Friday, August 14, 2009

Free Market Capitalism and Communism: Birds of a Feather


"In theory, communism works. In theory." -Homer J. Simpson
Amidst all the rabble about government regulated health care reform, the radical free market capitalists have begun to bang their pots and pans rather loudly. With such blind passion flying around, I have to wonder if they've sat down and thought about their position. Is a free market really the magical answer to all of our health care woes?

I have always thought that the pragmatic refutation of communism is the strongest and it goes something like this: sure, the promise of equality as an end result of a communistic revolution sounds great, but getting there requires gross violations of human rights, a period of violent upheaval, and the unavoidable likelihood of abusive fascism and corruption. So while it sounds good on paper, communism in practice just doesn't work.

Well, the same argument can be levied against radical free market capitalism: sure, maybe at the end of the our little economic experiment, competitive free market forces will have created an even playing field where only the best solutions have survived, but in the meantime, we will have to suffer through unbridled corruption, monopoly, Bernie Madoff, and credit meltdowns.



Free market capitalism is the bastard cousin of the equally malfunctioning philosophy of social Darwinism. The problem with both of these worldviews is that they are fundamentally wrong. Evolution is not a calm, upward march toward progress. It has no direction. It is an arms race, a violent struggle for survival, red in tooth and claw. It is no system for decent human beings to model themselves after, social or economic.

Like most things, the best solution is somewhere between the extremes, a golden mean between too much government involvement and too little. I say bring on national health care reform if for no other reason but to add a little more competition to keep the big guys honest. It'd also be nice if my starving artist friends could just afford to see a doctor from time to time.

4 comments:

Fearsome Comrade said...

Your list of the sins of the free market is incorrect:

"Unbridled corruption." This can only happen when politicians have a lot of power and money to throw around. A free market requires a small limited government.

"Monopoly." Monopolies have to be government-enforced in order to thrive. Why do you think big corporations support regulations that suffocate start-ups? They know where their future competition comes from.

"Bernie Madoff." Madoff is a criminal. What he did was a crime. He did it by lying to regulators and breaking finance laws. He is in prison for it. Blaming law-breaking on a lack of law is ridiculous.

"Credit meltdowns." In a free market, no one would be loaning money to subprime borrowers, because there would be no GSEs to buy the loans. You should read about the role the government had in the credit crisis. "It's the free market's fault" is the cry of ideologues, not a conclusion drawn from the facts.

Fearsome Comrade said...

You're also wrong about the pragmatic refutation of communism: The refutation is that it simply does not achieve what it promises. The USSR remained technologically stuck in the 1940s. It had chronic shortages of grain, despite controlling vast regions of the Europe's most fertile plains. It exported no manufactured goods, no textiles, nothing that required human ingenuity--only what it could pull out of the ground, and it still required the charity of free states in order to prevent starvation.

The pragmatic argument for freedom is simple: In the same 80 years that the Soviet Union was rationing bread and antibiotics, the free world produced more wealth than all of human history combined, many times over what was produced behind the Iron Curtain.

The pragmatic answer is that a year we call a "crisis" or "recession" is still better than the best year the USSR ever had.

Jay said...

In the case of American railroad companies, government regulation was a response to monopoly, not the other way around.

Bernie Madoff is a criminal who got caught. Exactly! It may not be the best case of the US securities and exchange commission's diligence, but I'm inclined to believe Madoff might have done much worse if not for government intervention.

How can I be wrong about the pragmatic refutation of communism? Perhaps you mean to say you believe you have a better refutation. But that would be beside the point.

Suffering though fascism and despots for communism or barons and crooks for free market capitalism is enough to condemn and pragmatically refute both philosophies.

Anonymous said...

I agree with much of what you say except for:

"Unbridled corruption." This can only happen when politicians have a lot of power and money to throw around. A free market requires a small limited government.
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Small limited government can be just as corrupt as big government... Do I really need to list the myriad of failed State experiments, some had a ruling family, others only a ruling despot... yet they were as corrupt as the biggest of governments. (look at Africa!)

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"Monopoly." Monopolies have to be government-enforced in order to thrive. Why do you think big corporations support regulations that suffocate start-ups? They know where their future competition comes from.
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So Microsoft is a product of government regulations? NOPE! Not at all actually! They were there first, they produced a good product that was accessible and they developed that product over decades. UNIX had many years head start (& government interest) but hasn't made a dent in MS marketshare... And we've watched ENOUGH well connected, well financed competitors try to compete against MS - from OS2, to NeXT systems and Macs.

No government program ensured MS victory over another company or corporation - but rather - smart business decisions ensured they thrived. It's classic survival of the fittest.

To say startups are stifled is puzzling at a time when small business is on the rise and the resources and information required for business ownership are accessible as they have ever been.

The number of grants, generous loans and other programs available to small business is downright intimidating.

This isn't to say that it's "easy" for the little guys but to say the game is somehow stacked against their succeeding is untrue! Most jobs in the workforce were created by somebody who is or once was a small business owner.