NationStates Jolt Archive

I was recently shown a film titled Life and Debt. It was a documentary, following the troubles that Jamaica has gone through financially in recent times. The simplified version is that, during the oil crisis, Jamaica didn't have enough money to pay for it's infrastructure costs (hospitals, schools, and so on). No private bank would lend the Jamaican government the money it needed, so it turned to the International Monentary Fund. The IMF was willing to loan them the money, but only on one condition: that they remove all barriers to total free trade with other nations. The intent was to bring Jamaica more into line with American free trade thinking. The result was, and continues to be, largely catastrophic; Jamaican farmers cannot compete on a level playing field with American farmers, who can export their product and still maintain a lower price than the Jamaican farmer selling at a store down the road from his house. The dairy industry is the same way; American powdered milk is the staple there, as it is now cheaper than Jamaican milk of any sort. The result is that Jamaican basic industries are dying out, giving rise to unprecidented levels of homelessness and poverty. The only really thriving industries these days are tourism (which, of course, does not show this side of life on the island) and banana exports, which are also declining. It is, really, a very bad situation.

Now, this got me to thinking about something that I have been wondering about for some time; though I have debated numerous times with free-market capitalists and big-L Libertarians, and such debates often revolve around the free market, I realize I have never once heard one admit to any flaws or drawbacks to a totally free market. As such, my question, posed to people on this forum who believe in the free market, is; do you believe that the free market ultimately does not have flaws and limits, or that they are acceptable in the face of the good that such a system would bring?

I was recently shown a film titled Life and Debt. It was a documentary, following the troubles that Jamaica has gone through financially in recent times. The simplified version is that, during the oil crisis, Jamaica didn't have enough money to pay for it's infrastructure costs (hospitals, schools, and so on). No private bank would lend the Jamaican government the money it needed, so it turned to the International Monentary Fund. The IMF was willing to loan them the money, but only on one condition: that they remove all barriers to total free trade with other nations. The intent was to bring Jamaica more into line with American free trade thinking. The result was, and continues to be, largely catastrophic; Jamaican farmers cannot compete on a level playing field with American farmers, who can export their product and still maintain a lower price than the Jamaican farmer selling at a store down the road from his house. The dairy industry is the same way; American powdered milk is the staple there, as it is now cheaper than Jamaican milk of any sort. The result is that Jamaican basic industries are dying out, giving rise to unprecidented levels of homelessness and poverty. The only really thriving industries these days are tourism (which, of course, does not show this side of life on the island) and banana exports, which are also declining. It is, really, a very bad situation.

Now, this got me to thinking about something that I have been wondering about for some time; though I have debated numerous times with free-market capitalists and big-L Libertarians, and such debates often revolve around the free market, I realize I have never once heard one admit to any flaws or drawbacks to a totally free market. As such, my question, posed to people on this forum who believe in the free market, is; do you believe that the free market ultimately does not have flaws and limits, or that they are acceptable in the face of the good that such a system would bring?


The problem isn't free markets exactly, the problem is US agribusiness gets massive subsidies. If I were a libertarian I would criticize that. Since I am not a libertarian I would argue that developing countries need to protect homegrown buisnesses before they have to face global competion. Countries which have undergone rapid development in the last few decades have all strongly supported their local businesses. For example the South Koreans had the Chaebol (spelling?) economic system where the government focused on developing a few powerful conglomerates like Hyundi or Samsung which became strong enough to compete internationally. Free market capitalism only works where there is a realtively level playing field.

I know very little about Jamaica but it sounds like they are in a lot of trouble. They deffinitely need to get out from under US imperialism, perhaps they should look to emerging powers like Brazil for development assistance without the strings attached.

Now, the free market itself if perfect, but the people, who are responsible for the carrying out of the freemarket aren't. They mess up, and cheat and do very bad things. They intentionally harm others. Therefore, I believe that there should be limitations on the free market. Rules, regulations, ways to ensure that noone robs people under the pretext of business. That's what I'm saying I guess.

Now, the free market itself if perfect, but the people, who are responsible for the carrying out of the freemarket aren't. They mess up, and cheat and do very bad things. They intentionally harm others. Therefore, I believe that there should be limitations on the free market. Rules, regulations, ways to ensure that noone robs people under the pretext of business. That's what I'm saying I guess.
So essentially, it's like any other social/political/economic theory; great on paper, but doesn't work as well when transferred to the real world?

A big part of the problem is the IMF. Look at what they did to Argentina--same story, to the point where private concerns were able to get hold of and control the water supply and other traditionally public entities, like energy production. That's what they're really after--natural resources and the things that locals can't do without. It wasn't until Argentina gave the IMF the finger, dared the people they owed money to try to foreclose, and started putting their own tax money back into infrastructure instead of debt service that they started to recover. And they've been doing better as a result. The IMF tries to act like they're responsible for the recovery, but that's crap, and anyone who reads the slightest about economics knows it, if they're intellectually honest with themselves.

So essentially, it's like any other social/political/economic theory; great on paper, but doesn't work as well when transferred to the real world?
yeah, idealism is foolish, people have to be realistic about their political theories, and not follow crackpot ideals like anarcho-communism or anarcho-capitalism

Well, no matter what theory you subscribe to, you have an ideal situation, so it's an ideology...but of course, some ideologies are more realistic than others, scale depending. I have no doubt that a group of 50 anarcho-capitalists living in isolation could make anarcho-capitalism work for them, though I similarly have no doubt it won't work outside of such a group (this coming from an anarchist, no less).

Well, no matter what theory you subscribe to, you have an ideal situation, so it's an ideology...but of course, some ideologies are more realistic than others, scale depending. I have no doubt that a group of 50 anarcho-capitalists living in isolation could make anarcho-capitalism work for them, though I similarly have no doubt it won't work outside of such a group (this coming from an anarchist, no less).
true dat :)

A big part of the problem is the IMF. Look at what they did to Argentina--same story

speaking of argentina, naomi klein and avi lewis (http://www.zmag.org/content/showarticle.cfm?SectionID=42&ItemID=6792) are calling for solidarity with one of the worker-run factories there, which is facing some legal problems.

free and easy online petition to support zanon (http://www.petitiononline.com/zanon/petition.html)

speaking of argentina, naomi klein and avi lewis (http://www.zmag.org/content/showarticle.cfm?SectionID=42&ItemID=6792) are calling for solidarity with one of the worker-run factories there, which is facing some legal problems.

free and easy online petition to support zanon (http://www.petitiononline.com/zanon/petition.html)
Thanks--just signed the petition.

Signed it, although unfortunately online petitions tend to be more of a symbolic act than anything that gets real attention.

Signed it, although unfortunately online petitions tend to be more of a symbolic act than anything that gets real attention.

no doubt, but its marginally better than nothing

Alright, being a fairly large L Libertarian, I would contend there are some things that must be remembered in this sort of discussion.

First, the market isn't perfect. This is only because people, fabulous as they are, are also less than perfect. There can be valid problems with markets as they interact with certain factors, such as environmental concerns.

Second, this issue does not arise here. From what has been said, it would appear that the Jamaican government, finding that it could not fund itself to the extent it desired, decided to borrow funds it could not afford.

No doubt servicing that debt has led to the crippling taxes which must be the reason why poor, developing country farmers can't make dairy products at the same price as rich, lazy Americans - subsidies aside.

Or it could always be one of the other factors that cause developing countries to perpetuate their poverty by sticking the knife into enterprise and commerce. At worst, most western countries leave it at the boot. Realistically, Jamaica is 41st of 123 of economically free countries as rated by the Fraser Institute (http://www.freetheworld.org/) , with 6.9 out of a possible 10. Not exactly a capitalist, libertarian utopia.

I'm sure there are lessons in the Jamaica (and Argentina) stories, but the idea that the interaction between sovereign governments, global pseudo-governmental institutions and internal and external regulation of trade represents a failure of free markets probably isn't it.

First, the market isn't perfect. This is only because people, fabulous as they are, are also less than perfect. There can be valid problems with markets as they interact with certain factors, such as environmental concerns.
Thank you. It's good to see people finally clarifying this stance. I don't necessarily agree with it, but I was after clarification.

Second, this issue does not arise here. From what has been said, it would appear that the Jamaican government, finding that it could not fund itself to the extent it desired, decided to borrow funds it could not afford.

No doubt servicing that debt has led to the crippling taxes which must be the reason why poor, developing country farmers can't make dairy products at the same price as rich, lazy Americans - subsidies aside.

Or it could always be one of the other factors that cause developing countries to perpetuate their poverty by sticking the knife into enterprise and commerce. At worst, most western countries leave it at the boot. Realistically, Jamaica is 41st of 123 of economically free countries as rated by the Fraser Institute , with 6.9 out of a possible 10. Not exactly a capitalist, libertarian utopia.
Actually, according to the Heritage Foundation's "Index of Economic Freedom," Jamaica has lower income taxes than the US, and about the same corporate taxes.
Source:
http://cf.heritage.org/index2004test/country2.cfm?id=Jamaica
http://cf.heritage.org/index2004test/country2.cfm?id=UnitedStates
There could, indeed, be other factors, but paying off the debt in the face of the IMF's restrictions (which also, as I recall, forbade subsidies of one sort or another) seems to be playing the largest part.

I'm sure there are lessons in the Jamaica (and Argentina) stories, but the idea that the interaction between sovereign governments, global pseudo-governmental institutions and internal and external regulation of trade represents a failure of free markets probably isn't it.
Not going to say that the story of Jamaica is the best example for this sort of discussion, but it was what got me thinking about the issue, so I figured I would put it out there. What, in your estimation, would be the main lesson to take from such a story?

Actually, free markets are perfect both in theory and in practice. The problem is that what is often called a "free market" often isn't--those are the things with problems.

Of course, it's all irrelevant, since principle is the only important thing. Pragmatics are meaningless and base.

While I agree that pragmatics do not rise to the level of principle, they can't be thrown out entirely on the very basis of principle. Free markets only work where the playing field is level. The current economy in the US is a good example. Some things are working well, depending on the business sector. But the job market is a clear indication of one of the problems with moving from a somewhat isolated market to a more open one. Wages in the US are inflated relative to the rest of the world and as a result middle and low income jobs, and anymore, even some white collar jobs are being shipped to cheaper labor markets.

The problem is that we expect a certain standard of life in this country so we demand higher wages and as a result we are demanding ourselves right out of the labor market, at least in an open market environment.