15 May 2015

A thought on capitalism

Some people on Facebook were blaming "capitalism" for exploitation of workers. I disagreed with this:
Capitalism is a system in which people compete for profits in markets. Capitalism can be distorted by rules that favor some over others (on the production or consumption side). Capitalism is unhelpful when (negative) externalities are significant.

Capitalism is NOT about fairness of inputs, outputs or outcomes. Fairness is best addressed via politics (sharing, rather than competing).

Corruption can be "measured" by the degree with which politics is influenced by money AND vice-versa (e.g., the Natural State vs. the Open Access State, North et al).

Alternatives to capitalism (more command, less competition) can be better or worse, but they can also be poisoned by corruption.