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March 25, 2013

Cyprus and Capitalism

It may be time to rethink economic theory. Historically economics was taught with a national perspective and over time it was applied globally. With the advent of fast global transportation and computerization do the old rules apply anymore?

As capitalists should we be in favor of letting the wealth of our citizens flow wherever it finds the greatest return even at the expense of our society? An economic system is created to serve society; society is not created to serve an economic system. Technology today allows capital to flow freely and instantly all over the world.

The Cyprus crisis raises the question whether capitalism works at a national level, but not at global level. Capitalism dictates that money flows freely to wherever it can obtain the greatest financial return, even if it means across borders.

If somebody or some corporation earns its money within its own political borders should it be allowed to use that money outside of its political borders to maximize its wealth.even at the expense of the society in which it lives? By allowing capital to flow across borders, the national society loses out on much of the capital being created.

I only have questions, help me fill in the answers. It is one thing to be in favor of capitalism when wealth is changing hands within our borders. The game changes some when there are no borders.

3 comments:

  1. It use to be labor came to capital. That was a main reason for this countries growth. Now it is easier for capital to go to labor.

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  2. I've heard national borders, tariffs, sovereign national currencies and other impediments to the free flow of capital across borders compared to the waterproof bulkheads on a ship or a submarine.

    They're inconvenient and unnecessary when everything is going great, but if there's a leak in the hull they prevent the whole ship from going down. Would Cyprus be making international headlines if it still had its own currency and could bail itself out? How durable is the EU if it has to worry about what happens on a tiny island like Cyprus, which has fewer residents than Philadelphia?

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  3. "An economic system is created to serve society; society is not created to serve an economic system."

    This a great statement; the reverse is damaging our country. We have become a nation of Mercantileists.

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