What’s Wrong with the World

Like a crazed stalker, I can't let another one of Maximos' economic rants go by without comment. To wit, David Frum is making a perfectly excellent point in contrast to Frank's drivel. Namely, show me an economy in the 70s that was open to global commercial credit markets and I'll show you (mostly) thriving and growing market economies. The fact that some Latin American (and African) countries were mismanaging their economies in all sorts of different ways (mostly through half-baked socialist measures like nationalized industries, burdensome business regulations, high tax rates, run-away government spending, etc.) is not a case against an open economy or international finance. I guarantee you that South Korea, Hong Kong, Taiwan, Singapore, Chile, Greece, Spain, and other countries that were actively involved in foreign trade and investment (including "global commercial credit markets") did fine in the 80s and 90s.

Jeff Singer,
In addition to these economic correctives, I hope you can help David Frum with his polemics. His ridiculous response to Franks, is on par with his notorious "Unpatriotic Conservatives", as witness this;
"It's rare for a columnist to manage to cram historical illiteracy, economic incompetence, political authoritarianism, and utter disregard for human suffering into a single sentence." And this; "Franks' idealized Maoist era"

Anyone who differs with the guy is either a Fascist, a Marxist or a traitor. What he lacks in insight, is more than compensated for with dismissive intolerance. He was quite the phenom when he first came up, but right now, he's the washed-up slugger who angrily tosses his bat towards the dug-out after each, futile at bat. It's pitiful to behold.

Jeff,

The 1997 Asian financial crisis ring any bells or do currency markets not count as international trade?

Kevin,

We'll have to agree to disagree, although the "idealized Maoist era" is obviously a cheap shot. I do not want to rehash the debate over "Unpatriotic Conservatives" except to note that the piece extensively quoted the individuals in question and made an argument and judgement call based on those quotes. I'm sure you disagree with Frum's judgement, but I do not think it can be characterized as "dismissive intolerance". Ironically, he is now the one being criticized by Rush (and others) on the Right, for making the argument in "Comeback" that the Republican party needs to change. Finally, I think he does a great job at bat when confronted with this nut job:

http://www.youtube.com/watch?v=99QopsseBM4

Step2,

And that crisis destroyed those East Asian economies? Last I checked, while the "crisis" was painful, it was no worse than our own "crises" dealing with stagflation in the 70s or the S&L collapse in the 80s, etc. In other words, in an open market economy there will be ups and downs, but over the long haul wealth steadily increases. South Korea, Thailand, et. al. are still growing and economic life is improving for the people of those countries.

Jeff,
I'll not return to the "Unpatriotic Conservatives" debate, other than to say, the quotes were purposely selected and taken out of context to justify an unjust premise. Just because Tom Fleming thinks France possesses a superior cultural history, does not mean he loves America less. Yet, Frum built his entire case on such sophistry. And the pattern continues. Franks is accused of an "utter disregard for human suffering", because, well because he is not a capitalist. Just how barren can political debate get?

I haven't read much of Frum since 2003, and have no idea what his prescriptions are for the GOP, but given his track record, and his cable TV-fitted rhetoric, let the buyer beware. I wish you would stop defending him, and instead, start instructing him. Or, he'll soon be unable to do anything other than debate 9-11 conspiracy theorists in out of the way coffee-houses.

Frum's caustic, borderline-libelous response to Frank would be warranted, with respect to the economic assertions, if and only if economic mismanagement and corruption were the sole reasons for the failure of nations that opened their economies to capital flows and attempted to follow the neoliberal path. And that is simply false. Economic conditions differ from nation to nation, based upon the human capital, balance of industries, natural resources, cultures, and so forth, and implicit in this entire discussion is the supercilious, blame-the-victim mentality of neoliberalism: the ideology can never be ill-fitted to circumstances; no, when it fails, it must be on account of corruption, or "half-baked socialist measures", because the one-size-fits-all programme is bound to lead to success if only the poor wogs recognize that one size does indeed fit everyone.

My point is not that half-baked socialist nonsense didn't cause problems for developing countries, but that this is not a universal and reductive explanation for all developmentalist failures. A country such as Chile, which possessed many resources and commodities desired on global markets, could benefit somewhat from a limited adoption of the programme; other nations in Latin America and Africa, lacking such resources - many of them really possessed little more than arable land and tropical fruits - only ended up in debt. In other words, economic unsuitability for the neoliberal scheme contributed to failure alongside crackpot governance, and once the West purposed to Whip Inflation, that had consequences for such nations. As regards China, the Maoist regime impeded the economic development of the nation, but that isn't really germane to the relatively narrow point at hand: when China did open up to the world economically, it benefited from the fact that it had not borrowed funds that would have to be repaid at high rates of interest, and opened to the world at a time when capital flows were not only increasing, but accompanying the wholesale transfer of industrial capacity out of the West.

Two other points merit statement. First, several of those Asian nations - Taiwan, Singapore, and Korea - deviate significantly from the straight neoliberal programme, and have implemented industrial policies, capital controls, and protectionist measures at various times. Capital flows can be beneficial, but they are neither necessary nor sufficient as we know them now. Second, several of those nations were governed by juntas during the Seventies, and one of them - Chile - is infamous for having adopted neoliberalism only because it was ruled by a military dictator. Anti-American sentiment in two others - Greece and Korea - owes much to American support, on anticommunist grounds, for genuinely unpopular juntas during the Cold War. If Frum wants to tango to the theme of dictatorships that inflict suffering upon their people, he is welcome to do so; but that argument cuts both ways, and is more damaging to neoliberalism than is commonly recognized, for if the 'economic ideal' can only be realized in many nations by undemocratic means, than all of the grandiose rhetoric about democracy, freedom, and suchlike turns about to be so much agitprop. Freedom really means unfreedom, doing things the way Western financial and business elites demand, and not necessarily self-government. Freedom apparently refers to one narrow class of liberties, magnified above all others.

As for the financial crises of the past fifteen years, what they demonstrate is that the more extravagant rhetoric about self-regulating markets is a farrago of nonsense, and that capital flows can actually be destructive, if they pursue short-term speculative gains at the expense of the gradual, ordered, measured development of an economy - and this is precisely what happened in Asia, which experienced numerous speculative bubbles. It turns out that capital can go on strike just as can labour; when capital doesn't garner desired returns, or reaches the limit of an artificial bubble, its holders can simply walk away. When labour does this, it will be admonished that its conduct is antisocial and obstructionist, almost as though it were 1935, and we were leveling accusations of "wrecking", and told to suck it up, go back to work, and take a crappier wage. When capital, however, does not earn a "sufficient" rate of return, it is never admonished that circumstances are such that it will have to accept lower returns, or adapt to a gradualist pace of development; no, it can just take its toys and go home, and everyone is supposed to twitter on about the wonders of the market mechanism, the Invisible Hand, and the rights of investors. Frankly, this glaring inconsistency is a hallmark of ideological thought.

As for Frum, his Dead Right evinced flashes of brilliance, but his unhinged diatribe against the paleos essentially amounted to the accusation that opponents of the Empire hated their country. More recently, he has taken to arguing, with ample justification, that the Reagan era has ended, and that conservatives must assemble a different policy toolkit if they are to find employment in changed circumstances, characterized by distinct conundrums; he's perfectly correct, though I am, of course, skeptical of most of his counsels. His willingness to entertain constructive deviations from recent GOP orthodoxy will come to naught, however, if he does not resist the tendency to hurl epithets and anathemas, since this is the very tendency that produced the sclerosis on the right in the first instance.

When labour does this, it will be admonished that its conduct is antisocial and obstructionist, almost as though it were 1935, and we were leveling accusations of "wrecking", and told to suck it up, go back to work, and take a crappier wage. When capital, however, does not earn a "sufficient" rate of return, it is never admonished that circumstances are such that it will have to accept lower returns, or adapt to a gradualist pace of development; no, it can just take its toys and go home, and everyone is supposed to twitter on about the wonders of the market mechanism, the Invisible Hand, and the rights of investors. Frankly, this glaring inconsistency is a hallmark of ideological thought.

I'm really trying to assimilate that bit. I realize I'm relatively ignorant here on these subjects compared to either of the Jeffs debating (no, that is not a sarcastic remark but meant seriously), but this really baffles me. "Labor" is just another name for non-managerial people who work, right? So what people is "capital" another name for, and what do those people do? And how is there at all a parallel here? After all, suppose it _is_ 1935. Actually, nobody can "tell" you to suck it up and go back to work in the sense of leveling a gun at your head and forcing you to do so. You could, of course, just do without a job and take the consequences. No fun, that, I admit. But the fact that there are a different set of consequences for quitting your job because you think the wages are not high enough and...what?...investing in a different market?...hardly seems to me to be something to get all up in arms about. I'm really trying to wrap my brain around this. Is the idea that it's _unfair_ that a guy who refuses a job because he wants higher wages and then can't find a job may starve, but a guy who refuses to keep investing in something he was investing in before can always find something else to invest in and won't starve because he moves his investment money around? My heart is just not leaping up in indignation, here. Not a single extra beat of injustice-inspired anger. But perhaps I've just misunderstood the comparison.

My meaning is actually pretty straightforward: we, as a society, have a collective conception which tells us that "circumstances may dictate that non-managerial people simply have to suck it up" when management imposes wage and benefit reductions, declares bankruptcy in order to raid the pension fund, offshores operations, and any number of other things likely to be opposed by labour. Correlatively, we have, at a minimum, an amorphous conception of what it is for labour to "demand too much"; we may not be able to define the concept with any precision or rigour, but we certainly "know when we see them" so-called "gold-plated union contracts" and suchlike. Nevertheless, we do not possess an analogous conception for capital, according to which "management and holders of capital, when circumstances dictate, may have to accept a lower rate of return, a lower level of profitability" when economic growth in some sector, country, or venture fails to meet expectations; the notion that holders of investment capital might have inflated expectations simply does not register with us. When returns are not as anticipated or desired, they may simply withdraw their capital and take it elsewhere. In other words, we have a vague notion of labour being obligated to think of society as a whole, or consumers as a category, or even the poor noble capitalist, when it asserts its own interests; we do not have even a glimmer of a notion that capital ought to think of the societies in which its investments are made, workers as a category (let alone as persons), or even the workers who suffer when capital is withdrawn - for we think of capital, implicitly, as an analogue of that passage in Isaiah, in which God states that His word shall not return to Him void, but shall surely accomplish the purpose for which He sent it. It's acceptable, societally, for labour to return home void, or at least poorly compensated; but heaven shall burn if capital is not permitted the widest scope to pursue the fullest returns. What I'm suggesting is this: labour may be obligated, in certain circumstances, to press its claims against capital with greater vigour than we might like to concede, because labourers have families to sustain; and capital may be obligated, in certain circumstances, to stick it out in investments that might generate lower rates of return than other opportunities, precisely because real people depend upon its effects upon development and economic activity.

I think that this dichotomy arises, in part, from a tinhorn-dictator, plenary conception of property rights, according to which those who possess property act, and those who have it not are acted upon.

I don't think of inflated labor demands as anti-social so much as stupid, in and of themselves. And I suppose as far as that goes that inflated investor demands might be stupid, too, in much the same sense: That you can't get them. I _do_ get to thinking of inflated labor demands as anti-social when they are forced, as in forced negotiation under government auspices, for which there is no analogue that I can think of for investors. Presumably you want there to be one. So it is really you who are imposing a moral interpretation rather than I. My problem isn't with strikes ("strikes are antisocial and immoral") but with forced arbitration in strikes. You want us to interpret "going on strike" with one's capital as immoral and hence to find some way to prevent it. I'd prefer to treat both refusing to work as a ploy to get higher wages and refusing to continue to invest in X in the hopes of getting better returns from Y as not having moral weight in themselves, though the acts may be wise or foolish in the given circumstances, and let the chips fall where they may.

The reason that I would say a worker sometimes has to "suck it up" is just simply that there are more serious consequences to having no job than to having your money stuffed in a mattress rather than having it invested. But that's reality. To try to say, "There _ought_ not to be heavier consequences to having no job than to having your money uninvested" or "It _ought_ not to be easier to get a better rate of return on your investments than to get a higher wage for your job" strikes me as an ideological war on reality much like the many liberal ideological wars with reality that we are familiar with. It's like saying, "It's just wrong that you can get killed jumping off a cliff but not jumping off your front step. We must do something about this injustice." Social liberals think it's unfair that men and women are unequal in upper body strength. Economic liberals think it's unfair that an investor has more options as to what to do with his money than an employee has as to what to do with his time. Both seem to me bizarre and childish: "I'll make the world be otherwise than it is."

I'm just glad that someone else thought that Jonah Goldberg's take on Fascism was idiotic. I don't thinkit was PostModern discourse, any more than Dawkin's "God Delusion". It just seemed to be transparently wrong.

Graham Veale

Kevin,

Frum discusses Fleming's tenure at "Chronicles" and his support for the Serbian cause during the 1999 war over Kosovo, as well as quoting Fleming saying this about France:

"I respect and admire the French, who have been a far greater nation than we shall ever be, that is, if greatness means anything loftier than money and bombs."

All I'll say, is that this seems like an odd sentiment from a paleo as I always thought the paleos were the ones who emphasized the importance of local attachments and the importance of taking pride in your own culture and heritage.

Maximos,

You say "Frum's caustic, borderline-libelous response to Frank would be warranted, with respect to the economic assertions, if and only if economic mismanagement and corruption were the sole reasons for the failure of nations that opened their economies to capital flows and attempted to follow the neoliberal path. And that is simply false."

I say, you are just plain wrong and the actual facts do not correspond to your analysis. Latin America is actually an excellent case study -- both Chile and Argentina (not to mention Brazil) are blessed with all sorts of "resources and commodities desired on global markets". In fact, I would argue that both Argentina and Brazil are blessed with more resources and commodities than Chile -- but both were cursed with bad government policy (i.e. more socialism). Only now, at long last thanks to the former leftist "Lula" adopting real neoliberal economic reforms is Brazil's economy beginning to realize its potential.

Or take India and South Korea. Here is a delightful passage from an article by Clive Crook:

"The development experiences of Third World countries since the fifties have been staggeringly diverse—and hence very informative. Forty years ago the developing countries looked a lot more like each other than they do today. Take India and South Korea. By any standards, both countries were extremely poor: India's income per capita was about $150 (in 1980 dollars) and South Korea's was about $350. Life expectancy was about forty years and fifty years respectively. In both countries roughly 70 percent of the people worked on the land, and farming accounted for 40 percent of national income. The two countries were so far behind the industrial world that it seemed nearly inconceivable that either could ever attain reasonable standards of living, let alone catch up.

If anything, India had the edge. Its savings rate was 12 percent of GNP while Korea's was only 8 percent. India had natural resources. Its size gave its industries a huge domestic market as a platform for growth. Its former colonial masters, the British, left behind railways and other infrastructure that were good by Third World standards. The country had a competent judiciary and civil service, manned by a highly educated elite. Korea lacked all that. In the fifties the U.S. government thought it so unlikely that Korea would achieve any increase in living standards at all that its policy was to provide "sustaining aid" to stop them falling even further.

Less than forty years later—a short time in economic history—South Korea's extraordinary success is taken for granted. By the end of the eighties, its per capita income (in the same 1980 dollars) had risen to $2,900, an increase of nearly 6 percent a year sustained over more than three decades. None of today's rich countries, not even Japan, saw such a rapid transformation in the deep structure of their economies. In contrast, India's income per capita grew from $150 to $230, a rise of about 1.5 percent a year, between 1950 and 1980. India is widely regarded as a development failure. Yet over the past few decades even India has achieved more progress than today's rich countries did over similar periods and at comparable stages in their development."

What is so risible about Frank's quote is that he is essentially making the argument that if a government mismanages the economy for years (which is putting it mildly in the case of a country like China) and then decides to adopt free-market policies we should somehow praise that government's foresight (?!) for earlier not getting the country into crushing debt? He implicitly assumes that the choice back in the 60s, 70s, and 80s was either crushing capitalist debt or sealing off the country from free-market capital flows. Frank is the one who is simplifying the world, not Frum. In truth, you are right Maximos about one thing -- global capital markets weren't that important to growth for most of the successful developing countries in the 70s and 80s (they financed most of their businesses with domestic household and business savings). But an openness to global credit also allows global expertise to help domestic businesses and really goes hand in hand with an openness to trade more generally and free market economics.

Finally, the fact that capitalists want high returns from their money is not a problem with the market, IT IS AN INTEGRAL FEATURE TO ITS SUCCESS! Many investors take risks with their money and lose it all. As Lydia so eloquently points out, it is just common sense to want a good return on your investment and when an investment performs poorly, this is a market signal to shift capital to more productive uses. These price signals (i.e. profit and loss) and the key to the success of any free market and whether you are talking about a hedge fund manager, a mom & pop restaurant, a real estate speculator -- they all respond to the same price signals. Do all these investors make bad decisions from time to time? Of course, but allowing them all to fail and pick up and try again is part of the key to the success of a market economy.

And I suppose as far as that goes that inflated investor demands might be stupid, too, in much the same sense: That you can't get them.

That is quite true in itself. But it is also true to say that you often can't get them without doing something immoral, where inclusive in something immoral is shirking moral duties one has to employees.

You can always get a higher overall return if you ignore your moral duties, in general. There are always incremental 'opportunities' to make more money than the guy who is constrained by moral integrity. Pornography is a trivial example.

In my view the resistance of dogmatic capitalists to this basic truth collapses the credibility of everything else they have to say. Anyone who refuses to admit to this without any hedging or tergiversation really has no standing to comment on morality and economics at all. I'm a firm believer in the salutary nature of capitalist activity in general, but I often find myself commenting on its failings and limitations precisely because so many folks on the right-liberal side of things simply refuse to admit that it has any at all.

It is something of a sorites paradox, to be sure, or at least some kind of paradox, and I'd be the last person to be sympathetic to aggressive government interventionism in what is subtle and complex. Government is a blunt instrument, incapable of subtlety no matter how much modern technocrats or others wish it were a scalpel.

But rejecting the fact that an investor unconstrained by moral concerns can in fact achieve higher returns than an investor constrained by those concerns, and that there must therefore be some extra-market constraints on what investors are permitted to do -- including how much it pays for labor, conditions to which labor is subjected, where it gets its labor from, etc -- is just ridiculous.

But something similar is true of an employee, Zippy, though it may not be as obvious. Suppose your employer depends on you. Suddenly threatening to quit and leave him in the lurch with no one else trained to do your job (I can think of secretaries who have this power at this very moment) is a form of disloyalty and manipulation, but it might very well work to get you a higher wage. That is a trivial and relatively uncontroversial example, but I would apply the principle to less trivial and more controversial cases as well.

My objection here is to this weird idea that it is _unfair_ that an investor can more easily divest from one thing and try to get a higher rate of return elsewhere than an (un-unionized) worker can quit his job and try to get a higher wage elsewhere. For one thing, this whole "investors vs. labor" story is artificial; the same person might be both. Here's Bob: He has a job, and he also has money in mutual funds. Let's suppose Bob's job isn't unionized. He'd like a higher wage at his job, and he'd also like a higher rate of return on his mutual fund. But he can more easily take a risk on the latter than on the former, because he's living on the money he gets from his job and not (now) on his returns from his mutual fund. So he can sell his stocks and try a different investment, and the consequences for failing to get what he wants aren't immediate and dire. But if he threatens to quit if not given a higher wage and his employer says, "You're fired," the consequences of trying and failing there are pretty dire, especially if his skills aren't in much demand. Big deal. There is no heavy moral significance to the differential ease with which Bob qua investor can try for a higher rate of return and Bob qua employee can try for a higher salary. None whatsoever. It's also easier than either of these for him to try a different brand of orange juice at the store or to "go on strike" from drinking orange juice whatsoever, but no one calls the relative ease of purchasing different products at the store vs. trying different stock investments "unfair." The whole thing is just silly. Different activities in life carry different risks. In some areas it's easier to get what we want than in others. Circumstances constrain our options for trying to get what we want in some areas more than in others. Big deal. There is no reason why this is bad, or unfair, or should be equalized somehow. Maximos's outrage over such inequalities in outcomes and options just leaves me unmoved.

Us "dogmatic capitalists" agree (or at least this one does) that an employer has moral duties to his employees. We disagree on what those duties are. I wouldn't go much further than basic honesty and respect (i.e. don't call female employees "sweetie" if they find it offensive, etc.) I fear very much the supposedly "moral" duties you would impose on capitalists.

Lydia, I have not proposed the utopian ideal of the abolition of all differentials of status and power; what I have questioned is the curious and entirely unjustified modern assumption that particular, contingent differentials either are, or should be treated as, natural, that for any given differential range, the maximal expression is to be considered licit, even desirable, and that no such differentials are morally contextualized or raise moral questions. In other words, I question the tacit assumption that what is, is just. There is no advocacy of the bizarre idea that risks in life should be subject to some sort of egalitarian leveling; this doesn't concern the existence of such differentials, merely their degrees.

Jeff, Chile, Argentina, and Brazil are not the whole of Latin America. And even between them, there are important differences, both of culture and political tradition, that militate against the uniform application of the neoliberal paradigm. Chile is largely a success story, though in recent years, there have been some popular complaints about the neoliberal settlement, and the electorate has moved to the left. Brazil's success depends, in part, upon its energy sector, which is at least partially state-owned, and underwrites the nation's energy independence. And Argentina in the past decade stands as a textbook illustration of how neoliberal strictures can be utterly unsuitable for particular countries. If, as you concede later in your comment, reliance on international capital markets is not a prerequisite for economic advancement, then a corollary of this is that the neoliberal paradigm is not for every nation; some nations, owing to historical and cultural factors, might do better do rely upon other methods of development. As I've indicated, this worked for several nations in Asia. Crook's analysis spotlights how remarkable those transformations have been; but this has not been an undifferentiated triumph of neoliberalism.

As regards Frank, he is not arguing that some governments might deserve credit for having been tyrannical, then seeing the light and opening up to the world. In fact, Frank can assume anything he wants behind his published statement, and I could not care less, because the statement as it stands is correct. Prior to the neoliberal turn and the recent phase of globalization, the opening of a socialist economy to foreign investment/borrowing was no guarantee of improvement, and that not solely on account of the wastefulness of socialism generally. Hell, the Russian example, well within the globalist age, demonstrates that even under conditions of greater openness, neoliberalism does not guarantee success in the transformation of a socialist economy. China, in other words, has benefited from both historical fortuities and a measure of prudence, which is not to minimize the many injustices of the regime.

but allowing them all to fail and pick up and try again is part of the key to the success of a market economy.

That this is true generally does not entail that it is true in each specific instance; or, better yet, that it is true generally that the pursuit of profits is beneficial and legitimate does not entail that each instance of that pursuit is beneficial and justified.

Lydia:

But something similar is true of an employee, Zippy, though it may not be as obvious.

Jeff (Singer)

I wouldn't go much further than basic honesty and respect...

It is too lunatic to be taken seriously.

Jeff,
Anyone as familiar with Fleming, as Frum is, knows the former has made attachment to the local a major theme of his work, to the point of telling his readers more than we would ever care to know about Rockford, Illinois. In fact, it is this very attachment that forms his aversion to military actions in distant lands. Fleming's rhetoric regarding our culture's utilitarianism, may or may no be excessive, but to suggest he is treasonous or unpatriotic as a result, is absurd.

Frum's demonization of right-wing opponents to the Iraqi War was, like the rest of the Administration's sales job, successful. One would hope, sheer decency would now lead him to second thoughts regarding his personal role in the whole tragic affair. Yet, if he does, he has been uncharacteristically quiet and apparently unrepentant.

Maximos,

I just don't agree with your facts -- for example, Brazil has always had a state-owned energy sector and until now (with Lula's economic reforms, i.e. less state regulation, lower taxes on investment, etc., etc.) they haven't been able to grow the economy very effectively. I agree with you that every country has a unique "culture and political tradition"; but what is so amazing about the neoliberal capitalist system is that despite these differences in culture and political tradition, when a country adopts basic market reforms (laws that respect private property and contracts, less state regulation over economic decisions, lower taxes, etc.) they prosper. Look, each country won't adopt all these reforms in exactly the same way or following some sort of textbook script (not that one exists). It doesn't do much good to open your country up for trade if laws don't protect private property and contracts; it is not a good idea to borrow lots of money from foreign banks to give away this money to the poor (which is basically what Argentina did through economic mismanagement -- not by following the neoliberal "script"), etc. So we can haggle over the details but not the fundamental truth -- the neoliberal paradigm works to raise the economic well-being of the people of ANY country.

Zippy,

I don't understand why what I wrote is "lunatic". What would you constrain business owners from doing? How would you command they run their business?

Maximos, I think I follow you to some extent. But I think, too, that you should abandon your complaints about how "our society" views people's quitting their jobs. For one thing, there is plenty of labor sympathy in "our society" and union-busting measures would probably be unpopular. You can make of that what you will, and so can I, but it certainly isn't the case that "our society" views strikes as anti-social and wrong. More to the point, it isn't true that the capitalists you disagree with view job-quitting or strikes as inherently morally wrong while viewing capital reinvestment as morally neutral or legitimate. Rather, what they object to is the government's guaranteeing to the strikers protection against the results of their striking: For example, their all being fired and replaced. The moral judgment, then, is not against the supposedly "anti-social" behavior of striking. Taken in itself, it could be considered just as a thing people can try to do to try to get what they want. It might sometimes be wrong but wouldn't be wrong in general. The judgement is rather against government protection of strikers against firing and the insistence that employers negotiate with unions. The nearest parallel in the case of investment would perhaps be some sort of government protection for investors such that they can never lose more than such-and-such if they try some particular investment strategy. But I'm not asking for such investor protection. Investors take their risks, employees who strike or quit take theirs, sky-divers take theirs, airplane pilots take theirs. Life is not without risk.

It is you who want to blame people for things, to guarantee or partially protect one sort of risk-taking against loss while leaving the other risk-taking open to loss and, indeed, perhaps finding some way to _force_ investors to take losses that they could otherwise avoid by reinvesting. So employers are forced to negotiate with striking workers and investors are forced to take losses rather than cutting their losses. This, as far as I can tell, is your idea of a just world.

For my part, I won't blame employees for taking their risks, but I also don't want them protected by government against the consequences of their actions. Similarly, I can see no reason for blaming investors for taking their risks, and nothing even remotely just or fair about forcing them to take more risk than they presently do without the "out" of divesting. As far as regulation goes, let the worker quit his job if he wishes, judging for himself the risks and benefits, and let the investor sell his stocks and reinvest if he wishes, judging for himself the risks and benefits. That would be a truly parallel situation. That the outcomes might be different for people who try these different things seems to me no more a deep moral problem than any other difference in risks and outcomes that we encounter in life.

If neoliberalism were merely the rule of law, a general tendency towards fewer regulations, and lower taxes, it would not be nearly so controversial and resented. Neoliberalism, in practice, often amounts to the full panoply of capital mobility rights, anti-inflationary monetary policy where this might be injurious given the configuration of economic and political forces, the "rights" of foreign entities to full ownership of native assets, full foreign repatriation of profits, the elimination of tariffs, and so forth. Hence, if you mean by "neoliberalism" the former three things, then, generally speaking, this circumscribed neoliberalism works; if you mean the latter, then no dice - circumstances are too variable.

Lydia, I suspect that our anecdotal observations concerning public perception of, say, union strikes, vary widely. Virtually everyone in my experience has viewed them negatively. For that matter, American economic policy for two generations has aimed, mostly indirectly, at the weakening of union power; and throughout that period, the opposition of the public at large has been nearly nonexistent.

As regards the theme of risks, we're going to have to disagree; certainly, what capitalists find objectionable is mandated collective bargaining or arbitration, and the protection of strikig workers from replacement. All that demonstrates is that capitalists are deaf, dumb, and blind regarding the ethical implications of the power differentials they incarnate; it is licit, on this understanding, for capitalists to become virtual price-makers in the labour market, but illicit for labour to seek and possess any compensatory leverage against this power. Behind this is the fiction that each employment contract represents a good-faith negotiation entered into by both parties; in reality, only highly-skilled professionals ever really acquire the market power to so negotiate, and absent the compensatory leverage of unions, most employment "negotiations" are in reality binary proposals: take it or leave it. We have the labour legislation he have, in part, because past generations adjudged that such concentrations of power as the great capitalist entities represented required balancing. Once more, we are back to the fundamental question of power differentials: why should the maximal expression be preferred?

anti-inflationary monetary policy where this might be injurious given the configuration of economic and political forces,

So much for my lurking, back-of-the-mind conjecture that Maximos might be somewhat more open to libertarian economics if only it were the more hard-core Austrian kind (with its strong anti-inflationary bent) rather than the present kind, with government bail-outs, inflation to rescue the economy, and so forth.

So much for your conjecture? Huh? I fully appreciate the perils of inflation; I also appreciate the structural difficulties associated with the transition from politico-economic systems reliant upon inflation to those in which inflation is controlled. In other words, the rate of inflation is one concern among many, and an anti-inflationary policy which causes an economy to crater, or obliterates the industries upon which many people depend for livlihoods, can be equally as injurious as hyperinflation. Transitions, in true conservative fashion, should be undertaken in a spirit of gradualism, appreciative of local conditions, rather than imposed as shock therapy.

Honestly, it was just a conjecture from previous threads. I suppose any attempt to get off the treadmill, inflation-wise, will be injurious to some, even if undertaken gradually. And I suppose it's possible that there are some things that literally cannot be done gradually. I honestly have no panacea to offer and would only say that you can't rule out any policy purely on the grounds that it will be injurious, because there are always tradeoffs and compromises involved (HT to Thomas Sowell) in policies and very few plain-old solutions.

Yes, I know we disagree about union bargaining power. What I'm challenging is your implication that capitalists have a double standard or are inconsistent in some way. I don't think they are at all. From my perspective, the laborer is just as welcome as the investor to take his marbles and go home. I say that I have a single and consistent standard. I don't favor forcing laborers to labor or forcing investors to invest. What you don't like is simply that the laborer may suffer more serious consequences if he takes his marbles and goes home, or takes his marbles to a different job, than the investor suffers if he changes his investments. That's your judgment of how the world ought not to be, and we disagree. But you certainly haven't turned up any inconsistency in the capitalist's position by having a certain set of ideas of your own about what consequences people should be guaranteed not to suffer (in the case of workers), or regulatorily forced to suffer (in the case of investors) for their choices.

And I still don't actually know how you propose to force investors to continue to invest when they are losing money. No doubt you have something concrete in mind. But whatever it is, a capitalist's opposition to it doesn't show him to be inconsistent because of his position on labor strikes.

Yes, there are always tradeoffs and compromises; and there are always better and worse ways of addressing necessary economic transitions. Too often, the West has advised developing nations to follow courses that have been more injurious than they needed to be. One wonders why. Or not.

What I'm challenging is your implication that capitalists have a double standard or are inconsistent in some way. I don't think they are at all.

I'm primarily concerned with general societal perceptions, as opposed to the perceptions of the capitalist/investor/rentier class. It is not precisely inconsistent - though if the arguments were teased for a while, I'm certain that one could be elucidated - on the part of capitalists to maintain that they should be permitted to do as they please and take the consequences (though, in reality, they don't really make this claim, which is why we have 36000 registered lobbyists and Wall Street bailouts for impecunious investment bankers), while maintaining that labourers should be subject to the same sort of risks - sure, quit your job or go on strike, and then take the consequences without calling in the government for assistance - but it is self-serving, amounting to the declaration that they should be permitted the exercise of untrammeled power. "Let me have my way, and it will be my way or the highway for labourers, but that's OK because I'm entitled to rule as a tinhorn despot" is what they are really saying.

To clarify: what is inconsistent is the prevalent notion that labour has obligations, or must yield to certain alleged cold hard facts, but that capital has no such obligations, and, more often than not, does not have to yield to cold hard facts.

I'm happy to ditch the bailouts for bankers. At that point, I'm also happy to say that everybody has to yield to hard, cold, facts. It's just that in some areas of life, the facts happen to be harder and colder than in others. Like I said, the same person takes more of a risk re-investing his 401k than the same person takes quitting his job or threatening to quit. He has to yield to the hard, cold, facts either way. It's just that as things happen to be, he has more to worry about in making some decisions than in making others--he stands to lose more for a mistake in some areas than in others. I see no inconsistency there of any kind at all.

Jeff,

Sorry to respond to you so late. So if the IMF has to swoop in and salvage an economy from collapse, that is just part of the normal business cycle. That is rich, pun intended.

Maximos,

The problem, from my limited perspective, is the massive liquidity of capital these days. Because they are guaranteed nothing from a failed investment, unlike bondholders who have limited rights after bankruptcy, stock and derivative investors demand liquidity as their backup plan to salvage something from investments gone sour. Not only does this provide a blueprint for increasingly speculative returns, it inverts the degree of risk, since the major stockholders (who in theory are taking the greatest risk) will typically have the greatest ability to analyze the fundamental market forces in play and act upon that before the individual investor notices something wrong.