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What Capitalism and Communism have in common

October 15, 2007

In What they’re not telling us, Rachel at Mahablog raises the possibility that modern capitalism is making a similar fundamental mistake to that of communism; lousy incentive.

While addressing our declining productivity, she asks, “But at least we’re doing better than lazy ol’ socialist Europe, right?…”

Categories: Economics, Politics
  1. Lucas
    October 16, 2007 at 00:21 | #1


    “First, in the 1970s, women entered the workforce in large numbers. This of course was partly because of second-wave feminism, but it also corresponded with the slowdown of the economy that occurred after 1972.”

    I wonder if this had anything to do with the lower growth in productivity rates?  Many of the women who entered work in the last thirty years had not been employed for quite some time, thus leading to a lower rate of average productivity growth as each relatively less skilled worker entered the workforce.  I wonder if this will level off at some point. 

    The writer also compares average productivity growth with growth in nonsupervisory pay, and then says that because there is a mismatch, there is no incentive to work.  In my work experience, the possibility for advancement provided a strong motivation to work hard and gain skills.  The concept of working in a restaurant again is a power motivator for me to do well in graduate school.  While I think there is something to the “alienation of workers” thesis (it certainly jibes with my experience), I would probably find a cushy guaranteed union job much *more* of a disincentive than a crappy paying job with the promise of great things if I gain skills.

    The writer makes some decent points (and certainly things which management and workers in US corporations should think about), but the post is very poorly argued.

  2. Ted
    October 16, 2007 at 07:15 | #2

    …find a cushy guaranteed union job…

    I’ve been around union jobs, and never found them cushy or guaranteed. They were collective bargaining tools that takes advantage of human resources against capital (where business has gross advantage due to NLRB stacking).

    Most of the union abuse stories are outliers that are used to hyperbolize the narrative and radicalize.

    Me—I worry about having my taxes being used to incentivize black unemployed crack mothers. It’s only moral to keep my hard earned taxes from being redistrubuted to them in order to support their abuse habits. (That was hyperbolized sarcasm btw.)

  3. Ted
    October 16, 2007 at 07:22 | #3

    Just went over to read the original. There’s a reference to there to Joe Beagent’s Dear Hunting With Jesus.

    It’s a populist book with depressing content, written in an engaging style. I recommend it.

  4. October 16, 2007 at 09:02 | #4

    In my work experience, the possibility for advancement provided a strong motivation to work hard and gain skills.

    I agree. In my younger years, advancement made a difference to me. But nowadays, my motivation comes from me more so than an outside force.

    For market systems, pure anything is bound to fail, which is why balance is important. Voting for Bush because he wanted to lessen the governments involvement in the open market was pointless, because we don’t have a true capitalist system.

    I’m not really a socialist I just think there are certain things which should be provided to the citizens of this country to better the country as a whole, such as health care and education. When you don’t have to worry how you are going to afford medical care or education, you can focus on more important things.

  5. October 16, 2007 at 18:59 | #5

    The whole concept of ever-increasing growth is stupid, whether in a capitalist system or otherwise.  The whole concept of a publicly-held company’s primary responsibility being to the shareholders is equally stupid.

  6. October 16, 2007 at 19:06 | #6

    Or to put it another way,

    “Growth for the sake of growth is the ideology of the cancer cell.”
    - Edward Abbey

  7. james old guy
    October 17, 2007 at 11:20 | #7

    “The whole concept of a publicly-held company’s primary responsibility being to the shareholders is equally stupid. “

    Kindly explain the thought process behind this statement? I am not aware of many people that invest money in companies without thinking they will receive some sort of return? Without shareholders companies cease to exist, along with the workers and the products.

    “..find a cushy guaranteed union job…”
    Unions have become self destructive, the UAW is a prime example. These same Unions sold the idea that they were a partnership with the companies that they had unionized. Well that all went well until the quality of work hit the bottom.  Back in the days before Toyota,Honda and BMW were forced to open plants in the U.S., our cars were junk. Look at the latest strike with UAW and GM, the union was demanding that worker be guaranteed a job even if the factory was closed. There are factories today that have workers who’s jobs have been eliminated still drawing full salary for sitting in a room watching television. Its very hard to compete when a company is dragging non productive people into the profit margin.

  8. October 18, 2007 at 20:11 | #8

    Old Guy:  I never said they should not expect return.  I have investments, and I expect returns.

    A company’s primary responsibility is to its customers and potential customers, and to its employees.  THOSE are the resources it has in addition to investor capital.  Companies that focus primarily or solely on ever-increasing ROI for the investors will lose both customers and employees.

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