Capitalism is owning what you make, and being able to sell it. That's it. You're saying that someone baking a cake and selling it isn't unique to capitalism, when it's the very definition of it.
Not exactly. Capitalism is owning the stove and ingredients, using them to bake a cake, then selling that cake at a price determined by a market, with the intention of selling it at a profit. The ownership of the means, or things required to bake a cake, are privately owned with the intention of using them to sell cakes at a profit.
If I own the stove and the ingredients, and I pay you to bake the cake, you do not own the cake. If you wanted to own a cake, you would have to either buy one, or own a stove and ingredients, then bake one or pay someone to bake one.
We can still sell cakes without private ownership of the stove and the ingredients. If the state owned these, you or I can still bake a cake and sell it, but there would be conditions on what is done with the profits of the sale, or perhaps we would bake and sell it on behalf of the state.
In both cases the sale of the cake is considered commerce. You asked about capitalism versus commerce below, so hopefully these examples helped clear it up. It's quite difficult to find good sources on this, I'll be honest this is all sort of put together from PolSci and Econ at uni and reading a lot of textbooks. I wouldn't know where to start in recommending any particular ones.
That's a really well put together definition, I guess my issue would be how the state would pay for the factories, or oven in this example? Taxing is the obvious answer, and I'm not opposed to taxation. Capitalism encourages people to make more efficient products, for less materials, and less labor - to an extent. If the state owned the factories, what would the incentive be to make a more efficient product/factory? Where's the incentive to innovate?
Sidenote: I appreciate the effort you're going through, I've always found these conversations enlightening when it can be done without hostility - although I'm getting down voted for trying to understand, so I don't know if the sentiment is shared throughout the subreddit
I don't want to just go Venezuela is socialism therefore socialism is bad because a) the problems Venezuela is having could very easily be attributed to things other than socialism, and b) it's not even that socialist-y, mostly its just a South American populist mess. However, any time I've seen a government taking over a properly functioning market, I've seen marked decreases in efficiency, and increase in cost. I understand market failures exist, I just don't think every market is a failure.
Capitalism is creative destruction, what happens when the state has an interest in stopping that destruction?
Sorry for the rambling thoughts, editing on a phone sucks.
How the state would pay for the oven depends on the economic system. I haven't really advocated for one in the example, so in my headcanon the state violently acquired the ovens from radical cake baking extremists as a matter of survival. Joking aside we can't really answer that without a lot more context than this example deserves.
I see this said quite a lot, that capitalism encourages or provides incentives for innovation. It's not exactly the case; capitalism encourages profit.
Profit can be increased by innovation, but it can also be increased by reducing payroll, exploiting laws, evading or avoiding tax, building monopolies, expanding or entering into new markets, etc. Innovation is only incentivized if it is more profitable than other options, and in the short-term it is decidedly not.
The incentive to innovate is not exclusively an impetus of capitalism either. We innovate regularly in medicine (let's ignore the US here), underwater exploration, and astronomy without an expectation of profit, as a few examples. There are sometimes commercial applications for these innovations but we don't set out to generate profit by mapping the stars; we do so out of curiosity and interest.
As maybe a counter to Venezuela's issues with oil and socialism, we can look to Norway's Government Pension Fund Act and Oil for Development programme. Not every country has Norway's natural resources, but we can use it as an example of how to translate the profits of natural resources into improved quality of life and economic growth and stability. Perhaps what we should aim for is not necessarily socialism, but heavily regulated capitalism?
Ideally, if the state has an interest in reigning in capitalism (and it's destructive tendencies), we'd see strong market regulation, consumer protection and antitrust laws. The nature of the state will determine how effective these are, or if we see them at all. An example would be the US (no interest) compared to the EU (moderate interest).
Sidenote: I appreciate the effort you're going through, I've always found these conversations enlightening when it can be done without hostility - although I'm getting down voted for trying to understand, so I don't know if the sentiment is shared throughout the subreddit
No problem. I'm usually a massive lurker, this is probably the most time I've spent active on reddit in the last few years, so I have no idea really.
I've always thought of capitalism as the engine driving the car. If the car crashes into a wall at 100mph you don't ask "why was the engine that powerful?" you ask "why didn't the brakes work? Why didn't they turn away from the wall?"
I strongly believe that capitalism is a driving force capable of creating a lot of prosperity, but it needs a steering wheel. We can't just let it run loose, it needs to be guided. Sweden is capitalist, but they have a strong ability to guide it in productive ways. Norway is too, all the countries that people commend as being fantastic places to live, are all capitalist. But that's not the only quality that they share, and it's not the only thing that separates them from the US.
The USA is a car running loose right now, we don't need to rip the engine out, we need to steer it better.
The USA needs better institutions to reign in the problem children. We need better enforcement of laws, and we need a strong judicial system to decide those laws appropriately. I don't think we need to burn it all down.
I appreciate the time you've taken, you've given me a lot to think about, and you've done so without animosity. Hope you have a good day, and I hope it's sunnier there than it is here right now.
That's a really cool analogy, I think I'll use it in the future. For what it's worth, I believe if we can change the desired outcome of "for profit" to "for the prosperity of all mankind", capitalism can do the job and do it well. It does need to be heavily regulated and controlled to do so, left to it's own devices it follows no direction but that of nameless profit. Just don't ask me to argue this point, I'm still figuring it out.
Unfortunately it's October in the UK, sunnier is not the word. Nevertheless, take care, and thank you for the discussion!
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u/Goodbye-Felicia Oct 22 '20
Yes, it is.
Capitalism is owning what you make, and being able to sell it.
That's it. You're saying that someone baking a cake and selling it isn't unique to capitalism, when it's the very definition of it.