And I would like to add: this does NOT mean that there are no problems with the state interfering too much in the economy. It can do this without budging the spending/GDP ratio by one jot: by regulating, insisting on certain pay standards, or even by having small but influential state actors undermining competition at the margin.

these points are made more on the original blogpost, if you are curious.

A standard attack on Labour . . .

Isn’t it interesting how the language of war and aggression is so prevalent in recent decades. It used to be “A standard criticism of Labour”>

“the state employs 6 million people, or about 20% of the workforce”

True – but only c. 520,000 are in the civil service:
http://www.civilservant.org.uk/numbers.pdf

There is a persisting myth about the number of civil servants working in London. Some 18% of the civil service work in London and only about 12% work in central London.

Right – and you could even augment the story by arguing that while the state is generally less efficient at producing certain goods than the private sector, it is more efficient at producing others. Public goods are the classic example (in the technical econ jargon sense), but you could even start arguing that the private provision of healthcare, for example, creates incentives for lots of unnecessary treatments, lowers incentives for preventative care, adds lots of transaction costs, etc. and hence the public sector is actually more efficient (I wouldn’t stake my life on that argument, mind). Anyway, Baumol’s cost disease tells us that that the relative costs of goods and services that require lots of human input (like health, social care, eduction) are consistently rising relative to costs of manufactured goods etc. so if the state sector is the best sector for producing such services, we will see it grow proportionately larger as we grow richer (Wagner’s Law. You have to control for this somehow before you know how to interpret an increase in the size of government.

It may not feel like a transaction is taking place when you pay taxes and receive street lighting in return, but it is … in fact, come to think of it, isn’t your pie chart a bit misleading in that regard, because it doesn’t show ‘transactions’ like paying taxes and receiving policing, social work, etc. in return? If we want to know the size of the government, isn’t the right thing to look at the proportion of real output that is produced in the state sector? I’m not sure looking at household transactions in the way you do here is the right thing to do.

Interesting post, but I’m not sure it gets us much further in terms of the stultifying influence of the growth of the state in our lives.

(By the way did Sunny actually read your article before he changed the headline on his BBC micro?).

In terms of the efficiency of the economy, you are quite correct that what matters is not spending in relation to GDP but how much government intervention prevents ordinary capitalist motivations from influencing economic decisions. But you cannot argue that such has not been the defining feature of government behaviour over the last 12 years.

Interesting, also, that you mention Tesco, because it seems to me that the other influence on the efficiency of the economy has been the pitiful (and perhaps deliberate?) failure of the competition authorities to prevent the development of oligopolies (see banking for example).

But the effect of the state on the economy is not only related to its consumption of resources or the consequences of the redistribution of wealth, it also intervenes by way of regulation and statutory compulsion, and this has an immediate and crippling effect on our efficiency and competitiveness.

And finally, of course, the malevolent influence of the state does not only relate to the economic inefficiency it contributes. It blights our lives in many much more subtle ways.

“You could have a larger state – Sweden, say – that redistributed quite a bit, got Policy Exchange all hysterical, but had no nationalised industries and no stifling market-defying regulations. This could quite easily grow fast.”

Absolutely. No national minimum wage, vouchers for education, low capital and corporate taxes (thus keeping capital per worker and productivity nice and high), health service organised around reasonably sized units (the county, tax is raised in county and spent in county) rather than nationally…..there’s all sorts of things that Sweden does very well.

I may not be all that in favour of the amount of redistribution they do but they’re quite possibly more capitalist (even neo-liberal) in their economy than we are.

Luis

To be fair I did sign up that failure of the example you point out in last paragraph; nevertheless, I would hazard a guess that even with those ‘hidden’ transactions, much more of the repeat transactions cascading down from one big government purchase (e.g. paying a teacher’s salary) are then privately motivated.

And thanks for the links to Wagner and Baumol – that puts some theory behind my prejudiced guesses.

It is beginning to bother me how much consensus there is around being like Sweden.

On Tescos, I ought to hate them but find I can’t -their size does not seem to have precluded some useful innovation. Banking, that’s another matter altogether

The state employs 6 million people, or about 20% of the workforce

True ….up to a point.

It includes most NHS staff, for instance, but doesn’t include GPs, who are theoretically self-employed.

It includes teachers on the permanent staff of state schools, but not the supply teachers who move between them.

It includes those dustmen who this year happen to be nominally employed by their council’s direct labour force, but not those who happen this year to be on the books of some French-owned private enterprise. (Some cannot remeber from one year to another which they are. But whichever, it’s the taxpayer footing the bill.)

What’s striking about your thought-experiment with the diagram though is how the reallybig-ticket, high-value stuff in our lives – £6,500 per capita on schooling; healthcare etc are done by the State, while we are left with discretion over what we buy at the pub or spend in Tescos.

“Right – and you could even augment the story by arguing that while the state is generally less efficient at producing certain goods than the private sector, it is more efficient at producing others. Public goods are the classic example”

Nooo….that’s not quite right. Some public goods are more efficiently produced by the State. Defence, a criminal legal system and so on. It’s also true that public goods might need to be subsidised by the State (say, education). Or the legal system needs to be jiggled to increase production of certain public goods (ie, create property rights through copyright and patent to encourage the public good of invention). But that’s not to say that simply because something is a public good it is best provded by the State. “Production” is rather different from the State necessarily being involved.

One example might be education: I’ve no doubt that at least to a certain level being part of a society where near all are literate and numerate is a public good. But that doesn’t mean that direct provision of education by the State, as opposed to financing out of tax revenues but provision by private actors, is the more efficient method. The differences between the products of State schools and private schools might be a hint there.

“Anyway, Baumol’s cost disease tells us that that the relative costs of goods and services that require lots of human input (like health, social care, eduction) are consistently rising relative to costs of manufactured goods etc. so if the state sector is the best sector for producing such services, we will see it grow proportionately larger as we grow richer (Wagner’s Law. You have to control for this somehow before you know how to interpret an increase in the size of government. ”

True so far as it goes. But then you’ve got to look at the other part of Baumol’s work as well. The cost disease thing is because innovation in services is more difficult than it is in physical production processes. But a huge chunk of Baumol’s work is in looking at what systems foster such innovation. To which his answer is the market/capitalist one. Which rather means that if, just as an example, we don’t want the NHS to become 99% of the economy at some future date then we’d better introduce those markets and at least a simulacrum of capitalism (even while we keep the State funding) so as to encourage the innovation which will reduce that price disparity and thus reduce the future size of government.

Sorry, one more thing. Innovation in education for example. One could imagine the replacement of some or even the majority of a university education (umm, the education bit, not the shagging, boozing and growing up bit) with online lectures and course notes for example. A technological change which would reduce the cost substantially. Even an innovative use of a technological change to reduce the cost of a formerly labour intensive service.

Actually, we don’t even need to imagine it. We’ve already done it. Open University.

“Imagine if the development of the IT industry had been all decided in think tanks and Whitehall. We would still be on BBC Microcomputers.”

Though of course the IT industry was nurtured and developed in publically-funded uiversities and accelerated by the defence industry – satellite technology for e.g.. The same could be said of any major technonlogical advance, from shipping, through railways, the aicraft industry, and so on. All took off under state sponsorship. Left to the free market we’d still be in the dark ages.

[The BBC’s popularisation of the Acorn microcomputer – which had a great impact on the nascent market for home computers – is a case in point.]

Tim,

Sure, it’s not necessarily the case that direct production by the state is most efficient – the state may pay a private contractor to provide street lighting. That’d still be taxpayer funded, so I guess it’d be accounted for as production within the state sector, and come to think of it I’m not sure what the right definition of “produced in the state sector” is … after all, we don’t think the NHS is any less of a state producer because it pays private companies to manufacture its stationary and bed linen. Is the right definition control rights, or something?

I agree about the need to foster innovation and how difficult that can be within a non-competitive non-market setting but trying to create a competitive market setting can sometimes create problems of itself, so there can be a trade off.

[n.b., being picky, I’m not sure education is strictly a public good per se – it is excludable – although there are doubtless externalities involved, meaning a free market might under supply it]

On the PC point – the BBC Micro and the Sinclair Spectrum were both far superior machines (in absolute terms, and even more so in value for money terms) to the IBM PC. So were Apple’s, DEC’s and Commodore’s computers.

Unfortunately, because IBM was able to use its dominant position in US office supplies to establish a user base that dwarfed any potential market for the startups, network effects made it rational for people to switch to IBM’s inferior product.

If the US government had mandated the use of, well, pretty much anything except the IBM PC, that would have had massive positive effects on the efficiency and development of the global computer market.

(see also: the mobile phone market. In the world outside the US, governments were highly prescriptive on technology standards used; in the US, they were laissez-faire. As a result, the US mobile phone industry is still way behind other developed countries, and only came anywhere near catching up once mobile phones became sufficiently PC-like to allow US PC makers to transfer their skills across)

“being picky, I’m not sure education is strictly a public good per se – it is excludable -”

Indeed, which is why I heavily qualify it: “I’ve no doubt that at least to a certain level being part of a society where near all are literate and numerate is a public good.”

But then of course that thought is not original to me. One A. Smith Esq.

“The same could be said of any major technonlogical advance, from shipping, through railways, the aicraft industry, and so on. All took off under state sponsorship. Left to the free market we’d still be in the dark ages.”

Eh? Shipping? Brunel? Vanderbilt? The RN was decades behind the private sector for almost all of the 19th cent. Railways? Sure, there was large government involvement in securing the rights of way (you needed an Act of Parliament I think?) but outside that it was all private capital. Indeed, the railways are often used as an example of an internet style boom and bust in how entirely private developments in technology lead to, umm, booms and busts. US railroads similarly and the S. American railroads were almost all built by private British companies.

Aircraft? Well, sure, the RAF and so on bought quite a lot of them but the biggest US subsidy to airlines and aircraft in the early days was deliberately subsidising them as mail routes.

Those three really aren’t the best examples of “state spnsorship” that I would try and come up with.

Actually the truth is that the government footprint is much larger than what it spends or passes to others to spend. Government regulation also greatly affects most of the productive economy in ways not involving receiving or giving payment.

For example electricity prices are roughly 4 times what they are in France because government prevents the building of nuclear power stations. House prices have risen 4 times more than the RPI over the last century not for any technical reason but because of planning restrictions. The EU admits/claims that their regulations cost 5.5% of the GNP of the EU. Economists say regulators cost the regulated 20 times more than they cost the government that employs them so the 200,000 Health & Safety bureaucracy cost the work of another 4 million people (it has been shown that the concomitant cut in GNP causes 2 orders of magnitude more deaths than the HSE “saves”).

All in all this accounts for another 100% of GNP foregone meaning government controls 150% of current & 75|% of the possible economy & the productive part only 25%. This, of course, takes no account of the foregone GNP which a faster rate of growth like China’s 10% could have achieved. Over the last 12 1/2 years that could have nearly tripled GNP again.

@15:
* electricity prices are higher in the UK than in France because French electricity prices are directly government-subsidised. In the UK, prices are set by the free market.
* the EU neither ‘admits’ nor ‘claims’ that its regulations cost 5.5% of the GNP of the EU.
* which ‘economists’ claim that?
* who ‘has shown’ the frankly bollocks stat about H&S?
* are you really too halfwitted to understand the difference in potential growth rates between a country with a very low per-capita GDP catching up with the rest of the world, and a country with a very high per-capita GDP performing in line with its peers?

awesome move using China to demonstrate how much faster we could be growing if only we had less state interference

See Giles! China as a political football, not a notion to scoff at.

In the world outside the US, governments were highly prescriptive on technology standards used; in the US, they were laissez-faire. As a result, the US mobile phone industry is still way behind other developed countries, and only came anywhere near catching up once mobile phones became sufficiently PC-like to allow US PC makers to transfer their skills across

Yeah I was going to make that point. The US confusion over GSM v CDMA technology held them back for years, while Europe and (especially) Japan shot ahead thanks to the govts forcing a standardised technology (GSM) that made it easier for everyone.

Otherwise we’d have the absurd situation of phones not working when even going to EU countries.

I love that! We grow at 1-2% pa for centuries with a tiny government. Then we grow at 2.5-3.5% for decades with a 40% government – and someone pops up to say ‘if only it was not for the EU, we’d be growing like China’.

It is difficult to know where to start.
One: countries with GDP/head at a tenth of the leading country can naturally grow faster by capital deepening and – economic phrase coming up – ‘copying’.
Two: China has far greater state involvement in its industries.
Three: Regulations are also not one-sided. Sure, HSE decisions may throw some sand in the wheels, but they also stop a few deaths per year.
Four: are you sure we are not talking about the state subsidizing or burying future economic costs of nuclear decommissioning out of the marginal price? Why is the French example the base case? France seems rather unique here. And are you sure that french marginal electricity prices are FOUR times less than ours? link pls

I think Tim has it bang on: state funded should not mean state provided. See the Academies argument, for which CentreForum get a lot of stick from parts of the Liberal democrat party

I actually agree about planning restrictions though: one of the most egregious examples of state intervention rigging markets.

“Half of the state’s spending is actually transferring money to people so that they can spend it themselves. Government consumption is about 20-25%”

And don’t forget that half of the remainder is purchased by Government from the private sector (IT, office supplies, waste collection etc).

Government directly produces around 10-15% of GDP.

“Yeah I was going to make that point. The US confusion over GSM v CDMA technology held them back for years, while Europe and (especially) Japan shot ahead thanks to the govts forcing a standardised technology (GSM) that made it easier for everyone.”

I think this unlikely: Japan does not operate on GSM and never has done. They chose an entirely different Gen 2 technology and then very quickly moved to 3G.

I agree that GSM helped telecoms in Europe. But that very experience of Japan shows that there’s also something else going on. Japan is most would say more advanced yet isn’t GSM.

“Two: China has far greater state involvement in its industries.”

Arguable. The usual story about China’s incredible growth over the past couple of decades is that, yes, they did used to have a great deal of government involvement in business. They owned and ran 100% of it in fact. Then they decided that that State owned industry….more, in fact, the State run industry, 5 year plans and all…..would be maintained at about its then current size. They didn’t want to fire hundreds of millions for fear of the social unrest.

The rest of the economy would simply be left to develop in a laissez faire manner. That private sector economy is possibly more “laissez faire” than any other economy ever.

The State economy has indeed stayed roughly as it was and the “free market” economy has been growing near exponentially.

So the Chinese economy started at 100% State and is now much less than 100% State. But more because of growth of the non-State economy than shrinkage of the State. Wikipedia tells me that the labour force of State owned industries is now some 24 million people….which if true means that there’s less direct Govt role in production than there was in hte UK in 1979.

“House prices have risen 4 times more than the RPI over the last century not for any technical reason but because of planning restrictions.”

So recently, it wasn’t anything to do with consumer debt rising to £1.4 trillion after all? And in the longer term, it had absolutely nothing to do tax breaks for home ownership or the rising population density as Britain’s population grew from c. 40 million in 1940 to 61 million now?

C’mon.

Giles’s original post: “Half of the state’s spending is actually transferring money to people so that they can spend it themselves.”

Most of that money is delivered to people who don’t earn much at all. Some of that money — tax benefits to (predominantly) couples, housing benefit to low paid workers — is effectively a refund of tax payed by the poor employed. Note to lefties: the latter “benefits” are not distributive; they are about paying back money that should never have been taken away.

If you take those “benefits” into account, state spending becomes a tiny bit smaller.

This distinction can be illustrated with a thought experiment. Imagine an economy – PrivateLand – in which the government ‘does’ nothing – produces no goods or services – except remove about 50% of the income of some people, and give it out to other people. Education, health, even defence are all provided privately. How the tax was gathered would affect economic incentives, but every further economic transaction takes place in a competitive marketplace.

Now consider an economy – SovietLand – where 50% of every economic activity is done by the state, paid for by taxation. The state takes tax, and uses it to provide, free, loads of groceries, clothes, iPods, holidays, financial advice, music etc that it makes itself.

Both these economies would have a 50% government-spending to GDP ratio. But PrivateLand would clearly be the most efficient.

By certain measures of efficiency that make sense in economics textbooks alone, I guess this would be true. On the other hand, it would probably be a dire place to live where inequality was an inescapable fact of life and poor people were miserable. So, y’know, swings and roundabouts.

@19 Sunny: “The US confusion over GSM v CDMA technology held them back for years, while Europe and (especially) Japan shot ahead thanks to the govts forcing a standardised technology (GSM) that made it easier for everyone.”

That’s an anecdote about how government imposed standards worked in the mobile phone market. Once. If the Japanese had picked CDMA, they would have become as isolated in the mobile phone market as they are in the desktop computer market.

25+ years ago, the UK government tried to impose a set of communications standards for computers and related devices commonly known as Coloured Books. Some of us even tried to implement it. Most people have never heard of it, but they payed for its failure in taxes.

Computer manufacturers continued to use proprietary standards (Novell IPX, DecNet, AppleTalk, IBM SNA), partly noting international standards (IEEE 802.x). When all of that settled out, everyone just used TCP/IP. At the time of popular adoption (late 1980s), TCP/IP was a much more fluid standard than Coloured Books. But system administrators and network engineers liked TCP/IP more than anything else.

TCP/IP works on almost any physical layer (copper, fibre, wireless, carrier pigeons). Nobody owns it. Its effectiveness as a standard results from its universality and flexibility, not from government policy.

Lol. Aren’t you simply emphasising how little value the average person gets from the large state?

@praguetory

The ‘net balance’ of tax and spending at the individual level is interesting.

In a static analysis, many will be net contributors at a point in time (e.g. childless
provided they do not become ill and have a job, plus higher income people who send their kids to private school/use private health
insurance), though I suspect most are net beneficiaries.

But is this the right metric?

In a dynamic analysis, I suspect the vast majority are net beneficiaries over their
lifetime.

Everyone has access to a free birth in an NHS hospital, free education from 4-18, heavily subsidised education 18-21, a variety of benefits, tax credits and other
welfare benefits when they have dependent kids and then a state pension worth significantly more than what they put in. And of course everyone received employment insurance, health insurance and sickness insurance too, which is worth a lot of money to them. And that’s without even thinking about the 6 million Government employees, those who gain from Government foreign and business
policies and anyone in the private sector who benefits from
Government procurement.

It would be interesting to look at studies of this if anyone
knows of any.

11. Charles Wheeler – “Though of course the IT industry was nurtured and developed in publically-funded uiversities and accelerated by the defence industry – satellite technology for e.g.. The same could be said of any major technonlogical advance, from shipping, through railways, the aicraft industry, and so on. All took off under state sponsorship. Left to the free market we’d still be in the dark ages.”

Well no it couldn’t be said for any major industry. Unless you can name where and when Stephenson was funded by the State. Neither Shipping nor the Railways got much support from the State when they were starting up. The American Transcontinental railway did admittedly, but the main innovation in shipping (containers) came about despite the US Government, not because of it.

It is the free market that drives innovation even if the State chucks good ideas some cash every now and then. As can be seen by the fact that the US is a great deal better at innovating than Europe which in turn is vastly better at it than the Soviet block or the Third World.

“In a dynamic analysis, I suspect the vast majority are net beneficiaries over their
lifetime.”

Well, maybe, but you do need to look at the other side of the ledger as well. What does it all cost everyone?

Is that list of things people get worth the taxes that are taken off them over a lifetime? Don’t forget two further things.

1) There’s a deadweight cost to taxation. Usually rated at about 20-25% of the amount raised.

2) We don’t have a very progressive taxation system. So the rich don’t pay for everything.

@24 Charlieman

Note to lefties: the latter “benefits” are not distributive; they are about paying back money that should never have been taken away.

That’s why I’m a supporter of the negative income tax. It completely cancels out the inefficient ‘money going both ways’ system we have. Case in point. ONS’s Effect of Taxes and Benefits 07/08 shows the poorest 20% of households receive ~£32.5bn in cash benefits and pay ~£6bn in direct taxes, meaning that around a fifth of the ‘spending’ on them is just a return of tax that needn’t have been taken in the first place (no doubt less an administrative cost). Now I know the aim is to create targetted benefits so that those in most need get the most help (a cynic might say those whose votes are most sought after get the most help), but the way we have it now just invites inefficiency.

29
The soviet world, as you put it, developed from a feudal society in 1917 (95 per cent of the population were peasantry) to a modern industrial society in less than 60years, and, by 1970, had overtaken the US for the percentage of scientific and technological staff. The soviets put the first man into space, a great blow to the US.
The Greeks and Egyptians did very well with regard to knowledge, innovation and invention without the motivation of markets and profit. Newton was born well before the emergence of industrial capitalism. I could go on forever citing examples.
I have noticed that some commentators on this site have some rather delusional ideas about the superiority of industrial capitalism compared to other economic systems.

“and, by 1970, had overtaken the US for the percentage of scientific and technological staff. The soviets put the first man into space, a great blow to the US.
The Greeks and Egyptians did very well with regard to knowledge, innovation and invention without the motivation of markets and profit. Newton was born well before the emergence of industrial capitalism.”

Umm, yes, this is really rather the point I’ve been trying to make to you.

Knowledge and invention can occur under many different systems. It’s innovation, putting those new things to use across the economy which capitalism/markets are so good at.

Which is why those of us lucky enough to have been born into roughly capitalis/market economies are so much wealthier than those who were unlucky enough not to be.

Steve, I think you are being delusional about how name-checking a few geniuses that existed before the industrial revolution proves something. Newton may have been remarkable: he also endurd living standards that were not that far from those enjoyed by the Romans. The Egyptian society you are talking about had 2-3000 years to develop not very much technology. Think of what industrial capitalism has done in that regard since 1900 alone.

The Soviets had a lot of scientists because their system could ORDER people to be scientists. Not sure what this proves. And their model of catching up relied on other, genuinely innovative capitalist societies going ahead of them. They would not have being able to invent the items that stocked their 5-year plans – they had exemplars to copy, in Britain and the US.

the 60 years of development that the USSR ‘achieved’ were amongst the most miserable that any population has ever had to endure, and not just the war years. I would not set them up as an example of how other models are superior to industrial capitalism.

@27 Praguetory, no it proves nothing like that. For this to be true, we would need some metric of value-for-money to be ‘I’ll only pay the government a lot of money if it does loads and loads of things’. This is the last thing we want it to do. We pay over money to the government largely so that it can commission things and do some redistribution: more actual involvement would be dreadful.

33
I think you are using your values and culture (which reflect capitalist ideology) to judge a different environment. I am sure that those who lived in another era would be dismayed to have had a pre-view of society within capitalism. Indeed after the 1917 Russian revolution, the peasants wanted to return to their lives within a feudal economy although much of western Europe had industrialised. But, of course, cultural imperialism is the norm, and we in the west have managed quite successfully to impose our values either by military or economic force.
34 Ditto, your comparison with other economic ages are quite meaningless because your criteria about what makes you ‘happy’ is quite different from those who you make the comparison with. But like soviet industrialism, capitalism, also drew on previous innovators, how do you think that Brunel was able to build what he did. There are dozens of examples,
I certainly did not hold the Soviet model as superior to capitalism, just pointing out that the claims made in favour of capitalism are incorrect. And if you think that the masses in the 19th century had a wonderful time, I think you need to read more social history, their misery lasted far longer than 60 years.

32. steveb – “The soviet world, as you put it, developed from a feudal society in 1917 (95 per cent of the population were peasantry) to a modern industrial society in less than 60years, and, by 1970, had overtaken the US for the percentage of scientific and technological staff. The soviets put the first man into space, a great blow to the US.”

No it didn’t. It developed from a moderately industrialised country to a moderately de-industrialising country in 60 years. It is simply not true that 95% of the Russian population were peasants and the Russian economy in 1914 was producing about as much steel as the UK. By the 1970s the Soviets were producing a lot of highly skilled engineers and scientists. Who then wasted their lives doing nothing very useful. The Soviets did well in theoretical science. They did reasonably well in adapting Western weapon technology for their much poorer industrial base, but they did not do much more. They did put a man into space. But they did nothing to develop the science or even the technology of this achievement. Tsarist Russians did much of the theory. The Germans provided them a lot of the technology.

“The Greeks and Egyptians did very well with regard to knowledge, innovation and invention without the motivation of markets and profit.”

The Greeks lived in a world of markets and profit. Still, the Egyptians had a few thousand years of world domination – and produced what?

“Newton was born well before the emergence of industrial capitalism. I could go on forever citing examples.”

Yes but you would have to understand them first. Sure, Newton lived in a capitalist society and did some good theoretical work. So what?

“I have noticed that some commentators on this site have some rather delusional ideas about the superiority of industrial capitalism compared to other economic systems.”

Yes. You may notice some commentators have similar views about gravity.

36
In 1917 quite a number of the Russian population were serfs. The Russian revolution is too complicated to describe in a post, but the main catylist for it was Tsar Nicholas deliberately blocking industrialisation in order to a. hold on to absolute monarchy (all modern industrial societies had rejected an absolute monarch) b. To maintain an agrarian society in order to supply the rest of Europe with grain. In fact, Russia was so far behind with technological development that the train used to ship men and supplies to the front did not have brakes. Indeed, the once invincible country (based on population), fell quickly to the German’s superior technological weapons.
Comparison with the technological development of the U.S. and other advanced western countries (Mass production was well advanced) Russia was way behind.
I have given examples of great thinkers and other societies because there have been comments on this post, and others, which suggests that innovation is the
hallmark of capitalism – it is not.
Capitalism is now very much a global phenomenon, and if you look around your immediate environment you will probably be aware of masses of objects which you really don’t need. Meanwhile, there are others,who are part of that global system (many forced into it) who can hardly survive. This happens to be my own value judgement, but I see this as extreme failure.
The Greeks did, in fact, have markets, but this was left to the slaves.
So SMFS, what has capitalism produced of intrinsic value that you feel other societies lacked?

AS ONE OF THIS STATES RECIPIENTS (SCROUNGERS) ONE AGREES THAT THE STATE BE TOO BIG !
THE ‘WELFARE’ STATE BE A FARCE… SO MANY DIFFERENT BENEFITS – WHY ? THERE BE THREE DIFFERENT CATEGORIES OF CLAIMANTS… JUVENILES (THROUGH THEIR PARENTS), ADULTS OF WORKING AGE (UNEMPLOYED FOR WHATEVER REASON) AND PENSIONERS. QUITE SIMPLY, IF YOU HAVE LITTLE OR NO INCOME THE STATE SHOULD HELP YOU OUT. IT DOES… BUT ONLY AFTER YOU JUMP THROUGH COUNTLESS HOOPS. THEN, PARTICULARLY IF YOU COME FROM THE SECOND GROUP, IT FORCES YOU TO DO SILLY THINGS (TRAINING SCHEMES) – THESE COST A FORTUNE TO RUN AND DELIVER FEW TANGIBLE BENEFITS. THEY BE SIMPLY A MEANS TO EMPLOY THE OTHERWISE UNEMPLOYABLE ! THEY BE ECONOMICALLY UNPRODUCTIVE.
IF YOU ARE BRITISH ( PARTICULARLY BORN) YOU SHOULD BE ENTITLED TO HELP WITHOUT SUCH MEANINGLESS HASSLE. BETTER TO FIND THESE ‘TRAINERS’ PRODUCTIVE EMPLOYMENT ELSEWHERE.
LORD DESAI SUGGESTED A NATIONAL INCOME FOR ALL (INCLUDING THE EMPLOYED) AT AROUND £100.00 POUNDS A WEEK. THAT WOULD BE ALL… THAT WOULD BE FINE… NO SILLY SCHEMES / SCHEMERS TO EMPLOY.

Bob B denies that government regulation in the 50% of the economy not conventionally counted as state controlled can have anything to do with house prices rising 4 times faster than the RPI because (A) tax breaks have helped housebuying & (B) population has gone up.

Compare this with food where (A) VAT is not charged & (B) population has gone up yet food prices have not risen like that. His unadmited & wrong assumption is that it is impossible to increase the number of houses in line with population as we do with food. I am quite certain that if the state massively prevented any increase in food production (as indeed suppression of GM food shows it starting to do) prices would go up & people would be willing to become indebted rather than go without.

The state is indeed 75% of our potential economy & the wealth producing part is only 25%.

37. steveb – “In 1917 quite a number of the Russian population were serfs.”

No they weren’t. Anything further I would have to say on this subject would violate this site’s policies. I will simply point out that all of Russia’s serfs were freed quite a while before 1917. Not merely freed but in fact rapidly acquiring all of Russia’s land for their own as the aristocracy’s control on the countryside was declining in the face of free peasant competition.

“The Russian revolution is too complicated to describe in a post, but the main catylist for it was Tsar Nicholas deliberately blocking industrialisation in order to a. hold on to absolute monarchy (all modern industrial societies had rejected an absolute monarch)”

Except he didn’t. Russia’s economy was growing rapidly under the Tsar and industrialisation was taking off. Stalin’s economic achievements were based on the ground work laid down by the Tsars.

“b. To maintain an agrarian society in order to supply the rest of Europe with grain.”

Russia being the world’s biggest grain exporter – which was greatly enriching Russia’s economy and paying for that massive industrialisation under the Tsar. An achievement that the Soviets managed to reverse in no time with their re-serfment of the peasants, the collapse of the rural economy and hence famine (which only ended once the Soviets decided to export timber and gold instead of grain and so imported food from the West).

“In fact, Russia was so far behind with technological development that the train used to ship men and supplies to the front did not have brakes. Indeed, the once invincible country (based on population), fell quickly to the German’s superior technological weapons.”

This is not even worth commenting on. Russia’s railways were not particularly advanced but this is childish fantasy. Sorry but when was Russia invincible? You mean in WW1 or in WW2? Russia was always technologically backward but it was probably less so in 1914 than in 1939 and certainly less so than in 1812.

“Capitalism is now very much a global phenomenon, and if you look around your immediate environment you will probably be aware of masses of objects which you really don’t need.”

Who the [snip] are you to decide what I do or do not need? What you mean is that poverty for the plebs is ennobling and Capitalism sucks because it gives us what we want. That is an idiotic argument.

“Meanwhile, there are others,who are part of that global system (many forced into it) who can hardly survive.”

No one who lives in a capitalist economy can hardly survive. They have so much they hardly know what to do with it. As can be seen by the fact that in the West the biggest health problem for the poor is over eating.

“The Greeks did, in fact, have markets, but this was left to the slaves.”

Why do you persist on commenting on things you know nothing about?

“So SMFS, what has capitalism produced of intrinsic value that you feel other societies lacked?”

Freedom. And my new mobile phone. And pennicilin.

40
“In 1917 quite a number of the Russian population were serfs” “No they wern’t”
You must be making reference to the Emancipation of the Serfs laws in 1861 and 1866, unfortunately, the redemption tax imposed on serfs from private estates in 1861 was far more than most could afford, consequently, they had to wait until the October 1917 revolution to be freed.
“Anything further I would have to say would violate this site’s policies” – It is a pity that you cannot debate in a rational and reasonable manner without the contraints of the site policy.
Libcom is a debating site where all posts are likely to be challenged, like most commentaters I utilize concrete facts and opinion and I always attempt to check the accuracy of the facts I use, all are easily checked on google.
Certain commentators (including yourself) have made claims about capitalism giving certain examples, I have merely challenged those claims giving counter-examples, this is called reasonable debate
I will persist in challenging views/evidence as I am sure you will,
“Who are you to decide what I do or do not need?” When have I made any such suggestions? – you need to get a grip

41. steveb – “You must be making reference to the Emancipation of the Serfs laws in 1861 and 1866”

Ya think?

“unfortunately, the redemption tax imposed on serfs from private estates in 1861 was far more than most could afford, consequently, they had to wait until the October 1917 revolution to be freed.”

Well no because they were cancelled in 1907. But it is also irrelevant. The Serfs were freed and the landowners compensated with Government loans. The Serfs then paid the State back. Theoretically. But they were still free. The debt was owed to the State.

“Libcom is a debating site where all posts are likely to be challenged, like most commentaters I utilize concrete facts and opinion and I always attempt to check the accuracy of the facts I use, all are easily checked on google.”

Given that I have repeatedly pointed out that your facts are ahistorical delusions this is not even funny.

“When have I made any such suggestions? – you need to get a grip”

In the post numbered 37. I quote:

““Capitalism is now very much a global phenomenon, and if you look around your immediate environment you will probably be aware of masses of objects which you really don’t need.”

So Much for Subtlety,

I’d hesitate to enter this discussion, but…

Is it not the case that Stock markets are damn near ubiquitous? A global phenomenon even?

Are they not, near as dammit, a definition of capitalism?

Dunno about Cuba right enough.

As I nearly said, I am no economist….

I wouldn’t say that, I think the government is doing its best through keeping its government marketplace open for efficiency and development. Like all progress there are always up and downs and in the long run everyone is doing great.