Capitalism is broken

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ManusJustus said:

I think a lot of people here are looking past what truly matters in economics, and its not terms like socialism or capitalism, its incentive.

Personal incentive is the sole driver of economic productivity, and it governs everything from overhead business decisions to what you are going to buy for diner. Contrary to what many here believe, there is no difference between communism and capitalism when it comes to this important characteristic, as personal incentive works the same in communist and capitalist economies. Which ever economy provides more personal incentive will be the economy that is more productive, regardless of what it calls itself.

Capitalism obvioulsy offers a lot of personal incentive, but it fails in many regards. Everyone from doctors to Wal-Mart employs (personal experience for both) create inefficiencies because of lack of personal incentive. There are doctors who make bad medical decisions because their personal incentives are misplaced, and there retail employees napping in the bathroom or fiddling in the back because they have no personal incentive to work when the boss isn't in sight.

The same can be said for communism. Stalinism, believe it or not, was very productive. The Soviet Union was the first country in space and Americans were afraid of the Soviets powerful economic machine, the problem was that the personal incentive here was personal harm (same goes for slavery in America). Nothing makes someone want to work harder than fear of being put in a gulag. This is not an acceptible form of personal incentive. Obviously, collective farms with no personal incentives for production (monetary or punishment wise), which is what many people think of communism as, is very unproductive. Why should I work hard if it doesnt benefit me? Same goes for many government workers and the above mentioned Wal-Mart employees.

However, some forms of communism can create more personal incentive and be more productive than their capitalist counterpart. That personal incentive is worker ownership of production. When Russian farmers were given the land that they once leased from feudal lords, they became more productive. When every effort that a factory worker puts into his product is returned to him, they become more productive. Some forms of Marxism, Troskyism, and Lenin's early Soviet Communism is an example of this, and it uses the same method of incentive as many businesses today, only to a much higher degree. Profit sharing, which many business do with their employees, leads to more productive workers. Imagine how productive all workers would be if they recieved full profit sharing, which is essentially what worker owns of production is.

You seem to understand and agree with why capitalism is a better system but can't bring yourself to acknowledge it.

You say what truly matters in economics is the personal incentive, and you're right to an extent.  Where you're wrong is that communism is nowhere near as good as capitalism at providing personal incentive, even within your examples you've got it wrong.

The Walmart example is bad because capitalism doesn't dictate that the employee work at walmart..in fact the example is bad because you aren't starting from the beginning..you're starting from the middle of the story.  This person who is working at a walmart probably doesn't have more than a high school education because he failed to work hard and apply himself in school.  Now his job opportunities are limited and you are pointing to him as an example of low personal incentive. Well its not that he doesn't have incentive...its that he failed to take advantage of the opportunities granted to him and now his opportunities are drying up because he applies himself less and less.  This isn't a problem with capitalism..this is a problem with the individual. 

If this person had an education and worked hard and applied themselves they would have tons of options and thus tons of incentive.  For example even if their hard work was not rewarded by walmart they could easily get a job with their skills and work ethic at another business that has a greater use for (and thus a higher demand for) those skills.

So he either has no skills and that is his only job because he failed to take the opportunities (ie its his fault), or he does have the skills to get a better job but for whatever reason doesn't get a better job with those skills (still his fault). 

Moving to the Doctor example this is actually an example Obama used in support of health care recently...before he had to back off of it because doctor's took great exception to the implication that they would put personal financial interests over the health interests of their patients.   I find it highly suspect that this is the case on any significant scale and I'd ask you to put forward proof that it is widespread before furthering the argument.

As for the classical view of communism you mention, you pretty much hit on why it sucks...you're forced and threatened to do things. However when you compare this to Walmart employees it is really just nonsense. The communist worker is forced into that position where they have to work with no possibility to move up, the walmart employee put themselves in that position and had other options.

In your final paragraph you're advocating workers owning a share of the product they make, the problem with this of course is that you're not asking the workers to invest in an equavalent share of the company.  Almost anyone can invest in the company they work for in the US and thus purchase the rights to a share of the profits their work produces.  Additionally companies can implement such structures in their own business to increase efficiency (and many do).  Keeping it on a business by business decision rather than a government mandate allows the idea to be fluid and responsive to changes in the market and competitiveness rather than rigid and unresponsive (as all legislation is).

In short if you implement the idea free-form under a capitalist system it can work, but if you force it on companies under a pre-set government plan you're quickly going to create a scenario where your nation's companies are not competitive and jobs start flying out the door to other countries where workers recognize that all they are doing is pressing buttons and that this work is outsourced.  The other option is to create a government beaurocracy that manages it...but already I think we can see why this method is doomed to fail....

edit: On this last point I just want to point out that the workforce can choose not to work at companies that don't provide those incentives and that in this way it is certainly appropriate for workers to look at their skills as their own business and make smart decisions for themselves.  But like a business that raises its prices they have to make sure their product is worth the price or their customers (employers) will look elsewhere.