Economic Models

[MystifyingVol]

Which do you consider the superior economic model?

 

[MystifyingVol]

I'm wholly in the Free Enterprise camp, the US' needle is currently in the State Regulated Capitalism area, which is no more than Corporatism.

I ran across a good discussion on the differences between Capitalism and Corporatism at Economic Policy Journal.

What is Capitalism?

Capitalism is a social system based upon the recognition of individual rights, including private property rights where all goods, both intermediate goods and final goods, are owned privately. The “rights” referred to above are ethical-legal principles that identify and sanction man's freedom of action strictly within a social context.

Under capitalism, each individual possesses the legally unalterable authority to support and sustain himself, to conduct himself in accordance with his own independent judgment, to control the material product of his mental and/or physical labour, and, in connection with these rights, each and every individual has the legal authority to be free from the initiation of physical force. The absence of aggression that exists under capitalism allows for the formation of the free market, the vast network of voluntary exchanges of property titles to intermediate and final goods.

However, Government intervention in the markets is a form of aggression to fulfill certain socio-economic objectives. As such, it contradicts the essential nature of a capitalist economy as a non-aggressive economy. An economy remains capitalist so long as the government, or any other agency for that matter, refrains from intervening coercively in the peaceful private lives of citizens. The implications of this fact are substantial: under pure capitalism there are no taxes, no price ceilings, no price floors, no product controls, no subsidies to either the rich or the poor, no public streets, no public schools, no public parks, no central banks, no wars of aggression, no immigration restrictions, etc. Government neither resorts to aggression under capitalism nor does it sanction its use by others, end of story.

What is Corporatism?

Corporatism shares no such description. It is a social system where the government intervenes aggressively into the economy, typically with political instruments that benefit large corporations and enterprises to the detriment of smaller businesses and private citizens. Such instruments include subsidies, tariffs, import quotas, exclusive production privileges such as licenses, anti-trust laws, and compulsory cartelization designs. All involve the initiation of physical force: subsidies come from taxes, tariffs are taxes, import quotas restrict trade, license schemes prohibit non-licensed producers from producing certain goods, anti-trust laws allow competitors to gain or retain market share through legal competition in court, and compulsory cartelization speaks for itself.

Similar to socialist governments, corporatist authorities seize control of land and capital goods when they feel it is necessary to do so without regard for private property rights. However, unlike socialist governments, corporatist states usually do not formally nationalize private sector firms, choosing instead to assume de facto control over them rather than de jure control. This difference however is procedural, one of style, not of essence, making it superficial - ancillary at best - and therefore fundamentally useless as an argumentative tool of fascists and socialists to distance themselves from each other. Corporatism is a system of institutionalized aggression. Between the complementary terms “capitalist” and “non-capitalist,” corporatism finds itself comfortably within the latter.

This means that the latest attempt by the federal government to save the financial industry by subsidizing failed or failing institutional investors and banks is an illustration of a corporatist, not a capitalist effort. Market forces have nothing to do with the Troubled Asset Relief Program or the misleading “American Recovery and Reinvestment Act of 2009.” Under capitalism, firms that do not satisfactorily satisfy consumer demand are made promptly to surrender their assets and their business influence. Financial capital is siphoned away from these unproductive enterprises and allocated toward those who have proven themselves capable of taking up the mantle of “producer.”

Conversely, the kinds of legislative bills, laden with underhanded plots to subsidize various politically-connected businesses and undertakings, which see the desk of our current president, and have appeared before to his immediate predecessor, are political tools meant deliberately to obstruct the operation of this most capitalistic profit and loss mechanism. Call it what you’d like but you may not call it “capitalism.” If you find yourself cursing the wretched collaboration of businessmen and statesmen, by all means proceed. I welcome it. However, if that’s the case it is not the free market system that you find so reprehensible.

 

[Weezy]

Anything with utopia in it can't be all that bad.

 

[VOLatile]

I'd vote Democratic Socialism, but it's not an option. Sits between Utopian and Marxist Socialism.

 

[milohimself]

I voted state regulated capitalism, but I wanted to choose the mixed regulated private enterprise.

First, I don't believe that perfect competition and efficient markets can always necessarily exist on their own (education and healthcare in particular), but that regulation should be more of a combination of general framework and pigovian tax only where necessary rather than the cumbersome regulation and government involvement that we currently have.

Second, the private enterprise option brings up unions, which I believe have every right to exist in the private labor market.

 

[MystifyingVol]

I had to drop both "Democratic Socialism" and "Mixed State and Private Enterprise Capitalism" due to poll restrictions (it only allows 10 options).

First, I don't believe that perfect competition and efficient markets can always necessarily exist on their own (education and healthcare in particular), but that regulation should be more of a combination of general framework and pigovian tax only where necessary rather than the cumbersome regulation and government involvement that we currently have.

What brings you to that determination? When was the last time we had Free Enterprise Capitalism in this country?

 

[MG1968]

free market capitalism, ftw!

 

[milohimself]

What brings you to that determination? When was the last time we had Free Enterprise Capitalism in this country?

Dunno about that last part, but for me it's the notion that there are certain things, like roads and military defense, with which a free market cannot deliver efficient outcomes, unrealized costs of externalities, and the notion of strict financial regulation, which goes all the way back to Adam Smith. Just for example.

I believe that the free market is generally the best solution, not always the best solution.

 

[n_huffhines]

I voted state regulated capitalism, but I wanted to choose the mixed regulated private enterprise.

First, I don't believe that perfect competition and efficient markets can always necessarily exist on their own (education and healthcare in particular), but that regulation should be more of a combination of general framework and pigovian tax only where necessary rather than the cumbersome regulation and government involvement that we currently have.

Second, the private enterprise option brings up unions, which I believe have every right to exist in the private labor market.

Which is fair as long as businesses is allowed to collude as well.

 

[MG1968]

Second, the private enterprise option brings up unions, which I believe have every right to exist in the private labor market.

they have every right to exist, but they should not be protected by the government (ie, the Wagner Act)

more states are adopting right to work laws, which is a good thing, closed shops are no better (in concept) to segregated water fountains, etc.

 

[RespectTradition]

Dunno about that last part, but for me it's the notion that there are certain things, like roads and military defense, with which a free market cannot deliver efficient outcomes, unrealized costs of externalities, and the notion of strict financial regulation, which goes all the way back to Adam Smith. Just for example.

I believe that the free market is generally the best solution, not always the best solution.

Texas revolution
American revolution

Just two examples of military victory without the benefit of a true government.

Where do you think all those roads west came from in 1800s? Or what about the Great Northern Railway (a transcontinental railroad), built totally privately?

I think your thinking is limited to the current paradigm. There are many examples from history that show us we do not need the government to control or regulate these things for them to work.

 

[Rasputin_Vol]

And none of these systems can support entitlement programs without running up major debts over time.

I would like to see how each of these models (in theory) are supposed to handle entitlements. I can't make an honest vote on this until I have that answered.

 

[Burger]

So many other economic philosophies are forgotten about here.