Anarcho-capitalism VS Objectivism

[Gary Fisher]

@Francisco Ferrer

There is nothing for those computers to calculate. As I said "well-being" in the subjective sense is a convenient fiction that economists use to study aggregate human behavior. It does not correspond to anything in reality.

Subjective utility is a placeholder for a multitude of objective values. It is a scientific fact that a person needs food to live. It is not a scientific fact that a given person derives x amount of utility from eating a unit of food.

In a soviet style economy, the planners would decide how much to produce and what to produce with reference to their objective goals. For example, if they want their people to be alive, then they will need to produce enough food to feed them. It's not by any means an impossible calculation. However, the objective goals of soviet planners tended to be mostly about keeping their jobs and glorifying the communist party, so production tended to reflect that instead. A soviet planner also couldn't keep the stuff he produced, and how much he got paid depended mostly on his loyalty to the communist party, so long term investment took a back seat to the personal consumption of party members.

A capitalist economy is really just a command economy where the planners get to keep what they earn and have complete control over the things they own. Their only objective goal is to turn a profit rather than to glorify the party or whatever. Since capitalists can keep the profit they make, they are free to re-invest it back into the economy. A system of free enterprise therefore encourages economic investment.

Note that, in order to actually run a successful business in a capitalist economy, we need a business PLAN. Our objective goal is to turn a profit, and we make our plans accordingly. We do not just produce something and then figure out consumer demands and prices later according to what the market dictates. Instead, we shape the market according to our needs. Every last detail is meticulously accounted for before any purchases or sales are made.

[Francisco Ferrer]

@Francisco Ferrer

There is nothing for those computers to calculate. As I said "well-being" in the subjective sense is a convenient fiction that economists use to study aggregate human behavior. It does not correspond to anything in reality.

Subjective utility is a placeholder for a multitude of objective values. It is a scientific fact that a person needs food to live. It is not a scientific fact that a given person derives x amount of utility from eating a unit of food.

In a soviet style economy, the planners would decide how much to produce and what to produce with reference to their objective goals. For example, if they want their people to be alive, then they will need to produce enough food to feed them. It's not by any means an impossible calculation. However, the objective goals of soviet planners tended to be mostly about keeping their jobs and glorifying the communist party, so production tended to reflect that instead. A soviet planner also couldn't keep the stuff he produced, and how much he got paid depended mostly on his loyalty to the communist party, so long term investment took a back seat to the personal consumption of party members.

A capitalist economy is really just a command economy where the planners get to keep what they earn and have complete control over the things they own. Their only objective goal is to turn a profit rather than to glorify the party or whatever. Since capitalists can keep the profit they make, they are free to re-invest it back into the economy. A system of free enterprise therefore encourages economic investment.

I don't follow you. In Post #155, you wrote, "There is no such thing as 'well-being' in an objective sense."

But now you write, "In a soviet style economy, the planners would decide how much to produce and what to produce with reference to their objective goals." So "well-being" cannot be objective, but apparently certain other goals can be, depending, I suppose, on whether you approve of those goals or not.

While the "well-being" of the typical comrade was of no importance in the U.S.S.R, the "well-being" of the inner party members was held to be one of utmost national importance.

Note that, in order to actually run a successful business in a capitalist economy, we need a business PLAN. Our objective goal is to turn a profit, and we make our plans accordingly. We do not just produce something and then figure out consumer demands and prices later according to what the market dictates. Instead, we shape the market according to our needs. Every last detail is meticulously accounted for before any purchases or sales are made.

Business plans are based on market research, and real markets exist only where there are prices which respond to supply and demand. Estimates of profit and therefore decisions to invest are based on a mechanism of prices free to rise or fall depending on conditions. No such price feedback exists under socialism where prices don't have to respond to economic conditions because there are no profits to be made. Again see Mises and Hayek.

For example, if they want their people to be alive, then they will need to produce enough food to feed them. It's not by any means an impossible calculation.

Really? Do the socialist planners know in advance how many sirloin steaks, strawberries, and bottles of brut champagne to put on every comrade's table each month? How do they know this? Does the socialist-designed super-computer give them a detailed list of what to put into production?

Or perhaps the only goal is to keep the population from dropping like flies. In which case, perhaps a diet of one quart of thin gruel per comrade per day would suffice. Who needs more when the "well-being" of the proletariat has been shown to be entirely subjective and illusory?

However, the objective goals of soviet planners tended to be mostly about keeping their jobs and glorifying the communist party, so production tended to reflect that instead. A soviet planner also couldn't keep the stuff he produced, and how much he got paid depended mostly on his loyalty to the communist party, so long term investment took a back seat to the personal consumption of party members.

Yes, as I indicated earlier, the achievement of the much-vaunted Soviet industrialization of the 1920's-30's was not an improved society or standard of living but stoking the ego of the dictator and his commissars.

A capitalist economy is really just a command economy where the planners get to keep what they earn and have complete control over the things they own. Their only objective goal is to turn a profit rather than to glorify the party or whatever. Since capitalists can keep the profit they make, they are free to re-invest it back into the economy. A system of free enterprise therefore encourages economic investment.

Okay, if we've got a command (i.e., planned) economy here, how many plasma TV's, jet-skis, sets of golf clubs, and Hawaiian airfares have I been allotted in the current five-year plan?

[Wolf DeVoon]

A capitalist economy is really just a command economy where the planners get to keep what they earn

Toilet bowl theory of supply and demand. If you build it, they will poop.

[Gary Fisher]

@Francisco Ferrer

Let's say we know that a customer is willing to trade 3 dollars for 3 apples today, and we are going to sell him some tomorrow. What does this knowledge tell us? Absolutely nothing! By tomorrow, his subjective wants could change so that he might want 30 apples for 3 dollars or 100 or 2, just as easily. In economics, consumer wants are assumed to be an unquestionable given. A starting assumption used to analyze idealized trades. In reality, human wants are determined by their circumstances and objective facts about their psychology. For example, if a hungry person walks into your store, you don't have to know anything about how much he is willing and able to pay for this or that amount of every type of food, you just offer him an amount of food you deduce he might want for some price you think he might pay and see whether or not he buys it. You would not, for example, try to sell him a washing machine. The fact that he is hungry and human are useful objective facts, and these can be used by a businessmen to create a plan that would turn a profit.

Similarly, in a command type economy, a planner could use the exact same reasoning to figure out how much food to produce. If a quart of thin gruel per comrade is sufficient to meet the caloric needs of the country and that is the planner's goal, then what's the problem?

Your criticism of the Soviet economy is like going up to a guy building a car and saying "wow, what an ineffective ship." The soviet economy was never intended to work by maximizing profit so we shouldn't expect it to do so. There is no need for a price feedback mechanism in order to provide one quart of thin gruel for each comrade. On the other hand, capitalist economies are not about maximizing anyone's subjective "well-being" either. They are about turning a profit. And profits are an objectively measurable quantity which are related to prices. If you want maximize profits then you obviously need to pay attention to prices (which in turn are determined by other objective factors). If it isn't, then you don't. It's as simple as that.

[Gary Fisher]

Sorry, that last sentence should say: if your goal is to maximize profits then...

[Selene]

@Wolf DeVoon The Soviet Union was actually quite successful, to an extent. They managed to industrialize very quickly and successfully kept Western Powers out of Eastern Europe. What ultimately did them in was the lack of the critical component of free enterprise. Without that, business (in the form of a high ranking position in the bureaucracy) was just a privilege that the state bestowed upon a party member in exchange for his loyalty to the current regime. It wouldn't make sense for them to invest any value generated from the activity of the economy, since it all belonged to the state anyway, and how much of the value you made you got back depended on how much the party leadership liked you rather than how well your little sector of the economy actually performed.

Really Gary?

In late 1927 a severe grain crisis emerged as collections fell by a third over the previous year. Historians are divided on the primary cause of the crisis, but explanations range from deliberate engineering by Stalin to undermine support for the NEP and economic freedom, to erroneous price policies and underinvestment in agriculture. Regardless, Stalin framed it as a failure of the free-market allowances of the NEP and a clashing of class interests. He accused the Kulaks (wealthier peasants less receptive to Marxist-Leninist ideals) of withholding grain to undermine the revolution.[2]

Stalin knew that hardship and confusion from the grain crisis would escalate into social unrest unless the government was seen to be doing something.

On 28^th May 1928 Stalin made a speech declaring that his five year plan of rapid industrialisation would transform the living standards of the people of the Soviet Union. If the NEP focused on the repairing of a broken society, Stalin’s first five year plan celebrated the building of a new one.

A year later the plan was formally adopted at the All Union Congress of Soviets. Retrogressively effective from October 1928, it ambitiously predicted a 236% increase in gross industrial output and 70% increase in real wages by 1933.[3]

The essence of the plan was large-scale, centrally-planned mobilisation of labour and capital in urban areas and agricultural collectivisation. Stalin envisaged a moneyless, industrialised, socialist economy; with virtually no private market activity or class differentiation. The use of violence and coercion against uncooperative peasants was common and Kulaks were deported en masse to Siberia.[4]

That the Soviet Union was coming from such a dismal starting position did not worry Stalin. He realised the country could simply import the technical standards achieved by years of trial and error in capitalism.[5] The need for workforce skills could help explain why education was a focal point of the first five year plan. Primary education became near universal in urban areas and there was a 450% increase in the number of higher education students over the duration of the plan.[6]

However, by 1930, administrative chaos and resource shortages created an economic crisis. From April to June 1930 the gross output of large-scale industry dropped by 4.9%. The political fallout was such that some individuals within the party called for decentralisation reforms and market incentives. Stalin labelled these voices as “enemies of socialism”, and proclaimed that the crisis would be overcome by further industrial acceleration and stricter controls on labour discipline.[7]

An agricultural crisis quickly developed concurrently. Output declined yet state procurement rose by 4% from 1931 to 1932, further demoralising farmers and hastening the decline in output. A severe shortage of food soon followed and mass starvation afflicted many parts of the western USSR.[8] Historian Robert Conquest estimated a death-toll of 7 million lives; including 5 million in Ukraine alone, where it is now known as the Holodomor (hungry mass-death).[9]

By mid-1933 the famine appeared over. Productivity began to increase as the rapid influxes of unskilled peasants from rural areas refined the skills necessary to work in large-scale industry. By the start of 1934 the economic and agricultural crises were fully overcome. The feeling among the party was victorious and drafts for a second five year plan were in motion.[10]

A...

[Selene]

Some people argued that Duranty had been involved in a cover-up concerning the impact of the economic changes that were taking place in the Soviet Union. An official at the British Embassy reported on the 21st June 1932: "A record of over-staffing, overplanning and complete incompetence at the centre; of human misery, starvation, death and disease among the peasantry... the only creatures who have any life at all in the districts visited are boars, pigs and other swine. Men, women, and children, horses and other workers are left to die in order that the Five Year Plan shall at least succeed on paper."

http://spartacus-educational.com/RUSfive.htm?menu=RussiaSU

[Gary Fisher]

@Selene

I'm afraid I don't see the issue.

[Selene]

@Selene

I'm afraid I don't see the issue.

It is fine, I am not surprised.

[Brant Gaede]

@Selene

I'm afraid I don't see the issue.

It is fine, I am not surprised.

Adam, if Gary doesn't see the issue he doesn't see the issue. If it's the truth he doesn't deserve condescension. If it's a lie you know is a lie he deserves something else, something worse.

--Brant

my paternal ancestors who stayed in Russia were murdered by Stalin in Ukraine

[Brant Gaede]

@Wolf DeVoon The Soviet Union was actually quite successful, to an extent. They managed to industrialize very quickly and successfully kept Western Powers out of Eastern Europe. What ultimately did them in was the lack of the critical component of free enterprise. Without that, business (in the form of a high ranking position in the bureaucracy) was just a privilege that the state bestowed upon a party member in exchange for his loyalty to the current regime. It wouldn't make sense for them to invest any value generated from the activity of the economy, since it all belonged to the state anyway, and how much of the value you made you got back depended on how much the party leadership liked you rather than how well your little sector of the economy actually performed.

I assume you are addressing and not quoting Wolf.

Substitute Nazi Germany for the Soviet Union and change some particulars, then make and defend your statement.

--Brant

[Gary Fisher]

@Brant Gaede

Nazi Germany was also successful before the war. After WWI, and the Treaty of Versailles, Britain, France, and the US started buying out German industry, and were attempting to create captive market in Central Europe for their exports as well as a source of cheap labor. Western industrialists, including US industrialists such as Henry Ford, also started supporting various extremist political groups, both the communists and the Nazis among them. In other words, they were engaging in half-assed nation building, rather than keeping troops in Germany and making sure that only a leader friendly to the West could emerge. Well, the German people weren't stupid. They saw and understood what was happening to their country. This explains why such extreme nationalism as that which the Nazis offered was attractive to the German people. Hitler eventually gained control of the country, but as it turned out, he had his own ideas about how things should be run.

The Nazis were successful in that they managed to re-industrialize Germany and reboot its economy. But like the Soviets, despite their successes, they had no interest in freedom.

[Brant Gaede]

@Brant Gaede

Nazi Germany was also successful before the war. After WWI, and the Treaty of Versailles, Britain, France, and the US started buying out German industry, and were attempting to create captive market in Central Europe for their exports as well as a source of cheap labor. Western industrialists, including US industrialists such as Henry Ford, also started supporting various extremist political groups, both the communists and the Nazis among them. In other words, they were engaging in half-assed nation building, rather than keeping troops in Germany and making sure that only a leader friendly to the West could emerge. Well, the German people weren't stupid. They saw and understood what was happening to their country. This explains why such extreme nationalism as that which the Nazis offered was attractive to the German people. Hitler eventually gained control of the country, but as it turned out, he had his own ideas about how things should be run.

The Nazis were successful in that they managed to re-industrialize Germany and reboot its economy. But like the Soviets, despite their successes, they had no interest in freedom.

I didn't think you had the balls. I'll reply tomorrow when I'm sober.

--Brant

damn--now I have to work!

[Wolf DeVoon]

US industrialists such as Henry Ford, also started supporting various extremist

[German] political groups, both the communists and the Nazis among them.

You're a total fool, Fisher.

Ford remained a staunch Wilsonian and supporter of the League of Nations. ...a series of strokes in the late 1930s had left him increasingly debilitated, and his mental ability was fading. Ford was increasingly sidelined, and others made decisions in his name... The first plants in Germany were built in the 1920s with the encouragement of Herbert Hoover and the Commerce Department, which agreed with Ford's theory that international trade was essential to world peace. [Wikipedia]

Henry Ford’s disdain for Bolshevism and communism has been well documented... For Ford, his capitalist machine

was a way to combat Bolshevism by displaying capitalist prowess. [debatingbolshevism.wordpress]

As a private company, Ford Motor Company had no stockholders to satisfy and no dividends to pay... When My Life and Work appeared in German translation in early 1923, Weimar Germany became “infatuated” with Fordism, as the historian Mary Nolan put it. Ford seemed to offer something for everyone—employers looked to Fordist rationalization, unions to Ford’s high wages, and conservatives to the Fordist promise of social harmony. But Fordism was hardly a uniquely German predilection. Ford’s contemporaries across the globe showered Crowther’s Ford book with praise... Rumors, according to which Ford financially supported Hitler’s party in the 1920s, have never been verified by evidence—and their accuracy seems unlikely, given Ford’s general aversion to credit and his consistent refusal to honor monetary solicitations from all quarters. [stephan Link, Harvard University]

[Gary Fisher]

ord had opposed America's entry into World War II[35][46] and continued to believe that international business could generate the prosperity that would head off wars. Ford "insisted that war was the product of greedy financiers who sought profit in human destruction"; in 1939 he went so far as to claim that the torpedoing of U.S. merchant ships by German submarines was the result of conspiratorial activities undertaken by financier war-makers.[47] The financiers to whom he was referring was Ford's code for Jews; he had also accused Jews of fomenting the First World War (see the section on his anti-Semitism below).[35][48] In the run-up to World War II and when the war erupted in 1939, he reported that he did not want to trade with belligerents. Like many other businessmen of the Great Depression era, he never liked or entirely trusted the Franklin Roosevelt Administration, and thought Roosevelt was inching the U.S. closer to war. However, Ford continued to do business with Nazi Germany, including the manufacture of war materiel.[35] Beginning in 1940, with the requisitioning of between 100 and 200 French POWs to work as slave laborers, Ford-Werke contravened Article 31 of the 1929 Geneva Convention.[35] At that time, which was before the U.S. entered the War and still had full diplomatic relations with Nazi Germany, Ford-Werke was under the control of the Ford Motor Company. The number of slave laborers grew as the war expanded although Wallace made it clear that companies in Germany were not required by the Nazi authorities to use slave laborers.

[Wolf DeVoon]

This post is hidden because you have chosen to ignore posts by Gary Fisher.

[Selene]

ord had opposed America's entry into World War II[35][46] and continued to believe that international business could generate the prosperity that would head off wars. Ford "insisted that war was the product of greedy financiers who sought profit in human destruction"; in 1939 he went so far as to claim that the torpedoing of U.S. merchant ships by German submarines was the result of conspiratorial activities undertaken by financier war-makers.[47] The financiers to whom he was referring was Ford's code for Jews; he had also accused Jews of fomenting the First World War (see the section on his anti-Semitism below).[35][48] In the run-up to World War II and when the war erupted in 1939, he reported that he did not want to trade with belligerents. Like many other businessmen of the Great Depression era, he never liked or entirely trusted the Franklin Roosevelt Administration, and thought Roosevelt was inching the U.S. closer to war. However, Ford continued to do business with Nazi Germany, including the manufacture of war materiel.[35] Beginning in 1940, with the requisitioning of between 100 and 200 French POWs to work as slave laborers, Ford-Werke contravened Article 31 of the 1929 Geneva Convention.[35] At that time, which was before the U.S. entered the War and still had full diplomatic relations with Nazi Germany, Ford-Werke was under the control of the Ford Motor Company. The number of slave laborers grew as the war expanded although Wallace made it clear that companies in Germany were not required by the Nazi authorities to use slave laborers.

And is this your statement?

Or, are you going to try to follow a veneer of scholarship and cite a source, with a link?

OL has a general rule about providing a source.

You know, kinda like not walking on the white rug with your muddy boots.

I know when I go to my Muslim, or, Oriental friends, or, clients homes, we leave our shoes at the door.

A...

[Gary Fisher]

It's from this wikipedia article:

http://en.wikipedia.org/wiki/Henry_Ford

[Selene]

It's from this wikipedia article: http://en.wikipedia.org/wiki/Henry_Ford

Thank you Gary.

[Francisco Ferrer]

@Francisco Ferrer

Let's say we know that a customer is willing to trade 3 dollars for 3 apples today, and we are going to sell him some tomorrow. What does this knowledge tell us? Absolutely nothing! By tomorrow, his subjective wants could change so that he might want 30 apples for 3 dollars or 100 or 2, just as easily. In economics, consumer wants are assumed to be an unquestionable given. A starting assumption used to analyze idealized trades. In reality, human wants are determined by their circumstances and objective facts about their psychology. For example, if a hungry person walks into your store, you don't have to know anything about how much he is willing and able to pay for this or that amount of every type of food, you just offer him an amount of food you deduce he might want for some price you think he might pay and see whether or not he buys it. You would not, for example, try to sell him a washing machine. The fact that he is hungry and human are useful objective facts, and these can be used by a businessmen to create a plan that would turn a profit.

I do not know of a single reputable economist or entrepreneur who treats "consumer wants [as] an unquestionable given." Anyone who has had experience in the restaurant business, for example, understands the fickleness of customer preferences. Promoting specials, additions to the menu, and wholesome ingredients are attempts to keep the customer from going elsewhere or eating at home.

Similarly, in a command type economy, a planner could use the exact same reasoning to figure out how much food to produce. If a quart of thin gruel per comrade is sufficient to meet the caloric needs of the country and that is the planner's goal, then what's the problem?

"What is the problem?" is what the admirers of the great "workers' paradise" in Russia are still asking themselves. Why would the proletariat of Russia, Poland, Hungary, Czechoslovakia and elsewhere demand the luxury goods of the decadent West, when the commissars were giving them Sputnik and quarts of thin gruel?

In fact, socialist planners do not use anything like the logic of the entrepreneur. The latter works at maximizing his customer base by improving the value of his products. The former have a guaranteed customer base. The Soviet store manager gets the same wage whether the stock moves or gathers dust.

Your criticism of the Soviet economy is like going up to a guy building a car and saying "wow, what an ineffective ship." The soviet economy was never intended to work by maximizing profit so we shouldn't expect it to do so. There is no need for a price feedback mechanism in order to provide one quart of thin gruel for each comrade.

If only someone had explained that to East German citizens, there might have been no need for the Berlin Wall.

On the other hand, capitalist economies are not about maximizing anyone's subjective "well-being" either. They are about turning a profit. And profits are an objectively measurable quantity which are related to prices. If you want maximize profits then you obviously need to pay attention to prices (which in turn are determined by other objective factors). If it isn't, then you don't. It's as simple as that.

You have to pay attention to prices--and to consumer preferences. Their inability to satisfy consumer preferences is why the Soviet Politburo is now in the dustbin of history.

[Gary Fisher]

@Francisco Ferrer

Let me ask you a question. How could you test the hypothesis that people have subjective "well-being"?

[Brant Gaede]

@Brant Gaede

Nazi Germany was also successful before the war. After WWI, and the Treaty of Versailles, Britain, France, and the US started buying out German industry, and were attempting to create captive market in Central Europe for their exports as well as a source of cheap labor. Western industrialists, including US industrialists such as Henry Ford, also started supporting various extremist political groups, both the communists and the Nazis among them. In other words, they were engaging in half-assed nation building, rather than keeping troops in Germany and making sure that only a leader friendly to the West could emerge. Well, the German people weren't stupid. They saw and understood what was happening to their country. This explains why such extreme nationalism as that which the Nazis offered was attractive to the German people. Hitler eventually gained control of the country, but as it turned out, he had his own ideas about how things should be run.

The Nazis were successful in that they managed to re-industrialize Germany and reboot its economy. But like the Soviets, despite their successes, they had no interest in freedom.

I didn't think you had the balls. I'll reply tomorrow when I'm sober.

--Brant

damn--now I have to work!

On review a further reply by me is not needed. Others have weighed in. I generally prefer a different approach to ideas.

--Brant

[Francisco Ferrer]

Mises defined "well-being" in the linked article:

well-being, that is, add something to the wealth available without impairing the satisfaction of wants which [one] considers more urgent.

No, there is no yardstick for determining what socialists and fascists place such great store in: national pride, sense of community, brotherhood, inner glow, etc. But given that the by-products of Lenin and Stalin's large scale experiment included torture, Siberian prison camps, and mass murder (20 million), we can well wonder if the average Soviet's citizens inner glow exceeded the average American's to such an extent that a drop in and stagnation of standard of living were worth it.

[Gary Fisher]

@Francisco Ferrer

The fact that Soviet Citizens were tortured, brutalized, enslaved, starved, murdered, and, perhaps worst of all, enjoyed a lower standard of living, tells us absolutely nothing about their subjective "well-being". Who knows, maybe they were masochistic and enjoyed having these things done to them? According to the theory of subjective value those preferences would not be any less valid than any other preferences.

I think the subtext of your argument demonstrates the absurdity of the subjective theory of value perfectly. You want to argue that it is an objective fact that living in a communist country like the Soviet Union is less preferable than living in a capitalist, free-market society. However, the subjective theory of value does not permit one to conclude that one thing would be objectively preferable to anything else, for obvious reasons. So you've conveniently swept the issue under the rug by invoking OBJECTIVE factors such as torture, prison camps, mass murder, and standard of living.

[Wolf DeVoon]

There you go, have Fisher explain philosophy of law.