Wednesday, September 07, 2005

Individuals in a Capitalistic Society

The gnuarch mailing list is under fire again. Companies are evil this, venture capitalists are slash and burners that.. the same old story from you know who. When I hear tirades such as these, I can't help but consider the motivations of the writer. Is the person complaining that the system does not work at all, or is the individual is complaining that the system does not work for them?

The prototypical industrialized society is framed around the capitalist system. This system provides for the private ownership, either individually or as groups, to conduct commerce interdependantly with a minimal amount of government controls. An entity can focus on the things that it is good at and trade resources (typically capital, workprodcut, goods or ingenuity) for the things that it is not. This specialization allows for much greater efficiencies than any person could achieve individually.

A player in the capitalist model, whether its an inventor, an investor, a small company or a large corporation, is essentially a living organism that requires certain resources to exist. These players, instead of living off of salads and cheeseburgers, live on capital. Any entity in the capitalist model that runs out of capital will starve and die no less surely than any breathing creature that runs out of food.

This means that the capitalist system is, to some extent, darwinistic. Players, in order to successfully compete against other players, will maximize their value (price vs. worth) by making arrangements with the most effciencient players that they have access to. Failure to do so results in less capital as the competiting players become more efficient than the players that don't.

The price of a product is not limited to the initial cost. Direct factors include, but are not limited to: transportation costs, resale value, maintenance costs. Indirect price factors include the cost of maintaining the relationship with the vendor such as, but again not limited to: Effort contacting the vendor, the integrity of the vendor and the cost of maintaining a positive relationship with the vendor.

A key point that many individuals fail to realize is that individuals are mandatory participants. An individual, just the same of a large multi-regional conglomerate, has a certain amount of resources, whether its capital (venture capitalists), workproduct, ingenuity or other things. These resources can be traded for other resources such as a paycheck, partial company ownership, health care, pensions and so forth. These resources are used to keep the indivitual playing in the game, so that they are able to earn (and potentially reinvest) for more capital.

Just as with any corporation, an individual can price themselves out of the market in any of a variety of ways. One of the many ways that an individual can undercompete is asking for an amount of capital that exceeds thier worth as perceived by others. Another, more subtle, way to undercompete is to make the cost in effort of working with the individual high enough that potential worth is overwhelmed. An individual that is unreliable, inconsistant and works poorly with others may not be able to trade his inherent worth at any price (even free).

Thus, any person or company that finds itself running out of capital must immediately improve the offered value of its goods or services or face failure. Failure to do so can result in metaphorical (literal in the case of the individual) starvation. Thusly, a player must reduce either cost or increase worth. Increasing worth over the immediate term is typically not practical. Reducing cost, however is.

For an individual, one can either reduce the price for doing business or reduce the cost of doing business with the individual. An individual faced with the need to immeidately reduce cost has options available to him or her, including: Improving reliability, improving consistancy, improving honesty, improving relations with others and getting along better with others.

Fighting with others, complaining and other non-constructive acts while under the threat of starvation is a short sighted methodology that will not work.

1 Comments:

Blogger James Blackwell said...

Andrew Suffield was kind enough to comment on irc about this paper. Here is the conversation:


asuffield: that's a good example of why society is so damned fucked up
asuffield: precisely that attitude is why the rich get richer and the poor get left in a hurricane-wrecked city to drown

jblack: I don't see it as an attitude so much as a definition of how things are.
jblack: You give me too much credit if you think I define how the world works.

asuffield: the attitude would be that it has to work this way
asuffield: there's plenty of systems other than capitalism

jblack: I don't say there aren't. I said that's the model that (most or many) industrialized societies use.
jblack: The difference between the way things are and the way things should be isn't what this is about. Its about how to survive in how things are.

asuffield: that's because it plays well to certain very human tendancies: arrogance, greed, lust for power, and the herd mindset

jblack: Again, I'm not defending capitalism.

asuffield: 'surviving' in this system means getting stomped on, and lying down for the next guy to stomp on you
asuffield: you can be a doormat, you can play to win (which means making other people be doormats), you can game the system, or you can duck out of it entirely

jblack: I disagree. surviving in the system means learning how to play more efficiently than the other players.
asuffield: well, your description was the way to be a doormat
asuffield: nobody at the top got there by acting that way

jblack: How carefully did you read it?

asuffield: they got there by climbing over all the other bastards which they killed along the way
asuffield: "any person or company that finds itself running out of capital must immediately improve the offered value of its goods or services or face failure"
asuffield: this is the doormat approach. the notion that your value is determined by the services you can provide

jblack: in a capitalist system, it is.

asuffield: the 'winner' approach would be "any person or company that finds itself running out of capital must immediately take capital from other people or companies"
asuffield: here, your value is determined by the services that other people can provide to you
asuffield: you don't invent something worthwhile, you find somebody else that did and construct a legal way to steal it

jblack: No, you're backwards. value is determined by part in worth.

asuffield: that's philosophy, not capitalism

jblack: asuffield- I don't want to be rude, but this stuff should have been covered in your 110 courses in college.

asuffield: "american herd-animal indoctrination" is not a required course in UK universities
asuffield: I'm quite aware of the bullshit they feed you and why they do it
asuffield: it is one of the reasons why american 'winners' are so derisive of university education

jblack: You're welcome to respond and show everyone where the logic fails.
jblack: I suggest that you bear in mind that survival has always been competitive, and its not likely to change any time soon.

asuffield: I rather think I just did, and you responded with an argument from authority, which is what I'd expect from the indoctrination

jblack: Ok. which statements did I make that are wrong?

asuffield: that's what I just covered, and I really don't feel like going over it again

jblack: No, you didn't.
jblack: You covered why the capitalist system is wrong.
jblack: You didn't cover why my statements are wrong.
jblack: You didn't say "You're wrong here, because unlike your statement here, the capitalist system doesn't work on a good based system."
jblack: If I had made the statement 'The capitalist system is the right way to go, and this is why", then you could say I was wrong about that with proof that statements were wrong.
jblack: But I didn't say that. You're performing a straw-man argument.
jblack: Are you saying that my statements are not true, that that is not how the capitalist system works?
jblack: Or can you state that my statement, that most industrialist societies are not capitilist? (You hint at that above)
jblack: That's what I thought. :)

asuffield: I'm saying that you're describing capitalism from the perspective of the doormat members, and assuming that there's no other way to deal with it
asuffield: the extension of this principle is that if you're a good doormat, you might be a winner someday. that's what the indoctrination taught you

jblack: Ok. But what did I state that was wrong? Which conclusions have I made that you can prove are either A) unsubstantiated (or worse) B) false. ?

asuffield: shrug you've carefully avoided making conclusions in aneffort to handwave away objections (which does mean your rant lacks a point). I'm just saying that your attitude is why things are like they are.

jblack: Oh, I make a very clear conclusion.
jblack: People that get along poorly with others can exceed their value to others and resultingly end up very hungry.
jblack: can exceed their worth, I mean.

asuffield: if they're a doormat

jblack: You're resorting to ad-hominem attacks again.
jblack: You're not addressing my argument.
jblack: Can you prove a different way to remain fed in a capitalist market?

asuffield: three (well, two). above.
asuffield: the important one being this: nobody who gets to the top got there because of value they provided to others

jblack: Certainly you can reasonably argue (and remain consistant to my argument) "Sure, so don't live in a capitalist place"
jblack: Thats outside the framework of this logic.
jblack: What's more, I agree with many of your points, that capitalism is in direct conflict with humanism (and I'm a humanist, myself)
jblack: Ok. ...nobody who gets to the top..
jblack: Ok. That's an argument that gets pretty close to what mine implies.
jblack: Although I'm not really hitting on success. I'm hitting on avoiding failure.
jblack: I'm not sure that you could argue that avoiding failure and success are synonymous (though they're certainly not mutually exclusive!)
jblack: If you could successfully (pun not intended) prove that success and avoiding failure are the same thing, then you could possibly get through a logical argument that my paper may be accurate, but not useful.
jblack: another thing you could do is drop the atom bomb of philosophy, Nietze, and argue that there's no point to making a logical argument at all.
jblack: At that point, we all may as well all go get drunk and give up figuring out anything.

3:17 PM  

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