Spectrum of capitalism - something between pure market to pure state

comments on "Davos elite confront capitalism crisis", 26/01/2012, see http://www.businessspectator.com.au/bs.nsf/Article/Davos-elite-confronts-capitalism-crisis-QUL3N?OpenDocument&src=hp9

The debate really is no brain. It is like the kind of debate between new-classical economists and new Keynesian economists, the truth is always some where in between.

Keynesian realise that market can have problems from time to time in getting full employment not soon enough and that is true, so government has to do something to aim at achieving full employment.

Even that theory works, then there is politics that endangers the theoretical fiscal policies that will be needed to ensure full employment.

Then, there are further problems with markets, it is not just aggregate demand or supply that are the only issues, there are structural and inter-temporary issues that are not too dissimilar to the aggregate issues. Those kind of structural and inter-temporary issues also need policies to manage and government is needed to play that role to address those issues.

Then of course income allocation has been recognised as an issue so government constantly work on taxation and welfare policies.

All those issues added together, you have a much bigger role for government to play in the economy: that is essentially some kind of capitalism and state work together, or some kind of state capitalism.

Of course, countries may differ in the kind of issues and their severity that requires different kind of combination of market and state, akin to the kind of Samuelson’s synthesis of classical and Keynesian economics.

Don't expect too much from businesses

Comments on Peter Shergold “Business must engage in battle for hearts and minds”, 18/10/2011, http://www.theaustralian.com.au/news/opinion/business-must-engage-in-battle-for-hearts-and-minds/story-e6frg6zo-1226169108879

It seems Professor Shergold is creating a new capitalist economics for business.

It is, however, unclear whether it is realistic or feasible to ask business of so many firms to do so.

It ignores the difference in the role the government should play and the role businesses should play.

Certainly there would be free riders, and perhaps many will be such free riders under what the professor is proposing!

A fundamental economic principle from Adam Smith is that social value is created at the same while every unit is pursuing it own interests!

That has been the social basis for capitalist businesses.

Now the professor is challenging that very principle!

I am not sure his proposal is sound from business point of view.

I think a possibly feasible proposal is to appropriately regulate businesses by government, so the Smith principle can always hold even when market is imperfect!

That role is for government, not for businesses, I would imagine.

What should be important to consider on immigration by government?

Comments on Ross Gittins “Punters well aware of economic case against more immigration”, 24/11/2010, http://www.smh.com.au/opinion/politics/punters-well-aware-of-economic-case-against-more-immigration-20101123-185ij.html?posted=error
This is a good article with a balanced view on the issue of immigration from an economist – it is the per capita wellbeing of the local people/workers/labour that should be the first order issue to be considered by government and policy makers.

Most economists only talk about wage and its impact inflation but ignoring the political economy of impact on local wage earners of immigration and the required extra infrastructure.

Of course, the political economy of higher immigration benefits businesses, due to lower wages resulting from more labour supply.

A side issue is the view of taxation of mobile capital and labour and consumption. Business should be made to contribute to building infrastructure, as opposed to taxing less on capital, with consumption tax that is not too different from taxing labour more heavily in a different guise.

Lucy Turnbull's affirmative argument for capitalism

Comments on Lucy Turnbull “Capitalism is still the only system that works”, 9/08/2010, http://www.smh.com.au/opinion/politics/capitalism-is-still-the-only-system-that-works-20100808-11q55.html?posted=sucessful
I note that Lucy has used China as an example to support her argument for capitalism.

However, Lucy did not say whether China is a capitalism system or not.

Most people argue about capitalism and communism as two extremes. But the reality is that most systems are not in those extremes and are somewhat in the areas not too far from the centre of the spectrum.

In most capitalism system, there are elements of socialism and in the few official socialism systems left, they are introduce capitalism elements.

Socialism or communism in its original and extreme form is dead, but it does not mean no other less extreme ones are left.

Capitalism has also evolved quite a lot from its original extreme form. Social welfares, though still swing around, are not based on the extreme capitalism. Government interventions or regulations, are not that either.

What is the future of the two systems?

It is highly likely that they will become different parties within a country; all will try to win the voters and become the government. In doing so, they will all adopt or evolve to become relevant.

There will no extreme capitalism, nor extreme socialism. Neither will exist for long, if any one or party adopts them.

It means both will coexist and compete.

This should tell if Lucy’s argument is correct or not.

No death of either capitalism or socialism now

Comments on Irwin Stelzer “Death of capitalism exaggerated”, 7/10/2009, http://www.theaustralian.news.com.au/story/0,25197,26174260-5013479,00.html

The argument of the death of capitalism of course is exaggerated, because that argument is silly and hysterical. However, it does not mean capitalism is completely health and is also equally silly and hysterical to argue that capitalism does not have problems.

Yes it is true that capitalism is adaptive and is evolving generally in the direction to the better. That itself shows that now there is no pure capitalism as such it existed when Karl Marx confidently did his work on capitalism. It has incorporated many elements or goals of the communism or socialism.

Only in this way that capitalism has survived to date, although it still has suffered serious and almost fatal problems from time to time that require more and more communism elements.

Indeed, what the Keynesian economics or macroeconomic policy for government to use taxes and spending to manage the economy could be argued as an offspring of socialism.

On the other side, socialism is no longer as pure as what Karl Marx had in mind. China is a prime example that incorporated market economy into its socialism.

So while it was premature to celebrate the death of capitalism by a handful extreme leftists, it is equally premature to declare a victory of capitalism over other types of social and economic systems.

Every system can be adaptive and it is now too early to predict the long fate of each of them capitalism and socialism included.

Everyone, leftists or rightists, extremes or moderates, should and needs to bear that in mind.

More fundamental factors in play in history

Comments on Robert Manne “Past another turning point in history”, 26/09/2009, http://www.theaustralian.news.com.au/story/0,25197,26124842-7583,00.html

While your view of the left and the right in the west may have some truth, your have ignored some important points of their evolutions. You only noticed the bad aspects of the former USSR and ignored its any merits, even though you are a professor in history.

I am not a historian as you are. But it appears to me that there have been some more fundamental factors in play than what you have relied on for your argument.

I think one has got to look at the history more objectively, in the context of both longer history and wider social and international perspectives.

Did the rise of Keynesian have anything to do with the creation of the Soviet Russia and the USSR as a competing social system?

Did the re-emergence of the right or neo-liberalism have anything to do with the inability of government intervention based on the Keynesian aggregate demand management, or the failure of the both Keynesians and monetarists to come up with more effective macroeconomic tools to deal with the supply side macroeconomic problems as a result of the first oil shock?

Will the current crisis and the success of some developing economies in the east generate other new economic and social thinking beyond the confines of the left and the right in the west?