I agree. I’m not emotionally attached to corporations, and I have no problem with cooperatives, as long as they’re actually efficient.
Excellent point. This forced reorganization scheme really has no merit, but I don’t think any of us would oppose the formation of cooperatives, as long as they’re not given any form of privilege.
I don’t understand how accumulated wealth is an infallible proof of business acumen. Perhaps this is one of the tenets of capitalist dogma my silly leftist brain is simply incapable of comprehending.
All being in a position to buy assets from a failing company means is that you either have liquid capital requisite to do so, or a line of credit. I have never said that in all conditions, workers’ government is superior to individual management. I do, however, think it is rather foolish for you to discount the argument in favor of cooperative management on the basis of theory without examining the principles as they have been put into practice.
I lived in a co-op for over two years and was very active with a lot of other local co-operative ventures in my Marxist days. I got to see for myself how they were run. While they have their own quaint charms and fill a niche for rich hipsters, heaven help us if they become the dominant business entity in the economy.
Different type of cooperative, comrade. If these corporations were inefficient, they would have failed.
Well you have to understand profit. Profit consists of two separate phenomena: (a) the maximization of revenues, or the ability to satiate consumer desires, and (b) the minimization of costs, or the ability to engage in production with as little resources as possible (allocative efficiency). There’s also (c) the ability to accurately speculate on future demand conditions and adjust, but this is really part of (a).
The line of credit is not gratuitous. You are given access to that line of credit, and you have capital on hand, for a reason.
I think you undervalue the role of the entrepreneur in economic activity. Assuming that he (or she) has had no government aid in building up his enterprise to profitability, it means that he knows how to run a tight ship, how best to allocate scarce resources for the greatest benefit to society. The workers operating the plant don’t have that kind of resume. The profit/loss system isn’t just some arbitrary measure of capitalist greed, but it rather plays a significant role in arranging price signals to determine how best to allocate resources to their most productive use for the benefit of consumers in society. Things like business failures happen for a reason; they are not arbitrary and can be resuscitated at the whim of a bureaucrat. This piece from Jim Cox’s Concise Guide to Economics will give you a clue as to how integrated and systematic the economy is:
Haha thank you for the quick lesson - but that principle only explains why the most profitable manager would be the most efficient one. It does not answer why those in a position to buy assets from a failing company would necessarily be better managers than the previous ones. I understand the principle of profit - what I do not understand is how accumulated capital, as distinct from profits, somehow entails superior acumen as your original post implied.
I must say, given the circumstances, that this has been a very cordial and fun discussion.
In and of itself, it doesn’t mean that they would necessarily be better managers; however, they’re willing to risk their own capital in the acquisition of a business that previously failed. In other words, they’re expending some of their capital now in the hopes of being able to turn a profit in the future… if they’re able to do so, then they have successfully satisfied the wants of consumers and performed the job more successfully than the previous owners/managers.
It’s nice to see someone with an opposing view that speaks politely and intelligently and doesn’t dodge questions. (Similarly, it’s nice to see the same politeness in most of the responses from regular posters.)
Yeah, it’s hard to find polite Marxists, at least in my own personal experiences. Many of them accuse you of being a reactionary apologist who supports the raping and pillaging of labor and the poor.
Marxists do not understand profit. If they did, they wouldn’t be Marxists. (Sorry to be blunt, but it is true.)
And you answered your own question. The most profitable businessperson tends to also be very efficient. Efficient at what? Best serving the needs of the consumers, since that is the only way he could have created his fortune (again, we are assuming he isn’t just hitting up pols in Washington). And yes, there isn’t any guarantee that he will be able to use his new assets in a profitable way. He could also go under. But his assets still remain, and the market will self-correct and hand them off to someone who is better able to utilize them.
Exactly why I take very few so-called Marxists seriously. Marxism, like any political philosophy, has to be able to engage with its rivals on an intellectual level. Failure to do so is nothing but an admission of defeat.
Since this thread is already off topic - what do you gentlemen think of Andrew Lo’s Adaptive Market Hypothesis? Is it an effective modification of current macro-economic models, or do Austrians still prefer the rational market model?
Austrian’s don’t accept Fama’s efficient market hypothesis nor Lucas’ rational expectations model. Is this what you’re talking about? You can’t have efficient markets or rational expectations without a functional price mechanism, that is, in the face of perpetual inflation.
I think that is a rather facile characterization - I am not challenging the ideal dynamics of profit in a free market: I am challenging the idea that the conditions that enable such smooth functioning of the market exist consistently enough to promote sustainable economic growth. Of course, ceteris paribus, the market’s self-correction will allocate resources where they are most valued. But that is not the way things always work in practice - and unless the free-market can somehow attain that ideal level of efficiency in reality, I do not see how the idealized relationships of capitalism can be used to discredit alternative forms of economic management.
Yes, I was referring to the EMH in particular. What sort of macroeconomic model does Austrian economics employ then?
Austrian. There is no general equilibrium; there is only perpetual change and radical uncertainty. The market is a process.
Absolutely. I would love nothing more than to debate Marxists like those at revleft on a purely intellectual level. But you have to remember that Marx and Engels set a bad example for their followers by doing everything in their power avoid intellectual arguments and instead undermine the integrity of the persons they were debating. They built up a great deal of their philosophy on the point that the enemies of socialism were to be dismissed outright because their logic was founded upon class interests. This polylogism gave them and their successors a convenient means of avoiding challenging arguments by condemning the ideas of their opponents as a symptom of incurable bourgeois logic, as if this was a substitute for actual debate. Marxists in the past have been notorious in their use of the ad hominem. The fact that many of their modern followers often utilize the same tactics isn’t some anomaly; it is a deeply ingrained part of their philosophy and tradition.
Ah, the tried and true “fly by the seat of one’s pants” approach haha.
Definitely true, and has been a major political handicap for Marxism in my opinion.
So how bout that health care bill?
Whats the big fuss about this bill? How is this news any different than other spending programs?