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There's a fundamental flaw in your reasoning too. You can't have capitalism without some form of government and you can't have government without some form of

There's a fundamental flaw in your reasoning too. You can't have capitalism without some form of government and you can't have government without some form of taxation.

darjen 17y ago
you can have voluntary, free trade without government. whether it's called "capitalism" or something else can be a matter of discussion...
- larryfreeman 17y ago
  Property rights need to be protected or an economic system falls into anarchy. On a small scale, it is possible for the community to enforce these rights (in which case, the community has formed a local government) but on the larger, societal scale, a transcommunity government is needed (or a warlord/city boss/etc appears which is, by its nature, a form of government). If all free trade actions could be resolved by rational, respectful, interaction of two individuals of integrity (ie they keep their word), then no government is needed. As far as I can tell, if such a world existed, we wouldn't be having this discussion. As long as individuals need to collaborate in order to resolve disagreements, as long as certain individuals need to take responsibilities for overseeing these collaborations, government is necessary.
  - darjen 17y ago
    my question is can property rights be adequately protected by government? seems like history has proven that not to be the case. the assumption that warlords would always appear in society no matter what is just that - an assumption. on the other hand, every government we have today was born by conquest and initially created by warlords. I simply don't hold to the assumption that government will always be necessary in society to protect property rights. they are actually the biggest violators we have of property rights. people are capable of progressing beyond government, and I think they will once they finally realize what government really is.
jriddycuz 17y ago
Maybe the term capitalism has a different meaning to you than it does to me, but I use almost synonymously with "free markets." And I would actually make the case that you can only have "pure" free-markets without government. What I was suggesting in my comment above is that the failures of a bound and adulterated form of free markets do not indicate that free market principles are themselves flawed. The notion that banks' or other firms' abuse of bailout money is a problem with capitalism neglects that an extremely important (and often ignored) freedom in capitalism is the freedom to fail.
- sramana 17y ago
  I agree that free market capitalism ended when the government bailed out the banks. I think, the issue on that is what would have happened if the banks were not bailed out? Many believe, the western financial system would have collapsed and we would have been sitting amidst 25-30% unemployment right now. Most economists agree that bailing out the banks was the right thing to do under the circumstances, and faced with the consequences. But now that we do have a financial system that has not collapsed, we need to rethink how we recover from 10% unemployment and a gaping deficit wound that has been created. For that to happen, we need more people like Kao, fewer like Soros. Those, after all, just examples. My point is, the system has created incentives for people to be attracted to the Soros-like professions, not the Kao-like professions. And what we need right now are more the Kao-like innovators (and the Jobs like entrepreneurs, who, to your point, is very wealthy). But entrepreneurship and innovation are not short-term money-making propositions the way speculation-oriented professions are. And my point is we're diverting the youth in two directions as a result: (a) an entitlement path, where they expect the government to come to their rescue (b) the speculator path, where they are attracted by easy money. The path that is longer, harder, riskier - the path of building, creating, innovating - is losing out in the process.
- larryfreeman 17y ago
  I am unable to understand this viewpoint that you can only have "pure" free-markets without government. There can be no free market without government unless you define government as "official" government. If you define government more loosely as a "governing body", then it is clear that government must always exist in a free market system because conflicts and disagreements will always exist. The governing body is a necessary factor in economic system. I would argue the free markets never exist in a 100% free state. To talk as if they do is really to ignore the realities and complexities of modern economic systems.

There's a fundamental flaw in your reasoning too. You can't have capitalism without some form of government and you can't have government without some form of taxation.

darjen 17y ago

you can have voluntary, free trade without government. whether it's called "capitalism" or something else can be a matter of discussion...

larryfreeman 17y ago
Property rights need to be protected or an economic system falls into anarchy. On a small scale, it is possible for the community to enforce these rights (in which case, the community has formed a local government) but on the larger, societal scale, a transcommunity government is needed (or a warlord/city boss/etc appears which is, by its nature, a form of government). If all free trade actions could be resolved by rational, respectful, interaction of two individuals of integrity (ie they keep their word), then no government is needed. As far as I can tell, if such a world existed, we wouldn't be having this discussion. As long as individuals need to collaborate in order to resolve disagreements, as long as certain individuals need to take responsibilities for overseeing these collaborations, government is necessary.
- darjen 17y ago
  my question is can property rights be adequately protected by government? seems like history has proven that not to be the case. the assumption that warlords would always appear in society no matter what is just that - an assumption. on the other hand, every government we have today was born by conquest and initially created by warlords. I simply don't hold to the assumption that government will always be necessary in society to protect property rights. they are actually the biggest violators we have of property rights. people are capable of progressing beyond government, and I think they will once they finally realize what government really is.

jriddycuz 17y ago

Maybe the term capitalism has a different meaning to you than it does to me, but I use almost synonymously with "free markets." And I would actually make the case that you can only have "pure" free-markets without government. What I was suggesting in my comment above is that the failures of a bound and adulterated form of free markets do not indicate that free market principles are themselves flawed. The notion that banks' or other firms' abuse of bailout money is a problem with capitalism neglects that an extremely important (and often ignored) freedom in capitalism is the freedom to fail.

sramana 17y ago
I agree that free market capitalism ended when the government bailed out the banks. I think, the issue on that is what would have happened if the banks were not bailed out? Many believe, the western financial system would have collapsed and we would have been sitting amidst 25-30% unemployment right now. Most economists agree that bailing out the banks was the right thing to do under the circumstances, and faced with the consequences. But now that we do have a financial system that has not collapsed, we need to rethink how we recover from 10% unemployment and a gaping deficit wound that has been created. For that to happen, we need more people like Kao, fewer like Soros. Those, after all, just examples. My point is, the system has created incentives for people to be attracted to the Soros-like professions, not the Kao-like professions. And what we need right now are more the Kao-like innovators (and the Jobs like entrepreneurs, who, to your point, is very wealthy). But entrepreneurship and innovation are not short-term money-making propositions the way speculation-oriented professions are. And my point is we're diverting the youth in two directions as a result: (a) an entitlement path, where they expect the government to come to their rescue (b) the speculator path, where they are attracted by easy money. The path that is longer, harder, riskier - the path of building, creating, innovating - is losing out in the process.
larryfreeman 17y ago
I am unable to understand this viewpoint that you can only have "pure" free-markets without government. There can be no free market without government unless you define government as "official" government. If you define government more loosely as a "governing body", then it is clear that government must always exist in a free market system because conflicts and disagreements will always exist. The governing body is a necessary factor in economic system. I would argue the free markets never exist in a 100% free state. To talk as if they do is really to ignore the realities and complexities of modern economic systems.