Re: capitalist religion (was: NANO: _Forbes_ cover story)

From: Technotranscendence (
Date: Wed Jul 18 2001 - 07:50:15 MDT

On Tuesday, July 17, 2001 10:17 PM Miriam English
>>It seems your analogy actually works against your convictions.
> Hmmm. :-( This is why I kept reminding people that I am *not* against
> capitalism -- I am just scared of people adhering to it as a religion.
> "Capitalism alone will work... really it will. Have faith."

I was not saying your conviction was "against capitalism," but it was
certainly for a mixed economy.

Have I here or anywhere told you to "[h]ave faith" in the free market? I've
actually provided arguments and data (or places to look up data). You have
not really answered these.

> A quick response to your point of bank deregulation: The biggest disaster
> in Australian banking was when our government of idiots swallowed that
> propaganda about deregulation, hook line and sinker. They deregulated the
> banks, and since then banking costs to the consumer have spiraled upward,
> the banks have been closing local branches everywhere, and they have been
> making record profits.

I'd need to know more details about the case -- and I suspect you need to

In the US, in the late 1970s and early 1980s, the Savings & Loans were
"deregulated." Specifically, restrictions were loosened on what they could
invest in. However, the FSLIC -- deposit insurance for the Savings &
Loans -- was NOT disbanded. In other words, these banks -- the Savings &
Loan institution -- were allowed to invest more wildly without having truly
to pay the cost of this. What did this encourage? Riskier behavior,
eventually leading to the S & L Crisis, the FSLIC went broke because of all
the bailouts and, to prevent the whole system from collapsing, the Federal
government bailed out the FSLIC with taxpayer money. (See Catherine
England's "The Savings and Loan Debacle" and Lawrence J. White's "What has
been Braking U.S. Banks?" in _Critical Review_ 7(2-3) [Spring-Summer 1993]
for a more detailed analysis of this crisis. _Critical Review_'s web site
is at

Most comentators believed that the Savings and Loan Crisis was caused by
deregulation and from that derived the notion that deregulation does not
work. However, when you look at the data, it's deposit insurance that is to
blame and the particular deregulatory path taken with regards to the Savings
and Loans enhanced the problems with deposit insurance. Yes, Savings and
Loans, and in fact all banks, showed be allowed to diversify, BUT they
should also bear the costs of such. Removing both the limits on their
investments _as well as_ deposit insurance would have made for a less
regulated banking system that was more robust and stable, as banks that made
bad loans would be more likely to fail, thereby making it more likely that
banks would watch who they loaned money to and developed better standards
for deciding. They would have incentives to do so. Deposit insurance --
the FSLIC, in this case -- only funded their bad behavior. Hence, the

> Government was originally formed (if I remember my history correctly) to
> give the population some way to control the powerful individuals (lords,
> kings, and barons) that oppressed people.

I've always thought kings, etc. were the government. You seem to mean
representational government and not government in general. Regardless of
why governments are formed, we must look at how they actually function and
what certain policies result in. The view that government somehow can and
will do the right thing is merely an assumption -- worse, one that does not
stand up to close scrutiny.

Does this mean private individuals or firms can and will do the right thing?
They are not angels either, but a free market generally insures that those
who do get rewarded and those who don't eventually go broke.

> Of course, government can step
> into those same nasty shoes and can be just as dangerous to the people.
> Power corrupts, and absolute power corrupts absolutely. It doesn't matter
> if that power is in the hands of government, or big companies, or powerful
> individuals. It all comes to the same thing.

Truly, but the way big companies and individuals usually get power is by
taking control of or getting favors from the government. In fact, the
latter is almost always the case. Companies use regulations to keep out
competitors or to get subsidies. Individuals can do the same. It all
requires that a regulatory state exists in the first place. If the
government's power was limited in the extreme, then less of this predation
would go on.

> We have a new religion taking hold around the world at the moment that
> convinces people to let the most powerful companies and individuals rule
> the planet unopposed in the name of "market forces". People are
> indoctrinated, perversely, to relinquish all control with faith that the
> invisible hand of the market will balance all things. This, in the face of
> innumerable examples of how out-of-control things can get under pure
> capitalism.

The problem is, right now, we do not have a free market anywhere.

> Heard of the town of the babies with no brains in Brazil? Union
> Carbide's disasters in the third world? Nestles' nasty child murdering
> campaign in Africa? Similar examples can be found of how crazy things get
> when royalty or governments have too much power.

I've heard of worse stories. However, when looked at carefully, we can see
usually some rights violation and more often than not local governments
backing it up.

> Until we find a natural way to stop money and power concentrating in just
> few hands, we can only work the powers against each other. Use government
> as a brake upon big business and powerful individuals, bleeding money from
> them to redistribute it to society at large. Use big business to criticise
> and oppose government and royalty and do things more effectively where
> possible. Use royalty to point out the abuses by government and big
> business and sponsor humanitarian projects.

The problem is not that government will curb these tendencies. Instead,
what has actually happened is you give more power to the government and more
people who'd rather get their money the easy way -- having it redistributed
to them (and I don't mean just poor people, but also big companies trying to
keep out competition, get a government contract, or loan guarantees) -- put
in a huge effort to do so. This is the story of our times and probably the
story of all time. The solution here appears obvious: reduce the power of
government. (Surely, you can still use it to prevent force and fraud in
society, but anything beyond that leads to the above.)

If concentrations of wealth and power are bad, per se, then you have to
wonder about concentrating them in the government. What brake wil lthere be
upon government? Using big business to do so seems folly, since big
businesses, typically, want government favors.

> Things are not back and white -- there are many levels of grey.

Cliches really do not clear things up.


Daniel Ust
    See "The Many Births of Free Verse" at:

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