nrh@inmet.UUCP (02/13/85)
>***** inmet:net.politics / whuxl!orb / 11:31 pm Feb 9, 1985 >It is amazing how people can forget inconvenient facts of history in >the cause of ideology and their pet theories. Previously Danny Mck. >has repeated the recently resurrected laissez-faire apology for the >Depression: in spite of the fact that Herbert Hoover and the >Republican administrations consistently pronounced against government >intervention in the economy and acted in the same vein, somehow >"government intervention" is blamed for the Great Depression. This is interesting stuff -- I'll try and dig up the reference, but FDR apparently made a real hell-for-leather get-the-government-off- the-people's-back speech before he was elected. After the New Deal began, with its consequent expansion of the government, FDR asked his speechwriter if he should refer to the earlier, laissez-faire speech. The speechwriter is said to have answered: "Mr. President, the only thing you can say about that speech is to deny you ever made it". The moral? It doesn't matter what people say nearly as much as what they do. If it's popular to be for the free market, you can bet politicians will swarm to that banner, regardless of what they intend to do. Similarly, you may only fairly judge a system according to what happens. It's been pointed out to you that there was centralized control of the money system at the time of the Great Depression, and that the controllers screwed up badly. To argue that since the politicians at the time SAID they were for the free market, and that therefore the free market is to blame for the Depression is a little dangerous, particularly if you, as a socialist, wish to disassociate yourself from others who have said they were socialists (Josef Stalin comes to mind). >The argument here is basically one based on faith: regardless of any >evidence of an overall lack of government intervention in the economy >under Hoover and Coolidge, the fact that a Depression in which fully >30% of Americans found themelves out of work occurred is proof that >"something went wrong". Since we know (from the immutable laws of >free market economics) that such problems could not have resulted >from the natural evolution of the economy away from the conditions >under which free market laws really work, then they must be blamed on >the familiar villain: i.e. government intervention. Hmmm..... Not a bad description, except for one thing: theory should suggest places to look for answers, and history (or better, experiment) should provide tests for the answers you get. In this case, it's pretty clear that previous collapses were avoided by the government NOT making mistakes, and the Great Depression came about only when the government made a BIG mistake. The market theory suggests that you want to look for government ineptitude, and, voila! The money supply was massively contracted at a time when banks were starting to fail from lack of ready money. Not a bad apology, in general: "I didn't do it". Let me include here my "apologies" for the Viet Nam War, and the creation of the IRS: "I didn't do it". >Notwithstanding these meticulous attempts to find *some* scraps of >evidence that government intervention *led* to the Depression, the >stalwart defenders of immutable free market laws never go on to mention >another salient fact: just what it was that brought the country >*out* of the Great Depression. For that is yet more damaging to their >naive faith in a free market system that has become no longer a free >market system. There is no doubt in anyone's mind that World War II with >its consequent enormous government expenditures on the supplies of War >for both the US and allies brought the US out of the Great Depression. >How could this be? How could massive government expenditures bring >the country out of a Depression that had been languishing for years? My own, rather vague understanding of this is that the depression was coming to an end naturally before the outbreak of war-preparation, and even before the WPA. I suspect what is needed here is a little exposition by someone who knows the history involved. As for there being "no doubt in anyone's mind", I find that argument amusing in a world now considered round (there was once "no doubt in anyone's mind" that the world was flat, get it?). >What does this historical evidence tell us about the knee jerk opposition >of free-market ideologues to any government intervention in the economy? >It tells us their abstract theories do not adequately explain the REAL WORLD >in which we actually live. I don't know of any abstract theories that adequately explain the "REAL WORLD" in which anybody lives -- to do so would require an extraordinary accuracy. Does Quantum Electrodynamics "adequately" explain the existence of "banjos"? One question one might ask oneself at this juncture is "Which theory -- the Marxist or the Libertarian -- most adequately explains the world one experiences?" You may recall that Marx predicted the imminent revolution of the industrial proletariat, but..... >But it is also quite irritating the degree to which these defenders of >privilege will readily grant the impediments to the free market represented >by groups of workers who have banded together to insure their rights >in the workplace ,higher wages and greater benefits. To wit: >> >> I did not claim that we live in a Free Economy; elsewhere I have >> repeatedly pointed out that we do not, and in the analysis that Kelly >> responded to, I introduced coercive unions and Minimum Wage laws (hardly >> the stuff of a Free Economy). > >I will not deny that unions and minimum wage laws affect the assumptions >of the free market by creating monopsony power. But does Danny Mck. or >other naive apologists for the people who now control our economy admit >to any distortion of free markets by *monopoly* power or the increasing >dominance of the economy by big corporations and conglomerates? Find a monopoly. Please..... Something stable, something that really required government intervention to fix, and was not supported by government to begin with. Then complain about this, but if you cna't, forget about it. Standard Oil does not qualify -- it wasn't stable. >And the "coercion" of unions? Unions, in the first place, must be approved >by a 70% vote of the workers. Hey! What about the remaining 30%? What about the "closed shop"? >In the second place, Union leaders are >elected by the membership and in the third place, contracts are approved >or disapproved by a vote of the membership. Right! Of course, I wound up having to pay money to the union when I worked as a kitchen helper at college. I didn't get to vote.... >Who elects the company >president or the managers? The people who've committed their capital to the project -- workers, if they wish to take the risk.... >If a nonunionized worker is fired by the >company president or manager because he has long hair or (the *worst* >offense!) has petitioned his fellow workers for a union is this not >coercion far worse than paying union dues? Err.... Yes, but that's about the worst that happens to a non-union worker who's willing to leave when fired, and who is not prevented artificially from being fired. Of course, closed shop regulations may prevent his getting a job in the first place, and he may be beaten up as a "scab" if he tries to take a job offered him by a consenting party. >No,( say the ideologues) because it is a "free" market. >(even tho' in conditions such as the Great Depression 30% of the >people may be unemployed: he is always "free" to take another job(???)) You'll have to show that the Great Depression was the outcome of uncoerced non-governmental decisions before you can cut any ice with it. >If one is to be fair, then it is necessary to admit that the distortions >to a free market involve both sides, labor and capital. Absolutely! Both sides would (and do!) use government to benefit themselves artificially. The problem is that RIGHT NOW, unions have the upper hand in this regard (though it's being eroded quickly). It's not too surprising, given that various unrealistic advantages have befallen union workers, and equilibrium forces are now causing some adjustments. Libertarians in general argue that BOTH must be stripped of their special powers with respect to individuals. >And before making blanket condemnations of government intervention >it is important to consider the lessons of the Great Depression and just >how exactly the country both got into it, and *out* of it. You seem to be taking as given the notion that the government got us out of the Great Depression when nothing else would. Since you also take as given the notion that the Free Market got us into it (despite references offered by me and others), I'm not at all sure you can do this without some authority other than "everybody knows this".