@ekklesiagora thanks again for the added feedback.
Id argue socialism is a bit of a sliding scale these days. I consider most nation states in the west are socialist in their policies, the USA included (although we shall see how long that lasts). That said, the economic viability of socialism I find illogical over the long haul.
We can look at the USA in numbers to see this. Right now, many services in the USA are provided publicly. They are also provided privately, but that tends to be true the world over. Anyway, the public services are all running out of capital. The USA has over 100 Trillion dollars worth of unfunded liabilities, and is suffering from 20 Trillion dollars worth of debt. Those policies as they stand cannot be maintained.
The same is by and large true for other countries. I'll give another (albeit semi-anecdotal) example. When I was studying at Uni here in the UK about computers, the example of a bad design for a system was the new (and as far as I am aware still being developed) NHS IT System. The system was unusable by the staff, cost billions, and wasn't a decade behind its delivery date when I left university. By every software design and planning measure, it was a failed project, and yet instead of cutting their losses, the state continued to (and as far as I am aware, still continues to) pump good money after bad on this project.
I'll agree socialist concepts sound great. They are well intentioned, and they ought to work to our benefit. But, I feel I must point out Hume's Guillotine here - what Is is not what Ought to be, and vice versa. Claiming something should be X, ergo it must be X is not a valid claim one can make. One must prove those concepts are viable logically at minimum, and the core concepts of socialism (collectivism) is massively illogical.
All that said, the benefit of an free society in the end is that both the socialist solutions and the capitalist ones can voluntarily chosen. People from each camp can choose to associate or not as they see fit with others. With no single reality being forced on all people, all people can determine the best solution for each of them. From my view, free market capitalism provides the most efficient and beneficial solutions, were it to exist, and yes, I would agree as well that actual capitalism is not practised today. What we have today is the bastard child of corporatism(aka fascism as defined by Mussolini himself), state socialism, and oligarchy. Anyone arguing that is an example of capitalism doesn't understand the meaning of the word, or the externalities of the state.
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Personally, I like markets. I think market systems have the capacity to maximize human wellbeing. However, I believe that government is necessary for the creation of markets, and government policy has the capacity to make them run smoothly (or make them unstable).
Contrary to popular belief, money did not emerge from a free market. Money was originally created by primitive States: when one nation invaded and plundered another, they’d take all their valuables, and the State would mint the gold and silver into coins to pay the soldiers with. At the same time, the State would start demanding its subjects to pay taxes in the form of this government-issued currency, creating a general demand for money, and thereby leading to the emergence of a market. Prior to such government intervention, there was nothing like a market in the conventional sense. (David Graeber, Debt: The First 5,000 Years)
And monetary systems need to be regulated in order for markets to function efficiently. The gold standard collapsed, not because the government mucked it up, but because unregulated currency just doesn’t work...and that’s why the governments had to change their policies. Money is a commodity, like any other commodity. Why do supply and demand equilibrate within a free-market system? Because the producers of commodities increases production to match any increase in demand. If there is a higher demand for widgets, the manufacturer of widgets will increase production in order to meet the demand. When there is greater demand for money, you need to increase the production of money—i.e. increase the money supply. This monetary inflation will not cause price inflation so long as you do not “print” more money than is needed to meet the increase in demand. If you don’t increase the money supply in order to meet the greater demand for money, this leads to the phenomenon of what Milton Friedman called “too many hands chasing too few dollar bills,” which was a major cause of the Great Depression. When the demand for money goes up, the value increases; so, the government can increase the money supply to meet that demand. The value of the currency won’t change, as the increase in value due to increase in demand is merely offset by the decrease in value due to increase in supply—the end result is that the value of the money stays the same, i.e. remains stable. (Cf. Milton Friedman, A Monetary History of the United States)
John Maynard Keynes’ argued that a primary function of money is its use as a store of value. In order for a market to function efficiently, the value of money needs to be stable. Under a pure gold standard, the value of gold would fluctuate drastically as gold flowed in and out of the economy due to international trade. If international trade led to a bunch of gold leaving the American economy, then gold in the U.S. would become more scarce, harder to acquire, and would be more expensive. (We sort of saw this with Bitcoin, where the higher demand in relation to availability in parts of Asia led to the price on Mt. Gox being much higher than on exchanges based in other parts of the world.) Keynes argued that governments need to pursue monetary policies that stabilize the price level and avoid drastic fluctuations—both inflation and deflation are evils to be avoided. We are better off with a stable currency than with a currency that drastically fluctuates in value. Bitcoin, for instance, would make a terrible currency for a free market. You wouldn’t want to rely on it as a store of value. (Cf. John Maynard Keynes, A Tract on Monetary Reform)
Now, don’t get me wrong, I’m familiar with the works of Rothbard and Karl Menger on the history of money, banking, etc. I just think that they were wrong. This is not to say that the Austrian School is completely wrong on everything, just that they are wrong on some very important points. For instance, F. A. Hayek and Ludwig von Mises were totally right when they held that artificially low interest rates encourage malinvestments, thereby stimulating unsustainable booms that inevitably lead to busts. Nevertheless, Rothbard is wrong on money in general. Rothbard thought that any system that allows banks to adjust supply in accordance with demand would constitute counterfeiting or fractional-reserve banking. (Cf. Murray Rothbard, The Case for a 100 Percent Gold Dollar & The Present State of Austrian Economics, where he argues that issuing money not directly backed by gold [or another commodity] ought to be legally prohibited) More recent anarcho-capitalist theorists have departed from Rothbard’s stance though. Jeffrey Tucker supports Bitcoin as a stateless alternative to government money, even though it is not backed by any commodity, and David Friedman supports fractional-reserve banking within an anarcho-capitalist framework. (Cf. David Friedman, The Machinery of Freedom, Ch. 46) David Friedman’s anarcho-capitalist framework would actually allow banks to privately regulate the value of money through lending practices, then competition would keep them from devaluing the currency since everyone will want to use a privat currency with a stable value rather than an inflationary one. If you aren’t familiar with David Friedman, you should check him out. As far as anarcho-capitalist theorists go, he is by far the most interesting. Personally, I think a system of competing currencies is not likely to produce stability. When we look at crypto-currency markets, they are extremely volatile. We need stable money. And I don’t accept Friedman’s assertion that competition would be sufficient to keep private banks from devaluing money.
Another reason for my departure from market-anarchism is that I have been influenced by F. A. Hayek and Hernando de Soto Polar’s ideas about the role of rules and social order in free-market systems. In order for businessmen to be able to plan their actions, they need to know what the rules of the game are going to be. So, Hayek holds that there should be isonomy (equal law), where the rules are standard. There ought to be no arbitrary interventions in the system by the State; the rules ought to be standard across the board.
Spontaneous order, per Hayek, doesn’t emerge from a vacuum. The State has to create the rules first, then the spontaneous order will emerge. Government ought not to intervene in the economy to help this business or that business. Government should create the rules and regulations that create the framework for a free market: establish property laws, establish courts and police to enforce those property laws, establish a standard currency, etc. Then the government should step back and let the free market take care of the rest. That was Hayek’s view.
Hernando de Soto Polar, another free-market economist, focuses more on property arrangements. Without government, there are natural systems of property, but they tend to be usufructuary. In a state of nature, there is no legal “title” or “deed” to a piece of land. This restricts markets and keeps them from being able to function most efficiently. If you create legal property titles, it allows people to use their homes and land as collateral for loans, which gives people the capacity to borrow money in order to go into business. Thus, it is in the best interest of society that government create a standard system of legal property titles, as well as a system of law governing contracts and a system of courts and police for adjudication/dispute resolution and enforcement. It’s only within this sort of framework that markets can be truly free and entrepreneurs can do their job.
Anarcho-capitalism, in my estimation, can’t serve the same purpose. Under anarcho-capitalism, you would have a system of polycentric law. There would not be standard rules that apply universally, so it would be much harder for businesses to plan. Markets would probably be more chaotic and less stable. This is not to say that anarcho-capitalism wouldn’t work. It could work, but it would be less stable and less utopian than its advocates imagine. I also suspect that it would tend to degrade over time. I think that “anarchistic” systems like anarcho-capitalism (on the right) and democratic confederalism (on the left) can work. I just don’t think that they will produce the utopias that their advocates believe they will.
Furthermore, I do not think that markets are perfect. We live in an imperfect world, after all. You should read my post Markets Are Not Perfect. The free market simply can’t deal with things like pollution and healthcare in an efficient and affordable way. I somewhat follow ordoliberalism in believing that markets sometimes fail and that governments need to “ensure that the free market produces results close to its theoretical potential.”(Wikipedia)
So, basically, I follow Hayek in believing that government should create the framework for law and order that allows for spontaneous order to occur, and then let the market do its thing, for the most part, but I follow ordoliberalism in thinking that government ought to step in when the market fails to bring about the most desirable results. If corporations start polluting the air and water, the government needs to take action to fix that.
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As for “fascism” or “corporatism,” I generally don’t like the right-libertarian talking point that what we have is corporatism rather than capitalism. What Mussolini meant by “corporatism” or “fascism” was quite different. The term “corporation” in Mussolini-style fascism referred to guilds or syndicalist co-operatives. Italian fascism developed out of marxist syndicalism. The term fascio had a dual meaning in Italian. The Latin fasces literally meant “a bundle” (as in a bundle of sticks) and referred to the Roman symbol for unity and strength/authority. (See image below.) In Italian, the term also meant “league” (as in a league of men) and could therefore designate a political party, a syndicate, or guild. So, the term “corporations” to fascists actually referred to workers’ guilds or co-operatives, not to corporations in the capitalist sense. Fascism and actually existing capitalism bear no similarity whatsoever. Fascism was a form of authoritarian socialism, in line with the dual meaning of fascio as designating both authority and socialist co-operative, not a form of crony capitalism. (Cf. Larry Gambone, The Road to Fascism)
The term “capitalism,” like “socialism,” has several different and contradictory meanings. The term capitalism was coined by socialists to refer to actually existing capitalism, not to refer to free markets. Technically, the socialist that coined the term, Thomas Hodgskin, advocated replacing capitalism with a free market. It “is recorded from 1872, originally used disparagingly by socialists. Meaning ‘concentration of capital in the hands of a few…’”(Online Etymology Dictionary) Generally speaking, critiques of capitalism define capitalism as an economic system in which capital and means of production are concentrated into the hands of the few, such that the vast majority of the populace has little choice but to work for wages. This is the definition of capitalism that was historically used by socialists, from Thomas Hodgskin and Pierre-Joseph Proudhon to Karl Marx and Eduard Bernstein. This situation of wealth concentrated into the hands of the few and the majority of people having to work for them was not caused by free-market processes; even Karl Marx recognized that.
During the era of the enclosures in England (and elsewhere), the government confiscated the land of the peasants and handed it over to feudal lords. This theft is what laid the foundation for capitalism. Distributists, mutualists, and marxists all follow this same basic analysis. The current distribution of wealth was not caused by free-market processes but by government theft of land from the peasants. The government took their land and handed it over to feudal lords, landlords. This allowed the lords to collect rent or tax the peasants for the use of the land, even though the peasants had previously been the rightful owners of the land. According to a Lockean theory of property rights, even a Rothbardian interpretation of it, the land would naturally belong to the peasants, since they are the ones that acquired it through “adding their labor to it.” But the State stole their property and gave it to someone else, and their new landlords extracted rent (taxing the peasants), and thereby were allowed to accumulate massive amounts of wealth without ever contributing any labor. This accumulation of wealth via theft is what allowed for the vast accumulations of capital that were necessary for funding the industrial revolution.
It’s important to realize that the people who criticize capitalism aren’t always criticizing a free-market, but rather criticizing the system of wage-slavery (the system in which most people have to work for wages in order to survive) which is predicated on the historical theft of land from the masses. I am not a fan of Marx, but Marx was correct in his theory of “the primitive accumulation of capital” being rooted in government stealing land from the masses and giving it to a select few individuals. Personally, I find distributism to be more interesting than marxism. I like the analysis of Hilaire Belloc, on how the really unequal distribution resulted from the enclosures, and how property can be restored to people in general. (Cf. Hilaire Belloc, The Way Out & An Essay on the Restoration of Property; also, CF. Christopher A. Ferrara, The Church and The Libertarian)
On the definition of capitalism, see Kevin A. Carson’s Free-Market Anti-Capitalism. I recognize that anarcho-capitalists tend to define “capitalism” as a free market. And it’s fine to use that definition, as long as you keep in mind that most other people don’t really define the term that way. For critiques of capitalism, a market is a necessary condition but not a sufficient condition for identifying a system as capitalistic.
Also, equating capitalism with free-markets causes confusion, since many writers that were historically "anti-capitalist" were actually advocating that capitalism be replaced with totally free markets. (E.g. Benjamin Tucker, Lysander Spooner, et al.) At a very minimum, we need to not use the term capitalism to mean an absolutely free market when we are talking about historical writers who defined terms differently, otherwise we might as well not discuss their ideas at all.
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