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How come Capitalism works better in a Communist country?


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China has had double digit growth for how long now 10? 20? years?

 

No capitalist country can do that.

 

As soon as growth gets above 3-5% the central bank bungs up interest rates to stop inflation and 'cool' the economy.

 

However China seems to cope with growth of 10-17%!

Absolutely unheard of growth in western capitalist democracies.

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Hi Michaelangelica,

 

China is doing quite a bit of catch up and, as you state, has a central control mechanism.

 

There are also very many poor people who, compared with the poor people in the developed world, can improve their currents situation and standard of living through western capitalists moving their jobs to the cheapest supplier of labour.

 

Unfortunately, just like global warming, the types of imbalances created cause massive social upheaval in developed countries where standards of living for more people are actually decreasing at the same rate that the living standards of the undeveloped world are increasing.

 

The 4 handmaidens of the recent financial apocalypse (which incidentally have been working overtime lately to compensate money spinners for the money lost through belief in these same handmaidens) 1/ The Santa Clause Rally 2/The Easter Bunny Rally 3/ the Tooth Fairy Rally and (take your pick of the rest for the last one) 4/ the Sandman Rally mean that it probably won't matter how much any undeveloped country actually does produce soon because the damage of only looking at one side of things (i.e. the upside) means that they will only be able to increase through internal business due to increasing protectionism or environmental protectionist tarrifs.

 

I just hope China has put something away for the inevitable rainy day, because it's usually the case that the faster they rise, the faster they fall (i.e. the bigger they are the harder they fall).

 

But it looks like good old western capitalism will come to the rescue in its usual way (a great big F**ken world war). I wonder which side Australia will be on?

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China doesn't have price fixing/regulation does it?

So how does it control inflation, which seems to be the 'breaks' for Capitalist growth.

Well, the main way they "fix prices" is that they peg the exchange rate of the Yuan to the US Dollar. This keeps their currency artificially depressed, and keeps the value of their goods low and the cost of foreign goods high so that they can maintain their unbelievable (and bad for everyone else in the world) trade imbalance.

Does the fact ? that the Chinese save half their salary have anything to do with it?

That certainly helps. Means that there's no demand for externally produced goods, and would maintain their trade imbalance even if they did float their currency (which would be disastrous for the US dollar, even though both the Bush and Obama administrations have pushed the Chinese to do so).

Which side will Oz be on?

What do you think?

...we always like to back the looser.

How so?

 

The market can stay irrational longer than you can stay solvent, :)

Buffy

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Well, the main way they "fix prices" is that they peg the exchange rate of the Yuan to the US Dollar. This keeps their currency artificially depressed, and keeps the value of their goods low and the cost of foreign goods high so that they can maintain their unbelievable (and bad for everyone else in the world) trade imbalance.

True, but the reverse of this coin is they are paying more for raw materials coal, iron, gas from Australia etc

 

That certainly helps. Means that there's no demand for externally produced goods, and would maintain their trade imbalance even if they did float their currency (which would be disastrous for the US dollar, even though both the Bush and Obama administrations have pushed the Chinese to do so).

And not a lot of debt that funds consumerism in the US and Oz?

Do you think the US$ would fall if China floated? I guess the Chinese don't want this as the trillions in Reserve (in U$) loans will loose value. I sometimes wonder if it was a good idea for Oz to let the market decide the Oz$ value-- because there is not a lot of it --and it has therfore become the plaything of currency dealers and speculators.

What do you think?

I was replying to this question posed by Laurie:-

But it looks like good old western capitalism will come to the rescue in its usual way (a great big F**ken world war). I wonder which side Australia will be on?

A good question as traditionally we have supported USA forign policy in the hope of US military protection. (God knows- what from-- Kiwis?). Yet our bread and butter now comes from China

How so?

A long quirky tradition dating back to ANZAC Cove in Turkey in WW1. A tradition, only briefly interrupted by WW2, then we backed USA in Vietnam, Korea, Iraq, Afghanistan etc.

A comment only partly tongue in cheek.

The market can stay irrational longer than you can stay solvent, :phones:Buffy

I stopped studding Economics in my youth. The fact that Economic models never accounted-for/factored-in the irrationality variable was the reason.

 

I guess central control and planning must hep China get things done quickly. Yet when Russia tried this it was an economic disaster .

I am still puzzled that no other country seems to be able to mange double digit GDP growth. Even Oz which is fueling the Chinese Dragon. (Reserve's 'optimistic' forecast is 3&3/4%)

I guess it is a bit academic anyway as there has to be a finite end to world growth at some points as we run out of planet.

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True, but the reverse of this coin is they are paying more for raw materials coal, iron, gas from Australia etc

Yes, but they're sitting on so many billions of reserves, what do they care? :phones:

That certainly helps. Means that there's no demand for externally produced goods, and would maintain their trade imbalance even if they did float their currency (which would be disastrous for the US dollar, even though both the Bush and Obama administrations have pushed the Chinese to do so).

And not a lot of debt that funds consumerism in the US and Oz?

Do you think the US$ would fall if China floated? I guess the Chinese don't want this as the trillions in Reserve (in U$) loans will loose value. I sometimes wonder if it was a good idea for Oz to let the market decide the Oz$ value-- because there is not a lot of it --and it has therfore become the plaything of currency dealers and speculators.

Yes, the Chinese would take it in the chin if they floated too, but the thing is that they could afford it (that's where the quote in my sign off comes in!!! more later....). You can only afford to peg--or to float--if you're in a superior position with regard to assets. You'll still take a loss if you un-peg--or quite frankly if you peg--but it's only a problem if you don't have the reserves to cover it.

 

Can Oz do this and hide the loss from the average mate? Not bloody likely....

A good question as traditionally we have supported USA forign policy in the hope of US military protection. (God knows- what from-- Kiwis?). Yet our bread and butter now comes from China

Yah, but when China finishes buying up Sydney and the Gold Coast, you'll be their slaves without any need for a messy military invasion.... :)

 

A long quirky tradition dating back to ANZAC Cove in Turkey in WW1...A comment only partly tongue in cheek.

No kiddin'... Anyone who doesn't get this, go rent Gallipoli.....

I stopped studding Economics in my youth. The fact that Economic models never accounted-for/factored-in the irrationality variable was the reason.

Baby-bathwater, dude: Not an excuse to simply say, "since it's all rubbish, even the craziest theory is equally probable."

I guess central control and planning must hep China get things done quickly. Yet when Russia tried this it was an economic disaster.

Uh, no. There are *plenty* of dysfunctional "capitalist organizations" in China, most of them owned/run by the Red Army.... :rolleyes:

I am still puzzled that no other country seems to be able to mange double digit GDP growth. Even Oz which is fueling the Chinese Dragon.

Now *there's* where the "controlled market" comes in. No one believes the economic statistics coming out of China. The "fake" enterprises (owned by the Red Army and other's basically still owned by the government or stolen by party members) still over inflate their growth numbers, and the government itself is busy finding a number halfway between the actual numbers horridly overheated by a devalued currency and the poor performance of what is an amazingly inefficient "capitalist" sector which is made to look efficient by incredibly below market wages and undervalued home-grown resources (something that is going away rapidly as they find they have to import raw materials to keep up with demand).

I guess it is a bit academic anyway as there has to be a finite end to world growth at some points as we run out of planet.

There ya' go! :cheer:

The market can stay irrational longer than you can stay solvent, :phones:
Buffy, we should put this on a bumper sticker and make millions. :)

Gosh if people would just go to school and stop thinking that Economics is "boring" or "wrong because it doesn't account for reality" we'd all be a whole lot better off... :rolleyes: :evil:

 

Education: the inculcation of the incomprehensible into the indifferent by the incompetent, :phones:

Buffy

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Hi Guys,

 

China's economic future (and the worlds for that matter) will depend on the ongoing battle between 'Blind Loyalty' and 'Competence', one being a breeding ground for corruption (that shows a united front albeit political, and obhorrs change) and the other being a breeding ground for innovation (that shows disunity but obhorrs corruption due to innate inefficiencies).

 

I've been rereading Herodotus 'The Histories' (a bit self fulfilling like Plato and Aristotle really) and came across the following in Book 7 Ch 102 (Penguin Classics) which illustrates my point. Xerxes has amassed a humungeous Persian army with the purpose to capture greece and asks the opinion of Demaratus, a Spartan self exile.

 

'King' Demaratus replied, 'is it a true answer you would like or a pleasant one?' 'Tell me the truth' said the king: 'and I promise that you will not suffer by it.' Encouraged by this Demaratus continued: 'My lord, you bid me speak nothing but the truth, to say nothing that may later be proved a lie. Very well then; this is my answer: poverty is Greece's inheritance from of old, but valour she won by herself by wisdom and the strength of law. By her valour Greece now keeps both poverty and despotism at bay. I think highly of all Greeks of the Dorian lands, but what I am about to say will apply not to all Dorians but to the Spartans only. First then, they will not under any circumstances accept terms from you which would mean slavery for Greece; secondly they will fight you even if the rest of Greece submits.'

...

'So it is with the Spartans; fighting singly, they are as good as any, but fighting together they are the best soldiers in the world. They are free - yes - but not entirely free; for they have a master, and that master is Law, which they fear much more than your subjects fear you. Whatever this master command they do; and his command never varies: it is never to retreat in battle, however great the odds, but always to remain in formation, and to conquer or die.

 

Now Herodotus was making a philosophical argument through this speech in full knowledge of the results of Thermopylae and the eventual result of the war (I'm not going into the many obvious contradictions). It's interesting to note that the end result of the Persian war was obtained through an essential combination of common logic, politics didn't really come into the solution related by Herodotus.

 

One thing that is the common enemy within of any system is corruption, the thing that rots the core of all humanity, and whosoever can control and vanquish corruption will win whether they be communist, democratic or monarchy or any combination.

 

I've always said that corruption won the cold war (with plenty of help from crony capitalism, it's not a system but a parasite on any system) and both communism and democracy lost, I just hope that history proves me wrong.

 

‘The Eternal Battle of the Wits’

 

Quarter wits view things from one perspective alone

while half wits see things in two colour monochrome.

 

Three quarter wits see things in a third way

while few can see all four colours anyway.

 

Some entirely witless unfortunates

totally devoid of any original thoughtfulness

champion judgements made through threequarter wits cautiousness.

 

Witless advice from three quarter wits is unfit

when it recommends promoting quarter wits, to wit.

 

Soon all the half wits appear very blue

only one shade of colour when previously there were two.

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Another way to look at this is, China went from socialism into a blend of socialism and capitalism. The adding of capitalism, appears to responsible for the changes we see. We started with one variable (socialism) and achieved given historical results. We added a second variable, and noticed a major change. This gives us some idea of the influence of the second variable, by comparing it to only the first variable; science inference.

 

Right now capitalism has a lot of fertile ground that was left unused during pure socialism. For example, in socialism there is little need for a lot of restaurants. But with capitalism increasing disposable money, there is a lot of opportunity to start a restaurant business, with this expanding to the suburbs. When this open ground is used up, and internal China starts to compete for the same land, there might be a capitalist shakedown analogous the internet boom.

 

When the internet first appeared, there was open fertile ground for many years, with any business finding a niche, because the land was fertile and untapped. When all the land lots began to touch, due to too many squatters looking for opportunity, there was a shake down. This increases resource efficiency.

 

This may be when China socialism will need to add additional influence, to deal with the social consequences of the internal free market shake down. Countries like the US won't be able to borrow and may need to budget more within their means. China may need to call back some of its loans to pay the costs of the socialism, so as to not further cool the economy with too many internal taxes.

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Can Oz do this and hide the loss from the average mate? Not bloody likely....

The reserve usually posts a substantial profit from its own A$ trading every year. It obviously has afigure in mind wher it would like the A$ to be and plays the markey to promote this.

Yah, but when China finishes buying up Sydney and the Gold Coast, you'll be their slaves without any need for a messy military invasion.... :yay_jump:

Too late the Yanks and the Japanese own it already. It seems the Chinese want the mines, the Yanks want the businesses and fast food, the Japanese prime costal real estate

 

Baby-bathwater, dude: Not an excuse to simply say, "since it's all rubbish, even the craziest theory is equally probable."

Not rubbish, just disappointing and delusional. It is interesting that so many 'chaos theory' physicists/mathematicians are now employed in economic areas. It is also a pity that psycological models are as poor as economic ones (if they exist at all).

 

Uh, no. There are *plenty* of dysfunctional "capitalist organizations" in China, most of them owned/run by the Red Army.... :woohoo:

There's the rub Who "owns" anything in China?

Now *there's* where the "controlled market" comes in. No one believes the economic statistics coming out of China.

Well half the worlds steel, cement and coal has to be going somewher?

The "fake" enterprises (owned by the Red Army and other's basically still owned by the government or stolen by party members) still over inflate their growth numbers, and the government itself is busy finding a number halfway between the actual numbers horridly overheated by a devalued currency and the poor performance of what is an amazingly inefficient "capitalist" sector which is made to look efficient by incredibly below market wages and undervalued home-grown resources (something that is going away rapidly as they find they have to import raw materials to keep up with demand).

 

There ya' go! :rant:

 

Gosh if people would just go to school and stop thinking that Economics is "boring" or "wrong because it doesn't account for reality" we'd all be a whole lot better off... :clue: :cap:

What academic discipline does account for "reality'?

Gardening?

 

Education: the inculcation of the incomprehensible into the indifferent by the incompetent, ;)

Buffy

Not always, perhaps not even, most of the time.

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The reserve usually posts a substantial profit from its own A$ trading every year. It obviously has afigure in mind wher it would like the A$ to be and plays the markey to promote this.

How much they make in *trading* A$'s is irrelevant: in fact they're in a perfect position with inside information to ensure that they make money trading! But what if what they're doing is trading on the value of the A$ *falling*? That means their trading activity makes money, but all those A$'s that you have to buy Japanese TV's and Chinese steel with *cost more*.

Not rubbish, just disappointing and delusional. It is interesting that so many 'chaos theory' physicists/mathematicians are now employed in economic areas. It is also a pity that psycological models are as poor as economic ones (if they exist at all).

Well, actually it makes a lot of sense to merge in chaos theory: old economic models did not handle feedback loops very well, because they were computationally "difficult" so the economists tried to "simplify" them out. That resulted in models that were much less than perfect.

 

It still sounds like you're just going to ignore them, which while it may be disappointing, is still avoiding what may be useful information in deciding what economic initiatives the politicians put up you should support! :rant:

Uh, no. There are *plenty* of dysfunctional "capitalist organizations" in China, most of them owned/run by the Red Army.... :yay_jump:

There's the rub Who "owns" anything in China?

Well, what's happened is that many companies that have not been sold off have been retained by the government, or "transfered" to other parts of the government which themselves have "gone capitalist" (it's rumored that the Red Army is the primary source of pirated DVDs in the world....) in order to increase their budgets (not really unique to Communism: John Poindexter and Ollie North in the US Pentagon sold missiles to Iran in order to fund illegal military actions in Nicaragua and Guatemala).

 

Now the current laws in China provide some nominal protections for what used to be called "Capitalist Running Dogs," but you're right: all those capitalists have in the back of their mind the idea that with a change in "approach" by the government, they could lose everything. That's why they end up spending quite a bit of their profits on bribing party functionaries for what the mob here calls "protection."

 

The names change, but it's pretty much the same as it's always been.

Well half the worlds steel, cement and coal has to be going somewher?

Oh of course! Heck China is where we buy it from! But the accounting for it is more than a little bit fuzzy. We got a bunch of bad steel for the New Bay Bridge that's going across San Francisco Bay: the company in China that produced it thus had to produce it twice and technically took a hit on the contract, but the several billion the stuff cost probably got counted twice. It's not that the abacuses don't work well, it's the *interpretation* of the numbers for the Chinese GDP that gets interesting....

What academic discipline does account for "reality'? Gardening?

I always hope it includes Nuclear Engineering! :woohoo: ;)

 

Reality is the leading cause of stress amongst those in touch with it, :clue:

Buffy

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Not rubbish, just disappointing and delusional. It is interesting that so many 'chaos theory' physicists/mathematicians are now employed in economic areas.

 

This is the first I've heard of this. Can you point me to some reading?

 

It is also a pity that psycological models are as poor as economic ones (if they exist at all).

Psychology is arguably the youngest science. Economics, as a discipline, precedes psychology. (as funny/ridiculous as it sounds)

 

Both disciplines can benefit from each other. When has this ever been more beneficial and prosperous? (trick question warning)

 

There's the rub Who "owns" anything in China?

Walmart.

 

What academic discipline does account for "reality'?

 

None. There is no single academic discipline that explains "reality". Each specialty exists to explore their own little chunk of reality. Some fare better than others, but the end result is a conglomerate of reality that does the best we can to express the whole. But to say that one segment extrapolates to the whole, denies the other aspects of reality. Gestalt.

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How much they make in *trading* A$'s is irrelevant: in fact they're in a perfect position with inside information to ensure that they make money trading! But what if what they're doing is trading on the value of the A$ *falling*? That means their trading activity makes money, but all those A$'s that you have to buy Japanese TV's and Chinese steel with *cost more*.

The point i was trying to make it Australia like the USA and China do fix their curresncies. We just fix it in a broader range than the Chinese, so the futures guys can pay for their Porches

 

 

Well, actually it makes a lot of sense to merge in chaos theory: old economic models did not handle feedback loops very well, because they were computationally "difficult" so the economists tried to "simplify" them out. That resulted in models that were much less than perfect.

Freezar my knowlege of this comes from a TV documentary on stock enchanges. From memory the comment was 'most' choas theorists ended up in Wall St or equivalent . However the only other enployment avenue would probably be universities

 

It still sounds like you're just going to ignore them, which while it may be disappointing, is still avoiding what may be useful information in deciding what economic initiatives the politicians put up you should support! ;)

No, i try not to have extreme vies on any modelling. All have their limited uses. I do dispair when I see simplistic models used to predict the future. However it would be nice if economists could explain why some of their basic models are wrong EG "As the price rises, demand will fall"

Well, what's happened is that many companies that have not been sold off have been retained by the government, or "transfered" to other parts of the government which themselves have "gone capitalist" (it's rumored that the Red Army is the primary source of pirated DVDs in the world....) in order to increase their budgets (not really unique to Communism: John Poindexter and Ollie North in the US Pentagon sold missiles to Iran in order to fund illegal military actions in Nicaragua and Guatemala).

 

Now the current laws in China provide some nominal protections for what used to be called "Capitalist Running Dogs," but you're right: all those capitalists have in the back of their mind the idea that with a change in "approach" by the government, they could lose everything. That's why they end up spending quite a bit of their profits on bribing party functionaries for what the mob here calls "protection."

 

The names change, but it's pretty much the same as it's always been.

Well a lot of them are buying private properties in Tasmania and Victoria.

This sound like a house of cards How can it be made to work?

Oh of course! Heck China is where we buy it from! But the accounting for it is more than a little bit fuzzy. We got a bunch of bad steel for the New Bay Bridge that's going across San Francisco Bay: the company in China that produced it thus had to produce it twice and technically took a hit on the contract, but the several billion the stuff cost probably got counted twice. It's not that the abacuses don't work well, it's the *interpretation* of the numbers for the Chinese GDP that gets interesting....

I was talking about domestic use. how many power stations will USA build this year? One a month, as in China?

 

I always hope it includes Nuclear Engineering! :yay_jump: :clue:

Quite the optomist.

 

Reality is the leading cause of stress amongst those in touch with it, :woohoo:

Buffy

Most of us are stressed. . .

 

Psychology is arguably the youngest science. Economics, as a discipline, precedes psychology
.

I would have thought modern psycology would have been born with Freud and James; modern Economics only emerged with Galbraith?

We invented money and banks and credit 500 years ago and still haven't got it right.

 

There's the rub Who "owns" anything in China?

Walmart

.

Walmart owns what is in its landed containers; that's all. And Walmart is owned by 6? 12 ? people?

Perhaps the Chines people see themselves as owners of all China, not any individual or corporation?

I would love to hear of any western companies owning land, factories, mines, means of production etc in Mainland China.

i hear NASA has just discovered that China owns 96%+ of the world's rare metals.

None. There is no single academic discipline that explains "reality". Each specialty exists to explore their own little chunk of reality. Some fare better than others, but the end result is a conglomerate of reality that does the best we can to express the whole. But to say that one segment extrapolates to the whole, denies the other aspects of reality. Gestalt.

Perhaps it is just the little gestalt we all carry in our inadequate heads. A little 'reality model' that gets us by.

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Rio Tinto's Stern Hu to face trial within weeks, Graham Fletcher tells Senate | The Australian

 

Economics is not a true science (political science maybe but still not true science), remember when the dot-com bubble burst global economists were just deciding that 2 consecutive quarters did not make a recession.

 

That reminds me of the old Uni joke.

 

Two professors were walking along and the engineering professor commented how he had to create new exam questions every year and check them because the uni published all previous exam papers. The economics professor replied that their questions stayed the same each year, only the answers changed.

 

The oldest profession was probably created by whoever first could accurately identify when the seasons changed to optimise agricultural societies (planting times) if it wasn't those who actually farmed on a regular basis in the first place or those who initially herded livestock.

 

The Chinese civilisations go back around 6000 years, maybe they know how old philosophy is?

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Hi A23,

 

Could we argue that communism put any country to ruins (the belief that something put in common could be shared afterwards, could lead to conflicts and profit of only some people)?

 

We could also argue that particles and anti particles cancel each other out and only those transactions that occur on the event horizon of black holes have the potential to produce a yield.

 

So that, in fact nobody will use communist money, it's too dangerous, and hence remains only the other system ?

 

The communist 'money' is actually US debt, in the context of quantum science/finance (above) you claim that anti particles are too dangerous that nobody will use them. Unfortunately that is not the case because China has sold part of its anti money to Japan so that both countries now hold equal amounts of US debt.

 

While it looks like even greater amounts of money are being spun out of our quantum/financial/physics system at the moment, they are also operating on the edge of a gigantic Global Financial System wide black hole, I tend to agree with your comment with regards to the scientific and financial aspects, they are too dangerous and we are but pawns to the 'masters of the universe' and the politicians/scientists who fail to regulate their own man-made systems.

 

Interesting thoughts A23, but will our scientific/financial/political leaders agree before the black hole creates a universal singularity? Bad science/finance/politics has the same result regardless.

 

'The Grey knights claim'

 

We hopes your star advisers

are truely opposite southern diviners

lest they all disappear up their conniverses.

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