Tag Archives: Capitalism

A Definition of Capitalism by Andrew J. Galambos

We have never had this:

“Capitalism is that societal structure whose mechanism is capable of protecting all forms of private property completely.” – A. Galambos


The Soviet Story

Crony Capitalism Revisited (Is Keynesianism What We Think It Is?)

Capitalism! Capitalism is an alternative to what we have now. I highly recommend it.” – Jim Grant


How Joplin Missouri Was Rebuilt Quickly and Well Post Tornado – No Red Tape

Thanks to AgainstCronyCapitalism:

Fried by the Volt

From DollarVigilante:

[The following post is by Redmond Weissenberger, Managing Editor of the Dollar Vigilante and Director of the Mises institute of Canada]

A government that sets out to abolish market prices is inevitably driven toward the abolition of private property; it has to recognize that there is no middle way between the system of private property in the means of production combined with free contract, and the system of common ownership of the means of production, or socialism. It is gradually forced toward compulsory production, universal obligation to labor, rationing of consumption, and, finally, official regulation of the whole of production and consumption.

Ludwig von Mises, Theory of Money and Credit

The wholesale socialization and subsequent destruction of the US economy continues apace. The most recent example of the massive malinvestment brought on by the Federal leviathan is the saga of the Chevy Volt.

GM recently decided to suspend production of the volt due to declining sales – they have also stopped releasing sales projections. From AP:

A GM spokesman said Friday that the company will shut down production of the Volt from March 19 until April 23, idling 1,300 workers at the Detroit-Hamtramck assembly plant.

General Motors was once the Jewel in the crown of American Capitalism. By many, it was considered the greatest manufacturing company in America, if not the world. The company was destroyed by the insidious nature of the Neo-National Socialism that has infected the USA for well on 80 years now, when the merger of state and corporate power that swept across Europe was aped first by Hoover and then by FDR in the disastrous New Deal. The unions that were encouraged to eat away at GM from the inside were bailed out and the US Federal government took a 25% ownership in company. In the 2009 deal to “restructure” GM, the bondholders were wiped out, and the Unions were given a free pass to continue their destructive behaviors.

Built by what is now a de facto state-owned corporation, the Volt was the child of the green-washed brains of the Obama administration. The Volt was built for no-one, but a vision of the perfect, “New eco-Socialist Man”. Who is buying the Volt? According to Bill Visnic, senior editor of Edmunds.com, “The Volt appeals to an affluent, progressive demographic” General Motors itself stated that the average income of a Volt buyer is $175,000 a year. This trend does of course line up with the type of individual who has been at the forefront of the environmental movement since day one. A rarefied elite, righteously indignant, statist in nature, ready to have the government force eco-correct behavior on all who inhabit the land. The classic example is Prince Philip, Duke of Edinburgh, who once opined that “In the event that I am reincarnated, I would like to return as a deadly virus, to contribute something to solving overpopulation”.

The Volt is a very good example of what happens when the means of production falls into the hands of the State. The system of profit and loss that can only operate when prices are set by the private owners of the materials and the means of production. The Chevy Volt can only exist within the sphere of the state wherein there is no rational economic calculation possible. From Economic Calculation in the Socialist Commonwealth by Ludwig von Mises:

Hence, in a socialist state wherein the pursuit of economic calculation is impossible, there can be–in our sense of the term–no economy whatsoever. In trivial and secondary matters rational conduct might still be possible, but in general it would be impossible to speak of rational production any more. There would be no means of determining what was rational, and hence it is obvious that production could never be directed by economic considerations.

When taking a look at the resources that have been poured into the Volt, one can only come to the conclusion that there was no rational economic calculation present. It is estimated by Tom Gantert that the Volt has received up to $3 Billion in Local, State and Federal Subsidies. And if you believe that GM has indeed sold 6,000 Volts, then the total subsidy per car can be estimated anywhere from $50,000 to $250,000. All of this for a mid-sized 4 door sedan that retails for $39,828 (eligible for a $7,500 federal rebate of course).

Compare that with TATA motors Nano, a four door wonder built in India with a sticker price of just under $3,000 USD for the base model. Without the hampering effects of state intervention and government backed unions monopolizing the labor pool, it is amazing what can be profitable. It’s a wonder the car doesn’t explode into flames.

If you have an understanding of the necessity of private property, and the market based, wealth generating price system that accompanies it, one shouldn’t be surprised that the Volt is such a massive failure. Even after the clear example of the failed crusade of abolishing private property for half of the world’s population during the 20th century yielded nothing but starvation and death on a genocidal scale, there are still some who claim that “Socialism hasn’t been tried” or “free markets can’t allocate resources”. Of course if we take an honest look at the test cases provided by history, it is clear where the truth lies.


At the end of the Second World War, Germany was split into two halves – the eastern half ruled by the Soviet Union was known as the GDR or German Democratic Republic, and the western half was occupied by France, the UK and USA and known as the FRG or Federal Republic of Germany.

In East Germany Socialism and the abolition of private property and central planning of the economy for the allocation of resources was instituted. According to Jacob G. Hornburger, in Western Germany:

The Allied occupation officials imposed an extensive set of price controls on the German economy. When Ludwig Erhard, the free-market leader of Germany, asked the officials to lift the controls in order to relieve the economic plight of the German people, they refused, claiming that an immediate lifting of controls would produce chaos. One Sunday morning, to the surprise of everyone, Erhard issued a public announcement lifting the controls. It was that action, more than anything else, that led to what became known as the German “economic miracle.

The German government of the day threw off the yoke of price controls and opened the doors for innovation and capital accumulation.


Two populations, similar in composition, were subjected to two different economic systems, private property and free market prices vs. state ownership of the means of production. The results of this 40 year experiment were quite clear – in 1988, West Germany was producing the best cars in the world and East Germany was producing the Trabant, a car that literally melted away.

The USSA has been accelerating down the road of serfdom for more than 80 years now, and the incremental destruction of private property and the rule of law. The USSA is gradually forcing compulsory production, universal obligation to labor, rationing of consumption, and, finally, official regulation of the whole of production and consumption. The Volt is only a symptom of the socialist cancer at the core of Washington D.C. and welfare/warfare state that is has spawned. Is the Volt a vision of the future? Or a sign of the coming collapse of the system?

Free Market Capitalism is an Economy Driven by the 99%

From AgainstCronyCapitalism:

I’ve watched the Occupy movement with quite a lot of interest. I hung out for a day in October at McPherson Square with the Occupy DC folks. I was even on NPR for two seconds as they identified me as someone who was sympathetic to the TEA Party and also interested in what OWS had to say.

I was at CPAC and literally right next to Andrew Breitbart (coincidentally—we weren’t hanging out) as he traded words with Occupy.

Later that night I took part in the impromptu “beer summit” at CPAC where TEA Partiers basically bought drinks for a group of Occupy people and we traded ideas civilly.

I’ve read plenty of Marx, and Chomsky. My favorite class in college was a seminar I took on revolution.

The point is I have a decent sense of where Occupy is coming from and though I don’t agree with much that I hear from Occupy, I respect the noise. It is good for the Republic to have people yelling at the top of their lungs.

But there is one vital point that Occupy does not get. Markets and free market capitalism are the best things that ever happened for the “99%.”


That is a ridiculous statement Nick! How can you possibly say that? Look around. There is poverty everywhere. Kids graduating from college are saddled with horrible debt. Look at the wars and the war profiteering! Look at Wal-Mart and its exploitation of its workers!

Thing is, if one looks closely, it is the hand of the state that is behind these perceived injustices not the invisible one.

The poverty one sees in the United States is perpetuated by a highly inefficient welfare system.

People fall on hard times. Some people just cannot care for themselves and those people must not be tossed into the cold, like they were before the industrial revolution. Society recognizes the collective responsibility it has for this relatively small sliver of the population. American society always has, and did so long before the advent of the welfare state. Churches and civic organizations used to handle such problems. Imagine if we actually let them solve such problems today without an intrusive state? The country would be far better off.

The co-founder of this website, Hunter Lewis, has actually written a book on how society can deal with many of its challenges through charitable organizations entitled Are the Rich Necessary? Someone should put a copy in the Occupy community library.

Students are indeed saddled with horrible debt. This student still has some to pay off and I graduated over 10 years ago. Trust me I can relate to the students who are graduating these days with the equivalent of a mortgage to pay back, before they can even think about a mortgage. That kind of puts a damper on working life.

But it’s not the market that is to blame for this situation. In an effort to turn college into an American right the federal government has poured massive amounts of subsidies into the system, which colleges adjusted tuitions for, thereby increasing the cost of a college education. It’s simple supply and demand.

Huge amounts of federal money were sent to colleges through federal student loans and other vehicles and surprise, surprise the price of a college education lurched skyward. It used to be that people really could work their way through college and emerge free and clear. Now one must take out loans because the government has inflated the cost of education. This bubble is bursting, however, thankfully.

As for the wars and war profiteering, these things do not exist without a massive federal government. When contractors and manufacturers make money on war, when politicians can use war as a jobs program, war happens.

Additionally it is very hard to wage 10-year wars with a currency that can’t be debased by the Federal Reserve. If for instance the dollar was backed by gold, the limited nature of gold would have restricted our “efforts” overseas. The government would have had to come to the people to ask for permission to continue the wars, because in a hard money regime (the dollar backed by gold or a basket of metals and/or commodities) taxes would have to be raised to continue the fight. Afghanistan would have ended five years ago if the taxpayer actually felt that he or she had to pay for the war instead of financing it with a credit card to be paid off by future generations.

As for Wal-Mart, I am no particular fan. But I will say that Wal-Mart has helped many people gain access to goods that make their lives better. And Wal-Mart workers can afford to shop in the store in which they work.

What I have found is that over and over the social ills that government tries to solve almost always end up expanding the problem that was to be addressed. The War on Poverty worked pretty well, and the War on Drugs, and the War on Terror. All of these “wars” are shining successes!

War is perpetuated by the state and each war needs fodder. The 99% provides the fodder.

In a truly free market however, where money is not destroyed and manipulated by central banks, and where innovators and entrepreneurs are allowed to solve problems without jumping through hoop after hoop, the 99% are who is in charge, not the state.

The “people” can simply vote with their wallets. In a free market the average person is empowered because he or she can simply opt out or support alternative solutions to problems. In a free market a boycott works. In a society run by the government one can boycott a company all one likes, but so long as that company has the right friends in government that company will survive.

Sure Nick, but what if we simply abolish the private ownership of companies? That’ll make things right. That’ll make the “people” the owners.

Yes, it’ll make the people the owners of a nonproductive entity. Then the people will starve because whether one wants to admit it or not the profit motive and markets are as natural as gravity. Markets are how nature deals with inequality and want. This was as true in the Soviet Union as it is in the United States. One can either learn the Tao (way) of markets or spend a lifetime (and the lives of others) fighting it. Go with the flow and people will flourish. There will be inequality as markets emerge and then go away, but thankfully markets come and go. The state instead crushes this dynamism.

If one is miserable, and indeed believes things are always going to be miserable, it makes sense to expand the state. If, however, one has any sense of optimism for oneself and one’s fellow humankind allowing markets to grow and die is the only way to go. It is also the only “sustainable” way for a society to exist. The constant expansion of credit by government encourages the trashing of the planet (for all you enviros out there).

Many people subscribe to the false belief (in my view) that the government is the people, that it should be composed of the 99% and that the government should then be used to rein in the evil 1%. So long as Occupy believes this, and I am of course speaking broadly, it will only make matters worse.

A free market economy is an economy run by the 99%. Just ask Jeffery Imelt the CEO of GE and good friend to the Obama administration if he personally would be better or worse off in a free market. Ask him if a free market gives more power to his customers to force changes in his company.

The answer is that he would be far worse off and that the products his company makes would be far more responsive to the desires of the 99%.

The question really is: Does Occupy honestly want the 99% running things? If so it should embrace free market capitalism.