Indeed. It's called "rational self-interest." It means that if you're too greedy and you don't consider the welfare of your customers along with profit, you will soon have no customers. Just look at all the opprobrium here against Bill Gates and Steve Jobs because they are alleged to have not given enough of their personal wealth to others. Social conscience and altruistic acts are all part of the capitalist's efforts to attract and keep customers. That's why companies donate to green causes and makes energy-efficient devices; because that's what their customers expect and demand of them.MiM wrote:But that statement is far from a truism, and it requires much more from the said capitalists, especially it requires them to be altruistic (at least among each other).Seth wrote:It's a semantic shortcut, nothing more. I could have said "it's in the best economic interests of Capitalists, who want to make money, to make sure that their customers have money to spend," but I thought most people here were smart enough to understand such things.MiM wrote:Hmmm, very interesting concept "capitalism's best economic interests"Seth wrote:Capitalism cannot exist without creating upward economic mobility because capitalism depends on free-market trade and commerce, and the destitute don't have any money to spend as consumers, so it's always in capitalism's best economic interests to make sure that it's customers have enough disposable income to support commerce. It all balances out very nicely when the markets are left to operate naturally and without redistributive regulation.
Who or what is this capitalism, that can have interests of its own? Are you absolutely sure you are not bowing to a God here?
Please excuse me for making that mistake with you.
No capitalist can ignore social issues or pressure for long because eventually it turns into bad press, which affects profits. That's exactly why unions still have power and why companies don't simply fire all union members and hire non-union workers. They are reacting to the economies of politics and social conscience.
I, for example, will never buy another General Electric product because GE is sucking at the Obamatrough and is supporting Obama's Marxist Progressive ideology and agenda. It's no different than Krupp Steel kowtowing to Hitler in order to become an industry giant in making artillery. By the way, that's the very definition of Fascism; "Cooperate with the dictates of the government and the government will favor you in commerce with regulation and economic incentives. Fail to cooperate and your company will be destroyed by those same regulations."
That's what Hitler did, and that's what Obama is doing.
Which is ignorant nonsense. The majority of "capitalists" are the mass of private middle class workers who invest in a few stocks or mutual funds and contribute to their 401K programs. Sure, there are short-term venture capitalists out there, but huge risk is deserving of huge rewards. The economic rewards of investing large sums of money are simply the fruits of the labor of capital owners who are risking those huge sums of capital in order to try to create some profits, be they short term or long term.The biggest problem, as I see it with the global capital market today, is that the capital is anonymous and separated from the people (the workers and spenders), and for the average single capitalist with big money to spend todays markets creates the best opportunities for those who bet their money on fast revenue, and completely disregards employees and customers long term well being.
Without capital investors willing to risk their capital, the economy would grind quickly to a halt, as we've seen in this recent recession. The reason unemployment is so high and the world economy is so slow is that capital owners (both companies and venture capitalists) are afraid of the regulatory and tax atmosphere and the uncertainties of making a profit through risking their capital loaning it to companies or using it to expand production. The Fed (and other central banks) are trying to stimulate business investment in expanding production by offering government money at almost zero cost, but companies are not biting at the bait because they are afraid that they will have all their profits taxed away from them if they invest. Venture capitalists are doing the same thing for the same reasons. They are sitting on vast pools of cash waiting out the 2012 election to see if a more salubrious regulatory and tax climate will emerge.
And justifiably so. Obama has promised to "tax the rich" to pay for his social engineering programs, so the rich are withdrawing their capital from the markets and they are sitting on it, not making profits, which means there's nothing for Obama to tax, which prolongs the recession but also helps to ensure that he will lose the election and be replaced with someone who won't try to soak the rich to redistribute their wealth to the dependent class and will give them regulatory and tax certainty that will permit them to calculate returns on investment and profits with some sort of reliability.
The notion that capital owners are strictly in it for short-term profits is not really true at all. It's all a balance. If a company needs investment capital to expand production, the venture capitalist will usually loan them money at a rate that makes the venture capitalist a decent return without bankrupting the goose that lays the golden egg, and the workers profit because the company prospers and expands. If the venture capitalist asks for too much profit, the company won't borrow the money and won't expand production, and the workers will suffer as the company stagnates or even declines and they lose their jobs.
And no company that relies on any sort of skilled workers can afford to pay them less than the market rate because they will just go elsewhere, so they pay them enough to avoid the costs of hiring and training new employees, which means a fairly negotiated wage dependent on the market for the skill set the worker is leasing to the employer.
When the economy contracts, usually (as in this case) due to government interference in the markets involving redistributionism rather than market regulation (it was the redistributionist efforts of Barney Frank and Chris Dodd, among others, that wiped out the real estate markets), then employers have no choice but to lay off workers or pay them less, because they aren't charity organizations, they still have to make a profit to continue their existence.
As the labor market is glutted with workers, wages naturally fall because of competition for jobs. And that's how it has to be. Industry cannot afford to carry workers indefinitely if their services are not needed or if the market price for the product has declined due to a stagnant economy, and workers either accept less for their labor or they lose their jobs.
The way to recover the economy quickly is for government to step aside, quit trying to prop up its failed social redistribution programs, set a firm, fair and affordable tax policy in stone, and stop trying to overregulate the economy.
With regulatory and tax certainty, companies will be able to predict costs and profits better, and will then plan expansions and increases in production accordingly, and the venture capital will flow for the same reasons.
It's all the fault of government over regulation and taxation for the purposes of social engineering and wealth redistribution. That's the cause of this worldwide recession, and governments are finally beginning to see the truth and take steps to quit spending so much money trying to buy the votes of the dependent class and let commerce recover and flourish.
