Not only is the capitalist system not responsible for the latest economic crisis, but all attempts to severely hamstring or regulate the market economy out of existence only succeeds in undermining the greatest engine of economic progress and prosperity known to mankind.
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Preaching to choir… of course… Duh. Cartoon Homer could figure it out after a coupla beers. Why can’t Obama?
Hopefully Laird will bear with me:
One factor in these misconceptions of “capitalism” including views held by those more erudite than I (Schumpeter, e.g.) is that “Capitalism is a system or something similar.
What has been labeled as “Capitalism” in its several manifestations over many, many years is actually a Resultant Condition ; resulting from particular relationships conducted in particular circumstances which result in the creation of surpluses that are accumulated (Capital) for future uses (production, consumption, physical and technological improvements, etc.)
Marx focused on the use of accumulated capital for added production.
Those resulting conditions have been Feudal, Mercantile, Industrial, Financial and our current Managerial “Capitalisms;” each resulting from their particular relationships and circumstances of their time. They have not all been the identical; though each form accumulated surpluses that carried forward.
The “issues” that arise with the condition that is “Capitalism” are those from the qualifications of those relationships and circumstances.
The interferences with those relationships or those circumstances, whether through some sovereign, some consolidated interests, a State – or
natural event, can alter the condition.
That is what is transpiring in our time. The surpluses are not being redeployed (as has been past experience)Regulations disrupt the relationships and constrain the circumstances.
The “Capitalism” we have is Managed by private and State (political & administrative) managers who are contending for dominance amongst them.
Oops I left out Commercial Capitalism which preceded the Industrial.
Obama probably does understand that economic prosperity and wealth flow from “capitalism,” that is, the free-market system. That is not to say he understands the system (after all Chicago and Austria are still at odds over it, along with the lesser lights) or why the results are prosperity and wealth.
But what keeps being overlooked is that O and his kind don’t hold prosperity and wealth in all that much esteem (except for themselves, most of the relatives, some of their friends, and the others of the Anointed [snitching from Sowell]). Other things are far more important, like that nobody has more than anybody else (save the aforementioned), and that nobody except said Anointed have any say in how things are to be run and who is to do the running.
(Pages of expatiation on this theme omitted, since every Samizdatista worthy of the name can recite them chapter and verse.)
But I do think it’s important to understand that it’s not that O. doesn’t understand that free-market capitalism brings wealth and prosperity; it’s that W&P is not his goal. His goal is to reduce everyone to serfdom or worse.
RRS, interesting line of thought, thanks. By the way — I’m not clear on what you mean by Commercial Capitalism. Do I take it you mean global trading, as in Marco Polo, the Silk Road, young Christopher C. and so forth? But then what’s the difference between that and the preceding Mercantile Capitalism?
Come to that, I’m probably being even denser than usual, but how did the accumulation of capital for future production occur in the Feudal system?
During the Dark Ages and Medieval times England was a major exporter of Wool, iron ore, coal and copper ore.
The nobles taxed them at the ports and nearly put them out of business, nothing has changed with the ruling parasite class. The hit song by Queen ‘We will fuck you’ is the anthem of Gubbmints.
The post is correct.
The essence of “capitalism” is “capitalists”
People investing their REAL SAVINGS – or the REAL SAVINGS of others entrusted to them.
Under the modern policy real savings do not matter – as lending is financed by creating money (from nothing) not REAL SAVINGS.
No capitalism without capitalists – and capitalists are about REAL SAVINGS.
The actual sacrifice of consumption in order to have money to invest in industry.
By the way….
Most Western nations (on top of the insane monetary policy) have government spending at about half the entire economy – and the rest of the economy saturated with regulations.
If this is capitalism – then I am Sir Robert Walpole.
I wish that the point RRS is making was made more often and sunk deeper. Even in N. Korea there is capital being accumulated and invested/spent – the real question is by whom and how.
With regard to O. and his likes, what Julie said: they do understand, and so did Marx – that’s the whole point.
“Capitalism” and “socialism” are both misnomers.
As collectivist/Statists, “socialists” of all varieties from c. BC 100 on espouse three, and only three, wholly non-economic positions: Divide-and-rule, or ruin; something-for-nothing; us-against-them. So-called “militancy” (read confiscation, cronyism, Police-State persecution), is brutally self-serving oligarchs’ universal stock-in-trade.
Rightly understood, “capitalism” connotes competitive free-markets, entrepreneurial-innovative risk/reward, a political/economic Emergent Order based on individual, personal rights and property– the State not as overweening Lord and Master but as arbiter of civilly conflicting interests in cause of peace-and-prosperity under intelligible statutes’ equally applied, fair-minded Rule of Law.
“By their fruits ye shall know them”– collectivists’ Grand Theft, gunpoint share-the-wealth, “creates a desert and calls it peace”. On ‘tother hand, knowing their own best interests, independent citizens abjuring Big Government demagogues’ contorted prejudices will flourish mightily, bequeathing compound legacies of self-fulfilling worth to their home-country via every family’s most capable and withal fortunate descendants.
This is not an academic, theoretical exercise. Either a polity of autonomous, free moral agents takes personal responsibility for individual as well as societal destiny, or rabid ideologues will pyramid heaps of flaming skulls.
@ John Blake:
Not to cavil on too narrow a point, but the term “Capitalism” came from the focus on the economic use of surpluses (in addition to their derivation from “Labour”)attempting to establish that there was an objective of the system of industrial production to accumulate for additional production (objective purpose implying the “ism”)
However, what is labeled Capital-ism is the resultant condition of individual human actions in seeking individual objectives. The surpluses are not accumulated (or redeployed)in accord with any defined or definable “system.” The accumulations and their uses can represent a multitude of objectives to the extent of the degree of Open Access (freedom!) in a social order to determine objectives and the means of seeking them.
Socialism (in all its varying degrees from the most mild “social” democracy to unbridled totalitarian tyranny) does have definable operating objectives as a system, including allocating obligations and benefits; and not just through the uses of surpluses (which are often destroyed).
@ The PMO:
The post may be “correct,” but it is incomplete.
REAL SAVINGS most surely come from the creation of surpluses generated by some form of efforts to produce goods or services.
REAL SAVINGS are those accumulations from what is not consumed.
They may be accumulated for objectives of deferred consumption
or other objectives to generate better conditions (ease or efficiencies) for production, or just production – that would be investment.
To say “No capitalism without capitalists,” is another way of saying that the individual objectives in, and selection of means for, determinations of creations, accumulations and deployment of surpluses are what result in that condition – so labeled.
The role(s) of credit (not just “lending”) in the relationships that generate the resulting condition are just another piece of evidence demonstrating that we are observing a resulting condition; and, that disruptions to the relationships change the condition – not – some presumed failure of what is presumed to be a system.
One thing inferred: REAL SAVINGS deployed into sovereign debt (of various kinds) must fall in the category of individual deferred consumption, even though some of that seeps through into a few “Public Goods” that are used in,and do affect, production.
There is also the issue of “parked” surpluses (profits)from enterprises, which is one of the freak results of managerial capitalism. That will probably sort itself out with the rise of things like Blackstone, Berkshire Hathaway, private equity and others of that ilk.
RRS
Your analysis is grim and not entirely inaccurate. I hope you will explain more about the difference between ‘commercial capitalism’ and mercantilism. I would also be interested in your take on fascist corporatism.
From my point of view, we have today widespread modern mercantilism in South America, and parts of Europe and Asia.Sadly under our current beloved leader we are headed that way here in the US as well. I think Hernando de Soto did an excellent job of describing contemporary mercantilism in “The Other Path”.
Fortunately occasionally free market capitalism is allowed to work, otherwise we would all be in deep deep kim chee.
@ Julie Near (the bankrupt):
Gawd! you do put the most excruciating points (questions too).
Like so many, I have more opinions than information (let alone knowledge, which is something else)on the subjects that draw my interest. But, what information I have gathered about the stages that scholars have assigned to forms of “economies” that they labeled “Capitalist;” the most common denominator being accumulations, led me to qualify my terms,”. . . surpluses that are accumulated (Capital) for future uses (production, consumption, physical and technological improvements, etc.)” Thank goodness for “etc.”
My opinions from reading are that the Continental and English Feudal economies differed. But, under the manorial system in England, much accumulations began to go to consumption of “luxury goods;” and a trade in them developed. Some was applied to manorial organization, allocations of incentives, creation of conditions that increased the “value” of the holdings, etc. (again). On the continent more went into military equipment, particularly “heavy” cavalry, which became a necessity simply to retain holdings, let alone acquire more. Very little seems to have gone into “incentives” – resulting in things like the jacquards, etc. (again).
The Mercantile period seems to me better assigned to that trading era to which you refer, when the objectives for relationships were determined on more municipal or quasi-national bases, such as Venice, Trieste, certain “Free” Cities. A prime example might be the Hanse, which set the terms of relationships (and quite often the conditions).
When we move into the Commercial, we have the expressions of individuality, which began to form in North Eastern Europe (Holland in particular)in the 17th century and expanded into England as its aristocracy opened to successful individualities, keeping it a vital source of elites (at that time).
None of the periods are exact and their time spectra overlap as the phases unfolded into succeeding forms of relationships and circumstances.
@ Taylor:
Lawzy Me! I done step in it !
Again, OPINION.
I read the Mercantile economies as those in which a dominant coalition (not necessarily what has come to be designated a class) determines the objectives for the relationships (as well as their structure and compositions)and selects (to the extent possible) the circumstances that result in the way and purposes for which accumulations are achieved and deployed.
That is of course true in all but those few of the Western societies which have Open Access (see, Douglas North, et al.). See my reply to Julie for a view on “Commercial.”
I understand “Corporatism” somewhat differently from other common usages. To me it signifies a form of political (usually, but not exclusively, through Government) intervention into the economy, principally upon the productive (goods and services) facilities existing, or developing. In “advanced” industrial and commercial economies that involves interventions in all the relationships of those facilities, which when attempted “piecemeal” may be disruptive to the point of destruction; when comprehensive they appear to have contributed to, if not caused, stagnations.
We are currently observing what may a series of such interventions as a “clash” is developing between the private managers of enterprises and the managers of the Administrative State. Historic experience does not auger well for management of enterprise by the managers of an Administrative State – which is the political form of Corporatism. But, we are headed there.
My goodness, an intricate discussion of some very complex subjects, indeed.
Pardon my desire to return to simpler, more basic issues, although that is in no way a criticism of the discussion so far.
Economics is what people do every day. For most of human history, that activity was some form of farming, or animal husbandry, at least since the development of those activities several thousand years ago.
Even in pre-agricultural times, hunting gathering cultures engaged in trading, either among their own small group, or with travellers. The “ice man”, found in a melting glacier, is thought to have been such a traveling merchant, as some of the items found with him originated many hundreds of miles from where he was found.
The critical issues, then as now, are who decides what should be done, who decides the roles of the participants, and who decides on the cost of any transaction.
In a free market, the participants decide these issues for themselves. This sounds so simple, and obvious, that it is easy to forget that it is rare in history, and poses a significant threat to those who wish to be in control of other people, whether because they are born into some ruling elite, or attain membership through religious or ideological purity and devotion.
The freedom to choose one’s own work, and how to dispose of whatever value that work might create, also poses a threat to those who are invested in the status quo, whether they are at the top or the bottom of the prevailing system.
One of the truly remarkable results of the western experiment with more open markets, being realistic about the incomplete nature of any economic system’s freedom of action, are the enormous, accelerated, and compounded innovations that rapidly and fundamentally changed the entire concept and nature of work, business, and economic organization.
We are now so removed from our history that it is difficult to remember that, for millennia of our culture’s existence, people didn’t travel, didn’t read and write, didn’t meet more than a few dozen people, didn’t have any real choice about where they lived, what work they did, or how they did it, and were required to dispose of their products through an intermediary chosen by a local lord, at a fixed price decided by fiat, not an open market.
Increasing economic liberty, along with broader freedoms, disrupted all of these cultural traditions.
We of this century, living with constant developments, innovations, and economic disruptions, are injured to these disruptive aspects of free markets, to a certain point. But people before us were stunned, and many are still reacting with incomprehension and fury, at the idea that everything they knew could change, and then change again and again, instead of remaining constant and reliable for generations, as things had always been.
Economic liberty doesn’t respect any vested interest, whether based on birth, ideology, or, indeed, past achievements. And this, more than any other factor, draws the wrath, and eternal hostility, of any and all elites who firmly believe that they know best, that they should decide, and that they should not be subject to the tender mercies of some social or cultural inferior just because he had a new idea about how something could be done.
In our era, there have been several major disruptions, recessions, and depressions, that have severely damaged the overall economy. Invariably, these disruptions are political mistakes which then have serious economic consequences.
Since statists never admit that their policies might have negative effects, or damaging, unintended consequences, their immediate response to any economic trouble is to blame the major economic players who were required by political policy to behave as they did, and then propose more extensive political controls as the remedy.
We are approaching the final convulsions of the collapsing “blue model” social welfare state. The evidence of it’s bankruptcy, both financially and intellectually, are evident all around us. Our task is to deny the collective its usual scapegoating, and to firmly pin the blame for the coming problems right where it belongs—on the incompetence and utter corruption of the ruling political and social elites.
Equally important, if not more so, we must deny to the collective and its apologists the moral legitimacy they assert as justification for their failed policies. In many, many ways, this is the more difficult of any issue we must face.
At various times in the past, freedom has been opposed by the most powerful theocracy in history, and won; by the most powerful empire in the world, and won; by a society built on the subjugation of other men that has been ubiquitous in human history, and won; by a coalition of the great empires of the world, and won; by the most bloodthirsty, murderous ideologies ever devised, and won.
We are now confronted by an alliance of cockroaches, termites, and bedbugs. Having defeated lions, we are beset by parasites and vermin.
We need sunshine, soap, and bug spray. Get to it.
@ V R
Around 2005 -2006 Douglas C North and others began to consolidate their several approaches to interpreting recorded human history and came up with a new “framework.” The first publication I know of it is in NBER Working Paper 12795 (December 2006). This work has been followed by other papers, including one for the World Bank – all on the same theme. The most recent consolidation is in Violence and Social Orders (Cambridge 2013 ed.).
What you refer to as the “western experiment” falls within the scope of their “framework” for understanding how (and when) it came into being in its current form, which they label as Open Access.
In very simplified description they assign two forms to societies “Limited Access” and “Open Access.” They also assign a major function to the mode of use or control of violence in those societies by dominant segments.
Their suggested framework departs somewhat from the more classic interpretational format you envisage; in fact, quite a bit.
The improved conditions you paint probably can be traced back only to the mid 1800s and forward, disrupted by the violence of the first half of the 20th, then picked up again, but now possibly (likely) in regression back to more limitations. The identification of the factors for this regression (which may be linked to regression in the role of individuality) is difficult [news?].
In the west (and disturbingly increasingly so in the eastern margins) transactions have become extensively impersonal, replacing the former inter-personal aspects (almost unknown nor comprehended by the current generations). And yet there is the tendency to personalize the sources of difficulties and disruptions that occur. It’s not simple [news?].
I think that Leftists/Progressives NeoMarxists DON’T CARE about the fact that capitalism leads to prosperity. That’s a fact proved countless times before and it’s not a difficult concept to grasp. If they really cared, they wouldn’t counter facts with lies, they would teach in grammar school that there’s no such thing as an unregulated market, as anywhere there’s a demand for a product, someone will seek to supply it, and as long as you have supply and demand….you have a market, whether “black” or legal, and ALL markets are regulated by supply and demand. All additional “regulations” merely fuck-up the natural regulations of markets.
I don’t think they really believe that without additional “regulations” (i.e. state mandates and attempts to steer markets) things would fly out of control. I think all they care about is that THEY maintain control, period.
Just as they would prefer everyone being “equally” poor, rather than someone like Donald Trump being fantastically well off, paving the way for others to be moderately better off, I think that, likewise, they would rather rule an anthill than to have fantastically flourashing free markets improving everyone’s life where they’re not in control.
I don’t consider this cynicism, I think they prove my point factually time and time again. I don’t thnk they have well intentions. I think they’re fucking evil.
The fact is, the market is always there; even – maybe especially – in systems that anathematize it. Economists can no more choose to have the market than physicists can choose to have gravity.
PFP—exactly. There was a huge black market in the Soviet Union, and that remains a factor in numerous economies around the world, including the US.
I remember an article from th 1970’s which described the role cigarettes, Kents, I believe it was, played as an alternate currency in Romania. And of course, there were numerous stories from the soviet countries which described the black market value of liquor, blue jeans, Beatles albums, cosmetics, etc.
Autocrats only care that they are in power, and can provide a lavish life style for themselves and their allies. They have no real concern for the common citizen. The claim that any collectivist despot is doing it for “the people” is one of the great lies of all time, even as it is constantly repeated every day by the prongs.
That is the kind of moral claim I referred to above when I said we had to demonstrate the ferocious immorality of collectivist ideology to a culture that has been taught that the state is a benign, compassionate entity.
In the final analysis, it is that moral inversion, in which free individuals are labelled as dangerous and callous, while the state is extolled as the savior and protector of the common man, that has powered much of the violence and repression in history, and especially in the last century.
note to RRS—I appreciate your detailed analysis of various terms or conflicting points of view, but I am interested in basic problems that confront ordinary people trying to live their lives in peace and freedom. The date that somebody said something, or the difference between how “tomato” is spelled by one theoretician instead of another are arguments I leave to the professional libertarians.
I find such endless squabbling over minutiae to be pointless and irrelevant. YMMV.
Veryretired wrote,
“Equally important, if not more so, we must deny to the collective and its apologists the moral legitimacy they assert as justification for their failed policies.”
Indeed. They do not operate on facts, logic nor reasoning. They operate on feelings, intentions, and political correctness. The first measure, as you stated, is to expose their presumed moral superiority, which is a complete falsehood.
They maintain that their opposition are racist, sexist, homophobes if we are not universally tolerant, and they react with character assassination when one disagrees with them, having committed the crime of causing THEM to become offended. (It never occurs to them that they choosing to be offended when people disagree with them is due to their extreme lack of tolerance).
They feel free to shout you down, calling YOU “fascist” and strive to have you un-platformed if you disagree with them, but then they attack you for infringing on their “free speech rights” when you publicly disagree with their views. (It never occurs to them that free speech means that you have the right to disagree, rather than they having the right to an unchallenged expressed opinion).
They call you unsympathetic, unempathetic, non-compassionate if you don’t endorse taxation schemes which strip people of earned wealth using force and intimidation, to be used “for the common good”. (Never mind that the government keeps a full 5/6 of every dollar slated for welfare programs, with only 17 cents of every dollar actually making it to the hands of the “unfortunate”.
The Collectivists feel MORALLY SUPERIOR to you for this reason. THEY want to help the poor, but assume that we have to use the brute force of G-Men with guns and cages to extort wealth from everyone else. THEY are morally superior you see. They feel “compassion” for the little guy. (It never occurs to them that armed robbery via government force is itself immoral and morally inferior to virtually ever other possible alternative).
We need to publicly and loudly expose their hypocrisy (and blind-eye turning).
They’re free to call their opposition racists, sexists, homophobes, tranphobic, etc BECAUSE they’re morally superior. They’re morally superior because YOU’RE bigoted, because you disagree with their policies or question their effectiveness. They’re free to be bigoted towards you….because you’re a bigot. You must be, you disagree with them. Again, no one does hypocrisy quite as well as the progs.
Very Retired:
My apologies, Sir. From your posts of years past I mistook the nature of your intellect and its range of interests.
RRS said,
“My apologies, Sir. From your posts of years past I mistook the nature of your intellect and its range of interests.”
How much do snarky backhanded complements go for these days?
RRS, thanks for your reply to my question way up above, including your comment addressed to Taylor. :>)
I may be a bit of a punch drunk middle aged man (indeed I am a bit of a punch drunk middle aged man) – but I do not see what the dispute between RRS and Very Retired is about.
To me both of them support voluntary choice – i.e. oppose serfdom and slavery.
Both support private property rights.
Both support lending from real savings – not the government printing press or book keeping tricks.
Both oppose the wild Welfare State spending that is destroying the West.
Just as both oppose the Credit Bubble financial system that governments foolishly think will fund the unlimited growth of the Welfare States.
I might argue with both of them on some details.
For example I think some statists are totally sincere – I think “Bernie” Sanders really thinks spending another 18 TRILLION Dollars (on top of the bankrupt spending already happening) would be a good thing.
I think he is nuts – but I think he is sincere.
I even think Jeremy Corbyn is sincere – sincerely nuts.
The schools and universities around the world teach nonsense – and this nonsense gets reflected in policy and beliefs.
Endless “monetary expansion” and government spending and ever more regulations.
Yes – bankruptcy (in fact if not in law) is inevitable.
As for the courts.
The more I see of the appointed judges – the more sure I am that the Common Law was right to entrust basic decisions to juries.
Juries have many terrible faults – but they are better than government appointed judges filled with “Progressive” (essentially Francis Bacon Progressive) ideas.
PM
I am an old [91] man, so I pick and have no disputes. But, I do err in evaluations (as noted).
Interesting that you select a fierce personal enemy (Bacon) of that originator of the perpetuation of Common Law as “Progressive.”