communism/technocracy as an emergency measure

[Sisyphus]

But the crash of 1929 was caused by a lack of physical, tangible wealth. Or rather, it was caused by a ridiculous distance between what actually existed and what people thought existed, hence a whole economy built up on credit, on promises that couldn't be fulfilled, on nothing. It was "consumer confidence" that caused the crash.

[-Demosthenes-]

But the crash of 1929 was caused by a lack of physical, tangible wealth. Or rather, it was caused by a ridiculous distance between what actually existed and what people thought existed, hence a whole economy built up on credit, on promises that couldn't be fulfilled, on nothing. It was "consumer confidence" that caused the crash.

 

Indirectly. If the "consumer confidence" stayed, then everything could have stayed the same. But human nature is to lose faith as soon as anything goes wrong.

[CPL.Luke]

However the stock market can't always go up just because people will it to be so. If a new alternative resource that could replace oil came out tomorrow, the oil companies stock would plummet faster than an airplane without wings, and while the new companies stock would rise very quickly, their would still be some drop in the market. And in the case of the 1920's this drop however small could escalate to the level of a full fledged crash, soley due to the "economy of credit" (nice phrase demos).

 

 

in other words consumer confidence is not enough.

[Sisyphus]

Indirectly. If the "consumer confidence" stayed, then everything could have stayed the same.

 

I can't imagine how. That is, excluding mass hallucination, where everyone thinks they have much more stuff than they actually do...

[Dak]

Dak you seem to be operating under the assumption that economic crashes like the one in the 1930's occur just because alot of people went out and sold their stock one day.

 

[etc]

 

oh, that deficit. duh! i dont believe i didn't twig that was what you were reffering to, sorry

 

hmm... that is rather a problem.

 

how about, then, if not all industries are continued: if we were to switch to communism, carry on with the food and transport industries, and other non-deficit industries such as policing, teaching, and the medical services, and also a sustainable level of manufacturing etc that was much lower than pre-crash.

 

then we could do something like this: people get a food ration so they dont starve, they get payed a wage (but dont need to spend it on basics), then, hopefully, the industries that provide non-essentials could start up again and restart the economy, before switching back from a communism.

 

the reason it appeals to me is that, afaict, when trying to recover from a crash, you have to fix the following:

 

unenployment

lack of industry

devaluation of currency

poverty

lack of confidence

side effect: poor living standards, including hunger.

 

and its hard to fix them, cos they each cross-perpetuate: it's hard to fix unenployment when theres little industry to enploy, which is hard to rectify when no-one has any money to support industry, which is hard to fix when everyone's unenpoloyed...

 

if you were to switch to a non-money 'do what the govournment tells you to do' way of doing things, then most problems get fixed strait away:

 

 

unenployment <-- you can give people jobs to do

lack of industry <-- people will still be working, hence industry will not be as lacking

devaluation of currency <-- no currency = no problem, at least short-term

poverty <-- people should be less poor, in real terms. if essentials are still being produced, and are rationed out

lack of confidence

side effect: poor living standards, including hunger. <-- hunger, at least, would be avoided by taking control of the food and transport industries

 

give that enough time, and confidence in the country should return.

 

im just thinking that this is a much better position from which to reintroduce currency and capitalism than a crash.

 

reintroduce money, and, what with most people still having a job, industry still existing, and so on, they should be able to spend it and restart the economy.

 

yes, industry would still be lower, and unenployment higher, than pre-crash, but the economy crashing tends to take out sustainable industrys (such as food production) with it, even tho the us was perfectly able, resorse wize, to provide food for its people.

 

im suggesting the govournment takes control, the price-system is abandoned, and sustainable industries are sustained to limit the depths of the crash; then, after a period of planning and stabalisation, the price-system could be reintroduced, and capitalism reinstated.

 

makes sence to limit the effects of the crisis.

[-Demosthenes-]

I can't imagine how. That is, excluding mass hallucination, where everyone thinks they have much more stuff than they actually do...

 

In years preceding the Depression you could borrow a couple hundred bucks, buy some random stock, and sell it for an insane profit the next week. The only reason anyone brought it was because they believed it was worth it.

 

So much of the wealth in the US was represented by this intangible medium, one that is controlled by the minds of the people, it was only a matter of time before something bad happened.

 

So it's not like they believed they had more than they had. The small "piece" of a company you owned, represented by a piece of paper, was worth a lot because others wanted it and would pay a lot for it.

 

As soon as no one wanted it, all of a sudden it was worth less. Wealth was destroyed everywhere all of a sudden merely because no one wanted to buy the stock. That wealth only existed because others wanted the stock, because of "consumer confidence."

 

Something's worth is completely dependent on the consumer's demand. A diamond is extremely expensive, but if no one wanted one they would be completely worthless. So if all of a sudden no one wants something, or they don't believe it's worth as much, it will be worth less. Society's faith makes or breaks the economy.

 

[...]

makes sence to limit the effects of the crisis.

 

A ruined economy' date=' in a developed country, is a [i']psychological disorder[/i], and should be treated as such.

[Dak]

ok.

 

imagine i went out and bought lots of luxuris -- spent my entire month's wage the day i got it on fast cars, a new big tv, and beer, in the belief that i would, a week later, win the lottery and I thus have the belief that i am financially stable, despite my wanton spending.

 

i can sustain this for a while, but a week later i have a problem. i dont win the lottery, and suddenly realise that im screwed. i stop believing im financially stable.

 

this problem was caused by my unwarranted belief in financial security to a level where i could splash out. continuing to believe that i was economically secure, and continuing to splash out, will not help the situation. continuing to believe that i've won the lottery will not put food on my plate. and, at this point, acknowledging that im finatially up the creek is not a psycological disorder -- failing to acknowledge it would be.

 

yes, the attetude went a long way to making the problem worse. but, the base problem was there, and was non-psycological. it was an unsustainable prosperity, and a reliance on this unsustainable prosperity caused the crash. lending, iirc, $9billion a year to people to invest in an unsustainable boom was pretty dumb. as was letting this money be invested on margin. and the fact that the banks lent all their money out, and even borrowed money from the insurance companies to speculate with.

 

when the demand for cars, hoovers, washing machines, fridges etc -- things that people dont carry on needing at the same level as they do when they've just been introduced for very long -- dropped, industries closed, unenployment rose, people lost money on the stocks which now, justifyably, were worth less than they were before. this, in and of itself, is a problem.

 

the stock market crashed, which was largely due to an unjustified belief in them before the crash; no amount of positive thinking could disguise the fact that shares in companies HAD dropped in real value after the boom was over.

 

stock prices crashed, peoples wealth dissapeared, which had the knock-on effect of making banks wealth dissapear, which made other peoples wealth dissapear, which caused people to withdraw money from other banks, which made more banks wealth dissapear, which made yet more peoples wealth dissapear, and also took out the insurance companies that the banks couldn't repay, and also made many buisnesses wealth, stored in banks, dissapear; everyone was poorer, which made them spend less on an allready falling industry, which made it fall faster, which made more people unenployed, which made people poorer, which made people spend less, etc etc etc.

 

putting it down to everyone loosing confidence is wrong. their attetude greatly increased the damage, but wasn't the ultimate cause; and, in some cases the attetude was pretty reasonable -- it was the confidence before the crash that was silly, not the loss of confidence after.

[CPL.Luke]

DAk, the banks money was effectively in the stock market, they had lent it out to people who's express intent was to buy stock in the market, and the bank new this so it kept a clse watch on the stock market, if the stock went down such that the bank wouldhae lost money they made a "margin call" wher the individual who had taken out the money from the bank would have to put more money into the account in order for the bank to stay at a profit, if the person couldn't do this the stock went to the bank which would do with it what it wanted.

 

now on aday where the stocks start to turn down, the banks were making some pretty big margin calls that people just couldn't pay, so they turned the stock over to the bank, which promptly sold it.

 

but every time this happened the banks Lost Money, some so much that they had to shut down. But these banks didn't just deal with stocks, they dealt with personal savings, checking etc. so when they shut down people lost their life savings. So as word spread that that was what was happening people rushed the banks in order to get their money out before they closed. and this caused more banks to close until as you pointed out earlier 2500 banks had been shut down.

 

part of what happened was that there was a fundamental economic implosion because we believed that there was more money in the economy then their actually was.

[-Demosthenes-]

Was there less physical wealth after the stock market crash? No, it was the willingness to exchange that wealth for products and services that was lost. Once people get scared they start hording what they have, which is, as you said, justifiable. A normal economy can't work with that kind of social attitude. Banks will assume that massive amounts of money wont be taken out in a short amount of time; product makers will assume that someone will buy their products. If consumers loose faith in that system, then bad things happen

 

It's not a belief that you will win the lottery that keeps the economy going, it's a belief that you can invest and interact with the economic system -- exchange goods, services, or capitol with others for other goods, services, or capitol safely. If a society believes that they can do that, then the economy will be fine under reasonable conditions.

 

Of course food and other raw materials may be become scarce, and this will cause an economic problem. But this isn't what happened in the Depression, and isn't what causes a problem of this scare in a developed country. That's an important distinction. In a developed country food is never a really a problem. It's safe to assume that there is enough food produced each year to feed everyone in a country like the United States enough so they don't die, if we wanted to.

 

It costs like $50 a person to feed someone at an acceptable level? Times 300 million, that's 15 billion a month, or 180 billion a year. That's significantly less that has been spent of the war in Iraq by the US alone. Food is easy.

 

Lack of other raw materials hasn't caused something of that scale in a modern developed country before, but there hasn't been a real test of that (?).

 

Anyway, provided enough raw materials and food (which is easy), the attitude of the society, their wiliness to participate in the economy, decides the health of that economy.

[Dak]

It's not a belief that you will win the lottery that keeps the economy going, it's a belief that you can invest and interact with the economic system -- exchange goods, services, or capitol with others for other goods, services, or capitol safely. If a society believes that they can do that, then the economy will be fine under reasonable conditions.

 

untill it becomes unavoidably obvious that their fiath was misplaced, which was my point.

 

irreguardless: as you said, there wasn't less phisical wealth after the crash -- if anything, i'd argue that, at the very beginning of the crash, there was more.

 

the industry dropped down, but only in responce to dropped demand. there was enough industry to meet a reasonable demand. there was enough food and infrastructure. but, because of the crash, demand droped even further, more industries closed, food was not distributed etc. this was entirely an artificial result of the crash, and not lack of demand nor americas inability to phisically meet demand.

 

hence my question: when there's a genuine demand for stuff, and that demand can be met, but it isn't because the economies broken, should the state sieze control of industry in order to fix it?

 

i suppose what im saying is that communism cant fix phisical problems -- it cant supply a demand that the country is incapable of supplying -- but it can supply a demand that the country is capable of supplying (albeit possibly with long-term concequences). so can capitalism, usually. which would fix a crash faster: communism, or capitalism given that the capitalism is broken

 

No, it was the willingness to exchange that wealth for products and services that was lost

 

not just willingness, but ability: no money = no ability to trade welth for products. everyone else doesn't have enough money = no ability to trade products for welth.

 

even if the govournment had regulated better, and the banks had not leant so much, and the market had closed early that day, then the industry would still have reduced in size markedly, due to a genuine drop in demand, and had in fact been dropping leading up to the crash. maybe it wouldn't have caused a crash on it's own, but stocks would still have invariably and justifyably fell, and unenployment rose, so i think you'd have at least had a reccession. the crash was not caused entirely by attetude.

 

anyway: which would restore consumer confidence in the economy quicker: carrying on with an obvioulsy non-functioning economy, or temporarily abandoning it and then reintroducing it, possibly gradually, after a period when the industry/infrastructure/etc has demonstraitably been up-and-running?

[-Demosthenes-]

untill it becomes unavoidably obvious that their fiath was misplaced, which was my point.

 

irreguardless: as you said, there wasn't less phisical wealth after the crash -- if anything, i'd argue that, at the very beginning of the crash, there was more.

 

the industry dropped down, but only in responce to dropped demand. there was enough industry to meet a reasonable demand. there was enough food and infrastructure. but, because of the crash, demand droped even further, more industries closed, food was not distributed etc. this was entirely an artificial result of the crash, and not lack of demand nor americas inability to phisically meet demand.

 

hence my question: when there's a genuine demand for stuff, and that demand can be met, but it isn't because the economies broken, should the state sieze control of industry in order to fix it?

 

i suppose what im saying is that communism cant fix phisical problems -- it cant supply a demand that the country is incapable of supplying -- but it can supply a demand that the country is capable of supplying (albeit possibly with long-term concequences). so can capitalism, usually. which would fix a crash faster: communism, or capitalism given that the capitalism is broken

 

 

 

not just willingness, but ability: no money = no ability to trade welth for products. everyone else doesn't have enough money = no ability to trade products for welth.

 

even if the govournment had regulated better, and the banks had not leant so much, and the market had closed early that day, then the industry would still have reduced in size markedly, due to a genuine drop in demand, and had in fact been dropping leading up to the crash. maybe it wouldn't have caused a crash on it's own, but stocks would still have invariably and justifyably fell, and unenployment rose, so i think you'd have at least had a reccession. the crash was not caused entirely by attetude.

 

anyway: which would restore consumer confidence in the economy quicker: carrying on with an obvioulsy non-functioning economy, or temporarily abandoning it and then reintroducing it, possibly gradually, after a period when the industry/infrastructure/etc has demonstraitably been up-and-running?

 

It would depend on the population you are talking about. Straight up communism does not work in any population larger or less intimate than an immediate family. Even experiments into small scale communalism (communALism = communism on community level) have all failed. There simply isn't the motive to work that there is in a capitalist society.

 

Only when China finally permitted the farmers markets Chinese farmers had a motive to grow as much and as well as they could. The most important part is the motive, and the "consumer confidence" allows that motive.

 

The need to restore the motive rules out true communism. What they need is some kind of security, which a healthy dose of Socialism can give, at the very least giving the appearance of security. As long as you make it look like things are getting better, people will start to spend. I can see the temporary nationalization of some industries as a viable option, government projects that hire people to do things, and other highly publicized attempts to fix the economy.

 

But then you don't just have to recover from the depression, but from the extra government after it's over. In the US, we still have bureaucracy left over from the Depression in the 30's. Government doesn't easily let go. But in the end it was probably worth it.

[CPL.Luke]

hmm is there any evidence that the government is "bigger" after the crash as compared t before the crash?

[-Demosthenes-]

The federal government still has some crazy laws and acts about farming and agriculture. Soil Conservation and Domestic Allotment Act replaced the Agricultural Adjustment Act (because the court ruled it unconstitutional) and many government programs associated with it are still around. Social Security isn't working so well, the Tennessee Valley Authority is still around for some reason, the Federal Housing Administration, the Commodity Credit Corporation, and the Farm Security Administration.

 

It's like they wanted to do something, but they didn't want to go too far, look too much like "socialism". Spending money on all these little programs is expensive, and isn't worth the money for what they do. Too many programs, too many people working on the same problem, getting nothing done. Like all the little programs in the health care system in the US.

 

The government spends around $2200 per person every year on health care, and it only pays for 44% of the the citizens medical expenses. Canada spends are $1500, and covers around 70% of medical expenses, the UK spends a little less and covers around 80%.

(Canadian health care in comparison with calculations)

 

Giving people medical care doesn't cost that much money. It's the bureaucracy that costs money. In an effort to "not look socialist" we've created a bunch of little programs that actually only accomplish half of what we need, and cost twice as much.

 

Bureaucracy or "extra government" is only bad when it doesn't do anything, or doesn't do what it should be able to. There are too many people being paid to decide what to do with the money that there isn't any left to do stuff with. That's the problem with "bigger government".

[bob000555]

or the german hyper-inflation.

Do you mean when Hitler cam to power...yeah that worked well.

[CPL.Luke]

actually the Nazi party worked miracles on the German economy, they went from being one of the poorest nations on earth to being a major world superpower in merely a few years. Granted what came after that didn't work out to well, but thats still no reason to discount the things that did work out.

[Dak]

iirc, hyperinflation happened before the nazi's came to power, and was one of the arguments that the nazis used to get elected (look how much they've screwed up our country etc)

 

demo, i think you have an oversimplistic view of communism. russia went from backwards to global power in 15 years, and china is set to overtake the us, all from a communism (later mixed communism/capitalism). so, saying 'communism doesn't work above the family level' is, imo, unsuported.

[CPL.Luke]

however atm China is experiencing massive growth through a practice similar to what America did in the 20's, their putting loans out at a rate thats impractical for their economy to sustain, right now the practice works because everyone wants to outsource to china for their cheap labor, but when that trend changes, their economy could collapse.

 

Fr example, my father does business in china. He told me there was one factory that his company was considering purchasing, but when they looked at the factories total assets they found that the factory had something on the order of 70 million in assets, and only did about 50 million dollars in business. This is happening all over the place in China because the government is pumping money into their economy and financing new business ventures to he point where they're bound for economic collapse.

 

It may be that government has a better handle on the economic situation than the American government had in the 1920's, but maybe they don't, and maybe they think that in the end this massive growth and then collapse will be good for their economy, it was for the US.

[Sisyphus]

so, saying 'communism doesn't work above the family level' is, imo, unsuported.

 

Or at least misleading. As you say, clearly a communist state can accomplish a great deal. Like becoming a global superpower and going toe to toe with another such superpower, one with every conceivable unrelated advantage, for half a century. Remember, the U.S.S.R. started out basically at zero, besieged from all sides, and in the meantime took the brunt of the most destructive war in the history of mankind, not to mention a couple crazy-ass leaders. That they were able to do anything at all is an astounding accomplishment. By comparison the United States had it ridiculously easy, and was fortunate in all the ways the Soviets were not.

[Pangloss]

By comparison the United States had it ridiculously easy' date=' and was fortunate in all the ways the Soviets were not.

[/quote']

 

I don't entirely agree with that last part -- the US always fights every battle with one hand tied behind its back, primarily due to social reasons. That doesn't make the rest of your statement wrong, though. I think it perhaps more accurate to say that both the superpowers often blundered along like half-awake giants, and humanity is probably only in its infancy in terms of figuring out the best way to govern itself.

[-Demosthenes-]

iirc, hyperinflation happened before the nazi's came to power, and was one of the arguments that the nazis used to get elected (look how much they've screwed up our country etc)

 

demo, i think you have an oversimplistic view of communism. russia went from backwards to global power in 15 years, and china is set to overtake the us, all from a communism (later mixed communism/capitalism). so, saying 'communism doesn't work above the family level' is, imo, unsuported.

 

I'm talking about true Communism. The only reason China has it's pseudo-Communism is because they've opened up key free-market structures allowing for some motive to work.

 

I'm sure true Communism could last for a while, but only under Totalitarian rule. Some cultures withstand these kinds of governments more than others, and king/emperor/dictator/etc type governments have lasted for great lengths of time in the past, but the distant past. In modern times, and in a developed country, Totalitarianism wasn't work so well.

[bob000555]

For a question such as this one must ask themselves if they are willing to sacrifice their freedom for economic prosperity. For me the answer is no.

[-Demosthenes-]

For a question such as this one must ask themselves if they are willing to sacrifice their freedom for economic prosperity. For me the answer is no.

 

Historical, this is how most cultures feel.