Economics Questions

Re: Capitalism is not Free-Market

ama gi — Thu, 24 Apr 2008 09:35:52 GMT

I think it is important to make a distinction between those who favor free market our of principle, and those who favor it for the sake of profit. Those who favor free markets only to make a profit will favor state intervention when it is more profitable than earning wealth on the free market.

Re: Capitalism is not Free-Market

Niccolò — Thu, 24 Apr 2008 02:16:12 GMT

wuzacon:

Thank you that is a definition. However, the rest of your argument is now circular.

The argument is not circular.

wuzacon:

As I understand Marx, this type of monopoly business is what he was railing against. That doesn't make it capitalism unless you use your definition, for which you have cited no authority.

The authority is that capitalism is a term defined to describe a political economic system of the contemporary time - a time where businesses and merchants were as in bed with government as any other time.

wuzacon:

And in any event, Marx was against private property -- the very essence of your preferred free market entrepreneurealism. Also, I did not ask about the Muscovy Company. I had already discussed the history of the Muscovy Company. I asked about the connection between the Muscovy Company and "Capitalism," which also does not appear in your chosen citation of the history of the Muscovy Company.

Given all of the above, I don't see any need to stop equating the term "Capitalism" with a free market economic system. Wikipedia specifically segretates mercantilism from capitalism. Wikipedia upends your scapegoat argument by stating that Adam Smith defined the mercantilist system in 1776. It goes on to define capitalism as follows:

Yes, wikipedia does, as you do, yet it is still wrong. So goes the general persuasion of a society submerged in wrongheaded terminology.

Mercantilism has always been capitalism, however, as capitalism had a bad name, capitalist apologetics - to save their term, just defined a scapegoat for the diseases of the masses.

wuzacon:

There is no mention of reliance on the state in this definition. Seems like a perfectly good word to me, and generally well understood to be equated with the free market economy.

It's an awful word, and the continued use of it will damn any progress that free market advocates try to make.

Re: Capitalism is not Free-Market

Sage — Thu, 24 Apr 2008 01:54:34 GMT

JonBostwick:

Legitimizing the Corporation

Exactly. Kinsella hits the nail on the head. Corporations can exist in a free society because limited liability, legal personhood, etc can be created contractually.

However, I do imagine they would be much less powerful than today with no barriers to entry.

Re: Capitalism is not Free-Market

wuzacon — Thu, 24 Apr 2008 00:12:15 GMT

Niccolò:

wuzacon:

A negation is not a definition.

So that capitalism is a system of business relying on the institution of a state is not a definition... Ok then.

Thank you that is a definition. However, the rest of your argument is now circular.

Niccolò:

I took it for granted that even a child could do a quick google search about, "The Muscovy Company."

[The Muscovy Company] began in 1553 as a group supporting exploration of a possible northeast passage to Asia. An expedition under Richard Chancellor reached the White Sea, and Chancellor himself continued overland to Moscow. The company was chartered in 1555, with a monopoly on the newly opened Russian trade, and between 1562 and 1579 it financed expeditions to establish overland trade routes to Persia. In 1646, English merchants were excluded from Russia, but trade reopened on the restoration (1660) of Charles II, and the company was reorganized as a regulated company. It lost its monopoly, long a subject of political opposition, in 1698 but continued in existence until 1917.

The Columbia Encyclopedia, Sixth Edition. 2001-07.

In fact, throughout most of history, and indeed the history of capitalism, the notion of a "free-trade" and a "capitalist" economy has always been in the form of merchant capitalism - i.e. what capitalist apologetics now term, mercantilism (a scapegoat for poor, beaten capitalism ).

Indeed, this seems to be the system that Marx pointed out - wrongly conflating it with free-markets - in his Communist Manifesto.

As I understand Marx, this type of monopoly business is what he was railing against. That doesn't make it capitalism unless you use your definition, for which you have cited no authority. And in any event, Marx was against private property -- the very essence of your preferred free market entrepreneurealism. Also, I did not ask about the Muscovy Company. I had already discussed the history of the Muscovy Company. I asked about the connection between the Muscovy Company and "Capitalism," which also does not appear in your chosen citation of the history of the Muscovy Company.

Given all of the above, I don't see any need to stop equating the term "Capitalism" with a free market economic system. Wikipedia specifically segretates mercantilism from capitalism. Wikipedia upends your scapegoat argument by stating that Adam Smith defined the mercantilist system in 1776. It goes on to define capitalism as follows:

Capitalism refers to an economic and social system in which the means of production are predominantly privately owned,^[1]^[2] are operated for profit,^[3] and in which investments, distribution, income, production and pricing of goods and services are determined through the operation of a market economy. It is usually considered to involve the right of individuals and corporations to trade, using money, in goods, services (including finance), labor and land.

There is no mention of reliance on the state in this definition. Seems like a perfectly good word to me, and generally well understood to be equated with the free market economy.

Re: Capitalism is not Free-Market

Niccolò — Tue, 22 Apr 2008 15:22:58 GMT

JonBostwick:

How do you know? In either case? What stateless society proved the existance of property? If propery can be justified on purely natural rights, or even utilitarian grounds, then so can the corporation.

Even if it were historically true that the corporation has only existed under the state, that would not prove that corporation can only exist under the state.

If corporations exist because of the state, then they would disolve in a stateless society. If corporations were able to function without the state, then they would prove themselves to be market entities.

So how you feel about them is irrelevant. If you are right and they are statist, they will disapper without your help. But if you are wrong, you would be crusading against a peaceful use of another person's property.

Yes, this is a valid point. I think, however, that my concern was more of one in which property has existed - and does exist - without the state, whereas corporations seem only to exist because of the state.

I really do think that it's just a matter of considering the current constructs as they are though. The idea of a corporate model isn't really nefarious at all.

Re: Capitalism is not Free-Market

Nitroadict — Tue, 22 Apr 2008 13:55:25 GMT

liberty student:

JonBostwick:
I don't believe that benefitting from the state is proof enough that one person is guilty of the State's crimes.

Corporations do not neccesarily get their income from the government, they get it from participation in the market. I'm opposed to the idea that if an activity is prohibited, except for a certain group of people, that those people are aggressors.

Certain Indians Reservations are allowed to gamble in California, though its outlawed in the State. These Indians should not be accused of being branches of the State. The crime here is not that the State allows Indains to gamble, its that the State forbids others from doing it. If a fellow slave is more privileged by the master than us, it does not mean he is guilty of the master's crimes.

Obviously, things would be very different without the state. And maybe without the state no one would choose to create corporations, but I see no moral conflict between limited liability and market anarchist.

Now you did it. You opened Pandora's box.

...and I'm all out of bubblegum, damn.

Re: Capitalism is not Free-Market

liberty student — Tue, 22 Apr 2008 13:07:43 GMT

JonBostwick:
I don't believe that benefitting from the state is proof enough that one person is guilty of the State's crimes.

Corporations do not neccesarily get their income from the government, they get it from participation in the market. I'm opposed to the idea that if an activity is prohibited, except for a certain group of people, that those people are aggressors.

Certain Indians Reservations are allowed to gamble in California, though its outlawed in the State. These Indians should not be accused of being branches of the State. The crime here is not that the State allows Indains to gamble, its that the State forbids others from doing it. If a fellow slave is more privileged by the master than us, it does not mean he is guilty of the master's crimes.

Obviously, things would be very different without the state. And maybe without the state no one would choose to create corporations, but I see no moral conflict between limited liability and market anarchist.

Now you did it. You opened Pandora's box.

Re: Capitalism is not Free-Market

Bostwick — Tue, 22 Apr 2008 10:39:22 GMT

Legitimizing the Corporation

Re: Capitalism is not Free-Market

Bostwick — Tue, 22 Apr 2008 10:26:59 GMT

Brainpolice:

If all current corporations are invalid because we do not have a free market, then all current property is invalid for the same reason

No, that does not logically follow. Why do you conflate "property" and "corporation" as if they are 100% synonamous? Not all of current property is the result of the same direct relationship to the state that a corporation may have.

You are trying to show that corporations are illegitimate because of their relationship to the state. But all property is the result of a relationship with the State. Clearly only people who respect the state are allowed to own property.

I did not mean to imply your ideas are marxist. I'm trying to point out a possible hazard in your logic.

Brainpolice:
But I am saying that they wouldn't be anywhere near as sucessful and centralized without the boost of the state. I am saying that free competition would have otherwise disallowed them from amassing as much power as they currently have. As they are not the result of a pure laissez-faire economy. That should be obvious.

I don't believe that benefitting from the state is proof enough that one person is guilty of the State's crimes.

Corporations do not neccesarily get their income from the government, they get it from participation in the market. I'm opposed to the idea that if an activity is prohibited, except for a certain group of people, that those people are aggressors.

Certain Indians Reservations are allowed to gamble in California, though its outlawed in the State. These Indians should not be accused of being branches of the State. The crime here is not that the State allows Indains to gamble, its that the State forbids others from doing it. If a fellow slave is more privileged by the master than us, it does not mean he is guilty of the master's crimes.

Obviously, things would be very different without the state. And maybe without the state no one would choose to create corporations, but I see no moral conflict between limited liability and market anarchist.

Re: Capitalism is not Free-Market

Brainpolice — Tue, 22 Apr 2008 09:44:17 GMT

JonBostwick:

Does it occur to you that you are using the same anti-statist argument against corporations that Marx used against property?

No, I believe you're using Marxism as a mischaracterization. My quarrel is not with private property. My quarrel is with the patronage between buisiness and state and special protections to buisiness (including legal statuses).

I would also apply the same arguments I'm making against corporations to central banks and contemporary unions. They are not free market entities. They are a bunch of damn cartels.

Re: Capitalism is not Free-Market

Brainpolice — Tue, 22 Apr 2008 09:43:11 GMT

If theory can justify property, theory can justify the corporation.

At face value, the latter statement does not logically follow from the former. The corporation is not the exact same thing as "property" in general. The corporation is not purely the result of legitimate economic means. It is the result of a combination between economic and political means. It is the product of a degree of state intervention, protection and patronage.

The labor theory of value is fallacious. Anything scarce can have value, not just labor.

I said the labor theory of property, not the labor theory of value. The labor theory of property is merely neo-lockean and/or Rothbardian homesteading theory. I don't adhere to a labor theory of value.

Agreed.

Well, my entire point is that the contemporary corporation is not consistantly in line with libertarian theory of justice in property.

I can. You're the one trying to use the current legal status as proof that corporations are excluded from the rightful ownership of property. You are using the same fallacious argument as vulgar libertarians, only in reverse.

I'm not saying that those particular organizations necessarily have zero rightful ownership. But I am saying that they wouldn't be anywhere near as sucessful and centralized without the boost of the state. I am saying that free competition would have otherwise disallowed them from amassing as much power as they currently have. As they are not the result of a pure laissez-faire economy. That should be obvious.

If all current corporations are invalid because we do not have a free market, then all current property is invalid for the same reason

No, that does not logically follow. Why do you conflate "property" and "corporation" as if they are 100% synonamous? Not all of current property is the result of the same direct relationship to the state that a corporation may have.

Re: Capitalism is not Free-Market

Bostwick — Tue, 22 Apr 2008 09:36:32 GMT

Does it occur to you that you are using the same anti-statist argument against corporations that Marx used against property?

Re: Capitalism is not Free-Market

Bostwick — Tue, 22 Apr 2008 09:33:48 GMT

Brainpolice:

If corporations were able to function without the state, then they would prove themselves to be market entities.

At which point they would cease to be corporations in any contemporary sense of the term.

Even if the concept of limited liability remains intact?

Re: Capitalism is not Free-Market

Brainpolice — Tue, 22 Apr 2008 09:30:30 GMT

If propery can be justified on purely natural rights, or even utilitarian grounds, then so can the corporation.

A utilitarian analysis is not enough. The corporation may be defended on certain utilitarian grounds, but it cannot be legitimized via utilitarian theory. The contemporary corporation as a legal entity is not justified based on non-utilitarian libertarian theories.

Even if it were historically true that the corporation has only existed under the state, that would not prove that corporation can only exist under the state.

The premise at hand is not that corporations have existed under the state, it's that they are the result of the legal privilege of the state. They are the consequence of legal status, patronage with the state and cartelization.

If corporations exist because of the state, then they would disolve in a stateless society.

And they will.

If corporations were able to function without the state, then they would prove themselves to be market entities.

At which point they would cease to be corporations in any contemporary sense of the term.

Re: Capitalism is not Free-Market

Bostwick — Tue, 22 Apr 2008 09:28:56 GMT

Brainpolice:
Property in and of itself does not derive from the state. Property naturally forms as a result of the transformation of resources by people (I.E. the labor theory of property)

If theory can justify property, theory can justify the corporation.

The labor theory of value is fallacious. Anything scarce can have value, not just labor.

Brainpolice:
But not all currently existing state-defined property titles are just according to libertarian theory dealing with legitimate and illegitimate property aquisition/appropriation.

Agreed.

Brainpolice:
Surely you make a distinction between the currently existing legal status of property and rightful ownership of property?

I can. You're the one trying to use the current legal status as proof that corporations are excluded from the rightful ownership of property. You are using the same fallacious argument as vulgar libertarians, only in reverse.

Brainpolice:
Currently existing corporations are not natural formations from a free market, as we don't have a free market.

If all current corporations are invalid because we do not have a free market, then all current property is invalid for the same reason. But you are not speaking against all current corporations, you are opposed to all corporations that could ever exist.