Many prominent American figures claim to be proponents of free markets but in practice advocate neomercantilist, corporate welfare policies. These policies eventually, and unsurprisingly, lead to disastrous economic and social consequences. These catastrophes are then blamed on capitalism, free markets, and deregulation, at which point, socialists are easily able to convince the distraught public that capitalism is a failed experiment and only massive government intervention in the markets can save them. Such is the way that capitalism dies.
--Briggs Armstrong "The Enemies of Capitalism" 01-27-09
"I've abandoned free-market principles in order to save the free-market system."
---George Bush on CNN
"I'm a market-oriented guy, but not when I'm faced with the prospect of a global meltdown." ---George Bush before the G-20 summit.
When one of the nation's most visible proponents of capitalism claims that he has abandoned it, because, without big-government policies, capitalism itself would be destroyed, there remains little work for those who desire socialism. Thus it is easy to see how those who believe Bush to be a true capitalist could be persuaded to accept the propaganda that the free market has failed, and that government must step in to save the day.
Before we try to untangle the causes of financial crises, or attempt to project the effect of proposed remedies, let's get our definitions straight.
Capitalism: the social system in which individual rights are applied to the realm of trade; a social system based on private ownership of the means of production. (Reisman, pg 19)
Statism: The practice or doctrine of giving a centralized government control over economic planning and policy (Dictionary.com)
Socialism: an economic system based on government ownership of production (Reisman, pg 264); any of various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy (Dictionary.com)
Mercantilism: the theory and system of political economy which espouses the need for government intervention into economic affairs in order to assure a favorable “balance of trade”, i.e. exports greater than imports (Dictionary.com, Reisman, 526.)
Mixed Economy: an economy which remains capitalistic in its basic structure, but in which the government stands ready to intervene by bestowing favors on some groups and imposing penalties on others (Reisman pg 34); an economy based on the private ownership of the means of production but more or less severely hampered by an extensive list of socialistically motivated government intervention (Reisman, pg 264.)
The United States is not now, and never has been a capitalist economy. From its inception, the U.S. has been a mixed economy with an ever-increasing amount of government intervention. We are currently implementing a degree of central planning which can only further undermine the benefits and blessings which capitalism has thus far provided: our wealth and our freedom.
Massive amounts (trillions) of spending have recently been approved, with yet even more being proposed. To implement these programs, government must expand even further into our private lives and businesses. (Full nationalization of the banking system is seriously being considered!)
With the slump in stock and housing markets, the subprime mortgage debacle, the domino-failures of banks, the proliferation of comparisons to the Great Depression and the resurgence in the prestige of New-Dealers and Keynesians, it is time to study economics.
On this blog,I attempt to explore and explain the basic tenets of capitalism as they pertain to current events; to tease out the fundamentals and present them in a way that makes sense to the educated layman. The better we understand the laws of economics, the better we can analyze what is happening in the world around us, and speak out effectively in economic self-defense. Let's not let Gresham's Law of money (bad money drives out good) apply to the realm of ideas.