Old vs New Capitalism

Discussion in 'Economy' started by sparky, Apr 6, 2012.

  1. sparky
    Offline

    sparky VIP Member

    Joined:
    Oct 19, 2008
    Messages:
    3,326
    Thanks Received:
    324
    Trophy Points:
    83
    Location:
    paradise
    Ratings:
    +341
    Time again for Coolidge Capitalism?

    The debate among the Republican presidential hopefuls over the role of capitalism in our society is likely to be a faint foreshadow of the contest this fall. President Obama cannot accept blame for the persistent recession and expect to gain re-election. His only rational option is to blame someone else. Pinning the blame on his predecessor worked for a while but he has realized that this will not be acceptable to the necessary number of voters come November. So the strategy is simply to blame the bad economy on capitalism itself.

    And since every political enemy must have a human face, the culprit will be personalized as capitalists. His policies over his first three years in office are consistent with this view, with the exception of his total failure to investigate and hold to account the individuals criminally responsible for the financial crisis that shortly preceded his taking office.

    In one sense blaming capitalism for the recession is correct; business cycles are a necessary part of the process by which innovation and productivity are advanced and inefficiency is reduced. And the financial crisis that triggered the retreat was arguably the result of capitalistic greed and regulatory myopia. But the prolonged nature of the current recession could legitimately be placed at the president’s feet. However, as the even the communist Chinese have learned, the cure of this nation’s economic ills is the very thing the president is poised to demonize – capitalism.

    The question is will capitalism have an advocate in the fall debate? In today’s society where public understanding of these principals is at an historic low, will anyone articulate the truth, and do so in a way that is both comprehensible and compassionate? Anyone so inclined would be advised to review the words of our 30th president.

    Calvin Coolidge was an unabashed capitalist. He consistently promoted unencumbered commerce as the machinery through which society’s ills would be repaired. But he was careful to distinguish between means and ends: He wrote, “Of course, the accumulation of wealth can not be justified as the chief end of existence. But we are compelled to recognize it as a means to well nigh every desirable achievement. So long as wealth is made the means and not the end, we need not greatly fear it.”


    On January 17th, 1925, Coolidge addressed the American Society of Newspaper Editors in Washington, D.C. Out of nearly 2,500 thoughtfully prepared words, nine would come to define the Coolidge philosophy: “… the chief business of the American people is business.” For those of us too young to remember the twenties, we need only look back at the 1990’s to understand why these words resonated within their time. And why, given the perspective of the 1930’s, they were revised (“The business of America is business”) and scorned.

    more>>>>>
    Vermont Tiger: Presidents Day

    ~S~
     
  2. itfitzme
    Offline

    itfitzme VIP Member

    Joined:
    Jan 29, 2012
    Messages:
    4,580
    Thanks Received:
    184
    Trophy Points:
    83
    Location:
    United States
    Ratings:
    +193
    Tripe.

    It is self contradictory tripe. If business cycles are a "necessary part of the process....." as part of capitalism, then the prolonged recession is a "necessary part of the process....." as part of capitalism.

    Prove that business cycles are a "necessary part of the process....." Prove that innovation and productivity are only advanced and inefficiency is only reduced by the business cycle. That is what "necessary" means. It means required. As I recall the automated check out line was created back in 2005, that is innovation and efficiency. That happened before her recession, not as an effect.

    Business cycles are not a necessary part of the process of capitalism. Capitalism is simply private property rights. Business cycles are an unfortunate side effect of market instabilities. Indeed, it was mechanization, the over abundance of agriculture that drove the Great Depression.

    Feed back mechanisms have positive and negative feedback. Negative feedback stabilizes and positive feedback destabilizes. A dynamic and living feedback system, like the economy, changes the very nature of it's own feedback. When it gets into a positive feedback, like deflationary processes, it drives it self downward. Losing the productivity of 5% to 10% of the workforce isn't a part of the process by which innovation and productivity advanced and inefficiency is reduced. Innovation and productivity are advanced and reduced through competition. Eventually, competition catches up and becomes as productive, adopting the same innovation.

    Business cycles are an unnecessary secondary effect of an unstable process.

    How about "tornado's are a necessary part of they cycle by which poorly built houses are weeded out and demolished." Or that same for hurricanes. How about "cancer is a necessary part of life that eliminates people that are prone to cancer."

    Utter bull shit.
     
    • Thank You! Thank You! x 1
    Last edited: Apr 6, 2012
  3. TakeAStepBack
    Offline

    TakeAStepBack Gold Member

    Joined:
    Mar 29, 2011
    Messages:
    13,935
    Thanks Received:
    1,723
    Trophy Points:
    245
    Ratings:
    +2,012
    I agree with itfitzme on this one. The business cycle is a creation of monetary policies. It is not a process of which is inherent to capitalism. Or we would have seen the same constant bubbles during the classical gold standard. They are pleasantly absent during that time frame.
     
  4. itfitzme
    Offline

    itfitzme VIP Member

    Joined:
    Jan 29, 2012
    Messages:
    4,580
    Thanks Received:
    184
    Trophy Points:
    83
    Location:
    United States
    Ratings:
    +193
    Except that never actually happened, did it?

    Oh, I get it, suicide bombers. I thought the outsourcing the call center was the joke. Couldn't figure out what it had to do with truck driving school, or if it is some sort of hyperbole. It's a little funny, but then loses too many points on obscurity and racism (i.e. "Pakistani's are suicide bombers.")
     
    Last edited: Apr 6, 2012
  5. itfitzme
    Offline

    itfitzme VIP Member

    Joined:
    Jan 29, 2012
    Messages:
    4,580
    Thanks Received:
    184
    Trophy Points:
    83
    Location:
    United States
    Ratings:
    +193
    That's somewhat amusing. Thanks for agreeing with me for the wrong reasons.

    I already did this one in another thread. There were business cycles throughout the entire period that the US was on the gold standard. A gold standard does nothing but fix the price of gold to some ratio of the average price of goods.

    Would you like to provide an operable definition of "classical gold standard"? I'd enjoy doing a proof on that.

    A gold standard also limits monetary policy from maintaining price stability.

    Busines cycles are not caused by monetary policies. Bad monetary management can allow price instabilities.

    Business cycles are caused by systematic behavior of economic agents that drive the very process that they are intending to overcome.

    Declining prices case consumers to hold back spending. This promts businesses to lower prices to entice sales.

    In the case of the Great Depression, over abundance of agriculture depressed prices causing farmers to ramp up production to increase output. This just depressed prices further. Revenues were less then needed to pay back the yearly loan which then caused farms to fail. One would have only hoped that this would have simply shifted production from farms to other enterprises. Unfortunately, is caused a banking crisis. In the total scheme of things, the propagation of information was faster then many of the physical process could adjust.

    In the case of the '07 recession, declining return on investment caused investors to abandon investment which drove return on investment down. Home owners, as consumers, seeing declining growth pulled back on spending. Businesses, seeing limited and declining growth began shedding workers. Rising unemployment drove demand downward, driving more businesses to shed workers. In the positive feedback, the system collapse.

    Monetary policy isn't the cause of recessions. Recessions happen whether monetary policy exists or not. A declining money supply can cause a recession. If no monetary policy exists to mitigate declining money supply, additional recession will occur. If monetary policy doesn't maintain the correct money supply, recessions can happen. Monetary policy may allow them to occur or fail to stop them.

    What is your idea, to not have monetary policy and just let it be random? Now there is an idea. Maybe we should get rid of stop light because they cause rear end collisions.
     
    Last edited: Apr 6, 2012
  6. editec
    Offline

    editec Mr. Forgot-it-All

    Joined:
    Jun 5, 2008
    Messages:
    41,427
    Thanks Received:
    5,598
    Trophy Points:
    48
    Location:
    Maine
    Ratings:
    +5,617
    I guess it must be Itfits' turn to bang heads withthe gold bugs.

    We've seen this happen over and over again.

    Gold bugs cannot be squashed by facts or reason.

    Gold Buggery is a FAITH BASED economic theory.

    Want to know where GOLD BUGS basic premise is wrong?

    Ask them if gold has intensic value and that is why it is a good specie.

    You see, they think units of measure of past work are real-er than the work that species represents.

    They believe thast STUFF has value BEFORE humans give it value,

    Basicially these people don't understand what money really represents.
     
    Last edited: Apr 6, 2012
  7. TakeAStepBack
    Offline

    TakeAStepBack Gold Member

    Joined:
    Mar 29, 2011
    Messages:
    13,935
    Thanks Received:
    1,723
    Trophy Points:
    245
    Ratings:
    +2,012
    I'll get to what a classical gold standard is after a bit. That's enough for now.
     
  8. TakeAStepBack
    Offline

    TakeAStepBack Gold Member

    Joined:
    Mar 29, 2011
    Messages:
    13,935
    Thanks Received:
    1,723
    Trophy Points:
    245
    Ratings:
    +2,012
    Gold was money more than 6,000 years for a reason. I'm not going to spell it out for you. The intrinsic value, comes from several things about gold. It, like many items, requires labor to obtain, the energy from which all the market place derives from, being part of it. It's also, rare, maluable, almost indestructable, easy to recognize and impossible to counterfeit (unless based on purity).


    I suppose everyone that came before was stupid and we suddenly figured it all out in the last 100 years. That would be why this entire system is facing a masssive collapse (Imm sure you'll disagree with that too). We see boom/bust harder and faster each time and the debasement of the money is a great thing. I really do not have an interest in arguing with people over gold in this thread. There are several like it.

    You either understand that exchange medium arised naturally through human action/markets, or you believe that governments are the ones who decided it is a good idea. One is right, the other is wrong. Plain and simple.
     
    • Thank You! Thank You! x 1
  9. midcan5
    Offline

    midcan5 liberal / progressive

    Joined:
    Jun 4, 2007
    Messages:
    10,776
    Thanks Received:
    2,363
    Trophy Points:
    245
    Location:
    Philly, PA
    Ratings:
    +3,287
    The debate goes on, but any reading of the economy before the gold standard was discarded proves the complete failure of that idea.

    Good piece in February Harper's on contemporary market capitalism - not sure if available or for how long. Killing the competition: How the new monopolies are destroying open markets?By Barry C. Lynn (Harper's Magazine)


    This looks interesting: [ame]http://www.amazon.com/Paper-Promises-Money-World-Order/dp/1610391268/ref=sr_1_1?s=books&ie=UTF8[/ame]


    "Moreover, if we give the matter a moment's thought, we can see that the 20th century morality tale of 'socialism vs. freedom' or 'communism vs. capitalism' is misleading. Capitalism is not a political system; it is a form of economic life, compatible in practice with right wing dictatorships (Chile under Pinochet), left-wing dictatorships (contemporary China), social-democratic monarchies (Sweden), and plutocratic republics (the United States), whether capitalist economies thrive best under conditions of freedom is perhaps more of an open question than we like to think." Tony Judt 'Ill fares the Land'
     
    Last edited: Apr 6, 2012
  10. TakeAStepBack
    Offline

    TakeAStepBack Gold Member

    Joined:
    Mar 29, 2011
    Messages:
    13,935
    Thanks Received:
    1,723
    Trophy Points:
    245
    Ratings:
    +2,012
    Yeah, no.
     

Share This Page