Economics Questions

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

filc — Wed, 31 Mar 2010 21:19:41 GMT

wilderness:
What kind of gov't is that? Even a monopoly on currency via gov't is a tax on purchasing power.

Indeed, seems like a fairytale notion. I would agree. A government that doesn't tax, and only offers business subject to consumer sovreignty is no government at all, but just another business. :)

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

wilderness — Wed, 31 Mar 2010 21:02:47 GMT

filc:
But all things aside, assuming no taxes, theres nothing wrong with government attempting to make a profitable business.

What kind of gov't is that? Even a monopoly on currency via gov't is a tax on purchasing power.

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

filc — Wed, 31 Mar 2010 20:11:47 GMT

Smiling Dave:
2. Mises in Socialism disagrees with you. But I think he is talking about things like the post office, where the people have an option of not buying the product the state offers.

If the state has a national business and it's funded by no means of coercion(cannot be funded by taxes) then there is nothing wrong with that service at all. It's entirely subject to consumer sovereignty. The state would have all the normal incentives and feedback mechanisms to judge their performance.

The problem is the state does not do this, they force consumers to pay for the service via taxation, whether they actually use it or not. But all things aside, assuming no taxes, theres nothing wrong with government attempting to make a profitable business. The problem is it never does that, it always uses some level of force or coercion to keep it's bad business afloat.

Smiling Dave:
3. In an interventionist thing, like regulating an industry, or taking from the rich to give to the poor, I don't see how your above analysis would apply.

Interventionism is still a disruption of the direction of the consumers. It's really another article all together but essentially the consumers are more or less directing things in a free market. When interventionism is applied the consumers wishes are what is lost.

When usually happens in that case is a State or government nationalizes a private industry, so they just end up in one of the models I describe above.

Thanks for the kind words Dave!

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

Smiling Dave — Wed, 31 Mar 2010 19:59:01 GMT

Fascinating article, great graphics.

Here are some things I thought about when I read it:

1. I think your analysis holds water for those services the state provides "for free", like roads, schools, police, things like that.

But what about if they nationalize an industry, then charge for it, like the post office? Would there not be feedback from the consumer in such a case?

2. Mises in Socialism disagrees with you. But I think he is talking about things like the post office, where the people have an option of not buying the product the state offers.

3. In an interventionist thing, like regulating an industry, or taking from the rich to give to the poor, I don't see how your above analysis would apply.

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

wilderness — Fri, 26 Mar 2010 17:03:03 GMT

Thanks filc. Enjoyed the post tremendously!

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

filc — Mon, 11 Jan 2010 00:35:57 GMT

Thanks for the response Lilburne. My ISP is crapping out atm but when it comes back up I'll give your response some consideration. I'm not disagreeing with you at all necessarily, my concern is that calling things bureaucratic by todays standards may confuse people of our position on why we think bureaucracy does not work.

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

filc — Mon, 11 Jan 2010 00:33:31 GMT

bloomj31:
The more I've been reading, though, the more I've come to conclude that properly, "segmented socialism" is better known as corporatism.

Yes I didn't get into the specific taxomony if different types of government models but I would assign corporatism as being a type of fascism, which is ultimately type of socialism. It's socialized because the costs are shared amongst all citizen's against their will and the fascist private firm are directed by the state. It is no less a socialized service though, it's cost is shared amongst the entire nation. Even if it is a private firm the state is paying for.

bloomj31:
Socialism, according to what you note as its proper definition, is where the state owns the means of production. This usually doesn't work and as far as I know, our government doesn't own much.

Well in my essay above I haven't attempted to classify our present government programs in a specific type of model. My essay is showing the link between all models. What you provided here was the traditional definition of socialism, that is not what my essay argues as I explained in the opening paragraphs. My essay is showing that socialist programs are socialist because they cannot calculate, they are incapable of calculating because of the use of coercion which breaks step 2 of my summarized model to the formation of prices. With step two broken we cannot adequately read what consumers desire.

So in my essay I try to explain that coercive monopolistic programs are what we call socialist. I know that this has far reaching consequences and Caley McKibbin has brought this up, but considering things from a calculating stance I think it's all very consistent. Ultimately it's the difference between voluntary and involuntary trade.

bloomj31:
Now doesn't that sound more like what we have now rather than a situation where the government literally owns everything? I mean what does the government really own?

On paper the government may not own it, but they still control and direct it's productive use. The only reason why they don't own it is red tape. Fundamentally the difference between fascism and socialism is red-tape, and who's names are on various titles of ownership. The mechanical process of fascism and socialism are identical however. The only difference is where/who owns the capital. But even if the capital is owned privately, if it is being operated and managed by the state the same results will occur, inability to calculate.

bloomj31:
Notice he's not talking about owning the companies, he's talking about having his hands in them. He's talking about having them as a part of the State.

I briefly tried to explained this in my section "Consequences of my argument". That ultimately it matters not who owns the capital, if owners cannot freely employ it as they see fit.

bloomj31:
"Fascism desires the state to be strong and organic, based on broad foundations of popular support. The Fascist State lays claim to rule in the economic field no less than in others; it makes its actions felt throughout the length and breadth of the country by means of its corporative, social and educational institutions, and all political, economic, and spiritual forces of the nation..."

Yes and I'm not sure I'd hold Mussolini as an authority of economics and economic categorization. Marx does the same thing to capitalists, they are allegedly slave drivers to the laborer. It is ofcoarse just rhetoric, just as Mussolini's statement above. It has no real tangible meaning or value.

bloomj31:
But fascism and socialism are very different even in terms of practical application and historical manifestation. Stalinist Russia was almost purely socialist. Mussolini's Italy was almost purely Fascist.

Well in my essay I'm explaining that the two fail for the same reasons. If we do not call them socialized programs what do we call them in terms that are not misleading? The only differences between the two systems are aesthetics, mechanically they operate the same. Most people understand why socialism fails, because it cannot calculate. Many folks however do not understand why fascism fails. The point of my essay is to show that they fail for precisely the exact same reasons. Using a more consistent terminology will help people understand this. The only difference between the two are aesthetics of who's name is on a piece of paper, like a title of ownership. The state however still dictates the control of said private property, regardless of whether it's state owned or not.

bloomj31:
Couldn't one direct something without owning it?

This goes back to the Consumer Sovereignty section I wrote. Ultimately it's the consumers who need to be sovereign. When they are not is when things break down. Again all of these attributes are identical for any type of coercive monopoly, regardless of what we call it.

bloomj31:
I understand what you're saying. And perhaps, functionally, they can look identical. But, at least nominally, the corporate state leaves the deed of ownership in private hands

So the point of my essay is to show that the differences are simply aesthetics and superficial. Let me give you another analogy. It's like calling black people a different race from white people, but not calling red heads a different race from brown heads. Fundamentally there is one race, the differences can be found in our gene's. If we beleive black people are their own race then we also have to beleive that blue eyed people are their own race. What about blue eyed black people?

So the point is that they are not different. Humans are humans with different aesthetics, differences, preferences, ect... Fascism/Socialism are one in the same mechanically. I am not arguing the degree to which a specific state model is likely to socialize a market. It may be true that fascism smaller in size than heavy socialized countries, it may not. I am not debating at which specific model is more likely to annex the largest portion of the economy. socialism.

Thanks for the kind words LS, and thanks for the contributions everyone else. And thanks for posting Bloom.

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

Daniel James Sanchez — Sun, 10 Jan 2010 23:11:11 GMT

Wow filc, the extent to which you've actually carefully studied Mises is admirable and heartening. I'm rather blown away by this post.

I must still disagree, and still hope that you do not convince many people. But even so, this post is highly valuable for the cogent expression of the Misesian fundamentals you've marshaled to make your case.

filc:
If we are not supposed to call individual state programs socialized what do we call them? I'll not accept bureaucracy as some have argued as even corporations can be bureaucratic but can calculate on the market correctly using prices.

I think it is a misnomer, in Misesian terms, to call a corporation bureaucratic. Corporations should be said to be managerial, but not bureaucratic, because they operate under profit management, and not bureaucratic management. I'll post again this passage which I've recently posted elsewhere:

"Bureaucratic management, as distinguished from profit management, is the method applied in the conduct of administrative affairs, the result of which has no cash value on the market. The successful performance of the duties entrusted to the care of a police department is of the greatest importance for the preservation of social cooperation and benefits each member of society. But it has no price on the market, it cannot be bought or sold; it can therefore not be confronted with the expenses incurred in the endeavors to secure it. It results in gains, but these gains are not reflected in profits liable to expression in terms of money. The methods of economic calculation, and especially those of double-entry bookkeeping, are not applicable [p. 309] to them. Success or failure of a police department's activities cannot be ascertained according to the arithmetical procedures of profit-seeking business. No accountant can establish whether or not a police department or one of its subdivisions has succeeded." (Human Action, ch. 15)

Also, a bureau is a parasite on a market, while an autarkic socialist state (autarky being necessary for a state to be considered socialist in the strict sense) is a parasite on whatever paltry means there happens to be in a non-market barbarous mass of humanity. I think it is useful to distinguish between the two.

Another advantage with the "bureaucracy/socialism" divide is that the terms are dissimilar. A "socialism in particular/socialism in general" divide will lead to confusion between the two terms. We have enough confusion fostered by such non-dissimilar divides as "capital good/capital value", "general profit/pure profit", "prices (speaking loosely to include fiat prices)/prices (speaking strictly to exclude them), "inflation (money supply)/inflation (price level)", and many others. We shouldn't be deliberately creating more.

Also, in terms of rhetoric, if we go your route, we can no longer use the calculation argument to say that socialism is theoretically impossible. This statement has gotten a lot of mileage in tarnishing the prestige of socialism, and I think it would be disadvantageous to throw it away.

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

filc — Sun, 10 Jan 2010 22:40:21 GMT

I dont know why but something is FUBAR'd on this thread. I can't post any meaningful replys.

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

bloomj31 — Sun, 10 Jan 2010 22:01:34 GMT

nirgrahamUK:

bloomj31:
Couldn't one direct something without owning it?
i think you have in mind directing as 'suggesting' but if you think about what it means to have the right to manipulate the good in question in a certain way, and to exclude others from interfering, what else is that other than ownership ?

I understand what you're saying. And perhaps, functionally, they can look identical. But, at least nominally, the corporate state leaves the deed of ownership in private hands. Also, the degree to which the corporate state "directs" production and consumption varies. In a truly socialist state, the deed is not in private hands and all levels of the production and consumption cycle are completely controlled by the state.

Take, for instance, banks in America. They're privately owned, privately held. The profits the companies retain are distributed in the forms of dividends and higher share values to the shareholders. But, there's also a safety net. That safety net is financed with public money. So if they fail, they're bailed out. It's the PPCC game. Privatize profit, commonize cost. But this isn't the same thing we'd see under a socialist state, where both the profits and the costs would be commonized.

Additionally, the state grants certain privileges to certain institutions. So they pick and choose who does well. Bear Stearns and Lehman Brothers didn't get picked. Goldman Sachs seems to have come out great in all this. This isn't indicative of socialism to me. In my mind, it's corporatism, pure and simple.

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

nirgrahamUK — Sun, 10 Jan 2010 21:49:38 GMT

bloomj31:
Couldn't one direct something without owning it?

i think you have in mind directing as 'suggesting' but if you think about what it means to have the right to manipulate the good in question in a certain way, and to exclude others from interfering, what else is that other than ownership ?

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

bloomj31 — Sun, 10 Jan 2010 21:45:05 GMT

nirgrahamUK:

'has its hand in' is just code for 'part owns'. if they are the only hand, they are the owners.

Couldn't one direct something without owning it?

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

bloomj31 — Sun, 10 Jan 2010 21:44:19 GMT

Ok, fine. But for someone who accepts statism, like me, the differences seem huge.

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

nirgrahamUK — Sun, 10 Jan 2010 21:44:14 GMT

'has its hand in' is just code for 'part owns'. if they are the only hand, they are the owners.

Re: Genuine Socialism and Socialized Services, a semantics argument (LONG POST)

liberty student — Sun, 10 Jan 2010 21:42:45 GMT

bloomj31:
But fascism and socialism are very different even in terms of practical application and historical manifestation. Stalinist Russia was almost purely socialist. Mussolini's Italy was almost purely Fascist.

But it doesn't matter, because it is not the market.

bloomj31:
You may not value categorizations, but I do. In my opinion, there is a continuum of ideas here that cannot be adequately dichotomized as "market" or "state.'

bloomj31:
Also, as you have told me before, something isn't necessarily true just because everyone agrees with it.

For the purpose of communicating ideas, it is necessary to use clear language. This isn't an argument to populism, it is pointing out that there is very little difference between socialism and fascism, to someone who rejects statism. It's like a group of pacifists arguing over who was the better axe murderer or vegetarians arguing over who makes the tastiest all beef cheeseburger.

It's great you're into breaking down statism into all sorts of different personalities, events and structural minutiae. But that has nothing to do with the purpose or direction of the OP.