Here’s full video for the last public debate I’ll be doing for a long while. See here, here, and here for further discussion.
Update: On his blog, Leiter writes:
My point–which alas Professor Caplan steadfastly ignored–is that a serious discussion of the merits of capitalism or socialism should not be based on the bad behavior of self-proclaimed capitalists or socialists. It was striking that Professor Caplan did not have any real reply to my basic point about the logic of capitalism:
[C]apitalist producers must reduce their costs, for if they don’t, their competitors will do so and then drive them out of business. Since the logic of capitalism demands reduction of production costs, and since the wages of most people under capitalism are simply “production costs” to be reduced or eliminated, this cannot end well. The only humane alternative is socialism, that is, ultimately taking collective control of the immense productive power that capitalism generates, so that its purpose is not the endless pursuit of profit, but producing what human beings need to live and flourish.
I think I did reply during the debate. But if misremember, I definitely replied shortly after the debate:
Leiter’s better argument was that capitalists are perennially trying to cut costs – and that in the long-run capitalism works. So eventually capitalists will figure out a way to run the economy without workers – an outcome that is individually rational for a capitalist, but socially disastrous for capitalism. My response: Yes, capitalists want to figure out how to produce a given level of output with fewer workers. Their deeper goal, however, is to figure out the most profitable way to employ all available inputs. As long as there are able-bodied people who want to work, there will be a capitalist brainstorming how to make money off the situation. And to echo Leiter, in the long-run this works.
READER COMMENTS
Ashley Aitken
Apr 1 2020 at 12:59pm
Thanks for sharing Bryan.
Although I think of myself as a social democrat – I live in Australia – and dislike a lot of what I hear and see in the US – still a social democracy but more capitalist, I like your thinking on democracy and education.
That said, I don’t like your answer to Professor Leiter’s question above. What happens when there are machines that can do everything a human does more effectively and efficiently. Will capitalist still find rewarding jobs for us?
I don’t think so, so that leads to huge unemployment and thus a lot of people without money to spend on the goods produced by the capitalists. And, perhaps, capitalists without an incentives to do their thing.
I think you may have mentioned briefly taxing them (the companies and owners) more to support the un-employed, which sounds somewhat socialist or at least a more of like a social democracy. Is that what you were suggesting?
Finally, what about the end game when robots are much smarter and more effective and efficient than all of us, i.e. the Technological Singularity, which some (including me think is coming quicker than most expect). What’s your story then?
Keep well,
Ashley.
PS Have you written or are you going to write something on healthcare?
Thomas Sewell
Apr 2 2020 at 9:27pm
Ashley,
This isn’t going to happen, for the simple reason that human wants are literally endless (get back to me when we each have our own Galaxy to play with, then we’ll talk…), but taking the scenario seriously, let’s see how it plays out.
These machines are super-cheap, right? Because they can be created by just using previous machines to make more. Therefore, everyone can have as many of these machines as they want to use. All they need is the output of a single one in order to bootstrap themselves into however many they want. You’d don’t need “a capitalist” to find you a rewarding job. You can be your own capitalist.
Everything else is also super-cheap. You can get all the food and luxuries you want because they’re all made by the limitless machines, who also repair themselves, produce any raw materials needed, and create more more of themselves when they might wear out. In your scenario, even the poorest live lives of unimaginable luxury compared to today.
Can you shoot holes in those scenarios without creating some sort of work for a human to do instead?
Steve
Apr 1 2020 at 1:04pm
This feels like a one-time “cash grab” of the wealth that capitalism has historically generated. By what mechanism does Leiter intend to not slowly whittle away that wealth? Do we just keep vacillating between capitalism (growth) and socialism (spread the wealth until we’ve destroyed a lot of value then rinse and repeat)?
robc
Apr 1 2020 at 1:23pm
So Leiter is saying that socialists wouldn’t use labor saving devices? That sounds miserable.
And, yes, that is ultimately what he is saying.
Steven Hankin
Apr 1 2020 at 6:09pm
I find that debates on the merits of capitalism vs socialism usually suffer from a myopic focus on the employee employer relationship. It should not.
The principal role of an economy is to allow our limited resources to be used to maximize consumer value instead of principally to produce jobs (good or bad paying). Of course, the consequence of a good economy will be more jobs. Clearly, the Socialist always focuses on the employee-employer relationship, and allowing the debate to so focus, essentially makes the pro capitalist argue his position with one hand tied behind his back.
Again, an individual worker is from an economic perspective, a resource. But to the socialist, the individual represents an obligation of the society/the nation, and thus he is effectively ignoring the worker as a resource.
The idea that there will be fewer jobs as a result of machines replacing workers is misplaced. Yes, there will be fewer jobs in that factory or even that industry. But releasing people (a scare resource) from one job allows them to be employed in another job; perhaps, they will be employed in jobs in areas that are more service oriented. The socialist treats the person who works for another person (the employee-employer scenario) as a unique relationship, differing fundamentally from one where the person is self employed (ie he works for himself). But from an economic perspective, there is little difference. In both instances, the individual is employed as an economic resource. Unfortunately, the opportunities for such self employment have been limited by the government’s onerous regulations on starting and running a business; ironically, these are typically regulations that the socialist embraces (as so often does the rent seeking businessman). The socialist ignores the fact that new businesses will be formed to avail themselves of unemployed workers (particularly if the minimum wage is eliminated or reduced)
Bryan, I would appreciate it, if you could, at least. indicate to me that you have read this message. Of course, it would be even nicer to have your reactions.
Thanks
Steven J Hankin (mdhankin@hotmail.com), your former student
Steven Hankin
Apr 1 2020 at 6:28pm
Continuation of previous message:
A possible consequence, on a national basis, of machines replacing workers is, that if workers are employed in higher paying jobs, workers may, over time, choose to work less and less hours. This is a consequence of having employed more machinery, the newly created jobs will pay more, on a account of the fact that the workers will be more productive. So again, the Socialists are misguided to the extent they focus so much on the employment relationship (here, specifically, hours of employment). So, in this context, less employment is arguably a good thing, as something desired by the worker.
Steven Hankin
Apr 1 2020 at 6:43pm
Continuation of the previous messages;
Another problem with the Socialist advocate is he effectively looks at an employee who has no choice but to work for a given employer and accept his wage. This is of course wrong. He can look for another job or he can become self employed.
The socialist always argues that each individual should have work that he finds is self fufilling and gov should facilitate that. Yet, if one is self employed and owns a business, if the businessman produces what he likes producing, but his customers
don’t desire, he will go out of business in short order. If government owns all the businesses and allows the producers to produce what they like, much will be produced that the public doesn’t want. the customer loses. It is the Socialist’s focus on the worker that has to result in less consumer value and therefore a lower standard of living.
Steven Hankin
Damian Park
Apr 2 2020 at 1:09am
Why does Prof Leiter assume you are making facts up? I think the answer is because very few people talk like you do. Very few use the word poor to mean those who earn below the poverty line. Very few appreciate the point that much of what we consume today are “luxuries” because a cell phone isn’t what most people consider a luxury, even though it of course isn’t necessary to survive. And again, by survive, you mean literally that, while Prof. Leiter and many others probably have a much different notion of what “survival” means. So those differences in language made some of the debate difficult.
Also, I don’t think Prof Leiter understands your point that although capitalists try to lower costs, they also try to find new uses for labor as well. Both are part of the profit system – I don’t see why Leiter only focuses on the labor contraction aspect when as you have pointed out, and as he should know, capitalists routinely find new uses of labor as well.
I also wish you pushed back on the idea that Capitalists actually do try to cut labor costs, because while some do, cutting wages and firing workers is very difficult in reality and many avoid it, even if perhaps it would increase profits. Pretty sure you have researched that and written about it on this blog.
And as for cost cutting – it doesn’t strike me as the main way in which firms compete. Amazon changed book buying – is that cost cutting? Uber/Lyft didn’t cut costs to outcompete Taxis although some Uber/Lyft drivers certainly make less than they would have in a Yellow Taxi world. Netflix didn’t cut costs to beat out Blockbuster. Apple didn’t do this either.
Finally, when is a country rich enough to transition to Socialism? And how does one do that without coercion? Huge questions that were not addressed by Leiter.
Jonathan S
Apr 2 2020 at 4:06pm
+1 I was surprised that Bryan didn’t respond to the accusation of just making up facts.
I was even more surprised by how quickly Leiter conceded the economic advantages of capitalism over social democracy. Leiter’s argument seems to hinge on a paternalistic moral subjectivism (i.e., the state is better than you at making you feel happy). Though Leiter didn’t formalize this, my takeaway of his perspective was that A) most people are miserable when making decisions for themselves under capitalism and B) social democracy makes people more happy than they otherwise would be under capitalism.
I’m not convinced with either claim, though let’s give Leiter the benefit of the doubt. In a social democracy would these marginal improvements in happiness be worth the costs of lower GDP? Probably not.
In the end, markets would be what settles this debate anyway. If there existed both social democracies and capitalist states with free migration between them, then the market would decide the equilibrium between the various economies in the long-run. I’d put money on the long-run outcomes of capitalism vs. the long-run outcomes of social democracy.
Dave Smith
Apr 2 2020 at 4:52pm
One question I have here. Leiter thinks it is essential for people to do whatever productive activity they want without having to worry about earning a wage. This seems like a ridiculous view. Does he think that people in socialism won’t have to work? There still will need to be some mechanism to decide what “productive” is. What does Leiter think that should be? (For example, if I think a meaningful life is playing video games all day, how will that support other peoples’ freedom?)
Floccina
Apr 3 2020 at 11:51am
If we end up with true full socialism run in a Democratic way, I’m voting against making Goth clothing, and BTW large sizes of Yoga pants.
Floccina
Apr 3 2020 at 12:03pm
Oh and another thing, he should have to define abundance. He thinks we need abundance first then socialism, but compared to 200 years before, Cuba had abundance before it went communist. You can always define sufficient abundance as more than any socialist country had when it went socialist.
Also on poverty, I think a guy like Mr Money Mustache could probably live well on minimum wage and put a little money away. Also people in the poorest county in the USA, Kiryas Joel, about half of the households report annual incomes less than $15,000 and they have many children but they, are really not poor. Poverty in the developed world is not simply a lack of money.
BC
Apr 3 2020 at 4:48pm
I’m not sure when this debate took place but, given our current circumstances, it’s hard to believe that anyone could credibly try to claim now that we will have a problem with abundance and no jobs left because machines will produce “everything”. We certainly have not found a way to produce all the hospital capacity, masks, PPE, ventilators, and toilet paper that we will ever need, nor do we have more people than what we know what to do with developing vaccines and, thinking ahead, new antibiotics for super-bugs that are resistant to known antibiotics.
Having machines that could produce all of the above goods, or machines that could produce other goods so that more humans could be devoted to producing the above goods, would be a utopia not a dystopia. It should be obvious to everyone now that no matter how much “immense productive power” capitalism produces, we should always be aspiring to produce more. Such aspiration is not a matter of greed; it’s a matter of life and death. Even in the First World, people are dying now mainly because we are not wealthy enough.
BC
Apr 5 2020 at 3:47am
After reviewing the video, I agree that Caplan did address Leiter’s basic point about technological unemployment. Namely, capitalists will not only try to minimize number of workers required to produce a given level of output, they will also try to maximize output for a given number of workers. The two are equivalent as long as we have insatiable demand for more output and, hence, as long as that is the case, we won’t have to worry about technological unemployment.
Of course, Leiter’s claim is that capitalism will eventually become so productive that all of our wants and needs will be satiated. As far as I can tell, though, he offers no reason to believe that state of abundance will ever be reached. Regardless, if we could get every socialist to concede, as Leiter seems to, that (1) capitalism is superior to socialism in terms of producing more output for any given level of economic resources and (2) the time for socialism will not be reached until capitalism has achieved a state of abundance, i.e., produces enough output to satiate all human wants and needs, then I think socialism truly will have been relegated to the dustbin of history. Like Caplan, I doubt that we will ever reach that utopian state of abundance.
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