Political Philosophy and Ethics discussion
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Classical Liberalism; Libertarianism and Anarchocapitalism; Objectivism
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Alan, Founding Moderator and Author
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Jun 19, 2014 08:22AM
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Ron, I guess I don't understand how free market capitalism is consistent with "nutrition, health and education" being assured a priori. In the USA, libertarianism is precisely opposed to any such a priori assurances. Rather, libertarians, especially anarchocapitalists, believe that everything should be left to the free market, i.e., the profit motive. There is no profit in assuring nutrition, health, and education, and libertarianism means, in practice, the collapse of any such social safety net.
Alan - I´m not supporting libertarians or anarchocapitalists. If everything, in actual social pact, follow profit motive, outcome will be an increase gap between rich and poor. Big problem of free market is that it produce what is profitable and not what is needed - Joan Robinson - european economist lady - worked with Keynes, was clear on that capitalist finding. Profit for burgeosie will be reduction of tax - in other words: less government and more freedom - this new fresh proposal for economy vision is the only way to reduce govnmt interference. Regards. Ron
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I am inspired to add a reference or two to this discussion. 1) I much welcome the reference to Joan Robinson. I was privileged to take a university course from her following more or less the material in her book Economic Philosophy. I share her assumption (which she shared with the socialist Lange) that the Walras / Marshall marginal theory of price (proposed by Menger and Jevons as well) is an advance over the labor theory of value of the classical English school and of Marx. I dicuss Walras's critique of the anarchosocialist Proudhon and Marx here.
2) I think that the liberal (libertarian) views of von Mises, Hayek, Rand, and lesser imitators (Ron Paul et fils) are pantsless. I embrace Polanyi's critique wholeheartedly here.
3) I am a great admirer of Hobbes (to Alan's great disappointment) in that he showed us that government is absolutely essential for human society.
4) The basis for the neoclassical school of economics was totally undermined by its most brilliant founder.
Nuff said for now.
Cheers,
Randal
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As for Hobbes, he was certainly correct that government is absolutely necessary for society. However, he was wrong in saying that government should be empowered to do anything it wants to do to us other than take our lives.
Your posts and linked essays are always interesting, informative, and entertaining. Keep up the good work, to coin another phrase.
Hobbes was correct - in actual pact - government is absolutely necessary and must be increased as long as rich and poor gap increase. Lets go straight to my point - what I propose is a new social pact where nutrition (agriculture) health and education as a voluntary adhesion - be part of labour contract and will be assured by private enterprise with correspondent reduction on government tax. Everything change within this new vision of productive process. Less gvnmt more freedom - less corruption more opportunities - full productive employment !!! do you have any idea what it means!! gvnmt doesn´t have to fix a miminum wage, salary goes up. Please, see more detais on - http://ronaldocarneiro.wordpress.com - I´m absolutely sure that under this proposed pact, free market works much better than gvnmt iron hand. Regards. RonRandal - thanks for your Polanyi´revision - and your neologism "pantsless" I enjoy it!!
Ronaldo wrote: " . . .what I propose is a new social pact where nutrition (agriculture) health and education as a voluntary adhesion - be part of labour contract and will be assured by private enterprise with correspondent reduction on government tax...."Ronaldo,
I think Marx got this much right, at least. You have struck onto the center of his argument. The problem with capitalism ("free enterprise") is that the owner of capital who hires a worker who has only his labor to trade takes the surplus value that always derives from cooperative enterprise for himself. The worker has a contract only for his own labor, not the surplus that derives from the fact that production is social. In other words, capitalism socialized production; what is lacking is to socialize distribution of the surplus. Marx's way was socialization of ownership. The way that Europe and America followed was some version of social democracy grafted onto capitalism.
Polanyi well argues that free enterprise is never free of this iniquity. If one wants capitalism for it's encouragement of innovation, one either has extreme misery for the vast majority or a safety net provided by government. This safety net would never be provided by capitalists of their own accord. Polanyi well shows why this is the case.
How could a new "social pact" be "assured by private enterprise?" If you could provide an answer to this, Ronaldo, we would all be so grateful to you. We could skip all the arguments between the Republicans and the Democrats and just enjoy the good life. But you had better hurry, Ronaldo, because our Koch Brothers dominated world is melting the glaciers and pickling the oceans. When "free enterprise" pollutes the commons, the commons eventually responds.
I well understand the aversion to government by the followers of Locke, Bastiat, Von Mises and the rest. But I think they are living in a fantasy world. I prefer the attitude of Hannah Arendt that politics is an essential part of the good life and that men and women who focus only on private gain are not living up to their full potential as humans.
I look forward to your working out how this social pact would be achieved on the basis of the system unregulated free enterprise. As you have explained it so far, it seems to be a circle squared.
Regards,
Randal
Here are some quotes from Ayn Rand. A friend of mine edited a text for economics students with readings from various economic thinkers, each with an introduction by my friend and his co-editor. The second edition of his book includes an introduction to the work of Rand, written by my friend. My friend is a Marxist with a libertarian streak and his introduction was not totally unsympathetic to Rand. Her representatives subsequently refused to give rights to include a selection from Rand's writings based on their thought that the introduction "slandered" her. Having read my friend's introduction, I find that it slanders her far less than her own words quoted above (in a blog by a Swedish economist, not my friend).
Ronaldo wrote: "Randal - thanks for your Polanyi´revision - and your neologism "pantsless" I enjoy it!!..."My wife informs me that this expression is not a Randal neologism, but an old Brit saying. And I thought I made it up! But in looking up definitions in cyberspace, most that I find refer to the literal experience. My reference is/was purely metaphorical!
Cheers,
Randal
Randal wrote - "our Koch Brothers dominated world is melting the glaciers and pickling the oceans. When "free enterprise" pollutes the commons, the commons eventually responds" Nature always responds - it seems timely to remember Jean-Jacques Rousseau's remark that "Nature never deceives us; it is always us who deceive ourselves" or Francis Bacon's inexorable certainty: "In order to give orders to nature, we must learn how to obey it.")I´m sure our Kock Brothers will be happy to embrace a new economic vision to have reduced tax and assuming some social responsibilities - cause they will make more money, they are much more competent than gvnmt. Following this way, society will produce what is needed and not only what´s profitable - Joan Robinson - our great teacher will applaud whenever she is !!
Some basic concepts on new social pact:
Government is an institution economically impractical, because its revenues and expenditures shall be determined by acts of human will. ("They do not disdain , in certain cases, alliances with cheating, fraud and corruption", to use the words of VILFREDO PARETO.)
Economics is a science whose techniques are valid and applicable when the will of economic agents is limited by the natural law of supply and demand.
The world assists today, baffled and powerless, the supremacy and domination of the class of bureaucrats, since the practical evolution of the capitalist and socialist systems converge inevitably to a totalitarian regime. That is to say, the inequality of opportunities in the current rules for human coexistence is generating the most terrible process of human domination and bondage, the dictatorship of bureaucracy.
Straight to your central question: How could a new "social pact" be "assured by private enterprise?" - just discussing among smart people and responsible thinkers. Regards. Ron Carneiro
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"government is necessary, though it should have nothing to do with the spiritual realm" "no government, laws, criminal justice system, etc. should be imposed"
We have much to learn with anarchocapitalists. Nobody can control the economy - with government interference outcomes are briefly results like waves in ocean - better now and worse after - minimum wages is typical - you only reduce people in the table. Cheerrss
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Ronaldo wrote: "Randal wrote - "our Koch Brothers dominated world is melting the glaciers and pickling the oceans. When "free enterprise" pollutes the commons, the commons eventually responds" Nature always respon..."Ron, it is not the responsibility of private enterprise to pursue or implement a new "social pact". The purposes of private enterprise have long been limited to the completion of tasks and activities desired by the market to be sold (hopefully) for a profit ( hopefully) . In pursuit of said objective, owner of private enterprise takes funds which can be used in other ways for his or her personal enjoyment or satisfaction, and puts them at risk to achieve the goal of profitable sales.
Now, currently the definition has expanded to include interests of other stakeholders so that it appears that private enterprise has something to give in the broader societal context. While I believe that large corporations are "not persons", and therefore subject to a different set if rules, smaller firms are a world apart and much of the conversation around stakeholders and private enterprise responsibility to the greater good is wholly ignorant of that fact.
The question of whether we need a new "social pact" is perhaps a good one in these days, but it certainly is not for private enterprise to pursue. We have a hard enough time just making sure the rent and employees are paid.
Charles - welcome a board. Idea of Social Pact include: workers, burgeosie and government. Nutrition, health and education as productive process responsibility - included in job contract - and government reduce tax correspondent. Imagine what will gonna happen with profit depending on human health!!! more health more profit. Think about. Regards. Ron
Ronaldo wrote: "Government is an institution economically impractical, because its revenues and expenditures shall be determined by acts of human will. ("They do not disdain , in certain cases, alliances with cheating, fraud and corruption", to use the words of VILFREDO PARETO.) . . . Straight to your central question: How could a new "social pact" be "assured by private enterprise?" - just discussing among smart people and responsible thinkers...." Charles wrote: "The question of whether we need a new "social pact" is perhaps a good one in these days, but it certainly is not for private enterprise to pursue...."
Concerning Ron’s first contention, I have written an outline (referenced above) of Oscar Lange’s refutation of the arguments of von Mises and Hayek that government is “economically impractical.” Bureaucracies are similar in capitalist enterprises and in the state and publicly paid managers are just as likely (and just as unlikely) as capitalists to guess where investments should be made. The big difference is that the public manager has the official responsibility to pursue outcomes that work out the best for all, as opposed to the capitalist, who has only one person’s gain in mind.
I have recently been reading Pareto's little-read teacher, Leon Walras. Besides his more well-known Elements of Pure Economics I have also been reading the French and English translation of his Studies in Social Eocnomics. In these two books I have been concentrating on Walras's critique of the labor theory of value (LTV). In the first book, he attacks "the English School," concentrating on Ricardo. In the Social Economics book he takes on Marx.
Making the long story short, Walras follows his father Auguste in seeing scarcity as the source of "value" combined with utility, rather than the classical notion of labor as the measure of value: "There are no products that can be multiplied without limit. All things which form part of social wealth - land, personal faculties, capital goods proper and income goods of every kind – exist only in limited quantities.” In elaborating his father’s theory of “rareté” Walras secured his place with Jevons and Menger as one of the founders of the neoclassical school of economics that more or less reigns supreme today in Anglo-American universities. This earned him the title of “the greatest of all economists” from Schumpeter.
In the second book Walras proposes two theorems: I) “Personal faculties are, by natural law, owned by the individual” and II) “Land is, by natural law, the property of the state.” Walras would have the state buy back all property from private owners by selling bonds which would be paid back by collecting rent on the land. The remainder of the rent would be used to fund other natural tasks of government. These beliefs he considered sufficient to allow him to say “we socialists” without irony.
On Marx he says “First, consider Marxist collectivism. It is completely based on a twofold mistake in the field of economic theory: first, only labour has value, and the normal value of any good is nothing other than the quantity of work it embodies; second, all types of labour may be reduced to only one type, whose unit can serve as standard measurement of value. This mistake has now been cleared away; it was partially made by Adam Smith, but he did not retain it Karl Marx, on the contrary, pursued its deductions and consequences with rigorous logic.” He then goes on to show what he sees are the illogical consequences of these errors.
My reaction to Walras had been to find his critique of the LTV quite devastating from a purely logical point of view. We don’t, in fact, value commodities because of the labor that went into them, but rather because they are scarce and useful. Great labor could go into constructions of no interest to anyone but the lunatic who created it. Commodities have value because they are scarce and useful, not because of the labor that was expended upon them. Classical economics has no demand curve! Prices are determined (for the case of constant returns to scale, at least) by cost of production. And labor is at the root of costs of production (but only if you can get land and capital for free!) But with no demand curve we are unable to determine how much to produce. So the classical LTV of both Ricardo and Marx fails to adequately explain value or price.
So far, so good. But to make for some balance in my evaluation of the subject, I turned to Ronald Meeks’s book Studies in the Labor Theory of Economics. Meeks is an economic historian and his book is a full-bore defense of Marx and his LTV. My copy of the book has many stick-on notes exclaiming with disdain the number of times he speaks about the “unearned” rewards of capitalists. But these are only “unearned” if you subscribe to the LTV! Petitio principii!
The LTV was important to Marx, of course, because he saw the concept of “surplus value” as unlocking the key to understanding capitalism. Workers make individual contracts with capitalists and in the process of their social interaction in the workplace create more value than the sum of the parts. The capitalist claims this value for his own, since he has an individual contract with each worker in isolation. He (unjustly by Marx’s circular reasoning) claims this surplus value as his own. This is Marx’s theory of exploitation. The clarity of his belief in the “unearned” value of capital (and land) provides the moral engine of Marx’s rage against capitalism and the goal of his political agitations. I had often wondered about Marshall’s justification of interest as “reward for waiting.” Rather, “a reward for having money”, I had often thought. Having now read Walras, I think I finally see this as rather, a reward for having (and not spending) a scarce commodity. As Charles has said here, the “owner of private enterprise takes funds which can be used in other ways for his or her personal enjoyment or satisfaction, and puts them at risk to achieve the goal of profitable sales.”
But, as I kept on reading in Meeks, I came upon a rock which struck the hull of my smooth sailing through this critique of the LTV. The words come from Marx’s Critique of Political Economy: “a definite production . . . . determines the consumption, distribution, exchange, and also the mutual relations between these various elements.” I am reminded of the old Woody Guthrie tune, Do Re Mi:
“Oh, if you ain't got the do re mi, folks, you ain't got the do re mi,
Why, you better go back to beautiful Texas, Oklahoma, Kansas, Georgia, Tennessee.
California is a garden of Eden, a paradise to live in or see;
But believe it or not, you won't find it so hot
If you ain't got the do re mi.”
There is no demand curve if no-one has funds to buy. This was the basis for “Fordism,” Henry Ford’s realization that he needed to pay his workers enough so that they could afford to buy his cars. But Fordism was not able to prevent the crash of 1929 and the Great Depression that followed. And it has been forgotten almost entirely in our post- Reagan/Thatcher era. As Fordism has been forgotten, world inequality of wealth and income have fallen back to nineteenth century levels as well-documented in recent books by Atkinson and Piketty.
And as carbon dioxide from burning of fossil fuels accumulates in our atmosphere and oceans with resulting sea-level rise, acidification of the oceans, and devastation of fisheries and species diversity, among other consequence, this brings us back to Ron’s original contention: “How could a new ‘social pact’ be ‘assured by private enterprise?’ - just discussing among smart people and responsible thinkers.” So exactly how will discussing among smart people prevent the interests of wildly powerful capitalists from preferring vast negative consequences to most of us as long as their income stream is protected (by governments!?)
If we are agreed that public harm for private gain is “not for private enterprise to pursue,“ but that private gain is protected by the state, what are we to do? What about the cases where private profit produces clear public harm? A growing number of us, including Gar Alperovitz and my neighbor David Korten, to name just two, have come to the conclusion that it is time for systematic change to the capitalist system. Free-market capitalism has no answer to the question of how to curb public harm caused by the invisible hand. State socialism in the Soviet Union had the very positive consequence for the West of providing an alternative that frightened capitalists into accepting the New Deal, which addressed some of the worst outcomes of capitalism. Now, in the absence of that viable alternative, how can we solve the growing problems of devastating climate change, pollution, corruption and massively growing inequality that are a direct consequence of private ownership of social production?
Last night I spent a wonderful evening dining in the middle of 40 acres of productive agriculture in the center of the island where I live. I was reminded that one half of that 40 acres was publicly-owned and that the island municipality owned a total of 60 acres which are leased to farmers for production of the food and wine that we enjoyed in the summer light last night and which we regularly buy in our public market each week. This reminded me of Walras’s second theorem. I am also in the midst of a campaign to buy back the electrical utility owned by a bank in Australia who delivers us power at a price that is higher than 80 different public utilities in my state and which is generated from one of the 10 most polluting coal-fired power plants in the United States.
These are examples of significant local steps that we can take to bring some amelioration to the disastrous world that global capitalism has brought us. But they are not enough. The US government owned two major auto companies and one giant insurance company in the public interest in the wake of the Great Recession. Why did it sell these back? What right do private persons have to reap profit from social production? Well, we have discussed this above. Private persons have a logical right to return on investment from their thrift (or inheritance, for that matter). That right comes from the logical fact of the scarcity of capital. But do they have a logical right to the profits from banking, large-scale industrial production, health care, and power production enterprises that are inherently social (to name just a few) and when they are harmful to the public interest?
It seems to me that this right is granted only by governments, that is, by the consent of you and me. I, for one, am inclined to withdraw that consent. Public enterprise can operate these social organizations in the public interest as well or better than private entities. It is time for us to start acting on this thought. Hume famously declared, “'Tis not contrary to reason to prefer the destruction of the whole world to the scratching of my finger.” But only the public can grant that power for public harm to private interests. I find it to be disproved by Hume by logic and by all of the last two centuries of experience with capitalism that we should trust to private persons by virtue of their capital the right to the power for public harm that they currently wield in our economies. It seems to me (and many others) that we need to take those rights that harm the public interest back from private hands. And may the day come soon that we do so.
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Thanks, Randal, for the excellent post. I think you just saved me about 500 hours of reading and study on economics. And you have now, inadvertently, identified for me the source of a favorite saying of one of my former bosses: "To me, it's all about the do re mi."
Yes , excellent post that drives me to respond at the high bar that Randal always sets. I have learned much in my Goodreads experience and the introduction to Walras is part of that. He now sits in good company on my to read list. The issue of scarcity does make the world go round as they say. Supply and demand is an unforgiving master. Just ask the CEOs of mining companies hit hard with demand destruction from China. On the other hand what can we make of Uber's $50B valuation, certainly not a scarcity of capital, but perhaps of good sense? Just saying. Good ideas are scarce and the people to take advantage of them. Many times its capital, employees , time and the courage to hang tough. Randal's central argument about government's role in the administration of goods and services for the society is compelling and one that I don't have alot to disagree with, as the the post office is a 250 year proof of that idea. Many would argue, as I have for decades, that public and private health are too important and not really market ready deliverables to be controlled by private enterprise. However, my list is short while I am guessing that his is long. My own experience with government at the local, state and national level is not unagreeable, however it has never been an environment that drives innovation, risk taking or accountability. Those qualities are the purview of the market, and ultimately its the unrepentant accountability of said market that really produces the greatest good for all. I know that globalization is a four letter word in many parts (dont know about Goodreads), but the genie was let out of the bottle along time ago. The markets edges have always had to be smoothed to avoid the extreme outcomes of untrammeled capitalism, (TR to the rescue), but the trick is in the balance between the gross incompetence of an unaccountable bureaucracy and the extreme recklessness of unchained capitalism. Like Jefferson, I am a lover of the small, local and global business , who has its own future directly connected to its customers and community. However I remain as I have been for over 30 years a committed Hamiltonian, recognizing that only the liberty for thr pursuit of excess produces the maximum benefits that this country offers.
Randal - could not be better!! you saved 500 hours of Alan and 3 times of myself. Alan - your former boss is right - back to economics do-re-mi:1)Economics is a science whose techniques are valid and applicable when the will of economic agents is limited by the natural law of supply and demand;
2)new concept of human labor as a transformation process of human energy into physical or intellectual power. It will replace the changing logic of ideas – ideology – with the invariable logic of life - biology
3) The State is the great fiction through which everybody endeavors to live at the expense of everyone else." Frederic Bastiat (1801-1850) - Hegel is revolving in his tumb realizing what´s happening now a days - "government as supreme creation of human ethics!!!
4) Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration”. Abraham Lincoln
5) The real need for government intervention is in the fact that 3 sectors: agriculture, health and education cannot walk alone – The government needs to pump resources into these 3 sectors – something necessary, even if inefficient
6) imagine what´ll gonna happen when to make profit you need to improve human health!!! it´ll "bring some amelioration to the disastrous world that global capitalism has brought us"
Charles, I strongly agreed: "Good ideas are scarce and the people to take advantage of them. Many times its capital, employees , time and the courage to hang tough"
Please, forward your mail - Randal, Alan and Charles - I´ll forward you some of academic texts concerning issue. Mine is - rcarneiro4@gmail.com - Cheeeerrrrsssss. Ron
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Along this line, I read an interesting book a while ago demonstrating that—the Chicago School of economics to the contrary notwithstanding—Wall Street is often irrational: Justin Fox, The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street (New York: HarperCollins, 2009).
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[public email address deleted on 9/13/2015]
Chagonz@yahoo.comAlso , setting the story farther back ; Charles Mackay "the extraordinary madness and delusions of crowds" published in the 19c I believe describing among other manias ; the Dutch tulip bulb of the 17c ; the French have a saying ; plus ca change, plus ce la meme chose ; meaning the more things change the more they stay the same , , along the same lines Carmen Reinhardt's ; "This Time it's Different"
I hear so much of supply and demand...rarely, hardly ever have I heard the other side of the coin..."what the market will bare.Like a one parent family is "supply and demand"....the family of Economics suits best with mom and dad...so to speak.
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I posted today a review of a book that fits squarely into this category: The Free Market Existentialist: Capitalism without Consumerism by William Irwin. The review on Goodreads is here and on my blog here. My reaction: I really didn't like the book! Cheers, Randal
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So I am about half way through "Capitalism and Freedom" by Milton Friedman (posted in this thread because Friedman described himself as a "small l libertarian") and I can't stop being bugged by one thing in particular: I don't feel that he treats corporations as political institutions. Keep in mind I am half way through so that could change.For the record I strongly recognize the benefits that free market principles can have on poor and developing communities. I generally believe government should more or less promote a free economy, while ensuring that groups that may be marginalized or exploited are protected and recognized as deserving of a basic standard of living. With that said I understand that I am idealizing what I want a free global economy to look like. I recognize that while some have seen real benefits from global development and international trade, others nationally and internationally have been brutally exploited without said protection or recognition.
Friedman begins his book criticizing Kennedy's famous "Ask not what your country can do for you, ask what you can do for your country". To Friedman this either treats government as paternalistic (the former) or as a master one serves (the later). Friedman states, "To the free man the country is the collection of individuals who compose it, not something over and above him. He is proud of a common heritage and loyal to common traditions. But he regards government as a means, an instrumentality, neither grantor of favors and gifts, nor master or god..."
Thanks to this group I took the time to read the Federalist Papers in full recently and now think Friedman misrepresents what the foundations of American government and freedom meant. Madison, Hamilton, and Jay clearly do not see government as master or father. A free society did not mean a free market so much as a balance of power. Where Friedman see's the balance of power most rationally handled among individuals in the free market, the federalist authors saw as a balance among institutions. This is what Friedman neglects; that individuals still form institutions that in turn act and influence the political realm.
Madison in No. 58, states that too large a body of representatives may create an easily persuaded political body, saying "the countenance of government may become democratic, but the soul that animates it will be more oligarchic. The machine will be enlarged, but the fewer, and often the more secret will be the springs by which this is directed". Many might see this quote benefiting Friedman, but Friedman never addresses oligarchy, and Madison's passage seems to imply much more that powerful institutions and influence arise and interact within the public and private.
This is all basically to say that my biggest criticism of a libertarian political philosophy is that it seems to ignore the problem of power and its distribution within the private realm and free market. Thoughts and criticisms welcome!
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Thank you, John, for your thoughtful post. The economic libertarians would like to think that very small or no government is possible in complex societies. They fantasize that all will be well if only the free market is given free reign: the market, not the government, will take care of everything. Unfortunately, in my view, it's not that simple. The greed of unregulated capitalism necessarily leads to some people being unjustly exploited. As Madison wrote:
"But what is government itself but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controuls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: You must first enable the government to controul the governed; and in the next place, oblige it to controul itself."
The Federalist No. 51 (emphasis added).
One of the best books I have read on these themes is Colin Woodard's American Character: A History of the Epic Struggle Between Individual Liberty and the Common Good (2016). I recommend it.
Great thank you! I have "American Character" on my list.
So I am in general agreement with John's post about Friedman. Like most libertarians and conservative writers, they have a disjointed understanding of especially the Hamiltonian construct and design of this country. They sort of ignore his very considerable planned economic adventures and predilections in pursuit of American economic greatness while genuflecting to Hamilton's economic and business centric focus of American policy. Living as I do in the NYC area and travelling the roads here, I pass by the city of Paterson NJ often. Its a grimy depressed place now, but it was the site of Hamilton's grand experiment in government sponsored and funded industrial policy. In addition to his famous Federalist contributions, he authorized the study of American manufacturing in the first Washngton Administration and produced, from its findings, his Report on Manufactures. A stronger testament to American industrial policy driven by government does not exist. Corporations, however are not as Friedman states, political entities. While they may be "people too" as per Romney and Heritage, et al, their prime purpose is quite simple, the focused gathering and application of labor and capital to create a desired outcome or value for a society that is wiling to pay for it. Time and space does not allow for a deeper treatment of the corporate model and its role,in the political realm.
As Alan has articulated in other posts, the friction between capitalism and government is an ongoing and necessary part of our history and future. Both serve the same end, the pursuit of our ability to pursue happiness In Jefferson's 18c definition other term. Hamilton understood that the Founder's vision and dream of the US was only going to be satisfied by the robust and focused harvesting of our nationl resources by business. As I have stated in many other posts, I am glad to been the beneficiary of Hamilton's economic vision and not Jeffersons.
Charles wrote: "Corporations, however are not as Friedman states, political entities. While they may be "people too" as per Romney and Heritage, et al, their prime purpose is quite simple, the focused gathering and application of labor and capital to create a desired outcome or value for a society that is wiling to pay for it. Time and space does not allow for a deeper treatment of the corporate model and its role,in the political realm." Thanks Charles. My interpretation of Friedman stated above is not that he believes that corporations are political entities. I am actually saying that his belief negates private institutions as having political power. He is not assuming that individual collectives take on the form of politically powerful institutions within the private market. I think this is where maybe I was unclear since politics and power are interchangeable but quite different.
I see corporations as political entities because they are clearly institutions with more power than civil society. Take trade deals for example. I would argue that corporations and industry play a clear role as a set of dominating voices in trade deals that argue over a certain amount of privilege and power written into these agreements. Then include ruthless lobbying techniques, the ability to sue other countries, or the ability to exploit countries for extremely cheap labor. I would say that these are examples of an exercise of authority over either the less powerful or the political system itself. I could see though that one might argue that this does not make them into political entities since they do not have statehood, legitimacy, or real power in terms of the ability to wage violence or enact law. But they certainly have a strong ability to both advocate for violence and change law. So I guess Im saying that I have a hard time buying Friedman's idea that a free market offers individuals total freedom, when it is clear that corporate and industrial institutions have a great deal of power over us.
"Time and space does not allow for a deeper treatment of the corporate model and its role,in the political realm." This made me think of a series I recently finished. Manuel Castell's turn of the century "The Information Age" does an incredibly unique job describing the rise of informationalism in the 20th century and its transformation of capitalism.
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Hamilton's economic system was not an unmixed blessing. As Madison (who criticized Hamilton's initial proposals before Jefferson returned to the US from Paris) and Jefferson observed, Hamilton was, by his own admission, intent on adopting the British financial model, including its widespread speculation and corruption (for which Hamilton had no problem, though he was not personally corrupt). Madison and Jefferson were concerned that a national bank would result in something akin to the South Sea Bubble in early eighteenth-century British history. They were much influenced by Cato's Letters or Essays on Liberty, Civil and Religious, and Other Important Subjects by John Trenchard and Thomas Gordon, which was originally a series of newspaper articles published in London in 1720-21. This work focused on the South Sea bubble and the associated speculation and corruption that caused it.
Hamilton said that the British governmental and financial system (including its monarchy and its national bank) was the best form of government, and his unsuccessful proposed plan in the 1787 Constitutional Convention reflected this belief. Nevertheless, being the great lawyer that he was, he strongly defended the Constitution of 1787 in his substantial contributions to The Federalist. Hamilton nevertheless had substantial doubts that the new constitutional system would be successful. Of course, Madison, Franklin, Washington, and others also had such doubts, though from different perspectives.
As Jefferson and Madison predicted, speculation and corruption did indeed become rampant as Hamilton's program was implemented. And the speculation and corruption remain with us today, as evidenced in the subprime mortgage bubble leading to the 2008 stock market crash and ensuing Great Recession.
Economic libertarianism usually fails to observe that corporations are legal fictions solely created by government. Although the Supreme Court held in the nineteenth century that corporations are "persons" within the meaning of the Fourteenth Amendment Due Process Clause, corporations differ from natural persons in that their shareholders have limited liability (limited to their investments) from contract or tort judgments against the corporation. Accordingly, from the get-go, corporations have a governmentally favored status in American law. John's points about the political power of corporations are well taken. I could elaborate, but I need to leave my computer right now to go to an appointment. I don't have time to proofread the foregoing post, so I apologize in advance for any typos, grammatical errors, etc.
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As indicated in preceding posts, Hamilton was not a libertarian. His proposals as secretary of the treasury involved governmental promotion of American businesses and industries by various means. Today's libertarians consider him an enemy, not a hero. But this shows how much the United States changed over the centuries. In the early decades of the republic, laissez faire was the province of the Jeffersonian party, which was the party of small farmers and business owners. The Jeffersonians, like the Antifederalists before them, looked at big government as being the necessary ally of big business. As a result of the industrial revolution, the entire scenario changed. Now it is big business that wants to be free from governmental regulation (except for those "crony capitalists" who seek competitive advantage through governmental favors). Thus, the Koch brothers are big names in the libertarian movement and are substantial financial contributors to it. Whereas big business was identified with big government in the founding era, big business now (again with the exception of "crony capitalists") finds it more profitable to be free from the governmental regulation that arose when the industrial revolution made it impossible for everyone to be an independent farmer or business owner. This is a long story, recounted in many books and articles, and I have just sketched the outlines. But it shows that for either present-day conservatives or present-day liberals (progressives) to appeal to the US Founders is a bit disingenuous. The Hamiltonians favored big government, and the Jeffersonians opposed it, but in those days, in contrast to ours, big government and big business were considered allies, not, as today, enemies. The industrial revolution changed everything.
Gentlemen, it appears we are veering into corporation as bogeyman territory here. They are an easy target certainly, however, and I will defer to Alan's professional knowledge and expertise here, the point of limited liability was to incentivize the corporation, for the benefit of its shareholders, to take certain decisions (investments) of no uncertain risk in pursuit of growth. Unlike pre-corporate entities with unlimited liability ( such as partnerships), the corporate structure helped to deliver the kind of continuous investments and growth that we enjoy today. Now I can agree that the consolidation of corporate structures into the gigantic behemoths of today poses serious questions about the continued efficacy of the model. Though in certain industries size does matter, especially with the growth of the state owned structures now found in more unsavory locales. I suppose one can argue that corporations definition as persons relates to their basic structure, as they essentially represent the economic interests of their individual owner/shareholders. At least that was the intent. Now with pension fund socialism( a la Drucker) and institutional ownership, it is more difficult to accept the corporation as collection of individuals. I suppose an expert in corporate governance might have something to say about this.
Hamilton's vision was the correct one for this nation. Sitting in the small Treasury office in 1793, its a wonder that he, among a very few, saw the US for what is could and needed to be, thus the need for access to capital, easy capital. Yes, fortunes were made and lost, panics came and went; capitalism is, as was said, a terrible way to organize a society until you consider the alternatives. It is interesting the his plan to emulate the British model eventually produced the policy decision that smoothed out many of the rough edges of American finance via the creation of the Federal Reserve system in 1913, basically using the British Central Bank as its model though, in a sop to the banking industry and, our federal DNA, utilizing regional banks to tie the whole system together. Messy, sure, but its hard to argue with a $20 trillion economy.
Charles wrote: "Gentlemen, it appears we are veering into corporation as bogeyman territory here. They are an easy target certainly, however, and I will defer to Alan's professional knowledge and expertise here, t..."Yes I agree, "corporation as bogeyman" is not territory I want to veer into as well. As stated above, I understand the benefits of capitalism and the free market, and large corporations have the ability to bring development, run charitable programs, create unique business models that create strong employment opportunities etc. But if we mix these in with the list of exploitative concerns I listed earlier, both good and bad outcomes demonstrate power over others. I think that is good reason to consider them as institutions with an affect on lives that deserve checks and balances, much in the same way we attribute to government. Some of the US's protectionist measures today are strikingly bizarre, and I would not suggest a return to those policies. For example the fact that until 1903, the US limited corporate charters from 20 to 50 years, with the right for legislature to revoke a charter if said corporation was being irresponsible (read this in John Mickelthwait & Adrian Wooldridge. The Company: A Short History Of A Revolutionary Idea).
Every country has some protectionist measures, and done in the right way I think this is a good thing in the sense that it protects certain groups from exploitation within the free market. But I completely acknowledge that protectionism has often been more destructive than helpful, be it raising tariffs on Bangladesh to punish sweatshop labor in the 90's sending I believe an estimated 40,000 children by oxfam's account from the shops to working in quarry mines and slavery. Even in today's media, as praise goes out to countries like Denmark for being working socialist countries and examples of the welfare state, this isn't really 100% true. Denmark has had some of the loosest free trade rules in the world and has deeply benefited from those free market policies. So I am not advocating by any means some idealized move to a control economy; just recognition that corporations should be treated as institutions with power over others that need sophisticated checks and balances.
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One does not have to consider big corporations as bogeymen to realize that they have often exercised their outsized political and economic power to the detriment of the common good. The books and other analyses discussing this subject are legion.
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http://lithub.com/how-bad-writing-des...
Rand, for whom English was a second language, probably used the wrong word in the title of her book The Virtue of Selfishness. She made it clear that selfishness in the popular sense was the opposite of her position, but, of course, she was always going to be characterized as supporting the popular meaning of the term. This was predictable, albeit perhaps not to one who had not been raised with English as her mother tongue.
In his review, Adam Weiner seems to allege that Rand stole many of her ideas from Nicolai Chernyhevsky. I suppose that this is possible, though I don't think that Rand ever mentioned Chernyhevsky in her writings, and she usually was not shy about such attributions.
Rand did often mention that she was very much influenced by Aristotle's ontology and logic while disliking his ethics and politics. Of course, Aristotle very probably would have disagreed with the way that Rand applied his ontology and logic.
As I have previously mentioned, I hold no brief for Rand, and I am not one of her followers. However, the popular understanding of Rand (whether among her epigones or among her critics) does not quite accurately reflect what Rand actually wrote. I disagree with most of what she wrote—and how she wrote it—but she did occasionally have an insight that is worth thinking about, even if one ultimately rejects it. Nevertheless, all of this is lost with all of the propaganda that has been leveled both against and for her. So be it.
And, of course, I disagree with Alan Greenspan's approach to economics. I would note that even Greenspan admitted, after the 2008 crash, that some of his fundamental premises had been incorrect. Ironically, Greenspan has always (at least since his involvement with government) been castigated by the libertarian right as being insufficiently libertarian.
Yuval Levin - conservative writer, thinker and editor contributed the following article, " Conservatism in an Age of Alienation" in the EPCC; Ethics and Public Policy Center and Modern Age. Know most here trend center left but Levin, a thoughtful and at times brilliant thinker and writer captures the time better than most and more importantly offers a way out, for both conservatives and progressives. Maybe....https://eppc.org/publications/conserv...
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Charles wrote: "Yuval Levin - conservative writer, thinker and editor contributed the following article, " Conservatism in an Age of Alienation" in the EPCC; Ethics and Public Policy Center and Modern Age. Know mo..."Alienation and lack of self-awareness seem to be the costs of financial gain which is why Trump's supporters seem so out of touch to those on the left, and why Trump's supporters lost the popular vote. Even though they lost the popular vote, this article calls this phenomena "popular conservatism", so what does that say about the electoral college votes? The Electoral College isn't alienated in an age that is?
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August 17, 2017 Note:
Another review of Nancy MacLean's Democracy in Chains appeared in the August 15, 2017 New York Times. This review is more thorough than my above-referenced review, and I recommend its perusal.
