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To my knowledge, it has never been tried in the history of the world, which suggests humans understand it is simply not doable.

But more to the point, how is it workable, when economies need regulations in order to protect consumers and curb greed and excesses?

This is borne out by the historical track record. If I'm not mistaken, all these successful economies like Britain, Japan, Australia, New Zealand, Germany and America, employ mixed economies, which have combinations of freedom and control, capitalism with socialism. And they are doing fantastic as far as economically and their standards of living.

Also, since these countries are doing so well and are still here, does that prove Rand was wrong when she said:

"A mixed economy is a country in the process of disintegration, a civil war of pressure-groups looting and devouring one another."

asked Feb 10 '14 at 18:39

KineticPhilosophy's gravatar image

KineticPhilosophy
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edited Feb 11 '14 at 00:14

Greg%20Perkins's gravatar image

Greg Perkins ♦♦
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This question contradicts itself in its first two sentences:

[Laissez-faire capitalism] has never been tried in the history of the world.... [But] economies need regulations in order to protect consumers and curb greed and excesses....

The questioner can't have it both ways. Either laissez-faire capitalism exists and has problems, or it doesn't exist in the world and the world's problems therefore cannot be blamed on laissez-faire capitalism.

Observe that Ayn Rand did not title her well known book as Capitalism: The Untried Ideal. She titled it, Capitalism: The Unknown Ideal -- with emphasis on "unknown." The world has never really known what laissez-faire capitalism actually is, all the way down to its fundamental base in the morality of individualism and the efficacy of reason. America in the latter 1800s came very close to a system of laissez-faire capitalism, but not quite fully -- and certainly not in explicit philosophical understanding of capitalism's moral meaning and moral foundation.

It is mixed economies (and dictatorships) that need regulations to protect ordinary citizens -- not because laissez-faire capitalism has been tried and has failed, but because no political-economic system to date in world history has consistently comprehended and upheld individual rights, free of wrenching conflicts with anti-life, anti-rational, anti-individualist moral presuppositions.

The question is very mistaken about the "historical track record" of mixed economies. They certainly are not "doing fantastic ... economically and [in] their standards of living." Mixed economies worldwide (including the U.S.) are exactly as Ayn Rand described: they are "in the process of disintegration, a civil war of pressure-groups looting and devouring one another." (This quote can be found in the topic of "Mixed Economy" in The Ayn Rand Lexicon,excerpted from CUI p. 185.) One can readily find abundant references in the literature of Objectivism for the full story of capitalism versus mixed economies -- works such as Capitalism: The Unknown Ideal (CUI), Free Market Revolution by Yaron Brook and Don Watkins, and so on. There are also numerous summarizing excerpts in The Ayn Rand Lexicon under the topics of "Capitalism," "Mixed Economy," and related topics. Also be sure to check out the numerous references listed at the end of CUI.

If the question is attempting to assert that a mixed economy is demonstrably a system of harmful "greed and excesses," and that laissez-faire capitalism would be no different, Objectivism challenges that assertion. A mixed economy allows violations of individual rights by government, and also fails to protect individuals fully from violations of their individual rights by others. Laissez-faire capitalism allows neither. Laissez-faire capitalism consistently upholds everyone's individual rights, both by strictly limiting the prerogatives of government, and by protecting individuals from violations of their individual rights by other individuals or enterprises. Under laissez-faire capitalism, irrational "greed and excesses" are penalized by the mechanism of a free market insofar as they do not involve violations of anyone's individual rights, and punished by government when "excesses" mean initiation of direct or indirect physical force against others. Again, no one can claim that laissez-faire capitalism has been tried and has failed; it hasn't. What failed wasn't laissez-faire, and its closest approach so far in history (in the 1800s) was spectacularly successful compared to all known alternatives and subsequent interventions.

If the question is attempting to use "greed and excesses" as an indirect "code word" expression for "inequality," Objectivism challenges the premise that egalitarianism is a moral ideal. Objectivism recognizes that there is a "pyramid" of productive ability in laissez-faire capitalism, and that it is blatantly unfair to greater producers to shackle them for the alleged benefit of anyone who is less productive. Objectivism points out that laissez-faire capitalism actually does vastly more to raise everyone's standard of living than any other system ever devised by man, but capitalism does it by embodying and rewarding the morality of individualism and rejecting the morality of altruism, which committed altruists, blinded by their altruism, will never endorse no matter how much material prosperity capitalism brings.

Laissez-faire capitalism is neither utopian (in the conventional, "something for nothing" meaning) nor a fantasy (insofar man's life, both individually and in a society, depends on upholding individual rights consistently). Laissez-faire capitalism is simply the fully consistent expression and result of upholding man's individual rights (which do not include the freedom to defraud others, or to commit unilateral breaches of contracts, or to commit slander or libel against others, or to violate anyone's individual rights in any other respect).

Update: Sanction of the Victim

In the original question and again in the comments, the questioner has very forcefully stated his basic contention, notwithstanding any references in the literature of Objectivism to the actual history and economic theory of laissez-faire capitalism.

...the essential point of what I'm saying on Laissez Faire capitalism [is:] You need external oversight or regulations from the government or some such institution to have checks and balances(regulations) on the economy so consumers and workers don't get exploited and to reign in capitalist excess or greed.

Appeals to individual rights, including the rights of producers, have no apparent effect on the questioner's thesis, which proposes to infringe the individual rights of producers in order to sacrifice the producers for the alleged benefit of others. By what moral right does anyone propose to initiate physical force against producers (or anyone else)? Objectivism classifies the initiation of physical force against others as morally evil, deserving of decisive retaliatory physical force in response.

The person who motivated me to ask this question ... cites actions like your boss could make you work as many hours as he wanted without overtime; Also I think there were low wages. He called the almost completely unregulated capitalism of the industrial revolution, horrendous, and that is why we don't do unregulated capitalism anymore.

The unmistakable thrust of this formulation is that producers are going to be shackled for the benefit of others no matter what, without regard for any differences in either history or economics between full laissez-faire capitalism and nineteenth century mixed-economy capitalism, without regard for the difference between economic power and political power (refer to that topic in The Ayn Rand Lexicon), without regard for individual rights, or individualism versus altruism, or even the efficacy of reason itself (particularly on the part of the producers).

It might be asked: how can one deal with such a person, especially if he and others like him resort to all-out war on producers in order to enforce their will? Ayn Rand magnificently concretized her answer in her seminal novel, Atlas Shrugged. The fundamental theme of that work is the role of the mind in man's existence. She concretizes what makes the survival of the whole society possible, what sustains the looters, and what the producers can do about the looters. She concretizes the principle of "the sanction of the victim." A memorable explanation by Galt in Part III Chapter I puts it this way:

We've heard it shouted that the industrialist is a parasite, that his workers support him, create his wealth, make his luxury possible—and what would happen to him if they walked out? Very well. I propose to show to the world who depends on whom, who supports whom, who is the source of wealth, who makes whose livelihood possible and what happens to whom when who walks out.

What the producers need to do is stop giving their moral sanction to their destroyers. They need to learn to "shrug," to resist and oppose mysticism-altruism-collectivism-statism wherever and whenever they encounter is, and uphold reason-egoism-individualism-capitalism instead, so long as they remain free enough to speak out about it. (For further explanation of the "Sanction of the Victim," refer to that topic in The Ayn Rand Lexicon.)

answered Feb 12 '14 at 00:21

Ideas%20for%20Life's gravatar image

Ideas for Life ♦
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edited Feb 15 '14 at 19:56

Thanks for the response Ideas For Life, but I must say your claim that the question contradicts itself in its first two sentences, was false.

This is because I never said Laissez Faire capitalism exists, and of course I never blamed the worlds problems on it.

(Feb 12 '14 at 02:51) KineticPhilosophy KineticPhilosophy's gravatar image

"America in the latter 1800s came very close to a system of laissez-faire capitalism"

Yeah, and from what I understand, it was a disaster. The person who motivated me to ask this question agrees with you that we had almost completely unregulated capitalism in the industrial revolution. He cites actions like your boss could make you work as many hours as he wanted without overtime; Also I think there were low wages. He called the almost completely unregulated capitalism of the industrial revolution, horrendous, and that is why we don't do unregulated capitalism anymore.

(Feb 12 '14 at 03:31) KineticPhilosophy KineticPhilosophy's gravatar image

your boss could make you work as many hours as he wanted without overtime

If true as literally written, this is most definitely not an example of laissez-faire capitalism. Note slavery did exist during this period which is a big reason the period was not fully capitalist.

Yeah, and from what I understand, it was a disaster.

Nope, it was far from a disaster. You should read some history of this period because your friend is wrong. I recommend "The Capitalist Manifesto" by Andrew Bernstein: http://www.amazon.com/The-Capitalist-Manifesto-Philosophic-Laissez-Faire/dp/0761832211

(Feb 12 '14 at 11:19) Raman ♦ Raman's gravatar image

@Raman

"this is most definitely not an example of laissez-faire capitalism."

Well wouldnt it be? Since being able to do that to a worker is due to lack of regulations that protect the worker from being exploited by the boss or company. Such regulations or external oversight would be missing in laissez faire capitalism would it not?

(Feb 12 '14 at 15:00) KineticPhilosophy KineticPhilosophy's gravatar image

No. Capitalism is not anarchy.

In capitalism, it's perfectly acceptable to exploit a worker, but only with the worker's permission.

Capitalism is based on the recognition of individual rights. Slavery is a system which violates the individual rights of slaves. Do you agree with that?

(Feb 12 '14 at 15:21) anthony anthony's gravatar image

@Anthony

You're using the word exploit in a nuanced way that is not the way I'm using it. When you used the word exploit there, you mean "to make productive use of". When I use the word exploit here, I mean "to make use of meanly or unfairly for one's own advantage".

Thus when a boss makes you work as many hours as he wants without overtime, he is exploiting the worker, because the worker is not being compensated for all the hours being put in.

This is why regulation is needed to prevent such abuses by employers, and one of the main reasons people feel Laissez faire capitalism cant work.

(Feb 12 '14 at 16:15) KineticPhilosophy KineticPhilosophy's gravatar image

"Your odd and fallacious definition of "exploit" aside,"

How in the world was that definition odd and fallacious? LOL!

(Feb 12 '14 at 18:03) KineticPhilosophy KineticPhilosophy's gravatar image

I think we're getting a bit too off-topic here.

(Feb 12 '14 at 18:54) anthony anthony's gravatar image

@KineticPhilosophy: No, forcing a worker to do something he does not agree to do is not capitalism. It is slavery. As Anthony said, capitalism is not anarchy, nor is it compatible with slavery. In laissez-faire capitalism, forcing someone to work is an initiation of force, and therefore illegal. It would be a violation of the worker's individual rights.

You need to differentiate between "laws" and "regulations". Having no regulations does not mean having zero laws. Watch this video: http://www.youtube.com/watch?v=dKpbmm8Iqv0

(Feb 13 '14 at 12:46) Raman ♦ Raman's gravatar image

@KineticPhilosophy: terms like exploit are emotionally loaded, and so the left loves to use them. Think about it like this: in a society where no one can initiate force (by law), how would an employer "exploit" a worker? Why wouldn't the worker just quit? By our modern standards, working conditions in the 1800s were horrible, and pay was crap. But workers did not quit. Why? You need to consider the historical context. What those workers left behind to work in those factories was 10 times worse than what they gained. Capitalism improved everyone's life tremendously compared to before.

(Feb 13 '14 at 12:54) Raman ♦ Raman's gravatar image

And furthermore, our "modern standards" of pay and safety and working conditions were not created by regulatory fiat. They were only made possible by the wealth created by capitalism. Every modern regulation in this area came after huge improvements were already being implemented by the free marketplace. Read the book I referenced above for more on this, and lots of further references/sources.

(Feb 13 '14 at 12:56) Raman ♦ Raman's gravatar image

@Raman

"No, forcing a worker to do something he does not agree to do is not capitalism"

You misrepresented. If you notice in my responses to you I didn't use the word "forcing".

Also, if you are even remotely familiar with jobs, making employees do what they don't want to do, happens all the time. No force is required. It's a tacit understanding that you do it, or you are no longer wanting your job, or some other punishment like demotion.

Boss tells you to work extra hours. You do it knowing if not, you might get fired. No force required, but you're getting exploited.

(Feb 13 '14 at 19:46) KineticPhilosophy KineticPhilosophy's gravatar image

@Raman

Here's a video for you:

https://www.youtube.com/watch?v=YwpnH_OTZio

"He admitted to what he called a flaw in his long held belief that markets could regulate themselves"

Which is the essential point of what I'm saying on Laissez Faire capitalism. You need external oversight or regulations from the government or some such institution to have checks and balances(regulations) on the economy so consumers and workers don't get exploited and to reign in capitalist excess or greed.

(Feb 13 '14 at 20:15) KineticPhilosophy KineticPhilosophy's gravatar image

@KineticPhilosophy: your boss asks you to do something that sucks. You do it because doing it is a better choice than quitting and doing something else. You can just as easily reverse it: the employee demands a raise, or benefits, or time off. The employer has invested thousands of dollars training this employee. He knows if he does not give the employee what he wants, he will lose that investment. So now, in your terminology, the employee is exploiting the employer. No, the employee and employer are both trying to gain overall from their relationship, and both do.

(Feb 14 '14 at 04:00) Raman ♦ Raman's gravatar image

@KineticPhilosphy: Regarding Greenspan: He was not a supporter of laissez-faire capitalism, so why would you take his comments on laissez-faire capitalism to mean anything? He was simply deflecting blame onto markets in an effort to avoid blame falling on himself as a prime instigator of the whole problem via bad monetary policy at the fed (an institution that would not even exist in a free market). See: http://www.aynrand.org/site/News2?id=21757

(Feb 14 '14 at 04:04) Raman ♦ Raman's gravatar image

Boss tells you to work extra hours. You do it knowing if not, you might get fired.

You think there's something mean or unfair about that?

I guess the meanness depends on how the boss goes about it. If a boss is constantly threatening to fire her underlings, that boss probably isn't very nice (and probably not very successful either). I've certainly had bosses that were well aware that their request to work additional hours was just that - a request, and phrased their request accordingly. I tend to be both a valued employee and an employee that won't put up with mean bosses, though.

(Feb 15 '14 at 07:18) anthony anthony's gravatar image

As far as the fairness, you have a choice. Actually, you have lots of choices, one of which is to realize that if you're a good worker you can almost certainly either get out of the extra hours, get paid extra for the extra hours, or get future time off for the extra hours, without getting fired.

(Feb 15 '14 at 07:21) anthony anthony's gravatar image

@Raman

"so why would you take his comments on laissez-faire capitalism to mean anything?"

Laissez-faire capitalism is essentially a matter of deregulation and separation of economy and state, and letting the markets regulate themselves.

Greenspan was a champion of deregulation, and admitted that markets can't regulate themselves.

They need governmental oversight to reign in excesses and greed. Which then means, based on this, that laissez-faire capitalism doesn't work.

(Feb 15 '14 at 14:20) KineticPhilosophy KineticPhilosophy's gravatar image

@KineticPhilosophy: Greenspan was not a champion of deregulation -- if he was he would have advocated dismantling the fed, which is the biggest economic regulator there is. Instead, he led it, and gleefully used its power to create vast amounts of fiat money and inflate at least two bubbles. If you believe Greenspan was a champion of deregulation, provide some actual proof that he was so, in actual actions taken rather than Greenspan's own false words.

(Feb 15 '14 at 14:30) Raman ♦ Raman's gravatar image

It seems that if a worker is not being physically coerced into doing something, then it is "A-OK" from an Objectivist perspective (per @anthony & @Raman). I think in the real world, the power of workers and employers is vastly unbalanced. This is doubly true after the recent economic meltdown/recession. Workers are cowed and prone to take anything employers dish out. Of course, this asymmetry is on the worker's side in a boom but there hasn't been a boom for a long time. Thus it seems to many that the recession will continue and employees will be on the short end more or less forever.

(Feb 16 '14 at 18:59) Danneskjold_repo Danneskjold_repo's gravatar image

Thus it seems to many that the recession will continue and employees will be on the short end more or less forever.

I guess it's better to be an employer than an employee, then (or at least a sole proprietor with no employees). Too bad the government makes it so difficult.

I don't understand the argument. Things aren't working now, so we should keep them the same?

(Feb 17 '14 at 08:44) anthony anthony's gravatar image

I don't think the people complaining about capitalism want the "same" situation as today. People think that the current situation has arisen from "too much freedom" for employers. Given this freedom, employers have abused it and have pushed workers around with abandon and treated them like machines. The thinking is that new regulations and rules would protect workers from such abusive employers. People see outsourcing and steady wage erosion in the middle class as proof that the "little guy" is getting shafted by a cabal of cigar chomping capitalists in cahoots with a corrupt government.

(Feb 17 '14 at 19:08) Danneskjold_repo Danneskjold_repo's gravatar image

And you think these people have legitimate points, or you're just reporting on it?

I do agree that there are problems, but I think the solution is more freedom, not less.

(Feb 17 '14 at 20:06) anthony anthony's gravatar image

@Raman

"if he was he would have advocated dismantling the fed"

According to Jerome Tuccille, Greenspan testified in front of a congressional committee that if it were up to him the Fed would be abolished.

He was also called a champion of deregulataion by Lisa Myers.

(Feb 19 '14 at 02:42) KineticPhilosophy KineticPhilosophy's gravatar image

@KineticPhilosophy: Let's look at his actual statements instead of secondary sources: before becoming Chairman of the Fed he writes a (good) article in Capitalism: The Unknown Ideal about the gold standard vs central banking (1966). He then turns around and runs the Fed, a statist organization, for decades. He says he was wrong about the free market in testimony in 2008. He turns around again and "clarifies" his belief in laissez-faire capitalism in an interview (2010). Is this really what you are basing your entire argument on? (Note: I can find no information backing up Tuccille's statement)

(Feb 19 '14 at 11:12) Raman ♦ Raman's gravatar image

@KineticPhilosophy: Your entire argument is logically false even if you are right about Greenspan: your argument is that since Greenspan (supposedly) supported laissez-faire, and since Greenspan (supposedly) stated he was wrong about regulation, then that proves regulation is needed. It is simply a (poorly made) argument from authority. If you really believe that is a valid and strong argument for your position, then you aren't worth talking to any more.

(Feb 19 '14 at 11:16) Raman ♦ Raman's gravatar image

@Raman

"then you aren't worth talking to any more."

Woah, hold on. Those are aggressive, mean spirited words there, over what seems like no reason to do so at all. Given that I just calmly answered your concern from the 15th, and that's about it. Calm down.

"I can find no information backing up Tuccille's statement"

It's probably somewhere in the book "Alan Shrugged".

"Your entire argument is logically false even if"

You're forgetting the part about the deregulation policies were put into practice and led to the great recession. It's not based on authority but real world results.

(Feb 19 '14 at 13:10) KineticPhilosophy KineticPhilosophy's gravatar image

You're forgetting the part about the deregulation policies were put into practice and led to the great recession.

Ah, the familiar canard that deregulation led to the 2008 recession. Ok, I'll bite, but you'll need to give me more than generalities. What specific deregulation(s) are you referring to? If you say Glass-Steagal, then I'll want some indication that you actually understand what Glass-Steagal was, and how you think its repeal was the cause of the recession.

(Feb 19 '14 at 17:16) Raman ♦ Raman's gravatar image

"Ah, the familiar canard that deregulation led to the 2008 recession. Ok, I'll bite . . ."

Heh, you know you shouldn't do that. :)

Seriously, if we let measures of GDP bear upon our evaluation of the correctness of political decisions, we've lost. State and economics should be kept separate.

Yes, it's incorrect that deregulation led to the 2008 recession, but moreover, it's irrelevant. Increasing GDP (or keeping GDP from falling) is no excuse for using force against people.

In fact, I'd say not recognizing this was one of Greenspan's primary errors.

(Feb 19 '14 at 17:46) anthony anthony's gravatar image
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Asked: Feb 10 '14 at 18:39

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Last updated: Feb 19 '14 at 17:59