[lbo-talk] Why Capitalism Cannot be Tamed

[Wojtek S]

[WS:] By this logic, the legal system and norms make no sense, because
people will always find a way and commit crimes.  Yet, criminal
activity is rather rare - only a small number of people engage in it
and only occasionally.  In other words, most people are honest most of
the time.  It might be a mind boggling mystery to economists, but not
to sociologists.  It is so, because economics has a fundamentally
flawed concept of human behavior that misses its most important aspect
- social connections and networks.

Plenty has been written about the importance of social networks in
prevention of malfeasance in business and everyday life (references
available upon request.)  The bottom line is that delinquency is
effectively controlled in most human societies through informal social
controls.  The fact that criminal gangs, which include many financial
institutions and corporations, developed criminal subculture that
justifies malfeasance instead of controlling it is further case in
point.  Banksters break the law (regulations) because they are a part
of criminal culture - glorified by economic theory - that puts a
premium on lawbreaking behavior.

Wojtek

On Fri, Oct 29, 2010 at 10:51 PM, michael perelman
<michael.perelman3 at gmail.com> wrote:
> A little more than a year ago, I posted a note using football as a metaphor
> for the futility of effective regulation.
>
> http://michaelperelman.wordpress.com/2009/09/13/the-futility-of-financial-regulation-lessons-from-science-and-professional-football/
>
> Some people dismissed the football metaphor.  The Wall Street Journal today
> has a story about how people design new psychotropic drugs to get around
> regulation.  It may be that these new drugs are more dangerous than banned
> drugs.  In all likelihood, they can design these drugs faster than the
> government can make regulations.
>
> How in the world can regulators get ahead of financial industry or tax
> lawyers, even if the lobbyists were not writing the regulations or the tax
> codes.
>
>
> Whalen, Jeanne. 2010. "In Quest for 'Legal High,' Chemists Outfox Law." Wall
> Street Journal (30 October).
> http://online.wsj.com/article/SB10001424052748704763904575550200845267526.html?mod=WSJ_World_LeadStory
>
> --
> Michael Perelman
> Economics Department
> California State University
> Chico, CA
> 95929
>
> 530 898 5321
> fax 530 898 5901
> http://michaelperelman.wordpress.com
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