Liberal Forum

Dantev2 » 07 Nov 2017 3:39 pm » wrote:
Karl Marx and Pierre Joseph Proudhon popularized the term "capitalism" - contrary to popular myth, classical economists like Ricardo and Smith did not use the term "capitalism," even though it was implied in their works.

Production of commodities for exchange instead of use, private accumulation of capital, private ownership of productive property, and wage labor as the primary system of employment are the four mainstay pillars of capitalism.

Before I continue, I am obligated to correct two common myths:

1) that a central bank is anathema to capitalism. I don't know why this libertarian myth has run rampant in the past few years, but it is patently false. The stated purpose of central banks is to stabilize the monetary system (which in turn will stabilize the entire economy - I will not argue that central banks are particularly successful at this job), while in reality central banks act as hit-men for the ruling class, which earn their profits by exploiting the "time value of money" (another capitalist creation). The lie behind the TVM is that idle money in the present is worth more than money in the future. I will not spend time debunking the TVM for now, but suffice to say, it is a tenet of capitalist economics.

2) that a central bank "prints money out of thin air."

Before I debunk this myth, I must point out that I am not arguing central banks don't increase the money supply.

I am arguing that the money doesn't come out of nowhere ("thin air").

This is the critical flaw in Austrian economics, and why it should be fully rejected.

Money is simply a representation of value in a capitalist system. The value, in the end, must come from somewhere. Value cannot be "created out of thin air." It is mathematically impossible.