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Marc Faber Warns "Karl Marx Was Right"

Tyler Durden's picture




 

Authored by Marc Faber, originally posted at The Daily Reckoning,

I would like readers to consider carefully the fundamental difference between a “real economy” and a “financial economy.” In a real economy, the debt and equity markets as a percentage of GDP are small and are principally designed to channel savings into investments.

In a financial economy or “monetary-driven economy,” the capital market is far larger than GDP and channels savings not only into investments, but also continuously into colossal speculative bubbles. This isn’t to say that bubbles don’t occur in the real economy, but they are infrequent and are usually small compared with the size of the economy. So when these bubbles burst, they tend to inflict only limited damage on the economy.

In a financial economy, however, investment manias and stock market bubbles are so large that when they burst, considerable economic damage follows. I should like to stress that every investment bubble brings with it some major economic benefits, because a bubble leads either to a quantum jump in the rate of progress or to rising production capacities, which, once the bubble bursts, drive down prices and allow more consumers to benefit from the increased supplies.

In the 19th century, for example, the canal and railroad booms led to far lower transportation costs, from which the economy greatly benefited. The 1920s’ and 1990s’ innovation-driven booms led to significant capacity expansions and productivity improvements, which in the latter boom drove down the prices of new products such as PCs, cellular phones, servers and so on, and made them affordable to millions of additional consumers.

The energy boom of the late 1970s led to the application of new oil extracting and drilling technologies and to more efficient methods of energy usage, as well as to energy conservation, which, after 1980, drove down the price of oil in real terms to around the level of the early 1970s. Even the silly real estate bubbles we experienced in Asia in the 1990s had their benefits. Huge overbuilding led to a collapse in real estate prices, which, after 1998, led to very affordable residential and commercial property prices.

So my view is that capital spending booms, which inevitably lead to minor or major investment manias, are a necessary and integral part of the capitalistic system. They drive progress and development, lower production costs and increase productivity, even if there is inevitably some pain in the bust that follows every boom.

The point is, however, that in the real economy (a small capital market), bubbles tend to be contained by the availability of savings and credit, whereas in the financial economy (a disproportionately large capital market compared with the economy), the unlimited availability of credit leads to speculative bubbles, which get totally out of hand.

In other words, whereas every bubble will create some “white elephant” investments (investments that don’t make any economic sense under any circumstances), in financial economies’ bubbles, the quantity and aggregate size of “white elephant” investments is of such a colossal magnitude that the economic benefits that arise from every investment boom, which I alluded to above, can be more than offset by the money and wealth destruction that arises during the bust. This is so because in a financial economy, far too much speculative and leveraged capital becomes immobilized in totally unproductive “white elephant” investments.

In this respect, I should like to point out that as late as the early 1980s, the U.S. resembled far more a “real economy” than at present, which I would definitely characterize as a “financial economy.” In 1981, stock market capitalization as a percentage of GDP was less than 40% and total credit market debt as a percentage of GDP was 130%. By contrast, at present, the stock market capitalization and total credit market debt have risen to more than 100% and 300% of GDP, respectively.

As I explained above, the rate of inflation accelerated in the 1970s, partly because of easy monetary policies, which led to negative real interest rates; partly because of genuine shortages in a number of commodity markets; and partly because OPEC successfully managed to squeeze up oil prices. But by the late 1970s, the rise in commodity prices led to additional supplies, and several commodities began to decline in price even before Paul Volcker tightened monetary conditions. Similarly, soaring energy prices in the late 1970s led to an investment boom in the oil- and gas-producing industry, which increased oil production, while at the same time the world learned how to use energy more efficiently. As a result, oil shortages gave way to an oil glut, which sent oil prices tumbling after 1985.

At the same time, the U.S. consumption boom that had been engineered by Ronald Reagan in the early 1980s (driven by exploding budget deficits) began to attract a growing volume of cheap Asian imports, first from Japan, Taiwan and South Korea and then, in the late 1980s, also from China.

I would therefore argue that even if Paul Volcker hadn’t pursued an active monetary policy that was designed to curb inflation by pushing up interest rates dramatically in 1980/81, the rate of inflation around the world would have slowed down very considerably in the course of the 1980s, as commodity markets became glutted and highly competitive imports from Asia and Mexico began to put pressure on consumer product prices in the U.S. So with or without Paul Volcker’s tight monetary policies, disinflation in the 1980s would have followed the highly inflationary 1970s.

In fact, one could argue that without any tight monetary policies (just keeping money supply growth at a steady rate) in the early 1980s, disinflation would have been even more pronounced. Why? The energy investment boom and conservation efforts would probably have lasted somewhat longer and may have led to even more overcapacities and to further reduction in demand. This eventually would have driven energy prices even lower. I may also remind our readers that the Kondratieff long price wave, which had turned up in the 1940s, was due to turn down sometime in the late 1970s.

It is certainly not my intention here to criticize Paul Volcker or to question his achievements at the Fed, since I think that, in addition to being a man of impeccable personal and intellectual integrity (a rare commodity at today’s Fed), he was the best and most courageous Fed chairman ever.

However, the fact remains that the investment community to this day perceives Volcker’s tight monetary policies at the time as having been responsible for choking off inflation in 1981, when, in fact, the rate of inflation would have declined anyway in the 1980s for the reasons I just outlined. In other words, after the 1980 monetary experiment, many people, and especially Mr. Greenspan, began to believe that an active monetary policy could steer economic activity on a noninflationary steady growth course and eliminate inflationary pressures through tight monetary policies and through cyclical and structural economic downturns through easing moves!

This belief in the omnipotence of central banks was further enhanced by the easing moves in 1990/91, which were implemented to save the banking system and the savings & loan associations; by similar policy moves in 1994 in order to bail out Mexico and in 1998 to avoid more severe repercussions from the LTCM crisis; by an easing move in 1999, ahead of Y2K, which proved to be totally unnecessary but which led to another 30% rise in the Nasdaq, to its March 2000 peak; and by the most recent aggressive lowering of interest rates, which fueled the housing boom.

Now I would like readers to consider, for a minute, what actually caused the 1990 S&L mess, the 1994 tequila crisis, the Asian crisis, the LTCM problems in 1998 and the current economic stagnation. In each of these cases, the problems arose from loose monetary policies and excessive use of credit. In other words, the economy — the patient — gets sick because the virus — the downward adjustments that are necessary in the free market — develops an immunity to the medicine, which then prompts the good doctor, who read somewhere in The Wall Street Journal that easy monetary policies and budget deficits stimulate economic activity, to increase the dosage of medication.

The even larger and more potent doses of medicine relieve the temporary symptoms of the patient’s illness, but not its fundamental causes, which, in time, inevitably lead to a relapse and a new crisis, which grows in severity since the causes of the sickness were neither identified nor treated.

So it would seem to me that Karl Marx might prove to have been right in his contention that crises become more and more destructive as the capitalistic system matures (and as the “financial economy” referred to earlier grows like a cancer) and that the ultimate breakdown will occur in a final crisis that will be so disastrous as to set fire to the framework of our capitalistic society.

Not so, Bernanke and co. argue, since central banks can print an unlimited amount of money and take extraordinary measures, which, by intervening directly in the markets, support asset prices such as bonds, equities and homes, and therefore avoid economic downturns, especially deflationary ones. There is some truth in this. If a central bank prints a sufficient quantity of money and is prepared to extend an unlimited amount of credit, then deflation in the domestic price level can easily be avoided, but at a considerable cost.

It is clear that such policies do lead to depreciation of the currency, either against currencies of other countries that resist following the same policies of massive monetization and state bailouts (policies which are based on, for me at least, incomprehensible sophism among the economic academia) or against gold, commodities and hard assets in general. The rise in domestic prices then leads at some point to a “scarcity of the circulating medium,” which necessitates the creation of even more credit and paper money.

 

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Thu, 11/07/2013 - 19:10 | 4132851 xamax
xamax's picture

The End is near.....

Thu, 11/07/2013 - 19:29 | 4132914 PhattyBuoy
PhattyBuoy's picture

When does Bernanke get his just deserved "Nobel Prize in Economics" ?

Thu, 11/07/2013 - 19:54 | 4133045 Pinto Currency
Pinto Currency's picture

It is not a matter of a "capitalistic system maturing" that leads to a massive crash.

It is the creation of a crony capitalistic system on a basis of centrally planned fiat money that leads to a massive crash.

Thu, 11/07/2013 - 21:13 | 4133375 Seer
Seer's picture

No, it's the meeting of theory with the REAL world...

When we start off with the premise that we can have perpetual growth on a finite planet -which is impossible- then every fucking thing that is then built on top of that is "crony."  No one can define anything for swallowing that doesn't contain the word "growth."  Allowing things to be chopped down, as Faber suggests, won't, over the long-haul, keep us from melting down from total over-consumption of Natural Capital (the physical world): sure, it'll reduce the massive swings, but "steady as she goes," when growth is the model, will, nonetheless, have its come-to-Jesus moment with mother nature.

This shit was building up from 1971 when we hit the peak.  Anyone pretending that it's some recent infestation just isn't paying attention to history (and is doomed to fall victim to a repeat performance): and it goes back as far as you can find written records- power and greed, laws/rules are no match against claws and fangs...

Thu, 11/07/2013 - 21:26 | 4133409 Pinto Currency
Pinto Currency's picture

 

The infinitely increasing physical growth and consumption story is one that has been sold to us because the fiat money debt ponzi on which the economy has been built necessitates it.

These pyramid schemes are all the same as they all require continued exponental growth until they blow up - ask Bernie.

This fiat money debt pyramid is no different.

 

Thu, 11/07/2013 - 22:10 | 4133547 SafelyGraze
SafelyGraze's picture

what we need is a mission to mars

or a levitating train or something

also houses that clean themselves

Thu, 11/07/2013 - 21:44 | 4133450 Future Jim
Future Jim's picture

"the premise that we can have perpetual growth on a finite planet -which is impossible"

That is exactly what the crony media and crony academia want you to believe; however, you forgot about increased innovation and efficiency. we have had perpetual growth in computational power for centuries, and yet the resouces involved are flat. Likewise, we are growing 3 times the amount of food as in 1960 on the same amount of land.

Thu, 11/07/2013 - 22:26 | 4133609 11b40
11b40's picture

Is the water supply flat, as well?  Is the air as clean?  Is the Ocean?  Are there as many edible fish?  

Just a few basic questions about reality vs abstract concepts or mechanical improvements.

Thu, 11/07/2013 - 22:59 | 4133736 NidStyles
NidStyles's picture

Which is why I have been saying that the governments need to get out of the way so humanity can figure a way to solve those issues and how to get it's fat ass off this rock and start doing some explorations on suitable secondary locations for storing some of the more useless humans.

Fri, 11/08/2013 - 05:16 | 4134365 zhandax
zhandax's picture

Humanity won't solve shit until these unfit beggars are so destitute that the noise level is low enough for rational discussion to take place.

Thu, 11/07/2013 - 23:07 | 4133770 brundlefly
brundlefly's picture

You of course understand that innovation cannot overcome the laws of thermodynamics and diminishing returns? Economic growth requires energy, not just capital or labor. We have used the highest quality fossil fuel energy as a replacement for human labor, and we are all rich. The production of conventional oil has not increased since 2005. We will soon be riding the downslope of Hubbard's peak, where oil shale and other low quality resources must be used and are slower and more difficult to produce. It used to take 1 barrel of oil to get out 100. Globally, we are now below 1:20. This means that the price of energy will continue its upward march because it will take more and more energy (and capital) to extract the last dregs of oil sludge. Food production increases were achieved using industrial agriculture (oil), using fertilizers mined and produced by oil. Hmm, it seems that if the rate of oil production cannot increase to meet the needs of an exponentially increasing population, we have a problem. That is just one of many limits to growth about to smack us in the face.

Thu, 11/07/2013 - 23:19 | 4133811 Future Jim
Future Jim's picture

What if we discovered the superconductors necessary to make fusion power feasible? Then you concern would sound as silly as the concern about running out of wood to burn hundreds of years ago.

Of course, the self-proclaimed Elites don't want unbridled innovation for obvious reasons.

Fri, 11/08/2013 - 00:57 | 4133985 Flakmeister
Flakmeister's picture

And what if Unicorns could shit Rainbow Skittles....

Explain to us how fusion can be used to generate usuable energy....

Edits: All I hear are crickets.... Any of you fucktard junkers care to parade your ignorance for us?

Fri, 11/08/2013 - 08:02 | 4134478 BigJim
BigJim's picture

I've been reading that fusion is a mere '10 years away'... for the last 40. It's a massive boondoggle for physicists... and the heavy industries that build their multi-billion dollar toys, and the politicians who get to look 'presidential' and 'visionary' when they vote for robbing present and future taxpayers to pay for it.

Liquid sodium Thorium reactors look very promising in comparison.

Fri, 11/08/2013 - 09:29 | 4134515 the tower
the tower's picture

We have what we need right now: 

http://www.theguardian.com/science/blog/2012/feb/09/accelerator-nuclear-reactor

We don't need dreamers and futurists, we need people who do stuff right now.

Fri, 11/08/2013 - 09:44 | 4134769 Flakmeister
Flakmeister's picture

I was at Carlo Rubbia's Energy Amplifier Talk at CERN back in the 90's...

Interesting, but it seems to have gone nowhere...

Fri, 11/08/2013 - 10:03 | 4134888 the tower
the tower's picture

Most real and actual innovations go nowhere.

This is because consortiums like Rockstar (there are many) are holding back progress... The most powerful companies in the world are hampering the evolution of tech on a massive scale.

The best thing that can happen to the world is the massive crisis we all so desperately wait for. It will break up power structures and invalidate patents, so we can finally move on.

Fri, 11/08/2013 - 10:32 | 4135055 Flakmeister
Flakmeister's picture

No, it is very simple, when you discount the cost of a new facility it does'nt make sense given the value of your existing facilities... 

For much the same reason there are no significant refineries near the Tar Sands.... 

What you describe is collapse and I doubt very much if a high tech civilization will be reappearing anytime soon, if ever...

Fri, 11/08/2013 - 09:42 | 4134758 Flakmeister
Flakmeister's picture

Call me when a single commercial reactor optimized for the Thorium fuel cycle is in operation...

You appear to have no comprehension of scale....

Sun, 11/10/2013 - 11:29 | 4140318 BigJim
BigJim's picture

Call me when a single commercial Uranium or MOX reactor is in operation without having recieved massive subsidies from .gov

Oh! THAT'S why Thorium was sidelined - because it wasn't useful in the A-bomb making process.

Twatmeister strikes again.

Mon, 11/11/2013 - 11:11 | 4142591 Flakmeister
Flakmeister's picture

Wrong....Look up Operation Tea Pot...

Do you really believe that any nuclear reactor is going to get built without massive state subsidy? Please do not insult everyones intelligence...

Mon, 11/11/2013 - 11:20 | 4142619 Bearwagon
Bearwagon's picture

Don't have to look it up to know you're right. I heard that breeding of U233 has also been part of Indias program. (By the way, ain't it interesting that the critical mass is considerably smaller than that of U235?)  ;-)

Fri, 11/08/2013 - 05:39 | 4134378 the tower
the tower's picture

The future doesn't exist yet, though you heavily bank on it.

"What if" doesn't sound very scientific, making me think that you are disconnected from society.

Taking risks with humanity with a "what if" statement is rediculous.

How about we start living within our means and embrace scientific breakthroughs when/if they happen?

Wanna know how silly your thoughts are?

The future doesn't exist, so part of your nick doesn't exist either, so you're just "Jim". That's all.

Fri, 11/08/2013 - 05:05 | 4134359 daemon
daemon's picture

"It is not a matter of a "capitalistic system maturing" that leads to a massive crash.

It is the creation of a crony capitalistic system ...."

Let me tell you a story : " Once upon a time, a guy had a great idea to make money. Being an entrepreneur, he started a business. Some years later, his business had had such a huge succes that the guy had become multi billionaire; he had made (more or less voluntarily) a lot of friends in the government (because you know, sometimes it can be useful), he had made (more or less voluntarily) a lot of friends among other successful entrepreneurs (because you know, even when there is no government, there is always someone else to "corrupt").

In the end he had become a very rich, very powerful entrepreneur, .... and a very .... crony capitalist ."

Fri, 11/08/2013 - 06:49 | 4134407 The Mist
The Mist's picture

Exactly! A sound money system would not require infinite exponential growth. A system without a central bank faking low interest rates wouldn't create massive bubbles. A system without a government interfering wouldn't award banks for fucking up and give them bailouts.

The problem is NOT capitalism! It's the god damn cronies.

Fri, 11/08/2013 - 08:06 | 4134481 BigJim
BigJim's picture

In the end, the problem is the Demos (no, not 'Democrats', but the people in the polity) who confer enormous power onto their governments, making cronyism not only inevitable but essential for businesses not to get screwed by regulation... and wind up hijacking the regulatory process and screwing everyone else.

Thu, 11/07/2013 - 19:37 | 4132938 Future Jim
Future Jim's picture

"The End is near..... "

There is reason for hope, but it is true that Everything afflicting the people (that wasn’t caused by evolution) is caused by dishonest banking and a dishonest money supply, and the watershed of problems are self reinforcing.

Also, Faber is conflating cronyism and capitalism.

Thu, 11/07/2013 - 22:57 | 4133724 NidStyles
NidStyles's picture

I'm confused how was any of this Marx? Marx never said anything about any of this. In fact it was someone that came before Marx that attacked Financialization first. It was Bastiat second.

Thu, 11/07/2013 - 19:10 | 4132853 ParkAveFlasher
ParkAveFlasher's picture

So...when are the ninjas coming for our gold?

Thu, 11/07/2013 - 19:11 | 4132854 rtalcott
rtalcott's picture

How Can A Poor Man Survive?

https://www.youtube.com/watch?v=6efQ_GyQW3o

Thu, 11/07/2013 - 19:25 | 4132903 steelrules
steelrules's picture

Always liked Ry Cooder, thanks I'll have to go through my old cassetts and give him another listen.

Fri, 11/08/2013 - 08:08 | 4134486 BigJim
BigJim's picture

He's a great musician, and a very caring fellow, but like most intelligent caring people who have never bothered to pick up an economics textbook, a dreadful lefty 'progressive'.

Thu, 11/07/2013 - 19:11 | 4132856 Flakmeister
Flakmeister's picture

This has the potential to be a very entertaining thread....

Time to fire up the popcorn maker...

Fri, 11/08/2013 - 08:09 | 4134488 BigJim
BigJim's picture

I read somewhere that popcorn makers produce a LOT of poisonous CO2, thereby threatening our beautiful sacred Gaia with fireballs and tidal waves.

Shame on you!

Thu, 11/07/2013 - 19:11 | 4132857 earleflorida
earleflorida's picture

history can vindicate its past if not forsaken'd to fatalist

Thu, 11/07/2013 - 19:13 | 4132862 pcrs
pcrs's picture

What capitalism is he talking about? The centrally planned economy from money supply to what you are allowed to grow in your garden and you get thrown in jail for collecting rain water on your own property ?

Thu, 11/07/2013 - 19:16 | 4132870 macroeconomist
macroeconomist's picture

Pfff. That shows very clearly you have never read Marx or Hilderfing, or Gramsci. This is what capitalism evolves to, as a result of its dynamics. Marxists wrote that capitalism would turn into this 100 years ago.

If you are dreaming of an anarchistic capitalism with no monopolies, no powerful interest groups capturing the state, you had better wake up to reality.

Thu, 11/07/2013 - 19:19 | 4132880 blabam
blabam's picture

There would be no state silly...

Thu, 11/07/2013 - 19:26 | 4132906 macroeconomist
macroeconomist's picture

Oh really? A capitalism without a state? 

Somethimes, the level of illiteracy on this blog astonishes me.

State is what ensures capitalist mode of production prevails and reproduces itself. Only a bunch of idiots like you might believe there can be a capitalism without a state, which protects private property.

Those bankers would be hanging on the trees now if there had not been a state which will imprison those who hang them ...

Thu, 11/07/2013 - 19:31 | 4132923 kaiserhoff
kaiserhoff's picture

Study the history of the American frontier.

We're going back to the future, those of us who make it.

Thu, 11/07/2013 - 19:35 | 4132943 Ralph Spoilsport
Ralph Spoilsport's picture

We're remembering the future too.

https://www.youtube.com/watch?v=ulL1mOECYJs

Thu, 11/07/2013 - 19:44 | 4132988 jon dough
jon dough's picture

Plus 1 for the Nektar, great band.

Wish I could find some Guru Guru, all I have are vinyl...

Thu, 11/07/2013 - 19:54 | 4133042 Ralph Spoilsport
Ralph Spoilsport's picture

There seems to be a fair amount of Guru Guru on YouTube if you haven't checked.

Fri, 11/08/2013 - 03:51 | 4134311 Ghordius
Ghordius's picture

"Study the history of the American frontier."

yes, do that. in the context of what was happening elsewhere. the American Frontier was a sparsely populated backwater. in a low-pressure zone of the planet. while the rest of the planet was engaged in high-pressure imperial dominance fights on all levels, military, political, financial and economic

that's not "looking down the nose", that's just a fact. when did Commander Perry "visit" Japan, for example?

Thu, 11/07/2013 - 19:36 | 4132944 Seasmoke
Seasmoke's picture

Protects private property....ha ha ha

Thu, 11/07/2013 - 19:38 | 4132954 macroeconomist
macroeconomist's picture

Yes, not your private property, the capitalist class's private property. I cannot believe i have to explain everything like I am talking to a 15 year-old.

Thu, 11/07/2013 - 20:24 | 4133193 putaipan
putaipan's picture

marx was right about henry george too ....

Thu, 11/07/2013 - 19:39 | 4132955 macroeconomist
macroeconomist's picture

Double post.

Thu, 11/07/2013 - 19:38 | 4132953 Flakmeister
Flakmeister's picture

Munch... Munch....

Thu, 11/07/2013 - 22:04 | 4133525 SunRise
SunRise's picture

Man that sounds good - I'm going to pop some!

Thu, 11/07/2013 - 19:39 | 4132961 TBT or not TBT
TBT or not TBT's picture

Indeed, capitalism assumes protection of property rights.   Statism of the type that ate Europe and now the USA sheds that charter for a new one that takes private property for its own use, outright, or through mandates and actual threat of force, backed by its prisons, unaccountable prosecutors and law enforcement bureaucracy, and frankly all of its bureaucracy.   It has tens of thousands of felonies on the books, and unknowable amounts of regulation, plus the simple use of capricious, on-the-spot ruination of your life, or politcally motivated ruination.     The enforcement bureaucracy at the federal level are nearly 100% unionized, upwards of 95% Democrat (government party) true bellievers who look at the private sector as both milk cow and enemy.

Fri, 11/08/2013 - 08:12 | 4134493 BigJim
BigJim's picture

+17,000,000,000,000. Beautifully expressed!

Thu, 11/07/2013 - 19:57 | 4133056 blabam
blabam's picture

Because only states can provide security for private property. 

Thu, 11/07/2013 - 21:13 | 4133377 Seer
Seer's picture

Pinkerton!

Thu, 11/07/2013 - 20:05 | 4133095 Wyatt Junker
Wyatt Junker's picture

State is what ensures capitalist mode of production prevails and reproduces itself.

 

Wrong.  The State is what ensures what gets siphoned off any production that may or may not exist, since the State produces nothing. 

As for this...

Only a bunch of idiots like you might believe there can be a capitalism without a state, which protects private property.

Apparently you haven't read up on the Kelo decision.  And besides Kelo, what are taxes if not a direct lien against private property?

Thu, 11/07/2013 - 20:16 | 4133167 macroeconomist
macroeconomist's picture

"The State is what ensures what gets siphoned off any production that may or may not exist, since the State produces nothing. "

Typical Austrian nonsense. You do not understand what state means, take POLS 101 again.

State is a social institution which makes sure private wealth accumulation by the few continues unabated, and it is not only the politicians or government workers. From wikipedia: '(Gramsci divides the state into) political society' (the police, the army, legal system, etc.) – the arena of political institutions and legal constitutional control – and 'civil society' (the family, the education system, trade unions, etc.) – commonly seen as the 'private' or 'non-state' sphere, mediating between the state and the economy. The division is purely conceptual and that the two, in reality, often overlap. The capitalist state, Gramsci claims, rules through force plus consent: political society is the realm of force and civil society is the realm of consent"

"what are taxes if not a direct lien against private property?"

More Austrian non-sense. Taxes are essential in the redistribution of income among the classes, up to the point that social fabric/capitalist system does not break up through violence.(That does not mean the capitalist class does not confiscate a large proportion of these taxes for themselves) Capitalists invented "social welfare state" in order to protect the system via small scale redistribution against a possible overthrow by the working people.

Thu, 11/07/2013 - 20:33 | 4133232 Wyatt Junker
Wyatt Junker's picture

Awww, your head, it got all fucked up in a classroom.  You got the Ueker seats, front row, head down in the Acer, taking notes like a lapdog. 

Taxes are essential in the redistribution of income among the classes, up to the point that social fabric/capitalist system does not break up through violence.

Taxes are a direct form of violence themself since they are backed up BY violence in order to collect them. 

Capitalists invented "social welfare state" in order to protect the system via small scale redistribution against a possible overthrow by the working people.

Wrong, the inventors were FDR and LBJ primarily, both big Statist Ass Clowns who HATED capitalism. 

 

Thu, 11/07/2013 - 20:42 | 4133263 macroeconomist
macroeconomist's picture

you can go on and on denying that this is capitalism, but that does not change the fact that this is your beloved capitalist system, at its best. It has turned into this because of its very nature, it could not have turned into anyhting else, as the greatest philosopher of all times wrote 150 years ago. 

How funny that when someone says something good about socialism, all the parrots here repeat the century-old arguments against it, and point the Soviets as a horrible example. When I say this is your beloved capitalism,you start crying that this is not really what capitalism is and I get junked 100 hundred times every time. 

You know what your love for capitalism is called in psychology? Stoockholm Syndrome.

Fri, 11/08/2013 - 04:49 | 4134347 pcrs
pcrs's picture

The love for you oppressor is called Stockholm syndrom and by calling oppression/government essential you are sufferign from it yourself. Don't call freedom slavery please.

Both Rome, Berlin, Soviet and American empire are statist/centrally planned communo/facsist constructions. They all go for military overstrech and will all fail economically.

The root problem is the approval of the initiation of force by some individuals towards some others. The coercion and exploitation will always spread and the power of the state will fall into the most capable lier able to expand it.

Freedom is the way out.

Fri, 11/08/2013 - 05:47 | 4134383 SunRise
SunRise's picture

Do you believe in slavery?   If so, do you believe that you are qualified to be a slave master?

Thu, 11/07/2013 - 21:08 | 4133355 Future Jim
Future Jim's picture

Although the state is not literally necessary, I think we should also point out that the state authorized by the Constitution does not allow any of this cronyism, but ultimately, the power of the Constitution rests on the character of the people, and the people are really messed up.

Thu, 11/07/2013 - 21:25 | 4133420 Seer
Seer's picture

"Taxes are a direct form of violence themself since they are backed up BY violence in order to collect them. "

WOW, news to me! </sarc>

And, once again, it's "govt" force that is used to enforce the laws of property protection.

We're humans, we're animals.  Quit pretending that there's some fairy land in which we don't lust for violence and power.

I never advocate for the State.  But I am also under no illusion that ridding ourselves of the State would reduce violence and struggles for power: we'd only experience small doses on a more regular basis.

Dump al govts and we're still looking at 7+ billion humans and counting, all within an environment that is rapidly being depleted of its low-hanging fruit.  Eventually hungry people leads to wars... with or without being under the banner of some "State."

Again, it amazes me how people can think that humans magically transform when operating under one legal "construct" vs another ("public" vs. "private").  Further, as time progresses there will be, with or without "govt," consolidation; and this consolidation will result in larger control by fewer entities- I doubt that I'll be able to catch up with anyone in the future to say "I told you so," but I'll guarantee that if you don't do what they tell you that they too will reign down violence on your head- because, power is power... the ideological zealots will continue to overlook this and will continue to resort to emotional rhetoric in place of sound logic.

Fri, 11/08/2013 - 03:15 | 4134271 Golden_Rule
Golden_Rule's picture

"Again, it amazes me how people can think that humans magically transform when operating under one legal "construct" vs another ("public" vs. "private").  Further, as time progresses there will be, with or without "govt," consolidation; and this consolidation will result in larger control by fewer entities- I doubt that I'll be able to catch up with anyone in the future to say "I told you so," but I'll guarantee that if you don't do what they tell you that they too will reign down violence on your head- because, power is power... the ideological zealots will continue to overlook this and will continue to resort to emotional rhetoric in place of sound logic."

 

I agree that it is the direction we are going *now* and have been going for some time.  But we are not slaves to the future

My life plans:

1.  Take market share from 1%ers and companies they invest in (or as I say, crush the 1%ers)

2.  Redistribute the wealth myself

 

I agree with your larger point though that a state (or city) is necessary for the protection of liberty. 

Thu, 11/07/2013 - 20:46 | 4133244 Future Jim
Future Jim's picture

"Oh really? A capitalism without a state? Somethimes, the level of illiteracy on this blog astonishes me. State is what ensures capitalist mode of production prevails and reproduces itself. Only a bunch of idiots like you might believe there can be a capitalism without a state, which protects private property. Those bankers would be hanging on the trees now if there had not been a state which will imprison those who hang them ..."

Oh really? A communism without a state? Sometimes, the level of illiteracy on this blog astonishes me. State is what ensures communist mode of production prevails and reproduces itself. Only a bunch of idiots like you might believe there can be a communism without a state, which protects community property. Those politburo would be hanging on the trees now if there had not been a state which will imprison those who hang them ...

Before spouting off again, try thinking whether your statement passes the mirror test ... rookie mistake ...

Thu, 11/07/2013 - 20:51 | 4133290 macroeconomist
macroeconomist's picture

It is funny to discuss with the illiterate. But I am tired. Do your homework first, and then we shall continue discussing.

"Capitalist production and exchange are inherently "anarchistic". Individuals, each in pursuit of his or her private interests, cannot possibly take "the common interest" -- even of the capitalist class -- into account in their actions. Thus, the capitalist State has also to function as a vehicle through which the class interests of the capitalists are expressed in all fields of production, circulation and exchange. It plays an important role in re- gulating competition, in regulating the exploitation of labor (through, for example, legislation on minimum wages and maximum hours of employment) and generally in placing a floor under the processes of capitalist exploitation and accumulation. The State must also play an important role in providing "public goods" and social and physical infrastructures which are necessary prerequisites for capitalist production and exchange but which no individual capitalist would find it possible to provide at a profit. And the State inevitably becomes involved in crisis management and in coun- tering the tendency for the rate of profit to fall. State intervention is necessary in all of these respects because a sys- tem based on individual self-interest and competition cannot otherwise express a collective class interest."

http://www.socialsciences.manchester.ac.uk/disciplines/politics/research/hmrg/activities/documents/HarveyAntipode1976.pdf

Thu, 11/07/2013 - 21:02 | 4133309 Future Jim
Future Jim's picture

Just because the state does provide these things does not mean that the state must provide these things. Try thinking outside the box created by the the crony media and crony academia.

There is no such thing as collective interest. There are only individual interests and individual actions. Anything else is an illusion. There is only voluntary cooperation or fascism. You can also have some communism with your fascism if you want. They are very compatible.

Thu, 11/07/2013 - 21:05 | 4133341 macroeconomist
macroeconomist's picture

Ok, I can see I will have to be more precise. The collective interest mentioned in the paragraph aboce is the collective interest of the capitalist class, which is the continuation of the capitalist system.

Have you heard of Buffet's recent rant about a class war, and that his class does not understand that if they do not share part of what they have accumulated, there is a danger of a systemic collapse through violence?

Oh sorry, you understand capitalist dynamics better than Buffet.

Thu, 11/07/2013 - 21:16 | 4133387 Dr. Engali
Dr. Engali's picture

The problem with using Buffet as your reference is that he says one thing and does another. For example he has sheltered his wealth in a charitable trust to avoid taxes. Another example is the vast amount of lobbyists he has in Washington. Buffet is the quintessential crony capitalist.

Thu, 11/07/2013 - 21:28 | 4133424 macroeconomist
macroeconomist's picture

"Buffet is the quintessential crony capitalist."

I completely agree. What I am saying is that he is a smart capitalist that understands that capitalists' collective interest requires a redictribution at the moment, or else the system will break down (as everyone here believes so as well). And he is not the only one that understands this fact, there are many others too, but the problem is that the financial capitalists that have captured the states all over the world are too blind with greed and short-termism to see that.

Thu, 11/07/2013 - 21:53 | 4133489 Seer
Seer's picture

I'm thinking that one gets to the point of wielding so much power that it's inevitible that one eventually ends up "mis-behaving" in order to keep their edge: when you've got major shareholders telling you how to run the business- how good company heads have been rolled in the interest of short-term profit-taking?  As returns get harder (owing to greater pressures on natural capital) it takes ever-greater risk to eek out what it takes to keep an edge.  When one looks at the debacle that is the financial sector it becomes clear that eventually the sludge forms and are arteries are clogged with all the foul shit.  And while there most certainly are shitty folks running around, I do not think that it's any different than it's ever been.  The only differences now is that the stakes are higher; and this is, as I keep trying to hammer on, is more to do with resource scarcity than it does with some change in human behavior.

I worked for a company that was private for the longest time.  It was a family business: it's name was recognizable world-wide; and it was always a name that was viewed with high regard.  I left a year after it went public.  The entire feel of the company changed.  We became just another widget manufacturer.  Sign of the times...  They were the best of times and the worst of times...

I'm not so certain that there's ever been those Mayberry RFD days: most has been an illusion propagated from the likes of Edward Bernays.  And before Bernays' time?  Robber Barons.  Keep winding it back and one can see that there never was a "good old days" when viewed as some human era; rather, it's more based on what was good for some subset of people- and it's most certain that the "good old days" were more traceable to the recountings of those of wealth and power.

Buffet is just more of a visible person.  Kind of like a barker at the circus.  Brandson is siimilar.  One could say the same of Gates.  But in no way does it mean that because you're not seeing or hearing others of significant wealth that they're not lobbying for added position.  I do, however, recognize the sense of dispair that one could have in trying to hold on to a company that's going to get whacked: I've worked at startup companies that eventually realized their goal of being bought out (somewhere along the line I forgot to make my millions!).

It's more to do with POWER than a given economics system.  Once you have power then all can be corruptable.

Thu, 11/07/2013 - 21:20 | 4133391 Future Jim
Future Jim's picture

Do you really believe what buffet says publicly?

A more accurate statement of your other point is that cronies tend to support cronyism ...

Thu, 11/07/2013 - 21:11 | 4133366 stocktivity
stocktivity's picture

It's all bullshit!!!

Fri, 11/08/2013 - 04:30 | 4134327 pcrs
pcrs's picture

The state does not exist. Just a bunch of guys with guns that claim your obedience in name of the state. But I have never seen a state. Just like the guys who claim your obedience in the name of God. I have never seen God nor state. I have just seen the guys who I have to be obedient to. And a pile of dead bodies of people who went to war for God and Country.

You don't need a state for protection of property rights, in fact, the claim that the guys with guns steal your money in order to protect your property is ridiculous.

It's as silly as claiming humans could not reproduce without state approved marriage. Or that they could not trade property titels without a overseeing thieve. You have drank their coolaid and it tasts like blood.

Fri, 11/08/2013 - 08:44 | 4134545 BigJim
BigJim's picture

You don't need the state to protect property rights, you're right.... but, given the predatory nature of (some of) humanity, you will either need to spend your time prowling your property (in the case of a claim to a piece of land) with a weapon to fend off theives... or pay someone else to do it.

That 'someone else' will probably be cheaper and more effective if he is part of a group. In fact, if he's not part of a group, he will be overpowered by the first roving band of criminals who come along and decide to loot 'your' property (we'll overlook how you established this 'rightful' claim to a piece of the earth's crust in the first place). You then have the problem of how to keep your guardians from evolving into the very predators you appointed them to protect you against in the first place.

Anarchists/panarchists point to Ireland prior to the English takeover as an example of a working, voluntary society. And I agree, it sounds great... except they got taken over by a roving band of criminals (the English) who imposed statehood upon them. So clearly it didn't 'work' in the sense of being able to protect its members' property rights.

So, no, you don't need a state to protect you. But one will evolve around you, one way or another... yes, it will eventually collapse when the kleptocratic layer overwhelms the polity's productivity. But you are where you are... and at the moment we appear to be approaching the final stages of of the Big State.

Having said that, North Korea keeps chugging along despite its gross inefficiencies. So maybe we have a long way to go yet.

Sat, 11/09/2013 - 05:59 | 4138039 pcrs
pcrs's picture

There is a difference in some people voluntary organizing to defend pproperty rights and forced membership of a monopoly that claims to do it and does the opposite. I don't see how me voluntarily chosing a hair dresser, will inevitably end up with a monopoly of hairdressers forcing me to take a hair cut every day against ridiculous prices.

The example from the past 'did not work' has limited value. All states from the past failed as well and all fiat currencies did. Argue against those then.

Up to the Wright brothers all attempts to fly failed. Untill they did not. Untill 1900 slavery was everywhere, untill it disappeared. Women did not have equal rights, untill they did.

Sat, 11/09/2013 - 12:38 | 4138434 BigJim
BigJim's picture

The problem with the hairdresser analogy is that the hairdresser isn't being hired because he and his gang are more badass than the criminals who would predate upon you in the 'hairdresser's' absence. That gives your spear/sword/gun/tank wielding 'guardians' a distinct advantage when it comes to initiating and enforcing a monopoly of violence that the average hairdresser struggles to match.

Look, I'm not arguing in favour of the state. What I'm saying - a la the Platonic/Polybian idea of Kyklos - is that polities tend to go through cycles, for the reasons I outlined.

Pointing out that improving technology has managed to overcome technical hurdles isn't much help, either, because, unless you somehow can get rid of the human inclination to predate upon others, there will always be a need for people to guard against predators... and the selection of the most capable (ie, most inclined) to violence to be appointed to that job, with the risks they'll decide they aren't your appointed guardians, they're your government.

There's a reason the Latin phrase Quis custodiet ipsos custodes? has resonated down the ages.

Sat, 11/09/2013 - 16:26 | 4138968 Flakmeister
Flakmeister's picture

Well isn't that the core of the issue...

You can't really trust anyone or any institution to protect your "rights and liberties".... 

The Libertarian answer is basically to deny the problem really exists, whereas the social democratic approach is an attempt to make sure that no one segment of society can dominant. It comes at a price though many find repugnant.  Germany is probably the best example where government, labor and management produce a 3 way system of checks and balances. Clearly, you must also have competant bureaucracy that is respected... 

Fri, 11/08/2013 - 05:39 | 4134377 Euro Monster
Euro Monster's picture

It is really pointless to argue with addicts. Everything you say is logical, and as they cannot think logically, they will ridicule, insult you. Let them keep their thruthiness, they will just learn the hard way. That's it.

Fri, 11/08/2013 - 07:52 | 4134469 macroeconomist
macroeconomist's picture

Thanks, I know, I am used to that on this website for over 3 years. I am not writing for those addicts who just repeat the nonsense on mises.org like a bunch of parrots, I am writing for sensible people that read this thread. Even if one gets it, that is still a plus.

Fri, 11/08/2013 - 08:01 | 4134477 Ghordius
Ghordius's picture

+1 for the "Euro Monster" and +1 for our valiant macroeconomist. personally, I prefer Hayek, among the Austrians

btw, the strangest thing about the whole Austrian School is that the Austrian Empire - from which the core came from - was socially and politically very authoritarian and autocratic, while it's economy was structured along very liberal (in the non-US sense of the word) lines. and somehow this is still very visible in their way of thinking

Fri, 11/08/2013 - 08:20 | 4134503 macroeconomist
macroeconomist's picture

I could not agree more Ghordius. What I find even stranger is that the Austrians are all against government or regulation of any sort, but they continuously whinge about TBTF, mega-corporations, power of monopolies etc, without thinking for a second that the very reason these super-powerful entities exist is the lack of regulation and control, which in a capitalist system inevitably leads to this. I'd say they are simply "very confused"

You might like this discussion here:

http://www.thenation.com/article/174219/nietzsches-marginal-children-friedrich-hayek?page=full#

http://coreyrobin.com/2013/05/13/critics-respond-to-nietzsches-marginal-children/

Fri, 11/08/2013 - 08:54 | 4134575 BigJim
BigJim's picture

No, you're the one who is confused. You routinely conflate disagreement with illiteracy, and then quote some lefty political academic as 'proof' that people who disagree with you are wrong.

 What I find even stranger is that the Austrians are all against government or regulation of any sort...

LOL, where to start. Not all Austrians are "against government or regulation of any sort" Hayek was indisputably an Austrian, but he supported central banking!

but they continuously whinge about TBTF, mega-corporations, power of monopolies etc, without thinking for a second that the very reason these super-powerful entities exist is the lack of regulation and control, which in a capitalist system inevitably leads to this. I'd say they are simply "very confused"

Haha, 'mega-corporations' and the privileges they enjoy (low taxes, limited liability, etc) derive entirely from the state! And how does a commercial organisation impose monopoly without state support? As for "lack of regulation and control" - there has never been as much regulation and government control! The EU and DC churn out thousands of pages of new and additional regulations every year! And who writes those regulations - the very 'mega-corporations that they're ostensibly regulating!

If you'd actually read some Austrian literature, perhaps you'd have some comprehension of the situation. But as your head has been stuffed with Marxist dogma you are unable to approach the subject objectively.

Fri, 11/08/2013 - 09:19 | 4134633 macroeconomist
macroeconomist's picture

I have read enough Austrian economics, and I even teach it, using primary sources rather than Marxist critics of it. (yes, I do, that is what academic ethic requires).

I have explained above endless times why the State gets captured by capital as an inevitable result of capitalist dynamics, and why capitalism cannot exist without the coercive power of the state.

But let us assume there is no state at all, and we live in an anarchistic capitalism, with no taxes/regulation as you lot would love. As a natural tendency, this will bring about monopolization as capitalists will swallow each other through competition. This is how monopolies are formed, as competition leads to concentration of capital at the hands of the few. Monopolies would arise even without a state.And in time, some owners of capital will get economically so powerful that either

a) they will form sort of a state to be able to keep their power.

b) there will be riots by the oppressed, which will lead to a confiscation of wealth from the hands of the capitalists.

c) We will have a system that resembles feudalism.

So what do the Austrians recommend? Anti-trust laws? High taxes? Breaking up monopolies? Laws prohibiting wealth accumulation beyond a certain point? 

Here is what they recommend:

http://mises.org/daily/6134/An-Open-Letter-to-Warren-Buffett

 

"the privileges they enjoy (low taxes, limited liability, etc)derive entirely from the state! And how does a commercial organisation impose monopoly without state support? As for "lack of regulation and control" - there has never been as much regulation and government control! The EU and DC churn out thousands of pages of new and additional regulations every year! And who writes those regulations - the very 'mega-corporations that they're ostensibly regulating!"

Yes, that is exactly what I said above. That is the nature of capitalism. That is why capitalist states have emerged since its beginning. That is why there is a state, and even if you manage to overthrow it and start anarchistic capitalism from scracth, we will end up in this again in 100 years. Simple as that. And that is what Marx himself, and Hilderfing after him wrote, and they were right.

 

Btw, Austrians are the last people to call Marxism a dogma. Look in the mirror.

Sat, 11/09/2013 - 13:05 | 4138496 BigJim
BigJim's picture

 As a natural tendency, this will bring about monopolization as capitalists will swallow each other through competition. This is how monopolies are formed, as competition leads to concentration of capital at the hands of the few. Monopolies would arise even without a state.

Sorry, this is incorrect. Except in the few specific instances where 'government' is required to allocate natural resources in a monopolistic fashion (for instance, the laying of telephone lines, roads, natural gas pipelines) by exercising eminent domain, it's virtually impossible to impose a monopoly (and unlike a lot of other 'Austrians' I actually am in favour of government regulating the aforementioned 'natural' monopolies)

In every other industry, however, you can reduce the number of competitors by buying them up, but you cannot reduce competition because there's nothing stopping other entrepreneurs employing the laid off workers/management to start companies doing the same thing as soon as the would be monopolist raises prices in an attempt to capitalise on his supposed monopoly... and that's even supposing i) even this much 'monopoly' can be established when the world is a big place and there are competitors everywhere, and ii) evolving technology doesn't give the more agile competitive startups an edge.

Something I've noticed about Marxists is that they cling to their dogmas despite centuries of evidence refuting their core beliefs.

Incidentally, I agree that capitalism will naturally evolve into fascism. But this is because every polity, irrespective of its economic system, will eventually be hijacked by a sociopathic, parasitic oligarchy. The difference between a socialist state and a capitalist one in this regard is that all the tools of tyranny are explicitly baked into the cake with socialism.

Capitalist economies fail in direct proportion to how much central planning they are subject to (ie, how far distant they move from the free markets ideal); socialist states fail in direct proportion to how much central planning they are subject to (ie, how close they are to their socialist ideals).

How could you possibly favour the one that has failure built-in?

Sat, 11/09/2013 - 13:15 | 4138516 BigJim
BigJim's picture

PS - what is the relevance of the Buffet letter? The author appears not to know that Buffett is a classic crony capitalist. But his primary point - concerning Marx' error with regards to labour 'exploitation' - stands.

Thu, 11/07/2013 - 19:35 | 4132941 Dr. Engali
Dr. Engali's picture

Please, I am about as big of a supporter of free markets as there can be, but to suggest that there wouldn't be a state is just silly. In order for any market to properly function you must have the rule of law. Once that is thrown out then you have either a fascist state like we have now or chaos.

Thu, 11/07/2013 - 20:07 | 4133104 Wyatt Junker
Wyatt Junker's picture

We haven't had rule of law (aka Constitional order) for over a hundred years now.

Thu, 11/07/2013 - 20:13 | 4133131 Dr. Engali
Dr. Engali's picture

1913 rings a bell when it comes to the major disruption of the constitutional republic. Since then it has been a slow erosion of the constitution, and the process has been accelerating over the past few years.

Thu, 11/07/2013 - 21:18 | 4133398 Ignatius
Ignatius's picture

By "major disruption" did you mean a 'nuke'?

Everything -- and I mean everything --  in politics is done these days in the name of lies (WMD, hate us for our freedoms, healthcare for everybody, etc.).

Thu, 11/07/2013 - 21:23 | 4133414 Cloud9.5
Cloud9.5's picture

We can go back to the first Democrat Andrew Jacksion.  He told the Supreme Ct. to take a hike and put the Cherokees on the Trail of Tears.

Fri, 11/08/2013 - 08:59 | 4134588 BigJim
BigJim's picture

Yes... but he also worked tirelessly to rescind the Second National Bank's federal charter.

Great man if you love sound money... dreadful man if you believe the natives had human rights.

He was a racist (like most of the people of his time). Judge as you will.

Thu, 11/07/2013 - 20:52 | 4133287 Future Jim
Future Jim's picture

I think you mean we need to have reputable institutions, and thus those institutions would be profitable, and thus they would exist - no state required. We need reputable institutions for lots of other reasons too, but again - no state required.

Fri, 11/08/2013 - 04:43 | 4134339 pcrs
pcrs's picture

The state does not exist. Just a bunch of guys with guns that claim your obedience in name of the state. But I have never seen a state. Just like the guys who claim your obedience in the name of God. I have never seen God nor state. I have just seen the guys who I have to be obedient to. And a pile of dead bodies of people who went to war for God and Country.

Why would you need a state for rule of law? You need contracts and contracts enforcers, they can all be private parties, who do not have a monopoly and to whom you are a coluntary customer and not a slave. Read a book or two about things you find ridiculous at first sight. Perhaps ask a question. Start with anarchy and the law by Stringham.

https://mises.org/store/Anarchy-and-the-Law-P335.aspx

You don't need a state for protection of property rights, in fact, the claim that the guys with guns steal your money in order to protect your property is ridiculous.

It's as silly as claiming humans could not reproduce without state approved marriage. Or that they could not trade property titels without a overseeing thieve. You have drank their coolaid and it tasts like blood.

Thu, 11/07/2013 - 19:29 | 4132916 TBT or not TBT
TBT or not TBT's picture

This is what Democracy evolves into.    There was never supposed to be a strong central anything in the USA, but the nature of even limited democratic forces in a federal republic of limited powers is to slowly but surely give up more and more power to the center, via demagogy, and the classic voting of free goodies from the public treasury.   The Founders and de Tocqueville forsaw this, well ahead of Marx.  

Thu, 11/07/2013 - 19:34 | 4132932 NOTaREALmerican
NOTaREALmerican's picture

Re:  never supposed

When EVER you have words like "never supposed" that means you've got a moral statement.

The sociopaths don't care about laws and "never supposed" toozz.  They do what it takes to screw people and take their loot.   

Laws and morals are for children.   Duplicity is for the adults.

Thu, 11/07/2013 - 19:51 | 4132996 TBT or not TBT
TBT or not TBT's picture

Not just "supposed"   There truly wasn't a strong central power in the USA for well more than a century.  The 19th century and early 20th saw massive, rapid increases in American prosperity driven by capitalism and rule of law, with not much of a central government(the federal budget was a tiny part of GDP and operated on import tariffs mostly).  A good part of that time there was even no national currency, but rather competing currencies, privately traded and privately valued.   Of course there was no central bank either.     This got eroded in the early 20th century by progressivist changes at the federal level, driven by tyrannical populists ratcheting ever upward centralisation and control, under democratic mandates.   The direct election of senators, the personal income tax, and the threatening of supreme court justices to reinterpret the plain meaning of the Constitution to its opposite meaning brought us ever more centralised control, ever bigger central government.    Also, big economic crises, big wars, and the coming thorough collapse of the american experiment in human liberty. 

Thu, 11/07/2013 - 19:57 | 4133057 NOTaREALmerican
NOTaREALmerican's picture

Re:  There truly wasn't a strong central power in the USA for well more than a century.

The government was OWNED by the railroads from 1860's through the 1890's.  Gimme a break.     

The tyrannical populists came about because large numbers of dumbasses were dieing.   That's what happens in a survival of the fittest world, the fit eat the dumbasses alive.  

Thu, 11/07/2013 - 20:49 | 4133282 Flakmeister
Flakmeister's picture

That's mighty statist of you....

Thu, 11/07/2013 - 21:23 | 4133412 TBT or not TBT
TBT or not TBT's picture

The point is, that there was not much central government to be owned/bought/corrupted at that time, in the absolute but also and very importantly relative to GDP.   Its powers and impact on local life and commerce were very limited.  

Naturally, quite naturally for better and for worse, the railroad and canal interests did indeed get tied up with what central power there was, because some or all of this development occured in territories or involved interstate commerce, imminent domain, and modifications to public property.   Those developments required capital formation on what was at the time a very large scale, which would not be risked without all sorts of concessions, guaratees, and cooperative interactions with government:   Imminent domain and interstate commerce.   This was all provided for in the Constitution, without any, or much, of the modern overarching statism that started developing so quickly under populist, constitution hating progressvists in the early 20th century.   

Thu, 11/07/2013 - 19:36 | 4132940 macroeconomist
macroeconomist's picture

Capitalism has very similar dynamics everywhere in the world, not just U.S. In every country, the state IS the financial elite, and that does not have anything to do with rather or not there is a democratic system. 

Where there is a democratic system, the state uses mass propaganda and the voting system to make sure wild capitalism prevails (Read Gramsci once again, you lot are not first geniuses to think about this)

Where there is no democracy, things are a little bit more straightforward.

In any case. there is NOT A SINGLE CAPITALIST society which has not evolved into this crony capitalism. 

If you will come up with the standard argument that we have never had proper capitalism, then I will say we have never had a proper socialism as envisaged by Marx - Engels. So that is a dead end. 

Thu, 11/07/2013 - 19:42 | 4132974 NOTaREALmerican
NOTaREALmerican's picture

Re:  proper capitalism

Whenever you use a word like "proper" you are taking about morals.   Morals are for children.   Adults deal with duplicity.

Thu, 11/07/2013 - 23:23 | 4133835 NidStyles
NidStyles's picture

You continue to say that to justify your guilt, it's ok we can tell you have commited atrocities and use that justification to absolve yourself.

The rest of us can admit when we have fucked up though. That is the difference between a child and an adult. Children have to hide behind lies and decept when they fuck up. They are incapable of accepting responsibility and rectifying the situation in an appropriate manner.

Your justification makes you fit into the child category.

 

Thu, 11/07/2013 - 19:54 | 4132979 Dr. Engali
Dr. Engali's picture

There will never ever be any pure form of any sort of "ism" besides fascism. The thieves and the crooks will always gravitate towards power and corrupt any system. The beauty of our system is that here is just enough socialism for the capitalists to blame our problems on them, and just enough capitalism for the socialists to point the finger of blame at the capitalists. Nobody will ever see their utopian "ism" of choice in it's pure form.

Thu, 11/07/2013 - 20:19 | 4133180 Wyatt Junker
Wyatt Junker's picture

I wish there was 'wild capitalism' or capitalism gone awry.  The freedom and growth would be exponential.  But the govt wants their vig at every level now and their cut is getting bigger and bigger, suffocating dreamers in the armpit of their regulation. 

Democracy is just a dumb ass word for mob rule, or 50% plus 1, that's tribal, mob anarchy which is what we have now, not a Republic anymore which protects minority interests.  We have an American Idol Diebold vote today.

There is only virtue and anti-virtue aka freedom versus the coercive.  The State is the Coercive.  It creates nothing, adds nothing of value.  A hamburger tastes good.  It makes the hungry go away.  Mmmmm.  Yum.  The State doesn't know how to make a hamburger.  Instead, it raises the cost artificially of the hamburger by taking from the hamburger maker.  You could say what about roads to the Hamburger Palace, and I'd say if it was worth making a profit from a hamburger, the roads would get made without the State, even better roads, without potholes.  The State is already failing at roads and bridges everywhere because public pensions are robbing from the general purse which is really just a general pension now.  Look at the rail roads before  the govt. got involved. 

The Coercives have no answeres for any of this.  They create nothing of value, have no ideas.  They are not makers.  They are takers.  There hasn't been capitalism for over a century now.  It has been co-opted by powermad dumbshits, glorywhores and their wall eyed followers, like you.

 

Thu, 11/07/2013 - 20:35 | 4133239 NOTaREALmerican
NOTaREALmerican's picture

Re:  I wish there was 'wild capitalism' or capitalism gone awry.

We had "wild capitalism" in the late 1800's.   That's how we got to socialism.   Eventually, even the most optimistic of the dumbasses realize they can't compete with the real winners of humanity: the predator sociopath.    

Re:  Look at the rail roads before  the govt. got involved

Yeah, look at them.  They OWNED all the politicians.    Great system.   Pick up the book "Railroaded" and tell me what you think afterwards.

Thu, 11/07/2013 - 23:28 | 4133854 NidStyles
NidStyles's picture

Perhaps you should stop with your anti-capitalist rant for a few days and actually read into who exactly was financing and promoting the railroads. If you were intelligent enough to do that before hand you would have seen it was the same people that were trying to establish a central bank. They used the Railroads to justify corporate person-hood so they could protect themselves, and then create the need and demand for eminent domain so they could make a fortune off of selling confiscated land, and then finally they were capable of manipulating trade enough to create panics and take over everything.

 

The government rubber stamped the whole fucking thing, because the politicians want power, and that is what the government gives them. The problem is not that capitalism is a failure, the problem is that there are morons like you enabling and supporting the government in what it want's to do, which empowers the government regulated and created corporations to trample on everyone. Those of us that are not morons call it Fascism. It's a dirty form of National Socialism, and the rest of the world would appreciate it if you stopped promoting it.

Thu, 11/07/2013 - 23:20 | 4133798 NidStyles
NidStyles's picture

Marx was dead 100 years ago dipshit. He was also catering to the Socialists of the time whom were still Utopians when he wrote about the evils of what he tried labeling as Capitalism even while it was already being call Mercantilism. Now a days we call Mercantilism; Fascism.

The actual definition of Capitalism, which was ignored as it was defined 100 years before Marx was even a zygote, is that by which the Classical and Austrian schools still go by. It's easier for you to ignore that your buddies have been rewriting history for the past 100 years to fit your ideology though.

 

Thu, 11/07/2013 - 23:27 | 4133847 Future Jim
Future Jim's picture

Would you say that mercantilism is the same thing as crony capitalism, or how are they different?

Isn't mercantilism just the most likely economic model under fascism, but is not fascism itself and is not required by fascism?

Thu, 11/07/2013 - 23:41 | 4133874 NidStyles
NidStyles's picture

In order for Fascism to function properly it has to have state controlled capital that has managers that handle the day to day business. This is essentially what Mercantilism is, the State hand's over the handling of their interests to intermediates. Now the most like action is that the state want's to enrich itself at the expense of foreign states, because all states are in competition with each other. Which is where the expansionist phase of Mercantilism/Fascism comes from. This expansion starts out as economic and political posturing first, and aggressive military enforcement second, and outright invasions third. All of this is merely to support the bloated State as the Statists of that region all flock into government to get their "share of the pie". So they are essentially both the same thing as they both require the same exact conditions to be met to function properly, just one is done under the idea that there is a singular sovereign, and the other is under the idea that only the State is sovereign. Both are forms of Absolutism, and very dangerous to anyone that doesn't enjoy mass murder.

 

That is a very simple explanation, but Mercantilism and Fascism are merely stages of maturing governments that have gone through an Empire phase already. The US's Empire Phase was the end of World War 2. It ended after Korea. After Korea the US was on it's gradual decaying orbit into dictatorship. Whether this will be a party based dictatorship like the Soviet Union, or a lone figure like Hitler makes no difference. A dictator is a dictator, even if he has advisers he has to go through.

 

Mind you this is just the way governments are, doesn't matter what nation or culture we are referring to. In fact that was one aspect the CIA was very good at understanding to the point that they would create third world economies to prevent the US from having competition. That is what that whole Latin invasion nonsense in the 70's and 80's was all about, keep this region under the Monroe Doctrine and under US dominant control.

The only good thing is that the collapse of the USSR took a lot of the wind out their sails, and it's hard to justify those budgets when they have bankrupted the nation.

Fri, 11/08/2013 - 00:02 | 4133942 Future Jim
Future Jim's picture

"The only good thing is that the collapse of the USSR took a lot of the wind out their sails, and it's hard to justify those budgets when they have bankrupted the nation."

You mean they lost the USSR as their pretense, or that the failure of the USSR scared them about the possibility of going down the same path?

Fri, 11/08/2013 - 00:28 | 4134011 Flakmeister
Flakmeister's picture

Nice post....

You really should display this level of rationality far more often...

Fri, 11/08/2013 - 07:19 | 4134428 macroeconomist
macroeconomist's picture

"But wait, wait, this is not capitalism, uhuhuhuhuu"

Cry baby cry...

I am not justifying government, morons like you cannot understand what they read.

Mine is ideology, but your unconditional love for a system that fucks you up the ass is not?

You Austrians are the most pathetic lot I have seen in my life. Keep on crying

 

Fri, 11/08/2013 - 04:21 | 4134324 pcrs
pcrs's picture

yes, I know your line: freedom leads to slavery. You have been assimilated by the machine of coercion.

Would have been nice if Marx also had made some correct predictions about where communisme would lead to. About 100-150 million dead in the 20th century.

http://www.hawaii.edu/powerkills/20TH.HTM

Would also have been nice if he had not been trading in stocks himself and talking about abuse of workers by capitalists, he would not have knocked up his only employee, the house keeper and had Engels pretend to be the father. Would also have been nice if he had nto had 2 daughters who committed suicide.

Fri, 11/08/2013 - 07:35 | 4134444 macroeconomist
macroeconomist's picture

Stupid ad hoc personal attacks on Marx, and utter nonsense arguments about where communism will lead to. You are not even worth replying to.

Thu, 11/07/2013 - 19:32 | 4132926 NOTaREALmerican
NOTaREALmerican's picture

Re: What capitalism is he talking about?

You need to stopping think about a point in time and think about a system evolving over time.

Assuming "capitialism" actually existed at one point in time THEN the smartest-n-savviest of humans (aka the sociopaths) would immediately begin figuring out ways to game the system to their advantage.   That is the role of sociopaths in evolution.   They screw the dumbasses any way thay can, and there is no BETTER way than rigging the game.   So, capitialism, socialism, commumism are all just fantasies of (mostly) semi-austist males of a system in a static state; with no sociopaths and no dumbasses, and no smart-n-savvy people screwing the dumbassws, and no bullshit created by sociopaths about why it's good to have a few wealthy "job creators"..., just a fixed unchanging state.

Life isn't really like that.   The sociopaths always ruined the system.  Don't you remember the kids at the back of the class who ruined the class trip for everybody?  The assholes?   They run the world now.

Thu, 11/07/2013 - 19:46 | 4133003 Quus Ant
Quus Ant's picture

All true, but the dumbasses have benefited for a long time.  Americans have enjoyed a high standard of living, so they didn't mind, or even notice the shearing.  Now they've been sheared and the thief, who never knows when to quit, is coming back for their skins. 

 

Thu, 11/07/2013 - 19:53 | 4133037 NOTaREALmerican
NOTaREALmerican's picture

Re:  Americans have enjoyed a high standard of living, so they didn't mind, or even notice the shearing. 

 

The magic of the US political system was how both Teams were able to give their dumbasses - for 60+ years - the Big-Gov both sets of dumbasses loved.  There was manly crony-capitalims for the Red Team and girly crony-socialism for the Blue Team.   As long as the dumbasses were getting richer (as measured in bling) both sides were happy to just bitch at each other's Big-Gov.  

I don't think most Mericans know their standard living is dropping yet.   The bling is still there.   Dumbasses in cars with oversized tires abound.

It's all about bling and bullshit now.

Thu, 11/07/2013 - 19:28 | 4132868 lolmao500
lolmao500's picture

Communism, socialism, fascism and this ``thing`` the MSM calls capitalism are all the same... Whoever is connected or is part of the state... gets special treatment, gets power and more money... everybody else is fucked into poverty. And if you dare protest, you die or end up in a gulag.

A slight difference from that is democracy... 51% can rape/kill the other 49% and it's all ``legitimate`` because you know, the majority agrees so it's alright!

Thu, 11/07/2013 - 19:36 | 4132946 Shizzmoney
Shizzmoney's picture

So this.  Glad some do get it.

It's also funny how some equate Marxism to Socialism, and Socialism to Communism.  All are VERY different, yet all fall under the same umbrella as you mention with the other "isms" in terms of the history of corporate governance: those who is, is; and those who ain't, aint.

Marxism is the best at identifying problems, but is the worst are creative solid, concrete solutions.  Capitalism, on the other hand, is the opposite of this. 

But really, in the end, all governments are totaltarian constructs b/c of the fact they are essentially hordes of men (armed and entitled) who tell other hordes of men what to do. 

In the end, we really just are hairless apes, despite what the NeoLiberal (today's technocratic fascist who has no party) wants you to believe.

 

Thu, 11/07/2013 - 19:59 | 4133066 lolmao500
lolmao500's picture

All isms are statism under another name... The only real not statist system is free-market capitalism with almost no government and laws. It's something close to anarchy... but with decent people who want a civilized society... Like when a bunch of friends who respect each other gather... everyone is frendly, nobody is making rules or trying to control others, they work together and have a good time... If someone is trying to stir shit up or be a dick, he's kicked out...

Thu, 11/07/2013 - 20:14 | 4133155 LeisureSmith
LeisureSmith's picture

Hairless? Don't know about you, but i've got hair coming out of my ass both literally and figuratively.

Thu, 11/07/2013 - 19:17 | 4132873 AgAuSkeptic
AgAuSkeptic's picture

When the financial bubble bursts we will have plenty of financial paper (dollar bills, stocks, bonds etc.) which future generations will use to burn and keep warm.

Thu, 11/07/2013 - 19:19 | 4132876 nestle
nestle's picture

COMMIES!!

Thu, 11/07/2013 - 19:20 | 4132882 nestle
nestle's picture

I am longing gold and silver.  Who's going to cry about it?

Thu, 11/07/2013 - 19:20 | 4132884 nmewn
nmewn's picture

The Five Rules of Living Under Socialism

1. Do not think. 2. If you must think, do not speak. 3. If you think and speak, refrain from writing. 4. If you must think, speak and write, then do not sign charters. 5. In case you think, speak up, write and sign, then do not be surprised by what happens to you.

Thu, 11/07/2013 - 19:26 | 4132907 DOT
DOT's picture

6. Do not smile too often. Your attitude will attract attention you will not want.

Thu, 11/07/2013 - 19:31 | 4132919 lolmao500
lolmao500's picture

7. Keep to yourself. Try to interact with the least number of people possible, including your family. Whoever you know or talked to in the past might bring you down in the future.

Thu, 11/07/2013 - 19:30 | 4132920 alessior
alessior's picture

http://static.vg.no/uploaded/image/bilderigg/2007/09/23/1190533839698_418.jpg

 

Is Faber getting crazy? 

 

stop in bleaming capitalism !!!

http://mises.org/daily/2895

 

 

Thu, 11/07/2013 - 19:39 | 4132959 Flakmeister
Flakmeister's picture

Buurrpp....

Thu, 11/07/2013 - 19:34 | 4132936 Quus Ant
Quus Ant's picture

I'm going to die anyway, right?  Big picture.

Besides, I like surprises.

Thu, 11/07/2013 - 22:54 | 4133715 1223pm
1223pm's picture

 

 

 

1. Do not think. OK

2.  If you must think, do not speak.OK

3.  If you think and speak, refrain from writing. OK

4.  If you must think, speak and write, then do not sign charters.OK

5.  In case you think, speak up, write and sign, then do not be surprised by what happens to you.OK

6. Do not smile too often. Your attitude will attract attention you will not want. OK

7. Keep to yourself. OK

8. Feel like you Live in DPRK.  OK

 

 

Fri, 11/08/2013 - 02:04 | 4134199 g'kar
g&#039;kar's picture

9. If you drink, drink heavily.

10. If you don't drink, start.

Thu, 11/07/2013 - 19:22 | 4132892 DOT
DOT's picture

Polity and policy in the modern world.

Man I love this !

Thu, 11/07/2013 - 19:24 | 4132894 Edmon Plume
Edmon Plume's picture

Marx was right, namely Groucho:

"The secret of life is honesty and fair dealing.  If you can fake that, you've got it made."

Thu, 11/07/2013 - 19:24 | 4132898 NOTaREALmerican
NOTaREALmerican's picture

+1000

One of the best "jokes" about duplicity ever.  

Thu, 11/07/2013 - 19:23 | 4132895 NOTaREALmerican
NOTaREALmerican's picture

Just another hippy malcontent who hates Ronald Reagan, and the troops.

Thu, 11/07/2013 - 19:25 | 4132899 LawsofPhysics
LawsofPhysics's picture

A capitalistic system would imply a healthy respect for capital.  Please, America hasn't had that since 1913.

Thu, 11/07/2013 - 19:39 | 4132958 NOTaREALmerican
NOTaREALmerican's picture

Re:  Please, America hasn't had that since 1913.

Whenever you have worlds like "respect" you are dealing with morals.  Morals are for children.  Duplicity is for adults.  

The adults screw the children by telling them bullshit stories about "respectful behavior" and then FUCK them.  

Thu, 11/07/2013 - 19:40 | 4132966 Flakmeister
Flakmeister's picture

Ummm.... can I haz moar butter?

Thu, 11/07/2013 - 20:03 | 4133065 Quus Ant
Quus Ant's picture

Morals are for evolved humans.  Duplicity is for those who have something to hide or something to hide from.  Being moral does not equate to being a patsy. 

As wise as serpents and innocent as doves.

Thu, 11/07/2013 - 20:05 | 4133093 Flakmeister
Flakmeister's picture

Pleae share with us your solution to the problem of the duplicitous sociopaths using every means possible to corrupt any system to their own ends....

I am all ears....

Thu, 11/07/2013 - 20:13 | 4133138 Quus Ant
Quus Ant's picture

solution?  seriously?  I'm not on this planet to solve every problem.  As if there is an answer. 

As for adopting the ways which the state has provided for remedying the evil, I know not of such ways.  They take too much time, and a man's life will be gone.  I have other affairs to attend to.  I came into this world, not chiefly to make this a good place to live in, but to live in it, be it good or bad.

Thu, 11/07/2013 - 20:20 | 4133181 Flakmeister
Flakmeister's picture

Fine.... 

If that is the case you really should not stick you head into a discussion about the role of sociopaths in fucking up every ism attempted to be put into practice...

Thu, 11/07/2013 - 20:27 | 4133210 Quus Ant
Quus Ant's picture

I stuck my head into a discussion about morals and duplicity.  Thanks for policing the thread.  Why do you want an answer?  The history of man is cycles of freedom and repression.  Don't hold your breath for utopia. 

Thu, 11/07/2013 - 20:31 | 4133225 Flakmeister
Flakmeister's picture

Re: Utopia, don't worry about that....

Thu, 11/07/2013 - 20:09 | 4133115 NOTaREALmerican
NOTaREALmerican's picture

The sociopaths hire politicians to create believable bullshit for the dumbasses, who turn the bullshit into soothing self-delusion.  The sociopaths then deliever their followers to the sociopaths who feast upon the dumbass, and eat them alive.   It has always been so.

Morals + bullshit = religion.
Government + bullshit = politics.
Craft + bullshit = spatter art.

The sociopaths use bullshit to add value.    Morals are nice for the children to believe in (the bullshit), but sociopath's kids are going to inherit the nice Italian villas.  

Thu, 11/07/2013 - 20:17 | 4133174 Quus Ant
Quus Ant's picture

So your real problem is with bullshit.  Anything plus bullshit equals bullshit.  We can agree on that.

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