Squashed is never happy with the status quo, and is currently giving his usual thoroughness to the idea of improving capitalism. I’m throwing in my two bits, more with the intent of helping him refine his argument than with the intent of refuting him (though I’ll attempt to refute his titular premise).

squashed:

There are other possible systems

• Jewish law, for example, has a Jubilee every seven years where all private debts are cancelled. (Some exceptions apply). It also gives the particularly poor an affirmative right to glean leftover food after a harvest.
• We used to have debtors prisons rather than bankruptcy. When your net worth drops below a certain point, you can declare bankruptcy and start over. (Some exceptions apply.)

Neither of these are particularly at odds with Capitalism. You can be certain that lending behavior would be different if there was a jubilee, but it seems like a more chaotic form of our present bankruptcy system. You could be certain that a lender would weigh the risk of canceled debt in their decision to lend. A lender would also likely weigh the history of canceled debts for a given borrower.

As far as allowing the poor access to fields after a harvest, this does occur, though it is obviously at the discretion of the field owner rather than an affirmative right. Given that in our current system, property rights come from the government (and ownership of land originates from government sale — sometimes with zero or negative cost), it would be quite possible that all deeds came with a clause of this sort. It would influence the price of the land, and have other repercussions. However, our concept of “property rights” is somewhat of an accident, and there are other possibilities.

Debtor’s prison is used in some places. Fortunately, the US system has evolved away from such a practice. The lenders have figured out other punishments for default (credit scores) that are socially agreed to be much more humane. Of course, this is considered when pricing a loan.

• Resources and rights that could be communal are private and resources that could be private are communal.

I’d be interested in more concrete examples, but this does sound rather incompatible with our current system. That said, this is an example of where I take issue with the assertion that “Capitalism is neither inevitable nor natural.” The fact that black markets arise in all non-capitalist systems indicates otherwise. Resources are always limited. These limits necessarily create shortages. Capitalism is very robust. Even when things are illegal (drugs), markets are created. Of course, black markets are almost always inefficient, but they do lend evidence to the inevitability of Capitalism.

• We have a monetary system that expects a relatively low rate of inflation each year and is not pinned to any particular commodity. Other systems have tied it to gold, silver, or cowrie shells.

Money is an interesting subject. Money also seems rather inevitable. Money has three purposes: A common measure of value, a medium of exchange, and a store of value. Some monies are better than others. Gold backed money is nice for various reasons. It seems to perform well in all three categories. However, gold is fairly rigid. Many people don’t like a gold standard because it is difficult to manipulate, and sometimes when things are truly screwed, people want money manipulated. Fiat currency allows that manipulation, at the expense of money’s utility as a store of value. The type of money used doesn’t change whether or not capitalism arises, but does impact other things (such as whether the monetary system collapses).

• We believe the land can and should be divided and owned.

Update (I intended to put something here and forgot): This has some rather huge consequences. I don’t see a non-capitalist system resolving this other than might-makes-right. Certainly there are better spots to sleep than others, and relying on first come/first served is a recipe for disaster once a population grows. Still, I’d be interested in hearing alternatives.

• Money is inherited. Some people get a lot of money from parents. Others get none.
• Debt (beyond assets) is not inherited. (Some exceptions apply).

These also have little to do with the inevitability of Capitalism. It does, however, have a lot to do with whether or not Capitalism is a fair system. The empirical evidence, however, is not as damning as you might believe. The ability for wealth to survive multiple generations is rather limited (again, empirically). Still, it is worthwhile to examine the consequences of different socioeconomic starting points.

• Every year, people pay a certain amount of their money to the police to ensure that those who don’t follow this system are locked up. The government is in charge of prosecution. In other cultures, private citizens may have had to take the initiative.
• We prohibit trespassing. (Some exceptions apply).

Update (I also intended to put something here and forgot): I again fail to see how this is an argument about the inevitability of Capitalism. Our society has chosen one method over another, though it isn’t clear that it has chosen a superior method. Ok, so I apparently didn’t have anything useful to add.

• We don’t haggle with grocery stores or utility companies.
• We do haggle over cars and houses.

A lot of this has to do with the efficiency of the pricing mechanism in these markets. I do actually have friends (yes, multiple) that haggle with electronics stores, grocery stores, and even utility companies. It’s ridiculous, but the fact is that they frequently come out ahead. I don’t personally believe it’s worth the effort, but it seems to provide them with some entertainment value, making the exercise worthwhile independent of outcome (though if the outcome was always negative, they probably wouldn’t derive the same entertainment value).

• Our immigration laws allow anybody to leave but only certain people in.

… Some exceptions apply (my father, for example, must notify the state department every time he leaves the country. The rich cannot renounce citizenship without tax consequences, etc.). There are many examples of US Sovereignty interfering with what might otherwise be freedoms. These are also interesting, but also not really supportive of the idea that Capitalism is not inevitable.

All of these choices affect the probable distribution of resources. All of these are value judgments made consciously or unconsciously. Many of them are good ideas. But we should not pretend that they are inevitable or that there is some natural law of freedom that makes these the only possible policy choices. We have adopted them to promote certain social ends. Often that social end is to make sure that people who have lots of stuff can continue to have lots of stuff without undue interference.

We can say that we simply want to enhance liberty and that capitalism is the inevitable result. When we do this, we decide which liberties we consider important (my right to make my yard greener even if the fertilizer hurts the water supply) and which we don’t (my right to farm unused land that somebody else purports to own). My point here is not that capitalism is a bad thing—it’s just that there are many potential economic systems (and many that we would still call essentially capitalist) and we should not argue that capitalism is just solely because its the one we happen to have.

I would argue that capitalism is the inevitable result even when we don’t want to enhance liberty. Again, my empirical evidence is the rise of black markets in all other systems, save some (but not all) primitive economies. The level of interference and the initial conditions are largely accidental. So are the details of the property rights. These are all worthy of examination. For example, I think most rational people (should?) agree that externalities such as pollution should be tied to property rights. It’s an accident of history that you are prevented from damaging my property, but you can dump toxins into the air or water supply.

While I strongly doubt that there are many improvements to be made to the basic premises of capitalism, I do not harbor such prejudices about the boundary conditions (for lack of a better term). Property rights have evolved over time. Birthright/Inheritance has evolved over time. The concept of a societal safety net has evolved over time. The various consequences of breaking rules has evolved over time. I expect that these things will, and should, continue to evolve.