I think this article misses the point of Georgism: that the land tax replaces all other taxes.
In other words, while land belongs to the government (people), individuals are entitled to the entire product of their labor (as well as returns on capital). Georgism is simultaneously extremely Communistic and Capitalistic.
Monopoly is set up as a zero-sum game, hence it is not representative of capitalism at all. Free markets are not zero sum.
That's easily shown. Give me $20 of art materials, and I will turn out something I have to pay someone to haul away. Give it to Picasso, and he'll turn it into a million dollar creation.
In fact, the entire software industry is based on creating value out of nothing.
Which is why all these Enterprise software companies are sharing code to build more robust systems right? Systems that never see public licensing are still written under NDAs.
If value isn't created out of "thin air", so to speak, their is no intellectual property for people to want, and nothing for the government to bother enforcing.
You are trying to argue that people don't create value with software because you dislike what they do with value once they've created it.
Much of that "value" is built on the fact that previous code, or dependencies, aren't available to the commons, either for reuse or for inspection (security experts "create value" from fixing flaws caused by proprietary hardware or software, software consultants "create value" when they fix the same types of issues across frameworks or systems): artificial scarcity and broken Windows (pun intended) fallacies abound.
So Linux has no value? GCC has no value? You seem to be arguing software only creates value because there are patents artificially protecting it, when in fact, many proponents of patent reform argue that by eliminating software patents even more value could be created "out of thin air".
Also, software patents do not prevent you from releasing open source software; you can have a patent and release the source of your implementation. They are not related at all.
Linux's value stems from the fact that it works on a lot of (proprietary) hardware and from the scarcity of robust open source OS's among mostly proprietary ones preferred and taught to students or employees through education suppliers and government contracts, it is hardly the magical gift of a free market (one sans IP law and subsidies).
Linux is not the gift of any system. Linux is an example of “value added out of nothing”. It is also an example of “value added out of nothing” that is both patent free and open source. Whatever the system is, value can be added out of nothing by for example creating art, writing a book, and even writing software.
Your problems with patents or the free market make no difference to that.
Products and their consumers don't climb out of empty voids, and a system with government enforced patents, NDAs, or any other IP law is, by definition, not a Free Market.
you are twisting his words. there are sound arguments against capitalism and wealth creation but "resources are spent when you do things with them" isn't on the list.
> The world is finite. Resources are finite, and infinite expansion is impossible.
If you were right, the $10 trillion China added to its economy annually (you know, just ~$64 trillion of new GDP that didn't exist before, over the next five years) - in just the span of ~16 years, would have had to come out of someone else's pocket, which would have caused extreme collapse in numerous other major economies to make room for it. That of course didn't happen at all, the rest of the globe's GDP expanded along with China in real terms.
For all realistic practical purposes - since we're nowhere near maximum resource utilization - that has yet to be an actual problem and we're up to 7.x billion people now. Every serious problem to that expansion, we've managed to solve, enabling continued expansion (see: we were all supposed to starve to death decades ago).
Back in reality - and out of the realm of theory that only exists in a strict vacuum - Capitalism is the exact opposite of a zero sum game. That has been proven by the radical improvement in living standards at the median for all the developed nations, all of which heavily utilize the free market economic system (including all of the Scandinavian nations, none of which are actually Socialist at all).
If Capitalism were a zero sum game, China would not have just enjoyed the greatest, fastest mass standard of living improvement in world history thanks to its modest adoption of the free market, and its blatant shift away from Statism.
The free market largely won globally, and thanks to that, the world has less poverty, war, violence and starvation than at any other time in history.
You sound just like a preacher. That's right because what you're preaching is a religion, not an economic system. All economic systems have matured and were finally replaced by something better. Given the level of crisis we see nowadays, the time for capitalism's replacement doesn't seem to be very far away.
> the world has less poverty, war, violence and starvation than at any other time in history.
Is this true, though? Certainly as a percentage of global population things like poverty and hunger are in decline but some of this can be attributed to population increases. There were 795 million hungry people in 2015 [1], but this is more people than were alive in 1750. It stands to reason that 300 years ago there were considerably fewer individuals living on the brink of starvation.
If 5 billion people are on the planet and 10% are in poverty, its probably better to be that 10% (trending downward) than it would be if you had 1 billion people at 40% poverty (trending flat).
Statistics can be used in many ways. You could also say that the "system" was able to feed and care for almost 6 billion people in 2015, almost the number of people estimated to have been alive since 10.000 BC until 1950.
Energy might be conserved, but wealth is not. Life is not a zero sum game.
Society is vastly more wealthy than we've ever been before. Access to education, medicine, information, transportation, entertainment are at all time highs. Life expectancies continue to rise and gdp adjusted by purchasing power on a per capita basis is up over 40% in the last 3 decades.
Not exactly true. Life expectancy hasn't slipped, although admittedly it hasn't been increasing very fast in the last couple of years (up only 1 year over the last decade). http://hdr.undp.org/en/indicators/69206
Either way, you shouldn't look too much at short term trends when trying to measure long term development. If you start from 1990, life expectancy has actually risen by 4 years.
Software is a fine counterexample. It's made of bits, which cost nothing to create, and the value is in the order of the bits, not the bits themselves.
Your point is totally correct, but just to be pedantic, it's fixed-sum not zero-sum, since the monopoly economy get injected N*$200 for passing Go every few turns.
What if only outliers or lucky ones are creative enough to generate value and the vast majority is obliged -because of internals or externals reasons- to play the zero sum game part ?
Capitalism is complex, that's one side of it - that value can be created. Another side is that those with capital (whether inherited or earned) have a significant leverage over those who don't. This is what monopoly was designed to illustrate.
This tends to lead to concentration of capital over time, and greater and greater inequality. In the end, it leads to impregnable monopolies if unchecked. Picasso was an interesting example to choose - he's a rare example of an artist who did well from their work, most die poor and their work is then sold for millions after their death, precisely because being able to create value does not mean you will necessarily be rewarded for that value, often the inverse - often others with capital are the ones who benefit from creation, not those who create. You can see this in art, games, engineering and in startups, almost any domain you care to think of - those who do the work are not necessarily or even usually those who benefit, those who control capital are the ones who benefit most, because it is not very hard to grow capital once you have it. So the trick is to have capital and control others who labour, not to work hard.
Regulated capitalism is an answer to this fundamental imbalance. Progressive taxes, bans on monopolies, inheritance tax are all there to even the playing field a little, but it is still vastly skewed to those with capital rather than those who live off labour.
Capitalism is indeed complex, and something I think gets missed in the popular perception is that capitalism depends completely on things like property rights and contract law. Basically, regulation and government is strictly required and the details of that regulation are always up for debate.
That said, people who talk about 'evening the playing field' scare me. For starters, armchair analysts underestimate the amount of good done by greedy people in a well created market economy. For seconds, fairness is very expensive. And for thirds, people don't understand what the regulation of the current systems does. There is no need to pronounce capitalism doomed when it has such a track record of success.
capitalism depends completely on things like property rights and contract law
Completely agree. Capitalism could not function without enforced property rights of all kinds. In addition regulation often hands out monopolies(e.g. Patents), sometimes usefully, sometimes distorting the market horribly, but regulation is also used to prevent monopolies and other forms of market abuse.
a well created market economy
Do you mean well regulated? Economies are not created. I agree enlightened self interest is useful and regulation is hard.
fairness is very expensive
Civilisation is expensive.
Nobody is saying capitalism is doomed, but the heavily regulated version we have now is superior to unregulated capitalism, which leads to monopolies, cartels and other brutal forms of oppression.
>> Regulated capitalism is an answer to this fundamental imbalance.
This assumes that governments are incorruptible. Monopolies don't exist without government collusion. In the game of Monopoly, that part is played by the roll of the dice - which favors certain players.
So ironically, more regulation would potentially lead to creation of bigger monopolies as it gives the capitalist's more incentive to influence the regulations and create monopolies for themselves. That is what we see happening in the real world.
> In the end, it leads to impregnable monopolies if unchecked.
That's the conventional wisdom, but there are no examples of it happening, and examples of the reverse. Rockefeller's market share diminished throughout the years of SO's anti-trust trial.
This is not the greatest example. Picasso just made $999k, but it came from somebody else. There was no value creation there as a whole. In Monopoly I can sell a thing for more than I bought it too!
Perhaps a better example is that a farm increases in value as the techniques and technology for growing increases. Ultimately the extra value comes from somewhere, everything else is just redistribution.
It is a good example. The creation of value, such as a painting, increases the total value of goods and services in the economy. It most certainly is creation.
Of course a painting can be value creation. Aesthetic value is as real as food value or any other desirable in the eyes of ourselves or others. Ultimately, value comes from our local star which blasts us with a massive amount of energy every day. The rest is redistribution if you like. In other words it provides the conditions whereby we get up in the morning and expend energy doing something someone finds of value. Along the chain, someone worked harder and innovatively such that someone else could satisfy the desire to own that painting whether for the value they themselves could see in it or for the value others will see in it in the future (investment).
If I paint a painting, I do not have more stuff. Someone else might be more willing to trade my paint for more of their stuff.
But in an econonmy where there are only $20 for the paint, Picasso won't be getting a million no matter how hard he paints. The money simply isn't there!
Reality is complicated, but if you're looking for a simple example of creating value in a "closed economy", art is not intuitively right
There is no such thing as a free market. The markets have all been setup by laws and regulations. In the lack of such regulations there would be no Wall Street and not even mom-and-pop businesses would be able to survive. The tech industry exists only because governments used public money to research and develop the technologies that nowadays we call Internet. It doesn't seem to me that Google or Facebook did any of this from nothing.
Free markets rely on a system of laws and regulation that prevent the use of force or fraud, and provide enforcement of contracts. That function is provided by government.
The notion that the internet required government technologies and so otherwise there would be no internet is not correct. Google FidoNet, for just one example (there are others).
Whatever the alleged reason, Monopoly looks to me like it was invented as a fun game rather than a allegory for anything at all. It does seem to be trying to resemble actual economic activity at all.
For example the Banker is not only a kind of public service, but is performing a service only vaguely related to what banks do. And in what world do you need to own a whole neighbourhood before you can put a hotel anywhere?
Was Microsoft a monopoly? Or did they create a new paradigm and when their services were deemed so valuable and important to society that regulators started viewing their platform as a public utility, they decided to call it a monopoly?
The government never gave them a chance to lose market share, unfortunately. Microsoft created a ton of value for people, but they were worsening their product by preventing competition on their "platform" (Windows). If it wasn't for the government preventing consumers from starting to choose their competitors, we might have more Linux-based / Apple market share right now.
In any case, no one was harmed except for the competitors who wanted to compete with Microsoft on its own platform.
Rockefeller's Standard Oil is an example of a natural monopoly that brought down the price of kerosene by over 50% over the course of his reign. There is a such thing as a natural monopoly, but not a natural, malevolent monopoly (except governments, of course, but even they can be overthrown).
>no one was harmed except for the competitors who wanted to compete with Microsoft on its own platform.
That's not the point. The point is that "services rendered by MSFT" was _not_ a free market. Going against the initial thesis (that monopolies only exist due to gov't).
Is it Microsoft's job to provide a "free market" in a new market that they create? Of course not. Agents in a free market can certainly create sub-markets with their own rules, so long as they don't violate the rights of anyone in the broader market.
And to my initial point, government helped Microsoft. Their dominance might have been shorter lived otherwise.
Not really. Monopolies are spawned by runaway fluctuations on the market (one player getting successful enough to start protecting their business faster than the competition can work around it). Monopolies are natural outcomes of the market unless special care (e.g. state regulations) is taken to prevent it.
DeBeers until recently? Monsanto? I think neither relied on direct state intervention.
As for whether or not state enables monopolies, it's important to notice that market and governance are not, and can never be, disconnected. If you're big enough, you write your own rules.
Patents? Maybe I'd understand if you were talking about IP law (in which case we're too far apart) but to my knowledge patent threats were not really the tool of MSFT in the 90s.
Instead they would opt for more classic techniques like threatening resellers by withholding access to their products.
The MSFT in the 90s didn't have a monopoly that had lasted for a decade.
My point is not that companies can't achieve market dominance, but that it's almost always short-lived - unless they have the power of the State propping them up. Like the multiple patents that MS got during the 90s, and which have extended until this day.
The best place to observe this is in local property markets. Many central business districts and other urban areas are dominated by a cartel of property companies. Some of these little monopolies are very localized but drive the values of heir neighbors and inhibit growth.
Documentation of this stuff is fuzzy for various reasons, many properties are difficult to trace ownership of due to tax and liability concerns. One well known example would be Columbia University in New York City. They own like 25% of Morningside Heights and at least 200 properties in total.
According to various news articles, Morningside Heights prices have risen less than other Manhattan boroughs, and there's plenty of new construction happening, which residents are trying to use State powers to prevent[1].
I can see why finding who owns stuff might be difficult, but the effects should be easier to detect; do you have any examples of districts and urban areas with rising prices and very little or no growth, despite a lack of ordinances and other regulations preventing it?
Free market requires constant, explicit effort to keep it free. Otherwise all of the things you mention will be replicated in similar way by market actors themselves.
Pretty funny that this is getting downvoted even though it's nothing more but the truth which is clear to anyone who has learned the basics of economy.
Tells something about the lack of education among the US leftwingers.
History shows that even big states crumble sooner or later. So this is not an argument for anything but lack of long-term stability of human organizations.
And I agree that subverting the market already happens. But it's not (just) the state, but (also) every big company out there.
Has anyone here actually played Monopoly as an adult?
My memories from childhood are of it being quite fun, and slow.
While managing a hostel a few years ago I played hundreds of games with hundreds of adults - with adults it's extremely cut-throat and downright nasty. I estimate 75% of games ended with people yelling and screaming, after less than 4 times around the board.
It's amazing to watch how nasty it gets, and how everyone takes it so personally.
My memories of playing it as a child is kids crying and whining. I think this game is designed so nobody really wins, they just slowly bleed the losers until they have a breakdown and quit.
Playing it as an adult, it was mostly an excuse to drink, and people had the sense to quit before the breakdown part.
If she wanted to demonstrate "the evils of capitalism" it's pretty ironic that she decided to name the game with problem that can only exist in non-capitalist systems and is the flagship product of communism/socialism.
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[ 3.1 ms ] story [ 168 ms ] threadIn other words, while land belongs to the government (people), individuals are entitled to the entire product of their labor (as well as returns on capital). Georgism is simultaneously extremely Communistic and Capitalistic.
That's easily shown. Give me $20 of art materials, and I will turn out something I have to pay someone to haul away. Give it to Picasso, and he'll turn it into a million dollar creation.
In fact, the entire software industry is based on creating value out of nothing.
You are trying to argue that people don't create value with software because you dislike what they do with value once they've created it.
Also, software patents do not prevent you from releasing open source software; you can have a patent and release the source of your implementation. They are not related at all.
Your problems with patents or the free market make no difference to that.
If we give you $20 if art materials, we can't give Picasso those materials because you already have them.
The world is finite. Resources are finite, and infinite expansion is impossible.
If you were right, the $10 trillion China added to its economy annually (you know, just ~$64 trillion of new GDP that didn't exist before, over the next five years) - in just the span of ~16 years, would have had to come out of someone else's pocket, which would have caused extreme collapse in numerous other major economies to make room for it. That of course didn't happen at all, the rest of the globe's GDP expanded along with China in real terms.
For all realistic practical purposes - since we're nowhere near maximum resource utilization - that has yet to be an actual problem and we're up to 7.x billion people now. Every serious problem to that expansion, we've managed to solve, enabling continued expansion (see: we were all supposed to starve to death decades ago).
Back in reality - and out of the realm of theory that only exists in a strict vacuum - Capitalism is the exact opposite of a zero sum game. That has been proven by the radical improvement in living standards at the median for all the developed nations, all of which heavily utilize the free market economic system (including all of the Scandinavian nations, none of which are actually Socialist at all).
If Capitalism were a zero sum game, China would not have just enjoyed the greatest, fastest mass standard of living improvement in world history thanks to its modest adoption of the free market, and its blatant shift away from Statism.
The free market largely won globally, and thanks to that, the world has less poverty, war, violence and starvation than at any other time in history.
Is this true, though? Certainly as a percentage of global population things like poverty and hunger are in decline but some of this can be attributed to population increases. There were 795 million hungry people in 2015 [1], but this is more people than were alive in 1750. It stands to reason that 300 years ago there were considerably fewer individuals living on the brink of starvation.
[1] http://www.npr.org/sections/goatsandsoda/2015/06/01/41126502...
Society is vastly more wealthy than we've ever been before. Access to education, medicine, information, transportation, entertainment are at all time highs. Life expectancies continue to rise and gdp adjusted by purchasing power on a per capita basis is up over 40% in the last 3 decades.
https://www.cnbc.com/amp/2017/02/22/us-life-expectancy-is-lo...
Either way, you shouldn't look too much at short term trends when trying to measure long term development. If you start from 1990, life expectancy has actually risen by 4 years.
Software is a fine counterexample. It's made of bits, which cost nothing to create, and the value is in the order of the bits, not the bits themselves.
This tends to lead to concentration of capital over time, and greater and greater inequality. In the end, it leads to impregnable monopolies if unchecked. Picasso was an interesting example to choose - he's a rare example of an artist who did well from their work, most die poor and their work is then sold for millions after their death, precisely because being able to create value does not mean you will necessarily be rewarded for that value, often the inverse - often others with capital are the ones who benefit from creation, not those who create. You can see this in art, games, engineering and in startups, almost any domain you care to think of - those who do the work are not necessarily or even usually those who benefit, those who control capital are the ones who benefit most, because it is not very hard to grow capital once you have it. So the trick is to have capital and control others who labour, not to work hard.
Regulated capitalism is an answer to this fundamental imbalance. Progressive taxes, bans on monopolies, inheritance tax are all there to even the playing field a little, but it is still vastly skewed to those with capital rather than those who live off labour.
That said, people who talk about 'evening the playing field' scare me. For starters, armchair analysts underestimate the amount of good done by greedy people in a well created market economy. For seconds, fairness is very expensive. And for thirds, people don't understand what the regulation of the current systems does. There is no need to pronounce capitalism doomed when it has such a track record of success.
Completely agree. Capitalism could not function without enforced property rights of all kinds. In addition regulation often hands out monopolies(e.g. Patents), sometimes usefully, sometimes distorting the market horribly, but regulation is also used to prevent monopolies and other forms of market abuse.
a well created market economy
Do you mean well regulated? Economies are not created. I agree enlightened self interest is useful and regulation is hard.
fairness is very expensive
Civilisation is expensive.
Nobody is saying capitalism is doomed, but the heavily regulated version we have now is superior to unregulated capitalism, which leads to monopolies, cartels and other brutal forms of oppression.
This assumes that governments are incorruptible. Monopolies don't exist without government collusion. In the game of Monopoly, that part is played by the roll of the dice - which favors certain players.
So ironically, more regulation would potentially lead to creation of bigger monopolies as it gives the capitalist's more incentive to influence the regulations and create monopolies for themselves. That is what we see happening in the real world.
That's the conventional wisdom, but there are no examples of it happening, and examples of the reverse. Rockefeller's market share diminished throughout the years of SO's anti-trust trial.
See "Titan" by Chernow.
Perhaps a better example is that a farm increases in value as the techniques and technology for growing increases. Ultimately the extra value comes from somewhere, everything else is just redistribution.
If I paint a painting, I do not have more stuff. Someone else might be more willing to trade my paint for more of their stuff.
But in an econonmy where there are only $20 for the paint, Picasso won't be getting a million no matter how hard he paints. The money simply isn't there!
Reality is complicated, but if you're looking for a simple example of creating value in a "closed economy", art is not intuitively right
The notion that the internet required government technologies and so otherwise there would be no internet is not correct. Google FidoNet, for just one example (there are others).
For example the Banker is not only a kind of public service, but is performing a service only vaguely related to what banks do. And in what world do you need to own a whole neighbourhood before you can put a hotel anywhere?
Now Bohnanza (https://en.wikipedia.org/wiki/Bohnanza) has some resemblance to real capitalism, but is also too much fun to a lesson in anything.
Snakes and Ladders was made in India to teach people about determinism, for instance.
https://medium.com/re-form/the-timelessness-of-snakes-and-la...
Dr. Jordan Peterson does a good detailing of this phenomenon.
https://youtu.be/TcEWRykSgwE
The government never gave them a chance to lose market share, unfortunately. Microsoft created a ton of value for people, but they were worsening their product by preventing competition on their "platform" (Windows). If it wasn't for the government preventing consumers from starting to choose their competitors, we might have more Linux-based / Apple market share right now.
In any case, no one was harmed except for the competitors who wanted to compete with Microsoft on its own platform.
Rockefeller's Standard Oil is an example of a natural monopoly that brought down the price of kerosene by over 50% over the course of his reign. There is a such thing as a natural monopoly, but not a natural, malevolent monopoly (except governments, of course, but even they can be overthrown).
That's not the point. The point is that "services rendered by MSFT" was _not_ a free market. Going against the initial thesis (that monopolies only exist due to gov't).
And to my initial point, government helped Microsoft. Their dominance might have been shorter lived otherwise.
As for whether or not state enables monopolies, it's important to notice that market and governance are not, and can never be, disconnected. If you're big enough, you write your own rules.
Though these companies ended up getting split up.
We didn't make anti-trust laws out of the goodness of our hearts but because doing nothing created monopolies.
Instead they would opt for more classic techniques like threatening resellers by withholding access to their products.
My point is not that companies can't achieve market dominance, but that it's almost always short-lived - unless they have the power of the State propping them up. Like the multiple patents that MS got during the 90s, and which have extended until this day.
Documentation of this stuff is fuzzy for various reasons, many properties are difficult to trace ownership of due to tax and liability concerns. One well known example would be Columbia University in New York City. They own like 25% of Morningside Heights and at least 200 properties in total.
I can see why finding who owns stuff might be difficult, but the effects should be easier to detect; do you have any examples of districts and urban areas with rising prices and very little or no growth, despite a lack of ordinances and other regulations preventing it?
[1] https://www.dnainfo.com/new-york/20160411/morningside-height...
Inner city rents are similar to the suburban developments and until recently higher than mortgage payments.
The top 5 landlords control 30-50% of the market and own whole blocks at various times.
- IP rights
- Protectionism, tariffs, Quotas etc.
- Exclusive rights and laws generated by Lobbying
- Unnecessary Licenses and regulations (often with public health excuses)
- Uneven Taxation
- State ownership of production
Surely all capitalists desire to be a monopoly, but free markets is the only power to stop them.
On the actual subject, the game "Monopoly" implies Capitalism, but to me it is just a game.
Tells something about the lack of education among the US leftwingers.
And I agree that subverting the market already happens. But it's not (just) the state, but (also) every big company out there.
My memories from childhood are of it being quite fun, and slow.
While managing a hostel a few years ago I played hundreds of games with hundreds of adults - with adults it's extremely cut-throat and downright nasty. I estimate 75% of games ended with people yelling and screaming, after less than 4 times around the board.
It's amazing to watch how nasty it gets, and how everyone takes it so personally.
There's definitely a set of the population that has no chill.
Playing it as an adult, it was mostly an excuse to drink, and people had the sense to quit before the breakdown part.