By: xandre on Mercoledì 24 Agosto 2011 18:44
Da Jesse's Café Americain .
Central Planning - It's Not Just For Communists Anymore
I found this email from a reader to be very interesting, and I asked him for permission to share it with you.
Most students of economics are aware of the tendency of 'perfect competition' to zero economic profit over time, unless there is a continual renewal and reinvention of the business, under the guidance of a wise, insightful, and responsive management. Even the best enterprise involves a risk of loss, the expense of well paid employees, and significantly hard work, all combined with a bit of luck. Little wonder that a minority of businessmen find this arrangement less satisfactory that other alternatives, which unfortunately includes various forms of cheating, if not outright fraud.
And therefore there is a constant tendency of participants in capitalist systems to foster the unreasonable profits of cartels and the stable pricing power of monopolies, natural or otherwise, with a measure of discretionary control over resources and choices, legislation and information, and political and monetary power.
When corporations obtain an inordinate amount of power over the social fabric of regulation and governance, the creation of an oligarchy distorts the real economy through the accumulation of too much power in too few hands, in the manner of the central planning bureaucracies of the old line communist nations.
And this is why the standard economic solutions of both stimulus and austerity for normal cyclical excess can be doomed to failure, as they are at this time. The system itself has become distorted and broken, and is badly in need of reform. Whatever one puts into it will come out badly, and be turned to fruitless purposes, corrupted by the unprecedented concentration of power in the hands of the few, the partnership of the Wall Street banks, big media, multinational corporations, and their servants in the government.
The hallmark of a corrupt enterprise is that while it has the power to confiscate and destroy, it cannot create sustainable organic growth and recovery that benefits the broader public.
The modern, somewhat romantic theory of naturally efficient markets peopled by inhumanly rational and altruistic individuals is a fairly modern twist on the noble savage ideal of Rousseau, and just as other-worldly and impractical when applied to a modern society. Certainly no one who has driven recently on a modern highway in rush hour could believe it.
The corrupting tendencies of the concentration of power is an intriguing idea, with an historical resonance from the trust-busting Teddy Roosevelt, and his distant cousin Franklin, as well as the famous observation of Lord Acton:
"And remember, where you have the concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that."
Nineteenth century Americans viewed the business trusts as un-American "internationalists, and heartless, abusive exploiters of the public interest." And rightly so. They looked for relief to the reform of their government, and the power of democracy and the law.
This struggle of the individual to maintain a balance of power with the organizations, whether they be the corporation or the state, is a recurrent theme, a continuing saga throughout human history. Big Government and Big Business have both been inimical to human freedom.
Whether such an accumulation of power in a few hands is achieved by the gun and star chamber, or the pen and the bribe, may not matter to the end result, which is a society plagued by corruption, stagnation, and at its end, a growing instability with a resort to physical force and more overt repression on its own people.
