This week the cover of “Newsweek” magazine assures us that “We are All Socialists Now,” and that the end of capitalism has arrived. We have heard this all before.
But Capitalism is not the culprit for the present recession, it is the government’s own monetary and regulatory policies, as I argue in a new piece of mine, “Capitalism the Solution, Not the Cause of the Current Economic Crisis.”
The only truthful policy government could offer, as I emphasize, is for those in political power to admit that they are the one’s who got us into this mess. And the only “pro-active” policy the government could follow for a real positive effect would be to get out of the way and allow the market to rebalance and adjustment after all the misallocations and misdirections of capital and labor their monetary and regulatory madness has created.
As Ludwig von Mises said with great clarity during the real Great Depression:
“If everything possible is done to prevent the market from fulfilling its function of bringing supply and demand into balance, it should come as no surprise that a serious disproportionality between supply and demand persists, that commodities remain unsold, factories stand idle, millions are unemployed, destitution and misery are growing and that finally, in the wake of all these, destructive radicalism is rampant in politics . . . With the economic crisis, the breakdown of interventionist policy — the policy being followed today by all governments, irrespective of whether they are responsible to parliaments or rule openly as dictatorhsips — becomes apparent. Hampering the functions of the market and the formation of prices does not create order. Instead it leads to chaos, to economic crisis.”
This is as true today as when Mises spoke these words in 1931.
Richard Ebeling
{ 18 comments }
Those in political power cannot possibly admit anything when they are essentially clueless about all of this. I think they are honestly looking for answers when they turn to the clueless bankers and financial “experts”.
DD,
I think you have a small point. When the Government look for solutions however they are bound to see a few, and when they see an economic theory that promotes the use of Government intervention to bring the economy back to the full employment level only one picture will emerge in a politicians head. That the Government can save the day. That there will be unemployment figures that reflect the Government as saviors would catch any lawmakers attention. In terms of a career decision and the great amount of uncertainty at the moment taking part in the bailout vote could mean survival, as even when it does fail, people will say that at least these people tried.
It’s quite amusing to watch them contradict themselves, almost within the same sentence:
“We are not going to reward failure”
“We are going to give lots of money to failing institutions, so they don’t cause a bigger problem”
Hmm, haven’t thought too deeply about this, have we?
Reminds me of the WWII Japanese soldiers hiding in the caves of Pacific islands, unable to face the reality that the war is over and you lost. The world has evolved and you can either come along and lend a hand or allow pride to keep you in your cave, yelling instructions to a non-existent army.
The critical flaws in your theoretical structures have been pointed out ad nauseum but the most dramatic argument is reality. The mass suffering, war and environmental “creative destruction” of capitalisms 200 year rampage will no longer be tolerated. History has spoken.
@Troutsky
I’ve said it before and I’ll say it again now:
You *have* to be a troll because no one can be that stupid.
Who’s pointed it out? You? That’ll be a laugh.
You *have* to be a troll because no one can be that stupid.
I beg to differ. I have had similar conversations with a lot of people, many of them with doctoral degrees. They are that stupid.
Troutsky (or is it Trotsky) is right about the WWII Japanese soldiers. The only thing is, it’s the statists who are in denial and refuse to come out of their caves.
Note to the socialists: Okay, fine. We’re all socialists now. The socialists are in charge. No more evil capitalism!
Funny thing about being in charge: it means you’re responsible for what happens now. Economic problems can no longer be blamed on capitalism or “free market failure”. Now it’s socialist failure. Are you ready for that?
Huh. Be sure to warm up. You could get injured by suddenly backpedaling on cold muscles.
Lowell Sherris,
I love the Plato Reference, how ever ironic it is that Plato was a complete statist. It is true that politicians look for the theory that justifys their existance. Sadly their visibility is self perpetuating. Meaning that have credibility because they are visible, and they are visible because they have credibility. So sad when a person can be proved wrong a thousand fold, and still hold sway with the american people. All because of fear mongering.
Unfortunately, socialism will never be blamed for any crisis in the public mind, even after the last vestige of the free market has been destroyed. At that point the argument will probably change to say that we don’t have enough socialism, or that we simply didn’t vote in the right people. Freedom just isn’t popular anymore, and as far as the majority of the public is concerned it’s the root of all our problems.
“The only thing is, it’s the statists who are in denial and refuse to come out of their caves.”
Why would they come out? They have their “animal spirits” to guide them and keep them company.
Like all nonsensical theories, be it Creationism, the Big Bang, or Keynesianism, they can always resort to the supernatural and ad hominems when their arguments stray from rationality and fail. “History” has spoken! Deus ex machina!
@ Nick et al: “You *have* to be a troll because no one can be that stupid.”
Why can’t Troutsky be that stupid? Have you tried to decipher the ranting nonsense on his blog? It is thought-disordered non-sequitors and rambling circular logic, where there is any evidence of logic at all in the “stream of consciousness” gibberish.
Just ignore his posts, they are obviously intended to incite venomous responses, rather than to stimulate rational debate.
The competition for power must be done at the expense of everyone and everything. It is not a matter of admitting rightness or wrongness, it is a matter of wielding power for personal aggrandizement and benefit. The world may lie in ruins, but that is of no concern to the power mongers.
Like Mephistopheles said in Paradise Lost, “Better to rule in Hell than serve in Heaven!” Truly that is the mentality of those who stand diametrically opposed to libertarians and lust for power. It doesn’t matter whether their policies and practices destroy the world. Many of them probably understand the consequences of their actions perfectly well. They don’t care so long as they are kings of the hill and grinding our faces into the ground.
And no one is going to successfully oppose such malignant tyrants unless they embrace the fact that it is a fight to the death. The gang of thieves who have usurped control of society will lie, cheat, steal, and kill to maintain their positions. No election will sweep them from power, no persuasive argument will be allowed to turn the tide of public opinion, and no serious threat to their power will be allowed to flourish.
We cannot expect to get an outcome like the American revolution that did spread liberty unless you are willing to suffer the consequences that the founders of the United States faced and overcame. No entrenched elitist ruling class will go quietly. If you say “Give me liberty or give me death!” the State agrees completely–and opts for the latter. You will have to fight for the former.
“We cannot expect to get an outcome like the American revolution that did spread liberty unless you are willing to suffer the consequences that the founders of the United States faced and overcame.”
Uh oh! David Spellman has found the Achilles Heel of the Libertarians – you have remove statists with deadly force not wait and hope they go away.
I’ve just read the Newsweek article referenced above. It was a ridiculous, luke warm analysis of the role of government in America, trying all too futilely to appear unbiased, but ultimately, despite admitting several times throughout the piece that government control slows progress, concluding that in this day and age it’s necessary. It even alluded to the mistaken assumption that though we are becoming more and more like the Euro-zone, our version will be uniquely American, and so I assume better? Nonsense.
Autrian Economics has made my daily life an actualization of dramatic irony.
It is my understanding that the tax on guns and bullets/ammunition is going to go way, way up (or at least it is an idea on the Democrats docket)–what better way to discourage gun ownership, and pay lip service to the 2nd Amendment?
One could assume that this…discouraging… the population from gun ownership is to prevent the possibility of bloodshed over the economic turmoil that is likely to get worse over the years. D. Spellman is correct–the statists are not suddenly going to wake up and say “Oops, our bad. Time for a crash course in Austrian economics everyone! Which federal government agency should be abolish first?”
Capitalism has been the great liberator from the formerly iron rule of state and church. Thus both consider it a great evil and rejoice during any downturn. They also take advantage of a decline to attempt more restrictions in order to ‘protect’ the people. If people really studied what the average persons life was like before the rise of capitalism they would be immune from such activity. Sadly that seems unlikely to ever occur.
I dont know if this is the place to say this, but I have been thinking about how the markets have been going down and down over the last few months, and everyone says that there are no investors or that investors dont want to invest. My question is that who are these so called investors…couldnt you and me simply be investors ourselves. On the other hand most of the business community does not like governments investing in companies since they are against nationalisation and any thing like that.
Some others may already have thought about something like this but anyway I will say it.
Therefore I was wondering why cant the government purchase stocks in these companies and write of those shares among the general public in small and equal portions in a manner that will see the general public as the investors technically rather than the government. The government could develop a scheme in which the general public receive the benefits of holding stocks in a company, and once everything is stabilized those stocks could be sold off to professional investors which will help pay back the government on its investment, but without any interest. But the government should also make sure to impose certain regulations to see that business organisations carry out a proper practice to avoid further downturns. The government should also keep a regular check to make sure that those guidelines are adhered to. Another option would be to encourage the general public to invest small portions of money in the stock market, since it may not cost too much to purchase a few shares, especially since share prices have fallen substantially.
I think that this will help reverse the present direction of the stock market and help get companies back on track. But it is a must that the governments keep a close watch on almost all companies especially those which were badly affected initially to make sure they stick to correct practices.
I know there maybe quite a few things missing from this idea but I hope that those who specialise in this area would be able to give it further thought and work on it. I put this idea on here as I dont know where exactly I can post something like this.
Anyway hope everything get resolved in the end.
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