Business doesn't support the free market, so let's have socialism
You will enjoy this weird case for why we should have socialism because not even big business really favors the free market. Also, in this review, you will discover for the first time that
The free market has been shown to fail again and again. From the railroads in the nineteenth century, the Great Depression, the Savings and Loans scandals of the 1980s, to the recent housing bubble meltdown and financial crisis to cite only some examples from the United States, the market has proven to be irrational from the point of view of society as a whole.
Comments (9)
Inquisitor
Sigh, more irrelevant blathering from slightly relevant individuals.
Published: December 29, 2008 10:28 AM
koroviev
"The free market just produced a major housing bubble and a banking crisis, as Marxist political economy had predicted, "
funny stuff
Published: December 29, 2008 10:38 AM
Chris Butler
I don't know aobut you folks, but this old lefty bromide "the market has proven to be irrational" really gets under my skin. Does the market have an acutal brain, or a body as its shell? Do markets have emotions? Or, are we talking about people. If people are irrational in a market system, why on earth would they be rational in a centrally planned system? Seems like faulty premises from the get-go to me.
Published: December 29, 2008 11:39 AM
n005
Free-market economics assumes that all people are rational because it is a moral economic system, intended to be in harmony with the interests of the moral and rational.
We owe no quarter to the irrational; it is not our responsibility to explain why an irrational person suffers and starves. If a man cannot function in a free market, then he is wrong, and has nothing and no-one to blame but himself.
Free markets aren't irrational, they just allow irrational people to be exposed as such -- there is no "society as a whole" for them to hide behind.
Published: December 29, 2008 2:43 PM
Milan
n0005,
great post. I am actually going to steal that and use it once or twice!
Published: December 29, 2008 3:32 PM
jeffrey
I wonder what "society as a whole" really means to this writer. It lives. It breaths. It has an independent logic, consciousness, interest, and historical drive. It is not a composite of individuals but a wholly new unit of which we as individuals are merely moving parts.
Published: December 29, 2008 3:43 PM
Glen
Many, maybe even most people I talk to, seem to implicitly believe that rational action is one that aligns with their goals and beliefs. Obviously, by that definition many actions in a free society would seem irrational. However, human actions are based on the ACTORS goals (which change over time and are subject to time preferences of the individual) and beliefs (which are also subject to change over time) not the OBSERVER.
Published: December 29, 2008 4:27 PM
Captaindiesalot
The Market is neither Free nor Unregulated...the Capital Markets have been used as the personal piggy bank for politicians, regulators, and industry insiders...the results of this Lack of Freedom are all around us.
If Markets were truly free, investors would have personal responsibility for their money, and the vast majority of the speculative bubbles and deep troughs would not happen, because individuals would only invest in what they understand.
The SEC and other regulatory bodies have failed and should be abolished.
Businesses are run by individuals affected by the rules & regulations of the political elite. The operate in the Real World...and need to manipulate the political and regulatory elite to best serve their ownership.
What else can they do? We do not live in a Free Market society.
Published: December 30, 2008 6:37 AM
DS
The terms "rational" and "irrational" are economic constructions, not the literal usage of the term. In mainstream economics all economic actors (homo economicus) act in ways that conform to economic theories - maximize utility, produce until marginal price equals marginal cost, etc, etc. Any actions taken by people that do not conform to the existing economic theories are deemed "irrational" and are viewed as defects or "market failures". Most mainstream economic theories say that these defects must be corrected by government.
The problem is that this is a circular argument. It assumes that the theory is already correct, instead of coming to the correct conclusion - that the "irrational" behavior points out failures in the theory, not in the system being observed. Instead of observing all economic behavior and trying to formulate a theory that explains it all, the mainstream economists have taken the lazy route and just assumed that any behavior that doesn't fit must be "irrational".
Or, they have simply formulated their theories in order to empower the government to do what it wants to do anyway - spend money - and any inconsistencies just need to be explained away, since the goal isn't to formulate an accurate, predictive theory in the first place.
Published: December 30, 2008 7:25 AM