Sunday, October 04, 2009

Objectivism & Politics, Part 28

Politics of Human Nature 12: Humanitarianism and nihilism. Humanitarianism, when it becomes extreme, desperate, belligerently utopian, and revolutionary, begins to merge into nihilism. A clear example of this is the revolutionary version of Marxism. As the economist Frank Knight wrote:

The [Marxian] doctrine itself—that all that need be done in order to awake the next morning in, or on the way toward, an idealistic Utopia is to destroy the admittedly crude and imperfect civilization which the race has developed through history thus far, by destroying its institutions and power relations and turning over all power to the promoters of the destruction for the purposes of reconstruction—has an evident if mysterious appeal to elemental human nature. How such propaganda and the romantic appeal of destruction in general, is to be effectively combated, is perhaps the most serious of practical social problems. And the most serious as well as the most puzzling phase of this situation is that in their manners and conscious intentions the promoters are for the most part “nice people,” and “honorable men,” and will readily, and often artistically, “with reasons answer you.” Not only that; they are morally earnest, even to a fault—in fact, to a degree which makes it a serious ethical problem whether moral earnestness can be assumed a virtue at all [a statement that can be applied to Objectivism as well]. For in plain factual appraisal, what they are doing is more catastrophically evil than treason, or poisoning wells, or other acts commonly placed at the head of the list of crimes. The moralisation of destruction, and of combat with a view to destruction, goes with the kind of hero-worship that merges into devil-worship. [Freedom and Reform, 118-119]


Knight’s phrase “moralisation of destruction” goes to the very heart of the nihilistic pathology. On a superficial level, Rand’s view is not necessarily all that different. Nihilism, for Rand, is “hatred of the good for being good.” Okay, someone who hates the good for being good will probably be attracted to destruction, so Rand's speculation here at least has plausibility on its side, if not truth. Where Rand goes seriously off the reservation is when she speculates about the source of this hatred. Consider Rand’s analysis of the infamous streaker at the academy awards as related by Peikoff:

Having grasped the streaker’s nihilism … [Rand] was eager to point out some different examples of the same attitude. [Peikoff goes on to relate how Rand observes the presence of nihilism in modern literature, progressive education, and “avant-garde physics.”] That streaker, in short, was the very opposite of an isolated phenomenon. He was a microcosm of the principle ruling modern culture, a fleeting representative of that corrupt motivation which Ayn Rand has described so eloquently as “hatred of the good for being the good.” And what accounts for such widespread hatred? she asked at the end. Her answer brings us back to the philosophy [Rand opposed], the one that attacks reason and reality wholesale and thus makes all values impossible: the philosophy of Immanuel Kant. [Voice of Reason, 344]

Here is a good example of Rand’s typical mode of proceeding on such questions. She starts out promising enough by identifying the streaker with nihilism. That’s a bit over the top, but interesting nonetheless. She goes on to relate the streaker’s attitude to modern literature, progressive education, and “avant-garde physics” (what on earth could that be?). Again, it’s over the top; and Rand also leaves herself open to accusations of painting with too broad a brush. Still, with a bit of overly generous interpretation, we might be able to extract something resembling plausibility out of it. The very worst aspects of modern literature and progressive education do have a strong nihilistic stench to them. And Rand’s phrase “hatred of the good for being good” also shows promise as a fascinating conjecture. Of course, it may also be possible that nihilists simply have a different idea of the good; still, it’s an eloquent phrase and Rand may really be on to something. But having gotten this far without making any serious blunders, she could not, alas, leave well enough alone, but has to reduce her entire analysis to raving absurdity by bringing up her long-established bête noire, the old wizened pedant of Königsberg, Herr Kant. It appears that Kant’s philosophy is the source and cause of nihilism! If only Kant had been smothered in his cradle, we would have been spared the combined horrors of James Joyce’s Ulysses and the Look-Say method of pedagogy!

Rand’s philosophy of history (like her view of human nature upon which it is based) is a millstone around the neck of her social and political views. It drains her social analysis of whatever aura of plausibility her skill as a propagandist can attach to it, and renders her political objectives unreal and impractical.


52 comments:

tenaj said...

Michael Moore's new film Capitalism ends up not being about capitalism IMHO. Capitalism is the private ownership of the means of production, is it not? How is the financial paper meltdown on Wall Street a product of any kind?

The pure stance taken by ARI on some of this can be praised. Greenspan was a government appointed Chairman of the Federal Reserve. How is that free market capitalism? BB (PAR) even has a picture of his swearing in ceremony attended by ......Rand herself. Why did she sanction his joining the Federal Reserve is the question LP should be asking? Her sanction put a halo around him at the time. Who could dispute his selection as she attended his induction ceremony?

Capitalism is used fast and loose. People scream to protect it and what they want to protect is not capitalism. When did it morph into something else? Into a way of seeing the world, of choosing a mate, of deciding who you will fuck or not, of whom you will marry and on and on into every social relationship there is.

I go on more about this someplace else.

http://www.openleft.com/diary/15391/michael-moores-capitalism-love-story

Damien said...

Greg,

I personally wonder how many people hate good things simply because they are good. Just because you regard something as good does not mean that everyone else will. So how can one always say that if one wants to destroy something that you regard as good, its because it is good?

Damien said...

Tenaj,

Micheal actually had the gall to claim that capitalism did nothing for him.

Unlike what he claims, he's obviously not part of the working class anymore. The guys a multimillionaire! Plus the working class really wouldn't benefit from a non capitalist economy, regardless of what he might think, or dream. Not to mention the fact that I don't think the Mr. Moore would like all of his wealth redistributed.

Damien said...

Tenaj,

Also come to think of it, Moore also befitted from capitalism, by getting privately own stores to sell his products and privately own movie theaters to show his films. Not to mention the fact that he probably gets well over ninety percent of every thing he owns from the free market.

He really should think a little bit before he says something, in person or in one of his propaganda films.

tenaj said...

No I think you are wrong. Moore is making a product. He works exceptionally hard in putting that product out. Yes other people are employed but he isn't just sitting around using the phone for mergers etc as he is out on the street filming and interviewing. He has 100% control over the final product (editing) and yes other people invest money in his project and distributors (Weinsteins in this case) buy it from him for distribution and it makes money for them too.

Where I think he is confused is with the definition of capitalism. I personally don't think the finance people on Wall Street are capitalists. I think they are gamblers as are many people who buy and sell stocks. Others put them away for retirement. Two different activities are going on here. Options for example. They are a way to hedge. A farmer has a huge crop of corn. He wants to sell it even before he puts the seed in the ground. Someone buys it before the seeds are planted for x amount of money. But suppose there is a drought, a flood, a fire whatever. The buyer needs insurance. The options purchased on corn futures (or the futures themselves) are insurance in case anything happens. If nothing happens then yes you are out the insurance money. But your house didn't burn down.

Now you or I can buy futures or options without having any corn crop or desire to take possession of all that corn. We just want to speculate on it. We can bet it will go up or down and if we are right we will make money on that speculation. If we are wrong we will lose our money. But what does speculation have to do with producing anything of value? It's just a refined way of gambling.

This whole Wall St mess was based on gambling that not enough people would default on their mortgages to tank the derivatives. But they did and they did and the whole damn world economy dropped into the gutter.

Rand did not mean this. This was not what she meant by capitalism. I am just saying or rather asking What is the boundary? Capitalism needs to be redefined. We need to stop calling all monetary transactions capitalism because they are not. I think Chomsky has made this clear that we do not have a free market economy. We have a controlled one with the military in control. The military develops (internet, space travel) and then sells to the marketplace. We have a government controlled economy that is called free market capitalism and it is very much disguised. It is a government controlled economy masking as free market capitalism. Now that's pure Orwell.

Damien said...
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Damien said...
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Damien said...

Tenaj

We don't have a pure, free market economy, but than again, no nation does, and ever has, and most likely no nation ever will. As for your claim that we don't live in capitalist society, we actually do live in one, most of the means of production are not controlled by the state. Instead, most of the factories and farms are owned by and controlled by private individuals.

Micheal more is a hypocrite, because he condemns capitalism, and yet he uses capitalism to promote his anti capitalist agenda. He produces products to sell on an open market, without the intervention of the state, and he clearly sells them at a price where he can make a profit. Also he hires workers, who work for him, not just for the "greater good," but because they need money. Off course there maybe other reasons in addition for them choosing to work for Moore, but its unlikely that that is not one of them. Now either he does not know what capitalism is, or he is guilty of hypocrisy for condemning it, and at the same time practicing it.

Damien said...

Tenaj

Also for the most part, supply and demand still determines the price of a commodity here in America. For the most part prices are not set by the state, but are instead set by the market.

tenaj said...

Damien, I think you are innocent. Supply and demand is not the be all and end all. What advertising and the media do is create a "demand" that is spurious. It makes a bubble. Uninformed people want to buy into that bubble so the price goes up until it collapses. Is is not driven by simple supply and demand, it is driven by market forces with a different agenda. Until people become educated about the hidden agenda, it will continue. The beautiful woman beside the new Mercedes. Get a Mercedes and she will be yours is the subliminal message. Or course you may have to buy her too to get her. Part of college courses in media understanding is to debunk this shit. Leni Riefenstahl's two fascist films have been considered art by her and propaganda by the rest of the world. Actually they are both. Nowhere has such a breathtaking example been so beautifully portrayed.

But I digress. I am saying that Moore has not carefully defined capitalism for himself. He damns it and uses it, yes. Then the profit he makes goes into financing the next one to give him more control. It gets plowed back in. And he makes a product. But the real estate bubble was not supply and demand but driven by abnormally low interest rates, which were not market driven but set by Greenspan's Fed. Market forces would never have allowed the RE bubble, which bled into a gambling addiction IMHO.

Let's take food. When it is subsidized to the extent that it is, it is no longer under any constraints of supply and demand. I suggest you see Food,Inc which is a detailed account of what I just wrote. It has led to all sorts of contamination of our food supply. Eat at your peril.

Damien said...

Tenaj,

I specifically said that we don't live in a pure capitalist society, (its debatable weather or not that would be a good thing or even if it could work) but we don't live in a pure capitalist society. None the less we live in a capitalist society, and that's a good thing, because the alternatives are not very pleasant.

The government does not always let market forces work, and in many cases they should, but for the most part supply and demand still govern prices.

HerbSewell said...
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HerbSewell said...

"The pure stance taken by ARI on some of this can be praised. Greenspan was a government appointed Chairman of the Federal Reserve. How is that free market capitalism? BB (PAR) even has a picture of his swearing in ceremony attended by ......Rand herself. Why did she sanction his joining the Federal Reserve is the question LP should be asking? Her sanction put a halo around him at the time. Who could dispute his selection as she attended his induction ceremony?"

What saction? What are you talking about? Greenspan joined the Federal Reserve in 1987, five years after Rand's death. 

Michael Prescott said...

"Greenspan joined the Federal Reserve in 1987, five years after Rand's death."

True. The photo of Greenspan with President Ford was taken when he was appointed Chairman of Ford's Council of Economic Advisers, a position he held from 1974-1977.

"What advertising and the media do is create a 'demand' that is spurious. It makes a bubble. Uninformed people want to buy into that bubble so the price goes up until it collapses. It is not driven by simple supply and demand ..."

Advertising is part of supply and demand, and has been from the beginning. A vendor in a produce market hawking his wares is engaged in advertising. Anyone who offers his goods or services to someone else for a price is advertising his services.

The history of free market societies is replete with bubbles, going back at least as far as the Tulip mania in Holland. Usually the cause of the bubble is a large profit made by some investors, which triggers other people to want to get in on the action. Media and advertising can help spread the word, but simple envy and greed are the driving forces.

Regarding options trading, it's true that there are many speculators, but speculation does serve a purpose: it maintains the liquidity of the options market.

gregnyquist said...

Damien: "I personally wonder how many people hate good things simply because they are good. Just because you regard something as good does not mean that everyone else will. So how can one always say that if one wants to destroy something that you regard as good, its because it is good?"

Of course one can't always say that, and if that what Rand believed, then she clearly overstated her case. But it is not implausible that some people may hate the good primarily because it is good. They may do so because they can't achieve that particularly good and feel frustrated and envious of those who can achieve it. Often, it is a status thing: people hate a good people because they have more status in society because of their goodness. Of course, they will rationalize all this hatred by claiming that the good they hate really isn't good. And in rationalizing, they may end up hating other good things merely by the polemical force of their original hatred—in other words, hating many good things simply because of their inability to achieve one good.

Anonymous said...

Yes, it must make you supporters of capitalism sore, that when your pockets are empty, Moore's are overflowing.

Why not write him a begging letter for a handout? He helped out his staunchiest critic when his wife needed money for an op.

By all meand criticise him but have you ever thought about getting off your backsides and doing something, anything that will make you as wealthy as him? Or it easier just to snipe at him?

Jim said...
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Jim said...

"Kant’s philosophy is the source and cause of nihilism!"


Nihilism was inevitable. Rand preferred nothing - except perhaps her own (narcissistic) thoughts - to either the rigid structure of religion or the seemingly chaotic cacophony of nihilistic thought.

She must have refused to see that any of the axial religions exhibits the necessary tendency of humanity both to deconstruct and to create. Philosophical though in the 19th century into the post-modern era serves as a prime example of the former. This nihilism, however, is the means by which archaic, static systems are purified and improved. As time progresses and society changes, outdated modes of understanding must be replaced. Religious institutions, along with a host of other despotic social structures, must be continuously destroyed and recreated. As the NT depicts, Christ said in defense of healing on the sabbath, "the law was made for man, not man for the law." Shall we curse one the world's most famous religious figures because of his tendency toward nihilism? Shall we purport Taoists as devious because they sought to be "the uncarved block?" What about quantum physicists?

Perhaps Rand traded religious dogma and nihilistic doctrine for her own narrow view of the universe! Yes, she was trapped by her philosophy and, in the spirit of Narcissus, drowned in an intellectual pool of her own ideas.

tenaj said...

I am talking about the two kinds of options available. If you own stock, do not want to sell it because you don't think it will tank, then, as insurance, you can write an option of the stock you own to come due on a certain date at a certain price with built in premiums. Someone who might like to buy that stock at that lower price will buy the option to exercise it if they wish to do so, rather than wait and watch in case it might sink lower. They will have already decided it is a good buy for them at that price. The owner then must sell if the option is exercised, but even though selling lower than it really is worth, they will also have made money on the option sale. This is opposed to the casino of options of people who do not want to own the underlying commodity or stock, but merely to speculate. Instead of writing an option on what you own, you can simply buy an option on what you own as insurance. The casino aspect does not really help the farmer with the corn crop. There are plenty of people who want to buy his/her corn at a specific price and they may get it cheaper by buying the option. And the farmer is assured that the crop has been sold before it goes into the ground. I don't see that the casino adds anything to the mix. I admit it leads to many more options being written for the purpose of gambling, which may be advantageous for the farmer in question. But greatly more advantageous than just writing an option on his crop? How so? If the option is not exercised the farmer has the money and can sell into the marketplace and keep the money for the options to offset a maybe lower price.

tenaj said...

Moore is considered an auteur. That is, he makes his own films and then sells them. He has final edit and can negotiate for the best deal he can get for them. And as time goes on the deals get better for him as more people are bidding for them because they have a good financial track record.

He was pretty much dead broke when he was filming Roger and Me. After that people wanted to invest in his films, but he kept control with his own money going into them.

Rand did not write on huge advances, I don't think. She footed her bills while writing Atlas. Then she made money and LP made a whole lot more than she ever did.

And I have said that without NBI there would never have been an objectivist movement. Since the end of NBI Rand and then LP have never been able to get something like that off the ground again so objectivist members are recruited from Atlas and not fast and furious.

As far as I can see she self-destructed her own movement. She did not act in her own self-interest. And that is the flaw that Greenspan couldn't understand when the derivative people destroyed their financial companies. That they would not act in their own self-interest was what Greenspan called the flaw he couldn't understand. No wonder he couldn't understand it. He couldn't understand it when Rand did it to NBI.

Fortunately it freed NB. What he couldn't do on his own was done for him, eh? BB saw a good thing and tried but was too compromised with too much baggage from the past. And I don't think she could have continued with its success. The times were beginning to turn anyway. LP continues to ride the cash cow but looks increasingly harassed on his youtube appearances with all the contradictions he must be juggling.

And I bet he hates NB not because of his lying to Rand and deceiving her, but because of the truthful things NB said about him. They were wounds in his narcissism that he cannot forgive and probably cannot forgive Rand for the things NB said she said about LP. Those things must hurt. So no he will never sell those books nor have anything to do with people who praise them or refer to them positively.

But Moore and capitalism, and his disparaging, I think that comes from the elusive and sliding definition of the word itself. It has morphed into something perhaps only Marx could have foreseen with some serious thought. I think we are disagreeing about the definition of a word when it comes to Moore. Yes, he used his own capital and others to make his first film at least. Probably the rest also. But he sees that as borrowing and investing. There is a risk yes. And I think it is real. If Moore dies (and his health looks compromised to me) halfway through a film, then what happens. All that money may be lost unless someone else can finish it and hype it the way Moore can. So investing in his film is risky in that respect. In his thinking he considers what Wall Street does as capitalistic and evil. At some level he knows it isn't what he does, but he has not differentiated the two concepts. and neither has anyone else.

Michael Prescott said...

"I don't see that the casino adds anything to the mix."

Speculators buy options. This increases the open interest, which narrows the spread between the bid and the ask. Narrowing the spread allows the farmer (in your example) to buy an option at the best price. It also gives him more leeway to sell his option, should his circumstances change, because there is a greater market for the option. In the absence of speculation, the market for many options would freeze up -- no liquidity. Speculation provides liquidity and makes the market more efficient.

It's also fun. And, when done right, rather lucrative. :-)

tenaj said...

Michael I guess I am not making myself clear. If you own stock or a crop like corn you can write your own option. You decide the date of expiration, the amount included in the option etc. It is bought by someone who wants to pay your price for what you are selling: corn, stock cattle, lumber,etc. That way you are protected. The person may not exercise the option but then you have the money paid for it. And then you are free to sell it on the market. This is simplified.

The secondary option market exists like a bookie's outfit. Options are made and people buy them or not. If you sell one you have to be able to deliver the product in case the buyer wants it. In most cases the buyer does not want it and they expire worthless. Yes this is fun. Gambling is fun and the odds are better than Vegas. But it is a casino developed by people who want a legalized bookie operation. So just call it that, and don't drag Wall St in on it to legitimize it. No wrong word. Whitewash it. Make it look different from a bookie outfit run by the mafia.

Michael Prescott said...
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Michael Prescott said...

Tenaj, if I understand you correctly, you approve of protective puts and covered calls (both of which serve as hedges, i.e., insurance), but you think there is something shady or crooked about trading options as speculation.

My point, though, is that without speculators the options market would be much less liquid, and investors who want to buy protective puts or write covered calls would have more difficulty doing so. They would find it harder to get the "insurance" they need.

If you look at options with little open interest, you will see that they trade inefficiently, with a wide spread between the bid and the ask, and a big chunk of each transaction going to the market makers. On the other hand, options with a lot of open interest have a narrow spread, meaning that the market makers get very little, leaving more for the actual buyer and seller. It's the difference between paying (say) a 25% commission to a middleman vs. paying 1%.

The only effect of limiting speculation would be to enrich the market makers at the expense of buyers and sellers. In other words, it would enrich the middlemen by allowing them a bigger cut.

At any rate, I think it is futile to defend capitalism while conceding the leftists' arguments about Wall Street. You ask, "How is the financial paper meltdown on Wall Street a product of any kind?" Well, I don't think the meltdown per se is a product, but stocks and derivatives are products -- financial products. They may not be as tangible as a bushel of wheat or a barrel of oil, but they are products of human intelligence that represent real value.

Jim said...

The melt down is a result of the moral hazard of cheap money along side an incomplete philosophical attitude of the public which demands that summer exists simultaneously in both the northern and southern hemispheres.

Michael:

The inefficiencies of the system need to be weeded out. While low commission for the middle man may make the market more liquid, an increase in the middle man's commission would bring investment to a sustainable level, though it may cause markets to crash in the short term, to decrease the liquidity of the market would force corporations to act more responsibly. Furthermore, less energy spent trading would free up man power for more productive jobs. And finally, a decrease in market investment would free up resources in local markets, providing for a more sustainable system which would waste less capital on unnecessary long distance transportation.

Michael Prescott said...

"While low commission for the middle man may make the market more liquid ..."

You've reversed cause and effect. It's high liquidity that reduces the commission, not the other way around.

"The melt down is a result of the moral hazard of cheap money along side an incomplete philosophical attitude of the public which demands that summer exists simultaneously in both the northern and southern hemispheres."

I have no idea what this means. The meltdown came about because of a residential real estate bubble (partly encouraged by government policies) in combination with sophisticated derivatives that the traders themselves (mostly hedge funds) didn't understand.

The solution is more and better regulation of new, untried financial instruments. In other words, it would be nice if the SEC were at least half awake, some of the time.

Michael Prescott said...

It occurs to me that the people who think options trading is no different from gambling may never have engaged in it, and may not know what it entails.

If I'm considering an option trade, I start by running a stock screen to select the best opportunities. Then I review each of these options to see which offer the best return. Having selected the top choices, I examine each underlying stock in detail, using both fundamental and technical analysis, and paying particular attention to any regent news developments. Only if I'm confident that the underlying stock is strong and the option offers an acceptable premium will I proceed.

The process is not rocket science, but it is a bit different from laying a bet on 23 at the roulette table.

Is it "productive"? Who cares? Isn't it symptomatic of a collectivist, altruist mentality (to use Objectivist terms) to care whether your livelihood contributes to the common good and the social welfare? Call me cynical, but given the direction of today's society, I don't care if I contribute anything to it or not.

Anonymous said...

Apparently the Treasury has over 2000 economic models to help the government get the economy out of a depression. How many of them actaully work? Guess we will foind out! But really all the solutions I've read in this thread have been tried before and failed before. There are gluts in the market, goods not sold so factories will close and people will lose thier jobs. If you know how to solve that then I'd love to hear it.

Anonymous said...

Michael, call me cruel but I don't think you do contribute anything to today's society. Am I the only one here who cares enough to point that out?

Michael Prescott said...

"Michael, call me cruel but I don't think you do contribute anything to today's society."

Fair enough! But my point is, I don't care. Although I'm not an Objectivist anymore, I still agree with one tenet of the philosophy - namely, that your purpose in life is not to slave away for "the common good" (a term that usually means "the good of those in power").

tenaj said...

Michael, good to see others in here at last. Your answer about liquidity does make rational sense. Yes it does. And that's why it can be perceived as a rationalizing of your position. The internet can easily do away with this false liguidity that makes commissions for the brokers and professional traders who grind up clients money doing these trades.

It is still legalized gambling no matter how you rationalize it and it does not contribute a product. It may make you money but is inherently devoid of meaning.

As Marcuse said, Capitalism is like pac-man devouring even its opposition which Moore has pointed out in the success of his films. He is using capitalism in hopes of weakening it.

I spent an evening at Murray Rothbard's apartment with some libertarians in 1964's summertime. He lived in a rent controlled apartment. My Randian morality at the time questioned him about this. He said that everything the government offered one should take advantage of. That way you helped to weaken your enemy. Would I had remembered his words when offered a NASA grant that I turned down in graduate school (ruining my career) because Greenspan had lectured against those things. (Needless to say I am bitter when it comes to Greenspan. )

Trading stocks and options etc can be an empty and sterile pursuit in life. Unless there is a grand scheme it is being done for, as Engels had to subsidize Marx. To do it for play as an adult to increase personal wealth in and by itself cannot enrich a person's life.

I have said that derivatives are an ingenious mechanism. But they open up places like Countrywide that prey on greedy (yes I think so) and math challenged adults by pushing mortgages that were doomed to failure. That it was expected that the failures would not affect the derivatives too much is not the point. They were not gambling but selling snake oil. I saw it but that's because I know some math. But I remember I time when I did not and would have been caught unaware.

My way of trading options used to be to see what I thought was going to happen. Take a look at various stocks in that industry and check the price of the options on it. Then decide how far out and how much in the money I wanted to be for leverage. More easily done and doesn't take very much time while you are doing what you love to make money.

I have an acquaintance that bet on the dollar's slide after 9-11. She picked up 40,000 in one day of trading. This, BTW, is how George Soros operates, as opposed to Warren Buffet. Soros also has a grand plan to finance the Open Society described by Popper. (As opposed to tribalism and other manifestations of Platonic influential doctrine.) But Plato has said that democracy leads inevitably to totalitarianism because of the appeal to the least common denominator of intelligence in citizens.

Again I think we should be trying to redefine capitalism. Chomsky says that we don't really have it. We push it on developing countries and pauper them. The Caribbean islands used to grow their own food. In Haiti we got them to import our agriculture. This is crazy. The military develops here and then sells to private enterprise (internet, air waves,military weapons and stuff, etc), so how is this capitalism. Tax money is taken to promote industries we may or may not want.

Capitalism is so great for small business. Hippie capitalism got an incredible number of small businesses up and running. But multi-national corporations that exist through the aegis of governments is not capitalism IMHO. But I don't know what to call it. Has anyone else thought about this? Any ideas?

HerbSewell said...

Tenaj, I believe this is the term you are looking for.

http://en.wikipedia.org/wiki/Crony_capitalism

Michael Prescott said...

"Your answer about liquidity does make rational sense. Yes it does. And that's why it can be perceived as a rationalizing of your position."

LOL. So I should give an answer that doesn't make rational sense? Then at least I can't be accused of rationalizing!

Believe it or not, I wasn't trying to justify my livelihood to you. (My small forays into options trading don't have any significant effect on liquidity, anyway.) I was only trying to explain why speculation (properly regulated) is a help, not a hindrance, to the smooth functioning of a market.

"It is still legalized gambling no matter how you rationalize it and it does not contribute a product. It may make you money but is inherently devoid of meaning."

I don't think anything is inherently devoid of meaning. The Buddhists have a saying: "Before enlightenment - chop wood, carry water. After enlightenment - chop wood, carry water."

What they mean is that, enlightened or not, we have to do our daily chores. If these are done mindlessly, they are meaningless. If they are done mindfully, they have meaning.

The meaning is not in what you do, but in how you do it. After all, any product you produce is going to be obsolete and forgotten eventually -- probably in a few years, certainly within a century or so. And what is a century? A blink of an eye. So how can there be any meaning in a product?

I spent more than twenty years writing novels for a living. Now I trade stocks and options. The one is not more -- or less -- meaningful than the other.

Chop wood, carry water.

tenaj said...

Crony capitalism is what we have. Thank you Herb. I haven't heard or used that term for so long I forgot it even existed.

I also checked your books out at half.com Michael. Quite a lot of them.

Jim said...

Michael:
The moral hazard was the massive increase in credit by the Fed along with government agencies such as Freddy and Fannie. (It is worth noting that Freddy and Fannie couldn't exist without the Federal Reserve playing the role of lender of last resort.) The crisis was a long time coming, and it is not over yet. The Fed's manipulation of the currency through increased liquidity via the open market is tantamount to thievery, and will continue to damage trust in the dollar.

I was speaking metaphorically when I said that people think that they can have summer all the time (in both hempispheres), but to put it plainly, the creation of currency without the creation of product results only in inflation. To propose that investors, businesses, and home buyers who act foolishly should not face the consequences of foreclosure and bankruptcy is the moral hazard inherently tied to government bailouts and artificially increased liquidity.

We have traded the housing bubble for the bail out bubble. No amount of regulation will stop the government from running massive deficits which it cannot repay.

We need to let the market set interest rates, not the Fed, otherwise we will continue to build unsustainable bubbles in a race toward economic Armageddon.

Jim said...

"But multi-national corporations that exist through the aegis of governments is not capitalism IMHO. But I don't know what to call it. Has anyone else thought about this? Any ideas?"

I believe it is the road to fascism paved by corporate welfare. Call it what you will, but it is simply a distortion of the free market. In a technical sense it can be called capitalism. What many of us are looking for, however, is a more level playing field in which laissez-faire is a phrase which applies not only to government, but also the multi-national corporations which influence it.

tenaj said...

Bernard-Henri Levy has written that we are in a window of freedom between fascism and totalitarian socialism. When the Soviet Union was united it seemed like an equal choice but now it appears that multi national corporate fascism will win out. Unless there is a complete breakdown http://www.kunstler.com that will take us into the world envisioned in Atlas. Wood stove cooking etc. I think this is what's coming for most while for the extremely wealthy will live on a different plane. It won't be nice for anyone but it will be real. Or it may resemble Athem.

tenaj said...

I personally wonder how many people hate good things simply because they are good. Just because you regard something as good does not mean that everyone else will. So how can one always say that if one wants to destroy something that you regard as good, its because it is good?

As Czeslaw Milosz says in the The Captive Mind Russians who admire your house don't want to build one like it, they want to destroy yours. He says it is a cultural trait.

tenaj said...

Herb Greenspan joined the fed before Rand died. He became chairman in I believe 1987. BB has a photo of Greenspan and Rand going into his swearing in ceremony in PAR.

tenaj said...

Maybe laissez-faire is the beginning process of crony capitalism and multi corporate fascism?

Ebay, when it started, was very laissez-faire. It has continually introduced regulations, all in the name of better to serve you,as it has become a huge multi national corporation. I can't say their regulations are not without merit because they are helpful but they are limiting. Hippie capitalism was very laissez-faire until individual businesses became very successful. Above the radar.

tenaj said...

So far they are not taxing internet sales unless they are in your own state (you pay sales tax or are supposed to) or have a bricks and mortar business.

This has allowed the internet to grow fast and furious.

But in my little neon red town retailers have no idea that their competition is the internet because they can't see it across the street.
I buy vitamins on ebay not at the local pharma for example. There is a custom t-shirt business next door to me but they have no idea their competition is ebay and amazon and they are not at either place. They are not internet savvy in this respect and so don't know, although they use computer software to design t-shirts giving them a false sense of security since they use the computer every day.

The housing bubble was a godsend to anyone who knew it was just that as it allowed one to speculate and sell to people ordinarily not able to qualify for a mortgage. And to inflate the price. After all that's capitalism, isn't it? Multi emails came every day to my account after I clicked through to one of the refinancing places. They never stopped. So I thought that that was probably happening to millions of people, not just me. And that's when you know a bubble is forming. When everyone is doing it. But every generation gets caught in a new one, eh?

How did anyone know inflation was coming? When Ron Paul said in 1982 that the paper money had been changed and metallic numbers were embedded to avoid counterfeiting. Ha! A signal it was coming but not until the generation that got caught in it was a few decades older and a younger one who didn't know would be driving the economy. New suckers. That also is capitalism. Taking candy from babies. If you grew up in a financially sophisticated family you were in on it. Not many though.

HerbSewell said...

"Herb Greenspan joined the fed before Rand died. He became chairman in I believe 1987. BB has a photo of Greenspan and Rand going into his swearing in ceremony in PAR. "

HerbSewell said...

Source?

Michael Prescott said...

"Source?"

You want a source for "Herb Greenspan" joining the Fed?

I don't know about Herb Greenspan. But Alan Greenspan was appointed to the Fed on August 11, 1987, as chairman. He does not appear to have served in the Fed in any capacity prior to that date.

Source:

http://www.federalreserve.gov/BIOS/boardmembership.htm

Ayn Rand died in 1982, five years before Alan Greenspan was appointed to the Fed. During Rand's lifetime, Alan Greenspan did serve as President Ford's Chairman of the Council of Economic Advisers.

Michael Prescott said...

My link got cut off in the previous comment. Here's the source:

http://snipurl.com/sfzh0

tenaj said...

I forgot to put a comma after Herb so that's the confusion. If Greenspan did not join the fed when Rand was still alive, then where was he when he was selected to be chairman? And the photo in BB's PAR with Rand at his swearing in ceremony is a photo of what?

HerbSewell said...

"True. The photo of Greenspan with President Ford was taken when he was appointed Chairman of Ford's Council of Economic Advisers, a position he held from 1974-1977. "

proudfootz said...

Rand's bumper-sticker slogan about those who 'hate the good simply becuase it is good' is eerily reminiscent of the propaganda slogan used by a recent US administration that oppressed people around the globe 'hate us for our freedom'.

When detatched from any kind of empirical basis one can really fall for this kind of thinking.

Streaking was just good, clean fun. That's not nihilsim.

But what Rand & Co wanted to do was tear down and utterly destroy the society that nurtured them. Now that sounds more like the real nihilism.

Anonymous said...

Over in the UK the welfare state, not socialism btw as the capitalist class in the UK welcomed it as it would help them compete in a post-war market-place, educated me, looked after me when I got sick and allowed me to become economically productive.

Now that I am I know see these things as straight forward fascism...no wait they are totalitarian socialism. Btw I'm not just using these words without any understanding of them, honestly. So now I want to tear them down, even after they have helped me, because they are fascism and/or socialism. How big a *beep* am I?
Be like somebody coming into you home, accepting your hospitality, eating your food and drinking your drink. Then, when asked what they thought of you, told everybody you were the biggest *beep* alive.

Anonymous said...

For those of you here that say the welfare state is fascism and I don't dobut that what you say is true as you are all clever people my question is what, we have had the welfare state in the UK since 1948 and we haven't gassed any Jews yet. Do you guys, you know, the clever ones, have a timeline as to when the UK is going to start building concentration camps for the Jews, Gypsies, gays ect. and gas them? When is the Uk going to suspend parliamnetary democracy and lock up the left-wing politicians and union leaders? When is the UK going to have it's version of crystal night? Presumably as fascist state the UK will declare war on Isreal, any idea when?

If the welfare state is socialism, I presmume you mean socialism=USSR. So, again for the clever ones, when is/are the Communist Party of Great Britain going to take over and declare a one party state? When are the gulags going to appear? When are they going to nationalise all industry and take it under state control? Becuase lately successive governments in the UK have been privitasing inudstries and selling off state assests. Shurely shome mistake?

But, I'm just a humble man and you know what will happen, one day I'll wake up and it'll be too late! So c'mon guys, thinking caps on and tell me when all this is going to happen.

Anonymous said...

Theroem? Are those that believe the welfare state equals fascism the same people who take The Ominous Parallels seriously?

Anonymous said...

Actually The government in the UK has part-nationalised the banks...but only those that were going to go into liquidation. They took these measures as a last resort after everything else had been tried and failed.