Posted on 12/31/2010 6:16:53 AM PST by verdugo
....By purely capitalist standards, capitalism does not work and never has.
What, precisely, does a capitalist mean when he says that capitalism works? Simply this: that the capitalist system can provide a relatively stable and prosperous economic order without a lot of government interference in the market. That is to say, capitalism is basically “self-regulating,” and needs no outside force, such as government, to balance supply and demand and ensure prosperity. ... But he cannot fail to notice, if he is intellectually honest, that capitalism has never been a stable economic order without the heavy involvement of the government. And if this system that we pronounce “working” is really one that requires the heavy hand of government for its stability, can we really call it “capitalist” without at least adding some modifier.....The people who argue that “capitalism works” are the same people who argue that we should have less government interference in the market. Now, I am all for less government; however, the plain fact of the matter is that capitalism cannot function without this interference; capitalism relies on an expanded state to balance aggregate supply and demand. Consider this fact: in the period from 1853 to 1953, the economy was in recession or depression fully 40% of the time. Since 1953 the economy has been in recession only 15% of the time.. Consider the following chart, which depicts the American economy in the period from 1900-2006 (click on the CHART to see a better version)
The problem with socialism is that is rewards only those in government and those who serve their ends and always destroys the middle class and makes the average citizens just another member of the poorest of people. The socialist system bankrupts everyone and eventually destroys itself after much suffering and bloodshed.
Marxism parading as Catholicsim.
The argument over government and the business cycle continues.
Take your pick: More government involvement with fewer but far more serious recessions. Or less government involvement with morre frequent, but less serious recessions.
The problem with government involvement is that it fuels massive bubbles when it gets involved, either by lowering interest rates (then not raising them in time), or by deregulation of usurious business or banking practices.
Do usch bubbles occur naturally? Sure, but they’re rarely as serious. IMHO, the government needs to regulate usury in all its forms, then pay more attention to immigration and the makeup of the population rather than interest rates.
The problem isn’t so much regulation but the irrestible urge of government to tap into the wealth created by capitalism. It’s theft, rationalized initially to defray the cost of regulation, then outright redistribution to the less or nonproductive elements who are quite simply, envious. When government has the access to private wealth, the temptation to steal for political advantage is overwhelming.
I reject the idea that there is a “capitalist system”.
The freedom to own what is yours and to buy and trade with others is natural law, and the biblical way.
All capitalism needs from government is a stable, predictable legal system, stable and predictable fiscal and monetary policy, and an impartial system of arbitration and courts in which to resolve disputes.
Having secured these, it is then government’s role to stay entirely out of the way.
Capitalism always needs order - ability for contracts to be enforced and property rights to be enforced. With a moral people the need for government is less.
But government manipulating aggregate supply and demand? Who is the quack that wrote this?
I'm not going to read this drivel, but would like to point out that the goal of "capitalism" is not stability.
Capitalism (which word is itself a Marxist insult to the concept of free market trade among peoples) produces goods and services because humans are productive, but the growth of productivity occurs because humans are also creative. Creativity is all about destruction of old ideas by replacing them with something new and improved.
Introduce government and collectivism into the mix...and see the whole system grind to a halt as the element of creative destruction is replaced with stability and (to use Obama's favorite term) "fairness."
I would like to know what other capitalistic system has existed out side the USA?
Unless there has been such a system, they must have failed for them to say it has never worked.
What price freedom? I’ll take the risk of more economic “instability” over the fascist government/crony protection racket.
Marx coined the phrase ‘capitalist system’.
I agree with you. There are many ‘laws’ that pertain to commerce that describe human behavior cause and effect.
GDP is the sum of Consumption, Investment, net Exports X and government spending G...GDP=C+I+X+G. The Keynesian idea that increasing government spending G increases the GDP fails to understand that the increased taxes or debt needed to fund this government spending decreases consumption C, investment I and makes net exports X more negative as US production of good and services for export decrease with lowered investment. Consumers necessarily spend and invest less when their disposable income is reduced by higher taxes.
Another important point made by Hayek in The Road to Serfdom is that increased government control over the economy diminishes individual liberty. The economist Milton Friedman also related how government control of the economy means less choice and freedom of enterprise.
We have to no more than look at the government controlled socialist economies of Europe to see the failure of more government involvement.
I don't know.....you know what DOES work?
Paragraphs.
What's my motivation for bothering with anyone - about anything - who doesn't understand the concept and use of paragraphs?
Seriously. What a bunch of self-important nonsense.
Capitalism needs minimal government involvment.
The author chooses a time period where our economy was in the midst of a transformation from agrarian to industrial, ending with the Great Depression which was brought about and lengthened by government interference.
“All capitalism needs from government is a stable, predictable legal system, stable and predictable fiscal and monetary policy, and an impartial system of arbitration and courts in which to resolve disputes.”
Strike “predictable fiscal and monetary policy” and replace it with “national defense against non-Capitalist aggression from Socialist states” and I’ll agree with you.
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