Wednesday, February 22, 2012

Machinery of Freedom: Starvation

To the right is an image of a Haitian mud pie, a now staple of the diet in Haiti under normal conditions, not just earthquake conditions.

David Friedman writes:
I know of only one occasion in modern peacetime history when large numbers of people starved although food was available. It occurred under an economic system in which the decision of who needed food was made by the government. Joseph Stalin decided how much food was needed by the inhabitants of the Ukraine. What they did not 'need' was seized by the Soviet government and shipped elsewhere. During the years 1932 and 1933, some millions of Ukrainians died of starvation. During each of those years, according to Soviet figures, the Soviet Union exported about 1.8 million tons of grain. If we accept a high figure for the number who starved—say, eight million—that grain would have provided about two thousand calories a day to each of them.
Haiti in the past produced enough food for their own population, but now their food producing capacity has been undermined. Leftist governments were deposed in favor of right wing governments that favored free trade with the US. Meaning the importation of subsidized US agricultural products. This has decimated Haitian food production.

In Tanzania children fight over what little rice is available while cargo plane after cargo plane is loaded with fish taken from Lake Victoria and shipped to Europe where it can fetch an impressive price. It's more profitable to serve it in upscale European restaurants than to feed starving Africans. On capitalism the goal is profit, not fulfillment of need, so this is our expectation. India is a net exporter of food while 350 million go hungry. Brazil and other places are likewise net exporters of food while millions go without.

This does not change what Stalin did. But we must be clear about what the argument is. Friedman sounds like he's objecting to socialism. He's quoting Orwell and Marx. Is his criticism of socialism or is it of state capitalism, which is what Stalin represents? And if it's state capitalism, who are the advocates of that view?

It grates the socialist when he hears the implication that the Soviet Union represented socialism. What is socialism? Worker control of industry. How much worker control existed in the Soviet Union? About zero. This is why people like Noam Chomsky railed against the Soviet Union when it existed. This is why his books were banned by the Soviets. Chomsky has only been barred from entering countries to give lectures twice. Once was recently when he was barred by Israeli security from entering the West Bank to deliver a lecture. The only other time was when he was barred from entering Soviet controlled Czechoslovakia. He was hated by the Soviets, and with good reason. He objects to their economic arrangement since he advocates worker control of industry, not state control.

But doesn't the USSR acronym include socialism? Sure. And the R is for Republic. Was the Soviet Union a Republic? They applied the socialist label because of its positive connotations, just like they applied the Republic label. But the USSR represented neither.


HispanicPundit said...

Your defense of socialism in the face of history reminds of this recent post from my favorite economist Caplan:

What real-world events would measure up to my standards?  I'd be willing to argue that extreme nationalism was refuted by the history of Nazism, and radical socialism was refuted by the history of Communism.  Both sets of events were awful; neither produced significant countervailing events; and both showed philosophies in very pure forms.  You could argue that Nazism and Communism suffered from the bad luck of extremely wicked leaders.  But given the two philosophies' disdain for division of powers and embrace of unrestrained hatred of their enemies, the atrocities of Lenin, Stalin, Hitler, and Mao reveal a systemic flaw in the philosophies themselves.

In other words, if you want to argue that socialism was never truly tried on a large scale, the right winger has no problem with that. In fact, that is one of our main critiques of socialism - namely, it can't ever be tried successfully on a large scale. The incentives are such that the most power hungry despot will aggregate power.

History shows that.

Jon said...

You could argue that Nazism and Communism suffered from the bad luck of extremely wicked leaders.

I think that's a misunderstanding of radical socialism. You don't actually have leaders in radical socialism. There is no hierarchy. It's pure democracy. There's also no compulsion on anarcho-syndicalism, which is socialism in it's purest form.

The right will continue to call the Soviet Union socialist because obviously the capitalist wants to continue making money by doing nothing and so he must discredit socialism. But then why is Chomsky banned and barred in the Soviet Union? Why was he praising the democratic forces in the USSR (while at the same time focusing most of his energy on the US)?

If it were true that it hasn't worked on a large scale, that's not an argument against it. You could have said the same of democracy at some points in the past. But there could be cases where it has been done. I think some Native American societies would be anarchist/socialist in some respects and they flourished, and would have continued to flourish if not for disease (read Charle's Mann's 1491 for some eye opening information about their technological advancement). You could look to Amish societies in the US. No heirarchy, no force (they don't call the cops). Democratic control really. It's possible Spain was anarchist for a brief period, but was overrun by fascist forces in 1939, but I don't know the details on that.

HispanicPundit said...

It wasn't just the USSR, it was everywhere it was tried...China, Vietnam, North Korea, Cambodia (bet Chomsky wasn't banned in Cambodia ;-)) etc...

Jon said...

When did China have worker control of industry?

Chad said...

Coming in late here, but wanted to drop my 2 cents.

Those in this countries form of government that Jon loves so very much is allowing their people to starve, yet they stay fed and rich. Again the same old story - socialism is for the people not the socialist.

Jon looks at the sanctions - fine, but if the government idea was sound then the sanctions would not matter and the people would not be hungry. If the leaders/dictators denounce true Democracy to allow a republic to form then they are the cause for the hunger and the people need to rise up and take out the leaders.

Jon loves to use misdirection to drive the argument. This is a CHOICE made by leaders of a nation to take their people in this direction. If the leadership of this country was on dirt floors eating mud pies then I would listen, but they are not - the leadership is rich and need those people to stay poor to continue being rich. The blame falls right there so if you want change then what you should be advocating is for the people to rise up and take out the leadership or your advocating that the US through military action take out the leadership and hand back the power to the people.

I do not want one single solitary penny of my money going to that country for anything while the people set there and let their leadership make them eat mud pies.

Sheldon said...

First in his comment Hispanic Pundit ignores the failure of neo-liberal capitalist policies in Haiti, a country that was once at least semi-self sufficient in food production, and also one that has suffered at the hands of U.S. supported despots and wealthy elite.

This is the thing about right-wing defenders of capitalism, they never get tired of pointing to the real flaws of "state socialist" societies (I myself reject the label of "state capitalism" for the SU etc. that Jon uses, but that is another debate). However, they are often blind and unwilling to discuss the real flaws of capitalism as well.

On the other hand, there is a long tradition of debate about the problems of socialism on the left.

"In fact, that is one of our main critiques of socialism - namely, it can't ever be tried successfully on a large scale. The incentives are such that the most power hungry despot will aggregate power."

First error here is the implicit assumption that power hungry despots are exclusive to leftists govts. when obviously this isn't the case. What is necessary to prevent despotic governments are democratic institutions that put checks and balances on despotic power.

I think the example of Chile is instructive here. Chile had the longest history of democratic government in Latin America, and began a transition to socialism under a democratic government. In this case it was a capitalist restoration that required a despotic government that threw Chile's constitution in the garbage. All in collaboration with Friedman's Chicago school of economics.

Second, another fallacy revealed here is the assumption of that the course of history is uni-linear, and any socialist experiment will have identical results, or that particular historical events and outcomes are inevitable.

I will use an example from the article you cite from Caplan where he argues that the events of 2008 do not refute capitalism once and for all. I would agree. Maybe if Glass-Steagall had not been repealed some decade earlier, maybe the latest recession and financial crisis would have been much different?

What if there had been several socialist revolutions in Germany and other countries alongside Russia, and Stalin never consolidated his power? Could the history of those first socialist experiments been different?

The early Russian Marxists socialists such as Lenin, Kautsky, Trotsky etc., actually believed that socialism was impossible or very unlikely to be developed in a society lagging behind the development of capitalism. This is basic Marxist theory that capitalism develops the prerequisite conditions for socialism.

Perhaps the conditions and infrastructure of a radically democratic and functioning socialism is just coming into being?

Seems to me capitalism is offering no resolution to the crisis it creates. The relative generalized prosperity of capitalism under a Keynesian state that we had here in the U.S. from 1950 to 1970s is now over.

HispanicPundit said...


If were sticking to your analogy of Chile, you should continue further and mention that Pinochet actually non-violently stepped down from power.

That is precisely my point: economic freedom precedes political freedom. Socialism, eliminating economic freedom, then will never be able to have large scale political freedom.

Now you of course disagree. And you will argue, theoretically of course, that what I say is wrong. But it is a historical fact that there is NO large scale socialism despite many various attempts at such. Your arguments to the contrary are purely academic and represent no real world experience. Proving, exactly, the right wing case against it.

Is capitalism imperfect? Sure. Does capitalism create economic systems that can be rigged and catered to the upper class? Maybe. But atleast capitalism can be implemented on a large scale.

Socialism, on the other hand, doesn't even get off the ground. It's a nonstarter, IMHO.

Jon said...

Socialism is a non-starter because if you try our government either attempts a coup, as in Chile, or if that fails, as in Vietnam, they send the B-52's. Or it's 50 years of terrorism as in Cuba. This is proof that Socialism is unworkable? Saying it's unworkable is simply saying that those with power, who want to retain their power and prevent freedom, will never be defeated.

Pinochet built concentration camps, ended democracy, imposed Milton Friedman's version of capitalism, which entails investor control as opposed to worker control, and this is freedom? Capitalism is in fact tyrannical by definition. A corporation is not some sort of democracy. It's massive concentrations of power controlled by a tiny minority and they are unaccountable to the people. And their decisions affect those very people that have no control in the important decisions made.

Of course I'm an ex-right winger that likewise used to believe that there was a tight correlation between capitalism and freedom, but understand what that means. Allowing workers to have control in the decisions a company makes is regarded as un-freedom. Having an elite minority that controls that same apparatus is freedom.

Also note what "failure" means. Cuba is the only state in the region that has basically eliminated starvation and homelessness. That's failure. Capitalist Nicaragua and capitalist El Salvador, with thousands of people at subsistence living, that's success. You can rip on the Soviet Union if you like and I'd tell you they aren't Socialist. But look at how far they came since 1917. They were a total backwater at that point. Their growth from then to 1989 was comparable, or perhaps a little more rapid than economic growth in the US. And they were devastated by wars at home, which the US avoided. I think 60 Russians died in WWII for every 1 American that died. Don't call me some sort of defender of the Soviet Union because I object to their economic arrangement, but a little perspective is helpful I think.

Jon said...

One other quick point. Capitalism seeks cheap labor to maximize profits. Where do you find cheap labor? Overseas. What is the barrier to implementing that? Resistive governments. So capitalism by it's very nature is hostile to foreign governments that prevent it from exploiting that cheap labor. Military intervention then is kind of a natural feature of capitalism. That's another freedom limiting feature.

Contrast with Socialism. If workers in the US have a factory that is profitable they don't necessarily have an incentive to go find cheap labor. If they want to double their output that means merely that twice as many people are required at present technology. If they open a factory overseas those new workers are just as much owners as the workers in the US. Socialism wants to maximize profit/worker. Expansion can mean more profits, but it's also more workers. Profit/worker under normal conditions would be the same. So there is less imperialist incentive under Socialism. So Socialism is more conducive to freedom.

HispanicPundit said...


You really gotta stop basing your views on unsubstantiated claims - regardless of how well it fits your model.

When you make arguments like "Capitalist Nicaragua and capitalist El Salvador", you are basically arguing with yourself. As I have shown you repeatedly, no objective measure substantiates this. Though I can see why you would hope this to be true - but hoping is different from actually being true.

And for the record, I have no qualms with your definition of socialism. I would support a workers control of a company. In fact, in the United States and other mostly capitalist countries you have the freedom to do so. Even David Friedman defends such a view in his anarchist book!

The mere fact that it hasn't happened on a large scale is FURTHER proof that its all academic theorizing.

This is at the heart of why you find socialism appealing: You are comparing something that has actually been implemented on a large scale (capitalism), with all its warts and imperfections, with something purely academic. Something that could be represented in pure form.

And no amount of history - even objective measures directly contradicting your conclusions - will change your mind! In other words, you are still a fundamentalist, just of different stripes.

Jon said...

If you know what Capitalism is you know that El Salvador and Nicaragua are capitalist. But I learned in this thread that you actually don't know what Capitalism is. This is not about looking for an "objective measure". There's nothing here that requires that I "substantiate" my views. This is about basic definitions. I don't have to substantiate that a bachelor is an unmarried man. That's just what the word means. Don't private investors own the companies in El Salvador and the people sell their labor for wages? Don't investors reap the profits? Then it's a capitalist country. End of story.

It's not just you that doesn't seem to understand basic definitions. This is a new little thing I do. When I hear someone rail against Socialism and glorify Capitalism I now ask a simple question. "What is Socialism and how is it different from Capitalism?" Do you know that almost nobody knows? It's kind of humourous to me because right wingers are so adamant when they say that Socialism is the root of all evil and Capitalism is some sort of astonishingly wonderful system. Why do they think that when they don't know what either of them are?

It's like your comment here that the left requires big government. Socialism CAN BE big government. And so can Capitalism. But neither has to be, at least in it's idealized form. I would argue that Capitalism is completely unstable and unsustainable without government. You might think Socialism is. In any case both can tolerate big government.

I have a little theory about why people don't know. It's reinforced by your comment here. You have no problem with worker control. When people hear what Socialism is they think it sounds pretty reasonable. Why should Wall St control all the companies? Doesn't it make more sense to have the workers control their own factories? Sure does. Makes a lot of sense. To normal people. But here's who doesn't think it makes a lot of sense. The people with all the money. The people that earn income by living off the surplus revenue generated by actual workers and don't have to work themselves. The people that own all the media and are buying all the economics departments at schools. Funding the think tanks that provide the intellectual justification for them retaining this arrangement. No big conspiracy. They just have all the money. And of course they really believe that Capitalism is for the best. People tend to believe that what is in their own best interest is for the best. So they promulgate these views and they tend to obscure things in a manner that serves their own interest.

HispanicPundit said...

When I, and indeed, when economists speak of capitalism, were not talking about the strict definition form. Were talking about the whole package. Precisely what I defined in the post you link to. Precisely what the Ease Of Doing Business measures. As well as the freedom indexes, etc. (That's in fact the implicit assumption of WHY they make these rankings!)

It's the full system we call capitalism...not just the narrow Websters dictionary term. More importantly, we claim that it's the full system that is needed for capitalism to flourish.

The reason the definition for socialism is misunderstood, is that socialists themselves have been moving the goal post. When another one of their experiments fail, they rush to a more limited definition.

But really, now you have a definition that allows it to work within a capitalist system. So what you doing blogging man? Go out there and create a workers paradise! Nobody will stop you! :-)

Jon said...

Our arguments rely on words and these words require definitions. I'm using dictionary definitions. You're apparently using them in some other way. You claim it's a way that economists operate, but that's a very old, very tired claim that you never justify and never will.

For you Socialism means you get a low ranking from Heritage or the IMF and Capitalism means you get a high ranking. In that case, sure, Haiti is Socialist and the US is Capitalist. Africa is Socialist. Nicaragua is Socialist.

I don't support Socialism then, which apparently means low tariffs, low tax rates, low government regulation, austerity, etc.

I prefer worker control of industry to investor control. What shall we call my system and the one I oppose? Economic Democracy maybe? And what should we call investor control where people are paid profits by virtue of owning property and the worker earns income with wage labor? Shall we call that Propertyism or something?

Because if you just mean something totally different from what I mean when I say Socialism and Capitalism then there's no way to have a meaningful conversation. Suddenly it makes sense that you say Latin America and Haiti are not Capitalist. Do you support Propertyism then? Because that obviously exists in Haiti, Latin America, and Africa.

HispanicPundit said...

Let's remember Jon, we can't call any large scale system "socialist" by your definition - because none exists. This is your utopia in your head, that works well on paper and has never really been implemented.

To me, nothing can truly be defined as capitalist without strong property rights, zero to low tariffs (an extension of strong property rights), and the overall ease of doing business. Maybe we call it neoliberalism? If capitalism bothers you. I'm fine with that. But it's really the whole package that comes to mind when ranking what works and what doesnt.

Jon said...

If it's good with you let's continue to use standard definitions. The difference between say Ha-Joon Chang/Paul Krugman and David Friedman/Thomas Sowell is about differences between two different forms of Capitalism. Chang supports IP, Friedman opposes. I think Chang is right and Friedman is wrong. Friedman is a neoliberal form of Capitalism and Chang is not. Both are capitalist. I say Chang's version of capitalism works better.

Based on these definitions can you agree with me that El Salvador and Nicaragua are capitalist states? The disagreement we have about them is how Laissez-Faire/Neoliberal they are. You say they are not Laissez-Faire/Neoliberal. I say Laissez-Faire is kind of an impossibility that doesn't exist anywhere, but they are Neoliberal. Do we at least agree on the terminology?

HispanicPundit said...

Based on these definitions can you agree with me that El Salvador and Nicaragua are capitalist states? The disagreement we have about them is how Laissez-Faire/Neoliberal they are. You say they are not Laissez-Faire/Neoliberal. I say Laissez-Faire is kind of an impossibility that doesn't exist anywhere, but they are Neoliberal. Do we at least agree on the terminology?

I agree that ~90% of all economies today are textbook definition "capitalist". The only exceptions are the really shitty economies. The traditionally "communists" ones like North Korea, Cuba, and a few small countries in Africa...China before the free market reforms. Vietnam prior to free market reforms, etc.

So yes, on a strictly textbook definition, largely speaking, ALL countries are now "capitalist".

But what separates a country now (thank god!) is how neoliberal they are. The higher you are on the "Ease Of Doing Business" index, the more neoliberal. The lower, the less.

And it's not surprising that the higher the ranking, the richer the country.

Jon said...

The "Ease of Doing Business" index measures things like whether or not online databases are available. So in your way of thinking people that oppose neoliberalism oppose online databases.

We seem to be running into the same problem over and over. You don't follow dictionary definitions of Socialism, Capitalism, Laissez-Faire, and now neoliberalism. Laissez-Faire means government intervention. Socialism just means "low ranking from Heritage." Now neoliberal kind of means "hard to do business, lacks online databases, etc." It's hard to have a discussion when I don't know what you mean with words. Why not go with standard definitions?

HispanicPundit said...

The Ease Of Doing Business ranking measures:

The ease of starting a business
The ease of registering property rights
The tax rates
The level of free trade
The rule of law

These are the things that come to mind when I think of capitalism. It's not just the ability for investors, workers, and so forth to own the means of production. It's the level of property rights more generally, free trade, tax rates, rule of law, regulation, etc. This is what the IMF is measuring.

And I argue that the higher the ranking, the better the economy. And that is exactly what you see.

Jon said...

Those measures can very easily apply to non-neoliberal systems.

Which side of the debate says starting a business should be hard? Which side of the debate says registering property should be difficult? Taxes and free trade? Yeah, there's differences there. But the differences aren't necessary. High redistributive tax rates are not necessary on Socialism, though a socialist would recommend them in certain circumstances. Same with free trade. If you look at the incentives what you find is Capitalism naturally leads a powerful corporation to seek labor in a poorer area, and hence low tariff rates are preferred. But Socialism produces less incentive to seek that cheaper labor because in Socialism you want to maximize Profit/worker. So if you go to China, what's to be gained? Say you double your output. But all things being equal you've doubled your work force. Profit/worker is unchanged. So what's the incentive to go to China? So on Socialism you can have free trade. You just wouldn't expect as much movement of companies overseas.

What about the rule of law? What is the difference betweet neoliberal and non-neoliberal with regards to the rule of law? Does non-neoliberal prefer inconsistent application of the rule of law in your mind? Or does neoliberal prefer inconsistent application of the rule of law?

We have very inconsistent application of the rule of law in this country and that's a natural outgrowth of inequality. So according to this index which provides a better score? It would seem that neoliberal would be more likely to apply laws inconsistently. Is that "better" on this index? If it's worse then once again this index is not measuring neoliberalism, but something else.

HispanicPundit said... I said before, my version of capitalism does NOT preclude your version of socialism.

But the reverse isn't true.