WAR IS PEACE

FREEDOM IS SLAVERY

IGNORANCE IS STRENGTH

OK, those last three are George Orwell's little joke.

But it's really true that:

FREEDOM + RATIONALITY = CAPITALISM.

If you give people INDIVIDUAL FREEDOM, then their RATIONAL pursuit of their own interest will lead them to create a capitalist system. Just ask Warren Buffett or Bill Gates.

"Individual freedom" means you can do what you want as long as you don't initiate aggression against other individuals. The rules are self-consistent.

People will then automatically form companies, because the division of labor is incredibly efficient (as Adam Smith pointed out). Stock exchanges and banks will come into existence, because these organizations benefit the owners and customers, without violating anyone else's rights. All the trappings we associate with capitalism will come into existence on their own, without any command from above. Marx said Communism is inevitable, but it's actually Capitalism that's inevitable, because capitalism is the natural outgrowth of a system that allows individual freedom. In this sense, Capitalism isn't a system at all. Communism is, though. In the case of Communism, someone (e.g., Lenin) needs to think it out and implement it. The implementation inevitably involves government taking away individual freedom. The "camps" are an inevitable consequence.

Some of the problems we associate with our capitalist system have been caused by actually deviating from the ideal of freedom. E.g., our big automakers went down, and it's likely that was due to union interference. Our unions violate an important individual freedom: the freedom of association (the freedom to make contracts). Note that this violation of individual freedom has only been possible with government connivance.

Michael Moore is demonstrating that he has a very low awareness level by calling capitalism a failure. He's unaware that freedom + rationality = capitalism. Ironically, Moore's own success comes from the capitalist system. He's an independent businessman. It's really a tough job to attack either freedom or rationality. Yet, if you allow both, you get capitalism.

Martin_Straub:

It's really a tough job to attack either freedom or rationality. Yet, if you allow both, you get capitalism.

There are a number of problems with the premises of your argument. However in the interest of brevity I'll address just one: As a matter of established empirical observation, it is not in fact difficult to "attack rationality."

Behavioral economics has, over the past few decades, come to accept that humans are not, in the aggregate, rational actors. See pages 13 and 14 of this link for a brief sample explication.

Now, some human decisions are made on the basis of well-informed, rational self-interest, but many (even most) are not. This explains (in part) the abject failure of the infamous invisible hand to deliver on all the promises made on its behalf.

So inasmuch as a society relies on free-market premises alone -- which are based on a model of human behavior that is demonstrably wrong -- then that society will find that power imbalances accrue. One redress is to illuminate the results of following such a wrong-headed policy.

Way to not address 33% of your little equation there. The whole reason we're in this mess right now is because of lack of rationality. But you got your shots in at the Union, so good on you. If anything is bringing down companies it's certainly the workers.

Power imbalances between individuals are not the result of the free market. Power imbalances are inevitable in any system. This is part of human nature -- some people are more intelligent, ruthless, ambitious, lucky or conniving than others. These people will inevitably accumulate power (whether economic or political) regardless of the system in place.

Secondly - if people are not rational actors capable of making decisions for themselves, then someone must do it for them. Who is this to be?

Our unions violate an important individual freedom: the freedom of association (the freedom to make contracts).

How does a union contract violate "the freedom of association(the freedom to make contracts)?

Lonf live the Empire!

You are also forgeting the principal agent problem, the free rider problem, negative externalites, unequal access to information, unequal bargaining power, monopolies, the fact that people are not rational (which several previous posters pointed out) and other problems with pure laissez faire capitalism which prevent the free market from operating efficiently. That is why you need regulation of the capitalist system. That is why, for example, you need either regulations, taxes, fines, or criminal sanctions to force polluters to bear the burden of the negative exernalities they inflict on the general population.

I assume the poster is discussing the right to work as opposed to the closed shop. All of us know about nepotism in certain unionized industries like construction and entertainment.

How does a union contract violate "the freedom of association (the freedom to make contracts)"?

By forcing to the company to deal with the union. If you are free, you can tell the union where to go. And, by forcing people who want to work for the company at conditions unacceptable to the union to forgo such employment.

I don't reject the need for the government to regulate stuff like environmental pollution. That's different from things like giving unions special monopoly control over the labor supply to companies, or forbidding people from buying from whom they like (e.g., foreigners).

<< You are also forgetting the principal agent problem, the free rider problem, negative externalities, unequal access to information, unequal bargaining power, monopolies, the fact that people are not rational (which several previous posters pointed out) and other problems with pure laissez faire capitalism which prevent the free market from operating efficiently. >>

All these effects are real, but they're 2nd-order effects. Plus, people seem to be rational enough to make the system work (judging from appearances).

Freedom + Rationality = REGULATED Capitalism

Because 'Freedom' has to include having a say in your own government, otherwise it is more or less worthless. You can have total 'individual freedom' under a depotism, just like a slave can have his complete freedom--if his master allows it. But having individual freedom, and no ability to change the world you find yourself in, just means the freedom to be roadkill for the rich and powerful.

If you don't want to be bothered by child safety seat laws, just move to China. Nobody in the Chinese government cares if your kid goes through the window or if the window is safety glass or not. Or if you don't like American gun laws, move to Saddam Hussien's Iraq, there were no gun laws there. You could even fire your guns straight up on holidays and weddings, and if somebody got hit, well, too bad.

Once you allow people to have a say in their government, you're going to get government that caters to the needs of the people. That means we're going to have a lot of regulations, meat inspections, workplace rules, taxes, seat belt laws and more. We're going to have government programs, schools, roads, Social Security and (in most democratic countries) universal health care. We'll have 'bigger' government, which in many cases is bigger than government in China or the old USSR. But in fact we'll have more real freedom.