----------------- HES POSTING ----------------- Patrick Gunning <[log in to unmask]> made a valid objection to my approach: > Mircea, it seems to me that you are using two different meanings of the term "capital." > > > My personal belief is that 'capitalism' described well the developed world economy in 19th century to just about 1950; _capital_ was the main scarce factor of growth and it justified profits. > > Here, capital is a factor of production. > > > 'Market economy' describes better the current state of the world: capital can be obtained plentifully through a well-developed market; but the scarce factor to make it work are favorable _markets_, i.e. intense consumer desires and/or cheap, organized resources (technology, labor, nature). > > Here, capital appears to be money. Of course money can be used to buy machines, tools, buildings, etc. but it can also be used to buy technology, labor, and rights to "natural" resources. In both cases, I intend to use 'capital' both in the sense of long-use assets and the money needed to buy them. In the 'deferred consumption' by 'roundabout ways to produce' theory of capital, the decision to abstain from consumption to save is paralelled by the decision to invest the money (socially recognized signs of value) in new capital. Ultimately it's changing the purpose of use of resources: old capital, labor, natural etc. to make new capital instead of consumption goods. And I include durable consumption goods (a stock of TV sets etc.) under capital - as a means to substitute other current consumption goods (a flow of newspapers). Perhaps I have used 'market economy' in an improperly extended sense, not realising the very strong connotations the expression already had. Then my proposed notion for the modern economies should be _marketing economy_. I believe the transition from basic 'capitalism' to 'marketing economy' was still around 1950-1960, when the first large fortunes were made by better marketing instead of better production, aided by mass-media such as radio and TV. When did Procter&Gamble make its major advances in earnings, profits etc ? Another big difference is that 'capitalism' describes an economy sufficiently far away from its 'saturation level' of production. That is, it has too little capital given the current technological level. A 'marketing economy' is closer to the saturation level, and advances are possible mainly through technological progress and social change which makes this technology adopted. Marketing is a commercial means to push these social changes. It's the difference between the r-phase and K-phase of development in population biology (e.g. after a fire: fast-growing weeds, then more efficient trees, until they reach a 'climax' height, barely able to sustain itself). A simple logistical growth model can explain this. The analogy stops because 'technological improvement' of trees by evolution is much, much slower than human technological progress. Thank you for thinking on this, Mircea-Valer Pauca ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]