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[Paul Eres]

But the system has worked on a smaller scale (as mentioned, eBay, the Blackfoot tribe, certain black markets, and small voluntary unenforced marketplaces everywhere), so that's at least some evidence. It's not proof (Communism can work on a small scale too, but hasn't worked on a larger scale yet), but it's enough to get experiments in it started and to indicate that it could work. And the current economic system is unstable enough that it'll collapse anyway (perhaps even quite soon), so it's a good idea to get alternatives ready for when that happens.

[dither]

I'd recommend reading John Galbraith's excellent "Money: Whence It Came, Where It Went" for a good history of banking and finance, including some very readable information on the origins of currency.

I don't think the above is really particularly realistic, especially since you mention that deflation isn't a problem when there are tons of historical examples of it being a serious problem, such as the Great Deflation, the Great Depression, and the Asian financial crisis in the 90s.

Whether or not deflation is a problem depends on how it occurs. I was talking about deflation that results from an increase in the abundance of goods and services relative to the stock of a money-commodity like gold.

The deflation that occurred during the Great Depression was a contraction of bank credit by the central bank. This was only necessary because of the preceding expansion of bank credit by the same central bank, and all the attendant instabilities that resulted from it.

Even then, this deflation was a good thing, in the same way that withdrawal is a good thing for a drug addict. It is painful for a short time, but necessary for a return to health. The reason the Great Depression lasted for a decade was because the government tried to prevent the fall in prices by, for instance, destroying livestock and storing grain in sheds (while people went hungry, no less). This would be analogous to giving the addict more drugs.

Without writing much longer, the circumstances in Japan during the 90s were similar. The Great Deflation was a different case but still not related to the situation I described in my previous post.

It's just kind of the same line, right? When the government does something, it's bad, when 'the market' does something, it's good. But the market is just some people, and who's to say they will make better decisions?

There is a charming story by Leonard Read called "I, Pencil." The "moral" of the story is that no one person really knows how to make something as simple as a pencil, when you take into consideration every economic transaction that happens down the line relating to its production (including, for instance, the mining of the graphite and metals, and the engineering of the railway cars that transport the materials, and so on). And yet, all these activities and more are synchronized, day after day, without any mastermind or central planner.

That is the difference between the government and the market, and why government planning of the economy doesn't work.

[Paul Eres]

But oh, regarding the slave labour thing: yes, a lot of the U.S. foreign labour is, in fact, real slavery. If you're poor in Kenya and you want to start a family, expect to sell at least one child into coffee farming (average market price: five American dollars). In many large factories in China, people are moved away from their homes and families to work, and supervised constantly by armed guards. Attempts to 'leave work' are severely punished, and if you don't show up they send someone to beat you.

Yes, I said it's true of certain parts of Africa. It's true to a small degree in every country; selling children into slavery happens regularly even in rural India. But I don't think it's the base that the current world "market" rests on, as you implied. I also don't think the "work or we beat you" is true of most sweatshops, although it's no doubt true of many. I've seen documentaries of sweatshops in China and for the most part it didn't work like that, although the conditions were pretty bad.

[Paul Eres]

You're just taking all the bad things about capitalism, all the counter examples given to you, and saying "Nuh uh! No! That doesn't have anything to do with it!"
I think you might be blinding yourself with naive idealism.

It has nothing to do with idealism, it just has to do with terminology. Strictly speaking, capitalism is free, voluntary trade, without force, without the threat of force, and without regulations or oversight. It's not just semantics, it's what the word means. Equating most corporations with capitalism is just wrong, objectively. They like to use that term to justify themselves, but they aren't deserving of that term at all.

Perhaps you could make the argument that, if something is how a term is used enough, it becomes a new word with a new meaning. Fine, if that's the case, call them 'current capitalism' and the old meaning 'the original definition of capitalism' or whatever. But the two concepts really have nothing in common, despite having the same name.

As a similar example, socialism also doesn't mean what it used to mean. Socialism currently means "redistribution of wealth" whereas it originally only meant "control of the means of production by the workers". Obama is called a socialist in the first sense, not the second, even though the second is the original true sense of the word.

[increpare]

I consider the salary model (where one person pays another for their work) to be incompatible with capitalism, and the sine qua non of a corporation is having employees (except for worker-owned corporations, which aren't even worker-owned so much as the stocks being owned largely by the workers, which isn't the same thing).

I've often wondered with what ideology the notion of salaries are really compatible.  It seems to be an emergent phenomenon of the clash of socialism and capitalism, without being idiomatic to either.

Yes, I said it's true of certain parts of Africa. It's true to a small degree in every country; selling children into slavery happens regularly even in rural India.

Don't forget Brazil.  "In 2004 the [Brazilian] government acknowledged to the United Nations that at least 25,000 Brazilians work under legal work conditions "analogous to slavery." The top anti-slavery official in Brasilia, nation's capital, estimates the number of modern slaves at 50,000. [10] More than 1,000 slave laborers were freed from a sugar cane plantation in 2007 by the Brazilian government, in the largest anti-slavery raid in modern times in Brazil.[11]" (wiki)

[Paul Eres]

Yeah, but there it's at least against the law; it's legalized in many other places. And 25,000-50,000 out of Brazil's total work force is a really small percent. Brazil has more people than any other country in this hemisphere besides the US. By those numbers, the US has more slave labor (the 1.5 million in prison) than Brazil has.

[dither]

Economic growth under capitalism doesn't depend on consumption, but savings, which forms the basis for the future production of goods. If you eat the seed corn, so to speak, there will be no economic growth because there will be no tomorrow for you.

That's relevant here because, while everyone rightly deplores living and working conditions among the poor of Asia and Africa, it's a mistake to blame that poverty on capitalism. The standard of living can only increase with an increase in the capital stock. China was run by hard-line communists for a long time. Africa is still run mostly by socialist dictators. The application of these ideologies destroyed the capital stock of those societies. It can't be replenished overnight.

Everyone forgets that history didn't start this morning.

[Paul Eres]

That's true, but a lot of those dictators were put in place by the US and other powerful nations, and some even put in place by corporations (e.g. Chiquita Banana). But you're right that the reason a lot of third world nations are poor is because of their governments, but I think by far the most important cause is their lack of infrastructure. Infrastructure takes a lot of time and effort to build, and it hasn't happened everywhere yet. We take things like roads and running water and electricity for granted, but we forget that even in most of the US 100 years ago we didn't have those things, they took a lot of time and money to build.

[joshg]

It's not just that they're different groups of people, it's the manner in which it's done. When the market does something, it does something by definition through voluntary trade, all parties agree to it, whereas when the government does something, it does it by definition through force, one party forces the other to do something.

Voluntary trade by the people who control resources, you mean? All this still rests on the a priori belief that the free market will be balanced and leave all players on roughly equal footing. If someone seizes control of a resource or exploits the public consciousness or engages in dirty dealings or is even just wildly successful by making good products, they will immediately have advantages to be exploited against competitors which give them a more favorable position in the market.

The market is often very one-sided even in places where the government has not interfered, or where the government has interfered against parties with an unfair influence on the economy, through anti-trust litigation for example. There's no reason to think this wouldn't keep happening.

Yes.


p.s. YAY OBAMARAMA!

edit p.p.s. Yes, way more discussion happened after this quote, but this still seems to be the deal-breaker in a "free market" argument to me.

[Paul Eres]

My response to that was that unfairness is a poor excuse for force. The government shouldn't have the right to do anything that you and I couldn't do on our own. If we don't have the right to kill, the government shouldn't; if we don't have the right to steal, the government shouldn't; if we don't have the right to tell businesses how to conduct themselves, the government shouldn't.

[Smithy]

Yes, but that's not a very good response. If you're going to get into simplistic, broken down middle-school semantics, then we should say that in a 'representative democracy' is the form of government in which the populace places people in power to represent their values. So whatever action the government takes is action that the people are also taking. Ideally, the members of the government take action for the majority of the people.

So if governmental force is taken to regulate the economy and keep businesses from screwing people over/killing people/generally mucking things up, it's in the best interests of the people.

[Smithy]

Disclaimer: I know that governmental force is rarely is in the general interest of the people, just like I'm pretty sure you know real, unregulated capitalism results in something ugly and, to use your words, "not capitalism."

I'm just saying..

If we're going to always simplify everything to lowest common the-way-things-should-be denominator, the government always takes action in the interests of the people, and everything works out.

[Paul Eres]

Yes, but that's not a very good response. If you're going to get into simplistic, broken down middle-school semantics, then we should say that in a 'representative democracy' is the form of government in which the populace places people in power to represent their values. So whatever action the government takes is action that the people are also taking. Ideally, the members of the government take action for the majority of the people.

So if governmental force is taken to regulate the economy and keep businesses from screwing people over/killing people/generally mucking things up, it's in the best interests of the people.

That assumes that people know what their bests interests are, and it assumes that the "average" of the best interests of everyone are worth forcing on all the people who don't have those interests.

I'm not sure I follow your argument here. Basically I think you are saying "your argument is simplistic, therefore here is my simplistic assertion, which is wrong for the same reasons your argument is wrong". But I don't really see how that follows, because I don't think my argument or yours is simplistic.

[Smithy]

It's the cornerstone of your argument. Every time someone comes along and says, 'no, it doesn't work that way, and here's why,' you switch views and say, 'well, yeah, but idealistically and sophistically capitalism exists without force! idealistically!" You suddenly shift gears and dumb everything down to middle school, the way things ought to be rather than the way things are terms.

But following suite, with everything dumbed down to the same middleschool terms, people do know what's best for them, and governmental action does adhere to the will of the people.

Slipperyfish tactics.

[Paul Eres]

I think you only can believe I "switched views" if you mistake the two things that have been called capitalism for one another -- could you name something specific I switched views on?