Sunday, February 14, 2010

Keynes on Lenin

John Maynard Keynes on Vladimir Lenin's proposal on how best to destroy capitalism:

Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, Governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity (or fairness) of the existing distribution of wealth.

As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of Society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

6 comments:

TinLizzie said...

re: Misunderstanding Free-Market Capitalism

Hi Kyle

I hate to bother you here, but due to some bug I received a notice of your reply to me on TPN but, of course, cannot access it.

It sounded like you were winding up to give a good answer-- though I'm sure you don't want to type it out again. Is there a link you could give me to a similar topic, for the layperson?

Reasonsjester said...

Do you mean the thread on your webpage, or on the forum? Here is what I wrote earlier:

"Deregulation does not mean discarding of the rule of law. This is a favorite red herring of socialists and statists. In a laissez-faire capitalist economy, individuals and companies would still not have the right to inflict harm on others, though if the risk of using a product is transparent, then the buyer assumes the risk (caveat emptor, or, "buyer beware").

If anything, laissez-faire economics is even more desirable than it was when Adam Smith, David Ricardo, Frederic Bastiat, Ludwig von Mises, F.A. Hayek, and even Milton Friedman endorsed it. The reason for this is because the information revolution has made the research of goods and services so much more efficient, convenient, and nearly instantaneous for consumers that, if we maintain an open society, then we are in our infancy as an informed, empowered, market-savvy people.

The future is so bright and that is the exact reason the state's shadow is growing so long. The statists have to convince us that we are our own worst enemies, and that without them, we would revert to barbarism and savagery. But on the contrary, it is the state that embodies license, extortion, racketeering, coercion, and bullying, not corporations and businesses who depend on the wants and needs of consumers for their very existence. The statists argue that without them, corporations will quickly trample their competition to become monopolies, when it is actually statists who facilitate monopolies by allying with them to accomplish personal, regional, and national political objectives.

A free market is not perfect at any given point in time, but at least it is self-correcting. Businesses who harm consumers get sued; companies that grow into monopolies and become inefficient and exorbitant in their pricing open up opportunities for competition, if the rule of law is enforced; while the state never ceases to grow, to penetrate all areas of life it possibly can, including the economy."

Anonymous said...

Ah, the good ol' days of laissez-faire, when GE could dump whatever the f^ck it wanted into the Hudson! Screw all those suckers downstream, since we the executives lived upstream!

Reaganx said...

Anonymous, you're being a clown. Capitalism is based on the protection of property rights. So the owners of property downstream can claim damages from GE.

Anonymous said...

From 1947 to 1977, GE dumped as many as 1.3 million pounds of PCBs into the Hudson, turning a 197-mile stretch of the river into the nation's largest Superfund site. Even today, PCBs still leak into the river from GE's Hudson Falls plant. Under Superfund law, polluters are responsible for cleaning up the messes they make. Yet for years, GE fought the development of a cleanup plan with every tool it could buy, lobbying Congress, attacking the Superfund law in court, and launching a media blitz to spread disinformation about the usefulness of the cleanup....

The 2002 decision, which spurred GE to design a plan to remove 800 Olympic swimming pools worth of toxic muck from the river, was a landmark victory for the environment, and a blow to corporate polluters hoping to evade their cleanup responsibilities.....

GE, however, has been dragging its feet on carrying out the cleanup. Dredging was slated to begin in 2005, but GE has repeatedly requested delays, pushing the start back to 2009. And in October of 2005, the EPA changed tack, rewarding GE's foot-dragging by striking a backroom deal that allowed GE to commit only to completing the first phase of cleanup -- a mere 10 percent of the job. Environmental advocates and government scientists expressed concerns that the agreement would not even ensure adequate performance of that initial phase of the cleanup. Under the Freedom of Information Act, NRDC obtained records spelling out the detailed bases for these scientists' concerns, and filed suit against the EPA and the Department of Justice to compel them to release additional records they had refused to provide.

Despite the controversy, top federal officials pressed ahead with the agreement and, at their request, a federal court formally signed off on the EPA-GE settlement in late 2006. Although GE has now begun some of the preparatory work for the cleanup, it continues to challenge the EPA over important details, and to press a federal lawsuit challenging the EPA's authority to require GE in the future to complete the second phase of the cleanup. If GE ultimately backs out of Phase 2, taxpayers would have to foot the bill to clean up GE's mess, face protracted legal battles with GE to require the company to complete the job (delaying any eventual cleanup by many years), or else be forced to live with a polluted river indefinitely. Much of the upper Hudson is already closed to fishing, and south of Troy, New York, women of childbearing age and children are advised not to eat fish at all. And the pollution is spreading, continually moving downriver from Albany.....


Tell me again ReaganX how capitalism protects third party property interests? Jack Welsh symbolizes everything which is wrong with capitalism; he deserves a cardboard box on Eighth Ave. instead of his mansion in Westchester.

Reaganx said...

Anonymous, it's not as simple as lefties imagine. What is needed is a correct trade-off between industrial development and owners' obvious desire not to have their property polluted. The only rational way to achieve such a trade-off is by consistently protecting property rights and abolishing all government regulations on the environment. In this way, government will not be able to stifle industry but owners will still have legal recourse and be able to claim damages whenever they think someone violates their rights by polluting their property.
GE should be thanked for the tremendous industrial achievements that made all Americans wealthier and more prosperous and it's not GE's fault that the government has failed to establish a genuine system for protecting property rights and opted for absurd horse-trading and interest-group warfare inherent in the nature of environmentalist controls.