Saturday, February 8, 2014

Economics for Occupiers 14: Islamic Economics

A largely ignored economic system that deserves discussion because of the number of lives it currently affects is that of Islam.  Islamic economics have never been specifically defined.  The precepts of Islamic economic theory were established in a culture that was evolving from a tribal anarchy to a feudalist society.  The defining characteristics of Islamic economics would have been discarded centuries ago as unworkable, except they have the force of religious law to Muslims, who believe that they were handed down directly from Allah.

The Muslim world has been struggling to reconcile itself with the modern world throughout the twentieth century. They have been trying to overlay a medieval belief system onto modern political and economic methods with limited success.

Read more about this in chapter 10 of Economic for Occupiers, now available on

Thursday, February 6, 2014

Economics for Occupiers 13: Fascism

Fascism, like pornography, is one of those things that seems to have no specific definition, but everyone thinks they know it when they see it. Fascism is inextricably associated in public perception with Hitler and the Nazi Party.  It's a combination of complementary political and economic principles.  The conventional understanding is that it's a right-wing ideology, although it has nothing in common with conservatism, and grew out of leftist socialist movements in both Germany and Italy in the twentieth century.

Our discussion will focus primarily on the economic characteristics of fascism, and through that we will see how the political/ideological characteristics develop.

Fascism is was defined by Benito Mussolini as the "Third Position," an alternative to both Communism and Capitalism.  Under Fascism, the state-controlled economy is a mix of private and public ownership over the means of production. Both the public and private sector are directed by a State-directed economic plan. The prosperity of private enterprise depends on how well it synchronizes itself with the state's economic goals. Private companies are free to make a profit, but must uphold the national interest over profit. The government concerns itself with producing adequate domestic necessities to forestall dissension and popular unrest.

As one can imagine, this sort of setup is a fertile environment for corruption and cronyism, and indeed these were an endemic problem in Nazi Germany.  Nevertheless, when mobilizing the productive resources of a nation towards a specific goal, whether it be to put a man on the Moon, or take over all of Western Europe, there is no more efficient economic model, if the nation is willing to accept the many downsides and implications.

Read more about this in chapter 9 of Economic for Occupiers, now available on

Saturday, February 1, 2014

Economics for Occupiers 12: The Myth of the Regulation-free Market

There's a very vocal segment of free market capitalists that maintain that the free market should be entirely free of regulation.  Their position is that in a pure free market, anyone should be allowed to trade anything, to place any product for sale on the open market.  In their idealistic world, the free market will self-regulate, and substandard products will find no buyers, and every seller in the market will seek excellence, to the benefit of everyone. Anyone who dares to suggest that this may be an overly extreme position is immediately castigated and accused of being a "statist."  This black or white logical fallacy presumes that if you're a "statist," that you automatically endorse government regulation and interference at all levels of the free market.

As we saw in section 10, this view of a pure free market ignores a couple of important points.  You will remember from our basic definition of capitalism that transactions should be free of coercion or misrepresentation. For the capitalist purist market to work as desired, all participants in a transaction must have perfect knowledge of the value of the commodity being exchanged.  This is clearly impossible. What if the seller in a transaction misrepresents the product he's selling?  A seller can make all sorts of claims that may be difficult to verify during the transaction.  The answer given by the market purist is that doing so would stain the seller's reputation, and his product will quickly fall out of favor.  The purist offers no explanation of how this would happen.  I suppose the news of the miscreant's bad product will magically propagate through an almost infinite market by some sort of telepathy.

Read more about this in chapter 14 of Economic for Occupiers, now available on