What the World Crisis Teaces Us about Capitalism

[dann]

Public meeting Thursday Sept. 3,
in San Fransisco, 522 Valencia @ 16th Street

Quote:

The public’s initial outrage at the machinations of investment banks has long since turned into the hope that these greedy speculators get back on their feet again and do business in a more stable fashion. Meanwhile, capitalists are rescuing their property and protecting their profits by passing on the damages to their employees, sacking them and exposing them to greater deprivation. And the victims – they accept that sacrifices will have to be made in order for “our” economy to get off the ground again.
What the World Economic Crisis Teaches Us about Capitalism

[Puppycow]

Whatever the failings of capitalism may be, compared to Stalinism, Maoism or Juche, it appears to be very humane.

[drkitten]

Originally Posted by Puppycow

Whatever the failings of capitalism may be, compared to Stalinism, Maoism or Juche, it appears to be very humane.

And lung cancer is much less deadly than pancreatic cancer.

That doesn't mean we should cease our quest for actual health.

[Skeptic]

Every time there is an economic downturn or depression those who offer another economic version -- fascists, communists, whomever -- claim it is the "end of capitalism" and that it is time to "look for an alternative". This has gone on for the last 100 years, at least, probably longer.

What such "searches for economic health" are worth can be easily seen by looking at the fate of all such alternative economic system "of the future" which should have replaced the "dying" capitalism long ago.

[Puppycow]

Originally Posted by drkitten

And lung cancer is much less deadly than pancreatic cancer.

That doesn't mean we should cease our quest for actual health.

If there's something better, I'm all ears. AFAIK, it's like democracy: the worst system except for all the others.

(BTW, I am for a social safety net, public goods, and all that. My first principle is utilitarianism.)

[dann]

Originally Posted by Skeptic

Every time there is an economic downturn or depression those who offer another economic version -- fascists, communists, whomever -- claim it is the "end of capitalism" and that it is time to "look for an alternative". This has gone on for the last 100 years, at least, probably longer.

It’s always easier to go with your gut instincts and presume that you’ve heard this before than to actually read something and discover that you’re wrong. However, I can’t find any claim of the ”end of capitalism”, which your alleged quotation seems to claim:

Originally Posted by dann

Public meeting Thursday Sept. 3,
in San Fransisco, 522 Valencia @ 16th Street
What the World Economic Crisis Teaches Us about Capitalism

Quote:

What such "searches for economic health" are worth can be easily seen by looking at the fate of all such alternative economic system "of the future" which should have replaced the "dying" capitalism long ago.

Nor do any of the articles claim that capitalism is ”dying”, so congratulations with your straw man. What the articles actually do is analyze the present crisis. You could say that the logical next step would be to put capitalism to sleep in order to spare its victims, but nowhere do the articles say or even imply that capitalism is ”dying” of its own accord.

[DC]

Quote:

What the World Crisis Teaces Us about Capitalism

Managers love freetrade when making profit when in crisis they suddenly turn into Socialists and demand the government, that otherwise should keep its nose out of profit making, to help them financing theyr horendous bonus payments.

? :P

[Toke]

The crisis just confirmed to me that capitalism must be kept on a short leash, as in mixed economy.
As for skeptic's straw, just ignore him.

[drkitten]

Originally Posted by Puppycow

If there's something better, I'm all ears. AFAIK, it's like democracy: the worst system except for all the others.

I think Scandinavian-style "socialism" is a better solution than Reagan-style unfettered free market capitalism. I.e. there's no reason not to raise taxes substantially to mitigate the effects of all the unemployment created by corporations cutting jobs,.... especially if they're paying multimillion dollar bonuses to their top executives at the same time.

This unfortunately seems to put me at odds with most of the US government, and almost all of the Republican party that typically controls half of that government.

[lomiller]

Originally Posted by drkitten

I think Scandinavian-style "socialism" is a better solution than Reagan-style unfettered free market capitalism.

They both seem to be on the opposite outer edges of what works. I’d probably feel more comfortable someplace in between. An even better approach is to look at each issue individually, ask where you are now and decide which, if any, direction to move.

The worst approach seems to be the people who always call for a move in one direction of the other regardless of the current situation. Even Reagan was willing to raise taxes when faced with large budget deficits. Not enough, perhaps, given the increases in large ticket military spending he favored, but he was actually more sensible then the Gingrich crowd that followed him.

[Marc39]

Bull markets inevitably lead to bear markets.

[Puppycow]

Originally Posted by drkitten

I think Scandinavian-style "socialism" is a better solution than Reagan-style unfettered free market capitalism. I.e. there's no reason not to raise taxes substantially to mitigate the effects of all the unemployment created by corporations cutting jobs,.... especially if they're paying multimillion dollar bonuses to their top executives at the same time.

This unfortunately seems to put me at odds with most of the US government, and almost all of the Republican party that typically controls half of that government.

I think that I favor "Scandinavian-style socialism" too, at least as I imagine it to be. Maybe we are just arguing over semantics. I consider the "Scandinavian" system to be a kind of capitalism, with a social safety net and public goods.

What is the distinguishing feature of "socialism" as you see it? Is the "Scandinavian" system closer to capitalism or Marxism? The OP and the link in the OP seems to be Marxist-based. Which governments have been officially based on Marxism? Have the Scandanavian countries been more closely aligned with the Marxist countries or the Western countries?

[drkitten]

Originally Posted by Puppycow

I think that I favor "Scandinavian-style socialism" too, at least as I imagine it to be. Maybe we are just arguing over semantics. I consider the "Scandinavian" system to be a kind of capitalism, with a social safety net and public goods.

What is the distinguishing feature of "socialism" as you see it? Is the "Scandinavian" system closer to capitalism or Marxism? The OP and the link in the OP seems to be Marxist-based. Which governments have been officially based on Marxism? Have the Scandanavian countries been more closely aligned with the Marxist countries or the Western countries?

Well, this is a hard question, because "Marxism" bears little relationship to "Leninism" and even less to "Stalinism." I'm hardly the first person to point this out; Trotsky was drummed out of the Party for it. (In particular, Trotsky differed with Lenin over what was called the "Two Stage Theory," which is the idea, espoused by Lenin, that underdeveloped countries like Russia could not transition to the true communist utopia directly, but instead had to pass through a stage of technological development.... which hardened into the command economy in an effort to achieve maximum technological progress.)

Trotsky pointed out, correctly, that this intermediate command economy stage looked almost nothing like "Marxism."

So my first question to you is what are you comparing Scandinavia to? Scandinavia has more or less always been an affluent and technologically advanced society, so "Marxist" theory suggests that it should have an easier time redistributing wealth to the benefit of the populace as a whole while maintaining a reasonably healthy and productive economy. This seems to be true. If anything, I would suggest that Scandinavia is actually a pretty good demonstration of "Marxism" (and specifically Trotskyist Marxism) in action, but that what most Americans understand as "Marxism" is the failed Stalinist-Maoist experiment (which is actually closer to Fascism, despite the well-publicized differences).

And I suspect that the Marxists cited in the OP are closer to Trotskyists as well, simply because, well, no one supports Stalinism except for the old FSU apparatchniks, and (oddly enough), the proto-fascists.

[Puppycow]

From the link in the OP:

Quote:

The answers to these questions suggest that the capitalist system doesn’t deserve to get back on its feet, but to be abolished. The domination of capital reveals its absurdity and brutality all the more in times of economic crisis, when the expansion of capital – because it doesn’t succeed – strangles the entire material life-process of society. We invite you to come and find out.

Before we "abolish" the "capitalist system" I want to know exactly what it will be replaced with. Assuming that the answer is Marxism, show me a Marxist society that is more humane and gives more benefits to its inhabitants.

(ETA: Wrote this post before seeing the post #13 above)

[drkitten]

Originally Posted by Puppycow

Before we "abolish" the "capitalist system" I want to know exactly what it will be replaced with. Assuming that the answer is Marxism, show me a Marxist society that is more humane and gives more benefits to its inhabitants.

(ETA: Wrote this post before seeing the post #13 above)

Does post #13 answer your question fully enough?

[drkitten]

Originally Posted by Puppycow

Before we "abolish" the "capitalist system" I want to know exactly what it will be replaced with. Assuming that the answer is Marxism, show me a Marxist society that is more humane and gives more benefits to its inhabitants.

Further to above. I submit that Scandinavia can provide us with a good example of what such a Marxist society can look like.

In particular, I'd like to remind you of Marx's dictum "From each according to his ability, to each according to his needs." This is often misrepresented as being "to each according to his wants"; the idea that I can't have anything better than my neighbor. A better understanding is that I can't have have luxuries until my neighbor has had his necessities taken care of. In theory, in a Marxist dictatorship, no one should starve -- but that doesn't mean that everyone has to eat the same thing. That's a Leninist/Stalinist issue, because under Stalin, there wasn't enough food to go around, in part because the economy was so backwards. That's really not a problem in the United States today; we're more than capable of providing an adequate diet to everyone in the country. Indeed, since the green revolution, the planet as a whole has been capable of providing an adequate diet to the entire population -- and certainly Sweden doesn't seem to be having problems with mass starvation and food riots.

In fact, the infant mortality rate for Sweden is less than half that of the USA, due to the fact that Sweden does a better job of providing medical care and food to everyone "according to their needs."

Of course, once you've satisfied everyone's "needs," then there's nothing in theory to prevent people from doing as they like within the rather broad confines of state policy. Again, the Stalinist idea of forced employment ignores the fact that in a technologically advanced society, it actually takes very little labor to keep everyone fed, clothed, and housed. The problem isn't to get people to do the work,... a more serious problem is that there's not enough work to go around, which is why we have "socialist" issues like maximum work weeks and mandatory vacations, just to make sure that anyone who wants a job can have one. That's a far cry from the mass conscripts of Stalinist corvee labor....

So, yeah, I'm actually pretty comfortable looking at Sweden and saying "that's what Marxism is supposed to look like; that's what Marx had in mind."

[Puppycow]

Originally Posted by drkitten

Does post #13 answer your question fully enough?

Sort of. So the successful examples of "Marxism" are the Scandinavian countries? But, correct me if I'm wrong, but do any of the Scandinavian countries purport to be based on Marxism? It seem that the people who claim to be Marxists tend toward the Lenin-Castro-Mao-Kim models in practice.

Quote:

In theory, in a Marxist dictatorship, no one should starve -- but that doesn't mean that everyone has to eat the same thing.

The Scandinavian countries are not dictatorships, are they. What was Marx's position on democracy and private property? What about freedom of speech and dissent?

[Piggy]

Properly regulated capitalism is the most successful economic system in the world.

That said, it has enormous blind spots.

Bubbles are one.

The tragedy of the commons is another.

But other systems are also prone to those same glitches.

I think the primary problem that faces us now, and it may be an existential one, is more psychological than anything.

Human beings are prone to trade their tomorrows for today, as the rock 'n' roll cliche goes.

We're also bad to cut off our noses to spite our faces.

It's difficult to see how we're going to avoid ecological disaster if we cannot come to accept the situation that we're in and all agree to give up something in order to save our collective bacon.

But we seem to be stuck in a cycle of "Joshie got more juice than I did!"

Could be the death of us all, in the end.

[MattusMaximus]

Originally Posted by Dictator Cheney

Managers love freetrade when making profit when in crisis they suddenly turn into Socialists and demand the government, that otherwise should keep its nose out of profit making, to help them financing theyr horendous bonus payments.

? :P

Ironic, isn't it?

That said, I agree with the earlier comment: capitalism is like democracy - it's not perfect, but it's the best thing we have so far.

[Puppycow]

Originally Posted by MattusMaximus

Ironic, isn't it?

That said, I agree with the earlier comment: capitalism is like democracy - it's not perfect, but it's the best thing we have so far.

I would favor allowing some relatively small areas of land to be set aside for social experiments with willing participants. Give the Marxists and the Libertarians each an unpopulated area of land in the west of a few hundred square miles and let them test out their theories to see if they work. As long as they aren't practicing slavery or sacrificing children or doing anything dangerous to the rest of us.

Maybe one of those experiments will come up with a better system.

[Toke]

Originally Posted by Puppycow

Sort of. So the successful examples of "Marxism" are the Scandinavian countries? But, correct me if I'm wrong, but do any of the Scandinavian countries purport to be based on Marxism? It seem that the people who claim to be Marxists tend toward the Lenin-Castro-Mao-Kim models in practice.

No, we are not claiming to be Marxists, and the Danish Communist Party got so low on votes that they rolled up with other left parties into the Unified List.
The reason for the confusion may be our app. 50% income tax and world record in taxasion pressure. (Denmark and Norway are old members of NATO)

Quote:

The Scandinavian countries are not dictatorships, are they. What was Marx's position on democracy and private property? What about freedom of speech and dissent?

No, not Marxist or dictatorships.
For all I know Marx were very much in favor of democracy and at least some private property. It have been awhile since I read the Manifest. Drkitten could be right and Marx would have liked the scandinavian countries.

[DC]

I do belive Switzerland can also be watched as partial Marxist.

Not only because we have "From each according to his ability, to each according to his needs." in our constitution also because of many social security networks we have in place and a large package of rights tht others in the US for example would call outright Socialistic.

btw a very good post nr 13.

[Francesca R]

Originally Posted by Piggy

Properly regulated capitalism is the most successful economic system in the world.

That said, it has enormous blind spots.

Bubbles are one.

The tragedy of the commons is another.

Those are not blind spots of "properly regulated capitalism"--since it is quite possible to set up a central authority to regulate financial leverage, and to provide public goods.

They only qualify as "blind spots" in the realm of human nature (greed, mistakes, knowledge gaps, biases). Neither capitalism nor any other socio-economic system can control for those things themselves because they exist outside the -ism. It can mitigate or protect against the adverse effects to some extent.

Quote:

I think the primary problem that faces us now, and it may be an existential one, is more psychological than anything.

Maybe you're saying the same thing here.

[Francesca R]

Originally Posted by Puppycow

Sort of. So the successful examples of "Marxism" are the Scandinavian countries? But, correct me if I'm wrong, but do any of the Scandinavian countries purport to be based on Marxism?

No, Scandinavian countries most certainly don't purport to be "Marxist".

Originally Posted by Puppycow

I consider the "Scandinavian" system to be a kind of capitalism, with a social safety net and public goods.

That's more like it yes. But capitalism is supposed to have public goods and some degree of redistributional equity.

Capitalism with redistributional equity is covered by the two theorems of welfare economics. Redistribution is further warranted (in capitalist theory) by the absence of anything like complete insurance/hedging markets that are assumed in the Arrow-Debreu model. Progressive tax codes and social security systems are thus mainfestations of governments selecting a certain level of redistributional equity, believing it to be correct (optimal). Scandinavian states tend to select a higher level than other countries, believing that a higher level is more correct.

Public goods provision is in no sense contrary to capitalism. Capitalism much beyond spot markets (self-enforcing transactions) can not exist without some public goods (EG law enforcement, contract sanctity, court impartiality, property protection). Not all public goods need to be supplied and not all public goods are supplied. And some goods are far from public but can be labelled as such by private interests in order to get them for free/less. The latter is consistent with corruption. There is frequent confusion between redistributional welfare and public goods.

None of this turns the political/economic systems in Scandinavia into Marxism nor does it give Marxism any particular claim on legitimacy.

[Puppycow]

So basically we all agree that Sweden is good and North Korea is bad, and we fight over semantics and labels.

Can't we all just get along?

(Maybe the guy in the OP wants something more radical than Sweden.)

[Chaos]

Originally Posted by Puppycow

As long as they aren't practicing slavery or sacrificing children or doing anything dangerous to the rest of us.

Why do I get the idea that even these restrictions would be considered undesireable government intervention by the participants?

[dann]

Originally Posted by drkitten

So, yeah, I'm actually pretty comfortable looking at Sweden and saying "that's what Marxism is supposed to look like; that's what Marx had in mind."

Then I'd recommend that you read Das Kapital, which he wrote 20 years after the manifesto of his youth when he had had the time to do serious research of capitalism. It's a lot longer than the Manifesto, but it's worthwhile.

Originally Posted by Toke

For all I know Marx were very much in favor of democracy and at least some private property. It have been awhile since I read the Manifest. Drkitten could be right and Marx would have liked the scandinavian countries.

I don't know where you got your knowledge, Toke. But to you, too, I'd recommend that you don't base your opinion on the Manifesto. Kapitalen can be found in its entirety online in many languages. I'm pretty sure that Marx wouldn't have liked the Scandinavian countries - although he and Engels commented favourably on the Danish andelsbevægelse. (On a different occasion they scolded the 'socialists of the peasant country', I think.)

For an understanding of the present World Crisis - and what it teaches us about capitalism - as explained by a bunch of ruthless Marxists; see the OP. (Unfortunately I cannot be in San Fran on Sept. 3.)

[dann]

Originally Posted by Chaos

Why do I get the idea that even these restrictions would be considered undesireable government intervention by the participants?

I have no idea why you do. Do you?

[Piggy]

Originally Posted by Francesca R

Those are not blind spots of "properly regulated capitalism"--since it is quite possible to set up a central authority to regulate financial leverage, and to provide public goods.

I don't believe it is. There's reason to believe that bubbles, for instance, cannot be regulated out of the system. Will see if I can dig up the study.

[Francesca R]

Actually I more or less agree. Greed and fear and "correlated mistakes" can't be regulated against.

However I think the potential for their manifestation to cause undesirable social externalities probably can be. Not that it was. But in short the thinking behind this is that excessive leverage is a necessary (not sufficient) ingredient for the "public bad" effects of bubble&crash. And you can enforce against excessive leverage, once you know what is excessive*.

*There is--IMO--an "optimal" level of leverage which increases social welfare, but that's another story.

[drkitten]

Originally Posted by Puppycow

Sort of. So the successful examples of "Marxism" are the Scandinavian countries? But, correct me if I'm wrong, but do any of the Scandinavian countries purport to be based on Marxism?

No, but they do explicitly claim to be "socialist" and the actual "communists" are a moderately large power block.

Quote:

The Scandinavian countries are not dictatorships, are they.

Of course not.

Quote:

What was Marx's position on democracy and private property? What about freedom of speech and dissent?

Marx favored democracy but felt it did not go far enough (it could provide only formal equality, but not actual equality; i.e. as long as economic injustice persisted, the rich could manipulate the democratic system to their private benefit (which seems to be true; look at successful lobbyists).

He had a similar regard for human rights; they didn't go far enough and were primarily used by the rich to serve and protect their own egoistic interests against the poor. Rights are the rights of people who have property and want to keep it. Which, again, we've seen in action -- read any of the posts by the libertarians about how their "human rights" are being violated when the government tells them that they must provide fire escapes in their factories.

[Toke]

Originally Posted by drkitten

No, but they do explicitly claim to be "socialist" and the actual "communists" are a moderately large power block.

The block you are talking about must be the "Socialist Peoples Party" and the "Social Democrats".
We have no trouble telling them from communists.

[Darth Rotor]

Originally Posted by dann

Then I'd recommend that you read Das Kapital, which he wrote 20 years after the manifesto of his youth when he had had the time to do serious research of capitalism. It's a lot longer than the Manifesto, but it's worthwhile.



I don't know where you got your knowledge, Toke. But to you, too, I'd recommend that you don't base your opinion on the Manifesto. Kapitalen can be found in its entirety online in many languages. I'm pretty sure that Marx wouldn't have liked the Scandinavian countries - although he and Engels commented favourably on the Danish andelsbevægelse. (On a different occasion they scolded the 'socialists of the peasant country', I think.)

For an understanding of the present World Crisis - and what it teaches us about capitalism - as explained by a bunch of ruthless Marxists; see the OP. (Unfortunately I cannot be in San Fran on Sept. 3.)

Since Capitalism -- your favorite bogey man -- is exercised in varied forms the world over, with more and less regulation and restriction depending on where you are, the core of your argument is already on a foundation of sand. The continuum between a pure capitalist society passing toward a command only economy and statist Socialism has gradations of control.

One of the core errors Marx made is a presumption that labor is competent at long term thinking. Time and again that has been shown false, in practice. Labor thinks with its belly. While that is a good counter balance to those who think with their ledgers, it does not make for a system that can self correct.

The financial sector, on the other hand, has been long overdue for reform since about the mid 80's, as far as I am concerned, but it wasn't reformed, globally, since too many people were enjoying the ride.

This isn't a new happening in human history. To piggy back slightly on what Francesca R points out, the "beyond the system" behavioral factors are typically exercises in freedom and choice, for both better and worse.

That you are of the sort who wish to control other people's choices is rather obvious from your idealogue's soap box.

No sale.

[Chaos]

Originally Posted by dann

I have no idea why you do. Do you?

I´ve had some experience with libertarians. So, yes, I do think so.

[Beerina]

Originally Posted by drkitten

And lung cancer is much less deadly than pancreatic cancer.

That doesn't mean we should cease our quest for actual health.

A better analogy would be capitalism is like...capitalism, with people getting sick from too many cheap cheeseburgers and all-you-can-eat Chinese buffets.

But communism definitely is akin to a cancer. Neither lets you be free from their influence.

[Dum_Spero_Spiro]

Originally Posted by Piggy

I don't believe it is. There's reason to believe that bubbles, for instance, cannot be regulated out of the system. Will see if I can dig up the study.

bubbles are the equivalent of pump and dump. With stagnant wages the
system needs the hoopla bubbles create to keep the illusion going
among the plebes that they too can make it; if not this bubble, then the
next fer sure they will.
Except that the income distribution for most of us is exponential and its
inflation-adjusted "temperature" constant in time.

[ravdin]

To paraphrase Winston Churchill: free market capitalism is the worst of all economic systems, except all the others that have been tried.

[DC]

Originally Posted by ravdin

To paraphrase Winston Churchill: free market capitalism is the worst of all economic systems, except all the others that have been tried.

The Wörgl Experiment has beaten Free Market capitalism

[Puppycow]

Originally Posted by dann

I'm pretty sure that Marx wouldn't have liked the Scandinavian countries

Well, there it is. What country, if any, would he have liked? Cuba?

[Toke]

Originally Posted by ravdin

To paraphrase Winston Churchill: free market capitalism is the worst of all economic systems, except all the others that have been tried.

You do realise that capitalism is a range from An-Cap to scandinavian models. It is just as wide a definition as socialism.