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  1. #1 The visible hand 
    Senior Member Arroyo_Doble's Avatar
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    The visible hand

    The crisis of Western liberal capitalism has coincided with the rise of a powerful new form of state capitalism in emerging markets, says Adrian Wooldridge





    BEATRICE WEBB grew up as a fervent believer in free markets and limited government. Her father was a self-made railway tycoon and her mother an ardent free-trader. One of her family’s closest friends was Herbert Spencer, the leading philosopher of Victorian liberalism. Spencer took a shine to young Beatrice and treated her to lectures on the magic of the market, the survival of the fittest and the evils of the state. But as Beatrice grew up she began to have doubts. Why should the state not intervene in the market to order children out of chimneys and into schools, or to provide sustenance for the hungry and unemployed or to rescue failing industries? In due course Beatrice became one of the leading architects of the welfare state—and a leading apologist for Soviet communism.

    The argument about the relative merits of the state and the market that preoccupied young Beatrice has been raging ever since. Between 1900 and 1970 the pro-statists had the wind in their sails. Governments started off by weaving social safety nets and ended up by nationalising huge chunks of the economy. Yet between 1970 and 2000 the free-marketeers made a comeback. Ronald Reagan and Margaret Thatcher started a fashion across the West for privatising state-run industries and pruning the welfare state. The Soviet Union and its outriggers collapsed in ruins.

    The era of free-market triumphalism has come to a juddering halt, and the crisis that destroyed Lehman Brothers in 2008 is now engulfing much of the rich world. The weakest countries, such as Greece, have already been plunged into chaos. Even the mighty United States has seen the income of the average worker contract every year for the past three years. The Fraser Institute, a Canadian think-tank, which has been measuring the progress of economic freedom for the past four decades, saw its worldwide “freedom index” rise relentlessly from 5.5 (out of 10) in 1980 to 6.7 in 2007. But then it started to move backwards.

    The crisis of liberal capitalism has been rendered more serious by the rise of a potent alternative: state capitalism, which tries to meld the powers of the state with the powers of capitalism. It depends on government to pick winners and promote economic growth. But it also uses capitalist tools such as listing state-owned companies on the stockmarket and embracing globalisation. Elements of state capitalism have been seen in the past, for example in the rise of Japan in the 1950s and even of Germany in the 1870s, but never before has it operated on such a scale and with such sophisticated tools.

    State capitalism can claim the world’s most successful big economy for its camp. Over the past 30 years China’s GDP has grown at an average rate of 9.5% a year and its international trade by 18% in volume terms. Over the past ten years its GDP has more than trebled to $11 trillion. China has taken over from Japan as the world’s second-biggest economy, and from America as the world’s biggest market for many consumer goods. The Chinese state is the biggest shareholder in the country’s 150 biggest companies and guides and goads thousands more. It shapes the overall market by managing its currency, directing money to favoured industries and working closely with Chinese companies abroad.
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    Senior Member Molon Labe's Avatar
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    Captialism and Statism are incongruent.

    There are very few places in this world where true capitalism exists. The US is not one of them.
    Gun Control: The theory that a woman found dead in an alley, raped and strangled with her panty hose, is somehow morally superior to a woman explaining to police how her attacker got that fatal bullet wound - Unknown


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    Senior Member Arroyo_Doble's Avatar
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    Quote Originally Posted by Molon Labe View Post
    Captialism and Statism are incongruent.

    There are very few places in this world where true capitalism exists. The US is not one of them.
    Where does it exist?
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    Quote Originally Posted by Arroyo_Doble View Post
    Where does it exist?
    It probably doesn't. At least not in any large, successful form.
    And I'm not sure we would really be happy going back to the days of the robber barons. Most of us would like some sort of restraint.
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    Senior Member Ranger Rick's Avatar
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    You can see true capitalism in play with the illegal drug trade. What private party builds submarines or digs tunnels. The innovation, job creation, it is a shame we can not direct it into something more productive.
    I dream of the day a chicken can cross the road without it's motives being questioned.

    Quote Originally Posted by lazyboy97O View Post
    How is a state religion bad, but state medicine good?
    Quote Originally Posted by steamboatpete View Post
    Anyone who makes the decision to depend upon the government to take care of their basic needs has essentially doomed himself to a life of bitter disappointment.
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    Senior Member Molon Labe's Avatar
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    Quote Originally Posted by Arroyo_Doble View Post
    Where does it exist?
    Well, it came about as close as possible under the hand of our own Federal government about a century and a half ago. Believe it or not, some markets in Islamic countries are more free market oriented than anything we have here. Just walk around the markets in the ME and in the countries where they still use PMs for currency. Also Hong Kong until it came under the thumb of the Chinese government was pretty close. Not much else since almost every nation on earth uses fiat currency and central banking. Marxist b.s.

    Put it to you this way. Give me a place where there is the lowest most inconsequential tax burden and I will show you how easy it can be to prosper and take care of those who can't.
    Gun Control: The theory that a woman found dead in an alley, raped and strangled with her panty hose, is somehow morally superior to a woman explaining to police how her attacker got that fatal bullet wound - Unknown


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