I concur with the other correspondent that
capitalism and freedom are separate concepts. There are capitalist countries
that are not free. On the other hand, I
grant that no non-capitalist country can be called free (Viet Nam , China ,
Cuba
...). However this is a bit of a red herring because the term
"capitalism" embraces so many different systems, running the gamut
from Haiti to Sweden .
I think we can safely state that any well-run society must prominently feature
the market (more or less free) as a central reference point for allocation of
most goods and services.
However this does not mean "the freer
the better", or at least not beyond a certain point. The state is the
guarantor of freedom, including freedom of the market. The state must intervene,
on the market and elsewhere, to prevent deceit, injustice and gross economic
inefficiency.
An example of wasteful insistence on free
markets, to the great detriment of society as a whole, is the health insurance “system”
in the US .
It has been conclusively demonstrated that negative selection, moral hazard and
other factors necessarily occur on a massive scale in any free market in health
care, and that socialized medicine is the optimal solution. Proportionately to
its health care budget, Canada
spends only one third as much as the US on administrative tasks, and
Canadians enjoy better health than Americans. In other words, in this case the
socialist solution is far more efficient than the free market solution. I shall
spell it out: “In some sectors, Socialism=Efficiency & Free Market =
Inefficiency”.
Regarding the popular platitude that health
care must be rationed in a socialized system, I reply that in a capitalist
system it must also be rationed. However this rationing is conducted on the
basis of the patient’s purchasing power. I don't see what's so wonderful about
that.
In other words free-market enthusiasts are
proponents of junk [social] science. Their belief in unrestricted free markets
is of a religious nature, and is not based on evidence or reason.
Just to clarify, when I wrote “a greedier,
more sordid kind of capitalism” I did not mean to imply that all capitalism is
necessarily greedy and sordid.
[On the other hand, to the extent that
capitalism as such can be called greedy, this should be seen in the
light of Adam Smith’s concept of individual agents pursuing their own economic
interests, who nonetheless work for the benefit of society as a whole.
Consequently it is a controlled and constructive greed. And since we haven’t
yet come up with any reasonable alternative to capitalism, we’re just going to
have to live with it.]
Financialized/neoliberal capitalism is
greedier than its predecessor manufacturing/Keynesian capitalism in the sense
that for example a manufacturing corporation is now considered a mere portfolio
of assets that can be spun off whenever convenient, instead of as a productive
unit with long-term goals on the market for actual goods. Corporate executives
are motivated to maximize stock value at the end of each quarter, disregarding
any long-term corporate objectives.
The deregulation inspired by neoliberalism
and the reduction of state power it propounds have placed society at the mercy
of financial pirates who produce a world-wide economic crisis on the average
once every three years, for the last 15 years. Despite their ostensible
insistence on reducing state power, whenever the Wall Street crocodiles lose
their shirts as a result of their reckless gambles, the Fed steps in to rescue
them. On the other hand the individual enjoys less and less security, and is
increasingly exposed to the vagaries of a market place that is more erratic
than ever before. Neolib capitalism, by discouraging productive investment in
favor of speculation, has reduced worldwide economic growth rates compared to
the Keynesian period from 1945 to 1973.
Read all about it in “Off Center” by Paul Pierson & Jacob Hacker (a
Yale professor) and Hacker’s other books, like “The Great Risk Shift”.
Rinaldo, I think you mean "it's more
relevant than ever" ("actual" is not synonymous with Ital
"attuale"). I suppose you mean
that free-market fundamentalism is still a defensible concept. I'd be interested
in knowing your reasons for saying so.
I think it is generally acknowledged that
free markets are generally the best solution only if certain micro-economic
conditions are fulfilled. These conditions are for example (1) Many buyers
& sellers; (2) Market participants are well-informed about the goods they trade;
(3) The production function does not have any non-convexities, which implies
that there is only one maximum value, not 2 or 3; (4) There are no increasing returns to scale in
production; (5) No (or few) externalities; (6) The good in question is not a
public good; etc.
Adam Smith doesn't expressly list these
conditions, but they are implied.
Consequently, if for a given market these conditions are not
substantially fulfilled, you cannot assume that a free market is optimal in
that market.
Free-market fundamentalism on the other
hand claims that free markets are Pareto-optimal even in situations in which
the pre-conditions for their proper operation are lacking. This is what I mean
when I say that free-market fundamentalism is not based on reason, but on
faith.
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