Does free market economics work for everyone?

truth
Centroles, good thread. At the individual level it is obvious that inequalities in intelligence (but not cultural maturity and sophistication), financial inheritance, educational opportunties, and personality traits engender great differences in the life chances of people in capitalist systems. It's shame that the only differences that many of the privileged advance to explain economic differences between individuals are put in moralistic terms, e.g., laziness or "culture of poverty" in which poverty is blamed on the poor. It must be acknowledged that in any competitive system there must be failures. Indeed, competitive systems, by definition produce failures as inevitably as they produced successes. The concern should be to create "security nets" for the "failures." And since the "failures" are going to be most numerous, there is a kind of undemocratic process by which property laws are created and enforced to the advantage of people best constituted or situated to enjoy success.
Regarding the international scene, it is generally agreed among social scientists now that modernization has failed, that underdeveloped nations are not merely poor because they have not "evolved" to second or first world" modern status. It is generally suggested that underdevelopment is something that is actively maintained by the actions of first world nations. See the book The Development of Underdevelopment. It's been so long since I've concerned myself with such depressing matters that I've forgotten the author.
BTW, communism is not a alternative since it cannot compete militarally with the productive capacity of capitalism. What is possible, however, is a mixed economy and rules prohibiting the rapacious expressions of capitalism. Capitalism is like fire, wonderful but only when controlled.

Bravo on that post, jl.

The phrasing of the original comments here leaves a bit wide open here. I could (in theory at least) start my own nation on an entirely capitalist system internally and create a barrier between the interior economy and the the multi-national corporations. Whether the system internally is Capitalist or Communist the nation still has to deal with the exact same outside influences...

Third world nations have generally remained third world nations because of corruption within (or of) their own systems.

Bookmark...sorry - got to swim!

MNCs do not utilize capitalism or the free market, only consumerism, which is really a form of communism in another guise. I've heard people criticise capitalism saying that it doesn't work for "under-developed" countries because they are not investing their money building up more MNCs like the US has. That argument simply stems from ignorance.

Re: Does free market economics work for everyone?

No it doesn't. Don't take my word for it, ask the North Koreans, the Zimbabweans, and the Cambodians.

Free market economies don't work for every individual. No economic system does. But we have pretty good evidence that they work better than their alternatives for every country, and nearly no evidence that they don't.

Capitalism works for the individual, communism doesn't. It's in the definition. The fact that MNCs don't work for the individual (along with the US economic system at large) should say something.

truth
Fishin' I agree about the depressing corruption of governments in third world (and even second world--industrializing--nations like Mexico). But it must be realized that to a large extent we have taken advantage of this corruption to control prices of goods and services (not to mention Cold War loyalties in the past) from those countries. We have propped up unpopular and corrupt governments in return for "stability" and "cooperation." Second world leaders have served as middle men between the first world and the third world--or so I am told.

First of all, this isn't true. Democracy has many obvious flaws. The only thing going for it is that we don't know anything better. There are certainly losers in democracy (Native Americans and Judge Moore of Alabama are a couple of examples).

I feel the same way about the free market. There are without doubt losers, but it may be the best we know about for now. JL's view of controlled capitalism is fine, but no matter how you do it, it is a flawed system with folks on the losing end.

Maybe we can do better.

Don't mix up the ideology with the practitioners.

Re: truth


Sure we have. Of course. As much as we'd like to think otherwise there is corruption all the way around. Some are corrupted, some are the corrupters (is that even a word?? lol )

This is where, IMO, the arguments for Communism vs. Capitalism fail. Those favoring Communism theorize that by removing money and property you equalize power distribution amongst the masses. I see that as a major fallacy. People will seek power in any way they can. I don't need either if I can control others to do my bidding for me. Put children that have neither in a classroom and one will emerge as the most popular. Just by virtue of their popularity they have the ability to exert power over others.

IMO, it's not money or property that needs to be equalized. It's that ability to exert that power that leads to corruption and that's what needs to be equalized. Since that exertion of power is a basic component of all sentient beings I doubt any political system we could devise is going to control it.

truth
I agree wholeheartedly, Fishin'. There is no inherent need to equalize wealth, only its expression in power. I have no objection to families owning five houses, ten cars, access to boutique medicine, international life style, etc.. But I do not want them to be able to buy politicians or dominate the minds of our more mindless citizens through the owndership of news media. Let them enjoy their wealth; envy is beneath us. But control their access to power; that's the only way to make capitalism viable.

Re: truth


But that, in itself, violates the very principle. The only way to control someones expression of power is to exert a great power to counter theirs. The weak become the strong and the strong become the weak. You simply move chess pieces on a board. The corruption is still there. Nothing is resolved.

The FF's stated that all men are created equal. That's not a biological statement, it's a political statement. To the extent that the object of a democratic republic is to put everyone at the same starting line, the statement is valid. What you accomplish once the starting gun goes off is in the realm of speculation. Strictly speaking, democracy only means the rule of the people--we attach to much moralistic baggage to the term. If one starts with the original assumption of political equality, and works toward the goal of the most of the constitution, which is to limit either majoritarian or minoritarian tyranny, then we'll likely enjoy the best a social contract can offer--a chance to make something of oneself based upon one's effort and abilities. Capitalism and Communism are descriptions of economic systems, not political systems. Defenders of communism trot out an apologia similar to the devoutly religious--the perfect communist state has never existed. Well, neither has the perfect capitalistic state--for which we all should be grateful. There never has been and never will be a purely free market capitalist system, and this is perfectly justifiable in a social contract which seeks to prevent its members from being handicapped by the vagaries of personal greed and ambition. We don't allow the unregulated sale of putative food stuffs, and that is simply one of the more obvious examples of how the social contract works to protect the majority from the greed and venality of individuals.

truth
Good statement, Setanta. But you did discuss democracy as if it were a competitive economic system, i.e., equal opportunity. Later you noted that capitalism and communism are economic systems. Both can be democratic, in principle, at least.
Fishin' the "great power" that should control capitalist excesses is the people, through their elected representatives. If these representatives do not do their job, or if they are bought off, or if they exert unwarranted power, they can be elected out of office. So I do not see that the power that regulates power necessarily becomes as bad as what it regulates.

So, taking a more realistic approach. Should we really be trying so hard to make impoverished countries in Africa etc. into free market economies. Or would some other economic system (one that has tariffs and what not on goods not manufactured there) suit their needs better?

I agree, Centroles. Our kind of system can only work in a situation where there exist enough resources and a cultural work ethic consisting of competitive and materialistic values. And now with the advent of multinational corporations, I cannot imagine most counties getting off the entrepreneurial ground. They'll be very lucky if they are not dominated and exploited by first world corporations. On the other hand, if a country is poor enough, they may prefer to be exploited. One Malaysian peasant once said ironically, when he was replaced by a machine, "Worse than being exploited is not being exploited."
About free market economies. What is a (completely) free market economy if not a system of rules that permit virtually any actions in the pursuit of money? There must always be SOME regulations, some limits.

So very true JL.

As long as there are people out there that value money more then the value the sanctity of human life, we'll need regulations. I think no system is ideal, simply because of human nature. Hobbes may not be too far wrong as far as I'm concerned...

Naj

Naj