Partisan


I think it’s time I cleared up a few things, especially with people accusing me of being either “leftist” or “rightist” or espousing certain economic theories or wanting to ban/outlaw certain economic principles and all the rest. Hey, sometimes I write what’s in my head and I need the feedback to see where it gets lost in “translation”.

Most political blogs in English are set up in such a way that the author is some kind of partisan hack. If they’re generally conservative then they spend most of their time attacking everyone else and defending their own. Likewise for those who are staunch “liberals”, “progressives”, “libertarians” or all of the other main factions. I should hope it’s pretty obvious that that I’m not here to do anything like this at all. And if it’s not obvious, well now I’m telling you.

What’s interesting, in terms of history, especially as it relates to my recent post The Hidden History of 1492 is that the terms “left wing” and “right wing” came about from a meeting of the Estates-General (sort of a parliament) in France in 1789. One faction sat on the king’s left and so were referred to later as “leftists” or the “left wing”. Others sat on the king’s right. Even after the revolution, other parties and political ideas came to be called by these terms.

However few people remember that this meeting between the King and the Estates-General, which ended up leading to a tremendous amount of change in Europe from Britain to Russia, came about because of “financial problems”. The long and short of it is that the French government was dead broke and was far behind (in terms of capitalistic savvy) on how to raise new funds.

My position on these matters is vastly different than most other people’s, which is why it’s a little confusing. Sometimes I seem to be quite harsh about both the practice of representative democracy as well as capitalism. If Romania were still communist, I promise you I’d be equally as harsh. That’s because my standpoint is not one of partisanship, where I am backing one “horse” but from a systems theory.

That takes a little explaining and to prevent this post from being incredibly long, I’ll give one example. When I was a kid, I spent hours and hours having fun with my family and friends playing a game called Monopoly. I know they have a Romanian version because some of my friends here play it too.

Although vastly simplified, this is a game that is all about capitalism. You start off with money that comes from nowhere (from The Bank of course). The players start off exactly equal but over time, with a combination of luck and skill, one player ends up dominating or controlling the property market (hence the name monopoly). In fact, when you bankrupt the other players, that’s exactly how you win this game.

As far as the game goes, it can be fun. But imagine if everyone in the world were forced to play Monopoly not just a few hours one afternoon but day after day, for decades upon decades. Now it’s not quite so fun. Sooner or later, a group of players would rise to the “top” and expropriate all the land and wealth from someone else. The majority of the players remain in perpetual poverty and are now at the mercy of the wealthy. In fact, the only way they could even get back in the game is if The Bank doled out some more magic money.

My point here, in terms of systems logic, is that in the short time this might be a fun way to spend the afternoon. But when you change the time dynamic and look at it over the long run, suddenly it’s not fun. In fact, it would be miserable. Likewise with capitalism, as in the real thing.

In my last post, clearly the government of Britain was in a real quandary in 1690. They had just lost a major naval battle against France. Britain was completely unable to raise funds either the old way (through taxes or personal loans) or through the new way (loans on the money markets). Incorporating a Central Bank actually worked. The government got the money it needed, built a new naval fleet, went out and within 150 years had conquered half the world. If you looked at Britain in 1897 and compared it to 1690 and asked, “Was becoming a fully capitalist nation with a Central Bank worth it?” you’d be a fool to say no.

But in the long run, it’s not sustainable, for many of the reasons listed in my original post. A lot of things happening across the planet in their most modern forms are not sustainable, not just the economic model currently in place. Everything from food production (and food quality) to water quality (and quantity) to energy resources to air quality, crime, diseases and other things far too numerous to mention are built on unsustainable models.

But before I or anyone else can start discussing some very viable solutions, I have to put in the leg work and do the references and history of how we got here in the first place. Capitalism being barely 400 years old is already suffering tremendous shocks and on a systems level it is obvious that it is far too complex to withstand these for much longer.

I do believe there are some really good ideas about where to go next but have patience and we will get there. I promise you that these ideas are neither 1) outlawing or banning anything or 2) partisanship and defense of one of the institutional players in this “game” we call life. Not at all. I’ll leave the re-arranging of the deck chairs to others, thank you very much.

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12 Comments Add yours

  1. jos_cenzura says:

    On a different note, under communism, we didn’t have the game Monopoly (as the title sounded too much like a capitalist concept). We had Bunul Gospodar (the Righteous Head of Household in loose translation?) The title is really funny because of all the connotations (a “gospodar” is not just a head of household, but he is responsible, upright, does things the proper way, and is the one likely to deliver the Scolding of Righteousness rather than to be the recipient of it; “gospodina” is the female version of it and has the same connotations: she is tidy, cooks well, drinks little, doesn’t sleep around, only prefers the missionary position, and so on). The game was basically like Monopoly, but instead of acquiring properties, you had to acquire household appliances and other such things, like a true well behaved and responsible communist. I remember playing that game (of course making fun of the ripoff and ridiculous communist adaptation, because we were aware of the real Monopoly). Communism, if it weren’t so tragic, would be hilarious.

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    1. jos_cenzura says:

      I found pics here, the squares on the board are hilarious: http://www.boardgames-blog.ro/board-games/perioada-comunista-bunul-gospodar-mai-multe-poze/

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  2. jos_cenzura says:

    I think, in this discussion, we must all at least agree on the definitions of the terms we use (e.g. capitalism, leftist, and so on). Capitalism has been much-maligned, but it has produced the largest increases in tangible wealth for humanity compared to all other systems so far, in the arguably most fair process (willing transactions). Barter economy, feudalism, socialism, and others have been much less efficient. And capitalism is not at all like Monopoly because resources are not finite, so it’s not a 0 sum game. Human capital is infinite. Also, if I have 100 cows and you have 100 pigs, and we trade 1 cow for 1 pig, we are both in a way richer (more satisfied) than before. This is the true creation of wealth. Not printing/creating money to pay one’s debts, which is just an illusion of the creation of wealth (it does not create nor destroy wealth, but it does send signals which in the end hurt the true wealth-creating process). But all of these discussions are useless when we are talking about totally different things and calling them “capitalism”.

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    1. Daniel says:

      I know I’m nitpicking, but you do know that “barter economy” never actually existed, apart from the unfortunate cases when the pre-existing monetary system collapsed … right ?

      And like I said above – sometimes, printing money is the right thing to do.

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      1. jos_cenzura says:

        Printing money is the right thing to do for those who owe money, not those who are owed money. Also, I could see it being “right” to print money in order to keep up with the growth in output (so to prevent deflation).

        However, for the same reason central planning didn’t work (economists call it the economic calculation problem, too much info for even the best team of experts to keep up with), I find it hard that central bankers can do the same with money and keep its value truly in line with real output of the economy. just like the market for goods and services is more efficient in allocating them than central planning, a market for currencies would be more efficient than giving the monopoly to a central bank to do it.

        As for the nitpicking, I think I read somewhere that certain monkeys do have a simple barter economy (and I don’t think it replaced a pre-existing monetary system…) If they do it, why don’t you think we could have at some point?

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      2. Daniel says:

        I do believe it is wrong to say creditors are more worthy than debtors.

        And, like I said – central banks are dangerous.

        Regarding “barter economy” – anthropologists have found no evidence of it having ever existed. It seems to be a fiction concocted by economists.

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  3. jos_cenzura says:

    My one fault with capitalism is that it’s an utopia, like communism. I am NOT trying to get more hits on my blog (it’s only for my friends and I write only every few months, if even that), but I think this link is very on-topic, if you accept it (and if not, I can re-paste the essence): http://thevidra.blogspot.com/2010/08/capitalism-utopia.html

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  4. Daniel says:

    Oh, and for the record – I don’t know who accused you of being a “partisan” – certainly not me.

    What I accuse you of is IGNORANCE. Because any man that rants against short selling is economically illiterate. Deal with it.

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  5. Daniel says:

    “But in the long run, it’s not sustainable”

    “Capitalism […] is already suffering tremendous shocks and on a systems level it is obvious that it is far too complex to withstand these for much longer.”

    Pretty bold claims for which you have provided no proof.

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  6. Valentin says:

    One good mention would be that having a central bank is not really capitalism.
    Capitalism is a system where the means of production are privately owned. As soon as the government controls the money production, this becomes a collectively owned monopoly with no real feedback mechanism to ensure fairness. The central bank becomes a last resort lender to all the banks and inflation becomes the easiest way for the political powers to both fund their projects (roads to nowhere, useless railroads, changing road curbs every two months, electoral promises) or to bailout their favorite friends (the banks).
    Capitalism strives on competition and as long as the state has a monopoly on money, their value will always go down and ordinary people’s wealth will always decrease as they are forced to pay up for the other people’s mishaps and bad state-run investments through inflation. This is not a socialist style class war thing, those who are on the receiving end of the stick and those who are paying for them are often in the same social class. The magic happens because people live with the illusion that if something goes wrong, everybody but them will pay.
    So yeah, having a central bank issue and control the money supply is unsustainable.
    The problem is, just as with the British 100 years ago, the americans during FDR or the recent financial bubbles, inflating your way out of debt seems to good to pass up for politicians.
    In reality, printing money to get yourself out of debt is like trying to fly by pulling yourself up by the collar: impossible. Also the promise of a government bailout like the one in the States or the recent Greece bailout not only devalues the currency but also takes away any responsibility from the people who created this bubble, being it private or public sector. A bailout is just a signal for people to be even more bold, greedy and irrational in their investments. With no moral hazard, there is not natural incentive to save money, people just aggressively invest as they know if they get screw up, everybody else will pay. It’s what economists call the tragedy of the commons.

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    1. jos_cenzura says:

      This was one of the best responses I have ever read on any forum.

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      1. Daniel says:

        No, actually it wasn’t.

        Economics is not a morality plays. Sometimes the answer to a crisis is to print more money.

        And if you have the vaguest understanding of the “efficient market hypothesis” … you’d be very wary of talking about “bubbles”.

        That being said, moral hazard is a real problem. And central banks are a single point of failure – and that’s the single biggest reason to get rid of them.

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