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For the sake of argument, let's assume that human beings are like programmable Lemmings that don't really know anything. They've recently climbed down from the trees and are faced with resource scarcity for the first time ever. Thus, Capitalism does not already exist, it needs to be somehow created... If people want it to exist, that is.

I guess "resource scarcity" might be one prerequisite. If everything is abundant and easily available, there's no real need for trade, is there?

And I guess the idea of Capitalism and wanting Capitalism to exist might be other requirements. The humans might proclaim in Modern English: "hey, let's trade stuff!"


What other requirements are there, if any? And why might they be needed? :)

Capitalism is possible with one single human beeing - the only thing that is needed is the willingness to save by using scarce time to create tools or intermediate goods.

Property Rights
Rule of Law (it is hard to trade when it is easier to just rob or murder you)
Common Language (atleast for the trades)
Weights and Measures (helps determine price)
Demand for Trade


These are a few big ones to get it going.

Hi! Thanks for your response! It's food for thought. How would you distinguish your description of Capitalism from a minimalistic description of Communism? Or from a lonely hermetic lifestyle? I guess I was implicitly including "trade" as part of the description, but maybe that's incorrect?


Perhaps plain scarcity is not enough? I can imagine that if something is uniformly scarce, e.g.: pink-and-blue single-seater flying saucers are all uniformly unavailable, obviously they can't be traded. Nor would that fact encourage the trade of any other items.

Maybe scarcity also has to be relative?
E.g.: everyone might stockpile food for the winter, but because winter occurs at different times of the year and with different types of food becoming scarce depending on where you live, this might make it easier and more convenient to trade instead of just stockpiling?

Scare Resources
Voluntary Human Interaction

That is it. Things like money and language are kind of a part of the human interaction part. It also needs to be voluntary as if I force you to give me something than it is no longer capitalism. Desire to trade is also not necessary. If I buy a cake, it is as important that I bought the cake as important that I didn't buy everything else possible. It could be said that for anything I didn't buy, I was unwilling to trade.

Scarce resources are also necessary, as when things are infinitely reproducible (like ideas) then trade for them doesn't exist as anyone can easily acquire those resources themselves.

Strong property rights, and scarce resources. That's all that's really needed for capitalism to be possible. Pure capitalism also requires a rejection of force, threat of force, or fraud as legitimate means of acquiring property. "Programmable Lemmings" not required.

You are right Myrkul, Actually property rights og scarecity is enough, Force follows as a result of disputes.

Capitalism was invented by farmers, before money. Hunter gatherers care less about their property.

Keeping something as unstable as Capitalism afloat requires a hidden scaffolding of authoritrianism/feudalism.

Some of the mechanisms required to prop-up the fascade of a free market:

1) Buckets of intricate anti-monopoly leglisaltion and hidden agreement.
2) Control of the press while presenting the illusion of press freedom
3) I could go on... basically Capitalisim is a sham

State capitalism, a.k.a. corpratism, a.k.a. fascism, is, yes.

None of what you said actually applies to capitalism.

1vol·un·tary
adjective \ˈvä-lən-ˌter-ē\
Definition of VOLUNTARY
1
: proceeding from the will or from one's own choice or consent
2
: unconstrained by interference : self-determining
3
: done by design or intention : intentional <voluntary manslaughter>
4
: of, relating to, subject to, or regulated by the will <voluntary behavior>
5
: having power of free choice
6
: provided or supported by voluntary action <a voluntary organization>
7
: acting or done of one's own free will without valuable consideration or legal obligation

And it is voluntary for all parties. Not one, this violates the voluntary nature.

in·ter·ac·tion 
/ˌintərˈakSHən/
Noun
Reciprocal action or influence: "interaction between the two countries".

Can be talking, pointing, body language, trade, etc., etc., etc.

I have no problem with voluntary sparring or sporting in order to determine who wins something- like a wager. This would be considered voluntary interaction if both parties voluntarily consent to it- not that one beats on another and then takes "winnings".

+1

Saying that our current state is capitalism shows ignorance of economic and political theory. I'm pretty sure Noam Chomsky (who is insanely critical of "capitalism" aka fascism/ cropy capitalism) has stated that he would probably like and be ok with the "capitalism of Adam Smith" where there isn't all the corporate bullshit in our current economy.

Just one thing: Pain.

Pain from a lack of something we need (food, water, shelter, hard labor that would be made easier with some tool) keeps us wanting to get those things.
Pain from being slapped around by some other monkey when we try to take their stuff keeps us from taking their stuff, and forces us to look for some other means of trying to acquire it.
Pain or risk of pain from trying to take their stuff by force makes us look for more painless methods of acquiring that stuff, and trading things both of us want is so far the most pain-free method we have found.


The bolded part is the part you are missing. Where did you get the idea that "we" disapprove of violence?

If you think about it, all rights are property rights. You own yourself, so someone trying to take your life is attempting to steal your property - your life. And honestly, it doesn't matter whether rights are inherent, or ascribed by society, or derived from mutual agreement, for capitalism to work. As long as they are respected.

As I said, all rights are property rights. So I suppose you could say they're all necessary for capitalism. As to finding out what they are, it's very simple, if you're logical about it. Start with the right to life. Anything that supports that right, without requiring a positive obligation on another, is a valid right.

Then you're not using logic. Scarcity is not a requirement for desire. I desire knowledge, yet knowledge is not scarce.

Re-read my post. Person A takes Person B's stuff, Person B will smack Person A, and that will teach Person A not to do it again. If Person A notices that there is something Person B wants from Person A as well, then they can both decide to trade for the things they want. It does take some brains to figure out, but ours have the capacity for it.

A expresses preference for the apple from B and suggests a form of consideration (money, other product, sexual favors, getting rid of debt, altruistic feeling, friendship, etc.)

B accepts or denies

Accept and trade occurs.

Deny and suggest alternative or trade doesn't go through and A and B separate having not traded.

A accepts or denies alternative

so on..

They know they should negotiate because of voluntary interaction from others. If A beats up B, then C, D, and E will want nothing to do with A. Thus A can't get all the products and services he may want and lives a less fulfilling life that requires him to provide for himself more as the others do not want to interact with him.

People learn from personal experience and the collective wisdom of all who came before. It is the idea of spontaneous order. At the college I went to, paths had been made in the snow from many feet walking between paths. No one planned the paths. People can walk through the snow if they think it will be a better path from them, or they can take the one that everyone else took where the snow is packed down. The result is 99% of people take the same paths and they are the most efficient paths for the most people.

Those who go their own way have a harder path to travel, but may need to move really quick to get to class on time or something.

Those who build their own path, charge a toll for use and beat up anyone who takes another path gets no friends, realizes his costs exceed his profit, and quickly finds another way to get things done.

Sure, but it doesn't really have to be "human's" even. Other species can learn and adapt from pain too. They just may not realize other members' wants and desires, and thus not understand that someone else might want something of theirs in exchange for something else. So, I guess pain, ability to learn, and means of communicating wants.

Question to the OP: How do you get by day-to-day without engaging in capitalism? Do you have everything given to you by the government, or have the government dictate to you what you must obtain, where, and what you must pay for it?

Thank you for a thoughtful reply.

But doesn't Capitalism always decay into monopoly?

No. Why, and more importantly, how, would it?

I think you need to be at least two in the world for communism - one to abuse the other...

Anyway - capitalism can start with only one, voluntary trade with two or more.

Scarcity is always present.

So freedom from violence - private property - voluntary exhange. Some or all will save, which then will be capital. The capital is the basis for increasing productivity.

 

Why would the world require anti-monopoly legisaltion if monopolies weren't a problem?

It's a reasonable path for any business sector leader to simply buy up smaller competition
 whenever it arises. It could then make deals with other sector leaders to maintain a status-quo.

At present ,any monopoly is broken up by legislation and activity external to the Capitalist system.

 

I engage in lots of Capitalist activity -- I buy food and stuff. I earn money by providing a service to my employer... General things like that. I never said Capitalism was all bad.


Snipes777: I guess we covered most of that with Rassah, re: pain + learning + adapting.
However, now that you mention it, I guess there needs to be a trigger. Something has to actually do pain because the theory is not enough, it has to actually happen. People interact, they make mistakes, pain happens, and society evolves.

There seems to be a sort-of collision between the need for pain and the need for things to be voluntary. What's your view on that?

Without capitalism there would be no capital, just hand - to -mouth living, like am ant or a goat.

No problem. Voluntary pain in working out, sport, sex, and sparring are all legitimate. Pain is often a good thing. It tells your body valuable information. Without pain, people would do dangerous things or be bleeding and not even notice until they end up dying. Taking responsibility for your actions, even when they cause pain or shame can be valuable information and drive you to not go do it again and to fight for something better.

It is involuntary when I beat you and you didn't agree to that. It is voluntary when we agree to spar, or you like getting beat while if have sex and it is agreed. There is an obvious difference between involuntary and voluntary pain.

Quick note: in voluntary pain you can ask for it to stop at any time. Involuntary you ask to stop and it continues.

Having read "On the Origin of Species by Means of Natural Selection, or the Preservation of Favoured Races in the Struggle for Life" lately, and newer works on the evolution therory, it seems to me that freedom from violence it not something natural. At least genes seem to be rather indifferent to other genes' welfare! Consequently capitalism can not be totally natural, as we would like it to be. I have a vague idea of a resulotion to this. Is there a standard answer?

Why is "natural" the goal? Can we not evolve past a state of nature?

Plus many of the evolutionary texts talk a lot more about co-operation between species in order for both to survive. You have about a 7:1 ratio of bacteria to human cells in your body. The bacteria need you to survive, and you need the bacteria to survive (at least long and healthy).

Monopolies are usually (always?) a byproduct of favorable legislation in one way or another (ie a side effect of having a state to begin with). Here is a Murray Rothbard quote:


https://mises.org/rothbard/mes/chap10b.asp#_ftnref9

By addressing him, you are saying he "owns" his argument. You are also "owning" your fingers and mind to formulate the argument. Arguing against self-ownership always self detonate in this way.

There are no requirements.  The common understanding of what capitalism actually is, is false.  Capitalism is both a political ideology and a description of a set of natural laws, that together, give rise to an economic order that is emergent among any human population.  The ideological version of Capitalism is more of a religion than an economic system, and I won't address that here beyond saying that it's not really capitalism at all.
Capitalism doesn't require that the laws of a given society honor the natural laws that produced capitalism, and this really has never fully happened at any point, nor in any nation, since at least the Age of Judges in old testament Israel.  That is not required.  If the natural order is supressed, by law or otherwise, capitalism will still express itself in onther ways; usually in black markets & contraband trade.  There were capitalists in the former USSR and communist China the entire time.

There's no need for pain. Pain only enters the equation when someone tries to make something not voluntary.

You assume that because it exists, it is necessary. Standard Oil, long held up as the poster child of why such legislation is required, had, at it's peak, only 88% of the market. By the time the legislation was introduced, it had dropped to 64%. And in the meantime, heating oil prices dropped drastically. I don't see how that's a problem.

But it's not necessarily a reasonable path to accept a buy-out from a larger company. Actually, the most reasonable path is to accept the buy-out, and then start another competing company. And as for cabals, why would you expect greedy businessmen not to screw over their cabal mates in an attempt to get more money?

No, not any. There exists a monopoly on the industries of defense and justice which is not broken up.

Natural because we want no or minimal rules (that are not built into humans) and no or minimal police. We want it naturally peaceful. We want laissez-faire.

Modern evolution theory is not consistent with your comment on the bacteria in the body. Altruism is only possible between relatives, except that the fact that brains exist could blur the picture. Ref mr Dawkins.

Not to mention the money. That is until Bitcoin  :) ;D :D

I realize that this is not particularly critical to your point, but I'm calling bullshit on this claim.  Perhaps you wrote the ratio backwards?  References please.

+1

Very well, I withdraw my objections.

http://en.wikipedia.org/wiki/Symbiosis (http://en.wikipedia.org/wiki/Symbiosis)

I am not making the claim that all natural creatures are in a symbiotic relationship of one of the various types, but even predatory relationships can be beneficial for both "species" as without the predator, the prey may overpopulate and run out of food in an environment. Many species generally live in some sort of equilibrium with their environment in the long run, or they just screw themselves. Regardless, this is digressing from the original topic.

Well, in that case, you can answer your own question, simply by recalling how you yourself learned it.

Who broke up Microsoft and Internet Explorer? Government, or Chrome/Apple/switch to tablets and phones?
Who broke up Apple's near monopoly on smartphones? Government, or Google Android?
Who broke the monopoly of Kodak? Government, or digital cameras that Kodak didn't think were worth investing in?
Who broke the monopoly of IBM? Government? Or new "Personal Computers" hitting homes at a time when IBM thought only businesses had use for computers?
Even better, the government imposed monopoly of the postal service - if governments broke up monopolies, and the government is actually maintaining the USPS monopoly, you'd think it was invincible, yet...email.

In short, monopolies just don't last. Big reason for that is because they get settled in with what they know how to do best, and get killed by newer more efficient technologies they aren't able to adapt to.

I remember Microsoft being subjected to huge anti-trust action. It was smart enough to maintain a monopoly and, as such, was forced to let competition in.

Unfortunately, monopolies are a natural equilibrium state of capitalism. To function effectively, capitalism must be supported by a hidden system of authoritarian control..

This is what exists today.

You're welcome to believe that lie, if you like, but I'm not going to pretend it's truth to make you happy. For instance, you still haven't explained how that happens.

Well maybe it's not really Capitalism? I could analyse my own experiences without any discussion, make some conclusions and stick to them, but then there's no feedback, no quality control, no fresh ideas...



If you could slow down for a second... I'm trying to get to the bottom of this 'Capitalism' thing from first principles. The Lemming humans (from the OP) are being bombarded with new ideas:
Ownership? What's that?
Property? What's that?

Did the concepts exist before anyone "put pen to paper" or made sounds to describe them for the first time? Can a 'concept' be a law of nature? Or were the concepts created by people? They couldn't create themselves -- that would be paradoxical.

That's rather dramatic language. I'm not happy or sad about the nature of reality, I just try and see it clearly. Your attitude, by contrast, is of someone in denial
 when an attempt is made to rouse them from a comforting dream. Unfortunately, you are actually living in a dream world.

I restate: the real-world existence of anti-trust action and global monopoly legislation indicate that monopoly is a natural end state of capitalism.

To simplify, it "happens" though a process of concentration of power.    

That's not at all what happened.  Microsoft effectively won that fight, and the anti-trust portion of the case was completely dropped.

And then GNU/Linux and MacOSX proceeded to eat their lunch.

And by any objective definition of the term, MS was never a real monopoly, only a temporary market dominator.

Oh, the irony!  The cognative dissonance must be bewildering.

Remember my post the other day, in another thread, wherein I laid bare the reality that most people who argue on obscure Internet forums are actually not capable of changing their minds, regardless of what evidence is presented?

Based on both your most recent conversations here, and your experience in general, would you say my assessment is generally correct or generally incorrect?

On the contrary, it is that of someone living in the real world, confronted with someone espousing evil. If you truly try to see reality clearly, then understand this: capitalism is nothing more than the private ownership of goods and the voluntary trade of same.

I restate: the existence of a law does not prove it's necessity.

Don't simplify. I'm a big boy. I can handle it. Tell me in detail how voluntary trade and private ownership always results in monopoly.

All you have to do is provide a coherent and succinct counter arguement. That's all. No need for dramatics.

Well, save for the fact that I myself was convinced by argumentation of at least some of the finer points, I'd say, sadly, that you're right. Ah well. My fight is not for them, anyway. It is for, as you said, the unbiased.

It wouldn't matter.  We aren't even speaking the same language.  To prove that point, just try and define capitalism in one sentence. 

I already have. Your assertion has already been proven false in at least one case. Given that it's an absolute, ("always") that's enough to disprove it completely. I'll give you a chance, but the burden of proof lies with you.

I aslo qualified that by limiting that effect to those over 35.  Are you over 35?  If so, I may have to push up my model.

At least you can come up with a decent reply, thanks for that. The drama-queens and tantrum-monkeys on here are quite a drain.

What you say is true, the existence of a law does not prove it's necessity. But, considering economics as a rational science, it is evidence that monopoly is a danger.

My statement was that monopoly was an equilibrium state of capitalism. I'm not entirely sure what you expect when you want a detailed discussion of this. This a forum, not a journal.

Considering that there are a number of competing economic theories even today, and in many ways they contradict each other, I don't consider the above statement to be a given.  If you wish to keep it, you're going to have to make that case based upon whatever version of Economics you speak of.


And what is this premise based upon?  There is no evidence to suggest this is true, even temporarily.

Well, I am now, but I wasn't when that happened. Your model is safe.


If monopoly is the equilibrium state of capitalism, then you can describe how it gets there from a different state. Let us posit 1000 people, each granted equal land (which we will, for the sake of this discussion, assume is uniform in arability and resources). They are given nothing else, just the land, and themselves. Describe, if you can, how a monopoly forms from this, in as much detail as possible. If you find yourself unfit for the task, feel free to refer me to some other source, which has made the argument better than you can, or to quote it.

I would contend that formalized property rights are a result of capitalism at work, not a pre-requisite.  It's provablely true that capitalism exists even in places for which it is, directly or indirectly, forbidden.  If the society at large does not recognize the property rights of a capitalist, then he will find a workaround to that limitation.  Thus, strong property rights could not be a requirement.

Well, shit. That's a good point.

This is a wonderful resource for anyone trying to improve themselves in this topic.  As a sidenote, she takes donations for support via bitcoin.

http://praxgirl.com/2011/06/10/episode-1-the-introduction/

Be warned though, she and her crew have been doing this for a couple of years now, and have quite a few episodes in the can.  Not only can catching up take some serious time, she doesn't wait for the slow kids if they fall off the back of the bus.

And this one is useful as well, as the main characters are engaging in capitalism at the smallest scale.

http://www.desertislandgame.com/

Property rights are encourged by capitalism because efficiencies in markets favor strong property rights within those markets.  It's no secret that governments across human history are practially influenced by the wealthiest among them, and whenever capitalism has been allowed to dominate, the wealthy include those who became wealthy using capitalist principles, whether they understood them as such or not.  While the individial capitalist might favor a monopoly power, his peers resist that for their own ends.  This balance of forces favors the legal establishment and enforcement of property rights.


Scarcity is not a result of property rights.  Scarcity is a result of reality.  I really don't have a method of getting you there from where you are here.  Again, it's provablely true that capitalism exists even in societies that forbid it, and actively work to suppress it.  Thus property rights cannot be a pre-requisite.


Well, I can't prove a negative; but since there is no such thing as a natural and stable monopoly across the recorded history of mankind, I'd wager it's safe to say that she is incorrect on this point. 


Not without a government granted advantage.  Copyright is, by definition, a tempoary monopoly on the reproduction of artworks enforced by government statutes.  Absent the use, or threat of use, of government force; no artist could command a monopoly on similar works, nor on modern machine copies.

http://www.youtube.com/watch?v=IeTybKL1pM4

Or subversion thereof?! You seem to have stumbled upon a point where Capitalism might create a pressure for governments to come into existence and enact various laws. I suspect this might be anathema to some...

Indeed, just as any prosperous trade route becomes a magnet for thieves. The question is, who do you trust to guard your caravan? A hired guard, or one of the thieves?

To be fair, bonker is correct that monopoly is the natural tendency of a capitalist business; especially corporations. Since the point of business and capitalism is to acquire wealth, that often also means taking over an ever increasing share of the market. What bonker is missing is the fact that it's impossible to take over 100% of the market in anything for any extended period of time, due to competition and substitution (Coke tries to get a monopoly > Pepsi provides competition AND Tropicana Orange Juice provides substitution > Coke is forced to lower prices)

Certainly, but nor is a government a pre-requisite.  It's not inevitable either.  I think that we need to stop and agree on a definition for what capitalism is, for the purposes of this discussion.  As far as I can tell, I am the only person in this tread to point out that more than one popular definition exists.  Also, almost everyone's own understanding of the term varies, even if it generally agrees with one or the other common definition.  Are we talking about the ideological or economic definition of capitalism?

Thus, the equilibrium point of capitalism is not a single monopoly, but two or 3 big players, keeping each other honest through market competition, with a pack of smaller guys nipping at their heels, ready to tear to shreds anyone who falters, and claim their market share.

Of course, this only applies for industries where the economies of scale tend toward big companies. Many industries favor smaller companies. You might get a local monopoly in those, but you can't stretch that very far, because if your prices get high enough that it's cheaper to go to the next town over, you lose your business.

While true, taken alone, that statement does not prove his premise; that monopolies are an equilibrium state of capitalism.  While you provide one reason why, another is the issue of corporations themselves.  Corporations, as they currently exist, are not natural organizations within the context of capitalism ( economic definition) while they probably are within the context of Capitalism (political ideology).  Corporations are, by their very definitions, legal fictions of a nation-state; and thus cannot begin to exist in the absence of a government.  Although the disappearance of the national government may not be fatal to a corporation, due to the probability that any large and well funded corporation could reasonablely function in the place of government within it's own sphere of influence.  Corporations are, in effect, the children of the state that begot them, and may not require the care of the state after a certain maturity and development.

Yet, corporations that operate within the same industry cannot peacefully coexist in the absence of the parental state, so in the case of the fall of that parental state, corporations can be expected to behave badly towards each other and their peers' resources.  Much like the brothers of a recently departed king.  Companies that are wholly owned, however, function as an extention of that owner's own will; representing him both in business and reputation.  While a CEO can shrug off accusations of criminal activity under his charge, because of the distribution of responsibility that the corporate structure cultivates; the whole owner is truly responsible for the wrongdoing of his employees while operating in his employ.  This is not a small difference.

You are misinformed about what capitalism is.

Pure capitalism is absolute freedom coupled with respect for rational property ownership. Consequently those are also the only two prerequisites you need for capitalism.

(definition of rational property ownership: ownership based in first principles supported with reason and not some illusion supported with violence)

That doesn't make sense. If the concept of property ownership is rational, presumably there's some rational cause for it? I'm prepared to accept that property ownership might be irrational, e.g.: it's axiomatic and it "just is" or "it got made up because it's inherently true", but that's like saying that god "just is". No-one (in this thread or any of the other discussions I've seen) has ever presented a rationale for where the concept logically comes from.

Would your confusion be lifted if I substituted rational with logical? English is not my native language and I perhaps mistakenly treat those two as synonyms.

Capitalism -> Lending, and other options for using more capital than one could generate themselves and a market to sell the result to -> Wealth Generation and Better Products and Services -> More Leisure Time (you don't need to work 24/7 your whole life to work, you only need to work 8/5 for 40 years) -> Better Ideas -> More Ideas, Freedom, Agorism, Capitalism -> Lending for those ideas...etc.

This is how I imagine the cycle. So I guess in order for people to trade, they need more resources than they need to survive on average for a community. Thus, some elemental form of technology to allow people to produce more than with their own hands. However, even then people have, and would again, figure out tools and technology to make things better, even if it requires starving for a few days or waiting until there happens to be a large amount of food one season to eat.

Interesting reading, but one question:

Some of you believe that the natural occurrence of a state to enforce rules regarding property rigts, trade practices, etc is a necessity.

But how is a state administration different from any big player? Do you define state as a monopoly with alturic motives or is it in reality just the largest dog in the yard who has a monopoly on Force, punishment or rewards to it's employees?

Every company has top down organisation, It's laws, punishment (monetary or exclusion), secrets based on your level in the organisation. They wage wars on the competition.

The argument that a state has monopoly to print money or collect taxes is in the end also about it's capacity to excert force on those who disagree.

So isn't government just the largest gang in town? or the single most suscessful corporate monopoly within it's country?

The only reason I brought up corporations is because their purpose is specifically to increase profits, and thus market share. If I had simply said "the tendency of a capitalist business is to increase profits" I would have been wrong, since not all private business strives to increase profits or increase market share. Some are happy just where they are, since increasing profits or market share would result is more work than owners are willing to take on.
Carry on.

Bingo. At the core of it, Government is just a protection racket that is able, by virtue of it's willingness to commit violence, and it's successful propagandizing of it's "customers," to keep other rackets from muscling in.

Does anyone have issues with this definition of Capitalism?
http://en.wikipedia.org/wiki/Capitalism (http://en.wikipedia.org/wiki/Capitalism)
Capitalism is an economic system that is based on the private ownership of capital goods, or the means of production, and the creation of goods and services for profit. Elements central to Capitalism include capital accumulation, competitive markets, and a price system.

Yes, it's too broad.  You need to read a bit further in to see the problem...
And then things get more detailed here...

http://en.wikipedia.org/wiki/Capitalism#Types_of_capitalism

While I do agree that capitalism describes an "economic system" the very use of that term implies a structured plan, presumedly by human planners, as opposed to a natural & emergent order that develops on it's own if not interfered with by governments or other third parties.

"What are the minimum prerequisites for Capitalism to be possible?"

Not interfering with voluntary exchange.

Still on page 1 but I didn't see it there...

Capitalism needs a store of value. It doesn't work exchanging  chickens for corn if  the chicken spoils and the corn rots. Sure, you'll eat well but it's only when you get to chicken jerky, feathers for decoration and dry storage for the corn that capitalism kicks in

You remember the huge action. What you don't remember is that George Bush got in and it ended up with a slap on the wrist (and that's stretching it) for Microsoft.

And, by the time the wrist slapping happened, Microsoft had already lost its monopoly status in whatever it was being sued for

Pre-money capitalism typically traded the chickens alive and kicking.

I guess live chickens are a valid form of stored value :)

Other livestock, as well. "Look how rich he is! He's got five goats."

But money is important. It's easier to carry around than livestock, and with accepted ratios, easier to make change. Also, you don't need to feed it. Added bonus: you can bury it in the back yard, and dig it up a year later, still worth as much as the day you buried it. Try doing that with a chicken.

I guess the point I'm not really getting at very well is that it's not enough to have stuff, it's not even enough to have enough stuff to trade, capitalism requires that it be possible to keep the excess of value that is created in that trade.

Yes, but that store need not be long-term. Did you play that island game MoonShadow linked to? You get to "keep" the excess value in the form of a better meal.

I would say it has to be at least medium term for capitalism. You gots to have the capital itself.

At the most basic level, there are three types of capital: Time, Space, and Matter (Energy). Physics tells us that Matter and Energy are interchangeable, so I'll just treat them as the same thing: Matter. Physics also tells us that space and time are fundamentally interlinked, but practically we treat them very differently, so I'll keep them separate, but it may help to remember that Time is essentially just a 4th dimension of Space, albeit one we are extremely limited in our ability to traverse.

When we are born, we are granted some of this capital: an amount of Matter that comprises our bodies, and an unknown amount of Time. In order to gain anything else in the world, we must trade some of this capital, hopefully to our benefit. The first 18 years of our life are traded for the skills we will need to extend the rest of our time as much as possible. Perhaps your parents have granted you some Space, but more likely, you'll have to trade some of your precious Time for it, and for the Matter you will need to keep your own Matter chugging along.

Money makes this process easier, and more efficient, because instead of working directly for your landlord, or grocer and trading groceries for your rent, you can do something else, and use money to buy your groceries and to pay your rent. Money is an abstraction, and a convenient store of value. You could simply buy a lot of Space or Matter with your Time, and sell it off as needed, but it's much more efficient if you have an abstraction of value.

All you really need for capitalism is your body, and a willingness to trade some of your time for something of value.

Because I like to live in the world described by physics, not in faerieland.


I have never seen such naked mysticism attempting to masquerade as science.

You can't really give someone your spirit or qualia. You can't even measure them. And if you can't measure them, there's no way to assign a value to them.

Capitalism already exists in biology. Cells trade resources with eachother. Look inside yourself :)

You can measure things like time that takes to do something and amount of labor or effort needed for it, which is required for single person capitalism. You can't really measure your spirit or mood.

After reading through this thread I still have absolutely zero clue what "capitalism" means.

The only clear thing about it is that nobody is using the same definition.

+1

80% of debate between intellectually honest people can be solved by defining the terms.

Even what Russia had wasn't actually communism...  :P

I'm thinking, the minimum prerequisites are:
1) No central bank.
2) Only tax is a sales tax that is the same percent of all purchases.
3) Taxes are only used to fund defense and justice system.

Perhaps some kind of safety net could be devised that also would allow capitalism as well, I'm not sure on that one.

Edit: 4) No entities that get special justice systems (i.e corporations)

I think you've clearly defined the maximum level of government that will not interfere with capitalism (at least not much), but you've not really touched the definition of capitalism, nor the minimum requirements for capitalism.

Well, lets add to the list then. I think a concise definition may be difficult to pin down. Actually now I'm interested in the social net question. Can there be a government funded social safety net consistent with "capitalism"? I'll make a spin off thread.

Shortcut to the answer: Is theft consistent with capitalism. I guess it depends what your definition of consistent is. Remember, there was capitalism even in communism. In many ways, it's incorrect to call capitalism an ism.

The absence of any form of modern, operational government?

And that is exactly what I've been trying to say.  The very word "capitalism" did not exist before it's use by Karl Marx, and it entered common use only in contrast to the economic system he also defined as "communism".  Capitalism, even just as a contrast to communism, is simply the macro appearance of the many laws of economics when individuals are (generally) left to make their voluntary arrangements without third party (governments & other criminal organizations) interference.  The degree to which the people are left alone is also the degree to which a society is "capitalist".  And unlike just about every -ism that I'm aware of, capitalism doesn't require widespread agreement with and/or compliance with it's edicts.  In short, capitalism (from an economic perspective, not a political one) is the default condition of any society, while undisturbed by war or politics.  

The Hollandische Mercurius uses capitalists in 1633 and 1654 to refer to owners of capital

From wikipedia
http://en.wikipedia.org/wiki/Capitalism#Etymology_and_early_usage

The OP question was about minimum requisites. If you are interested in the definition of capitalism, one can be found in wikipedia also

http://en.wikipedia.org/wiki/Capitalism

Capitalism is an economic system that is based on the private ownership of capital goods, or the means of production, and the creation of goods and services for profit.

Obviously, this can be discussed ad infinitum.

In a modern society:

1. It must be allowed to own things. You own yourself, your things and your work capatity. This includes capital goods, also sometimes called the means of production.

Lots of common rules reduce this. Some things you can not own, and some things are taxed, some things can not be imported and so on. In my country, a land owner does not own metals over a certain specific weight. If you can not give your wealth to your children when you die, do you really own it?

2. There must be freedom. You are free to sell things, buy things, give away things by your own choice.

Lots of common rules reduce this, like income tax, sales tax, tarrifs. You are forced out of work beacuse of a union. You can not cut someones hair unless you have a special costly education. You can not trade your work because of minimum wages.

3. Everybody is allowed to make his/hers life better, as defined by oneself. Consequently, some must be allowed to be more wealthy than others.

The ultimate progressive income tax, would reduce effective wages to the same level.


In sum, capitalism is everywhere (may be not in North Korea, I don't know for sure), but is also repressed everywhere to some degree.

The effect of capitalism is that everybody can achieve his maximum living standard (as defined by himself). In addition, the saving and investment, and division of labour will increase the productivity of labour, for the benefit of everybody.

There will be difference of wealth, but it is not clear that the current system of reduced capitalism better spreads the wealth. Subsidies of certain industries including banks creates large differences, and morre importantly it reduces the ability of the market to maximize utility.

Therefore, maximum capitalism, which is minimum regulations, minimum taxes, minimum government spending will create maximum wealth.

Using sound money will support capitalism, since it will take the inflation tax away from governments, take away the governments ability to manipulate the interest, and will make it easier to calculate profit and loss in business.