In the 1930s Nazi Germany extended its influence over Eastern European countries. Germany as a powerful industrial country could offer to buy agricultural products from Easten Europe and give industrial products which were coveted by them. Agrarian France was in a very inferior position; it did not take the agricultural sales offered by Eastern European countries; it did not have industrial manufactures to give.

We do not live by economics alone. If this is what Chris is saying, I can't disagree at least to that extent. Shimane, Japan

Peter Hume,

We're actually talking about the current state of Western and Chinese economies not a redefinition of capitalism and I'm not interested in economic theory. You'd have a lot of trouble convincing me that the present Chinese "government exercises an overriding power to dictate any and every aspect of production" given the country's level of corruption.

In my opinion economics is not a science and therefore governments need to interevene in economies from time to time, your opinion is apparently the reverse, we're arguing from quite different postions.

I recommend that you read "Debunking Economics" by Steve Keen (an economics professor) he describes economics as "intellectually unsound".

Actually it was neither, Michi.

>>I read this story a long time ago. I do not know whether it was a historical fact or a thought-provoking excercise. The governments of Great Britain and Portugal agreed that the former concentrate on wool industry and the latter on wine production<<

It was the example used by David Ricardo in Chapter 7 of his 1817 book "On the Principles of Political Economy and Taxation". You can read the whole lot, here:

http://www.econlib.org/library/Ricardo/ricP.html

Or go straight to Chapter 7 here:

http://www.econlib.org/library/Ricardo/ricP2a.html#anchor_n20

Although Ricardo didn't use the term himself, it became known as the theory, or law, of comparative advantage.

As far as history records, there was no such trade treaty enacted between the two countries, so your corollary...

>>Great Britain put itself in a good position for industrial take-off; as all of us know, P in Piigs is for Portugal<<

...had nothing to do with the theory.

But props for contributing. Economics is not a topic to be scared of. Only economists...

Mac
If economics is not a science, and you’re not interested in economic theory, then how do you conclude what effect mercantilism had?

And how do you conclude that, or what, government interventions are indicated;and how do you know government interventions have the effect intended by their proponents?

Do you just directly perceive the complex chains of economic action correctly, without the need for recourse to reason or evidence?

If economics is merely ideology serving to mask the clash of secular interests, then how or why is government intervention in any better position, except that the transactions it overrides are voluntary and mutually beneficial, while those it substitutes are coerced, centrally planned, and zero-sum?

If economics is not a science, then does that mean you allow yourself recourse to supernatural or irrational explanations of economic phenomena?

Yes, economics based on positivism and empiricism is intellectually unsound. (What methodology does Keen adopt to exempt himself from his own critique?) But the fact you may not be aware of the existence of good economic science doesn’t mean it doesn’t exist.

You have not shown any rational justification for economic interventions and neither has Chris Lewis.

Michi
When tyre makers replaced wagon wheel makers, and when CD makers replaced record makers, someone “lost”. But that only shows that someone else was serving the public better, and someone worse. It does not, of itself, show that any political intervention is warranted.

However the same cannot be said for government interventions, in which someone loses both as to the input and the output. The input always involves confiscated property, in which the stronger takes from the weaker, and value is lost. The output usually involves the restriction of someone’s liberty, to benefit someone else, a zero-sum game.

So even if all we knew was that free trade proceeded from voluntary transactions, and government interventions from coerced transactions, we would know enough to prefer free trade over government interventions, both on ethical and on economic grounds.

Bryan Kavanagh suggests Ken Henry's recommendations for abolishing most of our piddly and inefficient taxes would be a good start in being able to compete. http://www.onlineopinion.com.au/view.asp?article=12514

The point is, what we are here witnessing the statists exhibit is an irrational belief system.

The theme of Chris’s articles is the need to find a “balance” between the market, and the assumed need for government interventions.

But why? And what could that possibly mean? How could this by anything other than a blank warrant for the increasing take-over of more and more areas by government?

If it’s true that government is capable of ordering economic relations so as to provide as a matter of priority for the most urgent and important human needs, what justification is there for the continuation of private property in any production?

On the other hand if it’s false, then what justification is there for government interventions in any given field?

The double standard of Chris, mac, and michi is “Government interventions are needed to compensate for the downsides of market relations”. But what about the downsides of government interventions? Doesn’t government action have downsides?

This way of thinking is a throwback to the feudal ages, only instead of reposing blind faith in the church, they repose it in the state. Mac openly and explicitly suspects reason and evidence as a methodology of knowledge. And when I point out the irrationality of Chris’s intellectual method, he makes no attempt to defend it rationally; all I get is “extremist!”, a modern version of “heretic!”, and an assurance that my views are not orthodox. That’s the level of his argument.

Mac disclaims economic science and economic theory as any support for *freedom*, but then wants to argue that government *restrictions of freedom* are warranted on the basis of…. if not irrationality, what else could it be but his economic theory?

Of course if there is really no such thing as economic science, then the theory that capital goods, or rain dances, are equally efficacious ways to produce crops, must be on an equal footing.

Real confused or anti-rational stuff, but even if all such claims were granted, it would still provide no justification whatsoever for any government interventions in the economy – on the contrary!