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Adam Smith wrote his work "The Wealth of Nations" to put forth the idea that free market competition was the best way to create and maximize the wealth of nations. Better than things like Mercantilism, slavery, hunter-gatherer, or feudalism. The system Smith championed was called Capitalism. It puts a premium on the most efficient use of capital and in doing an activity for the lowest cost possible.
Businesses are punished by share holders if they choose to do things inefficiently. You must use the best technology and practices. You must keep wages to the minimum practical. If you can do your business with few workers you must. This may have been good at the beginning of industrial development but as the economy develops. Wealth becomes concentrated and technology improves to the point that its use eliminates jobs not create them.
The USA is plagued by slow growth and if it weren't for the retirement of the Baby Boom Generation our job growth rate is grossly inadequate because it lags behind our population growth. Although our nations net wealth is growing it is many in the form or virtual financial wealth largely due to the fact or accident of history made the US dollar the international reserve currency that underwrites about 60% of all business activities globally and dollar denominated financial obligations exceed 600 Trillion dollars. The number of dollars in non-American hands exceeds that in American hands!
In looking at the current Presidential campaign much is being said about erecting tarrif walls, and other abandonments of the free market that it begs the question ,has the free market become inadequate for managing the American economy and have we outgrown a economic system first formulated in the 18th Century?
If we were anywhere near a free market then I'd actually consider it, but it's not even remotely close.
The state has gotten involved in almost every area of our lives and the economy, to the point where you need permits and licenses just to sell something like chicken salad out of your own home, and you have companies lobbying for regulations that hurt smaller competitors..people still call it the free market.
It's like a pizza place that makes the best cheese pizza ever, and then people start adding tons of random ingredients and people are like "this is just a terrible cheese pizza". Yeah, because it's not a cheese pizza when you add other toppings on it.
Didn't expect to make a cheese pizza analogy today..
Adam Smith wrote his work "The Wealth of Nations" to put forth the idea that free market competition was the best way to create and maximize the wealth of nations. Better than things like Mercantilism, slavery, hunter-gatherer, or feudalism.
Slavery and feudalism are not alternative economic structures to capitalism. Feudalism is primarily a political structure, and slavery in particular can (and did) coexist with capitalism for quite some time.
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The system Smith championed was called Capitalism. It puts a premium on the most efficient use of capital and in doing an activity for the lowest cost possible.
Businesses are punished by share holders if they choose to do things inefficiently. You must use the best technology and practices. You must keep wages to the minimum practical. If you can do your business with few workers you must. This may have been good at the beginning of industrial development but as the economy develops. Wealth becomes concentrated and technology improves to the point that its use eliminates jobs not create them.
Right, well the point of capitalism is to create aggregate wealth, not to create jobs.
Most capitalist thinkers (and/or economists) assume that creating wealth will thus create jobs, but this seems to be a rather faith-based view.
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The USA is plagued by slow growth and if it weren't for the retirement of the Baby Boom Generation our job growth rate is grossly inadequate because it lags behind our population growth. Although our nations net wealth is growing it is many in the form or virtual financial wealth largely due to the fact or accident of history made the US dollar the international reserve currency that underwrites about 60% of all business activities globally and dollar denominated financial obligations exceed 600 Trillion dollars. The number of dollars in non-American hands exceeds that in American hands!
ok.
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In looking at the current Presidential campaign much is being said about erecting tarrif walls, and other abandonments of the free market that it begs the question ,has the free market become inadequate for managing the American economy and have we outgrown a economic system first formulated in the 18th Century?
Free trade is one component of free markets, but free trade (especially trade agreements between nations) should not be seen as synonymous with "free markets." Tariffs generally go against 'free market theory' but they are not something that replaces a market-based system. They are just another form of tax, not a fundamental shift away from market economics.
The "Free Market" is a theory -- it does not exist. The United States economy is not a "Free Market." No country is. Arguably, no country could be.
We have, at best, a "Managed (regulated) market economy." And the effectiveness of that market for serving the will of the people is embedded in all the nuts and bolts details within the tax code and the law, at both the state, local, and federal levels. It is too large and overwhelming for any single person to understand, and not only that -- it is too boring for most voters to pay attention to.
A number of voters find market regulation so intellectually taxing and overwhelming that they give up on it entirely, and say, "The government screws up everything, therefore we must be anarcho-capitalist / libertarian." I do not share their perspective on that. I think regulation is critical to a functioning society, and simply declaring it "impossible to do perfectly" is not a reasonable rationale for abandoning it entirely. This is throwing the baby out with the bath water.
Regardless, in the context of how our markets are regulated, essentially we're at the mercy of our voting populace's ignorance and intellectual laziness, and the ability of well-educated, self-interested elites to exploit that.
Slavery was not capitalistic at all. This is a lie commonly spread. Capitalism systematically makes slavery impossible. I think people confuse a protectionist economy with a free market economy.
They aren't. And the market is corporatist, NOT a free-market.
Exactly! Our economy is loused up because politicians and their various clienteles are constantly trying to prevent the natural market forces from doing what they are expected to do.
Last edited by 2nd trick op; 05-12-2016 at 07:54 AM..
They aren't. And the market is corporatist, NOT a free-market.
Next thread
I feel this is just exposing a paradox and not really an answer to the thread itself.
Corporatism is really just a form of capitalism. Think about it. If individuals are free to operate business in whatever way they choose, what is to stop them from form corporations that then create special interests that allow them to influence public policy. After all, the primary goal of a capitalist is to generate profit, and I'm sure you won't disagree that corporatism has been quite profitable for some people. I don't see that as being inconsistent with capitalism at all.
You might say 'but what about regulations' and while there are exceptions to what I'm about to say, many of these special interest groups formed by free market capitalists encourage these regulations. They have the financial resources to survive regulations while smaller competitors will face more hardship. This certainly isn't a free market for the small competitor, but it is a free market for the bigger guys. I'm sorry to say, it seems impossible to have a totally free market while simultaneously giving the little guy exactly as much freedom as everyone else. The free market cannot be as free for everyone after a certain point because the most successful will do whatever they can with their own private capital to expand it, and since a genuinely free market would not restrict what an individual can buy, it stands to reason that they would target the state and use that to justify monopolies and other regulatory powers, thus making a completely free market self defeating.
I feel this is just exposing a paradox and not really an answer to the thread itself.
Corporatism is really just a form of capitalism.
Wrong. People associate it with capitalism because they feel anything that's for profit is capitalistic. Not true. Capitalism has nothing to do with motive, it has everything to do with methods.
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