What the World Crisis Teaces Us about Capitalism

[Ragnarok]

Capitalism is the ideal system for the elite to develop the technology necessary to increase their chances of survival if life on this planet is ever threatened.

[Puppycow]

Originally Posted by Dictator Cheney

The Wörgl Experiment has beaten Free Market capitalism

Hmm.

Wörgl

Quote:

The Wörgl Experiment

Worgl was the site of the "Miracle of Worgl" during the Great Depression. It was started on the 31st of July 1932 with the issuing of "Certified Compensation Bills", a form of currency commonly known as Stamp Scrip, or Freigeld. This was an application of the monetary theories of the economist Silvio Gesell by the town's then mayor, Michael Unterguggenberger.

The experiment resulted in a growth in employment and meant that local government projects such as new houses, a reservoir , a ski jump and a bridge could all be completed, seeming to defy the depression in the rest of the country. Inflation and deflation are also reputed to have been non-existent for the duration of the experiment.[2]

Despite attracting great interest at the time, including from French Premier Edouard Daladier and the economist Irving Fisher[3], the "experiment" was terminated by the Austrian National Bank on the 1st September 1933 on the basis of the "Certified Compensation Bills" being a threat to the Bank's monopoly on printing money.[4][5][6][7]

In 2006 milestones were placed, beginning from the railroad station through the downtown, to show this history, on top of questioning the authenticity of never-ending exponential growth triggered by the compound interest.

I don't know that one can draw any firm conclusions based on a 1 year experiment with alternative currency in a small village economy. What exactly distinguished this currency from others?

ETA: More details on the Wörgl Experiment

[DC]

Originally Posted by Puppycow

Hmm.

Wörgl



I don't know that one can draw any firm conclusions based on a 1 year experiment with alternative currency in a small village economy. What exactly distinguished this currency from others?

in short, the money was wothless if you didnt spend it. so it stays in circulation, there are special bonds for those wanting to put money on the side and save it.
but money itself lost its value.

http://en.wikipedia.org/wiki/Freigeld

sure its a very short experiment but considering how others did perform in this time, it was a huge succes. and should be repeated.

[ravdin]

Originally Posted by Dictator Cheney

in short, the money was wothless if you didnt spend it. so it stays in circulation, there are special bonds for those wanting to put money on the side and save it.
but money itself lost its value.

http://en.wikipedia.org/wiki/Freigeld

sure its a very short experiment but considering how others did perform in this time, it was a huge succes. and should be repeated.

I'm completely in favor of trying this experiment again. How would you go about it?

[drkitten]

Originally Posted by Ragnarok

Capitalism is the ideal system for the elite to develop the technology necessary to increase their chances of survival if life on this planet is ever threatened.

Is it?

"Capitalism" actually isn't that good at blue-sky research; the Golden Age of US technical development (say 1950-1970, the Sputnik generation) was actually mostly government-funded. The major players in technological development that weren't officially government-funded including mostly government contractors (e.g. Lockheed, Boeing) and/or regulated monopolies (AT&T) with a government-guaranteed source of funding.

To this day, levels of government support of R&D are among the better predictors of long-term economic growth as well as improvements in quality of living, precisely because government-sponsored research projects can typically afford to take the longer view and aren't compelled to meet short-term return-on-equity targets.

Now, I suppose you could say that only under "capitalism" is it possible to create enough wealth that the government can afford to extract enough in taxes to subsidize research and to educate the bright but poor scholars. But since a lot of the self-described "capitalists" here are vehemently opposed to both the extraction process and the educational subsidies (in many cases, decrying them as "socialism," i.e. "not-capitalism"), I'm not sure how much we can credit "capitalism" with technological progress.

[drkitten]

Originally Posted by Dictator Cheney

in short, the money was wothless if you didnt spend it. so it stays in circulation, there are special bonds for those wanting to put money on the side and save it.
but money itself lost its value.

It's not clear that demurrage was the key feature responsible for the success of the Woergl experiment.

[DC]

Originally Posted by ravdin

I'm completely in favor of trying this experiment again. How would you go about it?

sea steading or how was that called? but i dont like fish

[ServiceSoon]

Originally Posted by Puppycow

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.

Winner winner chicken dinner. IMHO the US was the closest we every got to an-cap, but we gradually got to where we are now.

[Piggy]

Originally Posted by 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.

Yeah, I'd agree with you there.

[Piggy]

Originally Posted by Dum_Spero_Spiro

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.

Pump and dump is a more specific, and always intentional and top-down orchestrated, type of mini-bubble.

More widespread, non-orchestrated bubbles appear to be inherent to the free market itself.

The most interesting result from the latest study I saw was that participants in a game market could learn to recognize bubbles and avoid them when repeating the game. However, when the parameters changed (say, the size of the shares and the trade limits) they became "blind" to the bubble again, even when the absolute risk (win/loss potential) and total volume of shares were identical.

[drkitten]

Originally Posted by ServiceSoon

Winner winner chicken dinner. IMHO the US was the closest we every got to an-cap, but we gradually got to where we are now.

.... when it was discovered empirically that AnCap didn't work.

And, if you look at the history, we made that discovery very early on. You want to see the AnCap version of the United States, look at the Articles of Confederation, which were ratified in 1781 and lasted less than ten years before people discovered that they needed and wanted a stronger central executive.

Hence the more modern constitution (1787). Because even the founders realized very quickly that AnCap doesn't work.

[Darth Rotor]

Originally Posted by Toke

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

You beat me to the punch.

[Dum_Spero_Spiro]

Originally Posted by Piggy

The most interesting result from the latest study I saw was that participants in a game market could learn to recognize bubbles and avoid them when repeating the game.

real market participants do not have the benefit of such repetition. Even if
they did the bubble-creating mechanisms are never the same in the real
world.

And let's not get into the quality of information market participants are
being offered on average.

I've been in the market for 20 years now. The best I can hope for is
to leave to my kid the nominal value of the money I put in and will
put in by the time I die. I doubt it will be possible for the average joe/jane
to retire. The banksters saw to that.

[Piggy]

Originally Posted by Dum_Spero_Spiro

real market participants do not have the benefit of such repetition. Even if
they did the bubble-creating mechanisms are never the same in the real
world.

You snipped the interesting part, which is that a mere shift in superficial parameters, but no change in overall risk or potential gain, led to bubble blindness again.

Originally Posted by Dum_Spero_Spiro

And let's not get into the quality of information market participants are being offered on average.

I've been in the market for 20 years now. The best I can hope for is
to leave to my kid the nominal value of the money I put in and will
put in by the time I die. I doubt it will be possible for the average joe/jane
to retire. The banksters saw to that.

It wasn't just the banksters. There's lots of blame to go around. And other kinds of economies got whollopped, as well.

[Dum_Spero_Spiro]

Originally Posted by Piggy

You snipped the interesting part, which is that a mere shift in superficial parameters, but no change in overall risk or potential gain, led to bubble blindness again.

sorry, not intentional. I guess that part jives with other studies that show
individuals are the worst possible investors. The banksters are smart,
kill unions (anti "free-market" hence unamerican), sell job insecurity
(downsize the corporation, upsize the individual), destroy traditional
bank accounts, etc., and then offer salvation a.k.a. Wall Street. And the
rest is history with the banksters laughing their transaction fees
all the way to their Swiss bank. We as a people capitalized the crooks
and what do we get back but ultimate uncertainty for the future
Some call it capitalism even though it's essentially anti-life as far as
the General Welfare is concerned.

Originally Posted by Piggy

It wasn't just the banksters. There's lots of blame to go around. And other kinds of economies got whollopped, as well.

sure, but I'll bet these other Western economies haven't offered their
participants stagnant real wages for the last 25 years and forward. Our
economy has.

[Piggy]

Originally Posted by Dum_Spero_Spiro

sure, but I'll bet these other Western economies haven't offered their
participants stagnant real wages for the last 25 years and forward. Our
economy has.

That's not the fault of capitalism, but of government.

[Puppycow]

Originally Posted by Dictator Cheney

in short, the money was wothless if you didnt spend it. so it stays in circulation, there are special bonds for those wanting to put money on the side and save it.
but money itself lost its value.

http://en.wikipedia.org/wiki/Freigeld

sure its a very short experiment but considering how others did perform in this time, it was a huge succes. and should be repeated.

Doesn't seem to be too much different from other kinds of currency, except that inflation (real inflation as opposed to nominal) is guaranteed.

If there is inflation and you don't spend your dollars, yen, francs or euros, they will be worth less (in real terms) in the future. If you want to protect the value of your currency, you can invest in bonds with positive interest rates, even inflation-indexed bonds if you prefer.

Originally Posted by ravdin

I'm completely in favor of trying this experiment again. How would you go about it?

Take the initiative and create your own local currency like this one:
http://en.wikipedia.org/wiki/Ithaca_hours

But, if the money loses its value faster than the dollar, who would want it? This experiment worked during The Great Depression and in the wake of an era of hyperinflation in Germany, relative to an economy in depression. No growth but no contraction is good compared to a contraction (depression) but less desirable than growth.

[Toke]

Originally Posted by Piggy

That's not the fault of capitalism, but of government.

What if government is bought by the industry, doesn't that reflect on the economic system?

[DC]

Originally Posted by Puppycow

Doesn't seem to be too much different from other kinds of currency, except that inflation (real inflation as opposed to nominal) is guaranteed.

If there is inflation and you don't spend your dollars, yen, francs or euros, they will be worth less (in real terms) in the future. If you want to protect the value of your currency, you can invest in bonds with positive interest rates, even inflation-indexed bonds if you prefer.



Take the initiative and create your own local currency like this one:
http://en.wikipedia.org/wiki/Ithaca_hours

But, if the money loses its value faster than the dollar, who would want it? This experiment worked during The Great Depression and in the wake of an era of hyperinflation in Germany, relative to an economy in depression. No growth but no contraction is good compared to a contraction (depression) but less desirable than growth.

yes we have inflation making the money loose worht, but normally that doesnt go that quickly like with Freigeld (and you, as a community can set the speed of it loosing worth) normaly you dont have a set date on wich your money will loose value.

and indeed it was during the great depression and also it was a totaly diffrent time.

I dont claim this system is the solution to anything.

i just would like to see more research and experiments into economic and political systems, so we can gain knowledge from other way of life and maybe improve our system, or even switch to a better working one.

there is more than just Smith and Marx, we should listen to all of them and cherry pick what we think is good and might work

[Francesca R]

Originally Posted by Puppycow

Doesn't seem to be too much different from other kinds of currency, except that inflation (real inflation as opposed to nominal) is guaranteed.

What's "real inflation"??

[Francesca R]

Originally Posted by Toke

What if government is bought by the industry, doesn't that reflect on the economic system?

It's bad/failed government. Government is not installed to be bought by non-citizens. If it was then the electoral system would be One Krone One Vote and you would need a certificate of incorporation rather than an ID card.

[UNLoVedRebel]

Originally Posted by Dictator Cheney

i just would like to see more research and experiments into economic and political systems, so we can gain knowledge from other way of life and maybe improve our system, or even switch to a better working one.

This is 2009. We know mixed capitalism is the only way to go. How much regulation and where is the only question.

[Puppycow]

Originally Posted by Francesca R

What's "real inflation"??

With Freigeld, the effect is the same as that of inflation. If the price of eggs stays the same but your Freigeld depreciates by 1% per month, it is like inflation.

From my link above:

Quote:

He issued numbered 'labour certificates' to the value of 32,000 schillings, in denominations of 1, 5 and 10 schillings, respectively. These became valid only after being stamped at the town hall, and depreciated monthly by 1 per cent of their nominal value.

This is effectively the same as a 1% monthly rate of inflation, is it not?

[Puppycow]

Originally Posted by Puppycow

But, if the money loses its value faster than the dollar, who would want it?

Also, who wants to have to go to the town hall every month to get new stamps for your money? That costs you time, and time is money.

[DC]

Originally Posted by UNLoVedRebel

This is 2009. We know mixed capitalism is the only way to go. How much regulation and where is the only question.

who is we?
its 2009 and we know sh...

[Francesca R]

Originally Posted by Puppycow

the effect is the same as that of inflation. [ . . . ] it is like inflation.

Yes. There's only one kind of inflation. "Real" typically means excluding or after inflation.

[DC]

Originally Posted by Puppycow

Also, who wants to have to go to the town hall every month to get new stamps for your money? That costs you time, and time is money.

i think nowadays we wouldnt need to go to the townhall to get stamps, we have computers nowadays, which could simplyfy the system.

it was usual for swiss to vote by hand at the townhall, meanwhile most dont go to any voting in the townhall, we can do that by postalservice nowadays.

[Francesca R]

Originally Posted by Dictator Cheney

who is we?

I'm all for Dictator C setting up experiments like this provided the voluntary backing for it can be secured. I don't wanna pay but I might watch the documentary

[DC]

Originally Posted by Francesca R

I'm all for Dictator C setting up experiments like this provided the voluntary backing for it can be secured. I don't wanna pay but I might watch the documentary

what was the word you used a few days ago, Parasite? na just kidding.

i hope others more knowledgeble people set up experiments

[Toke]

Originally Posted by Francesca R

It's bad/failed government. Government is not installed to be bought by non-citizens. If it was then the electoral system would be One Krone One Vote and you would need a certificate of incorporation rather than an ID card.

This is getting circular.
If companies are big enough to buy/rent the government, it is the fault of government for setting up a system where it is possible, or is the the nature of the economic system at fault.

[Ragnarok]

Originally Posted by drkitten

Is it?

Can you name a better one?

As to the rest of your post, Capitalism and consumerism create the wealth and the wealth creates the technology. You can have all the ideas in the world, but if you haven't got the cash to spend on them...

[Puppycow]

Originally Posted by Francesca R

Yes. There's only one kind of inflation. "Real" typically means excluding or after inflation.

Maybe I should have said "effective inflation"?

Please try to grok my true intentions instead of nitpicking my imperfect expressions.

[DC]

Originally Posted by Puppycow

Maybe I should have said "effective inflation"?

Please try to grok my true intentions instead of nitpicking my imperfect expressions.

but i see it as something diffrent.
the man and woman that are not financial craks have not much oversight on infaltion and it is not based on a clear process and a clear date, from now on its worth less. while with Freigeld you see the stamp and know what it is worth now. and its not the value of the unit that droped its more like you lost a few units for not spending it or investing it.

well i hope its understandable what is ment, i have huge troubles expresing me cirrectly on this topic (yes i know like in other topics )

[dann]

Originally Posted by UNLoVedRebel

This is 2009. We know mixed capitalism is the only way to go. How much regulation and where is the only question.

The only way to go? Sure! "Close to one in eight Americans struggled with food insecurity even before the downturn in economy."

Quote:

Effect: 50 million people are going to die of hunger, the newspapers write, because the speculation of some 100 investment bankers failed. In Germany, the same newspapers say, there will be 5 million more who will be unemployed this year, in the EU another 15 million. This year industrial production in Germany will shrink by 15%, exports by 25%, GNP by 5%; some states are going to fail, Iceland and Hungary have already done so, the Baltic States may follow suit.
What the World Economic Crisis Teaches about Capitalism

[dann]

Originally Posted by Ragnarok

You can have all the ideas in the world, but if you haven't got the cash to spend on them...

That's the true beauty of capitalism for you: Your access to cash decides if you eat or starve. If you don't have it, you don't eat.
That is the way that capitalism excludes people from the means of subsistence: On the one side a bunch of hungry people without money, on the other side an abundance of food that cannot be sold.
World Hunger.
http://forums.randi.org/showthread.p...38#post4496438
http://forums.randi.org/showthread.p...93#post4503293
http://forums.randi.org/showthread.p...04#post4503904
http://forums.randi.org/showthread.p...60#post4505660
http://forums.randi.org/showthread.p...50#post4507450
http://forums.randi.org/showthread.p...61#post4507761
http://forums.randi.org/showthread.p...12#post4509612
http://forums.randi.org/showthread.p...29#post4510629
http://forums.randi.org/showthread.p...92#post4510692
http://forums.randi.org/showthread.p...27#post4515827
http://forums.randi.org/showthread.p...76#post4515876
http://forums.randi.org/showthread.p...38#post4829338

[drkitten]

Originally Posted by Ragnarok

Can you name a better one?

As to the rest of your post, Capitalism and consumerism create the wealth and the wealth creates the technology.

That's half right. Wealth doesn't create anything. History and literature are both filled with misers who had tremendous amounts of wealth and didn't do anything with it. Alternatively, history and literature are both filled with spendthrifts and wastrels who had tremendous amounts of wealth and squandered it without any meaningful return.

One of the key aspects of government is that it's much better at converting wealth into ideas than the unregulated free market is (because it can afford to take a longer-term view).

Quote:

You can have all the ideas in the world, but if you haven't got the cash to spend on them...

Or, conversely, you can have all the money in the world, and not have a clue what to do with it, or not be willing to spend it on (risky) technological development.

[Piggy]

Originally Posted by Toke

What if government is bought by the industry, doesn't that reflect on the economic system?

I don't think so, since you can have undue influence by industry under command economies, too.

[drkitten]

Originally Posted by Piggy

I don't think so, since you can have undue influence by industry under command economies, too.

Indeed, that's often considered to be one of the defining aspects of fascism (see pt. 9).

[Ragnarok]

Originally Posted by drkitten

One of the key aspects of government is that it's much better at converting wealth into ideas than the unregulated free market is (because it can afford to take a longer-term view).

If only they could do that, instead of stumbling through leader after leader.

[Francesca R]

Originally Posted by Toke

If companies are big enough to buy/rent the government, it is the fault of government for setting up a system where it is possible, or is the the nature of the economic system at fault.

Do you think governments are poor little victims?