Redirected from Josh Grosse/Economics
To Joshua: I just realized in writing about RoseParks essay on Disabilities/EtiquetteTalk, that attribution can solve a great many woes. In this way, the Wikipedia avoids many difficult to resolve arguments of the type we have been discussing on this page.
I left this part of the original page, because it hadn't gotten a response yet.
Something you people are definitely ignoring, though, is that Russia did fare better under the soviets than before or after. The czars presided over an agricultural economy, and capitalism has accomplished sufficiently little that many wish to return to the old system, although to be fair it hasn't had much chance yet. Yet under the first few decades of soviet rule the country was industrialized and pushed to a world power status never before enjoyed. Such a system may have been doomed to collapse, and certainly proved unable to support a massively overdone military program like the US had, but you have to admit has ran better than par.
I personally am not ignoring anything. I'm talking about a very wide scientific consensus. If I had to personally respond, I would say that the movement from totalitarian dictatorship under the Tzars to totalitarian dictatorship under the Soviets was much worse for the millions of people murdered by that regime, and that the growth in prosperity during the reign of the Soviets was due solely to technological gains in the West. If the Soviet Union had been a free country for all those years, just think how much better off we would all be today.
And calling the current system of the former USSR "capitalism" is just a terrible, terrible stretch. I wouldn't even call it capitalistic, really. Freedom is still just a dream to the people there.
But, nevertheless, in forming general statements, we have to be led by the overall trend, appropriately qualified. Uniformly, more freedom is better for prosperity, ex ante. Perhaps the US would be wealthier in the short run if we made some brilliant person dictator of the economy (oh, we have, Greenspan ;-)), but that doesn't make the system better off. Sometimes people play Russian Roulette and don't die... doesn't make it a good strategy for survival.
There are two different things to consider here, though - that the USSR was socialist and that it was totalitarian. Most of the evils of that country can be attributed to the latter, but we are discussing the former, so as noone has offered an example of a democratic socialism we should try and dissociate the two.
Now you have claimed that the industrialization of the country was due to the technological advancement of the west. But the west had been industrialized for a century or two already, and Russia remained largely agragarian - why is it that only after Stalin came to power did this have any effect? It certainly is not that Stalin was a brilliant dictator, because even placing his mass slaughters aside, he was merely competent at best. If socialism is non-workable you should offer some sort of reason as to why such advancements were timed precisely with its inception.
As for the current system of the former USSR, what is non-capitalist about it? And as capitalism was obviously the intent, what went wrong?
Voting for democratic leaders who are supposed to decide what the people want, without a price system, is simply not workable.
Notice that I have said nothing here about the tyranny of democratic decisionmaking outside a framework of inviolable individual rights. That's a totally different issue that might make a person view democratic socialism as morally repulsive. I'm only talking about the liklihood that a system in which leaders are elected to centrally plan an economy without a price system will 'work' in any serious sense. The evidence strongly suggests otherwise.
As for the former Soviet Union, we have to keep in mind that the central defining feature of capitalism is individual rights, including rights to property. This is genetically dependent upon the rule of law, upon a stable system of courts which respects individual rights to a large degree, etc. My understanding is that the current situation over there doesn't qualify in the least. Massive degrees of corruption means that whoever has the most money, power, and guns makes the rules -- quite frequently without regard to individual rights.
My understanding, and I can try to find a reference if you're interested, is that for many fledgling businesses in Russia, taxes that are supposed to be paid are higher than *revenues*. Not higher than *profits*, mind you, but higher than *revenues*. This means that it is literally impossible for a business to be run in compliance with the law. This means that the honest business owner can't exist... you have to cheat on your taxes to survive, period, and therefore you are at the mercy of the local officialdom. Of course, a sensible solution to all of this is bribery, which in turn leads, in successful cases, to government backed monopolies... those impossible tax laws are enforced unevenly, with the politically connected succeeding at the expense of those who merely provide a better service at a better price.
The central idea of a free market is that every person has an equal right to trade value for value with others. Where that right doesn't exist, a free market doesn't exist. What does exist in the ex-USSR is a disorganized gangster state, absent the rule of law.
As to what went wrong, well, that's a question quite beyond my knowledge, I'm afraid. I don't think a lot is known about how to properly transition a nation from totaliarian communism to freedom. Among the problems are failures to understand that the essence of capitalism is individual rights... so attempts to replicate the forms (with privately owned large corporations) without the structure of justice, leads to all sorts of trouble.
Please do me a favor and go read that Hayek essay. It's really important. When I was in grad school, studying what was then (circa 1995) cutting edge theory on financial price systems and signalling, I came across this Hayek article for the first time and I was stunned. All the subtle nuances of current theory are represented there, all the questions of cost and signalling. It's really important stuff. Quite separate from rights and morality, which I think clearly show that democratic socialism is a hopelessly immoral system (it is wrong for you to take my home, if you act individually, but somehow right if a big enough gang votes on it?), there are very solid economic reasons, both theretical and proven in the best empirical research, to say that it just doesn't work.
Good points on Russia. Some notes about the rest.
Capitalism is not about individual rights, except for right to property, which other can be grafted over top of. However, many socialists claim that a capitalist structure defies certain rights which come first, and so property is not an inaliable right. In that case you would have to provide some sort of absolute moral framework - not easy - to defend claims of immorality, especially since when everything is publically owned you didn't own your house in the first place. On the one hand this is no different from a housing monopoly (not encouraged, but permitted by a free market) evicting you from its property; on the other hand, there is no guarantee it could even happen, since even socialist democracies can still have rights, and one of them could be that to a certain minimum caliber shelter.
I read through Hayek's essay - it wasn't as bad as I thought! It does not seem to me, though, that it precludes the possibility of socialism. Current markets are not dominated by small opportunists, but rather by large corporations, which as centrally controlled organizations should suffer all the same disabilities, but seem not to. Thus either momentary circumstances play far less of a role than he has stated, or more likely there are simply ways which even large central bureaucracies can take advantage of them, and either way effective government control is not ruled out by at least this line of reasoning.
wikipedia.org dumped 2003-03-17 with terodump