Economics: What might work, what should work, what has worked (command v. open market)

[OldGimletEye]

Just now, felice said:

I think we have some evidence that unrestricted capitalism is more likely to lead to serfdom - see the treatment of Amazon employees for an example. 

The stuff that Amazon has done, particularly in the US and the UK is atrocious. Evidently it didn't happen in Germany where organized labor still has clout.

Also, certainly, the democracy in the US has been imperiled by the feudal libertarian overlords and the Republican Party and Trump. And libertarian types aren't certainly aren't shy about overthrowing or subverting democracy when things get a little to socialisticyish for their taste.

 

[Alarich II]

Millions of dead in the Ukraine alone, but at least we got Sputnik into Orbit. Yeah, and Hitler built the Autobahn. I bet those Million dead would have preferred to industrialize a bit slower, instead of being starved, beaten and shot to death by the Stalinist reign of Terror.

We have seen that democracies can and do turn into autoritarian regimes. We see it happen in Turkey at this very moment. And, sure thing, Erdogan appointed his son-in-law as director of the central bank. That's just the kind of Thing authoritarians to. The problem is not socialism, the problem is that to do what is proposed (total seizure of all assets by the state) the state will have turn into an authoritarian regime. And there, it will stop. And that's the real problem. How many other important public goods like freedom of speech, freedom of assembly, free elections etc. are you willing to sacrifice just so that the state can seize all property from its citizens?

And then we get the claims like all private owners are completely unaccountable oligarchs. Yeah, tell that to the owner of the construction company next door, your baker, your plumber, your accountant and the thousands of other SMEs, the pensioners who invested their retirement funds in company Shares, tell them that they are apparently all completely unaccountable oligarchs. Actively selecting against empathy and the common good.

But the framing fits the authoritarian mindset: easy solution, they've had it coming, they vs. us.

[OldGimletEye]

Just now, Alarich II said:

But the framing fits the authoritarian mindset: easy solution, they've had it coming, they vs. us.

Well to be fair, many on the right have their own easy solution which is: The free market cannot fail! So I guess that means means we always have to cut taxes and destroy every social safety net and the government cant do anything right. Is there high unemployment because of a financial crash? The solution is easy. Just cut taxes for the rich and watch the market do it's magic!

 

Just now, Alarich II said:

And then we get the claims like all private owners are completely unaccountable oligarchs.

And yet, it would be absurd to suggest there are not extremely wealthy people that try to shape policy to benefit themselves and they usually try to claim that what benefits them, just so happens to benefit everyone else.

[OldGimletEye]

Just now, SeanF said:

The results of industrialisation under rulers like Stalin and Mao were certainly impressive in terms of producing good quality weaponry in large quantities, and appalling in terms of producing decent consumer goods.

Somebody mentioned something about South Korea.

And the fact of the matter is that while it was capitalist, it was hardly an exercise in “the government just getting out of the way...” South Korea pursued a high internal investment and export strategy. In short, it was quite willing to limit the consumption choices of it’s citizens to achieve its goals.

Just sayin'.

[Ser Scot A Ellison]

36 minutes ago, OldGimletEye said:

This is something that I've long thought about and have no answer. My question is whether the wealthy of any society will be able to live with it and not try to undermine it at every opportunity.

I've said here on this thread I'm a bit skeptical of "marxist solutions". But on the on the other hand without the threats of militant marxist and  communist, I do have to wonder whether the wealthy of a society would even agree to a more moderate social democracy.

I'll be perfectly honest I think that Soviet style state control is really a dressed up version of feudalism with the nobles being individuals in control of individual sectors or sub-sectors of the Government with the "politburo" or whatever arm of government is in highest control acting like the kind.  The specific sectors of control of the lower parts of the government act like the political or economic versions of fiefdoms.  

[OldGimletEye]

Just now, Scott de Montevideo! said:

I'll be perfectly honest I think that Soviet style state control is really a dressed up version of feudalism with the nobles being individuals in control of individual sectors or sub-sectors of the Government with the "politburo" or whatever arm of government is in highest control acting like the kind.  The specific sectors of control of the lower parts of the government act like the political or economic versions of fiefdoms.  

About 1954, Eisenhower wrote:

“Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things… Their number is negligible and they are stupld.

And in the 1950s his words would seem to be correct. Yet, by the 1970s, or at least by the 1980s those people that Eisenhower was referring to wasn’t a “tiny splinter group”. They became highly influential in the conservative movement, if not outright dominant, often financed by the rich and the wealthy.

Perhaps it is wise to always keep a few militant marxists in your back pocket, just in case certain sorts of people decide to over reach.

[SeanF]

7 minutes ago, Scott de Montevideo! said:

I'll be perfectly honest I think that Soviet style state control is really a dressed up version of feudalism with the nobles being individuals in control of individual sectors or sub-sectors of the Government with the "politburo" or whatever arm of government is in highest control acting like the kind.  The specific sectors of control of the lower parts of the government act like the political or economic versions of fiefdoms.  

I'm just reading The Court of the Red Tsar by Simon Sebag Montefiore.  Stalin's Court was no different to that of any other absolute monarch.  The great Communists were evenly jokingly referred to as "Princes."

[OldGimletEye]

Just now, SeanF said:

I'm just reading The Court of the Red Tsar by Simon Sebag Montefiore.  Stalin's Court was no different to that of any other absolute monarch.  The great Communists were evenly jokingly referred to as "Princes."

This of course I do believe in the last scene in Animal Farm, when the pigs and the men can't be distinguished.

[Gorn]

Personally, I think that workers' self-management in a capitalist system is the best of both worlds. In my imaginary system, all workers in a company, from janitor to CEO, own a share proportional to their position, seniority and work-hours, which cannot be sold or transferred to anyone not employed in the company. Different regulations would apply for smaller start-up companies, to make sure the person who started the business keeps the controlling share. People who retire keep a diminished share which cannot be transferred to their heirs, and people who leave the company or get fired keep their previously earned share. Upon any shareholder's death, his shares get proportionally divided among all current employees. All major decisions must be approved by full shareholder vote.

It fulfills the Marxist ideal (workers owning means of production), while keeping the state out.

[Alarich II]

41 minutes ago, OldGimletEye said:

Well to be fair, many on the right have their own easy solution which is: The free market cannot fail! So I guess that means means we always have to cut taxes and destroy every social safety net and the government cant do anything right. Is there high unemployment because of a financial crash? The solution is easy. Just cut taxes for the rich and watch the market do it's magic!

Yes, and? I wrote "authoritarian mindset". Do I really have to spell out that there are right-wing authoritarians too? This is not a left/right issue, this is not even an economic issue first and foremost, this is an issue of civil rights and the assault on our liberal demoracy comes from both sides.

41 minutes ago, OldGimletEye said:

And yet, it would be absurd to suggest there are not extremely wealthy people that try to shape policy to benefit themselves and they usually try to claim that what benefits them, just so happens to benefit everyone else.

Yes, and did I suggest that?

 

To be clear: there is a public interest and a state interest. And most of the times, the state tries to frame it's interest as the public interest. But really, the two only overlap, and that means the fewer people get to define what the state interest is, the smaller the overlap gets. And it really doesn't matter if you you shift the state interest more to the right or the left, the only question is, will the overlap with the public interest be greater or lesser. So at the moment we see that a few rich try to move the interest of the state towards their own interest. I don't deny that, but the answer is not a shift to the radical opposite. It's more of a question how to move back towards an equilibrium where we have a better and fairer distribution of wealth without sacrificing our civil liberties and prosperity. Of course the middle ground is the hardest position, because both fringes are saying if you're not with me, you're against me.

[aceluby]

4 minutes ago, Alarich II said:

To be clear: there is a public interest and a state interest. And most of the times, the state tries to frame it's interest as the public interest. But really, the two only overlap, and that means the fewer people get to define what the state interest is, the smaller the overlap gets. And it really doesn't matter if you you shift the state interest more to the right or the left, the only question is, will the overlap with the public interest be greater or lesser. So at the moment we see that a few rich try to move the interest of the state towards their own interest. I don't deny that, but the answer is not a shift to the radical opposite. It's more of a question how to move back towards an equilibrium where we have a better and fairer distribution of wealth without sacrificing our civil liberties and prosperity. Of course the middle ground is the hardest position, because both fringes are saying if you're not with me, you're against me.

Sure, but the question becomes when do you think that equilibrium existed.  1950's? 1960's? 1970's?  Obviously starting in the 80's is when the problem has blown up, so I'd assume that this equilibrium point was sometime before that.  So if one of those time periods was when there was an equilibrium, what are the 'non-radical' policies that were in place that helped foster that environment?

Because from what I see there were 70-90% tax brackets; HUGE government investments in infrastructure, science, and technology; and extremely strong unions in both the private and public sector.  Talk about any of those things today and you get painted as having views that want to shift to the 'radical opposite'.

Or maybe we never had an equilibrium in your POV and it's something else entirely.

[Ser Scot A Ellison]

34 minutes ago, OldGimletEye said:

This of course I do believe in the last scene in Animal Farm, when the pigs and the men can't be distinguished.

Yup.  

[Ser Scot A Ellison]

18 minutes ago, Gorn said:

Personally, I think that workers' self-management in a capitalist system is the best of both worlds. In my imaginary system, all workers in a company, from janitor to CEO, own a share proportional to their position, seniority and work-hours, which cannot be sold or transferred to anyone not employed in the company. Different regulations would apply for smaller start-up companies, to make sure the person who started the business keeps the controlling share. People who retire keep a diminished share which cannot be transferred to their heirs, and people who leave the company or get fired keep their previously earned share. Upon any shareholder's death, his shares get proportionally divided among all current employees. All major decisions must be approved by full shareholder vote.

It fulfills the Marxist ideal (workers owning means of production), while keeping the state out.

I love owner operated businesses.  I think it the way to get employees invested in their companies and to avoid top heavy management control that discounts the value of labor.

[OldGimletEye]

Just now, Alarich II said:

Yes, and? I wrote "authoritarian mindset". Do I really have to spell out that there are right-wing authoritarians too? This is not a left/right issue, this is not even an economic issue first and foremost, this is an issue of civil rights and the assault on our liberal demoracy comes from both sides.

Yes, and did I suggest that?

.

Frankly, it was a bit hard to understand exactly what you were suggesting, so I was picking at you for a clarification.

The fact of the matter is the right, particularly the American right often, tries to invoke "freedom" for it's preferred policies. But, as you rightly acknowledge, the right doesn't really have any particular superior claim upon freedom. And particularly after all the shennigans that is going on with Trump, any further talk of freedom by the American right, ought to be met with a big old horse laugh.

And of course the right has it's own set of "simplistic" solutions. I wasn't sure if you were merely accusing the left of this.

[maarsen]

1 hour ago, Gorn said:

Personally, I think that workers' self-management in a capitalist system is the best of both worlds. In my imaginary system, all workers in a company, from janitor to CEO, own a share proportional to their position, seniority and work-hours, which cannot be sold or transferred to anyone not employed in the company. Different regulations would apply for smaller start-up companies, to make sure the person who started the business keeps the controlling share. People who retire keep a diminished share which cannot be transferred to their heirs, and people who leave the company or get fired keep their previously earned share. Upon any shareholder's death, his shares get proportionally divided among all current employees. All major decisions must be approved by full shareholder vote.

It fulfills the Marxist ideal (workers owning means of production), while keeping the state out.

Iain Banks wrote a novel with just this concept. It was called The Business. 

[Erik of Hazelfield]

1 hour ago, Scott de Montevideo! said:

I love owner operated businesses.  I think it the way to get employees invested in their companies and to avoid top heavy management control that discounts the value of labor.

Sweden implemented employee funds in the early 80s. There wasn’t much enthusiasm for the idea though, the law that was finally implemented was watered down, and the employee funds were eventually abolished ten years later by a liberal/right government after large protests, including some high-profile wealthy families leaving the country. 

I’m not 100% sure about what exactly happened as I was born right about then, but as I understand it it was an ideological battle- most Swedes just weren’t ready to socialise the economy in the way that strong employee funds would eventually have done. (Even though back then the social democrats and the left had just over 50% of the parliamentary seats.)

[Jo498]

4 hours ago, Alarich II said:

Millions of dead in the Ukraine alone, but at least we got Sputnik into Orbit. Yeah, and Hitler built the Autobahn. I bet those Million dead would have preferred to industrialize a bit slower, instead of being starved, beaten and shot to death by the Stalinist reign of Terror.

You don't get it. I don't say that this was good. Of course it wasn't. But the main difference to the history of e.g. the US and the UK is that the dead were Ukrainians, not American Natives, Indians, Black Slaves, Irish peasants etc. and that it was Sputnik rather than the great benefits 200 years of capitalism and industrialisation brought to the world and that it took almost 200 years not only 40. This is exactly what I meant with the compression of a development in this case

Furthermore I do think that the moral (especially the common lopsidedly whiggish one) evaluation of history is rather silly. Yes, it was bloody. But there is nothing we can do about it now. We tend to pat ourselves on the back and recount all the atrocities of 50 or 100 or 200 years ago because it is quite safe, we cannot do anything about these and can quite easily feel morally superior. This way it is also easier to ignore the atrocities "we" (i.e. our governments, companies etc.) commit right now. Sure, they are of course not as bad as what the slaveholders or Stalin did. That's a pretty low bar to clear.

[Iskaral Pust]

I really like owner-operated businesses but there is the limitation that most businesses require capital investment, and rarely can employees finance that personally.  So whether debt holders or stock holders (or tax payers), you need to cede a large stake in the enterprise in order to receive capital.  That’s why OOBs are most prevalent in profession services (law, accounting, audit, etc) where very little investment capital is required.  Another major problem with forcing OOB — not allowing employees to sell their stake while they work there — is that individuals are left with intolerable concentration of financial risk.  If your employer gets into difficulties, you lose your job and your life savings at the same time because you could not diversify across hundreds of stocks.  If a company does start to get into problems, the owners will resist any downsizing that might save the company and allow it to return to viability, instead they’ll all ride it down together until everyone loses everything.

There are good reasons why our economy is the way it is.  These aren’t new ideas or tensions, it’s just the current equilibrium between them as we try the balance mny competing interests and needs.  And I agree that plutocrats have an advantage in placing their thumbs on the scale.

As to when was the best equilibrium, I think it’s both subjective and a false choice.  If any was best it would have lasted and created a golden age.  The postwar 1950s boom required devastation and poverty in most of the rest of the world for the US to be so wealthy and successful.  The 1960s-1970s required unsustainable near-constant fiscal stimulus and govt protection, which was guaranteed to generate a collapse and backlash (Thatcherism and Reaganism).  The 1980s required a huge debt expansion and huge drop in inflation and interest rates.  The 1990s required a one-off technology burst and start of globalization which would inevitably undermine the first world middle class.  The 2000s required a huge expansion of debt. 

None of these were sustainable.  They all carried the seeds of their own reversal and backlash, and yet within this cycle of booms and busts we have had an enourmous expansion in global health, longevity, wellbeing and lifestyle.  It’s just that equalization globally means that the first world middle class loses relative ground, in turn causing anxiety, depression and related social and health problems. 

[Spring Bass]

I actually don't think Social Democracy is that unstable. Social Democracy and the Welfare State are coming up on a century of dominance now in much of the rich world, despite enormous social, political, technological, and economic changes. Can any other regime claim to be stable in the face of that? The monarchical systems of the past certainly weren't. The socialist regimes of the 20th century certainly weren't.

As for Soviet development, most of continental Europe went through much more effective industrialization in roughly the same amount of time (3-4 decades) in the late 19th/early 20th century with mixed economies with heavy state and private investment.  I've read arguments that if you plot out the Soviet Union's average economic growth trajectory through the early to mid twentieth century, it's not much different than what was happening under the Czarist regime. Russia before Communism was industrializing - it just started later (and even in the US, people working on farms made up 30% of the population in 1920, and higher in France).

[Bennis of the Brown Shield]

29 minutes ago, Summer Bass said:

I actually don't think Social Democracy is that unstable. Social Democracy and the Welfare State are coming up on a century of dominance now in much of the rich world, despite enormous social, political, technological, and economic changes. Can any other regime claim to be stable in the face of that? The monarchical systems of the past certainly weren't. The socialist regimes of the 20th century certainly weren't.

As for Soviet development, most of continental Europe went through much more effective industrialization in roughly the same amount of time (3-4 decades) in the late 19th/early 20th century with mixed economies with heavy state and private investment.  I've read arguments that if you plot out the Soviet Union's average economic growth trajectory through the early to mid twentieth century, it's not much different than what was happening under the Czarist regime. Russia before Communism was industrializing - it just started later (and even in the US, people working on farms made up 30% of the population in 1920, and higher in France).

I have read that as well. The Russian Empire was forecasted to become the main economic power in Europe by the mid 1900's hadn't the revolution happened.

That trend was also presented as one of the reasons for why Germany was so eager to enter into WW1 when they did. For example, had they waited longer then their main strategy (to rapidly invade and knock out France before Russia had time to mobilize its army, thus avoiding a two-front war) would have become infeasible due to Russia modernizing its road and railway network. 

Now as we know that strategy didn't work anyway because they underestimated the defensive power of barbed wire and machine guns and so on, but that is a different topic. 

Another fun detail is that the German Empire provided the Bolsheviks with weapons and financing during the first precarious months after their coup, because them succeeding in taking power and running the country into the ground was perceived as better for Germany than the Russian Empire coming back. 

(Source: The Russian Revolution by Richard Pipes).