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Well, yes. As more of the money is used to make more money, instead of things, experiences, or people... It losses it's correlation with the things that we actu

Well, yes. As more of the money is used to make more money, instead of things, experiences, or people... It losses it's correlation with the things that we actually want out of an economy. Plus, those in power (rightfully) use the power to get more power of the sort they already have. According the history books I read as a kid, this is what caused capitalism in the first place (english barons with more money than power using that money to make more money) and the (serial) French revolutions (aristocrats with more power than money using that power to gain more power). I note these bits in particular: "After a financial and banking crisis, the first order of business is to clean up the banks, and to do it quickly and radically. Institutions that are not viable need to be shut down while the others should be provided with capital." "Their central thesis was that the key to [Western] success was not climate or religion, but the development of social institutions that included as many citizens as possible..." I'm also reminded of a good article on what Iceland did after the collapse - I'm having trouble finding the article, but part of it was that, instead of taking on the debt from their collapsed banks, they issued arrest warrants so Interpol could chase down the executives. (The initial government was going to acquiesce and take on the debt, and that's when the "revolution" happened.) Finally, someone gave me a really good quote a couple months ago: "Death is the way for an older organism to gift it's energy to a younger one." I then note that part of the financial problem is that failing institutions are not actually allowed to die - thus keeping that energy stagnating in the aptly-named "zombie" corporations.

dnautics 12y ago
Note that what Iceland did and the idea of clearing out bad capital and malinvestment are actually capitalist ideas, versus, say bailouts and central bank manipulation, which are not.
- RangerScience 12y ago
  Yeah. I'm, to a decent degree, a fan of calling what we have today "corporatism" rather than "capitalism".
  - curiouscats 12y ago
    Yes. Many of the problems today have nothing to with capitalism but with government policies that are largely aimed at making those with the gold happy. Capitalism is mainly about having markets that have competition. NO organization is suppose to have market power. This isn't really possible, but that is the concept. And we are so hugely away from it we can't call what is going on now capitalism. We have allowed people to convert what is called capitalism into an extreme political view that believes government is bad and huge corporations are good. That isn't capitalism, it isn't even an economic belief, it is a political belief. A capitalist country has to be focused on maintaining a fair marketplace where companies can compete for business and consumers (including companies buying from each other) have the freedom to buy in a competitive market (not a market dominated by trusts, monopolies and oligopolies that break the function of markets to advantage themselves). http://investing.curiouscatblog.net/2008/06/10/monopolies-and-oligopolies-do-not-a-free-market-make/ http://investing.curiouscatblog.net/2008/06/10/monopolies-an...
    - simonh 12y ago
      I agree with your point that capitalism is about markets, technically markets for capital, but markets for goods and services are also very important for a high functioning economy. We have those. To demonstrate this, let's looks at some alternative models such as those in Russia and the Chinese domestic markets, and contrats those with the west. The Chinese and Russian ssytems are very corporatist. In both cases huge corporations completely dominate the domestic economy. In Russia's case these are technically privately held, but the oligrachs are so closely tied to the political ruling elite that this realy is just a technicality. In China the major corporations are owned by the government and explicity run by government place-men. In both cases these corporations enjoy economic, financial and political patronage and privillege that makes it functionally impossible fror 'independent' corporations, companies or individuals to effectively compete with them. You might argue we have a similar ssytem in the west, but we realy don't. es there are instances of political patronage. Yes there are cases of undue political influence by corporations through lobbying. However the scale of such cases is absolutely riny and marginal compared to the standard order of business in Russia and China. There just isn't any reasonable comparrison. The rule of law, vita to the funcitoning of viable markets, it'sn just weak in China and Russia, it's functionally nonexistent. No matter what weaknesses and flaws you can pick at in the rule of law in the US or Europe, the difference compared to China and Russia is several orders of magnitude. Could our system(s) be better? Yes, of course. Is the situation gettign worse? In some ways yes. Are we in the same boat as Russia and China? No, not by any reasonable measure.
- stormbrew 12y ago
  I think it's really important to make it clear that they (well, specifically bailouts really) are also not ideas of the opposing bogeymen, though. No one who even thinks of considering themselves socialist or, say, anarchist would ever say "Yeah, let's give a bunch more money to rich people!" The tendency for power to accumulate into the hands of a few, who then manipulate the economy to their own ends, is a problem endemic to all social power structures. No system yet invented has proven immune to it merely through built-in assumptions of the model.
  - RangerScience 12y ago
    "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants" Hopefully we'll be able to do this in a less-than-literal fashion.
    - dllthomas 12y ago
      "The people can not be all, and always, well informed. The part which is wrong will be discontented in proportion to the importance of the facts they misconceive. If they remain quiet under such misconceptions it is a lethargy, the forerunner of death to the public liberty. [...] Let them take arms. The remedy is to set them right as to facts, pardon and pacify them."
  - ende 12y ago
    Nor has any political force yet emerged built on that premise of social power structures. Perhaps classial liberalism, georgism, distributism, and good old fashioned anarchy. Every existing political force along the spectrum simply tries to subvert the pyramid to its own purpose.
    - antimagic 12y ago
      Interestingly enough, the US Constitution's much-abused 2nd amendment was targetted at precisely this problem - the founders were at least aware of the problem. It's still too early to know if this is a sufficient safeguard. But things must be getting close - those Occupy Wall Street protests only needed to have a few hotter heads leading things, and we may have seen impromptu armies numbering in the thousands taking over corporate America. I don't know how the government would react to such an uprising.
- lotsofmangos 12y ago
  Bailouts and central bank manipulation are also capitalist ideas, or at least they were developed by capitalist economists within a capitalist framework on behalf of capitalists to try and keep capitalism afloat. Bailing out banks and hoping they will spend it on industry just after they bankrupted themselves by gambling shows an unquestioning and total belief in the institutions of capital. Socialists would have just lent cheap money directly to industry and full on communists would have thought it a great opportunity to dismantle the monetary system. edit - Thinking about it, it may be a weird form of cargo-cult capitalism. As in, the political business of managing capitalist economies has been replaced by a belief in preserving the current institutions of capital, irrespective of how those institutions are behaving.
  - ef4 12y ago
    > Bailing out banks and hoping they will spend it on industry just after they bankrupted themselves by gambling shows an unquestioning and total belief in the institutions of capital. On the contrary, it betrays deep distrust in the actual institutions of capitalism: market prices and bankruptcy. "Institutions of capital" cannot just mean "the people who hold the capital", because by that definition every oligarch since prehistory was a capitalist. That contradicts even Marx, who saw capitalism as a distinct modern development.
    - lotsofmangos 12y ago
      I was using the phrase to specifically mean the organisations that structurally underpin modern capitalist economies and have now come to represent it. Sorry if I did not make that clear enough from context. Now you can argue that what happened was bad economic theory, however the intent behind bailing out the banks was not to steer away from capitalism, but to prop it up, so even if you think it stinks from an economic theory perspective, it was at least intended as capitalist.
- eli_gottlieb 12y ago
  All Austrian-school ideology is capitalist, but not all of capitalism is the Austrian school. Both ideas were capitalist: private ownership of the means of production, with production being for profitable exchange.
hindsightbias 12y ago
> Iceland Not clear to me the executivies were charged for anything applicable to the overall collapse http://www.economist.com/news/finance-and-economics/21577064-why-have-so-few-bankers-gone-jail-their-part-crisis-blind-justice http://www.economist.com/news/finance-and-economics/21577064... 3 from Iceland, 2 for stock manipulation and 1 for fraud. Not viable institutions - that would be retirement and mutual funds with hundreds of billions invested in real estate tranches? > older organism to gift Not sure where all those energetic millenials would be living now if mom & dad lost their house on that HELOC and their 401K to a crushed Goldman or Fidelity. I'm for nihilism as long as people admit they're ok with more than old corporations dying.
- RangerScience 12y ago
  > ...charged for anything applicable I don't know if it's similar enough, but, a good extreme example is Al Capone. He wasn't charged with organized crime, but I don't think you could argue he wasn't jailed for it. Conversely (although that may be the wrong operation) and by design, you can do a Wrong Thing and not be jailed because it's a new Wrong Thing and thus there's no law against it - there's actually a technical term for this, and AFAIK it's one of the basic principles of our judicial system. > Not viable... I think you're reading in that I think we shouldn't have bailed out those institutions, since you're using examples with emotional impact. And actually, there may be an interesting correlation here... What do you think of the "Right to Die"? To continue with the medical analogies, if you have someone in a vegetative state (for the purposes of the analogy, they are no longer a viable person), you don't pull them off life support immediately, because it IS about more than just them. But you do let them die, eventually. So let's say you have this retirement and mutual fund that has - by virtue of a CONTINUED need for financial life support - demonstrated that it has entered a zombie state. Well, if you consider the invested funds as the organism's energy... redistribute that energy to new organisms (aka, break up the company). Energy still exists, energy is still invested - and yes, of course I'm simplifying this and it could be non-feasible due to the effort involved in that break-up, but the idea remains. > Where all those... ...Protesting? :D Joking aside, well - again, that energy isn't lost. Where does it go? I'm very much not enough of an economist to say what circumstances money is actually destroyed, but... as Lewis CK put it: nothing's on fire and nobody's dead. Now, want to say that energy doesn't go someplace appropriate? We could go the angry route and say it's going to the wall street bankers that caused the collapse, which in turn then looks like a whale eating krill. At some point the whale needs to die so there can be nourished krill, and the Cycle Continues, as they say. I'm OK with more than old corporations dying but I don't think either of these positions have anything to nihilism. Then again, SMBC is my understanding of nihilism. (http://www.smbc-comics.com/?id=2394 http://www.smbc-comics.com/?id=2394)

dnautics 12y ago

Note that what Iceland did and the idea of clearing out bad capital and malinvestment are actually capitalist ideas, versus, say bailouts and central bank manipulation, which are not.

RangerScience 12y ago
Yeah. I'm, to a decent degree, a fan of calling what we have today "corporatism" rather than "capitalism".
- curiouscats 12y ago
  Yes. Many of the problems today have nothing to with capitalism but with government policies that are largely aimed at making those with the gold happy. Capitalism is mainly about having markets that have competition. NO organization is suppose to have market power. This isn't really possible, but that is the concept. And we are so hugely away from it we can't call what is going on now capitalism. We have allowed people to convert what is called capitalism into an extreme political view that believes government is bad and huge corporations are good. That isn't capitalism, it isn't even an economic belief, it is a political belief. A capitalist country has to be focused on maintaining a fair marketplace where companies can compete for business and consumers (including companies buying from each other) have the freedom to buy in a competitive market (not a market dominated by trusts, monopolies and oligopolies that break the function of markets to advantage themselves). http://investing.curiouscatblog.net/2008/06/10/monopolies-and-oligopolies-do-not-a-free-market-make/ http://investing.curiouscatblog.net/2008/06/10/monopolies-an...
  - simonh 12y ago
    I agree with your point that capitalism is about markets, technically markets for capital, but markets for goods and services are also very important for a high functioning economy. We have those. To demonstrate this, let's looks at some alternative models such as those in Russia and the Chinese domestic markets, and contrats those with the west. The Chinese and Russian ssytems are very corporatist. In both cases huge corporations completely dominate the domestic economy. In Russia's case these are technically privately held, but the oligrachs are so closely tied to the political ruling elite that this realy is just a technicality. In China the major corporations are owned by the government and explicity run by government place-men. In both cases these corporations enjoy economic, financial and political patronage and privillege that makes it functionally impossible fror 'independent' corporations, companies or individuals to effectively compete with them. You might argue we have a similar ssytem in the west, but we realy don't. es there are instances of political patronage. Yes there are cases of undue political influence by corporations through lobbying. However the scale of such cases is absolutely riny and marginal compared to the standard order of business in Russia and China. There just isn't any reasonable comparrison. The rule of law, vita to the funcitoning of viable markets, it'sn just weak in China and Russia, it's functionally nonexistent. No matter what weaknesses and flaws you can pick at in the rule of law in the US or Europe, the difference compared to China and Russia is several orders of magnitude. Could our system(s) be better? Yes, of course. Is the situation gettign worse? In some ways yes. Are we in the same boat as Russia and China? No, not by any reasonable measure.
stormbrew 12y ago
I think it's really important to make it clear that they (well, specifically bailouts really) are also not ideas of the opposing bogeymen, though. No one who even thinks of considering themselves socialist or, say, anarchist would ever say "Yeah, let's give a bunch more money to rich people!" The tendency for power to accumulate into the hands of a few, who then manipulate the economy to their own ends, is a problem endemic to all social power structures. No system yet invented has proven immune to it merely through built-in assumptions of the model.
- RangerScience 12y ago
  "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants" Hopefully we'll be able to do this in a less-than-literal fashion.
  - dllthomas 12y ago
    "The people can not be all, and always, well informed. The part which is wrong will be discontented in proportion to the importance of the facts they misconceive. If they remain quiet under such misconceptions it is a lethargy, the forerunner of death to the public liberty. [...] Let them take arms. The remedy is to set them right as to facts, pardon and pacify them."
- ende 12y ago
  Nor has any political force yet emerged built on that premise of social power structures. Perhaps classial liberalism, georgism, distributism, and good old fashioned anarchy. Every existing political force along the spectrum simply tries to subvert the pyramid to its own purpose.
  - antimagic 12y ago
    Interestingly enough, the US Constitution's much-abused 2nd amendment was targetted at precisely this problem - the founders were at least aware of the problem. It's still too early to know if this is a sufficient safeguard. But things must be getting close - those Occupy Wall Street protests only needed to have a few hotter heads leading things, and we may have seen impromptu armies numbering in the thousands taking over corporate America. I don't know how the government would react to such an uprising.
lotsofmangos 12y ago
Bailouts and central bank manipulation are also capitalist ideas, or at least they were developed by capitalist economists within a capitalist framework on behalf of capitalists to try and keep capitalism afloat. Bailing out banks and hoping they will spend it on industry just after they bankrupted themselves by gambling shows an unquestioning and total belief in the institutions of capital. Socialists would have just lent cheap money directly to industry and full on communists would have thought it a great opportunity to dismantle the monetary system. edit - Thinking about it, it may be a weird form of cargo-cult capitalism. As in, the political business of managing capitalist economies has been replaced by a belief in preserving the current institutions of capital, irrespective of how those institutions are behaving.
- ef4 12y ago
  > Bailing out banks and hoping they will spend it on industry just after they bankrupted themselves by gambling shows an unquestioning and total belief in the institutions of capital. On the contrary, it betrays deep distrust in the actual institutions of capitalism: market prices and bankruptcy. "Institutions of capital" cannot just mean "the people who hold the capital", because by that definition every oligarch since prehistory was a capitalist. That contradicts even Marx, who saw capitalism as a distinct modern development.
  - lotsofmangos 12y ago
    I was using the phrase to specifically mean the organisations that structurally underpin modern capitalist economies and have now come to represent it. Sorry if I did not make that clear enough from context. Now you can argue that what happened was bad economic theory, however the intent behind bailing out the banks was not to steer away from capitalism, but to prop it up, so even if you think it stinks from an economic theory perspective, it was at least intended as capitalist.
eli_gottlieb 12y ago
All Austrian-school ideology is capitalist, but not all of capitalism is the Austrian school. Both ideas were capitalist: private ownership of the means of production, with production being for profitable exchange.

hindsightbias 12y ago

> Iceland Not clear to me the executivies were charged for anything applicable to the overall collapse http://www.economist.com/news/finance-and-economics/21577064-why-have-so-few-bankers-gone-jail-their-part-crisis-blind-justice http://www.economist.com/news/finance-and-economics/21577064... 3 from Iceland, 2 for stock manipulation and 1 for fraud. Not viable institutions - that would be retirement and mutual funds with hundreds of billions invested in real estate tranches? > older organism to gift Not sure where all those energetic millenials would be living now if mom & dad lost their house on that HELOC and their 401K to a crushed Goldman or Fidelity. I'm for nihilism as long as people admit they're ok with more than old corporations dying.

RangerScience 12y ago
> ...charged for anything applicable I don't know if it's similar enough, but, a good extreme example is Al Capone. He wasn't charged with organized crime, but I don't think you could argue he wasn't jailed for it. Conversely (although that may be the wrong operation) and by design, you can do a Wrong Thing and not be jailed because it's a new Wrong Thing and thus there's no law against it - there's actually a technical term for this, and AFAIK it's one of the basic principles of our judicial system. > Not viable... I think you're reading in that I think we shouldn't have bailed out those institutions, since you're using examples with emotional impact. And actually, there may be an interesting correlation here... What do you think of the "Right to Die"? To continue with the medical analogies, if you have someone in a vegetative state (for the purposes of the analogy, they are no longer a viable person), you don't pull them off life support immediately, because it IS about more than just them. But you do let them die, eventually. So let's say you have this retirement and mutual fund that has - by virtue of a CONTINUED need for financial life support - demonstrated that it has entered a zombie state. Well, if you consider the invested funds as the organism's energy... redistribute that energy to new organisms (aka, break up the company). Energy still exists, energy is still invested - and yes, of course I'm simplifying this and it could be non-feasible due to the effort involved in that break-up, but the idea remains. > Where all those... ...Protesting? :D Joking aside, well - again, that energy isn't lost. Where does it go? I'm very much not enough of an economist to say what circumstances money is actually destroyed, but... as Lewis CK put it: nothing's on fire and nobody's dead. Now, want to say that energy doesn't go someplace appropriate? We could go the angry route and say it's going to the wall street bankers that caused the collapse, which in turn then looks like a whale eating krill. At some point the whale needs to die so there can be nourished krill, and the Cycle Continues, as they say. I'm OK with more than old corporations dying but I don't think either of these positions have anything to nihilism. Then again, SMBC is my understanding of nihilism. (http://www.smbc-comics.com/?id=2394 http://www.smbc-comics.com/?id=2394)