The Rise of Disaster Socialism

I've seen the past...and it works

Michael C. Moynihan | October 20, 2008

In Naomi Klein's schizophrenic indictment of economist Milton Friedman, The Shock Doctrine: The Rise of Disaster Capitalism, it is argued that in times of great social and economic upheaval sinister free market advocates push their ideas of limited government and minimal state interference in the economy upon the vulnerable and the unsuspecting. The major points upon which this argument rests are dubious, if not outright false, and have forced her critics to ignore a more remedial point: Why is it considered sinister that, upon the spectacular failure of Marxism-Leninism, for example, it would be suggested that it was time to give classical liberalism a try? Indeed, why not encourage a scofflaw and killer like Chilean dictator Augusto Pinochet (or the brutal thugs of the Chinese Politburo) to liberalize the economy? And it hardly merits repeating that both Chile and China today have significantly higher standards of living than Cuba, an authoritarian regime Klein finds little time to condemn.

So it's equally unsurprising that we are now seeing Naomi Klein's thesis in reverse—the rise, amongst many in the pundit class, of "disaster socialism." As markets tumble and the world economy convulses, market-unfriendly ideologues are rushing in, seizing an opportunity to argue that they were right after all; to argue in favor of a rollback of "extreme" capitalism; and to suggest further government regulation and control of the economy. The gravediggers are leaning on their shovels, waiting for capitalism to expire, despite conflicting diagnoses on a patient very much alive.

So here, as an example of the recent dying-capitalism meme, is a front page story from The Washington Post, under an ominous (or is it triumphant?) headline presaging the "end of capitalism." The story begins with a bold, if entirely unverifiable, claim: "The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism." Now, it's anyone's guess what exactly this means, or just what qualifies as particularly American capitalism, as the effects of the crisis ricochet around the globe, and no data is offered to substantiate the claim. Wishful thinking, perhaps. A Reuters columnist was equally categorical, proclaiming "Capitalism as we used to know it is on its deathbed" and celebrating the turgid "scientific socialism" of Karl Marx, "whose thinking on banks seems oddly contemporary these days." Noted novelist and screenwriter Hanif Kureishi sees a fulfillment of Marxian prophesy—the need for total capitalism in order to reach the first stages of revolution. "Marx always said that capitalism would rise and then collapse, and this would be a continual process, it was built on that, and this is what's happened. And what can you do but laugh?"

Or take this bit of wisdom from Washington Post columnist Harold Meyerson, gleefully sounding the death knell for "unregulated capitalism." Two weeks previous, Meyerson bemoaned the "ideology of unregulated capitalism—of Reaganism" and predicted that the current economic crisis "may ensure that the GOP itself becomes one more casualty in the collapse of laissez faire." Both columns are laced with a series of little idiocies that, if true, would surely spell doom for the American economy. Meyerson, a former leading light in the Democratic Socialists of America, flatly states that "laissez faire" is in collapse, that financial markets were operating without regulation or oversight, and that Reaganomics and Bushonomics are analogous. (And as David Boaz points out, there is a certain perversity in Meyerson's comparison of free market advocates and those who stood four-square behind Stalinism.)

Nor are such sentiments isolated to the American debate. It is unsurprising that both the Mini-Mullah of Tehran, Mahmoud Ahmadinejad, and the unstable revolutionary of Caracas, Hugo Chavez, both declared "the end of capitalism." Australia's Labour Prime Minister Rudd added a modifier, stating that we were now seeing that "comprehensive failure of extreme capitalism." Par for the course from a Labour government. But it was with some surprise that I read that Swedish parliamentarian Rolf K. Nilsson, a member of the right-wing Moderat party, had declared that all was lost, because it was time to admit that "Capitalism is a bloodsucker system and a threat to the civilized world."

As most economists sort through the rubble, most pundits are trying to seize upon a narrative that, evidence be damned, will help advance a particular economic cause. (Meyerson has long played this game, telling the Baltimore Sun in 1994 that American capitalism and "globalization of markets" has "turn[ed] us into a nation of temps.") In his invocation of Reaganism, Meyerson is, of course, making a partisan point that has echoed across the blogosphere: We are witnessing the last gasp of Reaganomics. But when the 1987 stock market crash failed to provoke a depression, and when capitalism not only refused to die but appeared to have suffered little lasting damage, it was, liberal economics expert Paul A. Samuelson said, because Reaganomics wasn't "pure capitalism": "The 1929 panic was no greater than the 1987 panic. Black October 1929 was followed by a great depression because we lived under pure capitalism in those days. Laissez faire economics allowed 8,000 banks to fail." Not so with the regulatin' Reagan. John Heimann, vice chairman of Merrill Lynch Capital Markets, told an audience the same year that, "It may well be that historians, looking back at the '80s, will pronounce it an era in which a peak of government economic intervention was reached..."

But political hacks, like Robert Kuttner, were waiting in line, ready to blame unfettered markets and to dance on capitalism's grave. A week after the 1987 crash, future American Prospect co-founder Kuttner wrote in the Los Angeles Times that, "The stock market has signaled a warning: If they continue the economics of fiscal fantasy and extreme laissez faire, depression will follow market crash as surely as it did last time." Twenty years ago yesterday, economist Ravi Batra's paranoid treatise Surviving the Great Depression of 1990 ranked fifth on The New York Times bestseller list.

The point here is simple: Trust no one who declares an end to a system as complex and successful as capitalism, or who sees the current crisis as the long-awaited fulfillment of Marx's voodoo economics. It was The Guardian's Simon Jenkins—yes, that Guardian—who first noted that the current meltdown was immediately followed by "journalistic wish-fulfillment and glee," and observed that his fellow "Guardian writers and Labour politicians have been drooling all week over what they call the ‘collapse of the free market model.'" Now that globalization has brought unprecedented wealth to developing countries, and has lifted millions out of poverty, it's time, say the "disaster socialists," to try it our way.

But capitalism, globalization, and the free market aren't going anywhere. Yes, unemployment is still only 6 percent—it will most certainly rise—and the stock market isn't quite in full collapse, but is suffering from periodic seizures. And indeed, we are most certainly heading towards a severe recession. But capitalism is durable, and has sustained itself in far worse situations. So ignore the disaster socialists: They are, after all, only taking advantage of the current crisis to try a little shock therapy of their own. And who could blame them?

Michael C. Moynihan is a reason associate editor.

Comments

|10.20.08 @ 12:10PM|#

I hope somebody at Reason today takes on the Jacob Weisberg piece that's leading Slate.com...

Lefiti|10.20.08 @ 12:11PM|#

Socialism and the growing right-wing fear and/or exploitation of it are soooo yesterday.

|10.20.08 @ 12:13PM|#

Socialism and the growing right-wing fear and/or exploitation of it are soooo yesterday.

Yeah, liberty, harumph. So passe.

|10.20.08 @ 12:19PM|#

Capitalism isn't going anywhere. Even if Mommy divorces him, we still need Daddy to pay the bills and buy us our $200 Nike's.

OTOH, Socialism isn't going anywhere either. Daddy might tell us to either get a f***ing job and buy our own Nike's or be happy with Walmart shoes, while Mommy understands our "need" to fit in with the cool kids.

(apologies in advance to working women everywhere, this is an analogy based on "old-fashioned" gender roles)

|10.20.08 @ 12:23PM|#

The real question, ala Reardon, is how long "Daddy" is going to put up with paying the bills while being dissed by the rest of the family.

Young punk talking to his friend: "My Dad is such a sellout, he works 5 days a week! How lame is that? Wait a minute...Dad! Hey Dad! Don't forget pop-tarts!!"

gorgonzola\'s foil|10.20.08 @ 12:27PM|#

It's pretty disingenuous to claim that "american style" or, as the Economist terms it, "anglo saxon" capitalism is an unknown quantity. Here's the biggest difference between american and western european capitalism: until the bailout, the US didn't have de jure "national champions". We are soon to enter a phase where there is a national champion insurance conglomerate, investment bank, and probably car manufacturer.

|10.20.08 @ 12:38PM|#

So ignore the disaster socialists: They are, after all, only taking advantage of the current crisis to try a little shock therapy of their own.

Well that's just it. I think that socialist shock therapy could put capitalism on life support.

|10.20.08 @ 12:40PM|#

Tom, thanks for the heads-up on that Slate article. That was something. I think the biggest tragedy of this bailout mess is the false ire toward deregulation. Libertarianism is difficult enough to explain.

|10.20.08 @ 12:40PM|#

If you don't have your accounts at a bank with shares owned by the government, are you un-American?

|10.20.08 @ 12:45PM|#

Yeah, a seriously awful article there by Weisberg. I was already down to reading just three of their columnists anyhow...

Dello|10.20.08 @ 12:52PM|#

foil,
"We are soon to enter a phase where there is a national champion insurance conglomerate, investment bank, and probably car manufacturer."

Does that mean we all get to drive Fiats? :)

|10.20.08 @ 12:53PM|#

Weisberg had his sunglasses lift out of his pocket on a theme park Viking Ship. He thinks this discredits all that mumbo-jumbo about gravity.

|10.20.08 @ 12:56PM|#

If we're all going to be socialists I'm going to go all the way and grow a majestic beard.

|10.20.08 @ 12:56PM|#

We are soon to enter a phase where there is a national champion insurance conglomerate, investment bank, and probably car manufacturer.

oooo this is a fun point. I'd never really looked at it this way, but you may be right.

I heard the editor of Fortune magazine on NPR this morning claiming that those who were declaring an end to capitalism were just banks that didn't want restrictions on the money they got for bailouts. You know, us supporters of "real capitalism" don't actually think that the handouts themselves are a problem - we just don't want our god-like corporations to be told what to do with the money.

TallDave|10.20.08 @ 1:04PM|#

Heh. The socialists are a disaster alright. Venezuela will reportedly go bankrupt if oil doesn't go back above $70 this year. And Iran tried to build the world's largest sandwich, but hungry locals defeated the effort by mobbing the sandwich before it could be measured.

There's an endless attempt to conflate capitalism's occasional challenges with the ongoing continuous disaster socialism creates. This is only possible because so few people seem to notice that living standards, on average, steadily climb under capitalism.

Does that mean we all get to drive Fiats? :)

I'm happy with my Corvette, personally. It gets past 100mph so casually.

|10.20.08 @ 1:05PM|#

The problem with free markets isn't that they failed - it's that the phrase has been pressed into service to describe corporate subsidized statism. Much they way socialism was pressed into service to describe totalitarian statism.

Jerry|10.20.08 @ 1:08PM|#

Weisberg classics:
Con Air
The Other L-Word
The End of Libertarianism

|10.20.08 @ 1:11PM|#

Tom -
thanks for the tip.
That Slate article was so profoundly immature I can't think of how someone like that gets published.

|10.20.08 @ 1:15PM|#

Jerry, isn't it odd how that these people choose to push aside so many different possible culprits with actual political power to point the finger at libertarians who at every other moment are thought of as an electoral joke?

pungi|10.20.08 @ 1:17PM|#

I was a bit unsatisfied with the artical... Who cares what the statist say, the point is, our mixed economic system has failure built in, but it is certainly not because of laissez faire/extreme capitalism - which does not exist anywhere and never has... For the millionth time, gov't intervention in markets has always been the only reason markets crash and will eventually lead to total distaster. I'm baffled as to why the idea of gov't contolled economies is so popular right now when the FACTS are so obvious.

|10.20.08 @ 1:18PM|#

Jerry,

Nice linkage. Wouldn't we all like to write essays proclaiming the premature death of something we hate. I imagine some libertarian initiated force on the playground and took Weisberg's communally pooled lunch credits.

|10.20.08 @ 1:24PM|#

There is no rebuttal to Weisberg's article because there is nothing in it outside of pure emotion.
It sounds an awful lot like "how does your precious SCIENCE explain that?" And then when you start explaining, they go "blah blah blah, blah blah" Look, I KNOW the sun revolves around the earth because I can see it! It's obvious to the whole known world except for you freaks!

classwarrior|10.20.08 @ 1:26PM|#

Michael, have you ever stopped to consider that the developing nations that have enjoyed the greatest increases in living standards under globalization have NOT adopted the "free market" model to a large extent. China, India, South Korea all have had capital controls, fixed exchange rates and protections for infant industries (as did the US and Britain during their periods of industrialization). Please be honest about acknowledging this in your commentaries.

Paul|10.20.08 @ 1:28PM|#

It would almost be worth a few years of Socialism if hacks like Meyerson were pressed into road work gangs or factory workers.

Somehow I suspect that these so-called intellectuals don't see their privileged perch going away with Socialism.

Allison|10.20.08 @ 1:30PM|#

The reality of the situation is that Capitalism is taking the blame and it appears at least for a time, people will fall into line thinking a lack of regulation caused the collapse. Thus the door is open for all kinds of new meddling by the plutocracy.

Much the same as in March 2003, seven out of ten people believed Saddam was responsible for the Spetember 11th attacks.

|10.20.08 @ 1:31PM|#

"...South Korea..."
There was a lot more in play in South Korea than capital controls. For one, it was a place for Japanese electronics manufacturers (Sanyo, for example) to make parts for their products. South Korea took advantage of the technology and knowledge they inherited by being a location for "outsourced jobs" and turned it into companies like Samsung and LG. Only once the economy got really hot did the government put a lot of constraints on it, as governments have a want to do, and like to take credit for the happenings. Global trade brought South Korea from being akin to Algeria by Human Development Index standards to being in the top 30 countries in the world inside a period of 3 decades.

|10.20.08 @ 1:35PM|#

So here, as an example of the recent dying-capitalism meme, is a front page story from The Washington Post, under an ominous (or is it triumphant?) headline presaging the "end of capitalism." The story begins with a bold, if entirely unverifiable, claim: "The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism."

I almost dropped my spoon in my porridge this morning, when I read an actual, honest-to-god rational and reasonable op-ed in the WaPo. It *almost* makes up for their fear-whoring on the market adjustment. Actually, no, it's going to take a lot more front page reasonableness to make up for that. Still, it's a start:

Is Capitalism Dead? The market that failed was not exactly free.

|10.20.08 @ 1:39PM|#

classwarrior,

have you ever stopped to consider that fixed exchange rates and are not necesarily anti free market? flexible exchange rates may not be appropriate for devloping export based economies. You can be a libertarian and beleive that.

TallDave|10.20.08 @ 1:40PM|#

Great piece, JW. Thanks for sharing.

And the problem with the U.S. economy, more than lack of regulation, has been government's failure to control systemic risks that government itself helped to create.

Exactly.

TallDave|10.20.08 @ 1:43PM|#

have you ever stopped to consider that fixed exchange rates and are not necesarily anti free market?

This is a bit like arguing slavery isn't a restriction on freedom because the owners have the additional freedom to buy and sell slaves.

The currency markets are just another market.

flexible exchange rates may not be appropriate for devloping export based economies.

An export-based economy in which local currency is devalued discriminates against both its own consumers and foreign producers. It's an anti-free-trade market distortion.

|10.20.08 @ 1:46PM|#

I hope somebody at Reason today takes on the Jacob Weisberg piece that's leading Slate.com...

Wow. What a trite, dishonest punk.

I'm guessing he lets Naomi Klein use the Henry Waxman-head strap-on on him for their Tuesday night regular.

|10.20.08 @ 1:52PM|#

I hope somebody at Reason today takes on the Jacob Weisberg piece that's leading Slate.com...

Well, Slate was purchased from the capitalists at Microsoft by the socialists at the Washington Post, so I'm not surprised.

|10.20.08 @ 1:54PM|#

"This is a bit like arguing slavery isn't a restriction on freedom because the owners have the additional freedom to buy and sell slaves."

Notice I didn't say capital controls aren't anti free market - they unambiguously are. Currency pegs on the other hand, aren't necessarily. Being pro free market doesn't mean "every possible thing that can be made into a market must be otherwise we are all just slaves."

"An export-based economy in which local currency is devalued discriminates against both its own consumers and foreign producers. It's an anti-free-trade market distortion."

not every country with 0.1% of world GDP needs to have a seperate market for it's currency. Why don't we have a free market in californian rubles vs. texas blackgold dollars? I suppose the Euro is anti free market because it eliminated a dozen different currencies? A credible peg, currency board, or dollarized economy are almost identical.

HAL9000|10.20.08 @ 1:56PM|#

Its not capitalism vs. socialism, its evolution vs. "intelligent design." All the academics and columnists cited in the article above I am sure laugh at the assertion that some biological machine like an eyeball could arrive only via some great designer in the sky.

They then buy that whole philosophy when it comes to economics - and human society in general - and don't even see the irony. The designer in the sky becomes Franklin Delano Roosevelt (Marx was Moses!) in the White House instead of Jesus Christ on a White Cloud. Oh well, these morons are collectively going to print us into financial oblivion (Intelligent Designer needs fake, fiat money to effect his "designs") and we will get our clean slate or totalitarian state - a trying time lay ahead for free-thinkers in the coming decades.

concerned observer|10.20.08 @ 1:58PM|#

Disaster Soicalism. Wow. Way to go on the cognitive dissonance. I especially like the images from Soviet Russia. Of course, this website and Free Republic are the only places where the posters regularly ignore the fact that Soviet Russia was not at all what Marx in mind. In fact if you people ACTUALLY READ the communist manifesto you would learn that Marx actually advocated an ideal society without a "state" as we know it, he just thought there needed to be a period of political shift to allow its creation. A "necessary evil" if you will.

concerned observer|10.20.08 @ 1:59PM|#

@Hal9000-If you can't see the difference between an evidence-based approach to economics and a completely bogus "theory" then you should kill yourself.

|10.20.08 @ 2:02PM|#

concerned - great point, and exactly why libertarians never should have carried water for notional greatness big business conservatives. We end up getting blamed when the policies that bear the name but not the spirit of liberty crash and burn.

|10.20.08 @ 2:04PM|#

and is it possible that Hal9000 is a Russ 2000 upgrade? If so, I remember having this argument already...

|10.20.08 @ 2:06PM|#

concerned observer -
I don't mean to interject (well, I guess I do), but an evidence-based approach usually requires experiments, which, as I'm sure you know, require as few pollutants as possible to be conclusive. For example, in an econometric study you want to isolate the effects of different variables so that you can see the effects of the part you want to study.

Geotpf|10.20.08 @ 2:07PM|#

Capitalism always has losers as well as winners. That's how it works. And, sometimes, almost everybody is a loser at the same time, just like sometimes almost everybody is a winner. Usually, there are a lot more winners than losers, but sometimes, like right now, the opposite is true. However, having a system in which, by it's very nature, always has some losers and sometimes (like right now) has a lot of losers is not exactly popular, especially amoungst the losers themselves. This is very understandable. It's also understandable that regulations to reduce the number of losers are inevitable, even if they reduce the number of big winners in the process. Welcome to democracy.

derp|10.20.08 @ 2:08PM|#

Exactly concerned, the problem is that I think there are few that would willingly give away power and dissolve the state when the time was right.

Power isn't a means, it is an end.

concerned observer|10.20.08 @ 2:12PM|#

Geotpf-My point exactly. THe main line of thought here seems to be that everyone suddenly appeared out of nowhere and that each individual exists in a vacuum, and that society has no legitimate interests. Its an incredibly childish view that is not only unrealistic but, I would argue, immoral.

concerned observer|10.20.08 @ 2:13PM|#

@derp-So would you rather have our current plutocracy ruling your life?

fyodor|10.20.08 @ 2:14PM|#

Don't know if anyone's said it already, but this is almost exactly what I thought when I heard of Klein's thesis. Why the hell NOT push the policy set you believe preferable at ANY time, no less when people are scratching their heads looking for answers, and who for a damn second doubts the Left doesn't/wouldn't do the same damn thing!!?! And who could blame them??!?

fyodor|10.20.08 @ 2:18PM|#

Capitalism always has losers as well as winners. That's how it works. And, sometimes, almost everybody is a loser at the same time, just like sometimes almost everybody is a winner. Usually, there are a lot more winners than losers, but sometimes, like right now, the opposite is true.

Um, winners and loser compared to what? Even if you compared today's circumstances to before "all this" happened, I'd still venture to guess not "almost everyone" is a loser, and I don't know what measure would come closer to that. I think we're mostly winners compared to if we had socialism, this recent downturn notwithstanding.

|10.20.08 @ 2:19PM|#

fyodor, thats what I thought too. Times of upheaval are simply soft points in human history when the will to power of a few can set the next history shaping course of humanity - regardless of the philosophy they are peddling. In them, like in election, the first ideology to get defined by the opposition before they define themselves loses.

fyodor|10.20.08 @ 2:21PM|#

Thank you, domo.

Hell, the USSR was Disaster Socialism!!

|10.20.08 @ 2:21PM|#

"The socialists are a disaster alright. Venezuela will reportedly go bankrupt if oil doesn't go back above $70 this year. And Iran tried to build the world's largest sandwich, but hungry locals defeated the effort by mobbing the sandwich before it could be measured."

LOL.
Last week I went to eat at Burger King. They had no meat, only chicken. I found it incredibly ridiculous that I could not get a burger at Burger King...
Gracias al Socialismo Bolivariano del Siglo XXI!

concerned observer|10.20.08 @ 2:26PM|#

Thats right, lets all bash Venezuela. It doesn't matter at all that their president actually has strong support from his people and the international community. It doens't matter that he has started to bring economic justice to a country where it was long denied. None of those things matters cause hes a SOCIALIST!

Mike Farmer|10.20.08 @ 2:27PM|#

The same principle which ensures that if terrorism succeeds, it fails(because if we as a nation are truly terrified we're going to die unless we respond with great force, we'll cause a huge amount of destruction wiping out the innocent and the guilty), applies to socialism -- even if it succeeds in being implemented, it fails.

concerned observer|10.20.08 @ 2:27PM|#

@rana-I personally think you're about living in Venezuela.

|10.20.08 @ 2:39PM|#

Concerned,

I dont' know where you get your "facts" on Venezuela from, but "el pueblo's" support for Chavez has weakened, as well as international support. Things here are worse by every standard imaginable. Perhaps, Chavez has done a couple of good things but his failures far outweigh them.

Would you say it is "economic justice" when EVERYONE (except those in high government positions, aka "Boligarquia") is poorer? And yes, with the highest inflation, crime and corruption rates in South America, Venezuela's poor class has been hit the hardest.

|10.20.08 @ 2:40PM|#

"Of course, this website and Free Republic are the only places where the posters regularly ignore the fact that Soviet Russia was not at all what Marx in mind."

A stunning observation. I'd never considered that! Actually, the USSR was not what Marx "had in mind" but it's the semi-logical, ugly, as-applied-by-actual-humans, real-world example of what became of his ideas.

And fuck Chavez, BTW.

concerned observer|10.20.08 @ 2:41PM|#

@rana-Maybe you could show some actual facts and figures. Show economic figures from before Chavez's election in 2000 vs. today. And please cite your sources.

|10.20.08 @ 2:44PM|#

rana,

Just ignore him. He's just the latest in a long line of retarded trolls.

By the way, how's that concrete plant working out for you? Any imaginary improvements you'd like me to make?

concerned observer|10.20.08 @ 2:45PM|#

@Don Mynack-Right and when your ideas are applied by actual human beings they never turn out badly right? Never results in violations of human rights? For references look at Pinochet's Chile and China today.

|10.20.08 @ 2:45PM|#

rana,

Of course it's justice - everything you describe are the just deserts of allowing an autocrat to buy your vote for the promise of a few loaves. Hard lesson - but one I doubt Venezuala will make again fo a while.

concerned observer|10.20.08 @ 2:46PM|#

Screw you Sugar free just because you cant come up with a counterargument to justify your disagreement doesn't mean the best way to respond is by putting your hands over your ears and humming loudly.

|10.20.08 @ 2:47PM|#

Concerned,

You are right. I am about "living in Venezuela." If by that, you mean I live in Venezuela and often comment on issues affecting Venezuela.
I, unlike some people, am not arrogant to think I know more about issues affecting the U.S.A. than someone living there.

|10.20.08 @ 2:48PM|#

concerned observer: Socialism will always require a strong state because absent floating prices (i.e. free market prices)there is no other mechanism for production to be tailored to demand.

Every hippie commune ultimatly breaks down due to the same problem. People don't automatically decide to do the work required to run the commune in the right amounts. They have to be induced to do so by greater benefits or by the strong hand of a leader. (i.e. Jim Jones or Joe Stalin)

IMO, it's far more humane to reward people monetarily for doing what is needed and desired, even if this increases economic inequality, than to strong-arm them into it via the state, or via some local boss commanding the local workers collective.

|10.20.08 @ 2:49PM|#

that should read "arrogant enough"

Kyle|10.20.08 @ 2:50PM|#

concerned observer-

concerned observer of what?

|10.20.08 @ 2:52PM|#

"Of course it's justice - everything you describe are the just deserts of allowing an autocrat to buy your vote for the promise of a few loaves."

true.

"Hard lesson - but one I doubt Venezuala will make again for a while."
I'm afraid it is a lesson the Venezuelan people still haven't fully learned... Things have yet to hit rockbottom.

|10.20.08 @ 3:00PM|#

rana, i realized that my post may have seemed personally directed at you - was not my intent if that was unclear. should have read "...to buy one's vote..."

HAL9000|10.20.08 @ 3:10PM|#

concerned observer:

What do you mean by "evidence based" approach to economics?

|10.20.08 @ 3:24PM|#

and concerned - just what exactly is your view of economic justice that you say Chavez has brought? Or was that sarcasm...

|10.20.08 @ 3:26PM|#

Sugarfree,

I'm still waiting for my PINK concrete plant... Ever since El Comandante decided to nationalize the cement industry, cement is hard to come by.

|10.20.08 @ 3:27PM|#

I'll get right on it, boss-lady.

DannyK|10.20.08 @ 3:31PM|#

Michael, man, free market capitalism is already gone. Now we're living in a Partially-Nationalized Socialized-Risk Morally-Hazardous Capitalist Cluster****.

The sooner libertarians accept that, the sooner they can start coming up with ideas that fit the actual world we're living in.

Alan Vanneman|10.20.08 @ 3:45PM|#

This is all a damn plot by Naomi Klein.

|10.20.08 @ 3:54PM|#

Show economic figures from before Chavez's election in 2000 vs. today. And please cite your sources.

In doing your analysis, don't forget to account for self-aggrandizing distortions of said data by the Chavez regime, and for the incredible windfall Chavez has enjoyed in the oil markets.

Geotpf|10.20.08 @ 3:59PM|#

DannyK | October 20, 2008, 3:31pm | #

Michael, man, free market capitalism is already gone. Now we're living in a Partially-Nationalized Socialized-Risk Morally-Hazardous Capitalist Cluster****.

The sooner libertarians accept that, the sooner they can start coming up with ideas that fit the actual world we're living in.

Libertarians almost never come up with ideas that actually fit the real world. Let me give you an example: Libertarians tend to have a hard time supporting ballot propositions and the like that legalize gay marriage, not because they don't think gays should be able to enter into a marriage contract if they so desire, or that gays are icky or immoral, but because they think the government shouldn't sanction any marriage. Which is not the question presented at all.

|10.20.08 @ 4:17PM|#

The sooner libertarians accept that, the sooner they can start coming up with ideas that fit the actual world we're living in.
...
Libertarians almost never come up with ideas that actually fit the real world.


I have no idea what either of you mean by "fit the real world".

LarryA|10.20.08 @ 4:52PM|#

The story begins with a bold, if entirely unverifiable, claim: "The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism."

Actually this claim is accurate, if not for the reason indicated. The financial crisis will do major damage to capitalism, indeed it already has. The fact that "unregulated capitalism" was not to blame, indeed was nowhere to be found should be obvious to anyone who scans the Code of Federal Regulations.

In fact if you people ACTUALLY READ the communist manifesto you would learn that Marx actually advocated an ideal society without a "state" as we know it, he just thought there needed to be a period of political shift to allow its creation. A "necessary evil" if you will.

Actually Marx invented the idea that if you give the state more and more power it would "wither away." Everyone is still waiting for that to happen even once.

The main line of thought here seems to be that everyone suddenly appeared out of nowhere and that each individual exists in a vacuum, and that society has no legitimate interests.

Society is the collection of individuals. Society has no interests because there is no collective brain to house them. Those who claim to know society's interests are simply presuming everyone else has the same interests they do. The dangerous ones want to use the law to enforce those interests.

Usually, there are a lot more winners than losers, but sometimes, like right now, the opposite is true.

Wrong. We may not be up to the same standard of living we had in 2004, but we're doing a lot better than we were in 1954. By an order of magnitude, at least.

|10.20.08 @ 5:13PM|#

Libertarians almost never come up with ideas that actually fit the real world.

You have a product or service that I would like to purchase or lease. I have an agreed upon amount currency or other item(s) that will be sufficient to satisfactorily complete the transaction. Both parties are consenting adults and are fully informed as to the terms of the agreement.

Or

You have a substance that you wish to ingest and achieve an altered state of mind. You should be free to do so as long as you harm no one in the process.

ZOMG!!!1!1!! It's Bizarro world!

|10.20.08 @ 5:53PM|#

Libertarians almost never come up with ideas that actually fit the real world.

Yeah, that US Constitution thing, its just too out there to be realistic.

Most libertarians, and I count myself among them, would be head over heels with joy if we just applied the Constitution as written, not as re-written over the past 70 years by the Supreme Court.

|10.20.08 @ 6:00PM|#

"Heh. The socialists are a disaster alright. Venezuela will reportedly go bankrupt if oil doesn't go back above $70 this year. And Iran tried to build the world's largest sandwich, but hungry locals defeated the effort by mobbing the sandwich before it could be measured."

What are we defining as "socialist"? It's easy to pick two basketcases as examples, but how about Europe? Japan? The rising tigers of Asia? Canada? Sure, increases in economic freedoms have led to economic/quality of life increases, but I would venture to say that they are still, at least socialistic, if not socialist. Maybe a little bit capitalist and a little bit socialist? Is there a line in the sand where we can definitively separate the two, and if so, what is it? National healthcare? Five year plans? Govt ownership of companies? Maybe there is some point or range on the sliding scale between the two ideological extremes whose complex combination results in the optimal outcomes/trade-offs in an economic structure reflecting the non-rational "real" world as opposed to a rational "perfect" world? Beings that all of them at least started out as "socialist", what part did their earlier massive govt intervention/control of their economies play in their current development? Perhaps there is a natural progression of economic policies for countries to follow for the most efficient economic development with the least amount of social disruption and it trends towards free markets instead of beginning with it? And as it pertains to Venezuela and Iran, where on the sliding scale does the economy become less a function of socialism than authoritarianism?

|10.20.08 @ 6:36PM|#

great article but it´s Labor, not Labour. dont ask me why but it just is that way. And yes Rudd is a fool for saying what he did. And also with the new move to tax people aboe $1m/year at 50%

will|10.20.08 @ 8:52PM|#

Well, Lupan Sansei, there are many definitions of socialism, but they usually involve the government owning or heavily regulating the major sectors of a country's economy and having policies designed to prevent and/or level economic inequality. We define Venezuela here as socialist because the government owns the oil industry (arguably the single most important part of Venezuela's economy, especially now that the rest is blown all to shit) and because Chavez's policies are explicitly intended to redistribute wealth.

will|10.20.08 @ 8:53PM|#

Or, to put it another way, I'm not quite sure.

|10.20.08 @ 9:02PM|#

Capitalism is the only "ism" that occurs on its own, it just "happens", nobody "invented" the system. This is the main reason why it won't die as simply as it did the soviet system or the nazism. The "communisms" and "socialisms" are human designed artificial systems of how the society "should be" and thus can only be applied by force. Capitalism is the natural current stadium of how our occidental civilization is economically organized. No one "designed" it. It simply naturally IS. To Compare capitalism against socialism is like comparing a real language (French for instance) vs. Esperanto. Esperanto may be an excellent language but nobody speaks it…

|10.21.08 @ 12:48AM|#

I agree w/ Lupan that a healthy mix between socialism and capitalism seems to work best. I think the government should regulate the industries that capitalism has messed up (e.g. banking and healthcare right now) and deregulate the industries once a more favorable business environment has been created. The government should constantly adjust its portfolio (ie every 5,10,20 years) to keep certain industries from becoming too powerful and to allow for smart entrepreneurs to enter an industry and create value for both the consumer and shareholder.

Nasikabatrachus|10.21.08 @ 7:35AM|#

concerned observer | October 20, 2008, 1:58pm | #

Disaster Soicalism. Wow. Way to go on the cognitive dissonance. I especially like the images from Soviet Russia. Of course, this website and Free Republic are the only places where the posters regularly ignore the fact that Soviet Russia was not at all what Marx in mind. In fact if you people ACTUALLY READ the communist manifesto you would learn that Marx actually advocated an ideal society without a "state" as we know it, he just thought there needed to be a period of political shift to allow its creation. A "necessary evil" if you will.

To my knowledge, Marx didn't have many prescriptions for a successful socialist system. In fact I'm pretty sure he dismissed such discussion by saying "I will not write the restaurant menus of the future," perhaps because he viewed socialism as an historical inevitability. Though he did call for the violent suppression of capitalism, which is exactly what the Soviet Union did.

So of course the real USSR wasn't what Marx had in mind. What he had in mind was something that worked, by virtue of having gotten rid of his flawed theory of worker exploitation by capitalists. As it turns out it doesn't work that way and States don't just dissolve because there aren't any capitalists in control of it. Ideas have consequences. "Necessary" evils, being enjoyable to the people who commit them, lead to unnecessary evils.

|10.21.08 @ 12:54PM|#

Moynihan might have made the point that the present turmoil had nothing to do with "unregulated" capitalism. In fact it everything to do with the government-sponsored thuggery of Bill Clinton's and Janet Reno's Department of Justice, which forced banks to lend to unqualified minorities under pain of billion dollar lawsuits and actual criminal prosecutions. And, of course, to relieve the resultant pain, Freddie Mac and Fannie Mae would buy up all the toxic mortgages, relieving the orginators of the risk. Such a deal!

What seems particularly strange about these incontrovertible historical facts is that the McCain camp seems unable or unwilling to articulate them, preferring to rail on speciously about punishing "greed."

Of perhaps the awful truth is that McCain himself is simply too dense or ignorant to figure this out.

|10.21.08 @ 6:37PM|#

Capitalism is the only "ism" that occurs on its own, it just "happens"

"System of Natural Liberty" was it Adam Smith said

To reinforce that I'd say socialism is government coersion to achieve a preconcieved ideal society

|10.22.08 @ 2:11AM|#

An important difference between capitalism and socialism is what happens on their bad days. With capitalism you lose some money, maybe your job and you have to get going again. With socialism you end up with no money to lose and on on its bad days you and yours end up starving and dead in a gulag if you say anything. I'll take the loss of a few dollars any day and the chance to make them back and then some.

|10.23.08 @ 12:06PM|#

I would argue that the recent socialist moves by the governmet serve the same purpose as the more libertarian moves that naomi writes about: corporate profit protection. It may be true that corporate profits lead to a healthy/wealthy country, but this clearly shows that the corporate system is more important than any "ideal governing style" agenda.

|10.31.08 @ 2:37AM|#

What year did laissez faire end ? To all of the Leftist reading Reason, the RINOs, and Demopublicans, what does laissez faire mean?