Steve - cogent points. I’m glad you’re on this board.
If you think that the wealthy get their wealth from the poor, I have one question. How is it possible to get wealth from a group that has no wealth? Bill Gates’ wealth is greater than everyone who is considered ‘poor’ in this country. His wealth came from the production of software and it’s sale around the globe, not from any imaginary group of deprived people. I have not seen the world’s greatest proponent of capitalism even mentioned here so it is about time. Read Ayn Rand, especially her book of essays Capitalism the Unknown Ideal, and her novel which defines what capitalism is, Atlas Shrugged. Capitalism is based upon the production of goods and services, with production comes wealth, it is created. Available goods and services are what give gold its value, not the other way around. In a world without products gold is valueless. Gold is a medium of exchange, not a store of value. Gold has ‘value’ because of the expectation of being able to use it as a consistent medium of exchange, something you can store for future trade. Because of it’s acceptability and because, unlike a fiat medium, it cannot be expanded exponentially, gold is the best medium of exchange. A bank that serves its customers is capitalistic, one that serves speculators with it’s customers’ money is not. A bank that gambles with it’s customers’ money is not a bank, it is a casino. What kind of a bank do you have?
If you think that the wealthy get their wealth from the poor, I have one question. How is it possible to get wealth from a group that has no wealth? Bill Gates’ wealth is greater than everyone who is considered ‘poor’ in this country.
I will assume that this pertains to my comment since it seems to be directed at one specific line. The first response is please don’t extrapolate one sentence, one point, and make it the central thesis. Next, my comment was specific to the period when a capitalist system cannot grow to cover accumulated debt and finds other ways to do this. This can involve downsizing of companies, layoffs, liquidation of real assests, corporate mergers (that usually include all of the former), or in extreme circumstances tax payer bailout packages where losses get transferred to the middle-class and future generations. Of course there are periods of growth and when there is actual room for this growth (mostly at the expense of other places), things are good, but then the downturns comes and there must be contraction…this is the period of cannibalism (destruction capitalism). Policies, like the New Deal, did not strive to eliminated Capitalism, only to safeguard against devastating downturns by spurring investment that would benefit future growth (jobs, technology, and infrastructure). So, Capitalism is not evil, just a system with inherent flaws that need to be recognized. In all, I never argue against capitalism whatsoever.
"All currencies are backed by nothing. Or do you not realize that gold is just another currency? Currencies work because individuals agree to honor them. "
Uhh, what? Gold is a precious, scarce metal, with inherent value.
If not used as a currency, it is still a barter good that fetches a high value as compared to its small weight. It is also durable, in that it is not prone to erosion or rust, so is ideal for storage.
Without a doubt, Chris has done an amazing job, and we’re all for "integrity". So while we can appreciate thesis-level citations, this is a BLOG…
Regardless, here is the citation, and you can find the same citation elsewhere.
http://www.quotationspage.com/quote/37700.html
Thomas Jefferson - Letter to the Secretary of the Treasury Albert Gallatin (1802):
" I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
Steve -
Suffice to say that while we may agree on some things, we have a very different opinion on what individual freedom means in the realm of economics, and apparently a different reference on how government "protection" was used to subvert it.
I disagree that we have ever had "unregulated capitalism", and this gives birth to your straw dog.
Free men, "each a sovereign", at the time of the Declaration of Independence, was a unique experiment in human history. All prior politico-economic systems were variants of either monarchies (dictatorships) or tribalist (socialism, communism), whereby the rights of the individual were trumped by the royals, the dictator, or the tribe; and this has economic consequences.
If a man has individual rights, as defined in the DOI, he has a right to his actions. Consequently, he must have a right to the products of his actions, or the latter cancels the former. This makes all men "equals" in the pursuit of happiness (not the right of happiness - smart guys those Founding Fathers…)
On the other hand - The "Robber Barons" of the early industrial revolution (JP Morgan, Rockefellers, etc) profited from goverment regulation, as if issued to royals by the monarch. The railroads as owned by the "Barons" were granted monopoly powers by the ICC, preventing true competition, and creating fortunes for those lucky enough to be cronies of the politicians granting their economic monopolies.
This period was NOT "unregulated capitalism", but rather, freedom and capitalism skewed and regulated politically, for the benefits of a few, at the expense of others.
Similar monopolistic fortunes were allowed for Standard Oil, Westinghouse and on, with the complicity of goverment regulation.
Worst of all, last in 1913, these protected Barons were granted monopoly right to one of the few functions of government in the free rights of man (along with protection of the individual from foreign invaders or "national defense", and protection from internal criminals or "police and courts") and that is issuance of a nations currency.
It is this protected cronyism, as a perverted definition of "capitalism" that you attack. But, your solution IS consistent with a desire for regulation. This only means Comrade, that you need to be on the "right side" of the regulation to prosper (i.e., a member of the Politburo, or a recipient of the ICC, or the DNR, or the FCC, etc., etc…) Do you consider these to be "thoughtfully designed regulations and controls"? Your distinction between "good regulations" and tyranny, are only a subjective matter of degree.
Further - comparing Lenin’s communism, to any sort of "utopia" - well… best to ask somebody who lived it.
Further - in contrast to your statement that, "it is the nature of…capitalism to lift itself up by pushing others down" suffers further from your straw dog argument. True capitalism, where individuals are free to their output, allows for one man, to trade his productive output, for what he senses as an increased value, from another man, free to do the same. This make it a win-win for both, and this is the engine of human prosperity. Unless protected by the government, hustlers and swindlers are weeded out and brought before justice.
The current Banking system is a government-controlled monopolistic system, and I certainly don’t advocate more of the same.
As for the gold standard - to argue that we weren’t on it is just a lack of history knowledge. One only needs to read Article I Section 8 & 10 of the US Constitution.
As for "all currencies are backed by nothing" - If you mean that all "mediums of exchange" are conceptual, you are right. However, you obviously don’t know the difference between money and currency. Money represents tradeable value already paid for. Gold has the historical distinction as the most accepted concept of money in human history. If, walking in Italy, I find a gold coin dropped by a Roman soldier, it still has the "pre-paid" value associated with it from 2000 years ago, in terms of purchasing power. Can governments and the human population decide tomorrow, that gold is not money? Perhaps, but there has never been an equal in rarity (so no cheating), divisibility, durability, portability, etc. As a "barbarous relic", odd that the Central Banks still hoard it…
Currency is a paper "bill" or "note", and can be issued "in arrears", as a debt, and claim on future labor. Watch Chris’ Crash Course again to see the difference.
As for bank using (adverse?) leverage while on the gold standard - The gold standard is intended to prevent politicians and/or bankers from collusion, in devaluing the nation’s currency, which causes inflation. Unless there is money in gold, represented by "pre-paid" human effort, to which the currency is pegged, then you can’t just expand the currency supply "by fiat" - i.e., no cheating by Politicians and Bankers to cause inflation, (to pay for war and entitlements).
Because gold (and silver to some extent) represents the best example of true money, an ounce still represents the same value, in terms of what goods and services it can be traded for. While in 1930, an ounce was equaled by $26 (paper currency), that currency has been continuously devalued, by our government, on purpose, to "cheat" and buy war supplies and entitlements, such that $26 worth of essentially the same goods and services now requires $1000 of that currency.
For savers,inflation has, through intentional theft, taken 98% of the value of what that currency represented since 1930, and at the expense of the middle class. That is WHY it now requires 2 people in a household to "make ends meet".
As for Ron Paul, and those professing a love of freedom (economic and political), the "free market", as the ideal of America’s birth (and NOT the straw dog you are attacking), is considered a unique and highest embodiement of human achievement, in contrast to any "utopia" consisting of the same demeaning and worn tribalist systems (monarchies, socialism, collectivism, communism, etc) of the last 50,000 years.
So we have some differences, but hopefully we have the same desires for "the good".
ajparrillo -
What is your basis for assigning "Neoliberal philosophy" with Von Mises, and ascribing to him "a disdain for populist democracy"?
I would like to hear your basis for claiming that the ASE has any "disdain for populist democracy", unless you are defining "populist democracy" as advocating elimination of private property, or advocating government control over the decisions of individuals on their personal and subjective economic decisions and actions.
Where do you vind that Von Mises advocated "a specific agenda for apolitically entrenched economic structure that allocated power to a small proportion of ‘responsible men’"? This is just a crock.
What part of your misguided understanding of Von Mises, would conclude to you, that advocates of his theories and body of work would "not be a proponent of democracy"? Again, this is absolutely contrary to the teachings of the Austrian School.
What they DO believe is that free individuals, unhindered by coercion of government "guns", will each determine individually, through their own processes, the "value" represented by "price", and that this creates the market "in aggregate".
What they DO believe, is that governments allowed to manipulate and control credit, markets and individual actions, will necessarily reduce the efficiency of the people to determine for themselves, the "value" in market offerings, AND that this interference, or what they refer to as government-manipulated malinvestment, is what produces "Dot.com" bubbles, "Housing" bubbles, recessions and depressions.
What they DO belive, is that governments generating purposeful debt, to keep fiat-currencies in circulation, create an overwhelming debt burden on the populus, which eventually leads to economic and political serfdom, controlled societies and human poverty, ultimately leading to excess entitlements and war.
The current world credit and debt collapse is an amazing endorsement and vindication (after the rise of Marxism, Keynesian economics, and 2 World Wars plus numererous smaller ones) of many of the sound fundamentals in the Austrian School, of which Von Mises was a primary founder.
Finally, I find it interesting that one can speak against the Austrian School (albiet without fully understanding it), when much of what Chris Martenson has presented fully illustrates Austrian principles (inflation=excess currency supply; fiat-currency = debt currency; government credit control = asset "bubbles", etc., etc.)
If you feel Chris’ teachings and theories are of interest, I suggest you investigate the economic theories of the Austrian School (Von Mises, Hayek, et al) more thoroughly.
GDon,
Talk about straw dogs!? I think you are mis-perceiving my intentions of debating these topics on one hand and assume I am not knowledgable on some subjects on the other. OK.
SO, please focus upon keeping a civil debate and resist the temptation of assuming you know more just because you ascribe to a specific philosophical perspective. The Austrian School is philosophical and is not absolutely proven; THIS CAN BE SAID ABOUT ANY SYSTEM/IDEOLOGY. Just because someone does not ascribe to your chosen philosophy/theoretical perspective, this does not mean they do not understand your position, nor does it mean they are incorrect. With this aside, lets move on.
So, von Mises…The foundations of what is known as Neoliberalism is the Mont Pelerin Society (named for the Swiss spa of the orininal meeting in 1947) which included von Hayek, von Mises and Milton Friedman. Von Hayek, the political philosopher and economist, had political philosophies that mirrored Walter Lippman’s "responsible men." These were also echoed in the political philosophies of Leo Strauss, the father of Neoconservativism, that was also associated with the overall Neoliberal movement. Von Hayek, himself, proposed the founding of private "think tanks" as the long-term strategy as to change the conventional wisdom of society at large and to influence political structures.
It seems that you want to either seperate economic system/structure from political structure or indicate that economic structure satisfies the requisites political governance. The former only occurs in theory, not in reality, and the latter depends upon your vision of governance. Free market systems serve to entrech wealth over the long term as disparities develop, which will absolutely happen in a winner/loser system. With disparities of wealth, all men are not created equal, especially those born into wealth. Therefore, this wealth will create inequity in the PURSUIT of happiness from the outset; egalitarianism is deconstructed. Therefore, societal equity and democracy suffers when this economic system is allowed to dominate society…which occurs in ‘free markets’. Further, the supposed natural law of markets is a fallacy. Truly free markets only exist at very small scales; entrenched wealth creates new rules as the system increases in scale for many reasons, i.e. lack of perfect knowledge (a pivotal point that separated real world from theory), anonymous actors, etc. Recognizing this is important.
In the end, nowhere do I argue for one absolute theoretical system/structure over the other; I do not prescribe to absolutes since these will never exist and will never work since these demand ubiquitous belief systems. Nor do I argue that your beloved Austrian School is invalid; I am only critiquing aspects. I not a proponent of central banking, nor specific regulations, especially those in existence today. I personally prefer a regulatory system (societal agreement) that is as simple and streamlined as possible; the specifics being debatable. My position is that we need to preserve not only economic competition, but also the tennets of a pluralist democracy. For these to coexist, society must remain diligent, flexible and not overly reactive. Part of this is not regulating outcome, but ensuring that rules apply to all and that citizens can still pursue some happiness (i.e. their rights are protected). As a final thought, we have to think of this debate outside of the perfect theoretical landscape, but in terms of a limited world where there are already extreme wealth disparities due to force. The former being one of the points of CM in the Crash Course. I could go on with my idealized view of gov involvement, but I digress.
I don’t know, but I would guess that we would agree on many things, but for many reasons have come to understand the world a bit differently. That is fine…and good as indicated by the sharing of ideas and resulting debate. Since I value democracy (a socialist system) as the best bet for governance, I tend to lean towards preserving civil liberties over perserving the pursuit of economic profit…if necessary to make a choice. I think we have all said our peace on this issue and I really like debating these topics with you and others. Society needs to be more like this, individual engaged in conversations about the foundations of our lifestyles, not last night’s reality tv.
DDon,
I am sorry…I meant to acknowledge that my phrase choice was emphasizing my own take on von Mises’ political philosophies. The words "disdain for populist democracy" is an extrapolation of the "responsible men" notion.
Lippmann’s name holds significance for the evolution of neoliberalism in the wake of the New Deal for one primary reason. His ideas inspired the convening of the Colloque Walter Lippmann in Paris in August of 1938. Two of the founders of neoliberal ideology from the original Austrian School of Economics, Ludwig von Mises and Friedrich von Hayek attended this colloquium and based many of their ideas for neoliberal tactics on Lippmann’s ideas on propaganda and the role of the “responsible men.” Immediately afterward, Hayek would attempt to assemble a group of responsible men, noted for their commitment to the principles of economic liberalism under the banner of the Society for the Renovation of Liberalism. Though World War II would stymie their efforts, Hayek would renew them in 1947 when he convened the first meeting of the Mont Pelerin Society. Lippmann also attended that meeting.
We should not underestimate the significance of Lippmann’s associations with Hayek and the Mont Pelerin Society. In 1944, Hayek published The Road to Serfdom, in which he appropriated and applied an pseudo-Darwinian argument to explain that social history reveals a pattern of “natural selection” very similar to that revealed in natural history. Hayek used this argument to contend that only the “fittest” institutions survived. Older and more primitive institutions, he argued, suffered from a “collectivist” or “communal” orientation that inhibited individual liberty. Ignoring the corporate power behind Italian and German fascism, Hayek equated this “collectivist” principle with both fascism and socialism. He used this rhetoric to attack the anti-liberal policies of John Maynard Keynes and Roosevelt’s New Deal, arguing that any form of state intervention or planning would lead society toward fascism. Returning to his theory of social evolution, Hayek contended that history had proven three institutions to be of greatest value to humanity: the family, the church, and the free market.
Gabbard and Atkinson, 2007
ajparrillo -
I didn’t intend for a passionate response to be taken as arrogance - my apologies if it came across that way.
Certainly, I too appreciate the thoughtful debate, and it is through reasoned discourse, free from either government or populist restriction, that we will find the best solutions to obstacles and difficulties which await all of us.
Appreciate the discussion.
BRgds
GDon,Good stuff. I realized also that my reply sounded a bit accusatory in its intial tone…I think we are all passionate. Again, I think we would mostly agree on many issues. What I try to keep in mind that even though I may have some similar views with others, that we have probably come to these by very different routes that includes diverse sources of information…at least I hope so. I would hate to have a world where inportant information is scarce and narrowly defined. Again…good debate and keep fighting the good fight!