Thursday, February 10, 2005

On the Philosophy of Poverty, and the Poverty of Philosophy

Interesting long flamewar I had with a true believer in Laissez-faire the other day. Mostly shouting and insults, but some things struck me.

While I certainly do not believe capitalism is the end all to be all of economics, I certainly prefer it to some command economy based on a the insanity of a worker's party. I much prefer living in a bourgeoise democracy than a "communist" dictatorship. And it doesn't take a genius to realize both from seeing the results, to even reading cursory Marxist/Leninist theory, that they had their heads up their asses when it came to positing what should replace capitalism.

So for all true believers in laissez-faire a few notes for you:

1.) The closest we ever got to the system of laissez-faire (and it was pretty damn close, the closest you're ever likely to get in a real world circumstance), was England in the late 1700's to 1800's. And for the average working person it sucked shit through a straw because you got screwed daily, and if you put up any resistance, or tried to argue for better wages and/or working conditions, you got thrown into the massive army of the unemployed. These scenes are what caused Marx & Engles to write what they did in the first place. Roll a die with 1000+ sides, unless you rolled a 1, you were likely to be one of those people getting screwed. So much for your dreams eh?

2.) It can never happen again. The structure of mass corporate capitalism, investment and monetary capitalism, not to mention the state of international trade and development has not only surpassed the laissez-faire system, but pretty much made it impossible to impliment. Even if you could re-impliment it, it would not hold, because of the tendancy of competition to decrease and the tendancy of surplus to rise (which are still elements under our present system).

What do I mean by tendancy of competition to decrease? Well, lets take company A, which owns dominant share in market B. You start up company C, to compete with company A in market B. You both comprise the totality of this market, Each next player in this market, in order to successfully compete with either of you, requires more startup money than the last player, to successfully wrest a percentage of the market from Company A or B's grasp. This would happen even if you started from a position of perfect equality from the standpoint of the first players, with equal amounts of the market. Because each would invest to different amounts of return, and thus achieve different shares of a market, eventually dwindling out those who recieved the lowest returns. What happens in reality, is that eventually competition in a market reaches an equilibrium, where there is not too much, nor too little. This is the Coke Vs. Pepsi phenomena, smaller players are kept out of the game, by keeping competition low among the big players, thus limiting price competition and ensuring they both (or sometimes even more than two dominant players in a market) retain market dominance.

The standard reply to this criticism is what Shrumpter called "The Torrential Gale of Creative Destruction", or rather the ability of new technology to create new markets. However, even a cursory glance at the history of how this effects both class mobility, or the holdings of various major companies proves this false on the face of it. It's little more than a light breeze, and generally only upsets the larger players which are unable or unwilling to buy into the new technology, and they in turn get bought or mergered with the dominant players who do. This still in effect limits competition, and causes it to decrease and approach equilibrium. Even when you look at new startup companies in an existing market, they tend to have been started up by another large company seeking to enter into a new market, with the advantages of new technology, not by smaller players. Smaller players who enter into new markets tend to be bought up by larger players in existing markets. That's not to say that some don't survive this, and that old dinosaurs don't die off, but rather that they are the exception and not the rule.

Tendancy of surplus to rise refers to the surplus value of capitalist accumulation that cannot meaningfully be spent on goods and services, and can thus cannot be sufficiently absorbed by the economy. That is, if you make 10 billion dollars, in personal income, there's only so much you can spend on widgets, even luxury widgets, and as more and more of the economy becomes concentrated upward in this fashion, the more likely that economy is to become stagnant. Even when you consider that they can put this money into investment purposes rather than widgets, that only exascerbates the problem, as it causes the surplus to rise even more, by creating dominant returns on investment to those who allready hold large chunks of surplus capital. The ultimate effect, if not allowed to reach equilibrium, is a deflation of demand, and astronomically rising inequality.

3.) That I might use marxist analytical tools, does not mean I am a raving Marxist/Leninist. That Soviet Communism failed, that Marx was an idiot when he called for a "Dictatorship of the Proletariat" or even that his works had limitations, do not discount some of the major contributions he made to examining the structures of economies and social structures.

4.) There are not only two alternatives on the plate here. There is not a dichotomy between Free Market Capitalism and Communism. The cold war is gone, get over it. There have been lots of different types of economies, and even ones that don't make economic "sense" still lasted thousands of years. Even laissez-faire could come back in the event of a total collapse of our current economic structure, (and what I meant by "it can't happen again" in the first place, was that you cannot work backward and impliment it), even traditional economies could make a comeback. The Soviet Union could have lasted 1,000 years despite being evil, corrupt, and stupid. It's not like the Roman Empire didn't fit those adjectives compared to our current understanding, and it's not like the Greeks weren't highly enlightened, and blessed with the best society in comparison to their contemporaries, and their society still got beat out by the unenlightened and armed.

5.) You (as a laissez-faire true believer) suffer from the same thinking that makes die-hard Marxist/Leninists unbearable. You extrapolate single instances to apply to the whole, you believe in a "one true way", and you ignore what the results of your ideology would be to the suffering milions, followed to their logical conclusions. Another point which makes you both mirror images and unbearable: anything less than total obediance to your ideology is "tyranny".

Concluded for now, until I feel the need to rant about it again.

EDIT:

Oh, and one other thing, what do I believe will replace our current form of capitalism? Who the fuck knows.

What I do believe, assuming the human race survives to see it, is that you will eventually see the destruction of economics as we know it, by technology which allows for cheap ubiquitos energy, and cheap ubiquitos churning out of widgets with, cheap ability to produce both technologies. Such a point will make scarcity obsolete, and thus make capitalism more or less irrelevent, but also the traditional ideas of communism and socialism as well. The caveats to this are: That capitalist, statist, or other types of ownership of this technology must be entirely disallowed, and that we must actually structure our economy to become obsolete in order to adequately pursue this, and finally: that we must not kill eachother off in the process.

It may very well be our current form of capitalism that produces this, or something that comes out of a General Protective Liscense. It may take 1,000+ years, and 30 more types of economies to produce this.

It may also never happen.

Its the last one I'm worried about most.

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