Tag: Free Markets

The Birth Of Capitalism

College of  Political Knowledge

There are times when I just sit and think…..and suddenly the bright flash of inspiration crawls out my butt and into my head……both locations are seldom in the same place…….contrary to popular belief……after endless debates and politicians rattling on and on about the joys of capitalism…….. I feel I need to set the record straight…….

I was recently having a conversation with a friend….we were talking about federalism and how it had caught on across the world and how cool it was that it had its simple beginnings here in the good old US of A……and then my friend said that it was also cool that capitalism had its beginnings in the US as well….I had to set him right……

This is the silly season and there is a wealth of promises and historical re-writes going on……we hear all about the benefits of capitalism or the free markets or a wealth of other such things……but you realize the politicians have NO idea what they are talking about….and that is most of the time since a majority of them have a very limited knowledge of economics in the first place…….

Let us begin with the birth of capitalism…….believe it or not capitalism was NOT born when the US came into being and NO it was not born with the publishing of Smith’s, The Wealth Of Nations……..sorry to burst your bubble but the birth of capitalism had NOTHING to do with the Constitution or the DoI……or the publishing of a book considered the bible of capitalism….even though they were done in the same year….1776.

If not then….when?

The year is 1648 and after 80 years of fighting Spain finally gives the Netherlands their independence…..this small country had no aristocracy and no discernible class system….but what it did have was a fairly large middle class that had been developed over the years with city dwellers, merchants and small manufacturers and through the massive trade structure like the Dutch East India Company.

The capital Amsterdam was a great city in Europe up to the Industrial Revolution…..if was the first stock exchange and the first insurance company…..all these developments labeled the Netherlands as the first truly capitalist country.

The economic system of the day was mercantilism……..Theory of the responsibility of the state to protect and promote national wealth by encouraging exports and limiting imports.  Its central figure was the authoritarian monarch because only the monarch embodied the state’s general interests and only he could guide economic affairs.

So you see, regardless what you are told….capitalism did NOT originate with the founding of the United States….the concept was in play long before the birth of the US…..

The Self-Destruct Sequence

Kirk….admiral…..1A1

McCoy….ship’s doctor…..B1B

Scott..chief engineer……1B1

(computer replies)….self-destruct in 60 seconds

Okay, sorry, when I came up with the title that was the first thing that pop into my head…..I know my mind works in mysterious ways…..

We need to establish a few things…like what are free markets?  And what is capitalism?

The free market…….A market economy based on supply and demand with little or no government control. A completely free market is an idealized form of a market economy where buyers and sells are allowed to transact freely (i.e. buy/sell/trade) based on a mutual agreement on price without state intervention in the form of taxes, subsidies or regulation.

Now for capitalism……an economic system dedicated to production for profit and to the accumulation of value by private business firms. In the fully developed form of industrial capitalism, firms advance money to hire wage laborers and to buy means of production such as machinery and raw materials. If the firm can sell its products for a greater sum of value than that originally advanced, the firm grows and can advance more money for a new round of accumulation. Historically, the emergence of industrial capitalism depends upon the creation of three prerequisites for accumulation: initial sums of money (or credit), wage labor and means of production available for purchase, and markets in which products can be sold.

Those are a bit simplistic, but for this post and for a better understanding, they will do……..

There has been lots of opinions about the direction our economy is traveling free marketeers see this whole economic shake up as a good thing and others do not see it as something we should look forward to….a couple of years ago I wrote a post entitled, “Marx Was Right” and was not very popular at the time….read it here……http://t.co/IUnlAIJ

And since I posted that we have seen companies sitting on trillions and buying up their competition at record paces…..while sticking to the lie that they are not investing because of the uncertainty coming out of Washington…..yes, I believe this is a lie….they are buying up their competition so that when the government starts programs that will be more conducive for them….then they will have less competition and it will maximize their profits even more so than today….

It seems that I am NOT alone when I say that pure free markets and capitalism is self-destructing……watch this video from a couple of days ago……..http://t.co/q8994D5

So will capitalism self-destruct?  Just in case you were not paying attention…..in Marx own words…..

In capitalist society the working-class continues to grow, and ownership over the means of production continually dwindles into fewer and fewer hands. One example of this is the stock market, where the finance banks emphasize that “all workers” can own a piece of various companies. In fact, through offering “ownership” of these companies to more people, financial oligarchies are able to gain greater control over these companies by diluting the ownership amongst an unorganized group while also extracting capital from this large group for further investment. For example, a bank need only own 10 or 15 percent of a certain company to have an enormous controlling interest over that company, so long as the vast majority of stocks in that company are owned by thousands and tens of thousands of different people, people who do not have the time to attend shareholder meetings and are not united and unorganized on how to exert control over the company. Furthermore in capitalist society, the value of labour increases while labourers continually receive a smaller portion of that value they create. The selling of labour itself is continually reduced from something that is sold on a monthly or yearly basis to something that is sold day by day, and hour by hour, piecemeal or in short term contracts. As a result, the income gap grows continually larger.

You may NOT appreciate Marx….but his criticism from over a hundred years ago….sounds pretty close to damn accurate.  Bullsh*t!  He was DEAD ON!  The Banksters are pushing the self-destruct sequence for capitalism….you know that economic theory they so love!

What Is Free Trade?

Free trade means free production. Now fully to free production it is necessary not only to remove all taxes on production, but also to remove all other restrictions on production. True free trade, in short, requires that the active factor of production, Labor, shall have free access to the passive factor of production, Land. To secure this all monopoly of land must be broken up, and the equal right of all to the use of the natural elements must be secured by the treatment of the land as the common property in usufruct of the whole people.

Thus it is that free trade brings us to the same simple measure as that which we have seen is necessary to emancipate labor from its thralldom and to secure that justice in the distribution of wealth which will make every improvement or reform beneficial to all classes.

The partial reform miscalled free trade, which consists in the mere abolition of protection — the mere substitution of a revenue tariff for a protective tariff — cannot help the laboring classes, because it does not touch the fundamental cause of that unjust and unequal distribution which, as we see today, makes “labour a drug and population a nuisance” in the midst of such a plethora of wealth that we talk of over-production. True free trade, on the contrary, leads not only to the largest production of wealth, but to the fairest distribution. It is the easy and obvious way of bringing about that change by which alone justice in distribution can be secured, and the great inventions and discoveries which the human mind is now grasping can be converted into agencies for the elevation of society from its very foundations.

Agreements like NAFTA, CAFTA, etc are not promoting free trade.  They are however, destroying the manufacturing sector in the US.  It did however promote the spread of globalization which in turn out sourced thousands of Amewrican jobs to overseas locations.

I suggest that when Americans hear the words “free trade” uttered by their representatives then they sit up and ask questions.  So far it has not helped the US and its people.

Bush Defends Free Markets

Please!  Stop using that term!  It is a LIE!

Setting a tone for an economic summit on his turf, President George W. Bush plans to tell world leaders that reforming financial markets alone won’t help if they abandon the free market and restrict trade.

Bush, in his comments to be aired in his weekly radio address to the nation, made public a day ahead of the G-20 Summit, also highlighted the need for broader reforms to adapt the international financial systems to the 21st century.

“And the answer is not to try to reinvent that system. It is to fix the problems we face, make the reforms we need, and move forward with the free market principles that have delivered prosperity and hope to people around the world,” he said.

But the broader focus is on the deteriorating economy, which has millions of people grappling to keep their jobs, their homes and their hopes. The most severe economic downturn in decades threatens to end Bush’s tenure on the most sour of notes before President-elect Barack Obama takes over.

To rally a more coordinated world response, Bush is convening representatives of some of the world’s biggest industrial democracies, emerging nations and international bodies in Washington. He will host the leaders at a White House dinner Friday and review causes and solutions for the financial mess Saturday.

In the short term, the world leaders are expected to focus on ways to stimulate economic consumption, free up credit and ensure that international financial institutions have the money to respond. Goals include making financial markets more open and less risky for millions of investors.

Some critics have blamed lax oversight and failures by regulators in the U.S. and elsewhere to detect problems before the current meltdown. It began with the collapse of the U.S. housing market, froze up credit lines and the broader financial sector and rippled overseas.

In the United States alone, the nation’s jobless ranks zoomed past 10 million last month, the most in a quarter-century, as 240,000 more people lost jobs. In the latest dire sign, American automakers say they are struggling to survive.

Just how many times do I need to say this….if the markets need reforming by governments then they are NO LONGER free markets!  Calling them such does not make them so.  Sorry people the free markets died many years ago.  Please do not take my word for it–GO!  Read Adam Smith.  The idea of free markets today is just a slogan that has nothing to do with reality.

Free Markets: Truth Not Spoken

The best short answer is, the illegal drug trade, beyond that and there is not much of a free market. That is about the only part of our economic system that is truly free, the rest is monopolized, controlled and collectvistic.

Competition is a fine thing, but somewhere along the road someone figured out that competition lessens profits where a combining increased those same profits. In reality the whole concept of “free market enterprise” was on the way out by 1875. And by 1888, trusts and monopolies had a strangle hold on the American economy. It was so pronounced that Pres. Grover Cleveland said in a speech to Congress, “As we view the achievements of aggregated capital, we discover the existence of trusts, combinations and monopolies, while the citizen is struggling far in the rear or is trampled to death beneath an iron heel. Corporations, which should be carefully restrained creatures of the law and the servants of the people, are fast becoming the people’s masters”.

Because of this concentration of the “traditional American system of free competitive enterprise” no longer exists. In its place is a concentration of economic power in a few hands—a monopoly. Free markets are an extension of what is called Laissez-Faire economics, which is basically no regulation, no interference in the markets. That brings us to the current economic age where all talk about the free markets, but by definition there are none. There is however, interference by the government on the markets throught regulation and such and because of this interference the markets are failing.

The multinationals that we have today fly into the face of the “free market” concept. Why? Because in this concept there are no large corporations, but rather many smaller units in competition with each other. So when one fails it is negligible not the devastating crush we have now. And the consumer is in control, say coffee and milk are expensive, then the consumer enmasse stop buying the product and the price will come down, at least that is the theory. Why? Because there are so many competitors that it would be impossible for collusion to take place.

So when yiou listen to your politicians rant on about this free market or that, ask them to explain it to you. I would bet a dollar to donuts that their explanation is nothing near what is really meant by the theory. Today, without government intervention the financial crisis would topple the government and the economy, this is the beast that the multinational corporations have created and it cannot be stopped. These imperfections, man made, by the way, is what prevents the markets from existing and operating freely.