Capitalism has failed. Period



hopi watcher

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So you have nothing to say on the topic at hand? Or do you agree that there are times when the government should follow a hands off policy when GDP falls 25% in one year!?
No, the prime function of any government should be to ensure that the wealth generated is shared as fairly as possible. Allowing individuals to accummulate huge fortiunes is wrong and unjustified and will always result in the mess we are now in..
 

feargach

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http://www.politics.ie/economy/59996-case-against-fiscal-stimulus-1920-21-recession.html

http://www.politics.ie/economy/41009-case-against-fiscal-stimulus-post-wwi-recession.html

1920. GDP collapses 25%. Prices collapse 20%. Government continues to slash spending, engages in "courageous deflation". Wages fall and investments are liquidated, recession ends in about one year.

But perhaps this was not a "depression" but just a "recession". Perhaps. But you can bet your bottom dollar had there been massive State socialist central plan we'd be discussing the horrors of the 1920s depression.
The 1920s are well-known to be a very poor example of a healthy world economy, not only because of how it all unwound in 1929.

Apart from the insane explosion in speculation in America (foreshadowed in the forst half of the twenties by a typical capitalist speculative frenzy in Florida that ended in the usual orgy of bankruptcies) the rest of the developed world was in a poor state:

Unemployment, at first glance, was not so terribly bad in Europe. The rate was not horribly high in most countries. But that was before you adjusted to the fact that so many millions of the young men born in the early 20th century were in war graves from 1918 onwards.

If those young men had survived, the famine and mass unemployment that would have blighted 1920s Europe would have made Ireland in 1847 seem like a holiday camp.

Despite the fact that there was an unnaturally low number of young men to feed, nutrition and wages in 1920s Europe was extremely poor.

People seem to forget that the Labour party took power in the 1920s precisely because of the economic disaster that Europe was going through.
 

Clanrickard

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He clearly does not know that a central bank is pivotal as laid out by Marx
There was no central bank in Marx's time dan at least not as we know it.
 

20000miles

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http://www.politics.ie/economy/59996-case-against-fiscal-stimulus-1920-21-recession.html

http://www.politics.ie/economy/41009-case-against-fiscal-stimulus-post-wwi-recession.html

1920. GDP collapses 25%. Prices collapse 20%. Government continues to slash spending, engages in "courageous deflation". Wages fall and investments are liquidated, recession ends in about one year.

But perhaps this was not a "depression" but just a "recession". Perhaps. But you can bet your bottom dollar had there been massive State socialist central plan we'd be discussing the horrors of the 1920s depression.
I might add a postscript to this.

The Keynesian claim is that the capitalist solution to unemployment - a lowering of the wage rate won't be able to generate enough employment in order to end the recession. This clearly wasn't the case is 1920-21. Unemployment reached 25% in 1932 and lingered in the teens during Roosevelt's term. Perhaps it had something to do with Hoover/Roosevelt's benevolent high wage policy. But the results are in, a hands off policy and spending cuts were accompanied by recovery. Interventionism was met with a long, decade of stagnation. Even the most die hard empiricist would have to acknowledge this!

But what about the other interventionists; the Friedmanites? If accept the monetarist thesis of Depression - that the central bank didn't do enough to re-inflate, isn't it surprising that the 1920s weren't awful?


And finally, in 1921, the FED jacked it's interest rates waaaaayy up, while after the 1929 crash it droped rates waaaaayyy down to record lows. In short, according to the Keynesian/Monetarist doctrine, the 1920s should have been the most economically disasterous decade in the history of mankind. This was clearly not the case.
 
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Irish Liberty Forum

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The central bank is pivotal, as youngdan says (plank number 5):

The Communist Manifesto - Wikipedia, the free encyclopedia

10 Conditions For Transition To Communism

1. Abolition of property in land and application of all rents of land to public purposes.
2. A heavy progressive or graduated income tax.
3. Abolition of all right of inheritance.
4. Confiscation of the property of all emigrants and rebels.
5. Centralisation of credit in the hands of the State, by means of a national bank with State capital and an exclusive monopoly.
6. Centralisation of the means of communication and transport in the hands of the State.
7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.
8. Equal liability of all to labour. Establishment of industrial armies, especially for agriculture.
9. Combination of agriculture with manufacturing industries; gradual abolition of the distinction between town and country, by a more equal distribution of the population over the country.
10. Free education for all children in public schools. Abolition of children's factory labour in its present form. Combination of education with industrial production.
 

20000miles

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The 1920s are well-known to be a very poor example of a healthy world economy, not only because of how it all unwound in 1929.
Let's not forget the attempt to return to the gold-standard at pre-war parity prices. If this had not been the case there wouldn't have been the need for any mass unemployment - or a Keynesian revolution to explain it.

Of course, the 1930s wasn't exactly the rosiest macroeconomic time either.

But yeah, you asked for a recession that was ended by capitalism, and I provided one.
 

feargach

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But yeah, you asked for a recession that was ended by capitalism, and I provided one.
I believe I asked for a depression, not a recession.
 

20000miles

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Sorry, then. Depressions come about as a result of governments trying to fix recessions.

I might add that the 1940s Keynesians believed that the US economy would tank again after WWII ended, and that another stimulus package would be needed to get it going again. Nothing of the sort happened - government spending fell, price and wage controls were abolished, FDR and Keynes died, and the economy finally readjusted in 1946.

There's scarcely a better example of Keynesians getting it completely wrong!!*



*Although, that's not to suggest that there aren't many other examples of Keynesians getting things wrong!
.
 

20000miles

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No, the prime function of any government should be to ensure that the wealth generated is shared as fairly* as possible. Allowing individuals to accummulate huge fortiunes is wrong and unjustified and will always result in the mess we are now in..
*fairness being arbitrarily defined by government buraucrats.
 

mr_anderson

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What socialists fail to grasp is the concept that failure is part of capitalism.
Badly run companies going to the wall are a sign of capitalism working.

Bank bailouts and state interventions are NOT signs of capitalism at work.
The banks and other companies should be allowed to go bust.
New banks will emerge, but hopefully, with different people at the helm who recognise the lessons from past mistakes.

It would be hell for a while, but at least we wouldn't be paying out vast salaries and pensions to failed bank heads.
 

feargach

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Sorry, then. Depressions come about as a result of governments trying to fix recessions.

I might add that the 1940s Keynesians believed that the US economy would tank again after WWII ended, and that another stimulus package would be needed to get it going again. Nothing of the sort happened - government spending fell, price and wage controls were abolished, FDR and Keynes died, and the economy finally readjusted in 1946.

There's scarcely a better example of Keynesians getting it completely wrong!!*
.
Except it's a pointless example. Keynes never pretended to be a future-teller.

At root, he was just an insightful reader of the mechanics of money. Nobody who considers himself a barely-passable Keynesian has much truck with sooth-saying, just like a good surgeon does not attempt to predict what ailment tomorrow's patients will have, he simply deals with them as they present.

I believe tax rates in the USA were still at over 80% between 1945 and 1961. Not exactly free-market capitalism then. Still quite a government-dominated economy, all in all, with genuine markets playing a marginal role in economic matters.
 

20000miles

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Except it's a pointless example. Keynes never pretended to be a future-teller.
I'd say it's a pretty telling example. If a (future) Nobelist predicts economic disaster when war ends, and the opposite occurs perhaps you might wanna re-evaluate your framework.

Here is the Paul Samuelson quote, by the way, so you can see what crankery we're dealing with: "[at war's end] there would be ushered in the greatest period of unemployment and industrial dislocation which any economy has ever faced."

I believe tax rates in the USA were still at over 80% between 1945 and 1961. Not exactly free-market capitalism then. Still quite a government-dominated economy, all in all, with genuine markets playing a marginal role in economic matters.
And...?
 

feargach

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And the economy of the USA in the 1946-1961 era has nothing to do with capitalism, as the economy was a tightly controlled military-socialist one with only very slight elements of capitalism.

All you have proven is that somebody who called himself a Keynesian made a bad prediciton. If he had picked up his fish knife to eat his pie with, would you use that as proof that all Keynesians have bad table manners? If he put a dent in his car, would you say that all Keynesians are bad drivers?

Some muslims drink whiskey. That doesn't mean Islam is pro-whiskey.

Making predictions is to Keynesian economics what chugging Heineken is to Islam. Get it?
 

20000miles

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And the economy of the USA in the 1946-1961 era has nothing to do with capitalism, as the economy was a tightly controlled military-socialist one with only very slight elements of capitalism.
And yet this hardly proves the desirability of a military-socialist economy, or 80% marginal tax rates.

All you have proven is that somebody who called himself a Keynesian made a bad prediciton. If he had picked up his fish knife to eat his pie with, would you use that as proof that all Keynesians have bad table manners? If he put a dent in his car, would you say that all Keynesians are bad drivers?

Some muslims drink whiskey. That doesn't mean Islam is pro-whiskey.

Samuelson bases his predictions about the economy on Keynesian economic theory and gets it completely wrong, it does suggest a problem with the thoretical framework.

Anyways, we're way off topic. I've thouroughly trounced your Statist drivel about capitalism's inability to recover from downturns.
 

feargach

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It is wholly unable to recover from Depressions. Depressions are to capitalism what cyanide is to humans.

Conflating depressions with downturns is like mixing up the common cold with full-blown AIDS.
 


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