Sunday, March 22, 2015

So what is capitalism?

People can toss a word around where the meaning can get a bit fuzzy and hearing lots of talk about "capitalism" I thought it worth it to post about what it is. And will start with what the Wikipedia claims it is:

Capitalism is an economic system in which trade, industries, and the means of production are largely or entirely privately owned and operated for profit.[1][2] Central characteristics of capitalism include private propertycapital accumulationwage labour and, in many models, competitive markets.[3] In a capitalist economy, the parties to a transaction typically determine the prices at which assets, goods, and services are exchanged.[4]

For instance, if you make money from a store you own in a neighborhood, you are a capitalist. Your store is your capital, as well as the products it sells, which you presumably buy on the free market. And the living you earn from selling goods to others from your store is your profit.

For a country, the alternative in general to private ownership is that the government owns, for instance the store, and provides goods to a population.

And that's it.

So what if the neighborhood owns the store? Then the owners in the neighborhood are capitalists, if they operate for a profit. If they don't then they aren't.

Is there any scenario where people other than the government own the store which does not make the owner's capitalists?

Yes. If they don't make a profit from the store. But no, if they do.

That is, if you follow the definition, then the neighborhood store is capital. And those who own it, if not the government, are capitalists, if they make any money from it.

If they don't, then no.

And you can build from there.

The alternative from private ownership is ALWAYS the government owns.

So how can people operate something without a profit? It depends on how you define "profit".

My own view is that what you call profit is a matter of community.

What's interesting to me is that if you go with a person owning a store in a neighborhood who does NOT make a profit, then I guess that person would need to be independently wealthy to run the store.

But a community might be able to run a store without profit, assuming members of the community have income from some other sources.

While the government can run a store without profit, as it can rely on taxation.

And we can see an example where primarily the government runs things, where also there is private enterprise with education.

Here in the US below college level, schools are primarily run by the government, though there are private schools. At the college level, there are government run colleges and universities, as well as a lot more private ones, but even those are still for the most part non-profit.

And government pays for running schools at all levels primarily through taxation, though students are also at the college level often asked to pay fees.

And it can show how a community can move something outside the realm of profit motive as American society sees a benefit in educating its children. Yet things shift a bit with young adults, who aren't guaranteed a free college education. Though some have suggested such a thing.

But at this point in time, it's not clear what the value is, as college isn't for everyone, while EVERY American child needs school. Where I'm sure there is no real debate in this country as to whether or not that is true as it's a cultural value of this country.

James Harris
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