Twenty Years After The Wall Came Down: Rethinking The Myth of Unfettered Capitalism

I find it funny that many of the same people who mark the fall of the Berlin Wall as an American triumph would also mark the building of a U.S/Mexican wall as the same.

Not quite the most ridiculous comment I've ever read, but I haven't read everything yet.

If the U.S. builds a wall to keep Americans from leaving the country, I'll have to reconsider.

Debi

Agreed whole heartedly.

Although most of our political debates end up in hyperbolic straw man arguments about 'slippery slope' theories that lead to one extreme or the other, the stark reality is that nothing happens in black or white; we always find our way into the gray ;)

I second your agreement.

See, you don't understand Capitalism; it has nothing whatsoever to do with individual achievement and it's rewards (in fact it is the antithesis - the rewards go to those with capital, capitalism is royalty without the titles but with the exact same inherited aristocracy

There is nothing inherent in Socialism (as opposed to communism) that would prevent "individual achievement and it's rewards" going to the achiever - just no property to be owned by anyone ever (leased but not owned) - and this is anti - capital; anti-inherited wealth

Clearly a class in basic economics and / or history is in order

just no property to be owned by anyone ever (leased but not owned)

Uh huh. Is the TV Leasing Authority open on Sundays? There's a game I want to see. I hope they fixed the TV properly because the previous renter screwed up the remote and the government hasn't had a chance to fix it yet.

the rewards go to those with capital

Yeah, that is exactly what he said. Eriq you seem to be debating the fact that some have more capital than others; this has been and always will be a stone cold fact.

If I have even a very small amount of capital and a great idea or some sort of skill or intelligence I can make more capital.

Inherited wealth is what you seem to have a problem with Mr. Samson, but even if we were to change to a socialist country this would not change. Things would be worse off. Think about it, the goal in life is to own things: We want to own our first car, house business, etc.

Ownership keeps people working and striving towards something...

People exploit an advantage in the market to make a profit. Cornering the market to get a better price for whatever they are selling. This is of benefit only to the seller, not to society.

You argue that the benefit to society is that anyone can be a seller. One simply must work hard enough. This is the fallacy of equality of opportunity. What access to opportunity does a person born in the ghetto have? Is it truly equal to someone born in the suburbs on in a wealthy neighborhood.

I think government has a responsibilty to remedy this disparity. Conservatives think government should only prosecute wars and crime and stay out of business.

What access to opportunity does a person born in the ghetto have? Is it truly equal to someone born in the suburbs on in a wealthy neighborhood.

Yeah...this is like saying does the horse in last place still have a chance to win. I KNOW without a doubt he has a CHANCE to win, he didn't get off to a good start but he can still get the gold. Understood?

Are you saying they don't have the same opportunity? They do...

One has better start but that doesn't necessitate victory either. I am pretty sure, with the effort society puts in to trying to help those in the ghetto, they have advantages in certain situations that those who come from lower-middle class don't. Each has their own advantage/disadvantage (perhaps one more than the other) but the all have the same OPPORTUNITY and KGMO if you don't understand that...I can't help you.

There are men who come here with nothing but the shirts on their back. This is not a fallacy but a reality.

One has better start but that doesn't necessitate victory either. I am pretty sure, with the effort society puts in to trying to help those in the ghetto, they have advantages in certain situations that those who come from lower-middle class don't. Each has their own advantage/disadvantage (perhaps one more than the other) but the all have the same OPPORTUNITY and KGMO if you don't understand that...I can't help you.

You root for the underdog? You support the NAACP? How about ACORN?

I'm not talking about fairy tales and Horatio Alger stories. The reason those stories are so fascinating is because they are so rare. Most people die in the same economic status as when they were born. The American dream is a fantasy used to sell teeth whitener and duvet covers.

The American middle class is shrinking. People are getting poorer. There are fewer low white collar jobs in America. There are fewer middle management jobs. This isn't just Joe six-pack, Computer programming is being outsourced to India.

I don't root for anyone but there are those who are willing to help the poor if they seize the opportunity.

There are many more stories of low income children making it "big" in a manner of speaking. To make it big is really speculative and we don't hear stories unless they make it BIG BIG, if you catch my drift.

My analogy was to make a point but if we see this race more as a marathon (the NY marathon if you like) there are those that run the race because they have trained their entire lives and worked hard and want to win. There are also those who simply run it to say they did so. This is what life is. Based on our decisions, we make our lives what they are.

The American dream is a fantasy used to sell teeth whitener and duvet covers.

I beg to differ as immigration to industrialized countries is still very high.

The American middle class is shrinking. People are getting poorer. There are fewer low white collar jobs in America. There are fewer middle management jobs. This isn't just Joe six-pack, Computer programming is being outsourced to India.

This is a lot to talk about with this comment but to put it simply a shift has occured, similar to that of the industrialization shift where machines outsorced workers. I will say it is tough for those who are in certain industries (manufacturing, customer service, IT, etc.) but the only reason this article was brought about was because of a depression, recession, whatever this economic downturn is.

If we are to debate the merits of Capitalism it has strong fundamentals and always has, people just look at current states in their economic lives and make decisions based on emotion. If I lose/lost my job I would say, "Yeah, this isn't working!" but perhaps people should look inward or backwards in time to find out why they are in the situation they are in.

"Yeah, this isn't working!" but perhaps people should look inward or backwards in time to find out why they are in the situation they are in.

The prejudice of privilege. Your doing well(hypothetically) and you assume those that aren't as successful as you are, aren't successful because they made poor choices.

I have heard some opponents of health care reform argue that doctors aren't making what they used to. Do you think it's because they didn't make the right choices or because they didn't work hard enough.

You make a strong argument , and it's exactly the same eat your vegetables capitalism that I'm indoctrinating my children in. Am I a little bitter because of job insecurity? possibly.

But I think the table has tipped way to far to the side of the haves, at the expense of the have nots, and if the fat cat CEO's aren't going to provide middle class jobs here, I say we hang 'em.

Make them pay the payroll tax for their overseas employees. Stop giving a tax incentive for them to move operations overseas. If they want to leave this country, screw 'em. Make room for somebody else to rise up and take their place.

Of course that's just my opinion I could be completely wrong...;^)

The prejudice of privilege. Your doing well(hypothetically) and you assume those that aren't as successful as you are, aren't successful because they made poor choices.

Well, poor choices or they didn't put enough effort in. I am sure it is not uncommon for someone to give up on their economic goals and it is definitely harder in this day and age to "make it big" when you start from small but that opportunity is there.

This was a good exchange of ideas.

I cringe sometimes at the CEOs and their earnings too, but I always return to that thought of who am I to tell them who to employ or how much money they make.

I have a real simplistic question:

Why, if there are regulations on the books, that government put into law, is it the fault of Corporations, when the government has all sorts of watch dogs, to stop this kind of downfall?

I would say, corporations have had the regulations, but have been unchecked by government, the people that we elect, that seem to be more worried about collecting a paycheck than they are enforcing what laws they enact.

It seems their entire problem solving attitude is "Enact more laws", that should curb it for a while.

Bob, you've hit the nail on the head with the comparison of central planning vs. free market.

The free market provides equality of opportunity: a level playing field in which the players can score based on their skill, effort, and to some degree, luck.

Ideally, central planning or collectivism seeks to provide equality of results: distorting the playing field to ensure that regardless of any differences between players, the score remains equal.

I'm not sure of your definition of capitalism. My layman's understanding of the term centers on the private ownership of the means of production. The barber owns his tools; the dot-commer owns his server rack; the larger business owner owns his factory. I'm not sure why these would be opposed to the free market, other than wishing they didn't have to compete so hard.

Certainly bigger businesses have some advantages, e.g. economies of scale and large market share. But smaller business have some advantages, too, e.g. ability to react quickly and personal service. In the U.S., microbreweries are able to compete with big breweries.

Where businesses gain "unfair" advantage is through political influence. AT&T was only able to keep its quasi-monopoly through assistance from the government. This monopoly collapsed under its own weight when the electronics revolution helped seed an overabundance of devices that people wanted to connect to their phone lines without having to pay AT&T's monopolistic rates.

Banks and securities markets are two areas where the entanglement of government with business has become extreme. This was done with the best intentions, of course, such as protecting the savings and investments of the customers. The downside is that these industries were protected from the gales and tempests of the free market and thus became less competitive and more dependent on the government. Due to this entanglement, it's very difficult to open a bank, and all but impossible to create a new stock market.

In a like manner, the involvement of government in labor, while mostly well-intentioned, has had some severely anti-free-market consequences. Labor unions are able to gain control of a company's labor force and control the interaction between the company and its workers. Where this becomes unfair is that by law, the union has an advantage in organizing the workers in a company, and an advantage in staying in power. Effectively, the only option many companies have is to close a factory and reopen elsewhere without the union's interference.

Another area in which government distorts the labor market is in the mandating of a minimum wage. Rather than allowing the free market to set the wage floor, the laws force employers to game the system or break the law in order to control costs. If there isn't enough profit for his business to pay for 5 full-time people at minimum wage, what choices does the owner have? Reducing staff or hours reduces his output. He may have to game the system, converting his employees to contractors.

Also, I'm not sure I know what you mean by "the economy must serve the people".

Anyway, Bob, I enjoyed reading your comment and I'm curious to get your input.

crispy,

Ideally, central planning or collectivism seeks to provide equality of results: distorting the playing field to ensure that regardless of any differences between players, the score remains equal.

I don't pretend to be an expert on Marxist theory -- in fact I don't know much about it. But I don't think you're right, here. Marxists reject the validity of "efficient markets". They believe that people can manage labor and capital better than "the market". In my opinion, the Soviet Union demonstrated their error fairly spectacularly!

But the objective of central planning was maximum output, not equality. Redistribution of wealth was not to be accomplished at the production phase, but at the consumption phase.

I'm not sure what is meant by "collectivism".

... capitalism. My layman's understanding of the term centers on the private ownership of the means of production.

That is my understanding, also.

I'm not sure why these would be opposed to the free market, other than wishing they didn't have to compete so hard.

Well said! A barber may not like competition, but he can't do much about it. Boeing certainly can! As the ladies say, "Size does matter!"

I agree completely with your comments on entanglement with the government. I've used a much harsher word: "subversion". My thesis is that such behavior is intrinsic to capitalism. We see it clearly in the case of very big companies (Susan Bayh), but we know that the same thing is happening at the local level where even small companies use illicit methods like kickbacks to obtain municipal / county contracts.

the economy must serve the people

There is something obscene about celebrating a new record for the DOW, while unemployment is hitting new records, too. There is something obscene about a single mother having to hold down two jobs to survive while Golden Boys receive tens of millions for crashing the economy.

America is the richest country in the world... but the vast majority of Americans do not participate in that wealth.

America's wealth should serve the greatest number of Americans, not just the wealthiest few percent.

There is something obscene about celebrating a new record for the DOW, while unemployment is hitting new records, too. There is something obscene about a single mother having to hold down two jobs to survive while Golden Boys receive tens of millions for crashing the economy.

America is the richest country in the world... but the vast majority of Americans do not participate in that wealth.

America's wealth should serve the greatest number of Americans, not just the wealthiest few percent.

I think people act like we shouldn't do anything to correct these social inequities, because they don't think there is anything we can do.

They have accepted almost religiously their belief in an unfettered free market which is based on a myth. There has always been Government regulation of the market.

... almost religiously...

I like that.

Like I said, I don't pretend to know much about Marxism... But I'll stick to what I said:

Marxists reject the validity of "efficient markets". They believe that people can manage labor and capital better than "the market".

... and central planning is the consequence...

I agree that The Soviet Union denatured many Marxist ideas and ideals... but I also stand by:

... the Soviet Union demonstrated their error fairly spectacularly!

This might be a crazy suggestion but why don't you learn more about Marxism before repeating the same unsubstantiated and incorrect assertions over and over again?

http://www.britannica.com/facts/5/423721/economic-planning-as-discussed-in-social-science :

What Marx’s ideas have suggested above all else in a positive way is the possibility of a society directed not by blind forces of competition and struggle among economic elements but instead by directed planning.

Wow. A secondary source.

Try reading Marx. I'd start with Capital. You know, his work on capitalism.

Courts,

As sources go... Unless someone shows me something more direct, Britannica is OK for me. The only time I looked, Marx was just about as unreadable as texts can get. Or... since you pretend to know Marxism by heart, why don't you quote the pertinent texts.

If you can't give anything better than I have given... I would -- just maybe -- perhaps -- suspect that you're just blowing smoke.

More direct?

Read Marx.

More specifically, read Das Capital. There are decent translations available.

If you're going to speculate (incorrectly) about what Marx thought about markets, it makes sense that you'd go to his work on capitalism.

But then I'm just a political science professor. What the hell do I know?

I'm just a political science professor. What the hell do I know?

In that case, it should be easy for you to cite chapter and verse. Until then... I have posted... you have not.

Please understand, oh supremely respected font of wisdom, that I would be only too happy to gather the pearls of wisdom that fall from your lips... ... ... if any ever fall... ...

That's not how this works.

You see, you have both professed that you don't know much about Marx and asserted that Marx rejected the "validity of the efficiency of markets."

Even your quotation from a secondary source didn't substantiate this claim. The idea that it is possible to have a society "directed not by blind forces of competition and struggle among economic elements but instead by directed planning" says nothing about the validity market efficiency.

If you want your claim to have credence, you have to find (credible) evidence.

I am not the one who claims to be a political science professor.

And as for credibility... for the moment, I have the Britannica on my side, while you have... um... not much.

Mind you... I wouldn't mind being proved wrong. I enjoy learning. But the key word is always "proved".

That is "how this works"... Sort of like poker. Either you put something in the pot, or you fold.

As you'd know if you'd (a) read Marx or (b) understood the secondary source you decided to quote, Marx didn't dispute the efficiency of markets. Instead, he postulated that it was possible to organize a society in ways that were not governed solely on the operations of markets.

It's a simple concept. Markets are efficient. But markets fail. And sometimes, Marx would argue, there are social goods that are more important or desirable than efficiency.

It's called research. It's what you do before you start "discrediting" theories with which you are unfamiliar.

Is this how you teach? Do you simply browbeat your students, without ever actually presenting any supporting sources?

"Here is what you must think! You must think it because I say so!"

Socrates would be so proud....

Nope. I assign readings, expect my students to do them, and then have a conversation. It's called teaching.

I did my research and gave you my source--Das Capital. The fact that you're willing to rely on secondary sources and want others to do your research for you speaks volumes. By your own admission, you don't understand Marx. If you really want to learn more, as you claim, try reading Marx.

Last time I looked, Capital was in the major door-stop league. I'd like to learn... but nowhere near enough to read many hundred pages of turgid text.

Its a bit too easy: An "expert" who should be able to cite chapter and verse prefers to just declaim and then say "Read the book!" Sounds a bit "gotcha" to me...

I should think that an "expert on Marx" would easily be able to reference a quote where Marx praises the free market. Me, I must be unlucky... I find stuff like

Marx condemned the free market, for instance, as being “anarchic,” or ungoverned. He maintained that the way the market economy is coordinated—through the spontaneous purchase and sale of private property dictated by the laws of supply and demand—blocks our ability to take control of our individual and collective destinies.

http://www.econlib.org/library/Enc/Marxism.html

Really, really unlucky, in that is says sort of the same thing as the Britannica... "anarchic" or "blind"...

Again--and perhaps you're just unable to grasp the subtleties of Marx's "turgid" analysis--this doesn't say that Marx contested the validity of market efficiency.

Why all the wriggling and evasion, Courts, Killfile?

Either Marx advocated the free market, or he advocated intervention, or he said nothing about the topic, or he somehow advocated both.

The history of Marx-inspired governments seems to consist entirely of centrally-planned regimes. Arguably, Das Kapital is the theory, and these examples are the practice; but the results, including the collapse of East Germany, are hardly a shining testimony to the correctness of the theory.

Courts,

Now I have two sources... You still have none... And you continue to mince words.

Do you grasp the subtlety of "put up or shut up"?

Bob--

All you have to do is demonstrate that Marx contested the efficiency of markets.

Neither (secondary) source you've come up with has done that.

It's not my job to prove your arguments for you.

KF,

This is disappointing. I thought better of you. I hope this is an honest mistake, and not the intellectual trickery that it appears to be! Granted the prose is every bit as turgid as I remembered... From your own link:

What is the natural normal price of the labour of, economically speaking, a working man? Ricardo replies, “Wages reduced to their minimum — their lowest level."

That is to say, that during a certain space of time, which is always periodical, in which trade passes through the circle of prosperity, overproduction, stagnation, crisis — that, taking the average of what the labourer received more, and what he received less, than the minimum, we shall find that on the whole he will have received neither more or less than the minimum; or, in other words, that the working class, as a class, will have conserved itself, after many miseries, many sufferings, and many corpses left upon the industrial battle field.

Now, if you re-read the part that you quoted:

... we are for Free Trade, because ... [from its contradictions] ... will result the struggle which will itself eventuate in the emancipation of the proletarians.

We see that Marx is for Free Trade because he believes it will grind down the Worker and thus provoke the revolution.

If this is Marx's praise for Free Trade... it is a superb example of what is usually termed "damningly faint praise indeed!"

Courts,

Your incapacity to back up your position is flagrant. You are not credible. I'm done with you.

Bob,

Your inability to find sources that actually substantiate your position is obvious. You were right--you don't know enough about Marx (and obviously aren't willing to learn unless someone else does all the work for you) to engage in Marxian discourse.

Credibility isn't the issue. Intellectual honesty is. Before you spout off about theories you by your own admission do not understand, you might want to see if you can actually find support for your arguments (rather than sources that do nothing of the sort).

KF,

We may be getting somewhere... We agree now that Marx's "approval" was in fact that he believed that free trade would so crush the Worker as to provoke a revolution. Personally, I therefore cannot draw the conclusion that he is a genuine proponent. This speech drips acid sarcasm.

Part of the problem may be in the word "efficiency". He agrees with Ricardo that free trade drives prices of commodities to their lowest price. For us to consider, then, that Marx considered free trade to be "efficient", all that is needed is for us to admit that for Karl Marx, "efficiency" was equivalent to "crushing the Worker". Somehow... that just doesn't work for me!

You say:

Marx then sees and recognizes the efficiency of the free market. He just happens to be more interested in the price of that efficiency - a lack of equity and perceived "fairness."

I understand what you are saying, using "efficiency" in a strictly technical sense. Workers reduced to minimal survival wages are "economically efficient". He seemed to feel that it could be done "better" in an ethical sense...

Now... let's go back to my initial statement:

Marxists reject the validity of "efficient markets". They believe that people can manage labor and capital better than "the market".

Did I say that Marxists rejected the "technical efficiency" of the market? No, I did not. I said they rejected the validity of those efficient markets. I said that they believed people could do "better". "Better" injects a notion of "ethics" or "morals".

And I see nothing in our exchange that changes that position...

OK. We're getting perilously close to semantic ping-pong, which can be a spectacularly inefficient use of time.

When I said "rejects the validity of", I did not mean "denial of". I meant "even if true, not acceptable". I meant "not valid for any reasonable society".

Apparently there are others who grapple with the Marx/planning question:

http://books.google.fr/books?id=hc1Yl2rxhMkC&pg=PA64&lpg=PA64&dq=Marx+planning&source=bl&ots=S-El7DFEMt&sig=XPe-5YjO64ThXQ1Yxxevh0Vogk8&hl=fr&ei=PeQCS4_DAYLUjAfXkLWoAQ&sa=X&oi=book_result&ct=result&resnum=10&ved=0CDEQ6AEwCQ#v=onepage&q=Marx%20planning&f=false

Oh... and...

About the only thing that the "experts" seem to agree on is that Marx never wrote anything specific on the subject of economic planning in the future classless society.

So... Court's recommendation to read Capital was either ... ... ... voluntarily sending me on a multi-hundred page hunt for a dahu... or made in ignorance of the content of that book.

Either way... ... ... ...

... voluntarily sending me on a multi-hundred page hunt for a dahu...

Here are her posts:

This might be a crazy suggestion but why don't you learn more about Marxism before repeating the same unsubstantiated and incorrect assertions over and over again?

--

Wow. A secondary source.

Try reading Marx. I'd start with Capital. You know, his work on capitalism.

--

More direct?

Read Marx.

More specifically, read Das Capital. There are decent translations available.

If you're going to speculate (incorrectly) about what Marx thought about markets, it makes sense that you'd go to his work on capitalism.

But then I'm just a political science professor. What the hell do I know?

--

That's not how this works.

You see, you have both professed that you don't know much about Marx and asserted that Marx rejected the "validity of the efficiency of markets."

Even your quotation from a secondary source didn't substantiate this claim. The idea that it is possible to have a society "directed not by blind forces of competition and struggle among economic elements but instead by directed planning" says nothing about the validity market efficiency.

If you want your claim to have credence, you have to find (credible) evidence.

--

As you'd know if you'd (a) read Marx or (b) understood the secondary source you decided to quote, Marx didn't dispute the efficiency of markets. Instead, he postulated that it was possible to organize a society in ways that were not governed solely on the operations of markets.

It's a simple concept. Markets are efficient. But markets fail. And sometimes, Marx would argue, there are social goods that are more important or desirable than efficiency.

--

It's called research. It's what you do before you start "discrediting" theories with which you are unfamiliar.

Courts never supported anything she said. She was to be believed because she is an self-proclaimed expert. Intellectual browbeating.

Do you really think it reasonable to read Capital in order to learn that a particular subject is not there? Really?

As reasonable as it is for you to asking someone to prove a negative. Do you really want me to quote all of Marx's writings to you to prove that what you're saying isn't there? Do you understand how ridiculous that is?

You said that Marx discounted the idea that markets were efficient. He didn't.

If you want to make the argument that he did, you have to find evidence. The two sources you've quoted don't do that.

... scratched record...

I'm stopping here.

We'll try to do better next time.

This was a pretty interesting dialogue. Relating back to the original article by Killfile, though, it's not clear how much of the original thesis is left standing.

The wall was torn down which had separated an imperfectly Marxist country and an imperfectly free market country. Many of the citizens of the former DDR seemed to consider West Germany to be an improvement over their previous system of government. Granted that it had been an imperfect application of Marxism, but the "proletarian revolution" went 180 degrees from the direction predicted.

The problems in the economy, particularly in the States, are being touted as proof that the free market doesn't work, and that drastic measures must be taken, ranging from "stimuli" paid from the public treasury, to government takeovers (central planning) of business sectors. It comes as a surprise to these government enthusiasts when another "proletarian revolution" is presaged by talk of secession from an overreaching federal government.

The disciples of Karl Marx have had over 100 years to form an effective economic system, but they have not yet done so. Surely if the theories were correct, someone somewhere would have implemented a nugget of "pure communism". The superiority of that system over the rest would lead to an ice-nine style conversion of the entire world. Perhaps it will happen.

I'm not holding my breath.

Nice effort KF. At least you acknowledge RR's speech was good. And it was. It set the tone of things to come.

Your explanation of the wall coming down by miscommunication is really funny. It follows other famously unknown miscommunications throughout history... like General Pickett, who never really yelled "Charge" at Gettysburg. He was really yelling for his "Sarge".

The idea that Ronald Regan was responsible for the fall of the Soviet Union ignores the fact that "containment" went back to George Marshall at the end of WW II.

"Containment" was the only instance that I know, of an American diplomatic policy that was constant over a span of decades, regardless of the party in power. It was that constance, that relentless pressure, that ultimately exhausted the Soviet Union.

By contrast, all other American foreign "policies" have been ephemeral and based primarily on internal politics. Middle East policy, Latin American policy, African policy... all of them change with the winds in Washington.

Other countries have no confidence in America because American policy turns faster than any windmill...

It was the cold war Bob that brought down the Soviet Union. No one has ever implied Reagan did it all by himself.

The Soviets simply couldn't afford the cold war. They had to change. But it would be very disingenuous to think that it simply occurred on RR's watch without understanding the relationship between RR and Gorbachev. No paragraph could adequately capture what they created.

Yes. "Containment" was America's guiding policy for the forty years that the Cold War lasted.