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The Capitalist Threat
Every now and then the society undergoes changes, political or economical, but in most cases both. It happens when people get saturated with the current situation and the flaws of the system start to show up. The economy drops, people get unhappy, they want something that works, they want change. Hegel found a disturbing historical pattern that supports this statement – the crack and fall of civilization is due to them sticking and intensifying of their first principles. Leaving no flexibility to counter any kind of problems. Nowadays with different market values spreading into all areas of life are threatening our open and democratic society. Capitalism, instead of pushing our economy up, is pulling it down.
The “open society” was first mentioned by Henri Bergson and Karl Popper. They showed how totalitarian regimes and communism and Nazism had a common element – all claim to have the ultimate truth. But since that truth is beyond human reach, in order to maintain their position they have to resort to oppression. Popper also that nobody has a monopoly on truth because different people have different interests and views therefore institutions exist which help coordinate and allow them to live together in peace.
Soon after the term open society gained widespread popularity, many attempts to form such society emerged. People either accepted what it was from themselves because they wanted change and understood how an open society is different, while others just couldn’t see the point and never accepted the possibility of such society. Those groups which started forming an open society mostly targeted the civil society because they wanted everyone to be included, in the end it is an open society. After the collapse of communism, priorities started to shift, open societies started to get recognition and were being considered as more advanced than a closed society. So such organizations started to shift from a subversive to a constructive way of action. This laid the groundwork for a new and open society.
Fascism and communism had much in common, because both relied on the repression of individual freedom. The idea of an open society is based on an ideology where that kind of repression is unnecessary. As the result the marketplace and an open market became synonyms of people participation on a global level. That made the capitalist venture for self-interest one of the building blocks but also the threat to the open society because if a particular interest takes precedence over a common one the result could be inconsistent with the ideas and the open society could start to break down. Though the current open society is endangered by such capitalism, communism and socialism have been discredited enough, and we are still enjoying a global market economy which allows us to move services, goods, capital and people around freely. One of the threats is also the lack of recognition that we need to sustain those values and institutions.
Since the ultimate truth was no longer at the base of our society. The open market became a synonym for the individual participation. But soon enough the need to analyze that market rose in order to make the most out of it. A scientific approach was taken and Economic theory took the first place. The market had to underlie some kind of rules and those rules were supposed to be supply and demand where their equilibrium would represent the optimum state and allocation of resources. Economic theory is and axiomatic system which means as long as some basic assumptions hold, conclusions follow. That works in a closed environment where we can have perfect knowledge and understanding which does not apply to the real world. Supply and demand were independently given and the relationship between them was studied. That was not applicable to the financial markets as they were crucial in the allocation of resources. Every decision of each individual had an impact on the future and the curves of supply and demand couldn’t be expressed as a simple function anymore. The market is a two-way feedback system that reacts to every action of a market participant and in return further impacts the future decisions of the participants which will make further choices and so on.
So how are prices calculated if supply and demand are not given independently? After researching the market we can see that the prices are not tending toward equilibrium, but continue to fluctuate based on buyers and sellers expectations. Still the concept of equilibrium remains because it helps determining the price. Without the idea of equilibrium the market loses it's ability of optimal allocation of resources which further implies that the supposed scientific and axiomatic economic theory is trying to make social sciences the same as natural sciences. Time has shown that the market can't be forecast with empirical data only since events and decisions from the outside influence the market, it's still an open market. The market can't be viewed as a static thing, it offers feedback and behaves like a living thing, it constantly shifts and changes and adjusts to every action, theory or event that happens. The idea of perfect knowledge in an imperfect environment is not possible and threatens the market.
Because of all that activity and feedback and constant changes in the market, the market is inherently unstable. They are shaped by every action and observation and in return shape further perception and opportunities. Historic evidence has shown that there are financial breakdowns and that has led to initiatives to protect the open society from such cases. The result were government interventions and central banking to offer backup plans in such cases. Yet not all fault falls on the concept of the open market, since perfect knowledge is impossible, regulations are bound to be faulty too so they have their effect on the market which is not necessarily always positive. In the assumption of perfect knowledge if one is faulty the other is right, but in an imperfect environment none is entirely wrong or right and the only way to preserve stability is to deliberately care about it and balance both sides.
Why stability of the market influences everything else is because everything else influences the market. Tradition, religion and any other rational or irrational phenomenon has an effect on the market and affects the stability and in return the market affects them. As a result economic theories are considering the social aspect of an open market and society because they are deeply interlinked.