Socialism/Capitalism?

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81

OK, I’ve gotta speak up. I’m a PoliSci and Econ Major - on top of being a nerd - and I know a thing or two about all that’s being discussed.
Empirically, it has been the case that economic communism or economic socialism, with large amounts of central planning cannot survive for long (RE; The great leap forward, Stalin’s 5 and 10 year plans…). On the demand side Market conditions are too elastic and on the supply side too few incentives exist.
But it has also been shown that economic capitalism produces negative externalites and without provisions to protect labor, exploits labor unfairly. You still see examples of these Sinclair-esque horror stories in China, where a politically communist but economically capitalist system runs roughshod.

What has emerged - a compromise, if you will - is a reigned in capitalism, where by the gov’t provides the sticks (Taxes, interest rates) and carrots (Tax breaks, contracts, licences, access to foreign markets) to drive an economy. It retains capitalist structure with economically socialist control mechanisms. A great example of this is the German model of co-determination in the Social Market Economy.

As is the point in all applied economics, only a fool stays dogmatic. All the theories ARE fine - they just all have their place and application. There is a time to tax heavy and a time for inflation and a time to stop trade.
But that’s just the economic side to things.

Politically, there are different issues. Again to use China as an example, free markets may not always result in free people - although they seem to be the best precursor to that. Moreover, the most pressing issues in political economy today are how to ejudicate fair trade (b/c there are losers to trade) and maintaining the stability of an interdepenant global economy that is ever more volatile.

82

Very interesting briangoldstein…

83

During the laissez-faire capitalism of the 19th century, there were large subsidies for businesses to produce the railroad in the U.S.

84

I have to concur with you, briangoldstein, that dogmatism will hardly suffice in any circumstances when trying to understand with societal issues, or dealing with them. Politics, as with economy at large, is always incremental (Wildawsky et.al.). “The science of ‘muddling’ through” is often the only realistic approach to policy formulation (Lindblom). However, when opinions clash, it is often contradictory values that collide. Values often stems from theoretical extremes, therefore, the debate somehow turns towards a skirmish between ideals.

Davan, I like to see myself as a realist in the sense that we should always try to see things from different perspectives, and if possible: as they are. Seeing thinks ‘as they are’ is far more difficult than projecting reality through a theoretical lens because, we’re all, to some extent, trapped in a form of Plato’s Cave. Nevertheless, we should try, and therefore: I think multiple sources of information, including academic assessments, will be the way to reduce imperfect probing (I actually acquainted myself with some of Rand’s ideas [“The Virtue of Selfishness”], perhaps not enough?). Dismantling ‘most of the academia’ is unjust because it is there where many important arguments are put to the test, dissected, debated, reassessed, improved etc. I did not insinuate you being short-sighted when referring to the fictional plot and characters in a novel, merely implying that no book or single source whatsoever will be enough.

How should we deal with society then? Or is society dealing with us? We are collective beings, we can only prosper in a collective, that’s for sure – and no, I’m not advocating socialism here. You can only be free if you’re the only person on this earth, but you’re not, that fact alone will burden you will responsibility towards others; we are sharing limited resources, therefore, we should consider the consequences of our actions in an imperfect, unequal world; a place where more for me could mean less for someone else. For you alone, that might not be the case (you are only one of many), but when advocating that principle on a global scale, that same principle might just turn against you, and kick you in the butt.

85

I saw this post and just wanted to make the quick remark that this is a classic case of confusing capitalism and mercantilism. I’m not picking on Scarface, because this is a very common conceptual error that most people fall into if they’ve never studied economic principles and economic history (which accounts for 99%+ of the population). What is usually referred to as capitalism or global capitalism, by both it detractors and defenders, is not capitalism at all but in fact mercantilism (essentially rigged markets rather than free markets).

Again, I refer the interested reader to the two articles by Hoppe and Osterfeld that I linked to in a previous post. These articles make the point more thoroughly and articulately than I can.

The internal contradictions of capitalism to which Marx referred came from his attempt to conflate these two contradictory systems into one. He never understood the difference, which is really quite amazing for someone who closely studied the work of Adam Smith, which was largely a refutation of mercantilism.

As Osterfeld points put, much of Marx’s criticism of capitalism is in fact a criticism of mercantalism. And to the extent it is, it’s actually quite good.

As long as there is any government interference in commerce, there will be mercantilist policies that benefit the most politically connected businesses. Big Business loves Big Government because they can control it. Where do you think the politicians and regulators are drawn from, and where do you think they go after their stint in “public” service? As P.J. O’Rourke says, “When buying and selling are controlled by legislation, the first things that are bought and sold are legislators.”

86

Actually Flash, I have studied economics… As it was part of my requirement for my MBA. I am fully aware of mercantilism and the fact that it’s been the main system employed from the 1500-1800’s. However the late 19th/early 20th century was a time that was considered by many as the laissez-faire period. The fact that subsidies were given to businesses to produce the railroad in the U.S. during this period shows what occurs in the REAL world. As a matter of fact, the laissez-faire argument was then and is today used by many that would accept subsidies for business while denying it to the poor… The difference between theory and reality…

Laissez-faire in practice is as unrealistic as pure socialism in practice. Human interest gets in the way…

As long as there is any government interference in commerce, there will be mercantilist policies that benefit the most politically connected businesses. Big Business loves Big Government because they can control it. Where do you think the politicians and regulators are drawn from, and where do you think they go after their stint in “public” service? As P.J. O’Rourke says, “When buying and selling are controlled by legislation, the first things that are bought and sold are legislators.”

Anarcho-capitalism (no interference by government), which you seem to advocate, has inherent problems that has been discussed… Currently, big business has to go through government to get their way, as oppose to enforcing their will DIRECTLY on the people.

87

I misunderstood your point, which is actually in agreement with mine.

88

Murray Rothbard, Hans-Hermann Hoppe and Walter Block have disposed of this argument so many times, I will not even attempt to reproduce them here but merely refer interested readers to their work.

Regarding the general case against anarcho-capitalism (a term I’m not thrilled with), I’m actually working on a comprehensive theoretical treatise on legal theory and the a priori foundations of law that ultimately addresses this point. At my current pace, you should be able to read it in about 100 years. But essentially, it takes Mises’ proof of the impossibility of rational economic calculation under socialism and extends it to cover all monopolistic rule making (legislation, arbitration) to show that not only are monopolistic governments not needed to create and enforce legal rules, but actually can’t do it. (Bruno Leoni makes a short tease on this point in the introduction to his book Freedom and the Law.)

In government legislation, all rights and obligations are essentially pooled together (socialized) and then meted out according to political fiat. But they’re essentially flying blind in this process. This is where bribes, kickbacks and political horse trading come into play. It’s an attempt to reestablish some type of pricing mechanism regarding the distribtion of rights and obligations, which is what occurs during private contract. But in the case of “public law”, the parties to the contract are also playing with other people’s rights and not just their own, which is why they screw it up most of the time; they don’t bear the full costs of their deal making and can shift the cost to others not directly party to the contracting process. As Frederick Bastiat stated quite clearly, “The State is that great fiction by which everyone tries to live at the expense of everyone else.”

Socialism and capitalism are not different economic systems. Rather, they are different legal systems (property and contract) that have different economic consequences. Capitalism’s biggest problem is in fact socialism, specifically socialized law. (Frank van Dun also makes the point that capitalism’s biggest problem is a socialized money supply (central bank fiat currency and legal tender laws), which causes booms and busts. See Mises’ work on this point.)

Much of the analysis of socialism and capitalism is ultimately a question of legal science, and it’s very frustrating that jurists have ceded this area of study almost entirely to economists. Hopefully, this will change.

So going back to your original point, I agree with you. As long as people accept the legitimacy of the existence of the state (socialized law) (which is in decline but will be around for some time to come), there will always be people who will use it to their advantage at other people’s expense. There have always been criminals, and there always will be. Some criminals are just better at getting away with it. They’re called politicians.

89

Regarding the impossibility of ordered anarchy, I suggest reading the following article, Do We Ever Really Get Out of Anarchy? by Alfred Cuzan.

http://www.mises.org/journals/jls/3_2/3_2_3.pdf

It’s only 8 pages long and makes some very interesting points.

I also strongly recommend Anthony de Jasay’s article “Self-contradictory Contractarianism”, which is found in his book Against Politics as well as For and Against the State edited by J.T. Sander and Jan Narveson. Unfortunately, I can’t find a link to a free copy of that article, but it is a complete demolition of the prisoner’s dilemma argument for the necessity of a final arbitor (the state) in resolving disputes. The analysis in the article is absolutely mind blowing and dramatically altered my thinking on this point. (I was a reluctant anarchist.) I just wish it was more readily available.

90

You’ve made some excellent points… and I read the article…

I think we are in agreement that Capitalism might work without socialism. However, as humans are social creatures by nature, It’s virtually impossible to separate the two. It’s really impossible to imagine capitalism regulating markets efficiently enough for labor and business to produce at value when people are involved… As you mentioned some people are criminals, whether they are in business or government…

Conversely, I do like the idea of pure capitalism in theory…

91

It’s always a few rotten apples that spoil the bunch. :wink:

92

Very true… :smiley:

On the article: DO WE REALLY GET OUT OF ANARCHY?

The levels are Anarchy statement is valid. Under any type of rule anarchy exist -with so called government itself being the vehicle of anarchy as opposed to abolishing it…

93

We can only prosper in a collective? I think not. There are many definitions of collective, but if you aren’t using the most general one, then I will not agree with this. People do not inherently need each other to prosper as an individual (although it can be beneficial). Also, people do not need to agree on the same cause to progress. For example, one person may have a goal, but they may ask for the services of others on the way there to take care of small parts. In the “real world” that may be highering an artist to make a sculpture for your building or hiring a contracter to help put up the steel skeleton or something along these lines. The individual is the only one needed to “put it all together.” Also, ideas CANNOT be collective as it is the individual who comes up with the thought. You cannot share minds. Some may compromise on their idea or an “average” of ideas may be taken, but ideas alone cannot be collective, barring 2 “people” sharing the exact same mind, which isn’t currently possible.

You keep mentioning the “limited resources” yet neglect to also consider the fact that businesses are often the ones finding solutions to this, including making new energy forms, GM foods, more efficient farming methods, and more. It is government restrictions that often limit these, funny enough. As an individual, one may value the resources very highly and decide that they want to do their part in conserving, but should this be forced on a global scale by gun? I think not. Essentially, that is what you are advocating. We are not talking about what a person should do themselves, but what the government responsibility of the situation is.

94

I would hardly consider any period that incorporates tariffs and SLAVERY (depending on how late 18th century we are talking) as laissez-faire capitalistic. What occurs in the REAL world? In a non-laissez-faire world yes. When people say real world, it is rather annoying because there is no fake world. The fact is, the period was close to laissez-faire, yet still far from it. It is people like you who have believe that not having welfare or ss or medicare will “never work in reality” even the they don’t work in reality either.

Laissez-faire in practice is as unrealistic as pure socialism in practice. Human interest gets in the way…

Laissez-faire in practice hasn’t exactly happened, so I wouldn’t say so. There are many socialistic and communist examples to look at though and shows how they both really work. What I find funny is how you can look at the countries and notice that the more socialistic/communist they get, the worse they are off generally. France, Germany, Portugal, and other Euro countries are suffering SEVERE unemployment that the US has not faced even during the recent recession. North Korea and most of the middle east, well, look for yourself. The countries have ridiculously poor people, except for the ones who are so small and oil rich that the royal family(ies) can subsidize the citizens.

Anarcho-capitalism (no interference by government), which you seem to advocate, has inherent problems that has been discussed… Currently, big business has to go through government to get their way, as oppose to enforcing their will DIRECTLY on the people.

You obviously haven’t read my posts. I am avidly against anarcho-capitalism and have offered my own definitions for anarcho-capitalism and laissez-faire capitalism (you haven’t seemed to define either yet).

95

Government sadly seems to have many more. Look at the statistics of how many criminals there are in business. The number is ridiculously low. I have a book from George Stilger (Chicago economist along with many other institutions including Columbia) where he describes this and how ridiculously low and almost non-existant it is. This is why anarcho-capitalism would work though and why laissez-faire capitalism would be required so that situations like this could be avioded as best as possible.

I find it very interesting that a guy with an MBA is advocating socialism. The people I know with MBA’s from Chicago and other top tier institutions are all against it avidly, often to the extreme.

96

That statement on anarcho-capitalism was directed towards Flash, clearly… So relax! I know you are against anarcho-capitalism…

Yes, I have an MBA, and I am NOT advocating socialism. My premise has been mixed leaning towards Capitalism, (although in theory I am pure capitalist) for obvious reasons… You seem to want to either stomp out and/or label anyone that doesn’t advocate pure capitalism as socialist. And this is where I disagree completely -and yes, I am aware that some believe and argue that capitalism is an all or nothing deal. Furthermore there is a difference between theory and the REAL world…

Laissez-faire in practice hasn’t exactly happened, so I wouldn’t say so

The late 19th century (AFTER slavery) and early 20th century came the closest to and is described by many as the height of laissez-faire’s implementation. However, the fact that it has not happened completely strengthens my statement about human interest getting in the way of complete free markets and complete freedom… Whether in business or government… After all, it takes a special human being not to want to leverage their advantage. Regardless of whether it infringes on the rights or freedom of others or not… Even the most powerful predators prey mostly on the weak!

97

Davan, socialists say exactly the same thing about socialism “It’s never ACTUALLY happened, but it works IN THEORY.” North korea, and USSR aren’t “real” socialist bastions, they are dictatorships, I mean come on. And China? China has adopted more capitalist policies than America has…

Davan, you fail to even consider the early 20th century and late 19th century American economy as a valid argument. It’s obvious that you aren’t familiar with the era, because it totally blows your boat out of the water. “The more socialist a country becomes the worse off it becomes” this is true, but if you take into consideration 1880-1905 U.S. era, it becomes painfully obvious that the more capitalist the country’s policies become the wider the gap between the rich and poor becomes, the more incentive the rich have to abuse the poor, and the more power business moguls have to manipulate government. For the most part, the 1880-1905 era was 90% capitalist, by your logic, a capitalist country like that should be FAR more successful and ecnomically prosperous than a 90% socialist country, like the USSR, or modern day NK. But it wasn’t. Not for the average man. Not for the rich men, or the middle class.

98

Care to explain how you will prosper outside a collective? When did humans break away from being collective beings? Are we not living in societies after all? I’m obviously not referring to Borgs in Star Trek when bringing the collective notion to the table. Did you learn language by your self, or to think, or to act, or to trade, or to cherish capitalism over socialism all by your self? Every business needs to trade something, preferably on a public place; how is that not collective? I you get rich (prosper), you are doing it because your interaction with a collective is giving you surplus in one way or another – but only within the limits of the collective. That’s why you only prosper in a collective; you are part of it, that’s why you’re given the possibility to strive for your individual agenda! Without that, you would dig for food like any other mammal.

You only come up with your own ideas in interaction with other ideas; ideas that stems from other ideas …. And eventually from other people during the learning, socialization and interactive phases of your life – that being, your whole life, not just early childhood (in situations like this debate, on this particular forum and not any other forum with other people responding). That’s why a collective is a good thing: WE LEARN, but there is also, always, a private aspect as well as responsibility involved (responsibility to make the best of the situation both individually and collectively)

So, by saying that scarface is advocating socialism when in fact he is advocating social responsibility, one might ask: have you been responsible in your judgement to yourself and to others?

99

China has NOT adapted more capitalist policies than the United States. They have adopted many, but not even close to as many as the US or even their regional rival Japan. You bring up a time where the US was in reconstruction from a long slave period, which is a very big and very real cause for much of the poverty at the time, along with various civil rights disputes which go hand in hand with opening up the economy more to various different people. I would be interested to find out how you came up with 90% capitalism here. Subsidizing and allowing illegal practices (depending on what exact decade we are talking here) is NOT laissez-faire at all and does not protect the rights of the individual. If the government is able to be manipulated and take away people’s powers, then it is not an effective government. Regardless of who is in power, they should not even have the ABILITY to take away the rights of the ordinary citizen. This would go along with no dictatorship by the minority OR by the majority.

100

Again, if you broaded collective to “any communication and action” with other members of the human race, you can fit anything in there. I don’t think it would really be useful to define it as that for a discussion like this. Often, people will refer to collectivism more as gathering, specifically disregarding whether people want to or don’t want to be a part of it, which would include the obvious fascism, socialism, communism, etc. Also, you forget that people often want to teach you these things. You haven’t read through all my posts, especially the ones where I offered you quotes from the book you haven’t read (although you are able to criticize it) that details some of this. Taking care of your child is not a selfless or “collective” task at all. You value your child. It makes you happy to do so. You are fulfilling your own, personal values, goals, and morals in doing so.

Also, there is a big difference between an individual’s social responsibility and the government’s responsibility, which it seems many here are missing. Nobody is saying to overcharge some old grandma or any of that nonsense. The point is where the GOVERNMENT’S responsibility and power ends. By extending that to very blurry and very debateable points such as this, you risk and probably do take away the rights of many individuals as a claim for the collective. The question is though, if it is truly better for the “collective”, will people not do this part on their own? Does the government have to force them, if it is truly in their interests?