[coyote]

At this point, the extent to which the markets are free is the extent to which the commons are free.

The tragedy of the markets. I want to believe in free markets so bad I can taste it. I once did, thoroughly. It fits in perfectly with everything else I believe about government and freedom. But years of reading energy and environmental headlines have changed my mind. it's not working for us.

But neither does government control - Economic authoritarianism, or communism. That was always even worse. The environmental destruction in communist nations has been epic - not to mention the costs in human freedom.

Neither capitalism not communism has or can protect our world from destruction. They're both part of the old paradigm, both part of the fundamental misconception that the Earth is here to be done to as we will, and that it is our destiny to do it. Both a result of the internalized conviction that it is our purpose to better ourselves and grow our productivity, at the expense of everything else if necessary. Neither of those handles will get us to a less dangerous place, a less dangerous way of thinking. To navigate the train wreck ahead is going to require a such a shift in world view that is barely imaginable now.

Perhaps we can continue with free trade, but on a localized level. It would have to be a steady state system, and it must be something wherein the marginal costs - especially environmental and resource drawdown costs - are immediately apparent to everyone, and built into the cost of a product or trade item. It must rest on the understanding that we are part of our environment, and not lords of it. Perhaps it could mirror the structure and functioning of a healthy ecological system, one that combines cooperation with competition. What might that system be, and how to get there, I don't know - it'll take someone smarter than me to figure it out.

Where's the third handle?

[neocone]

Capitalism is about concentrating resources from places where they are left idle to make them work and multiply their reach... whether those resources are taken from the land (metals, oil) or people (money, work, etc..).

This is how Life works... and this is how we were created as a species. But I won't go on that tangent.

Needless to say any divergence from this norm will always backfire... after all the socialist block became so backward it crumbled by itself and all America had to do is stand by and watch it happen.

Socialism can also only be implemented with tyranny, and there is just too much guns in the US for this to happen.

[aflurry]

$this->bbcode_second_pass_quote('Homesteader', '
')I suppose a black market is the closest thing to a free market, so there is still hope.

[aflurry]

$this->bbcode_second_pass_quote('neocone', 'C')apitalism is about concentrating resources from places where they are left idle to make them work and multiply their reach... whether those resources are taken from the land (metals, oil) or people (money, work, etc..).

[coyote]

$this->bbcode_second_pass_quote('neocone', 'C')apitalism is about concentrating resources from places where they are left idle to make them work and multiply their reach... whether those resources are taken from the land (metals, oil) or people (money, work, etc..).

[Homesteader]

$this->bbcode_second_pass_quote('aflurry', '')$this->bbcode_second_pass_quote('Homesteader', '
')I suppose a black market is the closest thing to a free market, so there is still hope.

[CarlosFerreira]

$this->bbcode_second_pass_quote('neocone', 'C')apitalism is about concentrating resources from places where they are left idle to make them work and multiply their reach... whether those resources are taken from the land (metals, oil) or people (money, work, etc..).

This is how Life works... and this is how we were created as a species. But I won't go on that tangent.

[neocone]

$this->bbcode_second_pass_quote('coyote', '')$this->bbcode_second_pass_quote('neocone', 'C')apitalism is about concentrating resources from places where they are left idle to make them work and multiply their reach... whether those resources are taken from the land (metals, oil) or people (money, work, etc..).

[CarlosFerreira]

$this->bbcode_second_pass_quote('neocone', '
')Children of Tchernobyl, since for some idiots nuclear power seems a viable solution... certainly in a socialist framework!!!

[MrBill]

Free markets cannot exist with political interference in the economy. Capitalism does not equal free markets. They are two different terms. Learn the difference.

The opposite of a market economy is a centrally planned economy. There is no third way. If you want to call political interference in the market economy the third way, fine. I will call it what it is. Go back to school and learn something useful before coming here and defining these terms however you (and your professor) choose to interpret them.

Nation states existed long before we had access to cheap, abundant energy. Nation states sprung up due to the necessity to produce an agriculture surplus caused by over-population. They are a means to protect society from external threats. And a means to live with one another in close proximity with one another without killing each other.

There is nothing about the rules of economics that says we cannot over-produce beyond our sustainable limits. The results are quite predictable. There is nothing that says capitalism cannot bring about economic and environmental collapse. But by the same token there is nothing that says that a centrally planned economy will not bring about the same result. And political interference in the economy does not necessarily make it any more or any less sustainable.

Physical Reality > Economic Consequences > Social Reaction > Political Response > Feedback Loop > New Reality > Etcetera

Only the values of the citizens in the economy can make those choices. Values supercede economics. If our values suck then it is not the fault of capitalism or the market economy. Centrally planned economies are equally prone to bureaucracy, incompetence and corruption. Just with less choice or accountability. Good luck with your thesis! ; - ))

[idiom]

Fannie And Freddie Were Created by the Government.
Fannie And Freddie are being killed by the Government.
The Government giveth and The Government taketh away.
Blessed be the centrally planned economy.

[MrBill]

[align=center]
New Deal
becomes
Raw Deal[/align]

[CarlosFerreira]

$this->bbcode_second_pass_quote('MrBill', '
')There is nothing about the rules of economics that says we cannot over-produce beyond our sustainable limits. The results are quite predictable. There is nothing that says capitalism cannot bring about economic and environmental collapse. But by the same token there is nothing that says that a centrally planned economy will not bring about the same result. And political interference in the economy does not necessarily make it any more or any less sustainable.

Physical Reality > Economic Consequences > Social Reaction > Political Response > Feedback Loop > New Reality > Etcetera

Only the values of the citizens in the economy can make those choices. Values supercede economics. If our values suck then it is not the fault of capitalism or the market economy. Centrally planned economies are equally prone to bureaucracy, incompetence and corruption. Just with less choice or accountability. Good luck with your thesis! ; - ))

[idiom]

I am probably a doomer, but only because I assume that Political decisions and social reactions will stop a sensible and timely reaction.

The level to which you move to uber-doomer depends on how dim your view is of the plebs ability to get along on their own.

[MrBill]

The problem as I see it - and I got into this debate on the weekend with a developmental economist either from the UN (or working for an NGO that works with the UN) - is that finance and economics simply are. They are totally objective. The biggest mistake I can see is to apply subjective criteria to an objective subject.

Almost like blaming the climatologist for predicting manmade or natural global warming and climate change. Or blaming the Center for Disease Control for roadmapping an outbreak of human to human transmited avian influenza virus and its effects. Someone might say, but that is horrible. How can you support such a dreadful outcome? It just is. If you want to avoid that outcome you have to take the necessary precautions and treat outbreaks (or climate events) as they happen. But the treatment has to address the underlying problem and not the symptoms.

The market economy is the most efficient way to allocate resources within an economy using price. However, we can also use economic modeling - based on hard science and physical limits - to forecast whether our current use of resources is sustainable or unsustainable. Once we have that information we can create market mechanism to encourage conservation and discourage over-consumption. A command and control economy has no such feedback mechanism. And we cannot rely on the goodness of human nature to achieve these results either.

If proposed economic changes using price - either the price of a good or taxes on it - are unpalatable to the consumer then how should we expect them to voluntarily adapt to a new reality of resource scarcity if, for example, they are not prepared to pay 25% more for their power, so that utilities can employ the latest carbon capture or scrubbing technologies? Sure the government can mandate it, but then there will be backdoor lobbying to get this or that group excluded or subsidized. That defeats the whole purpose, which is to change behavior by sending a price signal that says this is scarce (or has a cost to the environment) therefore use less or find alternatives.

A social-democracy with a market economy is simply the best system we have ever invented. It is the pinnacle of our evolution. However, it is not perfect. Because we are not perfect. Therefore, good government is often selling unpopular policies by making constituents see that it is in their own best long-term interest to change their behavior. You can only do that with good science, hard arguments and an objective view of economics. Feelings and emotions are best left-out of the equation.

UPDATE:The worst housing slump since the Great Depression is slowing the economy and adding to the nation's budget deficit.
$this->bbcode_second_pass_quote('', '[')b]``People obviously don't want higher taxes,'' said Torricelli, who earlier this month hosted a fundraiser for Corzine's 2009 re-election effort at his Delaware Township home. ``They never want spending cuts, and no one is lining up to make sacrifices. That's what makes governing at this point in American history a challenge.''

[Kingcoal]

The inherent "problem" with free market price discovery is that it often produces prices which are either too high or too low, depending on what those in power want to see. Thus, those in power attempt to rig the markets to preserve and enhance their power. In pure socialism, price discovery is dependent on data from a free market, usually the world market, which is the only really free market there is. In that way, all socialist economies are ultimately dependent on other free market economies for price discovery. Time ultimately destroys all attempts at price fixing. Bernanke told Congress "the fed can't produce another barrel of oil."

$this->bbcode_second_pass_quote('', 'A')ll the king's horses and all the king's men
Couldn't put Humpty together again.

[CarlosFerreira]

$this->bbcode_second_pass_quote('MrBill', 'O')nce we have that information we can create market mechanism to encourage conservation and discourage over-consumption.

[MrBill]

No. You're once again talking about political interference in a free market. Not a free market. In a free market prices are neither too high nor too low. They just are what they are to match supply with demand. In a command and control economy those price signals are missing. Socialism is a political system and not an economic one. Although socialists* do prefer a command and control economy, so they can allocate production without any regard to market economics. All the arguments are old and worn. Its been tried. It failed.

*not to be confused with elected European social-democrats that may use the term socialist, but rely on a market economy to allocate production, albeit with a huge dose of political interference in the economy as well as high levels of taxes and other wealth transfers

[MrBill]

CarlosFerreira my last comment was directed at KingCoal. I can address your points only tomorrow. But just one parting shot. Economics and finance are objective. People's interpretations are subjective.

If I put $100 on deposit for one year at 5% I expect $105 at the end of the year. If I expected a default I would not enter into the deposit. I clearly do not expect $200 in one year. That is objective. $100, $105 or 5% are neither good nor bad. They just are. It would be a subjective value to say interest earned on capital is bad when really it is just the time value of money.

So if markets go into overshoot either from fear or greed then that is the market's reaction in response to new information. And information is relative. What were they expecting? How much does the new information differ from previously held beliefs? What are the incumbents' positions? Does the new information make or lose them money? How much?

But more on your post tomorrow. Cheers.

[nickynicky]

Every variety of economy has it's flaws, and the one's most knowledgeable are best able to exploit them.