This is not the end of capitalism

Tuesday, November 4th, 2008

Some of the comments on my last post on the economic unwinding of 2008 suggested that people think we are witnessing the end of capitalism and the beginning of a new socialist era.

I certainly hope not.

I think a world without regulated capitalism would be a bleak one indeed. I had the great privilege to spend a year living in Russia in 2001/2002, and the visible evidence of the destruction wrought by central planning was still very much present. We are all ultimately human, with human failings, whether we work for a state planning agency or a private company, and those failings have consequences either way. To think that moving all private enterprise into state hands will somehow create a panacea of efficiency and sustainability is to ignore the stark lessons of the 20th century.

The leaders and decision makers in a centrally-planned economy are just as fallible as those in a capitalist one – they would probably be the same people! But state enterprises lack the forces of evolution that apply in a capitalist economy – state enterprises are rarely if ever allowed to fail. And hence bad ideas are perpetuated indefinitely, and an economy becomes dysfunctional to the point of systemic collapse. It is the fact that private enterprises fail which keeps industries vibrant. The tension between the imperative to innovate and the consequences of failure drives capitalist economies to evolve quickly. Despite all of the nasty consequences that we have seen, and those we have yet to see, of capitalism gone wrong, I am still firmly of the view that society must tap into its capitalist strengths if it wants to move forward.

But I chose my words carefully when I said “regulated capitalism”. I used to be a fan of Adam Smith’s invisible hand, and great admirer of Ayn Rand’s vision. Now, I feel differently. Left to it’s own devices, the market will tend to reinforce the position of those who were successful in the past, at the exclusion of those who might create future successes. We see evidence of this all the time. The heavyweights that define an industry tend to do everything in their power to prevent innovation from changing the rules that enrich them.

A classic example of that is the RIAA’s behaviour – in the name of “saving the music industry” they have spent the past ten years desperately trying to keep it in the analog era to save their members, with DRM and morally unjustifiable special-interest lobbying around copyright rules that affect the whole of society.

Similarly, patent rules tend to evolve to suit the companies that hold many patents, rather than the people who might generate the NEXT set of innovative ideas. Of course, the lobbying is dressed up in language that describes it as being “in the interests of innovation”, but at heart it is really aimed at preserving the privileged position of the incumbent.

In South Africa, the incumbent monopoly telco, which was a state enterprise until it was partially privatized in 1996, has systematically delayed, interfered, challenged and obstructed the natural process of deregulation and the creation of a healthy competitive sector. Private interests act in their own interest, by definition, so powerful private interests tend to drive the system in ways that make THEM healthier rather than ways that make society healthier.

Left to their own devices, private companies will tend to gobble one another up, and create monopolies. Those monopolies will then undermine every potential new entrant, using whatever tactics they can dream up, from FUD to lobbying to thuggery.

So, I’m a fan of regulated capitalism.

We need regulation to ensure that society’s broader needs, like environmental sustainability, are met while private companies pursue their profits. We also need regulation to ensure that those who manage national and international infrastructure, whether it’s railways or power stations or financial systems, don’t cook the books in a way that lets them declare fat profits and fatter bonuses while driving those systems into crisis.

But effective regulation is not the same as state management and supervision. I would much rather have private companies managing power stations competitively, than state agencies doing so as part of a complacent government monopoly.

Good regulation is very hard. Over the years I’ve interacted with a few different regulatory authorities, and I sympathise with the problems they encounter.

First, to be an effective regulator, you need superb talent. And for that you need to pay – talent follows the money and the lights, whether we like it or not, so to design a system on other assumptions is to design it for failure. My ideal regulator is an insightful genius working for the common good, but since I’m never likely to meet that person, a practical goal is to encourage regulators to be small but very well funded, with key salaries and performance measures that are just behind the industries they are supposed to regulate. Regulators must be able to be fired – no sense in offering someone a private sector salary and public sector accountability. Unfortunately, most regulators end up going the other way, hiring more and more people of average competence, that they become both expensive and ineffective.

Second, a great regulator needs to be independent. You’re the guy who tells people to stop doing what will hurt society; it’s very hard to do that to your friends. A regulatory job is a lonely job, which is why you hear so many stories of regulators being wined and dined by the industries they regulate only to make sure they don’t look too hard in the back room. A great regulator needs to know a lot about an industry, but be independent of that industry. Again, my ideal is someone who has made a good living in a sector, knows it backwards, can justify their high price, but wants to make a contribution to society.

Third, a great regulator needs to have teeth and muscle. It has been very frustrating for me to watch the South African telecomms regulator get tied up in court by Telkom, and stymied by government department inadequacy. Regulators need to be able to drive things forward, they need to be able to change the way companies behave, and they cannot rely on moral suasion to do so.

And fourth, a regulator has to make very tough decisions about innovation, which amount to venture capital decisions – to make them well, you have to be able to tell the future. For example, when an industry changes, as all industries change, how should the rules evolve? When a new need for society is identified, like the need to address climate change early and systemically, how should the rules evolve? Regulators need to move forward as fast as the industries they regulate, and they need to make decisions about things we don’t yet understand. And even when you regulate, you may not be able to stop an impending crisis. It’s very easy to criticize Greenspan for his light touch regulation on hedge funds and derivatives today, but it’s not at all clear to me that regulation would have made a difference, I think it would simply have moved the shadow global financial system offshore.

So regulation is extremely difficult, but also very much worth investing in if you are trying to run a healthy, vibrant, capitalist society.

Coming back to the original suggestion that sparked this blog – I’m sure we will see a lot of failed capitalists in the future. Hell, I might join their ranks, I wouldn’t be the first ;-). But that doesn’t spell the end of capitalism, only the opportunity to start again – smarter.

129 Responses to “This is not the end of capitalism”

  1. I, the people » Idealni kapitalizem Says:

    […] Povezava (besedilo je v angleščini). […]

  2. Wynand Meyering Says:

    Google Adwords are becoming really expensive. I used to think Microsoft was the bad guy and Google was the good guy – now I know better. Both are monopolies that use monopoly pricing…

  3. Wynand Meyering Says:

    A code signing digital certificate from Verisign costs $431/year. That is quite expensive – especially for small software businesses and independent developers. It seems the only major real players that provide those security certificates are Verisign, Thawte ( owned by Verisign ) and Instantssl. They probably control 80% of the market.

  4. libervisco Says:

    With all due respect Mark, I think you’re contradicting yourself. First you espouse problems of capitalism so far which when you look closely at them all come down to private interests abusing government power to their ends through lobbying and corruption. And then instead of recognizing that you proclaim to be a fan of regulation. But isn’t that exactly the problem? All these laws these private incubent interests push to work in their favor ARE the regulation in question. They know that the system we have is “regulated capitalism” and thus try to sway the regulation to their ends.

    Your suggesting of regulated capitalism is only more of the same. I agree with you that private companies should play more of a role here, but I don’t agree that government should play ANY role whatsoever, not even as a lawmaker.

    This isn’t a failure of capitalism, it is a failure of state regulated capitalism – state regulated markets.

    Mark Shuttleworth says: Yes, I suppose you are right. These are failures of regulatory authorities. But ask yourself this – if there were NO regulation, would we really have seen a better outcome? Some people think that the absence of regulation leads to a freer, more competitive market. I think not. I think that an unregulated market tends to monopoly, not contestability. In this specific case, I think that big banks would have brutally eliminated newer, smaller, more ethical, more risk-averse banks. So we’d have seen fewer, less-accountable institutions, and been even worse off.

    What I’m arguing for is more effective regulation, not the absence of regulation. The truth is, it is extremely hard to regulate something as rich as a large bank. You have to hire amazingly insightful people, and pay them accordingly. And you have to fight hard against deep lobbying pockets. And you have to be willing to take risks, which means you have to be willing to accept mistakes, which is hard in matters political.

    Mark

  5. sohbet odalari Says:

    that actually regulates capitalism

  6. kikl Says:

    With all due respect libervisco:

    The absence of regulation would destroy the free market.

    The free market is in need of regulation just like a football game needs a playing field, a referee and rules. Without a referee, without a playing field and without the rules of the game, you won’t have a football game. The same must be said about capitalism. Capitalism without rules is anarchy. Look at Somalia. That’s a society without rules, it’s freedom without limits. Whoever has more weapons wins.

    Just take away the justice system, a government entity, and any decent form of capitalism is abolished! Why? because steeling is more profitable than growing crops. If that’s the kind of society you want, then X%&/§$ you!

    Any sensible discussion is not about whether we need regulation, we need it, there’s no doubt about it. We should really talk about what kind of regulation we need.

    Regards,

    kikl

  7. Max Kanat-Alexander Says:

    > [snip] if there were NO regulation, would we really have seen a better outcome? [snip]

    I’ve thought about this a lot. If we phrase the question as “civil anti-trust regulation vs. no anti-trust regulation,” it becomes very muddy and unresolvable, because neither of those are actually the basic issue. I figure that any time a question won’t resolve, either you have bad data or you’re asking the wrong question.

    There *are* free market examples where large near-monopoly companies have been challenged by smaller competitors, and where real competition has ensued (for example, AMD vs. Intel in the PC CPU market), so we know that it’s *possible* for an unregulated free market to work, at least in individual cases.

    Also, theoretically, it’s possible for a “benevolent monopoly” to come about, where only one company produces a product at sufficient quality and cost to succeed.

    The problems come along when a Big Company does something unethical to actually block the ability of a Small Company to do business. That is the point where a government needs to step in–not long after, where the Big Company has eliminated all competitors through unethical means and become a monopoly, and now “needs to be broken up.”

    So, for example, I wouldn’t be in favor of government regulation of “Can we buy out this business?” But I would be in favor of regulation that says, “It is illegal to maliciously undermine a business and then do a hostile takeover.”

    What we lack, really, is a code of business ethics codified into a criminal code of law. Unethical businesspeople are far more damaging to society than a thief, and yet only the thief can go to jail (excepting certain defined *personal* violations of ethics, like embezzlement). As long as we allow businesses to trample on the “human rights” of other businesses, we’re always going to have problems down the line, and we’re going to depend on these unwieldy regulatory agencies that we have now.

    So I’m in favor of codifying business ethics into laws. If you want to call that regulation, then I’m in favor of that sort of regulation. But not, to a large degree, the types of “regulation” that we see now–attempts to fix the problem far, far from its source, that only complicate things and are as likely to cause problems as solve them.

    -Max

  8. Roberto A. Foglietta Says:

    Capitalism was starting to die in the same day communism fallen because that day we lost the main reason to be good capitalists: build a better system than enemy’s one. Controlled capitalism is a way to make people pay for the funeral of the capitalism. In fact money drive economic as well as they drive politics. Someone starts to make money, much more money s/he makes, much richer s/he will became. Much richer s/he becames, much money s/he could do. After a certain grade of richness he/she starts to buy media (tv, radio, news paper, advertise) in order to “educate” people to her/his value. S/he drives the consensus and the consensus drives politicians. So controlled capitalism means that the people pay taxes to support the welfare system but money for welfare are spent to save banks from their bankruptcy instead (supporting the debt of those have been driven to buy what they cannot afford sounds as a better way than helps banks directly). After a certain degree of richness the money have not a proprietor any more but they became companies which have their own aims and the people (as humans) loose not only the control of their economic and politic system but the control of their own natural environment.

    We need to think our economy in a completely new way to find a way out of this situation. We have to challeng our believing in order to do that. I have not a solution obviously but I have a small idea about a possible direction. Imagine a capitalist 2.0 company: its value is quantized and you can buy as many quotes as you can and you will be paid back in relations of the number of your quotes (and performance as well, obviously). Unlike the capitalism 1.0 the number of the quotes would not modify that your opinion is evaluated as one head. Probably many high-level employees would buy one quote in order to drive her/his company a little bit. The problem of many peers drive a big company exists but the problem of who controls the economy would not exist any more. I think the technology and the education could solve the first problem but could not solve the second. Under this conditions a monopoly would not be a such big problem until many people could buy a quote of the monopoly control (citizenship is that quote in some kind of social business). The most interesting aspects of this vision are: a) you can collect a lot of money and you can buy quotes of many companies but you never would have the power to drive one of them completely. This would be the same for any media company (tv, radio, news paper, etc. etc.) so if no one could drive the media then no one could drive nor the consensus nor the politics; b) as far you became rich enough to satisfy all you material dreams then as less money value because they could not buy the power of control. You can buy many houses but after a certain numbers, it would be impossible to maintain the control over all of them. You need to rise a company to manage all those houses but the company could not be controlled completely by one person only. It is the end of capitalism because it is the end of the dream that a man could became so rich to buy everything. Every man could became rich but after a certain degree of richness s/he could not manage the richness by her/himself so s/he lost progressively the control of her/his money then cease the reason to be excessive rich. Under these circumstances no one would became as rich as possible but only rich enough. Differently than communism we still have enough freedom to let our individual ego find in being brilliant artists, musicians, developers, plumbers, lawyers, etc. etc. the meaning of the life.

    We thought the battle was capitalism against communism instead the battle is always be for freedom. Freedom means that everyone should be enough free but this means that no one should control much more than her/his life. My freedom ends where starts others freedom. Freedom to manage money should limited in order to let people manage their own existence.

    We need to think in a completely new way to find a way out of this situation. I have not a solution obviously but I have a small idea about a possible direction. Imagine a capitalist 2.0 company: its value is quantized and you can buy as many quotes as you can and you will be paid back in relations of the number of your quotes (and performance as well, obviously). Unlike the capitalism 1.0 the number of the quotes would not modify that your opinion is evaluated as one head. Probably each employee would have one quote in order to drive her/his company a little bit. The problem of many peers drive a big company exists but the problem of who controls the economy does not exist any more. I think technology and education could solve the first problem but could not solve the second. Under this condition a monopoly would not be a big problem until many people could buy a quote. The most interesting aspects of this vision are: a) you can collect a lot of money and you can buy quotes of many companies but you never would have the power to drive one of them. This would be the same for any media company (tv, radio, news paper, etc. etc.) so if no one could drive the media then no one could drive nor the consensus nor the politics; b) as far you became rich enough to satisfy all you material dreams then as far money loose value because they could not buy the power of control. You can buy many houses but after a certain numbers, it would be impossible to maintain the control over all of them. You need to rise a company to manage all those houses but the company could not be controlled. It is the end of capitalism because it is the end of the dream that a man could became so rich to buy everything. Every man could became rich but after a certain degree of richness s/he could not manage the richness by her/himself so s/he lost progressively the control of her/his money then cease the reason to be excessive rich. Under these circumstances no one would became as rich as possible but only rich enough. Differently than communism we still have enough freedom to let our individual ego find in being brilliant artists, musicians, developers, plumbers, lawyers, etc. etc. the meaning of the life.

    We thought the battle was capitalism against communism instead the battle is always be for freedom. Freedom means that everyone should be enough free but this means that no one should control much more than her/his life. My freedom ends where starts others freedom. Freedom to manage money should limited in order to let people manage their own existence.

    If you had read my whole comment please take care to left me your opinion on my blog also: http://robfog.blogspot.com/2008/12/freedom-econ.html. If this practice to cross-comment a post with another post would not be considered polite then ignore my request, please.

  9. libervisco Says:

    Thanks for the reply.

    Unfortunately I think you’re going after a very elusive goal. It’s been tried time and again and always resulted in the same thing, a collapse. And every time some people come along and say how we just need better regulation, just fine tune the system, but it never really changes the ultimate outcome. I think the problem is much more fundamental than that, but every often when someone suggests this people run away. The fear kicks in and default responses ensue instead of, at the very least, trying to understand what’s being suggested.

    Mark Shuttleworth: > I think that an unregulated market tends to monopoly, not contestability.

    Government regulation of the market is based on force rather than incentive. Every single regulatory rule either makes a prohibition or coercion and with it leaves certain businesses at an advantage compared to others. I think this is what contributes to the rise of monopolies more than anything that is void of force. Incentive is merely an incentive, but it still leaves you the possibility to ignore it and go against the grain risking loss of customers or huge success. By incentive I mean what most call “voting with your wallet”, but also ostracism, boycotts etc.

    I think government only helps keep the current monopolies going because humans are naturally driven by self-interest, *including those in the government*. Sooner or later the lobbying attempted by the big ones will be successful and laws that help lock their monopolies in place will be passed.

    And the anti-trust laws can only do so much. They only pay lip service to the problem and are far too inefficient.

    > In this specific case, I think that big banks would have brutally eliminated newer, smaller, more ethical, more risk-averse banks. So we’d have seen fewer, less-accountable institutions, and been even worse off.

    Where did those big banks come from in the first place? You may be familiar with the Fractional Reserve Banking practices (common in modern banking). I wonder if you’re familiar with the inherent flaw in it. It effectively allows banks to lend money they don’t have, charging interest in the process. This allows them great profits while causing inflation. This kind of practice is foolish because it exposes banks to the risk of quick collapse should there be a “bank run”, yet they do it anyway. Why? Because they expect a bail out. And the only one that can promise such a bail out is the government because no other company would buy a dead bank. The government, by its nature as a monopoly on force, simply does not have the accountability that private companies have.

    So what happens is what’s happening today. Nationalizations of the whole industries, at the taxpayer’s expense, only to do what? Prolong the crisis and have the taxpayers pay even more in the future. Regulations may change somewhat, but the fundamental problem remains.

    > kikl: The free market is in need of regulation just like a football game needs a playing field, a referee and rules.

    But a free market is not a football game. If you have two people with something to trade you have a free market. There needs to be no third party to oversee their transaction for that transaction to be made. If the deal is bad for either of them it simply wont happen. If either tries to steal, the other one can immediately defend himself. Unfortunately, the law here in a lot of places actually denies this right and goes so far as to disarm people of means of self-defense and thus cripple this particular market dynamic. Their substitute? Police.. which usually comes once the crime is already committed and damage done.

    I don’t see a free market as a “system” that needs to be built by someone and then implemented. It emerges naturally as individuals interact with each other in pursuit of self-interest.

    > Capitalism without rules is anarchy. Look at Somalia. That’s a society without rules, it’s freedom without limits. Whoever has more weapons wins.

    I think rules are emergent, not imposed. Order too is emergent, not imposed. Violence will only happen among people believing in violence. Defending government regulation is an expression of such a belief because government regulation cannot happen without the threat of violence. Thus what you’re defending is part of the problem rather than a solution, a problem evident even in Somalia. Factions that were fighting were fighting to become a new government and foreign forces were encouraging this by supplying the winning factions with weapons in the name of supposedly establishing one of them as the new government and “re-establishing” order. Thus incentive was provided for more violence, rather than less. This reflects a problem of the government oriented mentality, not of the free market.

    Indeed, the Somali market skyrocketed in their stateless years *despite* the faction wars.

    > Why? because steeling is more profitable than growing crops.

    What else is government doing than stealing? If you believe in absolute property rights as any capitalist would be inclined to then I probably don’t need to be convincing you that taking your property against your will is theft. Somehow you make an exception when it is the government doing it. Of course it is more profitable, then, when it is actually made legitimate, through government, to steal.

    If you actually allowed and educated people to hold on to their property, their means of self defense and be willing to use those to protect it themselves, acts of stealing would easily become far more expensive and thus far less profitable.

    Well, I don’t want to show disrespect. I am expressing my honest opinions. I didn’t develop them over night. I was a skeptic too, but when everything else fails isn’t the time to finally start looking at what we are usually inclined to ignore completely? All I ask is that you think about it rather than dismissing off hand.

    Thank you

  10. kikl Says:

    “Order too is emergent, not imposed.” That’s interesting. Just ask all those people in jail, whether the order is imposed or not. That’s ridiculous.

    “If you believe in absolute property rights as any capitalist would be inclined to then I probably don’t need to be convincing you that taking your property against your will is theft.”

    If you believe in “absolute property rights”, then you need somebody to enforce these rights. That somebody is called government. Therefore, you need a government that enforces rule, for example “absolute property rights”, if you want capitalism to work.

    Wake up from your dogmatic slumber. Your just as brainwashed as the communists and you can’t see the obvious. Capitalism without rules doesn’t work!

    Regards,

    kikl

  11. Kevin Dean Says:

    >> The free market is in need of regulation just like a football game needs a playing field, a referee and rules. Without a referee, without a playing field and without the rules of the game, you won’t have a football game. The same must be said about capitalism. Capitalism without rules is anarchy. Look at Somalia.

    Somalia is a horrible example. Look at how much money, time and weapons were dumped into the hands of Somalian warlords by the United Nations who has, since the collapse of the Somalian government, been trying very hard to put a government in place.

    Of course, while we’re on the subject of Somalia, I ask that you look at how much has blossomed in Somalia since the government there toppled. Infant mortality has dropped. Maternal mortality has dropped. Number of Somalians with access to a healthcare facility has doubled. Babies with low birthweight has fallen from 16 in every 1000 to .3 in the same.

    The assumption that people are too stupid, or somehow unable, to acquire the services they want (like clean drinking water or appliances that don’t explode when you plug them in) is insulting. If you’re talking police services or operating systems, people with skills will create a product or service that other people are willing to exchange for it and NONE of this requires coercive force.

    >> because steeling is more profitable than growing crops.

    I invite you to read from Frederic Bastiat, specifically, the Parable of the Broken Window. You’re seeing the short term, as he puts it “the seen”. What you fail to see is that “unseen” or the return for FUTURE goods. Every human being is different. We contribute different skills and talents to the marketplace and that specialization means that we’re each able to profit differently from things. The farmer may be capable of growing more healthy crops than you, but you probably build better furniture or whatever it is that you do. In the long run, tapping YOUR talents to produce a good or service and then trading it for the thigns you can’t easily produce, while ensuring you’ll be able to make future trades, is more productive.

    And before it goes there, no, it doesn’t require people “get wise”. People would figure this out pretty quickly, and indeed, most have. I would assume that the last time you were hungry, you went to a store and purchased some food. Was it fear of government retaliation that made you purchase that food or was it simply easier for you to exchange the money that you have for it? The idea that ONLY government can administer justice is also a bit odd. Surely justice is something in demand, and like all other products in demand, can be met by people in search of a profit by producing happy customers. Even without government police, theft wouldn’t simply be woven into the fabric of socieity. Theft is wrong because it deprives people of the fruits of their labor; it hurts people. Even in a world completely devoid of justice services (and I’m certain they’d exist, free of government), a thief would be expending a lot of energy avoiding the people, family and friends of those they harm.

    >> Any sensible discussion is not about whether we need regulation, we need it, there’s no doubt about it. We should really talk about what kind of regulation we need.

    Indeed, Mark hit the nail on the head when he said that good regulation is needed. Also as he pointed out though, it doesn’t need to be goverment regulation, done at the point of a gun.

    The best regulation is the simplest. Eliminate force and let customers choose. If a service meets a customer’s needs, those customers will continue to pay the service provider. If the service doesn’t meet their needs, they stop purchasing it. This is market regulation and without the voluntary support of customers, can’t exist. Bad business models fail and “bad business model” is defined as “not providing something people value”. Indeed, if people value a clean environment, someone will find a way to profit from cleaning it. Indeed, if people value fresh foods and clean water, someone will find a way to profit from providing it.

    Give humanity some credit. We’re all amazing individuals.

  12. libervisco Says:

    > That’s interesting. Just ask all those people in jail, whether the order is imposed or not. That’s ridiculous.

    You compare people in jail with common individuals? Also, the imposed order you speak of in jails is nothing short of justice as revenge, not justice as repairing the damage to those damaged. I think justice shouldn’t be about revenge, that’s just adding more violence to violence.

    > If you believe in “absolute property rights”, then you need somebody to enforce these rights. That somebody is called government.

    No, that somebody is called Danijel, it’s me. I can defend myself or hire someone to defend myself out of my own free will. I don’t need government to impose its inefficient protection service and then force me to pay for it whether I like it or not.

    Isn’t THAT more obvious than seeking a third party that doesn’t even know you nor your situation and can’t react then and there when you need it?

    Think about it please.

  13. kikl Says:

    “I can defend myself or hire someone to defend myself out of my own free will.” So defending yourself is merely a matter of the money you need for hiring someone. Somebody, who has more money than you, will just buy your defender and you will be defenseless. The free market does not provide any justice, it is in need of justice and therefore just rules must be imposed. Wake up man!

    Regards,

    kikl

  14. libervisco Says:

    You’re ignoring what I said kikl. I said I can defend myself OR hire someone to defend me. It’s not like I can’t do both and like it’d be so extremely expensive to both own a gun and have a defense agency. Regardless of whom comes to my doors, even if it was my defense agent, showing intent to hurt me, I can defend myself.

    Of course, you’re playing the game I’ve seen played out so many times by now. Pushing your negative scenarios to ever greater extremes until you can’t come up with any more. It usually ends with running in circles, unless you actually start seriously considering what I’m saying instead of just being dismissive on sight.

    Just like any other business defense agency in question must be accountable to keep a reputation. Too many of these cases of defense agents being turned against those they’re supposed to defend is likely to result in loss of revenue and market outcry.

    Yet you’re defending an organization which goes against me by default and yet still remains fallible to bribe you’re describing. It pretends to protect me and sometimes perhaps even manages to do so, while stealing my money in the process and thus being the enemy of my property rights all along.

    That’s also consisted with what I usually encounter with dismissive posters; as they begin coming up with super extreme negative cases they don’t realize those same cases already apply, with government “regulating” things.

    I should wake up? Geez, right back at you man.. If wars are fought with guns, then by definition governments are constantly at war, with their own citizens. Break a law prohibiting a non-violent crime and ignore court orders long enough and what do you face, a gun! Refuse to pay taxes (refuse to get stolen from) and again ignore their court orders, and what do you face, a gun to your face. If that means “being protected”, if that’s the order you’re talking about, then I think I’ll pass.

    But I’m not give much choice am I? Why am I not being given a choice to live my life as my own?

    Again, I ask you to start thinking and stop being dismissive. It wont hurt I promise and it wont all of a sudden make you into a nut that you apparently somehow imagine I am.

  15. kikl Says:

    I’m not defending any agency going against you. Your just completely dillusional to believe that you can defend yourself.

    “But I’m not give much choice am I? Why am I not being given a choice to live my life as my own?”

    As long as you choose to live together with other people, you will either act as a ruthless dictator or choose to live according to rules that the majority agrees upon. The latter is called democracy and it will restrict your freedom. In addition a number of basic human rights should be defended irrespective of the majority will.

    Regards,

    kikl

  16. libervisco Says:

    > I’m not defending any agency going against you.

    You’re defending government.

    > Your just completely dillusional to believe that you can defend yourself.

    You can’t be serious man. 🙂 I know you disagree, but I didn’t expect this. Ok, well, first of all you can’t exactly speak in my name and tell me what I can or cannot do (remember John Locke from Lost), so I’ll assume that if you’re making this claim you actually believe you aren’t capable of defending yourself. So if someone suddenly attacked you on the street you wouldn’t be capable of using your arms to resist? Or if someone threatened a gun at you, and you carried one for self defense too (assuming this was legal since I’m speaking about a hypothetical situation where you actually have that right), you wouldn’t know how to pick it up, aim and shoot? I know it probably takes training, but your statement implies you aren’t capable of self-defense, period, so no training would help you, right?

    I think you’ll have to rethink that one. Of course, the keyword again is thinking, not saying anything you can come up with to dismiss.

    > As long as you choose to live together with other people, you will either act as a ruthless dictator or choose to live according to rules that the majority agrees upon.

    That is a false choice. It would be near impossible to become a ruthless dictator if all of those other people believed in self-defense (which I seriously believe is a natural tendency of any human, even animals) and were actually allowed to exercise it (and without a government forcefully banning it, they would). As for living according to the rules of the majority that’s just an excuse for mob rule. If everyone is willing to defend themselves then the classic definition of liberty as “whatever floats your boat so long as it doesn’t sink mine” is perfectly and naturally applied by everyone involved and without anyone being above anyone to decree this as a rule.

    My freedom ends where yours begins. Don’t violate me and I wont violate you. If I try to violate you I risk being hurt by you. It’s just like the fact that if you decide to jump off a skyscraper you may very well die, a natural consequence. There was no government to decree the “law of gravity” into existence nor was it necessary for any other action-reaction process to be implemented.

    > In addition a number of basic human rights should be defended irrespective of the majority will.

    And who will decide what those rights are? If humans are fallible and corrupt, and your argument is pretty much founded on that belief then doesn’t it follow that we should not, under any circumstances give any one or few humans the right to decide *anything* whatsoever for the rest?

    That’s why every government corrupts. That’s why all governmental regulation fails. It cannot NOT to fail. People are naturally self-interested. Their power to govern should thus only be limited to the government of self and self only, not over anybody else. We need no single government. We need as many self-governments as there are individuals in the world.

  17. kikl Says:

    “I know it probably takes training, but your statement implies you aren’t capable of self-defense, period, so no training would help you, right?”

    Oh that depends on your opponent.Your completely dillusional to believe that you can always defend yourself with a gun. Your just a human being with limited powers.

    “It would be near impossible to become a ruthless dictator if all of those other people believed in self-defense.” Just about everybody believes in self-defense.That’s human nature. Nevertheless, world history has innumerable examples of ruthless dictators. So your reasoning is pretty flawed.

    “My freedom ends where yours begins. Don’t violate me and I wont violate you.” That sounds reasonable, but we may disagree on whether one of us has violated the others rights. Who’s going to decide who’s right? An independent judge in a fair trial, right? Or are you going to pull your gun to defend your rights? That’s anarchy your advocating.

  18. libervisco Says:

    > Your just a human being with limited powers.

    So is the attacker and so are the police which you somehow think are gonna be better suited for the job of defending you, even though they aren’t right there and then when you are being attacked. Your point is completely moot. As for being delusional, I can say exactly the same thing with you, but it’s so obvious I don’t need to repeat it in my every post. 😉

    > Just about everybody believes in self-defense.That’s human nature. Nevertheless, world history has innumerable examples of ruthless dictators. So your reasoning is pretty flawed.

    History is also full of governments and people believing in violence that goes beyond self-defense, like you, to supposedly establish some perverted form of “order”. Who do you think is easier to conquer to a ruthless dictator, a society of people who think violence against them is alright and thus let governments violate them as a matter of course, or people who reject all violence against them and thus readily defend themselves? I would think a government makes it far more easier for ruthless dictators to rise for power.

    > That sounds reasonable, but we may disagree on whether one of us has violated the others rights. Who’s going to decide who’s right? An independent judge in a fair trial, right?

    Exactly man. 🙂 I never said I don’t believe in arbitration (courts). In fact the only thing I reject is coercive monopolies, therefore, a monopoly on the arbitration services. We can agree to choose a trained third party arbiter and agree to accept his judgment on our dispute and his defense agent as the one who will enforce the decision.

    Even if you want the court process to resemble the one we have here you could have it (if there’s a demand there’s someone trying to capitalize on it), albeit you and most people would probably quickly realize that punishment based on revenge instead of repairing the damage and true rehabilitation isn’t a very effective way of dealing with the violators of individuals.

    I’ll take the liberty of guessing that you didn’t see that one coming in which case I think that underscores my point about you simply trying to dismiss everything off hand instead of actually understand where I’m coming from.

    I’m advocating more order than you’ll ever have with a government (which is effectively just a rogue corporation everyone is deceived to see as legitimate).

  19. rshortman Says:

    For the most part, I agree with you Mark. Proper regulation over capitalism would have prevented this problem to begin with, I’m sure we can all agree on that. I am no expert on the economy, but it just seems to me that the government is blind-sided, taking a position where they feel they have no choice in this matter. That’s a natural reaction for any bureaucracy, particularly one as large and complex as the US Government. Nobody wants to take risks anymore. Nobody wants to cause waves. They are satisfied with the status-quo for two reasons. 1. they’ve nested themselves into a comfortable little niche within bureaucracy and don’t want to step out of their comfort zone and actually WORK for their six-figure salaries. or 2. They feel change will get them into trouble and blame with be placed on them.

    That said, this is the accumulation of years and years of government growing too damn big and bureaucracy growing out of control. In the end, you have an weak, spineless, inefficient government that is afraid of creative destruction, afraid to let go, let things collapse, let the chips fall where they may. Government would do our children and our children’s children a terrible disservice if they do not let these corporate giants die. It will hurt at first, no doubt about it. It will suck immensely! That’s the price we pay for allowing democrats to control things with corporations in their back pocket. But with time, it will pass and the economy, America, capitalism and the world at large will be better and stronger for it. Perhaps in the future, we will learn from our mistakes and learn to regulate more wisely.

    No matter how much we lose if we let these guys die, we’ll lose much more if we allow Government to grow and socialism to take over.

  20. Kurt Rowley Says:

    Thanks to the posters here for some very clear-minded thoughts on the global economic crisis. The old Capitalism that could efficiently allocate resources using principles of comparative advantage and the wisdom of the players pursuing self-interest in an open and honest playing field is gone. The players have become befuddled, they do not understand the game anymore.

    I agree with Mark that capitalism must be regulated by competent regulators who are detached from commercial interests. However, well-intended but poorly conceived regulation helped us get into this mess. The regulators were trying to perform social engineering, to create an ownership society. The regulators in this case were finessed by short-sighted free market players. Governments are not skilled at upgrading economic systems, they are not designers. The regulators did not follow competent design practices in creating their regulations, they did not understand the incentives their new rules would create. How can we ever be sure that regulators can maintain the code of Capitalism? The system has become too large and complex, the rules too poorly enforced. There is too much spaghetti code and design processes are weak.

    So who has the ability to design a better economic system? I like the goal of direct democracy, of skilled participant designers. For example, Donohue’s ideas about ‘open source values’, those are good lessons learned about participative design. To add to his concept of values, I think we can also learn from the open source design process, think of the systematic processes followed when a community creates a software product to replace a legacy system. We can start with core structures that are known to work, consider lessons learned by the failed past systems, improve the theory of operations, add new and better methods, find sponsors to help implement the new system incrementally, encourage early adoption of the new system by people who are motivated by enlightened self-interest (a desire to improve the system and world they live in), then allow the best ideas to freely emerge.

    Like any open source system, a new economic system may need to be a parallel system for a time, until it is working well enough to ‘take over’ many of the functions of the previous system.

    Maybe better regulation of capitalism is a good stop-gap measure, but I believe we really do need a new economic system alternative. Not capitalism, socialism, or any other -ism that has been tried in the past. Our conditions have never existed before, our needs are unprecedented, we need a new hybrid system with some innovative features.

  21. lolz Says:

    1. Responsible Capitalism? There is no such thing. Capitalism is a system that relies on the profit system, and as such, is unsustainable. Only so much profit can be made because there is only so much profit to be made. It is a finite system, and I think that the most recent of economic crisis to strike the leader of world capitalism is the death knell for a system that is old archaic and outmoded. If you talk about the “consequences” of the Soviet period, how about the consequences of the 3 economic collapses the United States has suffered just in the 20th century, compare that to one economic collapse, of a system that by no means was socialism as defined by Karl Marx in the Communist Manifesto. All three of these events have had long lasting consequences years after they happened, just the same as in the soviet union. Not to mention the fact that Russia is experiencing super exploitation at the hands of super-wealthy oil barons who bought up all the natural resources after the collapse, that is the real source of Russia’s problems today, without that they could have recovered fine from the economic collapse.

    Free market capitalism I can completely agree is devoid of justice. The legal system is completely in favor of those who can afford to pay the cost of lawyers, law advice etc. Under capitalism no-one is equal before the law. The rich and famous get away with crimes that “average” people would get thrown in jail for years for, simply getting off with a slap on the wrist. Which is complete and utter bull-shit. Due to the out of control nature of capitalism money has increased peoples ability to gain power and manipulate the government and law making agencies of this government to such a degree that anything short of a revolution will not be able to “reform” it along with all of its crooked, corrupt, and otherwise incompetent organisms. Evidence of this can be seen quite clearly in recent news. Over 300 civil “servants” in Illinois have been found guilty and/or charged with corruption, slander, etc including the man who was trying to sell obama’s chair in the senate. Strangely he has no connection whatsoever to obama…weird. The corruption present in the government and civil service is so deep that it can never be reversed, or fought, corporations are too deeply entrenched and invested to ever be completely removed without a major revolution and re-structuring of society.

    Perhaps when we see the “Great depression” life style return to average americans they will open their eyes as they did in the early 1900s and a real working class movement will begin, and the government will be completely rebuilt to embody the interests and goals of workers, farmers, and average Americans across this country. So in a way I hope this crisis goes on and on, and drags on and on for decades (which it could, it has in the past look at the great depression, it wasn’t just from 1933-39, but went well into 1940’s until nearly the end of the second world war and the increase in production that gave it that spike). Oh and folks don’t count on the government to start massive public works programs to re-vitalize the economy, because it didn’t really work all that well in the 30’s actually, what actually got the US out of the great depression was not the public works projects, it was wwII. So what is in store for the US now? The capitalists need a WWIII to get themselves out of this mess, so who is willing to sign up for the draft? Be the first on your block to come home in a pine-wood box!

  22. kikl Says:

    The economy as a whole is so complex that it is difficult to tell, whether a certain event occurs due to some regulation. Maybe we need some kind of laboratory for testing how a certain regulation actually works before implementing it. Just a thought…

  23. Citizen Says:

    Well Mr Shuttleworth..

    I think you spoke too much.

    You cannot say what you said about Russia and what you’ve felt in 2000/2001.. Yes for sure people may have told you that their pains were due to Russian Communism! Of Course! the Russian Gov and the US told them that!..
    well You did not (I said did not because may since you ve written this text you ve search about what is really communism I means its real fundamental principles. and you ve understood that The Real Communism has never been applied in Russia or any other big country.) understand what communism and socialism really are.

    to simplify everything you may consider the aim of each system : capitalism is money or profit.. and communism is society. You spoke about Railways. just look what happend in the UK. you spoke about power plan. just look in Europe. they what to ‘open to the concurrency” the market of electric power. But in that aim they had to ask to the public society to increase the price from less than 1€/KWh (in France for example) to around 6€/KWh. because at less than 1€/KWh no concurrence is possible. So can’t blame public society!
    I’ve still not told that during all this public powered era (which is still not ended) EU was on the top in research for renewable energy (wind mill, hydrogen cell, nuclear fusion..)

    just look at what you’re promoting open source and community.. why do we develop free softwares? for money? no. to be competitve? no. to reach 30% of the market? no. for us? YES! for all of us. to get the software we want away from any economic reason or lobbiyng (maybe a little in fact). this enter in the ideals of primitive socialism. and as you can see decision are taken by a central power which is independent from Canonical.
    Well now just consider Canonical is a State and Ubuntu a public company and you’ll get an idea of socialism society

    I Can’t tell you how it is in a socialist country because i don’t know. and anyone can tell you.
    But we ve seen that capitalism fails too often. Why do you (not only you) refuse socialism? You don’t know what it is! We all don’t know how it looks like! It’s just because you’re scared!
    Remember your mother: ‘Don’t say No before you tasted’

    regulated capitalism is just like Brussels sprout with ketchup.

    [Sorry for my broken English]

  24. Igor Salmin Says:

    Greetings from Russia!

    I’m not a fan of historically real socialism. Capitalism is more perspective system for development. The Socialism is designed like a Mainframe, the architecture of Capitalism is closer to networks. Time of mainframes has passed. Globalisation will be successful only at the network architecture of system. But Capitalism has one fundamental problem which brakes its further development. The scale of the project “Capitalism” and speed of changes occurring in it does not correspond to the limited possibilities of out-of-date “Operating System” on which base it is created. Initially “Operating System” has been developed under the architecture of Mainframes. The problem is aggravated with that its source codes are closed. Also timely modification becomes almost impossible. Below I will explain these statements.
    The fact that the modern human society and the computer network are information systems allows a comparison to be made revealing a deep similarity between them. The key component of a computer network is the operation system with a nucleus containing algorithms and source data necessary for function and interaction of application programs. In the human society, the culture is an analog of the operation system. In its nucleus, the culture contains an ordered system of basic values determining the objective, not declared, morals and respective stereotypes of attitude to events occurring in both internal and outer worlds that manifest themselves in the human behavior in actual life situations. The nucleus of the Biblical culture dominating in the today’s society is for the most part a “closed source system” in which the tacit information quite often overrides the one proclaimed. It could be supposed that that was made in order to protect the “copyright” of developers and owners of “source codes” pursuing their lucrative purposes. It is known, however, that anything what is made by a human can be understood by another one. These “source codes” were revealed by a group of individuals named “Internal Predictor of USSR” in late 80’s.
    Irrespective of their element base and programming languages, all types of closed source information systems have a considerable objective disadvantage: they loss the prediction stability in certain circumstances. Starting from a certain level of system complexity, the task of introducing changes into and maintaining the performance of the system becomes non-trivial. It is far from being simple to ensure coordinated actions of many people who often do not know each other, work at various places and speak different languages. The closed state of source codes or their fragments leads to the growth of conflicts inside the system and it begins to crumble. Quite often, emerging problems are mended using local “patches” that leads to greater complexity of the system with the loss of stability ending in final operation failure. Similarly to the algorithm described above, a culture based on principles of “esotericism” suffers the risk of collapse when the resources of the “initiates” are not sufficient to “patch the gaps”, that is, to solve problems as soon as they occur. The system eventually “falls” with the increase of the time pressure. Here, opposite to computer systems, one cannot really avoid unpredictable effects by just pushing the Reset Button.
    Therefore, the new network culture is necessary for successful development of the project “Capitalism” with an open initial code. In Russia the kernel of such culture is developed, source texts are laid out in the Internet. Source texts can be downloaded from a site http://www.dotu.ru,then are compiled, installed, tested and use.

    Igor Salmin

  25. vitaminD Says:

    “Regulated or derregulated markets make no difference if you took the redpill.”

    At least Mr. Shuttleworth wants (I hope so) to change the cultural conditions trough the wire. Open Source is the next step of mankind regarding to our globalised world. The developer is at the same time the consumer – It`s definetly a great great step into a ONE OPEN SOURCE SOCIETY let us be free and let us life in creativity and so on (now I`m tired).

    “Uomo universale”

  26. Boycott Novell » IRC: #boycottnovell @ FreeNode: January 30th, 2009 - Part 2 Says:

    […] http://www.markshuttleworth.co… […]

  27. Andre Says:

    Simply read a bit about ordoliberalism.
    http://en.wikipedia.org/wiki/Ordoliberalism

  28. Marco Costa Says:

    Mark, you say that capitalism should be regulated, and yet you say that state control of enterprises would be totally undesirable because ‘state enterprises are rarely if ever allowed to fail’. Well, regulatory agencies share that same perk. I’ll give you the SEC as a recent example of an abysmal failure that will most likely remain in place, if it doesn’t get a funding raise.

    Your argument is also begging the question; if it is possible to have regulators that are superbly talented, independent, toothed and muscular and capable of making hard decisions about innovation, then you unwittingly made the case for socialism, because what you described is not a regulator, but a gifted entrepreneur, which profits and loses in the market based on how well he can estimate and forecast!

    If the Marxist fallacy that ‘freedom leads to monopoly and concentration’ was good theory, then – in a market with free entry, and little intervention as the web thankfully still is, Google by all means shouldn’t exist! Or GM, Ford and Chrysler wouldn’t be begging Washington for handouts while little Tesla Motors creeps in from outfield.

    Anti-trust laws and agencies do not reach their stated goals, if anything, the state _creates_ monopolies, by protectionist measures, credit expansion which invariably go to politically favored constituents, and finally regulations such as the Consumer Product Safety Improvement Act, that wipes out small toymakers who can’t afford to pay 3rd party testing for all their toys, while Mattel just adds another red line to its budget and enjoys further protection from new competitors.

    I’m gonna shut up now, and I’d just like to thank you for your amazing effort and generosity in getting this great distro out for all of us to use. Since I’ve installed Hardy I haven’t used anything else and it only gets better. Kudos to you and everybody at Canonical. 🙂

  29. emarkay Says:

    I recall something about selling them a rope, and another about long lines for vodka, but in the end, we are our own worst enemies.

    Face it, our advanced society has lost it’s personal integrity; oh yea, some still do, but those loving creatures are compromised into evil once they find the lust of control on their plate…

    And speaking about the plate, all this becomes moot when what once is a bad IRA or a failed bank becomes a week in the hospital or a forever in the ground.

    It’s not the economy, it’s the food…

    http://www.dickdestiny.com/blog/2009/02/us-businessman-as-terrorist-looking.html

    (A blogger laments on the Peanut Butter Scandal and beyond…)