Free Market Myth

[Agnapostate]

Run a goat farm, do we? This is what I do with verbal literalism.

 

[Zoomie1980]

My conception of communism consists of its literal definition. I haven't studied communism in even a fraction of the amount that I've studied capitalism. I will never agree with it, so in this particular case, I have no desire to study its differential usage throughout history.

You seem to advocate some of its merits, and that is probably why you study it so specifically. There's nothing about the ideology that interests me.

The end result of most pure socio-economic systems is that in their final state, the need for the state disappears. The idea is that the system so completely meets the needs of society that there is no need for a "referee" or a policing function, and the "state", itself, is no longer needed.

 

[Agnapostate]

What's most ironic is that the state has a far greater role in sustaining capitalism than it does in sustaining socialism.

 

[Toro]

The major variety of socialism that was implemented in Catalonia was collectivism, which has few doctrinal differences with communism. Indeed, outright anarcho-communism was implemented throughout parts of anarchist Spain.

That's correct. But like the communists, they had no problem decreeing the death penalty on those who disagreed with their philosophy.

when the Spanish Anarchists (anarcho-communists of the Bakunin-Kropotkin type) took over large sections of Spain during the Civil War of the 193Os, they confiscated and destroyed all the money in their areas and promptly decreed the death penalty for the use of money. None of this can give one confidence in the good, voluntarist intentions of anarcho-communism.

The Death Wish of the Anarcho-Communists by Murray N. Rothbard

 

[Agnapostate]

Unsurprisingly, Murray Rothbard's claims are as inaccurate as ever. While figures such as Ascaso and Durruti may have been admittedly excessive in their usage of violent tactics at times, (though pacifism was obviously not an appropriate policy towards Franco's fascist armies and their allies), the very obvious fact that the anarchist militias were not even present in many areas in which collectivization occurred (i.e. the Levant, Castile, Estremadera) should indicate that Murray Rothbard is either inexcusably ignorant or willfully lying. (Though he often tends to be both.)

The Spanish anarchists were not statists or anything similar, just as Murray Rothbard was not a libertarian. The libertarian tradition belonged to those of egalitarian schools long before capitalists stole the mantle, as the term was popularized in order to escape anti-anarchist laws, and the first person to use the term "libertarian" in print was the anarcho-communist Joseph Dejacque.

EDIT: Incidentally, Murray Rothbard has revealed more of his ignorance than usual in this particular article. The fact that he uses the phrase "anarcho-communists of the Bakunin-Kropotkin type" indicates that he knows nothing of anarchist theory, since Bakunin was an anarcho-collectivist, not an anarcho-communist, and there are important and fundamental theoretical differences between anarcho-collectivism and anarcho-communism.

Not content with this failure, he then grants us this gem:

Economically, anarcho-communism is an absurdity. The anarcho-communist seeks to abolish money, prices, and employment, and proposes to conduct a modern economy purely by the automatic registry of "needs" in some central data bank. No one who has the slightest understanding of economics can trifle with this theory for a single second.

When it comes to economics, the most profoundly ignorant person involved in this "debate" is Murray Rothbard. Anarcho-communists oppose centralized government, and would thus oppose a "central data bank." The fact that Rothbard is unable to differentiate between Marxists and anarchists (and between Leninists and Stalinists, for that matter) leads to his next failure.

Fifty years ago, Ludwig von Mises exposed the total inability of a planned, moneyless economy to operate above the most primitive level. For he showed that money-prices are indispensable for the rational allocation of all of our scarce resources – labor, land, and capital goods – to the fields and the areas where they are most desired by the consumers and where they could operate with greatest efficiency. The socialists conceded the correctness of Mises's challenge, and set about – in vain – to find a way to have a rational, market price system within the context of a socialist planned economy.

This is a profoundly ignorant claim. Ludwig von Mises was unable to defeat even state socialists in his contention with them. Not only did Enrico Barone develop a Pareto efficient socialist economic model twelve or thirteen years before Mises presented his economic calculation argument, Mises was unable to answer the challenge of Oskar Lange, for instance, on a theoretical level, and instead reverted to the claim that a socialist economy was not a "practical" system. Hayek also later abandoned Mises's claim of impossibility after he gained some faint conception of the buffoonish error that dear Ludwig have made in assuming that socialism is incompatible with a market system and that all forms of socialism are necessarily centralized, among other things.

 

[manu1959]

One wonders if this matters, considering that both liberals and conservatives effectively support mixed-market capitalism, simply to different extents.

True but there is nothing inherently wrong with free market capitalism - although I would remove the word free and call it simply a market system. It is what people do with it that matters. There is a curious paradox in the fact capitalism leads to a rich elitist corporate group and communism ends with a elitist party group. Privilege rarely leads to egalitarianism, it usually leads to the leaders assuming they know best.

having lived in sf and moscow....you are spot on......

 

[manu1959]

One wonders if this matters, considering that both liberals and conservatives effectively support mixed-market capitalism, simply to different extents.

True but there is nothing inherently wrong with free market capitalism - although I would remove the word free and call it simply a market system. It is what people do with it that matters. There is a curious paradox in the fact capitalism leads to a rich elitist corporate group and communism ends with a elitist party group. Privilege rarely leads to egalitarianism, it usually leads to the leaders assuming they know best.

having lived in sf and moscow....you are spot on......

the bushs etc.....can you say rich elitist corporate group.....

and the clintons kennedys obamas pelosis reids and kerry's.............

 

[Agnapostate]

No, that claim can't simply be accepted in that manner. What is commonly called "communism" or "socialism" is actually state capitalism in that state structures and organizations imitate the social structures of Western capitalism. Socialism necessitates the collective ownership of the means of production, and communism necessitates the existence of socialism, and thus, in a statist empire such as the Soviet Union, in which legitimate collective ownership does not exist, nor does socialism or communism.

 

[editec]

No, that claim can't simply be accepted in that manner. What is commonly called "communism" or "socialism" is actually state capitalism in that state structures and organizations imitate the social structures of Western capitalism. Socialism necessitates the collective ownership of the means of production, and communism necessitates the existence of socialism, and thus, in a statist empire such as the Soviet Union, in which legitimate collective ownership does not exist, nor does socialism or communism.

So what happens when some collectives end up doing much better than others?

Just wondering how this system might play out in a real world where people are still greedy.

You know in real world as opposed to a world where everyone thinks like angels.

And by the way, in this collective, is every decision made by popular vote or are there bosses who oversee such decisions?

And if there are bosses, then do they get paid more, and if they do not, why would they want those jobs?

And in this collective, what do they do with slackers who don't carry their weight, and who decides what is to be done with them, and if they are thrown out of the collective, where do they go?

If you want to know why every form of government fails in the long run, reconsider the meaning of ORIGINAL SIN, and consider that those bronze age Hebrews understood SOMETHING about human nature.

 

[Agnapostate]

If anything's "utopian," it's conceptions of free market capitalism, which rely on utopian understandings of perfect competition and such. The pragmatist will quickly realize that such a system cannot function efficiently, and will thus seek out one that can. A wide array of empirical evidence indicates that worker-owned enterprises and participatory management do not suffer from the inefficiencies that capitalism suffers from due to its hierarchical nature and creation of artificial management techniques. For instance, consider the work of researchers Logue and Yates in Worker-Owned Enterprises, Productivity and the International Labor Organization, Economic & Industrial Democracy.

A survey of empirical research on productivity in worker-owned enterprises and cooperatives finds a substantial literature that largely supports the proposition that worker-owned enterprises equal or exceed the productivity of conventional enterprises when employee involvement is combined with ownership. The weight of a sparser literature on cooperatives tends toward the same pattern. In addition, employee-owned firms create local employment, anchor jobs in their communities and enrich local social capital

Hence, if you cared to seek out a practical approach to maximizing productivity, autogestion and its variants would be a prime contender.

 

[Toro]

If anything's "utopian," it's conceptions of free market capitalism, which rely on utopian understandings of perfect competition and such.

This is a straw man. Nobody argues that perfect competition exists nor ever has. The conception is of a model, then empiricists work backwards from the model to find the optimum of efficiency.

The pragmatist will quickly realize that such a system cannot function efficiently, and will thus seek out one that can.

This is merely theory. Not only are nations that are freer more productive and richer, free market capitalism - or its next-best thing - has given mankind the greatest standard of living the planet has ever seen. The analytical evidence is overwhelming, as I have posted here on several occasions.

A wide array of empirical evidence indicates that worker-owned enterprises and participatory management do not suffer from the inefficiencies that capitalism suffers from due to its hierarchical nature and creation of artificial management techniques. For instance, consider the work of researchers Logue and Yates in Worker-Owned Enterprises, Productivity and the International Labor Organization, Economic & Industrial Democracy.

A survey of empirical research on productivity in worker-owned enterprises and cooperatives finds a substantial literature that largely supports the proposition that worker-owned enterprises equal or exceed the productivity of conventional enterprises when employee involvement is combined with ownership. The weight of a sparser literature on cooperatives tends toward the same pattern. In addition, employee-owned firms create local employment, anchor jobs in their communities and enrich local social capital

Hence, if you cared to seek out a practical approach to maximizing productivity, autogestion and its variants would be a prime contender.

And there is a fair amount of academic literature concluding that those who own their own property are more productive than communities that do not.

 

[Shogun]

Yea, people living under Cuba's Batista government probably agree! Hell, who DOESN'T want to become some "sweatshops benefit the poor" wage slave so that someone at the pinnacle of the capitalista hierarchy can feel like a humanitarian by putting poverty stricken toddlers to work in a factory!

 

[Richard-H]

The difference between communism and capitalism is that we here in America, where capitalism still reigns, have the ability to tell our leaders what THEY think, whereas in communism, they tell us what WE think.

Not really true. Of course you've been TOLD TO THINK THAT, so you do.

In fact, the education in the Soviet Union was excellent - far better than what passes for education in the U.S. The Soviet People were very well informed and knew A LOT more about us and our culture than we have ever known about them.

Most of what Americans believe about life in the Soviet Union is a bunch of BUNK. But most Americans believe what they are told to believe.

Now, it may be true that our government does not 'brain wash' us, in fact the government makes a pretty good effort to get the truth to us.

But in a capitalist society we are CONSTANTLY being 'brain washed' by those who make a profit from us being 'Brain Washed'.

Mass marketing, not only of products, but of ideas - most of them false - has controlled the entire psyhic of the American people.

The incredible lies that most Americans believe about the free market, capitalism above all else, supply side economics, social darwinism, religion, not to mention what music we listen to, what clothes to wear, junk food, fast food restaurants have all amounted to one thing: the destruction of the American middle class and the consolidation of all the wealth into the hands of a few.

 

[Agnapostate]

This is a straw man. Nobody argues that perfect competition exists nor ever has. The conception is of a model, then empiricists work backwards from the model to find the optimum of efficiency.

No, but models of perfect competition are necessary to assume that capitalism will have the utopian outcome that its supporters assume it will. But the reality is not only that perfect competition does not exist, but that nothing near perfect competition exists. If it did, I would be a wholehearted supporter of capitalism, but the pragmatist must acknowledge the fact that the nonexistence of perfect competition or a perfectly balanced supply and demand system necessarily causes inefficiencies.

This is merely theory. Not only are nations that are freer more productive and richer, free market capitalism - or its next-best thing - has given mankind the greatest standard of living the planet has ever seen. The analytical evidence is overwhelming, as I have posted here on several occasions.

Which specific evidence do you refer to? Not any analyses of Hong Kong, I hope. The fact that productivity is inhibited by capitalism due to the necessity of establishing hierarchy and other artificial management techniques is not merely a claim of the theoretical realm, but is borne out by empirical evidence. Do you have empirical evidence that indicates the opposite?

And there is a fair amount of academic literature concluding that those who own their own property are more productive than communities that do not.

You'll have to clarify the meaning of "property ownership" in this context. Private property is wholly distinct from personal possessions in that a personal possession has "use value," whereas private property is an establishment of a monopoly over an object not being used by its "owner." And let us not forget that it was Garrett Hardin's egregious misunderstanding of the nature of socialist property rights that led to his sadly misguided "tragedy of the commons" argument.

 

[FistyTheBadger]

So you are saying that neither of the two major parties really believes in free market capitalism. So what? What does that prove?

 

[Agnapostate]

Are you lost? We're discussing the relative merits of capitalism (demerits) and socialism as they relate to productivity and efficiency levels.

 

[FistyTheBadger]

Are you lost? We're discussing the relative merits of capitalism (demerits) and socialism as they relate to productivity and efficiency levels.

I know threads often diverge from the original subject of the original post. I was addressing the original post.

 

[Agnapostate]

Then quote it.

 

[FistyTheBadger]

Then quote it.

It is the original post. There is no need. I was making a fresh post to the thread itself.

 

[Toro]

No, but models of perfect competition are necessary to assume that capitalism will have the utopian outcome that its supporters assume it will.

You make a false assumption. The answer is not a utopian outcome but an optimal one. There is a big difference. For example, you say

But the reality is not only that perfect competition does not exist, but that nothing near perfect competition exists. If it did, I would be a wholehearted supporter of capitalism, but the pragmatist must acknowledge the fact that the nonexistence of perfect competition or a perfectly balanced supply and demand system necessarily causes inefficiencies.

What do you know about business? Have you ever run a business? Have you ever looked closely at a business? Because if what you argue is true, then no business is a price-taker. All businesses would be price-makers in your model. If the market was completely inefficient, then you could charge whatever you want. But in reality, most businesses are price-takers, not price-makers. This is why profitability reverts around a mean over time in almost all industries, because the market drives the price to where excess profits cannot be made over time. Of course, there are anecdotes when this is not the case, such as Microsoft for instance. But it is also true on the demand side. The commercial passenger airline industry has, in aggregate, lost money since the Wright Brothers and Kitty Hawk. But for the most part, profitability reverts to the mean as capital enters industries with excess profits and leaves industries with substandard profits.

Which specific evidence do you refer to? Not any analyses of Hong Kong, I hope. The fact that productivity is inhibited by capitalism due to the necessity of establishing hierarchy and other artificial management techniques is not merely a claim of the theoretical realm, but is borne out by empirical evidence. Do you have empirical evidence that indicates the opposite?

I have posted several studies for you in regards to this issue. If I have time tonight, I'll make a thread with the empirical evidence. Otherwise, I'll do so when I return from travel.