Free Rider Problem vs. the goal of socialism

Leftists shouldn’t try to ban competition altogether. The problem with capitalism is that the profit motive leads to dynamics like the business cycles:

1. Businesses are profitable when they succeed in lowering how much employees are paid. If companies succeed in systematically lowering pay, they will have difficulty selling their products back to the general population. To be profitable, production must skew its appeal to the wealthy rather than the people doing the actual work.
2. Most people need goods to be cheap to go about their lives, but cheap goods cause the market to enter a deflationary spiral. When prices are down, businesses can’t make a profit by producing goods because they can’t charge customers higher amounts. Investors hold onto their money instead of investing in production. The lack of production leads to scarcity.
3. Most small businesses fail. The pressure of trying to survive in a Capitalist market causes most small business owners to fall victim to the effects of Terror Management Theory. Businesses only start doing well overall when liquidity rises. hen the money supply increases, businesses are able to gather more of it. This makes them look profitable, but they are less pressured to perform socially beneficial work. Inequality also rises. This inflation required to keep capitalist markets in business lowers the buying power of most voters, empowering fascist talking points for them too.

As a result, when a capitalist economy doesn’t grow, it keeps shrinking. No stable state is possible. So far, capitalist growth has been fueled by incorporating new markets like new technology and populations who are willing to work more cheaply. This approach runs into natural limits.

There are many motives people have apart from the profit motive:

1. People do things because it will bring them respect. People are willing to kill themselves to be noticed.
2. A majority of workers are willing to see their work as romantic if they are given decent working conditions. Marx says people find meaning in life through their work.
3. People who are suffering from lack are willing to work to support themselves. If no one works in a given industry, no one will have the goods produced by that industry. Then the people inconvenienced by this will be willing to work to produce those goods. People whose essential needs are met are often willing to do this for free, even when the work is hard and underappreciated like shoveling snow.

Parts of point 3 is what economists say. The problem is that the capitalist market doesn’t line up with the reasoning economists use to talk about it, such as the skew towards appealing to the wealthy: What counts as demand in the market is not demand expressed by human beings but rather demand expressed by big spenders. A spender is big when the market thinks they will be able to amass large amounts of capital for whatever reason, and this is unrelated to social benefit.

Subsidizing businesses by vote subverts these problems entirely. The government should produce the goods because the people want them. Capitalists say they don’t want government intervention because they think it takes away the freedom of individuals. This “down side” only affects rich people.