Appreciation
Thanks CB, Ducky, Ren and others for respectful dialogue on last thread. The thoughtful, classical conservative is a rare breed, in my experience. Now more than ever I wish I had more knowledge of monetary policy,role of central banks, intricacies of financialization and the whole delicate structure which is modern capitalism. (variously referred to as state capitalism, mercantilism, mixed economy, monopoly capitalism, "late" capitalism, etc..) The debate about the continuing viability of this system obviously continues, as it should, and just as we Americans learned about Iraq by invading it, we wait till the DOW hits the 7000s to learn about economic crisis. Those who read the National Review like CB learn that FDR prolonged the depression by 30 years. (check his blog) Those who read ZNet learn about the tendency for the rate of profit to fall. Mussolini was a great believer in mixed economies. My hope is that this blog is a place to discuss and debate what we have learned.
One point that always comes up is the role of "human nature" and what economic system best utilizes these "natural" inclinations. Some say only competition produces innovation, others say "each against all" retards the species' social evolution. I ran across this early meditation on the nature vs nurture theme:
"And I affirm that as the instinct of the dog is to hunt, of the bird to fly, of the horse to gallup, so the natural bent of man is to philosophy and right conduct. As every creature most readily learns that for which it is created, therefore will man, with but sight effort, be brought to follow that to which nature has given him so strong an instinct- excellence- but on one condition: that nature be reinforced by the wise energy of the educator."
Erasmus
Filled up this morning for $1.78 a gallon. Best part is not having to listen to Silly Sarah jabbering about "Drill Baby Drill". Fellow hateful Alaskan Sen. Stevens will no longer gag us with his rat breath. Joe the Plumber is recieving food stamps and the auto execs flew to Washington in their private jets. Now does a tax hike for the rich sound ok? He can still feel good about being above the new World Bank international poverty line of $1.25 a day. How many are at or below? Tune in tommorro and find out!
posted by troutsky @ 11:24 AM
23 comments
23 Comments:
CB once visited a hardcore Pakistani Maoist/Stalinist blog. I was considered an enemy there, just think about what they thought about CB. That was a good read.
A baby animal, in next to no time, can be left alone in the wild. A baby human is worthless left alone. It needs to be nurtured by others to survive. Its life is a collective effort. Diapers from the level of raw materials, to manufacturing, transporting, selling involves maybe thousands. Humans need cooperation to survive.
trout, ren,
I am a student of human behavior and am most curious about the results of coercion versus voluntary associations and exchange. Intuitively and as a personal preference, I don't like to be compelled to do anything, most of us don't. While it can be quantified, my understanding has more to do with reasoning and logic than a double blind study or measurements like GDP, CPI, etc. Because I am a student, still learning, I learn more from talking with you than the echo chamber of those who believe as I do.
I am about to write on the subject of "America: Mercantilism, Collectivism or Capitalism?" In doing some research, I came across an article that may explain one of the barriers of communication between honest brokers on all sides. It was an article published in 1988 in The Review of Austrian Economics. The article was the review of a book entitled Traders Versus the State: Anthropological Approaches to Unofficial Economics.
In the review, the article's author pointed out that collectivists view of governance and markets is one and the same. Rather than explain it poorly myself, here is an excerpt from the article:
"Since the Marxist views both the market and the state as nothing more than alternative methods by which the ruling class is able to dominate and exploit the rest of society, he is unable to distinguish between the market process itself, and the effect of government restrictions on the market. Arid this, in turn, means that the Marxist cannot distinguish between what is commonly referred to as capitalism, or a system of free trade, and mercantilism, or a system in which the operation of the market is impeded by extensive government restrictions for the benefit of the ruling group. It is important to realize that it is not simply that the Marxist does not distinguish between capitalism and mercantilism. It is that the Marxist paradigm quite literally renders him incapable of making such a distinction."
These are the areas I like to explore because it is here that I can discern whether an advocate of collectivism's purpose is to benefit people or to control them. I can reason with the former but not with the latter. With the former, we can reason about human nature and approaches to governance. I can get with a Star Trek, The Next Generation, Jean Luc Picard approach to self-actualization whereby cooperation exists and everyone does their part, the question is how do we get there?
Ren, the observation I would make about the baby is that while it is collective effort, it is voluntary and cooperative rather than compulsory. Certainly, in some cases, aspects of care are compulsory, i.e., the child requiring care whose parents have no funds to pay for care or insurance. But wouldn't you agree that results are better at, let's say a Catholic or Jewish hospital whose mission is to provide indigent care than a municipal hospital that has the same "mission?"
I too appreciate the conversation!
Indeed Ren. All this talk about "harnessing natural attributes" misses two crucial points. Such attributes are in part created by societies objective conditions and that it is within our human capabilities to then choose and shape these attributes.
The other point missed is thatwe can develop to a point of transcending the mere "harnessing" to a point of planning,designing and coordinating.
Those who read the National Review like CB learn that FDR prolonged the depression by 30 years.
That's Murray Rothbard's argument in his book America's Great Depression. The Austrian school claims that the boom-bust cycle is caused by inflation--that is, an increase in the money supply--by the central bank. This causes malinvestment of resources, producing bubbles, which must be popped.
These bailouts are only going to prolong the inevitable. What goes up must come down, so we will experience a recession that will return prices into line with market forces as per the Iron Law of Supply and Demand. The process will be painful, but it must occur eventually. And once we get there, it will be better for everyone--well, except the fat cats who benefit most from the plutocracy.
Of course, if we retain the Federal Reserve, and really, the whole fractional reserve banking system, the odds that this happens again are high. I guess we wait and watch.
Friedman said that government took the wrong actions, particularly the fed, after the market crash in '29. Rothbard's point was that the fed was the problem. Well, that and all of the programs Hoover created that FDR later called the New Deal. Prior to 1932, there were less than 2,450 pages in the Federal Register. With the National Recovery Act, FDR added 100,000 pages of government regs. He continued to add 100,000 pages each year. It was a disaster. Rothbard was right.
Marx seperated market from state. There are schools as the Frankfurt School and a host of others, who try to change Marxist theory, might except such an idea. The state and the market are seperate under capitalism. Not only is the market not a means to control, it is essentially (sorry Larry Gambone) essentially anarchist.
The mainstream conservative assessment, is that this crisis, is related to bad loans given out 31 years ago. That is why McCain lost.
This comparing auto worker wages of US workers with Japanese etc. is a farce. The foreign automakers in Japan and Germany have state paid for healthcare. Conservatives are putting all the blame on the union. In addition the US has an older auto industry, and more retired.
Where I live both the private and public hospitals are good.
We don't have to listen to Sarah and drill baby drill, because the speculators fled.
One of the founders of NR is ex-Trotskyist James Burnham, who never changed from Trotsky's position about the state bureaucracy in Russia. Several others as well wrote for NR.
...All this talk about "harnessing natural attributes" misses two crucial points. Such attributes are in part created by societies objective conditions and that it is within our human capabilities to then choose and shape these attributes.
I believe, Troutsky, you have hit the nail on the head here. CB, from his comments, appears to be a classical Libertarian. The only question is he of the looney Ayn Rand branch, or more of the academic-theoretical Austrian School of Economics branch. From my survey of the thread, seems to be the latter.
Nevertheless, all Libertarians share some central myths and blindspots born of their obsession with a particular notion of liberty. Fundamentally, they take the notion of "individual" as given, when in fact, as you point out, there are no individuals without the collective society. Are animals individuals? Yes, in a sense we don't care about too much.
They also share a notion that the state is always, ipso facto, bad. The source of all evil. True, the state can be a nasty beast, but that is not a logical argument, only a historical one. They start with the notion that state power is necessarily a force for evil against the individual and everything is deduced from that. Thus, ANY scheme that would seek to turn state power to enhanicing human potential must inevitably fail because of "human nature."
I have been through this so many times, and it always comes back to the circular insistence on the evil of the state. How evil was the state when it outlawed Jim Crow?
The Libertarian view is basically a utopian anarchistic one that fails to realize the tyranny that is latent in small communities. Anyone who has escaped from a small town can tell you just how stifling of any diversity such a community can be. (Not that it MUST be.)
If you look at the writings of these Austrian economists, as they rant against the Federal Reserve system, etc. the argument is always that these institutions, as they were developed to limit problems in the system, enhance state power, and are therefore bad. The solution is always to dissolve the state institutions back to...what? Kirkpatrick Sale's vision of minimal bio-regional communities living in anarchistic bliss? Good luck! That's easy to imagine from our vantage point, but just try getting there if you REALLY give up the social and technical power of the massively organized societies we have created...
I could go on, but my point is that CB, although thoughtful and honest about his views, is peddling an ideology that purports to be developed on simple empirical observation and rational enquiry, but it is really founded on bedrock preconceptions about humanity and society that are not true or appealing.
I would say, if you want to get back to first principles, which is what Libertarians such as CB say they want to do, you have to study the origins of society, collective economies, AND decide what your values are first. Liberty, in the narrow individual sense does not trump fairness and basic human dignity in my book. One can disagree, but you can't assert a particular notion of liberty as an absolute good without challenge.
I conclude my rant.
lichanos,
Some interesting observations. To answer your question, I am an anarcho capitalist, Austrian school adherent. However, acknowledging the reality of a Federal Reserve and regulatory schemes that make us mercantilist, not capitalist, I also follow closely the arguments of the Chicago school with regard to monetary policy.
I make a distinction between the necessary cooperation that we voluntarily participate in and the coercive collectivism of which you write. The individual liberty that you so scorn allows us to organize ourselves into the associations that our in or interest. My interest may include school for my children, while you may be childless and have no need or interest. Why should you be burdened with my interest. In another instance, we may cooperate to police our community or invest in a grocery store or food co-op, if you prefer. But these associations are voluntary.
Government is not necessarily bad. For example, the maintenance of a common currency or the protection of property rights (which is the key to liberty and prosperity) through the courts, are common needs to all of us. Much beyond that, invites tyranny.
By the way, Jim Crow was enforced by government! Rosa Parks was arrested by the government for violating Jim Crow laws.
Free and voluntary association and exchange, without the tyranny of government interference promotes the most equitable, efficient distribution of scarce resources possible. The mechanism of price, where supply meets demand does more to achieve collectivist utopian vision than any artificially imposed schemes.
Progressive taxation, regulation, tariffs and subsidies, promote and lock in the income and wealth disparities they point to as flaws of "capitalism" when what they are identifying is capitalism's evil, bastard child, mercantilism.
If your goal is "fairness and human dignity" they are best achieved by the liberty and prosperity afforded by the market.
Perry Anderson wrote: "it is necessary to to be able to look theoretical adversaries in the face, without either indulgence or self-deception.That requires a culture of curiosity and critique.." This was his prescription for a Left trying to reconcile itself to defeat but applies generally I think and with the thinkers and the bloggers of this "culture" rest the fate of democracy.
Two issues that crop up immediately with terminology. First "collectivism", if used as a pole on a spectrum,refers to the sublimation of the individual and liberty to some utopian commonweal, commune, community, etc. I don't think this is a fair starting point.
Then there is the conflation of the state with it's authoritarian, coercive baggage and government,which creates ordered structure through some process.
I'll elaborate these problems later.
CB:
There's more to the economy than monetary policy...
"Necessary cooperation" vs. "coercive collectivism" of which I write? I'm not a Leninist! Do you get to make the distinction between these two? It's not at all obvious which is which. Are speed limits coercive collectivism? Is any tax coercive? If not, then it's just a question of argument over which are practical and fair, not a cosmic conflict over the State vs. Liberty. Tom Paine understand this very well when he wrote his wonderful essay, "On the Necessity of Taxation."
I may have no interest in school because I am without children, ergo, paying taxes for public school is coercive. That seems to be your view. But I am happy to live in a vast society that showers me with benefits that are only possible in a modern economy where education is widespread and easily available. Perhaps you would prefer to go back to the manorial system? What about public health laws - why should they be less than voluntary? I can move to the country to avoid infected people and avoid sex with prostitutes if I really want to live a long life...
I know the state enforced Jim Crow. It gives, it takes away. Man is a tragic animal, and anarcho-capitalism is not a silver bullet that will lift the burden of this condition from off of us. No good is unalloyed with the potential for something bad.
. The mechanism of price, where supply meets demand does more to achieve collectivist utopian vision than any artificially imposed schemes.
Look, I'm not arguing for a command economy circa 1930 USSR, but this argument is strictly historical, and very limited. It has worked well at places, in various times, but it has also led to serious social ills. Some societies recognize this and seek to moderate its downside. If there is a cost, they are willing to pay it. You and other libertarians consistently denigrate the value of democratic choice when it selects non-libertarian policy. That is, it's okay for the Chicago Boys to go to Chile and help a ruthless tyrant set up a laissez faire economy - that serves liberty. But if ordinary citizens see a positive tradeoff in voting for a welfare state, that's voting to walk down the road to serfdom...
What proof do you have that the market provides the greatest fairness and liberty...compared to what? Any policy that limits the breadth of the free market is considered to be anti-market, therefore, it's all or nothing for a libertarian.
lichanos,
That which most distinguishes the Chicago and Austrian schools is the issue of sound money and monetary policy, the former acknowledging the current reality, the latter demonstrating the folly of it.
Further, you can't fairly attribute government excesses, such as they exist, to any philosophy espoused by the Chicago school. I don't know how much Chileans are complaining though, theirs is the only economy in the western hemisphere that has consistently outperformed the American economy. They are moving in the right direction as we are lurching in decidedly the wrong direction.
Again, my premise is that those on the left conflate government with the markets. Chile moved to deregulate, privatize and strengthen property rights, that is the key to their economic success, not any response to the Maoist Sendero Luminoso.
I view all of these considerations on a continuum with statist "solutions" on the left and free markets on the right. No system involving people is without rough spots, so capitalism doesn't instantly resolve every issue, it is not a panacea, but as Churchill said of governance, capitalism is the worst method of organizing an economy ever devised, except all others. Likewise, addressing capitalism's deficiencies with artificial schemes is likely only to produce some unintended consequence worse than the "problem."
Prima Facie evidence that capitalism is superior: Hong Kong (pre and post handover), the US and the previously discussed Chile. Low regulation, low tax and strong property rights. Mainland China, especially the Guangdong province where China allowed for limited property rights which grew the economy. Attempts to roll back the property rights resulted in 10,000 MASS protests in 2006 and 2007 each. India, which has been a democracy but hasn't been vigilant about property rights. As they have liberalized those laws, their economy has exploded.
Conversely, Tanzania, Ghana, Zimbabwe, which used to be the "bread basket" of Africa and now has people starving. Contrast that with Botswana, whose economy exploded as their priority was property rights and low regulation. As they experienced success, they began to creep toward control and their economy suffered. I could go on and on and on, but that's enough for you to chew on for now.
I think that you guys are honest brokers but we are talking past one another with terminology. I have the weight of history on my side but that's not where my argument resides. You are swimming up stream against history so you can't hang your hat there. We are both dealing in the realm of the theoretical. We have to have some common language to discuss our divergent paradigms otherwise, we will get nowhere.
It seems like you want to change human nature to accomplish certain objectives we agree upon. I acknowledge human nature in my analysis to accomplish the objective. There are certain objectives where we don't agree, which is also a point of honest debate where we may have to agree to disagree.
CB:
You regard individual rights to property as the foundation of all social liberty. That is the disagreement. I think they are important, but not sacred, and not necessarily transcendent of all others.
For instance, if you ask Chileans if they like their current economy, it will depend on whom you ask. Of course, you can't ask the thousands who were murdered by Pinochet's men, but aren't their opinions of value too? It sounds like you are endorsing an Ends Justifies the Means point of view because you define the Good as a growing private business sector...
lichanos,
No, I don't suggest that the means justify the ends at all. I simply think it is an error in logic and fact to conflate injustices, real or perceived, to a policy that strengthens property rights, privatizes industry and organizes resource distribution around the mechanism of price, where supply meets demand. In other words, that which has led to Chile's improved economic fortunes has nothing to do with combating Maoist trying to overthrow the government.
Yes, I regard property rights as central to liberty and prosperity. This may be old for some who've read me go through this but I'll be as brief as possible. The slave owns nothing, has no property rights. They don't own the product of their intellect or their labor. They don't even own themselves.
Liberty is the ability to dispose of something you own, the way you wish to dispose of it. It also comes as a result of being owning yourself, determining where you go and what you do for yourself. The concept of "economic rights" or that which government owes you, requires that someone give up liberty to provide your health care, education, food, shelter, child care, etc. That person becomes your slave and is not at liberty with their time or their wealth, because it is coercive, not cooperative and voluntary.
Prosperity is possible when you have the ability to own something because you may dispose of it as you wish. In a market economy, you can sell your labor, intellect or property to acquire additional property (or more freedom).
CB:
What does the Sendero have to do with Chile? You're thinking of Peru, perhaps? Chile had a democratically elected socialist government, but it was overthrown in a coup with the help of Henry K. and Nixon. This is old news...
As for your bedrock principle of liberty, at this time I will observe only that the way you describe it, it sounds as if responsibility is a form of slavery. Are parents slaves to their children? You will say no because, presumably, they chose to have them. What if they didn't chose, or what if they changed their minds? They are still responsible for the children aren't they? Who is, if not they? But if they didn't make a completely free choice, isn't the burden of the children being forced on them?
Are any choices totally free as you seem to think? Libertarianism is all about the abstract binary logic of black and white situations. It ignores everything that clouds the question and calls it inessential. Thus, it is utopian in the worst sense of the word.
CB,
Isn't selling one's labor a false free choice?
CB,
I'm also concerned about your characterization of Chile. Is the only basis for your description of Chile as a "success" its GDP per capita, number of millionaires? The number of Chileans "complaining" is something worth research. How do you measure complaining?
In Latin America, only Brazil and Guatemala have less equitable income distribution. There is a large social divide between a small middle class, a massive urban and rural poor class and a very small and powerful elite class. (Source: United Nations. Human Development Report 2000.)
lichanos,
The reference to the shining path was my unfortunate, embarrassing mix up of South American countries with regard to government activity.
To your question, liberty requires responsibility! You are free to choose but you are responsible for your choices and must live with your decisions. The freedom to choose also means the freedom to fail. The good news is, that it is also the freedom to succeed, even after failing. So it is definitely not utopian.
Bob,
Selling your labor is only a false choice if you are a slave or effectively a ward of the state.
Looking at the CIA factbook GINI index which measures income distribution, Chile is in line with most of Latin America and has less poverty than most of the rest of Latin America. According to the World Bank, it's poverty statistics have improved every year for nearly the last two decades.
I don't think income distribution tells you as much as per capita GDP, poverty statistics, unemployment, currency stability, inflation, GDP growth and other measures that demonstrate opportunity. Look at its neighbors, Peru, Bolivia and Argentina. Peru and Bolivia are impoverished, although Peru has made real strides to stabilize its situation. 100 years ago, Argentina was one of the wealthiest nations on earth. It is blessed with a wealth of natural resources and a literate population but the government began to take over more of the economic life of the country and it is just now beginning to recover from statist policies and Chile has surpassed it in almost every measure of economic health.
The "market" is human nature in action and human nature is more often concerned with which immediate itch to scratch than the long term effects of policy.
As a result, cb, I think we have to say that an unregulated market is a disaster waiting to happen.
We know that much and need to act on that knowledge, NOW.
We also know that the "market" will distribute wealth in a very top heavy fashion. I'm am certainly not going to argue that everything can be made equal but we know that rotten things happen when the disparity is to great.
I'm also willing to concede that there are negatives to making it too small but we have definitely not approached that point in the problem in America.
I don't think income distribution tells you as much as per capita GDP
---------------------
I have to say that per capita GDP without some measure of the standard deviation of the distribution is next to useless.
duckmeister,
In a true market system, it is almost impossible to aggregate wealth into the hands of a few, only government intervention does that. It can be done with tax policy regulation, through currency manipulations or by showing preference to one actor in the market or another. I think a better measure of the economies ability to provide opportunity is the ability to migrate from the bottom to the top. Most American millionaires, for example, are first generation. Wealth in more mixed economies, where there are more barriers to entry, if you will, is more stagnant, i.e., the rich get richer.
As for GDP, standard deviation of the per capita number doesn't tell me as much as the percentage in poverty. That's because my goal is not equality of distribution, it's equality of opportunity. In a functioning market economy, where the government doesn't thwart wealth creation through confiscation or progressive taxation that makes you swim up stream, then people will find a level that suits them.
Someone asked up thread about that comment "the level that suits them," or maybe in the prior post because there are some people that want to be super rich and they're willing to make choices for that that I'm not. I have a pace, quality and preference of work that I prefer that allows me to maintain a lifestyle with which I'm comfortable. I could make more money and have, but I've determined that I prefer to sleep in my own bed rather than wake up wondering where I am (I hate that feeling).
It's my contention that government regulation, tax and monetary policy prevents more people from being willing to venture out and seek their own level. I gave up 2 businesses because I spent more time in compliance than helping customers and spent more money on accounting and other administrative services than made financial sense given my level of activity in those markets. It's a racket.
Most American millionaires, for example, are first generation.
This MAY be true - I won't count on it - but is it relevant when you consider that 400 families or so control nearly half the non-residential housing wealth of the USA? (See my blog for Lester Thurow's classic article, for a start...) Not that being a millionaire is something to sneeze at, but it makes it a rather poor argument for your assertion that
In a true market system, it is almost impossible to aggregate wealth into the hands of a few...
Of course, perhaps you would say the USA is not a TRUE market economy, but then why use the frequency of millionaires here as an argument for your point?? Can't have it both ways.
Your assertion that a TRUE market economy cannot see such aggregations of wealth and disparities is an absurd tautology. Any counter-example will be disproven by "showing" that the economy that produced it was not a true market economy. This is known as "dogma." The only proof, of course, would be to adopt the complete Libertarian program - then we would see the validity of your ideas. Of course, until then, we must wonder in darkness...and the few who know will point out that we just won't see.
lichanos,
I agree, it was a lazy attempt to make the point. Hong Kong is a better example because it is probably, even with the China takeover, the freest market in the world, maybe Singapore.
In a market economy where everyone has the same information (no one is advantaged by the government) unless you have a very small market or for some reason people are willing to give up their participation for non economic reasons, there will be a normal distribution. It may be slightly leptokurtic for a time but will revert to a normal bell shaped distribution.
What creates leptokurtosis in a market? Skewed information or advantage/disadvantage that can't be easily adjusted. The only player in the size of the macro markets were discussing large enough to do that is the government.
So, there it is without all of the historical baggage.
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