What Is Capitalism?

Tyler Durden's picture

On a day when the sad reality of our (AAPL-free) centrally-planned economy came a little unhinged, it is perhaps useful to reflect on just how different our 'capitalism' in the US now is from other 'capitalist' societies and the one we had in the 1900s. Robert Murphy (of The Politically Incorrect Guide To Capitalism book fame) explains how everyone has an agenda - yet everyone agrees that they despise capitalism. Capitalism is the system in which people are 'free to choose' and this is compared to socialist economies (where prices are set by the Fed state and assets can be confiscated for the benefit of the people). The fear of capitalism's citizenry running riot with unregulated actions leaves critics focused on a belief that regulators and bureaucrats know better than private citizens how to make their own decisions. This brief discussion ends with a sprinkling of Ayn Rand, Obama, Geithner, Barney Frank, and Harry Reid and their efforts to evade Capitalism's features, misrepresent its nature, and destroy its last remnants.


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Shameful's picture

Iceland was a financial fraud run wild, at least they did the right thing and didn't get saddled with the speculative debt by a complicit government, though their government sure tried.  The people didn't allow it, the government, of the people, seemed eager to sell them into bondage.  Norway is a Oil Emirate in Europe, when the North Sea oil runs out the piper will need to be paid.  My guess is they will enter into a death spiral when that ends, didn't do well in UK.  Singapore is quite free economically but with stricter social laws, and is a place I have looked at in the past.  Far from perfect, but we live in an imperfect world.  But then Singapore is more or less a dictatorship of the Lee family.  Turns out to be of the benevolent sort, but it is what it is.

How can government be honest?  Are thieves honest?  When something exists openly as an engine to expropriate money, how can there be consent?  The consent that is there is largely but the desire to be dominated by some and the fear of the monopoly of force by the rest.  There is a reason that the duly elected representatives for the US government are passing laws such as the NDAA.

Any size?  Then why not make everyone an employee of the government?  By that rational we should all be able to trust the government as we are all part of the government.  You do not seem to have a problem with 'government' productivity so surely this is an equitable solution for all?

Also please explain what GS has to do with this?  If it wasn't them it would be another group.  You cannot tell me that GS execs were pilfering the public coffers of Ancient Greece, the Roman Republic/Empire, or Medieval Venice.

NoClueSneaker's picture

France was a decent country with the highest social standard in the world.

Corrupt socialists went on rampage, inventing the €U-profit maximizing  fer da lameass aparatchiks. Change brought the incestuous fascist cleptocrats in the guberment, which choose the GS-bussiness model as the new credo for "La Grande Nation".

Three lameass banks destroyed  Europe as we know ( from 1789 ), and the "intellectuals" gave a hand to the viagra conservatives.


GS took a biggest part ( 2 Tr. ) of forfeited 2008 money from the Feds ( 16 Tr. ), and foddered the greediest suckers pretty much everywhere, just to short them.

Criminal energy of GS, and the genocide they effective executed has no match in the human history.

Goldman Sux killed more ppl. then Nazis, Soviets, American armed forces and Chinese together.

Any objections ?






BeetleBailey's picture

The countries you use - as well as Sweden - which is used by others, all have the same advantages going for them that the US does not;

1. They have strict, no bullshit immigration laws. Thus, their populations are static. Try to get in to one of those countries. You'll either have to have lots of money, be of family provenance, or marry someone indigenous to the country.

2. Indigenous populations, such as Iceland, Norway and Sweden for an example, have the same set of values, morals and standards. A better "fit", if you will, for a socialist central plan. Conversely, diverse countries such as the US, have all types of the aforementioned morays. One look at the U.K. bears this out. Their open immigration policies have led that once indigenous population into financial ruin, with their dual sword self-stab of governmental health care.

3. Lastly, you assume governments can be run "honesty". Our founding fathers - Jefferson to be sure - warned of this, and counseled to "question authority". Our government's track record of running anything has been abysmal. Either they bankrupt it, ruin it, or over-regulate it. Our government is THE authority on monopolies. The USPS is just one example. They have sole right to each person's mailbox. Imagine if Microsoft were THE only software maker/GM THE only car company, etc.

The government well knows that if they opened the competition to UPS and Fed Ex for your mailbox, they would have to;

*LOWER their rates

*Vastly improve their services

*Offer more features

...or be run totally out of business. Hell, they can't even turn a profit WITH the monopoly.

THAT...is why capitalism works. Freedom to CHOOSE the best for the least cost.

CONSUMERS - if given the choice, always choose the best for them.

This is why I teach to my students that we are really a CONSUMERISM nation.

jpmrwb's picture

What in the hell is a "decent equilibrium?" I love your precise economic calculation. So would one think the equilibrium has a bra and panties? Did you learn what your say from government schools? You must have gotten good grades from all your socialist teachers. Give us all a break and find another blog site. Maybe, MSNBC or the Huffington Post.

AnAnonymous's picture

If you believe the government should intervene in markets, you are in effect saying the government can and should have the power to pick winners and losers.


Huh, no, the government is just a tool that winners use to win. Losers fail to use the government.

Free marketeers have this tendency to think ethereal entities that exist independently of the others.

The markets, the government...

US citizen cheap propaganda.

GeneMarchbanks's picture

'Free marketeers have this tendency to think ethereal entities that exist independently of the others'


AustriAnnie's picture


The very existence of "corporations" implies government protection -- granting privilege to some market actors over others, via political means.

This is why the use of the word "capitalism" is so dangerous, nobody views it as "free market" but rather a market run by corporations (protected by government).  The definition has been hijacked.

GeneMarchbanks's picture

Incorrect, Annie. You and your buddy should read:


and while visiting realityville please also check out the work of Michael Hudson.

You and your pal are contradicting yourselves unknowingly.

AustriAnnie's picture

From the description: "Chang shows, today’s economic superpowers—from the U .S. to Britain to his native Korea—all attained prosperity by shameless protectionism and government intervention in industry."

That is exactly my point.  What has been labeled as global free trade was in fact nothing of the sort.

I think you and I are probably agreeing, but misunderstanding each other.

Buckaroo Banzai's picture

Michael Hudson is a fucking Marxist. That's a fact.

AnAnonymous's picture

The very existence of "corporations" implies government protection -- granting privilege to some market actors over others, via political means.


Absolutely. And it is of course not part of the competition process of allocation of resources to manipulate the rule, no, no, sworn.

DosZap's picture

This is why the use of the word "capitalism" is so dangerous, nobody views it as "free market" but rather a market run by corporations (protected by government). The definition has been hijacked.

Then INCORPORATE YOURSELF..............................

Belarusian Bull's picture

Under a free-market system, monopoly is impossible, unless it serves the best interests of it's customers (low prices, high quality). In this case, monopoly is a good thing.

riphowardkatz's picture

exactly. well said. 

There is nothing inherently wrong with  people  preferring one option over another.

don't like it start your own. it has happened tons and tons of times when companies have had a dominate market share


On the other hand when a mixed economy supporting government supports true monopolies like AT and T or to big too fail banks there is not even an option for choice.


GeneMarchbanks's picture

'Under a free-market system, monopoly is impossible, unless it serves the best interests of it's customers (low prices, high quality)'

That is a great line. Sadly, it can only work to mesmerize the man-children in the Infantocracy the US has become. Somehow these primarily decent and kind individuals have come to embrace a system that is keeping them hostage under a guise of security, turning a blind eye to global exploitation. A rootless utterly confused 'nation' worshiping their own slavery.

In the final analysis, it matters not. The dominoes have been arranged so and the 'capitalists' will hang themselves ultimately just as they desire. Hopefully, America can get rid of one of its most central sins, naivete, and start anew.

riphowardkatz's picture

and we will all aspire to become as wise the great genemarchbanks a true intellectual giant with so many words the generate awe and wonderment , a patriarchal tone that creates confidence and a misuse of language that is sure to not mean anything  but through its contortions justify his desire for  power that he has never been able to gain through his own effort.


GeneMarchbanks's picture

and we will all aspire to become as wise the great genemarchbanks a true intellectual giant

+1 I hope so as well. You're too kind.

JOYFUL's picture

let's see....

after a series of exchanges(see below 14:29. etc.) in which you fail to muster the ammunition to address or refute any of the guys' actual points, you indulge in an whiney kind of extended defamation of the personal sort that actually mirrors what yu impute to be the problem of the guy yu be maligning, and then to top it all off, treat us to the spectacle of an homage to the tired rhetoric of the great trotskyite neo-con icon herself, as if to announce to the assemblage that you have just graduated to the stage of adolescence where Randian semantics are of hypnotic allure....

please enjoy your visit.

riphowardkatz's picture

How do you respond to nonsense like this

can only work to mesmerize the man-children in the Infantocracy the US has become.

(talk about adhominens, he starts off discrediting the person as a man-child who lives in an infantocracy. Hard to argue with a name caller.)

 A rootless utterly confused 'nation' worshiping their own slavery.

(he does a diservice to the actual slaves that have an do exist. I can leave anytime I want, I can go off the grid anytime I want, he is making stuff up to make himself feel better and smarter.it doesnt work) 

In the final analysis, it matters not.
(Again no chance to argue because he already has said it is pointless to disagree with any thing he says because it doesn't even matter)

Regarding the "Randian" stuff, would it be possible for one just one Rrand basher to have a rational argument with out resorting to name calling and claiming things like sophmoric, or adolescence. Use facts to dispute what she claims. Show me where there are conflicts in what she claims, or can't you?


Ghordius's picture

LOL - Joyful, you nailed it! LOL

Stax Edwards's picture

The appropriate role of government is to assert its authority to break up monopolies if and when they form (particularly when they pose a threat to the population).  Government has shown an unwillingness to do this, rather they want to hang the taxpayers out to dry to save the monopolies.  We will find out what our .gov is really all about in the next couple years when we see if they will do their part and break up TBTF Banks.  I can accept that the system had to be saved.  I cannot accept that once the save has taken place they will not follow through and break em up.  TPTB have a real opportunity in front of them to restore trust.

It is telling that even Wen Jiabo is now advocating the break up of the behemoth chinese state run banks.  Global coordination is required here for success.  Me thinks that globally speaking, whether or not the Swiss will play ball is the tell.  China and US can and will push for it.  UK will go along. I am all about free markets but in a finite global environment too much concentration becomes a detriment to society as a whole.  We shall see soon which path is chosen.  I differ from the hardcore austrians in this belief.  Competition is good.  Monopoly with an implied taxpayer guarantee is BS.

jpmrwb's picture

Even Marx said that capitalism must run it's course before you get to his utopian socialism.

AnAnonymous's picture

Under a free-market system, monopoly is impossible, unless it serves the best interests of it's customers (low prices, high quality). In this case, monopoly is a good thing.

Ideal cases are study cases.

Usually, they do not exist.

It will converge toward the ideal case.

Monopolies are idealistic.

Oligopolies are the practical thing.

When a competition process runs to its end, the usual result is a state of oligopolies.

So yes, no monopoly but oligopoly.

jpmrwb's picture

Alcoa was a natural monopoly because they did not go to the government trough. It is very hard to maintain a natural monopoly because you always have competitors trying to make a better product at a lower price. In the case of Alcoa all the competitors went to the government and wella we have anti-trust laws.

riphowardkatz's picture

then what is socialism and fascism? smart guy.


GeneMarchbanks's picture

The difference between Mussolini and Tito?

riphowardkatz's picture

and the difference between mussolini politics and too big to fail?

jpmrwb's picture

Socialism and fascism are the same. They are collectivism and totalitarian.

GeneMarchbanks's picture

In fact they're not. Thanks for playing.

jpmrwb's picture

In fact they are. Tell all your socialist teachers that you have found that they are wrong and there is a better world. Thanks for not playing.

Ghordius's picture

eh? they are both totalitarian, but the one is collectivist and the other is corporativist

GeneMarchbanks's picture

You've been lied to. It's OK though. Compartmentalization of social movements is indeed very tempting mostly because it takes away the ambiguity of all of these very different movements.

Nazism, fascism, socialism are all basically social phenomena and there isn't one true interpretation of all these historic movements. You feel threatened having decided that I'm a socialist or somehow defending it, which only reveals your severe bias and lack of critical thinking. What we can safely say is that they are all reactions to unrestrained capitalism except for fascism which is just simply capitalist logic taken to its most extreme.


malek's picture

 you forgot to sign with

Your Ministry of Truth

HamyWanger's picture

"The robber barons" have actually helped the poor"

I've laughed on this one. How did Rockefeller and his Standard Oil improve the living conditions of the poor?

The Alarmist's picture

Uh, by bringing them oil to heat their homes more cleanly than they could with wood and coal? Oil to help run industry more efficiently so they could afford to buy the stuff they were making. Oil that to this day makes life so much better for billions of people despite environmentalist BS to the contrary.

Reminds me of the "What have the Romans ever done for us?" scene from Life of Brian.

Hamy, you continue to demonstrate a lack of vision beyond the tip of your nose.

q99x2's picture

The capitalist revolution is coming for the banksters, the Rockefellers and for your square oligarchist's flag. MoFo

riphowardkatz's picture

Does this help you hamy?

Rockefeller’s improvements, which can be enumerated almost indefinitely, helped lower the prevailing per-gallon price of kerosene from 58 cents in 1865, to 26 cents in 1870—a price at which most of his competitors could not afford to stay in business—to 8 cents in 1880. 


Vince Clortho's picture

The issue is framed incorrectly.  The issue is not whether some people incidentally experienced improved conditions as a result of  the Rockerfellers (and their associates activities) in route to becoming Planetary Rulers of us all.  The Robber Barons were motivated strictly by greed.  They came out on top in a scramble to see who could obtain dominance.  The improvement of the conditions for some was a byproduct of the need to recruit customers (debtors, users of products and services) rather than a desire to help others.  Anyone who has researched the Rockerfellers can attest to this.

The correct way to frame the issue is to ask how could the available resources have been most efficiently utilised to do the greatest good for the greatest number, over the long term.  The fact that the Robber Barons suceeded is in no way an endorsement of their methods being the only way, or the best way.  And fast forward a century later, and we find that some rather serious complcations that we are now experiencing on a Global Scale were part of the Baggage that came with the way things unfolded in the early 1900s.

Prometheus418's picture

Don't be a twit.

Oil made everyone's life better, and continues to do so.  Rockefeller and Standard Oil did that, and he deserves credit for it.  I don't support his hiers using their inherited money to control financial trusts that peddle influence to gain more money and power without producing anything, but the original Rockefeller was a humanitarian in a way that many find surprisingly difficult to understand- yes, he got filthy, stinking rich, but he did it by serving others, and paving the road for them to become rich as well, provided they had the ability to use the opportunity.  Even better- those who have little ability and produce almost nothing get a piece of that pie too.

All of this crap sounds like simple jealousy to me.  There is no question about how the resources could have been most efficiently ultilized, because without the guy that made it happen in the first place, there would be no resource for you to control and distribute.  And when the next thing comes along, it's origin will not be a government think-tank or a group of people ensuring that resources are being allocated according to some arbitrary scale that preserves the status quo.  It'll come out some some guy's garage, and the power that made it possible will have been supplied largely by oil bought on the free market.  That oil makes the power, provides the lubrication, makes the plastics, and produces the food that makes the modern world go 'round.

Let the big-talking planners control things, and innovation will end.  Why bother to make something new and bring it to market, when it's only going to be stolen?  You should thank Rockefeller every time you get in your car, fool- not sit around bitching about him on teh interwebs.  If you don't like oil, then don't use it.  I'd be happy to make *you* filthy rich by purchasing your cheap, portable, and easily available source of alternate power- so get on it, and I'll be happy to defend your wealth, too.

Forget your dumb theories, and look at the reality all around you.  This world was brought to you courtesy of men like Rockefeller and Tesla- that doesn't mean you need to be a slave to thier children or grandchildren, but it does not give you the right to badmouth your betters (To be clear, I mean the prime producers of wealth- not their families or organizations.)

JOYFUL's picture

thanks, for what must be the most confused comment ever laid in the magpies' nest..

This world was brought to you courtesy of men like Rockefeller and Tesla

...and the oddest bedfellows ever!! Your post is chock a block with equal gems of unintended hilarity...

You should thank Rockefeller every time you get in your car

and you call him a twit?!?!?!? If we could get yu together with M$B, the world would be set right at last!!!


p.s.  note to VC...thanks for providing the necessary corrective to a part of the thread that was in danger of becoming a parallel universe of inverted logic!

Vince Clortho's picture

Appreciate your support for my post, Joyful.  And I have to agree with you about those gems in Prometheus reply.

Vince Clortho's picture

Your ad hominem reply is indication of lack of substance and logic.

"without the guy that made it happen in the first place, there would be no resource for you to control and distribute "

Your implication above that the petroleum would be still laying around unused if it had not been developed by Rockerfeller is shallow and uninformed.

You then try to put words into my post that I never wrote creating a "straw man" and then attack that position.  Lookup logical fallacies on the internet and see that your post is composed of several of these logical fallacies strung together.

Your post contains distortions and false assumptions.  As it stands, its not worth any more of my time.  I'll leave it at that.

Prometheus418's picture

Probably more an indication of Vodka consumption, but there is a point to the above.

We go on and on about how everyone is manipulated and abused by TPTB, but not every case is the same in the same way.  I have researched Rockefeller, and while he may have been an asshole, he was the right kind of asshole.  The guy continually improved the refining process, and continually lowered the price for everyone- his competitors were not able to keep up, and folded.  That inexpensive oil that he made possible represents one of the single greatest gifts to humanity in history- his personality is irrelevant in the face of that.  It's like Henry Ford- he was an asshole, too- but he was the asshole that made the middle class possible by paying employees enough to buy his product.

Your assertion was that the use of oil should have been controlled and dispersed in some manner other than it was, but you left the method for this blank.  In every case I've encountered, this is an argument made by those who support state allocation of resources.  Yes, things would have been different if the government had held the reins on oil, but I can't see any evidence at all that it would have been better- they don't exactly have a great track record.

A great deal of this comes from having moved a bit up the food chain in the past couple of years- I know what both sides are saying, and to be honest, I have less and less sympathy for those who simply repeat actions created for them by others, and then whine about how unfair their lives are.  Didn't realize it until I had to deal with underlings, but frankly, the 99%'ers are a bunch of asses- while I was next to them, I assumed that they were doing what I was, and sympathized with how the mean old boss-man was making their lives difficult.  But then I grew up, and had real responsibilities- all of a sudden, people bitching about not getting this or that day off seems pretty stupid.  They weren't actually doing what I was doing, and that is why they stayed where they are.

It's the same old story it always has been- you'd make different, better decisions if they'd only let you- until you have to, and see the rest of the puzzle.  I'm not going to change your mind, but I will leave you with this- If everything you've been taught is a lie and propiganda created by a shadowy PTB, then why were you taught that Rockefeller was a Robber Baron that exploited the working class, and only the courage and heroism of Nast was able to curb his evil ways?  Hell- I don't know that you were taught that, but I know that when I was in school, that was the party line.

Everyone has personality flaws that can be used to cast them in an unfavorable light- yet we see those who produce and provide the most villified time and time again, while wastrels who produce nothing but hot air are continously lionized as champions of "the people."  Why do you think that is?  Who are the real powers that be?

I don't pretend or presume to have every answer- but I do know that the answer has not yet been discovered.  We've had boogeymen thrown up for our two-minutes hate sessions, but they aren't the puppet masters- I think if we knew the real truth about everything, it would surprise everyone.  Just keep an open mind- "alternative" dogma is still dogma, and maybe not everyone lives to see the world burn.

Marduk's picture

After 350 SPX points rally , when ZH finally called for a melt up last week, I knew we were in trouble.

I am guessing we will see 2 to 3 DD post per minute at the market bottom





Tyler Durden's picture

We may be in bigger trouble when our commentators actually start doing math and/or reading:

From March 21

"Dumb Money" Refuses To Be The Dumb Money For Yet Another Week


Goldman screams it is a generational buy, Larry Fink goes all in stocks, Notorious BIGGS is 90% long, anchors on comedy-financial fusion channels are channeling the producer in their earpiece and screaming at the teleprompter to "sell bonds and buy stocks", even as stocks are at their highest in nearly 5 years and... what happens? In the latest week, ICI just reported that domestic equity retail funds just saw another $2.9 billion outflow, the 4th consecutive in a row, and the 23 of out 27 outflows during the entire parabolic blow off top phase the market has undergone since October, and instead put another $9 billion in fixed income funds "soaring" yields be damned. What does this mean? Probably that the stock ramp is about to get uber-parabolic for the simple reason that this is the only thing left in the status quo's arsenal - to keep doing the same old same old, hoping for a different outcome, because this time it's different. Only this time the dumb money either doesn't have the cash to burn, or just doesn't want to participate in a rigged, corrupt, centrally-planned market. Whatever the case, the Primary Dealers and the Fed will just have to keep hoping more central banks pull a Bank of Israel and sell the hot grenade axes to them, since Joe Sixpack is done being the "dumb money."

Then two weeks later, just as the market peaked...

"Won't Be Fooled This Week Either": Retail Celebrates Highest Stock Prices Since 2007 With Biggest Redemptions Of 2012


Another week of artificial stock rampage courtesy of a transitory, one-time $2 trillion liquidity spike (that is now ending, if only temporarily), and another week of retail investors refusing to be suckered in (and joining corporate insiders who just sold a record amount of their own stock). In the week ended March 28, domestic equity mutual funds per ICI saw another $3.5 billion in equity redemptions: the biggest since the start of 2012, bring total 2012 YTD outflows to $19 billion, nearly 100% more than the outflow for the comparable period in 2011, which saw "only" $10 billion in outflows. Truly a good way to celebrate the highest artificial stock market high since December 2007. And to all the "but the money is simply going into ETFs" apologists: you are right, with one caveat: Bond ETFs! ... And of course, the TVIX.

Hedge Fund of One's picture

Where was the call for melt-up? I didn't see that one. Have seen sarcastic remarks of how bad news "might be good for another 10 point ramp", etc.

slewie the pi-rat's picture

as tyler sez:  the commentators (not the commenters) may need to study a bit more

a commentator might have seen "long positioning" from certain players and been reluctant to short;  another might have seen it too, and, especially w/ the quarter ending, been ok in stocks, last week;  maybe a "call" to not fight the tape here?  up means up!

these types of ideas were in the essays here;  not coming from tyler, tho, as he sez