Capitalism vs Socialism

[Joel`]

But what's the point of starting a debate if you don't define the terms of the debate?

Everyone else seemed to manage it fine.

No, I would say most people in history or political science that look at historical and real-world examples rather than math and abstract models think that most economists these days are full of ****. There's plenty of people that think like me, and we've seen a huge backlash in academia against the discipline of economics already in the past two years or so.

If you were an academic, than you'd argue based on what I say rather than discredit it because it appears in textbooks.

Well if there's always going to be a mix between the two than we're on the same page. But I certainly wouldn't want to live in a 'purely' capitalist country unless I was one of the very few wealthy. Without "socialist" principles incorporated into the economy, the vast majority of the population lives in poverty. This is what the western world looked like before World War II. Since we've incorporated a larger state and created 'welfare societies,' the standard of living for the populace as a whole has rised drastically. Sure, you didn't get the huge billionaire magnates in the Bretton Woods era like you did during the Gilded Age (1870-1929), but the vast majority of the population was much better off.

I wouldn't want to live in a purely capitalist country nor a purely socialist country. If anyone says they do, they're probably lying.

As far as the banker goes, you're assuming that the financial activity is sustainable and good for the economy in the long-run, and clearly, both the US and UK went through unsustainable asset bubbles in the 90's and 00's. Don't think in terms of what the banker 'does' for society, that's a poor way to think of it (although if we do want to take that route, the banker does nothing for society, he pushes paper, and sure he pays more taxes, but I thought you think that's useless, and second, he benefits from a society and government that allows him to make that money ultimately at their expense). Think of the different type of society and economy that allows a banker to make that wealth, and whether or not it is sustainable in the long run.

It was Gordon Brown who created the unsustainable growth. He claimed to have ended boom-bust, so went on a reckless spending spree, de-regulating the banks allowing them to do as they please, essentially making our economy even more active even when it was already in such a strong period of growth. That is why we're in such a mess now. That is why we have tax hikes and spending cuts now, it was frankly economic lunacy.
Where did I say that's useless, I'm not claiming to say that the poor all deserve to suffer, my family is working class anyway. The welfare state is a good thing. Doesn't change the fact the NHS is horribly inefficient. And the banker is just an example of the rich providing money that trickles down for everyone. I don't believe that a socialist economy is going to be anywhere near as productive for the reasons I mentioned in my essay: No incentive to produce if we're equal, business will move to country's where they're not restricted, the government is artificially creating growth (giving the lowest workers more money for no extra output, and restricting the workers at the top with high output, so output falls while costs rise). I'd rather live in a country where there's inequality but everyone is well off and can afford necessities, rather than being equal but with less.

I wouldn't call Sweden "just as capitalist" as the rest of Europe, considering its tax rates. But as I've said before, it sounds like a nice place to live and the Scandinavian countries have the highest measures of well-being in the world. But certainly Sweden would be a nightmare scenario for you, wouldn't it? The high taxes for the wealthy? The healthcare system? The huge state? Also, it's not successful because of the capitalist economy driving it, its successful because of its resources and the success of its industries. That's why the capitalist economy driving Haiti isn't doing too well.

Swedish governments publicly owned many firms, but sold them when they realised they realised they are far more successful by themselves. This created wealth from the private firms. They cut tax and de-regulated during the '90's and '00's and that is the reason for their economic growth. Don't confuse resources and economic system, you'll never be successful if you have no resources. The US would have nothing if it had no resources, just like every other country. Sweden is successful because of it's capitalism. I don't see how it's a nightmare for me because they have a healthcare system that's good, they also have an extremely low population density, and the aforementioned capitalism driving it. It's good for my arguments to be frank, showing the effect of a capitalist system trickling down to help the poor as well.

Why can't we bring in poor countries into the discussion? The vast majority of the world is poor, so why are we only allowed to use the few examples you want? Let's compare Cuba to El Salvador, for example...despite the trade embargoes and the amazing amounts of difficulty it faced from transforming its 1950's planatation US-dependent economy, it has the second best healthcare and education systems behind Costa Rica. I would way rather live in Cuba than in El Salvador, and I would way rather live in Cuba now than before the revolution (unless I was one of the small number of extremely wealthy American elites there). As far as Haiti goes, Haiti will probably be poor no matter what, but would it be better off if it was more "socialist?" We don't know. Would it be better off if it used the most free-market oriented policies humanly possible? We don't know, but judging by what you've said, you think so, because "the most free-market oriented solution is always best," right?

Why bother comparing the poor when they're going to have nothing either way we look at it? But anyway, yes the free market solution is going to work best because it creates wealth. The socialist system is never going to generate it as well, and they'll never be able to create the money to pass around in a welfare state in the first place.

Governments cannot create wealth, they can only re-distribute it. If they have no wealth initially, then they cannot re-distribute it. This applies to the majority of richer country's. Wealth is created by the capitalist economy so that the government can partially re-distribute it to cover for the poor. It happens in the UK, US, Sweden, Germany etc.

 

[Lloyd is Fat]

 

[ajt09]

I'm not going to pretend to understand either system. But from an outsider, I looked upon the idea of socialism/communism with great disdain. When you had the Warsaw Pact allies, the countries looked bleak, miserable, poor....including the former USSR. Then again, once the Warsaw Pact dissolved, and the Eastern Bloc imploded, have they become any better off really. Because basically they're being mullered by the committments of the EU. Then again, you now have China who is now a massive power, after as some one said already, being terribly poor. So the way I see it, neither system totally works as they're both equally as flawed.
Imo though-like I said I find it really hard to understand economics for different systems lol

 

[curtis290]

Everyone else seemed to manage it fine.
If you were an academic, than you'd argue based on what I say rather than discredit it because it appears in textbooks.

And that's what I'm doing here. You're the one that said 'only a pseudo-economist would believe what I said' or something along those lines, and I'm just pointing out that I'm not some lunatic but that plenty of well-educated people agree with me.

I wouldn't want to live in a purely capitalist country nor a purely socialist country. If anyone says they do, they're probably lying.

Well we're on the same page then. But a purely capitalist country (obviously never existed but let's use the US in the Gilded Age as an example) would be awesome to live in if you were one of the few wealthy people. Think of how sweet it would be to be Andrew Carnegie. Though on the other hand, the grass is always greener on the other side (as proven by psychological research), and you would just get used to that lifestyle and be just as happy/depressed as everyone else. But for the rest of the people during the era, life sucked. As for a more socialistic system? There aren't a few really wealthy people (but who knows how happy they are anyway), but most people live in relative comfort. I would rather live in that society than the 'more' capitalist one. I would rather live in the US during the Bretton Woods era than the Gilded Age or the second gilded age (although it would be sweet to be one of the billionaires, maybe). And I would certainly rather live in the USSR from 1953-1970s than in the US from 1871-1929 (unless, perhaps, I was one of the few billionaires).

1It was Gordon Brown who created the unsustainable growth. He claimed to have ended boom-bust, so went on a reckless spending spree, de-regulating the banks allowing them to do as they please, essentially making our economy even more active even when it was already in such a strong period of growth. That is why we're in such a mess now. That is why we have tax hikes and spending cuts now, it was frankly economic lunacy.
Where did I say that's useless, I'm not claiming to say that the poor all deserve to suffer, my family is working class anyway. The welfare state is a good thing. Doesn't change the fact the NHS is horribly inefficient. And the banker is just an example of the rich providing money that trickles down for everyone. I don't believe that a socialist economy is going to be anywhere near as productive for the reasons I mentioned in my essay: No incentive to produce if we're equal, business will move to country's where they're not restricted, the government is artificially creating growth (giving the lowest workers more money for no extra output, and restricting the workers at the top with high output, so output falls while costs rise). I'd rather live in a country where there's inequality but everyone is well off and can afford necessities, rather than being equal but with less.

As for what caused the crisis, remember that this is a global economic crisis. I won't disagree with anything you said about Gordon Brown but remember that this is a general trend. The general trend has been towards deregulation, easy credit, and doing whatever it takes to blow a huge asset bubble, and this happened in many countries (and of course, in no small part because we listened to economists so much). When it looked like things might stop in the 00's, countries like the US and UK went on state spending sprees combined with tax cuts to increase agregate demand and cover things up. Well the asset bubble hit its ceiling and crashed, and now we can't use state spending to increase aggregate demand because we already did that. It's a huge mess. But off topic.

As far as the banker goes, you keep on thinking in terms of the individual banker. Think in terms of the structure. The banker doesn't create that wealth out of thin air and let it trickle down to the people. What happened in countries like the US and UK was that we saw the growth of giant asset bubbles for a number of reasons, meaning the financial sector profited greatly and we see these bankers make a lot of money. But while this was happening, people were losing jobs, the middle class was shrinking, and ultimately, it was at the expense of everyone else.

As far as your essay goes, I skimmed it, and it's intelligent and well-thought out but we've heard these arguments millions of times for about 7 or 8 decades now. As far as productivity goes, you assume that all workers in a capitalist economy work hard (when in reality, most Americans work just hard enough to not get fired, and get paid just enough not to quit their jobs, though of course those statistic I saw were pre-crisis) and that ones in a communist economy don't. The USSR saw amazing amounts of productivity and growth in the 50's and 60's and even into the 70's...why? Because people believed in what they were doing. Of course that stopped in the 70's and 80's for a variety of reasons that I won't get into, but the notion that you can't see productivity and hard-work outside of the capitalist mindset is not true.

Also, most critics of capitalism don't criticize its productivity, they criticize its inherently volatile and unstable nature and its inability to distribute wealth fairly. These people mostly wrote in the pre World War II era, and once socialistic principles were incorporated into the capitalist economies and these critics were listened to, most people thought it was a happy medium. Times were good. Of course in the past few decades, we get this whole new wave of economists and the free-market crowd telling us about how great markets are and that the most possible free-market oriented solutions are always the best solutions to everything, and that everything that state does inherently turns everything to ****, etc. etc. etc. Because the models say so.

Another note on productivity: remember, capitalism's productivity was ultimately what Marx thought its demise would be, he thought a crisis in overproduction would occur that was so bad that the urban working classes would revolt. It almost happened several times in history, especially in 1848, but never did, which is how we get Bolshevism. Terrible crises of overproduction happened several times in history and were usually coupled with overspeculation/asset bubbles, in the US we had a real bad one in the 1870's (overspeculation and overproduction in railraods) but I'm not familiar with how it worked out in other countries. Then in 1929 agricultural overproduction combined with huge asset bubbles led to a global economic crisis that shook liberal capitalism at its very core. But in one of history's greatest ironies, we didn't see Marxist urban-proletariat revolutions overthrowing liberal governments, we saw fascist reactionary ones doing so. I think Marx's greatest flaw was his underestimation of cultural and national differences, which he thought were unimportant and that class was the true "social cleavage," as we would say in today's terms. Now in the late 00's we see the same thing: a crisis of industrial overproduction that has been a problem for a while now, coupled with giant asset bubbles that have been blown for a few decades now. Things look pretty bleak. But I digress.

I'm not arguing that capitalism is less productive than socialism (of course that depends on how we define productive), I'm arguing with the notion that the most free-market oriented solution always leads to higher productivity. Because if we look at the fastest-growing economies since World War II, in all of them, the state's role was paramount. This is in direct contradiction to the fundamental ideals of liberal capitalism (which is what we're talking about, right?), which are that markets are inherently the most effective, efficient form of allocating resources and that they are inherently stable and self-regulating.

Swedish governments publicly owned many firms, but sold them when they realised they realised they are far more successful by themselves. This created wealth from the private firms. They cut tax and de-regulated during the '90's and '00's and that is the reason for their economic growth. Don't confuse resources and economic system, you'll never be successful if you have no resources. The US would have nothing if it had no resources, just like every other country. Sweden is successful because of it's capitalism. I don't see how it's a nightmare for me because they have a healthcare system that's good, they also have an extremely low population density, and the aforementioned capitalism driving it. It's good for my arguments to be frank, showing the effect of a capitalist system trickling down to help the poor as well.

OK, but everyone was involved in the deregulation and anti-state craze in the 90's and 00's because that was what was profitable for almost everyone in the short term. What about the Swedish economy in the decades before that? It did great, despite not being very 'free-market oriented' by the standards of economists. Anyway, even with its moves toward deregulation, its economy is still really, really state-heavy, and in America, we believe they are evil aetheistic socialists. But are they all living in poverty? They aren't. Although they don't have a few really wealthy people, everyone is pretty well off. Many of us have repeated that this sounds like a great place to live, but the others keep saying that the economy is inefficient because of its high taxes and big state. And I'm telling you I wouldn't care. I would take less 'productivity' and 'growth' if it meant everyone was better off...I wouldn't care if my society had a few really wealthy bankers like the more capitalistic countries have in the US and UK. I would prefer inefficiency if it meant equality. And I guess that's why inherently I lean toward socialism before capitalism.

As far as resources vs. systems goes, you're not listening to my point. Ultimately a country's geography, resources, and history determine its success or failure, NOT its economic system. And its economic system of course must fit those circumstances. But that's not what people on the other side seem to be saying. People claim that the most free-market oriented solution is always best no matter what, and that since markets are so wonderful inherently, every nation should be able to be successful under capitalism. That's the notion I'm disagreeing with. Every country is unique, and needs a unique set of economic policies for optimal 'productivity' and 'growth.' The point I'm arguing is that people can't just pull out an econ textbook, list a few models, and tell us that they know the answers.

Why bother comparing the poor when they're going to have nothing either way we look at it? But anyway, yes the free market solution is going to work best because it creates wealth. The socialist system is never going to generate it as well, and they'll never be able to create the money to pass around in a welfare state in the first place.

A very poor argument (pun unintended). There are different degrees of poor, and I really don't like the notion that "they're going to have nothing either way we look at it." Economists and political scientists are always looking toward the developing world, so of course it's an important topic of discussion. I'll repeat myself. I would rather live in Cuba than in El Salvador. Sure, they're both poor, but in a poor country I would prefer for the state to take care of me rather than to be subject to the whims of the global capitalist economy (these countries tend to rely on raw materials and cheap labor, which are subject to violent market fluctuations).

We're discussing socialism vs. capitalism (so we should be able to discuss how these work in poor countries, after all), and capitalism inherently creates huge divisions in wealth. A few wealthy countries can be wealthy because the poor countries are dependent on them economically and are used by the dominant core nations. This is the point. You can't just look at the US, for example, and say capitalism rocks. The US is successful BECAUSE the El Salvador's and Guatemala's and Mexico's of the world are poor. So yeah, you have to take the poor countries into account, and one can't point to the wealthy banker in the UK and say "capitalism rocks" and ignore the poor farmer in Liberia. Capitalism inherently (without socialist principles worked in, like we see in most developed countries) benefits a small few, so you can't point to that small few and tell us how great it is while ignoring the vast majority of the people that live under that system.

As for your claim that the "free market oriented solution always works," again, that's not proven by history. None of the fast growing economies since World War II (or even in history, for that matter) used the most free market oriented solution. The state played a heavy hand in the development of all of them, which contradicts the models of economists and their textbooks.

Also, I would say the most pure socialist examples we can find (of course they're nothing how Marx envisioned it) would be Cuba and the USSR, and they were both successful. Even North Korea by some standards is successful.

Governments cannot create wealth, they can only re-distribute it. If they have no wealth initially, then they cannot re-distribute it. This applies to the majority of richer country's. Wealth is created by the capitalist economy so that the government can partially re-distribute it to cover for the poor. It happens in the UK, US, Sweden, Germany etc.

Governments can help wealth be created through sound economic policy, as we both would agree, but the difference is that economists would say that markets inherently create wealth and that the state simply has to step out of the way for that to happen. I don't believe that's true, and unlike economists, I think that in some cases, the state should play a heavy hand in helping the economy develop. And again, wealth is not 'created by the capitalist economy,' it is created by the resources and people that are there. Without socialist principles of re-distribution and a heavy handed state, life would be pretty terrible for most people, and the market would be subject to extreme fluctuations. This idea contradicts pure capitalism, and that's what the thread is about...whether or not you believe in liberal capitalism, or if you believe that markets are inherently unstable.

 

[ajt09]

And that's what I'm doing here. You're the one that said 'only a pseudo-economist would believe what I said' or something along those lines, and I'm just pointing out that I'm not some lunatic but that plenty of well-educated people agree with me.



Well we're on the same page then. But a purely capitalist country (obviously never existed but let's use the US in the Gilded Age as an example) would be awesome to live in if you were one of the few wealthy people. Think of how sweet it would be to be Andrew Carnegie. Though on the other hand, the grass is always greener on the other side (as proven by psychological research), and you would just get used to that lifestyle and be just as happy/depressed as everyone else. But for the rest of the people during the era, life sucked. As for a more socialistic system? There aren't a few really wealthy people (but who knows how happy they are anyway), but most people live in relative comfort. I would rather live in that society than the 'more' capitalist one. I would rather live in the US during the Bretton Woods era than the Gilded Age or the second gilded age (although it would be sweet to be one of the billionaires, maybe). And I would certainly rather live in the USSR from 1953-1970s than in the US from 1871-1929 (unless, perhaps, I was one of the few billionaires).



As for what caused the crisis, remember that this is a global economic crisis. I won't disagree with anything you said about Gordon Brown but remember that this is a general trend. The general trend has been towards deregulation, easy credit, and doing whatever it takes to blow a huge asset bubble, and this happened in many countries (and of course, in no small part because we listened to economists so much). When it looked like things might stop in the 00's, countries like the US and UK went on state spending sprees combined with tax cuts to increase agregate demand and cover things up. Well the asset bubble hit its ceiling and crashed, and now we can't use state spending to increase aggregate demand because we already did that. It's a huge mess. But off topic.

As far as the banker goes, you keep on thinking in terms of the individual banker. Think in terms of the structure. The banker doesn't create that wealth out of thin air and let it trickle down to the people. What happened in countries like the US and UK was that we saw the growth of giant asset bubbles for a number of reasons, meaning the financial sector profited greatly and we see these bankers make a lot of money. But while this was happening, people were losing jobs, the middle class was shrinking, and ultimately, it was at the expense of everyone else.

As far as your essay goes, I skimmed it, and it's intelligent and well-thought out but we've heard these arguments millions of times for about 7 or 8 decades now. As far as productivity goes, you assume that all workers in a capitalist economy work hard (when in reality, most Americans work just hard enough to not get fired, and get paid just enough not to quit their jobs, though of course those statistic I saw were pre-crisis) and that ones in a communist economy don't. The USSR saw amazing amounts of productivity and growth in the 50's and 60's and even into the 70's...why? Because people believed in what they were doing. Of course that stopped in the 70's and 80's for a variety of reasons that I won't get into, but the notion that you can't see productivity and hard-work outside of the capitalist mindset is not true.

Also, most critics of capitalism don't criticize its productivity, they criticize its inherently volatile and unstable nature and its inability to distribute wealth fairly. These people mostly wrote in the pre World War II era, and once socialistic principles were incorporated into the capitalist economies and these critics were listened to, most people thought it was a happy medium. Times were good. Of course in the past few decades, we get this whole new wave of economists and the free-market crowd telling us about how great markets are and that the most possible free-market oriented solutions are always the best solutions to everything, and that everything that state does inherently turns everything to ****, etc. etc. etc. Because the models say so.

Another note on productivity: remember, capitalism's productivity was ultimately what Marx thought its demise would be, he thought a crisis in overproduction would occur that was so bad that the urban working classes would revolt. It almost happened several times in history, especially in 1848, but never did, which is how we get Bolshevism. Terrible crises of overproduction happened several times in history and were usually coupled with overspeculation/asset bubbles, in the US we had a real bad one in the 1870's (overspeculation and overproduction in railraods) but I'm not familiar with how it worked out in other countries. Then in 1929 agricultural overproduction combined with huge asset bubbles led to a global economic crisis that shook liberal capitalism at its very core. But in one of history's greatest ironies, we didn't see Marxist urban-proletariat revolutions overthrowing liberal governments, we saw fascist reactionary ones doing so. I think Marx's greatest flaw was his underestimation of cultural and national differences, which he thought were unimportant and that class was the true "social cleavage," as we would say in today's terms. Now in the late 00's we see the same thing: a crisis of industrial overproduction that has been a problem for a while now, coupled with giant asset bubbles that have been blown for a few decades now. Things look pretty bleak. But I digress.

I'm not arguing that capitalism is less productive than socialism (of course that depends on how we define productive), I'm arguing with the notion that the most free-market oriented solution always leads to higher productivity. Because if we look at the fastest-growing economies since World War II, in all of them, the state's role was paramount. This is in direct contradiction to the fundamental ideals of liberal capitalism (which is what we're talking about, right?), which are that markets are inherently the most effective, efficient form of allocating resources and that they are inherently stable and self-regulating.



OK, but everyone was involved in the deregulation and anti-state craze in the 90's and 00's because that was what was profitable for almost everyone in the short term. What about the Swedish economy in the decades before that? It did great, despite not being very 'free-market oriented' by the standards of economists. Anyway, even with its moves toward deregulation, its economy is still really, really state-heavy, and in America, we believe they are evil aetheistic socialists. But are they all living in poverty? They aren't. Although they don't have a few really wealthy people, everyone is pretty well off. Many of us have repeated that this sounds like a great place to live, but the others keep saying that the economy is inefficient because of its high taxes and big state. And I'm telling you I wouldn't care. I would take less 'productivity' and 'growth' if it meant everyone was better off...I wouldn't care if my society had a few really wealthy bankers like the more capitalistic countries have in the US and UK. I would prefer inefficiency if it meant equality. And I guess that's why inherently I lean toward socialism before capitalism.

As far as resources vs. systems goes, you're not listening to my point. Ultimately a country's geography, resources, and history determine its success or failure, NOT its economic system. And its economic system of course must fit those circumstances. But that's not what people on the other side seem to be saying. People claim that the most free-market oriented solution is always best no matter what, and that since markets are so wonderful inherently, every nation should be able to be successful under capitalism. That's the notion I'm disagreeing with. Every country is unique, and needs a unique set of economic policies for optimal 'productivity' and 'growth.' The point I'm arguing is that people can't just pull out an econ textbook, list a few models, and tell us that they know the answers.



A very poor argument (pun unintended). There are different degrees of poor, and I really don't like the notion that "they're going to have nothing either way we look at it." Economists and political scientists are always looking toward the developing world, so of course it's an important topic of discussion. I'll repeat myself. I would rather live in Cuba than in El Salvador. Sure, they're both poor, but in a poor country I would prefer for the state to take care of me rather than to be subject to the whims of the global capitalist economy (these countries tend to rely on raw materials and cheap labor, which are subject to violent market fluctuations).

We're discussing socialism vs. capitalism (so we should be able to discuss how these work in poor countries, after all), and capitalism inherently creates huge divisions in wealth. A few wealthy countries can be wealthy because the poor countries are dependent on them economically and are used by the dominant core nations. This is the point. You can't just look at the US, for example, and say capitalism rocks. The US is successful BECAUSE the El Salvador's and Guatemala's and Mexico's of the world are poor. So yeah, you have to take the poor countries into account, and one can't point to the wealthy banker in the UK and say "capitalism rocks" and ignore the poor farmer in Liberia. Capitalism inherently (without socialist principles worked in, like we see in most developed countries) benefits a small few, so you can't point to that small few and tell us how great it is while ignoring the vast majority of the people that live under that system.

As for your claim that the "free market oriented solution always works," again, that's not proven by history. None of the fast growing economies since World War II (or even in history, for that matter) used the most free market oriented solution. The state played a heavy hand in the development of all of them, which contradicts the models of economists and their textbooks.

Also, I would say the most pure socialist examples we can find (of course they're nothing how Marx envisioned it) would be Cuba and the USSR, and they were both successful. Even North Korea by some standards is successful.



Governments can help wealth be created through sound economic policy, as we both would agree, but the difference is that economists would say that markets inherently create wealth and that the state simply has to step out of the way for that to happen. I don't believe that's true, and unlike economists, I think that in some cases, the state should play a heavy hand in helping the economy develop. And again, wealth is not 'created by the capitalist economy,' it is created by the resources and people that are there. Without socialist principles of re-distribution and a heavy handed state, life would be pretty terrible for most people, and the market would be subject to extreme fluctuations. This idea contradicts pure capitalism, and that's what the thread is about...whether or not you believe in liberal capitalism, or if you believe that markets are inherently unstable.

Have you and Joel ever thought about being politicians? You guys seem to make more sense than the majority in either government right now lol

 

[curtis290]

Have you and Joel ever thought about being politicians? You guys seem to make more sense than the majority in either government right now lol

Lol, for why I can't be a politician, see my posts in the 'Weed' thread.

 

[Joel`]

Lol, for why I can't be a politician, see my posts in the 'Weed' thread.

YouTube - Barack Obama "I inhaled frequently" "That was the point"

As for what caused the crisis, remember that this is a global economic crisis. I won't disagree with anything you said about Gordon Brown but remember that this is a general trend. The general trend has been towards deregulation, easy credit, and doing whatever it takes to blow a huge asset bubble, and this happened in many countries (and of course, in no small part because we listened to economists so much). When it looked like things might stop in the 00's, countries like the US and UK went on state spending sprees combined with tax cuts to increase agregate demand and cover things up. Well the asset bubble hit its ceiling and crashed, and now we can't use state spending to increase aggregate demand because we already did that. It's a huge mess. But off topic.

Gordon Brown was the first to de-regulate. America and the rest of the world follow in order to compete. He also inflated the public sector during recession in order to create employment, but it's employment that isn't needed, that didn't generate anything, and was a burden on tax. If he'd concentrated his efforts on inspiring the private sector we wouldn't be in as big a mess right now.

As far as the banker goes, you keep on thinking in terms of the individual banker. Think in terms of the structure. The banker doesn't create that wealth out of thin air and let it trickle down to the people. What happened in countries like the US and UK was that we saw the growth of giant asset bubbles for a number of reasons, meaning the financial sector profited greatly and we see these bankers make a lot of money. But while this was happening, people were losing jobs, the middle class was shrinking, and ultimately, it was at the expense of everyone else.

I am thinking in terms of structure, the banker is a mere example of showing the rich at the top and the money working its way down.

As far as your essay goes, I skimmed it, and it's intelligent and well-thought out but we've heard these arguments millions of times for about 7 or 8 decades now. As far as productivity goes, you assume that all workers in a capitalist economy work hard (when in reality, most Americans work just hard enough to not get fired, and get paid just enough not to quit their jobs, though of course those statistic I saw were pre-crisis) and that ones in a communist economy don't. The USSR saw amazing amounts of productivity and growth in the 50's and 60's and even into the 70's...why? Because people believed in what they were doing. Of course that stopped in the 70's and 80's for a variety of reasons that I won't get into, but the notion that you can't see productivity and hard-work outside of the capitalist mindset is not true. [/quote] You assume that all workers do the bare minimum, but they can be given incentives to be more productive. The manager will be paid via shares in a company for example, so he/she is forced to be productively efficient as it's in their interest now. Labourers can be given performance related bonuses etc.

Also, most critics of capitalism don't criticize its productivity, they criticize its inherently volatile and unstable nature and its inability to distribute wealth fairly. These people mostly wrote in the pre World War II era, and once socialistic principles were incorporated into the capitalist economies and these critics were listened to, most people thought it was a happy medium. Times were good. Of course in the past few decades, we get this whole new wave of economists and the free-market crowd telling us about how great markets are and that the most possible free-market oriented solutions are always the best solutions to everything, and that everything that state does inherently turns everything to ****, etc. etc. etc. Because the models say so.

The NHS is state run and it's horribly bad compared to others like Germany. That's not a model. That's evidence.

Another note on productivity: remember, capitalism's productivity was ultimately what Marx thought its demise would be, he thought a crisis in overproduction would occur that was so bad that the urban working classes would revolt. It almost happened several times in history, especially in 1848, but never did, which is how we get Bolshevism. Terrible crises of overproduction happened several times in history and were usually coupled with overspeculation/asset bubbles, in the US we had a real bad one in the 1870's (overspeculation and overproduction in railraods) but I'm not familiar with how it worked out in other countries. Then in 1929 agricultural overproduction combined with huge asset bubbles led to a global economic crisis that shook liberal capitalism at its very core. But in one of history's greatest ironies, we didn't see Marxist urban-proletariat revolutions overthrowing liberal governments, we saw fascist reactionary ones doing so. I think Marx's greatest flaw was his underestimation of cultural and national differences, which he thought were unimportant and that class was the true "social cleavage," as we would say in today's terms. Now in the late 00's we see the same thing: a crisis of industrial overproduction that has been a problem for a while now, coupled with giant asset bubbles that have been blown for a few decades now. Things look pretty bleak. But I digress.

Overproduction probably will be its downfall, but country's are already reaching a productive capacity, but the hyper-consumption active in all the current rich country's demands more and more, and it'll be one of the age's great economic challenges to fix this problem. And there's not much else I can disagree with in this, I think you rambled a tad.

I'm not arguing that capitalism is less productive than socialism (of course that depends on how we define productive), I'm arguing with the notion that the most free-market oriented solution always leads to higher productivity. Because if we look at the fastest-growing economies since World War II, in all of them, the state's role was paramount. This is in direct contradiction to the fundamental ideals of liberal capitalism (which is what we're talking about, right?), which are that markets are inherently the most effective, efficient form of allocating resources and that they are inherently stable and self-regulating.

My knowledge of economic history isn't great by any means, but as far as I know, the most socialist thing to come from WW2 was welfare states being established, which I agree with anyway. I don't know of any country after WW2 that succeeded with a truly planned economy.

OK, but everyone was involved in the deregulation and anti-state craze in the 90's and 00's because that was what was profitable for almost everyone in the short term. What about the Swedish economy in the decades before that? It did great, despite not being very 'free-market oriented' by the standards of economists. Anyway, even with its moves toward deregulation, its economy is still really, really state-heavy, and in America, we believe they are evil aetheistic socialists. But are they all living in poverty? They aren't. Although they don't have a few really wealthy people, everyone is pretty well off. Many of us have repeated that this sounds like a great place to live, but the others keep saying that the economy is inefficient because of its high taxes and big state. And I'm telling you I wouldn't care. I would take less 'productivity' and 'growth' if it meant everyone was better off...I wouldn't care if my society had a few really wealthy bankers like the more capitalistic countries have in the US and UK. I would prefer inefficiency if it meant equality. And I guess that's why inherently I lean toward socialism before capitalism.

I know a load of Americans that think Obama is a huge socialist though. I have a friend who studies economics in Sweden and he strongly disagrees with it being proof of a socialist system working.

As far as resources vs. systems goes, you're not listening to my point. Ultimately a country's geography, resources, and history determine its success or failure, NOT its economic system. And its economic system of course must fit those circumstances. But that's not what people on the other side seem to be saying. People claim that the most free-market oriented solution is always best no matter what, and that since markets are so wonderful inherently, every nation should be able to be successful under capitalism. That's the notion I'm disagreeing with. Every country is unique, and needs a unique set of economic policies for optimal 'productivity' and 'growth.' The point I'm arguing is that people can't just pull out an econ textbook, list a few models, and tell us that they know the answers.

I'm pretty sure I said that it depends on a country's resources, and if you lack resources your system is irrelevant?

A very poor argument (pun unintended). There are different degrees of poor, and I really don't like the notion that "they're going to have nothing either way we look at it." Economists and political scientists are always looking toward the developing world, so of course it's an important topic of discussion. I'll repeat myself. I would rather live in Cuba than in El Salvador. Sure, they're both poor, but in a poor country I would prefer for the state to take care of me rather than to be subject to the whims of the global capitalist economy (these countries tend to rely on raw materials and cheap labor, which are subject to violent market fluctuations).

I would rather live in El Salvador than North Korea. How can the state take care of you, when they have no initial wealth to re-distribute around? Capitalism creates wealth, when there is business then employment is created, and a cycle of wealth creating more wealth is created.

We're discussing socialism vs. capitalism (so we should be able to discuss how these work in poor countries, after all), and capitalism inherently creates huge divisions in wealth. A few wealthy countries can be wealthy because the poor countries are dependent on them economically and are used by the dominant core nations. This is the point. You can't just look at the US, for example, and say capitalism rocks. The US is successful BECAUSE the El Salvador's and Guatemala's and Mexico's of the world are poor. So yeah, you have to take the poor countries into account, and one can't point to the wealthy banker in the UK and say "capitalism rocks" and ignore the poor farmer in Liberia. Capitalism inherently (without socialist principles worked in, like we see in most developed countries) benefits a small few, so you can't point to that small few and tell us how great it is while ignoring the vast majority of the people that live under that system.

And how do you propose we make El Salvador, Guatemala
As for your claim that the "free market oriented solution always works," again, that's not proven by history. None of the fast growing economies since World War II (or even in history, for that matter) used the most free market oriented solution. The state played a heavy hand in the development of all of them, which contradicts the models of economists and their textbooks. [/quote]
*most* free market orientated stated solution. I thought we established the state must play some part to provide merit goods and assist welfare? There's no model in a textbook that tells you to go for the most free market solution possible.

Also, I would say the most pure socialist examples we can find (of course they're nothing how Marx envisioned it) would be Cuba and the USSR, and they were both successful. Even North Korea by some standards is successful.



Governments can help wealth be created through sound economic policy, as we both would agree, but the difference is that economists would say that markets inherently create wealth and that the state simply has to step out of the way for that to happen. I don't believe that's true, and unlike economists, I think that in some cases, the state should play a heavy hand in helping the economy develop. And again, wealth is not 'created by the capitalist economy,' it is created by the resources and people that are there. Without socialist principles of re-distribution and a heavy handed state, life would be pretty terrible for most people, and the market would be subject to extreme fluctuations. This idea contradicts pure capitalism, and that's what the thread is about...whether or not you believe in liberal capitalism, or if you believe that markets are inherently unstable.[/QUOTE]

 

[vlad-the-impaling-gunner]

Maybe you should put a poll to end this for once and for all.

 

[Jack]

Pretty much did an essay on this the other month, it was on nationalism, but hey all the same.

If anyones interested in nationalism, check out Tom Nairns 'The Break up of Britain'. He basically argues the point that nationalism can be used as a tool to avoid homogenising economies that come with capitalism. Quite an interesting read.

 

[Joel`]

Lol, for why I can't be a politician, see my posts in the 'Weed' thread.

YouTube - Barack Obama "I inhaled frequently" "That was the point"

As for what caused the crisis, remember that this is a global economic crisis. I won't disagree with anything you said about Gordon Brown but remember that this is a general trend. The general trend has been towards deregulation, easy credit, and doing whatever it takes to blow a huge asset bubble, and this happened in many countries (and of course, in no small part because we listened to economists so much). When it looked like things might stop in the 00's, countries like the US and UK went on state spending sprees combined with tax cuts to increase agregate demand and cover things up. Well the asset bubble hit its ceiling and crashed, and now we can't use state spending to increase aggregate demand because we already did that. It's a huge mess. But off topic.

Gordon Brown was the first to de-regulate. America and the rest of the world follow in order to compete. He also inflated the public sector during recession in order to create employment, but it's employment that isn't needed, that didn't generate anything, and was a burden on tax. If he'd concentrated his efforts on inspiring the private sector we wouldn't be in as big a mess right now.

As far as the banker goes, you keep on thinking in terms of the individual banker. Think in terms of the structure. The banker doesn't create that wealth out of thin air and let it trickle down to the people. What happened in countries like the US and UK was that we saw the growth of giant asset bubbles for a number of reasons, meaning the financial sector profited greatly and we see these bankers make a lot of money. But while this was happening, people were losing jobs, the middle class was shrinking, and ultimately, it was at the expense of everyone else.

I am thinking in terms of structure, the banker is a mere example of showing the rich at the top and the money working its way down.

As far as your essay goes, I skimmed it, and it's intelligent and well-thought out but we've heard these arguments millions of times for about 7 or 8 decades now. As far as productivity goes, you assume that all workers in a capitalist economy work hard (when in reality, most Americans work just hard enough to not get fired, and get paid just enough not to quit their jobs, though of course those statistic I saw were pre-crisis) and that ones in a communist economy don't. The USSR saw amazing amounts of productivity and growth in the 50's and 60's and even into the 70's...why? Because people believed in what they were doing. Of course that stopped in the 70's and 80's for a variety of reasons that I won't get into, but the notion that you can't see productivity and hard-work outside of the capitalist mindset is not true. [/quote] You assume that all workers do the bare minimum, but they can be given incentives to be more productive. The manager will be paid via shares in a company for example, so he/she is forced to be productively efficient as it's in their interest now. Labourers can be given performance related bonuses etc.

Also, most critics of capitalism don't criticize its productivity, they criticize its inherently volatile and unstable nature and its inability to distribute wealth fairly. These people mostly wrote in the pre World War II era, and once socialistic principles were incorporated into the capitalist economies and these critics were listened to, most people thought it was a happy medium. Times were good. Of course in the past few decades, we get this whole new wave of economists and the free-market crowd telling us about how great markets are and that the most possible free-market oriented solutions are always the best solutions to everything, and that everything that state does inherently turns everything to ****, etc. etc. etc. Because the models say so.

The NHS is state run and it's horribly bad compared to others like Germany. That's not a model. That's evidence.

Another note on productivity: remember, capitalism's productivity was ultimately what Marx thought its demise would be, he thought a crisis in overproduction would occur that was so bad that the urban working classes would revolt. It almost happened several times in history, especially in 1848, but never did, which is how we get Bolshevism. Terrible crises of overproduction happened several times in history and were usually coupled with overspeculation/asset bubbles, in the US we had a real bad one in the 1870's (overspeculation and overproduction in railraods) but I'm not familiar with how it worked out in other countries. Then in 1929 agricultural overproduction combined with huge asset bubbles led to a global economic crisis that shook liberal capitalism at its very core. But in one of history's greatest ironies, we didn't see Marxist urban-proletariat revolutions overthrowing liberal governments, we saw fascist reactionary ones doing so. I think Marx's greatest flaw was his underestimation of cultural and national differences, which he thought were unimportant and that class was the true "social cleavage," as we would say in today's terms. Now in the late 00's we see the same thing: a crisis of industrial overproduction that has been a problem for a while now, coupled with giant asset bubbles that have been blown for a few decades now. Things look pretty bleak. But I digress.

Overproduction probably will be its downfall, but country's are already reaching a productive capacity, but the hyper-consumption active in all the current rich country's demands more and more, and it'll be one of the age's great economic challenges to fix this problem. And there's not much else I can disagree with in this, I think you rambled a tad.

I'm not arguing that capitalism is less productive than socialism (of course that depends on how we define productive), I'm arguing with the notion that the most free-market oriented solution always leads to higher productivity. Because if we look at the fastest-growing economies since World War II, in all of them, the state's role was paramount. This is in direct contradiction to the fundamental ideals of liberal capitalism (which is what we're talking about, right?), which are that markets are inherently the most effective, efficient form of allocating resources and that they are inherently stable and self-regulating.

My knowledge of economic history isn't great by any means, but as far as I know, the most socialist thing to come from WW2 was welfare states being established, which I agree with anyway. I don't know of any country after WW2 that succeeded with a truly planned economy.

OK, but everyone was involved in the deregulation and anti-state craze in the 90's and 00's because that was what was profitable for almost everyone in the short term. What about the Swedish economy in the decades before that? It did great, despite not being very 'free-market oriented' by the standards of economists. Anyway, even with its moves toward deregulation, its economy is still really, really state-heavy, and in America, we believe they are evil aetheistic socialists. But are they all living in poverty? They aren't. Although they don't have a few really wealthy people, everyone is pretty well off. Many of us have repeated that this sounds like a great place to live, but the others keep saying that the economy is inefficient because of its high taxes and big state. And I'm telling you I wouldn't care. I would take less 'productivity' and 'growth' if it meant everyone was better off...I wouldn't care if my society had a few really wealthy bankers like the more capitalistic countries have in the US and UK. I would prefer inefficiency if it meant equality. And I guess that's why inherently I lean toward socialism before capitalism.

I know a load of Americans that think Obama is a huge socialist though. I have a friend who studies economics in Sweden and he strongly disagrees with it being proof of a socialist system working.

As far as resources vs. systems goes, you're not listening to my point. Ultimately a country's geography, resources, and history determine its success or failure, NOT its economic system. And its economic system of course must fit those circumstances. But that's not what people on the other side seem to be saying. People claim that the most free-market oriented solution is always best no matter what, and that since markets are so wonderful inherently, every nation should be able to be successful under capitalism. That's the notion I'm disagreeing with. Every country is unique, and needs a unique set of economic policies for optimal 'productivity' and 'growth.' The point I'm arguing is that people can't just pull out an econ textbook, list a few models, and tell us that they know the answers.

I'm pretty sure I said that it depends on a country's resources, and if you lack resources your system is irrelevant?

A very poor argument (pun unintended). There are different degrees of poor, and I really don't like the notion that "they're going to have nothing either way we look at it." Economists and political scientists are always looking toward the developing world, so of course it's an important topic of discussion. I'll repeat myself. I would rather live in Cuba than in El Salvador. Sure, they're both poor, but in a poor country I would prefer for the state to take care of me rather than to be subject to the whims of the global capitalist economy (these countries tend to rely on raw materials and cheap labor, which are subject to violent market fluctuations).

I would rather live in El Salvador than North Korea. How can the state take care of you, when they have no initial wealth to re-distribute around? Capitalism creates wealth, when there is business then employment is created, and a cycle of wealth creating more wealth is created.

We're discussing socialism vs. capitalism (so we should be able to discuss how these work in poor countries, after all), and capitalism inherently creates huge divisions in wealth. A few wealthy countries can be wealthy because the poor countries are dependent on them economically and are used by the dominant core nations. This is the point. You can't just look at the US, for example, and say capitalism rocks. The US is successful BECAUSE the El Salvador's and Guatemala's and Mexico's of the world are poor. So yeah, you have to take the poor countries into account, and one can't point to the wealthy banker in the UK and say "capitalism rocks" and ignore the poor farmer in Liberia. Capitalism inherently (without socialist principles worked in, like we see in most developed countries) benefits a small few, so you can't point to that small few and tell us how great it is while ignoring the vast majority of the people that live under that system.

And how do you propose we make El Salvador, Guatemala
As for your claim that the "free market oriented solution always works," again, that's not proven by history. None of the fast growing economies since World War II (or even in history, for that matter) used the most free market oriented solution. The state played a heavy hand in the development of all of them, which contradicts the models of economists and their textbooks. [/quote]
*most* free market orientated stated solution. I thought we established the state must play some part to provide merit goods and assist welfare? There's no model in a textbook that tells you to go for the most free market solution possible.

Also, I would say the most pure socialist examples we can find (of course they're nothing how Marx envisioned it) would be Cuba and the USSR, and they were both successful. Even North Korea by some standards is successful.

How can you class them, and specifically N.Korea as successful in any way?

Governments can help wealth be created through sound economic policy, as we both would agree, but the difference is that economists would say that markets inherently create wealth and that the state simply has to step out of the way for that to happen. I don't believe that's true, and unlike economists, I think that in some cases, the state should play a heavy hand in helping the economy develop. And again, wealth is not 'created by the capitalist economy,' it is created by the resources and people that are there. Without socialist principles of re-distribution and a heavy handed state, life would be pretty terrible for most people, and the market would be subject to extreme fluctuations. This idea contradicts pure capitalism, and that's what the thread is about...whether or not you believe in liberal capitalism, or if you believe that markets are inherently unstable.[/QUOTE]
Most economic textbooks say the state should help create the foundations for private firms to flourish, rather than leave the markets be. And also that there needs to be government intervention when there are market failures. Of course resources are what creates growth, a capitalist system makes the most from them though.

---------- Post added at 08:48 PM ---------- Previous post was at 08:43 PM ----------

Pretty much did an essay on this the other month, it was on nationalism, but hey all the same.

If anyones interested in nationalism, check out Tom Nairns 'The Break up of Britain'. He basically argues the point that nationalism can be used as a tool to avoid homogenising economies that come with capitalism. Quite an interesting read.

Will check it out, thanks.

 

[Nixon]

A poll is a good shout. Good thread as well, when people actually put forward reasoned points.

As for my opinion, neither is ideal. Each has their flaws and advantages of which I've seen many discussed here already. If forced to choose which I prefer, I'd probably go for capitalism.

This may be influenced by my current situation. My family live relatively comfortably and can afford to send me and my brother away from home to university without adversely affecting their lives. Because of the financial security I have at the moment, and the capitalist way in which it was gained, I recognise that to maintain the lifestyle I enjoy there needs to be an element of capitalism. Yes, this may make me appear like a spoiled c*unt, but at least I'll admit that I wouldn't enjoy the decrease in wealth that communism would cause for many people. I like the idea of equality, and everything would be equal in an ideal world, but in reality it's not going to happen. For communism to be truly effective it would have to be simultaneously implemented worldwide.

Another issue I have with communism is the equality aspect. Not everyone is equal. Some people are smarter, more sociable, more athletic than others. Why should people be paid the same when there are clear differences between their individual capabilities? And in turn, why would intelligent people push themselves to discover new ideas if they are still paid the same as others who do not have the same intellectual capacity, nor drive to succeed? I don't understand where the motivation to achieve comes from in a communist society when there is no reward for achievement.

The problem with comparing countries is that most of the country's economic situation is not hugely influenced by the type of society (capitalist or socialist). A country's wealth primarily depends on the resources available to it, the climate, terrain etc, and not the government in charge (although mismanagement by governments can have a major impact!). So comparing countries does not really prove anything, as there will always be poor capitalist countries and rich socialist countries, and vice versa.

Also, very few countries are purely socialist or completely capitalist. The UK and USA have not had truly free markets for a long time. And the Scandinavian countries are hardly socialist when you compare them to the principles of communism/socialism in the manifesto or Das Kapital.

I can't comment on the type of healthcare I'd prefer, as I don't understand enough about each type and have not experienced any others except for the NHS.

I think what I'd really like to see is a society that contains aspects of each. A society in which everyone is born equally, and everyone has the same opportunity to achieve what they wish in their life. And that society allows people to earn what they wish, depending on the importance of their job and the ability at which they carry it out.

PS. This will probably get ripped to shreds, but I thought I'd like to try and contribute my opinions. Although I find it very difficult expressing them in words. Ah well.

 

[Joel`]

Poll added. Meant to do it when I started the thread, but forgot.

 

[Mantra]

Wow, what a great discussion. I came here to find some 4 - 2 - 3 - 1 tactics for Fm 2010 and saw this being discussed and had to have a look.

I haven't read the whole of the thread yet, but will look over it all. Page 3 seems to go on forever.

My main reason for typing here was to introduce some of you guys to the work of Milton Friedman. He was an economist from the Chicago school who championed small government.

He died in about 2006 I think but luckily there are many videos of his talks on youtube and other such places. I recently watched a 10 hour documentary series he made in which he put over his ideas and then debated them with groups of interested parties. It was so good that I watched it all in 2 evenings.

I'm not sure if I'm allowed to post youtube links, so I will, but if they are not allowed then please can the moderators delete them and accept my apology.

Here are some of his ideas, these videos are between about 5 and 10 minutes long and I advise everyone to have a look at them. I hope they will make everyone think. If you are iterested he appeared on a talk show, twice actually, and these videos are longer.

YouTube - Milton Friedman - The Free Lunch Myth

YouTube - Milton Friedman - Redistribution of Wealth

YouTube - Milton Friedman - Socialism is Force

YouTube - Milton Friedman - The Robin Hood Myth

There are plenty more of his videos on youtube. There is no point me posting them on here as those who have found him interesting will no doubt look them up for themselves. I will also be re-watching these.

PS if anyone does have a good 4-2-3-1 formation for FM 2010 I'd be very grateful

 

[curtis290]

YouTube - Barack Obama "I inhaled frequently" "That was the point"

Yeah but Obama was never the stoner that I was.

Gordon Brown was the first to de-regulate. America and the rest of the world follow in order to compete. He also inflated the public sector during recession in order to create employment, but it's employment that isn't needed, that didn't generate anything, and was a burden on tax. If he'd concentrated his efforts on inspiring the private sector we wouldn't be in as big a mess right now.
I am thinking in terms of structure, the banker is a mere example of showing the rich at the top and the money working its way down.

Deregulation has been going on for a lot longer than Gordon Brown. In the case of the US, the deregulation that enabled the financial crisis stems back the the early Reagan era, most notably the 1980 Depository Institutions Deregulation and Monetary Control Act and the 1982 Garn–St. Germain Depository Institutions Act. There was also the Basel accords much later for the MBS stuff, and of course the Federal Reserve during the past two decades also played a big hand. Also, I think the system of floating exchange rates ultimately was going to bring us in this direction. Under such a system, you see a lot of short term growth and it's great for finance and globalization. But it also leads to glaring inequalities, ranging from trade balances to asset bubbles. The gold standard became obsolete, so did Bretton Woods, and now maybe the system we have now is heading to its grave. Of course the powers that be are doing everything they can to keep things from changing, at the expense of the taxpayer.

Anyway, the point is that the global economic crisis definitely is not just because of Gordon Brown, he's a microscopic piece of this. Also, I don't think he could have done anything to 'inspire' the private sector, as that ultimately depends on the conditions of the British and global economy. That's beside the point though.

As far as the banker goes, you're still not hearing hearing my argument. This banker exists and makes his money in places that have moved towards financial deregulation. This happened in the US and Britain as the middle class shrunk and industrial jobs moved overseas. Nothing he 'did' makes wealth trickle down nor is he any kind of example proving trickle-down economics, and a huge asset bubble generally benefits a few wealthy bankers to a great extent while lots of people lose jobs. In the case of America, he (indirectly) helps a lot of people get homes that they ultimately can't pay for. Now I'm not saying the move away from manufacturing and towards finance wasn't inevitable (it was because that's what was profitable in the short term), but they are only small signs of the inherent instability of capitalism. Industrial overproduction leads to financialization in some countries as they move away from manufacturing, but none of it is ultimately sustainable since it isn't based on real economic activity. And I've gotten way off topic already.

You assume that all workers do the bare minimum, but they can be given incentives to be more productive. The manager will be paid via shares in a company for example, so he/she is forced to be productively efficient as it's in their interest now. Labourers can be given performance related bonuses etc.

I didn't say all, I said many. Anyway, even under a purely socialist system, there are plenty of incentives to be more productive. The most obvious is working your way up the job ladder. Financial incentives can be given as well. Socialism doesn't have to mean that everyone earns the same, and that's ultimately up to your definition of socialism. Even if they do all earn the same base wage, financial incentives can be given on top of that for productivity. There's also punishment.

The NHS is state run and it's horribly bad compared to others like Germany. That's not a model. That's evidence.

I don't know much about the NHS, although I've heard from a lot of people that it isn't so bad and that the ones complaining about it are those who either think the grass is greener on the other side or have a lot of ideological bias against it. I won't comment on the NHS but America's health care system is as privatized as any in the 1st world's and it's absolutely awful. People in other countries have been polled on the satisfaction they have with their healthcare systems and they generally rate their systems much higher than Americans do. And there's more state involvement in theirs. America is one of the only advanced democracies where if you get sick or hurt and you're not rich, you're absolutely ******.

Overproduction probably will be its downfall, but country's are already reaching a productive capacity, but the hyper-consumption active in all the current rich country's demands more and more, and it'll be one of the age's great economic challenges to fix this problem. And there's not much else I can disagree with in this, I think you rambled a tad.

Glad we're on the same page then. Although the crisis of overproduction is worse than you might think, as the industrialized countries already operate much, much lower than their productive capacity, and in order to compete they simply must invest in plant equipment to increase productive capacity (efficiency), lower their wages, and deflate the value of their currencies. This began in the 1970's. The response in some of these countries was to financialize, which got us some short-term growth in the 90's and 00's, and a few wealthy people in finance made a **** ton of money, but unfortunately none of it was sustainable. I think the future is bleak, although hopefully it won't bring us to a 1929 style depression. If we're lucky, Japan over the past two decades will be our outcome.

My knowledge of economic history isn't great by any means, but as far as I know, the most socialist thing to come from WW2 was welfare states being established, which I agree with anyway. I don't know of any country after WW2 that succeeded with a truly planned economy.

The USSR succeeded with a truly planned economy, and my point was that the advanced democracies became welfare states. This period was characterized by very high growth rates, and for the first time in history, a relatively equitable distribution of wealth in these capitalist countries. Times were good, and my point is that this wasn't achieved through 'letting the market run wild,' it was done with a large state and Keynesian style economics. For the last 30 years though, Keynes has been demonized and everyone thinks that Friedmanite economics are the best thing since sliced bread. Hence many people believing the solution to every single economic problem is that the state just needs to get out of the way.

I know a load of Americans that think Obama is a huge socialist though. I have a friend who studies economics in Sweden and he strongly disagrees with it being proof of a socialist system working.

Yep, Obama is a commie for most Americans, although by Europe's standards he'd be considered a fairly ordinary politician. I also know people in Sweden that love their system and love living there. As I've said before, the Scandinavian countries score higher than anywhere in the world in terms of well-being and have the highest rates of political participation in the world. Even though it's really cold and dark all the time.

I'm pretty sure I said that it depends on a country's resources, and if you lack resources your system is irrelevant?

Well yeah, everything depends on a country's resources/geography/history/what have you. My point though was that we can't put poor countries out of the debate, they should be involved as well, since they make up the majority of the world. And to speak in broad terms again, capitalism is probably better for wealthy countries than socialism is, but socialism can very appealing to poor countries, moreso than capitalism. Also, no country has no resources, at the very least they have their labor (if that's all they have though, they're probably bound to be poor no matter what).

I would rather live in El Salvador than North Korea. How can the state take care of you, when they have no initial wealth to re-distribute around? Capitalism creates wealth, when there is business then employment is created, and a cycle of wealth creating more wealth is created.

I would certainly rather like in N. Korea than El Salvador, which is considered by many to be the most dangerous place on the planet. I would rather be in N. Korea than be one of the many in the world who is starving. If there is no 'initial wealth,' well, the country is in trouble, but over time, the state can develop the economy and provide people with the essentials of living. That's why when the USSR began and after the civil war and WWII when it had no wealth, it quickly grew into the world's second biggest super-power. As far as capitalism creating wealth, well it depends on the conditions, and often times, a heavy-handed state might be involved. The cycle doesn't always continue either. Anyway, socialists/communists don't believe that capitalism doesn't develop an economy, they simply believe that a different system will succeed it when it becomes obsolete.

And how do you propose we make El Salvador, Guatemala

I don't know enough about either country, but I'm sure it depends on factors unique to that country. That's why I don't think you can apply the one size fits all solution of "get rid of the state, cut taxes, and get rid of tariffs, and everything will be dandy" that you see most economists prescribe.

*most* free market orientated stated solution. I thought we established the state must play some part to provide merit goods and assist welfare? There's no model in a textbook that tells you to go for the most free market solution possible.

But most people seem to think these days that in every situation, the 'more free market oriented solution' is always the better one, and this includes econ textbooks and theorists. They markets inherently are the most effective and efficient method of allocating resources. That they are self-regulating and inherently stable. If you believe in this logic, as the discipline does, than you believe that the solution is almost always to simply get the state out of the way. That's why in econ class you learn that everything the state does is inherently inefficient, and that it always must let the market do its thing.

I have heard this so many times it's not even funny, whether it's economists claiming that Russia's failures over the past two decades stem from it not going far enough in its shock therapy or telling us that Argentina's crisis of '01 was caused by an inefficient and meddlesome state. Most Americans (and this group includes a lot of economists, sadly) think the economic crisis was caused by too much government intervention and regulation. They absolutely cannot fathom the concept that deregulation could have been a source of the problem (it doesn't matter how much logic or data you show them, they just can't believe it to be true). They ignore every move the state has made towards deregulation and market-oriented solutions in the past few decades and point to one instance of increased intervention and say that's what caused the crisis. And then of course there are the countless economists who simply assume that the crisis is a liquidity crisis that has nothing to do with structural issues. This includes the chairman of our federal reserve, who has taken on near dictatorial powers.

How can you class them, and specifically N.Korea as successful in any way?

Already went over this. When the Czar was overthrown in Russia in 1917 the country was an absolute mess. It had been devastated in the war and lost a lot of industry, not to mention the fact that it was a backwards agrarian backwater that barely had gotten rid of fuedalism (serfdom in Russia was abolished only a few decades before), so it was the absolute possible worse case scenario for a communist revolution. The country was then torn apart by Civil War in the 1920's, and Stalin's foolish ideas for the next few decades. World War II absolutely destroyed it once again, and Russia paid higher costs for that war than any country including Germany. But within 12 years they put something in space, and 4 years later, they put a human in space. In the 50's and 60's the standard of living in the Soviet Union was extremely high and much, much better than anything the country had ever seen. Unemployment was of course nonexistent as was crime, and everyone had the basic needs of survival met and then some. It was a better place to live than the developing world. There is a reason that the older Russians are reminiscent of even the Brezhnev years and that the Communist Party (which is not some new wave party, these people just want to rewind the clock back to the 70's and 80's) is Russia's second most popular political party behind Putin's United Russia. You don't have to like what the USSR stood for, but to describe it as a failure is simply bad history.

As far as Cuba goes, it certainly was a success if you compare it to its neighbors and to what Cuba was like before the revolution. Of course it went from being entirely dependent on the US to having a trade embargo put against it overnight, so things were difficult. But it has the second best health care and education systems in Latin America. Do they need to open up economically? Yes, and that reason has little to do with the inherent awesomeoness of capitalism but because its greatest resource will be tourism, something that requires economic liberalization. But would I prefer to live there as opposed to El Salvador or Honduras? Anyone would.

As far as North Korea goes, the populace's needs are generally met, and North Koreans are better off than a lot of poor countries in the world. There is a reason the government is still in power and that Kim Jung-Il is worshipped as a God. Things might change since many are upset about his son being thrust into the political scene, but this regime has the support of its people and will be around as long as Kim Jung-Il is around.

Most economic textbooks say the state should help create the foundations for private firms to flourish, rather than leave the markets be. And also that there needs to be government intervention when there are market failures. Of course resources are what creates growth, a capitalist system makes the most from them though.

'Creating the foundations for private firms to flourish' generally means for these people and books that the state should get out of the way in economic policy whenever possible. The state is supposed to suppress unions, social dissidence, and anything that could scare investor confidence and protect private property rights. That's what 'creating the foundations' generally means for these people. But it's not really supposed to intervene in the market at all for these people other than at a bare minimum for the safety reasons just listed. Look up the Washington Consensus on wikipedia, and that's the underlying logic to it.

Also, how does market failure occur? If markets efficiently and effectively allocate resources and are self-regulating and inherently stable (which is the foundation of neo-classical economics), how can you get a market failure? Economists have been telling us for three decades now that the state is evil and that privatization, deregulation, tariff-lowering, tax cuts, etc. is the solution to every problem. The state is inherently inefficient and needs to get out of the way is generally what we've heard everyday from these people for decades now. Because markets are perfect, any state intervention inherently keeps them from working at their best. So the most 'free-market oriented solution' possible is always the best one. All of the sudden there's a market failure, and now the state is supposed to step in and intervene. Now the state is necessary. Now markets don't work so well. This is such a blatant contradiction that it's amazing that all these economists can look at themselves in the mirror.

Most Republicans in America though don't buy this. They've been told and been telling others for decades that markets always work, and they're not about to change their ideology. This is why they oppose the bailouts and any state measures to regulate the economy or prime it with Keynesian-style spending. The state for them is to do nothing and the market will naturally recover. It's basically the same position the Republicans took during the Great Depression. I admire them for their consistency, and what they believe in makes more sense than the monetarists running around calling for more and more bailouts that only a couple of years ago were ******** about how big and inefficient and useless the state was and that we needed to let markets be less restrained if we wanted more economic growth.

As far as resources go, again its debatable whether or not capitalism 'makes the most of them,' and more importantly, the type of capitalism matters a lot. I don't buy into the notion that the most 'free-market oriented solution possible' is always the best one, and usually a heavy-handed and interventionist state is necessary for development. Also, as stated before, just because socialism/communism/whatever is less productive doesn't make it worse. 'Productivity' is certainly not the only thing in life that matters.

Moreover, capitalism is inherently terrible at using resources because without state planning and intervention it ruins and/or uses up these resources. This is why the Dominican Republic is better off than Haiti, and why many Caribbean nations were destroyed by capitalism and comparative advantage that incentivized the few wealthy on the islands to grow nothing but sugar and destroy the soil and thus, the economy, in the long-term. Ultimately there will be an ecological crisis on this planet since our sustainability is over 4 planets right now. I bet it will happen in my lifetime. Not sure what the outcome will be, but at the very least, it's going to require a big state with a lot of regulation and prudent planning rather than just "letting the market work its magic."

---------- Post added at 04:22 PM ---------- Previous post was at 04:15 PM ----------

Wow, what a great discussion. I came here to find some 4 - 2 - 3 - 1 tactics for Fm 2010 and saw this being discussed and had to have a look.

I haven't read the whole of the thread yet, but will look over it all. Page 3 seems to go on forever.

My main reason for typing here was to introduce some of you guys to the work of Milton Friedman. He was an economist from the Chicago school who championed small government.

He died in about 2006 I think but luckily there are many videos of his talks on youtube and other such places. I recently watched a 10 hour documentary series he made in which he put over his ideas and then debated them with groups of interested parties. It was so good that I watched it all in 2 evenings.

I'm not sure if I'm allowed to post youtube links, so I will, but if they are not allowed then please can the moderators delete them and accept my apology.

Here are some of his ideas, these videos are between about 5 and 10 minutes long and I advise everyone to have a look at them. I hope they will make everyone think. If you are iterested he appeared on a talk show, twice actually, and these videos are longer.

YouTube - Milton Friedman - The Free Lunch Myth

YouTube - Milton Friedman - Redistribution of Wealth

YouTube - Milton Friedman - Socialism is Force

YouTube - Milton Friedman - The Robin Hood Myth

There are plenty more of his videos on youtube. There is no point me posting them on here as those who have found him interesting will no doubt look them up for themselves. I will also be re-watching these.

PS if anyone does have a good 4-2-3-1 formation for FM 2010 I'd be very grateful

Wow, that was timely. Thanks for helping prove my point. As I keep repeating, we've had Friedman and his theories shoved down our throats for decades, and we're now realizing how wrong he was about so much. There's a reason University of Chicago had to change plans for naming a new building after him.

Friedman is just a dumbed down version of Hayek (if you want a good attack on socialism, read The Road to Serfdom, which is a million times better than anything Friedman ever wrote), and it's a **** good thing people have stopped taking him seriously after the crisis. Too bad our federal reserve chairman thinks his monetarist stuff is infallible.

Your post proved my point exactly, that even when 30 years of listening to this guy too much brought us to a financial crisis someone pops in and says "hey guys, why don't you check out Milton Friedman." Probably the worst moment of my day. No offense to you personally though.

 

[slbenficacoach]

Really, is this really a relevant discussion? Capitalism, needless to say why.

 

[curtis290]

Really, is this really a relevant discussion? Capitalism, needless to say why.

And how is free trade and the free-market oriented policies of the EU faring for Portugal right now?

 

[slbenficacoach]

Portugal's problems are deeper than the EU -.- . Our problems are chronic, always spending more than we have, and if we hadn't joined the EU back in 1986, we'd be in depper ****

And how is free trade and the free-market oriented policies of the EU faring for Portugal right now?

 

[Joel`]

Yeah but Obama was never the stoner that I was.

Deregulation has been going on for a lot longer than Gordon Brown. In the case of the US, the deregulation that enabled the financial crisis stems back the the early Reagan era, most notably the 1980 Depository Institutions Deregulation and Monetary Control Act and the 1982 Garn–St. Germain Depository Institutions Act. There was also the Basel accords much later for the MBS stuff, and of course the Federal Reserve during the past two decades also played a big hand. Also, I think the system of floating exchange rates ultimately was going to bring us in this direction. Under such a system, you see a lot of short term growth and it's great for finance and globalization. But it also leads to glaring inequalities, ranging from trade balances to asset bubbles. The gold standard became obsolete, so did Bretton Woods, and now maybe the system we have now is heading to its grave. Of course the powers that be are doing everything they can to keep things from changing, at the expense of the taxpayer.

Anyway, the point is that the global economic crisis definitely is not just because of Gordon Brown, he's a microscopic piece of this. Also, I don't think he could have done anything to 'inspire' the private sector, as that ultimately depends on the conditions of the British and global economy. That's beside the point though.

As far as the banker goes, you're still not hearing hearing my argument. This banker exists and makes his money in places that have moved towards financial deregulation. This happened in the US and Britain as the middle class shrunk and industrial jobs moved overseas. Nothing he 'did' makes wealth trickle down nor is he any kind of example proving trickle-down economics, and a huge asset bubble generally benefits a few wealthy bankers to a great extent while lots of people lose jobs. In the case of America, he (indirectly) helps a lot of people get homes that they ultimately can't pay for. Now I'm not saying the move away from manufacturing and towards finance wasn't inevitable (it was because that's what was profitable in the short term), but they are only small signs of the inherent instability of capitalism. Industrial overproduction leads to financialization in some countries as they move away from manufacturing, but none of it is ultimately sustainable since it isn't based on real economic activity. And I've gotten way off topic already.

And you're not hearing me, the banker is generating profit - for the bank - which is money circulating around our domestic economy. The government can tax the money that the bank generates and the income that the banker makes and re-distribute it to the poorer in the economy. Our manufacturing did not die because of overproduction, it died because trade unions were demanding 20% annual wage rises, and the labour government was afraid to say no. This obviously made us far less competitive, so the labour government was forced with either heavily subsidising an unprofitable business, or let the industry die and face unemployment. They chose to heavily subsidise a failing industry, the Tories let it go, got rid of trade union power and privatised which laid the foundations for the UK economy to be far more productive.

I didn't say all, I said many. Anyway, even under a purely socialist system, there are plenty of incentives to be more productive. The most obvious is working your way up the job ladder. Financial incentives can be given as well. Socialism doesn't have to mean that everyone earns the same, and that's ultimately up to your definition of socialism. Even if they do all earn the same base wage, financial incentives can be given on top of that for productivity. There's also punishment.

If you're equal, why do you have any incentive to climb the job ladder, since you're not going to be rewarded. Where do you stop the financial incentives, how do you determine them? You may as well let the free market reward them rather than random financial bonuses.

I don't know much about the NHS, although I've heard from a lot of people that it isn't so bad and that the ones complaining about it are those who either think the grass is greener on the other side or have a lot of ideological bias against it. I won't comment on the NHS but America's health care system is as privatized as any in the 1st world's and it's absolutely awful. People in other countries have been polled on the satisfaction they have with their healthcare systems and they generally rate their systems much higher than Americans do. And there's more state involvement in theirs. America is one of the only advanced democracies where if you get sick or hurt and you're not rich, you're absolutely ******.

The American health care system does suck, but so does the NHS, just not as much. Read what Chaz said earlier on it. The people who say it "isn't so bad" are just blindly patriotic and refuse to open their eyes that there are far better systems out there. Chaz already covered about the NHS being inefficient, so I won't bother repeating.

Glad we're on the same page then. Although the crisis of overproduction is worse than you might think, as the industrialized countries already operate much, much lower than their productive capacity, and in order to compete they simply must invest in plant equipment to increase productive capacity (efficiency), lower their wages, and deflate the value of their currencies. This began in the 1970's. The response in some of these countries was to financialize, which got us some short-term growth in the 90's and 00's, and a few wealthy people in finance made a **** ton of money, but unfortunately none of it was sustainable. I think the future is bleak, although hopefully it won't bring us to a 1929 style depression. If we're lucky, Japan over the past two decades will be our outcome.

Britain is financial because our strong manufacturing industry was killed some time ago, and we had little choice but to move to a service based economy.

The USSR succeeded with a truly planned economy, and my point was that the advanced democracies became welfare states. This period was characterized by very high growth rates, and for the first time in history, a relatively equitable distribution of wealth in these capitalist countries. Times were good, and my point is that this wasn't achieved through 'letting the market run wild,' it was done with a large state and Keynesian style economics. For the last 30 years though, Keynes has been demonized and everyone thinks that Friedmanite economics are the best thing since sliced bread. Hence many people believing the solution to every single economic problem is that the state just needs to get out of the way.

Keynesian economics is what led us to the recession of the '70's and the winter of discontent. It was great for a time, and I'm not knocking the man because he was one of the most intelligent British men ever, but it has been seen that simply managing the demand through fiscal policy wasn't sustainable over time, and the majority of country's no longer use fiscal policy as a tool of controlling the economy.

Yep, Obama is a commie for most Americans, although by Europe's standards he'd be considered a fairly ordinary politician. I also know people in Sweden that love their system and love living there. As I've said before, the Scandinavian countries score higher than anywhere in the world in terms of well-being and have the highest rates of political participation in the world. Even though it's really cold and dark all the time.

I never said they didn't like living there, I just said he disagrees with the view that it should be used as an example of a successful socialist system.

Well yeah, everything depends on a country's resources/geography/history/what have you. My point though was that we can't put poor countries out of the debate, they should be involved as well, since they make up the majority of the world. And to speak in broad terms again, capitalism is probably better for wealthy countries than socialism is, but socialism can very appealing to poor countries, moreso than capitalism. Also, no country has no resources, at the very least they have their labor (if that's all they have though, they're probably bound to be poor no matter what).

Yes, but education, health and labour are all needed for growth. Most country's miss one or two of those, and thus can never begin to start growing.

I would certainly rather like in N. Korea than El Salvador, which is considered by many to be the most dangerous place on the planet. I would rather be in N. Korea than be one of the many in the world who is starving. If there is no 'initial wealth,' well, the country is in trouble, but over time, the state can develop the economy and provide people with the essentials of living. That's why when the USSR began and after the civil war and WWII when it had no wealth, it quickly grew into the world's second biggest super-power. As far as capitalism creating wealth, well it depends on the conditions, and often times, a heavy-handed state might be involved. The cycle doesn't always continue either. Anyway, socialists/communists don't believe that capitalism doesn't develop an economy, they simply believe that a different system will succeed it when it becomes obsolete.

You'd rather live in N.Korea? Wow, that is brave.
How is the state going to develop the economy and provide the essentials? There are many Asian and African country's that have lived in squalor for years, and they've never got anywhere close to gaining any sort of wealth. China was in the same situation, then it embraced globalisation and look at it now.

But most people seem to think these days that in every situation, the 'more free market oriented solution' is always the better one, and this includes econ textbooks and theorists. They markets inherently are the most effective and efficient method of allocating resources. That they are self-regulating and inherently stable. If you believe in this logic, as the discipline does, than you believe that the solution is almost always to simply get the state out of the way. That's why in econ class you learn that everything the state does is inherently inefficient, and that it always must let the market do its thing.

I have heard this so many times it's not even funny, whether it's economists claiming that Russia's failures over the past two decades stem from it not going far enough in its shock therapy or telling us that Argentina's crisis of '01 was caused by an inefficient and meddlesome state. Most Americans (and this group includes a lot of economists, sadly) think the economic crisis was caused by too much government intervention and regulation. They absolutely cannot fathom the concept that deregulation could have been a source of the problem (it doesn't matter how much logic or data you show them, they just can't believe it to be true). They ignore every move the state has made towards deregulation and market-oriented solutions in the past few decades and point to one instance of increased intervention and say that's what caused the crisis. And then of course there are the countless economists who simply assume that the crisis is a liquidity crisis that has nothing to do with structural issues. This includes the chairman of our federal reserve, who has taken on near dictatorial powers.

In my economics class we were taught that the markets can fail and it's a necessity of government to step in to correct failures, but it still should play a small role at every other time.I never said they self-regulated and they were stable? I don't believe that at all. And of course deregulation was the cause, I never denied that either. Doesn't mean the whole system doesn't work though, government failures exist, no? You could say capitalistic greed drove us to it, but it's human instinct to always want more. If we had a perfect economic system where we were all equal, and we were offered the chance to all have 5% more, we'd take it.


Already went over this. When the Czar was overthrown in Russia in 1917 the country was an absolute mess. It had been devastated in the war and lost a lot of industry, not to mention the fact that it was a backwards agrarian backwater that barely had gotten rid of fuedalism (serfdom in Russia was abolished only a few decades before), so it was the absolute possible worse case scenario for a communist revolution. The country was then torn apart by Civil War in the 1920's, and Stalin's foolish ideas for the next few decades. World War II absolutely destroyed it once again, and Russia paid higher costs for that war than any country including Germany. But within 12 years they put something in space, and 4 years later, they put a human in space. In the 50's and 60's the standard of living in the Soviet Union was extremely high and much, much better than anything the country had ever seen. Unemployment was of course nonexistent as was crime, and everyone had the basic needs of survival met and then some. It was a better place to live than the developing world. There is a reason that the older Russians are reminiscent of even the Brezhnev years and that the Communist Party (which is not some new wave party, these people just want to rewind the clock back to the 70's and 80's) is Russia's second most popular political party behind Putin's United Russia. You don't have to like what the USSR stood for, but to describe it as a failure is simply bad history.

As far as Cuba goes, it certainly was a success if you compare it to its neighbors and to what Cuba was like before the revolution. Of course it went from being entirely dependent on the US to having a trade embargo put against it overnight, so things were difficult. But it has the second best health care and education systems in Latin America. Do they need to open up economically? Yes, and that reason has little to do with the inherent awesomeoness of capitalism but because its greatest resource will be tourism, something that requires economic liberalization. But would I prefer to live there as opposed to El Salvador or Honduras? Anyone would.

As far as North Korea goes, the populace's needs are generally met, and North Koreans are better off than a lot of poor countries in the world. There is a reason the government is still in power and that Kim Jung-Il is worshipped as a God. Things might change since many are upset about his son being thrust into the political scene, but this regime has the support of its people and will be around as long as Kim Jung-Il is around.[/quote] Not going to argue on Russia/Cuba yet because I don't know much about their history. But, North Korea, really? Their needs are not met, the whole country suffers from abject poverty. The reason he's worshipped as a God is because they have been brainwashed to believe it. They have no free media, the government selects people who it wants to know information. Libraries are run by government officials, and only North Korean propaganda is shown in them. No one is allowed into the country, if you try and escape then you are shot. If you try and protest, or do anything against the government, you are shot - publicly - as a show of strength. The whole nation is shown propaganda on the state television and other media outlets to make it seem like they are one of the wealthiest nations in the world, and that the rest of the world is far worst than them, and since they know nothing else, they believe it. When they entered the world cup, they couldn't even afford a training camp and hotel, so had to use the public gyms there. Sounds a great place to live?

'Creating the foundations for private firms to flourish' generally means for these people and books that the state should get out of the way in economic policy whenever possible. The state is supposed to suppress unions, social dissidence, and anything that could scare investor confidence and protect private property rights. That's what 'creating the foundations' generally means for these people. But it's not really supposed to intervene in the market at all for these people other than at a bare minimum for the safety reasons just listed. Look up the Washington Consensus on wikipedia, and that's the underlying logic to it.

As well as maintaining low inflation, making sure firms are competitive in the global markets.

Also, how does market failure occur? If markets efficiently and effectively allocate resources and are self-regulating and inherently stable (which is the foundation of neo-classical economics), how can you get a market failure? Economists have been telling us for three decades now that the state is evil and that privatization, deregulation, tariff-lowering, tax cuts, etc. is the solution to every problem. The state is inherently inefficient and needs to get out of the way is generally what we've heard everyday from these people for decades now. Because markets are perfect, any state intervention inherently keeps them from working at their best. So the most 'free-market oriented solution' possible is always the best one. All of the sudden there's a market failure, and now the state is supposed to step in and intervene. Now the state is necessary. Now markets don't work so well. This is such a blatant contradiction that it's amazing that all these economists can look at themselves in the mirror.

When have I said the market is perfectly allocative, self regulating and stable? Economic theories develop, they're modelled by what is seen. Just because economists say "the free market is the best solution, is in no way claiming it's a perfect system. There are flaws in every economic theory in truth. Just like there's flaws in capitalist systems, and flaws in the socialist ones. The general flaws with capitalist systems are the fact that it fails to provide equality, and social welfare suffers. This is fixable or can be mitigated through state intervention and implementation of the welfare state. As I've already said, a pure capitalist state would be a horrid place to live in for the vast majority, and show me a country right now that is purely capitalist, and is successful? Every major economy right now runs a capitalist economy with socialism policies added in to account for market failures, just the degree of socialism varies. I'm quite happy with the way the UK is run, and the rest of Europe. The US is probably too far towards capitalism for me. But implementing a system that leans towards more socialist policy? How do you fix the flaws with that system? When you figure it out, I'm sure many world leaders will be interested in your theory.

Most Republicans in America though don't buy this. They've been told and been telling others for decades that markets always work, and they're not about to change their ideology. This is why they oppose the bailouts and any state measures to regulate the economy or prime it with Keynesian-style spending. The state for them is to do nothing and the market will naturally recover. It's basically the same position the Republicans took during the Great Depression. I admire them for their consistency, and what they believe in makes more sense than the monetarists running around calling for more and more bailouts that only a couple of years ago were ******** about how big and inefficient and useless the state was and that we needed to let markets be less restrained if we wanted more economic growth.

Economic growth is unsustainable, so many country's were operating above their trend rates, it was clearly going to come to an end. It was ignoring traditional theories and political reasons that caused it to all go **** up. Also, republicans are idiots.

As far as resources go, again its debatable whether or not capitalism 'makes the most of them,' and more importantly, the type of capitalism matters a lot. I don't buy into the notion that the most 'free-market oriented solution possible' is always the best one, and usually a heavy-handed and interventionist state is necessary for development. Also, as stated before, just because socialism/communism/whatever is less productive doesn't make it worse. 'Productivity' is certainly not the only thing in life that matters.

You can't say that the lack of productivity isn't a major issue though. I've already said many times that I believe an economy with inequality but that can produce at its maximum, will result in better welfare for all involved due to re-distribution of the wealth by the state and welfare systems.

Moreover, capitalism is inherently terrible at using resources because without state planning and intervention it ruins and/or uses up these resources. This is why the Dominican Republic is better off than Haiti, and why many Caribbean nations were destroyed by capitalism and comparative advantage that incentivized the few wealthy on the islands to grow nothing but sugar and destroy the soil and thus, the economy, in the long-term. Ultimately there will be an ecological crisis on this planet since our sustainability is over 4 planets right now. I bet it will happen in my lifetime. Not sure what the outcome will be, but at the very least, it's going to require a big state with a lot of regulation and prudent planning rather than just "letting the market work its magic."

When we've finally ruined our resources, it's going to take science not economics to fix that problem.

 

[Mantra]

Portugal's problems are deeper than the EU -.- . Our problems are chronic, always spending more than we have, and if we hadn't joined the EU back in 1986, we'd be in depper ****

Yeah, the problem with big socialist governments is that they always spend too much of other peoples money.

The governments start with great intentions.They promise free education, free health care, pensions, dole money, housing benefits. They want to make society better, no one questions there intentions. These people mean well.

The problem comes when they have to deliver on these promises. All the above is not cheap, in fact it costs an absolute fortune. It doesn't cost the government anything however, but it costs the people. So the government has to take money from the people. They have to take that money by force, if you don't pay your taxes you are going straight to jail.

So the governments start by taking just a small amount of money from people, but this isn't enough. They start taking more and even more money from the people. And when even this isn't enough to fullfill all the promises they have made they have to borrow money from the bank. On this money they are charged interest and it costs them even more to pay it back. But the government was already losing money or elsee why did it have to get the bank loan?

This is what happened in Portugal. Big government stealing money from the people and then spending it. And when there wasn't enough money to be got from stealing from the people they endebted the people by borrowing from the banks.

Well, no one is going to extend credit forever and sometime the government had to pay. But of course, it wasn't the government who had to pay, government is just a bunch of buildings in the capital. It was the people who had to pay. Their big socialist government had endebted them. So when the government ran of of money it had to lay people of and cut back services. It couldn't keep paying money it didn't have.

This started with socialists who had the best intentions, they really did. When they say they wanted a better society I believe them. But life is not about intentions, it is about results.

 

[curtis290]

And you're not hearing me, the banker is generating profit - for the bank - which is money circulating around our domestic economy. The government can tax the money that the bank generates and the income that the banker makes and re-distribute it to the poorer in the economy. Our manufacturing did not die because of overproduction, it died because trade unions were demanding 20% annual wage rises, and the labour government was afraid to say no. This obviously made us far less competitive, so the labour government was forced with either heavily subsidising an unprofitable business, or let the industry die and face unemployment. They chose to heavily subsidise a failing industry, the Tories let it go, got rid of trade union power and privatised which laid the foundations for the UK economy to be far more productive.

I'm hearing you and I've heard these arguments millions of times. The banker creates wealth out of thin air that isn't based on real economic activity. His government helped him out with deregulation and orienting the economy toward finance. But none of it was sustainable and ultimately the rest of the population has to pay the price. This is why you can't assume that wealth creation or short-term economic growth is good for everyone or that it trickles down. Also, if it trickled down, than why was the American middle class shrinking and unemployment and poverty on the rise? This is the fundamental flaw with "trickle-down economics" (the silly thing that Reagan made up)...policy that benefits the wealthy mostly does just that, and ultimately, someone else has to pay.

Your manufacturing died because of global overproduction...organized labor stood firm over its demands, so labor moved overseas. In the 50's and 60's, England would have been fine paying its workers so highly. But with an overvalued currency and high wages, England's manufacturing sector couldn't compete with the others in an era of global overproduction. So it moved towards finance instead. It benefitted in the last few decades from the huge financial asset bubbles blown around the world, but now those are coming to an end.

If you're equal, why do you have any incentive to climb the job ladder, since you're not going to be rewarded. Where do you stop the financial incentives, how do you determine them? You may as well let the free market reward them rather than random financial bonuses.

For the dignity of work and to have a better job. I would rather be a manager than a worker even if the salary was the same.

On how these financial incentives are determined, why are you asking me? It would depend on the specifics of that country. I'm just pointing out that there are a variety of ways financial incentives could be used in a socialist economy. And no, you wouldn't just turn it into a free market, because under this scenario the people prefer a socialist economy, probably because it could guarantee full employment and take care of the needs of its entire populace. Or because capitalism is inherently unstable.

The American health care system does suck, but so does the NHS, just not as much. Read what Chaz said earlier on it. The people who say it "isn't so bad" are just blindly patriotic and refuse to open their eyes that there are far better systems out there. Chaz already covered about the NHS being inefficient, so I won't bother repeating.

OK, well some fairly privatized health care systems suck, and some more state-controlled ones seem to work better...not sure how this proves that markets are the solution to health care. Canada's system is much more 'socialist' than America's (and we call it that), but Canadians are much more satisfied with their healthcare system than America is. I'm sick right now, and rather than spend hundreds going to the doctor for a check-up in America, I'd prefer to be in Sweden where I didn't have to worry about it. I don't give a **** if it's not the most efficiently posibble solution, if a banker has to make 400,000 instead of 500,000 so average people don't have to worry about being sick, than I'm all for it. Another reason that I'm probably more inherently 'socialist' than 'capitalist,' which is I guess what the thread is about.

Britain is financial because our strong manufacturing industry was killed some time ago, and we had little choice but to move to a service based economy.

Not saying you guys had little choice, I'm just saying that capitalism inherently leads to crises of overproduction, which is what we're facing now, and is inherently unstable. Quite a contradiction to the ideas of Friedman or anything you'd find in an econ textbook.

Keynesian economics is what led us to the recession of the '70's and the winter of discontent. It was great for a time, and I'm not knocking the man because he was one of the most intelligent British men ever, but it has been seen that simply managing the demand through fiscal policy wasn't sustainable over time, and the majority of country's no longer use fiscal policy as a tool of controlling the economy.

OK, as for the majority of countries not using fiscal policy as a tool for controlling the economy, that's a load of bollocks, as you British would say. Every country still uses this today. Why do you think both the governments in the US and UK went on such a spending spree over the past decade? To increase aggregate demand. Come on, look at one of your textbooks, increased state spending leads to an increase in aggregate demand. That's about as much of a fact as you can get in this discipline. Was Keynesian style economics as effective from the late 70's until 2007? No, because amazing amounts of wealth were created in the financial sector, which is why the state didn't increase in size during this time period in relation to the economy. Keynesian style government spending won't get you those profits. However, none of those profits were based on real economic activity, and the house of cards is crashing down. Some people want to use Keynesian spending to get out of this mess, but we already did it in the 00's (which prevented the crisis from happening earlier) and now our deficits are out of control. There's nowhere to go.

I never said they didn't like living there, I just said he disagrees with the view that it should be used as an example of a successful socialist system.

OK. Well I know a few that do think it's a good example of a successful socialist system. But at the end of the day, what makes you happy is probably more important than other things, and if the people there are happy and like their system, why attack it on grounds of efficiency?

Yes, but education, health and labour are all needed for growth. Most country's miss one or two of those, and thus can never begin to start growing.

I don't really agree with this point and I'm not sure where this argument is going...I made the point that ultimately other factors determine a country's success economically than just how little the government intervenes in the economy. Economists think though that because markets inherently work, you let them work their magic in any country and you will see growth. I'm just making the point that that's not true and depends on other factors...the implications of this are important, because depending on what these factors are, the solution for the given country might not be to simply let markets work their magic.

You'd rather live in N.Korea? Wow, that is brave.

Not really. If you spent a year in El Salvador you'd be begging for N. Korea. In N. Korea you know you're not going to get shot or robbed. In El Salvador, violence and poverty are a part of your existence.

How is the state going to develop the economy and provide the essentials? There are many Asian and African country's that have lived in squalor for years, and they've never got anywhere close to gaining any sort of wealth. China was in the same situation, then it embraced globalisation and look at it now.

OK, so capitalism didn't work in those places...what's your point? In terms of a socialist system generating wealth out of nothing, that's not supposed to happen, socialism is supposed to follow capitalism, but Cuba and the USSR are great examples of socialist economies developing from nothing into something.

In my economics class we were taught that the markets can fail and it's a necessity of government to step in to correct failures, but it still should play a small role at every other time.I never said they self-regulated and they were stable? I don't believe that at all. And of course deregulation was the cause, I never denied that either. Doesn't mean the whole system doesn't work though, government failures exist, no? You could say capitalistic greed drove us to it, but it's human instinct to always want more. If we had a perfect economic system where we were all equal, and we were offered the chance to all have 5% more, we'd take it.

Why do markets fail? If they're inherently stable and self-regulating (which is why we're always supposed to get the state to get out of the way), they shouldn't fail. These same textbooks say that slashing tariffs, for example, is objectively the best solution for any country, because that means you are removing impediments to the natural equilibrium that markets reach. Yet now markets are failing? Now the state is supposed to step in? It's a huge contradiction. Governments fail because of incompetence or bad decisions, but if markets are systems that inherently reach equilibrium, and the state should always step out of the way, than markets shouldn't fail. The market doesn't much conscious decisions like states do.

If you said markets aren't self-regulating and stable, well then you're breaking with Neo-classic economics, and Friedman would scold you for such socialist talk. If you do think that markets are inherently unstable and lead to crisis, and you do admit that deregulation caused the current crisis, then I applaud you...but from that perspective, the state should play a much greater role in managing the economy and tempering the business cycle than you seem to be admitting. How can you say that markets are inherently unstable and then say Keynesian economics is dead and 'like' the post listing Milton Friedman videos?

Not going to argue on Russia/Cuba yet because I don't know much about their history. But, North Korea, really? Their needs are not met, the whole country suffers from abject poverty. The reason he's worshipped as a God is because they have been brainwashed to believe it. They have no free media, the government selects people who it wants to know information. Libraries are run by government officials, and only North Korean propaganda is shown in them. No one is allowed into the country, if you try and escape then you are shot. If you try and protest, or do anything against the government, you are shot - publicly - as a show of strength. The whole nation is shown propaganda on the state television and other media outlets to make it seem like they are one of the wealthiest nations in the world, and that the rest of the world is far worst than them, and since they know nothing else, they believe it. When they entered the world cup, they couldn't even afford a training camp and hotel, so had to use the public gyms there. Sounds a great place to live?

As I said before, N. Korea wouldn't be a great place to live, but it's not the worst. I would prefer it to El Salvador or Haiti, certainly, and most people would if they lost their ideological blinders. If the people only believe Kim Jong Il is a god because they are brainwashed to believe so, than why can't they be brainwashed to believe that Kim Jong-Un is also a God?

You seem to place a lot of emphasis on free thought, but do you think an illiterate farmer gives a **** about who runs the libraries? They just want to eat. In N. Korea they can, believe it or not, although that's not the case in many countries in the world. Anyway, N. Korea is a very poor example of a socialist economy because it's a small, poor country that had a revolution when it was a backwards agrarian backwater barely out of the feudal age. If you can say that N. Korea proves socialism is terrible than you can also say that Haiti proves capitalism is inherently terrible.

As well as maintaining low inflation, making sure firms are competitive in the global markets.

Not sure what your argument is here...that because the Washington Consensus has two valid points it's a great document? Also, making sure firms are competitive in global markets is certtainly not a concern of the Washington Consensus, since it believes in removing all barriers to trade. That prevents you from growing new firms.

When have I said the market is perfectly allocative, self regulating and stable?

Well some of what you have said seems to fit under the assumption that markets are perfectly allocative, self-regulating and stable, whether or not you said it. If they aren't, than they are prone to crisis and need a strong state guiding it, whether it's in the form of being a large employer, owning important firms (especially in regards to natural resources), regulating the economy, providing social services, maintaining high barriers to trade, etc. etc. etc. I don't think many of these would be to your liking judging on what you've said here and in other threads.

Economic theories develop, they're modelled by what is seen. Just because economists say "the free market is the best solution, is in no way claiming it's a perfect system. There are flaws in every economic theory in truth. Just like there's flaws in capitalist systems, and flaws in the socialist ones. The general flaws with capitalist systems are the fact that it fails to provide equality, and social welfare suffers. This is fixable or can be mitigated through state intervention and implementation of the welfare state.

Economic theories develop based on Mathematics, NOT historical example. One only has to glance at an economic textbook to know that. Economists use math to back up what they are saying, which is why they are different from Economic Historians, who, uncoincidentally, are considered by many economists to be cranks. Hence why Riccardo's famous example of wine and wool was totally different from what happened in reality (Britain forcibly removing Portuguese tariffs on British cloth to benefit its textile industry and raising tariffs on Portuguese wine to benefit its local alcohol industries).

Economists do believe that the free-market is perfect, which is why most of them argue that in every circumstance, the solution is getting rid of big bad government. Haven't you read Friedman? His fundamental theory is that markets are inherently self-regulating and stable, that they allocate resources in the most efficient and effective method possible. Because of this, the solution to everything is having the state step out of the way. Getting rid of regulations. Cutting taxes. Cutting the size of the government. Read any chapter of any of his books and that much is clear. And in fact, Friedman doesn't even believe market failure is possible, which is why in his work on the Great Depression (the one Bernanke believes to be infallible), the crisis is simply a liquidity crisis caused by the government's (especially the federal reserve's) failure to provide credit...even though they took unprecedented measures to do so, he thinks they should have done more and the Great Depression never would have happened. How this guy became famous is beyond me.

As I've already said, a pure capitalist state would be a horrid place to live in for the vast majority, and show me a country right now that is purely capitalist, and is successful? Every major economy right now runs a capitalist economy with socialism policies added in to account for market failures, just the degree of socialism varies. I'm quite happy with the way the UK is run, and the rest of Europe. The US is probably too far towards capitalism for me. But implementing a system that leans towards more socialist policy? How do you fix the flaws with that system? When you figure it out, I'm sure many world leaders will be interested in your theory.

I'd say we're in agreement here in this paragraph other than the last 3 sentences. But that means we completely disagree with Friedman...a purely capitalist country is Friedman's paradise...have you read Free to Choose? This guy is even opposed to public education. As far as a system that leans toward socialism, many people think the Scandinavian countries lean more towards socialism than capitalism, so why not look to them? As far as 'fixing the flaws,' well, the USSR did that for about 25 years, but that threatened the wealthy capitalist nations of the world (if the nations they depended upon for raw materials and cheap labor revolted, it could be catastrophic) so we spent the entire post WWII era trying to prevent such an idea from spreading. There's a reason that every time a left-leaning government came about in Latin America, we somehow helped remove it.

Economic growth is unsustainable, so many country's were operating above their trend rates, it was clearly going to come to an end. It was ignoring traditional theories and political reasons that caused it to all go **** up. Also, republicans are idiots.
You can't say that the lack of productivity isn't a major issue though. I've already said many times that I believe an economy with inequality but that can produce at its maximum, will result in better welfare for all involved due to re-distribution of the wealth by the state and welfare systems.

Lack of productivity being a major issue? What do you mean here? The crisis was due to overproduction.

As you've stated many times before, an unequal economy producing more is better than an equal one that produces less. Depending on how the numbers line up, I disagree with you, which is why I guess I'm inherently more socialist and capitalist. Often times these gains are only enjoyed by a few wealthy people while everyone else suffers...I would rather have a system where everyone's needs are taken care of than one where there is dire poverty and great amounts of wealth coexisting, even if the "average" is poorer. I also don't think that possession of useless consumer goods leads to happiness. I think my life would be better without the internet and FM, but unfortunately, I'm addicted. But these ideals are very different from the fundamental ideals of capitalism, which hold that wealth creates happiness. There's too much psychological research proving otherwise, and even if there wasn't, it's something I know from personal experience.

When we've finally ruined our resources, it's going to take science not economics to fix that problem.

And probably a new economic system to implement this science...history happens in stages. We used to be hunter-gatherers, and that was great, but then we switched to agriculture. Eventually we switched to feudalism, and then to agrarian capitalism followed by industrial capitalism. Something will come next? When? What will it be? I don't know. But I have a feeling environmental issues will be the catalyst.

Socialism is evil blah blah blah blah blah Big government blah blah blah blah blah they're taking over blah blah blah blah they're stealing from us blah blah blah blah blah big government caused the crisis blah blah blah blah blah if we would have privatized it and gotten rid of those stinkin regulations, there would be no crisis blah blah blah blah blah blah blah blah blah blah we should just cut taxes and government programs and the crisis will be over blah blah blah blah blah blah blah blah blah blah blah blah blah blah Milton Friedman blah blah blah blah blah blah blah blah blah blah blah blah I'm definitely either American or British blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah