I’m tired and a little cranky. The rest of your post is really pedantic and loaded with emotional rhetoric. If you can write something relevant to what I wrote, then I’d be interested in reading it. Bear in mind, I am a layman entrepreneur, not an academic, so this appeal to sources and block quotes doesn’t convey that you understand the topic, only that you can reference people that you believe understand the topic.
And I’d like to reiterate, you’re not using capitalism in the economic sense. You’re applying it in a socio-political sense. Capitalism, as it would be used here, would be to delineate property ownership along lines not employing authority or violence, thus not the state means.
Defining an economy as “centrally planned” because the institutions have control over the firm is like defining the human race as “divinely controlled” because each individual has control over their person. (That isn’t what centrally planned means in the context of economics). Further, I don’t see how being “undemocratic” makes a difference. Democratic arrangements of control are still fit withing the definition of “centrally planned.”
Centrally planned in the sense that it’s completely disseminated? Do you know what central planning means?
An argument and examples behind a blanket assertion would be nice.
Really? (emphasis is mine)
like the 62 drug act which banned “me too” drugs from the market. “Me too” drugs were drugs which didn’t infringe on intellectual property and had similar therapeutic effects to designer drugs. This act made it so new drugs had to be not only unique, but superior, severely limiting supply and solidifying monopoly control in the pharma industry. Also, it added extreme research and development regulations which increased operating costs 46 fold.
Government “unitzation schemes” of the 30s and 40s which mandated horizontal integration in the oil industry in order to boost prices–during the great depression. Or the “Connally hot oil act” which set state quotas and made it illegal to trade oil through state boundaries, further protecting local oil companies and artificially raising prices (during the great depression).
Government creation of the “seven sisters” which was a government created and backed American oil cartel (BP, Shell, Exxon, Gulf, Mobil, and others) which was countered by OPEC. We all know how well that turned out, and how it eliminated uncertainty.
The AT&T anti-trust act which forced them to choose between producing either semi-conductors or computers, and forced them to give licensing agreements for free to competitors. This worked out real well, as Japan quickly took over the semi-conductor market. This was only made worse by direct government interference within the semi-conductor industry, forcing firms to take their focus off of civilian use (the actual market) and directed their attention solely towards military use. The result (should be obvious)? Inefficient and noncompetitive industries entirely dependent on the government.
IBM anti-trust cases suspended American dominance in the computer market. (IBM wasn’t a monopoly, so the government defined the market as narrowly as possible, and talked about what would “happen in the future.” Their argument was that IBM would grow into a real monopoly, jack up prices and destroy “social welfare.” Of course, IBM was under extreme competition from the PCM (plug-in compatible manufactures) and other computer competitors such as Honey Well, UNIVAC, GE, and Japanese threats).
Government union enforcement lead the “experimental negotiation act” for U.S.S, where workers demanded a 5% increase in wages per year, while their productivity declined by 1.7% per year, destroying profits. Furthermore, when U.S.S no longer complied, there were massive strikes further destroying profits (Most of U.S.S costs were fixed, and required continuous operation for any kind of profitability). This lead to the destruction of America’s steel producing capabilities as Japan entered the market offering lower priced higher quality steel (they weren’t focused on marginal costs and could innovate in open hearth furnaces, while U.S.S was using technology from the 19th century).
The Japanese engaged in an infant industry policy and engaged in debt-financing for their domestic firms causing a massive asset bubble which eventually popped. Likewise, this lead to inefficient Japanese industries reliant on privilege and perpetual inflation. The Nikkei peaked at 76,000 in 1989, where’s it at today? Two lost decades.
I’m not even going to go in the monetary manipulation which turns every single individual into a speculator instead of a saver, destroys the functionality of the price mechanism, and causes business cycles.
This information (except the last bullet) comes from Industry, Structure, Strategy, and Public Policy, by F.M Scherer.
Ah yes, the socialist straw man of capitalism. The government interferes in the market with hundreds of thousands of regulations, inflates the currency, over-taxes capital, has “progressive” income taxation, engages in massive fiscal deficits, and owns 40% of the GDP. “Capitalism” really does depend on central planning.
At the Mises institute, we oppose this system you call “capitalism.”
As its name implies, market socialism retains markets. How can that be made any clearer?
Aside from the fact that the capitalist economy does not generate prices reflective of costs at present (which is particularly harmful in the case of negative externalities), prices are still generated by market forces in a market socialist economy and direct consumer inputs in a decentrally planned socialism economy, as seen from the example of parecon.
I’m going to hold that that is untrue, and that knowledge problems are a critical portion of the economic calculation problem as a whole.
So again, since I’m not an advocate of central planning, there’s simply no application to my own advocacy and far more application to actually existing capitalism and its centrally planned nature.
You don’t see how an economic system characterized by public ownership of the means of production and minimization/elimination of the state in favor of horizontal confederations of decentralized collectives and communes is different from capitalism? The difference is one of freedom and slavery.
Lack of response!
so funny.
What does what mean? The portion about the state’s role in capitalism? It means what it says; the state and capitalism are like two robbers who need each other to rob a bank, and while they may occasionally squabble about the loot, they still need each other. Hence, every advocate of capitalism is a statist, since capitalism is reliant on the existence of the state.
All self-professed Austrians, I’d hope. Otherwise, it would become clear that many people here don’t know what they’re advocating if they ignored Hayekian knowledge analysis.
That’s clearly not true. While I expect you’re accustomed to using the accusation of appeal to emotion as an all-encompassing disparagement against opponents, my post was characterized by emotionless references to historical and empirical research.
What I wrote is entirely relevant to the issue of the relationship between capitalism and the state.
The majority of our “points” are derived from others, I’d expect, lowly non-academic swine that we are. I simply admit that candidly, and source points.
Then it sounds like you’ll have to conclude that capitalism has never existed (or ramble on about Iceland and the Old West in the way that anarchists are accused of rambling about Spain), since capitalism has always been characterized by state intervention, with the capitalist labor market being characterized by authority and coercion. While Austrian advocacy of laissez-faire “free market” structure is something distinct, the most important distinction is that the “free market” is a perpetually nonexistent theoretical abstraction with no practical application and no use outside of the textbook.
What are you talking about?
I defined the capitalist labor market as characterized by central planning because the orthodox capitalist firm is a hierarchical one with a clearly defined chain of command. I defined capitalism as a whole as centrally planned because of the state’s historical and present role as a stabilizing agent in the economy and because market and wealth concentration has left an oligopolistic/oligopsonistic arrangement in place.
Some are and some are not. Republicanism requires some degree of central planning by its representative nature, since there is a detachment between legislative representatives and the general population. Decentralized direct democracy, conversely, does not fit within that definition.
Some people are confusing central planning with capital indivisibility. A capitalist hires workers because he can’t operate large capital himself. By the fact that he is hiring workers on the market, they are conducting economic calculations in the allocation of their resources (capital and labor), hence it is the opposite of central planning.
Also, market socialism doesn’t really have markets, and therefore also doesn’t have money. It has auctions for fixed resources, which it must used for fixed production recipe’s and then merely allocates finished goods. But The production methods must be elastic, since the desires of consumers and individual actors are elastic. The structure of production must continuously shift (both horizontally and vertically) in order to prevent misallocations, and to provide consumers with the goods/services they demand. This is why there cannot be fixed production recipe’s, because production methods must continuously change. Trial and error, disseminated information, and freely floating market signals is how the structure of production changes, evolves, and ultimately prevents insurmountable malinvestments and misdirections of resources/original means of production. I’m not even raising the whole technological progression argument, which stems from dynamic or x-efficiency (requires supernormal profit).
The introduction of money creates a price index, that is to say, every individual considers the money exchange ratio in his subjective valuations—prices become a point of reference. It the tool of economic calculation, since without it, all goods would demand and exchange at continuously fluctuating ratios on the market, to such an extent that it would be impossible to follow or act on.
That the point. You are re-defining “centrally planned”, obfuscating the argument. A firms organisation has nothing to do with the management of an economy. Going on to define capitalism as a whole as centrally planned ignores the entire argument all together.
Yes, it does (at least if by “that definition” we mean the relevant, economic definition) as the economy is still controlled via the voters. Authority in any form is still authority.
Leviathan do you know how prices are formed? Lets get to the root of our problems so we can see in plain daylight our differences. Please explain to me how prices are formed.
This isn’t socratic method. To properly employ socratic method (and get results) you have to turn the other party in a discussion back into their own argument, until they can see the portions of it which are contradictory/illogical/absurd.
Starting an entirely new discussion about the origin of prices will only lead to another 10 pages of posts with very little resolved re: the OP.
If you want to avoid the classic internet debate crisis where both parties become more estranged and further apart over time, do not go down this path. Instead work from the premises that the other party has already asserted.
In other words, don’t worry about winning the argument, worry about finding things both parties can agree on, and then check the differing premises against them.
If the premises are wholly incompatible then this method must necessarily fail. You will get to a point where both parties say, “okay, we will agree to disagree.” The problem, of course, is that one party is right, and the other party is wrong (or both parties are wrong, but one party is closer to the truth).
At some point, the premises have too agree, even if we have to retreat to very basic concepts like the law of identity.
While that is possible, it is not necessarily undesirable. As a voluntarist and praxeologist, I can accept that values differ, and they must differ because interpretations of reality and its consequences are not homogeneous and never will be. To be a libertarian requires tolerance. We can start by being tolerant of different ideas and foundations of knowledge.
If we approach social relations, communication and organization as a zero sum game, I think that is missing the point. You can be right without posting on this forum. The reason why we post on this forum, is to communicate the ideas we think are right. To do that, requires an approach that (1) conforms to our own ethics, in this case, non-aggression and voluntarism, and (2) will allow us to achieve our desired end.
I would suggest that being confrontational is not compatible with #1 or #2.
Right, so can we skip 10 pages of arguing details that are derived from a root, and instead hit directly at the root? Look I’m just trying to save Leviathan time and us time.
I’d like our Leviathan’s arguments to be as short and as sweet as possible. If he believe’s he is logically correct he has little to worry about.
Let me quote some Marxian I’ve been debating for about a week now about value (well-read in Marxian/Sraffrian/Ricardian analysis): “First, value is not something that people see, touch, taste, or even think about. It is not a chemical or psychological element that can be found within an item or coming from independent valuation of an item. It is a social relation, i.e. something that exists on a higher plane than that of individual consciousness and control. Questions of valuation come in nowhere when individuals make exchanges, though questions of price necessarily do.”
The only measure of success on an internet debate is the acknowledgment of your victory by semi-neutral third parties. People, when they converse online or in real life, have their views (for the most part) already set, and will never change them (this is especially true for Marxists); thus, my only goal is to defeat them and practice my debating abilities so that I can influence the third party participants. If I’m wrong, I will lose a debate, and will have to figure out (a) if I lost because of my debating skills, or (b) if my positions are incorrect. I don’t debate Marxists, Socialists, or whatever because I want to hear arguments in favor of the LTV (for example), when I’ve already heard them–in fact, I want the LTV to go away forever as its time is long over-due.
It’s still not the socratic method. The socratic method is not about confrontation. It is about introspection.
Obviously, you’re welcome to do what you like, but when you’re still arguing, completely offtopic at this point, 10 pages later, I will probably PM you with a “I told you so.”
Like you can’t use debt to solve a debt crisis, you also can’t use confrontation to solve an argument.
Sure, you’ve got someone who requires a massive investment of time to get to agreement with some basic economic premises. Personally, unless he is a leader of thousands of socialists, I probably wouldn’t invest the time. Come to think of it, very little progress ever comes from challenging the hard core ideologues because they are invested in a position, and even if one could make headway with their ideas, its still not a high enough reward for the effort. Any socialist or Austrian leader who rejected his ideology would immediately lose all credibility with those who previously thought him credible.
So you must have a lot of free time on your hands to invest in this guy.
Disagree. I’ve made close to 55,000 forum posts on the internet in the last 7 years. I have been in hundreds of flame wars. The only measure of success, is agreement and mutual respect.
Stereotyping. Who are “people”? I have brought dozens of libertarians to anarchism, liberals and conservatives to both. People do change their mind if you know how to communicate.
Zero sum game. Not a market solution.
You can make an argument for third parties, but you will not impress anyone if you are not sincere about communicating with the person you are engaged with. Don’t think people can’t spot a phony and a demagogue.
It won’t go away forever. But you can help strengthen the case against it by making sound arguments to people who are willing to listen. And to get people to listen, you have to be able to communicate and exercise influence. Influence comes from trust, not from authority.
Market socialism does not retain true markets, it merely tries to play market.
From Human Action, ch 18:
"If one takes the problem of convertibility into proper account, one can easily explode many widespread fallacies. Take, for instance, the infant industries argument advanced in favor of protection. Its supporters assert that temporary protection is needed in order to develop processing industries in places in which natural conditions for their operation are more favorable or, at least, no less favorable than in the areas in which the already established competitors are located. These older industries have acquired an advantage by their early start. They are now fostered by a merely historical, accidental, and manifestly “irrational” factor. This advantage prevents the establishment of competing plants in areas the conditions of which give promise of becoming able to produce more cheaply than, or at least as cheaply as, the old ones. It may be admitted that protection for infant industries is temporarily expensive. But the sacrifices made will be more than repaid by the gains to be reaped later.
The truth is that the establishment of an infant industry is advantageous from the economic point of view only if the superiority of the new location is so momentous that it outweighs the disadvantages resulting from the abandonment of nonconvertible and nontransferable capital goods invested in the already established plants. If this is the case, the new plants will be able to compete successfully with the old ones without any aid given by the government. If it is not the case, the protection granted to them is wasteful, even if it is only temporary and enables the new industry to hold its own at a later period. The tariff amounts virtually to a subsidy which the consumers are forced to pay as a compensation for the employment of scarce factors of production for the replacement of still utilizable capital goods to be scrapped and the withholding of these scarce factors from other employments in which they could render services valued higher by the consumers. The consumers are deprived of the opportunity to satisfy certain wants because the capital goods required are directed toward the production of goods which were already available to them in the absence of tariffs."
Not all Austrians are Hayekians. Hayek was at least as much a Wieserian as a Misesian. And LvMI folk tend to be more Bohm-Bawerk-Misesians than Wieser-Hayekians.
Capitalism is slavery and capitalists are robbers? Sounds like emotional rhetoric to me.
The absolutely perfect circle is, in engineering, a perpetually nonexistent theoretical abstraction. Do the geometric theorems relating to it have no application or use outside of a geometry textbook?
That is an abuse of language. All human action is driven by planning. You are conflating profit management with bureaucratic management.
“Bureaucratic management, as distinguished from profit management, is the method applied in the conduct of administrative affairs, the result of which has no cash value on the market. The successful performance of the duties entrusted to the care of a police department is of the greatest importance for the preservation of social cooperation and benefits each member of society. But it has no price on the market, it cannot be bought or sold; it can therefore not be confronted with the expenses incurred in the endeavors to secure it. It results in gains, but these gains are not reflected in profits liable to expression in terms of money. The methods of economic calculation, and especially those of double-entry bookkeeping, are not applicable [p. 309] to them. Success or failure of a police department’s activities cannot be ascertained according to the arithmetical procedures of profit-seeking business. No accountant can establish whether or not a police department or one of its subdivisions has succeeded.” (Human Action, ch. 15)
How. How would it be a different scenario. You have someone who knows the recipe for civilization leading tabula rasa humans. It is exactly the same.
In the example, technical capability is the fact that the planner knows the steps to industrialize and mass produce.
But the central planner can have some knowledge, just not anything close to what the market has. So, for example, you know that you’re planning for human beings so there’s a 99% chance that society will have to produce food somehow. And clothes, medicine, shelter, etc.
Right, okay. So you have it set up to where its not completely random to begin with. The planners have a list of multiple choice options which are all viable because they are all food, but if the planner didn’t have this list in the first place then rocks would be on the menu.
The inequality thing is a haphazard attempt to generalize the erudite leading the cavemen example.
Actually “boss-ism” is disappearing. LS mentioned a long time ago that professionals on the internet often get together to work on a project, then disperse after finishing. I can also say from personal experience that while corporations are required to have bosses be jure, the workplace can be very independent and individually motivated.
What is the recipe for civilization? Do tell. Is it markets? Freedom and decentralization? Is the plan of your planner to share decentralization with these folks? Or are you proposing that slavery is necessary for civilization?
In order to make your fantasy case, your planner has to be smarter than the market, not the primitives.
So he has better knowledge, which means in a market, he would be higher up the division of labor. But that doesn’t mean he has carte blanche control over an economy. Again, unless you are trying to promote the state over the market as a means of economic organization.
And primitive people would not have known they need food, clothing or shelter? They evolved precisely at the moment he arrived …
Again, your example is just fantasy. You can adjust the parameters any way you want, and we can spend all day analyzing hypotheticals. Instead of trying to make an empirical case based on fantasy, why not work from a theory in the Austrian tradition?
Sure it is random wrt to the menu items. I was going to introduce scarcity into the kitchen (the cooks not having enough materials to make everyone the exact same meal) but decided that would be over the top. You do realize I used that as a means of illustration, and not as an actual argument?
Just don’t tell the left-libertarians, they won’t have anything to be horrified about. [;)]
Bossism is disappearing because there is more decentralization in the labor force, and there is more decentralization because we have tremendous capacties to coordinate and communicate information, capacities which did not exist 30 years ago.
I think socialists and libertarians, particularly movement socialists/libertarians have focused on political power and violence as the force behind hierarchy, but it’s my opinion that control of knowledge has been the real economic and social power. If we’re to believe de la Boetie that government only exists by consent, then changing consent through different (and hopefully better) ideas seems consistent with what we see occurring today.