The free market or State planning??

[Son of the Empire]

Do you believe in the free market? Or State planning?? It's kind of a; Are you Capitalistic or Communistic question I guess... Still, it's also a question about Economic Idealism. And I would like to hear from you all what you think about it.

I myself believe in the free market with all my soul. The state has to let go of everything, including "The Commanding Heights"(Gas, oil and other natural-resources) in the economy. If they don't they'll end up like Soviet, Bolivia and all those other poor wretched countries. I also live in Norway where we right now have a socialistic government, and it doesn't work in the long scale. When we loose the oil, (in about 50 years) we can't rely on the "welfare" program anymore. And it amazes me that so few Norwegians understand that... In 2050 we will, with the welfare system of today, pay every coin of the state's treasury to pension. Which is quite alarming, for the ones of us who aren't old then...

If the market doesn't controll wages and prices, we loose something essential called competition. Which again contributes to zero efficiency at the factories and such. This will of course again contribute to higher state spending, which again contributes to the state taking loans to repair the lost productivity. These loans will contribute to a hyper inflation again, which is über bad!! So it's kind of a neverending spiral of growing poverty if you trust state planning and Communism.

These statements are made very easy to understand, but it's as you might understand more to it. But if I was to explain all sides of this topic, it would become an essay... Which isn't the meaning at all...

Still, I've would like to hear your meaning about this topic...

[Last Roman]

neither. I want something in between. A mixed economy. something like what the US has now, but more regulations on big business

[Tom Paine]

State planning, but small scale; I want autonomy in many respects but under the auspices of the state for each imdividual section of the economy, right down to shops and factories... the free market is a way to consolidate wealth nothing else, whereas central state planning leads to corruption and failing economy as the state is too large to regulate all the minor businesses at once.

[Kanaric]

One benifit of state planning: no super-corrupt evil corporations exploiting their workforce and the economy.

Their is middle ground, which the US and most countries use, that is good. You can't go one or the other.

[RusskiSoldat]

State planning to a certain degree.
Meaning corporations are free to do business as they want, but the government can override any decision and fire any employee (including the top) and replace them with another at any point in time.

[Darth Wong]

A totally planned economy won't work (see USSR). A totally unregulated economy will screw everyone over (see Enron). Neither extreme is workable.

[Guderian]

:sign_stup

Sorry DW, that's the closest smilie there is to I agree.

[Aristophanes]

A totally planned economy won't work (see USSR). A totally unregulated economy will screw everyone over (see Enron). Neither extreme is workable.

A completely unregulated anything will 'screw everyone over'. I don't see why, when we have a murder, or two, or what have you, there's no mention of regulatory or societal failure, but when you have a corporation scam the living daylights out of a fair few folk, suddenly everything's busted. There is no doubt that there have been periods in American history where those involved in business of one nature or another have been more likely to engage in 'certain' activities than others. A great deal of this relates to the prevailing culture and ethics of the time: there are other factors which contribute as well. I'm always worried that people, under the auspices of 'regulation', really mean something else entirely: whether that 'something else' is merely extra government intervention, or virtual bureaucratic tyranny is difficult to determine. I favour any 'regulation', or legal framework, that effectively decreases incentives to harm others, and thereby provides incentives for increased economic participation. But, one must merely consider the vast quantities of 'regulations' on the books, across various layers of governments, to form the opinion that not all things that present themselves under the auspices of 'regulation' are of palpable benefit to society.

The mistake we make, when discussing regulation, is to forget the amount of internal regulation that happens in a marketplace. Although far from perfect, and reactive to boot, these simple mechanisms do create a system which, over the long term, rewards good ethics, and penalizes bad ethics.[generally]
And yes, that doesn't mean that everyone in business is ethical: far from it; however, point me to one field of human endeavour where there isn't some unethical activity. It is impossible to completely wipe it out, but we all hold corporations to higher standards than we do ourselves.

[Darth Wong]

A completely unregulated anything will 'screw everyone over'. I don't see why, when we have a murder, or two, or what have you, there's no mention of regulatory or societal failure, but when you have a corporation scam the living daylights out of a fair few folk, suddenly everything's busted.

Because murderers do hard time, while white-collar criminals have historically been sent to country club prisons if they go to jail at all.

There is no doubt that there have been periods in American history where those involved in business of one nature or another have been more likely to engage in 'certain' activities than others. A great deal of this relates to the prevailing culture and ethics of the time: there are other factors which contribute as well.

True. And right now we are in a very pro-corporate era, as exemplified by the current American administration's attitude that whatever the business lobby wants, the business lobby should get. I have to wonder if Enron would have been nearly as much of a scandal if big banks and insurance companies and investment houses hadn't lost billions.

I'm always worried that people, under the auspices of 'regulation', really mean something else entirely: whether that 'something else' is merely extra government intervention, or virtual bureaucratic tyranny is difficult to determine. I favour any 'regulation', or legal framework, that effectively decreases incentives to harm others, and thereby provides incentives for increased economic participation. But, one must merely consider the vast quantities of 'regulations' on the books, across various layers of governments, to form the opinion that not all things that present themselves under the auspices of 'regulation' are of palpable benefit to society.

So? The statement that an unregulated free market would be a catastrophe is not refuted by pointing out that not 100% of regulations are perfect.

The mistake we make, when discussing regulation, is to forget the amount of internal regulation that happens in a marketplace. Although far from perfect, and reactive to boot, these simple mechanisms do create a system which, over the long term, rewards good ethics, and penalizes bad ethics.[generally]

Adam Smith's "invisible hand" doesn't scale well. He wrote at a time when "word of mouth" was a greater factor in business dealings than it is today. Today, a scammer can use infomercials and relocation to vacuum up new suckers almost indefinitely because the country is too big for bad word of mouth to make a serious dent in his ability to conduct business.

And yes, that doesn't mean that everyone in business is ethical: far from it; however, point me to one field of human endeavour where there isn't some unethical activity. It is impossible to completely wipe it out, but we all hold corporations to higher standards than we do ourselves.

It seems to me that corporations are actually held LESS accountable than individuals for their actions. A corporation can simply be dissolved by its owner and a new one started up which does the same thing, thus eliminating all debts and customer anger associated with the old name. It's not so easy to do that as an individual; bankruptcy dogs you for quite a while and criminal records can follow you around for life.

[Aristophanes]

Because murderers do hard time, while white-collar criminals have historically been sent to country club prisons if they go to jail at all.

I definitely agree that penalties have NOT been sufficiently harsh for white-collar criminals. So, I support the portions of Sorbanes-Oxley which call for harsher sentencing. As far as I'm concerned, defrauding a person of his life's capital is not that far removed from murder, and certainly a worse crime than common theft which generally occurs within limiting parameters. Throw 'em in with the general pop. It's a sad truth that there isn't one law for everyone in the United States.[or Canada, for that matter]

True. And right now we are in a very pro-corporate era, as exemplified by the current American administration's attitude that whatever the business lobby wants, the business lobby should get. I have to wonder if Enron would have been nearly as much of a scandal if big banks and insurance companies and investment houses hadn't lost billions.

Yes, some corporate lobbies are extremely powerful. Walmart, for example, has lobbied herself billions of dollars of subsidies on the municipal and state levels.

So? The statement that an unregulated free market would be a catastrophe is not refuted by pointing out that not 100% of regulations are perfect.

I'm not attempting to refute your statement: I'm pointing out that the cure can be worse than the malady.

Adam Smith's "invisible hand" doesn't scale well. He wrote at a time when "word of mouth" was a greater factor in business dealings than it is today. Today, a scammer can use infomercials and relocation to vacuum up new suckers almost indefinitely because the country is too big for bad word of mouth to make a serious dent in his ability to conduct business.

I should make it clear that I support all laws which take a very harsh line on fraud; however, the existence of the internet and its attendent sub-media, as well as television, telecommunications and radio do put powerful tools into the hands of consumers...should they choose to use them. Word-of-mouth still exists, it's just transmitted by different media.

It seems to me that corporations are actually held LESS accountable than individuals for their actions. A corporation can simply be dissolved by its owner and a new one started up which does the same thing, thus eliminating all debts and customer anger associated with the old name. It's not so easy to do that as an individual; bankruptcy dogs you for quite a while and criminal records can follow you around for life.

I should have been more clear: there's a political movement which is highly anti-corporate and seems to believe corporations are satanic institutions. It is very fashionable to talk against 'the corporations.'

Although it is true that suffering does result from limited liability, our society, and most, hold it is true, in balance, that corporations generate more than enough development and prosperity to offset that sad fact.

Limited Liability. Unlike in a partnership or sole proprietorship, members of a corporation hold no liability for the corporation's debts and obligations: see leading case in common law, Salomon v. Salomon & Co. [1897] AC 22. As a result their "limited" potential losses cannot exceed the amount which they contributed to the corporation as dues or paid for shares. The economic rationale for this lies in the fact that it allows anonymous trading in the shares of the corporation by virtue of eliminating the corporation's creditors as a stakeholder in such a transaction. Without limited liability, a creditor would not likely allow any share to be sold to a buyer of at least equivalent creditworthiness as the seller. Limited liability further allows corporations to raise funds for riskier enterprises by removing risks and costs from the owners and shifting them onto creditors and to other members of society, thereby creating an externality. Another rationale sometimes offered for limited liability is reducing the amount that an investor can lose reduces the time and effort required to determine whether a stock is risky, thus adding liquidity to the stock market - in contrast to the very illiquid market for partnership interests (however, given the due diligence already exercised by institutional and other large investors, and the availability of insurance, it is questionable whether added liability would increase the costs of determining risk sufficiently to impair the liquidity of the stock market). In any event, a lender or other creditor can require a personal guarantee on a loan to a corporation (normally a small corporation), thus introducing personal liability.

[1{H][NA]

anyone here by anychance watch the pbs doc "commanding heights" it disucsses just this problem of free markets v. central planning. i think things work differently for different countries. frees markets have worked in the US, but has proven to be a disaster in india and latin america, both now lean towards central planning. but in a way the US still uses central planning to a degree to get the economy out of a jam.

[John I Tzimisces]

The one Teddy Roosevelt had going. Corrupt as hell, but he only shut down those crazy trusts that didn't help the people.


So in essence you could say for me a regulated capitalism.

[LSJ]

I like a balance, like what Canada is trying to have. The US system is a little bit too free-market, businesses owns almost everything situation to me.
I think that having a semi-free market is beneficial to the people and the economy, without the societal issues that arise with complete free marketing, like ethics and natural resource exploiting.
I don't think there is any perfect way, but some kind of midpoint is nice. I don't believe in communism or pure capitalism.

[JP226]

I like the freemarket. There are natural laws of economic force and progress, state planning only obstructs those laws. State planning is akin to saying no entreprenuership/ no innovation and no incentive. Denying either of those turns you into a france, a germany a russia, just about any major european economy.

A totally planned economy won't work (see USSR). A totally unregulated economy will screw everyone over (see Enron). Neither extreme is workable.

i'd argue the freemarket worked in this case. You have to look beyond enron for a second and look at arthur anerson, once a premier accoutning firm. They didn't face any legal consequences that I know of and today they have very little business. The freemarket acted appropriately.

[Guderian]

i'd argue the freemarket worked in this case. You have to look beyond enron for a second and look at arthur anerson, once a premier accoutning firm. They didn't face any legal consequences that I know of and today they have very little business. The freemarket acted appropriately.

What about all the small investors who lost money on Enron, and now have to mortgage thier house? What about the State of California that got ripped off and lost millions of dollars? If that's you idea of a working economy then the planned economy works too, the government can just send everyone to goulags like Stalin did. Stalin's economy turned the USSR from a agarian country to a Industrialized one in half the time it took capitalistic nations.

The fact is Arthur Anderson continues to operate, in a few years, or decade perhaps everyone will have forgetten about Enron and AA will get it's customers back. A totally freemarket will never work in the interests of every citizen.

[JP226]

What about all the small investors who lost money on Enron, and now have to mortgage thier house? What about the State of California that got ripped off and lost millions of dollars?

nobody ever forced those people into the stock market did they???

Stalin's economy turned the USSR from a agarian country to a Industrialized one in half the time it took capitalistic nations.

it'll also destroyed incentive and innovation leading to a collapse 50 years later...

[internationalist]

nobody ever forced those people into the stock market did they???

Enron shut off their power stations so they could raise their rates...hardly ethical

[RusskiSoldat]

Stalin's economy turned the USSR from a agarian country to a Industrialized one in half the time it took capitalistic nations.

One fifth or even one tenth would be more appropriate.
To quote the man:

We are fifty or a hundred years behind the advanced countries. We must make good this distance in ten years. Either we do it, or they will crush us. (said in 1931, at the beginning of the rapid industrialization campaign; 10 years later, the Soviet Union was invaded by Nazi Germany)

nobody ever forced those people into the stock market did they???

So people being screwed over because of the actions of others is a good thing?

it'll also destroyed incentive and innovation leading to a collapse 50 years later...

Says the American who knows nothing of practical socialism.
1. Money existed (and so did different salaries)
2. It was perhaps the most innovative period in our history. Sciences flourished.
3. The collapse 50 years later can be traced from the late 60s and 70s, and directly attributed to Gorbachev's weak willed policies, but I fail to see how you can trace it back to Stalin.

[David Deas]

Neither would work by themselves. There has to be a balance between the two.

[Lee1026]

An absolutely free market system would work quite well. See Ebay, all we need is the red-green remarks system in real life, and it would work. Enron came about because of monopolies. If we can just prevent that.....