new_trader
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Utterly excellent posts ducati998 
mg
You don't actually state what this competitive advantage actually is, but I am guessing that you are referring to the competitiveness of exports. Through a devaluation of the money supply, which by lowering the real price paid, makes relative to other manufacturers, the goods/services of the devalued money 'cheaper', thus increasing demand. This is of course the current situation that we find ourselves in today.
The immediate problem that should stand out is this: production under the division of labour tends, in large measure to utilise stages of production, starting from the classic triad: land, labour, capital. Production then progresses through the various productive stages, culminating in the provision of consumer goods/services.
Each stage purchases and sells the productive elements, recording these transactions in money terms through accounting methodology, which is economic calculation, and records either profits or losses, on the conclusion of their various transactions.
The variable that is often forgotten is the variable of 'time' and the difference in value of present value against future value. Present value is always more valuable than future value, thus future value is always discounted at the natural rate of interest. Here we encounter the first problem: in a free exchange market for money, the natural rate of interest is pretty close to the 'market rate of interest'. In a controlled or manipulated market, the two rates may diverge significantly.
The net result of devaluing money, is that you export capital over time. You essentially subsidise the foreign purchaser of your export goods. The reason is due to the variable of time, and the flow of money, at prices paid.
The easiest way is to contrast it against a gold coin money, where, money has been used to purchase imports, thus creating a net outflow of money abroad. Then the following consequences hold.
*Purchasing power of money rises, reflecting its scarcity
*Prices of goods fall, due to reduced volume of money, again increasing PP
*Market rates of interest rise, required to provide increased supply of money.
*Time preferences of consumers adjust, saving preferred to consumption
*Imports become expensive, as there is physically less circulating money
*Exports become cheap, as the falling prices reflect the increased PP of money
*Thus, imports fall, exports rise, returning equilibrium, as money flows inward.
*Prices create the adjustment through fluctuation, which is their function.
The purpose of fiat money expansion via inflation, is to prevent an adjustment in prices. This is of course one of the dual mandates of the Federal Reserve and other Central Banks.
The only way to lower real prices, without actually lowering 'nominal prices', is to create an inflation. This inflation however confounds accurate economic calculation, which leads, over time to a net capital consumption. This is a huge economic cost, one which gold money prevents.
As just demonstrated, this is a fallacy. Gold money prevents capital consumption. In point of fact, it drives capital creation. Fiat money is an abomination. It's sole function, is to expand the ability of the State to expropriate property from legal owners.
You have the argument exactly backwards.
jog on
duc
You don't actually state what this competitive advantage actually is, but I am guessing that you are referring to the competitiveness of exports. Through a devaluation of the money supply, which by lowering the real price paid, makes relative to other manufacturers, the goods/services of the devalued money 'cheaper', thus increasing demand. This is of course the current situation that we find ourselves in today.
The immediate problem that should stand out is this: production under the division of labour tends, in large measure to utilise stages of production, starting from the classic triad: land, labour, capital. Production then progresses through the various productive stages, culminating in the provision of consumer goods/services.
Each stage purchases and sells the productive elements, recording these transactions in money terms through accounting methodology, which is economic calculation, and records either profits or losses, on the conclusion of their various transactions.
The variable that is often forgotten is the variable of 'time' and the difference in value of present value against future value. Present value is always more valuable than future value, thus future value is always discounted at the natural rate of interest. Here we encounter the first problem: in a free exchange market for money, the natural rate of interest is pretty close to the 'market rate of interest'. In a controlled or manipulated market, the two rates may diverge significantly.
The net result of devaluing money, is that you export capital over time. You essentially subsidise the foreign purchaser of your export goods. The reason is due to the variable of time, and the flow of money, at prices paid.
The easiest way is to contrast it against a gold coin money, where, money has been used to purchase imports, thus creating a net outflow of money abroad. Then the following consequences hold.
*Purchasing power of money rises, reflecting its scarcity
*Prices of goods fall, due to reduced volume of money, again increasing PP
*Market rates of interest rise, required to provide increased supply of money.
*Time preferences of consumers adjust, saving preferred to consumption
*Imports become expensive, as there is physically less circulating money
*Exports become cheap, as the falling prices reflect the increased PP of money
*Thus, imports fall, exports rise, returning equilibrium, as money flows inward.
*Prices create the adjustment through fluctuation, which is their function.
The purpose of fiat money expansion via inflation, is to prevent an adjustment in prices. This is of course one of the dual mandates of the Federal Reserve and other Central Banks.
The only way to lower real prices, without actually lowering 'nominal prices', is to create an inflation. This inflation however confounds accurate economic calculation, which leads, over time to a net capital consumption. This is a huge economic cost, one which gold money prevents.
As just demonstrated, this is a fallacy. Gold money prevents capital consumption. In point of fact, it drives capital creation. Fiat money is an abomination. It's sole function, is to expand the ability of the State to expropriate property from legal owners.
You have the argument exactly backwards.
jog on
duc
Correct.
Further, the Central Bank, is a construct of government, through which they exercise monetary policy.
jog on
duc
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mg
So let's continue.
You don't actually define your term here, but I am guessing [always dangerous] that you are referring to this:
The Industrial Policy plan of a country, sometimes shortened IP, is its official strategic effort to encourage the development and growth of the manufacturing sector of the economy.[1][2] A country's infrastructure (transportation, telecommunications and energy industry) is a major part of the manufacturing sector that usually has a key role in the IP. The IP purports to "stimulate specific activities and promote structural change".[3]
Industrial policies are sector specific, unlike broader macroeconomic policies. They are sometimes labeled as interventionist as opposed to laissez-faire economics. Examples of horizontal, economywide policies are tightening credit or taxing capital gain, while examples of vertical, sector-specific policies comprise protecting textiles from foreign imports or subsidizing export industries. Free market advocates consider industrial policies as interventionist measures typical of mixed economy countries.
Essentially then your argument is that a central agency, in this case the State, represented by it's government, allocates investment to specific areas and projects: the very essence of central planning and Socialism, whereby you have the abolition of private ownership of the means of production, land, labour & capital, and the creation of a system of 'planned economy' in which the entrepreneur working for profit is replaced by a central planning body.
The problem with Socialism in a practical sense, ignoring any ideological objections is that when you remove ownership of the means of production from individuals, and arrogate to the State the ownership, the State cannot calculate economically. When the State owns all, there are no longer any money prices, and without the categories of profit and loss, no economic calculation can take place.
The State can only calculate if it has access to free market prices in free unencumbered markets. The Soviet Union had access to free market prices based on the West's [relatively] free markets to function.
Socialism now, rather than nationalising industries, viz. removing the ownership from private individuals, can implement the same level of control through the ownership of the money monopoly. When you can create unlimited money, can create legislation that allows/forbids certain actions, you essentially control the economy, which is your argument.
The exact same problems still exists: the problem of economic calculation. Through the unrestricted creation of new money and credit, the price system is distorted, creating an inability in extreme cases, and increasing inaccuracy in lesser cases, of the free market, via prices calculated in money terms, to calculate economically via profit and loss accounting.
What examples?
The gold standard, of course prevents the State from arrogating to itself ownership of the means of production, leaving them in private ownership, and entrepreneurs.
Modern societies made the choice?
Nonsense. The transition from gold money to fiat money was made at the point of a gun.
jog on
duc
So let's continue.
You don't actually define your term here, but I am guessing [always dangerous] that you are referring to this:
The Industrial Policy plan of a country, sometimes shortened IP, is its official strategic effort to encourage the development and growth of the manufacturing sector of the economy.[1][2] A country's infrastructure (transportation, telecommunications and energy industry) is a major part of the manufacturing sector that usually has a key role in the IP. The IP purports to "stimulate specific activities and promote structural change".[3]
Industrial policies are sector specific, unlike broader macroeconomic policies. They are sometimes labeled as interventionist as opposed to laissez-faire economics. Examples of horizontal, economywide policies are tightening credit or taxing capital gain, while examples of vertical, sector-specific policies comprise protecting textiles from foreign imports or subsidizing export industries. Free market advocates consider industrial policies as interventionist measures typical of mixed economy countries.
Essentially then your argument is that a central agency, in this case the State, represented by it's government, allocates investment to specific areas and projects: the very essence of central planning and Socialism, whereby you have the abolition of private ownership of the means of production, land, labour & capital, and the creation of a system of 'planned economy' in which the entrepreneur working for profit is replaced by a central planning body.
The problem with Socialism in a practical sense, ignoring any ideological objections is that when you remove ownership of the means of production from individuals, and arrogate to the State the ownership, the State cannot calculate economically. When the State owns all, there are no longer any money prices, and without the categories of profit and loss, no economic calculation can take place.
The State can only calculate if it has access to free market prices in free unencumbered markets. The Soviet Union had access to free market prices based on the West's [relatively] free markets to function.
Socialism now, rather than nationalising industries, viz. removing the ownership from private individuals, can implement the same level of control through the ownership of the money monopoly. When you can create unlimited money, can create legislation that allows/forbids certain actions, you essentially control the economy, which is your argument.
The exact same problems still exists: the problem of economic calculation. Through the unrestricted creation of new money and credit, the price system is distorted, creating an inability in extreme cases, and increasing inaccuracy in lesser cases, of the free market, via prices calculated in money terms, to calculate economically via profit and loss accounting.
What examples?
The gold standard, of course prevents the State from arrogating to itself ownership of the means of production, leaving them in private ownership, and entrepreneurs.
Modern societies made the choice?
Nonsense. The transition from gold money to fiat money was made at the point of a gun.
jog on
duc
VielGeld
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So is the solution simply to return to the gold standard?
I don't think so. One of the benefits of fiat money has been its unlimited supply as compared to precious metals, and its facility of transaction. That governments not understanding money is one thing, sure, but I think I'd take fiat over metals.
The best case would probably be to let the market decide. I believe I read somewhere that derivatives were becoming the new form of money which is an interesting concept. Whatever the case, I doubt either fiat or metals would be the ultimate form of money we'd settle on because they both have their own deficiencies.
I don't think so. One of the benefits of fiat money has been its unlimited supply as compared to precious metals, and its facility of transaction. That governments not understanding money is one thing, sure, but I think I'd take fiat over metals.
The best case would probably be to let the market decide. I believe I read somewhere that derivatives were becoming the new form of money which is an interesting concept. Whatever the case, I doubt either fiat or metals would be the ultimate form of money we'd settle on because they both have their own deficiencies.
vg
Yes, I believe that is the best solution by a country mile.
The volume of money, is irrelevant. The price system adjusts the demand and supply of money, against the demand and supply of commodities/goods/services.
Why?
Well the market did decide, and chose commodity money. Government didn't like that decision, and sought via numerous means, to achieve their end, viz. the monopoly over money supply.
Derivatives are not money, not even fiduciary media. To qualify as a 'money' the receipt must be redeemed at par value, at any time upon demand.
You seek perfection. Good luck with that.
jog on
duc
Yes, I believe that is the best solution by a country mile.
The volume of money, is irrelevant. The price system adjusts the demand and supply of money, against the demand and supply of commodities/goods/services.
Why?
Well the market did decide, and chose commodity money. Government didn't like that decision, and sought via numerous means, to achieve their end, viz. the monopoly over money supply.
Derivatives are not money, not even fiduciary media. To qualify as a 'money' the receipt must be redeemed at par value, at any time upon demand.
You seek perfection. Good luck with that.
jog on
duc
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VielGeld
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No, I can't see the gold standard as the solution. It has too many drawbacks.
You're basically eschewing economic progress for lower government control. I firmly believe the benefit of fiat (its flexibility and ease of use) is the major determinant in using it above something merely derived from the old way of exchanging metals as money. Let's face it, under that system the rich v. poor divide was even worse, and constrained economic opportunities to those who already had wealth. Fiat may be ugly, controlled, and imperfect, but I do think it does more good to the economy than the gold standard ever could.
Whatever the case, neither system is what we'll settle on in the future, and I would welcome an evolution in this area. But I certainly do not want a step backwards into the gold standard.
You're basically eschewing economic progress for lower government control. I firmly believe the benefit of fiat (its flexibility and ease of use) is the major determinant in using it above something merely derived from the old way of exchanging metals as money. Let's face it, under that system the rich v. poor divide was even worse, and constrained economic opportunities to those who already had wealth. Fiat may be ugly, controlled, and imperfect, but I do think it does more good to the economy than the gold standard ever could.
Whatever the case, neither system is what we'll settle on in the future, and I would welcome an evolution in this area. But I certainly do not want a step backwards into the gold standard.
vg
And they are?
Through this sentence you state that government is causative of economic progress. If that were true, then Socialism, taken to it's logical conclusion would provide the greatest economic progress of any system.
As this is categorically false, your premise is simply nonsense.
A pure Socialism, as already defined, viz. 100% ownership by the State of the factors of production, land, labour & capital, would, and must preclude any economic calculation, money per se would be redundant in any case. Without economic calculation, allocation of the factors of production would be arbitrary. An authority, comprised in any manner you chose, would have to coordinate all allocations.
The Soviet Union couldn't even manage it, and they still had access to the prices generated on the free market. Remove all prices generated by a free market and you simply cannot calculate economically, thus, the factors of production are impossible to coordinate.
The benefits that you list here, are contained in any 'money', that after all is the purpose of money. You list nothing that any money cannot perform.
The real purpose of fiat is to provide the State with the ability to expropriate the legal property of individual owners, to the State. That is precisely what a commodity money prevents. So unless you have some other merits of fiat money that you have not yet discussed, your argument is without merit.
You are confusing Economics with Ethics.
Such as?
Since you seem unable, or unwilling to elucidate your arguments in support of the alleged advantages of fiat, I find myself unconvinced by your conclusions.
jog on
duc
And they are?
Through this sentence you state that government is causative of economic progress. If that were true, then Socialism, taken to it's logical conclusion would provide the greatest economic progress of any system.
As this is categorically false, your premise is simply nonsense.
A pure Socialism, as already defined, viz. 100% ownership by the State of the factors of production, land, labour & capital, would, and must preclude any economic calculation, money per se would be redundant in any case. Without economic calculation, allocation of the factors of production would be arbitrary. An authority, comprised in any manner you chose, would have to coordinate all allocations.
The Soviet Union couldn't even manage it, and they still had access to the prices generated on the free market. Remove all prices generated by a free market and you simply cannot calculate economically, thus, the factors of production are impossible to coordinate.
The benefits that you list here, are contained in any 'money', that after all is the purpose of money. You list nothing that any money cannot perform.
The real purpose of fiat is to provide the State with the ability to expropriate the legal property of individual owners, to the State. That is precisely what a commodity money prevents. So unless you have some other merits of fiat money that you have not yet discussed, your argument is without merit.
You are confusing Economics with Ethics.
Such as?
Since you seem unable, or unwilling to elucidate your arguments in support of the alleged advantages of fiat, I find myself unconvinced by your conclusions.
jog on
duc
new_trader
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You are confusing money with productivity. It is productivity and capital accumulation that raises the standard of living for everyone, not money and especially not Government. Break your argument down to the island economy level with only 5 people and you will see what I mean. What works on the small scale will work on the large.
barjon
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It seems to me that the Gold Standard is but one way of imposing a discipline on government, assuming they don't cheat of course. The key word is "discipline" and if that can be effected by other means, so what.
Fiat may give the State an ability to rob you, as you suggest, but again - so what. The State also has the ability to murder you if it has a mind to do so.
Government has a duty to facilitate, improve and maintain the well-being of its people - standard of living - and whether by accident or design it has done that. If you could say that peoples' tangible standard of living has deteriorated since coming off the Gold Standard you might have a point that we've all been robbed. But, in the face of significant improvement in peoples' tangible standard of living, you can't.
jon
new_trader
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In order for the Government to provide something it must take it from someone else because Government has nothing on its own. Government doesn't create wealth, it can only take it. To raise the standard of one group of people it must lower the standard of living of another group.
Societies overall standard of living is raised as a consequence of individuals seeking to satisfy their own individual needs and wants. I don't subscribe to the notion that we need Government to protect us all from greedy Capitalists. It doesn't stand up to scrutiny.
One last point when talking about money and discipline. Gold protects the purchasing power of individuals so it's not only about restraining Government. You are right, a Government can rob an individual of their wealth, life and/or liberty but the gold standard is about making the whole society richer. No Government can remain in power for very long if robs the whole society of their wealth, life and/or liberty.
barjon
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No, but it facilitates its creation. It only robs peter to pay paul if it hasn't facilitated an increase in wealth overall - which it has.
new_trader
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Hardly. Put that premise to the Robinson Crusoe test. If you were stranded on an island with 4 other people do you think creating a Government would be the number one priority? If you want to survive and raise your standard of living, each person within the 'society' would have to be productive. Whether its foraging for food, fishing or building shelter, none of that would happen without the productivity of the members in that society. You couldn't have one person calling themselves 'Government' and claiming that they will tax others in order to provide shelter.Who would build them?
Martinghoul
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Let me respond to what I see as the main issues. I am not going to respond to every single thing you have said, because some of them are independent issues or are discussions that would be just splitting hairs. If I end up omitting anything of importance, pls let me know and I would be happy to address specifically.
Well, it's easy to just postulate that it was "of course capitalism". However, how can you actually prove this? Moreover, there's a big question of how exactly you define capitalism...
Well, I am going to have to disagree with you on this. Can you support this assertion with any evidence whatsoever? I can cite you a whole lot of research that suggests that a government IS, in fact, necessary where provision of public goods is concerned. This is an issue that has been discussed and covered by a lot of work and there's all sorts of evidence that suggests (not surprisingly) that, without a functioning government, social outcomes are significantly worse. Moreover, what if we take an extreme situation, i.e. your country being attacked by a foreign power (say, with a strong central government)? Do you still believe that a government of your own isn't necessary?
Well, tbh, I was hoping that you would have a go at trying to come up with these independently, but that's OK. The costs I was referring to have to do with the loss of competitive advantage that arises when you don't have a domestic agency that controls your money supply. Moreover, that loss, in extreme cases, can lead to all sorts of severe short-term and long-term repercussions. My point here is simple and is just based on the obvious observation that you can't get something for nothing.
Well, this would have been true, if it weren't for some unfortunate deficiencies of capitalism. Yes, taxation creates distortions etc and that is also a well-known and well-studied subject in economics. However, taxation deadweight loss shouldn't be viewed on its own, but rather combined with the deadweight loss that results from negative externalities/public good problems. Once you have done that, you have to conclude that some level of taxation is optimal.
jon
How else would you propose exercising a discipline on government?
Well I suppose if you are indifferent to being robbed, then that I guess you also are indifferent to them murdering you or your family. And of course it is only a short step from one t'other.
Really?
First off, you need to define whether your 'government' is privately owned, or publically owned. An example of privately owned today would be the Saudi royal family 'government' there are many examples of publically owned governments.
The immediate observation is that the same differences in incentives exist in government as they do in any other public/private debate with regard to the 'tragedy of the commons'.
Of course then you can look at Socialism as a form or ideology of government, which in it's final iteration is Fascism on the right and Soviet style Communism on the left, both are Totalitarian. Would you argue that their 'priority' corresponds to your definition?
Which leaves us with Western democracy. Our perceived government form was created during the Enlightenment period: governments were small, had limited power, no control over the money supply etc.
The current governments of today are no longer constrained by the liberal ideology that pertained, already we have seen reference to the US Constitution, and the flaunting of it's Republicanism.
If you care to develop your argument, I will certainly go into far greater detail as to why I do not believe that your statement holds any water at all.
Incorrect.
As I have already elucidated to 'vg': if 'government' were truly the catalyst for social improvement, then we should logically move to the final position, viz. government owns 100% all the factors of production, land, labour & capital. That logically is the correct position if what you state is true, pure Socialism.
Socialism, as already stated, cannot economically calculate. Thus, your statement is false: it was not 'government' that was responsible for social improvement measured in material well-being. It was capitalism.
Simply capitalism is responsible. However, with ever growing government, that rate of progress is slowing as government constantly erodes the built up store of capital that has been accumulated in the past.
jog on
duc
How else would you propose exercising a discipline on government?
Well I suppose if you are indifferent to being robbed, then that I guess you also are indifferent to them murdering you or your family. And of course it is only a short step from one t'other.
Really?
First off, you need to define whether your 'government' is privately owned, or publically owned. An example of privately owned today would be the Saudi royal family 'government' there are many examples of publically owned governments.
The immediate observation is that the same differences in incentives exist in government as they do in any other public/private debate with regard to the 'tragedy of the commons'.
Of course then you can look at Socialism as a form or ideology of government, which in it's final iteration is Fascism on the right and Soviet style Communism on the left, both are Totalitarian. Would you argue that their 'priority' corresponds to your definition?
Which leaves us with Western democracy. Our perceived government form was created during the Enlightenment period: governments were small, had limited power, no control over the money supply etc.
The current governments of today are no longer constrained by the liberal ideology that pertained, already we have seen reference to the US Constitution, and the flaunting of it's Republicanism.
If you care to develop your argument, I will certainly go into far greater detail as to why I do not believe that your statement holds any water at all.
Incorrect.
As I have already elucidated to 'vg': if 'government' were truly the catalyst for social improvement, then we should logically move to the final position, viz. government owns 100% all the factors of production, land, labour & capital. That logically is the correct position if what you state is true, pure Socialism.
Socialism, as already stated, cannot economically calculate. Thus, your statement is false: it was not 'government' that was responsible for social improvement measured in material well-being. It was capitalism.
Simply capitalism is responsible. However, with ever growing government, that rate of progress is slowing as government constantly erodes the built up store of capital that has been accumulated in the past.
jog on
duc
new_trader
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Yet you are an advocate of fiat money. Now that is what I call contradiction!
new_trader
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BTW. I am not saying we don’t need any Government, I am saying we need limited Government to provide things like the protection of individual private property, to enforce laws and contracts and National Defence. Government is an expense, pure and simple and we need to keep it as cheap as possible.
mg
Capitalism is defined as: the private, legal [under tenets of natural law] ownership of the factors of production, utilising the division of labour, producing under comparative advantage, with free markets available to all, using a free market money to facilitate indirect exchange.
Let me address this commonly asserted fallacy, or group of fallacies:
Perfect Knowledge:
For example the purchase of a second hand car. Where the seller of the car has far more historical information than the potential purchaser. This is of course the purpose of prices and discounting the future to present values. If I suffer from an ‘asymmetry of information’ the present value I assign will be far lower, not knowing the future. So this objection is incorrect.
Information asymmetries do relate to insurance. The rather lacking in detail of the statement rather distorts the accuracy of the statement. Information asymmetries can be important, or, they can be far less so. One form would preclude insurance, the other would not.
Class probability means, that we know nothing about an individual outcome, but we know everything about a whole class of events, and are certain about the future. In a lottery, for example, we know how many tickets are in total and how many will be drawn. But that does not say at all, if a particular ticket or tickets will win, and buying more tickets does not increase the chance of winning. An instance of class probability is called risk. It is possible to insure against risk, because the behavior of a class of events (or a reasonable subset of it) is well known.
Case probability means, that we know some of the factors which determine the outcome of a particular event; but there are other determining factors which we don’t know. The cases are individual, unique, and nonrepeatable, their result is uncertain. If in roulette a ball falls ten times on red in succession, the probability, that in the next turn will be the result black, is not greater than it was before. Football games cannot be predicted on the results of last games, nor can be presidential elections.
Externalities:
Negative externalities, or the ‘tragedy of the commons’ is a failure not of ‘capitalism’, rather it is a failure of ‘property rights’. Property rights can only be enforced through the ‘law’ which has been monopolised by the ‘State’. The tragedy of the commons is therefore a failure of ‘government’. The apologists for socialism always promulgate this lie.
Free Entry:
Free markets promote free entry and competition. This limits the size of dominant firms and their market power. Without government, areas would return to much smaller areas that are governed through the free market with regards to law and law enforcement, city states. City states would, even if they required a military, would have a much smaller and less powerful military, which would limit military actions. Even should military actions take place, the involvement and duration must be lesser.
Market Failures:
Most of which are already covered in a your previous objections. Really all that is left is ‘monopoly’ possibly principal/agent problem. So before addressing ‘monopoly’ let me quickly dispense with the principal/agent problem: This is best dealt with via clear and enforceable property rights. This is not a free market failure, this is a failure in legal titles. As already stated, the way forward is through enforceable property rights.
Public goods deal with ‘positive externalities’ that would not be provided due to the ‘free rider’ problem. National defence is always put forward as the ultimate ‘free rider’ problem. Government as a monopoly can only ‘grow’ larger and more powerful through acquiring more territory and population to exploit through theft of property. Capitalism promotes competition, the very anti-thesis of monopoly. Government is the prime institution that promotes aggression and war, which is clearly highlighted throughout history. The larger ‘governments’ have become, the larger and more destructive the wars or potential wars have become.
Thus government promote this idea that they protect us. Nothing really could be further from the truth. It is not us that they seek to protect, rather it is their area and population monopoly that they seek to protect from other governments that are seeking to eliminate ‘market competition’ in monopoly coercion.
Free markets promote free entry and competition. This limits the size of dominant firms and their market power. Without government, areas would return to much smaller areas that are governed through the free market with regards to law and law enforcement, city states. City states would, even if they required a military, would have a much smaller and less powerful military, which would limit military actions. Even should military actions take place, the involvement and duration must be lesser.
Thus the whole myth of government providing protection is a giant propaganda exercise, reinforced by technocrats and apologists who draw their living from the government depredations upon the producers in society.
I'll return to your other points in a separate post. I need a fresh coffee.
jog on
duc
Capitalism is defined as: the private, legal [under tenets of natural law] ownership of the factors of production, utilising the division of labour, producing under comparative advantage, with free markets available to all, using a free market money to facilitate indirect exchange.
Let me address this commonly asserted fallacy, or group of fallacies:
Perfect Knowledge:
For example the purchase of a second hand car. Where the seller of the car has far more historical information than the potential purchaser. This is of course the purpose of prices and discounting the future to present values. If I suffer from an ‘asymmetry of information’ the present value I assign will be far lower, not knowing the future. So this objection is incorrect.
Information asymmetries do relate to insurance. The rather lacking in detail of the statement rather distorts the accuracy of the statement. Information asymmetries can be important, or, they can be far less so. One form would preclude insurance, the other would not.
Class probability means, that we know nothing about an individual outcome, but we know everything about a whole class of events, and are certain about the future. In a lottery, for example, we know how many tickets are in total and how many will be drawn. But that does not say at all, if a particular ticket or tickets will win, and buying more tickets does not increase the chance of winning. An instance of class probability is called risk. It is possible to insure against risk, because the behavior of a class of events (or a reasonable subset of it) is well known.
Case probability means, that we know some of the factors which determine the outcome of a particular event; but there are other determining factors which we don’t know. The cases are individual, unique, and nonrepeatable, their result is uncertain. If in roulette a ball falls ten times on red in succession, the probability, that in the next turn will be the result black, is not greater than it was before. Football games cannot be predicted on the results of last games, nor can be presidential elections.
Externalities:
Negative externalities, or the ‘tragedy of the commons’ is a failure not of ‘capitalism’, rather it is a failure of ‘property rights’. Property rights can only be enforced through the ‘law’ which has been monopolised by the ‘State’. The tragedy of the commons is therefore a failure of ‘government’. The apologists for socialism always promulgate this lie.
Free Entry:
Free markets promote free entry and competition. This limits the size of dominant firms and their market power. Without government, areas would return to much smaller areas that are governed through the free market with regards to law and law enforcement, city states. City states would, even if they required a military, would have a much smaller and less powerful military, which would limit military actions. Even should military actions take place, the involvement and duration must be lesser.
Market Failures:
Most of which are already covered in a your previous objections. Really all that is left is ‘monopoly’ possibly principal/agent problem. So before addressing ‘monopoly’ let me quickly dispense with the principal/agent problem: This is best dealt with via clear and enforceable property rights. This is not a free market failure, this is a failure in legal titles. As already stated, the way forward is through enforceable property rights.
Public goods deal with ‘positive externalities’ that would not be provided due to the ‘free rider’ problem. National defence is always put forward as the ultimate ‘free rider’ problem. Government as a monopoly can only ‘grow’ larger and more powerful through acquiring more territory and population to exploit through theft of property. Capitalism promotes competition, the very anti-thesis of monopoly. Government is the prime institution that promotes aggression and war, which is clearly highlighted throughout history. The larger ‘governments’ have become, the larger and more destructive the wars or potential wars have become.
Thus government promote this idea that they protect us. Nothing really could be further from the truth. It is not us that they seek to protect, rather it is their area and population monopoly that they seek to protect from other governments that are seeking to eliminate ‘market competition’ in monopoly coercion.
Free markets promote free entry and competition. This limits the size of dominant firms and their market power. Without government, areas would return to much smaller areas that are governed through the free market with regards to law and law enforcement, city states. City states would, even if they required a military, would have a much smaller and less powerful military, which would limit military actions. Even should military actions take place, the involvement and duration must be lesser.
Thus the whole myth of government providing protection is a giant propaganda exercise, reinforced by technocrats and apologists who draw their living from the government depredations upon the producers in society.
I'll return to your other points in a separate post. I need a fresh coffee.
jog on
duc
