Saturday, April 13, 2013

Peter Radford — Democracy versus capitalism: take two

That economics textbooks muddle this all up and confuse or conflate the political system with the economic system is a major ideological faux pas.
Neoliberalism conflates the freedom of economic choice in the free market economic system of capitalism based on property ownership and exchange with political freedom in a democracy based on political rights, rule of law, and representative government. They are not the same, nor even necessarily complementary. Historically, they have often been antithetical — the story of the class struggle between propertied and unpropertied, and between privileged and commoner.

The post also explore many issues that we deal with here at MNE on a regular basis between institutionalists and individualists.

Real-World Economics Review Blog
Democracy versus capitalism: take two
Peter Radford


37 comments:

Bob Roddis said...

Of course they are not the same thing. The free market allows you to be free of governmental and non-government thugs and live in safety, peace and prosperity.

Democracy allows the majority to vote in favor of eating you and your kind for dinner. And torturing you before the feast.

It's a matter of civilization vs. barbarism.

Ralph Musgrave said...

There are any number of so called professional economists who can’t distinguish economics from politics. There is a list of 150 of them here:

http://www.scribd.com/doc/48737188/150-Economists-Call-for-Spending-Cuts-to-Boost-the-Economy

Another classic instance of this confusion is the currently fashionable claim by the political right that more public spending exacerbates the deficit and debt. The reality is that more public spend won’t exacerbate the deficit is enough tax is collected. I.e. there are two decisions being conflated there: first the decision as to what proportion of GDP is allocated to public spending (a political decision), and second, there is the decision as to how large the deficit and debt should be (an economic decision).

Of course the confusion by the more intelligent members of the political right is deliberate. The rest of the political right and much of the political left are suckers whose brains are being controlled by the above intelligencia.

Unknown said...

Democracy allows the majority to vote in favor of eating you and your kind for dinner. Bob Roddis

Yes, perhaps after a ruling elite in a non-democracy has starved the population into desperation (though I note that the French did not eat their aristocracy during or after the French Revolution).

Matt Franko said...

Bob,

Serious question: Are you vegetarian?

Rsp,

Matt Franko said...

Radford does not include a view of how our monetary systems worked during the different periods of history that he is profiling.... it matters.

All "Money" is not all "money".

"Why else was Romney decrying the 47%? "

I thought Romney broke out his 47% cohort because they supposedly didn't pay any taxes?

ie You hear the Tea Party people say "What are you doing with MY tax dollars?!" all the time...

Under the metals, this could have been looked at as "True", or at least mathematically possible... that govt didnt have any 'money' to spend without first taxing... govt treasuries first needed to acquire mass measures of the metals before they could spend them....

But that is NOT the way it works under a FFNC type system like we've fully been under since 1971: MATHEMATICALLY impossible.

So this development HAS to be taken into account when you are examining economic history throughout these monetary system transitions...

The economic history is NOT ACCURATE unless you do this.

Radford: Suggest go back and re-write this chronicle with the details of our contemporaneous monetary system in view throughout the time series.

rsp,

Bob Roddis said...

Mr. Franko said:

Radford does not include a view of how our monetary systems worked during the different periods of history that he is profiling.... it matters.

All "Money" is not all "money".


Au contraire! Randy Wray said (in the typical dishonest debating style of Keynesian/MMT butchering of terms and concepts):

Q: Philip: Austrians use a bait and switch operation—denying that what we have is capitalism and comparing it to some sort of ideal utopian capitalism.

A: Agreed. That makes it easy to blame all of real world capitalism’s problems on its deviation from utopia. It is fundamentally an anti-scientific approach. Let’s analyze what we have and try to make it better. We cannot have utopia. We’re dealing with human society, after all.


Seriously, Mr. Franko is correct. Each monetary regime and legal regime must be defined and distinguished for what it actually is. Sloughing together different and disparate regimes is lazy and ultimately fraudulent. As in mixing a fiat system with a hard money system and calling them both "neoliberal" purely for sake of confusing people.

Matt Franko said...

"for sake of confusing people."

Bob,

imo they are not trying to confuse people they just cant see these two systems for some reason... to them "it is all the same thing"...

rsp,

Anonymous said...

I don't think the question about the legitimacy of taxation has a lot to do with the nature of the monetary system.

How the money in general use comes into existence initially doesn't entail anything about who owns it at the time it is taxed. For example, if I grew carrots in may garden and then bartered them with you for some blueberry preserves, then although the carrots begin as my property they become your property. If I then take the carrots from you without legal authorization, I am stealing them.

If the public or sovereign manufactures money in some form and it is therefore initially public property, that doesn't mean that it can't subsequently become the property of others.

Taxation, whether paid in money or in kind, is always government taking, even if what is taken is something that initially belonged to the government. So the question of the legitimacy of the taking then comes down to the political questions about the legitimacy of the government and its laws.

We could imagine systems in which the money in general use remains at all times the property of the public sovereign, which is then just loaned to citizen or subject in exchange for the permanent relinquishment of goods and services. But I don't believe any such legal framework exists in our society.

Tom Hickey said...

Libertopia, which corresponds to the liberal economic (laissez-faire), Libertarian and Objectivist models, is a place where there are three natural rights operative, the right to life, liberty and property ownership and free exchange. There is no government or state. Reason rules and law is custom. The only general customs are market exchanged based on free choice, non-aggression and non-coercion. Enforcement of these customs is by individuals. There are no institutions or social relationships other than kinship and economic relations. Value is subjective. There are never any social problems in Libertopia because "there is no such thing as society. All issues are personal, affecting individuals alone. There is no need for formal governance because the invisible hand rules from behind the scenes. Capitalism delivers.

Utopia, which corresponds to socialist models, is a place where all people are good and naturally cooperate voluntarily for the common welfare. Everyone is altruistic and each individual takes his or her happiness to be dependent on the happiness of all. Governance is provided by consensual democracy in which the collective will prevails through dialogue of equal voices. There are no social problems because of consensual agreement and the application of collective effort to create distributed prosperity and abundance iaw the principle, "From each according to ability and to each according to need." The Constitution is summarized in the Golden Rule. Their is no crime, only ignorance and mental imbalance that can be resolved through education and psychiatric treatment. Democracy delivers.

Then there is the Real World of the 21st century in which history is shaped by the dialectic of opposites, in economics and politics this being capitalism and democracy, as well as class interest and other interests. Individuals are creatures of habit and emotion as much as reason, and they are shaped by environmental factors (nurture) as well as genetic differences (nature). There are spectrums of interests, tendencies, moralities, ideologies, etc, that must be integrated for society to function without encountering areas of dysfunction that introduce not only economic inefficiency but social conflict. Governance is based on institutions susceptible of class and other interests, as well as of corruption. The rule of law is available for redress to the degree that it can be controlled democratically to work for the majority instead of being subverted into a double standard by a privilege interest group. This dialectic is on-going and the pendulum swings from one extreme of the range to the other over time with the result that radical and reactionary forces vary in influence. Results may vary.

Matt Franko said...

Right Dan,

To me paying taxes (under a FFNC) is an act to demonstrate one's subjection to government authority... not for govt to "get the money".

iow you say: "comes down to the political questions about the legitimacy of the government and its laws."

So when we pay our taxes under FFNC we are in effect saying: "we acknowledge that our govt is legitimate".

So accordingly, all govt has to tax is at the rate that results in the non-govt making this affirmation or acknowledgment... but not one penny more.

This has to work both ways.

The non-govt is being tremendously overtaxed today ("deficit reduction!") .... because those in positions of authority think they have to get tax revenues to be able to spend... they are still stuck in what Warren describes as "the gold standard mentality"..

Paul to the Romans who were also under a FFNC back then:

"5 Wherefore it is necessary to be subject, not only because of indignation, but also because of conscience.
6 For therefore you are settling taxes also..." Rom 13

"It is necessary to be subject... therefore you are settling taxes."

HARD STOP.

This is how it is supposed to work under a FFNC system.

The metals work otherwise...

rsp,

Critical Tinkerer said...

They conflate freedom TO and freedom FROM, also

Bob Roddis said...

Utopia, which corresponds to socialist models, is a place where all people are good and naturally cooperate voluntarily for the common welfare. Everyone is altruistic and each individual takes his or her happiness to be dependent on the happiness of all. Governance is provided by consensual democracy in which the collective will prevails through dialogue of equal voices.

Human beings on their default setting:

http://www.flickr.com/photos/bob_roddis/8525140770/in/photostream

My PROPOSAL is that they make it their highest priority to not aggress against each other or defraud each other. If they could ever manage to do that, most other problems of living would be minimized.

Can you commies identify any group of folks who are safe from aggression or the threat of aggression who are living in poverty today?

Matt Franko said...

Bob,

You're making my point for me...

Those Spaniards were after the metals!

rsp,

Matt Franko said...

Bob,

Should be: "Gold lovers on their default setting".

rsp,

Matt Franko said...

Bob,

Both the Spaniards AND the Indians were human beings... so how can this depict "human beings" in their default mode?

Which is the default mode? The killers or the killees?

So this doesnt even make sense.

It cant be a human "default mode" as both groups are human.

The "differentiator" is/are the metals.

rsp,

JK said...

Humans on their default setting, too: http://www.healthyalberta.com/Images/HE_In_the_News_Making_Time_for_Family_Meals.jpg

Ultimately what Bob suggests is that humans a more inclined toward competition and violence than cooperation and compassion.

His premise, on which his entire argument rests, is questionable.

I think human's default is both cooperation and competition. Are we creating a world and rasing children to learn that cooperation is the key to their own betterment, or that competition is the key?

Our evolution is toward more cooperation and less competition. i.e. we're slowly leaving the jungle.

JK said...
This comment has been removed by the author.
Bob Roddis said...

Human beings seem to be inclined towards making strangers and people of other races and ethnic backgrounds into "the other" who might be safely robbed and/or bombed and/or enslaved or whatever. For maybe the 18th time on this blog, I will restate my simple proposition, which you again will all surely misrepresent:

The major problem facing human beings is assaultive behavior by other human beings, not a "lack of aggregate demand". The purpose of the proposal for a rigorous enforcement of the non-aggression principle is to eliminate this problem.

This is all so obviously true and self evident that you guys are compelled to go into your obfuscation routine just to avoid this obvious truth.

JK said...

Dependency and connectedness is also the spiritual evolution. It's one thing to be able to rationalize it, it's another to feel it. There is no you that is seperate and disinct. The components of our bodies were made in stars. The air necessary for us to breathe is a thin layer of atmosphere between the earth's crust and space. There are billions or trillions of bacteria in our digestive system that without them, we'd die. etc etc etc.

Capitalism, built on the individual, the Ego, Bob Roddis's ideal, is a stage in our evolution. It's a primitive stage.

He's clinging on tight. So are we as a species.

Bob Roddis said...

Capitalism, built on the individual, the Ego, Bob Roddis's ideal, is a stage in our evolution. It's a primitive stage. blah blah blah

The non-aggression principle is based upon not initiating force against your fellow human beings. Once safe from harm, you will be free to do whatever you want, including gazing at your navel and thinking up phony and pretentious "progressive" analyses of the various alleged stages of societal evolution.

JK said...

~Austrians are just lazy Marxists~

Tom Hickey said...

Human beings on their default setting

Yes, human beings on their default setting are large primates who occupy a privileged position among animals owing to their opposing thumbs, their more developed nervous systems, their ability to communicate, etc., but they are essentially predatory pack animals that left to "nature" will band together to dominate their environment.

There are no natural rights and there is no natural law other than the invariances and regularities that are observed in nature. There is no natural basis for non-aggression or non-coercion. There is no natural tendency to band together other than in interest groups in order to dominate other interest groups. Rule within interest groups is based on power to control other.

Social relationships beyond the default setting are the result of emerging evolutionary traits that tend in the direction of social construction of the environment based on informal cultural ritual and formal institutional arrangements. The rest is history, which can be read as the natural development of the species homo sapiens sapientis.

I happen to like Hegel's account of how history is the dialectic process of the unfolding of consciousness to itself through reason. The rationale for history is progressive self-discovery of the potential for consciousness to know itself through objectifying itself in its own constructions.

Marx believed this to be driven from the side of the objective, that is, the material body and its environment. Hegel saw it as the phenomenology of Geist, which is translated alternatively as "mind" or "spirit."

For Marx, history is class struggle and the story of shifting power relationships. For Hegel, the productions of mind objectivize the creative potential of mind, which is the unfolding of greater universality. Human intelligence differs from animal intelligence in its potential for awareness of universality. Hegel would agree with much of Marx's historical analysis of power relationships, but Hegel did not consider that to be the cause but rather an effect.

continued

Tom Hickey said...

continuation

Many thinkers in addition to Hegel have held that as humans develop, the natural state of humanity evolves in the direction of greater awareness of universality. The cognitive aspect of this growth is philosophy, from which science spun off, making the sciences branches of philosophy as the tree of knowledge. The affective aspect of this growth is greater appreciation of unity, which is reflected in love as apprehending self in others, and which is the basis of the Golden Rule. Both the cognitive and affective influence the volitional individually and also the development of culture and society.

I am not claiming that Hegel's phenomenology is correct in its details, although in my estimation it is a good attempt to articulate the role of reason in history. I do think, however, that Hegel's dialectical approach to understanding history in terms of the unfolding of reason in nature as natural process is a useful methodology.

From this perspective every "moment" of history is the display of the balace of rationality and irrationality at a point in time and in a particular locale that is objectified in the events of that time. Hegel's argument is that history of the story of the progressive unfoldment of reason and its display in events as civilizations. Hegel's view of this is more a reflection on him and his times, and therefore a moment, rather than the culmination of a process as he apparently thought.

That process is still unfolding dialectically, and it is a dialectic of reason against instinct ("irrationality"), with instinct remaining extremely strong in most people, e.g., displaying itself as narrow self-interest. Social constructions like cultural rituals and institutional arrangements are evolutionary developments that channel instinct toward reason and bridle instincts for social purposes that are more universal than individual or kinship oriented. In this sense economics and politics are evolutionary enterprises that also evolve in stages and objectify the level of collective awareness of the time and locale.

The direction of history can be viewed as running from narrow self-interest (getting a bigger share of the pie) to "enlightened self-interest" (making the pie bigger for all) to the universal interest of the enlightened, expressed in unconditional love.

Bob Roddis said...

If you are precluded from the initiation of force, your options for "power relationships" are severely limited.

Matt Franko said...

Bob,

" "the other" who might be safely robbed and/or bombed and/or enslaved"

I submit that any "robbing" or "bombing" or "enslaving" that was done since about 1700 years ago was done either directly or indirectly in the pursuit to obtain metals...

rsp,

Bob Roddis said...

I submit that any "robbing" or "bombing" or "enslaving" that was done since about 1700 years ago was done either directly or indirectly in the pursuit to obtain metals...

1. I guess that kills your "state theory of money". Finally. Thanks. I'll be bookmarking that quote.

2. Did you know that since 1971, almost all bank robbers have stolen fiat money?? And that people who murdered for money actually murdered to steal fiat money?

zzzzzzzzzzzzzzzzzzzz

The Rombach Report said...

"~Austrians are just lazy Marxists~"

JK - You're getting kind of personal.

Tom Hickey said...

If you are precluded from the initiation of force, your options for "power relationships" are severely limited.

That is a huge assumption that history doesn't bear out. Cultural rituals and institutional arrangements are sufficient for power relationships to develop. No actual physical coercion needed, although the rule of law, or at least conforming to the rules, that underlies most social groupings implies enforcement.

Frontiers provided the alternative. Now that frontiers have all but disappeared, virtually all land now being claimed as someone's property, that has changed.

Ignacio said...

To Bob the only possible coercive and violent relationship is one where you can physically abuse someone.


I think this says it all.

Matt Franko said...

Bob,

"Did you know that since 1971, almost all bank robbers have stolen fiat money?? And that people who murdered for money actually murdered to steal fiat money?"

Yes, I know this and YOU know this, but THEY don't know this... they think we still are on the gold standard...

rsp,

Matt Franko said...

Bob,

We have manifest morons in charge who think "we're out of money!"... so they are not providing enough USD balances to allow for settlements and savings by the citizens, so the citizens have to rob and steal to get some balances...

rsp,

Bob Roddis said...

"We're out of money" is actually a fairly close approximation to reality.

We're out of stuff to pay to welfare recipients. Your pathetic argument that since we can allegedly create unlimited funny money "dollars" this solves the problem of scarcity is, well pathetic.

Go for it. Explain it this way to the masses. Go for it. Really.

Matt Franko said...

"Scarcity" ????

Bob, what planet are you living on?

JK said...

"We're out of stuff to pay to welfare recipients."

Whose pathetic argument?

In the meantime, how about some public policy to harness waste and recycle more? Oh the oppression!

Greg said...

"We're out of stuff to pay welfare recipients"

Is that so?

If we just look at the stuff an actual welfare recipient receives, or more accurately the stuff they consume/services they use with the dollars they receive, what we find is that its mostly food, shelter, phone, utilities, transportation. Ill throw in drugs, alcohol and some other vices as red meat for you as well as an admission that this does get consumed with welfare payments.

Are you saying we have a global food problem and CANT produce enough calories off the aerable land we have? Are you saying we dont have enough raw materials to build adequate shelter for every human being on the planet? Are these people stressing our transportation system by clogging our airports and highways? Is our energy system incapable of providing the power this population uses?

The only things that I see as scarce are clean drinking water, which has nothing to do with previous decisions regarding a level of compensation to welfare recipients, cheap abundant energy, which again the problem is solvable if current political power relationships can be broken and sane policies followed, and trained people to provide the health care needs of all, which is just education.

Oh, we do have a dearth of empathy and common sense....... which might be our undoing.

Matt Franko said...

right Greg,

I'm sure Bob and his metal-loving, rebellious cohort of disgraced humans are mainly thinking "precious metals" when they think "scarcity"...

But looks like the Pharma industry may have a solution, from Tom's post above on the UK Drug Tsar:

"I wonder how many other opportunities have been lost in the last 40 years with important drugs like MDMA, with its empathetic qualities,..."

Maybe we can start slipping this MDMA into the drinking water around the country...

Tom Hickey said...

Scarcity thinking is the basis of most modern economics that is being taught today. Neoclassical economics is based on the assumption of scarcity.

"Scarcity thinking" is one of the psychological disorders that psychotherapists deal with all the time. The attempt to counter it with "prosperity thinking" or "abundance thinking." Why? Because scarcity thinking limits vision and constricts opportunities, develops paranoia, and reduces the ability to empathize and cooperate. It make one a psychological wreck. It's no wonder that our political thinking is imbalanced when it is based on scarcity thinking.

How to change the teaching of economics away from neoclassicism? Jamie Galbraith answers with ten points in Can we please move on?, the essence of which is:

Economics over the sweep of history is not mainly about scarcity (which technology overcomes) nor about choice (which is generally neither free nor the defining characteristic of freedom). Rather, economics is about value, distribution, growth,  stabilization, evolution. The great ideas  in these areas, and the history in which they were embedded, are fundamental.  They should be taught, and not as dogma but rather as a sequence of explorations.

He concludes:

10.  Finally, our economics is about problems that need to be solved. There remain before us the pursuit of  full employment, balanced growth, price stability, development, a sustainable standard of life.  That is why students once were attracted to our field.  That is why they abandon it now.  That is also why, if we develop a coherent research program, and a teaching curriculum derived from it, that broadly respect the principles outlined above, we will prevail in the long run.