> I think that in the interest of denigrating capitalists you
> are ignoring the facts. As a class, capitalists are rewarded
> because they control the direction of the economy through
> ownership of money/capital. But capitalists are indeed
> rewarded for taking risk *relative to other capitalists*.
> Right? If they stick their money in bonds they make a little
> more than inflation. If they put their money in something
> more risky they can do better (or worse). And remember that
> capitalists often "risk" their money unintentionally. There
> is nothing preventing, say Pfizer, from simply taking all its
> profit and sending it to the owners as dividends. Except that
> Pfizer would fairly quickly cease to exist. So the managers
> of Pfizer have persuaded the owners to allow them to "risk"
> the profits on keeping the company going. And this is a risk.
> All you have to do is go a little North in New Jersey and
> you'll find Merck, where the owners would have been better
> off getting all that money spent developing and marketing
> Vioxx as dividends, surely.
I still do not understand why Merck etc. should be "rewarded" for keeping their share of the market. You seem to confuse two different things: risk management that is socially necessary given the current level of knowledge and technology, and the management of added risk of maintaining one's privileged position within a society.
The socially necessary risk can be maintained by various institutional mechanisms, each one exacting different transaction costs. Take for example the risk of infectious diseases. This is a socially necessary risk inasmuch as we as society cannot eradicate certain diseases and thus suffer the risk of contracting them. That risk can be managed in several different ways e.g. by a nationalized health care and prevention system with relateively low transaction cost, or by private profit-oriented firms like insurance and pharmaceutical companies with higher transaction costs. From a purely rational point of view, the risk management solution with the lowest transaction cost should be the one adopted in a society, but things are not always rational. If we have a situation in which a corporate cabal usurps, by hook, crook or outright coercion, the semi-monopoly right to manage society's necessary risk - that cabal is not being rewarded for its socially necessary risk management service. Instead it is reaps "economic rent" (or tribute in everyday English) for its monopoly rights enforced by hook, crook and coercion.
Now if these capitalist semi-monopolist face the added risk of loosing their market shares i.e. their monopoly rights vis a vis other semi-monoplists- that is undoubtedly a real and serious concern to them, but why should the rest of us give a flying fuck about it, let alone "reward" them for maintaining these rights is beyond me. Actually, by nationalizinng these private monopolies of risk management, the society as a whole would be better off by saving the tribute and the higher transaction costs.
However, I fully agree with you that the menagement of socially necessary risks, whether done by government or semi-governmental or private instituions should use cost- benefit analysis and all planning tools available, including financial management - no quarrel here. But you woul dcertainly agree with me that financial management, while certainly important, is not panacea and non-financial considerations which do not enter fiancnail management must also be duly considered.
> I would say that the system of financial management we have
> is inherently perverted but sound in most other respects -
> like a pedophile who has a regular job and gets along with
> people but uses his money to buy child pornography. And it's
> not nothing for capitalists to decide that peace and
> econoomic security are more important than acting on their
> amoral impulses. Leaving aside the present American regime,
I agree. I would not even call it "perverted" - just limited, as every other tool, like computers. They are excellent tools for solving data or numerical problems, but they suck if you try to program them to write poetry, or at least good poetry. That does not mean that we should get rid of computers because they are useless for meeting human needs for poetry, but likewise we should not get rid of poetry writing because it cannot be managed by computer programs. Two words are in order here: judicious choice. Judicious choice of means to various human ends (not the other way around).
> let's look at France and Germany - or better yet, Poland and
> Germany. Clearly there is something to modern finance
> capitalism if it makes former enemies who slaughtered each
> other in their millions within recent memory to decide that
> such behavior is unthinkable. It may seem a simple triumph of
> the most elemental rationality, but elemental rationality has
> not had a good record in Europe until recently. Why else
> would Poles, with every right and provocation to hate
> Germans, decide that it is more satisfying to trade with them
> than to murder them (however satisfying that might be)?
I'd say it has more to do with the norms of civlity or even human reciprocity than with finances. For the most of human pre-history, human groups both fought and cooperated with one another. Only when the professional warrior class took over, social and economic interest were subsumed to total warfare. However, the warrior class (e.g. in ancient Rome, or aristocracy in Europe, escpecially the Prussian military and junker class) has been loosing its role which resulted in partial restoration of civlity among nations. I'd argue that the good Polish-German relations are owed more to the communists' good works of breaking the backbone of the Prussian military and the junker class, whose power base used to be in Eastern Germany (xGDR) than to anything else.
Wojtek