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The difference between Capitalists and Businessmen

In following the debate over the wall street bail out, and listening to the arguments, about Whether the bailout results in socialism and a abandonment of capitalism, it strikes me as neither. Capitalism and socialism are theories of how goods and services should flow through the system. Thus, a capitalist believes in the free markets and a socialist believes in some government control and regulation over the markets. A businessperson believes in only one thing - making money. Generally speaking, businessmen will favor the capitalist system. However if the capitalist system no longer proves able to provide profits, and indeed leads to losses, socialism will be favored. Witness Paulson’s views on the subject. As a banker at Goldman Sach, he favored capitalism. Now as secretary of the treasury will Goldman Sach in danger of failing, he favors the socialist propping up of the banking system that he once profited from. It seems that the United States is neither capitalist nor socialist, but a country of businesses. The current bailout supported by both Democrats and Republicans indicates a desire to protect those interests. The interests protected, however appear to help only the largest business interests as there does not seem to be anything in the bailout that helps small businesses like Realtors, who appear to still have the capitalist option of failing with out any prospect of a socialist bailout.

Posted by Louis Cammarosano on 10/12/2008 01:04 PM

Comments (10)

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10 Comments on The difference between Capitalists and Businessmen

OCT

2008

Never looked at it the way you did, but you make a good point.

I think the bail-out bill was something that was just an effort to patch a problem and that our officials in DC, Paulson included, who will be out of office with the new administration, were not looking for a real solution. The depth of the problem is beyond their level of abilities to come up with some real solutions. What we do need is a committe of some high power business folks to offer up some good ideas to create capital and stimulate the economy.

Nicely put. It doesn't have to be an either/or. What I mean by that is that government has a role in moderating capitalism. People need to grow up and recognize that there is no such thing as a truly FREE market - unless complete fiscal chaos is your goal. Greed and fear sometimes ....SOMETIMES....work in concert to create an "invisible hand" to control markets, but as we are seeing now - this often isn't enough. That's because there will ALWAYS be the "ethically challeneged" who will game the system and run amok. There will also be times when the greed:fear ratio will get out sync. Govenment needs to be there to control the excesses without stifiling innovation. Most would prefer a simple all or none solution and almost look upon socialism vs. capitalism in philosophical terms. The reality is that things are far more complex than that. IMO, the free maket cowboy "philosophy" has been proven to be a dismal failure. We now need to re-regulate the system, but great care needs to be taken that we don't over-regulate.

Really, it would be hard to point out a nation that is fully capitalist or fully socialist. All are a mix of the two. The argument is what the most effective mix is.

Capitalism is more about the private ownership of the means of production than it is about regulation.

You can have highly regulated capitalism, or lightly regulated. High regulation does not necessarily constitute socialism.

Socialism is about state ownership of the means of production, generally.

Free markets are a big part of capitalism; the question is what constitutes freedom. Some people think freedom is anarchy, whereas others see a system of laws that guarantee equal protection to be more 'free'.

@June-agreed, it seemed that Congress spent more time on the baseball steriods "crisis" and gave it more thought than they did in agreeing to spend $700 billion !!

@RuthMarie -the current situation shows that even those that appear to be the most ardent capitalists believe in some form of oversight.

What I am surprised about is the lack of leadership from ANY elected official or any one who is running for office. I don't hear the current presidential candidates offering reasons why they voted for the bailout and what the benefits are.

One would think that if you agreed to spend $700 billion you would be trying to talk up why you did it...

Vocal support comes from the most unlikely source-Paulson! who two years ago when he was at Goldman Sach would have resisted this type of government intervention!

Perfect! Yes, there is a distinction between businesspeople and capitalist. Capitalism works best under the rule of law where all laws apply equally to everyone, instead of rule by men who can be corrupted and favor some over others.

Someone just looking for a profit will seek it in the free market or by bribing a politician, if need be. If rule of law prevents politicians from favoring some over others, then everyone is forced to seek profit in the free market where they have to perform, not merely bribe.

"Free market" capitalism is a farce. If true savage capitalism were at work in this country the government would stay out of the current crisis and let those unfit to compete collapse. The inherent contradiction of the US system is that on the one hand when times are good the capitalists tell us they hate government intervention, however when they are going under they ask the government to bail them out. The capitalists speak from both sides of their laizzes faire mouths and in both instances the tax payer is left holding the bag. The meaning of "free-market" capitalism shifts depending on whether the upper 1% is winning or losing. The government bailout is socialist. If Hugo Chavez privatizes the financial system in Venezuela our representatives in the US call it socialism. Why is it socialism in Venezuela but not here? Karl Marx is right my friends.

***Correction: I meant "nationalize" instead of "privatize" in the previous Venezuela example. The banking system is becoming nationalized in the US, I call it socialism. If you disagree, why?

OCT

2008

Karl Marx is right? I'm not sure what that means, but, to the actual post - I think it's an astute observation. The truth about the economy is that it runs in cycles and sometimes we need to nudge it one way or the other. Sometimes a little more government, sometimes a little less. In this instance, all got out of hand and more than just a nudge was needed.

I don't think it means we are becoming socialist or capitalism doesn't work. To the contrary, what we are seeing is how our system is supposed to work when something like this happens. It is about business, not about capitalism or socialism. How we actually got to the point where something of this magnitude was needed is another story all together.

I agree with Karl Max The Gorilla. Anyone with a rudimentary understanding of Das Kapital would comprehend that Karl Marx is correct. The "free enterprise" system is built with many inherent contradictions which it can not resolve by itself, otherwise there would have been no bailout. The market would decide which companies survive and which die under a truly free system. The government (us-the populace) is now putting up the money to prop up failed institutions whose management made catastrophic decisions. This is contrary to what capitalists always tell us: through hard work and ingenuity they are free to profit or fail in the market. Well, in this instance the government is not allowing them to fail. This is not free market capitalism. The nationalization of financial institutions is socialism plain and simple.

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