History suggests only that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition. - Milton Friedman
bchadwick Wrote: ------------------------------------------------------- > There are lots of assumptions about what makes > capitalism work that don’t necessarily hold in the > real world. When resources become too > concentrated, the enormous gains received by the > top few percent in society do not necessarily > benefit humanity as a whole, and benefits to > humanity as a whole is one of the main > justifications for capitalism. It is also true > that capitalism tends to allow greater freedoms in > principle, and that is very good, but if the > concentration of wealth is extreme, it can get to > the point where these freedoms become effectively > unexercisable by most people. They become, for the > majority, freedoms only on paper, which is more or > less what freedoms were under socialism too. > > Capitalism tends to concentrate wealth, and in the > first generation, there may be some justification > for granting profits to those who work hard and > take on risk successfully, but then how do you > deny these people the right to pass wealth on to > their children, who did not necessarily earn that > wealth, but become entitled to the power and > benefits it grants. I’m not saying that you > should deny them this right, but if you grant > people the freedom to use and consume assets as > they see best under capitalism, one of those > benefits is to pass on wealth to children and > heirs, and then all of a sudden you have wealth > that isn’t the return on diligence, and risk > taking, and all those things we think capitalism > is good for. > > So capitalism tends to concentrate wealth, and > concentrated wealth tends to undermine the social > benefits of capitalism, but there is no method > within capitalism to correct this tendency. In my > mind, this is one of the strongest reasons for > having democracy as a counterweight to the > concentration of power and wealth. Not that > democracy always works, since the wealthy can > often buy the powerful (e.g. the Bush > administration), but when democracy is functioning > well, it can serve as a counterweight to excessive > concentration. > > Amartya Sen points out in one of his articles that > the fact that capitalism is more productive than > alternative systems and therefore generates a > larger amount of wealth per capita suggests that > it is superior because everyone could in theory be > better off under the system. However, this > theoretical superiority is only an illusion if an > evening of the distribution of that wealth never > actually happens. > > I’m not advocating socialism as the answer (main > problem is that those who control the state can be > just as self-interested as those who control the > means of production in a capitalist economy, but > without the threat of competition to keep them in > check), but one must be aware of the limitations > of capitalism and be willing to search for > solutions to address them. Anti-trust law is one > good thing, very hard to explain to most people, > but it is more than just that which is needed. > > I’m not an advocate of the state intruding into > everything (I don’t like how many Republicans > suggest that the state ought to regulate my family > and religious life, and I think that there are > many politicians who are too eager to use the > power of the state to implement > not-well-thought-out plans), but I think that > blindly asserting that the state should stay out > of everything is a formula for disaster. i think what you dislike about free markets is the crony capitalism it has morphed into. truly free markets are utopian much like a socialistic valhalla
bchadwick Wrote: ------------------------------------------------------- > There are lots of assumptions about what makes > capitalism work that don’t necessarily hold in the > real world. When resources become too > concentrated, the enormous gains received by the > top few percent in society do not necessarily > benefit humanity as a whole, and benefits to > humanity as a whole is one of the main > justifications for capitalism. It is also true > that capitalism tends to allow greater freedoms in > principle, and that is very good, but if the > concentration of wealth is extreme, it can get to > the point where these freedoms become effectively > unexercisable by most people. They become, for the > majority, freedoms only on paper, which is more or > less what freedoms were under socialism too. > > Capitalism tends to concentrate wealth, and in the > first generation, there may be some justification > for granting profits to those who work hard and > take on risk successfully, but then how do you > deny these people the right to pass wealth on to > their children, who did not necessarily earn that > wealth, but become entitled to the power and > benefits it grants. I’m not saying that you > should deny them this right, but if you grant > people the freedom to use and consume assets as > they see best under capitalism, one of those > benefits is to pass on wealth to children and > heirs, and then all of a sudden you have wealth > that isn’t the return on diligence, and risk > taking, and all those things we think capitalism > is good for. > > So capitalism tends to concentrate wealth, and > concentrated wealth tends to undermine the social > benefits of capitalism, but there is no method > within capitalism to correct this tendency. In my > mind, this is one of the strongest reasons for > having democracy as a counterweight to the > concentration of power and wealth. Not that > democracy always works, since the wealthy can > often buy the powerful (e.g. the Bush > administration), but when democracy is functioning > well, it can serve as a counterweight to excessive > concentration. > > Amartya Sen points out in one of his articles that > the fact that capitalism is more productive than > alternative systems and therefore generates a > larger amount of wealth per capita suggests that > it is superior because everyone could in theory be > better off under the system. However, this > theoretical superiority is only an illusion if an > evening of the distribution of that wealth never > actually happens. > > I’m not advocating socialism as the answer (main > problem is that those who control the state can be > just as self-interested as those who control the > means of production in a capitalist economy, but > without the threat of competition to keep them in > check), but one must be aware of the limitations > of capitalism and be willing to search for > solutions to address them. Anti-trust law is one > good thing, very hard to explain to most people, > but it is more than just that which is needed. > > I’m not an advocate of the state intruding into > everything (I don’t like how many Republicans > suggest that the state ought to regulate my family > and religious life, and I think that there are > many politicians who are too eager to use the > power of the state to implement > not-well-thought-out plans), but I think that > blindly asserting that the state should stay out > of everything is a formula for disaster. Great post chadwick. another problem with pure capitalism (completely free of gov’t intervention) is that it is not balanced when it comes to the distribution of social costs. each entity should receive all of the benefits for its venture and an entity should pay all of the related costs to that venture. That includes social costs, environmental costs etc. Without any regulation/oversight, it is way too easy to ignore these extra costs since they are not tangible. that’s exactly the deficiency that our legal system attempts to address. to be sure that costs (as well as benefits) are allocated appropriately. as much as i can’t stand the legal profession/lawyers, they do serve a legitimate purpose. Pure unchecked capitalism would create quite a mess.
nolabird, you misunderstand free markets.free markets is not a free for all. what you have in the US is basically a perverted form of capitalism where lobbyists and big businesses get special advantage because they can influence state policy. “pure unchecked capitalism” is impossible in the current big-govt scenario because the state especially one which with such a large bureaucracy lends itself to being manipulated .thats why the state should butt out of most things and let the market decide what it needs to do about almost everything. the state’s role should be restricted to law enforcement -especially enforcing property rights. thats what the republicans used to stand for. now…theres not much difference between them and the socialists who want to redistribute wealth (except Republicans want to distribute from the poor to the rich).
Dyslexic, what’s your stance on environmental externalities?
Dsylexic Wrote: ------------------------------------------------------- > nolabird, you misunderstand free markets.free > markets is not a free for all. what you have in > the US is basically a perverted form of capitalism > where lobbyists and big businesses get special > advantage because they can influence state > policy. After reading your response. I’m not sure if we are even disagreeing here? The definition that I was using for pure capitalism is an economic system that operates unfettered by any limiting factor such as government control or regulation. By this definition, a free market is a free for all. a pure capitalist system supports a misdistribution of costs if regulation doesn’t step in. Take the disposal of toxic chemicals. without regulation, what is there to stop a company from dumping waste into your drinking water? In this case, you would be absorbing the cost (perhaps having to buy britta filters), and the company gets to make the profits. In cases such as these, we need someone to step in and be sure that companies are absorbing all of the appropriate costs. we need laws (as you point out below) and we need them enforced. you call them laws, i call them regulations. same difference. just as you agree that the US system has a corrupt capitalist system, there is def the same issue with pure socialist systems. I’m not sure if it’s the economic system that corrupts or if its power that corrupts people. The difference is who has the power? > “pure unchecked capitalism” is impossible in the > current big-govt scenario because the state > especially one which with such a large bureaucracy > lends itself to being manipulated . I agree that pure unchecked capitalism is impossible. as is pure unchecked socialism. the key is to find a balance which is what i understood bchadwick’s post to be about (and i agreee 100%). thats why the > state should butt out of most things and let the > market decide what it needs to do about almost > everything. I agree that the market should decide most things assuming that the market is distributing costs and benefits appropriately (which it most assuredly will never do). > the state’s role should be restricted to law > enforcement -especially enforcing property > rights. Agreed. Law enforcement is important. Property rights are important. FYI- laws/regulations… its all the same difference. gov’t imposed rules. > thats what the republicans used to stand for. > now…theres not much difference between them and > the socialists who want to redistribute wealth > (except Republicans want to distribute from the > poor to the rich). I’m still convinced that we are talking about the same thing. Maybe I misunderstood your post though…
bchadwick Wrote: ------------------------------------------------------- > Dyslexic, what’s your stance on environmental > externalities? i believe enforcement of property rights is the key to addressing the environmental issues as well.if a corporation is polluting your property, the govt should step in and enforce your rights. the govt would ,ofcourse, be the entity responsible for agreements between countries
nolabird032 Wrote: ------------------------------------------------------- > Dsylexic Wrote: > -------------------------------------------------- > ----- > > nolabird, you misunderstand free markets.free > > markets is not a free for all. what you have in > > the US is basically a perverted form of > capitalism > > where lobbyists and big businesses get special > > advantage because they can influence state > > policy. > > After reading your response. I’m not sure if we > are even disagreeing here? > > The definition that I was using for pure > capitalism is an economic system that operates > unfettered by any limiting factor such as > government control or regulation. By this > definition, a free market is a free for all. a > pure capitalist system supports a misdistribution > of costs if regulation doesn’t step in. Take the > disposal of toxic chemicals. without regulation, > what is there to stop a company from dumping waste > into your drinking water? In this case, you would > be absorbing the cost (perhaps having to buy > britta filters), and the company gets to make the > profits. In cases such as these, we need someone > to step in and be sure that companies are > absorbing all of the appropriate costs. we need > laws (as you point out below) and we need them > enforced. you call them laws, i call them > regulations. same difference. > > just as you agree that the US system has a corrupt > capitalist system, there is def the same issue > with pure socialist systems. I’m not sure if it’s > the economic system that corrupts or if its power > that corrupts people. The difference is who has > the power? > > > > “pure unchecked capitalism” is impossible in > the > > current big-govt scenario because the state > > especially one which with such a large > bureaucracy > > lends itself to being manipulated . > > I agree that pure unchecked capitalism is > impossible. as is pure unchecked socialism. the > key is to find a balance which is what i > understood bchadwick’s post to be about (and i > agreee 100%). > > > thats why the > > state should butt out of most things and let > the > > market decide what it needs to do about almost > > everything. > > I agree that the market should decide most things > assuming that the market is distributing costs and > benefits appropriately (which it most assuredly > will never do). > > > > the state’s role should be restricted to law > > enforcement -especially enforcing property > > rights. > > Agreed. Law enforcement is important. Property > rights are important. FYI- laws/regulations… its > all the same difference. gov’t imposed rules. > > > > thats what the republicans used to stand for. > > now…theres not much difference between them > and > > the socialists who want to redistribute wealth > > (except Republicans want to distribute from the > > poor to the rich). > > > I’m still convinced that we are talking about the > same thing. Maybe I misunderstood your post > though… nola, i guess we agree on most of the above. i am only trying to point out that there can be no capitalism without the rule of law.if you mean “unfettered” in the sense that govt is restricted to law enforcement(property rights) and not meddling in business/economic decisions, then we can agree that “unfettered” capitalism is good!
Rule of law is definitely necessary, but what should that law be? What happens when something that was historically innocuous becomes recognized as a pollutant with health, climate, or ecosystem effects either because of new scientific knowledge or because concentrations are suddenly large enough to be significant. What should be the principles behind the legislative process in those circumstances?
Jimmyleg’s post was something about capitalism still works and government should totally butt out of all business/economic decisions. That individuals should take responsibility for their own circumstances. No gov’t handouts etc. My point is that pure capitalism (which is what I think Jimmy was advocating) and the US’s version of capitalism isn’t the same thing. The only reason why “capitalism still works” is because of government regulation… ensuring that costs (and benefits) are being allocated appropriately. Not only should individuals take responsibility, corporations should as well. I feel like it is conflicting to say that government should enforce laws, but should stay out of business/economic decisions. Especially if those laws influence business/economic decisions… such as the one I described above. So… as bchadwick already mentioned… the real issue is what laws should be enforced? A little off track, but I read somewhere about how the human mind is incapable of understanding statistics. It was related to illness/cancer… if you find out that you have a 40% survival rate, your mind is not capable of understanding this… in your mind you have to decide if this means you will live or die, because you can’t be 40% alive. Anyhow, I think this can be applied to economics/politics as well. Its really difficult for some people too see the middle ground. You’re either pro-capitalist or pro-socialist… when in reality our economic system is a little of both. And that is actually a good thing!
bchadwick Wrote: ------------------------------------------------------- > Rule of law is definitely necessary, but what > should that law be? What happens when something > that was historically innocuous becomes recognized > as a pollutant with health, climate, or ecosystem > effects either because of new scientific knowledge > or because concentrations are suddenly large > enough to be significant. > > What should be the principles behind the > legislative process in those circumstances? excellent questions. i guess you are referring to something like tobacco -its probably best left to local government bodies to tackle such social ‘evils’. the federal govt should not have a cookie cutter solution for all these issues,IMO. as far as pollution is concerned, governments and businesses have been guilty,ever since the industrial revolution, of not enforcing property rights.often, the lobbies have more influence on the govt, so it is futile to expect that the govt itself will be able to take care of evolving policies to address them. i disagree with the notion that we need more laws/regulations.more regulations dont mean better enforcement -just more red tape. i think the govt butting out of business will provide better solutions to environmental issues than govt regulation. example. currently the distortion caused by govt subsidies(tax breaks among other things) to oil companies ensures that the price of oil doesnt reflect the real costs including pollution costs . otherwise,who knows,green energy could be more realistically priced.