Favorite Economic System

[phk]

“The fall of the Berlin Wall in November 1989 …marked the end of the most extensive controlled experiment in the history of social sciences – the division of Germany into two economic zones, one centralised and planned, the other a market economy. After forty years, the gap in living standards between the two was so extreme that the experiment was terminated.” - John Kay

Why is capitalism so successful over the long run?

    * Prices act as signals; the operation of the price mechanism is a better guide to resource allocation than central planning
    * Markets function as a process of discovery, the chaotic process of experimentation through which a market economy adapts to change…Centralised systems experiment too little. They find reasons why new proposals will fail – and mostly they are right in their suspicions, because most experiments do fail. But market economies thrive on a continued supply of unreasonable optimism.
    * Markets yield benefits from the diffusion of political and economic power… A one sentence description of why some countries are poor and others rich is that the politics and economics of poor countries are dominated by rent-seeking and the politics and economics of rich countries are not.

But isn’t a market economy one motivated solely by greed?  Can a country motivated solely by greed be successful?  According to Kay, “This is the economic environment of Nigeria and Haiti, and it does not work.”  Instead, the greed must be tempered through the mechanisms of trust relationships and reputation.  To get a broader perspective, Kay concludes with the following:

“Markets are not a well-oiled machine: they more closely resemble a constantly changing, adaptive biological system. Pluralism is their motive force, their essence is chaotic, their development inherently uncertain. If we could predict the evolution of markets, we would not need markets in the first place.”

[Tetro Kornbluth]

Biological metaphors should be banned from sociological discourse.

[Beet]

Oswald Spengler claims that markets undermine democracy in the long run by turning free speech into nothing but a tool of greed and corrupting legislators, making the vote worthless. He says free speech is nothing but an instrument of class war, the bourgeois against the aristocracy (or in today's day, that would be the 'special interests' against everyone else) As a result, a Caesar would arise to overthrow free market democracy. Spengler claimed this was preferable. Upon lengthy reflection, I disagree, and would prefer a corrupt democracy over a Caesar.

However, in light of recent events, it seems Spengler was quite right about the first part. The question is, why has American democracy survived for 234 years without giving way to a Caesar? And can it continue? It's too early to say that free market democracy has triumphed. Capitalism might just take longer to collapse than Communism.

[Tetro Kornbluth]

Oswald Spengler claims that markets undermine democracy in the long run by turning free speech into nothing but a tool of greed and corrupting legislators, making the vote worthless. He says free speech is nothing but an instrument of class war, the bourgeois against the aristocracy (or in today's day, that would be the 'special interests' against everyone else) As a result, a Caesar would arise to overthrow free market democracy. Spengler claimed this was preferable. Upon lengthy reflection, I disagree, and would prefer a corrupt democracy over a Caesar.

However, in light of recent events, it seems Spengler was quite right about the first part. The question is, why has American democracy survived for 234 years without giving way to a Caesar? And can it continue? It's too early to say that free market democracy has triumphed. Capitalism might just take longer to collapse than Communism.

After the Civil war how many real social crises has America faced? The 30s? The Vietnam War Era? Both of those were actually pretty tame in comparsion to Europe of the time...

Also is Capitalism really the free market? If we take Capitalism to be a historical or presently existing phenomenon then those two are really in conflict...

[Beet]

Oswald Spengler claims that markets undermine democracy in the long run by turning free speech into nothing but a tool of greed and corrupting legislators, making the vote worthless. He says free speech is nothing but an instrument of class war, the bourgeois against the aristocracy (or in today's day, that would be the 'special interests' against everyone else) As a result, a Caesar would arise to overthrow free market democracy. Spengler claimed this was preferable. Upon lengthy reflection, I disagree, and would prefer a corrupt democracy over a Caesar.

However, in light of recent events, it seems Spengler was quite right about the first part. The question is, why has American democracy survived for 234 years without giving way to a Caesar? And can it continue? It's too early to say that free market democracy has triumphed. Capitalism might just take longer to collapse than Communism.

After the Civil war how many real social crises has America faced? The 30s? The Vietnam War Era? Both of those were actually pretty tame in comparsion to Europe of the time...

Good point.

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Explain...

[Tetro Kornbluth]

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Well I'm sort of taking my thesis from Fernand Braudel (and Andre Gundar Frank.. though he would later reject 'capitalism' as a label entirely, read his ReOrient for a super-revisionist account of world economic history). That is 'capitalism' refers to the historically phenomenon of the movement of 'capital' starting in Europe and reaching global scale-dominance in the 15-16th Century following De Gama and Colombus. In this account the state by manipulating the market was always an essential part of the project, only that the maneouvers of states always benefitted 'capitalists'. Consider that the first real consumer goods in Euro-American history were crops like Sugar, Tea, Tobacco, etc which were only grown with slave labour but were backed by state-run monopolies; viz. The British East India Company, The British Royal African Company, their French equivalents, etc. The market played little role in this formulation. 19th Century liberal states re-formulated their economies by liberalizing them* by they were formerly national states interested in developing national economies so British Textiles became dominant as the British State destroyed the Indian textile industry... and this continues today with the protectionist policies in the north in say agriculture reducing markets in the 'south'. If we take 'capitalism' to mean free markets or even semi-free markets no such state has ever existed.

* - yes this is economic history 101 (less than that) but a real explanation would take too long