Anyone who has seen any of my YAL posts on capitalism or economics probably knows that I'm a big fan of the left-libertarian/mutualist school of thought. We of this mindset always try to ask the question: Are capitalism and a free market necessarily the same thing?
While I greatly appreciate the Austrian School of Economics, in particular its views on business cycle theory, monetary policy, and government, I break from Austrian theory on the historical development and current nature of capitalism. For example, I take issue with Ludwig von Mises's claims that the industrial revolution was such a wonderful thing for the common people. He writes in Economic Policy:
All the talk about the so-called unspeakable horror of early capitalism can be refuted by a single statistic: precisely in these years in which British capitalism developed, precisely in the age called the Industrial Revolution in England, in the years from 1760 to 1830, precisely in those years the population of England doubled.
Well, China's population has increased at a faster rate over the past 50 years than the United States,' so I suppose that this "single statistic" must mean that China has been a better place to live during this time. I think we all know this is not the case. Hence the falsity of the idea held by many capitalists that "growth" is always an ultimate good.
Not only this, but such views seem to assume that the Industrial Revolution was a result of the market, when in fact this also is highly questionable. The capital necessary to spark the Industrial Revolution was largely accumulated via the trans-Atlantic slave trade, when the product of the labor of millions of slaves was accumulated with no wage compensation. Also, this trade brought huge amounts of sugar to Europe, an extremely low quality food that could fuel a massive working class population unlike any other food native to the continent.
Even during the Industrial Revolution itself, the working class had both their bargaining power in the wage market and their traditional property rights stripped from them through state action, like the Combination Laws which prohibited laborers from bargaining collectively and the Settlement Act which gave control of housing and rent to any who already controlled large estates.
With this history in mind, the advocate of "capitalism" often finds himself on the defensive, and this is exactly what happened to the Classical Liberal school of thought after the advent of socialism, and in particular Marxism. Murray Rothbard takes note of this in For a New Liberty:
If the laissez-faire liberals were confused by the new recrudescence of statism and mercantilism as "progressive" corporate statism, another reason for the decay of classical liberalism by the end of the nineteenth century was the growth of a peculiar new movement: socialism. Socialism began in the 1830s and expanded greatly after the 188os. The peculiar thing about socialism was that it was a confused, hybrid movement, influenced by both the two great preexisting polar ideologies, liberalism and conservatism.
And now, finally, I get to the reason for even making this post in the first place. Libertarians are people who truly are looking to make changes in the current system. However, by claiming to promote "capitalism," libertarians put themselves on the defensive, as the majority of society, correctly or incorrectly, views "capitalism" as the source of our current woes. Even though the libertarian sees the state as the source of these problems, it still can be difficult to sort out what aspects of our modern economy are a result of government, and what aspects are a result of markets.
I do not want to see the libertarian movement share the fate of the classical liberals, becoming a defensive movement fighting against a "progressive" leftist ideology. Thus, it is with great care that we must employ the word "capitalism," for the only real meaning that our words have are those that they are given by our audience. Just because you think capitalism = free market does not make this the universal case.
Libertarians need to be ideologically on the offensive, and show that it is state actions dating back to the trans-Atlantic slave trade that have led us to the massive statist system that we have today. It is for this reason that I have been so impressed with the work of Kevin Carson, a little-known political theorist who essentially works out of his own house and puts pdf's of his books online for free.
Unfortunately, many libertarians do not take Kevin Carson seriously simply because he advocates a revival of Labor Theory of Value, a major tenet of Karl Marx. I again see this as somewhere where Mises went wrong, as he seemed to constantly want to critique every aspect of socialism without ever paying regard to any of its benefits. In his book Studies in Mutualist Political Economy, Carson incorporates the Austrian ideas of time preference and subjective value into this labor theory, and shows that this theory is very useful as a descriptive, though not prescriptive (as Marx wanted), value theory. In this book, he also discusses the role of the state in capitalism's formative years.
I unfortunately have watched as many libertarians and anarcho-capitalists have attacked Carson with what have been little more than ad hominem attacks, saying that he is a "socialist" and "Marxist." Walter Block wrote of Kevin Carson:
For someone in this day and age to even take (labor theory of value) seriously, let alone actually try to defend it, is equivalent to making a similarly widely and properly rejected position vis à vis the flat earth, or the phlogiston theory. It is, in a word, medieval.
After reading Block's article, it seemed obvious to me that he not only was misrepresenting Carson's views, but probably had never actually read Carson's books, simply noting that he embraced labor theory of value and branding him a "Marxist."
I hope that the libertarian movement soon wakes up and realizes that if we are to truly make the changes that we wish to see, we have to be ideologically offensive in our thinking, and not simply defend a "pro-capitalism" status quo for which the working public has little respect. In the words of Carson himself:
Vulgar libertarian apologists for capitalism use the term "free market" in an equivocal sense: they seem to have trouble remembering, from one moment to the next, whether they’re defending actually existing capitalism or free market principles. So we get the standard boilerplate article in The Freeman arguing that the rich can’t get rich at the expense of the poor, because "that’s not how the free market works" -- implicitly assuming that this is a free market. When prodded, they’ll grudgingly admit that the present system is not a free market, and that it includes a lot of state intervention on behalf of the rich. But as soon as they think they can get away with it, they go right back to defending the wealth of existing corporations on the basis of "free market principles."
The "population doubling" statistic isn't meant as a comparison the way you're straw-manning it. Mises simply states the fact that the industrial revolution was better than the status quo. I do not think you can debate this with a straight face. Likewise with China. Nobody suggests that China is a "better place to live" than the U.S.
Of course I will concede that there are other alternatives that likely would've fared even better, but that wasn't the argument, IMO.
cheers - dz
Mises straight up says that that is the one statistic that proves all the supposed evils of the industrial revolution to be false. I'm not sure how I'm straw-manning that, that's literally what he says.
If you are basing your criticism of Capitalism based on what Mises says then you are making the same error that you claim others are making. You are taking Mises words as Capitalism gospel. Of course I explain below what Mises full argument was, and it had nothing to do with simple population growth.
Free Markets and Capitalism are one thing. Corporatism is the bad stuff .. Michael Moore confuses the 2. Ron Paul sets it straight in that one Larry King interview. Check it out sometime. Peace
Vinny
You put forth an interesting argument. I would like to know more about Carson's view on the labor theory of value. While you may can fault Mises for making too much of one statistic when it comes to population, he does a very good job of shattering the idea of the labor theory of value. I'm not sure what Carson could add to it to make it jive with logic, but I would like to hear what he has to say.
I myself have begun simply calling my outlook on economics as being pro free-market and not so much capitalism. My view is that nothing should be forced onto anybody. Whatever comes from this cannot be faulted. It can be improved by the actions of humans in an effort to better their situation, in which case I believe the free market is the most efficient means of doing this. Capitalism's definition is too hard to pin down and that is why I think it might be best to stop trying to defend "Capitalism" per say, and just defend free action on the open market with no force perpetrated by a "state" in order to make life better for the "greater good."
If we can agree to rid the world of the State, I think civilization will progress nicely.
Nice equivocation in the use of "capitalism." Real lovers of liberty support capitalism in the sense that the people own and control the means of production. You are saying that capitalism means the current economic system that the west practices at the moment. The truth is that the west employs a nice fascist/socialist mix at the moment. There is no existing true capitalism in America and therefore nothing to defend. If you should be advocating anything, you should be advocating that people educate the unthinking majority of America.
And let's face it, the labor theory of value is not even close to descriptive. It doesn't take that much labor to create a bar of gold or cut a diamond based upon their prices. It's an indefensible position.
"Real lovers of liberty support capitalism in the sense that the people own and control the means of production. "
That's also the same with socialism in which the laborers own the means of production; in fact, if the justice or "liberty"-factor of an economic system is judged by its ability to be owned and controlled by the people, then maybe socialism (not statism, note the difference) is the best way to go. In capitalism people do own the means of production, but only a select few who are privileged enough to own property own the means of production. The rest, aka the laborers, do not own the means of production, they merely are hired as wage labor.
The truth is capitalism is an impossibility without government intervention in markets. Without the state acting to grant corporate statuses, subsidize businesses (through transportation/education/tax status/etc.), or control the distribution of privilege in a society (via control of the money supply, property law, etc.) the accumulation of capital required, by definition, for the existence of capitalism, is near impossible or entirely impossible.
On a similar note, to believe that true capitalism could even exist is purely utopian. Not only is the existence of capitalism impossible without the support of government intervention, the existence of pure, laissez-faire capitalism is impossible because it creates too much of a social footprint to slip past the parasitic tentacles of government corruption. Even if pure-bred, non-interventionist "capitalism" was as productive as its proponents claim, a government could not leave such an easily accessible, productive entity alone. Capitalism inevitably devolves, whether through market or government forces, into an economic order designed to proliferate the ruling classes.
"Without the state acting to grant corporate statuses, subsidize businesses (through transportation/education/tax status/etc.), or control the distribution of privilege in a society (via control of the money supply, property law, etc.) the accumulation of capital required, by definition, for the existence of capitalism, is near impossible or entirely impossible. "
This is so presumptuous and wrong I just feel it takes somebody with an agenda to state it. You can't just wisp away a theory by saying how you believe it to be impossible. First off, corporate statutes are state created, but this does not mean in a free-market businesses could not form contracts where corporate entities similar to the ones today could exist. Insurance companies would take the reigns where governments usually like to stick their nose, along with private arbitration agencies. And business subsidies actually prevent the formation of capital by hampering the flow of resources into more profitable ventures. You are arguing against capitalism by using examples that completely go against its ideologies. I think the most incorrect statement here is your one about the control of the money supply, which hampers the market unlike no other and so distorts the formation of capital that our economy is plagued by boom and busts cycles in perpetuity. Yet, you somehow suggest that control of the money supply creates an environment friendly to capital formation. This is totally absurd.
And you say the government could not but help themselves to a productive entity, and this is precisely true. This is why all your examples of corporate subsidies and control of the money supply are totally bogus. These are examples of the government acting as a parasite on the productive nature of free market enterprises. Given state charters do form these entities, but even sole-proprietorships are state regulated not because the law protects their investments up to a specified amount, but because their profitability makes the government salivate. You are simply making a circular argument. You say capitalism can't exist without government intervention and then say if entities were able to be productive without the government intervention you praise so much, the government would simply regulate them and use all the tactics you say creates capital formation in order to devolve such an entity.
Mises does not claim that population growth makes things better, like Engstrom suggests in his blatant strawman attempt, but that capital per capita is the source of a higher standard of living.
This is exactly what I was talking about. Whether you like it or not, not everyone shares your definition of the word capitalism. In fact, most people don't. So, when you're talking to your friends at mises.org or lewrockwell.com, then sure you can go on and on about how true capitalism is a free market. But if you ever want the liberty movement to go anywhere at all, then you can't go run around saying how much you love capitalism, because the fact is that most people do not associate that word with the same things that you do.
As much as I have enjoyed Elliot Engstrom's articles on foreign policy I think he fundamentally misunderstands the Austrian School of Economics.
Engstrom writes:
“Well, China's population has increased at a faster rate over the past 50 years than the United States', so I suppose that this "single statistic" must mean that China has been a better place to live during this time.”
Austrians make no claim that “growth” is good at all. Mises makes the claim that if one espouses utilitarianism then there is no reason for third party interventionism (i'll find the necessary quotes if wanted). When people are free to prefer one thing over another, autistically or within markets, then they naturally choose for themselves that which optimizes their own utility. If anyone has heard Dr. Roger Garrison speak about the business cycle he explicitly states that people often think that all economists are all about growth. He then goes on to explain that even growth is a preference for which people could be averse to, and therefore by the Austrian theory, any growth optimizing intervention would sub optimize utility. If people prefer current consumption at a high rate, then of course they have an extremely high time preference.
Yet Mises does use population growth in particular to illustrate points about capitalism. In “The Free Market and it's Enemies,” Lecture One, Mises points out the incredible population growth in in the world from 1700 to 1950. He says
“With specific reference to the population, it is four times greater today [1951] that it was more than 250 years ago. If Asia and Africa are eliminated, the growth is even more startling. Great Britain, Germany, and Italy, three countries that were completely settled and where every bit of land was already in use by 1800, found room to support 107 million more people by 1925. (This seems all the more remarkable when compared with the United States- many times the area of these three countries- which increased its population by only 109 millionin that same period.)”
Mises does not claim that population growth makes things better, like Engstrom suggests in his blatant strawman attempt, but that capital per capita is the source of a higher standard of living.
“There is only one way to improve the standard of living of the population- increase capital accumulation as against the increase in population. Increase the amount of capital invested per capita”
Engstrom then goes on to defend some sort of amalgamation of the subjective theory of value combined with the labor theory of value. I'm not going to read Kevin Carson's book too root out this theory but instead I will point out why something like this could lead an empiricist astray.
It is well known that most economists seek an empirical way to measure wealth and value. Many of these efforts have lead to what we now as the “Labor theory of value.” Many decent economists and brilliant people have espoused this theory including the creator of the theory of Comparative Advantage, David Ricardo. However, sometimes it is best to just let a bad theory die.
The Labor Theory of Value basically states that the value of a good is somehow objectively correlated to the labor put into it.
This theory fails on many levels.
There are many examples of people working hard on worthless products (my writings, for example, i'm not getting paid for this.. of course we are talking in terms of dollars.. and already there is a disconnect between labor and “value” in dollars).
Subjective theory clearly explains phenomena like marginal value and time preference. If the two theories are mixed there is absolutely nothing the labor theory of value could add to our understanding of value.
Labor input is often related to value, but this is only a correlation. LTV advocates take this correlation and can attempt to add elements of subjectivist theory to fully explain value, but what they are really doing is taking a dead theory and trying to fit it with the evidence. LTV makes no logical sense. Yes, the market will attempt to fill societies most urgent, but always SUBJECTIVE needs by producing to the best of their ability that which they think people value. People who successfully produce what society wants will be around to produce more. Those who don't, well, they'll be out of a job. Labor doesn't create value, it seeks after it.
Though Engstrom claims Walter Block was making an ad hominem attack, my above point illustrates why Walter Block was exactly correct in his assessment. The Labor Theory of Value is dead, no sense in reforming to fit evidence like the average creation scientist does with biblical text.
That leads me to my final points. Why was there a population explosion and what caused it? I'm not historian, and i'm not even going to pretend I looked at this question in too much detail. The best explanation I have come across, however, is that the legalization and acceptance of interest rates as a legitimate function of society (coordination of markets through time) has allowed people work together instead of separately to increase their standard of living. “Usury” was banned by the Church and many other institutions for centuries, but great thinkers came out and conquered such myopic thinking.
I am disappointed that someone who can write such magnificent stuff on foreign policy can so fundamentally misunderstand such an important topic, but we're all young here. Let's fight against vulgar libertarianism, not capital in and of itself. Let's fight against the notion that capitalism and credit expansion go hand in hand, or that capitalism requires subsidies and protectionism.
So you're not going to read the book, you're just going to assume that you know what it's about and then argue against what you think it probably is about. That, actually, is a textbook straw man argument. I still don't see how my use of Mises was straw man, as he literally states that the doubling of the population of Britain refutes any and all claims about the awful nature of early capitalism. This is really where the Austrian school gets on my nerves -- Austrians think they already know everything, and if you go against them then you're just stupid.
Like Block said, believing in LTV is like believing in a flat earth. You're free to believe it if you want, but it's already been proven to have serious empirical flaws.
The reason some people can dismiss Carson at Block's word is that block has proven himself with other works as a solid empiricist, whereas Carson is yet to do so. It lends to credibility; Carson has none. He must first establish it before he can make claims and expect them to hold any water.
We all can't read every PDF-file-called-"book" out there every time some armchair philosopher decides he's reinvented the square wheel, claiming it WORKS this time. The comparative advantage here is to take people whom we trust academically at their word about the validity of the work.
If you want to address George's specific problems with LTV by quoting Carson on how those have been solved, then by all means, do so. Perhaps you will be the one who sparks an interest in Carson's work, and then more people can bring his ideas to market. If not, then people won't "buy" his product, and his labor and work are valueless. See how that works?
...and you're suggesting that the austrian school has that much more credibility? all credibility reflects is ideological hegemony, not truth, objectivity, etc.
How about responding to my comment if your doing it in this sub thread.
I'm not saying anything of gradience about how much credibility the Austrian school has, I'm simply stating that Carson has none at all. It has nothing to do with ideological hegemony; it's a completely personal revelation of insight.
I can't read every individual's theory about how things work, so I have to devise a method from which to pick and choose. This usually takes the form of cognizant individuals posting a few quotes or excerpts that have merit, followed by me looking into it deeper.
I do not take very many people at their word without reserving judgment until I can examine it further. Certain individuals have written articles that I like, therefore I am more likely to read the next article that they write. I'm not going to just accept their word as truth, though, until I've seen it for myself.
Howevever, I also do not see the value in reading an entire PDF based on the praises of a person I do not know, with little or no supporting information as to why it's relevant. It's a waste of my labor to do so.
Make me want to read it.
Alright, if you don't want to engage in a discussion that's fine. I opened it up so you can criticize my assessment of LTV based on my guesses of how one who combine LTV and STV (which is a more educated guess than you think, having read Carson's rejoinders to his critics.. including the Walter Block article over a year ago).
Mises never claimed that a society in which population is increasing is the ideal society. Economists know that you cannot compare two societies in different stages of development. We are better off now than we were in the industrial revolution. China is going through a capitalistic revolution of sorts. Comparing use to them isn't useful, not even in context with what Mises said about population. I quoted what Mises was really getting at.
As for the "awful nature of early capitalism," yeah, it was tough. But when you go from Royalty having 16 children without a single one making it into adulthood to the later parts of the industrial revolution where the mortality rate was much lower, I think we have an improvement.
The problem with your "analysis" is that you compare the industrial revolution to what we have now. A better comparison would be the industrial revolution compared to what preceded the industrial revolution.
I'm going to check up on this to see if you can challenge STV with LTV, because i'd be interested to hear some sense come out of that school of thinking.
I agree with you. I don't really think that rehashing a "tweaked" labor theory of value is even worth my time to read. The theory is dead in its tracks.
Thanks.
However, if someone were willing to summarize the argument i'd be willing to read it. Still waiting for that to happen.
Engstrom could probably explain it better than me, so I will let him do that. However, the LTV in reference can be found through this link: http://www.mutualist.org/id47.html . The entire first section is devoted to discussing LTV, its critics (including the Austrians), and its evolution...if you've got the time.
Thanks for the link. I'll try to get some of this read over spring break and will have an analysis soon. I may do an analysis as I read.
This article was a bit unsulting, presumptious and certainly a waste of my time.
The Future of Capitalism lies in two new concepts of Capitalism that is brilliantly beginning to take entrepreneurs and businesses to a whole new level. 1) Conscious Capitalism and 2) Natural Capitalism.
For Conscious Capitalism refer to http://cc-institute.com and http://www.consciouscapitalism.com.
For Natural Capitalism refer to http://www.natcapsolutions.org.
Have fun!
Robert Heinlein actually makes a great argument about value in his book Starship Troopers. The book takes place in a very misinterpreted setting and political system, a meritocracy, Libertarian Republic. Short read, and on the reading list of all four Military academies.
Robert A. Heinlein (Starship Troopers, Stranger in a Strange Land) offers a great argument about value and politcal franchise. Search for quotes.
Let's assume for a minute that there is no government to interfere in markets, and we have complete anarchy. Capitalism is the economic system that would be in place. So yes, capitalism and free markets are the same thing. In fact, I believe you can't have true capitalism without free markets.
Wow. Talk about begging the question.
I think what Anonymous may be trying to get at is; would the labor theory of value require government intervention?
I am almost willing to read at least Carson's theory of value if a response is not forthcoming on this blog.
I really just don't know how to summarize his entire argument in a comment. I'd definitely recommend giving it a read. It involves a survey of the development since the original labor theory before he even gets into putting forth his own.
If you spend enough time talking about how good something is, you'll eventually believe it, even if it isn't true.
You are absolutely wrong. I can not even begin to take the time to dismantle this nonsense. I have a close friend from China and she will tell you that aside from the horror stories of Mao and the regime, the past 50 years in China has been significantly better to live through.
Perhaps you should join the College Democrats. You may be much happier there. Then you can talk about the nonsense of how a product's value is related to the labor needed to produce them. And bash the founders for the slave trade. And whoop and holler for big government interventionism into the "evil capitalist free market".
It could take a long time to build a worthless product, and in the end it would still be worthless. Without intervention, the market determines the value of a product. The market takes into consideration all of the factors of production and logistics of transporting. As George points out in his comment, labor theory value falls right on its face. Perhaps Marx would not have had the time to give us such dribble, had he not been supported by the successful capitalist Engles cotton mill family. He would have been too busy working.
LTV - Marx supported by Capital/Free Market Engles family $$$!
I like how everyone on here will attack labor theory without researching it except from the perspective of the Austrians, who did nothing but critique it. This entire discourse has really made me question whether libertarians are any better critical thinkers than anyone else in politics. Sure there's some great ideas on economics and political philosophy, but when you attack a libertarian idea it's just "blah blah blah you're a Marxist blah blah join college democrats blah blah blah I love capitalism." George is the only person on this entire thread who has even attempted to make an argument, which I appreciate. Everyone else has just seen that this idea goes against what they already believe, and thus has rejected it. Way to use those thinking caps. Blindly accepting the words of Mises and Rothbard is no better than blindly accepting the words of Obama and Bernanke. If you're not willing to intelligently accept critiques of your own viewpoints, you might as well just stop critiquing those of others.
I hate to say this (because people seem to mentally masturbate to the ideas of catching someone in a logical fallacy, and I find it really annoying) but you just posed a pretty big straw man argument here. Just because people don't agree with you doesn't mean they're blindly following anyone. Yes, the jerkoff who said you should join College Democrats was being, well, a jerkoff, but understand that a lot of people reading this forum right now took a long road to get here.
A lot of the people who post here are still teenagers, who probably jumped into libertarianism as soon as they had any inclination of political thought. That's not the case for everyone. Some people have gone over a lot of information over the years, searching for what made sense, and discarded a lot of garbage on the way.
That being said, if you're going to pose some point about LTV and not even bother to explain how or in what context Carson may or may not have fixed SEVERE problems with LTV, then it's not even interesting to me. I don't really have the time or inclination to reread the communist manifesto. If you think Carson has made some valid points, then share them with people. If they're interesting, then perhaps people will then read more of what he has to say.
By citing nothing specific, it's as if you just claimed that someone you knew worked out the problems with slavery, and now it makes sense. It has already been shown to be a terrible plan, so unless you have COMPELLING evidence to the contrary, it's not worth the labor it would take for me to read it.
I second Bryce.
Elliot,
I think you would help your case quite a bit if you would explain what exactly is different in Carson's LTV than standard LTV. Personally, I do not think it makes much sense to criticize someone else for criticizing something they haven't read (Carson's LTV) when you have not summarized it yourself (it just makes us think you haven't read it yourself).
With that said, I think everyone here would be much happier (and we could get something useful done as well) if you would explain the major differences between Carson's LTV and the standard LTV.
His only criticism was that I haven't read it, not that my analysis of what I think Carson may be saying is wrong.
David Gordon wrote an elementary Economics logic textbook that is critical of neo ltv theory. Using subjective theory to analyze the marginal value of labor (thus explaining wage differentials) is using a good theory to make a bad theory work.
I debated in depth with one Francois Tremblay about LTV vs. STV, and his most poignant point was that those who advocated STV thought they could dictate reality with their mind. If this is seriously the only criticism of STV then I suggest embracing STV fully. If anyone wants the contents of the debate just send me an email at geoedwar@gmail.com
The problem with discussing any macro economic structure is that they are all in their own ways a failure. Socialist ideas tend to lead to mass shortages of everything except police uniforms. Capitalist ideas tend to concentrate wealth into the hands of few leaving many to scrounge for crumbs based upon nothing more than they were dealt a raw deal. Both have their own problems.
To me this screams one altruism, "You can't determine the actions of anyone for any reason." Individuals will always make irrational decision, its part of being human. Emotions, lies, and arrogence can lead us to continuously be against our own self interest. So any attempt to try to establish any type of "system" in my opinion is fool hardy.
I'm no wizard in economics. I just recently bought "Road to Serfdom" and haven't had a chance to crack it open yet. But to me it boils down to this--for any macro system to work you have to have the acceptence by all those invovled with that system. From my understanding of history, this has never, and most likely will never occur. Until this harmony of human consciencenous exists we will never be able to reach the uptopia's from either the capitalist or socialist perspective.
"Capitalist ideas tend to concentrate wealth into the hands of few leaving many to scrounge for crumbs based upon nothing more than they were dealt a raw deal. Both have their own problems."
In my opinion, you have restated an idea associated with capitalism in such a way that it sounds bad. Capitalism, without government intervention, tends to concentrate resources in the hands of those who use them most efficiently. What is wrong with that? Also, you are forgetting that in a free market, individuals and businesses would not receive special benefits from the government. Furthermore, individuals and businesses would be free to make whatever decisions they want to. No one has to work at a particular firm, or buy that firm's products, people will choose to do so if it benefits them (and thus it will benefit the other party as well).
Of course, but to say that this idea leaves no one behind, has no one scratching from bread crumbs, and is the end all that be all is just as false as applying altruism to my statement. Capitalism revolves around the idea of haves and have nots. For one person to succeed in the market they must take a share from someone else, of course unless you introducing a completely new item.
This is a logical critique that cannot be solved without some redistribution. I for one feel that redistribution is immoral and equivalent to theft, therefore I believe that government intervention to right this wrong is immoral. So while I believe in the free market I understand that to do this we sacrifice the living standards of some groups. However to me that sacrifice is typically justified due to the lack of motivation for those who do not achieve to change their own circumstances. Though he typically promotes socialist ideals, Mos Def has a great line in one of his songs about this. "Its 10% condition, 90% response."
Shaun, basically, you have no idea what you are talking about when it comes to economics. Resources are finite, yes, trade with another person allows you to do many things that autistic living doesn't.
1. Ever read David Ricardo's Comparative advantage? Or even Adam Smith's Absolute advantage? Look em up.
2. I don't want to overuse Roger Garrison in this post but in this case it is relevant. What allows us to consume outside PPF curve (production possibilities frontier) is to trade with others who have different PPF curves. We are only able to produce a finite amount of goods, yes, but international trade, or even local trade, allows us to increase our consumption and lower our costs. Look up point one and you'll see what I mean.
3. The position and wealth of those "left behind" in a capitalist society are far better that the majority of those in a socialist society. First, economic calculation is impossible in a socialist society because there is no market for capital goods and no way to exploit urgent needs (the exploitation of which will both lower costs and increase profits, if you're not sure why.. ask). When the right to food and other things is guaranteed by the government, the only thing a population receives is guaranteed scarcity.
The free market sacrifices the living standard of NO group (see point one). Socialism sacrifices the living standard of EVERY group.
The free market allows for people to be greedy. When people are allowed to be greedy in a situation in which they cannot use violence against others to gain wealth, the only alternative is to produce what society demands in order to gain wealth. The more success one has at enriching others, the more money he earns.
In an alternative society, on in which greed causes damage (any government organization, etc), each and every law that claims to help the poor actually perpetuates their poverty and destroys social mobility.
So, like you said earlier, you don't know much about economics... and should probably forgo commenting on the subject until further study
You are correct George- the notion that capitalism involves the wealthy "taking shares from the poor" is fallacious. One may normatively reject the idea of the entrepreneur having so much more than the poor,* (and may say that he is 'exploiting' the poor's shitty situation by making money off of employing them in a better yet still shitty job ) but a basic explanation of comparative advantage--through a PPF or mere logical reasoning-- easily dispels Shaun's insinuation that free markets (i.e. voluntary exchange) involve transactions that enrich the entrepreneur at the expense of the poor.
Terrible as some jobs in the 3rd world may seem, these jobs are a net benefit to both parties in a transaction. Otherwise, a voluntary exchange wouldn't be made by self-interested, rational actors.
The only way to argue differently is through a LTV lense, which I consider to be discredited and pseudo-scientific. I also agree with Bryce that the onus is on Elliot to summarize Carson's interpretation and justification of LTV. This is especially true because Elliot was implying others were just blind followers of Mises and Rothbard. (Though disagreement arose, I don't recall anyone getting upset when I attacked MNR's position on FRBanking as poorly thought out)
* I disagree with the *'d argument. I am just illustrating a leftish argument I can respect more than the faulty one Shaun made. (which has happened to everybody at some point, so don't take it personally, Shaun)
This brings up two points of basic economics in capitalism that I've always found to be incredible.
1. Even if your analogy with the breadcrumbs is halfway credible, you have to understand that the breadcrumbs that fall from the table of capitalism can feed the world. 50 years ago, economists were sure that we would use up all of the available farm land by now, and mass famine would consume the world. Instead, foodstuffs have gotten so cheap that we're hurting African farmers because it's not worth their time to plant. A lot of goods have seen revolutions in production in this way.
2. To say that capitalism takes advantage of the poor to benefit the rich simply demonstrates a mistake in correlative and causal action. True capitalism creates a system in which some individuals do not reap the gains created by another. In transitioning from a socialist to a capitalist society, it might appear that the poor are being treated badly, when in reality the entrepreneurs have shrugged off the dead weight of the unproductive. For the first time in their world, productivity is rewarded, and sloth is punished.
Is it immoral to pull off the leech that sucks the blood from your body? Starving a parasite is not criminal, or even unfair, in my eyes. Besides, charity can make up the gap between starvation and prosperity, until such time as the parasitical individuals understand that they must find a new source of food.
Here is a hypothetical for anyone buying into the LTV: if I was to randomly stumble upon a quarter sized diamond, would it be 'worth' the same if it were mined in the midst of a civil war in Africa? I exerted pretty much no effort whatsoever, aside from bending down to pick it up, whereas in Africa mines have to be built, militias employed to protect the land, and numerous other measures have to be taken in order to ensure the diamond is mined and safe. Then, let's say, I along with my African pal go to the exact same diamond dealer. We each give the guy our diamonds (same size and carat) explaining the circumstances of acquiring them. The diamond dealer is obviousl not going to price his diamond higher than mine. Why? Because goods don't only take into account how much labor goes into it. They also take into account subjective valuing by consumers (is it a diamond craze era? or are rubies now fashionable instead?) and the demand for them.
I agree with JBryce. I tried to read the link you posted to Carson, but I really just don't have time at the moment to go through everything. I am bogged down by school and any free time I get is going toward working my way through Human Action. Perhaps when I get done with this ridiculously voluminous work I can take a look at Carson. But right now, I would really love to have just a quick summary of his view on the LTV because, as I said earlier, the traditional LTV is extremely flawed and the Austrians have done a good job of discrediting it. Therefore, if I am to spend the time in reading the entire work you posted by Carson, I am going to have to have something that catches my eye that somehow refutes what I have heard from many economists which totally blows LTV out of the water.
If Carson does do a good job of resurrecting LTV, I would really like to know a summary of the major points he makes which somehow overturn all the critiques of it. Then I can decide to give him a read after I finish Human Action.
I'm glad to see other people are angry that such a low quality post was made. I really hope to never see this author write again here. The mutualist school of thought is a variety of SOCIALISM. So I'm not really sure how a socialist got the clearence to post ona libertarian site. This article makes me sick.
a - mutualism is a left libertarian ideology. in fact there is a rich mutualist vein in the libertarian tradition (e.g. benjamin tucker, lysander spooner).
b - not to say that mutualism is socialist, but, regardless, socialism isn't contrary to libertarianism. STATISM is contrary to libertarianism; there's a big difference. but once again. mutualism is not socialism, it's just not reflective of the right-wing libertarian ideology that so many like to associate with.
c - also, everyone is making such a big deal out of this article, like its counter to libertarian ideals or something. engstrom is not hating on free markets at all, he's just trying to differentiate between the common conception of capitalism and the free market. he's trying to protect free market ideology by separating it from the misconceptions and problems of capitalism.
a. Mutualism is a part of libertarianism like corporatism is a part of capitalism. It's the retarded little brother that we have to tolerate because the basic ideals are sound, and we like hanging out.
b. Socialism is statist. You can argue up and down all you want about voluntary socialism, but in reality, any system of government, if voluntary, is compatible with libertarianism. It's a false choice. Hell, if everyone agreed to it, you could have a fascist libertarian government, or libertarian communism. The entire problem with libertarianism is that we don't have the free choice; when you argue about socialist tendencies, you're arguing about a hypothetical world that doesn't exist, never has, and likely never will. Rather than discuss utopian world views where everyone agrees to the same set of rules, let's work on a model where we can all agree to disagree without infringing upon one another.
c. This isn't about protecting the free market. This post blurs the definitions of capitalism, points out examples of how the term capitalism is misused, and then jumps over to trying to justify Labor Theory of Value without any corroborating information. I don't have a problem tolerating different ideas, even if I don't agree with them. However, I have a serious problem with terribly put together posts that don't even attempt to support themselves.
It's not a bad post because it's philosophically wrong, it's a bad post because it's written poorly and doesn't make any objective sense.
Socialism isn't contrary to libertarianism?
Ever hear of private property? Or, the right to keep it? The fruits of your labor? How about the oppressive nature of redistribution?
Wow.
wow. have you heard of libertarianism. cuz im pretty sure by the looks of it youre a right winger
Post new comment