So basically we need massive wars/destruction of wealth to keep the global economic system functioning?
That seems pretty shit.
War/destruction is as common as metricfy them with graphs like that.
what the fuck happened in the 1970s?
>>1012473
blacks got the vote
![GDP_growth[1].gif](https://i.imgur.com/Hww1k8z.gif "GDP_growth[1].gif")
>>1012452
Your graph is wrong
>>1012452
If so, we'd need a continual war, those few years of economic rising can't prevent the general trend in your graphic.
>>1012477
rate of profit is entirely different from GDP growth.
>>1012485
I know, but that's besides the point
>>1012473
Veitnam
>>1012452
Yeah. Basically modern capitalism is making it so that a little part gets profit from a bigger "inferior" part. And since it's not profitable to society as a whole, every once in a while shit have to hit the fan to allow the survivord to build a better, more functioning society, until it goes to crap again, etc
Prove me wrong. I'm sure I'm forgetting about a lot of factors and other aspects but fundamentally, this is it. No meme answer pls.
>>1012452
Yeah
It's not really new desu
Rome had a similar system for example
>>1012485
Yeah one mirrors living standards the other is a cherry
>>1012481
> We'd need a continual war
> Implying that's not exactly what we have
>>1012452
War is so common that this graph is meaningless. Even if you only include the ones that include "major" economic powers, you're missing:
>pre-WWI: Franco-Prussian, Russo-Turkish, Spanish-American, Boer, Russo-Japanese
>post-WWI, pre-WWII: Italo-Ethiopian, Japanese invasion of Manchuria, Spanish Civil War
>post-WWII: Korea, Vietnam, Afghanistan (Soviet), Afghanistan (American), 2nd Iraq War
>>1013274
>Prove me wrong.
War has occurred constantly throughout human history, it's nothing inherent in capitalism. The number of wars between countries has actually declined since the fall of the Soviet Union, so if anything capitalism makes major wars less likely (I don't believe that btw, but it makes more sense than what you're arguing).
>>1013274
Also, modern capitalism didn't cause WWI. The Great Depression indirectly caused WWII, but it's arguable that prewar capitalism isn't even "modern capitalism".
>>1012452
Isn't reduced profit a sign of more competitive and better functioning markets?
>>1012452
No, that's just a meme, global gdp growth is not strongly correlated to periods where there is a lot of war either way.
Rate of profit is determined by the amount of capital invested divided by returns, the higher rate of profit (even greater than today during the great depression according to your chart) is due to a lower amount of capital invested proportional to returns, not due to faster economic growth.
http://www.ggdc.net/maddison/Historical_Statistics/horizontal-file_02-2010.xls
This is also obvious phenomenologically, wars are very costly and destructive, they cause political instability, disrupt global trade and make it difficult to do business or make investments in other countries. The arms industry composes a smaller proportion of the economy than civilian industries, for every stereotypical plutocrat who wants a war to boost arms sales there are about 20 (judging by purchasing power) who would prefer not to have to pay war taxes and would only relent if there is a pressing need like nazis or commies trying to take over the world.
>>1012452
chart I made based on this
http://www.ggdc.net/maddison/Historical_Statistics/horizontal-file_02-2010.xls
>>1012452
>neoliberal recovery
You have to be kidding
>>1012477
And you're just ignorant.
>>1013606
Exactly.
Didn't read the thread and OP's pic is stupid but this is absolutely true.
A perfect market has 0 profits and allocates all resources in the most efficient way possible.
OP seems to want to have all the wealth in the hands of Rockefeller type monopolists.
>>1013293
>mirrors living standards
It literally does not
>>1013837
That assumption is 100% bullshit though.
A perfectly functioning market does not get zero profits.
Even theoretically it doesn't make sense. No one would enter the market without a return on capital or a profit.
Adam Smith and classical Liberal economists made up shit to suit their opinions.
>>1013868
Thanks for showing that you never studied Economics.
I guess its my bad for not being clear enough. In a perfect market firms do not earn excess profit. They do earn a 'normal profit' which is exactly the amount of profit that an owner requires to compensate him for the effort (/opportunity cost) of owning the firm.
The returns in OP's graph are well in excess of such a 'normal profit', as a result of imperfect markets.
>>1013868
The fuck are you talking about? There are still profits. Just not absurd amounts of profit for a handful of individuals. Competition keeps profits low and innovation high instead of a few people monopolizing the market and making crazy profits. Competition is the whole reason capitalism benefits humanity.
>>1013896
You didn't specify. And I am an Economics Major.
Even the "normal profit" isn't enough profit for investors to put their capital in.
At a certain point if theory can't be replicated at all closely to reality, that theory goes in the trash. For why would we listen to a theory that is meaningless to us?
The theoretical side of this theory is simply illogical.
>>1013919
A theoretically functioning free market would not innovate in many circumstances.
>>1013924
First year or just a liar?
>Even the "normal profit" isn't enough profit for investors to put their capital in.
By definition it is.
>At a certain point if theory can't be replicated at all closely to reality, that theory goes in the trash. For why would we listen to a theory that is meaningless to us?
The theoretical side of this theory is simply illogical.
You should drop out
>>1013939
I would like to no more.
Under what circumstances would a competitive free market not innovate?
>>1014167
>>1013939
There are two sides to this.
In a fully competetive market firms are required to produce to their marginal cost, and everyone will sell at the same price. Being the marginal cost.
The reasoning behind this is that the marginal cost covers every expense the company has, to survive and pay all it's employees. If a company can produce to a lower marginal cost, it will lower it's price to gain market share. This gives the company incentive to innovate to increase productivity, which lowers the marginal cost, and thereby increase market share.
However. The fully competetive free market does not award legal protection on new ideas i.e. patents, trademarks etc. Or else it wouldn't be a free market, but a regulated market. This means that a company looses it's incentive to innovate, because it knows that their product/idea would be stolen/copied the moment it came out. A company then has a lot of wasted money on R&D, which is often pretty expensive. Other companies can copy the innovation, without the same expensive R&D.
This menas that the company that did the R&D would have a higher marginal cost, than those who copied = they have to set the their price higher = they loose market share to other companies who produce cheaper
>>1012452
Is this shit real? Because it's basically Marx-was-right: the graph
>>1015864
How?
>>1015871
https://en.m.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall
>>1015871
nothimbut
https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit_to_fall
https://www.youtube.com/watch?v=-e8rt8RGjCM
just a meme though because capitalists and skilled workers managing complex machines can still trade among themselves and leave unskilled workers outside (or underemployed or on welfare)
>>1015871
I'm not an expert but two of the more questionable and foreseeing prediction parts of Marxist analysis (as I understand it) is the phenomenon of "overproduction" and the observation of the "tendency of the rate of profit to fall". Basically Capitalism is a self contradictory fire that burns itself out over time. It needs constant growth but suffocates itself.
Over production is when capitalist constantly try to automate chasing cost cutting and therefore profit generation measures in competition. BUT, as Marx sees it, Capitalists are mistaken in assuming machines and not people are the true generators of value and therefore profit. When they fire workers they deplete their own revenue stream until the system can no longer hold.
Profit constantly falling on aggregate over time is a sign of this. If capitalism was sustainable the rate of profit would fluctuate up and down or remain stable. It's not like efficiency/technology is down or there is a crisis in population and resources, so the rate of profit declining could only be explained by some esoteric measure like worker exploitation. Namely they're exploiting too little too efficiently. You can only squeeze so much blood out of a turnip.
It always struck me as one of the hokey parts of radical socialism even though I'm a sympathizer, but there it is. Constantly falling despite neoliberalism being ascendant. They're gonna run out of third world to "open up" sooner or later and then this shit really starts to accelerate.
>>1012477
Cost of gold $1 of 1890 and cost paper $1 of 1995 different. So by your chart very difficult understand was this inflation or was this enrichment.
>>1012452
In mine area are high competition and very many same goods and services, much more that people may purchase. Oversaturation of goods.
>>1015983
It seems pretty obvious that as you pour capital into investments, eventually you run out of good investments (unless some new technology comes along). Did Marx base this idea on someone else's idea?
>Capitalists are mistaken in assuming machines and not people are the true generators of value and therefore profit
Surely they are the same, a profit-oriented capitalist will look at people and machines purely for their utility because that is what they are in practical terms for a capitalist. People might get cheaper or more expensive, but the prices of machinery and raw materials can fluctuate also, some capitalists are masters at dealing with price fluctuations so I don't think this would be a problem for them.
>It needs constant growth
>They're gonna run out of third world to "open up"
Also if the rate of profit fell to near zero, couldn't capitalists say "well, instead of reinvesting dividends I guess I'll spend them on luxuries", if they ran out of third world to "open up", that is essentially the same as
I feel like I'm missing something.
>>1015823
>not knowing about first mover advantage
>handwaving 2/3 in
>>1012452
>So basically we need massive wars/destruction of wealth to keep the global economic system functioning?
Broken window fallacy
Try taking an economics course before pretending like you know shit about shit
>>1016121
>>2016 still believing that neoclassic growth theory is empirically valid.
Even Mankiw rejected the neoclassic assumptions in 1992 in his empirical test.
Read up on the evolutionary growth theory by Nelson & Winther please. It is clearly estimated that the general imitation coefficient is up to 0.7 in most industries and even larger in the production industry, while the labor/capital ratio is up around 2.7 USD per work hour. This means that most industries have a ratio of 2.7 units of capital (machines etc.) per labor unit aka. the industri is fairly capital intensive, rather than labor intensive. The only way for a company to raise it's productivity is to raise it's level of human capital (i.e. knowledge through education/experience) or to raise it's productivity of it's capital (i.e getting faster/more efficient machines). The ratio of 2.7 means that companies has to raise it's human capital level 2.7 times more than it's capital-productivity for the same advantage in competitiveness = it costs alot more to invent a new technology, than just buying a more productive technology that is already available.
Companies therefore chooses to imitate with a 30% lower value, instead of innovating at 2.7x the cost of imitating - even though the imitation in general is 30% shitter than the original. It's simply not worth the hassel.
Even though their test is based on a market with vague monopolistic competition, it still shows that "the first mover advantage" is so slim in most cases, that it is practically non exsistant for medium-large size companies. Only monopolistic giants (Apple, Microsoft, Google) has the benefit of innovation.
Furthermore the theory of a fully competetive market assumes perfect information, which means that the imitation coefficient is even higher - in theory 1. A lot more information is available, so the first mover advantage is non-existant in theory
>>1016019
It literally states that it was taken in worth as 1996 dollars.
That's the fuckin' way she goes bud
>>1016288
>harder means it never happens
>No one invented anything or did science before the patent system
>something as simple as a playlist should be patented because only a monopolist can innovate
>monopolies are the only place innovation comes from
>walling people off from trying something new causes innovation
You give possible mechanisms for disincentivizing innovation, I've shown you reality.
>>1013948
The realistic application of this theory shows it to be wrong.
>>1016121
Wew
>>1015823
Is that really relevant though since patents have been a thing for quite awhile and baring foreign patent infringement is still very much a thing?
>>1016804
>I didn't respond to his point
Seems like that
>>1017028
In a perfectly free market innovation would "rarely" occur. This is because of market failures. And "first mover advantage" is bullshit in reality for most firms. Only imperfect monopolistic/oligopolistic firms have been shown to have an incentive to innovate.
Mirroring this with reality in our, admittedly imperfect, market shows that in REALITY the classical theory of economics fails.
Which proves my ORIGINAL POST was correct. Here>>1013939
Glad we have that figured out now.
>>1016804
Please read my comment again. The fully competetive market does not exist, and never have. The situation were the first mover advantage is viable, is in reality rare - I never said it didn't exist. Only in the theory about fully competetive markets is the first mover advantage non existant.
The mechanisms about disincentivizing innovation you talk about is purely theoretic. The same goes for the first mover advantage - it's a theoretic situation. You did not show me any empirical evidence about the first mover advantage - aka you did not show me reality. My argument contains empirical evidence about the first mover advantage - aka it is grounded in reality.
This graph is a bit different from OPs one.
Either way, so how does this work? The more you produce something the rates of return are lower per item or something?
>>1018490
Yes. The marginal product declines with growing production.
The idea is that a company at some point can't fit anymore employees in their factory. Let's say you have 1 machine and one person to operate it. If you hire one more person they can work in shidts, and thereby increase production. But if you hire 10 people and doesn't by another machine, the employees would be tripping over eachother. Therefore the marginal product per new employee declines after some point.
The company could just expand, but if it doesn't have the capital to by more machines or a larger factory, it would face the decline at some point.
Even if the company can expand, it would at some point reach another decline in production. If they open 10 factories they would at some point reach a situation where the central administration couldn't handle more factories.
>>1013816
that is the weirdest scaling of an X-axis I've ever seen
>>1012452
Low interest and low profit margins are an indication we're rich.
>>1013274
Because you're literally retarded. War doesn't create or move capital or wealth, it just destroys it. It consumes it, and kills potential workers and scientist before they even had a chance to enter the workforce. I question how you even came to the conclusion that war can lead to anything else.
>>1018598
>I question how you even came to the conclusion that war can lead to anything else.
"War is just a tool of the rich to get richer, man, it's all of a part of the system, man " is a pretty popular belief among young leftists
>>1018598
But he is somewhat right though.
>it destroys capital and consumes it
Then there is room for growth. It's like trimming a bush.
>>1012452
What the fuck is a 'rate of profit'?
Shit graph
>>1019299
>In economics and finance, the profit rate is the relative profitability of an investment project, of a capitalist enterprise, or of the capitalist economy as a whole. It is similar to the concept of the rate of return on investment.
