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  •  It's the same problem that arises with any "ism." (8+ / 0-)

    Whether it's capitalism, communism, or socialism.

    Human nature comes into play. People start rigging the system for their own benefit.

    Under the theory of capitalism, competition and the pressures of supply and demand will create a system of checks and balances that will benefit capitalists, labor and consumers.

    Unfortunately, this doesn't work when, for example, Company A is willing, as some companies were during the 19th century, to hire armed thugs to burn, destroy or wreck the operations of competitors, or beat the hell out of anyone proposing a labor strike.

    It doesn't work when a mega company tell suppliers that it will buy from them only if they don't sell to the mega company's competitors.

    And it doesn't work when company boards are made up of CEOs of other companies, and they all end up scratching each other's backs when it comes time to set executive compensation.

    Human nature can be counted on to come into play no matter what organization you create, from a huge corporation to the smallest country church.

    One function of government is to "provide for the common welfare" by holding this tendency in reasonable check via sensible regulations.

    •  That's the best expression of this (5+ / 0-)
      Recommended by:
      Devilstower, kaliope, JeffW, brein, yaque

      principle I have ever read.  

      This is how I put it recently:

      I think "free markets" would work if it was possible to make men behave without corrupting the system.

      It seems that there is always the fraudulent manipulation by a few who gain to the disadvantage of millions of others.

      But your explanation is so much better, and applies in a more general fashion.

    •  Basically true (1+ / 0-)
      Recommended by:
      yaque

      The problem with your thesis is that while communism and socialism are both inherently dysfunctional, i.e., they will never work properly due to the concentration of power in the hands of the few who will inevitably be corrupted, capitalism/free markets can work if properly regulated to avoid conflicts of interest and fraudsters who constantly prey upon the gullible.  

      But the Republicans' fanaticism about free markets as the perfect solution to economic problems caused the debacle of 1929 and 2008.  We collectively forgot why FDR implemented the SEC, Glass-Steagall Act, and numerous other rules to regulate financial markets.

      We forgot the hard lessons that our grandparents learned in 1929 and we were condemned to repeat that history - Don't let Wall Street run wild.

      •  Socialism and communism work fine.... (1+ / 0-)
        Recommended by:
        Calamity Jean

        ....as theories. So does capitalism.

        But no "ism" is going to work as postulated in any theory. I agree that capitalism will tend to work a bit better because it's predicated on the idea that people will work harder and smarter when it's for their own, individual benefit. In that way, capitalism is more realistic when it comes to human nature.

        However, unchecked and unbalanced, capitalism too will tend to "concentrate power in the hands of a few who will inevitably be corrupted."  The mess we are in now is proof of that.

        My real point is that no large scale human system  is capable of static perfection. Like any delicate and complicated machine, they all require constant adjustments...and constant watching.

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