AHC: No "Great" Depression

Competitive markets have nothing to do with Capitalism going by your definition though, they are a tangential situation marked off by a "usually". The entire GDP could be the private property of a single man and it would still be capitalist, although I question what the practical difference between such a scenario and state ownership of everything in the country would be.
 
^^You're right that Competitive Markets aren't by necessary definition a part of Capitalism -- I mean, just look at Fascism (which uses the Corporatist model). However, I would say that it requires some kind of distinction between political and economic power, else there would be no way to separate "public" from "private ownership", and that would be Socialism.
 
Yet in the case of, say, Saudi Arabia, what is in fact the practical difference between state ownership and a business owned privately by the king? Other than the Crown/State and the King as privately being separate legal persons, I can't really see much.

Also, where the owner of all industry is sovereign, famines tend to happen because the state is selling grain on the world market and taking it away from those who are growing it, and this is as true of Indian famines during Company Rule as it is of the Holodomor.

There is still a distinction possible to make between state/private ownership and common/cooperative ownership though.
 
Yet in the case of, say, Saudi Arabia, what is in fact the practical difference between state ownership and a business owned privately by the king? Other than the Crown/State and the King as privately being separate legal persons, I can't really see much.

I agree too -- Saudi Arabia's economy has strong socialist elements (though overall, I think it's more appropriately described as a "mixed economy")...

Also, where the owner of all industry is sovereign, famines tend to happen because the state is selling grain on the world market and taking it away from those who are growing it, and this is as true of Indian famines during Company Rule as it is of the Holodomor.

This is true.

There is still a distinction possible to make between state/private ownership and common/cooperative ownership though.

So you're saying the distinctions between state and "common" ownership, and between "private" and "cooperative" ownership are bigger than those between state socialism and private capital markets? I don't think I agree with that...

Also, this may be getting into Chat territory.
 

MAlexMatt

Banned
I'd say that syndicalist organization is best, from the perspective of informational issues outlined by Hayek and from the perspective of individual liberty. The informational issues outlined in The Use of Knowledge in Society, are a feature of vertical (hierarchical) information flows, and can only be overcome by horizontal communication between relatively autonomous actors. This is achieved both by markets and by the federalist organization of syndicalist unions.

I really think a healthy mix of both is necessary. Employee owned firms and employers, in some mix determined purely by market forces (instead of the employer favoring state influences that predominate today) would maximize both the productivity of the economy and the achievement of justice in society over time.

Employees only need organize where employers have already organized, and vice versa. A more dramatically decentralized system of economic management is possible where the good faith exists such that no organization above the level of economic necessity exists.

Several reasons:

Firstly and fundamentally, I think it's because where wage-labor predominates the disposal of value created in production rests primarily in the hands of the owner/management rather than the workers who created the value (this is because wage-labor is a power relation where the boss is lord and master while the worker is subjected to the bosses control) and hence the workers perceive the value they create as "not my money" while it actually isn't the boss's money. This power differential and is at the core of the irrationalities of capitalism.

I could have sworn you were one of the ones here intelligent enough to have seen past the Marxist veil.

This depends on the notion that value is the result of labor, rather than a psychological tick based on the subjective preferences and goals of the individual economic agent. Without a labor theory of value, the Marxist critique of capitalism falls to pieces.

Secondly, in order to maintain wage-labor as the predominant form of production it is necessary for the state to constantly and massively intervene in the labor market, so as to keep the price of labor artificially low and the supply of labor artificially high. If not for this government regulation and intervention workers would use their liberty to associate to form unions which would restrict the supply of labor and hence raise wages to the point that workers could start buying means of production and independent artisans and businessmen themselves. Since the labor market is never allowed to approach equilibrium beyond a certain point this failure ripples through the entire price system.

'Restrict the supply of labor', that is, 'cause unemployment'. This is another mark of the weird Hegelian way of looking at things: Looking at people as members of groups and classes. Where the group or class benefits, obviously the person benefits. But this isn't true. Throwing some into unemployment in order to benefit 'the working class' really just harms those unemployed to the benefit of those employed.

The proper role of organized labor is to:

1. To re-normalize the negotiating process when employers attempt to organize (that is, form employment cartels) and fix the offered wage.

2. Provide services to their members, including things like credit unions, health insurance, unemployment insurance, educational services, and whatever else their members might desire.

3. To, perhaps, act as centers of communal association, where other organizations (such as churches or hobby/sporting associations) do not already do so.

Thirdly and most immediately, in the Minskyian scenario that Shevek outlined, speculative risk taking is fairly key. The failure speculative enterprises is what sets off the general collapse as jobs are lost and with those jobs the spending of income and the multiplier effect of that spending. If the workers of any enterprise had an equal say and stake in that enterprise, then these speculative enterprises would be greatly reduced (but still present). Crazy schemes that will fail and novel schemes that will turn out solid will both be less able to attract the human capital/labor force that they need, but the system will be much more stable for that and the novel schemes will prove themselves in time in the more stable environment.

The thing is, speculative enterprise is almost all enterprise. Uncertainty in the market is all pervasive, an omnipresent condition of investment and economic activity in general. Speculative enterprises are failing all the time, there's a constant background of bankrupt firms entering liquidation and new ones with unpredictable futures being founded.

The problem, and the general form of the business cycle, is that there's a sudden burst of these failures, an alignment of many failures all at once. Shevek outlined the reason for this very well when he noted that it's related to uncertainty about future demand, and that was the whole point of my explanation on the relationship between the interest rate and the periodicity of investments.

It's not something that 'just happens', it's something with definite causes that aren't a necessary condition of market economies. When central banks (or similar institutions in the distant past) manipulate the monetary base without the widespread, accurate knowledge of the manipulation amongst the users of the monetary base, then knowledge of future demand is distorted and so are the economic plans of those who supply future goods and services.

Edit: So, what do you mean when you say Capitalism?

Depends, what do you think I mean?

IMO our categories for speaking about this kind of stuff are hopelessly inadequate.

I'll usually happily use 'capitalism' to refer to a free and open market, but then I can see a use for 'capitalism' that isn't quite that. I think I could see 'capitalism' being used to refer to the current regime that overly favors employers through the use of a system of centralized corporate economies established by statutory law and monopolies in a few, key sectors. In that case a 'free market' and 'capitalism' aren't actually the same thing, and a 'capitalist market' cannot be free.
 
So you're saying the distinctions between state and "common" ownership, and between "private" and "cooperative" ownership are bigger than those between state socialism and private capital markets? I don't think I agree with that...

No, Command Allocation and Market Allocation are fundamentally different systems of distribution, and while distribution intersects with ownership it isn't the same thing. The internal allocation of a capitalistically owned/managed company's resources and the allocation of resources in a command economy has many parallels though.

I am saying that a state owned firm follows many of the dynamics of a privately owned firm, while common ownership in the same way shares dynamics with cooperative ownership.


Also, this may be getting into Chat territory.

You asked about how to avoid the worst crisis Capitalism has faced, what kind of economic model accurately describes reality is pretty vital to how to solve your challenge or even if it's possible.
 
I really think a healthy mix of both is necessary. Employee owned firms and employers, in some mix determined purely by market forces (instead of the employer favoring state influences that predominate today) would maximize both the productivity of the economy and the achievement of justice in society over time.

Employees only need organize where employers have already organized, and vice versa. A more dramatically decentralized system of economic management is possible where the good faith exists such that no organization above the level of economic necessity exists.

Perhaps, but I think we would greatly disagree on what proportion would constitute a "healthy mix", I think a vanishingly small percentage being waged work for an employer would be healthiest.

I could have sworn you were one of the ones here intelligent enough to have seen past the Marxist veil.

This depends on the notion that value is the result of labor, rather than a psychological tick based on the subjective preferences and goals of the individual economic agent. Without a labor theory of value, the Marxist critique of capitalism falls to pieces.

When I say "value they create" I mean the value embodied in the items and services created by the worker. It is entirely irrelevant to my first point whether the value is created through the labor of the workers or the subjective desirability of the goods created/services rendered or some combination of both. This is an application of the labor theory of property, not the labor theory of value.

'Restrict the supply of labor', that is, 'cause unemployment'. This is another mark of the weird Hegelian way of looking at things: Looking at people as members of groups and classes. Where the group or class benefits, obviously the person benefits. But this isn't true. Throwing some into unemployment in order to benefit 'the working class' really just harms those unemployed to the benefit of those employed.

The proper role of organized labor is to:

1. To re-normalize the negotiating process when employers attempt to organize (that is, form employment cartels) and fix the offered wage.

2. Provide services to their members, including things like credit unions, health insurance, unemployment insurance, educational services, and whatever else their members might desire.

3. To, perhaps, act as centers of communal association, where other organizations (such as churches or hobby/sporting associations) do not already do so.

Causing unemployment isn't "restricting the supply of labor", it's "increasing the supply of labor". An increase in the supply of labor means an increase in the number of people looking for work who are competing with each other. To restrict the labor supply is to have people start co-operating in the job search instead of competing, or for John to buy a farm and become an independent yeoman no longer looking for work.

Also, as Adam Smith noted, employers are always in an informal combination to lower wages.

The thing is, speculative enterprise is almost all enterprise. Uncertainty in the market is all pervasive, an omnipresent condition of investment and economic activity in general. Speculative enterprises are failing all the time, there's a constant background of bankrupt firms entering liquidation and new ones with unpredictable futures being founded.

The problem, and the general form of the business cycle, is that there's a sudden burst of these failures, an alignment of many failures all at once. Shevek outlined the reason for this very well when he noted that it's related to uncertainty about future demand, and that was the whole point of my explanation on the relationship between the interest rate and the periodicity of investments.

It's not something that 'just happens', it's something with definite causes that aren't a necessary condition of market economies. When central banks (or similar institutions in the distant past) manipulate the monetary base without the widespread, accurate knowledge of the manipulation amongst the users of the monetary base, then knowledge of future demand is distorted and so are the economic plans of those who supply future goods and services.

This is a good point. I concede on this point. However, there are other manifestations, such as minimum reserve requirements, that also screw with interest rates. Which is what Tucker called the Money Monopoly and serves generally to push interest rates up.

I'll also note that central banks and other such monetary intervention usually serves to provide leverage needed by ever bigger business. Could US Steel have been created with out a dramatically more centralized banking system than what had been there pre-civil war or even immediately post civil war?

Depends, what do you think I mean?

IMO our categories for speaking about this kind of stuff are hopelessly inadequate.

I'll usually happily use 'capitalism' to refer to a free and open market, but then I can see a use for 'capitalism' that isn't quite that. I think I could see 'capitalism' being used to refer to the current regime that overly favors employers through the use of a system of centralized corporate economies established by statutory law and monopolies in a few, key sectors. In that case a 'free market' and 'capitalism' aren't actually the same thing, and a 'capitalist market' cannot be free.

Eyup, the second definition is historically the one used for capitalism, and it's the one that I use.
 

MAlexMatt

Banned
Perhaps, but I think we would greatly disagree on what proportion would constitute a "healthy mix", I think a vanishingly small percentage being waged work for an employer would be healthiest.

I dunno. I don't really have a strong opinion on what proportion is proper. In fact, I don't think there's a universally proper proportion. The relative magnitudes of the mix are going to be determined by underlying economic fundamentals. Managing a firm democratically requires a certain level of knowledge and social capital that requires effort to obtain. I could easily see individually owned firms being used as 'teaching' institutions that teach groups of younger or otherwise inexperienced employees to cooperate as a cohesive labor force and as a functional social group.

There are probably other variables that would determine the proportion in question, but I think you get the idea.

When I say "value they create" I mean the value embodied in the items and services created by the worker. It is entirely irrelevant to my first point whether the value is created through the labor of the workers or the subjective desirability of the goods created/services rendered or some combination of both. This is an application of the labor theory of property, not the labor theory of value.

Actually, the difference between the full price of the good produced and the wage paid to the employee divided by their marginal product is the rent paid to the owner of the capital for the use of said capital. In a modern retail environment, for instance, the employee isn't just handed the full cash value of the goods he or she sells because he's essentially paying his or her employer for the use of the storefront, of the inventory, of the advertising that brought the customer in, and a host of other factors that contributed to said employee's productivity.

Causing unemployment isn't "restricting the supply of labor", it's "increasing the supply of labor". An increase in the supply of labor means an increase in the number of people looking for work who are competing with each other. To restrict the labor supply is to have people start co-operating in the job search instead of competing, or for John to buy a farm and become an independent yeoman no longer looking for work.

What? No, the only way to 'restrict the supply of labor' for a given pool of prospective employees is to somehow cause some number of those prospective employees to not seek employment. It's exactly the kind of thing monopolies in other industries try to do when they lower their output in order to jack up the price of their respective good.

Also, as Adam Smith noted, employers are always in an informal combination to lower wages.

I really don't care too much what Adam Smith noted without some kind of substantiation.

This is a good point. I concede on this point. However, there are other manifestations, such as minimum reserve requirements, that also screw with interest rates. Which is what Tucker called the Money Monopoly and serves generally to push interest rates up.

I'll also note that central banks and other such monetary intervention usually serves to provide leverage needed by ever bigger business. Could US Steel have been created with out a dramatically more centralized banking system than what had been there pre-civil war or even immediately post civil war?

I don't really see anything I disagree with here.

The interesting thing about the US Steel case is that it's related, not just to the institutional structure (although that was key), but also to specific actions taken in that institutional structure. The National Banking System had a few attributes that would tend to concentrate wealth in fewer hands than it would be otherwise, it was specifically the funding of the Civil War through the massive expansion of public debt that centralized a lot of financial power into a relatively few institutions and hands.

Eyup, the second definition is historically the one used for capitalism, and it's the one that I use.

OK. I personally dislike arguing over the meaning of words. Words are instruments, not objects in themselves.
 
¡ Hi ! yep, there exists a lot of correct/nice economic ideas for fix/avoid that problem, but don´t forget another fuel for the problems generated, was a severe land´s erosion problem, forest destruction, etc... sneeze, cof, cof, DUST BOWL cof, cof...;):eek::(:eek:.

Peace:).
 
I dunno. I don't really have a strong opinion on what proportion is proper. In fact, I don't think there's a universally proper proportion. The relative magnitudes of the mix are going to be determined by underlying economic fundamentals. Managing a firm democratically requires a certain level of knowledge and social capital that requires effort to obtain. I could easily see individually owned firms being used as 'teaching' institutions that teach groups of younger or otherwise inexperienced employees to cooperate as a cohesive labor force and as a functional social group.

There are probably other variables that would determine the proportion in question, but I think you get the idea.

I think I get the idea as well.

Actually, the difference between the full price of the good produced and the wage paid to the employee divided by their marginal product is the rent paid to the owner of the capital for the use of said capital. In a modern retail environment, for instance, the employee isn't just handed the full cash value of the goods he or she sells because he's essentially paying his or her employer for the use of the storefront, of the inventory, of the advertising that brought the customer in, and a host of other factors that contributed to said employee's productivity.

Marginal Productivity is the ammount of product that is subtracted when you take away a given worker or gained when you add them, right? Lets say you have a simple railroad car that requires a fireman to stoke the engine and an engineer to run the thing, and it's impossible for a single person to do both, and the car won't move without both jobs being done. The marginal productivity of either worker would seem to be 100% of the product.

Also, from a strict labor theory of property viewpoint, where the only way to own something is to create it or trade something you made for it, Rent is a form of theft. Reason being that the price of the item is continually paid and yet the owner never parts with the item.

What? No, the only way to 'restrict the supply of labor' for a given pool of prospective employees is to somehow cause some number of those prospective employees to not seek employment. It's exactly the kind of thing monopolies in other industries try to do when they lower their output in order to jack up the price of their respective good.

I really don't care too much what Adam Smith noted without some kind of substantiation.

I have a more "reserve army of labor" conception of the labor market. Anybody who does not have a way to support themselves other than accepting waged work is in the labor market as a supplier. Unions act to decrease the effective supply in so far as the effect on price is, without actually decreasing the number of actual suppliers.

Additionally, an increase in wage won't decrease the demand for labor, since the money in the wage will be spent, there is a multiplier and so an increase in wages will stimulate the economy and hence increase the demand for labor. Of course this only applies until the increased wages start cutting into to profits enough to cause a wave of failures.

Many of the big business are so large and monoposistic in the labor market that it can be considered as requireing unions to offset them as such.

I don't really see anything I disagree with here.

The interesting thing about the US Steel case is that it's related, not just to the institutional structure (although that was key), but also to specific actions taken in that institutional structure. The National Banking System had a few attributes that would tend to concentrate wealth in fewer hands than it would be otherwise, it was specifically the funding of the Civil War through the massive expansion of public debt that centralized a lot of financial power into a relatively few institutions and hands.

As an aside, what's your opinion of Kevin Carson?
 
OK. I personally dislike arguing over the meaning of words. Words are instruments, not objects in themselves.

Words are very important, since they're the building blocks of communication. If the definitions don't line up, then people will be talking past each other.
 
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