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Capitalism and Innovation

 
weird buffalo
 
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weird buffalo
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10 September 2021 11:21
 

Not trying to spam the forums with threads, but felt this deserved a separate space for a discussion.

Here’s a key problem with associating capitalism and innovation: there’s no profit in solving the needs of the poor.

Capitalism only encourages the profitization of innovation.  If the core problem is efficiency or marketability, then capitalism does indeed encourage innovation, but at the roots of capitalism there is no incentive to inherently solve problems. Capitalism wants to solve the problem of disposable income that could be spent differently, and trying to find a way to encourage it’s expenditure in your favor.

As noted by Jefe in another thread, large corporations will buy up smaller firms, or purchase patents, in order to stifle competition.  The new innovation, the patent, is not offered to the consumer or client.  The corporation already has a system of providing products and services, and unless the new patent will save the money it takes to modify that system, it will not be implemented.

Some of the “creativity” is in name only.  For example, insulin drugs have been around for decades.  They’re so old, that there should be generic versions available.  The original drug was developed at a public university as well.  The corporations bought the patent in order to facilitate and profit from the drug’s manufacture.  Since then, they’ve made modifications to the drug that have no impact on it’s efficacy, side-effects, or any other benefit to the patient who takes insulin, but these changes reset the clock on the patent.  In addition, insulin prices have skyrocketed in the past 20 years, even though the drug was invented in the 1920’s.

Capitalism incentivizes people to own things, and to leverage their ownership into additional profit.  This is the underlying source of income/wealth inequality in capitalism, and will always result in income/wealth inequality.

 
nonverbal
 
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nonverbal
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10 September 2021 16:54
 

Capitalism rejects wusses and cripples yet when well governed, it can fund social services that outperform anything else on the planet.

 
 
EN
 
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EN
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11 September 2021 14:27
 

The most creative and innovative societies are driven by free-market capitalism. It rewards hard work, as it allows individuals to own the fruits of their labors and gives then freedom to realize the things they dream of.  Oppression and unjust income inequality can be minimized by a fair tax structure and regulation.  All income inequality is not bad.

 
weird buffalo
 
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weird buffalo
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11 September 2021 23:44
 

But you don’t own the fruits of your labor most of the time.  A scientist who invents a new drug working for a company doesn’t own the patent… the company does.

Companies have no interest in funding research that won’t pay off for another 20 years, they have to get quarterly profits now.

Everything about the iPhone was a product of government funded research over a period of several decades.  All Apple did was market it better.

 
EN
 
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12 September 2021 13:48
 

The most innovative companies in the world:  https://www.forbes.com/innovative-companies/list/#tab:rank

Notice that most come from the USA, and other capitalistic countries. And private ownership is a great motivator - I am much more motivated by things that will affect my personal life than I am by amorphous concepts such as “the public good”.  Furthermore, we are not living in the capitalism of the 1800’s. If a person today, working for a giant corporation, has an idea, he/she can start up his/her own company, and prosper greatly with that idea. Yes, there are anti-competitive pressures, but those can be moderated by regulation and antitrust laws, preventing monopolies. Would Apple, Google, Amazon, Microsoft, etc., have existed in a non-capitalistic environment?  I doubt it. The excesses of capitalism can be corrected by taxation and regulation. But capitalism is the engine that drives progress.

I’m pretty sure you disagree, but you would have to really show me something I haven’t seen to convince me that capitalism, per se, is bad.  As long as it is properly regulated, it is the way to go.

 
weird buffalo
 
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weird buffalo
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12 September 2021 15:17
 

Except the technologies that allowed Apple, Google, Amazon, and Microsoft to be successful were all the product of government funded research.

The core problem with your argument is you aren’t demonstrating a causal relationship.  Lets take your list from the link.  Do you honestly think that Monster Beverage company is funding research that is improving our understanding of the human condition?  Or are they just innovative for their marketing strategies?

Facebook doesn’t innovate any more.  They just buy companies that compete with them.  Is that actually innovative?

 
LadyJane
 
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LadyJane
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12 September 2021 15:57
 

The problem is that the anonymous dark money of crooked tycoons coordinated an elaborate scheme that effectively made them the regulators.  The Federalist Society.  Citizens United.  And several sets of organizations masquerading through fictitious names.  With very sinister intentions like Mandatory Arbitration and Voter Suppression.  That surely tarnishes the silver lining of capitalism.  I think if it were as simple as taxing the rich they’d have resolved things by now.  Exposing where the funding is flowing and dismantling the apparatus that ushers it in is the only way to establish a regulatory system that doesn’t cater to this sort of corruption.  A lofty aspiration.  Til then it’s just a pipe dream.

 
 
weird buffalo
 
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weird buffalo
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13 September 2021 08:11
 

A free market system does NOT have to be capitalist.

If you’re going to argue FOR capitalism. you must argue FOR CAPITALISM.  You cannot rely solely on the idea of a free market, because other free market systems exist.  If you want to tell us why CAPITALISM improves innovation, then you have to demonstrate that CAPITALISM improves innovation.

A definition of capitalism from the IMF.

The essential feature of capitalism is the motive to make a profit. As Adam Smith, the 18th century philosopher and father of modern economics, said: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Both parties to a voluntary exchange transaction have their own interest in the outcome, but neither can obtain what he or she wants without addressing what the other wants. It is this rational self-interest that can lead to economic prosperity.

Capitalism is the idea that we should organize our economy around ownership and profit.  That’s it.  That is what capitalism is.  Ownership and profit are the most important principles to organize an economy.

American Indians had a free market society too.  One in which mutual benefit and communal sharing were prioritized.  Still a free market.  People were free to choose to engage in transactions or not.  The goal of the system was different from capitalism though.  Still free, but it was not organized around ownership and profit.

 
nonverbal
 
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nonverbal
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13 September 2021 09:01
 
weird buffalo - 13 September 2021 08:11 AM

A free market system does NOT have to be capitalist.

If you’re going to argue FOR capitalism. you must argue FOR CAPITALISM.  You cannot rely solely on the idea of a free market, because other free market systems exist.  If you want to tell us why CAPITALISM improves innovation, then you have to demonstrate that CAPITALISM improves innovation.

A definition of capitalism from the IMF.

The essential feature of capitalism is the motive to make a profit. As Adam Smith, the 18th century philosopher and father of modern economics, said: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Both parties to a voluntary exchange transaction have their own interest in the outcome, but neither can obtain what he or she wants without addressing what the other wants. It is this rational self-interest that can lead to economic prosperity.

Capitalism is the idea that we should organize our economy around ownership and profit.  That’s it.  That is what capitalism is.  Ownership and profit are the most important principles to organize an economy.

American Indians had a free market society too.  One in which mutual benefit and communal sharing were prioritized.  Still a free market.  People were free to choose to engage in transactions or not.  The goal of the system was different from capitalism though.  Still free, but it was not organized around ownership and profit.

Can you refer to a current or past nation or county or city that exemplifies a free-market economic approach which excludes capitalism? Just curious.

 
 
weird buffalo
 
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weird buffalo
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13 September 2021 09:55
 
nonverbal - 13 September 2021 09:01 AM
weird buffalo - 13 September 2021 08:11 AM

A free market system does NOT have to be capitalist.

If you’re going to argue FOR capitalism. you must argue FOR CAPITALISM.  You cannot rely solely on the idea of a free market, because other free market systems exist.  If you want to tell us why CAPITALISM improves innovation, then you have to demonstrate that CAPITALISM improves innovation.

A definition of capitalism from the IMF.

The essential feature of capitalism is the motive to make a profit. As Adam Smith, the 18th century philosopher and father of modern economics, said: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Both parties to a voluntary exchange transaction have their own interest in the outcome, but neither can obtain what he or she wants without addressing what the other wants. It is this rational self-interest that can lead to economic prosperity.

Capitalism is the idea that we should organize our economy around ownership and profit.  That’s it.  That is what capitalism is.  Ownership and profit are the most important principles to organize an economy.

American Indians had a free market society too.  One in which mutual benefit and communal sharing were prioritized.  Still a free market.  People were free to choose to engage in transactions or not.  The goal of the system was different from capitalism though.  Still free, but it was not organized around ownership and profit.

Can you refer to a current or past nation or county or city that exemplifies a free-market economic approach which excludes capitalism? Just curious.

Perhaps read the full post?

Historically, capitalism was invented in the 16th century.  Just prior to that, mercantilism shared a lot of similar qualities, but it prioritized the national system over private ownership, and the two were somewhat mixed for a time.

So, any economic system in which people engaged in trade with each other, without a government force requiring them to engage in that force, is a free market system.  In effect, the entire of all economic activity in North America pre-contact with Europe was a free market system that was not capitalism.  Most of Africa, India, and Asia would fall under this definition as well for long periods of history. (Not always, since sometimes powerful people took over and mandated certain behaviors)

The European serf system would not, since serfs were under obligation to work, even if paid.  After certain rights and freedoms are enshrined/recognized though, even just after the first couple waves of the black death, the overall system hadn’t changed, but people had more rights to conduct their labor as they saw fit.

I think it’s interesting to note, that the English Commons (the communal land used to graze sheep and cattle) existed and worked for hundreds of years.  It wasn’t until capitalism was introduced that the Tragedy of the Commons became a thing.

 
nonverbal
 
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nonverbal
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13 September 2021 10:07
 
weird buffalo - 13 September 2021 09:55 AM
nonverbal - 13 September 2021 09:01 AM
weird buffalo - 13 September 2021 08:11 AM

A free market system does NOT have to be capitalist.

If you’re going to argue FOR capitalism. you must argue FOR CAPITALISM.  You cannot rely solely on the idea of a free market, because other free market systems exist.  If you want to tell us why CAPITALISM improves innovation, then you have to demonstrate that CAPITALISM improves innovation.

A definition of capitalism from the IMF.

The essential feature of capitalism is the motive to make a profit. As Adam Smith, the 18th century philosopher and father of modern economics, said: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Both parties to a voluntary exchange transaction have their own interest in the outcome, but neither can obtain what he or she wants without addressing what the other wants. It is this rational self-interest that can lead to economic prosperity.

Capitalism is the idea that we should organize our economy around ownership and profit.  That’s it.  That is what capitalism is.  Ownership and profit are the most important principles to organize an economy.

American Indians had a free market society too.  One in which mutual benefit and communal sharing were prioritized.  Still a free market.  People were free to choose to engage in transactions or not.  The goal of the system was different from capitalism though.  Still free, but it was not organized around ownership and profit.

Can you refer to a current or past nation or county or city that exemplifies a free-market economic approach which excludes capitalism? Just curious.

Perhaps read the full post?

Historically, capitalism was invented in the 16th century.  Just prior to that, mercantilism shared a lot of similar qualities, but it prioritized the national system over private ownership, and the two were somewhat mixed for a time.

So, any economic system in which people engaged in trade with each other, without a government force requiring them to engage in that force, is a free market system.  In effect, the entire of all economic activity in North America pre-contact with Europe was a free market system that was not capitalism.  Most of Africa, India, and Asia would fall under this definition as well for long periods of history. (Not always, since sometimes powerful people took over and mandated certain behaviors)

The European serf system would not, since serfs were under obligation to work, even if paid.  After certain rights and freedoms are enshrined/recognized though, even just after the first couple waves of the black death, the overall system hadn’t changed, but people had more rights to conduct their labor as they saw fit.

I think it’s interesting to note, that the English Commons (the communal land used to graze sheep and cattle) existed and worked for hundreds of years.  It wasn’t until capitalism was introduced that the Tragedy of the Commons became a thing.

Please let me know whenever at some point you’ll post fully. Also, wasn’t an implied capitalism in play prior to the 16th century? Never? Or does it require the coining of a term to actuate something so basic?

 

 
 
Jefe
 
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Jefe
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13 September 2021 10:09
 

There’s even an excerpt on wikipedia about free-market socialism - espoused by some nineteenth century economists.  Easily found.

https://en.wikipedia.org/wiki/Free_market#Socialism

I consider wikipedia a decent starting place to get some concepts and start to learn about some more esoteric ideas, but not a complete source of information. Learning, and understanding, are effortful endeavors.

Social Democracies, which frequently measure in the top 20 countries for quality of life and personal autonomy and satisfaction measures, seem, to me, to be a blending of free markets, capitalist practices and solid social support systems. 

But there could be better systems out there.  I don’t think venerating capitalism, or forms of free-marketism without acknowledging the benefits of social supports is the healthiest way of looking at macro-economics. 

And…I think that middle-out and demand-side economics are often overlooked in these discussions - or at least take second or third fiddle to the big concepts.

I think personal liberty plays a big part in innovation, but I also think societal economic stability and support also helps - allowing people to create and innovate without having to worry about that second or third job to make ends meet.

 
 
nonverbal
 
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nonverbal
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13 September 2021 10:33
 
Jefe - 13 September 2021 10:09 AM

There’s even an excerpt on wikipedia about free-market socialism - espoused by some nineteenth century economists.  Easily found.

https://en.wikipedia.org/wiki/Free_market#Socialism

I consider wikipedia a decent starting place to get some concepts and start to learn about some more esoteric ideas, but not a complete source of information. Learning, and understanding, are effortful endeavors.

Social Democracies, which frequently measure in the top 20 countries for quality of life and personal autonomy and satisfaction measures, seem, to me, to be a blending of free markets, capitalist practices and solid social support systems. 

But there could be better systems out there.  I don’t think venerating capitalism, or forms of free-marketism without acknowledging the benefits of social supports is the healthiest way of looking at macro-economics. 

And…I think that middle-out and demand-side economics are often overlooked in these discussions - or at least take second or third fiddle to the big concepts.

I think personal liberty plays a big part in innovation, but I also think societal economic stability and support also helps - allowing people to create and innovate without having to worry about that second or third job to make ends meet.

Yes. I was able to find that prior to having posted.

 
 
EN
 
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EN
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13 September 2021 11:48
 

The profit motive is just that: it is what motivates innovation through rewarding hard and/or intelligent work. It’s the reason people treat their own vehicles better than a rental car - it is theirs. It is in our nature that what affects us is more important to us - your family is more important to you than a family in China, etc. Sure, it is selfish, but that is why we need regulation, to keep that selfishness between the guardrails.

I continue to hold that the USA is the most innovative economy in the world, and it is driven by capitalism. Venture capitalists and banks have funded many a start-up or other enterprise.  It is not always just the government. It is private ownership and profit that drives the whole machine. And the government benefits from capitalism by having a base for taxation. It’s as easy as understanding that the reason most of us get up and go to work each day is because we are going to be rewarded for it. Altruistic and socialistic goals may be the motivation for some, certainly, but greed is the fuel for the masses. Then, you use government, through taxation and regulation, to correct the abuses and target socially laudable ends.

Anyway, the USA is my argument that a capitalistic system leads to the best economic outcome. We just need to reform our tax system.

 
LadyJane
 
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LadyJane
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13 September 2021 12:03
 

The argument you keep making repeats that it would work “if” they had proper taxation and regulation.  But they don’t.  So it doesn’t.

 
 
weird buffalo
 
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weird buffalo
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13 September 2021 12:27
 
nonverbal - 13 September 2021 10:07 AM
weird buffalo - 13 September 2021 09:55 AM
nonverbal - 13 September 2021 09:01 AM
weird buffalo - 13 September 2021 08:11 AM

A free market system does NOT have to be capitalist.

If you’re going to argue FOR capitalism. you must argue FOR CAPITALISM.  You cannot rely solely on the idea of a free market, because other free market systems exist.  If you want to tell us why CAPITALISM improves innovation, then you have to demonstrate that CAPITALISM improves innovation.

A definition of capitalism from the IMF.

The essential feature of capitalism is the motive to make a profit. As Adam Smith, the 18th century philosopher and father of modern economics, said: “It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” Both parties to a voluntary exchange transaction have their own interest in the outcome, but neither can obtain what he or she wants without addressing what the other wants. It is this rational self-interest that can lead to economic prosperity.

Capitalism is the idea that we should organize our economy around ownership and profit.  That’s it.  That is what capitalism is.  Ownership and profit are the most important principles to organize an economy.

American Indians had a free market society too.  One in which mutual benefit and communal sharing were prioritized.  Still a free market.  People were free to choose to engage in transactions or not.  The goal of the system was different from capitalism though.  Still free, but it was not organized around ownership and profit.

Can you refer to a current or past nation or county or city that exemplifies a free-market economic approach which excludes capitalism? Just curious.

Perhaps read the full post?

Historically, capitalism was invented in the 16th century.  Just prior to that, mercantilism shared a lot of similar qualities, but it prioritized the national system over private ownership, and the two were somewhat mixed for a time.

So, any economic system in which people engaged in trade with each other, without a government force requiring them to engage in that force, is a free market system.  In effect, the entire of all economic activity in North America pre-contact with Europe was a free market system that was not capitalism.  Most of Africa, India, and Asia would fall under this definition as well for long periods of history. (Not always, since sometimes powerful people took over and mandated certain behaviors)

The European serf system would not, since serfs were under obligation to work, even if paid.  After certain rights and freedoms are enshrined/recognized though, even just after the first couple waves of the black death, the overall system hadn’t changed, but people had more rights to conduct their labor as they saw fit.

I think it’s interesting to note, that the English Commons (the communal land used to graze sheep and cattle) existed and worked for hundreds of years.  It wasn’t until capitalism was introduced that the Tragedy of the Commons became a thing.

Please let me know whenever at some point you’ll post fully. Also, wasn’t an implied capitalism in play prior to the 16th century? Never? Or does it require the coining of a term to actuate something so basic?

I’ve explained the differences.  Please highlight some statements and tell me what isn’t making sense to you.  I’ve already explained it… so, just asking me to do that again isn’t helpful.  What parts of my explanations so far doesn’t make sense to you?

 
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