News Why is the genesis of capital a mystery in the modern world?

[Ivan Seeking]

Why has the genesis of capital become such a mystery? And why have the rich nations of the world not explained to other nations how indispensable a formal property system is to capital formation?

...The bell jar makes capitalism a private club, open only to a privileged few, and enrages the billions standing outside looking in. This capitalist apartheid will inevitably continue until we all come to terms with the critical flaw in many countries' legal and political systems that prevents the majority from entering the formal property system.[continued]

http://www.tessproject.com/products/seminars&training/seminar%20series/Assets_Materials/The_Mystery_of_Capital.pdf

 

[Smurf]

This is nonsense. Complete and utter nonsense.

 

[Ivan Seeking]

Okay. Why?

 

[russ_watters]

Okay. Why?

Its so bad, its difficult to know where to start. The subtext is the first hint: saying this needs to be explained to 3rd world countries implies there is some secret to it.

Second, what it describes just plain isn't how economics works. The condo I live in (owned by my best friend) is worth a specific amount of money for a specific reason: people are willing to pay that amount to buy it. It doesn't get any simpler than that.

Basically, it starts with the assumption that to become a successful capitalist country you have to oppress others and tries to fit the data to the conclusion. Its not even wrong.

 

[Smurf]

Hey look, me and Russ agree. What a great way to bring in the new year, Peace on Earth may have hope after all.

 

[Ivan Seeking]

LOL! I knew Russ would love it. If I can get Russ and Smurf to agree then the post was worth it!

Of course the source is the quarterly magazine of the International Monetary Fund.
http://www.imf.org/external/pubs/ft/fandd/fda.htm

 

[Bystander]

(snip)Basically, it starts with the assumption that to become a successful capitalist country you have to oppress others and tries to fit the data to the conclusion. Its not even wrong.

Huh? http://www.imf.org/external/pubs/ft/fandd/2001/03/desoto.htm ? Can't say I see such an assumption --- can't say the IMF 1/4ly is the original source.

de Soto's got a different slant on what I call "cultural inertia," but, beyond that the guy's pretty well nailed things --- his 200 year development period is more in the neighborhood of one-two ka if you happen to buy historical and archeological perspectives.

What were the circumstances/conditions in Europe and western hemisphere that favored development of capitalism? Nobody knows. The West went the property system direction, and the East got locked up in monarchial tax farming systems. Hong Kong thrived for all China to see for damned near two centuries before China chartered a bank and joined the mainstream global economy.

 

[Smurf]

I admit I havn't read the whole article but the first part really does seem full of assumptions that I don't agree with.

 

[kat]

You really need to read the whole article in the IMF quarterly. The quotes Ivan pulled out really misrepresents the intent of the article IMO, but would you expect anything less considering the source ? Har har, good one Ivan.

 

[tumor]

Hong Kong thrived for all China to see for damned near two centuries before China chartered a bank and joined the mainstream global economy.

China has joined your mainstream global economy under the barrel of a gun, and on the dead bodies of countless Chinese, same for Japan and other Asian nations(actually all).

 

[russ_watters]

Hey look, me and Russ agree. What a great way to bring in the new year, Peace on Earth may have hope after all.

Bizarre

Happy new year to you too.

Of course the source is the quarterly magazine of the International Monetary Fund.

I guess I'm expected to be a fan of the IMF...?

 

[Smurf]

I'm much more partial to the IGMTSF

 

[Polly]

From what I have read cursorily, the article makes a lot of sense. If there is not a comprehensive legal system to recognise and delineate any property right I have in my mud hut, how am I ever going to realize its financial potential by securing my financial arrangement with it and to engage in other economic activity as soon and as frequently as I want to? The English legal system transplanted to Hong Kong has always been touted as the best legacy a colonial government can be bestowed and I think for good reasons.

 

[Ivan Seeking]

I guess I'm expected to be a fan of the IMF...?

No, I was assuming just the opposite.

 

[selfAdjoint]

No, I was assuming just the opposite.

? Opponents of the IMF tend to be partisans of the third world, hence leftist if intellectual, green if street demonstrators. Do you think russ belongs in either category?

 

[Aquamarine]

The IMF and the World Bank are corrupt, financed by governments, controlled by goverments and use government (=taxpayers) money in order to do large scale interventions in third world countries. Usually resulting in catastrophic investments, corruption of the third world government and gigantic debts to be payed by the common people. This is socialism on a high level.

Why should any proponent of capitalism support them?

Yesterday I debated the World Bank at a conference in the Swedish parliament. My point was this: Statistics clearly show that free markets are successful where they are practised, but the WB, despite its advocacy of market economics, can show very few successful economies among those they have advised and sent money. Why? Simply because it’s almost impossible to push averse governments into reform with aid promises. They will take the money and do minimal reforms. Kenya’s dictator Daniel Arap Moi got 19 structural adjustment loans but never reformed, Pakistan got 20 loans, all with the condition that it reduced the budget deficit, but never did, and Zaire’s dictator Mobutu got 9 loans, and the only privatisation he ever practised was when he stole all the government funds himself.

Some WB-countries really reformed and made progress, such as Uganda and Mauritius, but most corrupt regimes never consented to the “Washington Consensus”. So why did they get funds again and again? The problem is that the World Bank is a political, tax-funded institution with its own interests. The country department’s budgets, staff and career opportunities depend on how much money they can give away. Noone ever wants to close their department just because the country they advise never reforms. The only graph that makes steady progress is the one on the World Bank’s staff – from 657 people in the 1960s to more than 10 000 today. Former World Bank economist William Easterly has written a great book on this problem, The Elusive Quest for Growth, which I highly recommend.

http://www.johannorberg.net/?month=01&year=2004&page=displayblog

 

[Ivan Seeking]

No, however, since I strongly support the IMF [or at least I did] I assumed that Russ doesn't. It was a guess based on experience.

 

[russ_watters]

? Opponents of the IMF tend to be partisans of the third world, hence leftist if intellectual, green if street demonstrators. Do you think russ belongs in either category?

Those are the most vocal, but there is another catgory, illustrated by Aquamarine, and I fall into that category.