Economics Matters

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The philosophy of freedom

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Freedom is still the most radical idea of all – Anonymous

When I started this blog, I wanted this to be a place where I could explain to people how and why free markets work. And I read verociously, collecting evidences to prove the efficiency of free markets. But in the process I have come to realise that this is not an argument that can be won solely on the merit of evidence alone. I for example did not become convinced of the benefits of free markets because I read some obscure economics text book filled with statistics of South Korean economy out-performing India. I did read them, but only later. Before I came to love free markets, I fell in love with something else first – FREEDOM. My college had an electrifying effect upon me in the first few months. I was a pond fish thrown into the ocean. I learnt my first lessons on freedom there. And freedom is a harsh teacher. When you are under the all protecting embrace of some one, you can afford to be irresponsible. You have neither freedom nor accountability.  But a day does come in everyone’s life when one has to leave the safety of one’s nest and find his own place under the sun. Then we realize that freedom is not free. With it comes great responsibility. You have to remember that every word you say is a promise and every act you do is set in stone. This huge accountability is what makes freedom too hot to handle for many. But even during the worst of days when I had messed up everything ( There were many ), never once did I want to trade my freedom for security.  And that is something I will always be proud of. Freedom is the lifeblood of my soul. It is not for sale.
As I fell in love with freedom, I wanted to make sure that she will never leave me. I searched for the best way to defend my newly found love. I still remember the night when Atlas Shrugged shattered all my existing notions of justice. Ayn Rand is a ruthless fighter. She is the perfect match for that wily old fox, Karl Marx. Ayn Rand was not an economist. She talks little about markets. Infact her heroes often hate  ordinary people like us who in fact constitute the markets. But she convinced the world that there is justice in freedom. That all talks of morality are meaningless without freedom. I have moved on after Atlas Shrugged. Ayn Rand cannot explain the world.  Her philosophy is too rigid and uni-dimensional. You cannot convince people that selfishness is a good quality. She has created a cult following. And cults are poisonous to freedom. But this is not to speak less of her influence on the philosophy of freedom. It is just that freedom is a very simple and natural idea and has to be supported by a simple and intuitive philosophy.
That philosophy is called Laissez Faire. It literally means “Leave Us Alone”. Western nations were governed by this philosophy in the late nineteenth century and they sowed the seeds of the greatest triumph of mankind in the several thousand years of its existence, when Capitalism lifted millions out of poverty within a span of a couple of decades and human population witnessed a dramatic boom.* America and Britain, the two freest nations on earth also became the most prosperous. People realised that markets had the midas touch. Whenever people were left free to trade, they generated unimaginable quantity of wealth. Then there were no economists telling people how to spend their money and how to live their lives. The subject of macro-economics was not even born. People did not care about GDP. They cared about freedom. The statesmen of that age were wise enough to know that freedom was the absolute necessity for human life. And once people are left free, they can generate all other material comforts.
Today laissez faire and capitalism are dirty words. The condition is not as bad as the 60s and 70s when several youngsters spent the prime of their life trying to be their country’s Che Guevara. ** But still even  those who understand the benefits of capitalism are apologetic about it. If only I had a nickel everytime I heard someone say this – “Socialism is noble, but Capitalism works”. What is noble about an ideology that refuses to grant people even the basic right to spend their hard earned money as they please? What is noble about attaining equality in starvation? Why is it so important that everyone should be equal, when the most special moments in one’s life are the ones when he realizes that he has done something sublime, something no one else could have done?  What is progressive about public ownership of property, when all of human civilization is due to man’s attempts to attain greater privacy and control over one’s life?
Do not confuse charity and socialism*** Socialists hate charity, because it reduces the need for an all encompassing big state.  The root of socialism is envy. Envy poisons human mind. It makes one want to destroy rather than create. That is why socialists never talk about creating wealth. They always want to re-distribute others wealth. In George Orwell’s words socialism is ” A boot stamping on a human face, FOREVER“. 
However poisonous it is , Socialism is an idea. And ideas cannot be fought using facts. If that was possible, just a look at the Korean peninsula would have sufficed. The difference between South and North Korea is all the difference there is between Capitalism and Socialism, between the morality of freedom and the (im)morality of equality. But people still love to flaunt Che Guevara on their shirts as if he were a rock star. We have to fight ideas with ideas. To believe in free markets and capitalism, one has to believe in freedom first. Milton Friedman, the most popular economist on the side of freedom said this –“Underlying most arguments against free markets is an argument against freedom itself”. 
Today free markets have clearly shown their superiority. But we should not forget that we are always one generation away from tyranny. It takes just one determined mad politician and a crisis to lose this fragile freedom we have. Freedom needs to win it’s battle against equality. If you are convinced of the tremendous importance of this cause, join me in defending freedom. Educate yourself about the working of free markets. Convince others that freedom works. I am planning to share whatever I have understood about the economics of freedom in a series of posts. Spread the word if you find that useful.
There is one scene from the first episode of FRIENDS that inspires me whenever I watch it. Rachel has freed herself from her benevolent family, but still uses her dad’s credit card to shop. Her new friends convince her to shred the cards. Then Monica tells Rachel this – ” Welcome to the real world. It sucks. You are gonna love it“.
To me that sentence captures all that I have learnt about freedom.

Noted in Passing:
* Yes. Do not be frightened by population. Despite all it’s problems it is good that mankind is populating the earth and not rats
** Che was a monster. To consider him an icon of liberty is equivalent to holding Madonna as an icon of chastity
***Anbe Sivam, a Tamil movie does this dirty trick


Written by Surya

September 5, 2010 at 3:50 pm

One Response

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  1. Had a very interesting debate when I posted this on Desicritics-

    Here Goodwill Hunter refers to me. That is my nick.
    The debate however good, has drained me out, and I might not post about economics for quite some time to come.

    September 21, 2010
    05:27 PM

    can freedom be free of freedom?

    is above rhetorical or philosphical?

    September 21, 2010
    08:29 PM
    “A boot stamping on a human face, FOREVER”. This quote from Orwell is NOT referring to socialism. Orwell was very much in favour of socialism.

    Somik Raha
    September 21, 2010
    10:42 PM
    I liked this essay very much. George Orwell was writing about a totalitarian state, but seemed to believe in democratic socialism. Unfortunately, that seems to me a contradiction – we are going to vote on how we will coerce the minority.

    It is amazing how quickly people are willing to give up not just their own freedom but also snatch the freedom of others, in the name of one ideology or the other.

    Goodwill Hunter
    September 21, 2010
    11:32 PM
    Temporal: Sorry. I did not understand your comment. Can you be more specific. The article is meant to be philosophical. My blog is an attempt to promote the idea of free markets. But rather than talking merely about their economic utility, I wanted to put the moral case for freedom first.

    Bonnie: You are partly right. George Orwell believed in a kind of Socialism. But the observation was also made in relation to Socialism only. The totalitarian system “1984” is called IngSoc – English Socialism. He had a moral case for freedom, but did not have the economic framework to support it. So he ended up wishing for some non-coercive form of socialism, which is a contradiction in terms

    Somik: I am happy that you liked it. Do not worry. People will see through the Socialist fraud perpetrated on them, when the cause and effect relations are clearly shown. I say this because I had a religious faith in Communism myself. It was the hard reality of the world, which forced me to reconsider my morals and beliefs.

    September 22, 2010
    06:31 AM
    I am all for freedom above all other ideologies.
    I see Freedom and Capitalism as distinct to each other.

    Freedom incubates Capitalism. Capitalism may have its deficiencies, but it surely is less venomous than socialism.

    Socialism is like an anti-biotic which needs to be prescribed every once a while when society becomes too infected and that underlines the needs for ches from time to time. Socialism however can not and should not be used as a substitute to your staple diet.

    September 22, 2010
    07:54 AM
    “And once people are left free, they can generate all other material comforts.Today laissez faire and capitalism are dirty words.”

    because de-regulation pushed by admirers of friedman and ayn rand, has contributed to the wall street debacle, the longest recessesion in the US for a long time, the housing crisis etc. the promoters of the so-called “free market” lining up for bailouts (arriving in their private jets of course) was quite an advert for the miracles of the free markets.

    pure socialism and pure capitalism are abstract models that that do not exist in reality. most real world economies are an admixture of the two. the economy of the country that touts the miracles of the so-called free market, is in the pits. Can you name any major product, consumer or otherwise that is made in america? you have extra time. and no, armaments don’t count. ford and gm don’t count either – “socialist” state help! is there a domination of the so-called “free market” in japan, sweden, france, china…and on and on?

    If the believers in one true socialism are driven by ideology alone, blind to the complexities of the real world, the same is the case with those deluded by something called the “free market” that exists only in their imagination.

    September 22, 2010
    01:57 PM
    Nice article , I completely agree with you , Goodwill Hunter.

    Basically if you look at both capitalism and socialism and their tenets there is no doubt in my mind that socialism is the real evil in this society. The only time that we have seen nations prosper is when the markets were freed up . Take any example you will see this , the author has already pointed out Britain and America of the old times as an example , even look at India or China. The only real progress we have seen in either nation was when their markets were opened up.

    And since you have brought it up please see that America was and pretty much still is the largest economy in the world , recession or no recession. Please tell me that it was able to reach its position of power due to anything other than its free markets. If in the future america goes down it will only be because of the interventionist policies of the government.

    Please understand that even at its very very best socialism is totally unaware of the peoples wants and needs , it ignores the ingenuity , creativity , the fighting spirit and of the individual. People are not statistical numbers , they do not want food doled out to then every night from a master hand that controls their existence. I am not saying this for socailism when it gets screwed up like in russia or something , i am talking about this when it is working at its best all govt institutions are working , no one is corrupt. Which is never the case.

    Capitalism on the other hand is based of the assumption that if left alone people will create wealth them selves. There is no doubt in my mind that our base assumption must be this not that all men are equal which is clearly not the case. In fact what a dull world it would be if this were the case.

    Unfortunately our Nehruvian socialist masters have manipulated our textbooks and (apologies if am sounding to harsh here, but it is true) brainwashed us from the time we were kids that it is hard for us to accept capitalism as good. It really requires us to get rid of that mindset and look at the issue in an unbiased manner looking from both sides before making up our opinion.
    September 22, 2010
    02:11 PM

    “And since you have brought it up please see that America was and pretty much still is the largest economy in the world , recession or no recession.”

    and China is the second largest economy in the world, but doesn’t mean shit when compared to Japan where the per capita income is much higher. in both china and japan the state (contrary to the myth you perpetuate), the state is heavily invested and intervenes all the time. same for south korea, sweden etc. in the US, since Reagan started de-regulating with a vengence, manufacturing has almost diappeared, 44 milllion people are below the poverty line etc. The myth of a “free market” unhinged from the state is just that. to re-cap again, the issue is not either pure socialism or pure capitalism. there is no country (perhaps barring north korea) where any of these pure mythical beasts can be located. if the state intervention is such an evil, why was wall street and GM, Ford bailed out. And who bailed them out? the “free market” or the state ie. taxpayers’s money. Try to give ideology a rest…even the success story of Singapore would not be possible without the public housing (socialist) in which 90% of the population lives – yes, subsidized by the state. If you think China is purely capitalist or socialist, think again. The US, I repeat, maybe the largest economy, but humans, as you say, are not statistics. Name one product, consumer or otherwise that that dominates the globe and is American manufactured. Yes, you can have extra time. and no, arms and nuclear bombs don’t count. on the other hand, think Sony, Samsung, Daewoo, Nikon, Canon, Hyundai, Mitsubishi, etc. etc. etc. With all due respect, there Adam Smith was deluded when he invoked the “hidden hand”; Ayn Rand needed some therapy; and yes, John Maynard Keynes was really the greatest economy of the century because he knew what he was talking about when he asked for state intervention after the war to revive economies that had come crashing down during the great depression….

    September 22, 2010
    02:16 PM

    “Capitalism on the other hand is based of the assumption that if left alone people will create wealth them selves.”

    really? more likely they would probably shag shamelessly unless it’s jip jip!

    September 22, 2010
    05:07 PM

    Capitalism, socialism, communism, Randism they are all ideas. Ideas are only as good as the people who implement them. There are no built-in guarantees in any of these ideas. So if communism and socialism have failed or appear to have failed, then there is the human folly to take into account. Corruption is universal and greed knows no race, no culture, no national boundaries; it exists every where. So if capitalism appears to be failing it is the same reason. So I don’t think you can make a broad claim one way or the other.

    The core issue is the human mind. The problem lies there. If we are able to fix our minds and all become the Buddha then any system or no system at all will just work fine. Until then we will keep floundering from ism to ism.


    September 22, 2010
    10:11 PM
    oops! posted on the wrong thread 🙂


    the issue is not that complicated. when the pendulum swings too far toward so-called “free-market capitalism” and leaves many people marginalized, it’s time to inject some “socialism” (better wages, welfare, medicare, regulation, anti-monopoly laws etc.) when “socialism” swings too far by stifling business through too much state interference, it’s time to inject some “capitalism” (some de-regulation, boosting the climate for non-corrupt business etc.).

    If you hanker after the mythical beast called “pure capitalism” like the deluded loony lefties hankering after some so-called “pure socialism”, welcome to the club for the delusional.
    September 22, 2010
    10:51 PM
    But I think captalism is better for wealth creation than socialism. And you can say that socialism is better for wealth distribution than capitalism. But one can only distribute what has been created. Therefore, by and large capitalism is better for the people although often it has produced lopsided distribution of wealth.

    It looks apparent that South Korea’s capitalism however corrupt has produced better result than North Korea’s soialism however pure for the people of those countries.

    Goodwill Hunter
    September 22, 2010
    11:04 PM
    Thank you all for taking time to read the post and comment on it. I myself felt that it was a pretty long article.
    Suhas: Thanks a lot. I could not have explained my case better.
    RK: I agree with you that the success of any system ultimately depends on the people who implement it. The question is who do you trust. In Capitalism or atleast in pure capitalism which as commonsense rightly points does not exist in the world today (something close to it exists in a few pockets like Hong Kong. ) power is distributed amongst all economic participants. Please see that for a person to succeed in the market, he has to convince consumers like you and me. For all it’s power, a private company cannot put a gun in my head and force me to buy products from it. If a businessman wants to force anything on people, he has to go to the government for it. Ultimately government holds the monopoly on force. So that is why so many wise men said that “Best government is the one that governs the least”. In Socialism government is given all the powers. You cannot even choose to leave the system. How do you even say that the evils of two systems are comparable. Socialism did not fail because we were not noble for it. It failed because we were not evil enough. It demands that people accept poverty just because our neighbours are as poor as us. Socialists always talk about relative poverty. According to them it is ok to have lower standard of life, if everyone would be forced to have the same. I don’t see how this can be seen as moral.

    commonsense: I kind of liked your first comment. But in one later comment you said that people if left to themselves will only shag. That was plain disgusting.
    You have far jumped ahead of me. I meant this post only to be a philosophical defense of freedom. I wanted to proceed slowly. But you have straight ahead jumped to the problem of government regulations. Since you raised it, I should answer you.
    I agree with the truth of a lot of your assertions. I only differ in the conclusions.I myself clearly said that I don’t agree with Ayn Rand, but still you conclude that my views are hers. And if you mean Alan Greenspan by the followers of Ayn Rand who brought this crisis upon us, then you are spot on. I do agree that he was the one who should take most of the blame. However I don’t understand how you see Milton Friedman here. He had some unworkable ideas, but his monetarist school lost influence much before the 90s.And further, please understand what Friedman said. He said that money supply should only be increased at the rate of GDP growth. I do not agree that money supply should be increased at all. But don’t misrepresent people. His ideas were tried in a limited measure during Paul Volcker’s time, and it was considered a stable period in American monetary history. Greenspan thoroughly followed Keynesian policies during his FED chairmanship.
    I too am equally disgusted by big banks stealing tax-payer money in the name of bail outs. Of course this is not free market. America ceased to resemble a free market several decades ago. I was talking about the America of the 19th century in my post. These banks preach free market when it suits them and demand socialism when they are in trouble. But it is the Keynesian economists like Paul Krugman who you seem to admire, who demand that big businesses be bailed out. And it is still the free market economists who are fighting that people should pay for their own mistakes and not transfer them to tax-payer.
    You keep asking me how many consumer products are made in America. I work in a technical firm. We are in a business park. All around me I see so many MNCs and all are head quartered in the US. Every software company operates out of the US. I don’t see where you got this idea. But yeah GM is not a capitalist business anymore, if that is what you meant.
    Yes America is a debtor nation today and does not produce as much as it used to. But so many people have clearly demonstrated that most of the blame for this rests on the shoulders of FED and it’s spendthrifty ways. It singularly destroyed the value of US dollar. But none of this work is highlighted in the academia or media. People prefer to sing Keynesian tones. Paul Krugman’s advice wrecked Japan. Now he is searching for the next victim.
    And as far as I remember, Reagan years were the ones, when all the big technological giants we see today were founded. Manufacturing sector declined a little because of competition from the then rising Asian Tigers. Of course some of his policies wrongly favoured the financial sector. But it was not so much lack of regulation, as special privileges granted to that sector, that contributed to this crisis. But again, the bulk of the blame falls on Alan Greenspan who wanted to be known as an Activist chairman and kept modifying interest rates. Thus creating the dotcom bubble and being indirectly responsible for the present crisis.
    And you say that Keynes is the greatest economist. Please tell me that you have read his General Theory of Employment before making such sweeping statements.
    And finally am not being delusional. To be honest I don’t think that a truly free market will ever exist. There are too many rewards for politicians and bureaucrats in intervening. So they will. Western style capitalist democracy is the best we can hope for. Pendulum does swing between the right and left. But that does not mean you should not logically analyse and decide what you should support.
    And for your information, pendulum seems to have swung to the right in Britain with the victory of conservative-lib dem coalition, and there is every chance that it will do so in America too in the 2012 elections.
    This comment keeps getting longer. I was thinking of discussing all these issues slowly. But it is good that you brought them up anyway.
    I don’t want to impose even freedom on anyone. You are free to make your conclusions after I present my case. I am happy with my life and intend to live it freely.

    Goodwill Hunter
    September 22, 2010
    11:13 PM
    In the previous comment the complete name of Keynes’s work is “The General Theory of Employment, Interest and Money”. It is a hodgepodge of so many conflicting, some downright wrong ideas. Keynes became known only because Paul Samuelson attempted to distil that huge mess and presented it in a form understandable to the world. Samuelson was your textbook academic who believed in nothing. He believed in the Soviet propaganda and faithfully reproduced their GDP statistics and wrote in text books that Socialism and Capitalism were just two different forms of economic organization. It is such blurring of meaning that is the most dangerous.

    Somik Raha
    September 23, 2010
    12:12 PM
    This is a very interesting discussion. Commonsense – to add to what has already been said about the wall street debacle, my understanding is that banks were pushed by the government in the name of a socialist ideal that more people should have homes, so lets help them get it. Instead of doing this sensibly, the banks got into the “subprime” business, where the incentives were around how many loans were made, and not the quality of the loans.

    All of this would have been unthinkable had not the Finance PhDs come in and completely obfuscated the tools of risk analysis with weird assumptions around brownian motion, unvalidated and untested in the world of asymmetric information. Taleb wrote eloquently about this in the Black Swan and got shouted out.

    I wrote an article titled Ignorance is Really Bliss which addresses why India escaped the catastrophic collapse. You might find it relevant.

    Goodwill Hunter
    September 23, 2010
    12:38 PM
    Wow. You are a PhD scholar at Stanford and publish articles in Business Standard. I am truly honoured that you found this article interesting. I just read your article. It was spot on. I agree with your conclusion that Indian banks escaped because they do not follow the statistical models ( I cannot help thinking that a lot of modern macro-economics will eventually face the same fate as alchemy ). My father works in a public sector bank too. And I have directly seen what you mean. But in India, there is a lot of political interference in the lending of loans. Managers have to throw all caution to winds when it comes to lending to very powerful people. I have seen such cases. But still the substance of your argument is entirely valid.

    September 23, 2010
    01:10 PM
    All the economic theory aside, nobody is talking about the responsibility here. None of the Freddy Mac, Fannie Mae, the banks, the mortgage consultants and the home owners took any responsibility for what they were doing. I don’t see any serious liability for anyone either. This clearly shows the limitations of runaway capitalism. Human nature triumphs any isms.

    All of the players mentioned above knew the ultimate responsibility can be passed on to others. Fannie Mae and Freddie Mac because they are almost like public sector ventures. Banks because they knew the could sell the toxic package deals consisting of the poor home loans but certified AAA by stupid (or cunning) credit rating agencies. The mortgage consultants because they didn’t have any stake if the homeowner defaulted. The homeowners because they could either foreclose or declare bankruptcy. So it is wrong to blame just the government pressure on banks to provide more home loans.

    Money corrupts and a lot money corrupts absolutely. So there are limits to how much wealth capitalism can generate and how much of it is equitable or least reasonable. Until we find a balance or a solution for the human nature, we will continue to flounder.


    Goodwill Hunter
    September 23, 2010
    01:54 PM
    Freddy Mac and Fannie Mae are federal entities owned by the US government. And yes no one took responsibility indeed. You are right about dishonesty on all their parts. And am pleasantly surprised that you accept that home owners are to blame too. Usually people try to portray that the common man is always innocent and noble.
    But I repeat that FED is primarily to blame. When interest rates are artificially lowered, financial intermediaries not only find a way to cash in on the greed, they are also forced in a way to join the loot. Because if they don’t and lock up the excess cash, their competitors would drive them out of business by lending out their reserves. It is like this. You know that things could turn out bad. But if you don’t participate in the party, you will definitely go down immediately. So why not join and have some fun and put off the worries to a later date?
    It is wrong to blame human nature.I would repeat what Milton Friedman asked “What system is not based on greed? Does Socialism not encourage greed? Is it not greedy to want other people’s money”. The truth is we are all self-interested. If not money then something else. In fact money is a comparitively innocent motive. Power is a far more seditious motive. And greed is wrong only when it interferes with other people’s rights. When greed motivates a person to create great wealth, it is the greatest constructive force on earth. Bill Gates was greedy that his operating system should reach every corner of the world. Tatas were greedy that they wanted to be the leaders in Indian industry. I am greedy in that I want everyone to read this article and comment on it.
    You cannot change human nature. We need systems that channel this greed properly. If you give me time I will show to you that a market has inherent mechanisms that do this job much better than regulators who in fact create the problems they pretend to solve. But you need not wait that long. You can go to my blog and visit the links I have suggested. My first suggestion would be Henry Hazlitt’s “Economics in one lesson”. Google for it. I repeat. Capitalism does not depend on producers of goods being noble. It depends on consumers being vigilant and competitors being aggressive and greedy.
    Again Bill Gates gets all his wealth only because consumers trust his product. As Gandhiji said this wealth is held only in trust. When a businessman breaks this trust, he loses the wealth. If you want to put a limit on this wealth, you essentially have to prevent consumers from buying a product that they have clearly preferred in the market. If you deny this and say that wealth in itself can corrupt, explain why Microsoft is suddenly losing it’s so-called monopoly over software now. Google is the new target of anti-monopolists and Microsoft seems to be the under-dog now. The truth is consumers are unforgiving. It is their greed that keeps the businessmen in check. And wherever there seem to be inefficient companies having a stranglehold, if you analyse carefully, you will see some laws enacted to artificially create a monopoly for them. As I said, government has the right to legislate, and ultimately any businessman who wants to do evil, has to go to the government. So it is a question of proper governance framework only. And that is why I insisted on Laissez Faire.
    Goodwill Hunter
    September 23, 2010
    02:35 PM
    I am happy that people have taken this article seriously, and that we are having a very productive discussion here. But this debate is getting ahead of me. I wanted my blog to be a place where people could get an introduction to economic thinking. I am not a professional economist myself, so I felt I will be able to explain in a way we common people can understand. In fact I have only published my first of the series of posts on economic concepts in my blog. It is on what I consider to be the Zeroth Law of Economics, one that should be recognised before learning economics – Scarcity. You can read it at . I am hoping greedily that I will be able to slowly take the reader through various concepts of economics. But I should clearly state that none of what I state is original. I am merely restating what so many wise people have said down the years.
    Thanks again for your patience.

    September 23, 2010
    04:49 PM
    i guess “in theory” everything works. the problem is applying it to the real world…tweaking what does not and does not work…and this is an endless process, with no end ever in sight.

    as for Morris’ comments, about South Korea…few people would describe it as “free market” at work…the chaebols or the conglomerates such as Huyndai etc. dominate the market and the state plays a major role in articulating policy and in regulation. some people would call this “socialism” or at least shades of it. same for Japan – the state intervenes at every level.

    goodwill hunter: while it is true that the US continues to manufacture this and that, most of the iconic consumer goods – from TV to cars to computers – are owned by non-US countries.

    At the end of the day, “capitalism” or “socialism” or the “free market” etc. are just models and should not be confused with reality. such conflation was termed “misplaced concreteness” by the philosopher A. N. Whitehead. Models are useful because they allow us to grasp important facets of reality. but they cannot be equated with reality. There is capitalism and there is capitalism – pretty much endless varieties of it. None of it is totally uncontaminated with elements of “socialism” ie. state intervention and provisions, that in reality prevent the truly greedy capitalists from destroying themselves by overextending their reach.

    as for keynes, to call him “the greatest economist of the century” is obviously to raise a slogan that cannot be equated with “reality”. however, policies based on his theories played a major role in the post-war recovery.

    you criticise Krugman, and surely like most other humans (including economists some of whom are humans too!) nobody is above critique and nobody can provide a faultless picture of how the economy or humans, society etc. work. The very nature of the social beast is such that there can never be a one true, all encompassing acccount. Thus we are left with no other alternative than to try out various policies, see if they work partially, then to tweek them or reject them etc. At the end of the day, we are still confronted with intangible but important issues such as: humanity, civility, happiness, satisfaction, quality of life, caring for other humans, empathy, sympathy, love, rivalry, malice etc. etc. And there is no metric for precisely measuring such all important issues. No economist can ever devise any metric for precisely figuring out how to measure and maximize such intangible but real issues. And therein lies the rub – the complexities and contradictions of being humans, and not atoms and molecules that have no feelings, desires, consciousness, viewpoints, perspectives, ideologies…

    so to say “freedom” is the best, may not make sense to somebody who might seriously be into S&M or somebody who craves to be led by others. Humans come in all types and sizes, and there is no “one size/ideology etc. fits all”

    At the end of the day, it’s all about the “meaning of life” I suggest a reading of Schopenhauer (spelling?) rather than economists…or even the Monty Python movie on the topic. Perhaps even Terry Eagleton’s brilliant _ The Meaning of Life_

    September 23, 2010
    06:17 PM
    goodwill hunter:

    “But in one later comment you said that people if left to themselves will only shag. That was plain disgusting.”

    i did not mean it in a negative way. i did not mean people should be prevented from shagging and having a good time. shagging is good and improves the quality of life – nothing disgusting about it at all! (even if the end result is pug-nosed kids 🙂

    September 23, 2010
    06:19 PM
    goodwill hunting:

    “”If only I had a nickel everytime I heard someone say this – “Socialism is noble, but Capitalism works”. What is noble about an ideology that refuses to grant people even the basic right to spend their hard earned money as they please?””

    there’s something noble about redistribution of wealth….there’s some human goodwill in it, such that one does not have to go hunting for goodwill 🙂

    September 23, 2010
    06:21 PM
    hey, a socialist to boot, jean-paul sartre no less, proclaimed “man (sic!)is condemned to be free” (as in freedom is not by any means the monopoly of the free-marketeers)

    September 23, 2010
    08:35 PM

    I was once enamored by Rand. She puts everything in black and white: freedom, free will, objectivism and other high sounding words. I would posit that she failed to understand the meaning of existence. Humans gave up the ultimate freedom – that of living in the jungles as they pleased and not having to worry about any rules whatsoever – for a good reason. We are truly not free because we are all bound together by the common thread of humanity. Some call it spirituality and some humanism, but it exists. That’s why people worry about legacy and doing something “good”. Freedom to accumulate and indulge is not a freedom at all. You are letting yourselves defined by things you possess rather than what you are. That’s what greed is. True freedom is achieved when one is free from want.

    You can’t eliminate human mind from the equation. No matter which form of governance you adopt, there are humans involved and they will do everything to influence it. Let’s consider the pharma companies in the US. Here are some facts:

    – Nobody can make a claim that anything other than drugs approved by FDA and manufacturers can cure or heal something. Good example is turmeric. If someone did, FDA will term their product as a drug and go after them.

    – Pharma companies do their own clinical research to “prove” drugs; it is like a wolf doing the security audit of the chicken coupe.

    – There are umpteen hurdles in importation of drugs manufactured outside the US.

    – Pharma companies play all kinds of tricks to extend their 17 year long patents. They even buy out the manufacturers of generics so that they can keep charging the hapless public for their deadly concoctions large amounts of money. Incidentally the same drugs are available for a fraction of a cost in Canada and European countries.

    – Other forms of medicine such as Ayurveda and Homeopathy have a second grade status at best.

    How do you think this came about? Most people have almost no say in any of this. One can argue that people can reject such candidates who favor such companies. There are very few alternatives and they are not any better. So people end up closing their collective noses and voting for the known devil. This is capitalism for you.

    The point is that you can not eliminate human mind from the equation. I agree that it is too hard to change people. But we are trying find a solution and the solution really lies in the minds, not in the markets or the isms. So don’t look for a lost ring under the street light if you lost it in a dark place.

    None of this is to say that I am above greed or want. I am equally if not more hedonistic than most commentators here and live happily in the decadent west.

    September 23, 2010
    08:47 PM

    “Freedom to accumulate and indulge is not a freedom at all. You are letting yourselves defined by things you possess rather than what you are. That’s what greed is. True freedom is achieved when one is free from want.”

    hear, hear! this is the key point. too many people know the price of everything, but the value of nothing…society and humanity are too important to be mortgaged only to naroow-minded economists (not all economists are narrow-minded. some economists, too few unfortunately, do realize that at the end of the day, humans are humans, not just cash)

    well put RK!

    Goodwill Hunter
    September 23, 2010
    08:49 PM
    If you go for a philosophical defense of socialism, then I do not want to continue arguing about it. However I would just say goodwill should flow out of human heart and it is called charity. You cannot force a person to share his wealth and call it goodwill.
    You say humans are too complex to attempt a one-size fits all solution. That is precisely why Keynesianism fails. It sees us as mere numbers in it’s statistical models.
    Somebody may want to be led by others and someone might see joy in leading. They can voluntarily enter into any agreement, even a S&M one. But I oppose it only when they pawn my property for their purposes. I value freedom.
    I don’t want to talk about Sartre. I find his philosophy bewildering. I am not interested in philosophy for it’s own sake. As I said laissez faire is a very simple idea. Every person has the right to pursue his own happiness, unless he hinders someone else’s pursuit by force. I specifically mention force because, you cannot claim I want to be wealthy but my competitor is forcing prices down etc. Freedom does not mean freedom to con the world. It is taken to mean that
    you are also accountable. I mentioned this also. That is where the need for a strong rule of law comes. Law should clearly define rights to life, liberty and property and punish anyone who violates these.
    I do not accept the concept of freedom without accepting any accountability. It is impossible for any society to exist at all in that case. You cannot want freedom from scarcity or troubles. The question is at who’s cost.It is your duty to gain your wealth.
    You are right that Freedom as a slogan has been used by so many others. Even French revolution had liberty as the rallying cry. Only that they wanted the liberty to loot and rape. I don’t support any such freedom.

    Goodwill Hunter
    September 23, 2010
    08:51 PM
    For the last time, I am not an objectivist. Please don’t point your objections to Rand at me. I am bewildered by that philosophy to me. My only philosophy is Live and Let Live

    Goodwill Hunter
    September 23, 2010
    09:02 PM
    I hope that both of you are commonsense and RK are residing in India. Because you are discussing the philosophical demerits of freedom, when people don’t have freedom to run their lives when it comes to very simple issues. Running a small business is still a frightening idea even after liberalization. And things seem to be taking a worse turn with the return of the Socialist rhetoric into politics again. That is the reason why I shared this post. We can have all philosophical discussions of freedom in the west. But here in India, people are choking ( We technical professionals may not feel it, as the government’s exporter friendly policies usually aid us ). You need not come all the way and support a completely free market like me. But let us atleast demand that we be given the freedom that an American enjoys or atleast that a Malaysian enjoys.
    Reagan won the 80 and 84 elections because he carried right wingers of all shades with him. He was not interested in merely talking about freedom. He knew that to make something happen he will have to make a lot of compromises and appeal to the conservative heartlands. He did that. You might have differences with his policies. But he restored respect to the political right. That is the kind of movement I want to see in this country. I do not want to answer beyond this. Read Rajaji’s article on Why Swatantra here –
    That is the kind of mindset I want to see in people.

    Goodwill Hunter
    September 23, 2010
    09:06 PM
    Regarding your objections to pharma companies,I agree.That is one issue I seriously disagree with Rand. I support patents only in the rarest of rare cases. Ideas are not scarce and do not need property laws. The creator of the idea should attempt to gain profit out of it while selling it the first time. He cannot force other people not to use their

    Goodwill Hunter
    September 23, 2010
    09:09 PM
    Sorry the comment got cut off. Let me continue.

    The originator of an idea should make profit out of it the first time he brings the idea to the market. He should not invoke patents and force others to use their legitimate property rights. There are so many ridiculous patents these days that it no longer aids the free market case. It seems to be a tool used by established companies to prevent entry of new competitors. So I repeat I support IP rights only on a case basis. And I am sure most cases don’t qualify today.

    Goodwill Hunter
    September 23, 2010
    09:10 PM
    In the previous comment it should have read ” should not invoke patens and force others not to use their legitimate property rights”

    September 24, 2010
    02:09 AM
    As I graduated out of the discussion on this board, I have emerged out to be a even stronger proponent of capitalism(and of course freedom).

    September 24, 2010
    08:30 AM
    freedom from freedom

    September 24, 2010
    08:53 AM
    Goodwill Hunter:

    “Che was a monster.”

    such black/white (black in this case) scenarios, ad hominem attacks on a person who many admire (and many hate too) does not inspire any confidence in your grip on the nuts and bolts of thoughtful analysis…

    but of course, I don’t intend to instigate a tangential discussion on Che!

    September 24, 2010
    09:14 AM
    Che didn’t matter to most Indians. The person who really influenced (negatively) Indian productivity was Jawaharlal Nehru. He stifled the entrepreneurial spirit of Indians with unnecessary government controls. I wish he had been overthrown in a coup.

    Before the British arrived, India was the wealthiest country in the world. Of course, the British stole a lot of our resources and wealth. But this is something we could have easily recovered from (witness Japan or even Britain which were economically ruined after WW II). But the decisive blow to the Indian economy came from Fabian Socialism, thanks to Nehru.

    It was not just economic stagnation, but also corruption and bureaucracy that inevitably came out of this mess. And we suffer the after-effects even post liberalisation till today.

    September 24, 2010
    09:36 AM
    well, china was relentlessly socialist for a few decades, pushed through land reforms, reduced the grinding inequality and is not in a better position, despite many other problems, to welcome capitalism.

    india despite all the rhetoric of socialism, never really did carry out land reforms (the bhoodaan was a cruel joke)…the grinding inequality continues, as long as it does, no amount of “free markets” will fix it.

    once again, neither the mythical “free market” (contrary to GH’s assertion, the “free market” ie. totally unregulated by the state, never did exist in reality, only in theory). The pure “socialism” of total state control is also a delusion and is simply impossible to actualize.

    On the other hand, there is the task of balancing wealth generation on the one hand and the redistribution of wealth on the other. Both are equally important and balancing them is the key. Easier said than done it’s true, but better than getting hung up on slogans such as “pure capitalism” or “pure socialism”.

    September 24, 2010
    09:38 AM
    “well, china was relentlessly socialist for a few decades, pushed through land reforms, reduced the grinding inequality and is not in a better position, despite many other problems, to welcome capitalism.”

    i meant, china IS in a better position than India; anybody who has ever visited China will attest to this…

    September 24, 2010
    11:35 AM

    Your article is pitched at such a level of vagueness, generality and abstraction that it is hard to agree or disagree. in general few folks crave for “unfreedom” and “bondage” (except for those into S&M shagging)


    1. Capitalists if they are totally free to accumulate wealth as long as they do not force themselves on others, or create unfreedom for others is a great idea in theory. in practice, a certain kind of industry, if un-regulated, might create toxic pollution that will impact negatively on others. It is the role then of the state to introduce anti-pollution legislation. The state bureaucracy may indeed grow unwieldly and be corrupt, but there is not other way around it. The capitalists cannot be relied upon to regulate themselves as they will label toxic pollution as an “externality” and therefore not my problem. They will naturally see any “regulation” as evil “socialism” ie. the state impinging on their ability to be unfettered in their pursuit of wealth. The wall street debacle was partly a consequence of de-regulation to a point where the financiers were assumed to be capable of regluating themselves. The results are there for all to see.

    I believe that thru the above concrete example, I have brilliantly 🙂 demonstrated that this “free market capitalism” vs. “socialism” is trapped in a dualist mode of thinking that, among many other non_indian philosophers, our Indian philosophers too debunked a long time ago. Society and social life is a process and cannot be be contained thru water-tight divisions of “capitalism” vs. “socialism”

    Look, I did not bring in Sartre, Che, Schopenhauer etc 🙂

    Goodwill Hunter
    September 24, 2010
    12:24 PM
    common sense:
    Thanks a lot for opening my eyes.
    “And finally am not being delusional. To be honest I don’t think that a truly free market will ever exist. There are too many rewards for politicians and bureaucrats in intervening. So they will. Western style capitalist democracy is the best we can hope for. ”
    ” You need not come all the way and support a completely free market like me. But let us atleast demand that we be given the freedom that an American enjoys or atleast that a Malaysian enjoys. ”

    All these statements can indeed together be taken to mean that I am delusional and believe that a mythical free market existed. Of course even my assertion that Laissez Faire was the dominant idea in the nineteenth century was wrong. You know we always have had a central bank, government regulations on what we eat,wear,learn etc. We even had right to food, right to healthcare, right to employment then.

    “well, china was relentlessly socialist for a few decades, pushed through land reforms, reduced the grinding inequality and is not in a better position, despite many other problems, to welcome capitalism”” china IS in a better position than India; anybody who has ever visited China will attest to this…”

    How idiotic of me to think that China is better than India because it had a ten year head start in economic liberalization and that it’s big business usually does not face the hurdles of a democracy and can bulldoze it’s way through any property and that all the Indian leftist intellectuals would be executed without trial if they tried this in China? How dare I refuse to recognize Mao’s contributions to China when it was relentlessly socialist and mao bravely sacrificed 1,000,000 Chinese in his socialist cause.

    “The wall street debacle was partly a consequence of de-regulation to a point where the financiers were assumed to be capable of regluating themselves. The results are there for all to see.” – I never tried answering this you see. How idiotic of me to invoke Volcker and Greenspan into this discussion. You had the answer right from the beginning.

    You have this to say since I said Che was a monster
    “such black/white (black in this case) scenarios, ad hominem attacks on a person who many admire (and many hate too) does not inspire any confidence in your grip on the nuts and bolts of thoughtful analysis…”
    How unintelligent of me. How stupid I had been that I chose to come out of the adolescent admiration I had for him and tried to find out what he really said and this is what he said –
    “Hate will be an element of the battle, a merciless hate for the enemy, that will inspire the guerrilla-soldier to superhuman efforts of strength and changes him into an effective, violent, selected, in cold blood killing machine”
    But don’t take my word. I may think that I read these words as penned by Che. But what the hell do I know. Maybe you can teach me to see Lenin and Stalin in different light too.
    You have your victory. Now I too believe in nothing. You see there is nothing right in this world and it cannot be explained. I am a heartless monster because I tried saying that charity is the noble gesture and not forceful redistribution.
    Of course you have the welfare of people in mind.
    After all when Suhas said “Capitalism on the other hand is based of the assumption that if left alone people will create wealth them selves.” you beautifully replied -” really? more likely they would probably shag shamelessly unless it’s jip jip! ”
    I have a lot to learn from you. But I have had enough economics and politics for a while. After all who am I kidding that this discussion is adding any value. Eveyone has left and we are the only ones here. So I concede defeat.
    CSK is batting. Let me go and watch. You see I am not enlightened enough yet to realise that when I am alone, I should only shag.

    And By the way,
    “hey, a socialist to boot, jean-paul sartre no less, “I suggest a reading of Schopenhauer (spelling?) rather than economists” – You indeed didn’t bring in Sartre and Schopenhauer. Someone is impersonating you. Be careful.

    Goodwill Hunter
    September 24, 2010
    12:37 PM
    FF and Ledzius:
    I am happy if you found my article and the discussion useful in any way. There is no need to direct our anger at Nehru who is resting peacefully now. You can choose to talk about freedom. I am not delusional ( despite what common sense says ) to say that you should participate in politics and change the system etc. But you can choose to speak out when you see someone praising socialism and speaking ill of the markets. It may not matter much immediately, but if at the end of the day, if you make someone even wonder that maybe there is a reason why so many people gave their lives in a heroic struggle against Socialism in eastern Europe, maybe there is a reason why the countries that are freer are also the ones that are more prosperous, then you have done something meaningful indeed.


    September 24, 2010 at 2:03 am

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