> Dear Eva:
> I am tempted to say that we disagree on some fundamental points, and
> leave it at that. However, I believe that you (and, in a different
> form, Ed Weick) raise important points, so let me try to distinguish, by
> "deconstructing," the strains of these argument.
>
I see, deconstructing means avoiding to answer
the question. By the way I have never equated
capitalism with selfishness. Socialism is based
as much on selfishness, just in that case people
realise that their best interests are met better
by that social/economical system.
Correction: Hungary has actually woted out the
socialdemocrats
and a conservative coalition is in government,
not that it makes any difference.
You regurgitated the "positive" stuff about
regulation and vaguely referred to the taxpayer
as the costbearer. But if profits are down
and the economy is slower and there are shortage
of markets, etc etc this is no way consists
of an economic basis for a keynesien revival.
And I haven't mentioned the much larger
body of the unemployed than in the 60s/70s.
Why, oh why do you advocate something without
considering these very fundamental gaps
in your argument? It is a copout that bring
us nearer to disaster.
If you said anything new, I'm sorry, I missed it.
Eva (yes, being impatient)
> As I see it, there are two questions at the core of the discussion:
> (1) What is the nature of capitalism (in its psycnological and
> behavioral roots, and in its functioning as a business-economic system)?
> (2) What is the nature of the relationship between capitalism and the
> society of which it is a part?
>
> As to the first question, I can accept the validity of what you and
> Weick are saying. Capitalism is based on the ethics and behavior of
> selfishness and this comes out most clearly if there is no other element
> that influences the participants -- ALL of the participants (not only
> owners, but investors -- including "widows and orphans", workers, small
> tradespeople, publicists, etc., etc., i.e. all the people, or the vast
> majority of them, in a society characterized by the capitalist mode of
> economic behavior). Ironically, the kindest view of this was
> articulated by Marx. He emphatically declared that the capitalist was
> not necessarily a bad person, but rather, caught up in the realities of
> the competitive system, is alienated from all moral or other
> considerations that might otherwise condition his behavior. ("If I don't
> act this way, and go for the last bit of competitive advantage in
> maximizing my profit, then someone else will do that to my disadvantage
> and eventually I may be driven to the wall. Where would I be then? And
> where would the system be? Would it be any better --- or would it be
> the same, but with me as a loser?" -- etc., so it goes.) The polite
> term for this, in conventional economic and business parlance, is
> "profit maximization." Less politely, all kinds of horrors are built
> into the system. In more contemporary analysis, this is a "zero-sum
> game", in which the gains of one are the losses of the others. In
> traditional pollitical palance, it is Hobbes's "war of all against all."
>
> At this point, we won't go down a whole other road of argument, i.e.
> whether this is a necessary condition, or whether capitalism can be
> replaced by something altogether different, in terms of human
> motivation, behavior, and economic functioning. We will accept Weick's
> view that this is capitalism "as is," in the real view, and also other
> views that have been articulated that suggest that there is "no free
> lunch" in designing and putting in place real world systems, i.e. that
> any alternative also has its own characteristics, some advantageous,
> some disadvantageous, some quite horrifying if taken in their pure form.
> (In imagining systems of alternatives, whether as regards economic
> systems, personal lifestyles, careers, relationships, etc., there is
> always a tendency -- as long as one is imagining -- to see the most
> negative features of the reality one is dealing with and which one
> dreams of escaping from, and idealizing that which one is imagining, and
> believing that it will be something as pure as the physical
> relationships between human beings in Erica Jong's first novel, an
> evocation of daydreaming abstracted from reality.)
>
> Let me turn to the second point. Given a reality like the functioning
> of capitalism, as it is, and in its pure, unrestrained, form, prudence
> dictates that we regard this as dangerous, even if it may be reality.
> So we construct systems of law, regulation, counterbalancing forces,
> economic policy systems (like Keynesianism -- but also others), or
> whatever =-- we try to tame this system to a point where we can live
> with it. Sometimes we will be more successful, sometimes less.
> Sometimes we will give up altogether, and then the beast begins to rage
> among us in its "natural" form. This is what I originally referred to
> be by asserting the positive possibilities and expereience of past
> regulation, etc.. And this was what I meant when I said that
> electorates, used to relatively smooth functioning of regulation,
> eventually become bored, become less vigilant, and contribute to a
> system where the blandishments of "unrestrained free enterprise" become
> sufficiently sufficient that the safeguards that have been built by
> society over time are disregarded and allowed to become corrupted.
>
> I don't want to take this father, at this point, because -- if my
> position is not understood -- it would simply mean repeating and trying
> to reiterate, in a different form, what I have already stated in my
> previous posting.
>
> There are, however, 3 other points that should be touched upon, at least
> to suggest further points which might be fruitful for useful discussion
> and argument. These are (a) regulation from the point of view of the
> capitalist; (b) Weick's point about mobility of capitalism in a
> globalized economy; and (c) the environmental question. I can try to
> sketch out just very bare beginnings of a discussion (from my
> perspective -- of course, I welcome your views, asssenting or dissenting
> so long as the discussion and understanding of the question is advanced
> by our mutual contributions):
>
> (a) Officially, the capitalist has to take the position that all
> regulation etc. is bad and is accepted with the greatest reluctance (to
> do otherwise would be "to let down the side.") Behaviorally, I am not
> too sure. In the war of all against all, the individual will want to
> maximize his gains without limit; but he is simultaneously living in
> fear that someone else will gobble him up. I think the few sentences
> that Marx devoted to this, early in the modern development of industrial
> capitalism, can probably stand the test. To jump to my conclusion it is
> that the individual capitalist (and others in the system) will be
> relieved whenever some rules are imposed on behavior. Of course, he
> will hope (and will try to pull strings) so that the rules go as far as
> possible to protect him and his interest, while having as little bearing
> as possible on constraining his own strategies and drives. If this is
> the reality, then I think that that bugbear of all right-thinking
> economic critics, Adam Smith (who was also a moral philosopher and
> psychologist) has a useful contribution to make: individual interests
> will differ; the ensemble of individual interests, in their interaction,
> each seeking protection from law and simultaneouslly wanting freedom
> from the restraints of law, will cancel each other out, and will leave
> scope (if the citizens push for the implementation of law and
> regulation) for some control over the system.
>
> (b) A few postings back, Weick, in passing, made the important point
> that the mobility of capitalism in a global economy made governments
> adverse to exerting controls over the system in their jurisdiction, or
> doing things that in general would be resented by the business
> community, which would find more attractive havens elsewhere.
> Obviously, Weick has made a very useful, realistic, and sensible
> observation. The behavior of governments in the last decade certainly
> seems to confirm this observation. To further the discussion, however,
> I would like to suggest that the history of the economy and society does
> not really unfold in a straight line, with a continuous reinforcement of
> the same trends and tendencies. It is more of a zig-zag (or, if you
> prefer, up and down) pattern, in wihch all kinds of risks and changes
> influence the outcomes and perspectives on what is happening now and
> what may be emerging as the next pattern. The East Asian crisis, for
> example, may deter (for a while) certain corporate and investment moves;
> already, "risk aversion" in terms of overseas investment is becoming a
> more frequently used term in economic and financial commentary. If
> mobility is constrained to more stable and political environments, then
> it is interesting to note that, in the European countries, in France,
> Britain, Italy, and Germany -- to cite only the major economies -- and
> in the Czech Republic, Poland, and Hungary, to speak of the newly
> emergent East-Central European states, Social Democratic governments
> have replaced right of center governments following the
> Thatcherite-Reganite-Kohl ideology and economic line. These newer
> goverenments may not move to policies that wholly satisfy the critics of
> the old order, but they may collectively create a critical mass of
> policy and programs that shift to the center left. In the last few
> weeks, the German developments have been particularly promising: first,
> in terms of the SDP-Green coalition and the agreement on policy (e.g.
> higher energy taxes) that forms the understanding on which this
> coalition was possible; secondly, the communique of a few days ago,
> issued after the Blair-Schroeder meeting, which stated that the two
> goverenments would work within the European Union to pursue a common
> European social policy agenda. These trends do not betoken as free a
> ride for the unrestrained capitalism forces as prevailed in the past;
> but how far this will go will depend on the forces that the public and
> that the activists can bring to bear to see that government statements
> are translated to meaningful realities. Finally, on this point, it is
> interesting that the U.S. elections of last week are being widely
> interpreted as a Democratic victory that was due to mobilization of the
> Afro-Americans and other minorities to protect their position against
> dangers inherent in the Republican ascendancy, and that it was an
> election that was fought on social-economic policy issues that, in the
> exit polls, these outplayed by far the attention that was expected to be
> given, in forming voters' voting decisions, on the Clinton-Lewinsky
> affair. It is hardly an accident that this election victory was gained
> when President Clinton was forced to keep out of the public eye and that
> social issues (which he had given only lip-service to, in his effort to
> compete with the Republicans for the middle-American constituency) were
> emphasized by the more socially active and receptive Democratic leaders,
> including Hillary Clinton and the Rev. Jesse Jackson. If we take all of
> these straws in the wind together, it may be that, for the next little
> while, there will be fewer safe places for business investment, and that
> the majority of these places will be prepared (individually and
> collectively) to deal with the market in more proactive fashion than the
> dominant Thatcher-Reagan-Kohl policies of 1978-1998 were prepared to
> envisage.
> (c) In the medium-to-longer-run (and showing some signs of serious
> impacts even now) the environmental and social consequences of an
> unrestrained economic system that is *successful* at doing what it is
> supposed to do -- i.e., increase productivity, and hence increase
> growth, with attendant pollution, waste, and rapid social change -- is
> by far the most difficult problem to deal with. I don't pretend to have
> an answer to this, far less to be able to give the answer in a few
> sentences or a few paragraphs if I could give one. What I feel is worth
> thinking about, and debating, is whether further evolution and
> implementation of the regulatory regimes is useful as a way of trying to
> get a handle on this problem. In the context of the notion that
> capitalism can be regulated, and that the question is really whether we
> get the right kind of regulation in place, with the right degree of
> regulation, and with adequate will to put in place and enforce
> reasonable regulatory constraints, then I base my argument on the
> follwing. If profit maximization is the key to capitalism, then the
> system (insofar as decisions are concern) will move into areas where
> profit is easier and attractive, and move away from areas where risk is
> higher, profit is harder to achieve, and profit is less attractive
> (i.e., lower). I remember that about 25 years ago, when these issues of
> growth were first being described, I first became aware (as a
> non-economist) of the significance of externalization of costs.
> According to my old friend Arthur Cordell (who, fortunately, is still
> making his contributions as a leading member of this list), business
> economics is based on offloading (externalizing) as much of your costs
> as possible elsewhere -- to have other people, such as the taxpayer, or
> the breather of polluted air, or the consumer of a product that may last
> only a few years instead of many years, bear the costs that you do not
> want to bear. In various ways, the system can be geaared to adding to
> the costs, and internalizing the costs, of behavior that bears heavily
> on the natural and social environment, while encouraging risk and
> investment in environment-sparing technologies and systems.
> (Obviously, this is an oversimplification, but it is as far as I can
> take things in this posting, and without a great deal more thought and
> development.)
>
> Saul Silverman
>
