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Malawi Vs. The World Bank

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Vincent L. Anderson posted on Thu, Feb 11 2010 10:35 PM

I am in an anthropology class this semester and we are all required to read and present our opinions on an article from the book Conformity and Conflict: Readings in Cultural Anthropology. Knowing that I am interested in Economics, my instructor assigned me an article with a particularly anti-free market message. However, I fail to see how this is related to the free market at all.

How should I go about explaining that this is not an example of free markets gone awry to my class? I genuinely want to make sure I have the best possible points because I know that many of my classmates are hardcore statists, and will attack me when it comes to the Q&A after the presentation. Any advice I receive would be greatly appreciated.

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Esuric replied on Thu, Feb 11 2010 11:02 PM

The IMF and BIS are not free market institutions, they were created by politicians in order to manipulate international economic conditions (same is true for WTO and the coming global warming monstrosity). They pass regulations (especially on banking systems) and are not themselves regulated by the any market. Wal Mart is a free-market institution, for example. Furthermore, the developed western world has long abandoned capitalism--rejecting communism doesn't mean embracing capitalism. The governments of the world have chosen a "middle way" for their respective economic systems--that is, a welfare/warfare state (America more so than others).

If a nation chooses to bailout farmers, for whatever reason, then they should be free to do so--though there are negative economic ramifications for such interventions (taxes destroy capital and lowers the productivity of labor, inflation financing destroys the functionality of the price mechanism and leads to business cycles, ect). But it's up to them to measure and weigh the potential costs and benefits, and the international community should have no say whatsoever.

Your teacher doesn't understand markets, the role of capital accumulation, and the necessity of prices. Wealth does not fall from the sky, nor is it created by lawyers who run for political office, and who are expert in making empty promises. Capital, the source of wealth, must be created (savings), structured (price mechanism), and maintained. Interventionism necessarily distorts the price mechanism, prevents savings (low yields on loans), and runs unsustainable deficits for an extended period of time (until it goes bankrupt like Greece, Italy, Spain, Ireland, Portugal, and probably the U.K and U.S).

She's basically attacking a straw man.

"If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion."

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In her very book, there are some biggies that show how the system there is screwed and not exasctly capitalism. One that I remember is that the currency exchange rate is artificially kept fixed. This is not capitalism. There is another, but I can't remember it now.

At any rate here is a lil gold mine of info about Malawi's economy:

Line by line almost it shows how the place is not capitalistic at all. For example inflation is high [which as AE tells us, is govt printing money]. For another it's hard to open a business what with red tape. For a third the govt takes over 40% of GDP. There is much more.

If we define capitalism as a lack of govt intervention and interference, that place is not Adam Smith's dream world by any means.

My humble blog

It's easy to refute an argument if you first misrepresent it. William Keizer

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Thanks for all of the helpful information. I need all the help I can get considering the nature of my class.

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