Capitalism does not need property rights.
I disagree.
You're out of step with what is argued in academic circles.
Capitalism can work without property rights on a small scale in which information about market participants is readily available.
Are you arguing against your own contention?
This is one way in which the tragedy of the commons can be overcome without private property. Robert Ellickson describes social norms among ranchers evolving to facilitate trade, negotiation, adjudication, etc in spite of the law.
Is it still capitalism? No. Capitalism avails actions as individuals independently of the actions of other individuals. Arrangements between individuals for transactional purposes doesn't entail capitalism per se. Capitalism is individual risk taking for gain without cooperation. To the extent one has cooperation with other individuals, to that extent capitalism is lessened, or anti-capitalism, socialism, is enhanced. You have to understand the very abstract and general concept in the nouns I used above. I know you won't do that, but I can try to warn you. For example, a corporation is an individual.
What I'm saying here is that corporations are groups of individuals who cooperate with one another for a singular capitalistic goal: earn profit. Is it not the case that corporations are the epitome of capitalism? Not in Adam Smith's conception. A corporation is a socialistic unit which doesn't have social objectives necessarily. By necessarily I mean social objectives of a corporation are only incidental to the objective of profit generation, For example, a corporation will comply with profit sacrificing environmental standards, even if they're not required by law, motivated by a bigger long term profit. A corporation never intends to operate with a social objective without profit motive. In contrast, a government primarily pursues unprofitable and maybe counter productive social objectives. Military defense can be thought of in this way. There's very little government does that doesn't fall into non-profit social objective.
Adam Smith looks at capitalism as composed of no groups, just individuals pursuing their own particular ends. To Smith a corporation would be considered just another individual, but also the modern corporation would be viewed by Smith as a collectivist entity that undermines individual welfare even as it provides for it. The individual can't pursue distinct lines of action but must cooperate with the group. Coordinated cooperation brings synergies of scale not possible when the independent efforts of individuals are simply added. However, I contend that when independent efforts of individuals are coordinated, greater synergies can be achieved than are attainable by the corporation individual. This wasn't possible until now because a corporation gains its coordinated cooperation from pyramidal chains of command and organization which require local information distribution not possible with non-locally distributed independent individuals. The Net has changed all that although it will take a 100 years to evolve away from the corporate model. It will inevitably happen because there's more individual profit incentive in the independent individual coordinated non-local distribution model.
But in a sufficiently complex economy of millions (and in the future, billions) of participants, information is hard to come by.
True,...
(A surprising reply! Since the complexity of society depends upon more information easy to come by in order to become complex!)
However, in the modern world,
...but that has to do with education and the world wide tendency to invent myth based on emotion or superficial evaluation.
i.e., it isn't easy to come by accurate information! With all the pseudo information, noise, as societal complexity rises, more noise is generated. That tends to undermine the achieved complexity, but fortunately since it's just noise, it has no effect! The actual information, the non-noise, is what supports and enables the complexity.
(It was said, by none other than Samuelson, that the stock market predicted, discounted, nine out of the last five recessions.)
What does this item have to do with the topic at hand? It's an example of noise, the recessions the stock market predicted, but didn't occur, and information, the recessions that the stock market predicted and occurred.
Thus, legally recognized property rights and enforceable contracts become important to keep widening the sphere of market influence.
This apparently true statement can't be generalized. You, Grace, others, assume that it can, as did Smith and the classical economists. The widening sphere of free market capitalism doesn't need property rights in order to widen. Grace said to me that the Austrians would disagree with this contention in a nanosecond. True, but they'd be dead wrong to disagree, if only because they'd jump to the conclusion they'd always cherished.
Let me ask you this, do corporations respect the property rights of the individuals composing its function? Isn't it the case that individuals in a corporation have to give up essentially all property rights in order for the corporation to achieve the synergies it does? Hmmm. No one 'splained it that way. Thus, the widening sphere of free market capitalism needs a narrowing sphere of individual property rights and no worse than a constant sphere of corporate property rights. Corporations are spreading socialism! This surprising conclusion is almost obvious intuitively, and is automatically realized by the naive public, even as the corporation delivers ever greater nominal wealth, and is so secretly coveted by the public.
Nothing has been said about the degree of efficiency available in the forms of capitalism.
What does this statement have to do with the above? It's a reiteration of the organizational complexity technologically constrained by information distributional models available in any era. The form of capitalism, Smithian, corporate, or Netian, and many others yet to be evolved under the constraint of technology enables different degrees of efficiency and so different kinds of property rights and different kinds of capitalism. |
