Monday, November 30, 2015

This is Capitalism?

Paul Craig Roberts is pretty good at foreign policy and empire analysis; I find him horrendous on all topics economic:

…the plummeting living standards forced on the Greek people by German chancellor Merkel and the European banks have forced large numbers of young Greek women into prostitution.

This is capitalism at work.

What are the characteristics of this “capitalism” that he decries?

In Greece the hardship is imposed from outside the country by the European Union, which Greece foolishly joined, giving away its sovereignty in exchange for austerity.

His complaints are regarding governmental and supra-governmental agencies.

The banksters and their agents in the EU and German governments claim that the Greek people benefitted from the loans and, therefore, are responsible for paying back the loans.

Here his complaints are regarding one of the most government-protected and enabled industries in the world as well as governmental and supra-governmental agencies.

The loans were made to corrupt Greek governments…

More complaints about government.

…Greek governments were paid bribes to borrow money from German or other foreign banks in order to purchase German submarines.

Complaints about a Government borrowing money to buy things made by one of the most government-supported and enabled industries.

You get the idea.  For Roberts, government supported and enabled cronyism and theft is capitalism.

Let’s look at some common definitions; from Wikipedia:

Capitalism is an economic system based on private ownership of the means of production and the creation of goods and services for profit. Central characteristics of capitalism include private property, capital accumulation, wage labour and competitive markets. In a capitalist market economy, investments are determined by private decision and the parties to a transaction typically determine the prices at which they exchange assets, goods, and services.

No room for government here, although Wikipedia goes on to allow government intervention into the definition, in contradiction to this opening paragraph:

The degree of competition in markets, the role of intervention and regulation, and the scope of state ownership vary across different models of capitalism.

There is competition or there isn’t; there is private ownership or there isn’t.  Anything in-between is government intervention in a capitalist economy.

Capitalism is a social system based on the principle of individual rights. Politically, it is the system of laissez-faire (freedom). Legally it is a system of objective laws (rule of law as opposed to rule of man). Economically, when such freedom is applied to the sphere of production its result is the free-market.

[A]n economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.

A system of economics based on the private ownership of capital and production inputs, and on the production of goods and services for profit. The production of goods and services is based on supply and demand in the general market (market economy), rather than through central planning (planned economy). Capitalism is generally characterized by competition between producers.

Again, introducing a contradictory sentence:

Other facets, such as the participation of government in production and regulation, vary across models of capitalism.

Roberts does not list a single complaint toward private ownership and decision-making, market-determined prices, market competition, free markets, or rule of law – even with the minor contradictions in the definitions, the most important characteristics of “capitalism” per every definition cited.  Instead, his complaints are aimed at the government interventions, in other words, actions that move the economy away from capitalism.

Paul Craig Roberts, with his complete ignorance regarding capitalism, demonstrates that he was perfectly qualified for a position at the US Treasury Department.


  1. Try telling Roberts that he misunderstands capitalism
    You'll either get a clarification or more likely after the last paragraph of your post, a jeer

  2. Isn't PCR just saying that capitalism always ends up crony capitalism unless your fight back. Aren't you describing utopian capitalism that never exists?

    1. If he is saying this, he should say it.

    2. The state is too powerful a cudgel to ever go unused. It matters not if the broader society is capitalistic or not.

  3. Capitalism is a de facto system that just results from private ownership, i.e. the natural result of the market place. The people can chose to pool their property in common ownership if they chose. But they seldom do –maybe in religious or utopian schemes. When the government interferes in private business the system tends toward fascism (as an economic term) rather than a free market economy.
    While the U.S. has had a capitalist market, this has been the result of government inaction and freedom of choice.

    1. Actually, capitalism IS the very pooling of resources to which you refer. It goes like this:
      Hey, Uncle Harry, I've got a great idea for a boutique ice cream shop down on the boardwalk. For $50,000.00, I can get a long term lease and the freezers, etc.
      If you lend me the 50K, I'll pay you back over ten years at 8% interest. You in?
      Sure, says Uncle Harry, and the thangs got legs.
      The nephew is an entrepreneur, and Uncle Harry is the capitalist.
      The thing about true capitalists, is they put THEIR money where somebody else's idea is. Talk about faith in your fellow man and gosh darn it, just plain virtue. Capitalists are most definitely unsung heroes.

  4. There are as many definitions of capitalism, within libertarian circles., as there are libertarians
    I don't know if Roberts is a libertarian although he is thought highly of at Lew, but Pat Buchanan also appears, so go figure
    Perhaps because both are critics of the Empire??

  5. Pat Buchanan is the same. Excellent on foreign policy - everything a conservative used to be and should be.

    On capitalism, part of me wants to disregard the words and focus on what actually matters: their meaning. If words are not taken to mean the same thing by all involved, there is no communication. Isn't that why the first step of a debate is to define terms? So why insist on old meanings which hardly anyone uses anymore? If I say "socialism" but mean a system of private property, what difference does it make?

    Well, quite a bit, another part of me insists, because this way there is still no communication. So, what to do? Unless we want to go through life endlessly defining terms with everyone we speak to, we need a way to speak of what we believe and be correctly understood. I think we need to go past the labels and speak of the fundamental ideas directly. Instead of arguing about what capitalism is or isn't, I think it would be more productive to talk about justice.

    Igor Karbinovskiy