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Why Has Classical Capitalism Devolved To Crony-Capitalism?
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The money-shot: "People of privilege will always risk their complete destruction rather than surrender any material part of their advantage."
Here is the quote that perfectly captures our era: "People of privilege will always risk their complete destruction rather than surrender any material part of their advantage." (John Kenneth Galbraith) The trick, of course, is to mask the unspoken second half of of that statement: everybody else gets destroyed along with the Elites when the system implodes.
Union pension funds: toast. Government employees' pension funds: toast. 401Ks: toast. IRAs: toast. The echo-bubble in housing: toast. The Fed's favorite PR cover to cloak the enrichment of their financier cronies, the wealth effect:toast.
The primary tool the Elites use to mask the risk of complete destruction is magical thinking--specifically, that "given enough time, the system will heal itself."
That's rich, considering that the Elites' primary tool of avoiding destruction is crippling the market's self-healing immune system: price discovery. Thanks to ceaseless interventions by central banks, the price discovery mechanism has been shattered: want to know the price of risk? It's near-zero. Yield on sovereign bonds? Near-zero. And so on.
Prices have been so distorted (the ultimate goal of Central Planning everywhere, from China to the EU to Japan to the U.S.) that the illusion of stability is impossible without more intervention.
This leads to two self-liquidating dynamics: diminishing returns (every intervention yields less of the desired result) and the Darwinian selection of only those money managers who believe risk has been vanquished.
Everyone who pursues prudent risk management has either been fired or saw the writing on the wall and exited stage right. So the only people left at the gaming tables of the big institutional players are those individuals who are genetically incapable of responding appropriately to rising risk. Those who did have long been fired for "underperformance."
So how did classical free-market capitalism become state-cartel crony-capitalism, a Ponzi scheme of epic proportions that is entirely dependent on ceaseless central bank perception management and interventions on a scale never before seen?
We can start with these six factors:
1. Those who control most of the wealth are willing to risk systemic collapse to retain their privileges and wealth. Due to humanity’s virtuosity with rationalization, those at the top always find ways to justify policies that maintain their dominance and downplay the distortions the policies generate. This as true in China as it is in the U.S.
2. Short-term thinking: if we fudge the numbers, lower interest rates, etc. today, we (politicians, policy-makers, money managers, etc.) will avoid being sacked tomorrow. The longer term consequences of these politically expedient policies are ignored.
3. Legitimate capital accumulation has become more difficult and risky than buying political favors. Global competition and the exhaustion of developed-world consumers has made it difficult to reap outsized profits from legitimate enterprise. In terms of return-on-investment (ROI), buying political favors is far lower risk and generates much higher returns than expanding production or risking investment in R&D.
4. The centralization of state/central bank power has increased the leverage of political contributions/lobbying. The greater the concentration of power, the more attractive it is to sociopaths and those seeking to buy state subsidies, sweetheart contracts, protection from competition, etc.
5. Any legitimate reform will require dismantling crony-capitalist/state-cartel arrangements. Since that would hurt those at the top of the wealth/power pyramid, reform is politically impossible.
6. Understood in this light, it’s clear that central bank monetary policy—zero-interest rates, asset purchases, cheap credit to banks and financiers, QE, etc.—is designed to paper over the structural problems that require real reform.
Japan is a case in point: the Powers That Be in Japan have put off real reforms of the Japanese economy and political system for 25 years, and they’ve enabled this avoidance by pursuing extremes of fiscal and monetary policy that have eroded the real economy and created long-term structural imbalances.
In this 24 minute video Gordon T. Long and Charles Hugh Smith discuss through the aid of 17 slides the rapid advancement of Crony Capitalism in America. The facts are undeniable, but why is it becoming so obvious and undeniable? Why is it accelerating without any apparent 'checks and balances'? Where have the safeguards against this happening gone?
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I have been thinking about writing a new novel. It would be similar to a Grisham novel perhaps. I don't want it to be too realistic though. War is everywhere and I've looked through the eyes of imaginary spies often already. Front line war books about training ME morons who cant even get to the enemy before they attack themselves is kinda old too. We need something over the top. I'm thinking the NSA vs CIA to be specific. The setup: The American economy is about to crash. The Russians and Chinese are attacking the dollar and winning. Western countries have run out of gold/silver. The wheels are falling off the cart and both of these um... agencies are getting nervous. Enter Anonymous for a cameo. How hard could it be to convince the NSA that some of the CIA turned on them? This could lead to some serious fun. I mean think about it. The NSA can: Alter police databases, empty bank accounts, assume control of newer cars, fuck with GPS systems, infiltrate and spoof comms, take over and use foreign satellites, change newspaper headlines and more....The CIA has trade-craft, language, wet work skills and more...... No support needed for these guys just drop them off and right to work it is. It would go something like this. Spook stops off at a gas station and uses a burner card to pay for gas. Unknown to him this triggers a police call and IDs him as an escaped psycho mental patient! The espionage pro gets away and calls in to have the cop problem taken care of... and....the call rings one of Darrell Issa's aides. At the same time the Director of the CIA receives an untraceable email claiming that rogue (patriotic?) CIA agents are trying to take down the govt. On the same day about ten NSA guys don't show up for work because they are duct taped to a tree deep in Yosemite park. In addition Druge starts running a headline claiming that the CIA has proof that the NSA is attempting a coup on the US govt. The NSA sees this headline first of course! Believing they are being served up as a scape goats the nerds run for cover. Once they reach the back up systems the hackers instantly upload all the coke snorting, hooker killing, baby raping dirt they have collected over the years on DC. This is an attempt to take down the govt. before the spooks can kill them........5 minutes later Nancy Pelosi checks the news and finds out she is front page. And then the ball really gets rolling - CIA cars suddenly deploy airbags and accel blindly. NSA specialists running like hell with jacked up cyber ninjas hot on their heels. The news says Putin has annexed NY city. Congress starts shooting each other. The president moves to an "undisclosed location".......and when he gets in the bunker the doors lock right before the power and ventilation shuts down. Homeland security breaks into Langley!
Screw the book this should be a movie!
PS ISIL explained http://www.c-span.org/video/?c4508223/isis
Paragraphs homie, use them.
NAR: Don't forget, today is the BEST DAY to buy real estate!
Why do some people insist on calling our current system CAPITALISM?
At Flacon, ha ha true, peope have tried to call it "corporatism" because it's like Mussolini said, it is the merger of corporate and political power, or fascism, which is often characterized as militarized along racist imperatives.
Western "Capitalism" hasn't existed for decades. Articles like this only support that false paradigm.
Who wrote the title of this article? Is it click bait? Nobody is that naive.
"So how did classical free-market capitalism become state-cartel crony-capitalism...?
For those capable of thinking outside the box, the appropriate question is:
Would free-market capitalism become (state) cartel crony-capitalism outside the existence of government?
Exactly. We have social competition and that's all... any compulsion to cateogrize it or fit it into a cubby-hole are simply indicators of our own personal issues. This is what dominates every economy... competition... Some people think that the government is being utilized to prevent competition, however the very act of preventing competition is a form of competition... there is certainly a beneficiary in the process. It's a concrete jungle filled with apes wearing jeans.
When you have been immersed in the Government Universe your entire life, it is difficult to see the cause and effect of government.
The short answer to the article's thesis question is: central planning.
Private (including legal/moral) persons own most (>90%) of all capital. That's one definition of capitalism ... just not the one most people use most of the time.
"NAR: Don't forget, today is the BEST DAY to buy real estate"
Yeaaahh!!!! Real estate is ALWAYS a good investment, no matter how much you overpay! Yeah! It's never a bad decsion, buy it! It's value will never, ever go to zero! (okay, close maybe, but never exactlly zero!) Get it before the price moves out of reach! Get it now cause it's goin fast! Become a member of the property owner class!
(just cause it's flat as a board alkali scrub 59 miles from nowhere priced at 10x it's real value is no excuse to back away... go for it! You won't regret it, the NAR says so)
"everybody else gets destroyed along with the Elites when the system implodes."
Ahhh, you sure about that, dood?
I mean, the super-rich really don't appear on that Forbes list, don'tcha know by now? Sure, a few appear at the very bottom, perhaps, but they really have far, far more billions, 'cause it is unable to be tracked through private records (foundations, trusts, unregistered trusts, offshore havens, etc.).
You have to remember that magic word 'globalism'. When the system goes down this time it all goes down with no place to run. The elites think they they can buy and bribe their way out but when people are starving and there is nothing to buy at any price money including gold becomes worthless. I hold gold and silver for the 5 to 10 years after the collapse when civilization starts to reform. till then it'll be barter and trade.
Those who control most of the wealth are willing to risk systemic collapse to retain their privileges and wealth.
"Systemic collpase" but not personal destruction. The rich and ruling class play a game of chicken but they do not go down with the state. The elites always have escape plans of some sort whether underground bunkers, cash in Switzerland, villas in France, private jets, and ranches in Uruguay. They never risk themselves or their fortunes ... they always gamble with someone elses money. Witness the behavior of the Saudi elite when Hussein invaded Kuwait ... they all jumped in their private jets and flew to London with hundreds of tons of gold.
it appears you have succeeded in writing your novel / s
...and did it all in the 2 minutes after the article posted.
You left out the exploding oil tankers , and fertilizer plants near ill deeds of the past and near the date
-1 for lack of conciseness.
Humm, the movie "The Player" comes to mind.
That was like reading a condensed version of every psychotic comment posted to ZH.
RETUR TO MOTHER !!!!!!!!!!!
Red 105 standing by ready for debrief and new orders! Take that shit death star We got em!
BITCH
We fruit bats are one motherfucker of a bitch. I totally agree. Now quit whining on a finance chat room and get ready for some epic well ........everything!
That was my last post goodnight my friends and fare thee well!
http://www.c-span.org/video/?c4508223/isis
http://www.cnn.com/video/?/video/offbeat/2014/09/11/bts-bat-terrorizes-news-anchors.wate&hpt=hp_c4&from_homepage=yes&video_referrer=http%3A%2F%2Fwww.cnn.com%2F Ah ha ha ha we are every where!
Capital is always at risk.
Other [read: taxpayers] Peoples Capital at risk
"Why Has Classical Capitalism Devolved To Crony-Capitalism?"
Greed & Fear.....the human condition.
Yes. But these have been particularly concentrated and amplified in Corporate Governance (the Board Members who are supposed to watch the CEO and his Exec).
The CEO and Execs can do NOTHING of substance for any length of time, that the Board does not explicitly or implicitly approve. In the Final Analysis: "The Buck Stops with the Board", and corporate Boards have failed ABYSMALLY.
p.s. I have these views from several retired Execs (EVPs), some of whom also sat on Boards of other companies, and retired in partial or total disgust. In their own words: "I became totally disgusted with Corporate Governance -- or lack thereof -- in the 90s."
Some elaborated: "We became the 'Bitches of Wall St', when Exec Comp Plans became a much bigger part of Stock Performance. Juicing stock prices by any and all means became the Cause Celeb for execs. In the Roaring 90s it became so prevalent, that you were a Fool if you didn't play the same Merry-Go-Round Game. We all knew it couldn't last -- not without downgrading our domestic Mfg capacity, laying off tons of people, and helping China and various powers in Asia to rise. But, hey, we got our Bonuses and Golden Retirement Parachutes!"
Corporate boards have actually succeeded, you clowns who still hold with sane and rational thinking still don't get it:
every board that the "legendary" Martin Feldstein of Harvard has been on have succeeded dramatically --- HCA, hit with the largest out-of-court penalty settlement ever for Medicare/Medicaid fraud; Eli Lilly, hit with the largest criminal penalty for fraudulently marketing a drug that killed; and, AIG/Financial Products, involved with the largest insurance swindles in human history and had to be bailed out by the US government.
Yup, Feldstein's directorships and boards have been eminently successful at crime.
Agreed. Except that the morally-troubled Execs I cited had difficulty wrapping their (old-school) morals around the Feldstein et al "Nouveau Harvard" morals.
They just could not go to Church/Confession week after week, and still hope for Forgiveness for... Persistent and Premeditated Sins. Clearly not everyone had the same moral fiber/constituency to resist, and became far more successful by worshiping a different deity: Mammon.
A crucial aspect of confession is actually repentance. Meaning "I won't do what I done no mo'"
It's not suprising when they all sit on each other's boards. It's a big club, and we aint in it.
This is the best essay that Hugh-Smith has written in quite a while. But as ever, Charles stops short of coming up with a solution, or a process towardcoming up with a solution, leaving us with the implication that there is none.
Yes, but clearly defining the problem is the best first step towards solving it.
For capitalism not to become crony, there must at least be a set of truly constant rules. If that is not the case then "free market capitalism" (assuming a "free market" is possible) will always be like a strategy game where the most successful players can change the rules ingame, basically rigging the market to their own advantage and corrupting the entire system with their greed.
Absolutely. The problem though is that humans have not actually been able to devise and implement a solution. The issue is that the world's economy (life) is incredibly complicated and any police action to ensure competition by the rules fails for all the reasons central planning fails. Unfortunately, if left to our own devises, we end up the same. To regulate or not to regulate.
I suspect the reason is just as much that there have a lack of will to implement a solution amongst those with the power to do so, as it is lack a of ability. A solution should include decentralisation and redistribution of power, away from those who have it in whatever system is present, such a thing will never be easily done.
So your thesis is that, despite millennia of intelligent thinkers tinkering with how we interact, we just haven't come across the right idea? That despite millennia of trying literally every government (as well as anarchy) the solution hasn't occurred, but for a lack of implementation? You've got to be shitting me.
If there is an answer, and somehow it manages to be perfectly implemented, it will exist for merely an instant. From there, humans ruin it.
Once you place a rule on capitalism it is not longer pure capitalism. In fact, the only entity which could place a rule would be a government which is the first step toward cronyism.
If your definition of pure capitalism is a free market in the sense that the market is completely free of rules and regulations, then I am afraid that pure capitalism is just as big a utopia as pure communism. Anarchy in the market works the same way as anarchy anywhere else, one or multiple persons/entities that are stronger than the others eventually make their own rules and gradually forces more and more people to follow those rules as their power grows. The concept of "free market" can only work if your definition of the free market is the one which has the least possible rules in order sustain itself, if not it is doomed to disintegrate into cronyism.
Well said, which is why true anarchy is an unstable state....someone inevitably is always trying to become the next local "government", be it the local gang leader/strongman, religious leader/immam, clan leader, or militia commander. Saw this firsthand in Somalia during a series of church missionary trips there over a decade. Without the rule of law (or whatever passes for same) and enforcement of it, contracts cannot be enforced, price discovery cannot exist (coercion and deception prevail), and free markets cannot operate (because you cannot trust people).
Not all mathematics problems have a real solution.
There's a solution, but CHS can't advocate it. There would be people talking about terrrrrism. And he is one of the elites that is privileged, also. So if he says we should page Dr. Guillotin, then he just might get too close-up of a view of the situation.
Look to the things that will make it naturally crumble and then look to what is going on today and check for a match.
Parasites can only live as long as the host survives and is healthy enough to feed them.
Cheap Energy + Free Debt + Human Nature --> Ponzi Schemes + Currency Debasement.
corrupted human nature. Let's not get it twisted.
No - corruption is part of human nature. It is the individual's choice to shun it or wield it.
a child is not born corrupted. Augustine's purile understanding of the revelation fucked it up for everyone.
Alas, but a child first develops a sense of self. Id, the Ego then Super-ego. So, on the basis of relative stupidty - or perhaps sociopathic behavior - the super-ego is not very effective and lesser mechanisms drive.
Sorry, I'm a Jungian.
"Good" is an apriori notion. A child knows corruption - it just doesn't wield or shun it visibly until the toddler state.
I've said nothing about "good". Toddlers don't wield or shun corruption. They begin to sense the arbitrary nature of power and assert their own will in opposition. This is only corruption to those in power.
...or, money became dishonest, and the property of Authority.
+1. Indeed. Except that the part of "Human Nature", whose Primal Instincts gets uglier when not modified or tempered by a Moral and Social Code.
For many Execs it became: Out with Moses and Jesus (10 Commandments, Golden Rule), In with the Babylonian Talmud ("Fuck everyone else!").
When Checks & Balances are compromised, so does the entire complex social and economic System. Any healthy system in Nature (your body or whole ecosystem) needs to self-regulate, to remain healthy and robust. You can't keep amping up with Red Bull, w/o paying some price, sooner or later. Ditto for the economy and finance.
p.s. Under Bush/Reagan, in the 80s and 90s they had a codeword/weasel-word for "Removing Checks & Balances": "DEREGULATION". Boy did that sound good. And promising. Enter the repeal of Glass-Steagall, etc., etc., and we know the rest.
+1 Captain.
Leadership sets the tone. Washington, Industry leaders, etc. Current course is locked on. Heading straight for outright chaos.
Trickle down moral/ethical corruption.
Crony capitalism is way more profitable. It's similar to why gangs shoot other gangs instead of compete against them with lower drug prices.
The answer is simple...it's because humans are collectively a greedy and selfish species. Someone could devise the ultimate utopian society and within a few generations (if that) a small group of power hungry, greedy people would work the system to their advantage. Another problem is that many people are sheep and will do as they are told. Until people as a whole become more cooperative rather than competitiive any system (socialism, capatilism, communism, etc) will ultimately fail.
It begins and ends with fraudulent-reserve banking backed by the violence of government. A Ying and Yang of destruction if you will.
An American, not US subject.
"Save a human, guillotine a bankster."
"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage."
who doesn't remember our good friend hank paulson?
"there will be tanks on the street" if TARP not passed.
What a load ... Amerika would have survived a thumbs down ... and be MUCH better off today.
You mean Hank Paulson, ex CEO of Goldman Sachs, that Hank Paulson? Heh.
Charles - I agree, but propose it be called crony-debtism.
Speaking as a crony myself, I'm astonished that anyone is surprised. Capitalism is a game of musical chairs.
Government. Next question.
Because all "isms" are flawed.
Ideology is for apes.
When the music ends and the house lights come up you realize you've been dancing with a wookie the whole time.
Don't be polite and ask for her number. Head for the exit.
WHY?
BECAUSE:
Inflation-adjusted asset price histories are kept out of sight!
http://www.showrealhist.com/RHandRD.html
http://patrick.net/forum/?p=1223928
DEATH. In the days when poweful men kept a Memento Mori on their desk they were faced with the prospect of failure bringing extinction. In the New Narcissistic Era (NNE) the elites think they are immortal and untouchable.
They have lost the sense of fear. It is like those who have lost the sensation of pain, they no longer have the sense of danger. And, because the mass of people are nowadays so docile and drugged, they do not provide that sense of fear the elites need to keep them attuned.
It is rather like keeping lions in a zoo, they forget how to hunt and lose fear of predators
Memento Mori "a means of perfecting the character, and turning the attention towards the immortality of the soul and the afterlife"
Personally I believe in reincarnation, and if my soul is immortal, I want to look after it! Much like the price of risk, a human soul is bought and sold so cheaply these days!
DEATH. In the days when poweful men kept a Memento Mori on their desk they were faced with the prospect of failure bringing extinction. In the New Narcissistic Era (NNE) the elites think they are immortal and untouchable.
They have lost the sense of fear. It is like those who have lost the sensation of pain, they no longer have the sense of danger. And, because the mass of people are nowadays so docile and drugged, they do not provide that sense of fear the elites need to keep them attuned.
It is rather like keeping lions in a zoo, they forget how to hunt and lose fear of predators
No regulation, no enforcement of laws. Simple as that.
Well, exactly. Its not a SHORTAGE of laws. Its a shortage of enforcement of the laws. There are, in fact, two legal systems currently in operation in America.
One for your average man, the legal system we are all familiar with.
The other, for any one who can afford A TEAM of lawyers. Not A lawyer. A TEAM. You will pay a fine at best. The legal profession is thankful for your support, and will make sure you are involved in many court cases in the future (but with nothing more harmful than a fine as punishment, of course, they wouldn't ACTUALLY want to deter you)
The legal framework for "just-us" we use today we inherited from the Roman Empire, which is why it is repleat with latin terms and references to this day.
For poor Romans, justice was served with knives or staves in a back alley, but such simply would not do for the wealthy patricians, senators, estate owners, and merchants, whose lives they considered more valuable. Instead would employ 'Jurisprudence' to mediate and settle disputes by proxy (notice we still hire lawyers to our legal battlework for us), where a gamble, backed by money, decided the outcome.
Duplicate post.
I hate the inaccuracy and propaganda of the term "Crony Capitalism".
It is just plain cronyism.
Corrupt cronyism.
It has NOTHING to do with Capitalism.
The attempt to associate it with Capitalism smacks of the usual Commie lying, word-play, bias games.
It not so much inaccurate as purposely obfuscating.
Capitalism describes a system of private ownership not just a free market/free enterprise economic system. Cronyism in this case leverages government power to amass private ownership of more stuff for the crony class in circumstances when all parties should be treated as equals by the government.
But your point is well taken - as if there was no "crony socialism" in the USSR.
You can't really have cronyism period with small, limited government.
So...
Yeah, I mentioned the obfuscation part in my last sentence.
Small government, STRICT term limits and outlawing the lobbying class.
Then we have no parasitic, entrenched, career MFs engineering the corruption.
Republican Bloomberg destroyed ‘term-limits’ then flipped scripts becoming a Democrat.
As long as you, me and the others think leaders of the Red Team or Blue Team really do love us, we’re “loved” OK.
We call it crony capitalism because its cronyism, but everyone calls it capitalism.
<dupe print>
Why don't models match reality? Because people are imperfect and everything they touch gravitates towards entropy. Any rule-based system can be messed up by somebody unwilling to comply, and those are typically the very people making the rules. The purpose of "law" is to protect the lawmaker from law abiding citizens.
A Jew ain't gonna come out and say: "Jews are evil! Let's gas them all!" It takes a non-Jew to come up with such rule, and you bet, it is likely to benefit non-Jews at the expense of Jews.
Capitalism (or any ism) is just another set of rules where supposedly on paper it presents everyone with equal opportunity to produce and multiply capital, but in reality all it says is: "Follow rules, do this, and you're a winner among all others who follow rules." Well, what if you don't follow them? What if you seek shortcuts? What if you can't mess with capital representation (gold), can't print it, so you equate it to something that can be reproduced infinitely - paper certificates! Then you're a winner, much quicker than if you followed proper rules.
Embezzlement - big part of corruption and how does one do it? Simple! Earn trust, break trust, repeat. Make rules, show everyone how well they work - convince them to play your game, then mess with the rules. After all, they're all artifficial, flexible, implicit. No god-given rules, no intrinsic qualities, or inalienable rights. They're all things invented. So, as easily as guidelines can be invented, loopholes can and will be established and then it'll all come crashing down into the same dust it emerged from.
I don't think capitalism devolved into cronyism. You can't break trust you haven't built first. One enables the other. One creates the soil and sets foundation. The other is a logical progression. So it is evolution, not devolution.
Crony capitalism? It exists because we enabled environment in which it could grow - a land of opportunity that invited parasites. It created incentive not only for those infatuated with the original promise, but for those experienced at working outside the system. That's my perspective.
Not to pick on capitalism specifically. It's a general structure of every man-made system. Rules only work if everyone follows them and there is no way in the world to create any system that would not reward abuse and criminal ingenuity. Crime pays and that's why we have it. In fact, the richest people at the very top are all crooks and liars. The capitalist society is not a tainted system but a complete zoo - a total satire. True capitalism never ever existed. We went from slaves with shackles to slaves without. There was no golden era inbetween. From one from of criminal exploitation onto the next.
Insert random videogame quote:
Is a man not entitled to the sweat of his brow? "No," says the man in Washington, "it belongs to the poor." "No," says the man in the Vatican, "it belongs to God." "No," says the man in Moscow, "it belongs to everyone."
This is the inevitable result of capitalism. If you ran a thousand simulations of capitalism, no matter what variables you changed we would always end up in the same place. Capitalism is an escalator for sociopaths. No matter what you change, capitalism will reward the most sociopathic members of society. They will always end up with all of the money, weapons, and power.
Capitalism was designed by sociopaths for sociopaths. Human beings can't handle the concept of everyone doing what is in their own best interests to the exclusion of the best interests of the whole. It doesn't work. It will never work. Sorry.
This is correct if you will substitute capitalism for any economic system... this is why trying to categorize or classify economic systems in present terms is asinine... we compete with one another and some are better at it and more compelled to engage. Traditionally, our systems destroy themselves and we begin again with a mix of the old and new. The problem isn't so much with the busts, but with the possibility of no longer having a natural safety valve or a check and balance to consolidated power. It appears to me that with each successive bust, we're inching towards a more permanent societal structure. Whether or not it will ever be achieved is for competition to decide, but I'm not sure that induction and deduction align when debating the issue.
I tend to disagree....your system of thought is only supported with .gov intervention. Without .gov, mega corporations would not flourish. They are only around due to barriers to entry, regulations, taxes, etc. This is prevelent in Amerika and can be seen by the vanishing of small businesses.
Without all of the controls and interventions by the .gov back around 2008 alot of the ill-run mega corps would've went belly up...then the mom and pop shops would have sprung up to take up the slack. But, due to .gov, this didn't happen.
Sociopaths mainly thrive within megacorps...not mom and pop or small business (because they would wreck those businesses before they had a chance to grow).
So, capitalism will work and stay working as long as .gov is regulated....with a document kinda like the US Constitution....which if followed would allow America to thrive for millenia, not just a couple of centuries.
People have blurred Crony-Capitalism into Classical Capitalism…..
Classical Capitalism is an illusion.
That’s why there is still a Queen and Royal Family. Why Saudi Arabia is a ‘closed’ kingdom.. And why we don’t use popular vote and instead 'let' them electoral vote.
When exactly was the last time we had classical capitalism? The fact is that since 1913 50% of every non-barter transaction involves a commodity (fiat currency) controlled by a cartel granted monopoly power over it by the government. Yeah, tell me all about the problems with classical capitalism (which hasn't existed for at least 100 years). SMH
Fiat taxation of barter is what pisses me off the most. It is one single factor that forces everyone onto the Titanic, whether they like it or not. Self-sustainablity becomes impossible to achieve.
Could this be solved via some sort of 'payment in kind' system, where if you bought/sold 1 tonne of wheat, you could pay the tax in the form of 1% (I know, optimistic) of the tonne of wheat?
simple, the DC fascist/Nazis are in full control and the BIG PICTURE is not the US, its the WORLD.
If you have ever read Mullins - "World Order : Hegemony of the Parasite Class" you will understand the big plot and everything will make sense. US has run its course and they are out to continue its Hegelian dialect model. Remember, although they have US passports and reside in the US and hold key positions in the US power structure, they are NOT AMERICAN'S and view anyone with sidings with nations, religion and sectarium beliefs as MORONS! Only useful as SERFS. They can never be in the UNIPOLAR elite club. These criminals have contempt for humanity. They are well resourced, extremely intelligent and very well organized. The web is deep within all nations.
This is not any conspiracy theory or wacko statement, its all in the open and even stated in some congressional records. Many have even come out admitting the plot (Rockefeller for one), but most people are too dumb down and stupid to realize the contempt of the plot.
Why? Simple. Because "Classical Capitalims" has ALWAYS been "Crony Capitalims" to begin with. "Clasical Capitalims" is a fantasy invetion to pasify the masses with. No wonder Ameircans never think of themseves as revolutinaries but as failed milionares.
Capitalism relyes on 2 basic things:
1. MUST ALWAYS exploit something: people or/and natural respirces to make profit.
2. MUST ALWAYS continuesly conquire new territories (expand)
Since Capitalims doesnt have any new palces to conquire (expand into) and doesnt have any more things to exploit(besides the Chiense workers) Capitalims is now stagnating and has showed its true fact, i.e Crony Capitalims.
USA's Capitalims made profit for 400 years because it had virgin land and slaves to exploit. Now that USA is forced to play the real pirces for natural resources USA is faltering. No wonder WWIII is upon us. They would rather drag the Earth down into nuclear war than to give up their position.
Dont play dumb now.
"Ameircans never think of themseves as revolutinaries but as failed milionares"
Nice.
It is the nature of Empire to expand.
After a while, there are no more 'Low-hanging fruits'. The Romans, the Ottomans, the British, all experienced this.
Then the Empire loses stability (when it can no longer easily expand). There is an entire class that has been promised "conquered lands" and when they see there are no more conquests forthcoming (i.e. they are screwed) they lash out. Historically it was the armed forces. Conquer an area, suppress revolt, build a monastery, retire to monastery and brew beer for the rest of your days.
These days its the MIC and Multinationals that have benefitted the most from Empire-building (and thus most likely to lash out).
"Why? Simple. Because "Classical Capitalims" has ALWAYS been "Crony Capitalims" to begin with. "Clasical Capitalims" is a fantasy invetion to pasify the masses with. No wonder Ameircans never think of themseves as revolutinaries but as failed milionares.
Capitalism relyes on 2 basic things:
1. MUST ALWAYS exploit something: people or/and natural respirces to make profit.
2. MUST ALWAYS continuesly conquire new territories (expand)"
^^
Pure garbage. The foundation of capitalism is voluntaryism - free association and free trade amongst voluntary, willing, non-coerced participants. Anything else is just a mischaracterization to paper over the immoral and unjust use of coercive force - unless you think Ghengis Khan was a capitalist, then you're just plain ignorant.
Really? I was born into capitalism. Was I supposed to opt out before birth or before conception?
Anyway, thanks for the laugh.
Society is a natural order regulated by economic law. Yes, you were born into the state of nature, and thus are subject to its laws. Capitalism exists in a state of nature where individuals can homestead/own property and voluntarily exchange it. Yes, this is simplified, but in essence, this is the path of a civilized society - one which eschews the use of coercive force against another's will in order to dictate what another free, peaceful individual may do with his property. So, yes, you were born into it.
It's not capitalism's fault that man has a nature, the darker side of which would rather exist via predation rather than voluntary and productive relationship and exchange with others.
As the brilliant 20th century German sociologist Franz Oppenheimer noted, there are two diametrically opposed means by which a man may earn his subsistence in the world: 1. the “political means” of acquiring wealth (such as coercion and taxation) and 2. the “economic means” (through peaceful and voluntary exchange).
Notwithstanding the political climate in which you were born, this has no bearing on the essence of capitalism, and it's voluntary nature. As for any opting out on your part, it's a shame that you opted out on critical thinking. Sadly for me, the 1,000th regurgitation of fallacious, marxist reasoning is no longer funny. It's long discredited tripe.
As the great Murray Rothbard once said,
“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”
No, actually, it's not. The order of society was created and is regulated by man-made laws. The U.S. Constitution did not write itself. Neither did the Declaration of Independence.
Now, if you are arguing that we should ignore the act of forming society and focus only on what happens thereafter, your argument has slightly more weight in that the order (and the economics) naturally follows the laws that certain men made to further their own economic interests, but that does not make nature the author of either the order or the law.
Did you know that political economy as an intelletual discipline is at most 350 years old, that most of the "economic law" we know today was not codified prior to 1890 by Alfred Marshall as part of his neo-classical/marginal revolution, and that Utilitarianism is the basis of that "economic law" and not Locke's conceptions of Natural Law? Indeed, Bentham mocked the very notion of Natural Law, and the concepts of Utilitarianism and Natural Rights are mutually exclusive. The only reason you believe that the economic theory you espouse is somehow linked to natural law/order is that Utilitarians co-opted the language of Natural Rights.
What you are missing is that the market for "peaceful and voluntary exchange" is imposed by the "political means" of force. Judge Richard Posner rightly views criminal laws as being imposed to punish those who would try to avoid using the market. I'd go further and argue that the neoliberal approach to globalization, with its attempts to prevent countries from independently producing the means for addressing all its needs (thus imposing the Ricardian fantasy of Comparative Advantage), is a great example of how both individuals and nations are atomized and prevented from being self-sufficient.
And you have to remember Oppenheimer was speaking centuries after the Enclosure laws in England, and old form of "privatization", cut peasants off from access to the commons, eliminating their means for subsistence unless they "voluntarily" accepted whatever wages a factory owner would provide.
Anybody who enthusiasticly quotes a crank and pampleteer propagandist like Rothbard stands in no position to be critical of anybody else's thinking. It's amazing that humanity enjoyed society for millenia before economics was discovered in 1890. That's almost as amazing as how consistently wrong economists have been. Economics is not a science. Economics is political economy, a form of applied poltical science intended to persuade the masses to either support or oppose the status quo.
"No, actually, it's not. The order of society was created and is regulated by man-made laws."
Which came first, Einstein, government or society? Government is a coercive overlay on society. It didn't create it. Society preceded government.
"Anybody who enthusiasticly quotes a crank and pampleteer propagandist like Rothbard stands in no position to be critical of anybody else's thinking."
SMH. I have neither the time nor inclination to address the sheer volume of ignorance in your post. I'd recommend Human Action and The Epistemological Problems of Economics both by Ludwig von Mises, but I seriously doubt you've got the chops to read them, let alone understand them.
The capitalism you describe has never existed on the face of the planet in all of human history. It is an unstable, artificial, idealized state.
I challenge you to name a single example outside of a closed, contained ecosystem (such as within an extended family or clan) where coercion or deception was not in effect and such a purely voluntary free association existed.
As someone else has already pointed out, classical capitalism is NOT "free-market" and has nothing to do with any modern theory of the "free market". Adam Smith advocated a market free from economic rent, not a dismantling of the government of Britain.
"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage." (John Kenneth Galbraith)
Not true. Any student of British history can outline the slow erosion of the Monarchy's power starting with the Magna Carta in 1215 and the grudging giving way by the aristocracy to democracy.
The British royal family is still around, although their power is gone and their role now mainly symbolic. Likewise the aristocracy can no longer take their power for granted.
But they survive, unlike other countries where the old kings and barons refused to compromise and were swept away .
To detail what occurred with the British royals, it is necessary to read the travel brochures form the UK, which is where I first gleaned onto this.
Back in the early 1700s, the City of London Corporation, representing British/Dutch banking interests (and the super-rich of those times), struck a deal with the Royals: they would be leased, in perpetuity (that means forever, doods and doodettes), choice real estate belonging to the City, frozen at discounted 1700s' prices. (People always think I'm making this up until they verify it for themselves.)
So the Royals keep those revenues coming in, from all those leasees and renters, which the lesser royals (like the family Princess Di came from) act as the collection agents, etc.
And shortly after that deal was struck, the Bank of England came into being.
Read P.J. Cain and A. G. Hopkins most brilliant work on the British Empire as a financial empire --- most enlightening!
http://en.wikipedia.org/wiki/Gentlemanly_capitalism
#1 Queen Elizabeth IILand: 6.6 billion acres of land worldwide including Great Britain, Northern Ireland, Canada, Australia and a few other spots here and there. Also, the all-important Falkland Islands.
Read more: http://www.businessinsider.com/worlds-biggest-landowners-2011-3?op=1#ixzz3D1u6C74nso not one square foot of privately held property or held by the state?...all hers alone?
There are no absolutes. I was suprised she owns Canada.
Background: England's third (and most likely soon to be second) longest serving monarch, Elizabeth II retains royal title over The British Commonwealth and as such manages to keep her face on money throughout the globe.
With her 6.6 billion acres, Elizabeth II is far and away the world's largest landowner, with the closest runner-up (King Abdullah) holding control over a mere 547 million, or about 12% of the lands owned by Her Majesty, The Queen.
Read more: http://www.businessinsider.com/worlds-biggest-landowners-2011-3?op=1#ixzz3D2F0a7gwOver riding all this blame game stuff is the fact that we have been heading for dollar destruction since August 15, 1971. Had it not been for MUCH intervention we would already be in a new system (ie not the dollar reserve system).
It appears we have reached the point at which all support has either been withdrawn or has become useless. We are seeing that unfold even as the Fed 'valiantly' does it's last little thing. Soon the Fed must either admit it must do more (which I believe it will) or just watch as deflation begins.
Deflation is simply not ever tolerated in a purely fiat system...and it is not just the 'elite' who will call for 'more'; everyone who sees their pensions losing value, their homes drop in price and their jobs going away will call for the Fed to 'do something.
Those who can and who are closest to the printer will see the big advantage. The little guy will suffer as he gets the new money after prices rise.
The one way to escape is to buy gold and hold it until a new monetary system is summoned.
Gold has never left the international monetary system, it has only been denounced. ALL central banks (rare exceptions like Canada which has lots of gold in the ground) hold gold and many are buying more. The BIS has not demanded that Greece surrender it's gold (curious no?) and it looks to me like somebody is trying to keep the world's central banks in position to begin functioning anew when the dollar system fails.
We can be like the central banks and prepare with physical gold. It may drop much further as the paper gold (derivative) market is exposed as being unable to deliver but if you can make it to the finish line...you and yours could be OK.
lets just call it what it really is: FASCISM
Naaaaahh, I don't especially think this was an intelligent post, no offense, dood, as it has been a long time in the coming.
It's called WTO, the WTO Financial Services Agreement, the WTO's Financial Services Agrement's Fifth Protocol, dictating that foreign ownership of banks is to be allowed, as is their acceptance of credit derivatives (financial junk paper) as valid financial instruments, not financial fraud tools!
Can you dig it??????????????????????????
How do you spell love? M-O-N-E-Y! - Stevie Ray Vaughn (RIP)
Sell your bunkers and canned food and say hello to Japan.
Look at Japan; this is the future. There is no collapse anytime soon.
Inherent in capitalism is corporate super-agglomeration and aggregation of wealth into a few hands and we are reaching the end of that process. Contiguous with this attainment is the formation of subjugative political power structures, hence Lenin said:
"socialism is capitalism in decay".
Or reduced simply to the progression of corruption in a single man, having filled his desire for money, he proceeds to a desire for human power. Unfortunately, we are going to see this passing to socialism across the globe in the coming years!
The true economics is distributism as sponsored by Hilaire Belloc and G. K. Chesterton.
http://mtm.ufsc.br/~mcarvalho/DISTRIBUTISM.pdf
The "Capitalism or Socialism" debate is about false choices. Another hoodwink for the masses.
Bull crap! "Corporate super-agglomeration" and "aggregation of wealth" is not the least bit inherent in capitalism (at least not free market capitalism). That is the result of non-capitalists' attempts to control the ability of capitalism to skew income and weath towards those who deserve it the most, in favor of the less intelligent and the least industrious. Large businesses are able to expoit those (regulatory) efforts to exert competitive advantages over newer/smaller rivals, as the central banks print fiat money to paper over the economy's inability under such a scenario to create new wealth. That, my friend, is NOT a capitalist model...
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I have the answer and it has been known for a very long time.
now i know that sounds dramatic, but the answer is "neutral control" humans by nature will always fight the free market.
quite simply we are kind of like monkeys (not to be rude) but we have "confidence" in "energy tokens" we call that "money"
now the second problem is that has always been issued (in relatively modern "times")(not a long time at all) by a central authority, so Milton Friedman touched on it a little and everyone got very sensitive too it, he said that (i misquote) monetary mechanics should be "set by a computer".
so this made lots of "humans" nervous, if "monetary mechanics" can be set by "a computer that can't be controlled by anyone" so that that is the principal of Neutral Control.
Bitcoin tried to do that and the Protocol is correct but it failed because of a few flaws that humans took advantage of, but now there are many "e-cash" Protocol that have achieved "neutral control" for a number of different reasons.
So the answer is simple, to the degree that humans can effect centralization we will do that like the "monkeys" we are.
we see bananas and we will eventually want to make all the bananas our own.
the technicality of it is this if you want to learn:
The "free-market system" worked for the short period it did because it leveraged the free market, from a centralized point
the technicality of that is that in open market operations commercial institutions can engage in credit creation in a totally free market manner, the source of the issuance is of course a the centralized lender.
so if you are a semi intelligent monkey you will notice that the centralized force issues then lets the "market work", this is the key to what we call "success" in that system.
so you might say to the degree that the market works the system works.
(if you want to visualize it because you are having difficulty understanding)
try to do it like this:
if you read this i'm proud of you, you should know that. (if i could make a digital banana available i would)
People who aren't ideologues recognize that the Scandinavian model offers the best (so far in history) balance of innnovation, living standards and social benefits (plus better fiscal stability than the more anti-business or anti-social systems out there).
All the ideologues still dreaming of a perfect unregulated Capitalism or perfect planned Socialism, are stuck in a black hole of idiocy.
It does?
http://www.nytimes.com/2013/04/21/world/europe/danes-rethink-a-welfare-s...
http://www.newgeography.com/content/004028-the-dutch-rethink-welfare-state
http://www.express.co.uk/comment/expresscomment/402693/As-Sweden-burns-i...
Numbers beat anecdotal arguments. Scandinavian countries have less debt and better fiscal balances than more anti-welfare America and England. Their education system ranks above the US and UK, but it's almost free. They have great worker's benefits, yet they occupy the top rankings on innovation and nobel laureates per capita.
Drone all you want about the APOCALYPSE happening in well-managed Scandinavia and close your eyes to the anti-middle class shithole America is becoming.
The Scandinavian model works because they are Scandinavian. It's a Protestant culture that values hard work, community, and honesty.
What do Americans value? Hard work? Community? Honesty? No. Americans value money, power, and fame.
True, if it actually went that far. But, what seems to happen more often is everyone else gets destroyed, then the Elites step in with their last hundred dollars and buy everything that everyone else once owned for fractions of pennys on the dollar.
The Elites could care less where prices are. What they care about most is power to control a process which constantly channels more real wealth to them, regardless of the transfer price.
I think there's an old adage which describes it even more succinctly; "Money flows to power, not the other way around".
dont forget captured regulators, massive bureacracy that boggs you down in red tape unless you have the resources to cut through them...this acts as a barrier to entry and growth for many small businesses..
the more laws on the books the more corrupt the society, (Tacitus)
and boy do we have a lot of them...but they are intended more for control and maintaining the status quo pecking order than for real regulation...
remember these crony capitalists on top now made their vast initial wealth in times that are a lot more relaxed regulatory speaking than today....then these same entities will cheerlead through MSM for the need for more regulations and oversight...(GS, JPM) etc etc
and why not...all the regu;ators are captured, they will never really go after GS, JPM, or any of the big boys because these same regulators want to be working in these places one day...so who gets hassled and pinched, and nickeled and dimed to bankruptcy via regulation...small business
Society is organized by government.
What occurs in it is almost always a consequence of that.
The people of Ferguson are complaining about the very Economic Prison you describe.
because it has to
Things were never different all through the ages :
1° Alexander led his armies. He thought he was God.
2° Caesar the same. He wanted sole power.
3° King Francis 1 fought the two most important battles of Italy personally and was taken prisoner in second. He wanted to be Caesar, but found Charles V on his route.
4° Napoleon lost at Waterloo as commander, beaten by a capitalist and militarist alliance stronger than his.
Capitalism is all about power like kings and wars.
Capitalism is a form of war; and Oligarchs now are feudal orders who know no frontiers.
If you believe in creative destruction then that is what capitalism has become : a tool to give people the means of achieving their OWN dreams; not those of society.
What destroys power constructs is its inablity to accept opposition and its natural tendency to reinforce its own isolation and paranoid mindset.
Market economies like what existed in Venice, where Oligarchs (despotic monopolists) were NOT ALLOWED to exist, as power was collectively exercised by an elite of 40 leaders; all equal; we saw a very creative society emerge. But its power was limited compared to nation states who finished by submerging it. Size pays in empires and capitalist constructs.
Here is an interesting resumé about Venice and city republics during that period :
When trade began to revive in medieval Europe, giving powerful impetus to the growth of cities, the revival began in Italy. Some of the Italian cities became great centers of banking, commerce, and industry. Genoa, Pisa, and Venice early became important in the Mediterranean trade, and of the three, Venice, aided by the stability of her government, became the most prosperous. Florence became outstanding in banking and woolen manufacture. In the fifteenth century, Naples, Milan, and Venice ranked among the five most populous cities in western Europe. Numerous other cities grew and flourished, making Italy the most highly urbanized area in western Europe in the fourteenth century. Feudalism had never been so firmly established in Italy as in the north. It was, therefore, relatively easy for the growing cities to expand into the surrounding countryside by subduing the nobles and annexing their land. In Italy, to a greater extent than was customary elsewhere, the land-owning nobles took up residence in the towns and became a part of city life. Within these towns and cities, political power belonged to the possessors of urban wealth, that is, to bankers, merchants, and businessmen. The political life of these cities was filled with struggles for power, and these struggles were intimately connected with the rise of new classes as the result of economic growth. When cities began to take control of their own affairs, they were usually ruled by an established governing class which had ties with the land and the feudal nobility, although members of this class might be engaged in business activity. With increasing wealth and prosperity, however, the members of the guilds, commoners by birth but often rich and powerful, demanded a greater share in government. The old ruling class might be called the grandi, or great men, while the guildsmen took the name of popolo, that is, the people. The name people is a bit misleading both because some members of this group were very rich and because the great mass of the population was really not represented in the so-called popular party.
The normal result of the conflict between grandi and popolo was the victory of the latter. This triumph of the "popular" party, in time, led to the rise of a despotism or one-man rule. In the Italian city-states, the popolo, in its struggle for supremacy, tended to choose as its leader a member of the opposing party, the nobility, and give him a title such as captain of the people. Once the party had won out, its leader would be likely to become head of the state. Having achieved this position, his next aim was to make his power absolute, suppressing all other sources of authority. If he was able to do this, he then proceeded to make his rule hereditary. In this fashion arose many of the ruling families in the Italian towns. The tendency toward hereditary despotism was universal, but it did not always come about in the manner just described.
Venice had managed to avoid "populist despotism" over many centuries; unlike Florence and Genoa, Milan and Ferrara.
Beware of the "popolo" in politics.
"People of privilege will always risk their complete destruction rather than surrender any material part of their advantage." (John Kenneth Galbraith)
I heard this straight from his mouth, when I was a teenager listening to one of my first economics lectures. I was knocked out of my chair by it! This thought was new to me, and shocking. Now, after decades of experience. I realize just how right that old guy was at the time. He is dead on. And history repeats this theme over and over again. The USA is now in the grips of just such an elite. They will damn us all to hell, just to keep the riches flowing to themsleves, till it all goes to hell.
So they possess a version of the cornered-rat gene.
Control is a very successful survival adaptation.
Giving up control is not.
Galbraith was an economist like Pizza Hut is Italian Cuisine.
When you start quoting this guy, you are in trouble.
He authored what is still considered THE definitive book on the Great Depression. I suspect he might know something about economics.
one more time....
http://www.youtube.com/watch?v=6jgjk3DsN7c&feature=youtu.be
http://dilbert.com/strips/comic/1992-02-28/
Because the ever increasing mass of government is distorting the economic space, and exerting a greater gravitational force on nearby bodies.
Whether or not the dead star of government has become or will become a black hole with an inescapable event horizon, we will soon know.
Greed...doesn't matter what "ism" of the week you happen to be subscribing to.
Galbraith was a fatuous pinko academic, second only to Keynes himself, and this quote is just tired Marxism. Crony capitalism does not confer cronyism on the privileged, it confers privilege on cronies. Duh. See Warren Buffet.
here...let Killing Joke explain Crony Capitalism for you: https://www.youtube.com/watch?v=R_sot9ZK8X8
Grand Masters pulling strings
Wet dream of a new world order
New feudal blueprints rise
We all got fooled again
It's an ADD Generation
Everyone accepts the re-introduction of slavery
-By a corporate elect
Tyrant of mine, dominion of our lives
Condemned to Solomon's mine
We all got fooled again
This is the fight back now
Free speech put to the test by immoral psychopaths
We all got fooled again
conclusion: get outta dodge.
To start a new biz in the USSA is completely insane.
Classical Capitalism is NOT "free-market" and has nothing to do with any modern theory of the "free market". Adam Smith advocated a market free from economic rent, not a dismantling of the government (would have been strange if he did say it, being a subject of the British crown and all). This has nothing to do with the neoliberal idea of free plunder of the economy by unregulated banks.
free markets* are a means to an end
power is the name of the game
*to the degree they have been implented at any rate, which an Austrian or Libertarian might answer 'not a lot', but that only serves to prove my point
These kind of overreaching generic descriptions devoid of any kind of real benchmarks or historical perspective are generally meaningless. Whenever I hear someone yelling about 'capitalism' or 'socialism', you can pretty much tell there an idiot who talks in generalities and repeats buzzwords.