It’s unlikely, but you’re right, it could. But FDR was no communist and he did have appreciation for the capitalist economic model. Just as long as it doesn’t run unchecked and disenfranchise large portions of society. Nobody in this discussion is endorsing the libertarian point of view, are they? But you keep building strawmen scenarios just to knock them down and say, “See? Owners bad!” Checked capitalism works, though imperfectly, as we’ve seen. Libertarian or marxian utopias do not.
Excellent point. The owner decides how to risk his investment, and is rewarded for a good risk and penalized for a bad one.
Regards,
Shodan
Yeah, I can go along with that. If you’ll grant that workers are the creators of capital, I’ll agree that they need the permission of owners in order to use it.
I never claimed otherwise. In fact, some of my more radical left-wing friends really despise FDR for preventing a communist revolution. They see him as throwing just enough crumbs to the proletariat to cause them to go back to being passive sheep, and that the right wing industrialists who hated FDR and called him “communist” were incredibly shortsighted and extremely fortunate that he saved their bacon, all while they were hurling invective in his direction.
I had the impression that there were some, yes.
Funny, I thought there were a lot of strawmen being sent the other way.
First of all: just upthread I stated that “I am a pragmatist and would gladly settle for the centre-left programme advocated upthread by Triinopus”. I know any kind of planned economy in the US is not likely in the near or middle term due to political reality, and I can live with that. But at the same time, I think it’s worthwhile to discuss what could be possible economically if the political will were there.
Secondly, I think for the purpose of discussion we should dispense with the term “utopia”, which is a loaded one. My ideal economic arrangement would not attempt to absolutely equalise income and wealth, and would include incentives to work harder or smarter, especially on behalf of the common good. Nor would I be out to abolish petit bourgeois entrepreneurial ventures of the mom and pop variety.
And at the same time, I would support incentivising social safety net programs toward being more than just “the dole” even if it was just about doing volunteer type work or getting an education.
But I do wish we would stop allowing individuals and families to accumulate obscenely large amounts of wealth; and I would like to see large sectors of industry, especially transportation and energy related, be nationalised.
So that would be my ideas for a semi-planned economy. Not the same as what was done in the Soviet Union or elsewhere. Yet I will still defend to a degree what was done there economically. According to naysayers, they never should have been able to get anything going. The whole thing should have been far too complex, planning an entire nation’s economy, and it should have pretty much instantly crumbled or just remained at a very low level. Yet it was clear to me that the standard of living in the Soviet Union in 1990 was far higher than that for instance in Kenya, where I was born and where I lived for a time in the 1980s.
So the notion that a centrally planned economy is just an impossible task, because the complexity is too high for it to be done without Adam Smith’s invisible hand, has really been proven false. Yet people like you (and yes, nearly everyone else) continue to insist that their example proves that it doesn’t work. I find that puzzling.
But let’s even say we took it for the sake of argument as true that the Soviet Union was an utter failure economically. Even then, it would be a great stretch to say that this proves centrally planned economies are impossible. What if it were not impossible, but just a difficult organizational challenge? How would it be different from someone in 1789 scoffing that the U.S. Constitution was a pipe dream, because nothing of its sort had ever worked before? (By a few years later, they could point to the French Revolution as proof that people needed to be ruled by aristocracy as the only stable, workable system of government.)
Why does anyone who is interested in trying again have to settle for the results achieved by a few Russians (and one Georgian who took over) 100 years ago? How would this be different from telling the Wright Brothers to pack it in because others had already tried building a heavier than air flying machine and were unsuccessful?
Your Marxist ideals have a hell of a lot more to do with your problem accepting the definition of “owns” than your left wing orientation. I don’t know many left wingers who have issues with the concept of private ownership.
Seems you are using “left winger” to refer to what I would call a “liberal” or a member of the “centre-left”.
Kenya was also a socialist, planned economy.
[QUOTE=SlackerInc]
So the notion that a centrally planned economy is just an impossible task, because the complexity is too high for it to be done without Adam Smith’s invisible hand, has really been proven false. Yet people like you (and yes, nearly everyone else) continue to insist that their example proves that it doesn’t work. I find that puzzling.
[/quote]
I don’t know that that notion every existed to any real degree. It wasn’t considered impossible, just highly ineffective. Which it is.
Also, you may want to read up on how the Soviet economy actually functioned. It depended on “fixers” to illegally broker deals between factory managers, and a massive underground economy. The "invisible hand’ was very much directing the economy, just in a highly ineffective, underground manner.
Well, outside of the Soviet sphere there was China, Cambodia, Vietnam, Laos, Angola, Benin, Congo, Ethiopia, Mozambique, North Korea, Cuba, and Somalia. How many examples would be enough?
Compare to the nations atop the Index of Economic Freedom. Whose proletariat was and is better off?
Your conception of what it means to “create” something is very narrow. If I provide you with a lathe and wood, and you operate the machine to make a chair leg, who “created” the chair leg? You, me, and the workers who built the lathe and harvested the wood all have a claim, right? The answer is that we all created it.
Let me add India to that list. India and China are particularly nice examples because as soon as they (even partially) broke away from the socialist models, they’ve experienced massive welfare gains for hundreds of millions of people. I’m frequently surprised that some people still argue for socialism.
Watered-down socialism, such as the National Health systems of all of the industrialized nations except one, have a pretty good track record. Public fire departments are superior to private ones. Public school systems are superior to private ones.
Socialism, in a moderate degree, is a very, very good thing.
[QUOTE=SlackerInc ]
So the notion that a centrally planned economy is just an impossible task, because the complexity is too high for it to be done without Adam Smith’s invisible hand, has really been proven false.
[/quote]
Well, you can set up a planned economy, that’s not impossible (if you shoot enough people). The problem is not that it can’t be done - just that it won’t work very well, compared with free market economies.
You can paint a house with a toothbrush too. But the guy with a roller and a paintbrush is going to get a lot more houses painted, a lot better, and a lot more efficiently. So you can say “It isn’t impossible to paint a house with a toothbrush - I did it and it only took six months”. But the other guy who used efficient methods to paint is going to make you look pretty sick. And you are not generally going to be in demand as a painter, as long as no one is forcing people to hire you or get sent to the gulags.
I think what we are insisting is that it doesn’t work very well, compared to better ways of organized economic activity. See the history of the USSR, China, East vs. West Germany, North vs. South Korea, etc.
Regards,
Shodan
Socialism does not work because you have a small amount of it. Government intervention works because *some things are subject to market failure.
*
A simple question; why does Canada have an effective, popular government system for health insurance, but nobody wants to have a public system for distributing groceries? You need food just as much as you need health care, right?
The answer to that question is, in a nutshell, the answer to what socialism you need and what socialism you don’t.
None of those things, except healthcare perhaps, is ‘socialism in a moderate degree’. It’s provision of essential public goods, by the government, which is not something anybody with half a brain should be arguing against.
As for healthcare - I’m fairly sure public provision of healthcare is not the optimum way of going about things. Healthcare is a private good with a propensity for market failure. It’s my considered opinion that governments should be attempting to reduce/prevent those market failures rather than doing away with the market. So yeah, healthcare is a private good, and public provision of it is somewhat akin to socialism, but in my view it’s very debatable if it’s a good thing.
It depends on what you mean by deciding.
Take an old-fashioned manorial estate. Certain decisions have to be made each year: when to harvest, what to plant, whether to repair the old mill. They’re important decisions, and can have a direct effect on production.
But the lord of the manor isn’t necessarily the one who makes them. For one thing, he may not be the one for the job. Being a lord doesn’t make him an expert on weather, or millstones. For another, he might not care to do it. It sounds boring, doesn’t it? What’s the point of being lord if you have to do boring shit all day?
The same is true today. You may own Exxon, but that doesn’t mean you know anything about deep-water drilling, or oil spills. That shit is for employees to worry about. If you own Exxon, you’re there to collect dividends, and to hope the per-share price goes up. And that’s it. You don’t expect to be making any decisions about what Exxon does with its resources.
But maybe that’s not what you’re talking about.
Maybe what you’re talking about is whether to buy Exxon in the first place. Or an estate.
That’s a different kind of deciding. The thing about buying Exxon - or land, for that matter - is there isn’t any more Exxon - or land - because you bought some. There’s the same amount as there was before. There are no more gas stations, no more wheat, and no more (or less) oil spills than than there was before. The only thing that changes is the name of the person entitled to unearned income - dividends, in the case of Exxon; rent, in the case of the estate.
But there’s no more - anything - because of the transaction.
It’s not like deciding where to put a oil well, or when to plant the wheat.
There is no added value.
Unless we live in times of feudal serfdom, the lord of a manor has to negotiate with people to do these jobs. This has already been explained to you. Ignoring a fact you don’t like doesn’t make the fact go away.
They have to decide which people seem most trustworthy. They don’t just “permit” the capital to be used, in the passive way that your narrow ideology compels you to write repeatedly. They must make an active choice about who will give them the best return. This choice is based in a desire for profits, hopefully easy profits, but the decision is not necessarily an easy one to make. The result of an owner seeking out the best “tenants” is a slightly better chance of the capital being allocated to more capable hands. This is the abstract work of the owner. This has already been explained to you. Ignoring a fact you don’t like doesn’t make the fact go away.
They have to decide the appropriate compensation, striking a balance to retain trustworthy workers at a decent price. If it’s too low, they will bleed workers and there will be no production. Too high, and they won’t receive the return they’d like from their ownership. The balancing act often requires deep deliberation. This decision can’t be delegated away. This has already been explained to you. Ignoring a fact you don’t like doesn’t make the fact go away.
Many owners want to sit on their ass doing very little. Who wouldn’t? But they often don’t have this option because the market situation changes too much. This has already been explained to you. Ignoring a fact you don’t like doesn’t make the fact go away.
This last sentence is pure fantasy.
The owners of Exxon have to choose the board. They have to choose the board with the knowledge that the board has to choose management. They have to choose the board with the knowledge that the board chooses management and the management chooses employees. They have to choose the board with the knowledge that the board chooses management and the management chooses employees, and that all groups involved, including the shareholders themselves, will be involved in decisions about resource allocation at various levels. Even the shareholders themselves make direct decisions about resources whenever they vote to approve issuing more securities or to approve a merger. These don’t always happen with all companies or classes of stock, but they very often happen, and yes, the owners are part of the decision in determining how resources are allocated.
So we can add stock ownership to the growing list of topics that you write about despite your staggering lack of knowledge.
It’s already been explained to you that owners don’t necessarily do all sub-allocations, but they must still set up the overall system in an effective way, in part by hiring management but also by choosing a board to set up the general guidelines, the rules of the corporation by which management must work, so that those sub-allocations have at least some chance of happening correctly so that a corporation like Exxon can be profitable. A small stockholder without majority voting rights might be indifferent to the vote, based on the low chance of making a difference, but that very decision is contingent on the existence of those other majority owners who are presumed to take a deep enough interest in the company to make good choices about who to hire.
This general process, in somewhat less depth, has already been explained to you. Ignoring a fact you don’t like doesn’t make the fact go away.
And this is your final mistake. There is potential value added in making a purchase.
This thread is easily as bad as the last Rothbardist goldbug thread we had. You’re on the other side of the ideological spectrum, but you’re just as indifferent to factual information as any goldbug I’ve ever come across. It’s the exact same habit of repeating the fantasy and ignoring all cogent criticism. You’re their Mirror Universe doppelganger. (You will have to decide for yourself whether you’re burdened with the added disadvantage of looking particularly unattractive in a goatee.) Your credibility couldn’t sink any lower, so at a certain point, it’s not worth pointing out your zombie mistakes any longer. There’s no profit in it.
But here you make a new mistake, and it’s an interesting mistake. I’m not sure this particular mistake has been explained to you.
Deciding what to own, and what not to own, can in fact add value. You’re stuck in the concrete world. It’s all you notice. Tangible objects are the only things you’ve shown yourself capable of recognizing. You’re right that buying a share of Exxon doesn’t create any more Exxon. Purchase a share, and they have the same number of oil wells the second after the transaction that they had the second before the transaction. They have the same number of employees, rented office space, geological survey information, and all the rest. Buying land doesn’t create any more land. Buying gold doesn’t create more gold. Becoming an owner of a particular thing does not, by the very act of purchasing, create more of that thing. There is no concrete change in the world when we make an ownership decision.
There is an abstract change. From my first post in this thread:
Some people will always have problems with abstraction.
There is value added by making decisions about what to own. Not always. It’s not a perfect process. But it still exists. Buying something creates knowledge in the markets.
If I have a factory, and my employees have a process that they believe will be highly efficient and successful and profitable if we use twenty billion metric fucktons of tin, then our purchase of tin will in fact create value. It won’t change the amount of tin in the world. There will be the same amount of tin one second after the purchase as there was one second before the purchase. There is nothing concrete here that small children can easily see and understand. I write the check, and ownership of tin moves into my hands, but nothing concrete has changed at that moment when the ink dries on my signature.
Yet there is abstract value created. Because my purchase of tin increased the price of tin. My purchase created information. The suppliers of tin noticed. There is no more tin the moment I made the purchase, but there might be more tin next month because of the fact that I made a purchase, as the suppliers respond to the market signal. The buyers of tin noticed, too. There is no less tin the moment I made the purchase, but current buyers of tin might substitute away and look for a cheaper resource to use in the future. The choices we make ripple across the world. The decisions owners make about what to own ripple through the markets, and yes, that creates value.
When I buy Exxon shares, I can potentially change the price of Exxon. When I buy land, I might change the price of land. When I buy gold, I can change the price of gold. These are market signals. The buying and selling by owners is part of the act of price discovery, and those prices create value. They convey information.
Not perfect. Sometimes it’s bad information. Sometimes markets make mistakes. But the choices by owners about what to own conveys their beliefs to the world about how valuable they think those resources are. “The wisdom of crowds.” We each add our own tiny bit of knowledge, and often – not always, but enough of the time – the market will aggregate that information into a signal that other people can understand and efficiently respond to. They have a better chance of making good decisions with their own resources based on my purchase of tin. Buying things does, in fact, create value. It creates knowledge, and without this price system, our present civilization would immediately stop functioning. When people are buying up manors to become lords of their own little territory, that sends a signal. And when people are selling manors because we managed to recognize that we don’t live in the 19th century anymore, that also sends a signal.
This has now been explained to you. Ignoring this process in your future posts won’t make reality go away.
It did not strike me as at all socialist when I was there in the 1980s. Stark class divisions, name brands, lots of ads, etc.
Only one of those has AFAIK a notably worse standard of living for the bottom quintile (the way I consider best to compare countries) than its neighbours. And as discussed upthread, Cuba’s poor are far better provided for than in other Caribbean countries.
Uhhh…Linking to a bizarre right wing index that ranks Botswana higher economically than Norway doesn’t really buttress your point, though this shows why I had the feeling there were laissez-faire types about ITT.
Of all the claims on behalf of capitalism, the one that it is so efficient is the one I find most risible. There is the point I made earlier about the boom-bust cycling in the natural gas industry. Then there’s this.
Speak for yourself! I would love to participate in such a system. The purchasing power it would have would make most basic provisions dirt cheap, similar to prescription drugs. They could also cut costs by just sticking things on pallets, not worrying about presentation or placement, etc.
It’s easy to see how someone might think that way (well, someone who hasn’t read the previous 7 pages of refutations), but it’s not correct.
Investments help make something happen that otherwise could not have happened. They do change the world. Now, it might be if I didn’t invest in OmniCorp, someone else would have. Fine.
But someone had to make the investment, and put their money and ass on the line. That someone deserves some credit(s).
Furthermore, to actually make a decent profit, the investment needs to create wealth. If the market doesn’t grow, or you don’t grab market share (by providing a superior product), then the initial asking price is likely to be comparable to the value you get back.
(factoring in for things like opportunity cost: given the choice many people would prefer $300k cash in hand today rather than $300k + inflation in ten year’s time. The same concept needs to be kept in mind when evaluating whether investments were worth the risk).
Daniel Arap Moi’s government was more of a pure kleptocracy than Jomo Kenyatta’s, but in neither case was Kenya a free market economy.
You wrote:
I pointed that you don’t have to settle for those results, that the same system has been tried elsewhere and achieved the same poor results. As for neighbors…did you forget South Korea, Hong Kong, and South Africa, for a start?
If “Sure, socialism failed everywhere, but so did other economic systems besides a free market!” is what you’re reduced to, so be it.
Did you not read it, or just not understand it? It’s not a ranking of GDP or prosperity, but rather economic freedom. Read the “Method” section for more details.
Read the source article, not the HuffPo summary.
Furthermore, aluminum isn’t exactly a scare material. If Metro International’s delays are intolerable to their customers, they will buy their metal elsewhere.
That must be why groceries were so cheap and plentiful in the Soviet Union and China! Oh, wait, the exact opposite occured.
I think SlackerInc has been trying to make the case that this would work in places other than Soviet Russia, China, Cuba, North Korea, etc… You know, places with a western style free market economy. And I agree. I cite Sam’s Club.
He was responding to RickJay’s notion of a public system for distributing groceries, so a private, free-market grocer like Sam’s Club or Aldi doesn’t count. He wants the government to be in charge of food production and distribution, history be damned.