[quetzalcoatl]

But a major reason justice is not easy politically is precisely the sort of obdurate, anti-justice, socialist denialism quetzalcoatl exemplifies.

Major reason? Even 'minor reason' would be giving socialism far more credit than it deserves. Socialism is the philosophy that dare not speak its name - and even those who claim it (like Sanders) are weak sauce. Your indictment is not just misplaced, it is positively puzzling. Socialists have never been in the forefront of those who ardently defend land as property.

[Pants-of-dog]

TTP has weird ideas about what socialists think of land reform. According to him, Allende never instituted land reforms as part of his socialist government.

[Truth To Power]

Major reason? Even 'minor reason' would be giving socialism far more credit than it deserves.

I disagree. IME, the most stubborn, violent and irrational opposition to justice in land tenure comes from socialists, and their opposition is the most politically damaging.

Socialism is the philosophy that dare not speak its name - and even those who claim it (like Sanders) are weak sauce.

For weak sauce, it has certainly had sufficient corrosive effect on Venezuela.

Your indictment is not just misplaced, it is positively puzzling. Socialists have never been in the forefront of those who ardently defend land as property.

Wrong. They demand that land be collective property, not only administered but managed and used by a state or collective rather than private interests. But the key to solving the problem of land -- reconciling justice with efficient productive use -- is not collectivization but compensation: compensation paid by those who exclude others from land to the community of those excluded, and compensation by the community to the individuals excluded, in the form of free, secure tenure on enough of the available advantageous land of their choice to have access to economic opportunity.

[MeMe]

@ TheRedBaron

What is the socialist diagnosis, and why is it accurate? What arguments support their claim?

In 2012 quetzalcoatl gave the following reply in the (interesting) thread "DOES CAPITALISM EXPLOIT WORKERS?" from the forum Economics and Capitalism:

1) The initial stages of growth are fueled by development of heavy industry and transportation infrastructure, which provide adequate return on investment.

2) Successive stages are characterized by a more difficult environment. Low hanging fruit has been picked, and competition narrows margins. New markets are rapidly exploited resulting in an ecology with few unfilled niches.

3) As returns on productive investments decline, the financial sector begins to take up the slack. During the initial high growth phase, investors take on little enough debt that they have no trouble meeting their capital and interest payments. As real returns on productive investments begin to decline, they stretch their finances so they can only afford the interest. In the Ponzi phase they take on debt levels that require continuously rising prices to be safely financed.

4) This bubble process is more easily accommodated during the industrial phase. The creative destruction of failed businesses makes room for new enterprise.

5) In the later finance-dominated phase, the collapse of bubbles threatens the economic infrastructure of the nation, and government is forced to step in. In conventional industries, the demise of companies leads to “creative destruction” with capital being reallocated to more productive areas. But in banking and finance, a crisis leads to “deflationary destruction” as capital is eliminated. However, government backstopping of banking creates further incentive for risk taking.

6) Successive waves of financial bubbles lead to a debt crisis. Not the government debt, that is irrelevant to the present crisis. The real debt crisis is the ratcheting of private credit which finally reaches an unsustainable level. That which cannot be repaid will not be repaid. The extinguishing of any significant portion of private credit will create a deflationary holocaust, but that appears to be inevitable. Economic growth cannot generate returns large enough to finance private debt - and the desperate attempt to service that debt excludes other economic activity, which contracts the economy even further. A self-reinforcing cycle.

7) At the same time these successive bubbles are taking place, corporate culture increasingly dominates the political process. The natural tendency of large companies to stifle their competition becomes part of the legislative/regulatory environment. The economy becomes ossified and no longer innovates at its previous level.

That's the basic picture. It's worth noting that these cycles are not endlessly repeatable. There is an end game, reflecting the natural lifespan of any complex self-regulating entity.

Of course it may well be that in the mean time quetzalcoatl has changed his views. Nevertheless it may be worthwhile to reflect on this model.

[TheRedBaron]

@ Truth-To-Power

The moment you conflate land and capital as "the means of production," you are wrong

I do not equate land and production equipment. However, land can be capitalized by means of its rent and the rate of interest of capital.

Land and capital are utterly different

From a material point of view, nobody will deny this statement. However, I do not understand why there would be a compelling relation between land and the personal wellbeing, happiness and autonomy. Besides, this is not an important topic in the economic theory. And since economists are not idiots, there is undoubtedly a good reason for that.

To really free the masses from wage slavery, we would also have to:

1. Ensure everyone free, secure tenure on enough of the available advantageous locations of their choice to give them adequate access to economic opportunity without having to pay the full rent for it;
2. End the privilege of private banksters to issue debt money;
3. End ownership of knowledge and ideas through IP monopolies.

For me these three points are controversial, and I tend to disagree with them. Again, mainstream economists do not advocate these social reforms. They are so drastic, that they may well destabilize the economic system, and deteriorate our standard of living. Imho we must concentrate our efforts on furthering personal wellbeing and autonomy, in a step-by-step and reversible approach.

[Truth To Power]

TTP has weird ideas about what socialists think of land reform.

There are lots of different kinds of land reform. Socialists typically just want to convert land from private into state or collective property. Unlike the land reform I advocate, such socialistic land reform doesn't achieve justice, doesn't enable efficient productive use, and doesn't restore people's rights to liberty.

According to him, Allende never instituted land reforms as part of his socialist government.

No; according to me, Allende's land reform was typically socialist: it converted land from private into state or collective property, did not restore people's rights to liberty, and did not encourage efficient productive use. It also turned into nationalization/collectivization of non-land capital goods and the fruits of private labor.

I do not equate land and production equipment.

Socialism does.

However, land can be capitalized by means of its rent and the rate of interest of capital.

Equivocation fallacy. Being "capitalized" does not turn land into a product of labor, sorry.

From a material point of view, nobody will deny this statement.

Actually, socialists and capitalists (especially neoclassical economists) both deny it.

However, I do not understand why there would be a compelling relation between land and the personal wellbeing, happiness and autonomy.

Because you deny, within your own mind, one or more of the facts that: land is not a product of human labor; that we need to use it to sustain our lives; that we are naturally at liberty to use it for that purpose; and that appropriating it as property, whether private, state, or collective, forcibly removes that natural liberty.

Besides, this is not an important topic in the economic theory.

Which economic theory? The socialist and capitalist ones that have all proven themselves incapable of understanding or predicting actual economic events?

And since economists are not idiots, there is undoubtedly a good reason for that.

Indeed. As Peter de Vries so astutely reported, "Whenever I see something that makes absolutely no sense whatsoever, I know there must be a damn good reason for it." Economists are certainly not idiots. They are, however, liars, virtually to a one, as proved in books such as Debunking Economics, Economyths, and The Corruption of Economics. They choose to be liars for a reason that economists, specifically, consider to be very good: financial incentives. They know that they will obtain higher positions and incomes if they chant whatever lies are most favorable to the financial interests of the privileged, so they chant those lies. See Inside Job.

For me these three points are controversial, and I tend to disagree with them.

But cannot actually offer an argument against them. Check.

Again, mainstream economists do not advocate these social reforms.

Because they are servants of rich, greedy, privileged parasites.

They are so drastic, that they may well destabilize the economic system,

Their absence has done that quite well already, thank you very much.

and deteriorate our standard of living.

They would dramatically improve the standard of living of everyone but a tiny minority of rich, greedy, privileged parasites.

Imho we must concentrate our efforts on furthering personal wellbeing and autonomy, in a step-by-step and reversible approach.

That is not possible in the absence of the reforms I've proposed, for the reasons I have given. More particularly, the Henry George Theorem shows why anything you try to do to improve personal well-being and autonomy will benefit no one but landowners.

[quetzalcoatl]

Of course it may well be that in the mean time quetzalcoatl has changed his views. Nevertheless it may be worthwhile to reflect on this model.

I still find this a reasonably accurate, if simplified, picture. It's not necessarily a socialist diagnosis, btw. Minsky and others tried to introduce instability as a central feature of debt-based economic systems, but made little headway within the neoclassical paradigm. The point is that equilibrium economics cannot describe such a system - not even punctuated equilibria. Successive deflationary crashes do not return to initial conditions, but introduce irreversible changes that lead to an eventual exhaustion of the system's ability to recover.

That's the diagnosis part. As far as the prescription goes, that's relatively simple, at least for developed nations. The real impediment is political and cognitive, not economic.

[Truth To Power]

Minsky and others tried to introduce instability as a central feature of debt-based economic systems, but made little headway within the neoclassical paradigm.

Right. Neoclassical economics ignores debt, money, banking, and especially privilege (which provides the incentive for banks to create the money people obtain when going into debt). That is why it cannot make accurate predictions other than, "the recent tend will continue" -- which are only accurate until the trend is broken.

The point is that equilibrium economics cannot describe such a system - not even punctuated equilibria.

Right. Equilibrium serves the same function in modern mainstream neoclassical economics that circular orbits served in pre-Keplerian planetary astronomy: to pile on irrelevant mathematics that multiplies complexity while preventing understanding.

Successive deflationary crashes do not return to initial conditions, but introduce irreversible changes that lead to an eventual exhaustion of the system's ability to recover.

I'm not sure about that. It probably depends on the institutional environment.

That's the diagnosis part. As far as the prescription goes, that's relatively simple, at least for developed nations. The real impediment is political and cognitive, not economic.

True, except I'd say the prescription for stability, growth and prosperity is also simple for less developed nations: the liberty to produce, and justice to own what one produces.

[TheRedBaron]

@ quetzalcoatl

The point is that equilibrium economics cannot describe such a system

That may be true. On the other hand, it is unlikely that the above phase model really helps to understand the economic development. It looks like the model of state monopolistic capitalism, that was used by Soviet economists to describe the western states. In fact it resembles the view of Lenin himself. The problem is that this sequence is too rigid. It suggests that all crises follow the same pattern. In reality the economic system evolves, and each crisis has its own peculiar characteristics. There is no obvious tendency.

Incidentally, the Soviet economists followed the hypothesis of Marx that services and the administration do not add value to the national product. Thus they must be paid from the surplus value, that is generated in the productive branches (agriculture, industry, apparently also transport). This transfer of surplus value to "unproductive" activities diminishes the profit rate in the productive part of the economy. Obviously in this approach the profit rate depends on the definition of productivity, that is to say, the part of the economy that is labeled productive.

Nowadays economists are able to gain some understanding of the fundamentals of economics, for instance: how commodity markets work, or the market for capital, or the labour market. You can develop growth models, albeit with a limited applicability. You can even study the price setting of oligopolies. But it is an illusion to hope that the long-term development of any capitalist system at any time can be described, in a general model.

By the way, an increasing amount of the surplus value is invested in the exploration of space. It may well be that within several decades Mars will be colonized. Enormous amounts of land and fallow will be added to our stocks, ready for exploitation. What? Yes, this is an attempt to satirize.

[quetzalcoatl]

Wrong. They demand that land be collective property, not only administered but managed and used by a state or collective rather than private interests. But the key to solving the problem of land -- reconciling justice with efficient productive use -- is not collectivization but compensation: compensation paid by those who exclude others from land to the community of those excluded, and compensation by the community to the individuals excluded, in the form of free, secure tenure on enough of the available advantageous land of their choice to have access to economic opportunity.

This arrangement does not address the question of actual control of the land. Who owns it, how long do they own it, and for what purposes? Compensation makes no sense unless someone's rights have been abrogated. So what rights are associated with land, and how does one come into possession of these rights?

It seems likely to me that land will either be owned either collectively or individually. If land is indeed owned individually (as you seem to propose here - as well as most democratic socialists), then what is different about your system than what we already have? Surely compensation is inadequate in a structural sense. Oligarchic control of the levers of government would inevitably negate/weaken such an compensation scheme over time...just as it has other non-structural reforms.

-------------

Returning to 'Democratic Socialism in Practice,' we are left with several options. Assuming you find 'democratic socialism' a good thing, you might take one of the following tacks:

1) Align with the dominant center-right party, and try to develop a strong progressive alternative within the party (The Sanders Model). It principle this should be feasible. After all, the the GOP has been pushed so far to the right, that it is essentially a different party than the one Eisenhower helmed.
2) Align with the alt-right challenger. This is semi-accelerationist. The analysis is that neoliberalism will continue its consolidation within Democratic Party, unless the party is shocked by defeat. Success breed more of the same, while failure enables alternatives.
3) Desert both major parties, and form a democratic socialist alternative party. This is an extreme uphill battle in the US, given the winner-take-all nature of the electoral system.

[TheRedBaron]

@ TheRedBaron, all

Incidentally, the Soviet economists followed the hypothesis of Marx that services and the administration do not add value to the national product. Thus they must be paid from the surplus value, that is generated in the productive branches

This is not exactly what the hypothesis of Marx says. The exact formulation is that services do not generate surplus value. However the service provider still wants to obtain a profit. He must take his profit from the surplus value, that is generated by the producers of material goods. The available total surplus value is distributed between the productive and unproductive capitalists in proportion to their costs. The implications are: (a) the service provider buys the goods at a price below their actual value; (b) When the costs of the service providers rise, and the costs of the industry remain unchanged, then the profit rate of the industry will fall.

My previous fuzzy statement ("services do not add value to the national product") may mislead some. Of course, in the Marxist model the services create necessary costs, which do represent labour value.

[TheRedBaron]

@ Truth-To-Power

Because you deny, within your own mind, one or more of the facts that: land is not a product of human labor; that we need to use it to sustain our lives; that we are naturally at liberty to use it for that purpose; and that appropriating it as property, whether private, state, or collective, forcibly removes that natural liberty.

You give me too much credit. I have simply not yet taken the time to read books, that make land responsible for personal satisfaction. Unfortunately the lenght of life is limited, so that time must be carefully spent.

They choose to be liars for a reason that economists, specifically, consider to be very good: financial incentives.

Guilty as charged. Fortunately, the professional code of conduct puts some constraints on the ingenuity of the researchers. For instance, model results must show some similarity with experimental data. The collection of experimental data must be reproducible. Etcetera.

They would dramatically improve the standard of living of everyone but a tiny minority of rich, greedy, privileged parasites.

It is true, that people are influenced by their membership of various groups. However, human nature is a given. Free riding may not be the standard, but yet it is omnipresent.

[Truth To Power]

This arrangement does not address the question of actual control of the land.

Sure it does. It is controlled by the one who justly compensates the community of those whom he excludes from it. That is the one who pays the market rent to the community.

Who owns it, how long do they own it, and for what purposes?

No one owns it. Users get exclusive tenure in return for compensation to the community of those excluded. Usage would be up to the user, within limits defined by considerations of nuisance, suitable infrastructure, etc.

Compensation makes no sense unless someone's rights have been abrogated.

Correct.

So what rights are associated with land, and how does one come into possession of these rights?

Everyone is naturally at liberty to use land non-exclusively. That's how our remote ancestors lived for millions of years. Exclusive land tenure forcibly abrogates that right.

It seems likely to me that land will either be owned either collectively or individually.

Was it owned collectively or individually a million years ago?

If land is indeed owned individually (as you seem to propose here - as well as most democratic socialists),

No, land cannot rightly be owned. Individuals can only get rightful exclusive tenure by making just compensation to all whom they exclude.

then what is different about your system than what we already have?

My system secures and reconciles everyone's individual rights to life, liberty, and property in the fruits of their labor. The current system forcibly removes people's rights to liberty without compensation and makes them the property of landowners.

Surely compensation is inadequate in a structural sense.

Why?

Oligarchic control of the levers of government would inevitably negate/weaken such an compensation scheme over time...just as it has other non-structural reforms.

But the oligarchy gets most of its power from the very privilege I propose to abolish! MY reform is the one that strikes at the root. That's why the oligarchy opposes it with such fanatical hatred.

Returning to 'Democratic Socialism in Practice,' we are left with several options. Assuming you find 'democratic socialism' a good thing, you might take one of the following tacks:

Socialism is not a good thing.

[Stegerwald]

@ Truth-To-Power

No one owns it. Users get exclusive tenure in return for compensation to the community of those excluded. Usage would be up to the user, within limits defined by considerations of nuisance, suitable infrastructure, etc.

This looks a lot like leasehold land.

[Truth To Power]

This looks a lot like leasehold land.

Yes. The only real difference is that the lease payment would go to the government and community that create the land's value, instead of being given to a private landowner in return for doing and contributing nothing.

[Pants-of-dog]

I find it weird that this thread has yet to mention actual historical instances of democratic socialism.

[Truth To Power]

I find it weird that this thread has yet to mention actual historical instances of democratic socialism.

I think I mentioned Venezuela.

[Pants-of-dog]

Not as far as I can see.

Having said that, one of the obstacles that democratic socialists face (in the developing world) is the fact that the US will instigate a coup if you are successful.

[Patrickov]

Not as far as I can see.

Having said that, one of the obstacles that democratic socialists face (in the developing world) is the fact that the US will instigate a coup if you are successful.

Is it really the US instigating a coup, or just that the practitioners of democratic socialists have not transformed the country's economy enough such that they can have various choices?

I feel Venezuela's failure more related to its economy being too dependent on one aspect (petroleum).

[Pants-of-dog]

Is it really the US instigating a coup, or just that the practitioners of democratic socialists have not transformed the country's economy enough such that they can have various choices?

Yes, the US was actually behind the September 11th coup. This is supported by CIA documents.

I feel Venezuela's failure more related to its economy being too dependent on one aspect (petroleum).

While pinning your entire economy on one good or service is not a good idea, it does not contradict the argument that the US often involves itself in the politics of other countries for economic gain.