Anyone who has seriously studied applied macroeconomics knows that crony capitalists hate free markets, with all the fairness and transparency that they imply. Competition is a serious drag on enormous profits and introduces significant uncertainty and risk.

As soon as the game is underway, successful capitalists are constantly pushing the envelope of the rules, seeking to establish rents, monopolies, unfair advantages, and debt traps to snare the bulk of the players and stifle the profit-eroding tendency of real competition.

The 'efficient markets' hypothesis and the denigration of regulation serves to despoil markets of their capacity to create wealth and distribute it in a meritorious fashion.

This is the basis of all aristocracies, which are merely the institutionalisation of privilege. Once they make it they bloody well want to change the rules to hang on to it, and take the risk out of their equation. They foster a culture of two sets of books, two sets of rules, and two systems of justice. They are given over in their personal and professional lives to the benefits of hypocrisy and cheating, with little conscience to restrain them. There is a predatory class that is nationless, without allegiance to anything, any principle, but their own greed and lust for power.

The wealthy, not only by private fraud but also by common laws, do every day pluck and snatch away from the people some part of their daily living. Therefore, when I consider and weigh in my mind these commonwealths which nowadays do flourish, I perceive nothing but a certain conspiracy of rich men in procuring their own commodities under the name and authority of the commonwealth.

They invent and devise all means and crafts, first how to keep safely without fear of losing that which they have unjustly gathered together, and next how to hire and abuse the work and labor of the people for as little money and effort as possible."

Thomas More, Utopia

This failing is not particular to capitalism per se, but to any human system. So why not just dispense with rules and let the market have its way? If the system is so much work to maintain and keep free of corruption, why have any system at all?

THOMAS MORE What would you do? Cut a great road through the law to get after the Devil?

WILLIAM ROPER I'd cut down every law in England to do that!

THOMAS MORE Oh? And when the last law was down, and the Devil turned round on you, where would you hide, Roper, the laws all being flat?

This country's planted thick with laws from coast to coast, man's laws, not God's, and if you cut them down, and you're just the man to do it, do you really think you could stand upright in the winds that would blow then?

Robert Bolt, A Man For All Seasons

Anyone who thinks human systems function naturally well without rules and enforcement has never driven on a modern motorway in rush hour. To support this theory they must believe in the natural goodness and rationality of all people when motivated by self interest, which is the biggest sucker bet in history.

And when crime pays, it becomes prevalent. Bad behaviour that on the whole succeeds drives out the good, making it impractical. This is the lesson of the recent financial crisis.

Good government takes hard work and constant renewal and reform. Human systems do not maintain themselves, and are almost never self-improving, but rather given to entropy, manipulation, and deterioration.

But there are plenty of economists, authors, and editorialists who are willing to say for pay, to talk their own or someone's book, since there is little accountability for promoting quack thoughts, as there are for quack medicines that kill.

Merit works, but Privilege pays. And so the one continually undermines the other unless some restraint is applied. And that is the purpose of society and the law in the service of freedom.

By Jesse

http://jessescrossroadscafe.blogspot.com

Welcome to Jesse's Café Américain - These are personal observations about the economy and the markets. In providing information, we hope this allows you to make your own decisions in an informed manner, even if it is from learning by our mistakes, which are many.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.