[lbo-talk] US not a private enterprise system

Wojtek S wsoko52 at gmail.com
Wed Aug 26 06:47:28 PDT 2009


[WS:] Very true. The distinction between "public" and "private" or for that matter "statist" and "free market" countries is really misleading, as all modern countries have significant state involvement in the economy.

It would be more fruitful to look into the role state plays in externalizing (or socializing) the cost of doing business and internalizing (privatizing) profits. The success of the capitalist enterprise does not really depend on superior "productivity" - as the main stream economists want us to believe - but on its ability to externalize(socialize) cost and internalize (privatize) profits. The greater the ability to do that, the more "efficient" the capitalist enterprise appears to be.

The problem is, howver, that the ablity of capitalist enterprises to externalize costs and internalize profits is limited, and it needs the state to perform that function (i.e. to build infrastructure, supply credit, arbitrate contract disputes, clean up waste, protect property and operations of private enterprise, etc. while refraining from redistribution of wealth through progressive taxation and social welfare programs.) It is a continuum ranging from state pursuing aggressive redistribution policies and holding enterprise accountable for a significant share of the cost of doing business to state having little or no redistributive function and limited mainly to shielding operations of private enterprises.

The US state is probably in the mid-range of that spectrum. It has some redistributive policies, and some enterprise shielding ones, but the former tend to be less generous than those in most EU countriesm while the latter - more robust and business-friendly.

Wojtek

On Wed, Aug 26, 2009 at 9:06 AM, Matthias Wasser <matthias.wasser at gmail.com>wrote:


> On Wed, Aug 26, 2009 at 8:56 AM, c b <cb31450 at gmail.com> wrote:
>
> > Sure wish the book writers like Michael P. and Doug H. would do a
> > jointly authored one on how the threat of systemic failure on Wall
> > Street only avoided by trillions from the public, not private, sector,
> > means that this is no longer a private enterprise system. Not to
> > mention GM and Chrysler.
>
>
>
> But "private enterprise systems" have always required a large state to
> perform various tasks, especially at points of crisis. The state is just
> constituted differently and does different things than a pre-capitalist
> state does.
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