So.. I was thinking. What would happen if we didn’t allow any shareholders other than the government?

So you can still have private enterprise and ownership of businesses, and private enterprise still encourages growth, but the people can reap the profits instead of rich fatcats.

The state pension would have to take the role of private pensions, and I guess they’d have to provide investments and act as a savings bank too, paying interest out of their share of profits.

How are shares priced?

So are you saying we could have small companies privately owned but not bigger ones?

Not much room for entrepreneurs to do their thing.

like one big co-op?

That all sounds a little confused mol. You can have private enterprise and ownership but the government are the only shareholders???

if we didn’t allow any shareholders other than the government

that is the definition of nationalised industry.

Socialism doesn’t work for one reason alone – human nature. Same thing that creates wars, power and avarice corrupt.

Russia and China, those great bastions of communist equality are amongst the most corrupt and depraved countries.

Markets with some form of useful regulation are mostly the best compromise – something the boy george is suddenly very keen on this week.

Not an alternative, but the Scandinavian set ups seem to me to be the future I would like. A more inclusive, community based, more equitable affair all round.

Who would go public?
What would the banks do?
Are markets so bad that we have to exterminate them?

the Scandinavian set ups

The main difference I see there is the attitude of the people.
And a government or two that cares for the future more.

Socialism doesn’t work for one reason alone – human nature. Same thing that creates wars, power and avarice corrupt.

That’s not an argument against socialism – for two reasons, capitalism fails (or succeeds, depending on your point of view) for the same reasons, and in addition to that, selfishness is a the greatest driver of equality – I personally, don’t fight for the rights of other people for their benefit, I’m not much bothered directly, I fight for the rights, pay whatever of other people for my self, and my family, but I see the most effective way of ensuring that in the long term is for everyone to be better off – socialism is a selfish doctrine.

There are lots of different flavours of capitalism so which flavour do you want and alternative to – the government holding the shares – thats sort of a bit like State Capitalism as practiced by China and Singapore

It has been argued[22] that Singapore’s economic model is a form of state capitalism, where the state owns controlling shares in government-linked companies and directs investment through sovereign wealth funds

An alternative to capitalism would maybe be a pre-capitist system like Feudalism

How are shares priced?

They aren’t – they can’t be traded.

This isn’t traditional socialism. The government don’t RUN the companies, they just share the profits – they would not have board seats. Private enterprise still works – you can have multiple companies providing a service, they can still compete, and you can still get rich making them successful.

You don’t need to float you copmany, but you can still offer part of it for the govt to take a stake in return for cash. The price would have to be set somehow.

That all sounds a little confused mol.

It’s not a political manifesto, it’s a thought experiment. It’s aim is to eliminate fat cats who just skim off the cream, so that company profits benefit the country instead.

An alternative to capitalism would maybe be a pre-capitist system like Feudalism

Ok fair point – I should’ve said ‘alternative to the current capitalist system’

To the OP the quote: “So you can still have private enterprise and ownership of businesses, and private enterprise still encourages growth, but the people can reap the profits instead of rich fat cats.”

Sounds more like the distributism of Hiliare Belloc or G.K. Chesterton which is much more related to the traditional Tory perspective (not the much more Whiggish conservatives we have nowadays.) than socialism.

http://en.wikipedia.org/wiki/Distributism

Gonna need a lot of Gov’t money tied up in companies. Those fat cats take the risk – so if a company goes bust they lose not the state.

Socialism doesn’t work for one reason alone – human nature. Same thing that creates wars, power and avarice corrupt.

I would say capitalism fails for the same reason. Perhaps we need some medium between the two where resources are equitably owned between the people. I am less bothered about how we achieve this than achieving it However i cannot see capitalism delivering equality of wealth/income.

Russia and China, those great bastions of communist equality are amongst the most corrupt and depraved countries.

so the so called communism of Russia and china are just as corrupt as some capitalist countries- do they fail for the same reason?. Zimbabwe, Qatar, Saudi Arabia,Iraq – bit of a mix there eh

Perhaps what this says is something about corruption/human nature rather than political systems/ the ownership of capital?

Scandinavian models are much fairer but we seem to like competition more and individualism rather than collective well being.

How long does it have to be since the Scandinavian banking crises before the imperfections of their models are forgotten completely?

How long does it have to be since the Scandinavian banking crises before the imperfections of their models are forgotten completely?

what examples are there of models that are perfect?

Lots of flavours of capitalism are available. Likewise socialism.

I think we like individualism and markets because that’s what we are sold constantly, we are bombarded by instruction to express our individuality through our possessions rather than through collective endeavour. It’s not compulsory obviously, but all the messaging pushes us one way

None of the mainstream parties offer anything different. Just a bit of hardening or softening of social policy at the margins of market capitalism.

did the other versions of capitalism , and their banking in particular, do really well then and we all missed it?

If it shows anything it shows that capitalism is global and it affects us all

It also shows boom and bust is inevitable as a quick look at a graph over time will show though that is more controversial.

I cant think of any – perhaps that is why the world has developed towards different mixes of various types in the hope of maximising the benefits of each while reducing the negatives? This has been achieved to various degrees of success and failure. But remains a moving target IMO.

I think we like individualism and markets because that’s what we are sold constantly, we are bombarded by instruction to express our individuality through our possessions rather than through collective endeavour. It’s not compulsory obviously, but all the messaging pushes us one way

Plato’s cave…

… flavours of capitalism available… perhaps, doesn’t mean anyone pursues them. The hegemonic form is various strengths of neo-liberalism depending on what the electorate will allow in terns of small state (or are forced to take where democracy is weak). The model is actively promoted by IMF, World Bank, EBRD

The crash hit everyone because of the transnational nature of capital and production.

So bokonon, who lives outside the cave? What or where is the realm or being, or is that just another version of heaven?

There are a lot of empiricist on here who might be unnerved by this…..!!!!

The government don’t RUN the companies, they just share the profits – they would not have board seats. Private enterprise still works – you can have multiple companies providing a service, they can still compete, and you can still get rich making them successful.

You don’t need to float you copmany, but you can still offer part of it for the govt to take a stake in return for cash.

So, what happens if the company makes a loss?

The only real alternative to capitalism/monetarism is something like the resource based economy as proposed by The Venus Project. Observe:
[video]http://www.youtube.com/watch?v=mX6Y0D8WACA[/video]
http://thevenusproject.com/extras/faq

Get rid of the legal concept of corporate personality. Sure you can be in business you can raise capital by the sale of shares but the owners shareholders directors are all personally jointly and severaly liable for their actions and debts. This gets rid of the rewards for lax management the majority of tax avoidance schemes and the cowboy builder model of starting a co getting the cash in then folding it having the cash moved out of the co, then starting co number 2 and doing the same.

So no limited liability? Difficult one as it means private investors don’t know how much risk they are taking on, at the moment you shouldn’t invest money you can’t afford to lose; this change would mean you could lose a lot more. Difficult to know just how much we can trust management – could investors have known just what was going on in Enron say?

So bokonon, who lives outside the cave? What or where is the realm or being, or is that just another version of heaven?

It’s an analogy – and as such it’s a less than perfect description of a situation – it highlights a very specific position, rather than being the e all and end all.

In terms of who is in and who is out – that’s the beauty of the situation (what Mark Fisher calls ”Capitalist Realism“) , we are all at once the prisoners and the puppet showmen – whilst I’m unwittingly obfuscating for my children and students, they are doing the same for me. Marcuse goes into some detail on this idea in One Dimensional Man.

Crankboy, limited liability is massively important for businesses of all kids, especially small ones.

So, what happens if the company makes a loss?

I guess the govt would take the hit. But you’d hope they could absorb it, what with them also taking profits from all the other companies…

So where’s my reward for running my company well?

Lets remember that 1 in 3 companies fail in their first three years of trading! investing in startup companies is an inherently risky business.

Heres another way of looking at it –

At the moment, if a company makes a profit, the government already gets to share in the profits, through taxation, while if the company makes a loss the government loses nothing, zero risk to the taxpayer.

In fact, its even better than that, because the government is guaranteed a tax income from VAT, income tax, NI, & business rates regardless of whether the company makes a paper profit – now, could we simplify and alter the taxable allowances that can be written off against income, sure – but the principle remains, that at the moment every sucessful company pays a proportion of both its turnover and profits to the government, with no risk to the taxpayer – so how is your solution a step forward on that?

So private companies with a huge amount of state influence and control. Isn’t that a lot like Fascism?

Yep exactly no limited liability so the owners have to view their ownership as a responsibility not an investment. Why is it wrong to hold people to account for their actions.

Someone posted above about the fatcats taking the risk they don’t it’s a one way bet they take the profits but if their gambles go wrong they fold the company and carry on.

Limited liability is a rip off not even the banks believe in try getting a loan as a small limited company. The bank won’t touch you without personal guarantees.

As ninfan notes, there is little difference between what you propose Molgrips and the present setup.

NB: You don’t have to be a Ltd. there are other options out there e.g. companies carrying charity status don’t have limited liabilities, which can get downright scary at times.

Whilst some systems are better than others, and some just do not really work or just deliver a very basic level economic performamce, I think the real thing that matters is the basic attitude of the people in the system. In theory, most well thought out systems would work to a large extent if the majority of the people in them fully participate and the system responds to their needs. The problem is that human nature does not tend to lead to this, and the existing state of the society usually influences whatever new system is introduced.

I also think that some societies tend to be more cohesive – for example we always think the Scandinavian countries are more social. I wonder what would happen if Norway embraced a democratic communism or a similar system for example? A peaceful, fairly egalitarian country with low levels of corruption and crime with an accountable government may avoid the problems seen in the last century in communist countries. But they probably would not need to as their system works pretty well.

Perhaps the problem with communism etc is that it was rarely a democratic choice, and was imposed and moistly in unstable countries lacking a fair and reasonable government, often after revolutions. What chance would it have?

I think in Britain we are generally well off and the system is relatively fair enough that we will grumble in the bad times after a bust, but forget about it in the boom.

Intersting link bokonon, I had not heard of that book but it looks interesting. Thanks for the idea!

The main problem with capitaism is that there isnt enough of it. Business has to be accountable to governments who properly supervise what key industries like finance (so that we never get a bank the size of RBS in our midst) are doing, then keep out of the way as much as possible.

Global indicators of wellbeing are improving all the time. Its not fashionable to say it but it isnt an accident that this is happening exactly when the Chinese and Indian governments are abandoning state socialism and hundereds of millions of their citizens are moving off the land.

Want socialism? Have a look at what is happening to Venezuala as they start running out of money.