Free Market Enthusiasts

[Pa3s]

...may I ask you a question?

To me, it seems obvious that the main problem of a free market is the general lack of work. People need money to survive, they only get money if someone pays them. They get only paid if they can do some kind of job which is useful enough for someone to pay for it. That system worked well when the production output and efficiency of the people was awfully low. Everything had to be created with manuel labor and the only reliable source of power was the human itself (except for wind and water maybe, but they couldn't be used on a large scale in former times). So every person's work was useful, even if it was boring, simple and dull. But what is the result if there are no useful jobs for the masses anymore?

Labor is a commodity which is sold on the market like everything else. If you're a car manufacturer and the people don't buy green cars anymore, you simply cease to paint your cars green. But what if the only service some people can provide is not "bought" anymore? In a truly free market system, these economically "redundant" people would have to die. Yes, there probably would be charity organized by some of the people who actually have money, but that wouldn't change much, anyway. It's a fact that our technological progress both destroys and creates jobs. But the jobs that are destroyed are mostly those which require no or just basic training, while more jobs for highly skilled technicians and scientists are created.

I'm not entirely sure, yet, but it appears to me that every social security system there is, like unemployment benefit or pension, only serves as a security system for the state and the market system (whether you call it "free" or not). They could not simply let the unemployed people die off, this would certainly lead more people to question the system. So they decide it's better to drag these along for the sake of less problems with the citizens. You can even see that states periodically try to roll social services back to see "how far they can go" before people start complaining.

But that whole situation might become even more problematic in the future. If we assume that our technological progress facilitates production even further (which is pretty realistic judging from our past) even less people are needed to produce the things necessary for survival. Sure, you might say that we will have many more things to produce and buy in the furtue, but these things won't be necessary to survive or let's say to have a decent standard of living.

If we simply assume that 500 people are needed to produce the demanded things and offer the demanded services for 1000 people, how could the remaining 500 survive? They couldn't, if we only take the effects of the market itself into account. But their death would again affect the system and destroy it's equilibrium, because now, they would only need 250 people to produce the demanded things for the remaining 500 and so on. In the end, it would boil down to a tiny society in which everyone is almost indispensable.


How does the free market deal with this problem?

[Absurd]

...may I ask you a question?

Nope.

To me, it seems obvious that the main problem of a free market is the general lack of work. People need money to survive, they only get money if someone pays them.

Nope.

But what is the result if there are no useful jobs for the masses anymore?

Don't let this free market create one, that is, don't let it dictate what is needed/useful and what is not. You can easily fall in the opposite spectrum of economies. Unless, you don't have a problem with it, it's fine.

In a truly free market system, these economically "redundant" people would have to die.

Nope but close. Everyone is going to die sooner or later irregardless of economy.

Sure, you might say that we will have many more things to produce and buy in the furtue, but these things won't be necessary to survive or let's say to have a decent standard of living.

That's debatable.

How does the free market deal with this problem?

The way it always did - it rigs the prices for things you could buy for less/obtain for free and reduces them seeing the gap in potential buyers. Although I'm not really sure where does this free market exist. Somalia is out of the picture already.

[Iris]

That was interesting to read ^. A few thoughts of mine on the subject:

I think individual creativity and flexibility need to be promoted in schools to a greater extent, because advancing technology will always do away with some jobs. But I do believe there will always be jobs in a free market for those who are willing to take them.

Obsolescence does away with highly technical jobs as well as less skilled ones. I know of an aerospace engineer who was laid off when the space shuttle program came to an end. He did not want to be on unemployment because he enjoys working. He took an entry level job at half his old salary in the petroleum industry, and is learning a new type of engineering at age 55.

[Pa3s]

But I do believe there will always be jobs in a free market for those who are willing to take them.

I think this is what a lot of people believe. But what kind of jobs might that be? Will there really be enough? And is such a situation even desirable? We're not born equal and some people don't have the cognitive or physical requirements for a good education/job training. So these people are damned to either starve to death or do the jobs nobody else wants to do? It sounds harsh, but that's what comes down to.

If the simplified scenario I described in the last paragraph is true, there will always be people struggling to find a place in the system, some way to sell their working power. This group among us (and their children) will most likely be poor, uneducated and disdained by society. And since they have nothing else to sell on the market, they also don't have any other choice. I don't think this is necessary.

[Red Villain]

The free-market is fucked. We must all prepare our anuses for the second coming of Communism.

(Will provide more serious answer later on today)

[InvisibleJim]

The market has created a situation where considerably more goods are generated than are consumed by those who are earning the wealth with less menial jobs being available. Historically, only the mega rich could afford such luxuries as plumbing. There is an inherent assumption in your argument that 'new avenues of work' have not opened up.

This can't be the case because in the West - and throughout the world, despite the wealth disparity, the poorest people today are considerably wealthier than the poorest people of yesteryear.

The answer is twofold, the service economy and elasticity. A significant volume of activity has been diverted into artistry and trading. Second to this, as supply has boomed purchases prices have plummeted.

I'm afraid when you look beyond the internal logic of marxist economics, the reality of the situation does not match the luddite forecasting. Modern socialist thinking has become perennially stuck in the greedy analogy of relative wealth to complain at the statistics which shows the free market is an engine for generating wealth for the poorest.

[Finale]

But what if the only service some people can provide is not "bought" anymore? In a truly free market system, these economically "redundant" people would have to die.

People/labor are not like a metal strut or gear on an assembly line, hence when that assembly line is obsolete, they do not go to the scrap yard.

People are adaptable, malleable and can change at will. In fact, a free market thrives best when it's populace uses it's 'greed' to push itself in order to achieve greater rewards. The desire for consumption ("OMG! iPhone5!!") is a powerful motivator, if not just survival. Problem we have now is that iPhone's and color TV's are currently subsidized or can be provided by welfare systems vs. merit/effort.

Also, the markets are a lot like nature in that jobs aren't truly lost, they are simply transformed. Also, consumer ethics play a big part in molding free markets as well.

Take as an example these new self-service checkout stations at stores. If you reduce your cashiers by 50% and start using these new self-serve checkout stations, you lose jobs? Well, not exactly since now you have created the jobs to design/maintain the software and firmware, manufacturing, service and maintenance of the equipment and even multiple brands to compete for this new marketplace. While blue collar work has been eroded, some new blue collar work has been created and a large amount of white collar work is also added.

As technology increases, the bottom end of the labor pool generally goes UP, so as manual labor jobs (that most people do not like anyways) have a tendency to shift upwards. It's funny because most socialism/communism ideologies also try to create the same scenario but without any clarification of HOW that evolves vs. free markets where it evolves naturally.... much like how you went on to say:

But the jobs that are destroyed are mostly those which require no or just basic training, while more jobs for highly skilled technicians and scientists are created.

Correct. Free markets do cause a general upward trend. I don't believe mankind should be scrubbing toilets for all eternity. People should desire/want better and thus challenge themselves to get out of ditch digging at some point.

If we simply assume that 500 people are needed to produce the demanded things and offer the demanded services for 1000 people, how could the remaining 500 survive?

The remaining 500 would need to find something of value/demand to the 500 producing the demanded items. Otherwise, you have simple slavery with 500 producing, and 1000 consuming. Why wouldn't the "consuming only" 500 find something else of demand for the full 1000 so both are producing AND consuming?

And your later reply:

We're not born equal and some people don't have the cognitive or physical requirements for a good education/job training. So these people are damned to either starve to death or do the jobs nobody else wants to do? It sounds harsh, but that's what comes down to.

No, people can find a place, demand and value. EVERYONE. This is a very pessimistic viewpoint of humanity. Everyone can provide some value to their community or peers, period. Unless you specifically mean severely handicapped, children or elderly, at which point any civilized society will always safeguard those collectively.

If the simplified scenario I described in the last paragraph is true, there will always be people struggling to find a place in the system, some way to sell their working power.

Yes, a free market keeps people "struggling" to better themselves versus jack off and consume. It's either that or you have a system where other people work harder so others can jack off and consume. This is a good model for the people jacking-off, not so good for the achievers/hard workers.

InvisibleJim also described the current situation elegantly. We're in a very bizarre state right now due to the huge wealth disparity. This happens when free markets are tainted with non-free, regulatory power that can be corrupted.

[Absurd]

Yes, a free market keeps people "struggling" to better themselves versus jack off and consume. It's either that or you have a system where other people work harder so others can jack off and consume. This is a good model for the people jacking-off, not so good for the achievers/hard workers.

It creates racism as well when people are competing for resources that shrink and shrink every time.

[Finale]

It creates racism as well when people are competing for resources that shrink and shrink every time.

I disagree on both counts.

Racism creates racism. If this weren't the case, then how come so much of the 1% that isn't struggling for these "shrinking resources" as you put it are just as likely to be racist as the lower 1%?

Also, I disagree there are shrinking & shrinking resources. It's a closed circle. Are we jettisoning things out into space or something?

[Absurd]

I disagree on both counts.

Racism creates racism. If this weren't the case, then how come so much of the 1% that isn't struggling for these "shrinking resources" as you put it are just as likely to be racist as the lower 1%?

Also, I disagree there are shrinking & shrinking resources. It's a closed circle. Are we jettisoning things out into space or something?

Okay, I don't see any both counts though. Racism exists and existed when you have/had to compete for jobs, it's mostly due to overpopulation, the area being overcrowded. Disagree with that.

Jetfriggingwhat? Mind you, but I don't speak shorthand. My vocabulary is limited.

[InvisibleJim]

Okay, I don't see any both counts though. Racism exists and existed when you have/had to compete for jobs, it's mostly due to overpopulation, the area being overcrowded. Disagree with that.

Jetfriggingwhat? Mind you, but I don't speak shorthand.

Multi-culturalism just don't work bro.

[Absurd]

Multi-culturalism just don't work bro.

Thank you, brother.

[Finale]

Okay, I don't see any both counts though. Racism exists and existed when you have/had to compete for jobs, it's mostly due to overpopulation, the area being overcrowded. Disagree with that.

I don't see any correlation between overpopulation and racism. In fact, in some of the more sparsely populated areas here in America, you see the same or worse racism (back country, hicks vs. "dem negroes" etc.).

I'd' be interested if you have any clear examples of typical and numerous 'correlation dues not prove causation' studies that might show population vs. racism, etc. etc.

[willekeurig]

This can't be the case because in the West - and throughout the world, despite the wealth disparity, the poorest people today are considerably wealthier than the poorest people of yesteryear.

I'm not denying any advances made, but we need to remember that "the social minimum" for a decent standard of living is rising along with the rise of average standard for living - new requirements are being created all the time. The poor of today may be richer than the poor of yesterday if you count their possessions on a paper, but they also need more stuff in order to avoid being marginalized etc. Having somewhere to spend your night at and food to keep you alive might have been enough in the past, but in today's world it's virtually impossible to exist as a functioning citizen without the internet, a cell phone, electricity, skills like literacy and basic maths, some sort of education etc..

[jet city woman]

Okay, I don't see any both counts though. Racism exists and existed when you have/had to compete for jobs, it's mostly due to overpopulation, the area being overcrowded.

Where is the proof of such a thing?

Racism seems to exist in some cases because generally, one race determines that they are superior to another race in some way.... take African-Americans for instance. Supposedly, we brought them to America and exploited them to be used for slave labor. This did not occur because of overpopulation, or in competition for jobs. It occurred because people wanted slaves. Generally, then the racism spawned from there, because a race was exploited, with some whites to this day believing they are superior to African-Americans in some way, and African-Americans reacting to history and current thought of some people. It has little-to-nothing to do with overpopulation or competition.

[Absurd]

I don't see any correlation between overpopulation and racism. In fact, in some of the more sparsely populated areas here in America, you see the same or worse racism (back country, hicks vs. "dem negroes" etc.).

I'd' be interested if you have any clear examples of typical and numerous 'correlation dues not prove causation' studies that might show population vs. racism, etc. etc.

I don't do correlations, I'm not a frigging correlationist*. But I know for a fact some people do. Overpopulation is defined by how many organisms the environment can indefinitely sustain with its given resources, such as oil, crops, and water. Simple example would be Hutu-Tutsi conflict where Tutsi raised a monopoly on natural resources reducing the access of Hutu to it resulting in Rwandan genocide.

You're going to have to pay me for my efforts, Finale.

[InvisibleJim]

I'm not denying any advances made, but we need to remember that "the social minimum" for a decent standard of living is rising along with the average standard for living - new requirements are being created all the time. The poor of today may be richer than the poor of yesterday if you count their resources on a paper, but they also need more stuff in order to avoid marginalization and other problems. Having somewhere to spend your night at and food to keep you alive might have been considered enough in the past, but in today's world it's virtually impossible to exist as a functioning citizen without the internet, a cell phone, electricity, skills like literacy and basic maths, some sort of education etc..

If people require more 'as a minimum' then more should be asked from them in terms of responsibility, creative and productivity as a minimum.

[Absurd]

Where is the proof of such a thing?

[InvisibleJim]

Simple example would be Hutu-Tutsi conflict where Tutsi raised a monopoly on natural resources reducing the access of Hutu to it resulting in Rwandan genocide

Damned Mercantilism being misrepresented as a Free Market

[Absurd]

Those brothers and overpopulation. Warm brother I am not.

Damned Mercantilism being misrepresented as a Free Market

Well, point people towards the one and only Free Market existing. Name a location.

I'm also awaiting William with his diamond arrows to pierce my heart after seeing what I wrote.

[InvisibleJim]

Well, point people towards the one and only Free Market existing. Name a location.

You can only advocate for either position or a balance, there is always going to be 'corruption' in either system towards the other. However you can create a theory which provides causation for why either would work and match it with some empirical evidence to support it.

[Iris]

I'm not denying any advances made, but we need to remember that "the social minimum" for a decent standard of living is rising along with the average standard for living - new requirements are being created all the time. The poor of today may be richer than the poor of yesterday if you count their resources on a paper, but they also need more stuff in order to avoid marginalization and other problems. Having somewhere to spend your night at and food to keep you alive might have been considered enough in the past, but in today's world it's virtually impossible to exist as a functioning citizen without the internet, a cell phone, electricity, skills like literacy and basic maths, some sort of education etc..

Yes, acceptable living standards for the poor, in America anyway, are very different today.

I have a uncle who as a child of poverty in the depression, frequently did not know where his next meal was coming from. As a child and teen he took whatever jobs he could find: setting up pins in a bowling alley (now that's automated), working in a butcher shop doing odd jobs, etc. At age 85, he is still a successful business man, and I think his reaction to that poverty still affects him - he loves to work and will probably work til he drops dead. He loves to give to others and has great compassion for those less fortunate. He never judges that many of "the poor" accepting his help have cell phones and cars.

[Absurd]

You can only advocate for either position or a balance, there is always going to be 'corruption' in either system towards the other. However you can create a theory which provides causation for why either would work and match it with some empirical evidence to support it.

Well, even Socialism doesn't treat and didn't treat people equally (in the past), and "it" didn't really make excuses as to why ( it did, but I don't think majority on here went that deep), it just did. Whomever thought equality means being treated equally is dumb. I think Rand did, whoops.

As for this theory, fine, let's see it operate for a longer period of time. So far free markets are a bit unstable to say the least. Who knows, maybe people are the problem...

... and we need another genocide.

[willekeurig]

If people require more 'as a minimum' then more should be asked from them in terms of responsibility, creative and productivity as a minimum.

More stuff is being produced to the world with less effort than ever before. Everyone, the rich as well as poor, are getting more and more for less and less today. Shouldn't we also ask more from the rich in terms of responsibility, creativity and productivity?
I find the whole idea of people having to somehow earn their existence and prove their value rather weird. Who's the one to judge when someone's been being productive or responsible enough to deserve well-being? And what should we do with the people who aren't able to meet these standards? Experience suggests they won't just quietly accept their fate and disappear to the woods. The more we have people who's vital needs aren't being met, the more we will have all sorts of social problems.

Also, the poor didn't ask for the internet/cell phone/TV/younameit to be invented, they didn't choose the time they we're born in. This is not a matter of anyone getting greedy or ungrateful or whatever - try to live without any technological devices for a few days and you'll know what I mean. I think a phone, for example, can well be counted among the essential resources of life, along with water and food and a home etc.

[InvisibleJim]

More stuff is being produced to the world with less effort than ever before. Everyone, rich as well as poor, are getting more and more for less and less today. Shouldn't we also ask more from the rich in terms of responsibility, creativity and productivity?
I find the whole idea of people having to somehow earn their existence and prove their value rather weird. Who's the one to judge when someone's been being productive or responsible enough to deserve well-being? And what should we do with the people who aren't able to meet these standards? Experience suggests they won't just quietly accept their fate and disappear to the woods. The more we have people who's vital needs aren't being met, the more we will have all sorts of social problems.

Also, the poor didn't ask for the internet/cell phone/TV/younameit to be invented, they didn't choose the time they we're born in. This is not a matter of anyone getting greedy or ungrateful or whatever - try to live without any technological devices for a few days and you'll know what I mean. I think a phone, for example, can well be counted among the essential resources of life, along with water and food and a home etc.

They always did before, if they couldn't find food they starved.

There are limited resources available and materials and energy consumed today may be irreplaceable without the investment in capital, research, time and creativity to replace them with new inventions to either create or tap 'new' energy or materials, e.g. metal over wood, alloys over metal, plastics over alloys, and now future materials.

Without those resources being replaced then our descendants could suffer lower standards of living than their parents.

Whether they ask for things to be invented is not the problem if the inventors, they can choose to go without and live in woods, but for some reason they do not. You do the math.

The essentials in life are food, shelter and sanitation. Having a mobile phone, electricity and the internet is highly advisable, but you shouldn't get it for sitting and watching soap operas or unless someone who is productive is happy to give you those for free.

[FDG]

Pa3s, what is missing from the picture your "model" in the OP is a form of capital / financial market. (Bear in mind, I don't disagree with your general point, but a form of capital markets acts as a "dampener" to the existence of deflationary spirals)

Let us suppose interest rates are fully market-determined. In a fiat money system, those people who can work/earn "more" will somehow save "more". As savings increase, interest rates become lower and banks become more desperate to offer money for lending, to avoid going out of business. Those people who can earn/work less will borrow money and spend it, eventually borrowing more in order to repay their initial loans (or simply rolling them over, and borrowing marginally more to repay the interest). Banks will be pretty much forced to lend to this subset of people, since those who earn "more" don't need the money, but they wish to obtain some kind of interest on their savings / investments.

This would be a somewhat pessimistic scenario with a sure bust at the end of this naturally evolving ponzi scheme. Another a little bit more optimistic scenario will see banks using this "cheap" savings money to finance some kinds of new businesses, which may technically employ those people who are out of work. I say technically because that only happens in places with perfect employment mobility, an irrealistic (and perhaps negative, in some ways) assumption. Ofc this only works as long as there are additional "needs" to satisfy, an assumption which may be questioned (along with the perfect mobility of employment).

Finally, the general underlying "problem" you refer to is thighly linked with deflationary spirals. If there's some kind of unemployment shock which causes a big drop in demand, "rich" people will save but will be unwilling to invest in anything, since even just saving is more convenient / profitable, in general. Thus more and more people will be out of work, and so on...(something similar is happening in Greece right now).

[Pa3s]

The market has created a situation where considerably more goods are generated than are consumed by those who are earning the wealth with less menial jobs being available. Historically, only the mega rich could afford such luxuries as plumbing. There is an inherent assumption in your argument that 'new avenues of work' have not opened up.

Exactly, the market made the people produce much more than what is actually needed. And that's problem, because you also need people to buy all these products to earn money. That's the reason why even people we'd consider to be poor by today's standards have things like cellphones.

This can't be the case because in the West - and throughout the world, despite the wealth disparity, the poorest people today are considerably wealthier than the poorest people of yesteryear.

I might agree that people in the west (as a whole) are wealthier now, but not throughout the world. Whenever someone gets rich(er) someone else has less money in their pockets. Due to globalisation, we're just able to exploit other countries even more efficiently.

---

People/labor are not like a metal strut or gear on an assembly line, hence when that assembly line is obsolete, they do not go to the scrap yard.

Well, that's what you think, but our society is achieving exactly this situation. Jobs are more and more specialised and divided, not just the jobs that require working on an assembly line, but also the highly specialized ones. This results in a ever decreasing autonomy in production since everyone's work depends on many other specialised "gears". I do not deny that people can find different occupations once they were laid off, but in my opinion, we are pretty much gears.

People are adaptable, malleable and can change at will. In fact, a free market thrives best when it's populace uses it's 'greed' to push itself in order to achieve greater rewards. The desire for consumption ("OMG! iPhone5!!") is a powerful motivator, if not just survival. Problem we have now is that iPhone's and color TV's are currently subsidized or can be provided by welfare systems vs. merit/effort.

The advertising industry sure is very efficiently creating new desires. However, if I get back to my op, there must be a neverending stream of new products to produce, buy and consume. People are not creating new things to better the life quality of others, but to sell their stuff and thus, make a living. Do you see the inherent problem in this? We created an economy system to efficiently satisfy our needs and now we're creating needs keep this economy system alive.

That's because it all crashes down once people are happy and content with what they have.

Also, the markets are a lot like nature in that jobs aren't truly lost, they are simply transformed. Also, consumer ethics play a big part in molding free markets as well.

I have a good example for this. Let's compare two products which were designed for the same purpose, the simple electric light bulb and the compact fluorescent lamp.

The light bulb is very simple, it consists of glass, metal and a little bit of plastic. Yes, it wastes a lot of power because it gets pretty warm even though it is only actually used to light rooms. Light bulbs can easily be recycled and they do not contain any toxic materials. (And, they can be built to last a lot longer than 1000 hours. See [here])

The compact fluoroscent lamp is much more complex and there are more jobs needed to create them. It contains lots of plastic, microchips and toxic mercury. Every of these lamps is special waste when it's broken and can't be recycled.

Why should we invest so much more work and resources when our purpose is as simple as lighting a room?

Take as an example these new self-service checkout stations at stores. If you reduce your cashiers by 50% and start using these new self-serve checkout stations, you lose jobs? Well, not exactly since now you have created the jobs to design/maintain the software and firmware, manufacturing, service and maintenance of the equipment and even multiple brands to compete for this new marketplace. While blue collar work has been eroded, some new blue collar work has been created and a large amount of white collar work is also added.

The same situation as in my own example above. The task is to register the prices and receive the money. I'm not saying that being a checkout clerk is an awesome job, but it's certainly more efficient to let some person do it instead of putting a machine in their place, which takes lots of resources and work to be created. We should aim to reduce unnecessary jobs, but instead we create new ones and don't even split the work evenly among everyone.

As technology increases, the bottom end of the labor pool generally goes UP, so as manual labor jobs (that most people do not like anyways) have a tendency to shift upwards. It's funny because most socialism/communism ideologies also try to create the same scenario but without any clarification of HOW that evolves vs. free markets where it evolves naturally.... much like how you went on to say:

But the jobs that are destroyed are mostly those which require no or just basic training, while more jobs for highly skilled technicians and scientists are created.

Well, yes. Ideally, repetitive and simple work will decrease, but in your example of the checkout station you said that it also creates lots of blue-collar work. That means you may save the unpopular job of cashiers, but at the same time, create much more dull work for people putting together these machines.

Correct. Free markets do cause a general upward trend. I don't believe mankind should be scrubbing toilets for all eternity. People should desire/want better and thus challenge themselves to get out of ditch digging at some point.

This leads us back to the problem described in the OP. What happens to the people who can't follow that upward trend?

The remaining 500 would need to find something of value/demand to the 500 producing the demanded items. Otherwise, you have simple slavery with 500 producing, and 1000 consuming. Why wouldn't the "consuming only" 500 find something else of demand for the full 1000 so both are producing AND consuming?

Imagine those 500 people are satisfied with what they have (if you are willing to believe that, I know that some people argue that human needs are never fulfilled). Why don't they just split up the work evenly among all 1000 people? This would by far be the most reasonable solution for this problem.

No, people can find a place, demand and value. EVERYONE. This is a very pessimistic viewpoint of humanity. Everyone can provide some value to their community or peers, period. Unless you specifically mean severely handicapped, children or elderly, at which point any civilized society will always safeguard those collectively.

Of course, I'm not talking about people who are handicapped or too young/old to work. I also don't think I'm pessimistic as I do believe that everyone can provide a useful service to society. I am simply talking about the facts. Nobody would hire more employees or workers than absolutely necessary, that's the problem. Imagine the work was split up as I said above. Less working hours for all and everyone does their share of work. But that can't happen because employers wouldn't be able to earn enough that way.

Yes, a free market keeps people "struggling" to better themselves versus jack off and consume. It's either that or you have a system where other people work harder so others can jack off and consume. This is a good model for the people jacking-off, not so good for the achievers/hard workers.

You seem to believe that I want to promote some kind of socialist welfare state in which people get everything they want without working (hence "jack off and consume"), but that's not the case. I'm opposed to every kind of state, whether it calls itself "social" or "welfare state" or not as well as I'm opposed to the market system & capitalism. As I said, I'd much rather have the situation in which everyone does a share of the work, but that's not possible within the market economy.

InvisibleJim also described the current situation elegantly. We're in a very bizarre state right now due to the huge wealth disparity. This happens when free markets are tainted with non-free, regulatory power that can be corrupted.

I still don't think that the market will regulate everything to the humanity's benefit. But that's a matter of opinion.

---

Pa3s, what is missing from the picture your "model" in the OP is a form of capital / financial market. (Bear in mind, I don't disagree with your general point, but a form of capital markets acts as a "dampener" to the existence of deflationary spirals)

I'm absolutely aware of the fact that my statements were simplified and I don't claim to understand the mechanisms of our economy with all its details. However, I also think these facts don't change much considering the fundamental problem.

[InvisibleJim]

I might agree that people in the west (as a whole) are wealthier now, but not throughout the world. Whenever someone gets rich(er) someone else has less money in their pockets. Due to globalisation, we're just able to exploit other countries even more efficiently.

A common misconception

http://www.ted.com/talks/hans_roslin...ever_seen.html

The free market has hugely improved the wealth and living standards of the victorian concept of 'poor countries'

[Pa3s]

1. From an Austrian economic point of view, there is unlimited demand. People will always want more things. Until each and every single one of us is living in a mansion, has a personal yacht, a private jet, etc., there is no lack of desire or "demanded services" of people wanting to improve their lives and standard of living.

As I said, I'm well aware of that and I doubt it.

The main concern is making sure that supply side continues to grow. For everyone to have their ideal lives - a maid to clean the house, a cook to take care of cooking, a private driver to take them everywhere, etc.; each single person who gets to live the 'dream' life will employ many other people. For 1,000 to have all of their 'demanded services' would require a number greater than 1,000: maybe 5,000, 10,000, who knows. There wouldn't be a case where the demand is limiting society, in your example, but rather the supply.

Do you see how you just disproved what you said above? So for the lucky ones who can afford their ideal life (whatever that may be) there will be hundreds of thousands of other people working for them, both voluntarily and simply as a means to survive. Or do you think it was the dream of the maid to clean your mansion, or your driver always wanted to chauffeur people around?

If everyone lived in a mansion and had everything they wanted, who would do the work? It's just impossible. This is the same logic that makes people think that their money in the bank is magically "working" and giving them interest without effort. No. It's still people who do the work, they're just parasites who steal their money. This economic system is build upon slavery and exploitation, both of natural resources as well as of human beings.

2. Assuming price is free to fluctuate, demand and supply will naturally calibrate at an equilibrium. IE. in your example, the 500 people who were 'not needed' would find other goods/services to make/perform in order to survive, but most likely do it at a lower wage rate.

Yeah, and that would result in even more wage dumping. This is what happened during the industrial revolution, the market price of work just adapted. It's beyond the power of a worker to employ themselves, they'll have to find someone who hires them. And if this "someone" doesn't exist they're out of luck.

The free market has hugely improved the wealth and living standards of the victorian concept of 'poor countries'

Just because it became better for countries we defined as "poor" doesn't mean it works, let alone for a longer period of time. I'm not denying that there were improvements in these countries, but it's a also a fact that there will never be a situation in which we are all considered to be "rich".

And we shouldn't forget that it's important for our economy to always have a market which is not yet saturated. For example with cars or advanced production machinery. Poor China can't buy your stuff because it just doesn't have the money. But if it's a society with a steady rate of economic growth it is a perfect taker for your offers and makes your economy grow as well (or it at least prevents it from failing).

[Esaman]

1. Socialism is not at odds with free market... regulation 1. Socialism is not at odds with free market... regulation (of market)is.

2. Free market is at odds with what should be common sense. It is not in people's self interest to let other people's self interest to go unchecked, because conflict of interests is the most natural thing in the world. There are bajillion profitable practices that are so at detriment of everybody else.
Regulation of other people's behavior is unavoidable reality. For some building and accumulation of wealth is too much of a porn to consider it objectively.

3. Technology allows fewer people to provide all the material and informational goods. Period.
Science and engineering frontier doesn't need or especially profitably employ that many people.
Services are also encroached by technology but less so. There is limit to how many people services that serve actual reliable needs can employ.
In the quite possible world of plenty I'd rather have people spending time creatively jerking off than at a treat of hunger struggling to find creative ways to jerk off the ones that actually do something of value. Wait, no. Because of the competition market value of the work will be worthless, so all kinds of property rights will be the only source of real money and that will not be tolerated. Meaning reduction of property rights...

EDIT: (of market) - added

[InvisibleJim]

Just because it became better for countries we defined as "poor" doesn't mean it works, let alone for a longer period of time. I'm not denying that there were improvements in these countries, but it's a also a fact that there will never be a situation in which we are all considered to be "rich".

And we shouldn't forget that it's important for our economy to always have a market which is not yet saturated. For example with cars or advanced production machinery. Poor China can't buy your stuff because it just doesn't have the money. But if it's a society with a steady rate of economic growth it is a perfect taker for your offers and makes your economy grow as well (or it at least prevents it from failing).

You didn't watch the video. The statistics are against your argument - Although a wealth disparity exists people have become wealthier in all wealth brackets regardless of geography, either because of or despite an increase in free trade, so your thesis is wrong. Revise the thesis.

[Pa3s]

You didn't watch the video. The statistics are against your argument - Although a wealth disparity exists people have become wealthier in all wealth brackets regardless of geography, either because of or despite an increase in free trade, so your thesis is wrong. Revise the thesis.

No, I watched it. And I know that I won't be able to convice you of the contrary if you got that video ("the facts") that obviously proves me wrong. At one point (I can't exactly remember where) he says that it's dangerous to rely on this highly generalized data, and then he splits it up and we see much more diverse data which was just one large bubble before. But this applies to the whole issue, every data in such a diagram is generalized. Even if the country as a whole became richer, maybe only a portion of their people became actually rich and the rest still sleeps on the streets.

If you make the chart you can pick any factors about the society's development you want. I can understand that he chooses life expectancy as a measure of development, but why the size of the families?

And then there were these "hills" of income distribution. I'm talking about the imagine in which we see that 20% of the people have about 74% of the world's income. He said it was alright. I didn't agree.

If you're saying that I just want to talk my way out of this, go ahead. But I'm still a little sceptical when it comes to this data and presentation.

[Absurd]

1. Socialism is not at odds with free market... regulation is.

Socialism in terms of economy is regulation. Free market is as well, taking into account anti-theft regulations.

Generally, I believe it's human nature to want to acquire power and security, although we will all die eventually (which is why I personally believe it's better to store riches in heaven, and just help others while we're here).

How much does keeping your cash in this magical heaven bank cost? Help others to what - your money you deposited in heaven?

I mean I've heard that story about Jews keeping their cash on the Moon (or was it ****** that deposited it there in his mythical UFOs?), but I haven't heard of you keeping it in heaven. Now I did.

Anyway, looks as if religious Jews were to accept Jesus Christ, they wouldn't have to hide their cash so far away, and it wouldn't be ever stolen from them by alien nazi reptilians for example.

[Pa3s]

I'm just not sure what point you're trying to make. It seems as though you're frustrated about the imbalance and disparity of wealth. Is this correct?

Yes.

Yes, it's unfortunate that many are exploited through the capitalist system. But that's not because of economics imho, but a part of human nature. People have been bullying those weaker than them for personal gain for millions of years. It's ingrained, economic Darwinism - after all, those with the money, dictating the living conditions/future of those without money, are more likely to pass their DNA on, have multiple, healthy babies that are easily provided for, and continue the cycle.

A common argument.

I think you would agree with we if I say that we (unlike animals) are capable of acting against our instincts (of which we have already lost a lot anyway). Or do you rape a woman because you suddenly want to have sex? No, you don't. That means we have a choice regarding how we handle and organize our social coexistence.

Let's also imagine we were able feed all and make use of everyone's work in order to provide the food and everything necessary (not too unrealistic, btw). Do you think we shouldn't do that because nature dictates us otherwise?

In addition to that, evolution is at least fair in the way that animals of a species are born equal except their genetic material. But humans usually don't only inherit the genes of their parents, but also their social status. And this status depends on their wealth, their place of residence, race, ect. ect. That isn't fair. And since the only thing you actually need to "stay on top" is money, every inbred moron who is lucky enough to be born in a rich family will be able to spread their DNA. This is not "the survival of the fittest" anymore.

Why can't everyone just live peacefully? Well, as you keenly pointed out, not everyone can having everything they want. It's a pyramid structure. So basically, resources are limited. And when resources are limited, and the demand for them is greater than the supply, there will be fierce competition.

I did not say that. I said not everyone can have everything they want in a capitalist system, because there is always the need of a "proletarian" class. Of course, no matter what economic system you have, it's very likely that you'll never be able to give everyone everything they wish for. But well, if there is so much competition for the resources as you said, I'd still be in favor of feeding the starving people before someone gets their third swimming pool or their 16th car.

Who's to blame? It's easy to condemn someone else. But don't you enjoy eating? Do you want your family to eat? What if the competition is NOT about yachts or private jets, but about basic needs such as food for survival? And what if the loser of this fierce competition dies, and their family starves as well?

Sure, I want to provide for myself and for my family, that's not a question. I don't exactly see the point you're making here. If there is a global food crisis, I'd certainly do my best to assure my survival and that of my loved ones and those who can't get any food will die and their families will die as well. But all that happens because there just isn't any more food.

But that's not the reality. The people are actually competing to have yachts and private jets while other people don't even have food or shelter. We could produce more food and build more houses, but we won't, because they can't pay for it.

Generally, I believe it's human nature to want to acquire power and security, although we will all die eventually (which is why I personally believe it's better to store riches in heaven, and just help others while we're here). That being said, I believe the balance of power in today's society generally favors the common person. One might be an economic slave, but most people can work a decent living in America and live to old age. Animals in the wild do not have this guarantee.

Yeah. In America.
And I don't know why you compare people with animals in the wild. It's not like we have to choose between this society or none at all.

Consider previous societies as well, such as Egypt - many of the slaves building the pyramids, proven through analysis of recovered skeletal remains, had broken bones, cracked vertebrae, and distorted backs from carrying so much weight. These people built someone else's dream in a much more literal, painful way. I would argue that the modern 'economic slave' who is 'exploited' to work their whole life still has it much, much better than it could be.

I think you're a little too focused on America here. There are people in other parts of the world who work under extremely unhealthy conditions just to earn enough to survive and provide us westerners with TVs, computers, cheap shoes, whatever.

So, I enjoy my life and I give thanks every day. I would like to live a long life, but I don't take anything for granted. It seems as though America is the bully to many other countries and provides a higher quality of life to its citizens. My question is - is it wrong if you support it, generally go along with it, at the persecution of someone else? If humans will fight for power anyway, isn't it better to be on the winning side? Or is this shifting the blame, and a way to justify one's own selfishness?

Yes. Yes, it is wrong. If you "support it, generally go along with it" you tolerate everything that happens. I know that a single person can't do much about it, but there's always a start.

It is nice that you can enjoy your life and don't take all the things you have for granted, but that doesn't help anyone.

[ArchonAlarion]

1. Socialism is not at odds with free market... regulation is.

2. Free market is at odds with what should be common sense. It is not in people's self interest to let other people's self interest to go unchecked, because conflict of interests is the most natural thing in the world. There are bajillion profitable practices that are so at detriment of everybody else

Hence, property rights.

3. Technology allows fewer people to provide all the material and informational goods. Period.

Technology (capital) decreases the opportunity cost of performing certain activities. An innovative machine in a particular production process allows faster and/or less wasteful production. These variables are ultimately factors of opportunity cost, the benefits of performing one activity vs. the benefits of performing any other possible activity.

Technology does not mean that fewer people will work, it just means that the work done is less costly (in terms of opportunities).

Science and engineering frontier doesn't need or especially profitably employ that many people.

Wrong. I'm sure there are people who are great scientists, but poor businessmen. Nevertheless, it is the businessmen that calculate whether or not to employ the great scientists. Funding scientific research that is unfruitful (unprofitable) is a waste of resources, when resources can be better spent on opportunities to make a profit by feeding, clothing, housing, or entertaining people. Scientific research allows business to innovate, which means first-mover advantages for the innovative firm.

Services are also encroached by technology but less so. There is limit to how many people services that serve actual reliable needs can employ.

No there isn't...? The limit is demand for labor and there will always be a demand for labor, even if it is purely mental labor (research and development).

In the quite possible world of plenty I'd rather have people spending time creatively jerking off than at a treat of hunger struggling to find creative ways to jerk off the ones that actually do something of value. Wait, no. Because of the competition market value of the work will be worthless, so all kinds of property rights will be the only source of real money and that will not be tolerated. Meaning reduction of property rights...

The future may be plentiful, but it will never be enough. If those who labor to produce informational goods are not rewarded, then production will slowly grind to a halt and society will be unprepared for the future.

[FDG]

I'm absolutely aware of the fact that my statements were simplified and I don't claim to understand the mechanisms of our economy with all its details. However, I also think these facts don't change much considering the fundamental problem.

Well, I don't know. The fundamental problem being, that people don't have work, or that they don't have money?

Funding scientific research that is unfruitful (unprofitable) is a waste of resources, when resources can be better spent on opportunities to make a profit by feeding, clothing, housing, or entertaining people.

You're thinking as if people (entrepreneurs or w/e) already easily know what's profitable and what's not. I can tell you one of the very few sure things in economics: whenever there's easy and sure profits to be made, they will be quickly eroded by a large number of people entering the supplier's market. And only when profits are hard and risk, and potentially wasteful, can produce a somewhat long-lasting "leadership".

[mu4]

Funding scientific research that is unfruitful (unprofitable) is a waste of resources, when resources can be better spent on opportunities to make a profit by feeding, clothing, housing, or entertaining people.

This is wrong. Fruitful research can not be determined by profitability in the same way as business enterprises, this is fundamentally because turning science into technology can be a extremely long process. The market is not a mechanism that can price "truth" only commodities.

The only real determinant of fruitful research is truth, and if the research results in a good approximation of the truth and/or new formulation of the truth that might be useful in different ways. Regardless of whether or not this knowledge is profitable today or within the lifetime of a business, this is of value, and that value if preserved and taught can eventually lead to great profits in technology, but it's not really something that can be calculated effectively at this time.

Technology (capital).....

You're wrong here, capital prices/represents technology for social consumption. But you don't need a pricing mechanism or conscious representation of something to have technology. Capital is only a economic representation of goods, but it is not the goods themselves.

Scientific and technological advancement often falls outside of economics for this reason, because some of it cannot be priced, but just because it's not priced doesn't mean it's not worth anything eventually. Frankly, this way of thinking devalues the countless advancements of individuals who went down the path of discovery out of a sense of curiosity and interest and the pursuit of truth.

This is why scientific research and technological research have totally different "pricing" mechanism than economic goods, such as proof, scientific method, and measurement tools, etc.

You're thinking as if people (entrepreneurs or w/e) already easily know what's profitable and what's not. I can tell you one of the very few sure things in economics: whenever there's easy and sure profits to be made, they will be quickly eroded by a large number of people entering the supplier's market. And only when profits are hard and risk, and potentially wasteful, can produce a somewhat long-lasting "leadership".

Sounds like a slow crawl to oblivion.. ^_^;

[Esaman]

Hence, property rights.

Let put things in order. Property rights are a subset of personal rights. Personal rights are things that people have come to agree to be in all peoples interest. Self-interest of public.
Property rights have such separated singular priority in your ideology, because it is propaganda to maintain the disparity of wealth that is NOT in a public interest.

Property rights don't solve all the issues requiring the regulation of the market, and require regulation/limitation themselves also.

Technology (capital) decreases the opportunity cost of performing certain activities. An innovative machine in a particular production process allows faster and/or less wasteful production. These variables are ultimately factors of opportunity cost, the benefits of performing one activity vs. the benefits of performing any other possible activity.
Technology does not mean that fewer people will work, it just means that the work done is less costly (in terms of opportunities).

When technology does the job a person will not be paid to do it.
When industry is established the fraction of population it employs only goes down.
There is only so much material goods a person can possible use taking in to account natural resources divided by number of people wanting those material goods. So there wont be birth of new industries that not replace the old ones on that front.
All things that can be digitized will loose human work needed thanks powers of copying, computing and global, practically instantaneous communication.
Some customer services can be increased some but that does not make free market sense.

"Wrong. I'm sure there are people who are great scientists, but poor businessmen. Nevertheless, it is the businessmen that calculate whether or not to employ the great scientists. Funding scientific research that is unfruitful (unprofitable) is a waste of resources, when resources can be better spent on opportunities to make a profit by feeding, clothing, housing, or entertaining people. Scientific research allows business to innovate, which means first-mover advantages for the innovative firm.
No there isn't...? The limit is demand for labor and there will always be a demand for labor, even if it is purely mental labor (research and development).

There is no sense in employing hoards of scientists, you employ the best.

If those who labor to produce informational goods are not rewarded, then production will slowly grind to a halt and society will be unprepared for the future.

Problem with informational goods is that at best one person can satisfy the global need of that particular information or type of information. And no, human creativity and does not stop when profit and survival are taken out of the picture, it actually increases.

The future may be plentiful, but it will never be enough.

No, you cannot satisfy a megalomaniacal ego, but many people are not afflicted.

[ArchonAlarion]

This is wrong. Fruitful research can not be determined by profitability in the same way as business enterprises, this is fundamentally because turning science into technology can be a extremely long process. The market is not a mechanism that can price "truth" only commodities.

No, actually you are wrong. Firstly, I never said, "Fruitful research can not be determined by profitability in the same way as business enterprises." I said, "Funding scientific research that is unfruitful (unprofitable) is a waste of resources." At some point, a business is forced to innovate because profits in any given market tend towards an equilibrium with cost over the long term as firms enter and exit the market. Research and development are key to maintaining profitability in the long run. Turning science into technology may be an extremely long process in the current environment, but it doesn't have to be. The market cannot "price truth," but it can put a price on the production of scientific goods and the lengthy production process simply means a heavier reliance on society wide conditions. Obviously, the profit generated from opening a new market is significant and then it's just a matter of matching the potential profits to risk.

You have provided no evidence that markets avoid long term investments like scientific research. You are reciting the tired old mantra of academic patronage.

The only real determinant of fruitful research is truth, and if the research results in a good approximation of the truth and/or new formulation of the truth that might be useful in different ways.

No, the process of research requires resources and time. Therefore, opportunity costs. If you want to define fruitful research as research that discovers some new information, fine, but if it is incredibly wasteful and unnecessary than to me it is not fruitful.

Regardless of whether or not this knowledge is profitable today or within the lifetime of a business, this is of value, and that value if preserved and taught can eventually lead to great profits in technology, but it's not really something that can be calculated effectively at this time.

No, the process of producing informational goods has costs. The costs of producing the good today may be too onerous compared to other things that may be done today. Value is judged by individuals, some people may not desire the information or are apathetic about it. The usefulness of undiscovered knowledge will be uncertain, but so what? Businesses can contract with autonomous research and development/science groups and fund them in exchange for the "fruits" of their research. Guess what? This is already a thing.

You're wrong here, capital prices/represents technology for social consumption. But you don't need a pricing mechanism or conscious representation of something to have technology. Capital is only a economic representation of goods, but it is not the goods themselves.

A pricing mechanism facilitates the production of technology. I would argue that to coordinate the production of technology at our current "level" of technological progress, a pricing mechanism is "necessary."

Scientific and technological advancement often falls outside of economics for this reason, because some of it cannot be priced, but just because it's not priced doesn't mean it's not worth anything eventually. Frankly, this way of thinking devalues the countless advancements of individuals who went down the path of discovery out of a sense of curiosity and interest and the pursuit of truth.

This is why scientific research and technological research have totally different "pricing" mechanism than economic goods, such as proof, scientific method, and measurement tools, etc.

You aren't getting it man. I'm arguing that scientists use resources that can be used for other things. You need some sort of mechanism to determine when to use stuff for the production of scientific research and when to use it for other things. The best mechanism is the market because it takes into account far more information about the current state of the world than a government bureaucracy ever can.

http://mises.org/pdf/econcalc.pdf

[ArchonAlarion]

Property rights don't solve all the issues requiring the regulation of the market, and require regulation/limitation themselves also.

Of course not, but the alternatives are worse.

When technology does the job a person will not be paid to do it.
When industry is established the fraction of population it employs only goes down.
There is only so much material goods a person can possible use taking in to account natural resources divided by number of people wanting those material goods. So there wont be birth of new industries that not replace the old ones on that front.
All things that can be digitized will loose human work needed thanks powers of copying, computing and global, practically instantaneous communication.
Some customer services can be increased some but that does not make free market sense.

People may live longer. Population may increase. The human body may be altered with technology. Different people want different amounts of different things.

Just because production and communication became fast, does not mean they cannot or will not be made faster. People have to work to build the faster machines.

Problem with informational goods is that at best one person can satisfy the global need of that particular information or type of information. And no, human creativity and does not stop when profit and survival are taken out of the picture, it actually increases.

Human creativity will not stop because of a lack of economic profit, but it will suffer.

http://mises.org/pdf/econcalc.pdf

No, you cannot satisfy a megalomaniacal ego, but many people are not afflicted.

Then the human race will die off. Continual production and expansion are necessary to combat existential threats. I'm not megalomaniacal, I just value life and freedom.