@Graham;

Power without transparency tends to be a corrupt power.

What you say is quite agreeable, in a sense that you are forced to believe in the distributional properties of capitalism with legitimacy on the State which makes it nowhere to term the the present capitalism is a laissez-faire system, I suppose even in Canada?

Well, these problems are more characteristic of economies in transition- or closed door economies. How resources are managed, distributed, sold and the wealth fund generated gets distributed, is perhaps-the age old problem of political systems, cannot afford to disagree more on this...

Best, Sidharta

As we know as economists, pure capitalism is an efficient resource allocation mechanism when the necessary conditions hold. When they do not, government intervention is warranted for delivering efficient and equitable outcomes that adhere to consumer sovereignty. When a mixed economy struggles over the role of government, if any, in markets for public goods that do not meet the necessary conditions for efficient outcomes through the market system, capitalism comes under attack. Because there are too many who refuse to let go of the market system, despite its failures. The opinion of one US health policy analyst. :-)

Welcome Debra to my post.

Yes you are true to correctly assert the present messy condition of the US healthcare policy, it has become more political as well economical to keep aside promises which do not cost money to make, but are (indeed) costly by themselves for implementation, yet much essential.

There are indeed failures in the policy framework of capitalism, but not entirely that capitalism has become too anarchic, may be it has become bit archaic. So we need a change, a different form of capitalism, where, everyone's sense of belonging to such a system shall be worthy. It is not the fault of capitalism but may be the fault of its patrons, since it is human intentions which frame policies, where, the latter molds the former into its own shape.

I was discussing the same with Graham Burnett above, where, he also thinks that resources are misappropriated and such misallocations are being perpetuated by intentional groups with specific interests, well may be foreign, but it doesn't matter who is it, yet it matters why it should be. The reason is lack of awareness about political transparency, and lack of understanding of good policy potentialities. It is becoming more conservative than what capitalism standing on the shoulder of Democracy was destined to become: more liberal--which is capitalism's essence of policy freedom.

I have an small piece of article to share about.

Regards,

Sidharta Chatterjee

Defending Capitalism: The Essence of Economic Freedom

By Sidharta Chatterjee

Introduction:

The sense of ownership is something very different from the one-the sense of belonging to something. However, the sense of ownership should be based on some normative paradigm of freedom and liberty to hold or dispose off of one's ownership of property. Property encourages rationality (See Richard Weaver) and culminates the sense of responsibility. Systems of principles based on which such ownership is mandated should have some normative moral value-which shapes ownership of wealth or capital. The right to private property forms the bedrock of economic freedom, and that freedom translates into self-responsibility which moulds into concrete policies of how to hold or dispose of that private property. It is true that such a freedom to hold private property is mandated in the social space and political system to which the beholder belongs to. In fact, Locke(1632-1704) argued that people have rights, such as the right to life, liberty, and property, that have a foundation independent of the laws of any particular society. To enjoy a stable and comfortable economic environment, it is essential to have in place a political system which creates opportunities to own, trade and transfer/dispose off one's own property at will. Freedom of private property create opportunities to trade, that is, how much one is expected to own or sell to others, since, everyone cannot own everything, since, there would be no trade.

Free Trade Opportunities:

The opportunity to trade and own property depends on the principles of the free society (See Fred Hutchinson), and on the degree of freedom that the political institutions practice. Efficiency of a political system determines the course of trade and preconditions of free trade. However, ownership rights bring in personal privileges, to that extent only where the owner of wealth capital should derive advantage which comes from the wealth, that is, the power to buy what and how much of certain goods and services. Indeed, there remains much risk to the distortion of advantages which an owner may or may not derive which comes from his wealth- power to influence by wealth or buy corruption out of his wealth. The goodness in men and women determines the degree of morality and moral excellence that he or she practices. He can choose to buy pornography materials or afford a good meal to a hungry person, or donate or buy something other essential or luxury services. It is up to the owner of capital how he would spend his wealth, rationally. Human moral values shape human polity, and social norms. Given in a free society, one is free to buy and sell anything, good or bad, and everything that he has or produces, governed by institutional norms and ethical directives.

Property Rights: Equal for the base and the Noble

Holding property as well rights on property enables one to exercise ones' rational capacity or one's faculty of reason. Nobody stops a poor man from becoming rich by exploiting the resources provided by the norms of capitalism. Capitalism endorses the principles of entrepreneurship, which was rather undermined or ill-defined by Marx. According to Sadowsky:

"The owner of property performs an entrepreneurial function. He must predict the future valuation that he and others will make and act or not act accordingly. He is rewarded not primarily for his work, but for his good judgment"--James Sadowsky.

Human desires are reflected in the markets, and the demand determines which goods and services require to be produced. Effective pricing systems in a free market economy inform producers about consumer needs and desires. So, in other words, human necessity and desire guides production in a free market economy. Now, what factors ought to determine and model human desires, or how human wants and desires are shaped?

Capitalism, standing on the shoulders of democracy, facilitates such freedom and moral excellence throughout a culture that thrives in property rights and right to exercise one's free will. Capitalism is not anarchic; yet it is but to anarchists; neither it mandates exploitation of workers; rather it is mandated by those who have such moral inadequacies, particularly, the norms and ethics which form its foundational stones. One should be able to differentiate between capitalism and capitalists.

As William Shakespeare has mentioned:

"Wisdom and goodness to vile seem vile: Filths savour but themselves"

Capitalism is a political ideology, an institution governed by certain ethical norms which are shaped by human morality, for collective welfare and good. A capitalist's desire may be varied; good or bad. Yet, he is to follow the norms of capitalism which is meant for shared interests and wellbeing.

Criticism against attacks: Defenses

Indeed, capitalism is often attacked for being anarchic, neglects the poor where workers are exploited. It is much blamed for creating wealth inequality and disparity in wages. However, under capitalism, one is free to learn to invent and enjoy its use. One is free to produce and consume. One is free to employ workers and free to let them off. The market determines the price of goods and demands for services, and determines wages and parity. Nobody “dictates” what the wages should be; it is determined by free market forces. So, where originates the question of exploitation? Certainly, this is in vague in those economies having political systems other than capitalism; in communist nations, nations under dictators, who are factually, enemy of the rights of the property owner. Consider land-grants and property holdings in systems other than capitalism, where, individual feudal lords generally held lands and properties disproportionately, and not determined by free market forces, as of, how much you can own and hold in a free market? The competitive forces in free market determine individual property ownership and development.

Summary:

Capitalism enforces the freedom to desire by removing restrictions on human economic actions where human freedom becomes inseparable from economic freedom. Capitalism is the evolving pillar of economic freedom, and Democracy sustains capitalism. Capitalism is the present attribute of democracy. If capitalism does not survive, another attribute may take its place, but with similar attributes, somewhat modified, through market evolution. For as true essence of 'Promethean' capitalism, precisely described as a pure free-market capitalism, fully-consensual free enterprise and exchange for every individual.

References:

Aaron, Richard, 1937, John Locke, Oxford: Oxford University Press.

Edward Younkins : Capitalism and Morality

Richard M. Weaver: The Ethics of Rhetoric

http://www.promethea.org/Misc_Compositions/TextVersions/text_PrometheanCapitalism.html

http://www.renewamerica.com/columns/hutchison/071001

http://www.shakespeare.mit.edu/lear/lear.4.2.html

Stanford Encyclopedia.

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(This was my recent reply to economist Juan José Lara's article post about capitalism, not yet published or public_) I am just sharing this article written by me here.

Much Thanks,

Sidharta

Does capitalism exploit the worker? Sure, that is the foundation of its success. Does it ignore the poor? No, I dont think so. I think it pays attention it just doesnt want to improve the conditions of the poor. It pays attention because the more impoverished the population the more value that can be extracted, whether this is good or bad is subjective. I'm not an economist but I'd say that there are some very significant indicators that capitalism has grown more ego-centric and fast easy money is increasingly what drives it. It seems to me that the production process, at least in the U.S. is being increasingly circumvented via the finance sector. We're now trying to squeeze value out of thin air with "financial products" (a misnomer). If we make them more complex we can avoid detection and law enforcement and so we've been spinning financial boondoggles and whenever we're questioned about the legality of what we're doing we say oh you just dont understand the complexity of what we're doing. What allowed Madoff to do what he did, what allowed Enron JP, BoA, Barclays,GoldmanSachs etal., what allowed them all to do what they've been doing is the mystical notion that they are the smartest guys in the world and that if we dont agree with them...its simply because we cant grasp what's going on. If we look at our own democracy in the U.S. we see that with Citizens United our election process is now for sale more than ever...but its price has gone up. We've reached the era of "too big to fail"...and its a self-fulfilling prophecy...

I think that this question has interesting relevance to the current climate change debate and the notion of how to handle pure public goods such as the ozone layer when dealing with non-point source pollution.

In any debate or discussion concerning capitalism, its important to seperate the various streams of the concept. I agree with Debra Dwyer and that the concepts of pure free market capitalism truely only result in efficient resources allocation in a first best scenario, i.e. perfect market knowledge, zero transaction cost.

Unfortunately we operate under a second best or worse system in most markets and the occurance of market failure are prevelant, I believe that it is when the government does not interven in markets that this inequality occurs not the alternative.

However it is all to often when statutory bodies do intervene that the public believe capitialism is under attack.

@Jason; I'm sure people who support pure free market capitalism, do support the free international exchange of labor. However what you are asking is "why do statutory bodies prohibit its movement" thats more a question related to equity and politics rather than economic efficiency. Its not a contradiction for govt. policy as they would mostly support the path of paternalism.

Hayek explained the essence of economic freedom in the following way. He describes the virtues of the market game, explaining it as a ,,game which increas the chances for all “, or as ,, the game of wealth creation (ceating the wealth)”. Hayek `s economic theory shows the conditions under which institutions are constrained and complemented to the market, in order to avoid instability, inequality and poverty

Thanks for sharing your comments.

One question comes into my mind following all your comments is; should government intervention be optimized, or increased to allocate resources more efficiently under capitalism, including labor?

Best Regards,

Sidharta

Generally, conscious design is justified, if it is possible to use the knowledge accumulated in the experience. But, whenever the research ventures are found in the area in which previous advances in knowledge can not provide any guidance, there is no benefit from what is already known, but one must go blindly with bound to find out only ex post what works and what does not (work).

Best Regarts

Miloš

@Fabian: I dont see it as being simply an issue to be relegated to politics. The name of this thread is "Defending Capitalism". It seems quite relevent a question to ask given the forum. But even if we look at capitalism only in its mechanics we see this contradiction. If something is for sale, such as labor power, why can it not be sold on the world market with all the freedom of say, a ton of steel? I dont mean to imply that their are no restrictions on capital as well. But it seems to be a universal restriction with labor power. Outside of the margins of labor power we see a universal barrier to entry along all state borders.