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Free market economy: Difference between revisions
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''1. Do you think our free market economy, especially against the backdrop of unfettered transnational financial operations and the financial crisis, is the right way to live in a globalized world?'' | __NOTOC__ | ||
'''''1. Do you think our free market economy, especially against the backdrop of unfettered transnational financial operations and the financial crisis, is the right way to live in a globalized world?''''' | |||
=== | ===Jana Hybášková: === | ||
Globalization is not the result of the free market economy, in as much as the free market economy is not a function of globalization. | Globalization is not the result of the free market economy, in as much as the free market economy is not a function of globalization. | ||
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The direct threat to the free-market economy in the world is corruption, protectionism and exploitation. | The direct threat to the free-market economy in the world is corruption, protectionism and exploitation. | ||
====Stefan Marx==== | |||
Hello everybody, Hello Jana, | |||
thanks for the accurate and comprehensive answers. | |||
Concerning your answer on question one: I think you reduce the global financial crisis to financial derivates like CDS or CDO. But in my opinion it’s not only a problem of subprime. The origin of the crisis is how capital markets and our whole economy are construed. The shareholder-value approach (as you mentioned Friedman) and the resulting pursuit of profit forces banks to develop new products for receiving more profit. Without rising profit a takeover ensues. This is the determination of listed companies. So it's not just the companies that operate in the system of free market economy, it's the sytem itself in which they operate. | |||
Later you mention several rules which are needed in a globalised free market economy. Your points are really great but I don’t know how these goals can be achieved. The implementation of these rules should take place in a normative way (laws). But who will establish laws for controlling markets and enforce its validity? There is a dissent between national laws and global validity. In Europe we have EU Directives that national states have to convert into national laws. I don't think there is any regulation for global right... | |||
Friday, 11 December 2009 | |||
====Jana Hybášková==== | |||
Dear Stefan, | |||
After living through post68 normalization in the communist Czechoslovakia, than living in the Middle East and witnessing capitalism growing and facing crisis in my own country, I can only say, I am very far from disqualifying big systems and ideologies. Still, from the three systems I have witnessed in my life, capitalism allows comparatively for larger number of freedoms, individual creativity and responsibility. Yet, recalling all Leninism, Islamic fundamentalism, I am very far from saying that capitalism is wrong per se. What is wrong with capitalism is if it is spoiled, if it does not function. Corruptions, preferential treatment, lack of information, inside trading, are problematic issues. With fundamentalism and communism the problem is, if they function…So, I am not going to propose any change of the system. On the contrary, if rules of individual responsibility, transparency and accountability, no preferential treatments, no corruption, are applied, the system will be the most open to individual initiatives. | |||
Control and new financial regulations is what you ask in the second half of your question. Definitely there is a tool: FATF is the key instrument. Please, learn about it. Second instrument is US legal system – so called Federal Treasury matters. US are the hub for vast majority of financial operations. If the customers brake rules, if the transfers are not accountable, if there is substantial amount of suspicion – money laundering, human trafficking, drug trafficking, arms proliferation, duel use problems, US usually are very effective safeguard . So far Switzerland was opposite. This has changed. The same is going to happen to off shores and to Luxemburg. So comprehensive compromise reached between US and EU in G – 8, G-15 is reflected in US and EU legislation. And this is how it works. This is why we need these summits and we must not protest against them, otherwise we close the last effective action agreement. Good tool for cooperation is as well TEC – Transatlantic Economic committee. Thanks God, in EU US relations we have a lot of meeting points, which can translate the ideas into work, into common legislation, so it is not only EU directive. Vast majority of EU directives, especially those, which deal with financial instruments, are as well communicated and negotiated informally and formally with respected US bodies. EU US cooperation happens every day in real time. So EU does not function solemnly as well as US. Good communication and cooperation as well happnes with Japan. The rest is still the rest of the world. Problems are Russia and China. This is where transatlantic society has to square its head. | |||
Sunday, 13 December 2009 | |||
====Stefan Marx==== | |||
Dear Jana, | |||
I never wanted to demonize capitalism respectively the free market economy! If you compare it with different systems you’ve undergone by yourself I understand your preference. But I think we should consider different alternatives of what went wrong (and actually goes wrong) within this system. It’s not about comparing given systems in my opinion. Particular elements should be reconsidered (For instance financial markets, the divide between rich and pore, the policy of economy over environment, etc.). | |||
You mention the FTFA. This organization only regulates money laundering and the financing of terrorism and has little more than 30 members. In my eyes this is no appropriate instrument to control a global issue like capital market. It can only contribute. | |||
I think you didn’t get the point I’m driving at. I’m aware of the threats to the system you mention. Beside the problems of bribery, protectionism or money laundering this system per se is not stable and unfair. People are greedy and the free market economy increases this fact. The same applies to environmental problems. | |||
This is a very personal opinion, perhaps a little pessimistic. Never the less I respect your opinion basing on personal experiences I never made. To finish with a proverb of Thomas Hobbes: “Homo homini lupus”. :-) | |||
Tuesday, 15 December 2009 | |||