No they aren't. In a planned state owned economy 'companies' are not run on anything like a capitalist basis.  They are allocated a given amount of capital and set certain production targets.  If you're interested in an in depth analysis of how such economies function I'd recommend Janos Kornai's Economics of Shortage and The Socialist System.

You can make the Trotskyist argument that the party-state bureaucracy takes on the role that the bourgeoisie would in a capitalist state, but that's more political economy. For that the best are the original version (Revolution Betrayed) or Jacek Kuron's and Karol Modzelewski's Open Letter to the Party

Is any monetary production economy capitalism? If capitalism is the individual capitalist in control of production, as in the late 1800's, then is modern megacorp capitalism, capitalism? If both robber baron capitalism and megacorp capitalism are capitalism, would syndicalist capitalism be capitalism? How much direct production can be provided by state institutions before its not precisely capitalism anymore? Or is it pure capitalism if the production by the state is all complements to private production?

I think that capitalism is probably best understood as a term that is narrower than a monetary production economy in general. However, since all the monetary production economies that we have experience with are capitalist, more or less, it might be harder to envision a monetary production economy that is not organized on capitalist lines, or else one where the capitalist portion of the private economy is just one part among many.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

Since growth is no longer possible, this is a prerequisite of ANY realistic economic model.  

Well, I'm not holding my breath.  

The Fates are kind.

As I've long maintained capitalism only works when resources are readily available and the externalities of depletion and pollution are ignored. The borrowed money is paid back, with interest, by extracting value from resources which aren't accounted for. The continual existence of resources is also assumed which allows for permanent growth. An impossibility.

Now that the first person has acknowledged that capital is not the key to development how long will it be until the next economist admits that growth has to be replaced by a steady-state social state?

"Capital" and "Credit" have unfortunately become conflated because our Money is Credit (created by Banks).

The monetisation of Debt/ credit began to take on its modern form in 1718, courtesy of John Law's Banque Royale, and the result then was the Mississippi Bubble.

As I said in my Peak Credit Diary, I think that the monetisation of Bank credit reached the end of the road last year, and that it is now downhill all the way - for the US and UK anyway.

I believe that we need instead - through a "Debt/Equity swap" on a massive scale (albeit with a non-toxic form of "Equity") to monetise the output of productive Capital generally, and land and renewable energy in particular.

I think that this is in fact achievable through using new legal tools to create "asset-based", rather than "deficit-based" financing.

In my view, "Capital" consists of "Property" (rights of ownership and use)in respect of productive assets and this is now in massive oversupply, albeit concentrated in increasingly few hands - which is where taxation applied to Capital - not income - could help redress the balance.

The "market (clearing) price" or "Cost" of productive capital has come down from maybe 25% in Babylonian times (when it was almost entirely Land), through 10% pa in Medieval times, to 5% pa prior to the Industrial Revolution, and is probably now between 0.5% and 1.5% pa.

The cost of Credit (aka "Time to Pay") is a different issue, and comprises a system cost, shared costs of defaults, and the credit intermediary's profit (if there is a credit intermediary).

Neither the cost of Capital nor the cost of Credit has anything whatever to do with the arbitrary interest rates set by Central Banks, which were always unnecessary intermediaries and are even more otiose in the evolving "Peer to Peer" era of the Internet.

Unfortunately, Investors' expectations in relation to what constitutes a reasonable return have been distorted by inflation, which is caused by a combination of deficit financing (both by government cf Zimbabwe and banks) and the profit motive (aka Greed).

"The future is already here -- it's just not very evenly distributed" William Gibson

As I've long maintained capitalism only works when resources are readily available and the externalities of depletion and pollution are ignored. The borrowed money is paid back, with interest, by extracting value from resources which aren't accounted for. The continual existence of resources is also assumed which allows for permanent growth. An impossibility.

This was certainly Polanyi's position regarding 19th century USA.  He noted that economics was the art of allocating various scarce resources amongst various competing ends and then noted that economics did not really apply to 19th USA, as there was "free" land in the form of available homesteads, "free" labor in the form of large numbers of immigrants willing to work for bare subsistence and "free" money in the form of gold and silver that could be dug from the ground.

All of these points can be argued, but there is a certain truth to his argument.  It would also support a contention that the discipline of economics is more PR than science, certainly as practiced in its Neo-Classical incarnations.  When everything that is essentially free for the taking has been grabbed, then those who have grabbed the most need rationales for taking things away from those who have grabbed less.

"It is not necessary to have hope in order to persevere."