Who are you talking to about slavery that is emphasizing the financial loss to the planters over the freedom of the slaves themselves?

Originally Posted by JordanGoodspeed

Who are you talking to about slavery that is emphasizing the financial loss to the planters over the freedom of the slaves themselves?

I assumed a Ba'athist Nazi from Lower Appalachia.

Originally Posted by Justin '77

I assumed a Ba'athist Nazi from Lower Appalachia.

You forgot Stalin and George Bush (Jr. of course).

Mikebert, what you're talking about is closer to anarchosyndicalism than socialism. The Marxist solution was state ownership of the means of production. Also, Marxism didn't limit his definition to stocks or majority control over a company, it would define it as any part or portion of the company therein. Any private, but not personal, property.

Simply putting ownership in the hands of the employees would not stave off alienation, because alienation was alienation from the product, the work, the worker's fellow man, and himself. Marx's solution was to eliminate profit, not just to pass it on to the worker, because profit caused alienation, not mere ownership, through commodity fetishism. Ownership is just the means, profit is the problem, according to Marxism.

As for your examples, Marxism would consider not parties, the millionaire and the contractor, to be capitalists. To bring it back to inflation, all a capitalist has to do is devalue labor, and like you've stated, low taxes and low interst rates serve the capitalist class. Meanwhile, Socialism in any format is not about devaluing wealth, or devaluing money because doing so makes it more difficult for newer, younger participants to accumulate over time.

Socialism is about sharing wealth, and sharing it without bias. One of the core principals of Socialism is "each according to his ability and each according to his needs." Up trending older workers merely because of their age does not meet that standard.

Neither continual inflation nor ownership of the means of production by the workers individually is socialism, as it will just create industry classism and decreases class mobility over time. In order to have a society which is truly considered socialist, profit must be eliminated.

Originally Posted by JordanGoodspeed

Who are you talking to about slavery that is emphasizing the financial loss to the planters over the freedom of the slaves themselves?

In essence the slaves' gain of freedom was the planters' loss upon escape or emancipation.

Originally Posted by pbrower2a

In essence the slaves' gain of freedom was the planters' loss upon escape or emancipation.

Yeah, I get it. You phrased it like you were bravely taking the minority position. I asked who it was you've been talking to who has been taking the opposite position. I was unaware that there are reputable groups taking the position that slavery was a net benefit, to the nation as a whole or the slaves themselves.

Originally Posted by JordanGoodspeed

Yeah, I get it. You phrased it like you were bravely taking the minority position. I asked who it was you've been talking to who has been taking the opposite position. I was unaware that there are reputable groups taking the position that slavery was a net benefit, to the nation as a whole or the slaves themselves.

It's hard to put a price tag on freedom. Once one loses it one effectively loses everything. If one gains freedom one still must usually struggle for survival.

Originally Posted by Eric the Green

No chance of that. My hope is for more coops and small business, and the worker-owned industry you spoke of. Failing that, I suspect we'll muddle along with our current corporatism for quite some time, maybe with some government reform. But it is not government management that corrupts socialism; that is necessary as long as free enterprise exists. What we have is a socialism that never occurred, except for that government management and regulation, and government safety nets. That's all the socialism that ever existed in the USA. The corruption is that capitalism has been allowed to pursue its course, mostly, with its wealth and power allowing it to extort favors from the government. So what we have is rampant corporate control, dominating the market and the economy, inadequately regulated and managed.

I thought that co-ops count as socialism.

Originally Posted by pbrower2a

It's hard to put a price tag on freedom. Once one loses it one effectively loses everything. If one gains freedom one still must usually struggle for survival.

WTF? Why do you do this?

Why can't you guys just play Settlers Of Catan?

Longest *sheep*.

Originally Posted by Bad Dog

Why can't you guys just play Settlers Of Catan?

Longest *sheep*.

God, I miss playing seafarers.

Originally Posted by TimWalker

I thought that co-ops count as socialism.

I should hope not! A free society has room for a lot of different micro-arrangements that, if done by a monolithic entity, would have different names and be an economic disaster.

One notorious example is the Company Town (which was not a good place to live, from all I hear, though) - which, writ large, becomes the Soviet Union. (Think about it.)

Originally Posted by Kepi

Mikebert, what you're talking about is closer to anarchosyndicalism than socialism.

There are a variety of kinds of socialism (and capitalism for that matter). To clarify matters I will give my working definitions of capitalism and socialism.

There are three factors of production: capital, labor, and resources.

In a capitalist economy, capital plays the leading role. Economic activity tends to be organized in such a way as the maximize the growth of capital (maximize return on capital). In a socialist economy, labor plays the leading role. Economic activity tends to be organized in such a way as to maximum the benefit to workers and their families. One can imagine economies in which resources oir none of the factors play the leading role. These are beyond the scope of this discussion.

The Marxist solution was state ownership of the means of production.

I don’t think so for three reasons. The first is my understanding was that the state was supposed to fade away in a Communist state The second is Marx wrote mostly about Capitalism and almost nothing about the Communism that would replace it. It’s like he pointed out the problems with capitalism and left it to future workers to figure what to do after its overthrow. The third is that state ownership means a single owner, who likely would capitalist for the reasons outlined in the next section. A state that controlled the economic fortunes of the populace as well as the military and national security apparatus would put immense power in the hands of the ruler.

Ownership is just the means, profit is the problem, according to Marxism.

This may be true about Marx—I don’t know enough to have an opinion. No profit means no investment. No investment means no replacement of outmoded technology with new technology, no economic development, and no improvement in living standards.

Any society that did this would soon be overtaken by other societies that did not eschew profit and eventually be conquered by them. (For this reason alone, a state owner would necessarily practice capitalism in order to prevent its being overtaken by a capitalist rival state) Also the lack of improvement in living standards (which does not benefit workers) would mean Marxism does not fall into the socialist category as I defined it above, but rather in the fourth category, similar in some ways to the Inca economy, which featured no market exchange and government control of the economy with the purpose of supporting in lavish style the Inca emperors and their households, most of whom (the emperors) were mummies. A strange system to be sure.

To bring it back to inflation, all a capitalist has to do is devalue labor,

Monetary policy does not devalue labor. Labor, like a commodity, is a real thing and has a real value. Inflation reduces the exchange rate of the dollar relative to real things. It does not change the real values of things.

Capitalists do try to devalue labor. Crushing unions is one way. Monetary policy is another of the tools they use, but the mechanism is opposite of what you claim. It is disinflationary or deflationary monetary policy that can devalue labor. High real interest rates is the principal tool by which monetary authority retard inflation. High interest rates makes financial investment more attractive and debt-financed investments in the real economy less attractive. That is, it promotes the simultaneous financialization and deindustrialization of the economy. Deindustrialization is one of several factors believed to be responsible for the lack of wage/salary growth for working people and growing inequality over the last 40 years. On the other hand, the inflationary policy of 1933-1979 in which real interest rates were held at less that half the level they would be in the 1980's and 1990's had a much better track record with respect to wage growth and income equality. Did you look at my 2008 article I referenced? I go into detail there.

"each according to his ability and each according to his needs." Up trending older workers merely because of their age does not meet that standard.

It seems that older workers, who are more likley to be sick and less physically able to continue working have more needs that younger workers that do not have these issues. You might counter that such a society would have generous public pensions and universal health insurance. But isn’t that pretty much the same as uptrending older people because of their age?