The Current Crisis

[Khethil]

Originally Posted by BrightNoon

Also, Khetil
1) no government is capable of upholding pure laissez faire capitalism and 2) the principles upon which laissez faire capitalism are based have been shown to be faulty when employed as economic policy.

Those two statements clearly contradict each other...

This wasn't me. But I'm ok with roll-playing, if you'd like me to give it a shot

[Joe]

Originally Posted by Mr. Fight the Power

I certainly know of my condemnation of big government. I am an agorist.

As for your question, there must be a little more context, as I am certainly not prepared to model an entire society around drastic decentralization.

If you wish to know my view money, I believe it should be privatized as well, and will likely be done so electronically (like debit cards) through private banks. In fact, any institution that wished to issue currency could do so. Instead of a runaway institution that can pretty much steal at will through the inflationary introduction of new money, a private institution that must compete for the quality of their money must consider the actions that their money issuance has on their dollars. If we had competitive currency, the US dollar would not be held, it would simply collapse in value until nobody cared about it. Under the current situation, all Americans are doomed to have the dollars they hold to consistently lose value.

Because of this, I really like the idea of community banks or even national credit unions that are owned by like minded individuals that issue their own currency. In this way I am very similar to a mutualist, I just don't buy much of their justifications and predictions for what a natural free market economy may look.

Mutualists argue that most of the economic problems associated with capitalism each amount to a violation of the cost principle, or as Josiah Warren interchangeably said, "Cost the limit of price." It was inspired by the labor theory of value, popularized, though not invented, by Adam Smith in 1776 – Proudhon mentions Smith as an inspiration. The labor theory of value holds that the actual price of a thing (or the "true cost") is the amount of labor that was undertaken to produce it.
- Wikapedia

This seems prudent to the constant printing of money and the falling value of the dollar.

Thanks for the link Mr. Ftp, I admit i have no strong stance when it comes to economics because its always been presented in such a selfish way. I'm willing to learn different idea's though. It'll come slow because I'm not to interested in the idea of money and its structure in society. But since it is indeed important and I'm getting older, i guess there is some responsibility in analyzing the subject.

[Mr. Fight the Power]

Originally Posted by Joe

Mutualists argue that most of the economic problems associated with capitalism each amount to a violation of the cost principle, or as Josiah Warren interchangeably said, "Cost the limit of price." It was inspired by the labor theory of value, popularized, though not invented, by Adam Smith in 1776 – Proudhon mentions Smith as an inspiration. The labor theory of value holds that the actual price of a thing (or the "true cost") is the amount of labor that was undertaken to produce it.
- Wikapedia

This seems prudent to the constant printing of money and the falling value of the dollar.

You managed to pick out what I was referring to when I said that I didn't agree with the justifications and predictions. The Labor Theory of Value (LTV) was pretty well refuted shortly after Proudhon made most of his contributions. It has been replaced almost entirely by the Subjective Theory of Value, accept by a few apologists who wish to revive in order to save some of the ideas it implies.

This is for another thread, but if you wish to know more on this rather important subject (I doubt you do, it is not really a big draw to the newcomer to political economy) just ask.

Thanks for the link Mr. Ftp, I admit i have no strong stance when it comes to economics because its always been presented in such a selfish way. I'm willing to learn different idea's though. It'll come slow because I'm not to interested in the idea of money and its structure in society. But since it is indeed important and I'm getting older, i guess there is some responsibility in analyzing the subject.

Believe me, the nature of money in society was not one of my initial interests. The basic topic of this sort of libertarianism is the moral primacy of self-ownership and self-determination. It builds from there. If you would like, I could probably put together some good introductory reading, although it would be biased towards my own position I am sure.

[Joe]

Originally Posted by Mr. Fight the Power

The basic topic of this sort of libertarianism is the moral primacy of self-ownership and self-determination. It builds from there. If you would like, I could probably put together some good introductory reading, although it would be biased towards my own position I am sure.

I like the starting point. It does help understanding where the foundations lay. If you wanted to lead me too some helpful reading, that would be cool, i would read it, based on your presented knowledge and conversation.

good looking out

[Mr. Fight the Power]

I will attempt to put together a list of good introductory essays.

For now, this applies quite well to the current discussion:

"Is Laissez Faire Responsible for the Financial Crisis?"

A very pertinent portion addressing whether we have a laissez faire government:

Government spending in the United States currently equals more than forty percent of national income, i.e., the sum of all wages and salaries and profits and interest earned in the country. This is without counting any of the massive off-budget spending such as that on account of the government enterprises Fannie Mae and Freddie Mac. Nor does it count any of the recent spending on assorted "bailouts." What this means is that substantially more than forty dollars of every one hundred dollars of output are appropriated by the government against the will of the individual citizens who produce that output. The money and the goods involved are turned over to the government only because the individual citizens wish to stay out of jail. Their freedom to dispose of their own incomes and output is thus violated on a colossal scale. In contrast, under laissez-faire capitalism, government spending would be on such a modest scale that a mere revenue tariff might be sufficient to support it. The corporate and individual income taxes, inheritance and capital gains taxes, and social security and Medicare taxes would not exist.

There are presently fifteen federal cabinet departments, nine of which exist for the very purpose of respectively interfering with housing, transportation, healthcare, education, energy, mining, agriculture, labor, and commerce, and virtually all of which nowadays routinely ride roughshod over one or more important aspects of the economic freedom of the individual. Under laissez-faire capitalism, eleven of the fifteen cabinet departments would cease to exist and only the departments of justice, defense, state, and treasury would remain. Within those departments, moreover, further reductions would be made, such as the abolition of the IRS in the Treasury Department and the Antitrust Division in the Department of Justice.

The economic interference of today's cabinet departments is reinforced and amplified by more than one hundred federal agencies and commissions, the most well known of which include, besides the IRS, the FRB and FDIC, the FBI and CIA, the EPA, FDA, SEC, CFTC, NLRB, FTC, FCC, FERC, FEMA, FAA, CAA, INS, OHSA, CPSC, NHTSA, EEOC, BATF, DEA, NIH, and NASA. Under laissez-faire capitalism, all such agencies and commissions would be done away with, with the exception of the FBI, which would be reduced to the legitimate functions of counterespionage and combating crimes against person or property that take place across state lines.

To complete this catalog of government interference and its trampling of any vestige of laissez faire, as of the end of 2007, the last full year for which data are available, the Federal Register contained fully seventy-three thousand pages of detailed government regulations. This is an increase of more than ten thousand pages since 1978, the very years during which our system, according to one of The New York Times articles quoted above, has been "tilted in favor of business deregulation and against new rules." Under laissez-faire capitalism, there would be no Federal Register. The activities of the remaining government departments and their subdivisions would be controlled exclusively by duly enacted legislation, not the rule-making of unelected government officials.

And, of course, to all of this must be added the further massive apparatus of laws, departments, agencies, and regulations at the state and local level. Under laissez-faire capitalism, these too for the most part would be completely abolished and what remained would reflect the same kind of radical reductions in the size and scope of government activity as those carried out on the federal level.

Say what you want about whether you agree with these government actions, you cannot state that any government that acts in these manners is that supportive of laissez faire.

[Joe]

The economic interference of today's cabinet departments is reinforced and amplified by more than one hundred federal agencies and commissions, the most well known of which include, besides the IRS, the FRB and FDIC, the FBI and CIA, the EPA, FDA, SEC, CFTC, NLRB, FTC, FCC, FERC, FEMA, FAA, CAA, INS, OHSA, CPSC, NHTSA, EEOC, BATF, DEA, NIH, and NASA. Under laissez-faire capitalism, all such agencies and commissions would be done away with, with the exception of the FBI, which would be reduced to the legitimate functions of counterespionage and combating crimes against person or property that take place across state lines.

Its funny how the government always complains that their departments are big enough to handle problems.lol

Also one thing I think is important is that we dont really have a say in how are taxes are spent. I dont understand why we cant allocate our taxes. Maybe some should have to be taken automatically for things like health and education and possibly environmental. But for the most part, we are not represented from our taxes.

This is a great article.

[zolasdisciple]

It seems to me Bush put his own selfish needs in front of the american people then panicked and made a huge mess of our financial system by bailing out these compnies that are doing the people great harm.

[Joe]

Originally Posted by zolasdisciple

It seems to me Bush put his own selfish needs in front of the american people then panicked and made a huge mess of our financial system by bailing out these compnies that are doing the people great harm.

I think the word panicked would imply he doesn't know the outcome of all of this. People seem to think that Bush is a dumb person, which i dint think is the case. We see him socially as a jokester with bad communication skills. Thats what he is presenting to all of us. He looks like a joke because he is playing a joke on the American people.

Actually the way he has been carrying out his presidency is brilliant. I have no doubt that he has accomplished his agenda. He realizes that our system is no longer a democracy and that there is no real backlash from most of the people.

I guess what I'm trying to say is take a second look at Bush before you judge him as incompetent and unaware.

[Mr. Fight the Power]

Originally Posted by zolasdisciple

It seems to me Bush put his own selfish needs in front of the american people then panicked and made a huge mess of our financial system by bailing out these compnies that are doing the people great harm.

Bush has played a role in making this situation worse, but the nature of the system pretty much assures that any potential winning candidate would not have done much better.

I also do believe the W honestly did do what he thought was best, but this is what you get when you elect someone without much experience, knowledge, or willingness to educate himself past the advice of his advisors.

I also think he understands that is legacy will be as one of the worst presidents in history, but I don't really see him doing much to fix it.

[Didymos Thomas]

So your argument is that, because an ideal cannot be reached, no ideals should be held.

No, that's not my argument. My argument is that because an ideal is impossible, we should not suggest pursuing said ideal damn the costs. We should take into consideration reality.

Pragmatism is yet an ideal, however much you would like to deny it; all actions have a goal, which is the ideal.

Okay... All actions have a goal, but a goal is not necessarily an ideal. My goal might be to go from smoking twenty cigarettes a day to ten a day, even though the ideal is not to smoke at all.

In the case of your view, the ideal is the greatest prosperity/happyness of the greatest number of people, or something of the like, is it not?

Sort of; my ideal, I think, would result in such circumstances, ideally. But I know better than to suggest steps towards said ideal despite real world concerns; like cutting taxes no matter the circumstances as some suggest.

If you beleive that capitalism has failed, that is because you have evaluated its performance by your own ideal; indeed, it has not been equally beneifial to all and has ensured the existance of classes and of the poor. However, it is also responsible for the wealth of the U.S. that you would like to redistribute; Historically, America has grown strong under small government and laizze faire economics and has declined, since about the middle of the 20th century, after the imposition of elaborate social systems, higher taxation, larger government, etc.

We can get into the history if you like; I'm a history major. However, understand that I'm going to dispute just about every word of your summary of American history.

In any case, I believe capitalism has failed because it has, according to it's own standards. The very principles upon which supply-side economics are founded have been shown to be faulty. Even Keynesian economics has fallen short and needs revision.

You have a great deal of faith in the abilities of government, espeially in a demoratially eleted government, which tends to be filled with panderers, idiots and demogogues.

Do I? Or do I have faith in the angry masses?

When I say that periodic economic declines are 'natural' I mean that they reflect the reality of the world: the amount of resources, the tendenies of people toward spending or saving, the structure and efficieny of the apparatus of production.

But the apparatus of production we currently use, corporate capitalism, is not natural. Thus to call the result of this apparatus natural is misleading to say the least.

To assume that the government an impose a reality of their own is idiotic idealistic; to assume that the government could regulate the elaborate machinery in such a way as to actually allow it to function as it must, with regard to physical realities, and meet obligations for 'social justice', etc, is extremely optomistic.

Especially when that government is bought and sold according to the bottom line of corporations. Which is why I do not have faith in said government. I have faith in the people.

Partial regulation only hampers the natural processes without improving them; a really comprehensive regulation would be akin to a fully comprehensive and accurate weather forecast for a decade. The fact that our government is elected, with regular changes in personel and principles make this practical difficulty all but an impossibility. Your assumption that government can 'solve' economic problems is really more idealistic than 'pure capitalism'; you want to change human nature, I want to allow it to run its course.

This reminds me of a paper I wrote a year ago or so. I satarized a wealthy industrialist with something extremely close to what you say here. I have him say of the socialists that they want to change human nature, and that he accepts the nature of reality.

But my point remains - economics as natural as plastic. The government as is cannot solve much at all.

Also, regulation is not the only answer. The most important thing for us to do is reevaluate certain court decisions - like the decision that a corporation has the rights of a breathing human being. Rethinking that decision is not regulation, like a tariff or a new tax, it's a fundamental question facing our society. Can a nonperson have the rights of a person?

Firstly, making economi poliy based on moral judegments is always foolish; those fundementalist christians who consult their pastors for stock tips come to mind.

Really? Let's test this. Imagine economic crisis X, and possible solutions A and B. Solution A will result in untold thousands of people in other countries starving to death, but Solution A also solves crisis X with marvellous efficiency. Solution B will not cause the death of people, but will also be less effective in solving crisis X.

We have to ask ourselves - which is more important: morality or money? If it's money, I agree that we should not take morals into consideration in our economic policy. But I think morality should be considered in everything we do - that's why we have morals in the first place.

Secondly, no one forces anyone to buy tobacco products. Blaming corperations for the problems caused by the voluntary use of their products is absurd. Of course, there was a period in whih the corperations lied about the effects of tobacco, but that day is long gone. We all know what the effects are and many still smoke and chew: results of this are their problem, self-induced.

Corporations make more than tobacco. Living without purchasing from corporations is nearly impossible in modern American, and is certainly impossible for people in the middle and lower classes.

How was the 14th amendment used to empower corperations?

Corporate attorneys used the 14th amendment to grow the power of corporations.
Lochner v. New York - Wikipedia, the free encyclopedia
Adkins v. Children's Hospital - Wikipedia, the free encyclopedia

A couple of examples.

The freedom blacks enjoyed just after the civil war ended abruptly because reconstruction ended and the justifiably angry southerners regained control of their governments. They changed voting laws and terrorized blacks; I don't see what corperations could have had to do with this.

I didn't say the corporations were responsible for the reversal of rights in post-Reconstruction south. I just thought that the fact that these attorneys have no problem using the 14th Amendment to make more money, but are unwilling to use the 14th Amendment to protect real people is a screaming example of inhumanity in the corporate system.

Those two statements clearly contradict each other. If the ideal of pure capitalism is impossible to achieve in practice, how can that ideal have demonstrably failed? Your first statement is, however, probably true, considering the tendeny of the masses toward paternalism throughout history. The second depends on what you mean by 'faulty'; I would not call a system that has allowed for industrialization, increased consumer choices, higher efficieny and a higher standard of living faulty.

They do not contradict. The ideal of laissez faire capitalism is impossible to reach. That's a fact. Also, supply side economics has been shown to be principally flawed (Says Law doesn't work, folks) by economists. Even the replacement for supply side, Keynesian economics, has some flaws.

MFtP:

If you want to prove the the downfalls of the free market, please provide arguments that actually counter the arguments of its proponents.

Says Law doesn't work. Demand can exist without supply, and the fact that a supply exists does not necessarily mean that a demand exists for said supply.

While most free market supporters will support corporations (I am a little torn on them, I think they are natural but not at the current level), very, very few of them will support corporate personhood and the limited tort liability they enjoy. I would say that these properties of corporations are examples of government violating capitalistic and free market principles.

I also think the modern corporate form violates free market ideas. I'm at a loss as to why you think corporations are natural if you take issue with corporate personhood. Prior to corporate personhood corporations were organizations extremely restricted by the state. Basically, they were state organizations operated by a few private investors.

This was the point of my mini-diatribe: I justify corporations and big business if and when they offer the best service, but I cannot do so without my opponent attacking these corporations for things that I would never support in the first place.

Who cares if they offer the "best service", whatever that means, if as a side product of those services is atrocity after atrocity.
But let's think about this "best service" notion. Which service is better: the fine silk coat that cost five human lives, or the rough wool coat that required no human blood? I vote the later.

And how are your two points not mutually exclusive? Either government can uphold the tenets of the free market, or we cannot say that free market policy has been tried and failed.

Because the economic formulas upon which free market capitalism is based have flaws.

The market merely represents the values that are systematic to the aggregate economy. Capitalism cannot generate greed, it is merely present in our society and therefore will be present in any system that you wish to propose.

I never claimed that capitalism generated greed, I said capitalism was fueled by greed.