Broken Promises

Reader Nick M. writes: "I know that you pledged not to blog about Naomi Klein anymore, but I enjoyed hearing Greenspan debate her on Democracy Now. I think he pretty well ate her lunch." I did indeed pledge a temporary adjournment on Klein-related blogging, but I'll break my promise just this once. You can listen to the debate (which heats up towards the end) here. Some excerpts:

Greenspan explains that Russia's early 90s, transitional economy was more complicated than Klein is willing to acknowledge:

Well, remember that you don't get a market economy merely by eliminating central planning. And remember, when the Berlin Wall came down and the Soviet Union disintegrated, you didn't have a market economy. What you basically had was a black market economy. And they tried to develop the institutions of the democratic society, and it's not something which they have had back for generations. And as you can see now, there's an increasing authoritarianism. It's a very -- it's a society which has very different trends at different levels of that society. And I don't know exactly where they're coming up, but I don't like the direction it's been going in recent years.

Greenspan on immigration:

And I also argue in the book that we ought to be opening up our borders to skilled labor from all sorts of--from all parts of the world, because if we were to do that, we would increase the supply of skilled workers, which our schools have been unable to create, and as a consequence of that, we would lower the average wage of skills and reduce the degree of income inequality in this country. It's a very important issue, and it's a very important issue which I raise in my book. And we have to confront this both at the education level and on the immigration level.

Greenspan on Klein's anti-capitalism:

Well, let me ask you a question, which -- you are just taking the capitalist system, to state it very bluntly, and say it's deficient here, it's deficient there, it's deficient every other place. The capitalist system has created more economic wealth in the last seven or eight years around the world.

Transcript and mp3 here.

Comments

[Edward]

Somebody should tell Klein that the market won the argument with central planning a long time ago. The only dispute now is about how to manage the market.

[Syloson of Samos]

And they tried to develop the institutions of the democratic society, and it's not something which they have had back for generations.

Well, one could argue that Russia has never had a democratic society. There have been some "thawings" and the like (for example, the couple of years following the 1905 Revolution), but Russia's history as a political entity has largely been autocratic punctuated by periods of turmoil between strong central governments.

[thoreau]

Since immigration came up, I just want to say that I agree with MikeP.

[Dan T]

Well, remember that you don't get a market economy merely by eliminating central planning.

You don't?

[P Brooks]

"...we would increase the supply of skilled workers, which our schools have been unable to create...."

Allen Greenspan: our next Secretary of Education?
Vouchers, baby!

[:-]

I just want to say that I agree with MikeP.

That gag never gets old.

[joe]

Well, remember that you don't get a market economy merely by eliminating central planning.

No, you don't. A point that the "Washington Consensus" people who seized the "Commanding Heights" and tried to remake Russia need to be reminded of just as much as Naomi Klein.

Russia's problem wasn't absolute free market capititalism. It was free market capitalist absolutists.

[damaged justice]

Cute, but shouldn't be Klein be debating an actual capitalist?

[joshua corning]

You don't?

Property rights need to be defined.....otherwise you just end up with a mafia controlled economy....one central planning establishment replaces another.

[Syloson of Samos]

...we would increase the supply of skilled workers, which our schools have been unable to create...

Does it really have that much to do with our schools? Or is it more because our affluence?

[Troll]

Reader Nick M. writes: "I know that you pledged not to blog about Naomi Klein anymore, but I enjoyed hearing Greenspan debate her on Democracy Now. I think he pretty well ate her lunch."

Tuna Tacos?

[joe]

Property rights were defined, joshua. On paper.

In practice, the state/politicians/oligarchs didn't do a very good job living up to their paper obligations in those areas.

It's striking how much the effort to produce a free-market Russia looks like a mirror image of the effort to produce a socialist Russia.

That wasn't true capitalism, comrade. True capitalism has never been tried. If it was true capitalism, it would have worked.

[Dan T]

Property rights need to be defined.....otherwise you just end up with a mafia controlled economy....one central planning establishment replaces another.

That's true I guess. You also need a welfare/social safety net for that matter.

[dhex]

klein seems better matched to the populism of a fox news style debate. does she get face time on o'reilly and those types of shows?

[joshua corning]

Russia's problem wasn't absolute free market capititalism. It was free market capitalist absolutists.

One thing you can say for the mobster central planners vs the soviet central planners is at least the stores had food in them....plus they didn't have a gulag.

[Pike Me]

I just want to say that I agree with MikeP.

That gag never gets old.

Yes it does.

[Syloson of Samos]

joshua corning,

The last Gulag was closed in the early 1960s. Not that living in the Soviet Union became some paradise mind you.

[Syloson of Samos]

joshua corning,

There are also concerns that the old Soviet practice of throwing folks into psychiatric institutions for political reasons continues in Russia.

[fyodor]

Property rights need to be defined....

And protected!

It's striking how much the effort to produce a free-market Russia looks like a mirror image of the effort to produce a socialist Russia.

And Cuba? And China? And North Korea? And Cambodia?

joe, I know you repeatedly make the point that you do not endorse Marxist/Leninist Communism, but you seem to be implying here that M/L Communism not working in Russia is comparable to the free-market not working there. But presumably you would agree that free markets do indeed work elsewhere where proper government functions are not handcuffed by corruption? And BTW, I don't think one needs a pure libertopia to point to a functioning free market. Most aspects of our economy operately freely. Whether or not regulation helps or hinders markets' operations, there's obviously plenty of examples of them operating much more freely and much more like they're supposed to than M/L Communism did anywhere (not just in Russia!)!

[Warren]

Right, property rights are the key to a market economy. They're absolutely necessary and practically sufficient.

Re:Greenspan on immigration:
Let me ask you this Mr G. Can we also conclude from your remarks, that cracking down on unskilled labor immigration will raise the price of unskilled labor and also result in reducing income inequality? And a follow up, Why shouldn't there actually be an inequality between the incomes of skilled and unskilled workers?

[SPD]

we would lower the average wage of skills and reduce the degree of income inequality in this country.

I could use some help with understanding this statement. How does lowering wages reduce income inequality?

[JasonL]

Clearly there are functioning capitalisms in the world. The problem, and it is a huge one, is how to manage transitions of large economies and development of smaller ones.

Klein and company seem to be suggesting that the lower level of regulations created the problem of kleptocapitalism. I don't really follow that line of reasoning. Aren't the kleptocrats the regulators? How does more central control by those parties get you less corruption?

[Syloson of Samos]

JasonL,

The thing is that bribing and the like were parts of Soviet political culture. The practice didn't start when the USSR fell.

[P Brooks]

The Soviets' transition to a market economy was hindered, one might say, by a less than ideal process for the sale of State assets.

[joe]

fyodor,

Yes, like Cuba and North Korea. That's exactly what I'm saying - the project of attempting to set up a system that would be a wordly example of their theoretical ideas of the good society failed, and for many of the same reasons.

Let me it lay it out plainly, since you seem to have misinterpretted me.

In Russia after the revolution/after the red banner came down, a group of dedicated communists/free market capitalists attempted to set up a system of governance and reforms which would bring about a pure Marxist/free market society. However, since they were starting from a place that was very different from where they wanted to go, they set up a system intended to make the transition from A to B. It didn't work - not because the people who implemented it were insufficiently devoted to the principles of communism/free market capitalism, but because the assumptions they made about how such a transition would work, such as the central planning of the economy/government-directed privatization of state assets being only a temporary measure until the old habits were overcome, turned out to be wrong.

Ultimately, both groups thought that their utopian visions were the natural order, that would arise spontaneously upon the elimination of the state power that was holding them back. Well, they were wrong, and the reformist project that was intended to put itself out of business became the institution through which the bad guys seized the reigns of power.

[Syloson of Samos]

P Brooks,

Well, many state assets by the early 1990s weren't in great shape either.

[joe]

Also, fyodor, the proper comparison to "free market capitalism" is not "Marxist-Lenninist communism" but "Marxism."

ML Communism, like the "privatization" regime directed by the urbercapitalists who drank the Washington Consensus Kool Aid, was the means through which the ideologues attempted to bring about the real, government-free thing.

The equivalent to M-L Communism wouldn't be Free Market Capitalism, but the privatization efforts they undertook, such as auctioning off state assets, shrinking the pension-state, and allowing "shares" in the state-owned economy to be bought and sold.

[JasonL]

joe:

I think you are reading a lot in there. Nobody has found a way to transition a corrupt government reliably. So, let's say you have a gradual transition. Led by whom? Don't you have more opportunities to derail fundamental reform under that scenario? The state still controls the assets and somehow allocates them, it just takes longer.

I don't know whether the shock therapy solution is better than anything else, but it isn't demonstrably worse.

[joe]

Clearly there are functioning capitalisms in the world.

And functioning socialisms, too.

They're both half-assed versions of what the purists think will come about, if only those nasty governmental, social, and economic systems that evolved through the centuries were held in check.

[Georg]

A truly great book changes minds. I don't think there are many people picking this up who aren't already convinced capitalism is nefarious and evil. So Klein isn't really dangerous at all. Also, look at her style. Klein deals in ad hominem attacks. She pours anti-capitalist Marxist gravy on everything she says, largely to disguise the food she's slopping onto our plates. (How's that for a metaphor?)

PS It would have been so much easier if the Russian Revolution, and all the other communist takeovers around the world, hadn't happened at all.

[joe]

JasonL,

In the case of Russia, it isn't demonstrably different in any way.

[JBinMO]

When I was a kid, my mom used to make gulag for dinner. Iy was OK.

[JasonL]

joe:

I'm not critiqueing your critique of purists, just your assignment of blame. Centuries of corruption are hard to overcome, rapid or slow, socialist or capitalist.

[joe]

JasonL,

The difficulty of overcoming those centuries, or even decades, of bad practices is exactly my point, and the heart of my critique (as opposed to Klein's critique) of Shock Therapy.

Carts driven along the same path wear ruts in the road. If you suddenly take the driver off a wagon travelling down a well-worn road, it's going to stay in the ruts - even if some other paths can be shown to be objectively better.

The uper-capitalists who thought a spontaneous order resembling the free-market capitalism of their dreams (complete with the enlightenment liberal ideals of individual rights) would spontaneously arise if the title to assets was put in private hands, businesses began making decisions based on the profit motive, and pieces of paper traded like a mercantile exchange didn't understand how the world works any better than the people who thought that workers councils were going to start directing the operations of Russia's factories and farms once the Reds finished off the Whites.

[fyodor]

And functioning socialisms, too.

Oh yeah? I'm guessing you mean western European mixed economies (and Canada?), which are primarily capitalistic societies with socialized sectors. Or maybe you mean small cooperative communes. Any functioning fully or primarily socialistic nation?

As for your laying it out plain, I'm not sure if I follow, but I think you're saying that post socialistic Russia committed itself to an economic libertopia just as the early Soviet Union committed itself to a Marxist anarchy? Again, I think we obviously have plenty more models of capitalism and relatively free markets functioning reasonably well than we have for anything that would get you anywhere near what Marx envisioned, and thus there's no comparison.

[JasonL]

"The uper-capitalists who thought a spontaneous order resembling the free-market capitalism of their dreams (complete with the enlightenment liberal ideals of individual rights) would spontaneously arise..."

Maybe they did think this, or maybe they thought it might be less bad than alternatives. Can we see where "not shock" would have had any different results?

I get what you are saying, but my point is that blame of shock therapy is misplaced if other alternatives yield similar results.

[joe]

fyodor,

Any functioning fully or primarily socialistic nation?

No, the mixed economy has demonstrated its superiority on the national level. You won't find any "fullly or primarily capitalistic nations," either, if you judge these things by the standards of the purists.

I think you're saying that post socialistic Russia committed itself to an economic libertopia just as the early Soviet Union committed itself to a Marxist anarchy?

No, I'm saying exactly the opposite. Post-communist Russia committed itself to a "transitional" state in an effort to bring about an economic libertopia, just as the early Soviet Union committed itself to a "transitional" state in an attempt to bring about Marxist syndicalism. In both cases, this "transitional" state was created by ideological purists who were actively shooting for those pure states, not the state communism/corporatism they ended up bringing about.

[BakedPenguin]

joe, Russia was a basket case from the get-go, and it wasn't an overdose of laissez-faire that made it that way.

Several people have pointed out that the sales of state owned industries took place in a corrupt atmosphere that completely favored a few high placed pals of Kremlin goons. This is crony capitalism, not laissez faire. This is an extreme example of subsidizing certain profit making industries. You must have noticed, there isn't much favor for that on this blog.

Rule of law and property rights were (and are) almost nonexistent - land could not be owned at all until the mid 1990's. Foreign investment was limited, and tightly controlled. There were numerous limitations on economic freedom, and stating that Russia suffered from too much of it, then or now, is disingenuous.

[joe]

JasonL,

Well, the people who were behind the Shock Therapy certainly defined themsleves and their project as Freidmanesque Free Marketeers. I can still remember when they were pointing at Wild West Russia in the 90s as vindication of absolutist capitalism. Look at the flat tax! Look at the fortunes being made! In your face, Welfare Statists!

It can't be proven, one way or another, whether the Shock Therapy was the problem, or whether their vision of unfettered capitalism was inherently doomed to failure. Just as it can't be proven whether the radical reordering of the Bolsheviks was to blame, or whether Marx's vision of stateless, local-directed socialism was doomed to failure.

In both cases, the "but that wasn't true capitalism/socialism, the world has never seen true capitalism/socialism" excuse gets trotted out, but if I may be so bold, I'll suggest that there is a reason why the world has never seen those things in their pure form: because they cannot exist.

[joe]

BakedPenguin,

You have completely misinterpretted my argument.

I know that it wasn't an overdose of laissez-faire that made it that way.

My very first comment on this thread was Russia's problem wasn't absolute free market capititalism. It was free market capitalist absolutists.

Each and every one of the points you just made - literally, each and every one of them - are points I, myself, made.

[JasonL]

"In both cases, the "but that wasn't true capitalism/socialism, the world has never seen true capitalism/socialism" excuse gets trotted out, but if I may be so bold, I'll suggest that there is a reason why the world has never seen those things in their pure form: because they cannot exist."

Maybe I'm out of touch with the Faithful, but this smells a bit of straw. Friedman the senior was not an anarchist, and I never hear outside those circles clamoring for government fraud protection and that sort of thing.

In any event, let me just suggest that if the axis is regulated economy vs. wild west and you are starting with corrupt regulators, I can see where they were coming from.

[joe]

BakedPenguin,

The crony capitalism in Russia that you rightly decry came about as a result of the efforts of those who set out to produce a free market libertopia. They were truly devoted free market capitalists, and their efforts didnt' work.

Just as the Stalinist nightmare came about as a result of the efforts of those who set out to produce a socialist worker's paradise. They were truly devoted socialists, and their efforts didn't work.

Just as the sectarian/terrorist/Hobbesian nightmare in Iraq came about as a result of the efforts of those who set out to produce a liberal, democratic society and state. They were (some of them, anyway, and being generous) devoted liberal democrats, and their efforts didn't work.

[joe]

Jason,

I didn't claim that Freidman and the Washington Consensus set out to create anarchy, but free market capitalism.

[Thomas Jackson]

i just have one idea for mexico that is for ammerica to buy mexico from mexico than ship all immigrants to new- england ,new york,-new hamp -shire.new -jersy, new orleans than all americanws could just move to mexico and buy up all the land that will be avaible after we help all mexicans transplant to the old u.s.a.and we can injoy the got ya!
thomas Jackson

P.S. quit disrespecting all americans with your propaganda. and realize americans arent going to welcome criminals of any kinD AS OUR NEIGHBORS GET A CLUE our country,s not for sale too any criminal morons

[JasonL]

joe:

Somehow, I am dense today. I just can't follow your point. Yes, there was an ideological element to the direction Russian economic reformers wanted to go. No, it isn't clear at all that said ideology had anything to do with a worse outcome than any counter proposal I've heard. The problem wasn't with the ideology, it was with institutional corruption and an attempt to devolve power.

Maybe I need to see a counter proposal for how Russia should have been handled from where you are sitting. I get that you are tying what you perceive as zealotry to all sorts of ills, but the dots just aren't connecting here on my monitor ...

[BakedPenguin]

joe, okay, like JasonL, I missed your point. I noted you made similar points to mine, but since I thought you were arguing they came from laissez faire, my interpretation of what you were saying was different.

I suppose the takeaway from the Russian example is: establish rule of law, property rights, etc., first, then change the economic system.

[Paul]

You don't?

Property rights need to be defined.....otherwise you just end up with a mafia controlled economy....

a.k.a. cartel capitalism. You have to have institutions which protect rights. Property rights being one of the bigger elements of a well functioning capitalism. But Klein should take heart, we've been chipping away at our property rights for a very long time now.

[Paul]

Property rights were defined, joshua. On paper.

Kind of like...here.

[anomdebus]

SPD,
I think he basically saying that for a lot of highly technical jobs, there is a relative shortage of qualified people, leading to relatively high pay. Adding more qualified people reduces this and should lead to lower costs for those technical fields, disproportionately affecting high paid people.

Even if the new talent is not as skilled as the highest paid employees, it should have an effect since there will be more competition upwards as people have more incentive to rise above to fray. As opposed to the situation now (as proposed), where people are comfortable in their position because of scarcity and are less aggressive in advancing upwards.

[Paul]

She pours anti-capitalist Marxist gravy on everything she says, largely to disguise the food she's slopping onto our plates. (How's that for a metaphor?)

Top-drawer, I'd say. Bravo.

[fyodor]

joe,

I think I understand you. I'm not sure but I think I do.

I guess I can't "prove" that capitalism is the economic engine that makes the socialistic window-dressing in mixed economies possible (setting aside whether it's desirable or whether it slows or speeds the engine), but I think it's pretty self-evident. You'll draw your own conclusion.

Anyway, "purist" free market economics is not universally as dependent on the type of transition formerly Communistic Russia was forced to attempt to get to anything close to a free market as Marxist anarchy is on the Dictatorship of the Proletariat.

I do understand there are socialists (you among them?) who neither favor the Dictatorship of the Proletariat nor see utopian anarchy as their ultimate goal.

Hmm, I'm still confused by this paragraph:
No, I'm saying exactly the opposite. Post-communist Russia committed itself to a "transitional" state in an effort to bring about an economic libertopia, just as the early Soviet Union committed itself to a "transitional" state in an attempt to bring about Marxist syndicalism. In both cases, this "transitional" state was created by ideological purists who were actively shooting for those pure states, not the state communism/corporatism they ended up bringing about.

Was it the form of "transition" that was chosen which doomed both programs (with what you seem to claim are comparable lessons) or the ideological purity behind them? If the former, then their ideological purity would seem to be besides the point and I don't understand the lesson. If the latter, then I don't see why you said I misinterpreted you since it was the ultimate goals which inspired these transitions. And if it's the latter, I'll repeat in alternate form what I said above, that free market economics is not dependent on the type of transition that was chosen in the Soviet Union. The conditions on the ground that preceeded the transition required measures that would be unnecessary in any mixed economy.

[Paul]

I'll suggest that there is a reason why the world has never seen those things in their pure form: because they cannot exist.

joe,

I argue they can't exist because as you move towards the so-called pure form, you ironically get into arguments about what the definition of purity is.

For instance, you could argue that an economy that is largely free, has no income tax-- maybe a sales tax to keep government from dabbling in tax policy to drive behavior, but a government which would have oh, I dunno, a bill of rights thingy which kept the national government locked into enumerated powers and what not, might approach pure capitalism. But then you'd have someone who would argue that it wasn't, becuase that bill of rights thingy gets in the way of freedom.

[fyodor]

Further, I'll say that the conditions on the ground that existed at the time of the fall of Soviet Communism are chiefly responsible for the problems that have transpired since, not the goal of free market economics nor the "shock treatment" form of transition chosen.

I guess I can't prove that and I suppose the cockiness of the initial reformers can be used by the likes of you to imply that it was their free market goals that are responsible. Whatever.

[fyodor]

Good points, Paul.

joe, even if what the libertoids here seem like "purists" to you, all we really want are changes from the current system to emphasize freedom over regulation of noncoercive behavior. We see the fact that we want that in just about every case as indicative of a solid commitment to principle and a reflection of the good we see in liberty. I guess you see it as "purity." But we do NOT want some sort of huge overhaul that rearranges the entire system. Again, maybe the fact that we prefer liberty to coercion in virtually every case seems like a Marxist-like overhaul to you, but it doesn't to us. Put another way, reaching some ultimate goal of libertopia is NOT necessary to preferring liberty in any particular case where the question comes up, and we do NOT advocate some radical transition period that is totally at odds with that ultimate goal (as the Dictatorship of the Proletariat is to the final anarchic stage of Marxism). The only reason free marketers recommended radical moves for the former Soviet Union is because they thought that doing it slowly would be worse. Again, it was the conditions on the ground that necessitated some sort of difficult transition. Radical transition is not inherent to free market economics as it is to Marxism. The supposed "purity" of each have nothing to do with each other.

[fyodor]

I'll suggest that there is a reason why the world has never seen those things in their pure form: because they cannot exist.

You can always choose either freedom or regulation of noncoercive behavior. The more you choose the former, the better, we say. There are many political pressures and fears that prevent people from choosing those things, as we think they should. But that does not mean it is every impossible to choose freedom.

The ultimate form of Marxism depends on the succesful transition from a form of government diametrically opposed to it. Whether one can lead to the other is purely speculative, and to anyone with much common sense, fanciful.

As for anarchy in general (and don't forget there are libertoid anarchists, as well!), that's largely a matter of definition. Can you ever decree there is no "state"? Again, getting to some form of pure anarchy requires some sort of radical transformation of society, whether Marxist goals are the motivating impetus or not.

No, whether "libertopia" is possible or not has nothing to do with whether freedom is always preferable to coercion. But whether Marxist anarchy is possible is one of a number important issues one should consider before advocating Marxist based revolution. Big difference.

[joe]

JasonL,

Somehow, I am dense today. I just can't follow your point. Let's not rule out the possibility that I'm not making any sense.

The problem wasn't with the ideology, it was with institutional corruption and an attempt to devolve power.

How about, the ideology prevented the reformers from realizing that the mechanisms they produced to privatize Russia's economy, while functioning one way in a free-market system or something approximating it, would bring about a wholly different result in the context of the existing Russian economy and society?

[joe]

BakedPenguin,

I suppose the takeaway from the Russian example is: establish rule of law, property rights, etc., first, then change the economic system.

Let me say from the beginning that I am not even close to have the "counter proposal" JasonL would like to see.

Your idea sounds like a good start, but I'm not sure the two can be so cleanly separated. How can you have property rights without property? It might be better to think about the two moving in parallel, with each track taking another step in response to the other accomplishing its own step.

[joe]

fyodor,

Was it the form of "transition" that was chosen which doomed both programs (with what you seem to claim are comparable lessons) or the ideological purity behind them?

Good question - it really made me think.

I would say that, in the case of the Bolshies, the problem was not the purity of their adherence to Marxism, obviously, since they violated so many of its precepts. For example, local control, the withering away of the government, even the fundamental idea that the proletarian revolution has to come about after, and as a result of, the "crises of late-stage capitalism."

In the case of post-communist Russia, I'll repeat what I wrote above: the ideology prevented the reformers from realizing that the mechanisms they produced to privatize Russia's economy, while functioning one way in a free-market system or something approximating it, would bring about a wholly different result in the context of the existing Russian economy and society. How to categorize this in your duality, I'm not sure. A surfeit of ideological purity was part of the problem (the richest people and the best dealmakers buy the most stuff, what's more capitalist than that?), yet it manifested itself through the creation of a bad transitional form.

And let's not forget the third possibility - that in both cases, they ideologues were looking to create a utopia that, like the ultra-heavy elements in a partical accelerator, can't survive for long in the real world.

[fyodor]

How about, the ideology prevented the reformers from realizing that the mechanisms they produced to privatize Russia's economy, while functioning one way in a free-market system or something approximating it, would bring about a wholly different result in the context of the existing Russian economy and society?

Maybe. And maybe not. You seem to agree there's no clearcut way to accomplish the task being discussed. And I'd agree. Are there any better examples to point to? If not, the notion that the methods used were the wrong ones, not to mention the notion that it was ideological puritanism that can be blamed for the wrongheaded adoption of said methods, is purely speculative.

[joe]

fyodor,

At least in your case, I agree, the transition you are seeking from where we are now to what you'd like to see isn't a fundamental reordering of society and government, but more like fine-tuning. I would say the same thing about my own beliefs.

We're all supporters of a liberal, democratic republic, with an overlay of a welfare state on top of a mostly market-based system.

When we get to policy, as opposed to abstract principles, we're basically talking about "how much," "how," and "is this an exception to the rule?"

[joe]

...as opposed to the Free Marketeers who tried to reform Russia. They really were going for a fundamental reordering of society.

[Perry]

I think its way too early to make any sort of definitive judgment on Russia and its overlying change in economic fundamentals, but it seems that Russia circa 2010 will be a better place for most Russians than Russia circa 1980 was.

And I think that you can make that same judgment for most places that have advanced capitalist style reforms. For the most part, given a long enough time horizon to sort through the change, people are better off with more economic liberty than less.

[joe]

Are there any better examples to point to?

I suppose we could talk about China and Vietnam.

If not, the notion that the methods used were the wrong ones, not to mention the notion that it was ideological puritanism that can be blamed for the wrongheaded adoption of said methods, is purely speculative.

Of course it's speculative! So, once, was the idea that Shock Therapy would create a free-market-free-minds Russia.

Where I'd say I've got it over the Free Marketeers who tried to fix Russia is that I realize this is a speculative venture, I don't think we've seen the End of History, I'm not arrogant enough to think I know just what to do, and I recognize the wisdom of dictionary-definition conservatism.

Perhaps it's my study of urban planning's history that makes me wary of geniuses who are so certain about their brilliance and rightness that they don't hesitate or listen when they parachute into other people's communities to fix them.

[fyodor]

And let's not forget the third possibility - that in both cases, they ideologues were looking to create a utopia that, like the ultra-heavy elements in a partical accelerator, can't survive for long in the real world.

Please re(?)-read my post of 4:16.

the ideology prevented the reformers from realizing that the mechanisms they produced to privatize Russia's economy, while functioning one way in a free-market system or something approximating it, would bring about a wholly different result in the context of the existing Russian economy and society.

As I just in my cross-post, maybe, maybe not. Show that some other POV would have worked better. I'll agree that free market economics assumes certain facts on the ground that didn't exist in Soviet Russia. These are things that generally have come about spontaneously over thousands of years of social evolution but were destroyed by the Soviets. How to get them back and what to do in the meantime is anybody's guess at this point. If the "ideologues" were wrong, there's no reason at the moment to think they were any more wrong than anyone else. And seeking a functioning capitalist society is hardly utopian. Oh sure, I suppose there were some regulations since the earliest days of the US, so that proves that a "pure" free market cannot exist you say, eh? Whatever. I'm glad to take freedom one issue at a time.

[fyodor]

I suppose we could talk about China and Vietnam.

I don't know much about Vietnam. I do think China is improving economically, but obviously there's a shitload of political repression, and thus I don't know if it's really so much, if any, better than Russia.

[fyodor]

When we get to policy, as opposed to abstract principles, we're basically talking about "how much," "how," and "is this an exception to the rule?"

No offense, but it's hard for me to believe that you don't see the idea of government (to me, coercive means) acting for good as at least equal to that of not interfering with noncoercive behavior, whereas I see the latter as inherently superior and preferable in all but the most extreme cases, if any.

But that doesn't mean we can't peacefully coexist! 🙂

[BakedPenguin]

joe - I also initially didn't get your argument about the absolutism of the laissez faire proponents being a major part in the failure of markets in Russia.

This argument may have some validity - because Russia was culturally very unused to the idea of markets. The "shock" may have been too much for them to digest, although it worked very well in Estonia and Latvia.

Qua absolute free markets, I would disagree. I don't think there's anything systematically problematic to keep a very near absolute free market system from working, other than the religiously derived values of those who believe it uncompassionate.

The problems with "means of production" socialism were inherent in the system - most people won't work if they don't see a benefit for themselves.

[fyodor]

Where I'd say I've got it over the Free Marketeers who tried to fix Russia is that I realize this is a speculative venture, I don't think we've seen the End of History, I'm not arrogant enough to think I know just what to do, and I recognize the wisdom of dictionary-definition conservatism.

End of History???? Yow! I don't know what to make of all that, joe, and maybe it's cause I'm not as familiar as you with Russia's original reform consultants. But look, if they were nutty, they were nutty. Takes all kinds. I engaged you over your implication that someone saying that Russia's current problematic situation is not a result of free market economics because they don't have that is comparable to a Communist saying that the Soviet Union's problems were not reflective of true Communism. It seems much more parsiminous to assume it was either Russia's background or the methodology chosen to deal with that background that led to their current problems than somehow too "pure" or "absolute" a belief in free market economics. That's all I'm saying.

[joe]

fyodoor,

I did read your 4:16 comment. It's no more convicing an hour and a half later.

The uber-marketeers "chose freedom" as the model for what they wanted Russia's economy to look like. The wonderfulness of that vision, and even its very non-coerciveness, did not do a thing to stop the fascist Putin, and in fact, abetted him quite a bit.

Simply saying that you don't have to worry about these things because you are "choosing freedom" doesn't cut it. Who has the choice of "choosing" that the Russian economic system in 2007 will be based on non-coercive behavior? Somebody who wants to start a carpeting business and gets the knock on his door by the 51% shareholder he didn't realize he was in business with, who knows a guy who knows a guy who is Putin's chauffeur and fourth favorite leg-breaker?

The wonderfulness of their freedom-choosing intentions matter about as much as those of the Iraq hawks, as far as the wisdom and efficacy of their strategy goes.

[joe]

Show that some other POV would have worked better.

Or what? You'll dangle me out a high window? It will prove that the tack they chose was inarguably the wisest?

Oh, I see. If the "ideologues" were wrong, there's no reason at the moment to think they were any more wrong than anyone else.

Sigh. Yes, fyodor, your Kung Fu is the best. Those other masters don't have kung fu like your kung fu.

[joe]

BakedPenguin,

I don't think it was the compassionate values he learned in Sunday school that led Putin to hijack the Russian economy. I also don't think it was compassion that led the Russian public to so enthuiastically support his dong so in the last couple of elections.

You talk about the reforms being "too much for them to digest," in much the same way as I see ass-covering Iraq hawks say that, darn it, those Iraqis just weren't good enough for freedom. I don't recall either of these groups saying that their vision was exclusive at the outset - as a matter of fact, I recall them being quite confident in their assertions of the universality of their ideas.

So socialism's impossibility was inherent to the human character, because "most people won't work if they don't see a benefit for themselves." And you really see this as any more "natural" and less culturally determined than the will to power, or the other communitarian drives, that the capitalists keep blaming the general public for allowing to interfere with their dreams?

[Urkobold?]

ARE NONE OF YOU SMART ENOUGH TO RESPOND TO Thomas Jackson's COMMENT?

HE IS GOING TO BE NAMED ZOD'S COMMUNICATIONS DIRECTOR IN A LOVELY CEREMONY TOMORROW. PLEASE CONSIDER ATTENDING. WEAR SOMETHING SLINKY.

i just have one idea for mexico that is for ammerica to buy mexico from mexico than ship all immigrants to new- england ,new york,-new hamp -shire.new -jersy, new orleans than all americanws could just move to mexico and buy up all the land that will be avaible after we help all mexicans transplant to the old u.s.a.and we can injoy the got ya!
thomas Jackson

P.S. quit disrespecting all americans with your propaganda. and realize americans arent going to welcome criminals of any kinD AS OUR NEIGHBORS GET A CLUE our country,s not for sale too any criminal morons

QFT!

[joe]

fyodor,

Francis Fukayama wrote a famous article-then-book called The End of History, which was about how the fall of the Soviet Union "proved" the eternal and universal superiority of free-market capitalism and democratic republicanism. It was an oft-referenced touchstone for both the reformists who sought to seize (in a freedom-loving, non-coercive manner, of course) the "commanding heights" of the Russian economy for capitalism, as well as for the neonconservatives who sought to seize Baghdad.

Fukayama recanted, btw.

[joe]

fyodor,

It seems much more parsiminous to assume it was either Russia's background or the methodology chosen to deal with that background that led to their current problems than somehow too "pure" or "absolute" a belief in free market economics. That's all I'm saying.

Please, don't misunderstand. I'm not saying that the reformists' naivete was soley or even primarily the reason Russia isn't libertopia.

I'm saying, they made an ideologically-based assertion that Russia would become a brilliantly-functioning model of a free, capitalist republic - the real Russia, the one with its thousand-year history et al. - based on their uber-capitalist policy prescription. And they were proven wrong. It doesn't work like that.

No offense, but it's hard for me to believe that you don't see the idea of government (to me, coercive means) acting for good as at least equal to that of not interfering with noncoercive behavior, whereas I see the latter as inherently superior and preferable in all but the most extreme cases, if any.

All else being equal, I'd rather have less government than more. The question is, when is all else equal, or at least close enough for government work? Or non-government work, depending on your pee-oh-vee.

And before you bruise your back too hard, I'll point out someone who cuts an already-poor war widow's pension in half to make Russia's economy look more like a Von Mises textbook is sacrificing her for the greater good, too.

[BakedPenguin]

ok, joe. From your previous posts, I thought you were making these two arguments:

1) the people who brought about market reforms in Russia did so in an ineffective manner.
2) an absolute, or near absolute, free market economy is doomed to failure in the real world.

From your last post to fyodor, it looks like you were saying that 3) it was the way they went about it, given the conditions in Russia at the time. I tried to make a similar argument, which you dismissed as "talk[ing] about the reforms being "too much for them to digest," in much the same way as I see ass-covering Iraq hawks say that, darn it, those Iraqis just weren't good enough for freedom.

My comment about the religious basis for anti-market tendencies was obviously meant as a refutation for #2, not #1. Putin is a scheming, opportunist thug.

If you're including popular support for non-capitalist policies as part of your argument about why near absolute free market states can't exist, you may be right. Envy, tuk-r-jebs, mercantilism, etc., are popular enough ideas all over the world. Capitalism does produce "losers" who see their self-interest threatened by "winners". Politicians who propose policies that aim to support the less successful will always find some supporters.

Absent persistent propaganda / indoctrination / "education" efforts, I think self interest is a far more powerful force than communitarian beliefs. And as I pointed out above, many collective policies are put forward on the unstated assumption that those who support them will benefit.

Getting back to argument #3 - I would agree with that, in some cases it would be better to ease into freer, more voluntary policies.

[joe]

BakedPenguin,

You square the circle by acknowledging that there will be "conditions at the time" in any place and at any time in human history.

Absent persistent propaganda / indoctrination / "education" efforts, I think self interest is a far more powerful force than communitarian beliefs.

Your unstated assumption is that it is in everyone's interest to allow the uninterrupted pursuit of self-interest. And you assume this, even as you acknowledge that there will be "losers" under such a system.

[Happy Jack]

Are there any better examples to point to? If not, the notion that the methods used were the wrong ones, not to mention the notion that it was ideological puritanism that can be blamed for the wrongheaded adoption of said methods, is purely speculative.

They were just following what had worked previously in places like Bolivia and Poland. If I'm not mistaken, joe is arguing for a "go it slow" approach, at least for Russia. But, I'm unable to think of an example where this method had a track record of success. There's plenty of examples of failures of the slow transition model. I will grant though, that there isn't a long history to go by.

[BakedPenguin]

You square the circle by acknowledging that there will be "conditions at the time" in any place and at any time in human history.

And the conditions in places like Estonia, Latvia, Poland, Czechoslovakia were far more condusive to shock therapy than in Russia. Perhaps because unlike Russia, with its thousand year history that you mentioned, was unlikely to be receptive to free market ideas. Recognizing that cultural factors may mean that some countries need different paths to freedom is hardly the same as squaring the circle.

Your unstated assumption is that it is in everyone's interest to allow the uninterrupted pursuit of self-interest.

Sorry. I thought I'd stated this. I think it is in everyone's interest to allow the uninterrupted pursuit of self-interest, as they see it. Libertarian boilerplate - force and fraud, etc.

And you assume this, even as you acknowledge that there will be "losers" under such a system.

There are "losers" under every system, joe, including the market based + safety net system you apparently prefer. What I think is that eventually, most "losers" in a laissez faire system will make out better than some "winners" in less market based systems.

[fyodor]

Okay, okay, joe, no need to get pissy with me, though I'm sure you'll say I started it. I get your not so subtle point that ideologues contributed to screwing up Russia by following their textbooks instead of.....doing the right thing, whatever that was. I'm sure you would have done better with your urban planning background, blah blah.

But, can you please tell me, educate me (and I'm serious), on WHAT "absolutist," "purist" or "uber-capitalist" policies had the effect abetting Putin's fascism or enabling thugs to skim businesses' profits under threat of violence, etc?

If you can't answer me, nothing happens except I get to feel smug that you couldn't answer me. But I think if there's any substance to your argument, you'll be able to come up with some specific examples. Thanks.

[Paul]

How can you have property rights without property? It might be better to think about the two moving in parallel, with each track taking another step in response to the other accomplishing its own step.

I disagree... in part.

You can have property rights without property. They just won't be sophisticated. You can have, for instance, a rock solid definition and limitation for say, eminent domain, before real property is widely owned. Where property rights get complex is once large amounts of property is owned. On the other hand I agree that complex property rights, and interpretations thereof must evolve with the ownership of property. Ever see water rights law in the southwest? That's not the kind of stuff you figure out over night.

[nmg]

"It's striking how much the effort to produce a free-market Russia looks like a mirror image of the effort to produce a socialist Russia."

Minus the gulag I suppose.

nmg