Greatest debate in modern history? Socialism(not Stalinism) vs Capitalism

[calculusrocks]

Greenspan masterminded derivatives? The problem was a lack of regulation - too little government. Also, as Greenspan himself now admits, his fundamental belief and economic philosophy that markets are self-regulating, failed miserably. This leaves neoconservatives, and even proper conservatives, with no one to shoot at but themselves.

Nobody is apologizing for Greenspan. Nobody is saying Greenspan 'masterminded derivatives'. Greenspan kept interest rates too low, and Bush made gov't too big. That being said, the Bernanke/Obama team isn't changing any of that. We're trying to spend our way out of this, which is digging us deeper.

The regulators underlined the mortgages with triple AAA ratings aiding the moral hazard. As Schiff puts it "The government was co-signing the mortgages." Why wouldn't you invest in a security of gov't backed loans? Even in the "remote" possibility of a housing collapse, you know the gov't is going to back them like they are T-Bills. That's what the investment banks were thinking. Heads I win, tails the taxpayer loses. http://en.wikipedia.org/wiki/Moral_Hazard" . It's what caused the housing boom, and what caused the subsequent housing bust.

 

[edpell]

How then does one, say, get a building constructed
that costs $20 million? How does one grow any company to over $10 million?

100 million dollar building at least 10 owners. 4 billion dollar chip making factory at least 400 owners.

 

[calculusrocks]

Schiffer around 32:19, paraphasing:

Wall Street got drunk.
So was Main Street.
The whole country was drunk
what doesn't get asked is,
where did they get the alcohol?
Obviously, Greenspan poured the alcohol.
The Fed got everybody drunk.
And the government helped out with their moral hazards,
with the tax code and the incentives and disincentives.

Amazingly apropos.

It really is, and it applies equally well to the tech bubble.

This may not be entirely relevant to the original discussion, but I think people need to take a look at one of these boom-bust cycles and how it all happens. Historians will rewrite it to apologize for their own predispositions, but recent events still remain within the American psyche.

 

[jgens]

Could you name one such historian?

R R Palmer discusses this thesis at length in his text concerning modern world history and also notes that several historians subscribe to this thesis. Ronald E Powaski text The Cold War: The United States and the Soviet Union, 1917-1991 addresses this argument at length and (once again) notes that this interpretation does draw support from some scholars.

 

[russ_watters]

100 million dollar building at least 10 owners. 4 billion dollar chip making factory at least 400 owners.

mheslep gets a foul-tip for that one, not quite connecting with the point. As a potential $10 million investor, how would you convince me to buy into your real estate deal or chip company? Since I already have $10 million, I stand to gain nothing as any gains will be taken from me by the government and since this is a speculative real-estate deal, there exists a possibility of me losing everything. So what is the incentive to invest? Anyone who approaches the $10 million ceiling will take their money out of real investments and put it into savings accounts and CDs, reducing the risk to zero, but also minimizing the secondary effects on the economy (the money will no longer stimulate economic growth).

Moreover, what happens if it is 1980 and you are a computer nerd named "Steve" and the computer company you founded is about to become worth a whole lot of money? Because of this law, as soon as the company goes public, you lose control of it (to whom, I'm not sure: does the government sieze control of it or re-distribute the stock to the general public?). Imagine where Apple would be today if Steve Jobs had permanently lost control of it in 1980? Or, I hear Ireland has a pretty good IT sector - maybe he would have just moved it there in 1977?

Such a law would have an absolutely paralyzing effect on entrepreneurship, which is The unique driver of the American economy. With such a law, Silicon Valley wouldn't exist.

And, of course, this is in addition to such a law being immoral and unConstitutional. And by unConstitutional, I mean not in fitting with the intent of the founders - you can, of course, make anything Constitutional by amending the Constitution.

 

[edpell]

Since I already have $10 million, I stand to gain nothing as any gains will be taken from me by the government and since this is a speculative real-estate deal, there exists a possibility of me losing everything. So what is the incentive to invest?

You are correct as people reached the 10 million dollar mark they would retire. They have zero incentive to work, risk, etc. That will make room for others to work, risk, etc.

As you say anything can become constitutional as long as the defined procedure is followed. The founders would be quite surprised to find 28% tax on income if they were here now.

 

[AlexES16]

Well i was reading a book and now it give me this tougths. Maybe USA, and Europe, Japan and the other central capitalist nations are good, but their devolpment depends on the undevelpment of countries in Latin America and Africa and the other periferic capitalist countries. An example is my country El Salvador, we don't produce anything, not even food and we are capitalist, things are going worse, we only produce thousands of migrants each year to USA and the other central capitalist countries.

Now which is the argument of explaining the poverty in the 3rd world and don't come with fallacies that 3rd world countries are socialist or non-sense like that.

 

[jgens]

Well i was reading a book and now it give me this tougths. Maybe USA, and Europe, Japan and the other central capitalist nations are good, but their devolpment depends on the undevelpment of countries in Latin America and Africa and the other periferic capitalist countries.

A couple of things. The USA's early economic development did not depend on the exploitation of Latin/South American and African nations; moreover, historians like Robert Fogel and Eugene Genovese argue that the USA's exploitation of other people (Africans) stagnated the growth of the American economy. The USA didn't really begin exploiting the poor economic conditions in Latin/South America until the beginning of the 20th century, at which point, the US economy was already reasonably strong.

I'm not terribly well versed in European history so I shouldn't comment on them.

 

[czelaya]

Well i was reading a book and now it give me this tougths. Maybe USA, and Europe, Japan and the other central capitalist nations are good, but their devolpment depends on the undevelpment of countries in Latin America and Africa and the other periferic capitalist countries. An example is my country El Salvador, we don't produce anything, not even food and we are capitalist, things are going worse, we only produce thousands of migrants each year to USA and the other central capitalist countries.

Now which is the argument of explaining the poverty in the 3rd world and don't come with fallacies that 3rd world countries are socialist or non-sense like that.

Considering the natural disasters your country has recently faced it's no wonder that your economy is still recovering.

You're country is receiving monetary aide from the IMF, US, and other central banks. Like most monetary aide this will continue to keep El Salvador in serious debt. In some cases, the debt is paid by allowing foriegn markets to take control over domestic industries and services. El Salvador needs more domestic manufacturing (especially for exporting). In addition, the funding El Salvador receives from abroad stays in closed circulation to the very rich in your country (just like most Central American countries).

Another way of asking this question is to ask why a country, like Africa, is poor. Africa has an incredible array of natural resources and the potential to become a global power house. What keeps if from further development? It lacks crucial ingredients for capital growth:
-hardly no protection of property rights
-ability to create capital
-equal protection of liberty
-laws that are not enforced at state or federal levels
-infrastructure for the transfer of goods and services that is easily accesible to the general populace

 

[AlexES16]

How does capitalism protect your 8 hours of working? How does protect enviroment? What about the excessive consumersim? What about your rigths to vacation?

 

[russ_watters]

You are correct as people reached the 10 million dollar mark they would retire. They have zero incentive to work, risk, etc. That will make room for others to work, risk, etc.

That doesn't make sense. Money doesn't grow on trees. If you remove a large fraction of the entrepreneurs from the economy, the wealth of everyone else won't magically expand to fill the gap they leave. Quite the contrary: without those entrpreneurs to provide jobs and captial, the wealth of everyone else will decrease.

In any case, you didn't really address the example at all, you just brushed it aside with a hand-wave. If people who today would do a speculative real estate deal wouldn't under your plan, how would that make those with less money able to do it? It hasn't changed the equation for someone with a couple million in the bank: a large businss deal is too risky for someone who doesn't have money to burn. In order your hand-waving remark to be true, people with middle-class incomes would have to magically decide it is a good idea to take huge risks with their money, to fill the void left by the rich that no longer exist.

As you say anything can become constitutional as long as the defined procedure is followed. The founders would be quite surprised to find 28% tax on income if they were here now.

Indeed. But that doesn't make it right. I'd think they'd be pretty upset to find that the principles of freedom and equality of opportunity (ie, Life, Liberty and the pursuit of Happiness), the most important principles on which our country was founded, are being ground down to a bloody stump.

 

[edpell]

I do not think that there are a limited number of uber-mench that are the only people with abilities in society.

I agree with you on your closing line. But I do not see anything to do to improve things. :(

 

[calculusrocks]

How does capitalism protect your 8 hours of working? How does protect enviroment? What about the excessive consumersim? What about your rigths to vacation?

It doesn't. Capitalism provides you with opportunities, not guarantees. You have a right to create and store property. You have the right to voluntary exchange. You have the opportunity to create wealth. But, if guarantees are what you're after then Capitalism probably isn't what you're looking for, which is fine by me. I just don't want you to see these things as failures of Capitalism, because those aren't the aims of Capitalism.

Those are the aims of Statism, and it'd be equally fallacious for me to say that it is the failure of Statism that it can't create a strong economy for its people. That's not the goal of Statism to begin with.

To each his own.

 

[russ_watters]

I do not think that there are a limited number of uber-mench that are the only people with abilities in society.

Nor do I, but I don't see how that has anything to do with the topic of discussion.

I agree with you on your closing line. But I do not see anything to do to improve things. :(

How about staying out of the way and letting things improve on their own, as they have virtually non-stop since this country was founded?

 

[Max Faust]

This debate makes no sense.

Both "capitalism" and "socialism" require the existence of a much more fundamental social structure. If, say, you had the choice between utter lawlessness under a condition of sustained civil war (such as is the case in some countries of this world) and either of those two choices of decadent ignorance, you'd be only too happy to embrace your "opponent" of this artificial dichotomy.

I presume that nobody is arguing for the dissolution of all social structures.

You cannot actually have "capitalism" - understood as a modern transactional system of fiat currency - unless you have a strong sovreign (state) who holds the monopoly of violence (see Max Weber). Socialism, however, requires no money system (although this is more practical) as it is based in a more "tribal" approach.

 

[AlexES16]

Im still waiting for an aswer about the rights of workers in a pure free market economy, in the beginning of industrialization, few capitalist owned everything and made people work excessively, in that context Marx was right about being against that sytem. In one way or another the socialist ideology helped to make a more fair exchange capitalist-worker. So it looks like in that sense is a mixed economy the way or even a socialist one. I prefer being a middle class helping society than a rich slaving the others. But maybe I am wrong, maybe the free market provides more jobs and then people will go to best company.

 

[AlexES16]

It doesn't. Capitalism provides you with opportunities, not guarantees. You have a right to create and store property. You have the right to voluntary exchange. You have the opportunity to create wealth. But, if guarantees are what you're after then Capitalism probably isn't what you're looking for, which is fine by me. I just don't want you to see these things as failures of Capitalism, because those aren't the aims of Capitalism.

Those are the aims of Statism, and it'd be equally fallacious for me to say that it is the failure of Statism that it can't create a strong economy for its people. That's not the goal of Statism to begin with.

To each his own.

Well if pure capitalism dosent even protect you from working 16 hours a day, then i prefer keeping the fight against it. I will not want to have my life owned by company(if i quit i die of hunger).

 

[AlexES16]

Socialism is about workers taking command of the state and the means of production. Now my fear is about how in socialism you replace or use suply and demand.

Read the article : "Why Socialism by Albert Einstein"

 

[russ_watters]

I think you guys are creating a false dichotomy. I don't think anyone is suggesting a pure form of either, but rather just which side of center is preferred.

Edit...or which side of where we are now is preferred.

 

[czelaya]

Socialism is about workers taking command of the state and the means of production. Now my fear is about how in socialism you replace or use suply and demand.

Read the article : "Why Socialism by Albert Einstein"

So how well has socialism worked so far? How much have socialist societies contributed to science, technology, and the advancement of mankind? Do you actually believe state control will produce even half of what a capitalist society? Why do you put your faith in governments? Personally, I would want to live in a society where I have both economic and personal freedom... I don't want to rely on someone else... I want to be responsible for my own destiny. Government will never build this utopia where security guaranteed for life.

I've read the article before. Albert Einstein was a brilliant theoretical physicist but he even had his flows. He helped usher the advancement of quantum theory with his work on the photo electric effect then refuted quantum theory in general. I'm sure Einstein was not very well versed in economics like he was with physics.

 

[mheslep]

R R Palmer discusses this thesis at length in his text concerning modern world history and also notes that several historians subscribe to this thesis. Ronald E Powaski text The Cold War: The United States and the Soviet Union, 1917-1991 addresses this argument at length and (once again) notes that this interpretation does draw support from some scholars.

Thanks. And you contend that if I research their writings I will find they argue

[...] that the USSR failed not because of socialism itself, but rather because of the oppressiveness of stalinism (note: stalinism != socialism).

Yes? One immediate and obvious issue with that contention requiring clarification is timing. The USSR collapsed in ~1991, Stalin died in 1953. Do you contend (or these historians) that Stalinism (vice socialism) lingered on as the USSR's political system all the way through Gorbachev and Glasnost?

 

[czelaya]

Russwaters is correct. What exactly do you want? To live in a society where you have job security? If so, forget socialism. Maybe communism or fascism are the answers you're looking for.

 

[mheslep]

Socialism, however, requires no money system ...

Sure it does. Lenin tried abolishing the currency at first, and found everything quickly grinding to a halt. That experience led to his fall back statement of "we will control thehttp://www.dlc.org/ndol_ci.cfm?contentid=1570&kaid=125&subid=162"" e.g. factories, means of production, etc.

 

[calculusrocks]

Well if pure capitalism dosent even protect you from working 16 hours a day, then i prefer keeping the fight against it. I will not want to have my life owned by company(if i quit i die of hunger).

It may be easier to find a socialist country to live in, right?

Socialism is about workers taking command of the state and the means of production. Now my fear is about how in socialism you replace or use suply and demand.

Read the article : "Why Socialism by Albert Einstein"

In context historically, 1949 was right after WWII. We saw how our government took care of the NAZI's, and it lead to a belief that the government could end depressions. This was common thinking at the time. Besides, Einstein is making the point I was trying to make. Even if they prefer socialism, would rather live in a country with more economic liberty. He left Statist Germany, for somewhat more capitalist America.

 

[mgb_phys]

He left Statist Germany, for somewhat more capitalist America.

Although to be fair, there may have been other considerations beyond economic theory.

 

[mheslep]

...I'd think they'd be pretty upset to find that the principles of freedom and equality of opportunity (ie, Life, Liberty and the pursuit of Happiness), the most important principles on which our country was founded, are being ground down to a bloody stump.

Eh, maybe with respect to pursuit of happiness. Other than that, I'd describe the perversion of original intent in the opposite matter: that those important principles are being diluted down to nothingness by declaring everything a right. Included in this thread was the right to vacation of all things.

 

[calculusrocks]

Although to be fair, there may have been other considerations beyond economic theory.

No doubt he had to leave. But...

Why didn't he go to Canada? Why didn't he choose South America?

 

[CRGreathouse]

Well if pure capitalism dosent even protect you from working 16 hours a day, then i prefer keeping the fight against it. I will not want to have my life owned by company(if i quit i die of hunger).

Why would pure capitalism cause you to work 16 hours a day? That kind of coercion is almost the exclusive stronghold of statist regimes, not free market societies.

If a company (in a free-market state) required its workers to work 16 hours a day and they didn't want to work that long, they'd quit and get jobs elsewhere. If lots of companies require this (and lots of workers don't want to work that long), then new companies will enter to take advantage of the cheap labor supply of those unwilling to work 16 hour days.

Meanwhile, the companies requiring 16-hour days would have workers leaving, forcing them to cut production, raise hours (!), or employ more workers. To employ more workers they will have to offer higher pay. So now you have an industry with high-paying jobs and 16-hour workdays in some companies and (relatively) low-paying jobs with shorter workdays. Seems reasonable to me.


Personally, if that transformation was to happen to my industry, I would go in the opposite direction: trade time for money and work longer hours. On the other hand I know people who would be happy to earn less if they were able to cut their hours to, say, 25-30 per week. The free market is an excellent mechanism for allocating work between both types.

 

[BoomBoom]

So how well has socialism worked so far? How much have socialist societies contributed to science, technology, and the advancement of mankind? Do you actually believe state control will produce even half of what a capitalist society?

Quite a bit I believe...

You do realize that many (if not most) of our contributions to science, technology, and the advancement of mankind came directly from 'socialist' funding mechanisms, do you not?

There really is no money/profit in scientific research, so without funding grants, our sci/tech advancements would slow to a snail's pace, IMO.

 

[mgb_phys]

Why didn't he go to Canada? Why didn't he choose South America?

PIAS was the best place in the world at the time for theoretical physics.
Perhaps today the Perimeter Institute in Canada would be better?

I assume that he also felt that nowhere in Europe (Cambridge, Copenhagen, Leiden) would be safe. Bohr was 'extracted' from Copenhagen in a fairly risky war time mission.

 

[hagopbul]

i think the main problem that no one is living in a " Socialist " community ... so how you know if it is good or not

i like you all but the main problem in the idea of a government is one thing [not Socialist or capitalist] it is the Over important of money ! if money will be the most important concept of government or materiel way of thinking .. will make the life of its population ...bad.

 

[edpell]

I agree there are no pure implementations of any ideological system on the planet.

The most common "system" I see is the alpha male and his thugs hold the rest of the population in a dictatorship. This is a very common system on planet earth. A system I do not like (not being the alpha male and also having some moral sense).

 

[calculusrocks]

PIAS was the best place in the world at the time for theoretical physics.
Perhaps today the Perimeter Institute in Canada would be better?

I assume that he also felt that nowhere in Europe (Cambridge, Copenhagen, Leiden) would be safe. Bohr was 'extracted' from Copenhagen in a fairly risky war time mission.

What I'm saying is that it's not a coincidence that this opportunity existed in America. He wasn't some inventor trying to make the newest best thing and make a ton of money, BUT the projects he worked on were made possible by the inventors trying to make the newest and best things because the project came from their taxes.

 

[AlexES16]

Why would pure capitalism cause you to work 16 hours a day? That kind of coercion is almost the exclusive stronghold of statist regimes, not free market societies.

If a company (in a free-market state) required its workers to work 16 hours a day and they didn't want to work that long, they'd quit and get jobs elsewhere. If lots of companies require this (and lots of workers don't want to work that long), then new companies will enter to take advantage of the cheap labor supply of those unwilling to work 16 hour days.

Meanwhile, the companies requiring 16-hour days would have workers leaving, forcing them to cut production, raise hours (!), or employ more workers. To employ more workers they will have to offer higher pay. So now you have an industry with high-paying jobs and 16-hour workdays in some companies and (relatively) low-paying jobs with shorter workdays. Seems reasonable to me.


Personally, if that transformation was to happen to my industry, I would go in the opposite direction: trade time for money and work longer hours. On the other hand I know people who would be happy to earn less if they were able to cut their hours to, say, 25-30 per week. The free market is an excellent mechanism for allocating work between both types.

Well that sounds a reasonable answer.

 

[calculusrocks]

This debate makes no sense.

Both "capitalism" and "socialism" require the existence of a much more fundamental social structure. If, say, you had the choice between utter lawlessness under a condition of sustained civil war (such as is the case in some countries of this world) and either of those two choices of decadent ignorance, you'd be only too happy to embrace your "opponent" of this artificial dichotomy.

I presume that nobody is arguing for the dissolution of all social structures.

You cannot actually have "capitalism" - understood as a modern transactional system of fiat currency - unless you have a strong sovreign (state) who holds the monopoly of violence (see Max Weber). Socialism, however, requires no money system (although this is more practical) as it is based in a more "tribal" approach.

No, I'm not arguing for some form of anarcho-capitalism. I was simply contrasting. I don't believe at face value that a fiat currency is necessary. For instance, in concentration camps in WWII it's documented that sometimes cigarettes were used as currency. They can easily be divisible, easily be stored, etc. There are commodities that exhibit these kinds properties as well. Currencies can be traded just like any other good, and free individuals would adopt their own standard for intermediary units for trade.

In fact, fiat currency, or bad monetary policy in general perhaps, can lead to severe mal-investments. The housing bubble is an example of this. You had the gov't co-sign these mortgages and you had interest rates by the FED be artificially too low for too long under Greenspan (and now Bernanke). After this, investment banks started placing huge bets on junk bonds, and shoddy collateralized mortgage obligations. This caused the housing boom, which everyone loved, but this was all a mirage and all that time now is lost. We are in the bust.