NationStates Jolt Archive

"Consumers accept that companies need to make profits. What they won't accept is that the profits come entirely at the expense of consumers, [b]with minimal risk taken by the company.[b]"

I often hear people claim that free market capitalism is conductive to technological progress, with the US cited as a fine example and soviet Russia cited as a prime example of how more socialist systems stagnate. But, is the sole driving force behind capitalism profit, and if a route of research is not seen to be able to yield infomation useful to the creation of profit, then that route is not seen as worth researching.

Technological progress is more related to conflict and pure curiousity. With war creating necessity for certain advancements, such as the research into radar by Britain in WWII, and at that time can be argued that Britain's economy was mostly controled by the state. Also many discoveries can attributed to scientific curiosity with no real use for the findings yet planned.

This is all of course leaving alone the subject of just how nessisary technological advancement is.

Well, as capitalism is non-violent conflict...

I often hear people claim that free market capitalism is conductive to technological progress, with the US cited as a fine example and soviet Russia cited as a prime example of how more socialist systems stagnate. But, is the sole driving force behind capitalism profit, and if a route of research is not seen to be able to yield infomation useful to the creation of profit, then that route is not seen as worth researching.

Although not all research is performed by corporations, it is a basic tenet of modern economic thought (IE, the theories of economists) that corporations exist to maximize shareholder value (read: To generate profit). It is generally assumed that the reasons a person (or group) founds a company is to make money (profit). Any products or services the company develops are intended to be sold, at a profit. Most companies would not put money into researching something that was not likely to have a return on investment. In fact, companies that do that, may be in violation of certain laws, or at least subject to civil suit, because the CEO and board of the corporation are there to... maximize shareholder value (IE, make money for the owners of the company, in other words, the people who own stock in the company).

Technological progress is more related to conflict and pure curiousity. With war creating necessity for certain advancements, such as the research into radar by Britain in WWII, and at that time can be argued that Britain's economy was mostly controled by the state. Also many discoveries can attributed to scientific curiosity with no real use for the findings yet planned.

It's true that in times of war, a lot of technological development gets fast-tracked. but it also gets paid for, and utlimately, when the conflict is over, it gets put to civilian use and, generally, makes someone a profit. Even weapons systems are developed in a for-profit atmosphere. They are not developed by the government; they are developed by corporations and sold to governments (for a profit).

Well, as capitalism is non-violent conflict...
What happens when a company reaches a certain size and it is simply easier to undercut your competitor until he goes broke or withdraws from the market, or even simpler - just buy him out.

Capitalist thinking is not as unified as the first post here seems to imply (sorry if this implication was not intended). There are companies that are driven by the bottom line for this year, and these tend not to be innovative. Companies like Wal-Mart come to mind in this category. I challenge anyone to name a technological inovation for which they are responsible.

At the other extreme you have companies like Xerox and some pharmaceutical companies. These invest heavily in what is called blue sky research. i.e research that has no pre defined business goal. Xerox parc at Paolo Alto is the epitomy of this strategy. Over the long term this tends to work very well, but it does require a willingness to defer smaller profits now for probable bigger profits later. It is a gamblers mentality.

In the middle are the companies that have research and development, but this is very structured and goal oriented. These include Shell, GM, Intel, Microsoft etc. They tend to be, over time, the most successful companies. The research costs are controlled, but innovation is valued.

Capitalism does feed technological innovation, slavery to the bottom line restricts it. There has to be a balance bteween the profit now and the bigger profit in the future for innovation to be driven. What really kills it, is inflation.

I think it depends what you mean by capitalism. It seems pretty clear to me that a purely capitalist system would be horrible for technological progress. There's a lot of fundamental reasearch that would be either hard to justify as a money making endeavor. There's also a lot of research that is sufficiently vital that allowing any one person or group to own the rights to it could seriously slow future progress.

Government funding of pure research seems essential to progress as far as I can tell, and I think that pure capitalism wouldn't allow for that.

On the other hand, capitalism provides an impetus to do detailed research in fields that are vital to technological progress but that wouldn't really be interesting to anyone if there weren't money in it. The electronics industry is a perfect example. Our computers are as advanced as they are, and we have such a detailed understanding of semiconductor physics because there's money in it.

So I thin capitalism in moderation is good for technology.

Yet there are a number of things not taken into consideration here.

Government funding & academic institutions...

While the big corporations do have their eye solely on profit, often there is Govt funding available for less-than-profitable research (often much to the outcry of certain groups & individuals) and also in academic institutions as well.

Lastly I guess there are always venture capitalists looking for the next big thing...

Capitalist thinking is not as unified as the first post here seems to imply (sorry if this implication was not intended). There are companies that are driven by the bottom line for this year, and these tend not to be innovative. Companies like Wal-Mart come to mind in this category. I challenge anyone to name a technological inovation for which they are responsible.

Not to defend Wal-Mart-- because I think it's an evil corporation that advances bigotry and small-minded-thinking-- but they have made innovative use of data-mining to rapidly shift inventories in order to meet sudden changes in consumer demand. For example, they predicted which products were likely to be in high demand immediately preceding this year's hurricane season in Florida, and quickly increased stock of those items so that no one (who shopped at Wal-Mart) went without.

Capitalist thinking is not as unified as the first post here seems to imply (sorry if this implication was not intended).

There are companies that are driven by the bottom line for this year, and these tend not to be innovative...
At the other extreme you have companies like Xerox and some pharmaceutical companies. These invest heavily in what is called blue sky research. i.e research that has no pre defined business goal...
In the middle are the companies that have research and development, but this is very structured and goal oriented...
I wasn't really intending for my language to be that strong, but nevermind.

So that you seem to be saying is that some capitalist systems to not contribute to technological advancement, some a little, and some to more abstract progress. So is capitalism really pushing technological progress, or is it some other underlying human trait?

So while capitalism is primarily motivated by greed (and some economists would argue that humans are also primarily motivated by greed), progress is faciliated by desperation and curiousity.

I'm not trying argue that capitalism is bad, just that it is not conducive to progress.

Let us assume that humans are motivated by greed. Just a working assumption for this discussion. If this is true or not is another matter.
Capitalism fits this motivation very well. It works on the assumption that we always want more than we have. Now how does innovation fit into this picture?

Well, let us look at a case from the past. The home computer. This was definitely innovative, but until it was picked up by some true capitalists it languished in the labs of xerox and some hobby clubs. The research work was done without any real idea of maling a profit, it was more just fiddling around.

One of the driving forces was Sir Clive Sinclair (ZX80, ZX81, Spectrum)
One of his marketing strategies was:
Emphasise innovation. Sinclair has consistently claimed that his products have been landmarks of innovation - the first, the smallest, the most powerful, and so on. In fact, not many of Sinclair's products have been genuinely technologically innovative: the innovation has been in the way that they have been assembled from existing technologies. The important point is that the impression of technological innovation is conveyed. On occasion, the claimed "innovation" has been driven entirely by marketing concerns
source (http://www.nvg.ntnu.no/sinclair/sinclair/principles.htm)


The strategy was not innovative either. Look at the marketing for household electrical goods in the 50s and the 60s. Everything was futuristic, idealised.

This is one way that innovation is driven by capitalism, generating new markets with new profits.

The second way is that of the technology race. VHS vs Betamax, CD vs Laserdisc, Sony vs Nintendo vs Atari vs MS.
In these cases the motivation was to capture a larger slice of the existing market. To do that the product had to at least be seen as better than the opponent. In some cases the image did not match the facts, but the best image won anyway. (VHS is inferior in quality to Betamax, but with DVDs that does not matte any more).
This desire to sell more is based in greed, and realized through innovation. Thus innovation is driven by capitalist principles.

Now is it the best environment for innovation. No. Obviously a war time socialism works much better, as funding and resources are thrown at the scientists to develop the means by which to win the war.

However is being at war a wothwhile price for generating the greatest possible amount of innovation. I think not. I will settle for the greed based motivations of the capitalist system.

Not to defend Wal-Mart-- because I think it's an evil corporation that advances bigotry and small-minded-thinking-- but they have made innovative use of data-mining to rapidly shift inventories in order to meet sudden changes in consumer demand. For example, they predicted which products were likely to be in high demand immediately preceding this year's hurricane season in Florida, and quickly increased stock of those items so that no one (who shopped at Wal-Mart) went without.

Isn't that called "Informatics" or something like that?

He's right, though. Wal-Mart has made some real breakthroughs in efficiency and management technologies. For instance, they tracked down the stock mentioned above (strawberry pop-tarts are the highest selling item before a storm, fyi) and made sure that the stores had excess stock of those products, allowing a huge boon to both consumers and the bottom line.

They've also done some interesting (and somewhat terrifying) research on RFID technology (Radio Frequency Identification). Products are placed with an RFID, which is tracked as it is moved and purchased. Using this information, the company can database who buys what with what, and when. Using this information, sales can be coordinated and ads demographically targetted. When this is combined with a membership or credit card tracking system (yes, if you use a store credit card, a record is kept), they can target YOU with the ads you're likely to respond to.

It's interesting, and kind of scary, and Wal-Mart is kind of evil... but they do partake in innovation. If you stagnate, you lose your slot on the top.

(I acknowledge the wisdom that they do not innovate as much as a product-generating company, as they are simply a product-moving company.)

Capitalist thinking is not as unified as the first post here seems to imply (sorry if this implication was not intended). There are companies that are driven by the bottom line for this year, and these tend not to be innovative. Companies like Wal-Mart come to mind in this category. I challenge anyone to name a technological inovation for which they are responsible.

At the other extreme you have companies like Xerox and some pharmaceutical companies. These invest heavily in what is called blue sky research. i.e research that has no pre defined business goal. Xerox parc at Paolo Alto is the epitomy of this strategy. Over the long term this tends to work very well, but it does require a willingness to defer smaller profits now for probable bigger profits later. It is a gamblers mentality.

In the middle are the companies that have research and development, but this is very structured and goal oriented. These include Shell, GM, Intel, Microsoft etc. They tend to be, over time, the most successful companies. The research costs are controlled, but innovation is valued.

Capitalism does feed technological innovation, slavery to the bottom line restricts it. There has to be a balance bteween the profit now and the bigger profit in the future for innovation to be driven. What really kills it, is inflation.


Wal-Mart is a company that distributes products not one that develops new innovations to develop.

I'll jut put in my two cents here.
In a capitalist economy it is that much harder for environmentally friendly technologies, such as electric cars or clean energy, to become mainstream because of the cost to companies and apparently the loss of jobs. I'm sceptical on the second part because companies have no qualms about laying off staff for other reasons.

Before jumping to conclusions and shutting down industry and effecient transportation lets try to see what actually causes global warming first if it is real. By removing and regulating industry you are slowing down the progress of beneficial technologies so if there is actually a problem we won't have to struggle for a solution. Who knows? If global warming is real and is actually as bad as it sounds private companies will try to market eco-friendly products and more research will continue in that field.

Before jumping to conclusions and shutting down industry and effecient transportation lets try to see what actually causes global warming first if it is real. By removing and regulating industry you are slowing down the progress of beneficial technologies so if there is actually a problem we won't have to struggle for a solution. Who knows? If global warming is real and is actually as bad as it sounds private companies will try to market eco-friendly products and more research will continue in that field.
Firstly, global warming and climate change has plenty of evidence. Were you aware of the recent meteorology studies that show very strong evidence of climate change? Or the fact that Pacific Islands face the loss of their land?

And I never said anything about shutting down industry.

And companies will ONLY market eco-friendly products if it is in their interest. They run to deliver a profit. That's the bottom line.

And please, punctuate. Your post hurt my brain.

I'll jut put in my two cents here.
In a capitalist economy it is that much harder for environmentally friendly technologies, such as electric cars or clean energy, to become mainstream because of the cost to companies and apparently the loss of jobs. I'm sceptical on the second part because companies have no qualms about laying off staff for other reasons.

The development of these technologies though occurred in capitalist societies. The implementation of a new technology is different to the development of it.
You have every right to be cynical about the use, or non use that these technologies are put to, but their very existence is due to the society structure.

That is unless you believe that these would have been developed in a non capitalist (communist or communitarian) society.

Seeing as how (at least in my country, the US of A), the environment is a very low concern among people, eco-friendly products cannot prosper. This leads to eco-unfriendly products to continue to sell, and it erodes the environment even more. I am very angry. There needs to be far more education around pro-environmentalism. Screw the economy if it means degrading and destroying the Earth for everybody.

i should probably start eating healthy, too, with some excercise, so my body can live longer, but I'm too lazy and I dont feel like I'm going to die young.

EXACT SAME MENTALITY-- EXACT SAME DILEMMA

They've also done some interesting (and somewhat terrifying) research on RFID technology (Radio Frequency Identification). Products are placed with an RFID, which is tracked as it is moved and purchased. Using this information, the company can database who buys what with what, and when. Using this information, sales can be coordinated and ads demographically targetted. When this is combined with a membership or credit card tracking system (yes, if you use a store credit card, a record is kept), they can target YOU with the ads you're likely to respond to.
Not that big of a deal, RFID can be easily defeated with relatively light aluminum foil.

Someone mentioned greed a few posts ago, as a motivator in capitalism. But the primary motivator in capitalist markets is considered to be self-interest, not greed. Greed is pure love of ownership. Self-interest is looking out for yourself; this includes such things as, say, making sure that your own family is well-cared for (because you love them and their well-being is part of your self-interest), and taking reasonable steps toward keeping the environment, in which you live, from being destroyed. What are reasonable steps? That's an individual decision. Some people feel strongly that it is wrong to purchase non-recycled products when recycled products are available, and some people feel that landfills are an efficient means of disposal (or simply choose not to think about it).

But the fact is that in a market with a wide variety of products (IE, a lot of consumer choice), people will make their decisions about what to buy based on what they think is the best product that they can afford. That doesn't meant they'll spend all their money (economists consider savings a form of purchase choice as well), it just means that for whatever amount they're willing to spend on product-type x, people will buy the "best" product they can afford (with "best" being an individual decision that may or may not include whether the product is made of recycled materials).

This is what drives technological innovation.

It really has little to do with who is developing the new technologies. One thing that has not been noted yet, is that virtually all new technologies are immediately patented, no matter who has invented them (corporations, government, private individuals, research institutes, universities...). There is only one reason to patent an invention, and that is to prevent others from making money off of the invention without paying you for the privilege.

What happens when a company reaches a certain size and it is simply easier to undercut your competitor until he goes broke or withdraws from the market, or even simpler - just buy him out.

That's why Adam Smith said that when business people get to be too powerful it is the government's job to break them up.

What really promotes progress is competition of all sorts. If governments are in competition with other countries they'll promote progress, if companies are in competition with other powerful companies then they'll promote progress.

Take a look at Japan. In the 1500's they had a large army armed with firearms. The best in the world. But they were a small island nation on the edge of the world. No one cared to attack them, so once one army conquered all of Japan they just outlawed guns and stagnated. They had to re-discover firearms when the West showed up at their door and had to give Tom Cruise credit for modernizing their army to the condition it had almost been in 300 years before.

What happens when a company reaches a certain size and it is simply easier to undercut your competitor until he goes broke or withdraws from the market, or even simpler - just buy him out.
That company who tries to undercut their competition can only do that temporarily. In the end, to sustain profits, they need to be competitive. Standard oil (the quintessential "monopoly") maximum market share was 90% of the market and only had 65% of the market when the anti-trust suit came up. Standard Oil HAD to be competitive to keep their market share, which ended up giving great deals to consumers.

No true monopoly has ever existed in an industrialized capitalistic society that was not government sanctioned. The only monopolies that have ever existed in Amercia, were things like the phone company. Until recently, local phone service has been a monopoly, but cell phones have put an end to that.

Capitalist thinking is not as unified as the first post here seems to imply (sorry if this implication was not intended). There are companies that are driven by the bottom line for this year, and these tend not to be innovative. Companies like Wal-Mart come to mind in this category. I challenge anyone to name a technological inovation for which they are responsible.

At the other extreme you have companies like Xerox and some pharmaceutical companies. These invest heavily in what is called blue sky research. i.e research that has no pre defined business goal. Xerox parc at Paolo Alto is the epitomy of this strategy. Over the long term this tends to work very well, but it does require a willingness to defer smaller profits now for probable bigger profits later. It is a gamblers mentality.

That is not a gambler's mentality. If it were, they would lose more often then win. Since Xerox is solvent and has been for a long time, I am going to assume that their "gamble" pays off more often then not. There is a difference between investing and gambling. One is a calculated risk, the other is an uncalculated risk.

I think it depends what you mean by capitalism. It seems pretty clear to me that a purely capitalist system would be horrible for technological progress. There's a lot of fundamental reasearch that would be either hard to justify as a money making endeavor. There's also a lot of research that is sufficiently vital that allowing any one person or group to own the rights to it could seriously slow future progress.

Government funding of pure research seems essential to progress as far as I can tell, and I think that pure capitalism wouldn't allow for that.

On the other hand, capitalism provides an impetus to do detailed research in fields that are vital to technological progress but that wouldn't really be interesting to anyone if there weren't money in it. The electronics industry is a perfect example. Our computers are as advanced as they are, and we have such a detailed understanding of semiconductor physics because there's money in it.

So I thin capitalism in moderation is good for technology.
I cannot think of many technologies that have been developed outside of capitalism where as I can name a huge list of technologies that have been developed as a direct result of capitalism. Almost all computer technology, automobiles, cellular phones, televisions, microwave ovens. The only non-capitalistic technologies I can think of are atomic and nuclear fission, and ball point pens.

Isn't that called "Informatics" or something like that?

He's right, though. Wal-Mart has made some real breakthroughs in efficiency and management technologies. For instance, they tracked down the stock mentioned above (strawberry pop-tarts are the highest selling item before a storm, fyi) and made sure that the stores had excess stock of those products, allowing a huge boon to both consumers and the bottom line.

They've also done some interesting (and somewhat terrifying) research on RFID technology (Radio Frequency Identification). Products are placed with an RFID, which is tracked as it is moved and purchased. Using this information, the company can database who buys what with what, and when. Using this information, sales can be coordinated and ads demographically targetted. When this is combined with a membership or credit card tracking system (yes, if you use a store credit card, a record is kept), they can target YOU with the ads you're likely to respond to.

It's interesting, and kind of scary, and Wal-Mart is kind of evil... but they do partake in innovation. If you stagnate, you lose your slot on the top.

(I acknowledge the wisdom that they do not innovate as much as a product-generating company, as they are simply a product-moving company.)

What part of everything you just described is in herently evil?

No one is FORCED to get a store credit card.

It seems like it would be best for all if ads for products were targeted towards people who are likely to enjoy them. When was the last time you saw an advertisement in the wrong place at the wrong time (like a douche commercial in the middle of a football game)?

Tracking products inside the store is a good way to prevent theft, or prevent a known thief from entering the store ever again.

These all seem like REALLY good ideas. How about customer serivce? I've found better customer service at Walmart then almost anywhere else I've ever been. They pound their employees with the idea that customer service ALWAYS comes first, and that nothing is more important. Not enough businesses take this approach and have second rate customer service. This is one of the key reasons Walmart got so big in the first place. Go to some mom and pop joint. It seems like most of them don't give a rat's ass about customer service. The ones that do usually seem to do really well for themselves. The ones that don't usually seem to struggle. This doesn't work EVERY time, but it does work more times then not.

That's why Adam Smith said that when business people get to be too powerful it is the government's job to break them up.

What really promotes progress is competition of all sorts. If governments are in competition with other countries they'll promote progress, if companies are in competition with other powerful companies then they'll promote progress.

Competition is critical, yes. You don't see much innovation in a monopoly situation. But I'm not sure about the premise that governments in competition promote progress. The Industrial Revolution was not spurred by war or international conflict, but by the development of the modern market economy. And as I mentioned before, governments aren't coming up with most innovations; rather, innovations are generally sold to governments (or, if you prefer, contracted by governments) with profit as the motivating force. Governments may thus "promote" progress in the sense that they pay for its development; but the people actually developing the new technologies are selling their inventions.

What part of everything you just described is in herently evil?

Naw, I called them evil because I work for a chain store in a huge battle with them in the midwest. Our superior service will win out, I say!

No one is FORCED to get a store credit card.

Not just store cards... ALL credit cards keep date and item records. These records are fine, but the fear remains that they could be sold for profit, and you might have your insurance company decide to raise your rates because you buy too much beer. (Illegal in the US, but possible with the technology, so it worries me.)

Oh, and I sell store "loyalty" cards. Trust me, once I'm done talking to you, you'll "need it". [/self-love]
.

Tracking products inside the store is a good way to prevent theft, or prevent a known thief from entering the store ever again.
Never argued against Electronic Article Surveillance Systems (EAS), just against RFID targetted advertisement.

These all seem like REALLY good ideas.
Do you like pop-up ads? Those are targetted ads in the modern world. How would you like a LOT MORE OF THOSE in your daily life. Oh, and remember the insurance selling I mentioned, or the ability of someone to steal your information.

(Okay, time to sound paranoid: Combine RFID and EDR and you have enough components to digitally reconstruct a person's waking life outside of his home. Add in e911 protocol, and you have his realtime location.)

Oh, and someone mentioned jamming RFID with tin-foil: That would work, but I can't imagine the store security being too happy with you pocketing their product.

Many different systems are innovative. Capitalism is just more diverse, and less dependent on outside forces. It's all a matter of choice, and Capitalism has the most.

Is capitalism technologically progressive.

Well, seeing as though the oil companies have bought up all the alternate fuel technologies and sat their fat asses down on them so any potential competition gets nowhere, I'd say that in a lot of instances capitalism is not good for technological advancement.

It's good for patents, but if what you invented would make a corporation lose money, it ain't going nowhere.

I long for the good old days when all you needed to change the world was a good idea, a workshop, and a tenacious mind.

Well, seeing as though the oil companies have bought up all the alternate fuel technologies and sat their fat asses down on them so any potential competition gets nowhere, I'd say that in a lot of instances capitalism is not good for technological advancement.

That's most highly regulated business in the world. The oil countries and the oil industries will not allow a lot of things if their lobbying powers have a say.

I don't see patents as a part of Capitalism, IMO. Although I guess the propenents of Capitalism (e.g Jefferson) promoted it. Although come-on, Jefferson thought farming should be the primary industry in America-- permanently!

Note: And I actually like Jefferson, but I don't think anyones is perfect.

I just don't see the legitamacy of owning an idea, a sound, or anything a peaceful hand can recreate or copy. 'As long as there's no physical aggression or widely broken promises, then don't impose on other, with any morality of government'--my thoughts.


It's good for patents, but if what you invented would make a corporation lose money, it ain't going nowhere.

I'm not for patents, as you see.


I long for the good old days when all you needed to change the world was a good idea, a workshop, and a tenacious mind.

Thomas Edison was a crude man. If he was alive today, many people would see him as 'evil'...he would say 'everyone steals in the industry, I just know how.'...indeed he did.