Thinker2 has only cited examples concerning the environment which are owned and controlled by government, so I don’t see how you can conclude that he is right on those issues; he hasn’t even begun to address them, and neither have you for that matter.

The very issue is as to market failures, so it is no answer to say “and other market failure”. What sort of argument is that? You need to actually make your argument, not just assume it.

It is true that even if people started out equal, they would soon end up unequal, and that people with more wealth can afford more investment.

But the conclusion is not justified that therefore, in a society banning the initiation of aggression “eventually nearly all the resources wind up in very few hands”, nor that there would be class of desperate poor, nor that people would be more unfree than under interventionists government, for a number of reasons.

First, people with wealth don’t need to invest any. They can just consume it all, in which case the masses would be worse off, not better.

Secondly, capitalism is not just a system of profit – it’s a system of profit *and loss*. The only thing that can stop the capitalist from making a loss, is if he combines the factors of production in such a way that *the mass of the people as consumers* consider the final product more valuable – ie better at satisfying their wants – than the original factors were. Far from being exploitative, the system of profit and loss is the process by which the living standards of the masses are raised from the level of subsistence or barter to those of modern civilisation.

Thirdly, profit and loss are the instruments by which the masses exercise the ultimate direction of the course of production. Loss functions to transfers property out of the hands of those capitalists who are not using it to satisfy the wants of the masses as judged by the masses. And profit functions to direct capital so as to *remove the maladjustment* between ...

...where the factors of production are now, and where and how the masses *want* them to be so as to satisfy their most urgent wants and needs - as judged by them, not our political overlords.

Fourthly, the effect of modern capitalism has been to raise the living standards of the ordinary working people to the highest levels in the history of the world. It has also served to disperse capital ownership throughout the population to an unprecedented extent.

In practice, the working poor of the capitalist world are the furthest that any working poor have ever been from the emergencies of subsistence. Everything that retards capital accumulation – including all socialism – has served to *retard* the process by which the poor share in the riches of modernity.

Furthermore while, other things being equal, richer people can afford lower time preferences than poorer people, in reality, other things aren’t equal. Any person with money can be a capitalist by having lower time preferences, and even if this were not true for those at the means of subsistence, it is true for all the working poor in the western world. Most capitalists have not inherited their wealth by built it up by their own savings, work, risk and delayed gratification.

Even if your argument were valid, which it’s not, it would not apply to the vast majority of the population.

Besides, the *greatest inequality* in a free society is not as great as the *east inequality* as between the state and the individual, so even if your argument were valid, which it’s not, it still wouldn’t provide any ground for recourse to government.

Thus it is not true in theory or in practice that the result of a free society must be to create a caste of ultra-rich, and a teeming proletariat at the margins of subsistence. This is mere recitation of fourth-hand Marxist belief systems that have been definitely disproved and exploded in theory and practice over and over and over again.

Go ahead, let’s see you prove how dreadful these other market failures are.

BTW, you have taken no account whatsoever of government failures.

I have taken account of your criticism of the market, so now you should take account of my criticism of government.

Contrary to socialist fables, the economic intervention of government do *not* have the effect of making the masses richer. They have the effect of making them *poorer*, because all government intervention
a) re-directs the process by which the masses direct the course of production to satisfy their most urgent wants; for the benefit of politicians and their pet favourites
b) retards the process by which a greater surplus is available to fund higher living standards from a given level of inputs
c) is thus also worse for the environment for a given standard of living
d) actively causes unemployment by illegalizing employment at the market rate
e) actively promotes poverty, sickness, divorce, step-parenthood and dependence
f) creates special privileges both on the right and the left wing through the process of forced redistribution of the fruits of other people’s labour
g) causes the cycle of speculative boom and depressing bust by manipulating the supply of money and credit
h) fund aggressive war to gratify the vested interests of big business which otherwise must do something peaceable and constructive to earn a return on capital
i) spreads economic chaos into everything it touches by making economic calculation impossible
j) cause environmental destruction by spreading the tragedy of the commons
k) spreads the immoral idea that fraud and stealing are fine – so long as you’re the PM
l) “and other government failures”

Just temporarily assuming for argument's sake that my argument is correct – just think of the standard of living that the ordinary people would now enjoy – the health, the environmental standards, the freedom, the arts and sciences, the volunteerism – if 50 percent of the GDP of the western world had not been snorted up the snout of governments and spent on making the masses poorer, and creating a society of privilege, inequality and war directed by the frauds and sociopaths who inhabit our Parliaments!

Let me get this straight- we are comparing a medieval system where land and people were owned PRIVATELY by title holders with a lordly title, against a virtually free capitalist system that only demands people fund infrastructure via taxes (which would need to be funded one way or another), and obey business conduct laws, all of which governed by some form of democracy?

Really?

Thats all fine PH, but the recent GFC is stand alone evidence of market failure and the need for the wealth owned by the taxpayer, to subsidise the failings of the big end of town, ultimately. Even with their thumb in the pie, business has failed to meet the expectations of most people.

On the contrary, your assumption is that Gov't no matter what kind, is bad. This can a least be decided at election time in a democracy. Admittedly choice is limited in a 2 party system to Tweedle dum etc, both alternatives overly influenced by Big Business.

The middle East has seen an explosion of freedom of expression recently, the trouble is what is it?, that follows. Gaddafi claims that Al Queada will rule Libya . Guess it works for the U.S in Afghanistan.

What must follow is more representative Gov't, what's more likely, is more of the same or similar. So Peter I agree with you that something else must replace our understanding of Gov't, but Big Business is the last place I would be going for council re this subject.

To use an uncomfortable expression "this is a known known." Anecdotal evidence ad infinitum is not required. Exploiting the present at the expense of the future is not sustainable, that is another known.

At the very least we need more leadership and less law impeding peoples individual civil liberties. The fact is Peter that people are further away from the capacity for self determination than ever before, with ever increasing manipulation of our attitudes, by Gov't, but equally by Big Business. e.g. Massive anti mining tax advertising campaigns, potent enough too see the deposing of a PM in power.

Both Gov't and Big Businesses are culpable Peter Hume. We, us , the people are also are culpable if we stand idly by, accepting of our position in the pecking order and don't expect to have an influence on our own future, or strive for better leadership.

What else can we do Peter?, I think this is a bigger question that discussing whose fault it is.

Hazza
In those days government itself was privately owned, so this only takes us back to the underlying issue, which is, why should social relations be based on coercion and thievery rather than consent and property?

(Feudal government BTW was also full of the usual blandishments by the political class about how indispensable they are for the general good, how the victims of their predatory parasitism are really beneficiaries – exactly as our contemporary statists spout.)

thinker 2 and Divergence
You face four categories of conceptual difficulties:
1.
Even if your criticisms of capitalism were sound, you are completely unable to say *how* legalized aggression is going to be any moral, economic or pragmatic improvement on the original problem.

Even if we had the most perfectly representative form of government theoretically imaginable, it is clear that the legal power to lie, rob and kill is a social vice, not any kind of virtue. And popular input into how this power is to be wielded, without restraint of morality or practicality, does not and cannot be any improvement on the original problem whatsoever.

2.
But the form of government we have *in practice* is so corruptly far from the theoretically perfect form of government that it’s not funny. This enormous gap between theory and practice leaves you precisely no ground for recourse to government interventions in practice.

3.
Your criticisms of government are *unsound* because you keep on
a) ignoring the role of governments in causing the problems you’re identifying, and
b) assuming they are caused by capitalism without doing a reality or logic check; and
c) when the falsity of your beliefs is pointed out, simply persisting in endlessly repeating this circular and irrational method.

For example, the GFC was a *financial* crisis, and government at all relevant times had *control of the price and supply of money*. Get it?

According to orthodox establishment theory, the reason government had control of the money supply was because government HAS the competence to manage the economy so as to avoid recessions, stabilize prices, and prevent unemployment.