From: thant@void.esd.sgi.com (Thant Tessman)
Subject: Re: A hedgehog in fox's clothing, among the hedgehogs
Organization: Silicon Graphics, Inc.  Mountain View, CA
Date: Mon, 14 Sep 92 21:19:49 GMT


In article <BuKxE0.5Go@world.std.com>, jcf@world.std.com writes:

[...]

> However, I part company with them on one important issue: their
> worship of the market system, their belief that it is the only morally
> acceptable mechanism for combining individual into social goals.  This
> faith goes with a simplistic, quasistatic model of markets that leaves
> out most of their dynamics and all of their defects.

The market is not a moral system.  The market is merely a mechanism by
which the morals of the participants manifest themselves.  If this is a
'moral flaw' so be it.  But this claim does not in itself explain why the
government should have any moral superiority, even independent of the the
issue of differences between moral systems.  And given that operationally, 
the government operates via coercion, it is guaranteed to be morally more 
deficient than the marketplace to the degree that any social action based 
on coercion is considered immoral.


> 
>   A good example is a book that I read in 1983 at the house of some
> Libertarian friends.  It was both intelligent and sensible on many
> topics, but it had a chapter in which it was actually argued that the
> business cycle, whose cruelties have been perhaps the main motive for
> government intervention in the economy, was itself entirely due to
> government intervention in the economy.  A control system contains
> thousands of feedback loops with delays, but when it breaks into
> oscillation, that is all the fault of wicked people monkeying with the
> boundary conditions!  It would not be a long step from that to
> believing that government interference is responsible for hurricanes.
> I have no doubt that governments have often made things worse, just as
> doctors have in their sphere; but that falls short of proving that
> they are pernicious or useless in general.

Between 1922 and 1929 the government (via the Federal Reserve) expanded
the money supply by over two thirds.  There were more than twice as
many gold notes in circulation as there was gold to back it.  The 
practice of making money artificially cheap encourages long-term capital
investment at the expense of short-term counsumer-orient production.
Since the production cycles of capital-intensive goods (like construction) 
are typically much longer than consumer-oriented production, it takes a
while for these malinvestments to be recognized by the market.  They 
really are malinvestments because no one ever intended to buy them, and
no one has the money anyway because the money borrowed from the banks 
was just money printed up by the Feds.

But they eventually are, and the market compensates by moving capital-
investment and labor out of long-term production back into short-term
production.  And indeed, during the Great Depression, it was the
capital-intensive industries that suffered 80% to 90% unemployment while
the consumer-oriented industries only suffered 10% to 15%.

For more detail, see Murray Rothbard's excelent book 
America's_Great_Depression.

thant

P.S.  I liked the story.

Newsgroups: alt.politics.libertarian