Capitalism - a device for economic progress for everyone everywhere, every time it is tried.

[Monte_RCMS]

This is a somewhat provocative title.

A previous thread on Capitalism got a bit heated and was closed.

But, free market economic development is important to discuss.

And it’s relationship to government.

Here is a short paragraph [which I opened up with white space] from a friend that provided the inspiration to begin the discussion anew:

The American public through its representatives in government has ways to regulate the financial industry and do so when they overstep their ethical and fiduciary responsibilities. I’m more concerned about the gross corruption, mismanagement and entrenchment of government in general.

One can find ways to keep capitalism in check when they go off the deep end but Big Government is here to stay.

Big Government never generates income, it must always demand ever higher tax revenue to support it. We are now at a point where our national debt exceeds our economy (or shortly will be there). This is not only dangerous but should be our focus instead of the deflection of this issue by the Obama administration.

 

[ProVobis]

FWIW, from the Ayn Rand lexicon:

Capitalism
Theory
Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.

The recognition of individual rights entails the banishment of physical force from human relationships: basically, rights can be violated only by means of force. In a capitalist society, no man or group may initiate the use of physical force against others. The only function of the government, in such a society, is the task of protecting man’s rights, i.e., the task of protecting him from physical force; the government acts as the agent of man’s right of self-defense, and may use force only in retaliation and only against those who initiate its use; thus the government is the means of placing the retaliatory use of force under objective control.
…
When I say “capitalism,” I mean a full, pure, uncontrolled, unregulated laissez-faire capitalism—with a separation of state and economics, in the same way and for the same reasons as the separation of state and church.
…
The moral justification of capitalism does not lie in the altruist claim that it represents the best way to achieve “the common good.” It is true that capitalism does—if that catch-phrase has any meaning—but this is merely a secondary consequence. The moral justification of capitalism lies in the fact that it is the only system consonant with man’s rational nature, that it protects man’s survival qua man, and that its ruling principle is: justice.
…
The action required to sustain human life is primarily intellectual: everything man needs has to be discovered by his mind and produced by his effort. Production is the application of reason to the problem of survival . . . .

Since knowledge, thinking, and rational action are properties of the individual, since the choice to exercise his rational faculty or not depends on the individual, man’s survival requires that those who think be free of the interference of those who don’t. Since men are neither omniscient nor infallible, they must be free to agree or disagree, to cooperate or to pursue their own independent course, each according to his own rational judgment. Freedom is the fundamental requirement of man’s mind.
…
It is the basic, metaphysical fact of man’s nature—the connection between his survival and his use of reason—that capitalism recognizes and protects.

In a capitalist society, all human relationships are voluntary. Men are free to cooperate or not, to deal with one another or not, as their own individual judgments, convictions, and interests dictate. They can deal with one another only in terms of and by means of reason, i.e., by means of discussion, persuasion, and contractual agreement, by voluntary choice to mutual benefit. The right to agree with others is not a problem in any society; it is the right to disagree that is crucial. It is the institution of private property that protects and implements the right to disagree—and thus keeps the road open to man’s most valuable attribute (valuable personally, socially, and objectively): the creative mind.
…
Capitalism demands the best of every man—his rationality—and rewards him accordingly. It leaves every man free to choose the work he likes, to specialize in it, to trade his product for the products of others, and to go as far on the road of achievement as his ability and ambition will carry him. His success depends on the objective value of his work and on the rationality of those who recognize that value. When men are free to trade, with reason and reality as their only arbiter, when no man may use physical force to extort the consent of another, it is the best product and the best judgment that win in every field of human endeavor, and raise the standard of living—and of thought—ever higher for all those who take part in mankind’s productive activity.
…
The economic value of a man’s work is determined, on a free market, by a single principle: by the voluntary consent of those who are willing to trade him their work or products in return. This is the moral meaning of the law of supply and demand.
…
The essence of capitalism’s foreign policy is free trade—i.e., the abolition of trade barriers, of protective tariffs, of special privileges—the opening of the world’s trade routes to free international exchange and competition among the private citizens of all countries dealing directly with one another.…

aynrandlexicon.com/lexicon/capitalism.html

 

[GratefulFred]

Ayn Rand’s useful definition of Capitalism needs to be tempered by the Social Encyclicals starting with Pope Leo XIII’s Rerum Novarum, On Capital and Labor.

Successful capitalists have a moral obligation to use their success wisely for the good of others. That requires a lot of judgment. And it requires some control by government.

FREEDOM is essential. But more important is the GOOD USE of Freedom.

Capitalists, Labor Union Leaders, and Governments are all obliged to work together for the good use of Freedom. Yet they continue to work for their own self interests and ignore the common good.

 

[Abu]

ProVobis #2
Quote from Ayn Rand:
Capitalism
Theory
Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.
When I say “capitalism,” I mean a full, pure, uncontrolled, unregulated laissez-faire capitalism—with a separation of state and economics, in the same way and for the same reasons as the separation of state and church

Although a dissenter, in The Crash Of 2008: An Update, Interview With Peter Chojnowski, Ph.D., he identifies what is wrong with Ayn Rand:
‘The protective role of government defending the common good will be rejected with, “a separation of state and economics, in the same way and for the same reasons as the separation of state and church.” As you can see, all of the above is simply another morphing of Enlightenment Liberalism.’

The essence of capitalism’s foreign policy is free trade—i.e., the abolition of trade barriers, of protective tariffs, of special privileges—the opening of the world’s trade routes to free international exchange and competition among the private citizens of all countries dealing directly with one another…

The huge problem here is that countries that control their exchange rates, like China in particular, flood foreign markets with their goods and make a mockery of “free” trade and the result is the severe illness of manufacturing industries in many countries especially the U.S.A and Australia. It is suicide to allow this.

GratefulFred #3
Ayn Rand’s useful definition of Capitalism needs to be tempered by the Social Encyclicals starting with Pope Leo XIII’s Rerum Novarum, On Capital and Labor
Capitalists, Labor Union Leaders, and Governments are all obliged to work together for the good use of Freedom. Yet they continue to work for their own self interests and ignore the common good.

Hardly useful as her definition and meaning of “uncontrolled and unregulated” is quite unacceptable as the State has the right and duty to make wise laws, and that’s why we have laws to seek and punish those who steal, cheat, swindle, and against monopolies as people can, and some do, undermine the common good, and the primary role of government is to support families in solidarity, and the role of the Church in subsidiarity and, yes, the common good.

Real Catholics take their definition from Bl John Paul II who affirmed and defined the free economy in Centesimus Annus, 1991, #48, and the duties and limits of the State.

Pope Benedict XVI felt it necessary to teach that “Society does not have to protect itself from the market, as if the development of the latter were ipso facto to entail the death of authentically human relations…Therefore it is not the instrument that must be called to account, but individuals, their moral conscience and their personal and social responsibility.” (Caritas et Veritate, Benedict XVI, 2009, #36).

 

[fakename]

I think that what has to be remembered is that Capitalism defined as free trade is not a device for economic progress, it is the economy and so we find that even the soviet union owed what wealth it had to free enterprise.

In this light the argument over capitalism is really an argument over the axioms of economics.

 

[essie7777]

This is a somewhat provocative title.

A previous thread on Capitalism got a bit heated and was closed.

But, free market economic development is important to discuss.

And it’s relationship to government.

Here is a short paragraph [which I opened up with white space] from a friend that provided the inspiration to begin the discussion anew:

The American public through its representatives in government has ways to regulate the financial industry and do so when they overstep their ethical and fiduciary responsibilities. I’m more concerned about the gross corruption, mismanagement and entrenchment of government in general.

One can find ways to keep capitalism in check when they go off the deep end but Big Government is here to stay.

Big Government never generates income, it must always demand ever higher tax revenue to support it. We are now at a point where our national debt exceeds our economy (or shortly will be there). This is not only dangerous but should be our focus instead of the deflection of this issue by the Obama administration.

A discussion would be useful on free enterprise – however in 4 or 5 threads it has never happened as those that agree don’t answer challenges to the point of view so conversation halts.

…

I do however have an observation — your comment about the US is undisputed --here there is a huge debt,however what exactly is your government paying for? Your issue with big government may well be not so much an issue with “big” government per se but rather inefficient government.

The reason i state this is that i don’t think anyone would argue that the US does not have a welfare state by any accepted definition - there may be what are termed as welfare programs but they are hardly a blip on the radar in comparison to the size of the issues they “say” they work with.

So, surely a discussion about the size of government must actually assess what the US state is? Why is your government so “big” when it doesn’t actually do a huge amount at a federal level?

Before i get "battered (a very British phrase but appropiate!) I am only asking questions as it does seem a contradictory turn of phrase to use, when colloquially in political and economic terms, “big government” is usually a term coined and used for nations that are pushing past democracy into socialism style governments …with departments and state functions for every level of life and existence??This is not what the US has.

 

[carn]

inefficient government.

I do not understand to what this term refers to. In its basic meaning its a true statement, like heavy lead, wet rain and so on. By saying “lead”, “rain” and “government” the adjective is superflous.

Edit:
It somehow implies, there might in some remote corner of the universe exist the oppsite. But “efficient government” sounds as strande as light lead or dry rain.

 

[essie7777]

I do not understand to what this term refers to. In its basic meaning its a true statement, like heavy lead, wet rain and so on. By saying “lead”, “rain” and “government” the adjective is superflous.

Edit:
It somehow implies, there might in some remote corner of the universe exist the oppsite. But “efficient government” sounds as strande as light lead or dry rain.

i take the point there is always something that can be done to improve and streamline government processes and expenditure.

Still kinda of confused why the US has such a “big government” and such a huge debt – what is it paying for – its certainly not services.

 

[Robert_Sock]

Our social and economic institutions must eventually cater to the common good of the people. It’s the underdeveloped morality in our society that is preventing these, and other, humanitarian changes from taking place. If it’s ever given to a true, unadulterated vote, the majority of voters in a given society would favor social and economic institutions that cater to the common good of the people.

 

[fakename]

As a matter of statistics I think that America has a large spending problem because it spends a lot on the military. Our military spending is probably your welfare spending.

And for a more realistic POV, we need to spend because that’s how we keep our exports competitive (until the Chinese effectively call in all their loans).

For some American history, it all began with A. Hamilton who suggested keeping a perpetual debt to encourage the banking sector to favor the gov. and thereby keep a stable social and political order.

 

[manualman]

I’m always amazed at how many people take Ayn Rand seriously. The woman never held an productive job in her life. Never once took the risk of hanging up her shingle and making her way in the free market of products and services. She has zero experience in entrepeneurial competition with mega-corporations, oligarchies and monopolies. She sold her economic fantasies in Hollywood. She’s as qualified to pontificate on economics as Lady Gaga.

Her ideas are an artificial false dilemma in which she witnessed the depravities of communism and concluded that its polar opposite must be a comparative utopia. It never seemed to have occurred to her that there might be an ideal middle ground in which the people are protected from the tyranny of the state via the rule of law/private property rights AND potected from the tyranny of the oligarchs by laws designed to frustrate exploitive economic behavior. But then, she made friends with oligarchs, who gave her a pretty pampered life. Nice gig, if you can get it.

Those of us in the real world who work jobs and make things should consider her for what she was: a spoiled and ungrateful celebrity who was given what she had and deluded herself into believing she made it with her own hands.

Catholics should especially know better since the woman prized self interest as the greatest of virtues and despised altruism as the vice that would destroy civilization (conveniently ignoring the fact that it was the altruism of her extended family that enabled her to make her Hollywood connections…)

 

[carn]

The woman never held an productive job in her life. Never once took the risk of hanging up her shingle and making her way in the free market of products and services.

She was productive, her books sold in the millions. And writing books is quite risky at least early on, because its hard to convince anyone to promote your books and you spend a lot of work up front.

She has zero experience in entrepeneurial competition with mega-corporations, oligarchies and monopolies.
But then, she made friends with oligarchs, who gave her a pretty pampered life. Nice gig, if you can get it.

Thats a contradiction, if she made friends with “oligarchs” (I do not know a definition of the term.), she would have asked them about the competition among oligarchies. (She interviewed a lot of people, when designing her stories.)

Her ideas are an artificial false dilemma in which she witnessed the depravities of communism and concluded that its polar opposite must be a comparative utopia. It never seemed to have occurred to her that there might be an ideal middle ground in which the people are protected from the tyranny of the state via the rule of law/private property rights AND potected from the tyranny of the oligarchs by laws designed to frustrate exploitive economic behavior.

If her ideas are wrong, one could disprove them. So far i only saw people talking about it, but no one ever doing it.(Though its not that hard to spot loose ends in her thoughts.)
Futhermore Rand did not believe in such middle ground, because she considered it a slippery slope towards communism.
And if communism is horrible, it can be a good idea to look for the opposite. Especially because although communism was tried very often and always failed, capitalism was never tried in the last 100 years. Capitalism ended in the US about 1905-1920. And beforehand the US was an OK place to live, as millions of people immigrated, which they would not have done, if it had been as bad as communism.

Those of us in the real world who work jobs and make things should consider her for what she was: a spoiled and ungrateful celebrity who was given what she had and deluded herself into believing she made it with her own hands.

Being a spoiled and ungrateful celebrity doesn’t makes one’s ideas untrue.

Catholics should especially know better since the woman prized self interest as the greatest of virtues and despised altruism as the vice that would destroy civilization (conveniently ignoring the fact that it was the altruism of her extended family that enabled her to make her Hollywood connections…)

That is one of her errors, she actually saw personal altruism quite positive, at least her fictional characters show a lot of it. She doesn’t call it altruism and tries to explain it away with egoistic motives (and there she fails). What she understands as altruism is the one enforced by social norms or simply the law. And being sceptical of forced altruism is certainly a good idea.

You know “atlas shrugged”?
I’m quite certain, you think the main “good” chars are actually completely immoral. And yet i claim one could not name a single immoral act commited by them outside those regarding sexuality.(There rand’s ideas are wrong.)

 

[manualman]

You know “atlas shrugged”?
I’m quite certain, you think the main “good” chars are actually completely immoral. And yet i claim one could not name a single immoral act commited by them outside those regarding sexuality.(There rand’s ideas are wrong.)

Ya think? A late middle aged woman who seduces a starry eyed 20ish guy might indicate a screw loose somewhere?

I find one of the themes in the Fountainhead to be indicative of her glorification of the sin of pride. As a designer myself I found the architect hero’s arrogance laughable. He refuses to consider the actual needs of his clients and sees the projects for which he is hired to be solely about himself and his supposed magnificent skills.

Sorry, I’ve MET too many architects like that. If that’s your idea of a hero, I suggest you put Rand down and read the bible some more.

 

[JimG]

i take the point there is always something that can be done to improve and streamline government processes and expenditure.

Still kinda of confused why the US has such a “big government” and such a huge debt – what is it paying for – its certainly not services.

I think the government is spending between $4 billion and $5 billion every day more than it takes in. As to what it spends it for, I wish I could break it down. Part of it, of course, is to pay interest on the debt. And if interest rates rise, as they surely will, the cost of debt service will go up exponentially. Not only that, but programs such as social security and Medicare have enormous unfunded future liabilities. It will end either in monetary collapse or hyperinflation.

 

[Monte_RCMS]

I think the government is spending between $4 billion and $5 billion every day more than it takes in. As to what it spends it for, I wish I could break it down. Part of it, of course, is to pay interest on the debt. And if interest rates rise, as they surely will, the cost of debt service will go up exponentially. Not only that, but programs such as social security and Medicare have enormous unfunded future liabilities. It will end either in monetary collapse or hyperinflation.

Yes … we’re in a budget crisis. And … yes we need to cut government spending. However, during the Kennedy Administration this nation spent 50% of the federal budget on defense. It’s less than 20% today. Then we spent 9.5% of our GDP on Defense; today it’s 3.4% and getting lower.

 

[JimG]

Yes … we’re in a budget crisis. And … yes we need to cut government spending. However, during the Kennedy Administration this nation spent 50% of the federal budget on defense. It’s less than 20% today. Then we spent 9.5% of our GDP on Defense; today it’s 3.4% and getting lower.

Yes, the percent spent on defense has gone down. I make no arguments about spending priorities; I’m simply questioning the sustainability of the rate of increase in the debt.

I found this chart which shows the total national debt from 1791 to present:
cedarcomm.com/~stevelm1/All_US_Debt.png

(Note the 2nd line from the top represents $10 Trillion, the top line is $100 Trillion. We are currently at about $15.2 Trillion.)

 

[Abu]

Not only is “capitalism”, which is free enterprise, definitely not a “device” for it is a set of principles developed by Catholic late Scholastics, but these principles cannot be applied to any great effect for “economic progress” anywhere when, as we have seen governments and their central banks practice finagling interventions which create booms and busts, overdo welfare and produce the enormous deficits seen on both sides of the Atlantic

 

[Monte_RCMS]

Found this interesting essay … to not destroy the one Constitutional element that has brought us economic progress and allowed our freedom to flourish:

campverdebugleonline.com/main.asp?SectionID=36&SubSectionID=73&ArticleID=33269

excerpt:

Defense Cuts: Don’t Gut the One Thing that Makes all Else in this Country Possible. At the end of World War II, as our country rushed to disarm - the Air Force having assured the American people that, with the advent of nuclear weapons, ground forces were practically obsolete except as occupation forces - talk was renewed that the Marine Corps should be disbanded.

Many politicians and other-service brass didn’t like the idea of sharing the defense budget with “specialty” units. Marine leadership, used to “step child” status until the chips were down, hunkered down to weather the storm as the Corps was cut to a single, spread-out, division. Luckily, they had sense enough to preserve large quantities of weapons in storage depots (instead of disposing of them as did the Army) for a rainy day.

In 1950, untrained Marine reservists who had joined but not yet been to boot camp, were learning to fire basic weapons on the fantails of troop ships rushing them to Korea. They were to fill out budget-depleted units fighting for survival on the South tip of the peninsula. On-the-job training cost many lives before the tide turned.

In 1958, we were eating WWII era C rations discarded by the Army in favor of the new field rations. Our mess halls were receiving beef rejected by the other services. The Corps was the only service returning unspent funding to the treasury because it was “expendable” in budget fights. Today? “Déjà vu’ all over again.” Only this time all the services face the knife. Will they be capable to meet the challenge in case of another “Korea?”

In order to protect entitlement spending, the president wants to cut the military first - a familiar story throughout our history. He believes that he can protect the country with our naval and air forces, special operations units (Seals, Green Berets, etc.), drones and cyber technology, and still be capable of waging war in two separate regions of the world. Can he?

In the 1990s, the Clinton administration decimated the CIA, all but destroying its human-intelligence (HUMINT) capability in favor of spy satellites. It is arguable that on-the-ground intelligence may have prevented the 9/11/01 terrorist attack. [Read more: Barber/TheBugle/15January2012]

 

[Joe_Hill]

It is arguable that on-the-ground intelligence may have prevented the 9/11/01 terrorist attack. [Read more: Barber/TheBugle/15January2012]

But in the inquiry Condoleza Rice read a report warning of the 9-11 attacks given to her months before the attack by intelligence.

youtube.com/watch?v=DIpEwGmSsmM

there she is reading the title of the ntelligence report: “Bin Laden Determined To Attack”

 

[manualman]

Yes … we’re in a budget crisis. And … yes we need to cut government spending. However, during the Kennedy Administration this nation spent 50% of the federal budget on defense. It’s less than 20% today. Then we spent 9.5% of our GDP on Defense; today it’s 3.4% and getting lower.

Not exactly apples to apples. In Kennedy’s day, GNP (IIRC) was a measure of industrial output. When the tweaked the definition and renamed it GDP they lumped in all the useless services and products like Big Macs and manicures. I suspect that if you really did the analysis today on defense spending as a ratio of productive indutrial output our expenditures today would DWARF that of any other era. Our industrial base is a shadow of its former self and yet value added economic activities are the only REAL drivers of economic growth. Services that consist of passing the same dollar back and forth at an accelerating rate are NOT real economic growth. Taking a cheap raw resource and turning it into a valuable product is where wealth is actually created, and the USA does precious little of that anymore.

In short, I totally disagree with you. Our military budget is as bloated and top heavy as the rest of our federal spending, if not more.