Freedom Works
22nd October 2005, 23:48
Libertarian free-market theory although in words sounds high and lofty, in practice it is virtually impossible to uphold without it eventually degenerating into plain faced imperialism. The libertarian free-market theory espouses virtually no government interference and expounds the thoery that those who get to the top do so through their own personal prowess of business and market dynamics.
Although not an expert on the subject, allow me to try to refute the libertarian capitalist theory.
Let me split my refutation into parts for the sake of simplicity and clarity.
Throughout the 1800's and upto the present day, two countries have championed the cause of the free-market and libertarian philosophy, at least in theory, if not in practice. When these ideas were most powerful in their 'pure' form, India was still ruled by the Mughal dynasty and the British East India trading company was allowed to conduct business in India. This i will call the 'Indian experiment'
[B]The Indian Experiment:
The British East India trading company was separate from the British government, operating as a purely corporate entity and run by British businessmen solely on their own initiative. After presenting the Mughal emperor, Jehangir with a gift of a painting, the bgritish company was allowed to conduct business there. This was an entirely separate entity from the british government and strictly adhering to the liberatarian philosophy of government non-interference.
At that time the native indian textile industry was already advanced by standards of those days and allowed no inroads for British made textile goods, which were comparatively inexpensive but of lower quality. This remained the situation until the company began exporting textile resources such as cotton and jute to britain, these were exported on a large scale but still british industry was not able to make any progress in Indian markets. On the contrary, higher quality finished textile goods were making their wat into Britain. According to rational market theory, the high volume of indian imported goods should have brought their prices down and eliminated the British competition through sheer economies of scale. However, the weak british textile industry was saved by government intervention that slapped high tariffs on finished Indian textile products but not on imported indian raw materials. Thus came the finishing blow, the British east india company began importing dragoon guards into india and began expropriation of property and labour by force. The land taken over devoted to cultivating raw materials to export to England and the finished English goods back into India.
Thanks to this strategy the British textile industry was saved and the indian textile industry collapsed. This brings into sharp relief the inherent contradictions of the free-market analysis, whose very neck was saved thanks to government intervention, adding to that the newly aquired indian market, whose industry was crippled by force.
Similar comparisons of the validity of libertarian capitalism can be found in British foriegn policy at that time, China which was long importing opium from british india stopped doing so. As a result the main market for indian-grown british opium was lost. According to simple market analysis, the company that loses it's market should collapse. The british government however, again responded and declared war on China. Following China's defeat it was forced to import huge amounts of opium grown in India, the war however largely used indian soldiers employed by the British east india company. Again here too, the inherent contradiction of government non-interference was shown since it was largely the war that saved the opium market in China. Thus the industry survived.
The British East india company continued to exist in India thanks to earlier events that i have mentioned. However the conditions of labour got so inhuman when there were no limits to profit, that Indian soldiers in the employ of the company revolted. The British call this the Great Mutiny of 1857. Since the company existed as a separate entity from the governbment it should follow that the british presence should have been eliminated, However the British government again intervened and sent troops, this time to quell the rebellion. The british government then took direct control of india through which the remenants of the company elite then took official government positions. The british presence was thus continued in India.
[B]The United States experiment:
During the 1800's the united states of america also professed the free-market principle and still does to this day. However allow me to cite a few contradictions in the principle of governmental non-interference that took place in the U.S. During the 1800's the U.S steel industry was tsruggling to survive and growth was very small. It was continuosly hounded by the threat of cheaper imported alternatives. At that time Britain waqs importing cheap ore from India and producing steel relatively cheaply thanks to near inexhaustable indian ore and and extremely cheap indian labour in mines across the subcontinent. The british began exporting steel to the america's to capture new markets. According to the free-market principle, the cheaper alternative should capture the market and drive out the competition. However the american steel industry was saved when high tariffs were imposed on imported british steel, which was cheaper and of relatively higher quality. This allowed the U.S steel industry to survive and grow without threat from foreign competitors. Thus we see that government intervention was required for the survival of the American steel industry.
This was not the exception however, The American government through the Monroe Doctrine proclaimed the whole of the latin american continent to be a special 'sphere of influence' i.e it had sole economic and military influence over the nations and peoples of latin america and the unofficial power to determine what course it should take. This was enforced time and again through coups and economic isolationism of whole countries. For eg, Chile, Cuba, Haiti, Nicaragua, Brazil, Peru etc. where left-leaning governemnts were toppled by force or illegal economic pressure to accept american corporationism and surrender national resources. Any attempts at a command economy were crushed. Thus, it is shown that markets are not captured by market dynamism or any qualifications of the corporation but solely due to military, or the threat of military action. This example is only restricted to latin america but is played out all over the globe.
Let me give you an exampleof how beneficial free-market theory is by citing two parallel examples but which took different paths, Cuba and Haiti. Both are islands of comparable size and resources and both, priort to U.S interference had Sugar as the main commodity. Cuba took to a command economy and survives despite an embargo and isolation for the greater part of forty years, while Haiti opened up it's markets to american influence. The result, Haitian land was exorbitantly used for sugar cultivation by ameriacan companies, to such a large scale that the fertlity of the land was also diminished thanks to generous use of pesticides and fertilizers to enhance prductivity to unreal levels, and depriving land that could be used for food cultivation. Now, cuba is a largely self-sufficient economy, with an average age of 77, while Haiti is on the verge of collapse with 60% of the population unhealthy.
Apart from this, the economy of the U.S is lauded as a success of free-market Capitalism, resting mainly on the high-tech sector. However it's success can be largely attributed to frequent government subsidies and governemnt-funded research. For example, the laser was researched by the military under the tax-payers' dollar. Now, manufacturing corporations make full use of it in largely every sphere of manufacture. Similarily, the personal computer was researched by the military in conjunction with the space program. In those days they took the form of super-computers, ten-fifteen foot high cabinets.all under again, the tax payers' dollar, then was repackaged by microsoft, dell, apple, etc. now computers play an indespensable role in the high tech industry and are used in virtually every field. This again conflicts with the free-market principle of government non-interference, since it was the government that laid the foundations for the american high tech industry, on which the entire American economy rests!
Another example of the U.S governments' compliance with industrialists takes form in frequent tax-cuts, that relieves the capitalist from economic pressure and frees even more capital for growth and investment.
These are examples of the refutation of free-market principles in the two countries that most vociferously advocate the free-market. These very same countries, shown through these examples, engaged in and their economies still survive thanks to economic protectionism and not free-market principle, in fact the very opposite.
The USSR Experiment
The USSR during the cold war through socialism and collectivization registered the fastest growth of any country economically. It came to rival the United states and some even predicted that the cold war would end with the USSR and the socialist bloc victorious. The fall of the Soviet Union, was attributed to the failure of socialism and the triumph of free-market and free-enterprise. In comes Mikhail Gorbachev, with the much touted policy of Glastnost and prestroika, with the intention of opening up the soviet economy to investment and neglecting economic protectionism. The result was a catastrophic collapse of the Soviet economy and the Soviet Union. A collapse so sudden that it shocked world commentators and the nations profoundly. This resulted with widespread disillusionment and the crumbling of the socialist bloc collectively. This is enough to show that Marx spoke true when he said that the economy can only be developed forward, ie. from capitalist to socialist, but backwards will lead to catastrophe. This was manifestly shown in the collapse of the Soviet Union, which attempted to regress from a socialist to a capitalist one. If anything, it strengthens the weight of Marxism and displays the results of free-market capitalism. Now Russia is a gangster-led kleptocracy with oil barons at the helm.
The Chinese Experiment
The proponents of free-market capitalism would show that capitalism leads to stunning growth and a command economy is bound to fail. This however is refuted by the example of China. The economies of the U.S and the western hemisphere have largely stagnated, where the economy is largely in private hands. However in China, where only 10% of the countries' industry and agricultural infrastructure is in private hands, the system followed is a command economy. A centrally-planned economy following the pattern of five-year plans. With the government directing all aspects of the chinese economy. At this moment China is registering the fastest rate of growth of any economy is history. It's rapidly growing power is now threatening the vanguards of capitalism and has already overtaken most of the capitalist economies by far. This very fact should refute the free-market theory which states that growth is not possible under government hands. It can conclusively be shown that a command economy is far nmore efficient than a private, free-market one.
All historical facts aside, even the theorists of free-market libertarian capitalism warned against the cruelty of greed and the emergence of greedy industrialists. Most notably among these was Adam Smith and Madison, the founding fathers of the free-market philosophy. However even in this warning the shortcomings of the free-market philosophy are evident, They oppose monopolies but advocate government non-interference, they put no limits on the accumulation of capital, but oppose the emergence of a capitalist ruling class. They assume the progress of capitalism will trickle down to the copnsumer, but it is only enhancing suppression and proletarianization, a recent example is the privatization under progress of the NHS is Britain. They advocate a philosophy that is proven unworkable in history, and is full of inherent contradictions.
That was my attempt to refute the theory of libertarian capitalism. i know it is long but please bear with me and give your views/criticisms.
Thanks.
First off, SOURCES?
Although not an expert on the subject, allow me to try to refute the libertarian capitalist theory.
Let me split my refutation into parts for the sake of simplicity and clarity.
Throughout the 1800's and upto the present day, two countries have championed the cause of the free-market and libertarian philosophy, at least in theory, if not in practice. When these ideas were most powerful in their 'pure' form, India was still ruled by the Mughal dynasty and the British East India trading company was allowed to conduct business in India. This i will call the 'Indian experiment'
[B]The Indian Experiment:
The British East India trading company was separate from the British government, operating as a purely corporate entity and run by British businessmen solely on their own initiative. After presenting the Mughal emperor, Jehangir with a gift of a painting, the bgritish company was allowed to conduct business there. This was an entirely separate entity from the british government and strictly adhering to the liberatarian philosophy of government non-interference.
At that time the native indian textile industry was already advanced by standards of those days and allowed no inroads for British made textile goods, which were comparatively inexpensive but of lower quality. This remained the situation until the company began exporting textile resources such as cotton and jute to britain, these were exported on a large scale but still british industry was not able to make any progress in Indian markets. On the contrary, higher quality finished textile goods were making their wat into Britain. According to rational market theory, the high volume of indian imported goods should have brought their prices down and eliminated the British competition through sheer economies of scale. However, the weak british textile industry was saved by government intervention that slapped high tariffs on finished Indian textile products but not on imported indian raw materials. Thus came the finishing blow, the British east india company began importing dragoon guards into india and began expropriation of property and labour by force. The land taken over devoted to cultivating raw materials to export to England and the finished English goods back into India.
Thanks to this strategy the British textile industry was saved and the indian textile industry collapsed. This brings into sharp relief the inherent contradictions of the free-market analysis, whose very neck was saved thanks to government intervention, adding to that the newly aquired indian market, whose industry was crippled by force.
Similar comparisons of the validity of libertarian capitalism can be found in British foriegn policy at that time, China which was long importing opium from british india stopped doing so. As a result the main market for indian-grown british opium was lost. According to simple market analysis, the company that loses it's market should collapse. The british government however, again responded and declared war on China. Following China's defeat it was forced to import huge amounts of opium grown in India, the war however largely used indian soldiers employed by the British east india company. Again here too, the inherent contradiction of government non-interference was shown since it was largely the war that saved the opium market in China. Thus the industry survived.
The British East india company continued to exist in India thanks to earlier events that i have mentioned. However the conditions of labour got so inhuman when there were no limits to profit, that Indian soldiers in the employ of the company revolted. The British call this the Great Mutiny of 1857. Since the company existed as a separate entity from the governbment it should follow that the british presence should have been eliminated, However the British government again intervened and sent troops, this time to quell the rebellion. The british government then took direct control of india through which the remenants of the company elite then took official government positions. The british presence was thus continued in India.
[B]The United States experiment:
During the 1800's the united states of america also professed the free-market principle and still does to this day. However allow me to cite a few contradictions in the principle of governmental non-interference that took place in the U.S. During the 1800's the U.S steel industry was tsruggling to survive and growth was very small. It was continuosly hounded by the threat of cheaper imported alternatives. At that time Britain waqs importing cheap ore from India and producing steel relatively cheaply thanks to near inexhaustable indian ore and and extremely cheap indian labour in mines across the subcontinent. The british began exporting steel to the america's to capture new markets. According to the free-market principle, the cheaper alternative should capture the market and drive out the competition. However the american steel industry was saved when high tariffs were imposed on imported british steel, which was cheaper and of relatively higher quality. This allowed the U.S steel industry to survive and grow without threat from foreign competitors. Thus we see that government intervention was required for the survival of the American steel industry.
This was not the exception however, The American government through the Monroe Doctrine proclaimed the whole of the latin american continent to be a special 'sphere of influence' i.e it had sole economic and military influence over the nations and peoples of latin america and the unofficial power to determine what course it should take. This was enforced time and again through coups and economic isolationism of whole countries. For eg, Chile, Cuba, Haiti, Nicaragua, Brazil, Peru etc. where left-leaning governemnts were toppled by force or illegal economic pressure to accept american corporationism and surrender national resources. Any attempts at a command economy were crushed. Thus, it is shown that markets are not captured by market dynamism or any qualifications of the corporation but solely due to military, or the threat of military action. This example is only restricted to latin america but is played out all over the globe.
Let me give you an exampleof how beneficial free-market theory is by citing two parallel examples but which took different paths, Cuba and Haiti. Both are islands of comparable size and resources and both, priort to U.S interference had Sugar as the main commodity. Cuba took to a command economy and survives despite an embargo and isolation for the greater part of forty years, while Haiti opened up it's markets to american influence. The result, Haitian land was exorbitantly used for sugar cultivation by ameriacan companies, to such a large scale that the fertlity of the land was also diminished thanks to generous use of pesticides and fertilizers to enhance prductivity to unreal levels, and depriving land that could be used for food cultivation. Now, cuba is a largely self-sufficient economy, with an average age of 77, while Haiti is on the verge of collapse with 60% of the population unhealthy.
Apart from this, the economy of the U.S is lauded as a success of free-market Capitalism, resting mainly on the high-tech sector. However it's success can be largely attributed to frequent government subsidies and governemnt-funded research. For example, the laser was researched by the military under the tax-payers' dollar. Now, manufacturing corporations make full use of it in largely every sphere of manufacture. Similarily, the personal computer was researched by the military in conjunction with the space program. In those days they took the form of super-computers, ten-fifteen foot high cabinets.all under again, the tax payers' dollar, then was repackaged by microsoft, dell, apple, etc. now computers play an indespensable role in the high tech industry and are used in virtually every field. This again conflicts with the free-market principle of government non-interference, since it was the government that laid the foundations for the american high tech industry, on which the entire American economy rests!
Another example of the U.S governments' compliance with industrialists takes form in frequent tax-cuts, that relieves the capitalist from economic pressure and frees even more capital for growth and investment.
These are examples of the refutation of free-market principles in the two countries that most vociferously advocate the free-market. These very same countries, shown through these examples, engaged in and their economies still survive thanks to economic protectionism and not free-market principle, in fact the very opposite.
The USSR Experiment
The USSR during the cold war through socialism and collectivization registered the fastest growth of any country economically. It came to rival the United states and some even predicted that the cold war would end with the USSR and the socialist bloc victorious. The fall of the Soviet Union, was attributed to the failure of socialism and the triumph of free-market and free-enterprise. In comes Mikhail Gorbachev, with the much touted policy of Glastnost and prestroika, with the intention of opening up the soviet economy to investment and neglecting economic protectionism. The result was a catastrophic collapse of the Soviet economy and the Soviet Union. A collapse so sudden that it shocked world commentators and the nations profoundly. This resulted with widespread disillusionment and the crumbling of the socialist bloc collectively. This is enough to show that Marx spoke true when he said that the economy can only be developed forward, ie. from capitalist to socialist, but backwards will lead to catastrophe. This was manifestly shown in the collapse of the Soviet Union, which attempted to regress from a socialist to a capitalist one. If anything, it strengthens the weight of Marxism and displays the results of free-market capitalism. Now Russia is a gangster-led kleptocracy with oil barons at the helm.
The Chinese Experiment
The proponents of free-market capitalism would show that capitalism leads to stunning growth and a command economy is bound to fail. This however is refuted by the example of China. The economies of the U.S and the western hemisphere have largely stagnated, where the economy is largely in private hands. However in China, where only 10% of the countries' industry and agricultural infrastructure is in private hands, the system followed is a command economy. A centrally-planned economy following the pattern of five-year plans. With the government directing all aspects of the chinese economy. At this moment China is registering the fastest rate of growth of any economy is history. It's rapidly growing power is now threatening the vanguards of capitalism and has already overtaken most of the capitalist economies by far. This very fact should refute the free-market theory which states that growth is not possible under government hands. It can conclusively be shown that a command economy is far nmore efficient than a private, free-market one.
All historical facts aside, even the theorists of free-market libertarian capitalism warned against the cruelty of greed and the emergence of greedy industrialists. Most notably among these was Adam Smith and Madison, the founding fathers of the free-market philosophy. However even in this warning the shortcomings of the free-market philosophy are evident, They oppose monopolies but advocate government non-interference, they put no limits on the accumulation of capital, but oppose the emergence of a capitalist ruling class. They assume the progress of capitalism will trickle down to the copnsumer, but it is only enhancing suppression and proletarianization, a recent example is the privatization under progress of the NHS is Britain. They advocate a philosophy that is proven unworkable in history, and is full of inherent contradictions.
That was my attempt to refute the theory of libertarian capitalism. i know it is long but please bear with me and give your views/criticisms.
Thanks.
First off, SOURCES?