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July 28, 2004

Why Capitalism Works.

One of the great arguments of recent times (say the last century or so) has been about why, or if, capitalism works when the seemingly more rational planned approach (whether you call it socialism, communism, dirigiste statism or whatever) doesn't. Over the longer term the answer is in the capitalist economy's ability to foster innovation. Innovators don'e have to convince the planners, they just have to convince the occasional customer. The proof is in this picture from George Gaskell.

H/T Jeff

July 28, 2004 in Economics | Permalink


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Tracked on Aug 2, 2004 11:42:44 AM


Even knowing what I do now, I still would be reluctant to invest money in these guys.

Posted by: Gordon | Jul 28, 2004 12:45:19 PM

It's not even capitalism so much as freedom: "the right to be wrong".

The guy that developed the Xerox process was just flat wrong -- EVERYBODY knew that duplicating images REQUIRED wet chemistry. A rational society would have shut down his wasted efforts.

The folks selling Viagra are morally wrong. Either it's a boon to mankind which should be given away, or it's a frivolous vanity... In either case a moral society should shut the market down.

The idea of a "free" press -- from Peter Zenger to Glenn Reynolds -- is wrong. Ask anybody. Poll the world, anywhere, throughout history, and you'll find a majority that stoutly believes that journalists and reports should be accountable to a government board of official truth; some authority who prevents false ideas from being widely disseminated. And of course anybody who, like Rupert Murdoch, actually MAKES MONEY by advocating lies as truth should be subject to (otherwise forbidden) capital punishment.

But in free societies where various sorts of wrong-headedness are (grudgingly) tolerated ... all sorts of odd things happen.

Which of course is why unfree societies hate us.

Posted by: Pouncer | Jul 28, 2004 4:26:27 PM

That's rather better than what I wrote. So where do you blog? And if you don't why don't you?

Posted by: Tim Worstall | Jul 28, 2004 4:34:36 PM

What? This old thing?


Posted by: Pouncer | Jul 30, 2004 5:45:27 PM

Again, you guys--I'm with you in spirit but disagree entirely that the superiority of capitalism lies in its fostering of innovation.

First, some clarification of terms is in order. The general term, capitalism, is a process more or less universally employed, whether recognized or not. It consists in specialization and the allocation of augmented returns (through consumption of less than the total) to mintenance and improvement of the future production.

The capitalist system (Marx, I believe) is the modern variant, mostly associated with private property, individual liberty, and relatively free markets.Of course, all of these (as libertarians of all stripes will explain) are subsumed in the principle of liberty.

The entire matter of which system is better is intimately bound with the ideas of what is better; "better' is what people want more than some other condition.,whether it is in what they do or what they have. Without resorting to any economic argument, it is simply very difficult to comprehend that people doing more of what they individually want to do would not be happier--better off--than in some other arrangement saddled with inability to know, on some continual basis, just what all those others wanted or requiring the devotion of significant numbers of them to thwarting the desires of the remainder.

Some excuse earlier social reformers for an alleged ignorance of economic principles. But, while it is true that many were (and are) ignorant, it is far truer that very many people believe themselves better qualified to determine what others like or want than those others themselves and, moreover, simply deny that those differing from their opinions should have any influence whatever. Or freedom, or life, if they don't keep still.

Posted by: gene berman | Oct 27, 2004 4:43:23 PM

The Lancaster Bond Election site is up.
It's called Lancaster Rackets.

A little experiment in activism at a micro-political scale.

Posted by: pOUNCER | Sep 2, 2006 10:06:16 PM