calling something one doesnt understand “crazy” is hardly “useful,” Doug.

Like I said, my intentions were not to get into an online squabble. I referenced it and suggested some books.

I dont mind a dialogue - even with opponents - but I do mind wasting time correcting countless flaws or defending myself against absurd charges when the easiest and most time saving solution is to read a book that is readily availble online for free. The purpose is that the book covers more ground than I can in an internet forum. I would rather discuss it with someone who understands it.

If this is unreasonable then so be it.

Well, OK, TA, let me leave you with one last (I hope)—admittedly snarky—thought: given your complaints about my criticizing this idea without first reading the books, I take it that you would have little tolerance for anybody so narrow-minded as to criticize Christianity without first having read the Bible—or anybody criticizing Islam without first having read the Quran. 

Chris Crawford - 18 December 2008 04:33 PM

Well, OK, TA, let me leave you with one last (I hope)—admittedly snarky—thought: given your complaints about my criticizing this idea without first reading the books, I take it that you would have little tolerance for anybody so narrow-minded as to criticize Christianity without first having read the Bible—or anybody criticizing Islam without first having read the Quran. 

Correct. How could anyone properly have a valid argument against something they don’t understand? I am concerned that this isn’t common sense to you. You said you are an educated man with a higher education in a disciplined science: physics. So why you think it is acceptable to have a position on something you don’t know about is beyond me.

What led me to be supportive of parecon was not some rash choice. But an intentional choice to understand a few things:

1) what an economy is
2) what certain structuring of economies create
3) what is desirable and undesirable
4) what to do about it

My views on markets are, like my views on other things, the products of my understanding and not intentional ignorance. When I read a political economist say that markets are inefficient, anti-social, are biased for private consumption over social consumption and distort the true social costs and benefits of a product I seek not to agree or to disagree reflexively. But to understand the supportive facts, and then I choose whether I agree or not. And I have come to agree.

My views on private and state ownership follow the same trajectory. And I have not just read radical economists like Albert and Hahnel. I have read Smith, Friedman, Marx and other contemporaries like Ha-Joon Chang or Paul Kriegman and Dan Baker and so on.

I am sorry if it frustrates you that I dont want to teach Participatory Economics on an internet forum. I simply wanted to give my two cents on “long term requirements.” If you are interested in the topic then you should read two books and I will explan why:

1) The ABC’s of Political Economy by Robin Hahnel. This is a relatively short but comprehensive book that can give nearly anyone the ability to have a firm grasp and understanding of political economics and the two dominant schools of economics: micro and macro economics. The book only slightly goes into parecon at the end while referencing reform movements that can help us get there.

2) Parecon; Life After Capitalism by Michael Albert. This book is the opposite of the above where it spends less on explaining prevailing economic systems - though it still does reference many important facts - and more on describing and arguing for parecon.

TomTom - 03 December 2008 01:32 PM

What do you guys think?

http://www.youtube.com/watch?v=O_TjBNjc9Bo

Didn’t see it to the end because the computer played up but there is no doubt that America and the UK and many western nations are in a giant economic mess.

I heard Billy Bragg say ” the world is in a sorry state when half the world is poor and the other half is in debt” and I think that just about sums it up.

People talk about the current economic crisis being about irresponsible lending by the banks, poor regulation and such like but the fact is we are in a mess because we as nations spend more than we earn. This is a classic case of common sense being more useful than eductation or theory. It’s very simple, we all know how it works, who’s anyone trying to kid.

Economists are interested in debt as a percentage of GDP but what that GDP consists of matters. If it’s a number based on us all selling each other cups of coffee, then GDP is a worthless figure. Of course GDP is not based on that but I hope it illustrates a point, all the same.

We’ve been continualy trying to grow the GDP by borrowing money and using the growing GDP to justify that borrowing.

We need some new ideas, I’m afraid I have none to offer but let’s get real and admit what we are doing is not working, that’s the first step.

Stephen

Stephen,

Here is an idea or two or three or four…:

1) criminalize capital flight
2) put controls on foreign ownership
3) put a very tight leash on the financial industry
4) nationalize education, health care, telecommunications and other public services

To many “capitalists” this may seem to be an infringment on “economic freedom” but that is only if we adopt a very disturbed and perverse definition of freedom.

People should not be “free” to kill those they dont like, or “free” to steal, or free to “own slaves.” The legitimate concept of freedom and rights is the ability to do something without it infringing on someone else’s rights. We are free to speak but not free to shout “fire!” in a crowded theatre, because creating a hysteria where people can get trampled trumps our freedom to incite a stampede.

Why should businesses be “free” to send the wealth generated by workers somewhere else if the workers organize for better working and living conditions? Why should foreign businesses be “free” to take the lions share of wealth generated and send it back to where they came from (this same goes for our setting up businesses in foreign countries)?

These are not new ideas. In fact, these are economic policies that have helped the developed world become developed. New ideas are rethinking concepts of ownership, allocation, planning and division of labor.

We should be asking: why are people “free” to own the labors of others even if they dont own the workers directly? Why do we use markets to allocate resources when they pit buyers versuses sellers and ignore externalities or are bias over private consumption rather than social (i.e. health care, social programs and so-called “entitlements”)? Why are decisions that affect billions of people made behind closed doors through unelected and largely unaccountable businessmen loyal to profits, not people? Why do we remunerate people based on private ownership, or inheritance in the form of direct wealth or genetic lottery?

From Parecon:

In contemporary economies, a few lucky property holders come into the world to lead lives drenched in continually regenerated opulence. Millions of working people come into the same world only to wonder how they will afford another week’s subsistence. An economy’s ownership relations dramatically affect people’s incomes, economic responsibilities, and say over economic outcomes. Why are the propertied born already rounding third base headed for home with no catcher trying to tag them out? Why are so many others born standing at home plate, holding a matchstick bat, facing the world’s best pitcher, two strikes against them, resigned to failure?

TA, your ideas don’t appeal to me. Consider:

1. Criminalize capital flight. Back in the 1960s, when a whole flock of new countries were getting up and running, they were concerned about the vulnerability of their economies to large-scale capital transfers. Moreover, we had little experience with this problem, and so many economists supported measures to minimize the damage done by big capital transfers. So scores of different schemes were set up to protect these fragile economies. Some were rather heavy-handed, and some were more subtle. Most involved currency controls of some sort. The Indian raj system was one of the most extreme: it not only limited capital going out, it also limited it coming in! Anyway, by the 1980s, it had been clearly established that this approach doesn’t work. If you impede the flow of capital out, then you discourage the flow of capital in, and countries starved of capital had very low growth rates. These days, most of those capital-control schemes have been eroded down to almost nothing. There remain a few counterexamples, China being the biggest; but China’s economic distortions are intended to maintain an export economy, not to restrict outward capital flows.

2. Put controls on foreign ownership. This makes no sense. Do you really believe that an American-born owner will be any less eager to pursue profit than a foreign-born owner? Capitalists want ROI, not warm fuzzy feelings. There are still a few countries with such schemes, but most of them are restricted to either “national champions” or industries considered vital to the survival of the country.

3. Put a very tight leash on the financial industry. I’m in agreement with that—at the top end only. That is, the upper reaches of the financial system have the most widespread effects, the least competition, and engage in the least well-understood activities. That should be carefully regulated. At the middle and lower levels of the financial system I see little need for change.

4. nationalize education, health care, telecommunications and other public services. I see no reason to nationalize these operations; they can be farmed out to better overall effect. I’d certainly like to see improvements in the performance of both our education and health care systems (and in fact I offered a detailed scheme for that which involves a lot Federal activity). But simply taking them over won’t accomplish anything worthwhile.

These are not new ideas. In fact, these are economic policies that have helped the developed world become developed. New ideas are rethinking concepts of ownership, allocation, planning and division of labor.

This seems to suggest that more socialist approaches to economic policy are spreading throughout the world, when in fact the reverse is the case. For the last 30 years we have seen the steady advance of more laissez faire policies. There have been some reversals, such as in Venezuela. But the world as a whole, the lessening of government control over the economy has been the overall trend. And that trend is correlated with an increase in global GDP. It’s correlation, not causation, but it’s difficult to argue in the face of this evidence that diminishing the government’s role in the economy makes people better off.

We should be asking: why are people “free” to own the labors of others even if they dont own the workers directly?

They aren’t.

Why do we use markets to allocate resources when they pit buyers versuses sellers and ignore externalities or are bias over private consumption rather than social (i.e. health care, social programs and so-called “entitlements”)?

The task of integrating externalities into economies belongs to the government. I would love to see more government action in this area. And your last clause confuses me; are you suggesting that private consumption does not include health care, etc?

Why are decisions that affect billions of people made behind closed doors through unelected and largely unaccountable businessmen loyal to profits, not people?

The same thing could be said of the rulers of China or Saudi Arabia. But to answer your question, it is because this system has been found to work best. If you have a better system, put it forth.

Why do we remunerate people based on private ownership, or inheritance in the form of direct wealth or genetic lottery?

Those are some of the means of distributing wealth. I am in agreement with you that inheritance taxes should be restored to higher levels.

chris,

there are plenty of books on the history of economic development and its quite interesting.

and state protectionism is not socialism. socialism means the workers own it. but thats not the same as state protectionism. controls on foreign investment and ownership, high tariffs, subsidies, nationalization of banks and goods, and so on is precisely how the developed world got developed. look at the us, britain, germany, japan, south korea, india and russia. for the latter look at how quickly russia went from being a third world to a super power. it was through extensive forms of protectionism to build up industries and so on.

think of nascent industries as a child. you dont dump them in the real world and say they must compete with adults. they will get crushed. you protect them and build them up. the developed countries developed through extensive forms of protectionism. the developing world is being blocked. this is precisely what is being talked about in UN meetings and at places like Copenhagen. This is why the WTO is collapsing.

see bad samaritans by ha-joon chang or how the rich got rich and why the poor stay poor by erik reinhart.

people do own the labor’s of others. its called private enterprise. Bill Gates and Warren Buffet own the work of thousands of people and take the lions share of that without doing a fraction of the labor or putting in a fraction of the intensity and duration of those who get mere pitances in comparison. what entitles them to such an inequitable portion of the pie is that they “own” it. and since most people dont come into this world with the capital to “own” enterprises they have to settle for selling their labor or luck.

treating social services like health care as a private service is part of the problem. that is why we have the crisis we have. that is why market-lovers want to privatize social security. but i referenced a book that goes deeply into this subject of markets (the abcs of political economy).

the idea that the system imposed by brute force is the system that works best is a bit odd. this reminds me of something the writer bill blum wrote about communism (he is an advocate of central planning, which i am not, but the point is still clear and valid):

The boys of Capital, they also chortle in their martinis about the death of socialism. The word has been banned from polite conversation. And they hope that no one will notice that every socialist experiment of any significance in the twentieth century—without exception—has either been crushed, overthrown, or invaded, or corrupted, perverted, subverted, or destabilized, or otherwise had life made impossible for it, by the United States. Not one socialist government or movement—from the Russian Revolution to the Sandinistas in Nicaragua, from Communist China to the FMLN in Salvador—not one was permitted to rise or fall solely on its own merits; not one was left secure enough to drop its guard against the all-powerful enemy abroad and freely and fully relax control at home.

It’s as if the Wright brothers’ first experiments with flying machines all failed because the automobile interests sabotaged each test flight. And then the good and god-fearing folk of the world looked upon this, took notice of the consequences, nodded their collective heads wisely, and intoned solemnly: Man shall never fly.

I used the term “socialistic” more in the style of the Social Democratic parties of Western Europe, which are big advocates of protectionism. And they readily talk about protectionist efforts as socialistic.

controls on foreign investment and ownership, high tariffs, subsidies, nationalization of banks and goods, and so on is precisely how the developed world got developed.

Not true. Much of the huge expansion in American industry in the late 19th century was funded by British capital. And certainly nationalization of banks was never part of any western country’s economic foundation. Yes, protectionism was used at varying times over the last 200 years. But most economic historians believe that this protectionism hindered economic progress and served only to enrich the wealthy by reducing competition.

A rival approach to protectionism is the basis for much of the rapid industrialization of the developing world. The government requires foreign companies to set up partnerships with local firms in which the local firms have a majority holding. These partnerships then serve to transfer technology and skills to the local firms. This means that the local firms don’t have to re-invent every wheel—they can get the technology and know-how more rapidly.

By the way, if you truly want to see a good example of a highly protectionist nation, you need go no further than North Korea, with its juchi philosophy. It doesn’t make protectionism look very good.

I reject your claims about capitalists owning the labor of others, because a worker always has to right to step selling his labor to the capitalist. What really happens is an ongoing transaction in which the worker sells his labor for a salary. The owner of the company ends up owning the fruits of that labor, but the owner paid for those fruits at a price agreed upon by the worker. There is no injustice in this basic concept. Where the injustice arises is in the overall expectation that higher managers deserve vastly greater compensation. Back in the 1950s the compensation of the typical big-company executive was not many times higher than that of the lowliest worker. And highly progressive income tax rates insured a low Gini Index. But now, executives are earning hundreds or even thousands of times as much as the low-end workers, and income taxes are less progressive. This is where we need to make big changes. Ruining the companies isn’t the way to do it.

the idea that the system imposed by brute force is the system that works best is a bit odd.

I challenge you to show me the brute force CURRENTLY EMPLOYED in the USA to impose capitalism upon an unwilling population.

And re your long quotation regarding the brute force used to eliminate socialist states: it claims that China was forced by brute force to abandon socialism. I think your writer needs some re-education; China was most definitely a socialist state and since 1979 has been making the transition to capitalism on its own, with no outside pressure. Deng Chiaopeng was the man who started China down that road. That’s the most glaring mistake; there are others as well.

Chris,

protectionism in economic development was pervasive through the nascent economies of the current developed world. i suggested two important books on the subject. the facts are there.

as far as the last statement, I like how you throw in the caveat of “currently” as if the brute force used in the past doesnt have any significance on us now (the labor movement has largely been beaten into submission). you might want to get more familiar with the American labor movement history. There was widespread opposition to political and economic policies from the mid-1800s to the 1930s where the movements, uprisings and so forth were brutally put down with force by state militias and Pinkertons and police and so on and so forth. There are British and Australian newspapers from the time deploring the brutality in which our government responded to the workers.

As for the China comment you might want to check out the writers book Killing Hope. He provides a lot of resources for our subversion of Communist. In fact, the first chapter of the book is on China. The programs and policies we put in place in the post-WW2 era that ran up untill the 1960s played a huge role on what led to Nixon’s travel to China, which marked the turn around. In other word’s, China’s opening up to foreign investment wasnt simply the product of an internal choice. External forces played a big role too.

Anyway, I am tired of your constant antagonistic online pugilism. I have noted this behavior in some of your other conversations as well. Its boring. I prefer to state my views and provide some resources for those who want to investigate further. I dont have any desire to play these games with you.

OK, TA, if you don’t want to discuss the issues you raise, that’s fine with me. I expect, however, that you won’t mind if I post statements, directed solely at others, that serve to correct any misinformation (IMO) you present. You know, freedom of expression and all that. However, as a nod of respect to your wishes, I shall refer to you henceforth in third person, to make it clear that I am not addressing you.

The conspiratorial view of protectionism that TA offers oversimplifies a complex history. Prior to the industrial revolution, protectionism existed in a scattershot form, as an extension of the old guild system and the various royal monopolies bestowed upon fortunate intimates of the monarch. It did not exist to protect industries; it existed to benefit individuals.

The combination of the Industrial Revolution and the democratization processes in Western nations in the nineteenth century shifted the mechanisms of protectionism but did not alter the underlying political dynamics—protectionism in its various forms served exclusively to benefit a new industrial aristocracy that had replaced the old landed aristocracy. These protectionist policies were detrimental to the economic growth of all nations, because they served only to concentrate wealth in few hands and diminish the overall velocity of money through their economies.

Principled opposition to such policies started with Adam Smith in the late 18th century; the continued development of the field of economics provided better reasons to oppose protectionism. Ricardo’s work in the early 1800s on comparative advantage was particularly destructive to the justifications for protectionist policies. By 1850, the movement against protectionism in the West was an established political force, and protectionism was on the defensive. By the turn of the century, protectionism had ebbed to low levels. This period was characterized by a peak in international trade, explosive growth, and little protectionism.

World War I abruptly terminated this period, and the economic chaos after the war rendered protectionism a moot issue. Before international trade could be fully restored, the Depression cut it short. Politicians, responding to populist demands for action, renewed protectionist policies, a trend that economists now say deepened the worldwide Depression. This latter protectionist era was smashed by the internationalism of the postwar period, especially as expressed in the Bretton Woods agreements. These ushered in a new anti-protectionist regime that triggered greater international growth. The Western nations tore down almost all of the protectionist policies among themselves. Spooked by continuing fear of war with the Soviet Union, they did retain protectionist policies in some areas that they considered to be of strategic importance. For the most part, however, Western protectionism in the latter 20th century was directed against agricultural products from the Third World—a problem that continues to this day.

I’ll point out to the readership that TA has tacitly acknowledged that the use of force to protect industrialists pretty much ended before World War II.

Lastly, TA continues to maintain that Western activities subverted Chinese efforts at developing an alternative to capitalism. This claim is contradicted by the historical record. Western governments had extreme difficulties just figuring out what was going on inside China; there were long periods during which Sinologists were reduced to guessing who was really in charge. For example, the detonation of nuclear warheads at Lop Nor during the 1960s came as a complete surprise to Sinologists. The Cultural Revolution and the activities of the Red Guards completely confounded Western attempts to understand what was going on in China. Given these circumstances, the suggestion that Western governments were successful at manipulating the most fundamental precepts of the Chinese government is absurd. The shift towards capitalism has been a slow process. It was begun by Deng Chiaopeng in 1979 and faced serious resistance from the older elements of the Communist Party. There were some setbacks, and progress was not steady, but it has continued for thirty years now, and there is zero evidence of that Western actions forced any of this evolution upon an unwilling Chinese leadership. The change has been internally motivated, internally debated, and internally decided.

i dont mind at all if you post statements. because i provided resources that substantiate what i wrote and expose the silliness of what you have written. anyone interested enough to go beyond your online antics can check out the books i referenced, look at the evidence presented and discern for themselves.