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i love capitalism but have an issue with one area. This is something that i have struggled with for some time now and maybe someone could clarify.

I am a hairstylist and my salon carries products by the big three of cosmetics (loreal, proctor and gamble, and Estee Lauder) These groups collective own about 99 percent of all cosmetic companies and that is fine. the problem is that as i work with these groups more and more it has become clear that they spend the bulk for their money not on finding ways to make better products or more competitive prices. it is spent primarily on marketing.

By marketing i dont just mean product placement and billboards. they employ psychologists to show them how to position products to be subconsciously attractive to clients they use this to base their colors, shapes, words, and even ingredients.

for example there are multiple companies that use "diamond dust" in their ingredients which are literally ground up diamonds put in shampoo and conditioner. when i asked what the benefit is to a client their response was that there was none. it just made the product seem more attractive based on test studies and such. These and other techniques are used in all different industries very similarly. packaging, placement, and advertisements have become down right subliminal.

So as a capitalist I am a believer that the most popular product will be the one with the most value either by highest quality or by best price. It is contradictory in this case though because the most popular products today are rarely the best ones or the most reasonable but the ones who spend the most time trying to trick people into the illusion of quality. without regulation dont we get even more subliminal advertisement?

please help me understand this

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In the long run, in a free (capitalist) society, yes, the best product (quality and price, etc.) wins. There's that saying:

"In the short run, the market is a voting machine but in the long run it is a weighing machine." -- Benjamin Graham

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The answer doesn't lie in using the gov't to force manufacturers to advertise a certain way, the answer lies in making the consumers aware of such techniques. Are you the only one who has asked "What good are these diamonds in my shampoo?" If you cared enough to lobby the gov't for regulation, wouldn't you (in a laissez-faire society) care enough to organize a group for the purpose of enlightening the consumer to such practices?

Aren't you in essence saying that the people aren't smart enough to decide for themselves which product they like best?

Of course, outright fraud is illegal. If you wish to involve gov't, you must prove how subliminal advertising violates one's rights.

Ideally, one would expect the best product with the highest quality, etc., to win out in the free market. But if the consumers aren't aware enough to recognize "the best", it's one's perogotive to teach them to recognize it, not force them to.

Edited by Jam Man
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Subliminal advertising is a story made up by people that do not want to take responsibility for their choices, or blame why their sales are not at the numbers they want to be.

While there are ways to by-pass the cognitive processes, free will is not being bypassed, but actually exercise by the choice not to focus and clarify the issues at stake.

Companies market to the "bling-factor", because research show people make purchasing decisions based on "bling-factor".

You are frustrated by the understanding that people should seek value in "theory" but "practice" use a different shopping technique.

These are not problems with capitalism, however.

These are systemic to peoples perception of capitalism brought about by years of hearing half-truths, and not having been educated how to think clearly.

Government intervention into marketing is not the answer, however.

Government should only serve the purpose to intervene, if, and only if force or fraud is being initiated.

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So as a capitalist I am a believer that the most popular product will be the one with the most value either by highest quality or by best price. It is contradictory in this case though because the most popular products today are rarely the best ones or the most reasonable but the ones who spend the most time trying to trick people into the illusion of quality. without regulation dont we get even more subliminal advertisement?

please help me understand this

You need to keep in mind that Capitalism is a political concept born of ethics.

A good trick when thinking about an issue like this or debating with someone is to remember a simple thing – Substitute the word “Capitalism” for “Freedom” and reevaluate. The results can do wonders for clarity.

But to the point directly a producer in a free market produces a value to trade. The value may be the best product in quality and price but not necessarily so. Quality and price is subjective to the user when it comes to trading just like the diamond dust represents quality to some people but obviously not you. There is no contradiction – The producers are indeed creating what is valued and demanded by the market. It has to otherwise they would not be making any money and subsequently be forced to create a new value (or go out of business). Unfortunately, in this case, you don’t agree with the market. I can appreciate your frustration since I have similar issues when it comes to music.

But that isn’t the fault of Capitalism because it is not the fault of freedom. The contradiction is the idea that freedom should create specific results.

Capitalism is the freedom to live, associate, and trade with others. To choose Capitalism is to choose freedom because it is freedom… not because it produces the best results economically. It usually does but it is not the reason to choose it. That would be a utilitarian argument by claiming the Government’s policy should be determined by results instead of ethics.

As for subliminal messages dream_weaver said it best.

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Capitalism faces similar problems that a direct democracy does because it is impacted by a "democracy" of spenders. A store purchase is a vote in the market. Many people are irrationally impatient, impulsive, uninformed, and/or more convinced by fashion and cheesy advertisements than reason. This is why you can walk into Walmart is see huge, tall shelves packed with Captain Crunch, candy, sugary soda, and junk food. The prevalence of those products is a reflection of what people tend to spend money (vote) on. It is one reason (but certainly not the only reason) why McDonald's is so successful.

I am not saying that government is a good alternative. But I think it is a bit utopianist if wasteful advertisement is the only market imperfection you have conceived of. There are tons of problems with the free market (and any system). I think the free market economist Thomas Sowell said it well when he said that the world is flawed all you have to work with are trade-offs.

Edited by determinist
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Capitalism faces similar problems that a direct democracy does because it is impacted by a "democracy" of spenders. A store purchase is a vote in the market. Many people are irrationally impatient, impulsive, uninformed, and/or more convinced by fashion and cheesy advertisements than reason. This is why you can walk into Walmart is see huge, tall shelves packed with Captain Crunch, candy, sugary soda, and junk food. The prevalence of those products is a reflection of what people tend to spend money (vote) on. It is one reason (but certainly not the only reason) why McDonald's is so successful.

I am not saying that government is a good alternative. But I think it is a bit utopianist if wasteful advertisement is the only market imperfection you have conceived of. There are tons of problems with the free market (and any system). I think the free market economist Thomas Sowell said it well when he said that the world is flawed all you have to work with are trade-offs.

The imperfections you are describing are not faults in capitalism. They aren't even faults in Walmart or McDonald's. They are faults in individuals who buy those products that are (in your opinion) bad for them.

Here's the reason:

The proper goal of an individual, when making purchasing decisions, is to select the things that are good for him. If he fails to do so, then that's his failure.

The proper goal of a store or restaurant is to supply their customers with the goods and meals they wish to buy. If they fail at that, then they are imperfect. If the individuals fail in their decisions, that's their failure, not the store's.

The proper goal of a political system is neither of the above two things. The proper goal of a political system is to allow both individuals and all other economic entities (like stores and restaurants), to make their choices freely. If a political system fails at that, then it is imperfect. If it doesn't, then it is perfect. Even if the choices being made aren't perfect.

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"There are tons of problems with the free market (and any system). I think the free market economist Thomas Sowell said it well when he said that the world is flawed all you have to work with are trade-offs."

Elaborate on these tons that are free market related. Also, the world (if you are referring to the aspects that are not a product of human choices) cannot be flawed because it sets the standard for correct and incorrect. Correct is inline with reality, incorrect is not in line with it. If there is a flaw, it is in somebody's failure to recognize this and trying to judge reality against some non-existent thing they concocted in their mind as the standard for judging what is and is not correct. Why is this thing they dreamed up perfection? They just want it, so ultimately they are saying reality is flawed because it doesn't conform to whatever they desire. That's a rather childish position, is it not? "It's not exactly what I want so it is wrong." If you are only talking about the choices people make being irrational though, I think the quote in Trebor's post covers it pretty succinctly. People are capable of making suboptimal choices, however, because the irrational is that which is not in line with the nature of reality, you can only keep a particular irrational thing going for so long before inevitable consequences catch up and put a stop to things one way or another. How long this takes exactly to happen though can vary widely based on specifics involved in each case.

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I knew there was a great quote somewhere for when I heard this same observation in terms of why Einsteins are not as well paid as Lady Gaga's and the like. This helped me and I hope you find it applicable, Designer:

"The free market represents the social application of an objective theory of values. Since values are to be discovered by man’s mind, men must be free to discover them—to think, to study, to translate their knowledge into physical form, to offer their products for trade, to judge them, and to choose, be it material goods or ideas, a loaf of bread [, a conditioner containing diamond dust] or a philosophical treatise. Since values are established contextually, every man must judge for himself, in the context of his own knowledge, goals, and interests. Since values are determined by the nature of reality, it is reality that serves as men’s ultimate arbiter: if a man’s judgment is right, the rewards are his [I paid for this product for a purported benefit to me that is true/exists! yay me!]; if it is wrong, he is his only victim. [I paid for this product for a purported benefit to me that is false/does not serve my rational interests! if I am smart I will not make similar choices in the future]" (emphases and brackets mine) -- Ayn Rand, “What Is Capitalism?” Capitalism: The Unknown Ideal, p24

In other words, in a free society, the only ones harmed by foolish purchases are the fools that purchase them. Ways to stop these occurrences include education, campaigns, and other things someone more creative as well as deeply concerned about poor consumer behavior in the cosmetic market could come up with.

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In the first part of my post, I said capitalism has flaws. In the latter portion of my post, I said that a free market has flaws. I should have known better than to use them interchangeably. The argument can be made that capitalism is an abstract idea that is used as a model to base behavior from, so I guess I would not win on semantics there and should have chosen my words more carefully. However, I did claim there are problems with a free market. A market, by definition, includes both buyers and sellers. And considering that readers have already conceded there are problems with the buyers, I see that as settled.

Here are some ideas that were inspired by posts in this thread. Think them over and have fun commenting.

Alan Greenspan had a chapter about the gold standard in "Capitalism: The Unknown Ideal" and ended up as a Fed chairman after that book was written. Maybe he became corrupt. Or maybe, like a good scientist who is constantly willing to embrace new evidence, he came to believe that his ideas about laissez-faire economics in that book are obsolete. After all, its first edition was published in 1966, not 2011 or 2012. I really hope you are have spent at least a couple hundred hours reading Keynes and comparing his arguments to other economists before making your mind up. Investors have gotten rich by basing predictions on his models and his models can not be understood from a few pages. Sure, this would only be a consequentialist point anyways and you may reject consequentialist morality, but you can not reasonably conclude laissez-faire capitalism wins from an economic perspective without delving into economics.

Value is subjective. I think the Austrian school economists proved this long ago. If you like Pepsi more and I like Coca-Cola more, then a value of these sodas is subjective. This is a big reason why people can mutually benefit from free trade, whether paper bank notes or another intermediate medium are used. Do you disagree? If so, what is the rebuttal?

By Ayn Rand's own definition, she was not a capitalist. Here is her definition of capitalism.

Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.

According to that definition, all property would be privately owned. I do not see how the Pentagon is privately owned. I see no evidence that she believed in private protection agencies being allowed to compete with the centralized governmental monopoly on defense. Instead, she asked what would happen if private protection agencies had a dispute and suggested it would be a bloody battle. She did not look at it from the perspective of never violating anyone's rights unless they did so first; rather, preemptive arrests to prevent something before anyone actually initiated force to violate the rights of others. In other words, she saw morality as a means to an end: the means being a violation of rights of private protection agency employees, and the ends being the avoidance of a battle.

Edited by determinist
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I could imagine the Pentagon being privately owned, being leased or rented to the government. Would the owner be able to issue an eviction notice if the terms of the lease agreement (in this case, the U.S. Constitution) were broken?

Until the social system based on the recognition of individual rights, including property rights, in which all property is privately owned is instituted, can you only be an advocate of capitalism then?

- a capitalist at heart

Edited by dream_weaver
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I am not claiming myself as the arbiter of who can be properly called a "capitalist." I am merely quoting Ayn Rand and pointing out what the definition of "capitalism" she used truly entails.

Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.

According to that definition, if all property is not privately owned, then the social system is not capitalism. So, if you do not advocate a system in which all property is privately owned, then it is not capitalism according to that definition.

So, to my knowledge: All nuclear bombs, B-52s (not just some, but all), firearms (not just some, but all), and the Pentagon would need to be privately owned.

I could imagine the Pentagon being privately owned, being leased or rented to the government. Would the owner be able to issue an eviction notice if the terms of the lease agreement (in this case, the U.S. Constitution) were broken?

Until the social system based on the recognition of individual rights, including property rights, in which all property is privately owned is instituted, can you only be an advocate of capitalism then?

The onus is not on me to reconcile the quoted definition with individual rights (because I am not claiming it as the definition; Ayn Rand did).

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Haha. I did not intend to be testy. I just want to use the best language I can to convey this and get an extra mind cracking at the puzzle. How can Ayn Rand be a capitalist (according to the definition she selected) without believing that all property is private in capitalism, when the definition states that all property is private in capitalism?

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  • 1 month later...
please help me understand this

I agree with what others have said about Capitalism being about freedom of choice, not product quality or value.

In addition, keep in mind that when people buy certain products -- and cosmetics are definitely in this category -- they are buying much more than just the product itself. They are also buying a complex set of emotions; the purchase helps them feel a certain way, and they are willing to pay for that. The big cosmetics companies got to be that way because they recognized this crucial fact.

The truth is that people can get along without costmetics entirely (such as the "no-poo" alternative to shampoo). Hairstylists, too, offer a completely optional service. I would think, of all professions, you would understand how much the emotional aspect is a part of what your clients are looking for. Their goal is not just "clean hair" or a "haircut." Right?

This is not a negative aspect of Capitalism -- it's a wonderful and positive aspect. Imagine if government were to force companies to sell shampoos that cleaned hair really well. But that's not what their customers want to buy!

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"the problem is that as i work with these groups more and more it has become clear that they spend the bulk for their money not on finding ways to make better products or more competitive prices. it is spent primarily on marketing."

"By marketing i dont just mean product placement and billboards. they employ psychologists to show them how to position products to be subconsciously attractive to clients they use this to base their colors, shapes, words, and even ingredients."

If these companies found that making better products made them more money, then they would make better products. That they spend their money on marketing instead is an indication that it is more profitable to do so. Though I don't know this as a fact, I suspect that there's little difference in the effectiveness and quality of these kinds of products anyway -- if so, then it makes perfect sense to differentiate oneself from one's competitiors by marketing if qualitative differences in the products are not noticeable by the average consumer.

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I am not claiming myself as the arbiter of who can be properly called a "capitalist." I am merely quoting Ayn Rand and pointing out what the definition of "capitalism" she used truly entails.

According to that definition, if all property is not privately owned, then the social system is not capitalism. So, if you do not advocate a system in which all property is privately owned, then it is not capitalism according to that definition.

So, to my knowledge: All nuclear bombs, B-52s (not just some, but all), firearms (not just some, but all), and the Pentagon would need to be privately owned.

This is very foolish. Under capitalism the government is an organization which is capable of owning and controlling property with the same rights as businesses or individuals.

Under socialism, no one has rights except the government.

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It's that same gotcha mentality we see in American public life (and saw in the Peikoff thread). Just because the guy found a quote that, as long as it is kept totally out of any context, can be interpreted to mean what he says it means, doesn't mean Ayn Rand is implying that the government couldn't own property to achieve its proper functions.

If you look at even just a little more of the context in which the sentence appears in her book, or if you considered anything whatsoever she stood for or said over the years, this should be so painfully obvious to anyone that it's mind blowing that there is someone who refuses to interpret the sentence correctly.

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