Fundamental Leftist Errors

[Dglgmut]

This thread is going to be disjointed and not meant to focus on a single topic, but to examine multiple fundamental errors that lead to leftist ideology (and perhaps others, but that's not the purpose of this thread).

 

This is something I remember feeling myself when I was younger and I think is a common error that leftists make. This is not a cognitive error so much as it is a learned characteristic, but it is cured through cognition--which is in fact possible if the cure is more or less identification of the error. The result of this error is blatant hypocrisy: the cognitive dissonance that allows one to buy another new iPhone while publicly railing against capitalism. It is the practical belief that what you do is insignificant compared to the collective, and therefore it is not worth the cost of improving oneself before improving the collective. The cornerstone of leftist ethics is: after you. "Once the majority have rejected the benefits of capitalism, then, happily, I will too." What precisely is the error, though? The error is not placing proper importance on your own perspective. What you do may in fact not be significant from the perspective of society, but from your own perspective there is nothing more important.

 

Another error I've been interested in is the floating abstraction. This is the abstraction that fills a role, deductively, but is not connected to anything in reality. This is ubiquitous in leftist thought. What made me think about this recently is how convoluted prominent economic theory is compared to the Austrian school. One error Rothbard has pointed out, and probably others, is the concept of capital. Capital is a fundamental concept at the foundation of popular economics, but it is a floating abstraction. Capital is anything, aside from labor, that produces value. But this quality can only be attributed post hoc. There is no physical quality that makes something capital rather than ordinary property. One example Rothbard used was a chair from your home when moved into a hotel room suddenly becomes capital. The Marxist definition of capital is not the means of production, but the money used to buy those means. But this does not factor in the risk or the labor involved in minimizing that risk. This is the problem with this post hoc quality: if the money is spent with the intention of producing profit, but fails, suddenly it's not capital. This is just a specific example (another obvious one in economics is inflation--which prices matter?), but I believe there are floating abstractions at the foundation of all the monstrous, convoluted leftist theories.

 

Feel free to add to the list without forcing the thread down a specific path.

[Jon Letendre]

2 hours ago, Dglgmut said:

Another error I've been interested in is the floating abstraction. This is the abstraction that fills a role, deductively, but is not connected to anything in reality. This is ubiquitous in leftist thought. What made me think about this recently is how convoluted prominent economic theory is compared to the Austrian school. One error Rothbard has pointed out, and probably others, is the concept of capital. Capital is a fundamental concept at the foundation of popular economics, but it is a floating abstraction. Capital is anything, aside from labor, that produces value. But this quality can only be attributed post hoc. There is no physical quality that makes something capital rather than ordinary property. One example Rothbard used was a chair from your home when moved into a hotel room suddenly becomes capital.

I don't see a problem with there being no physical quality that makes something capital rather than ordinary property/wealth. Why can't the way it is being used be enough difference to make the difference? The chair is physically the same, but its use changes. I don't see the problem with that. Its use changed from private enjoyment, someone's wealth, to the production of services in an economy.

Even if we restrict to physical qualities, definite machines, even ones usually committed to making and keeping more machines, such as say a metal lathe or mill -- these can be and many are in fact in garages and basements. They solve hobby problems for their owners but they are not deployed in any economy. That latter distinction seems to me objective and relevant to economics.

[Dglgmut]

20 hours ago, Jon Letendre said:

I don't see a problem with there being no physical quality that makes something capital rather than ordinary property/wealth. Why can't the way it is being used be enough difference to make the difference? The chair is physically the same, but its use changes. I don't see the problem with that. Its use changed from private enjoyment, someone's wealth, to the production of services in an economy.

Even if we restrict to physical qualities, definite machines, even ones usually committed to making and keeping more machines, such as say a metal lathe or mill -- these can be and many are in fact in garages and basements. They solve hobby problems for their owners but they are not deployed in any economy. That latter distinction seems to me objective and relevant to economics.

To differentiate between capital and ordinary property is arbitrary because only after something has created value in the form of profit can you say it is truly capital. But to create value always takes human effort, so how do you separate the two? Your own person could be considered capital by this standard. Your food and house are necessities for the upkeep of this capital.

 

The reason for classifying some goods as capital and others not is that they should be treated differently, presumably, by the State. So if there is no non-arbitrary definition of capital (it's always based on the assumption that something will be profitable), this is necessarily going to distort the market. I'm not against using the word, but as a formal concept that supports a ton of weight in economic theories, it's not solid.

[tmj]

Doesn’t capital itself have to be a form of profit?

Capital is any good(s) beyond subsistence, no?

[Dglgmut]

30 minutes ago, tmj said:

Doesn’t capital itself have to be a form of profit?

Capital is any good(s) beyond subsistence, no?

Every good is a form of profit (depending on whether your definition of profit must include a trade), but if you created the value with pure labor then we can say there was no capital involved. So no, not everything above subsistence is capital--only that which contributes to the production of value.

[Jon Letendre]

2 hours ago, Dglgmut said:

To differentiate between capital and ordinary property is arbitrary because only after something has created value in the form of profit can you say it is truly capital. But to create value always takes human effort, so how do you separate the two? Your own person could be considered capital by this standard. Your food and house are necessities for the upkeep of this capital.

I disagree about only after it has created some profit. A thing is capital if it is deployed in an economy at making goods/services or more capital such as machines. I have never heard of asking whether the total enterprise is a success or not, whether profits are made or not as a criteria for whether something is capital -- whose idea is that? You separate the two by comparing the dollar cost of the relevant labor and capital.

[Jon Letendre]

1 hour ago, tmj said:

Doesn’t capital itself have to be a form of profit?

Capital is any good(s) beyond subsistence, no?

The things you have are your wealth. Some of your wealth may be capital, say an active mine you own.

Any item of your wealth may become capital if it enters an economy making goods/services/more capital items.

[Jon Letendre]

1 hour ago, Dglgmut said:

The reason for classifying some goods as capital and others not is that they should be treated differently, presumably, by the State. So if there is no non-arbitrary definition of capital (it's always based on the assumption that something will be profitable), this is necessarily going to distort the market. I'm not against using the word, but as a formal concept that supports a tone of weight in economic theories, it's not solid.

There are myriad reasons economists are interested in capital, its introduction into economies and its withdrawal in reaction to changing conditions, for example.

The definition is non-arbitrary.

Deployed or not at making goods, services and capital goods is objectively defined.

There happens to always be hope of success. No assumption of success is required for the definition.

I don't see how a distortion of the market arises from this objective definition.

[tmj]

So the definition of capital is accepted across all ‘schools’ of economics, it sinks , it is non-floating?

Grizzly Adams has all his goods in his cabin , but if he brings them to town they acquire the ability to become capital ?

I’m floating the abstraction by applying the term in describing solitary actions ?

[Dglgmut]

1 hour ago, Jon Letendre said:

There are myriad reasons economists are interested in capital, its introduction into economies and its withdrawal in reaction to changing conditions, for example.

The definition is non-arbitrary.

This is the modern definition (from Merriam-Webster) as it applies most to economics: "(1) : net worth : excess of assets over liabilities"

That definition is a derivative of this one: "(2) : accumulated goods devoted to the production of other goods" Without first the concept of goods that can be used to produce other goods, we would not connect the monetary value of assets directly to production of goods.

One thing to note is that the concept of capital originates from the businessman's perspective, and had nothing to do with macroeconomics. The concept was for personal use.

 

Technically both of these definitions are arbitrary. The second, more basic definition relies on the concept of "production" and "goods," which means that someone must first buy the products before we can say they have market value. The first definition is more derivative, but seems less arbitrary. You can do an inventory of everything a business owns, as well as it's cash balance, and come up with some dollar number to equal the capital. Technically there would be some arbitrary valuation of the non-liquid assets because unless someone buys them, they don't have a price. However, let's ignore that and say everything up until this point is non-arbitrary and the monetary number is absolutely correct, the main problem is how these assets were acquired... The business has assets in the first place because people invested in the business arbitrarily. They didn't have a guarantee that their investment would pay off.

 

So it's not arbitrary to say "capital is the monetary total of assets minus liabilities of a business," but ultimately that says nothing about whether value is being produced or not.

Quote

Deployed or not at making goods, services and capital goods is objectively defined.

I don't really understand this sentence, but I'll try to reply. "Goods" and "services," like prices, are only non-arbitrary after the fact. If you try to sell your art for $1,000,000 and nobody buys it, that's not the price. If you still can't sell it for $1 the value is likely nothing or less. Your paint brush is not capital, even though you thought it was.

 

I'm doing my best here, but the Austrian economists have already done it. Here's Mises: https://mises.org/library/capital-goods-and-capital

(My bold--the purpose of economics.)

"The money equivalent of the various factors of production owned by a business unit can be determined and summed up. But if we abstract from such an evaluation in money terms, the totality of the produced factors of production is merely an enumeration of physical quantities of thousands and thousands of various goods. Such an inventory is of no use to acting. It is a description of a part of the universe in terms of technology and topography and has no reference whatever to the problems raised by the endeavors to improve human well-being. We may acquiesce in the terminological usage of calling the produced factors of production capital goods. But this does not render the concept of real capital any more meaningful."

 

And his conclusion:

 

"The notion of capital makes sense only in the market economy. It serves the deliberations and calculations of individuals or groups of individuals operating on their own account in such an economy. It is a device of capitalists, entrepreneurs, and farmers eager to make profits and to avoid losses. It is not a category of all acting. It is a category of acting within a market economy."

[Dglgmut]

Just for context, the reason I brought up capital at all was because it's basically the most important concept leftists have for justifying socialism/communism. Marxism, and all of the accelerationisms, assume that owning capital guarantees profit and will necessarily lead to the concentration of all capital/means of production in the hands of a small majority.

 

For an economist to look at the amount of capital in a country as some kind of indicator of economic growth/decline is fine, but it's not a precise indication of anything except that people expect those assets and moneys to be profitable, and any policy based on this information (according to Hoppe's reasoning, ANY economic policy is necessarily arbitrary, which I agree with) is based on arbitrary information.

 

So as an approximation, sure, capital exists. But as a real, defined feature of assets and money that can be considered in terms of a massively complex national or global economy? It's a floating abstraction filling in a gap created by strictly top-down thinking: this gap is labeled "how rich people exploit the lower classes." How come it's called "Capitalism" instead of "Propertyism"? Who chose the name? Socialists. "Capitalist" was a sort of slur before "Capitalism" was ever used to describe the style of economic system.