On the Need for Laissez-Faire Capitalist Reforms

Great Debates
1

I wanted to write this post as a reply to [post=8552471]this post[/post] by Shagnasty, but I figured out that it works as a thread of its own. I’m putting it here, even though it does have its Pit-like aspects, because I seriously want it to be a debate on laissez-faire capitalism, and I hope to be educated.

This is a feeling that I’ve seen expressed many times by libertarians or other proponents of laissez-faire capitalism, and, well, it disturbs me at least as much as European socialism disturbs you. (I guess I could mention it in [thread=420016]the other thread[/thread], since it does touch on American cultural imperialism, but since I’ve seen it expressed by non-American capitalists, I guess here is as good a place as any.)

Historically, Europeans have chosen a way that’s different from Americans’. Americans apparently feel at ease in an individualistic world, where their individual liberties (including economic freedom) are the most important thing, and where government interferes as little as possible with the activies of private businesses. You, Shagnasty, clearly feel at home in such a society. You’re an American, this is what you’re used to, you work well inside such a framework. Europeans, traditionally, are less individualistic and more communautarian, and have valued a society with a greater role given to the government, in terms, among other things, of offering a social security net and intervening in the market. I see no problem with this, as long as the citizens of each agree with it. Different cultures breed different lifestyles.

But now modern capitalists are telling us that this doesn’t go. Maybe Europeans (or whoever) like their work conditions, safety net and governmental interventionism, but we’re in a global economy now! and if we want to remain competitive, we have no choice but to let go of them. I fail to see how this isn’t coercive. Of course, it’s economic coercion instead of governmental coercion, but it’s still forcing people to do things they might not want to do otherwise.

We have several threads open right now on the French presidential elections, and the libertarians are telling us that the French economy is in terrible state because of their socialism (under a right-wing government), and that Nicolas Sarkozy will be able to make it all right with laissez-faire reforms. How does it follow? How can introducing laissez-faire capitalism solve all our problems? Because to me, 19[sup]th[/sup] century Britain is an example of what laissez-faire capitalism produces, and it isn’t something I want to go back to.

Frankly, I must say that the prospect of a society with a pure capitalist economy scares me. It seems like it would breed a dog-eat-dog world in which everyone would have to watch their back constantly. Yes, I know that’s how it works in nature, but I like to think that humans are able to aspire to something else. I accept that it could produce wealth of the kind that we’ve never seen in the history of mankind. But I don’t see how it’s desirable. I’m willing to be educated. I’d like to hear about the pros and the cons.

2

Isn’t this a bit of a false dichotomy, though? Is there really any significant level of support, even in America, for a “pure” or completely unregulated capitalist economy with no social-welfare benefits at all?

Hell, even in America public opinion tends to be in favor of major tax-funded social supports and controls on laissez-faire capitalism:

The famed American commitment to maximum individualism and independence of government isn’t really that strong even in America. We Americans like to grumble a lot about how awful the government is, but when push comes to shove, most of us want the government to have some role in guaranteeing minimum standards of living and caring for those in need. Nineteenth-century dog-eat-dog capitalism isn’t coming back.

3

In my experience quite a lot - except when it comes to the government programs that benefit the person who wants to cut government. Which is why the Right hasn’t been able to slash social spending to nothing, here.

On the other hand, the neocons did their best to impose that in Iraq; we’ve all seen how well that turned out.

4

Der Trihs, the subject of this thread has virtually nothing to do with Iraq. Please don’t hijack us onto another topic.

5

They tried to impose laissez-faire capitalism on Iraq; this thread is about imposing laissez-faire capitalism. Like it or not, the subject is relevant. It’s not like you are going to find a real world example anywhere else.

6

Can you be more specific about the point you want to debate? Is it taxation and guaranteed benefits? Is it governmental regulatin of corporations? Is it the value of returning to “laissez-faire” capitalism? Is it whether or not economies that do not participate in the global economy will survive?

Perhaps you might try to narrow down what you mean by “laissez-faire capitalism.” If you take the term to mean a complete absence of governmental regulation of the economy, absolutely minimal taxation, minimal redistribution of income and wealth via social programs, and no governmental oversight of corporations, I doubt anyone wants to go back to that. It would not happen, in any case; I don’t see much opportunity for debate.

It’s true European countries have historically exercised more socialist policies than the US, but the US is nowhere close to laissez-faire capitalism. Europe has had the historic luxury of much more homogeneous populations as well. It’s much easier to implement socialist schemes across a homogeneous population (think Sweden, e.g.) than in a melting pot.

7

How is that coercion? If someone is doing a job better than you, no one is forcing you to do anything you don’t want to do. You are simply faced with the fact that people choose not to buy thngs from you. That’s the exact opposite of coercion.

8

Tough. If you can’t compete then who’s fault is it? I don’t see how its coercion at all to be honest. If some European countries want to keep their socialist programs then the price they pay is in how competetive they may or may not be. If it works for them, thats great. If it doesn’t then thats THEIR lookout.

Or do you want to coerce the rest of the world to make your own programs work when plainly they do not? How is THAT fair…to subsidize (or whatever) the behavior of an individual nation that chooses to continue programs and practices in the face of declining competetiveness with the rest of the world (this is a generic example btw…not targetting any specific country in Europe)?

It doesn’t follow because afaik NO ONE is proposing true laissez-faire capitalism reforms…including Nicolas Sarkozy. What he’s proposing (again, from what little I’ve read) is some reforms to lighten the heavy hand of socialism in France, especially wrt labor laws. In no way, shape or form are these true laissez-faire capitalism reforms.

On the off chance you don’t really know what laissez-faire capitalism IS, I’m going to cite this wiki article:

At its core, true laissez-faire capitalism has few, if any government controls at all…i.e. there are no regulations on business and the market is left completely free to run as it wills. Almost no one, outside of some of the more fanatical of my Libertarian bretheren think this is a good idea anymore. What most of us want is to minimize government regulation and allow the market to work as freely as possible, but within certain constraints set by society, allowing for enough investment in society (via taxes) to have some basic, minimum safety net for folks who fall through the cracks. Even THIS is an ideal not practiced even here in the US (certainly not by this supposed conservative president/administration). The reforms proposed in France are simply fixes to obvious problems…they aren’t even close to an attempt to impose laissez-faire capitalism on the French people (which would be a VERY radical change indeed…to understate things big big :stuck_out_tongue: ).

-XT

9

Considering that the Libertarian party typically gets < 0.5% of the vote in presidential elections, I’d say you’re absolutely right. :slight_smile:

Europeans seem to be more willing to offer open ended benefits to people, whereas Americans think benefits should be short-term help in emergencies only. That’s obviously an oversimplification, but anytime we speak broadly about the difference between cultures we’re going to have to make some generalizations.

10

Well, I guess my OP wasn’t crafted as well as it should have been. One of the things I am looking for is an explanation of why a reduction of the role of government, in terms of regulation and services, isn’t something to fear. It’s true that this doesn’t quite reach the level of returning to pure laissez-faire capitalism, but I’d like some of our more libertarian-leaning posters (those who have posted in this thread, as well as, say, Shagnasty and Sam Stone) to tell me to which level they would keep governmental intervention in what they would consider an ideal world, and to tell me why this is desirable. Because my opinion is that with less government intervention, you have a higher level of creation of wealth, but also a decreased quality of life for many people. So, first, is my opinion correct, and if so, what should we value more?

There are other things I wanted to discuss, but they might not be appropriate to the forum, and we probably should focus on the above.

11

Well, I consider economic imperatives to be a form of coercion. If, say, someone has to drop their studies in order to find a full-time job, because of a lack of money, they are being forced to do something they don’t want, even without “anyone” explicitely forcing them. As a society, we can decide that it is desirable to allow them to make the decision they want to make.

12

What if society doesn’t want to support that person? What if a tax payer doesn’t want to support that person? Who is ultimately responsible for the student? The student or the tax payer? Isn’t it a little more coercive to force someone to pay for another person to go to school when the person paying for it doesn’t even know the student in question?

The economic imperatives you mention aren’t just some thing an evil capitalist thought up to oppress the masses. If the student wants to go to school and not work then someone must a) pay for the students food and shelter and b) pay for the cost of the schooling (which includes the books, building, the teachers including the teachers housing and food, the electricity, the desks, etc). Food, shelter, books and schools are not free. They are things that someone has to create. That economic imperative is not decided by any government, it is a fact of nature, buildings don’t build themselves and crops don’t have an auto-harvest feature. If the student isn’t going to create any of those things or earn money to buy them but is going to use them then someone else must either a) give it freely to the student or b) be forced to give it to the student.

The scenerio you are describing, the ability for the student to go to school and be supported without working, implies that someone else must provide the necessities to the student. Who should have to do that and why? Why should the student get a free ride?

In the U.S we tend to believe that it is the persons own responsiblity to take care of themselves.

Slee

13

It should be noted that government intervention isn’t the only thing to make the US in 2007 different from Britain in the 1800s.

For example, we don’t have kids working in coal mines in the US, not because it’s the law, but because their absence can probably be attributed to the fact that today we can afford to have kids go to school instead of the mine.

IMHO, this is an important point to consider, especially when one talks about development in the Third World.

14

I don’t think your assumption is correct. With less government intervention, you have, as you said, a higher level of wealth creation. That means that more people are making more money. Not only the rich benefit, but so does every class in society. The poor are better off when it is easier to get a job and when jobs are more plentiful. The only way to move out of poverty is to have a job.

Those living on government assistance typically have pretty bad lives, at least here in the U.S. The medical service provided to those on Medicaid, for instance, is horrible. The nursing home care paid for by Medicaid is typically not something which you’d choose if you were paying. The government is intimately involved in your life when you are on government assistance, such as TANF. It’s not a good way to live. Furthermore, there is also a school of thought (which I think is dead on) which postulates that more people are pulled into poverty (and fail to escape poverty) by the availability of these programs. That is, people aren’t going to work for a better life if the government is there providing a living for them.

That definition of “coercion” makes the word meaningless. People do stuff they don’t want to do all the time. I’d say that most people would quit their jobs if they did not need the money. So they are all being “coerced”? No, they are making a choice. First and foremost, it is your own responsibility to support yourself. Do you agree to that? If not, then we don’t have much common ground to continue this discussion. However, if you do, then you must realize that if people are to support themselves they must work to do it. Most people make less than ideal choices about their work because that’s the way the world is. You have to comply with the wishes of others and in return you get money so you can eat and do what you want.

No society allows this, even Europe. If any government carried this out, then they would have no economy at all. For instance, my decision would be to travel. So under your ideal, the government would pay me to do it. After all, if I had to work to travel it would be a form of economic “coercion” and I would not be making the “decision I want,” right? Can’t you see how this type of utopian thinking is completely impractical?

15

There’s a difference between a safety net, laissez-faire capitalism (LFC), and varying levels of socialism. Very few people want laissez-faire capitalism in the US so there’s very little argument to be made in support of it. Even from a purely economical standpoint, I wouldn’t argue for LFC just as I think that the lack of any sort of security outside of holding a job would stifle the movability of people in the economy. Ultimately, if people want to play around with ideas or buck the system, they need to feel secure enough to do so. Personally I would argue that that’s a better thing for innovation and productivity than “Advance or Die.”

But I do think that any sort of social care should be a safety net and not just a given. Just the same as that while I think that someone should always be able to get shelter and be able to take a shower with soap regularly and I don’t think that everyone should have to have the same size house, I don’t think that everyone should have to get in the same line for medical care. If we don’t do it for other necessities of life, why would we for this one? Rich people get bigger houses, live better lives, and they get better doctor care. I don’t see anything wrong with that.

I do see there as being wrong with it not being that way though. As communism has shown, when people can’t be rewarded for being innovative, they cease being innovative. So while I can appreciate the glamour of the idea of everyone being supported nice and happily, I’m personally optimistic enough about technology and science that I think that stalling innovation will ultimately hurt humanity more in the long run than there is to be gained by instituting a successful social system. If people had instituted a perfect social system in 1900, then everyone may have all had doctor care and government housing and everything, but they would still not have vaccines, know about the necessity of regular bathing and soap. They wouldn’t have cars and Amazon.com, pizza delivery, etc.

Ultimately, a poor person in the US today is still better off than the most wealthy of 100 years ago. And I have little reason to doubt that that won’t be true in another hundred years. So while as I do support a safety net, I don’t think that the basic necessities of life should be equal for all. At heart, there’s nothing more that a person will work hard for than those. People will always rather have a bigger house, better medical care, better retirement money, than they will want the next generation of portable gaming like a Wii. And so long as you do have a safety net in place, what reason is there to ask for more?

Yes, to be certain the better and faster medical care a poor person can get to, the longer that person will be able to live. But, that’s just as true for living space; the larger and more well-insulated a house a person has, in a better area, etc. the longer a person will be able to live. Where is the difference? Why would I want a safety net for housing, but a social system for medical care? Or do you think everyone should only be able to get one size of house?

I do want there to be a safety net for 100% of the population, but I don’t see any advantage to having anything more than that. I certainly don’t see any advantage to removing competition from the medical and insurance realms or saying “Screw you. Get in line.” to the people who have worked hardest and created the most for the world. I.e. the people who moved us from how we were 100 years ago to how we are today.

16

Right on. A lot of American conservatives like myself might believe that pure-unregulated capitalism creates the most efficiency. But there comes a point where you have to look at what you’re sacrificing for efficiency. Is it worth it to have people starving to death just to have an economy with maximized efficiency? I’ve heard people go so far as to argue that those people are supposed to starve, that them dying off is a result of their not being productive in a competitive market.

Even if that’s the case, I don’t think any American cares that much about perfect laissez-faire capitalism in order to let such things happen.

Plus, we’ve all seen market failures. Monopolies and cartels are market failures, externalities have to likewise be dealt with.

Most Americans and most Europeans don’t want total, unregulated capitalism nor do we want totally planned economies. Europe and America are both market economies. Both have social welfare programs. Europe leans towards more, we lean towards yes. Both Europe and the United States have mountains of regulations on the market system. We may be at different points on a sliding scale but neither of us are really very close to the extremes. The USSR was very left on the scale, but even it wasn’t a perfectly socialist or planned economy. The 19th century U.S. and U.K. were both very unregulated, but again, weren’t completely so.

Severus the simple truth of the matter is, Europe is going to be forced to change. The tide is showing that the current European social welfare network is going to be hard pressed to survive in the face of an aging population that will overload the system. But hey, guess what, the same thing is happening in the United States. On both sides of the Atlantic we have to find some way to deal with the ever-growing problem of more and more people being dependent on the social security apparatus with relatively fewer workers to support them.

We have to cut back benefits, or drastically increase taxes. Both have serious problems. Only letting people work 35 hours per week makes it more difficult to fund the social welfare programs. Many European countries have static levels of unemployment that are relatively high.

17

It’s counterintuitive, but sometimes government regulations designed directly to help people, actually hurt them.

Look at protective tariffs put up to “save jobs” they end up hurting way more people than they ever help.

Rent control ends up hurting more people than it helps. It helps the people lucky enough to be in rent controlled property, but every one else ends up suffering because of it.

It’d be great if the economy was simple enough for things like protective tariffs and rent control to work as designed, but unfortunately, they don’t. It’d be great if we could say, “alright, no rent higher than this, every one gets to live at a reasonable rate” but unfortunately, while you could pass a law like that, the economic realities would undermine it.

18

The way I see it, the free market is a great idea and it works. It provides benefits not just for those people who “win” at it and become wealthy but for society as a whole. (Which is the real value of the free market - it’s easy to design a system that benefits just those on top but it’s very difficult to design one that benefits everyone.)

But the free market is not inherently self-correcting. It has flaws that will not be fixed by the system itself. Among these are the fact that the playing field is rarely as level as theory would like; that short-term benefits can outweigh long-term liabilities; that businesses can prosper just as well by eliminating the competition as by out-performing them; and that businesses can become big enough to be immune to the needs of the market place.

So I believe that outside interference (which will usually be government regulation) serves a valuable purpose in the free market. It forces the free market in reality to act the way it’s supposed to act in theory. As a metaphor, businesses are the teams and government is the league commissioner. Government doesn’t compete against the businesses and maintains a neutral stance towards who wins and loses, but it sets the rules that the businesses can freely compete under so the teams that play best can win.

19

Sorry for taking time to reply, I don’t always check the board all that often.

Well, if society doesn’t want to support that person, I guess it’s their choice. If what people want is a world where you just won’t get any help, no one should stop them. But I find it nice that different societies have different values. Personally, I’d rather live in a place where people who can’t currently support themselves will be supported, at least temporarily, by the community. I know it can be abused, but I think that the benefit (for society as well as for the individual person) is worth it.

What I mostly object to is the sentiment, expressed among others by Shagnasty in the linked post in my OP, that this divergence of values between societies isn’t desirable. That “progress” for all societies will have to pass through what he considers valuable.

My view is that by being part of a community, you agree that you have a moral responsibility to the well-being of this society, not only to yours. I mean, you have to agree to respect the values and standards of your society, you have to be able to communicate with other people, and you have to make an economic contribution to the society. But I guess that’s debatable, and different societies will have different views about this.

I don’t know. I’m of the opinion that a market economy, without intervention, is unstable. It doesn’t work as the theory would have it. I get this impression from seeing the fact that monopolies seem to develop naturally and need outside intervention to break them. So, instead of remaining fluid, I believe that unsufficiently regulated economies will eventually go a fixed state with a number of “haves” and “have-nots”, and minimal opportunity for moving from a class to the other. A kind of neo-feudal state, say.

So yes, of course it’s always desirable to have more jobs. But if you can hire people as little more than serfs, and people will take it, why would you do anything else? And it’s not through servitude that they’ll improve their case.

But why, especially since you just said that the service offered by Medicaid isn’t something you’d choose if you were paying? I’ll agree that some percentage of people will agree to remain in poverty if they can survive through governmental aid, but I think this percentage is quite small, and I find it somewhat arrogant to believe otherwise. It’s kind of like saying, “of course I want to do things I’m proud of and contribute to the world, but those people? They’re lazy parasites who have no pride, and of course the only way to make them work is to force them.” I know I wouldn’t want to live on social assistance for a long time; if I ever get there (right now I don’t expect it to happen, but we never know, which is why I want the option to remain there), it will be for a short time to get back on my feet. I’m proud enough that I want to have a positive impact on society, and I believe most people are like that too.

20

If I understand you, what you’re saying is that societies innovate (and ultimately, “progress”) when they’re not perfect and people want to improve their case. I guess that might be true, but I’m not quite sure what progress is. Would I want to live in a society without cars, vaccines, Amazon and frequent bathing, but otherwise perfect? Maybe, especially if I didn’t know about our current society. The “no vaccines” and “no frequent baths” do scare me a bit, because of the risk of disease, but this is why I don’t think you could have a perfect social system without them. There would still be people working to try to reduce disease.

I don’t know, I think we should strive to improve the lot of humanity and reduce inequality. But I agree with most of what you said, it’s acceptable to me that the more wealthy will have better houses, and yes, even better health care. (I’m entirely in favour of our public health care system here in Canada, but I’m also not against giving the private sector a place, as long as the public system offers good care. Same for education.)

That I’m not so sure of though. As I said, what scares me are the health concerns, but if you take a very wealthy and very healthy person of 100 years ago, I think they were better off than a poor person in the US today.