Collapse of the economy

[Egeides]

The Guardian and openDemocracy.org are talking about pretty worrying subjects: collapse of the world economy, as in 1929.

The article (also in my sig) that informs the most abou the subject is http://www.opendemocracy.net/debates/article-3-77-1463.jsp

What do you think about this? Do you have other sources on the subject, espescially sources saying the opposite?

[Edric O]

I was wondering when the next great crash would come... Now it looks like it's sooner than I thought.

Surprised? You shouldn't be. Such things are periodical in an unregulated economy.

[Dude_Doc]

Well, we should all be worried. In 1929, larger corporations bought the smaller ones, gaining more power. They (the big corps.), of course knew about it. So don't be surprised if you see "Microsoft Hot Dogs" in 5 years...

[Egeides]

Edric, this doesn't mean that the only way is total regulation though. I'm against oligo/monopolies like big corporations, so just imagine one big monopolistic entity called "state". What the studies done by those who are puting this out saying is that what should be done has some similarities to what Rosevelt did after the 1929 crash (which was forgotten as fast as possible thereafter, espescially with McCarthy that wouldn't have wanted to say Rosevelt was a communist ;D).

[Edric O]

Yes, traditional monopolies can only lead to disaster. That's because, in the absence of competition, the corporation that holds the monopoly can do whatever it wants, without having to answer to anyone. The same applies to the state monopolies in stalinist countries.

But I'm talking about a monopoly of a democratic state, which answers to the people. Not too different from what Rosevelt did, come to think of it.

[Caid Ivik]

Best prevention is to find a balance. OK for antimonopolistic bureaus, but no state dotations for those smaller (or less qualite). State can control the economy by owing it, of course, but altough nothing will be able to crash, motivation (and thus quality of products) will be minimal. If even costs are regulated, how you can imagine a technological progress?

[Egeides]

Caid, I think technological progress can hardly come from a soviet Gosplan, but it could from a control that would only be in terms of subventions. A free-trade economy, but with soem subventions to give certain directions. Like Sweden, Canada, or many others.

Besides, even USA isn't free-trade by its subventions to agriculture (which makes many Africans yell for injustice, but they aren't heared often anyway...).

I don't think something inspired from Rosevelt would hinder the economy. I even believe it could do the opposite by bringing a more secure economic environment and stop some losses such as "we wont pay for school, even if the consequence is inefficient workers for the next 50 years".

[Caid Ivik]

The most progressive part of soviet economy - warfare and intelligence systems - had own, concurence based "subeconomy". You had one shop for food, but for i.e.planes you had Suchoj, Mikojan, Iljusin... Less restriction means more efficiency.

[Egeides]

You didn't answered my post Caid, you only said that the soviet's best part of their economy was liberal while I said a post earlier I believed the Gosplan (soviet economic plan) wasn't working.

[Caid Ivik]

To be sure, you've made no question, at least such I have not answered yet ::)

[Edric O]

As I have already said in my previous post, any monopoly by an organisation (such as the state) which does not answer to the people leads to disaster, because it produces stagnation and hampers technological progress.

This was obvious in the Soviet Union and other stalinist countries: the unchecked state monopoly eventually lead to stagnation in all areas except those with limited competition (as mentioned by Caid), which eventually lead to the downfall of the whole stalinist system.

But lack of restrictions does not mean a better economy. On the contrary, it means an uncontrollable economy which goes up and down very fast and very often, and which produces the goods that sell, not the goods that are needed.

A very expensive luxury car sells well and brings a lot of profit, but it would be far better to spend those resources growing more food for the people who really need it.

[Egeides]

Caid: Sorry, I thaught your comment on communism was an answer to what I said about Rosevelt.

Then, what do you think about what I wrote?

Edric: I don't believe that such a concentration of power will stay clean. I don't believe neither that a plan made by some deciders where every single details is decided by them will go anywhere. I also believe that they will fulfill what THEY see should be fulfilled: they're in politics and politics acts as such. Why would politics be different for them? Machiavel.

[Edric O]

An economic plan that regulates every tiny detail would be a bureaucratic nightmare. No economy ever worked that way, not even the Soviet one.

A reasonable planned economy still leaves every economic unit free to do whatever it wants as long as it meets the requirements. It's only something like: "Do X thing with Y resources in Z time", nothing more.

Also, keep in mind that the planners have to be economists, not politicians. And each overall economic plan has to be approved by a majority vote of the entire population before it is implemented.

[Caid Ivik]

As I have already said in my previous post, any monopoly by an organisation (such as the state) which does not answer to the people leads to disaster, because it produces stagnation and hampers technological progress.

This was obvious in the Soviet Union and other stalinist countries: the unchecked state monopoly eventually lead to stagnation in all areas except those with limited competition (as mentioned by Caid), which eventually lead to the downfall of the whole stalinist system.

But lack of restrictions does not mean a better economy. On the contrary, it means an uncontrollable economy which goes up and down very fast and very often, and which produces the goods that sell, not the goods that are needed.

A very expensive luxury car sells well and brings a lot of profit, but it would be far better to spend those resources growing more food for the people who really need it.

State monopoly led to perfect control over economics. And why only state, there was very sophisticated system of cooperation withing whole eastern block. Problem is, that it was the Party, which decided what is "needed". There was much more waste than today. Now it is personal choice of everyone to decide what is needed, and what he buys. So things which are succesfully sold are needed. Yes, we can say that i.e.I don't need to have this computer for my life, but that's a thing of civilisation and my own resources, not some "party". Not saying that if we try to redistribute some resources to poorer countries, losses are too big.

Thinking about jokes like "Do X thing with Y resources in Z time" is a way to create controlled society. People will vote for it, they would not think about it much. And your managers will become an oligarchy. Like it was so... By the way, I can't see how would you eliminate that stagnation. It is sad view at one "worker", which will receive a command like "invent X with Y scientists, let they invent in Z time".

[Egeides]

The state exonomy wasn't ruled perfectly... There were incredible losses. So much that people were going behind wheat trucks to take what these trucks had let on the road: it made an income for them. Also, the economy isn't intensive but extensive, which means that instead of perfectioning its inner working, it is just "adding men"... It also means that technology is on the low.

I don't remember everything from my USSR course, but there's a bunch of reasons why the economy had big trouble, including corruption (was more profitable to sell your services out of the official system in exchange of others' service).

[Edric O]

State monopoly led to perfect control over economics. And why only state, there was very sophisticated system of cooperation withing whole eastern block. Problem is, that it was the Party, which decided what is "needed".

Exactly. The greatest problem with stalinism is that all decisions are taken by the all-powerful Party, and the people themselves are powerless.

In socialism, the people are the ones who hold the power, and they decide what they need.

Now it is personal choice of everyone to decide what is needed, and what he buys.

If you're rich, that is. The middle class have much fewer options to choose from, and the poor have none. Capitalism means freedom for the rich and slavery for the poor.

Thinking about jokes like "Do X thing with Y resources in Z time" is a way to create controlled society. People will vote for it, they would not think about it much. And your managers will become an oligarchy. Like it was so... By the way, I can't see how would you eliminate that stagnation. It is sad view at one "worker", which will receive a command like "invent X with Y scientists, let they invent in Z time".

The only sad thing I see here is your complete lack of respect for democracy. "People will vote for it, they would not think about it much" - you sound like an advocate of dictatorship. And you don't seem to realize that people are smart enough to think for themselves. The whole point of socialism is to put the means of production under the control of the people.

No one knows what's good for you better than you do. Therefore, no one knows what's good for the people better than the people themselves do. That is why they should be the ones deciding their own fate, both politically and economically. This is the argument for socialism and communism.

And by the way, "Do X thing with Y resources in Z time" is exactly what capitalist bosses tell their workers all the time. The differences between capitalism and socialism are that:

(1) In socialism the workers actually get to keep the fruits of their own labour, while in capitalism they become the property of the company owner and the workers are paid a wage which does not reflect the value of their product or the amount of work they put into it.

(2) In socialism the workers (as part of the people) get to decide the values of the X, Y and Z, by voting the economic plan of their choice. In capitalism, those values are imposed by the company owner.

As for discoveries and inventions, it should be obvious that those things cannot be part of any economic plan. You can plan scientific research, but that's all.

And finally, the problem of stagnation is solved by the fact that the means of production are in the hands of the people. Since everyone wants a better life, it will be in their own interest to make sure that the economy keeps improving and does not stagnate.

[Edric O]

The state exonomy wasn't ruled perfectly... There were incredible losses. So much that people were going behind wheat trucks to take what these trucks had let on the road: it made an income for them. Also, the economy isn't intensive but extensive, which means that instead of perfectioning its inner working, it is just "adding men"... It also means that technology is on the low.

I don't remember everything from my USSR course, but there's a bunch of reasons why the economy had big trouble, including corruption (was more profitable to sell your services out of the official system in exchange of others' service).

Your informations are accurate, but horribly incomplete. The economies of stalinist countries experienced periods of amazing prosperity as well as periods of great shortages (like the ones you described).

These things were usually determined by the level of corruption in the government. A corrupt government is an incompetent one, and in stalinism this leads to a very poor economy.

And there is also the fact that some stalinist leaders (such as Ceausescu) have intentionally ruined the economy.

[Wolf]

Edric: How in a socialist/communist society are the fruits of my labor my own? When I build them, do I get to keep them, take them home, and do whatever I want with them? Or am I forced to sell them? How exactly does that work? For, I do not see how the fruits of one's labor could be kept in a factory setting, when an individual only does one part of a huge job, i.e. putting one plug, or one screw. He cannot keep the car, for it is the product of many peoples' labor. So, how does he keep it?

COLLAPSE: I think that government regulation is good to reign in on corporations that sacrifice the stability of the economy for personal gain, as well as to stabilize the system as a whole. The problem, however, lies in the fact that a government that devotes SO MUCH of its time and energy to, for lack of a better term, socialist activities, is doomed to do NOTHING ELSE. IN Vietnam, we suffered a small crash because we fought a war, maintained medicare, medicaid, and social security, and experienced a recession at the same time -- A LOT LIKE what is happening today.

FACTS: Currently, 75% of the United States' budget is spent on "socialist programs", medicare, medicaid, social security, welfare, and etc.

The wars in Afghanistan and Iraq cost 166 billion dollars.

The United States budget is 1.8 trillion dollars.

Even though the war cost less than 10% of the budget, it poses a danger, for it exposes that a society that focuses so much on social programs is limited in the scope of its actions. 75%. If you are economically-driven and minded, that means 3/4 of the United States is socialist. I'm sure some of you are wondering why dollars can't vote.

Right now the ratio of social sec. payers to receivers is 3 to 1.

In 2018 it will be 2 to 1.

In 2033 it will be 1 to 1.

*EDIT: Birthrates in the US are going down, I can't find numbers, I apologize. Though, in Europe, especially, birth rates are headed even further down. For countries that have embraced social welfare far more than the conservative-US, they are just as much at risk, if not more.

All this stuff, the recent wars, plus the recession, plus the growing NEED for social programs, as more and more people get old, while the fact that Americans are having less children to pay for the old, are making it ever harder to MEET this need. Clearly, America's economy is walking a troubled line.

MORE FACTS: The United States represents about 44% of the world's economic capability.

CONCLUSION: Once America goes down, it will take a miracle for everyone else to stay up. And here you have economic collapse, Great Depression style. (I will attribute the fault of this to George Bush for his wars, and to the IDIOTIC Al Qaeda, IDF, and Hamas, and everyone like them, who drove a Texan to shooting guns he could not afford to shoot, because they had to kill each other sooooo badly.)

[Edric O]

Edric: How in a socialist/communist society are the fruits of my labor my own? When I build them, do I get to keep them, take them home, and do whatever I want with them? Or am I forced to sell them? How exactly does that work? For, I do not see how the fruits of one's labor could be kept in a factory setting, when an individual only does one part of a huge job, i.e. putting one plug, or one screw. He cannot keep the car, for it is the product of many peoples' labor. So, how does he keep it?

Well, maybe that wasn't a very good choice of words on my part. What I meant was that workers get paid the exact amount of money that their product is worth, not that they actually take it home with them.

When a single product is made by several workers, they will each get paid a fraction of the product's value which is proportional to their contribution in the making of that product.

In other words, the guy who makes a car door gets much more than the guy who puts in a screw. But since you can put in hundreds of screws in the time it takes to make one car door, at the end of the day those two guys will probably get very similar paychecks.

Of course, that happens in socialism. Communism is a different story: "from each, according to his means; to each, according to his needs". But we already talked in another topic about that.

I think that government regulation is good to reign in on corporations that sacrifice the stability of the economy for personal gain, as well as to stabilize the system as a whole. The problem, however, lies in the fact that a government that devotes SO MUCH of its time and energy to, for lack of a better term, socialist activities, is doomed to do NOTHING ELSE.

Well, what else should it do? Pretty much everything normally done by the government (except things like war) can be called a "socialist activity".

[Wolf]

Edric: Thank you for clearing that up, I think I'm getting a better picture of how this system works. Also, I think I was unclear. I meant to say a society that has split itself cpaitalist/socialst like the United States has done; we have not yet developed the means to deal with the cons of our social programs. A socialst society would have doubtless done so. Sorry about that. But, again, I see that you have a good point. The goverment's purpose is to better the social welfare of the people. The fact that a government could devote 100% of its ability to doing so, and nothing else, is not a bad thing at all. Doomed, clearly, was a bad choice of wording. However, when the US attempts multiple actions, well, you see where the problem lies.

(New question, yeah, I'm sorry about this, if I'm annoying you, just say so, and I'll go get a book about the topic, or something, I do feel I'm learning a great deal, though. Anyway, how would a socialst or communist society fight a war?)

[Edric O]

Annoying me? LOL, you're kidding, right? I love talking about this! :)

A capitalist/socialist combination does have its problems, but it's still a hell of a lot better than a pure capitalist system. Just look at the almost pure capitalism of the 19th century and early 20th century.

It seems that the more socialism we have, the better.

Now, about war: A socialist country would wage war in pretty much the same way as a capitalist one. The only difference is that the military budget will probably be a lot smaller, since the people will have the power to decide just how big they want their military to be.

A communist society has no state, and therefore it also has no army. However, since all the people have the right to bear arms, they can defend themselves. And they can also get military training if necessary.

[Caid Ivik]

Exactly. The greatest problem with stalinism is that all decisions are taken by the all-powerful Party, and the people themselves are powerless.

In socialism, the people are the ones who hold the power, and they decide what they need.

If you're rich, that is. The middle class have much fewer options to choose from, and the poor have none. Capitalism means freedom for the rich and slavery for the poor.

The only sad thing I see here is your complete lack of respect for democracy. "People will vote for it, they would not think about it much" - you sound like an advocate of dictatorship. And you don't seem to realize that people are smart enough to think for themselves. The whole point of socialism is to put the means of production under the control of the people.

No one knows what's good for you better than you do. Therefore, no one knows what's good for the people better than the people themselves do. That is why they should be the ones deciding their own fate, both politically and economically. This is the argument for socialism and communism.

And by the way, "Do X thing with Y resources in Z time" is exactly what capitalist bosses tell their workers all the time. The differences between capitalism and socialism are that:

(1) In socialism the workers actually get to keep the fruits of their own labour, while in capitalism they become the property of the company owner and the workers are paid a wage which does not reflect the value of their product or the amount of work they put into it.

(2) In socialism the workers (as part of the people) get to decide the values of the X, Y and Z, by voting the economic plan of their choice. In capitalism, those values are imposed by the company owner.

As for discoveries and inventions, it should be obvious that those things cannot be part of any economic plan. You can plan scientific research, but that's all.

And finally, the problem of stagnation is solved by the fact that the means of production are in the hands of the people. Since everyone wants a better life, it will be in their own interest to make sure that the economy keeps improving and does not stagnate.

In capitalism, there are also people holding the power. Do we need change if we can buy anything we need already? Also state provides enough for pure life to those unemployed - or a "poor class" how you call them. How much they receive depend only on taxes from productive private sector. For that coin you can't buy much here on the east, but phenomenon of american "leisure class" might scare and surprise. And producers try to fix their production what wants majority: if majority has low income, you can't produce something what you won't sell. That's why Ford successed with his model T. You know, planning is even today inside managements, but it is more flexible, creating short-ranged plans, dependent on will of customers. Economy is a dynamic thing, thus we need dynamic work. Socialism promotes slower economy, able to be driven by long-range plans. But that's too unwieldy nowadays.

5-year plan of informatics caused that in times of 286 we used maximally Sinclair-like PMD-85. That's a one way. Other is that commissions won't talk much about it and drive the plans every 2-3 months. Well, I want to see an administration which will make every month a full-scale voting about i.e.harvesting wheat ;D

[Edric O]

In capitalism, there are also people holding the power.

LOL, Caid, I like your sense of humour.

Of course that people hold the power. You wouldn't expect dogs and cats to hold the power, would you? But I was talking about the people. As in "ALL the people".

My point is that the power shouldn't be held by a tiny oligarchy of rich and powerful people (as in capitalism), but by ALL the people. All the people should have a say in how the country is run, and they should have control over their own lives (which can only be achieved by having control over the economy).

Do we need change if we can buy anything we need already? Also state provides enough for pure life to those unemployed - or a "poor class" how you call them. How much they receive depend only on taxes from productive private sector. For that coin you can't buy much here on the east, but phenomenon of american "leisure class" might scare and surprise.

News flash: Not everyone can afford to buy anything they like. Not by a long shot. There is a thing called "poverty" in the world - and it's growing. Maybe you can buy anything you want, but the majority of people are not so lucky.

And the so-called American "leisure class" (i.e. the problem with the people known as "welfare bums") is one of the most ridiculous parts of right-wing propaganda. The USA has far LESS social welfare than most countries in Western Europe, yet the right-wingers expect us to believe that there are MORE people living off welfare in the USA than in Western Europe. Absolutely ridiculous.

The only logical conclusion is that there are far less "welfare bums" in America than the right-wingers say.

By the way, I'm glad to see that you support social welfare (the state providing for the basic needs of the unemployed, the disabled and the elderly). Just keep in mind that it officially makes you a left-winger.

Perhaps you're not as conservative as you think.

And producers try to fix their production what wants majority: if majority has low income, you can't produce something what you won't sell. That's why Ford successed with his model T. You know, planning is even today inside managements, but it is more flexible, creating short-ranged plans, dependent on will of customers. Economy is a dynamic thing, thus we need dynamic work. Socialism promotes slower economy, able to be driven by long-range plans. But that's too unwieldy nowadays.

5-year plan of informatics caused that in times of 286 we used maximally Sinclair-like PMD-85. That's a one way. Other is that commissions won't talk much about it and drive the plans every 2-3 months. Well, I want to see an administration which will make every month a full-scale voting about i.e.harvesting wheat ;D

If the majority has low income, but there is a small minority of very rich people, then many companies will rather produce expensive goods for the rich than cheap food for the poor. If a million people are starving but there is no profit to be made from selling them food, then no company will sell them food and they will die.

As for having a full-scale poll every month, I need to remind you that the personal voting machines that I already talked about will make voting extremely easy. A full-scale referendum could last only a few minutes, and cost nothing at all.

So yes, we could easily have a full-scale poll every month if it's necessary. But I don't think it will be.

You should notice that today we have far more planning in capitalist economies than ever before. Not less, but more. Corporations control and plan huge chunks of the economy. You even admitted this, but then you contradicted yourself by saying that planning is "too unwieldy nowadays". But if it's so "unwieldy", then why are our economies controlled by huge corporations instead of small personal businesses?

The problem with corporations is not in the way they work, but in who controls them. As it stands now, corporations are undemocratic organizations which do not answer to the people. They are controlled by small groups of extremely rich and extremely powerful persons, and therefore they serve only the interests of those small groups. Basically, they are very similar to the old Soviet government, from every point of view. In fact, you could say that the Soviet Union was one big corporation.

[Caid Ivik]

In times of socialism it was one party of 15 000 members, now we have four parties with 1000-5000 members. Yes, they are smaller, but calling them oligarchically tiny...

Problem of "leisure class" is attack of right-wingers against social politics of those like Kennedy, Johnson and Carter. Democrats were always more on the left side, so you hit the wrong button. Jokes like that I am left spare for your own pleasure. I haven't said we have to change what's good now - that's conservativism about, anyway. Only that support of the older ones has to be reformed. It already takes half of government finances...

Reality of western world is rather else, altough in core it same, EdricO. Majority of people have average (hence the sign) payment, enough for nice home or flat, car, food, education for children and more. Of course, it depends on power of economy, how much of it. You can expect countries, which produced maximally slaves in past, will be as strong as i.e.Austria now. And also there are some richer, but it doesn't mean they form a class like aristocracy was. Anyone can be rich, luck is all you need.

And you still couldn't understood the thing about customercy! If you would not product for the majority, you won't be succesful. Remember Ford T and such... Bah, why should I repeat.

[Inoculator9]

To sum up my belief of the economic situation... Americans are hypochondriacs.