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Thread: Statism has crushed market capitalism

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    Politics.ie Member
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    Default Statism has crushed market capitalism

    Not really up for discussion or debate as a proposal. It's just a big clunking fist of obvious fact.

    Back after the fall of Russian communism, there was this big new orthodoxy, sometimes called the end of history hypothesis. The idea was that Washington consensus capitalism was proven to be the sole viable economic model. All alternative models were considered doomed to failure.

    The only viable way to do things, the viewpoint went, is for the state to withdraw from being an active economic participant, and to leave decisions as to the disposition of resources to the private sector. The state's only valid role in the economy was considered to be the writing of regulations to apply fairly to all, the enforcement of those regulations, the provision of infrastructure, and the provision of a modest social safety net for the very poor.

    Oddly, that consensus remains the dominant viewpoint, despite the fact that it is now shown to be totally untrue.

    A great portion of economic growth on planet Earth is concentrated in just three states: China, India and Brazil. None of them operate the version of market-based, laissez-faire economics that dominates the EU and the USA.

    They are interventionist, statist economies. And they are trouncing, really walloping the declining western nations which allow the large financial and industrial economies to do as they please.

    That is the core of the issue. In the EU and the USA, the politicians wring their hands impotently, hoping and wishing that the banks would choose to start lending again, and that the big corporations start investing their cash stockpiles. In China, the Party instructs the banks exactly how much and to whom to lend at monthly meetings, and any banker who demurs in the slightest has to clear his desk.

    In India, prices of a vast array of goods are set by the government, not by private entities. In Brazil, thousands of restrictions that are unheard of in the EU or the USA tie the hands of big business.

    The result of this statism? Big, crushing economic victory over the west. Without these three nations, the world would have been in constant recession (or extremely close to it) for most of the last decade.
    When you see the words "Mises" or "Hayek" in someone's post, just ask yourself: do I really want to ban paper money and go back to gold?

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    Politics.ie Member Shqiptar's Avatar
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    I think it's a little early to write off the West just yet. What with heavy state interventionism and God-awful demographics, don't be surprised to see China turn into what Japan is now - except far far worse.

    The West is in a period of retrenchment - there's no doubt about that. That won't last forever as budgets are balanced and debt is paid down, things will pick up again. We just need to realise that regulation-lite has been a disaster.

    Making the private sector pick up the tab for its own stupidity should - along with better regulation - avoid the Crunch from happening again.
    Eagla agus eaglais: an bhfuil an fhréamh teangeolaíochta céanna acu?

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    And let's not forget what interventionist statists did to the economy of this country.

    Yep, statism sure is the way to go!

    BTW, what are the poverty levels like in Brazil and India, are they comparable to our own?

    Quote Originally Posted by Shqiptar View Post
    Making the private sector pick up the tab for its own stupidity should - along with better regulation - avoid the Crunch from happening again.
    While we should allow capitalism to work we still have to balance a budget and close a deficit that was created by an intervening state.
    Last edited by Mossy Heneberry; 3rd February 2013 at 07:41 PM.
    ''The tattoo has a profound meaning: the superficiality of modern man’s existence.'' - Theodore Dalrymple

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    Politics.ie Member theloner's Avatar
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    So when's your deadline?
    'Travel is fatal to prejudice, bigotry, and narrow-mindedness'.

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    In the West, Corporatism has taken over, the Corporation has replaced the State - and we didn't even see it happen. Good OP!

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    There is a fundamental flaw in logic of the OP. the 3 BRIC nations mentioned have made their economic progress as a result of outsourcing by western corporations and western import Tariffs making import if cheap foreign goods possible . Therefore while these are certainly more centrally controlled nations and all three operate to keep their own domestic economies as closed as possible their economic development is entirely predicated on free market economics in the west.

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    Politics.ie Member henryhill's Avatar
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    There has never been such thing as market capitalism without state interference. On its own, the market is unstable and needs to be protected - as seen by the recent bailouts.

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    Politics.ie Member cottage_economist's Avatar
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    Good point Feargach, there doesn't seem to be anything like the triumphalism accompanying the fall of capitalism as there was when communism collapsed, or Soviet communism at any rate.

    It's interesting that when the chips were down for the UK in 1940, when national survival was at stake, even an arch Tory like Churchill ditched any notions of free market economy and put the whole lot on a command basis. As an example Spitfires, originally made by Supermarine, were also made by their rivals Glosters. There was no nonsense about market forces or business confidentiality, the planes were needed and the most suitable firms were told to make them. The Yanks did much the same, Jeep production was taken from the small company that invented them and put into the hands of Ford and Willys who had the production ability to meet the orders.

    The events of the last few years have really picked holes in the fabric of capitalism, and I do hope that before long something better will evolve.

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    Quote Originally Posted by cottage_economist View Post
    Good point Feargach, there doesn't seem to be anything like the triumphalism accompanying the fall of capitalism as there was when communism collapsed, or Soviet communism at any rate.

    It's interesting that when the chips were down for the UK in 1940, when national survival was at stake, even an arch Tory like Churchill ditched any notions of free market economy and put the whole lot on a command basis. As an example Spitfires, originally made by Supermarine, were also made by their rivals Glosters. There was no nonsense about market forces or business confidentiality, the planes were needed and the most suitable firms were told to make them. The Yanks did much the same, Jeep production was taken from the small company that invented them and put into the hands of Ford and Willys who had the production ability to meet the orders.

    The events of the last few years have really picked holes in the fabric of capitalism, and I do hope that before long something better will evolve.
    Capitalism can't fall per se. Capitalism is as natural to the human condition as eating and sleeping. Capitalism along with globalisation has been around with us since we've been put on this planet.
    ''The tattoo has a profound meaning: the superficiality of modern man’s existence.'' - Theodore Dalrymple

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    Politics.ie Member Analyzer's Avatar
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    It is state sanctioned capitalism. Highly centralized.
    Coveney's ambition is the be Ireland's next EU Commissar and Ireland will pay a price as he builds his CV to position himself sufficiently loyal to the nEU empire.

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