Friday, April 6, 2012

394: The Utopia of the Free Market - Who is guilty?

My thesis for this project is, that the idea of the Free Market as a kind of natural process based on the rational actions of man, is a utopia.

I focused on the immense popularity of the novel "Altas Shrugged" (1957) by Ayn Rand as the description of a modern Utopia.

Did this novel cause the financial crises of today? Of course not, but the novel appealed to basic ideas and sentiments of American culture.

European culture lacks the attitudes to which "Atlas Shrugged" appeals. . This resulted in the fact, that Ayn Rand is an almost unknown novelist in Europe.

Yet Europe has to deal with the same financial crises as the US. So what is going on? In general you could interpret the situation thus.

Ronald Reagan, president of the US from 1981 to 1989 and Margaret Thatcher, prime minister of the UK from 1979 to 1990 have laid the foundations of the breakdown of the welfare state - that applies mainly to Europe - and an increased economic individualism.

Thatcher got her inspiration from her visits to the Institute of Economic Affairs, where she learned a lot of Friedrich Hayek, a top economist.

Hayek was concerned "with that condition of men in which coercion of some by others is reduced as much as is possible in society"

Or the miracles of the free market in Hayek's words, "The marvel is that in a case like that of a scarcity of one raw material, without an order being issued, without more than perhaps a handful of people knowing the cause,

tens of thousands of people whose identity could not be ascertained by months of investigation, are made to use the material or its products more sparingly; that is, they move in the right direction."

The idea of markets automatically channeling self-interest toward socially desirable ends is a central justification for the laissez-faire economic philosophy.

In alternative models, forces which were such as large-scale industry, finance, and advertising reduce its effectiveness however.

Economists who emphasize the distorting effects of these forces include Marx and Keynes. Thence a government has to interfere and regulate the market.

Keep in mind, that economists see the free market is some kind of natural process, which takes care of a fair distribution of supplies,

based on prices which are determined by supply and demand. And this all executed by the rational human being.

Thence Thatcher in the UK. Her political philosophy and economic policies emphasized deregulation (particularly of the financial sector like Reagan did), flexible labour markets,

the privatization of state-owned companies, and reducing the power and influence of trade unions. She became the face of the ideological movement opposing the welfare state based on Keynesian economics.

In other European countries this neoliberalism has stealthily, motivated by pragmatic steps, made a big push, like in the Netherlands.

So different from the US, where the "Atlas Shrugged" bravado was recognized and embraced by a large group as the answer to collectivism.

For, in essence, "Atlas Shrugged" derived its appeal from its anti-collectivism message and arguments of the economists against the communist planned economy.

It all boils down to two utopias: the collectivist Utopia and the capitalist Utopia. Symbolically November 9 1989 the capitalist Utopia won, when the Wall in Berlin went down.

And as a matter of fact, in the US people are fighting against a basic healthcare for every citizen and in Europe we are facing the decline of the welfare state in honor of privatization and the free market.

We really have to dig deeper into this issue to unmask our current Utopia and try to understand what economics really is about.

The Discussion

[13:19] herman Bergson: Thank you...
[13:20] herman Bergson: The floor is yours....
[13:20] herman Bergson: Well..if you have any questions or remarks of course ^_^
[13:21] Mick Nerido: supply and demand is the concept i an familiar with...
[13:21] Tessa Zalivstok: of course the missing element here is that Marx's Utopia impoverished whole continents
[13:21] Tessa Zalivstok: do you have a view on that herman?
[13:21] herman Bergson: Oh yes....
[13:21] herman Bergson: that utopia didn't work....
[13:22] Tessa Zalivstok: no
[13:22] herman Bergson: simple as that....
[13:22] Tessa Zalivstok: not just didn't work
[13:22] Tessa Zalivstok: failed spectacularly
[13:22] Bejiita Imako: do any utopias work?
[13:22] herman Bergson: we are social beings...but that doesn't mean we are collective beings like bees in a hive
[13:22] Mick Nerido: why did it fail?
[13:22] herman Bergson: Well Bejiita...we are working on that....
[13:23] Tessa Zalivstok: you have to look at the most successful non Utopia in the world I think
[13:23] Bejiita Imako: for now to me utopia describes something perfect
[13:23] Bejiita Imako: like a perfect or ideal machine
[13:23] Tessa Zalivstok: the British Constitution
[13:23] Tessa Zalivstok: which isn't written
[13:23] Bejiita Imako: and that is impossible, with no losses and so
[13:23] Trisk (triskelion): Human nature we are evolved selfish so collectivism was doomed to fail. The reality is that we all strive to get the most for ourselves out of the system.
[13:24] herman Bergson: yes Trisk....something in that direction....
[13:24] herman Bergson: But there is also something like solidarity in with the group
[13:24] Mick Nerido: The Chinese have a hybred communist capitalistic system
[13:24] Tessa Zalivstok: what does that mean herman?
[13:24] herman Bergson: so it doesn't necessarily be only getting out of the system everything for yourself
[13:25] Trisk (triskelion): As long as solidarity is actually perceived to benefit the individual yes.
[13:25] Lizzy Pleides: perhaps this doesn't work in big groups like a nation
[13:25] oola Neruda: not everyone is after "self" there are people who care about others
[13:25] herman Bergson: Yes oola....
[13:25] herman Bergson: Altruism is a special subject in this context....
[13:25] Tessa Zalivstok: could I get back to my question
[13:25] herman Bergson: yes Tessa…
[13:25] herman Bergson: repeat plz ㋡
[13:26] Tessa Zalivstok: do you have a view on the British constitution which has deluvered peaceful government for 400 years?
[13:26] Tessa Zalivstok: but which is unwritten
[13:26] Lizzy Pleides: it has not Tessa
[13:26] oola Neruda: i do not see the british as all that peaceful
[13:27] Tessa Zalivstok: stable transitions of power with put insurrection
[13:27] Lizzy Pleides: look what the english did in the colonies
[13:27] Tessa Zalivstok: where else has that happened?
[13:27] herman Bergson: Isn't the Magna Carta from 1265 or so the basis of the British constitution?
[13:27] Tessa Zalivstok: no
[13:27] Tessa Zalivstok: the basis of the British constitution is unwritten
[13:27] oola Neruda: divine right of kings... don't need a constitution
[13:27] herman Bergson: But we had Cromwell for instance...
[13:28] herman Bergson: The glorious Revolution next
[13:28] Tessa Zalivstok: it's the settlement after the civil war and the glorious revolution of 1699
[13:28] Tessa Zalivstok: yes
[13:28] Trisk (triskelion): The civil was brought an end to the divine right of kings to rule.
[13:28] Tessa Zalivstok: thats the point
[13:28] herman Bergson: ok...
[13:28] Trisk (triskelion): In Britain
[13:28] herman Bergson: I am not an historian....
[13:28] Tessa Zalivstok: after that they decided that they hated each other but that the alternatives were worse
[13:28] herman Bergson: But traditions are unwritten rules ...
[13:28] Tessa Zalivstok: complete pragmatism
[13:29] Tessa Zalivstok: maybe thats what we want
[13:29] Tessa Zalivstok: institutionalized warfare without guns
[13:29] herman Bergson: It only shows that we as social beings are really capable of something
[13:29] oola Neruda: look what they did to countries all over the world... "looking down" upon those whom they colonized
[13:29] oola Neruda: ghandi... did not do what he did for no reason
[13:30] Trisk (triskelion): A fine illustration of what I meant by the selfish nature of humanity
[13:30] herman Bergson: smile
[13:30] herman Bergson: Yes oola...good point....
[13:30] Trisk (triskelion): Might makes right.
[13:30] herman Bergson: nice at home and bad abroad then
[13:31] herman Bergson: But our issue here is the utopia of the free market...
[13:31] herman Bergson: and in relation to that ...who caused it....
[13:31] Trisk (triskelion): It's large in history that those who can take from those who cannot. And surely this is the true agenda of the capitalist utopia?
[13:31] herman Bergson: and there I gave you two names...
[13:31] herman Bergson: Reagan and Thatcher
[13:32] Tessa Zalivstok: sorry?
[13:32] Tessa Zalivstok: lost here
[13:32] Annie Brightstar (anniebrightstar): Neither were in power when it collapsed
[13:32] Tessa Zalivstok: what did Maggie and Ronnie do that was so wrong?
[13:32] herman Bergson: No Annie but they laid the foundations for the collapse
[13:32] oola Neruda: they were at the start of the mess.. rather than the end
[13:32] Tessa Zalivstok: other than get their countries out of mega ruts?
[13:32] Annie Brightstar (anniebrightstar): No they inherited the mess
[13:32] Tessa Zalivstok: oh rubbish herman
[13:33] Annie Brightstar (anniebrightstar): No one in England should forget the winter of discontent
[13:33] Tessa Zalivstok: tell me exactly what you'd have done to prevent this ?mess"
[13:33] Qwark Allen: nothing
[13:33] herman Bergson: The stimulate deregulation and privatization....gave the banks all freedom on the financial markets
[13:33] Qwark Allen: that was the purpose
[13:33] Tessa Zalivstok: sorry?
[13:34] Trisk (triskelion): The free market is just a way of clearing the way for the exploitation of the many by the few. If you see it in this context you can understand why it does what it does. The privatization for example they ask them selves how can we make more money for ourselves and the plunder the nations resources.y
[13:34] Tessa Zalivstok: all I'm hearing here is slogans
[13:34] Tessa Zalivstok: can we get a little specific please?
[13:34] herman Bergson: Yes Trisk....
[13:35] Tessa Zalivstok: which regulation would you bring back
[13:35] Tessa Zalivstok: what effect would this have?
[13:35] oola Neruda: Tessa...what is your view of it
[13:35] Trisk (triskelion): Yes I have just lost my job because the government off the UK closed the public Forensic service and gave the business to its friends in private industry.
[13:35] Trisk (triskelion): Is that specific enough?
[13:35] Tessa Zalivstok: the absence if which regulations caused the "mess"
[13:35] herman Bergson: Well for instance all regulations that forbid banks to create derivates
[13:35] Tessa Zalivstok: why?
[13:35] Mick Nerido: after the 2nd WW the world economies diverged...
[13:35] Tessa Zalivstok: sorry
[13:35] Tessa Zalivstok: I want to hear why
[13:36] herman Bergson: regulations that forbid banks to sell mortgages to people that they KNOW, can not pay them in th elong rin
[13:36] Tessa Zalivstok: derivatives have been around forever
[13:36] Tessa Zalivstok: now we're getting specific
[13:36] herman Bergson: regulations that forbid banks to offer loans to people who can not repay them////
[13:36] Tessa Zalivstok: how would you determine who could pay?
[13:36] oola Neruda: Tesa... have you been following the problems of the economic collapse... as related to the banks
[13:37] Trisk (triskelion): Personal experience my bank actually told me to lie about my earnings to secure a mortgage.
[13:37] oola Neruda: it was more than just who could not pay
[13:37] Tessa Zalivstok: oh I worked in one for the period before the crisis
[13:37] Tessa Zalivstok: I know perfectly well about their regulation
[13:37] oola Neruda: there was a great deal of stuff going on that was under the radar
[13:37] Tessa Zalivstok: I happen to agree that they should separate things that financial institutions do
[13:37] oola Neruda: on wall st too
[13:37] Tessa Zalivstok: but banks have collapsed forever
[13:38] Tessa Zalivstok: I can give you a long list
[13:38] oola Neruda: they were not too big to fail the past
[13:38] Mick Nerido: banks got too big
[13:38] herman Bergson: yes Tessa...
[13:38] Tessa Zalivstok: none of this is fundamental to the issue in hand
[13:38] herman Bergson: and now it is the taxpayer who keeps them standing....!
[13:38] herman Bergson: Oh it IS fundamental....
[13:38] Tessa Zalivstok: history tells us that bank collapses, systemic bank collapses, happen on average ecvery fifty years
[13:38] oola Neruda: TESSA WHAT DO YOU THINK... why do you question... what is it you would propose
[13:39] herman Bergson: for at the end it is us the taxpayer who pay the bill...
[13:39] Tessa Zalivstok: what I will say
[13:39] herman Bergson: We omnly are producing the money to keep the system going by our labor
[13:39] Tessa Zalivstok: generalizations about niceness and cooperation never make a financial system
[13:39] Bejiita Imako: before banks were for us now we are for the banks
[13:39] Tessa Zalivstok: wherever you live you need a financial system
[13:39] Mick Nerido: no one really knows how the economy really works lol
[13:39] Lizzy Pleides: some managers let collapse their bank to get tax money
[13:39] Tessa Zalivstok: otherwise your money stays in your sock
[13:40] oola Neruda: stocks collapsed too
[13:40] Tessa Zalivstok: which doesnt work all that well
[13:40] herman Bergson: Ok Tessa...I'll serve you well in the next lectures....
[13:40] Velvet (velvet.braham): At least I don't have to pay my sock fees to keep my money there.
[13:40] herman Bergson: there I'll discuss the concept of what a Financial System is
[13:40] Tessa Zalivstok: you can't have philosophy that ignores money and how it circulates
[13:40] Bejiita Imako: aa or the classic one
[13:40] Tessa Zalivstok: it's an essential part of life
[13:41] Bejiita Imako: having the money in the mattress
[13:41] Tessa Zalivstok: good
[13:41] Tessa Zalivstok: I'd like to hear that
[13:41] herman Bergson: Well..this all sounds good....!
[13:41] Tessa Zalivstok: and I'd like to hear you discuss the non classical financial systems too
[13:41] Tessa Zalivstok: the Marxist one in particular
[13:42] Tessa Zalivstok: we had 90 odd years of that so it shouldn't be too difficult
[13:42] Lizzy Pleides: and black money market, giggle
[13:42] Tessa Zalivstok: yes
[13:42] Tessa Zalivstok: black markets
[13:42] herman Bergson: well..I'll do my best but I am educated in philosophy and not economy Tessa....
[13:42] Bejiita Imako: ah
[13:42] Tessa Zalivstok: very important
[13:42] Bejiita Imako: ㋡
[13:42] Tessa Zalivstok: but my point is how can you talk philosophy of large systems without talking about money
[13:43] Tessa Zalivstok: Jesus Christ used denarii
[13:43] Tessa Zalivstok: he even spoke abut them
[13:43] oola Neruda: so far we have been trying to understand the rand philosophy
[13:43] herman Bergson: I have no problem to insert a series of lectures on money....
[13:43] Annie Brightstar (anniebrightstar): He didn't like money lenders as I recall
[13:43] Tessa Zalivstok: nope
[13:43] oola Neruda: that was the impetus for the last number of lectures
[13:43] Tessa Zalivstok: drove em pout of the temple with whips
[13:44] Tessa Zalivstok: maybe thats an alternative.....
[13:44] herman Bergson: Indeed oola....
[13:44] herman Bergson: our primary subject was the philosophical antropology of Rand
[13:44] oola Neruda: and we have digressed in such a way as to ignore the subject that was intended for these lectures
[13:44] herman Bergson: and to what conclusions that would lead....
[13:45] herman Bergson: The basic idea is that at this moment GREED rules the waves
[13:45] oola Neruda: the world economy was not the subject... rand was the subject
[13:45] Qwark Allen: i think where both failed was about regulations! one with to much, the other with to few
[13:45] Bejiita Imako: aaa
[13:46] herman Bergson: Yes Qwark....THAT is my main target..... the role of governmental regulations in economics
[13:46] Qwark Allen: is there a way of balancing it?
[13:46] oola Neruda: that does not mean the world's financial systems are not important...they are...
[13:46] herman Bergson: Yes THAT is the question....
[13:46] herman Bergson: What we see today is that it is out of balance!
[13:46] Tessa Zalivstok: yes but you have to be specific
[13:46] Bejiita Imako: aa yes the regulations seem a tricky subject for sure however without proper and in correct amount
[13:46] Bejiita Imako: the system wouldn't work
[13:46] Velvet (velvet.braham): tax the richest to help the poorest? Robin Hood
[13:46] oola Neruda: yes...specific to the subject of the lectures
[13:47] Tessa Zalivstok: I can tell you now that the financial system is regulated to death
[13:47] Qwark Allen: i know hermann, i understand the idea of reagan and thatcher! they were the ones that begin this neo economist regulations era
[13:47] Bejiita Imako: its so tricky, i don't get really how it works
[13:47] Bejiita Imako: hard subject
[13:47] herman Bergson: exactly....
[13:47] Tessa Zalivstok: the compliance officer's role has gone from nothing 50nyears ago to whole departments
[13:47] Tessa Zalivstok: that seems to speak against the idea of no regulation of the system
[13:48] Tessa Zalivstok: so maybe it's specifics
[13:48] Qwark Allen: i think there should be a balance
[13:48] Bejiita Imako: yes
[13:48] Qwark Allen: regulated "free market"
[13:48] Qwark Allen: °͜° l ☺ ☻ ☺ l °͜°
[13:48] Qwark Allen: lol
[13:48] herman Bergson: What I try to find out Qwark...
[13:48] Velvet (velvet.braham): Unfortunately, in the USA, those who make laws & regulations are heavily influenced by the richest most powerful people & companies.
[13:48] herman Bergson: is how we can find this balance....
[13:48] Bejiita Imako: without regulation would be like tjernobyl = KABOOOM
[13:48] Bejiita Imako: and thats what we sort of see today
[13:48] Bejiita Imako: a runaway with no control and greed taking over
[13:48] oola Neruda: yes Velvet
[13:48] Bejiita Imako: not good
[13:49] herman Bergson: Well Velvet.....
[13:49] Velvet (velvet.braham): The fox is guarding the henhouse!
[13:49] herman Bergson: Robin Hood tax.....
[13:49] oola Neruda: with fine print
[13:49] herman Bergson: Let's think about that....
[13:49] Bejiita Imako: we need a new Robin Hood for sure
[13:49] Bejiita Imako: ㋡
[13:49] Mick Nerido: Markets change very quickly with computer running them
[13:49] herman Bergson: some person gets rich because he let's people work for him for low wages...and he takes all profits.
[13:50] Bejiita Imako: aaa yes the "stock robots"
[13:50] Bejiita Imako: as they call them
[13:50] Velvet (velvet.braham): I nominate Bejiita to be our Robin Hood.
[13:50] herman Bergson: Agreed!
[13:50] herman Bergson: ♫♪♫♪ ♪♫♪♫ APPLAUSE ♪♫♪♫ ♫♪♫♪
[13:50] Bejiita Imako: hehe
[13:50] Annie Brightstar (anniebrightstar): I have seen him with a bow and arrow; not sure that is such a good idea
[13:50] Bejiita Imako: id always wished I could do something indeed
[13:51] Velvet (velvet.braham): There's nothing wrong with a business owner profiting
[13:51] herman Bergson: Look at Apple and its Taiwanese factories where people work 18 hours a day or so for shameful wages...
[13:51] Bejiita Imako: getting tired of this unfair economic mess of today where a few takes everything from everyone else
[13:51] Bejiita Imako: want a more fair world
[13:51] Bejiita Imako: in general
[13:51] herman Bergson: yes Bejiita....
[13:51] Velvet (velvet.braham): oh, Herman, that's opening a can of worms!
[13:51] herman Bergson: in essence it is about a fair sharing of recourses in this world
[13:52] Mick Nerido: a fair world, now that is a utopia!
[13:52] herman Bergson: hastely puts the lid on it again
[13:52] Bejiita Imako: unfortunatley seems so today :(
[13:52] Velvet (velvet.braham): and we're back on the topic of utopia!
[13:52] Lizzy Pleides: if you have a bigger risk and a better education why shoudn't you earn more money
[13:52] Velvet (velvet.braham): I agree, Lizzy
[13:52] herman Bergson: Exactly Velvet..>!!!!!
[13:52] Bejiita Imako: because everything have been going in wrong direction as far i know
[13:53] herman Bergson: Well, dear class...
[13:53] Qwark Allen: ahhh
[13:53] Qwark Allen: AAHH!!!
[13:53] herman Bergson: we could go on for ever in our attempts to save the world....
[13:53] herman Bergson: Let's save some gunpowder for a next battle...:-)
[13:53] Qwark Allen: ::::::::: * E * X * C * E * L * L * E * N * T * ::::::::::
[13:53] Qwark Allen: thank you
[13:53] Bejiita Imako: ㋡
[13:53] Qwark Allen: ¸¸.☆´ ¯¨☆.¸¸`☆** **☆´ ¸¸.☆¨¯`☆ H E R MA N ☆´ ¯¨☆.¸¸`☆** **☆´ ¸¸.☆¨¯`
[13:53] herman Bergson: May I thank you all for this fantastic discussion....
[13:53] Bejiita Imako: interesting for sure ㋡
[13:53] :: Beertje :: (beertje.beaumont): thank you Herman:)
[13:54] herman Bergson: Class dismissed
[13:54] Tessa Zalivstok: thanks herman
[13:54] Bejiita Imako: ok cu next time

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