Thursday, May 09, 2013

23 Shades of Free Market Capitlism

Tim Worstall is writing a very amusing set of pieces for the ASI called "23 Things We're Telling You About Capitalism", I think it's intended as a kind of rebuttal to Ha-Joon Chang's 23 Things They Don't Tell You About Capitalism. Reading it is really quite amusing, simply for the number of omissions and giant stretches it requires to make Tim's worldview work.
"...But don't forget, Chang is writing a book about how capitalism and the free market just aren't all they're cracked up to be: if so, then how did we end up with the better technologies, better institutions, better firms and infrastructure  Could it, possibly, have anything to do with the fact that we've been largely capitalist and free market for a couple of centuries?" 
 The word "largely" in this particular point is doing one hell of a lot of work here, the USA for example has had a long history of imposing protectionist tariffs  in addition all western countries have spent a large number of decades developing their welfare states. The problem becomes even more acute when you get to some of the more recent developing countries.
 "..This isn't confined to any one group or set of countries either. Just since WWII, Hong Kong, Japan, Taiwan, S. Korea have all joined the nations that enjoy that distinction. China is catching up fast. Those countries that haven't haven't: like, for example, the bureaucratic and planned Licence Raj in India which still impoverishes Ram..." 
Let's we start with suggestion that democratic India is somehow not as capitalist or free market as a nation who's ruling body is called "The Communist Party of China"? Also, perhaps we can look at one of Chang's previous works for some fine examples of free market capitalist innovations South Korea.

For example, by the ASI's definition, the following government policies are now "free market" and "capitalist":

  • Government seizing control of the nations bank's and using them as a tool to control industrial development. 
  •  Government instructing one firm that it is only allowed to produce diesel engines for marine vessels while instructing another to work exclusively on diesel engines for motor cars.
The problem all through Worstall's piece is that the definition of free market capitalism that he defines as a good thing is so broad almost as to encompass a gigantic variety of policies. All this would obviously be fine, except that reading the work of both Worstall and the Adam Smith institute they would seem to subscribe to a rather narrower definition of free market capitalism in their own work. S

Still, for now I'm quite happy in advocating policies that will further extend the welfare state and increase the size of the state sector in the happy knowledge that I'm being a good free market capitalist.

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