Capitalism and Communism

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torontoprofessor
Capitalism and Communism

Learn all about it:

Capitalism (1948): A group of teenagers on a high-school radio program discuss just what capitalism is, seizing onto the example of the butcher who supplies the weenies for their picnic. With Mickey Hugh (Ray Bennett); Franklyn Ferguson (John Howell). Educational Collaborator: James Harvey Dodd, Ph.D., Head, Department of Economics and Business Administration, Mary Washington College, University of Virginia.

Communism (1952): Educational film on the Cold War conflict.

Note: These Coronet Instructional Films are in the public domain.

Doug

Well, we know what happened to communism - as for capitalism....

US Does Not Have Capitalism Now: Stiglitz

 

In short, a lot of what we thought we knew about capitalism isn't so anymore because the real "revolutionary class" who wrested the system away from the property owners turned out to be the managerial class, not the workers. 

 

N.Beltov N.Beltov's picture

Hmm. Let's see. These are films made at the height of the Xenophobic and McCarthyite atrocities in the US, right?

I thought so. Now where's that thread with the link to all the Catholic anti-Communist comics?

RosaL

N.Beltov wrote:

Hmm. Let's see. These are films made at the height of the Xenophobic and McCarthyite atrocities in the US, right?

I thought so. Now where's that thread with the link to all the Catholic anti-Communist comics?

 

Strange you should mention that. Today I clicked on my link to the comics and there's nothing there. Time for another google. (I seem to recall that the communists arrested all the priests and most of the protestant pastors. heh.)

sandstone

stiglitz book 'freefall' would be an interesting read...

Nobel Prize winner Joseph E. Stiglitz explains the current financial crisis—and the coming global economic order. The current global financial crisis carries a “made-in-America” label. In this forthright and incisive book, Nobel Laureate Joseph E. Stiglitz explains how America exported bad economics, bad policies, and bad behavior to the rest of the world, only to cobble together a haphazard and ineffective response when the markets finally seized up. Drawing on his academic expertise, his years spent shaping policy in the Clinton administration and at the World Bank, and his more recent role as head of a UN commission charged with reforming the global financial system, Stiglitz outlines a way forward building on ideas that he has championed his entire career: restoring the balance between markets and government, addressing the inequalities of the global financial system, and demanding more good ideas (and less ideology) from economists.

Doug

More from Joe - Why we have to change capitalism

 

 

 

sandstone

doug, thanks for sharing this link with stiglitzs comments...

Fidel

Doug wrote:

Well, we know what happened to communism - as for capitalism....

US Does Not Have Capitalism Now: Stiglitz

ha ha We know, Joe, we know. Laissez-faire capitalism was laid to rest in 1929. RIP.

 

genstrike

If Stiglitz is saying we aren't living in a capitalist economy, he's wrong.  We still have capitalism.  The overall system is exactly the same as it was before the bailouts, and the state working in the interests of capitalists is not a new thing.

Crises, recessions and depressions are also a part of capitalism, and they're nothing new either.  There were also many depressions before 1929, I mean, just look at how familiar the Panic of 1837 sounds.

Fidel

[url=http://www.cnbc.com/id/26603489/]US Is "More Communist than China": Jim Rogers[/url]

Quote:
"America is more communist than China is right now. You can see that this is welfare of the rich, it is socialism for the rich… it's just bailing out financial institutions," Rogers said.

genstrike

if true, that's more of a reflection on market reforms in China post-Mao than it is on the US.

But, the general point is that despite repeated crises, recessions, depressions and bailouts, the general class structure of the economy is still the same as it was in 2007, 1967, 1937, 1927, or 1867 when a guy named Marx wrote a book about it.

sandstone

regarding fidels link, i think it brings home to many more folks how corrupt and dishonest the present version of capitalism is... when a country is bailing out the rich, it is hard to explain it in typical capitalist terms... rogers is a bright person when it comes to markets... that is an article from 2008 oct.. it would be cool to here what he has to say now... he's always been ahead of the curve market wise..

Fidel

A large part of the US economy has nothing to do with free market capitalism. And that's true of very many western world economies. China's is a state interventionist government and showing no signs of letup, which also has nothing to do with laissez-faire capitalism. China still has state-owned central banking, state-owned construction and investment banks, and maintains state ownership in several key sectors of its economy. They are neither socialist nor capitalist in any pure sense of those terms.

Self-regulating, self-equilibrating  market ideology is more mythology than real world. Capitalists and their politicians today pay lip service to market ideology in ths same way wealthy Romans only feigned belief in a pantheon of gods that were allegedly responsible for Roman successes in their various exploits. What we  have today is a kind of globalized neofeudal-colonialism, predatory capitalism, imperialism etc. But what drives our economies has nothing to do with laissez-faire or even unregulated markets. Political conservatives themselves were without their own economic manifesto after 1929 and have since adopted economic liberalism as their own ideology. And if we mix liberal economics and political conservatism or vice versa in any combination of neo-liberalism and neo-conservatism, it's nothing. Capitalism devours itself always. Imperialism was replaced with feudalism, then colonialism, and finally predatory capitalism but not laissez-faire capitalism or free market capitalism - those were fleeting ideas that existed for no longer than 30 year time frames after which their real world implementations collapsed.

Capitalism doesn't really exist.

genstrike

sandstone wrote:

regarding fidels link, i think it brings home to many more folks how corrupt and dishonest the present version of capitalism is... when a country is bailing out the rich, it is hard to explain it in typical capitalist terms...

I don't disagree that the system is corrupt and dishonest (although it is ironically more or less working as intended), however I just think it is wrong to call it "not capitalism" when it still clearly is.  Also, I don't think we should be crowing over the death of capitalism now because we on the left haven't won - we've been getting our asses kicked harder than usual for the last 30 years or so, and right now it seems as though unless we can really ramp up some serious resistance, this crisis will get resolved on the backs of the working class and we're more likely to end up with fascism than with real socialism.

Fidel

If we're having beers with the guys, then it's okay to call the existing system 'capitalism'. Most beer buddies will be none the wiser and be mostly to entirely uninterested in theoretical nuances. But if we're beering with Stiglitz or someone like Michael Hudson, then it might be best to do more listening than talking on the subject of economic theory. Because those two guys will tend to want to point out real differences between laissez-faire capitalism and what it is we have today. Marx and Lenin would not recognize "this", what we have today at first glance. They would prolly say something like,  WTF?

genstrike

Ah, I guess us regular beer-drinkin' folk are too stupid to understand capitalism and need people with letters after their names to tell us what to think - even us beer-drinkin', Marx-readin', lecture-attendin', types.

Laissez-faire capitalism is pretty much a contradiction in terms though, as it took a lot of state intervention in the economy to really develop the capitalist system, going all the way back to the enclosures, then to colonialism, war and imperialism, beating and jailing union leaders, etc.  State intervention to preserve the capitalist system and the position of the elite is pretty much par for the course under capitalism, no matter the year.

You can make an argument that it's not laissez-faire capitalism, or only partially laissez-faire capitalism, but it's definitely still capitalism.

I would think that Marx looking at capitalism today would be like Henry Ford looking at a brand new Mustang.  It's not a Model T, but it still has four wheels, a gas engine, a steering wheel, and people drive them around.

Yes, capitalism goes into crisis on a regular basis.  But it doesn't "devour itself" - perennial crises are a part of capitalism.

Modern capitalism still is in line with more or less everything in Das Kap.  Marx today would still be able to pick out the commodities, the money, the use value and exchange value, the fetishism of the commodity, CMC and MCM, the sale of labour power, the surplus value, the worker and the capitalist, colonialism, etc.  It's just more advanced and more financialized than it was in his time, and there weren't as big of concerns about the environment in his time.  Heck, he predicted economic crises in Volume 3 of Das Kap!

It would be a terrible mistake to throw out Marx in a time like this.  I mean, just look at what he said about economic crises in Volume III of Das Kapital

Karl Marx wrote:
In a system...where the entire continuity of the...process rests upon credit, a crisis must obviously occur -- a tremendous rush for means of payment -- when credit suddenly ceases and only cash payments have validity. At first glance, therefore, the whole crisis seems to be merely a credit and money crisis. And in fact it is only a question of the convertibility of bills of exchange into money. But the majority of these bills represent actual sales and purchases, whose extension far beyond the needs of society is, after all, the basis of the whole crisis. At the same time, an enormous quantity of these bills of exchange represents plain swindle, which now reaches the light of day and collapses; furthermore, unsuccessful speculation with the capital of other people; finally, commodity-capital which has depreciated or is completely unsaleable, or returns that can never more be realized as gain. The entire artificial system of forced expansion of the [ecomony] cannot, of course, be remedied by having some bank, like the Bank of England (or Federal Reserve), give to all the swindlers the deficient capital by means of its paper and having it buy up all the depreciated commodities at their old nominal values. Incidentally, everything here appears distorted, since in this paper world, the real price and its real basis appear nowhere, but only bullion, metal coin, notes, bills of exchange, securities. Particularly in centers where the entire money business of the country is concentrated, like London [or New York]...the entire process becomes incomprehensible.

sandstone

genstrike, not to be bogged down in descriptions of capitalism, but i do think their is a vacuum left from the end of the ussr which has created a different mood globally.. initially it might have been perceived a few ways, but at this point i do think many people are much more skeptical of the idea of capitalism in its present form as practiced in the usa specifically.. rogue capitalism was a term used in the late 90's in relation to the asian crisis... it is a pretty good description for what has happened in the past few years in the usa as well... i think more folks are hip to this and more open to other ideas on the way to move forward... capitalism has been beaten up and bruised quite a bit since about the same time as the soviet collapse... perhaps it is premature to write it off, but i think more people view this system with many more question marks then ever before, and i believe this is a good thing... moderation in all things is a buddhist thought... i think we need to head in this direction and however many times we get things wrong, i think this thought keeps on knocking at the door... is their a pathway somewhere down the middle that isn't so hostile to either extreme? i think so... i think the possibility for this to come about is much closer today then it was 10 years ago...

to use the words of lennon

"you can call me a dreamer, but i'm not the only one."

N.Beltov N.Beltov's picture

for genstrike - Marx once remarked that, under capitalism, the only thing that ordinary people get to share in is the national debt. Heh. However, what's especially relevant to our present time is Marx's metaphor of metabolic exchange for the relationship between humans and their environment. J B Foster, the editor of Monthly Review, has written quite a bit about this metaphor and made use of it in his many Ecosocialist books.

Fidel

Fair enough. And JB Foster does a very good job of assessing today's capitalism. One thing about Marx is that he predicted that industrialization would become the dominant form of capitalism. But as we've seen, capitalists profit margins began falling in the 1970's. Finance capitalists would eventually usurp industrial capitalists by the 1990's. Instead, the "new" liberal capitalism became the dominant form of capitalism since the 1980's and 90's. Marx had something to say about fictive capital. Finance capitalism is undergoing a state of collapse around the western world, and no amount of credit inflation can revive it apparently. This is not a normal crisis of capitalism that can be fixed or overcome by one or two capitalist countries alone according to Marxists and their ideological cousins, Keynesians of today. Monetarist monetarism is in trouble. Big time.

genstrike

yeah, you do have a point, sandstone, in that the crisis rubbed some of the shine off the supposed glories of capitalism in the triumphalist "End of History" period, but I just think we should be careful to assume that that will translate into victories for us.  It is extremely likely that things will continue on the same course and we'll be in for a long recession.  Or, if there is change, the fascists are winning seats in Europe these days and would probably benefit from the crisis and racism in society.

Fidel wrote:
Marxists and their ideological cousins, Keynesians of today

???

Fidel

genstrike wrote:
You can make an argument that it's not laissez-faire capitalism...

It's not, and there are very good arguments to prove it that it's not. And you call yourself a lefty?

[url=http://gowans.wordpress.com/2009/11/15/polls-show-a-spectre-is-haunting-... show a spectre is haunting Europe…and much of the rest of the world[/url] November 2009

By Stephen Gowans

Quote:
Just two months before the West celebrated the 20th anniversary of the events that would lead to the collapse of communism in Eastern Europe, the Pew Global Attitudes Project, a polling organization funded by a tax-exempt trust established by the founder of the Sun Oil company, conducted a poll that showed that Eastern Europeans are decidedly gloomy about their lives under capitalist democracy.

 

While Western media and politicians spoke glowingly of Eastern Europeans embracing freedom and regular multi-party elections, Russians, Poles, Bulgarians, Ukrainians and other residents of former communist states complained to the Pew pollsters about being worse off today than under communism, about their dissatisfaction with capitalist democracy, and about the transition from communism to capitalism benefiting business owners and politicians, not ordinary people.

The poll revealed that what Eastern Europeans really think about life under capitalism is a far cry from the picture painted by US and British journalists, who, in their celebration of the 20th anniversary of the opening of the Berlin Wall, mostly presented the events of 1989 to 1991 through the eyes of dissidents and business owners rather than ordinary people. “Our voice, the voice of those whose lives were improved by communism,” remarked Zsuzsanna Clark, who has written a book about her life growing up in communist Hungary, “is seldom heard when it comes to discussions of what life was like behind the Iron Curtain. Instead, the accounts we hear in the West are nearly always from the perspectives of wealthy émigrés or anti-communist dissidents with an axe to grind.”

 

Frustrated Mess Frustrated Mess's picture

It is real capitalism no matter what Stiglitz says. Stiglitz is a darling of the liberal left because he is an insider offering a critique of the system. But, of course, Stiglitz would prefer we reform the system. But was is the system? Capitalism.

Capitalism is the commodification and standardization of everything, up to and including the building blocks of life, for short-term profit. The so-called golden age of capitalism between 1945 and 1975 was the anomaly. What we witnessed during the industrial period and what we have witnessed more recently during this, the post industrial period, is the true face of capitalism. It is the absolute control of every facet of life in the interest of transferring wealth from all of us to a very few of them. 

It is a mistake for us to believe capitalism can be reformed and it is a mistake to fall into the trap of debating what is "true capitalism" when capitalism as a philiosophy and an ideology is quite simple: funnel all wealth to the investor (ownership) class. The disputes over subsidies, bailouts, and election spending are between the world's richest people debating the distribution of wealth among their own.

genstrike

Fidel wrote:
And you call yourself a lefty?

What, I'm not a lefty because I believe in the indisputible fact that capitalism still exists?

Joey Ramone

Here, here FM.  I have never understood why any "progressive" would be pleased that China (or any other corporate state) has developed a "superior" form of capitalism, or in debating which system is "more capitalist".  Your description of capitalism is succint and bang on.  BTW Fidel, I concede that China's state sponsored crony capitalism is very effective at exploiting China's workers.

Fidel

Frustrated Mess wrote:

It is real capitalism no matter what Stiglitz says.

I think that's a very generous thing to say about capitalism and especially dignifying for those who still believe in capitalism.

Frustrated Mess wrote:
Capitalism is the commodification and standardization of everything, up to and including the building blocks of life, for short-term profit. The so-called golden age of capitalism between 1945 and 1975 was the anomaly. What we witnessed during the industrial period and what we have witnessed more recently during this, the post industrial period, is the true face of capitalism. It is the absolute control of every facet of life in the interest of transferring wealth from all of us to a very few of them.

That's a broad description. Socialists first described it as capitalism, but post-1929 North America saw the advent of mixed market economies with Keynes(Marxian) shaping our economies in the western world. There was very little public sector economy from 1900 to 1929. James Galbraith described [url=http://www.opendemocracy.net/theme_7-americanpower/article_1370.jsp]the real American model[/url] and how a large part of the American economy today has nothing to do with market capitalism, Soviet style soft budget constraints in the social sectors etc and propping up the ailing US economy today in more ways than we know as Stiglitz and others have described recently.  So even he most capitalist economy in the world began to change toward a semi-state capitalist, and some would even say state socialism to lesser extents not so long after Lenin passed on. But laissez-faire capitalism in North America was laid to rest with the New Deal socialist-style welfare state and mixed market economies from about 1930 to 1960's. Many socialists will agree that the USA was the most prosperous country in world history during that 30 to 35 year time span. But that was then, and there is no turning back to those glory days even if Americans,  and American oligarchs whove taken over the powers of federal resource allocation today, wanted to.

 And Marx said that capitalism is generally money invested leading to production of commodities which are then sold at some level of profit. He wrote about finance but kind of dropped it believing that finance capital would be subordinated to industrial capitalism. Workers today are caught between two warring factions of capitalism, industrialists and finance. The foundations of capitalism today are even weaker than Marx described. Industrial capitalism spanning the globe was supposed to be what socialism takes over some day and replaces. How can we take over factories when there are none? We don't make anything in Canada, and it's increasingly true of the US economy since neoliberalism began under Reagan. Industrial capitalism once produced things as its engine of economic growth. Today that's all changed. Today finance capitalism rules and is an extractive process. A large problem with American capitalism today is that it no longer produces but consumes. As Michael Hudson said in 2003, Wall Street finance capitalism has become parasitic of the real economy. And like parasites, Wall Street has taken over the brain of its host and convinced US government that it needs to be protected and fed the blood of the real productive labour economy in order that the host can live. And it's a delusion caused by lack of oxygen to the brain of the host, or something like that. Democracy was a nice idea, and so was the idea that the original 13 colonies would try and create the first government in world history that was not based on a monarchy and dependent on European financiers. Today there is more power on Wall Street than either Main Street or Washington. Anyway, there is relatively nothing in the way of an economic engine of growth driving western world capitalism today except for debt overhead based on credit expansion. Production is offshored. Credit expansion and bubble capitalism can't continue for much longer. It's bankrupt. Finished. The oligarchs and their hirelings in government are losing political capital because of it.

sandstone

perhaps it is youthful to be idealistic..  or is it idealism is lost on the young? capitalism ain't pretty, but until someone suggests a different platform and moves toward making it a reality, we will be working with what we have... frustrated mess, what political party is in any way representative of the system you would like to establish? as i see it we have a plutocracy, not a democracy... until that changes, very little else will change either... the best many can hope for is that this present system breaks up, but that would probably entail a lot of hardship on many... change can be tough..

Snert Snert's picture

We're criticizing capitalism, and yet no true capitalist state has ever existed.  True capitalism is beautiful and perfect, and if any so-called "capitalist" country is anything less than beautiful and perfect it's because it's not true capitalism!  The same goes for any future states that might appear capitalist.  If it's not perfect, don't even bother starting to criticize it because it won't be true capitalism either!  Only when it's perfect... at which point criticism will be absurd.

(Hey, this same line of reasoning seems to get some traction when applied to Communism or Socialism, so what the heck.)

sandstone

lol snert... this sounds like the one size fits all thing again..

Joey Ramone

My point has always been that it is futile and irrelevant for any "progressives" to debate whether a particular state is "capitalist" or not, regardless of whether that state claims to be based on free enterprise or some other system.  Does it matter to the exploited worker whether the exploitation is done by someone who claims to believe in free enterprise or by someone who belongs to or is a crony of the Communist Party of China or some other absurdly named authority?  I also do not understand the relevance of state involvement in the economy in this discussion.  Lots of crony capitalist states (call them whatever you want) have massive state intervention in the economy, but mostly on the side of the exploiters.  In this respect modern China and Canada seem quite similar in that public revenue is massively spent on subsidies for the rich and super rich.  Does that make these societies "socialist" simply because of large state involvement in the economy?  If it walks like a duck...

Fidel

Snert wrote:
The same goes for any future states that might appear capitalist.  If it's not perfect, don't even bother starting to criticize it because it won't be true capitalism either!

That's what capitalists have been saying with every failed experiment in capitalism dating back to 14th century Italy.

Fidel

Okay, so we've called the most capitalist country in the world all kinds of names. The only thing I haven't heard it referred to as is a "capitalist liberal democracy", in which case we'd lose our cookies for sure. America is the new liberal kleptocracy, American oligarchy,  and Canada is a long-time liberal stoogeocracy. Okay, I think we've had enough of that by now. What about communism?

brockm

Anybody who chooses to insist that the United States is a capitalist country certainly has their head in the sand.   One can be forgiven for the mistake, actually.  Unless you have a fairly good background and understanding of economic theory, it's easy to mistake the United States for being capitalist.

The first warning sign to any free market theorist will be the monopoly control of money and credit by the government.  Most free market theorists, with the notable exception of the Chicago School, who's most well-known adherent was Milton Friedman, were opposed to fiat currency and the government control of the money supply, believing that money, like any other commodity should be provided by the market through a system of competitive commodity-backed currencies.  

In this sense, Canada was a more capitalist country than the United States when it's banks were able to issue their own bank notes.   

Most people think the centralization of the money supply is a non-factor in whether or not a system is capitalist or not.  But this simply isn't true.  The effect of the government's taking control of the money supply, has been to turn banks into wards of the state, even if it doesn't appear to be the case.

The reason for this, is that most new credit and debt is issued by the government through the Federal Reserve discount window.  It is not issued by commercial banks against deposits -- like you would assume would happen in a capitalist economy.  Instead, all deposits are government backed, and all debt is government issued. 

Many leftists have often had a somewhat positive regard for Keyensians insofar as their willing to give market economists a hearing.  But they would be mistaken to do so, given the fact that Keynes was essentially the grandfather of corporatism and cronyism in America.  The very idea of using government to issue cheap credit to banks, and have government inflate the currency to fund massive fiscal deficits has had many perverse effects on the economy.  Not the least of which is the increase in the wealth gap, due to the disincentives to savings created by cheap credit.

When credit is cheap, instead of saving money, people leverage the credit to buy expensive homes and expensive cars.  The fact that borrowing has been able to outpace savings on insane multiples has not been merely a function of over-zealous bankers, but primarily a function of the government printing money to fund the whole thing, in exchange for a modest interest rate.  

But the interest rates the government sets on new money creation hardly bring the money supply into equilibrium with demand.  This is why we get inflation.  Price inflation is often mistaken both by capitalist and socialists alike as being a normal price market process.  But anyone who's studied and has solid understanding of economics knows, that deflation is a more common outcome of a free market.  Keynes understood this, and decided it was a bad thing, because deflation, he theorized, caused company profits to fall, and therefore employment demand to fall.  Therefore, he argued that government should provide a steady rate of inflation.  And when recessions hit, the government should flood the market with dollars to prevent deflation from kicking in.

What most people don't realize, had the US government not created trillions in new dollars to fund all these bailouts, mortgage modification loans, and so on, prices for food, housing, and other durables would have fallen. The market has been trying to push prices down, and the government has been trying to devalue the currency in order to "stabilize prices" -- as central bankers refer to the whole process.  But the funny thing is, deflation would help the poor as it would make things more affordable for them. Inflation has the effect of decreasing the buying power of the poor, and increasing the buying power of the rich, because the rich are the ones with access to the government discount window, to take the money, leverage it up, and walk away with windfall profits.

There is absolutely nothing capitalist about that.  

Socialists would be wise to actually listen to what real free market economists have to say about the situation, even if they don't agree with their prescription at the end of the day, because their analysis will give you a far better understanding of what's going on that simply calling the whole mess capitalism and assuming you know what you're talking about.

brockm

I would actually argue that Sweden is a more capitalist country than the United States.  And I know most people would disagree, simply because of the difference in taxation levels.  But you'd be wrong.  The level of taxation does not make or break a capitalist system.  But government abuse of it's control over money and credit certainly does.

It's worth noting that most free market theorists, such as Hayek and Friedman, endorsed the welfare state.  

Most free market theorists are against government-provided education and healthcare for instance.  But they're not necessary against government-funded education and healthcare.  Your mileage will vary.  The Austrians are pretty much reject all forms of wealth redistribution.  But Hayekians have often been more concerned with preserving the concept of voluntary association and choice amongst people (ie. being able to choose your education and healthcare, as opposed to having the government dictate the choices).  But they weren't necessarily opposed to using redistributory taxation to help the poor access such services.  

Most of these capitalist theorists were opposed to conservatism.  Hayek, Friedman, and even Ayn Rand all refused to associate with the conservative movement.   Yet many socialists often group them in with the conservative movement.  Some of them came into the fold at the beginning of the Reagan era, but were disenfranchised again by Reagan's overseas wars and his deficit spending.

Socialists often equate capitalism with imperialism, but this is dishonest, since most capitalist intellectuals: Hayek, Friedman, Rand, Smith, Mises, etc. were all anti-imperialist: opposing aggressive war, opposing militarism, opposing interference in the internal affairs of foreign countries.  

(Friedman is sometimes erroneously labeled as having supported interference in the internal affairs of Chile, by reactionaries like Naomi Klein.  But Friedman simply provided advice to the Chilean government upon request, and subsequently refused to accept a commendation from the Chilean government.  Any cursory research will reveal that Friedman was opposed to US interference in South America.)

One way I immediately know, when I'm debating a socialist, that the person has absolutely no background or understanding of liberal and capitalist theory, is when they try to tie capitalism and imperialism under the same ideological umbrella.  When in reality, liberal and capitalist theorists were just as opposed to imperialism and militarism as socialists.  One need not dig very deep to find evidence of this, either.  Look at www.mises.org, or www.reason.tv, or the Cato Institute; three of the largest sources of classical liberal / libertarian and pro-capitalist theory.  You will find strong themes of anti-militerism, anti-war, anti-racism, and anti-imperialist sentiment at all of them.

Yet I often find that socialists simply assume that such sources would be pro-war, pro-imperialism.  Which shows an intellectual dishonesty amongst the left, I think.

Fidel

brockm wrote:

The first warning sign to any free market theorist will be the monopoly control of money and credit by the government.  Most free market theorists, with the notable exception of the Chicago School, who's most well-known adherent was Milton Friedman, were opposed to fiat currency and the government control of the money supply, believing that money, like any other commodity should be provided by the market through a system of competitive commodity-backed currencies.

But the US Federal Reserve is a [url=http://www.globalresearch.ca/index.php?context=va&aid=8518]private financial institution[/url] It's private banksters who are forcing the US government to finance its own indebtedness. And you're right in the sense that if it was a capitalist system(and what country is capitalist today, really?) then Wall Street should not be bailed out by US taxpayers to the tune of something like $13 trillion dollars. That's not any kind of system other than a kleptocracy.

 

brockm wrote:
In this sense, Canada was a more capitalist country than the United States when it's banks were able to issue their own bank notes.

Oh our banksters certainly have been bailed out by the stoogeocracy here since Mulroney. Canada's big six banking monopoly have wanted to merge in order to gamble bigger and better alongside their US counterparts over the years. But the NDP and civil society groups maintained pressure on the feds not to at least let that happen. We don't really have capitalism here in Canada either. Canada is an incredibly naturally wealthy and highly indebted country led by a corrupt stoogeocracy for too long.

brockm

Fidel,

It's wholly dishonest to call the Federal Reserve a private institution. It's authority is derived from the Federal Reserve Act, and it's Chairman is nominated by the president and confirmed by the Congress. It's mandate is completely under control of politicians.

The last time I checked, there is no Microsoft Act and the president doesn't appoint it's CEO.

To try and call the Federal Reserve a capitalist feature is intellectually dishonest.

Fidel

In 2008, American citizen [url=http://www.globalresearch.ca/index.php?context=va&aid=8425]Ellen Brown wrote:[/url]

Quote:
The Federal Reserve is a private banking corporation that is owned by other banks. It was established in 1913 to prevent bank runs and otherwise keep the banks from getting into trouble for over-leveraging (lending out many times their assets), and that remains its principal function today. The Federal Reserve recently extended $200 billion in financing to 20 top investment banks at wholesale rates, but these low rates are not being passed on to municipal governments or home buyers. The Federal Reserve is evidently working for the banks more than for taxpayers or local governments.

Quote:
Once a nation parts with the control of its currency and credit, it matters not who makes that nation's laws. Usury, once in control, will wreck any nation. Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of democracy is idle and futile.”  -- Liberal Party leader [url=http://www.michaeljournal.org/plenty24.htm]William Lyon Mackenzie King, 1935[/url]

And from Leo Panitch's [url=http://www.npr.org/templates/story/story.php?storyId=103598828]Thoroughly Modern Marx[/url]:

Quote:
Ironically, one of the most radical proposals making the rounds today has come from an economist at the London School of Economics, Willem Buiter, a former member of the Bank of England's Monetary Policy Committee and certainly no Marxist. Buiter has proposed that the whole financial sector be turned into a public utility. Because banks in the contemporary world cannot exist without public deposit insurance and public central banks that act as lenders of last resort, there is no case, he argues, for their continuing existence as privately owned, profit-seeking institutions. Instead they should be publicly owned and run as public services. This proposal echoes the demand for "centralization of credit in the banks of the state" that Marx himself made in the Manifesto. To him, a financial-system overhaul would reinforce the importance of the working classes' winning "the battle of democracy" to radically change the state from an organ imposed upon society to one that responds to it.

brockm

I'm unsure why you feel the need to school me with those quotes.  Do you honestly think that I'm this educated in economics and economic history as not to know and understand the ostensible reasons behind the creation of the Federal Reserve Bank in 1913?

I'm familiar with Willem Buiter.  And he's a reactionary fool.   Both liberals and Marxists alike would be wise to pay little attention to his worthless ruminations.

Only a fool would think that a completely government-run banking system would serve the public interest.  There would suddenly be no seeming limit at all on public spending.  The government would borrow from itself without limit, and the situation would be even worse than it is today, as the currency would lose absolutely all value.  At least there some basic principles putting pressure on government to be austere about it's finances.  But not much.

If Buiter's proposal were put into practice, there would be an immediate loss of confidence in the currency by foreigners.  With money supply firmly in political control, it would only be a matter of time until the currency collapsed completely.  Just look at what happened in Zimbabwe when the government started lending itself unlimited amounts of money.

It's an offensive and illiterate economic proposal that would destroy the economy, leave millions to starve and bring society to it's knees.  If government can produce unlimited amounts of money for it's own purposes, it has effectively no value

It doesn't serve economic interests when government's bailout the private sector and it doesn't serve economic interests when a government tries to bailout itself, either.  Both activities represent malinvestment and economic distortion.  There's no such thing as a free lunch.  As cliche'd as that famous statement is, it's true.  Whenever government prints money to fund it's own obligations, it makes everyone else holding that currency poorer.  

p-sto

www.mises.org bwahhahahahaha

Fidel

brockm wrote:
Only a fool would think that a completely government-run banking system would serve the public interest.  There would suddenly be no seeming limit at all on public spending.

Surely you mean as it was with government-created money as a quarter of the total money supply in Canada between 1938 and 1974? In 2006, [url=http://www.comer.org/2006/qnselect.htm]Canadian Richard Priestman wrote:[/url]

Quote:
During the great depression we had the same problem; money was very scarce. To overcome this problem, Prime Minister Mackenzie King knew that it would be necessary for the government to take control over the issue of currency and credit. This was accomplished in 1938 when King nationalized the Bank of Canada, and control of the issue of currency and credit was assumed by the Government of Canada. The government borrowed from the Bank for WW II and the post war development, thereby helping “to avert the depression that had been widely expected” after the war. Instead of a depression, the Bank’s monetary policy “ushered in the most vibrant period in Canadian economic history” lasting until the early 1970s. Great social programs like Medicare and pensions were started, and money was available for housing, education and infrastructure.

However, step by step, banking regulations were removed after 1950 (not just in Canada, but throughout the western world) and the government once again parted “with control of its currency and credit.”

From 1975 on, the government’s long-term debt was borrowed almost entirely from the private sector. When interest rates went sky high in 1981, so did Canada’s debt. From confederation to 1974, our federal net debt amounted to $18 billion, and that included the debt of two world wars. By 1997 the federal net debt had climbed to a peak of $588 billion, an increase of over 3000% in 23 years. Net debt for the provinces and municipalities amounted to more than $400 billion, for a total public net debt of over $900 billion. Interest at one point amounted to $77 billion a year. It is now down to about $65 billion a year (which is 650 times bigger than the $100 million sponsorship scandal that everyone is bothered about, and it goes on year after year after year). Ninety-three per cent of the debt came from compounding interest – not from government program spending.

 650 times the value of the sponsorship scandal, year after year. Boy, our political conservatives sure do love banksters to hand them that much power for money creation and credit, and allowing them to load up with federal debt and with nothing down of their own money. Talk about a bank heist!

brockm

Fidel,

The Bank of Canada is still nationalized.  But King never nationalized the commercial banks.  From 1975 onwards, when the government started loaning from the private sector this had to do with a minor change in how money-issuence was made.  Instead of the Bank of Canada issuing the credit, it would make the Bank of a regulator who set the target lending rate (a function of money creation) and hold banks to hit that average during any 24-hour period.   

When the government lowers the rate to borrow from Bay Street, it's still lending to itself in effect.  It's simply going through intermediaries to get it.  They've added middle men.  Tthe government gets near-wholesale rates from the banks anyways, so it doesn't really make any difference. It's musical chairs. 

And Bay Street doesn't take on any risk, because the BoC guarantees the debt anyways. It's a meaningless manoeuvre.  And it only appears the government is lending from the private sector, when in truth, the government through the BoC controls the Chartered Banks.  

The real reason that national debt has increased has more to do with the collapse of the Bretton-Woods consensus than the machinations of how credit flows through the system. 

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

Quote:
When the government lowers the rate to borrow from Bay Street, it's still lending to itself in effect.  It's simply going through intermediaries to get it.  They've added middle men.  Tthe government gets near-wholesale rates from the banks anyways, so it doesn't really make any difference. It's musical chairs.

Sorry, but you're going to have to do better than this. What is the purpose of these intermediaries? Why were these middle men added, then? And why don't they make any difference?

Fidel

I think Brockm is trying to tell us that the monetarist monetary system is hopelessly bankrupt, and that there needs to be a new financial agreement between countries.

brockm

To be fair to monetarism, if it's prescriptions had been followed our entire system wouldn't be bankrupt. Which is why Milton Friedman noted that a monetarist system should really
only need a computer program to run it. Friedman himself, was aghast at what the banking cartel (that includes the Fed) made of his theories.

Just like with Keynes they couldn't keep their hands out of the money jar when times were good. Instead they kept inflating and inflating, causing these massive bubbles. Just like how even Keynes was abused when governments continued to run deficits in good times.

Essentially this is an indictment of central banking. Not just monetarism or keynesianism. Whenever you centralize the money supply, the elite and the banking cartels will find a way to get control of the system and make it work to their own advantage.

What we need is a free market for money itself, where nobody can control the money supply. Not government, not corporations, not anybody. We should be free to do business in any currency that two parties may mutually agree upon. Be it gold, silver, platinum or private currencies backed by those commodities.

This is the only way the lower and middle-class will be able to
emancipate themselves from the inflationary monetary system.

Fidel

The rich and corporations would love nothing better than to enter into labour negotiations with trade unions and nothing but the gold standard in their back pockets. I think they should consider Keynesian demands for financial disarmament.

Doug

Whether you're a central banker or a finance minister, it's hard to tell people the party's over.

Fidel

Doug wrote:

Whether you're a central banker or a finance minister, it's hard to tell people the party's over.

And especially now that phony majority governments are so hard to come by. Our dollar democracies have been eroded by inflationary cold war era tales for middle class capitalism based on consumption.

brockm

Fidel wrote:

The rich and corporations would love nothing better than to enter into labour negotiations with trade unions and nothing but the gold standard in their back pockets. I think they should consider Keynesian demands for financial disarmament.

Why do you think the wealth gap would be worse under a commodity standard?  This is quite simply contrary to economic history and experience.  In a commodity system, people can actually save their money free of the risk of inflation.  Because, prices tend to deflate in a commodity standard.  Gold gains value over time. 

When you put an ounce of gold under your mattress, it tends to be worth more when you pull it out 20 years later.  Can you say the same thing about any fiat currency?  I think we both know the answer to this.

The truth is, that if the middle-class has any chance of saving for retirement, they cannot rely on savings.  They must put their money into the financial system and risk losing it when the economy goes into a recession.  Because if they simply save their money, it will lose value over time.

The price of gold can't be manipulated like fiat currency can.  Government can print fiat money to fund it's wars, to bailout corporations, to do all of this stuff.  And the middle class always ends up paying through inflation.  

I'm not a socialist, so understand I'm not advocating for equality of outcome.  I accept the reality that some people will be rich, and others won't.  However, I refuse to accept that the money that people earn, once they've paid their taxes and their dues, should be subject to the manipulation and debasement of an inflationary monetary system.  Fiat money is how the rich steal from the poor without anybody even realizing it's happening.

Commodity-backed money is simply, more moral.

brockm

Fidel wrote:

Doug wrote:

Whether you're a central banker or a finance minister, it's hard to tell people the party's over.

And especially now that phony majority governments are so hard to come by. Our dollar democracies have been eroded by inflationary cold war era tales for middle class capitalism based on consumption.

Which is why we must end fiat currency and return to a commodity standard. See last post.

Fidel

brockm wrote:
Why do you think the wealth gap would be worse under a commodity standard?  This is quite simply contrary to economic history and experience.  In a commodity system, people can actually save their money free of the risk of inflation.  Because, prices tend to deflate in a commodity standard.  Gold gains value over time.

It was tried in the inter-war years and found to be incompatible with democracy. As Britain and other countries realized then, currencies had to be maintained at specific values per unit of gold. And if inflation did occur, then adhering to the gold standard meant that cuts to costs had to happen and labour was too large a cost to ignore. And then with the economic depression post 1929, things became worse for workers. Lowering interest rates or stimulus spending was out of the question for governments upholding the gold standard. And people suffered needlessly. In the end, governments were forced to abandon that financial regime in favour of something that worked for the majority of people. The gold standard worked for the rich in a time when full voting rights was still just an idea in the minds of the lower classes ie. commoners like our grand parents and great grandparents, and very many who were martyred by economic depressions and two terrible world wars. Keynes said governments have a responsibility to create jobs and stimulate the economies financially in order to prevent needless depressions. Laissez-faire capitalism as well as the gold standard were found to be at odds with democracy in general.

Lard Tunderin Jeezus Lard Tunderin Jeezus's picture

brockm wrote:

Which is why we must end fiat currency and return to a commodity standard. See last post.

Utter bullshit.

But rather than typing out pages from 'Shooting the Hippo' by Linda McQuaig in order to refute your nonsense, I'm going to suggest you give it a read; particularly the chapter called 'Death of a Usurer'.

brockm

Fidel wrote:

brockm wrote:
Why do you think the wealth gap would be worse under a commodity standard?  This is quite simply contrary to economic history and experience.  In a commodity system, people can actually save their money free of the risk of inflation.  Because, prices tend to deflate in a commodity standard.  Gold gains value over time.

It was tried by the British in the inter-war years and found to be incompatible with democracy. As Britain and other countries realized then, currencies had to be maintained at specific values per unit of gold. And if inflation did occur, then adhering to the gold standard meant that cuts to costs had to happen and labour was too large a cost to ignore. And then with the economic depression post 1929, things became worse for workers. Lowering interest rates or stimulus spending was out of the question for governments upholding the gold standard. And people suffered needlessly. In the end, governments were forced to abandon that financial regime in favour of something that worked for the majority of people. The gold standard worked for the rich in a time when full voting rights was still just an idea in the minds of the lower classes ie. commoners like our grand parents and great grandparents, and very many who were martyred by economic depressions and two terrible world wars. Keynes said governments have a responsibility to create jobs and stimulate the economies financially in order to prevent needless depressions. Laissez-faire capitalism as well as the gold standard were found to be at odds with democracy in general.

 

Fidel, you're confusing the gold standard with a free market commodity currency.  You see, the gold standard and fiat currency have more in common than what I'm proposing.  Because, ever since the civil war in the United States, the government has through various forms of monetary control, issued paper money.  It used a Bank Chartering system, similar to the Canadian system in the 18th century.  But fundamentally, the system hasn't really been free since the civil war in the 19th century.

It may have been a gold standard per se, but it wasn't what I'm proposing.  It was still an inflationary system!

The only real time that there was a lack of an inflationary system in the United States was from 1837 to 1863, known as the Free Banking Era. And what happened in the 1860s?  That's right: the Civil War. 

In 1863, the Congress enacted the National Bank Act so it could print money to fund the war effort.  And that's exactly what it did.  From that point forward, we had a fundamentally inflationary system.  The economic crisis in 1873, just like the financial bubble that we're in the middle of, was primarily caused by the speculative bubbles that were brought about by all the low interest rates caused the the inflationary system. 

I mean, I could go on.  You're just simply mistaken if you think the gold standard was a free market currency.  It wasn't.  The government controlled it.  The government inflated it.  The difference between then and now, is that the government can inflate even more than they could then.  But you're mistaken if you think that the inflationary system is only 30 some odd years old.  It isn't.  It dates back to the Civil War.

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