Since Lumo has been slandering me again a (see comments on previous post), I thought I might throw out a few ideas on political economy.

There is a pretty broad concensus that socialism is a failed economic system. A whole variety of variations from the most extreme totalitarianism to free republics have experimented with socialism, and the results have been overwhelmingly bad. So is capitalism everywhere triumphant, undisputed champion as idea and practice? Well, my answer is not exactly.

For one thing, no country practices pure capitalism, nor, very likely, can anyone even define it. All capitalist countries are in fact mixed economies - some functions are left to the free market and others are socialized. Virtually every country socializes it's core governmental functions: legislation, judiciary, defense, law enforcement, regulation of commerce and immigration. Almost all advanced countries socialize much or all of education, and most socialize medicine.

Every country, so far as I can tell, socializes the protection of property. As I have remarked elsewhere, this function is probably the original function of government. Bill Gates sells little plastic disks for hundreds or thousands of dollars, disks that can easily be manufactured for a few cents. How can he do this? Because the government works hard to protect his "intellectual property" on those disks.

Note that I'm not complaining - this function of government is what makes civilization possible. My point is that the very rich, those who have the most property, benefit disproportionately from the government, and it's not unreasonable to expect them to pay more for it.

The slightly ironic point here is that capitalism is impossible without government, and only works well when the government enforces property rights, regulates markets, and provides a whole host of other socialized functions.

In the US, we have a long history of socialization of some other economic functions, and in many cases this socialization was very successful. The building of the railroads, the settlement of the American West, the Interstate highway program, the land grant colleges, and social security are all examples of government sponsored "socialized" economic programs that played a key role in building this country.

Republicans and libertarians spread the propaganda that no government programs work well, but that's total nonsense, and all the programs mentioned above have been very successful. This doesn't mean I'm taking back the second paragraph - most innovation and initiative comes from a profit motivated private sector, and I don't know of any successful economy that doesn't give such an economy considerable scope.

Life would be simpler if economic and other questions were black and white, but the evidence indicates that mixed economies do the best in the long run. If you believe that, you also have to believe that "capitalism" and "socialism" aren't magic words that answer all economic questions - they are just the tactics of political economy, and need to be negotiated and decided for every issue, every time.


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