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Kudlow & Cramer on CNBC: This next guest is a real capitalist. At a time when the steel industry in the U.S. is on the ropes, he has his stock go up ~350% by selling steel scrap to China. ... Kudlow: ~"Do you think steel companies need government help, these tarrifs, to stay in business?" Steel magnate: "No, I don't." Kudlow: ~"That's a relief! Kudos to you sir. He deserves to be successful just for that." -CNBC, December 2, 2003
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The price of gold in SDRs has broken out above 276 to a new multi-year high. See the green line on the chart.
I don't think you've defined the problems correctly at all. First of all, the market process virtually everywhere in the world is well understood by the participants. It isn't a matter of educating people as to what a free market is, they already know what a marketplace is, they use it everyday. -ET
A free market is a theoretical geographical area in which people can trade anything they own for anything others own and are willing to trade --- and at what ever "price" they agree to without any coercion --- and no interference by ANY unwanted third parties in any way what-so-ever. No rules, regulations, orders, or controls. No taxes. No loom-stealers or vat-smashers. No protections for either "buyers" (those with "money" to trade) or sellers (those traders who want to trade FOR "money") unless they agree to such between (or among) themselves. Certainly no protection for the "vested interests of entrepreneurs, capitalists, land-owners, and workers" or any other non-participating, non-present (establishment) traders simply because they don't like the competiton!Perhaps this doesn't all ring true to you? Well, Mises explains it in a bit more scholarly manner:
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As I think you can see, we don't have any free markets in the united States, except perhaps in the case of private transactions that ignore all the rules, regulations, orders and controls - - - and if the people involved don't pay any "Taxes, Duties, Imposts and Excises" to unwanted third parties. In a major perversion of fact and practice, such unhampered free-market transactions are regularly labeled as occuring in a "black market" -- because, remember, the establishment "vested interests" (including business, labor and our seller half) don't like the effects free-market competition has on the prices they are able to charge. Free Trade: The Good, The Bad, and The Ugly: The Ugly
The consumers do not care about the investments made with regard to past market conditions and do not bother about the vested interests of entrepreneurs, capitalists, land-owners, and workers, who may be hurt by changes in the structure of prices. Such sentiments play no role in the formation of prices (It is precisely the fact that the market does not respect vested interests that makes the people concerned ask for government interference.) [emphasis added] -Ludwig von Mises, Human Action A Treatise on Economics, Third Revised Edition (Chicago, Illinois: Contemporary Books, Inc. 1966), pg. 337 [available also from http://www.mises.org/humanaction.asp]So we are not only up against the "vested interests" of capitalists and entrepreneurs, we are also up against land-owners and workers when we advocate free trade in free markets. It's for that reason I think we have a lot of work to do if we hope not to become more mercantilist, even fascist.
I don't think people are as woefully uneducated as you apparently believe. -ET
Secondly, your second premise [that people equate the word "capitalism" with mercantilist behavior -j.] is just plain wrong. You take a defined term, as you've done below, then change the definition to fit the outcome you want, and declare that "pop culture" doesn't get it. -ET
I don't think most people associate corrupt government / big business with capitalism. I would be very interested in your documentation of this claim, since your whole argument revolves around it. -ETGood! If you're correct, people aren't "woefully uneducated," most people don't "associate corrupt government / big business with capitalism" -- and "pop culture" does get it, that makes our job a lot easier.
Yes, j-man, you can certainly document, over and over, the problems with government interference in the marketplace. However, you, for some reason, want to then turn around and blame the disease on the marketplace. Sorry, your argument lacks any credibility. That is why we have definitions for terms. You correctly describe fascism for what it is. Unfortunately for your argument, it isn't capitalism, unless of course you change the definition of capitalism to that of fascism. -ETI don't blame the disease on anything, I just describe its etiology. Selfishness, particularly "clique selfishness" [3] is the base upon which this "disease" is built, and a firm altruistic base [4] it is, solidly rooted in human nature. Government is the "vector" that delivers it to our door, gaining much of it's power by promising to do just the opposite. My preference to fix things would to be to completely eliminate the vector from the marketplace -- and for that matter, elsewhere.
You're winning and you don't even know it. SLATT is right and I agree with him entirely; the world is not headed for the doom and gloom scenario so many seem to want to believe is just around the corner. Like I mentioned earlier, capitalism is breaking out all over. Everything you've criticized in your posts is the reaction of vested interests trying to hang on to the past. Take a look at the future; more of the world is abandoning controlled markets everyday. Because of technology, the average guy is becoming more adept at circumventing controls on both capital accumulation and trade. The real source of your anguish, as I see it j-man, is the bad money, not some argument over the definition of capitalism. None of the problems you've cited would be near as bad or even in existence, were money sound. The rising price of gold is a good omen, my friend. It signifies that markets are abandoning the fascist model. Actually, I believe this is occurring because the marketplace is much freer than you want to believe. Those that have benefited from the status quo will no doubt try to keep things in place, but like the Russian government learned, at some point, people just walk away. It's a market thing. -ETIt is fully possible that my perceptions of what I think people believe, built on observations of u.S. culture in the 50s & 60s, my formative years -- and fostered by exposure to Rand -- are out dated. If you could provide some documentation or your reasons for what appears to me as extreme optimism, I'd be much obliged, and I'd be quite happy to join the ranks of the optimistic.
No, j-man. The problem has been your claim that capitalism and mercantilism are one and the same and always have been. That is precisely what you stated in your previous posts. So are you now conceding that I have been right all along that capitalism and mercantilism are indeed quite different? -ETNo, ET. There are actually two problems. The main problem is how best to explain the market process effectively so we can keep the world from going fascist. The traditional way has clearly been a flop. [1] The second problem is closely related and it is, as you suggest, that I say capitalism and mercantilism, in practice, not in theory, are so closely related they are synonymous.
A. A relatively precise word used especially by Austrian economists to describe how folks save-up to buy equipment to make them more productive at what they do. This system requires no special rules to function -- if "private" property rights are a part of the wider culture.
B. A word used to distinguish how things are produced in societies which include strict respect for property rights as part of their culture (that is, "private ownership of the means of production") as contrasted to societies without property rights, particularly regarding the means of production.
C. A word used in pop culture to refer to the ways large economic organizations function in the real world.I have absolutely no problem with the process described as "capitalism" in definition A. It's a good and life- improving activity, which in the long run is good for nearly everyone and should be encouraged.
"The Japanese have now seen that US business is in partnership with the US government, and they had better sit up and take notice." -Lee Iococca after Jan. 1992 trip to Japan with George Bush and other US Auto CEOs
"[U]nder the licensing provisions," says Rep. John Dingell, chairman of the House Energy and Commerce Committee, "we give the broadcasters an absolute federally supported and sustained monopoly which denies anybody else the right to broadcast who does not have a license." -"The 'Fairness Doctrine': Keep It Buried!" by Jorge Amador, THE PRAGMATIST, Feb. 1994, pg. 10
"Essentially airline regulation was an organized attempt to keep out competition." -Alfred Kahn, chairman and chief architect of the Civil Aeronautics Board (CAB),
"The United States needs a new kind of capitalism as they already have in Germany, Canada, and Japan, where there is close cooperation between business and government." -John Chancellor commentary, CBS's Sunday TODAY, November 10, 1991
"Ross Perot wants to move into the twenty-first century and, like the European countries, have a partnership between business and government where government helps business compete." -Perot's designated surrogate on Good Morning America?, Friday October 30, 1992 [2]
The media officially dubs Japan "Japan Inc."
"Mr. Blair [now Britain's left-wing Labour Prime Minister] wants the new constitutional statement to acknowledge that Labour accepts the market economy but believes it should be run in partnership between government and industry, a central theme of his speech." -London Daily Telegraph, 5 Oct 94.
"Partnerships between business and labor need to be translated from local agreements into national policy." -Speech by Bill Clinton July 26, 1993 from CNN
It was reported today that the sale of a large number of jumbo jets to Saudi Arabia has become a contest between French and American aero-space companies. President Bill Clinton intervened in the negotiations on behalf of the American companies, McDonnell Douglas and Boeing. -CNN, 21 Aug. 1993
The Clinton administration announced a joint venture with auto makers to develop a more efficient gasoline engine. -CNN Sept. 29, 1993 ~14:32 EST
The Central Intelligence Agency is stepping up efforts to discover "who in foreign countries is bribing who else in order to get contracts that American companies are losing." according to James R. Woolsey, the CIA director. -International Herald Tribune, Hong Kong, Wed. Dec. 18, 1993, pg. 3
"With this nation's economic security so closely tied to our national security, all facets of government must actively protect the interest of U.S. industry. The Department of Justice is doing its part." -Attorney General Janet Reno, "Law Enforcement in Cyberspace" address, San Francisco, June 14, 1996
The Wall Street Journal reports today that the CIA was spying on Japanese negotiators and reporting daily to U.S. chief negotiatior Mickey Cantor during the U.S. - Japan auto trade negotiations earlier this year. -CNBC, 16 Oct 1995 ~ 9:15:03 AM
PHOENIX -- Twentieth Century Fox will launch an animation division by building a $100 million studio that will employ 300 people here. The state has committed $300,000 to train workers. -USA TODAY, Aug. 3, 1994, pg 6A
SIOUX FALLS [South Dakota] -- State officials pledged $1 million a year in annual debt reduction for the next 10 years to keep meatpacker John Morrell and Co. in Sioux Falls. -USA TODAY, NOVEMBER 11, 1994, pg 4A
Partisans who fought Italy's fascist regime during World War Two are protesting the government's plan to issue on Nov. 21 a stamp honoring fascist philosopher Giovanni Gentile. The stamp was ordered by the neo-fascist minister of post and communications, Giuseppe Tatarella. The neo-fascist-led National Alliance has five ministers in Prime Minister Silvio Berlusconi's cabinet. -USA TODAY/Ilternational Edition WEDNESDAY OCTOBER 12, 1994 pg 8A
"There is a coalition between old line Russian communists and industrialists. "Industrialists [i.e. the commisars who ran the state enterprises before] are real partners in the Russian Government now." -Yeltsin cabinet minister, McNeil Lehrer News Hour, November 30, 1992The reason there are so many clips is that once I got the idea that "capitalists," regardless of what we would like to think of them, behave as the lefties say they do, seeking out partnerships with governments -- consider libertarian-mercantilist Adolph Coors, Jr. for example -- I couldn't believe it. It took me a long time (and a lot of clips) to get over the fact that if Hank Reardon, et.al. existed in the real world, they would be as scarce as proverbial "hen's teeth." [3]
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'Up to and during the course of the fifteenth century the towns were the sole centers of commerce and industry to such an extent that none of it was allowed to escape into the open country' (Pirenne, _Economic and Social History_, p.169). 'The struggle against rural trading and against rural handicrafts lasted at least seven or eight hundred years' (Heckscher, _Mercantilism_, 1935, Vol. I, p. 129). 'The severity of these measures increased with the growth of 'democratic government' . . . . 'All through the fourteenth century regular armed expeditions were sent out against all the villages in the neighborhood and looms or fulling-vats [in which cloth was dyed] were broken or carried away.' (Pirenne, op.cit., p. 211)." -Karl Polanyi, The Great Transformation. (Boston: Beacon Press 1957), p. 277
And once again, maybe you could explain what you mean here. How is capital the result of trade? -ETYou might have me here. That depends on what your definition of "capital" includes. What does it include?? This could be an interesting path to discussion --
The saving and investing of capital is the key to understanding free markets. Little trade will happen until somebody decides to trade some of their accumulated capital for something else. That's all there is to it. What other parts do you think I'm leaving out of the picture? -ETCan you indulge in (free) trade without "capital?" What do you do with your accumulated capital if you don't trade it? Which is more important, capital or trade? If the answer is both, then why call it "capitalism" in preference to calling it "free-trade?"
Let me get this straight, you are saying that because we have explained what capitalism is to folks, this has allowed "enemies" to subvert markets. If we had only used the term "free market" rather than capitalism, those same markets wouldn't today be subverted. Are you kidding? -ETI'm not kidding. I just suggested we would have had much better success than we've had if we'd spent our scarce time and energy touting free markets -- which are clearly incompatible with mercantalism/fascism -- rather than defending "capitalism" which clearly isn't. That tactic is much more efficient. Try it a time or two, particularly on "lefties" and see what happens.
The next time you run up against a "capitalism hater," use some jujitsu. Use your opponent's "momentum" against hir. Agree that "capitalism" is bad. Equate it with mercantilism/fascism. Then point out on the other hand how saving and "investing" are good for "society" and free trade makes it all possible.Once you get the hang of touting "free-markets," (keeping in mind you'll get more static from business persons than from lefties with this approach) you'll find it works much quicker -- you won't have to be on the defensive much. You can spend your time "educating" and attacking rather than defending. Remember this from an earlier post:
Mr. Berry is absolutely correct when he identifies the problems associated with international capitalism: Unnatural concentration of wealth, unchecked degradation of the environment, etc. which is, as he ironically admits, "ratified and licensed by the new international trade agreements." Clearly these "international trade agreements" must have been "ratified and licensed" by governments. Mr. Berry, obviously ignorant of the one-to-one correspondence between international capitalism and it's direct predecessor and memetic sire, "mercantilism," (and thus ignorant of the built-in connection between business and government) suggests more of the same -- government interference in free markets -- as a solution.I know this goes against the grain, ET, but keeping in mind which definition of "capitalism" you're referring to -- and that all forms of capitalism are at least compatible with mercantilism [5] -- might help. This should markedly increase your effectiveness. And after all, you indirectly told me you're not having much luck with lefties (the "approximately half the population" in question [6]) when you posted:
Thanks! And good luck in your quest to convince lefties of anything reasonable. -ETAnd there's a bonus -- lefties, motivated by their "hearts," are much more likely to do things -- you know, make noise, demonstrate, etc. -- than are conservatives. We're going to need a lot of noise if we hope to escape a more full blown fascist/mercantilist police state than we already have. At base, we're losing, I think, largely because of a semantic deficit.
Big-heartedness, generosity, courage, and self-denial are the qualifications of a public servant, and the average Indian was keen to follow this ideal. As every one knows, these characteristic traits become a weakness when he enters a life founded upon commerce and gain. ... Such characters as those of Crazy Horse and Chief Joseph are not easily found among so-called civilized people. -Compiled by: Glenn Welker, Crazy Horse/Tashunkewitko, Oglala, Last Updated: April 6, 1999 return[4] This is hazardous in it's own right of course because as the saying goes, "When you go to bed with government, you get more than a good night's sleep." return
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Ron Paul: "Is it not true that in a free market with sound money you never welcome a down-turn in the economy, you never welcome the idea of decreased growth and you don't concern yourself about this? And yet here we talk about, 'When is the Fed going to intervene and turn down the economy,' ... Couldn't we make a case that the free market would operate a lot better than the market that we use today?"
Alan Greenspan: "Well, I think you have to define what you mean by a free market, If you have a fiat currency, which is what everyone has in the world ---
Paul: "That's not a free market."
Greenspan: "That is not a free market. Central banks of necessity determine what the money supply is. If you're on a gold standard or other mechanism in which the central banks do not have discretion, then the system works automatically. "-Humphrey-Hawkins Testimony to US House, July 22, 1998Regards,
Well that's fine then, j-man, you understand the importance of capital. Believe it or not, you've concisely described the entire process. The 'capital' part of capitalism is the key to understanding free markets. -ETThe problem here isn't the process of saving and investing [1], "capital," it's the problem of using the word "capitalism" in communicating the good that process produces and thus why it shouldn't be interfered with.
Frankly, j-man, I was not aware that the term "capitalism" glorifies money and people that have it rather than what people do to get it. -ETCapital formation is only a part of the free-trade in free-market process and is largely the result, not the cause of trade. Yet above, you suggested that "The 'capital' part of capitalism is the key to understanding free markets." The reason you may believe that's the case is that you have chosen to use the word "capitalism" as the icon and standard bearer for the much more broad and important "free-market" process. As a result, you focus on the "capital" part and subliminally believe "capital accumulation" or some-such is the most important aspect and "key to understanding free markets." This simply isn't the case.
I seem to rarely encounter people that have a difficult time understanding capitalism. Most everybody I know just takes the free market for granted. Value for value. Everyday stuff. -ETIndeed, folks tend to take "free markets" for granted -- which is quite telling, since the only free markets that exist today are so-called "black markets." The fact that we defenders of free trade in free markets have usually chosen to defend "capitalism" rather than free trade has helped enabled our "enemies" to clandestinely subvert markets to the degree that "Most everybody [you] know" mis takes our current-day extremely restricted, controlled and manipulated markets "for granted" as "free markets!"
Virtually everyone I deal with on a continuing basis are capitalists, not mercantilists or fascists. Essentially, people trying to improve their standard of living by serving others, our apparently hated capitalists. Are you really trying to get me to believe that nearly all the transactions you make from day to day are at the hands of unabashed mercantilists? -ETYou probably rarely encounter the mega-capitalists, who regularly and as a matter of course, seek out and create partnerships with government for fun and profit. The value for value stuff is for the little guy who can't afford one or even a piece of the ~22,000 paid lobbyists [3] prowling the halls of congress, looking for special favors and subsidies for their employers.
Certainly, my attempts at convincing you of such have met with failure. Wish me luck in the future. -ETThe only thing you didn't convince me to do was to use and defend the word and concept of "capitalism" as it's commonly understood by "the masses" in preference to defending "free trade in free markets."


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