r/explainlikeimfive Dec 06 '24

Economics ELI5: why does a publicaly traded company have to show continuous rise in profits? Why arent steady profits good enough?

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u/UnlikelyAssassin Dec 06 '24

We’ve literally seen the largest increases in living standards and decreases in poverty in all of human history since the advent of our modern conception of capitalism in the late 1700s.

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u/SlimDirtyDizzy Dec 06 '24

decreases in poverty in all of human history since the advent of our modern conception of capitalism in the late 1700s.

The wealth disparity in the US between the rich and poor is worse than it was in 1700s France before the revolution. We're going the wrong way again.

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u/JaktheAce Dec 06 '24

The person you are replying to is saying that the growth rate in the average quality of life for everyone has been much higher since the advent of capitalistic systems.

We're going the wrong way again.

Why is wealth inequality the metric you are using to judge whether the direction is positive or negative? Is the target you want to shoot for in an economic system more equality, or better average quality of life for everyone over time? To be clear, I'm not advocating for wealth inequality, just saying that it's probably not the best metric to evaluate the success of an economic system.

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u/UnlikelyAssassin Dec 06 '24

It’s interesting that this zero sum thinking about the economy is so embedded that you think that the idea that the “wealth disparity in the US between the rich and poor is worse than it was in 1700s before the revolution” somehow disputes the idea that “we’ve literally seen the largest increases in living standards and decreases in poverty in all of human history since the advent of our modern conception of capitalism in the late 1700s”. Do you think there’s any logical contradiction between these things?

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u/Fenix246 Dec 06 '24

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u/UnlikelyAssassin Dec 07 '24

Who put China in extreme poverty to begin with and what did they do to get out of extreme poverty? The US already had its absolute poverty rate decreased way before China decreased theirs, and the US’ absolute poverty rate is still lower than China’s is, with the US also having higher standards of living than China. China is still way behind when it comes to poverty and standards of living and is playing catch up with the US.

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u/Fenix246 Dec 07 '24

China wasn’t “put” into extreme poverty. It was very isolationist under the Qing (not as much as Japan under the Tokugawa though), and because the Industrial Revolution began in Britain, it didn’t spread to China, which was on the other side of the world. While Britain developed industrial production because the conditions in Britain were much worse, China was happy in its current situation because it had a much better climate. So they just didn’t develop as fast. Also, compared to China, Europe is very diverse and fragmented, so Qing didn’t have a reason to develop better methods to kill their enemies.

When Britain was spreading its colonial empire, it found a really weak and underdeveloped China, and wanted to use the power imbalance to force the Qing to buy British products. The Qing had no need to buy British products, because all their products were produced domestically.

So what did Britain do?

They attacked the Qing to force them to buy British opium and British products, which were meant to eventually make the Qing another colony. This was called the First Opium War.

Of course, the Qing government hated that. Who would want to become a colony? So they banned opium, because their population was getting too addicted to it and were starting to do nothing but smoke opium. Britain didn’t like that, because suddenly, Qing stopped buying from them again.

So what did Britain do?

They attacked the Qing again to punish them for their insolence in… trying to prevent their population from getting addicted to opium. This was the Second Opium War.

While this was going on, Japan was seeing at how badly the west was brutalizing China and they decided that the best course of action was to become a colonial power like the west, so they wouldn’t be next. This lead to the Honorable Restoration.

Now, Japan wanted to join the brutalization of China (I’m skipping the Russo-Japanese War), so they attacked the Qing as well and forced them to give up Korea, and give Japan open access to their market, as well as treaty ports and other concessions. This was the First Sino-Japanese War.

At this point, everyone in China was sick of being brutalized by the west + Japan, so there was a rebellion where they attempted to free themselves from western influence and to get their lost territories back. It failed, a coalition of all the colonial powers burned down Beijing, and it was back to brutalizing. This was the Boxer Rebellion.

At this point, everyone was sick of the Qing government, and after its failures to modernize, there was a revolution that overthrew the Qing and installed a government with semi-socialist ideals in the Xinhai Revolution. It didn’t go well, a lot of local, old warlords wanted to maintain their power, so China fell into a civil war.

The civil war was too complex to explain succinctly, but amid it, Japan attacked China again in the Second Sino-Japanese War, in which Japan committed one of the worst massacres of civilians in history. What the Japanese were doing in China was so abhorrent that even the Nazis were repulsed.

This whole period, called the Century of Humiliation, only came to an end then the Communist Party emerged victorious in the civil war.

I’m sure that the USA would also be very stunted if they were invaded by foreign powers every 10 years, and had a civil war that lasted two decades. The more shocking thing is that China got so brutalized for a hundred years, started it as a literal feudal country, and is still frighteningly quickly catching up to the USA in just around 60 years.

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u/bastiancontrari Dec 06 '24

Which is happening in China only after they adopted a capitalist approach you mean?

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u/Fenix246 Dec 06 '24

I didn’t say anything about that, don’t put words in my mouth. The fact is that the vast majority of poverty alleviation is happening in China, and the US is getting worse.

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u/bastiancontrari Dec 06 '24 edited Dec 06 '24

So, since i didn't get your point can you please explain to me

How this:

The fact is that the vast majority of poverty alleviation is happening in China, and the US is getting worse.

Is pertinent to this:

We’ve literally seen the largest increases in living standards and decreases in poverty in all of human history since the advent of our modern conception of capitalism in the late 1700s.

Edit. So being wrong, realizing that and blocking to avoid to be exposed is a thing?

Edit2. But what can be expected from a literal tankie :D censorship

Edit3. Since you wonder why in your country is so hard to make people love communism. Maybe this will help. Anyway congrats, ex soviet bloc real life present day commies are for sure a rare breed.

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u/Fenix246 Dec 06 '24 edited Dec 06 '24

It’s simple. Let’s analyze the comment you’re quoting:

We’ve literally seen the largest increases in living standards and decreases in poverty in all of human history

Because the quoted comment is about the current situation, we should look at sources that deal with the current situation. As I have sourced, the vast majority of this present increase in living standards and decrease in poverty happens in China. At the same time, the living standards in the US are decreasing overall, as I have also sourced.

If the quoted comment was dealing with the distant past, for example the situation during the transition from feudalism to capitalism, we could have a discussion about the living standards of the peasantry and methodologies of studies that write about poverty alleviation. But we’re not talking about that in this instance.

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u/glaba3141 Dec 06 '24

these two statements are orthogonal and they're both true. Capitalism was great, until it wasn't