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February 18, 2019


Professor Kennedy in her blog today gave us yet another tutorial of how capitalists and socialists paint the shortcomings of the other when in fact they not only co-exist but are blended together in many public initiatives, ranging from social security and medicare to capitalistic allocation of resources in our economy. She asked for comment and the following, slightly edited, was mine.

I often write here and elsewhere that I am trying to save capitalism if the capitalists will let me. Since and perhaps before Adam Smith the willing buyer-seller and full information availability of the factual background to both buyer and seller have been hallmarks of arguments for capitalism, and indeed one of my favorite economists, Joseph E. Stiglitz, won a Nobel Prize for his work in the equality of information between buyer and seller.

Unfortunately, such equality in this sophisticated economy is not possible in all buyer-seller interchanges. For instance, if I have an operable cancer and am shopping for price and quality with doctors, how can I as a buyer and the doctor as seller of such a service possibly negotiate from the same and equal platform of understanding? Similar situations exist in ever more such buyer-seller relationships where the sophisticated service is such that equality of information as between buyers and sellers is precluded.

Capitalism and socialism when mixed can work well for specific purposes, and Sheila mentions a few of them. The issue, as always, is to what degree one or the other should be applied and to what degree it should be applied for specific purposes. These decisions, unfortunately, are political, and as we all know, political decisions frequently are made based on campaign contributions rather than the common good.

Capitalists have successfully maligned socialism as authoritarian, which in pure form it can be, but have neglected to frame the excesses of capitalism as equally authoritarian in their effect upon the society in which they are lodged. Either socialism or capitalism, carefully regulated, can be consonant with democratic values and institutions, but the better system is a mixed one as measured by the common good. It is not an either-or matter but one of degree of application in such areas as health, taxes, transportation etc., and at long last and in view of the excesses of capitalism these days, the predictable backlash has set in and socialism is not a four-letter word anymore among younger voters, suggesting that there may be more emphasis on the socialist side of the mix than before as the backlash takes hold.

Expect fireworks.     GERALD        E

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