Does Capitalism need reigning in?

Political Philosophy
1

I am having this discussion with someone, and I wanted to get some feedback from you guys on where he is going with this idea. What is the rational explanation for laissez faire policies in light of the reality that people do cause harm to others?

J: Capitalism is not without problems, and there needs to be an oversight at times. The framers of the Constitution, being brilliant as they were, implemented checks and balances to safeguard our system because they knew that one government without same was likely to become totalitarian eventually without checks and balances.

Scrib > I would say, capitalism is without problems, but people are not. As

> soon as you introduce oversight, what you have is no longer

> capitalism. Capitalism is the regulatory mechanism itself, and if you

> interfere with it by introducing regulation, you prohibit it from

> acting, like picking a scab to see if a wound has healed. What

> problems do come up in the operation of capitalism come from fraud, or

> in other words from force and deception. Force and deception are and

> always should be illegal.

J: The problem is where there’s greed there’s an incentive to deceive. There have been lots of cases like that. You read the news and you know about them, I’m sure.

Scrib: > Part of the problem is that people think we have capitalism now (or

> have had it in the recent past.) But the closest thing the earth has

> ever seen to capitalism hasn’t been seen for a hundred or hundred

> fifty years. Not only do businesses have a quagmire of regulations to

> get into business and stay there, but cooporate law and so forth

> weighs the balance heavily in favor of large companies. Corporatism is

> not capitalism. It’s just as wrong to give government incentives to

> big companies (in the name of tax revenue they’ll get in return, or

> whatnot) as it is to create layer after layer of regulation for small

> businesses. Both should be able to compete without any restrictions

> *or benefits* from government.

J: I agree. . . . Bailout money is socialism. . . Corporations aren’t bad, but when the government is in bed with them, as they obviously are, and when it’s harder and harder for mom and pop startup companies, then we don’t have free enterprise, we have a different kind of socialism. . . .

Scrib: > So what do you think are the problems of capitalism? Go ahead and make

> me back up what I say–that’s the fun part of a discussion, I think.

J: Capitalism: think Copper Seven. Research it.

Or research the drug Nisental.

There are lists, and they’re long. People lie to make money, even if it kills people. Industry is not always nice. Sometimes they are awful.

In the “GOOD OLD DAYS,” if someone put something inside a man’s wife that killed her, and the person who put it there knew it would kill her, then the husband would get his shotgun and kill the (expletive). That’s free enterprise. Now we have the government to stop us from getting the shotgun. But they also have laws that protect corporations from criminal prosecution. That has to go. And in fact, that’s a violation of free anything. In a free society, someone would make the corporations pay in criminal justice when someone is killed because of deliberate negligence.

OTOH, when government controls corporations too much, then free enterprise fails because there’s no real competition. If you give 175 billion taxpayer dollars to one bank, then another bank that didn’t get that money is at a relative disadvantage.

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If a chef in a restaurant owned by a corporation is knowingly putting rat poison in food, that chef ought to be caught and tried as a criminal. That’s the theory. It is also the current practice.

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What is the rational explanation for laissez faire policies in light of the reality that people do cause harm to others?

That it is not a policy of laissez faire capitalism to harm people to begin with. Depending on what he means by harming people, a laissez faire (which we don’t have) system would still have laws regarding the protection of rights. Criminals exist in all economic systems. Greed exists in all economic systems.

4

Now we have the government to stop us from getting the shotgun. But they also have laws that protect corporations from criminal prosecution. That has to go. And in fact, that’s a violation of free anything. In a free society, someone would make the corporations pay in criminal justice when someone is killed because of deliberate negligence.

I think your friend has identified both the problem and the solution right there.

What is the rational explanation for laissez faire policies in light of the reality that people do cause harm to others?

The explanation for LFC is that LFC is the necessary result of the proper implementation of non-contradictory human rights. If undue limitations on and protections for corporations and individuals were removed and every player had to face criminal and/or civil charges for fraud, there would be no incentive to be fraudulent in a LFC system.

5

Capitalism does not need reigning in. People who poison others, steal from other, defraud others (by “lying to make money”) etc. need to be reigned in. That has nothing to do with Capitalism, which clearly prescribes a government that catches and punishes criminals.

And that should be the proper function of an anti-fraud policeman: to catch Bernie Madoff, not be too busy forcing companies who have not broken the law to send in endless paperwork about their daily activities, or hold up new drugs from coming out for years.

Also, the incentive to deceive does not come from greed: no one in American society deceives more on a mass scale than politicians who are seeking power, not money. Usually, they are seeking power to “help” people. Look at Al Gore, and his rationalizations as to why his stupid little movie was full of intentional lies. That’s the source of deception: people first lie to themselves, then to others. The one sector that contains the least concentration of scam-artists and manipulators is the area of industry which is not heavily regulated: IT. And the most examples of scams and frauds come from government: just this week there was talk of $50 billion being stolen from the latest “stimulus package”.

6

The problem is where there’s greed there’s an incentive to deceive.

This is false. A very strong motivation to achieve one’s values and/or to enhance one’s life (aka greed), provides no incentive, in any shape or form, to deceive other people.

To deceive is to fake reality to get an end, and in business it is called fraud, i.e., to lie about one’s product and/or services to get values from another, which would usually require force to take; i.e., fraud is faking reality, usually by making false claims, promises etc., to steal values, a criminal parasite would normally have to use force to steal.

In a healthy, non-super-inflated economy, instances of large scale fraud are very small, because large sums of money are not easy to come by. In a healthy economy, one not super inflated (one not sped up by inflationary pressure by massive central bank and/or government “incentives”) does not have too many dealings for individuals and firms to track and maintain.

But the ever lowering micro and macro fiscal standards of individuals, businesses, government officials, and policy makers, which characterize super-inflationary economies like ours, drive ever faster, ever riskier, and poorly planned dealings across the board. Thus, such an economy gives the worse kind of social parasites easy pickings.

By definition, criminal parasites are a fringe element in any degree of flourishing society. In a society with a inflated, super sped up economy due to long-term sustained governmental/central bank driven incentives with gobs and gobs of cheap money being pushed into the system, the criminal parasites, get a long time to sustain their “easy picking,” and can amass huge amounts of loot before their victims notice. In effect, in such an economy, there are many people with large sums of cheap money available to them, who are so distracted and/or complacent; the fringe criminal parasites can flourish.

In today’s economy, especially over the last 10 years, massive amounts of super cheep money has been flooding into the system, the major driver being lenders lowered expectation of risks, largely caused by long sustained government/central bank driven/backed campaigns to convince people to be ever looser with their money.

When the victims finally realize what happened, the biggest acts of fraud are splashed across the national news papers, which give the impression such instances of large scale fraud are more prevalent than they are; giving people who are already apt to over-generalize, readymade material to use to spout off.

Such, stories tend to confirm their own malevolent world view, as they tend to believe money is obtained by either by looting and/or mooching. Since, even the worst kinds of people retain some sense that the moral is the practical from their childhood, such stories perpetuate as these kinds of people derive a sense of satisfaction as a form of punishment to “rich” people who they feel “must be” bad because they have money.

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This post extends from here:

Does Capitalism need reigning in?

Again, in today’s economy, especially over the last 10 years, massive amounts of super cheep money has been flooding into the system, the major driver being lenders lowered expectation of risks, largely caused by long sustained government/central bank driven/backed campaigns to convince people to be ever looser with their money.

World governments have driven these cultural expectations in society, not only by oral arguments, but by backing the campaigns, with ever growing injections of ultra-cheap and/or free money; or via ever “improving” systemic guarantees that people do not need to worry “so much” about their money, choices and actions.

At the same time, and largely driven by the same mechanism of every loosening “minding” or guarding of people’s money, time and/or resources; the FED and other central banks, exasperated the situation by holding down the cost of borrowing large sums of money.

This coupled with pseudo-governmental organizations like Freddy and Fanny, acting on their explicit and implicit charter/duty to loan large sums of money with little or no concern of repayment; caused the economy to speed up causing very rapid turnover of deals, transactions etc.

With perceptions of large and sustained amounts of ultra-cheap and/or free money available driving, the world economy to speed up; general/personal fiscal standards across the board continued to be driven downward. In such a sped up system, most economic indications are that everything is on sale and that there’s ever lowering risk to make deals.

With ever lowering expectations of the amount of diligence required for dealings to be “safe”; people started expecting rapid returns on investments, with lower standards of evaluations, assessments, business cases and/or personal budgeting. The loosening of fiscal standards can be seen across the spectrum of dealing, not only business/banking dealings, but personal dealings, and government dealings. Economists, such as Peter Schiff characterize this situation as creating “artificial demand.” And he defined inflation as anything which causes such artificial demand.

All of this pushes upward on “supply” of goods, services labor in every private, business, and public sector. Most notably, as we have seen, one particular sector has been targeted for this inflation, the housing sector.

It has been targeted for many reasons, but almost everyone from government officials, politicians, construction materials manufactures, to furniture manufactures, to automobile manufactures, to farms, department stores, to the individual’s applying for mortgages, all possess incentives to “push housing,” “to sell, sell, sell housing” both as an idea and literally.

Housing is the long pole of the tent of society, and it has been the lever, which has pushed the “big top” of the biggest, circus-like economic bubble in history. It has been raised, not with a sturdy pole, but with all the over supplying driven by the major factors detailed above.

There is nothing in the nature of capitalism, i.e., of free, unregulated/forced trade which gives rise to today’s economic disaster. Capitalism, to the extent that it exists today, does not have the means to inflate, sped up to create massive “artificial demand” bubbles across the entire nation or world at once.

Only, huge central government funded organizations, in combination with central banks have the means to do this. Only, governments can provide the kind of systemic “guarantees,” which, sustained and grown over time can lower an entire country/world’s risk aversion and fiscal standards across the board.

Only, central banks have the ability to artificially lower the cost of money and sustain it outside market forces. Together, they have the means, motive and opportunity to distort the economy generating a worldwide perception of most everything being, basically, on sale; and they are the only ones with the means to sustain it for long enough to effect the risk expectations of the entire world.

Left alone, banks don’t over supply money, and don’t lower collateral requirements, and push gobs of money into the hands of people who will default in droves. Banks, left alone, understandably want to see good, sustained returns on their investments, so they have every incentive to maintain rigorous lending standards.

Only, governments and central banks can incentivize and force banks to loan out massive amounts of money at very low interest rates. They do it, in part by “guaranteeing” both literally and via implication by saying, “Don’t worry… loan, loan, loan, we’ll watch your back, we’ll bail you out, you’ve got the backing of the government.” This is exactly, what we have seen happening in the last 10 years.

Regards,

8

“Greed” is an anti-concept. A weapon of philosophical war.

9

“Greed” is an anti-concept. A weapon of philosophical war.

Interesting, I would have said the same not a year ago. But I listened to a Leonard Peikoff podcast recently where he made a strong case in defense of greed as a valid concept and as a morally positive emotion. Thinking about it, it seems clear that, like “selfishness”, greed has been packaged with lack of concern for others, or wanting more than one deserves, or wanting something irrationally. But there is no reason why it must be so.

That said, I generally consider myself accomplished if I can convince people that selfishness is a virtue.. Greed may have to wait.

10

VERY interesting, exaltron. Just when I’ve become effective at describing the moral and practical superiority of rational selfishness to others, I might have to up my game.

Rational GREED?!! Well, why not? It has always struck me that the people who ‘made it big’, were also those who had no concept of “enough.” You know, it’s the old story of you aim for a million and you’ll get a 1/4 million. Hell, go for 20.

Self limitation.

Again, it has been the Church that tainted these concepts: with the 7 deadly sins, Avarice, etc.

I can understand that self- limitation, in terms of excessive (?) wealth, would be far more immoral than going all out for the maximum - always.

I have a few qualms about some of the fellow-travellers we’d be picking up; some really rich people I’ve met are completely amoral cynics.

However, as I was going to post earlier, Capitalism is not culpable for the morality of ALL its practitioners. Also, such types will tend to fall away in an unmixed economy, I think.

Anyhow, I’m starting to see the value in being unashamedly rationally greedy. The way Capitalism is regarded by many, we may as well be hanged for a sheep, as for a lamb. :slight_smile:

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“Greed” is an anti-concept.

If greed is an anti-concept then what genuine, valid concept does it destroy?

Greed is not an anti-concept.

Greed is, at least, a very strong motivation to achieve one’s values and/or to enhance one’s life.

Greed is a concept to denote a particularly strong desire to achieve one’s self-interest.

The concept greed is only bad when the moral standard implied behind it is altruism, and in which case condemning greed is just condemning a particularly motivated variation of pursuing self-interest, i.e., a greedy person is a certain kind of self-interested person, i.e., the kind who is very motivated.

Rational GREED?!!

What would it mean to have irrational greed?

That’s the equivalent of saying there’s an irrational form of pursuing rational self-interest.

12

I am having this discussion with someone, and I wanted to get some feedback from you guys on where he is going with this idea. What is the rational explanation for laissez faire policies in light of the reality that people do cause harm to others?

Some of the previous posts have pretty much answered the question. People that knowingly harm others will always exist and need to be dealt with (be it a justice system or a shotgun). But this has nothing to do with free markets.

A couple other points that would likely come up in the referenced discussion:

A capitalist economy would in fact create an environment in which ‘buyer beware’ and personal/corporate reputation were of more emphasis. But this isn’t a bad thing.

Free markets have a business cycle that includes periods of growth and recession. That’s a fact. During a recession, employment will fall, output will decrease, and times will be tougher for people. All the recent attacks on free markets basically revolve around the fact that recessions suck and that means markets failed. When in reality the market is working exactly as it is supposed to – adjusting prices and output until back in equilibrium. No one likes a recession, but it comes with a free market – the market that has brought people amazing, unprecedented growth and quality of life improvements.

I am having this discussion with someone, and I wanted to get some feedback from you guys on where he is going with this idea. What is the rational explanation for laissez faire policies in light of the reality that people do cause harm to others?

Some of the previous posts have pretty much answered the question. People that knowingly harm others will always exist and need to be dealt with (be it a justice system or a shotgun). But this has nothing to do with free markets.

A couple other points that would likely come up in the referenced discussion:

A capitalist economy would in fact create an environment in which ‘buyer beware’ and personal/corporate reputation were of more emphasis. But this isn’t a bad thing.

Free markets have a business cycle that includes periods of growth and recession. That’s a fact. During a recession, employment will fall, output will decrease, and times will be tougher for people. All the recent attacks on free markets basically revolve around the fact that recessions suck and that means markets failed. When in reality the market is working exactly as it is supposed to – adjusting prices and output until back in equilibrium. No one likes a recession, but it comes with a free market – the market that has brought people amazing, unprecedented growth and quality of life improvements.

13

Thanks, everyone, I think the answer is clear: capitalism does not need reining in, but people do.

On the subject of greed, there are two parts of the definition in my dictionary; one is wanting unduly more than one should, and the other is wanting that more especially at others’ expense.

Split that way, we can say that greed is good if it means wanting more, because that is the motivating force of all improvement in the world. If we only wanted what everyone else had, progress would not occur. But if it is wanting it at someone else’s expense clearly is wrong, since it requires one person to live for another’s sake.

The real problem with the word greed is that those two defintions are conflated. Why should they even both be a part of the same word? That they are thought of this way is precisely the problem: it is assumed that one cannot have more than another WITHOUT it being at someone else’s expense.

14

Thanks, everyone, I think the answer is clear: capitalism does not need reining in, but people do.

On the subject of greed, there are two parts of the definition in my dictionary; one is wanting unduly more than one should, and the other is wanting that more especially at others’ expense.

Split that way, we can say that greed is good if it means wanting more, because that is the motivating force of all improvement in the world. If we only wanted what everyone else had, progress would not occur. But if it is wanting it at someone else’s expense clearly is wrong, since it requires one person to live for another’s sake.

The real problem with the word greed is that those two defintions are conflated. Why should they even both be a part of the same word? That they are thought of this way is precisely the problem: it is assumed that one cannot have more than another WITHOUT it being at someone else’s expense.

This is a trap that I’ve seen many Objectivists and students of Objectivism fall into: don’t conflate the concept with the dictionary definition. The concept is a philosophical categorization based on a rigorous epistemological analysis, i.e., “why does this need a name? Is this set of things distinct enough from other things, yet possessing common traits among the set?”, etc. The definition merely reflects common usage, so if everyone decides that “selfishness” doesn’t just include interest primarily in one’s own life, but “at the expense of others”, even if this is conceptually invalid, so be it.

I’ve seen many honest debaters get sucked into arguing on their opponents’ terms, simply because they couldn’t refute an invalid concept that popular usage had defined.

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PS, Here is the podcast where Peikoff discusses the concept of greed, courtesy of Scott Holleran’s blog. May be worth discussing in a separate thread..

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thanks for that, exaltron [oh and the definition trap reminder]