Agna ... one more try ...

[editec]

Capitalism is the greatest creator of wealth and increased living standards ever.

Actually, economic protectionism is the greatest creator of wealth, a condition utterly anathema to laissez-faire conceptions. For example, consider Ha-Joon Chang's Kicking Away the Ladder. As noted therein:



Almost all of today’s rich countries used tariff protection and subsidies to develop their industries. Interestingly, Britain and the USA, the two countries that are supposed to have reached the summit of the world economy through their free-market, free-trade policy, are actually the ones that had most aggressively used protection and subsidies.

This is wrong.

Like all social sciences, you always can find someone who bucks the conventional wisdom. However, the overwhelming consensus amongst economists is that free trade is the best creator of wealth. As Alan Binder notes

Nonsense.

Not even Adam Smith believed that. Perhpas you should reread Wealth of Nations again, and this time read it entirely and then you'll better understand what exactly he was talking about when it comes to trade policy.

Free trade makes sense under certain conditions : when there is a nature advantage to one nation and a nature disadvantage to the other. AS in don't try to grow cork or make wine in ENGLAND.

Smith ALSO believed in and supported STRONG tariffs to protect nacient and national industries, but oddly the free trade advocates of today never seem to mention that.

I wonder why?

For more than two centuries economists have steadfastly promoted free trade among nations as the best trade policy.

Yeah? Thank god they weren't in charge of American trade policy for the first 160 years or so of American history, then

Because if those idiots had been creating policy American would still be a third world agricultural nation if they had.

 

[Toro]

There would have been development with or without tariffs as a result of internal expansion, but my claim was merely that broadly protectionist policies played a role in augmenting that development. What have you to say specifically to this?

Its hard to say. There is mixed empirical evidence on protectionism and development, though generally, open economies have developed faster. There is little evidence that protectionism has broadly benefited developed nations.

But you have to remember that mercantilism was the dominant ethos up until the mid-1800s before the first era of globalization. Also, tariffs were around then a primary generator of revenues for governments. The fact that there were tariffs on imported goods is no surprise.

Nope. As previously noted, Irwin's The Smoot-Hawley Tariff: A Quantitative Assessment proves otherwise. Consider the abstract:

In the two years after the imposition of the Smoot-Hawley tariff in June 1930, the volume of U.S. imports fell over 40%. To what extent can this collapse of trade be attributed to the tariff itself versus other factors such as declining income or foreign retaliation? Partial and general equilibrium assessments indicate that the Smoot-Hawley tariff itself reduced imports by 4-8% (ceteris paribus), although the combination of specific duties and deflation further raised the effective tariff and reduced imports an additional 8-10%. A counterfactual simulation suggests that nearly a quarter of the observed 40% decline in imports can be attributed to the rise in the effective tariff (i.e. Smoot-Hawley plus deflation)

The abstract reads that the data is adjusted for changes in the general price levels. Ceteris paribus means "everything else being equal," which usually means that they have adjusted for all other factors, including the change in prices. Economists also usually publish in real - inflation/deflation-adjusted - figures. It wouldn't make much sense otherwise. So when the author says that it reduced imports by 4-8% ceteris paribus, and specifically note that the further effects of deflation, that appears to say that the figure is after deflation. What does the paper say?

As also previously noted, the tariff rate remained in the average range established since the Civil War period. In 1875, for instance, the average rate ranged between 40 and 50%. In 1913, the average tariff rate on manufactured products was 44%, whilst the 1931 rate was only 4 percentage points higher at 48%.

Global tariffs fell from about 1850 to 1913. Exports accounted for less than 10% of the US economy (if I recall correctly) so a constant tariff in the US would not have had much of an effect on development. After WWII, the average global tariff declined from 40% to about 5%, and the volume of trade expanded at a rate faster than the global economy.

I posted no advocacy of a "closed economy" anyway, and your comment wasn't relevant to my post. The benefits of trade are typically decidedly mixed, which is why fair trade is often able to facilitate an appropriate provision of benefits without incurring the costs that "free trade" often does.

Again, the general consensus amongst economists is that free trade is beneficial. Usually, economists disagree on the provisions of specific trade deals in the context of the institutional ability of countries to adjust to the terms of agreements, and on the framework of the deal actually being truly free trade.

As for "fair trade," it is almost always promoted by those who benefit from "fair trade" at a higher cost to everyone else.

But that's not relevant to the main point that I made, and honestly, analysis of growth in the capitalist economy must necessarily be more expansive than mere cursory investigation of the effects of trade. As long as capitalism suffers from the deficiencies of the maximization of static efficiency and the maximization of dynamic efficiency being incompatible, both the optimal creation of new resources and the most effective utilization of those resources once created will not be present to the fullest degree.

Capitalism does not suffer from an inefficient maximization of resources, at least no more so than any other system. The pricing system is the most efficient method at allocating resources. It is not perfect, but the collective wisdom of many is usually much better than the collective wisdom of a few.

The price system falters when

- it does not accurately reflect all costs, i.e. externalities such as pollution
- information is imperfect
- human biases are systematic, i.e. people are wired not to save enough for their retirement so government passes laws to force savings, free-rider problem, etc.
- it is impossible to do a cost/benefit analysis, i.e. education, which would be the future stream of earnings arising from an education for a five year-old.
- services are deemed too critical to be left to the market, as there will always be some losers, i.e. the police

But otherwise, capitalism is pretty efficient. We absolutely know this because the inter-industry returns within an economy, though volatile in the short-run, are fairly even over time. The capitalist system allocates capital within the economy based on expected return. Actual returns on equities (ROE) of broad industries average about 12% over time. Given that the capital structure of a typical corporation is 50% equity and 50% debt, the return on assets approximates the nominal growth of the economy at 6%, which is what neo-classical economic theory tells us should happen. The is empirical research, particularly by Charles Lee, has confirmed this. When industry ROE rises above 12%, capital flows into the industry, lowering returns for the industry. When ROE is below 12%, capital flows out of the industry until it rises back to 12%. If capitalism was inefficient, this would not happen.

 

[Agnapostate]

You have addressed nothing of the criticisms of your system, and you have simply chosen to ignore several key problems, including the glaring contradiction regarding your call for the theft of property and labor from the working class in order to support a class of leeches (which i personally suspect you would be a member of) as an inherent part of your system, per the very ideal that you forwarded in the other thread

This is a lie. As I said, since I don't support the mandatory acceptance of communism, it's quite absurd to suggest that I support mandatory conditions in communes: how could that be the case when my preferences call for the permissibility of economic systems that don't even involve the existence of communes? Your false assumption is based on the claim that I support the compulsory provision of goods and services to those who are able but unwilling to work. However, this is far from the case. Any consistent communist economy would involve the denial of access to such goods and services to the slovenly so as to retain appropriate incentives for work. I personally support provision of the means of life to such individuals, but such decisions would be the affair of democratic determination by individual communes. Now, is there cause for me to personally suspect that you're a member of the financial class, which is why you oppose examination of the deficiencies of capitalism? Because that's the rough equivalent of what you've claimed about me, except that my preferred form of economic organization doesn't permit for a leeching class, whereas yours does.

[W]hile denouncing the 'theft of surplus labor' in a capitalist system, all the while ignoring the fact that such contracts are not compulsory (unlike what you proposed), can be nullified by either party at any time (one can quit), and can be negotiated to achieve the most desirable results through unionization, strikes, and walkouts by the workers and through layoffs, the hiring of those willing to cut the best deal, and negotiation of benefits by the employer.

Not only do you continue to ramble on the basis of your false premise of me mandating certain compulsory conditions, you also ignore every single comment that's been made about the coercive nature of labor markets without taking care to rebut. There is coercion present in labor exchange; its source will merely vary from something such as asset specificity to market concentration. Moreover, labor activism is not sufficient to eliminate the inefficiencies in the capitalist economy any more than codetermination of profit sharing mandates are, and inefficiency is the source of my greatest focus.

You ignore the initial investments and principles put up by the entrepreneur and other investors and seek to nullify willful contracts and steal from those more successful to you what is rightfully theirs by their own investment skill because you personally feel they do not deserve to benefit from their investments, negotiations, and other efforts.

On what grounds should such investments be acknowledged to such a weighty degree? Considering the superiority of workers' ownership and management, there's no economically rational purpose for honoring such investment. Considering the theft of surplus labor that capital accumulation is based on, there's no moral purpose for honoring such investment. Now, apart from the fact that you've maintained a naive conception of the "entrepreneur" (and no obstacle to the liberty of the entrepreneur exists in any manifestation of the libertarian socialist economy, incidentally) rather than acknowledge the reality of control by the financial and coordinator classes, there is no feasible reason to maintain a class whose sole purpose it is to hoard and loan capital, especially in light of both its economic irrationality and basis in theft.

You denounce what you consider theft from one class by other other, while arguing not for an end to the theft of property and wealth, byu merely a reversal of the status quo and a class struggle that is targeted less at benefitting the lower classes than punishing those that have ucceeded or been fortunate enough to, through birthm, happenstance, or their own labors, achieve a standard of living better than your own.

Nope! This is merely regurgitation of a standard rightist talking point that's quickly trotted out whenever anti-socialists tire of pretending to have a legitimate argument: Socialists are merely jealous of the success of wealthy capitalists and wish to steal what they could not earn. This talking point is a pure travesty and an affront to legitimately serious and thorough economic analysis. It's the effective equivalent of claiming that anti-socialists are secretly capitalist fat cats and pigs who only oppose socialism because they want to greedily hoard their ill-gotten wealth, except that that would actually be conceivable in some cases...regardless, it's not a claim I've made; I'm fully aware that anti-socialists are merely arguing their sincerely held principles. Conversely, you seem to be unwilling to acknowledge the same.

Your system is punative in nature and glorifwes the authoritarianism and tyranny of the masses, while entrusting the mob with the Stateand ignoring the lessong iof history- when even your beloved examples of 'success' were unable to survive in the real world, where a State must be able to not only sustain, but also to defend itself. You are too focused on idealism and naivete to realize that the very nature ofg man your system depends on does not exist and that if it did, neither your system nor any other would be needed in the first place.

Similarly incorrect. My preferred system of political and economic organization (the two cannot be legitimately separated) is based on the consistent application of libertarian principles and the maximization of individual liberty even in the most communistic settings, since I've always emphasized voluntary association and a minimization of the tyranny of the masses through participatory input on a decentralized level rather than republicanism on a national level, where one vote makes effectively no difference. Anarchist and libertarian principles have maintained military organizations where appropriately implemented and in fair settings (see the Durruti Column and Nestor Makhno and his "Black Army"), and your criticism cannot be directed at organizational principles, since the individuals involved were subject to treacherous mutiny and superior military force through sheer strength of numbers despite their own superior organizational principles...it's almost akin to market concentration, another deficiency of capitalism that you chose to ignore. Lastly, my "system" necessitates no nature of man other than what currently exists; you clearly labor under the standard rightist delusion that socialism somehow requires a "communal" perspective rather than an "individualist" one.

The reality is that time and again you have been unable to brings your prosed systems or your criticisms of the principles of capitalism to terms with reality or the most basic of observations or simplest of questions or criticisms. For all you reading and propaganda, you are no different from Mao: your pretty words might sound inspiring, and it might be tempting to be swept up in idealism and grandiose dreams of destroying the bourgeoisie and creating the type of paradise found only in religious mythology, but the slightest touch of reality shows it too be too fragile to survive for any length of time in the harsh reality of the world that we have inherited or the very heart and nature of Mankind, that would inhabit it.

Totally wrong! If anything, I've applied excessively rigorous scrutiny and criticism through demands for empirical research to serve as the only ultimate validation for any theoretical ideology. That's the basis behind my rejection of the laissez-faire fantasy of free markets that has never existed outside of the textbook, effectively enjoying no historical legacy of implementation. You simply have no capacity whatsoever to comprehend the criticisms of inefficiency capitalism advanced in my first post of this thread, which is why you did not reply to them. Those criticisms are based on in-depth analysis of empirical literature that most people profess to be rather bored by (does the function of equilibrium unemployment as a worker discipline device sound "inspiring" or like "pretty words" to you?), which honestly includes myself at times. But you're merely guilty of an extremely basic fallacy that even a fairly insightful person like editec has committed: you've simply spewed the standard rightist talking point that "human nature" prevents the implementation of socialism because it would require a "communal" perspective, as opposed to our "self-interested" one.

What you have absolutely no capacity to realize is that these inane platitudes were acknowledged and rebutted by anarchists more than a century ago. It was almost one hundred and ten years ago that Peter Kropotkin wrote:

[W]hen my attention was drawn, later on, to the relations between Darwinism and Sociology, I could agree with none of the works and pamphlets that had been written upon this important subject. They all endeavoured to prove that Man, owing to his higher intelligence and knowledge, may mitigate the harshness of the struggle for life between men; but they all recognized at the same time that the struggle for the means of existence, of every animal against all its congeners, and of every man against all other men, was "a law of Nature." This view, however, I could not accept, because I was persuaded that to admit a pitiless inner war for life within each species, and to see in that war a condition of progress, was to admit something which not only had not yet been proved, but also lacked confirmation from direct observation...Besides the law of Mutual Struggle there is in Nature the law of Mutual Aid, which, for the success of the struggle for life, and especially for the progressive evolution of the species, is far more important than the law of mutual contest.

Nobody has denied the importance of self-interested motivation. What you don't understand is that the practice of self-interested behavior isn't merely the domain of unrestricted intra-species competition, or a distrusting standoff between every individual. The reality that exists in human civilization is that of mutual need. Mutual need in turn necessitates mutual aid, which is not offered because of some irrational communal sentiment of altruistic charity, but because individuals as a whole merely seek to maximize comparative advantage through associations wherein recipients of aid reciprocate and are cut off from the association if they do not. Foolish and naive belief in the utility maximizing capitalist is thus rendered far more idiotic than support of the feasibility of mutual aid. 'Can you direct me to the railway station?" asks the stranger. "Certainly," says the local, pointing, in the opposite direction, towards the post office, "and would you post this letter for me on your way?" "Certainly," says the stranger, resolving to open it to see if it contains anything worth stealing.' (McQuaig, 2001) That's why my preferred system of political organization has enjoyed historical implementation, whereas laissez-faire capitalism has not.

You speak of the 'immorality' of capitalism, presupposing a non-existent objective morality that fits your world view and ignoring social contract or the will of the masses while simultaneously showing yousrself incapable of defening the very aspects your system that you criticise when present in any form of capitalism. You claim a moral highground, yet cannot sdefend it when challenged.

I speak of the immorality of capitalism from the basis of having adopted meta-ethical prescriptives that the vast majority of analysts of morality consciously hold to be true, and the rest inwardly know to be true even if they remain in grim and stubborn adherence to some relativist philosophy: Happiness is good, and more happiness is better than less. I thus focus on the traditional utilitarian objective of happiness maximization.