Relationship of Marxism to Progressive Policies and the Virtues or Risks Thereof

[Emily's Cat]

Could you elaborate a bit more on these reservations and the problems you believe stock markets cause?

Very, very briefly...

Direct purchase of stock in a company is an investment with an evaluated risk profile - the individual person buying the shares is knowingly and intentionally trading free capital now on a risky venture for a potentially higher future payout. While it's always possible for individuals to make poor choices and bad investments, it generally holds true that the expected return is correlated with the riskiness of the entity in which partial ownership shares are being purchased.

When it gets to the stock market, however, those shares frequently get divorced from the underlying evaluation of the risk and reward associated with the company. Shares get treated as commodities in their own right, and traded back and forth in ways that frequently mask the underlying risk. They get rolled into mutual funds, or industry aggregations where the high risk associated with Company A is masked by the safety of Company B. Because the stock is all commingled, the risk gets reported on a presumed "average" basis. This can artificially prop-up A and artificially harm B. It ends up spreading risk not solely among the various shareholders, but also between the companies whose stocks are being aggregated.

It also creates a middle-man market for the trading of those shares, and then you get day traders and various other trading firms who then make money with little to no risk of their own by facilitating the aggregated stock trades of people who have no actual knowledge or understanding of the underlying value or lack. So now there's an entity skimming value - not from the actual value of the companies that are represented by the shares, but from the act of trading other people's money.

The secondary market is even worse, in my view. That's the realm of options, puts, shorts, etc. In that case, it's not even necessarily the actual shares being traded, it's entirely nebulous concepts of future possibilities. On paper, those secondary mechanisms can serve to hedge risk - but that really only holds true if it's partnered with actual direct share purchases and a very comprehensive understanding of the portfolio of stock that's already held. In reality it's turned into something tantamount to betting. Hedge funds end up betting with other people's money.

 

[Emily's Cat]

But that's capitalism in this situation.

It should be noted that there are many needs that capitalism and market forces don't, won't or can't address. Sometimes, it's because the needs are not substantial enough. Sometimes, it's because of crony capitalism, sometimes it's because it's too large a project and not enough capital. Sometimes it's over regulation. Sometimes it's monopolies and trusts.

Most of the time, it's natural monopolies where the cost to enter as a true competitor is prohibitive, or where the delivery of the good must rely on shared infrastructure that can't be functionally allocated among the users.

Utilities almost always fall into that category. It is prohibitively expensive for a water company to build competing water pipes throughout a given area, so the cost to enter as a full competitor is prohibitive. But similarly, if two water 'providers' are using the same pipes to deliver water to their end users, it's virtually impossible to determine who much of which provider's water made it to which destination. At the end of the day, competition among water companies isn't functionally possible... so water becomes a natural monopoly and is appropriately managed as a public or municipal utility.

 

[ahhell]

Except it's the nature of free markets to close the doors behind established companies.
The regulations are often promoted and lobbied for by them.

Which means its no longer a free market. I do agree that this a common practice for established organizations though. I just think that's more of an argument for less regulation and less state intrusion into the market rather than more.

 

[acbytesla]

Most of the time, it's natural monopolies where the cost to enter as a true competitor is prohibitive, or where the delivery of the good must rely on shared infrastructure that can't be functionally allocated among the users.

Utilities almost always fall into that category. It is prohibitively expensive for a water company to build competing water pipes throughout a given area, so the cost to enter as a full competitor is prohibitive. But similarly, if two water 'providers' are using the same pipes to deliver water to their end users, it's virtually impossible to determine who much of which provider's water made it to which destination. At the end of the day, competition among water companies isn't functionally possible... so water becomes a natural monopoly and is appropriately managed as a public or municipal utility.

I doubt most. Outside of electric and water companies, what other utilities?

I think many monopolies are maintained by corporations that deliberately use their dominance to eliminate competition and fight destructive capitalism.
Twice in my career, the company I worked for was purchased by a larger company and was dissolved. It was cheaper for them to pay off the owners of the companies I worked for than lowering prices to compete. This was better for our owners. But was worse for the employees and the consumers.

 

[Emily's Cat]

Kind of like how there's only one company in the whole world that makes extreme ultraviolet photolithography machines, despite the huge demand for such.

The world is weird - I just watched a documentary thing about how this works last night!

It's a crazy level of complexity.

 

[Emily's Cat]

Since this is a thread with some nominal link to Marxism: The "theoretical" end point of the ideology of capitalism is for one person to own everything.

That seems like about as much of a leap as saying that all Marxism is about cronyism and grifting. I don't think that's ever been the ideological end-point, but I suppose someone could make that argument.

 

[SteveAitch]

Having read most of this thread, all I can say is...Je suis marxiste, tendance Groucho.

 

[Emily's Cat]

BTW, I'm not knocking capitalism, I'm knocking unfettered capitalism.

Anyone with reasonably effective executive function knocks unfettered capitalism.

 

[acbytesla]

Which means its no longer a free market. I do agree that this a common practice for established organizations though. I just think that's more of an argument for less regulation and less state intrusion into the market rather than more.

Aye, there's the rub. Be careful of throwing out the baby with the bathwater.

Sometimes, even often, regulations are needed. Such as minimum wage laws, laws that protect consumers and the environment. Laws like the Sherman Anti-trust Act.

 

[Darat]

That seems like about as much of a leap as saying that all Marxism is about cronyism and grifting. I don't think that's ever been the ideological end-point, but I suppose someone could make that argument.

No it isn’t. The capitalist ideology imposes no restrictions on who can own what, eventually in such a system one person will own all the capital.

 

[catsmate]

Nope it was not an argument against Marxism, it was a statement about the current political landscape. There was no criticism of Marxism in that part of my post.

My criticism of Marxism came in the next part the "Marxism had its time and like all ideologies it failed to achieve its end goal."

The data supports that argument.


Marxism went beyond being an analysis of capitalism, to claim it wasn't and/or isn't a political ideology seems frankly incredible to me. And yes that would be the fallacy of an argument from personal incredulity - if I was putting it forward as a logical argument to support my conclusion. But I wasn't. I was stating my opinion.

I would like to point out that, barring academics, economists and those who've Done The Research, most people confuse Marx-Leninism for Orthodox Marxism.

 

[Emily's Cat]

Profit Margins are a direct measure of how easy it is to break into a market: no one can charge what they want when anyone could do what they can.
The fact that the same companies keep on making record profits year after year (so not just windfall profits) is proof that they have managed to make it impossible for any would-be competitor to even get a foot in the door. Where there are big profits there is no Market, just some type of monopoly.

Not necessarily. It can certainly be indicative of a monopoly or oligarchy. It can also indicate a middle-man disruption of the supply-demand relationship. That's the case in medical services in the US right now... although some of that is approaching oligarchy as well. There are a lot of services that are far, far overpriced by the provider, because the purchaser is insulated from that price via insurance. This is especially true for things that are either lifesaving or have a massive impact on quality of life.

In most cases, middle-men take profit from both the supplier and the demander. In some cases, especially when there are unbalanced regulations in place, a middle man allows the supplier to take nearly all of the surplus value.

In a perfectly efficient Market, profit margins are zero.

Well, no. In a perfectly efficient market, arbitrage is zero. Profit still exists whenever customers value the good at a higher price than it costs to produce. Which is almost everything. Profit gets very very small when you're talking about commodities... but most goods that we purchase aren't commoditized any more. Even eggs aren't commodities any more, what with organic and free range and all the other non-egg-related ways that different companies distinguish themselves and command a higher price point.

 

[Emily's Cat]

You're missing something. Capital is not infinite.

With fiat currency, capital is theoretically infinite.

Pragmatically, however, inflation is a limiting factor

Theoretically it will always go to where it can get the highest ROI. Someone could enter the market and industry for which I work with probably, oh about $50,000,000 in startup capital. But why would they do that if that capital can be better used somewhere else? Why doesn't my employer sell all their assets off and become an AI startup or similar. Its because they already have the personnel, expertise, and equipment in place to keep on doing what they are doing. The business is worth much more than the sum of its parts.

I mean, kind of but not really?

The worth of a business is the value of all of its assets, including the skills of its personnel, plus the extrapolated value of future profits. The valuation of those future profits is dependent on the risk of those future states.

Sure, your employer could sell off their assets and try to be an AI startup... but I bet the risk associated with that venture is extremely large and future profits are highly uncertain. Alternatively, they can continue to be what they are and have a much more stable and predictable future cash flow. Plus the goodwill of their customers and personnel.

 

[Emily's Cat]

Which means its no longer a free market. I do agree that this a common practice for established organizations though. I just think that's more of an argument for less regulation and less state intrusion into the market rather than more.

I don't know that it's an argument for *less* regulation, so much as for *better* regulation. Mostly it's an argument against lobbyists being able to buy political favor.

Regulation is necessary in a predominantly capitalist society. Humans are opportunistic by nature, and laissez faire capitalism is a fantastic way to ◊◊◊◊ up a society of more than about a thousand people.

 

[Emily's Cat]

I doubt most. Outside of electric and water companies, what other utilities?

Electric, water, gas, sewage, trash services, roads, street signs, police, fire fighters, emergency response services, weather prediction, probably a few others I'm forgetting. There are also things that we don't necessarily realize are natural monopolies, because they're underlying infrastructure - phone lines, undersea internet cables, etc. I suspect that in the coming decades, internet access will become a natural monopoly as it continues to evolve into a necessary service where it's inefficient and prohibitive for competing companies to lay their own lines, and there's no meaningful way for them to distinguish their services. In many parts of the US, there's already only one option for TV Cable or Internet for this reason. Many cell services build their own towers, but more and more they're starting to share/rent those towers to others - I expect cell service will also turn into a utility.

I think many monopolies are maintained by corporations that deliberately use their dominance to eliminate competition and fight destructive capitalism.
Twice in my career, the company I worked for was purchased by a larger company and was dissolved. It was cheaper for them to pay off the owners of the companies I worked for than lowering prices to compete. This was better for our owners. But was worse for the employees and the consumers.

Sure, of course that happens too.

 

[ahhell]

I don't know that it's an argument for *less* regulation, so much as for *better* regulation. Mostly it's an argument against lobbyists being able to buy political favor.

Regulation is necessary in a predominantly capitalist society. Humans are opportunistic by nature, and laissez faire capitalism is a fantastic way to ◊◊◊◊ up a society of more than about a thousand people.

I didn't say none. I'm just saying that regulatory capture doesn't strike me as a particularly good argument for a robust intrusion into the market by the state. And it's not...soley a function of capitalism. It was a thing under mercantilism and a it is a thing done by arms of the government as well. The best example I know of is the CA prison guard unions. They lobby against privatizing prisons and for tough on crime legislation to maximize jobs for their members.

California Correctional Peace Officers Association - Wikipedia

en.wikipedia.org

 

[Ivor the Engineer]

What sets levels of wages?

 

[Trausti]

Reality is that nobody has read Marx and been inspired or appalled by him. Emily's Cat certainly hasn't, and she doesn't have to in order to know what she thinks of him. I doubt that Stavros Halkias ever read Marx, but he's a pretty smart guy, so maybe he has. Even here at ISF, a couple of the rest of you guys may have read (some of) The Communist Manifesto, but that's about it.
Not even people who refer to communism "as the theory describes it" appear to have ever read or just attempted to read Das Kapital. I assume that's the reason why they go quiet when asked to elaborate.
Much like the Bible, Das Kapital seems to be whatever people make up about it. To The Big Dog it was 'the atheist Bible,' which I showed with plenty of examples that it wasn't. (Again: It's economics, not philosophy.) To Emily's Cat it's the evil lurking behind the ideas of woke or "progressive notions" and CRT. And alleged centrists and liberals aren't very different in this respect. Nobody has read it, but everybody likes to pretend that they know what it is.

That's an astute observation. All those failed socialist countries of the 20th Century. If they had actually read Marx, they wouldn't have failed. Brilliant.

 

[steenkh]

If they had actually read Marx, they wouldn't have failed.

Or they might never have started.