Capitalism

Labor supply and demand in a perfect competiti...
Labor supply and demand in a perfect competition labor market (Photo credit: Wikipedia)

A free market is one in which there is no government, monopoly or other authoritative interference in the workings of a market. However there is in practise no such thing, as there are always constraints on a market from one or more of those sources.

For instance, in a small country there may be only two or three organisations which are involved in the whole supply chain, and if they are much the same size there is no drive to compete strongly. If one large competitor decided to drive another large competitor out of the market, it would be expensive and difficult, and would more likely than not trigger monopoly prevention legislative mechanisms.

An example of a cover from a Monopoly video game
An example of a cover from a Monopoly video game (Photo credit: Wikipedia)

On the other hand, a small competitor might be worth an aggressive approach as an attack could be targeted and localised. It would be cheaper and while it might raise a few worries about lack of choice (in an area), it would not trigger any monopoly laws.

An open market goes hand in hand with the laws of supply and demand. Generally these are expressed as graphs showing the intersection of the supply curve (an upwards trending line) with the demand curve (a downwards trending line). Any change in conditions is shown by other lines more or less parallel to the first.

Fig5 Supply and demand curves
Fig5 Supply and demand curves (Photo credit: Wikipedia)

These curves can only be illustrative as they are almost never drawn with quantified axes, and the curves are drawn without the use of any measured data. They are arbitrary. Nevertheless they purport to show the effect of market changes on the equilibrium or balance point where the curves cross.

While the laws of supply and demand may be true in the sense that if either the price or demand changes the other also changes, the graphs are of little practical use, and they are only marginally mathematical, as definite mathematical conclusions cannot be made from them. It is impossible to quantify the effect on demand of raising the price of a can of beans by 10c, for example.

Curried Beans
Curried Beans (Photo credit: Wikipedia)

Nevertheless one could probably use the graphs to suggest that if the price changes in one direction the demand will move in another direction, and these guesses may be used to decide on price changes. It’s definitely a guess, though as the opposite may happen – if you put up a sign saying “Beans now $1.55 per can”, having raised the price by $0.05, you may sell more as you have drawn the customers’ attention to the beans.

The “Free Market”, the “Laws of Supply and Demand”, and the principle of “Laissez Faire” are part of the backbone of Capitalism. Capitalism is a robust economic system which has achieved immense feats and advances. It has harnessed science and sent men to the Moon, given us a computer and communication devices in our pockets. There is no doubt that Capitalism has been hugely successful.

A capitalism's social pyramid
A capitalism’s social pyramid (Photo credit: Wikipedia)

In spite of its amazing successes, there have always been drawbacks to Capitalism. The trend of prices is to rise continually, though at times, they do fall, as demand reduces in recessions and market collapses. These recessions and collapses hurt the poor much more than the rich, as the poor have fewer resources to cope with these setbacks.

Capitalist markets lead to concentration of resources, especially money, in the hands of the rich, and a scarcity of resources in the hands of the poor. It leads to the growth of large market dominating firms, as one firm succeeds while others fail. The successful firm often widens its control of the market by purchasing up and coming smaller firms or older firms who themselves may control a smaller market niche.

Capitalism fosters the growth of the gap between the very rich and the very poor. It is often argued that, in countries where the economic system is Capitalist in nature, the “poor” have much more in the way of consumer items than their parents could have imagined. Most people have a car. Most people have a television. Most have a cellphone.

This is all true, but that is only because these items are both essential and relatively cheap. At the same time, health care is becoming unaffordable for many of the new poor. Schooling is also a huge drain on the poorer families. Many poor people work at multiple jobs to bring up their children and pay for the operations that their parents are coming to need.

As a result, many of the new poor live from day-to-day, with no real opportunity to save for retirement or to lay by a little money to allow for the vicissitudes of life. A small accident that requires time off work and consequently reduction of income becomes a disaster in such a situation.

Capitalism stratifies society and the bottom strata, often those with a lack of education or intelligence, lags behind those who are in higher strata. Those at the highest levels tend to outstrip those at lowest levels until their wealth, to those in lower strata, appears as meaningless numbers. What the difference between $100 and $1000 to those at the bottom? It’s a huge amount. What about the difference between $10 billion and $100 billion? It’s irrelevant.

English: Memorial to a wealthy benefactor
English: Memorial to a wealthy benefactor (Photo credit: Wikipedia)

Capitalist market forces tend to favour those who already have over those who don’t and the barriers that prevent those in the lower strata from moving up are immense. Those few who make are the lucky ones. Yes, luck plays almost as big a part in entrepreneurial success as luck does in winning the lotto.

Capitalism is the best economic system that we have ever had, without a doubt. It is however not without its flaws. Socialism is not a good economic system, but purports to deal with the issues of poverty by redistribution of wealth. (Maybe I’ll do a piece on socialism’s flaws at some time).

Karl Marx (1818-1883)
Karl Marx (1818-1883) (Photo credit: Wikipedia)

Capitalism however does not deal with poverty or the poor. Some effects do trickle down and today’s poor appear rich in comparison with the corresponding strata in the past, but the fundamental poverty still exists.

It would be nice to think that there is some other system, waiting for someone to discover it. The odds are probably good, as no system lasts forever. What it would look like I’ve no idea. We would need to get a much better scientific view of the so-called social sciences to really solve this fundamental problem.

Iconic image for social science.
Iconic image for social science. (Photo credit: Wikipedia)

 

Time and time again


Embed from Getty Images

Well, this will be my third post in a row about time. I think I’ll discuss something else next week!

As I’ve said before, the path of a particle as it travels through space in the usual way can be represented as a line in a four-dimensional space-time system. There will be one and one line only that represents the history of the particle from the time it is created until the moment that it is annihilated. If we decide to plot only this particle’s location over time there will be no others lines in this space.

Diagram showing phase space plot of particle u...
Diagram showing phase space plot of particle undergoing betatron motion (Photo credit: Wikipedia)

The path will twist and turn as the particle is affected by fields and other particles. It may take a sudden turn when our particle collides with another particle. This interaction can be visualised by adding the data about the other particle to the same space-time graphs. However, since the particle is constantly jostled by other particles the diagram would quickly become crowded so to keep it simple let’s drop out the lines of all the other particles.

So we are back to the original single line we started out with. If we assume that it can’t time travel, there will be no loops and gaps in the line. In other words, for every time between its creation and destruction there will be one and only one set of three space coordinates. Of course the line will have curves and kinks as the particle interacts with other particles and fields.

English: The Markov chain for the drunkard's w...
English: The Markov chain for the drunkard’s walk (a type of random walk) on the real line starting at 0 with a range of two in both directions. (Photo credit: Wikipedia)

Suppose we allow choice into our system. Suppose we have two choices A and B. At the point that the choice is made (at a macro level), there are two possibilities for the space-time position of the particle. From that point on the particles history could be represented by an A line and a B line, which at first glance appears to contravene the single point rule. However by making a choice we are saying that either A will occur, OR B will occur, but not both, so we really have only one line.

A choice is not the same as travelling in time though, so let’s plot A AND B, and we will get a multiply branching tree of lines as the time line splits on every point where a choice is made.

English: Tree of choice for creative commons l...
English: Tree of choice for creative commons licenses. (Photo credit: Wikipedia)

The question arises as to which of these lines is the “real” life line of the particle. This we don’t know in advance because we don’t know what the choice will be, which leaves us in the uncomfortable situation of having something unpredictable happening and physics deals in things that can be predicted.

When a choice is made by someone, it is highly likely that one option is much more likely than the other. Maybe the probability is 0.8 to 0.2 (80:20 in percentage terms). Another way of looking at it is to say that, all other things being equal, if the choice were to come up 100 times, A would be chosen 80 times and B would be chosen 20 times. Of course in a 100 tests, it could be that the actual figures might be 79 and 21.

Brooklyn Museum - The Life Line - Winslow Homer
Brooklyn Museum – The Life Line – Winslow Homer (Photo credit: Wikipedia)

It would be highly unlikely that A would be chosen once and B chosen 99 times in 100 trials of course, but it remains possible. (We have to remember that the circumstances of the choice must be identical, that is, all other things being equal)

We could incorporate this into our system by adding a “probability” axis (running from 0 to 1, or equivalently to 0 to 100). A point on this axis would represent the probability of the choice that was made and the whole sheet represents the life of the particle.


Embed from Getty Images

It appears that two points on the line are axis, the ones at 0.8 and 0.2 are “special”. In the stated situation those at two probabilities of the outcomes A and B. The probability of any other outcome say Z are zero and effectively outcome Z does not exist.

All things being equal there appears to be no physical reason why someone would choose one option over another. It may be that, all things being equal, that one option gets chosen more often than the other, but the sum of all the probabilities is one – in other words it is absolutely certain that one of the options is chosen. I find this totally mysterious. A choice is an event where the outcome is not dictated by the prior history of the event and is decided by the person making the choice.

English: Figure 1. Demonstration of the decisi...
English: Figure 1. Demonstration of the decision space (Photo credit: Wikipedia)

However the person’s mind is making the decision, and the person’s mind is equivalent to the state of his/her brain and the state of his/her brain is determined by physics, chemistry and biology. I see no “wriggle room” to allow for a person to make a choice.

Can we solve this dilemma by introspection? Descartes looked within himself and concluded that “I think therefore I am“. I don’t know if Descartes intended or realised it, but the implication is that thinking, which happens in the mind/brain, occurs before consciousness. In other words, consciousness is an epiphenomenon of the mind, just as the mind is an epiphenomenon of the brain.


Embed from Getty Images

Why then do we think that we make choices and decide things? Well, by introspection I can look at any decision that I have made and I can always point at reasons why I made the choice. Well, of course this may be simple rationalisation. We look at the decision that we made we look at the reasons that might explain why we chose that course and we pick and choose the ones that we like.

While that may be the reasons that we give, and some of them may be true, I do believe that we have reasons for what we do, but those reasons are physical – the configuration of our brains, as a result of past events and happenings, results in a foregone conclusion – we perform an action which looks to the outside world like a decision.

Magnetic Resonance Imaging - Human brain side ...
Magnetic Resonance Imaging – Human brain side view. emphasizing corpus callosum. (Photo credit: Wikipedia)

For instance, if we are filling in a form and we are required to check a box, we “choose” the box depending completely on what has gone before. If the boxes are “Male” or “Female” we know what sex we are so naturally we would choose the correct box. No real decision is made. If we are annoyed at the form or we are in a joking mood we might tick the wrong box. It depends on our state of mind before making the decision what we do, and it depends only on that.

English: checkbox, check box, tickbox, tick bo...
English: checkbox, check box, tickbox, tick box Italiano: checkbox, check box, tickbox, tick box (Photo credit: Wikipedia)