The God of the Machine - Tranche 41

Posted by $ mshupe 1 week, 4 days ago to Economics
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Chapter XIX, Excerpt 2 of 3
Credit and Depressions

With a high production system, every part must be maintained by surplus production; the whole system came out of surplus production. Material is perishable in that it loses its usable form and quality with wear or neglect, in time. The kinetic energy of a production circuit may be dissipated without return in so many ways that it is tedious to enumerate them. It may be converted into static form which is useless for the circuit. They may be simple net loss, or carried dead load, at a continuing loss.

As long as financing came from private enterprise, the condition would be self-correcting. While more than 98 percent of the investment in railroads came from private capital, subject to the inescapable test of economic reality, 85 percent of recent increase in transportation plant came from tax funds, which are relieved of that ultimate test. The course of events reveals the true nature of capitalism, which cannot be brought into any system of collectivism. Capitalism is the economic system of individualism.

The quickest and most drastic liquidation of a credit collapse would be the most equitable. It would most rapidly reconnect the production system, but this is seldom allowed. Instead, the political machinery is called in to seize or depreciate money; the meter is falsified, and a general leakage along the line is caused. Under the Roman Empire, after the government intervened, there never was any recovery. That was the end of the empire; and Europe was sunk for centuries.

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  • Posted by VetteGuy 1 week, 3 days ago
    Is the second paragraph a quote from the book? Trying to get a sense of the full context. I've looked till my eyes have crossed, with no luck. But ... that may be because my eyes have crossed ...

    I realize this may come from the middle of one of her (typically very long) paragraphs. If you could give me the number of pages from the beginning of the chapter or some other hint (since our copies may not have the same page numbers) it would be appreciated.
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    • Posted by $ 1 week, 3 days ago
      Good catch, and I'll answer this a couple of different ways. As mentioned in the introduction to this series in June, "It should also be noted that the excerpts will not necessarily match the order in which the sentences or paragraphs appear in the text. My first objective is to highlight some important themes in a coherent, yet highly abridged format."

      In addition, I've limited each tranche to 3 paragraphs of about 75 words each. This is arbitrary, but it forces me to keep each paragraph relatively short and essentialize what I think are important ideas into something coherent. Sometimes, the flow is a little rough. Also, some of the sentences are shortened and combined with sentences in other paragraphs of the book.

      You may have a different edition that I'm using, but for the section about which you ask, the first two sentences are drawn from the footnote on page 223 and the last two sentences are on page 227. This condensation would have been hard to find but thank you for asking!
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      • Posted by VetteGuy 1 week, 2 days ago
        Got it! Thanks for the clarification.
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        • Posted by $ 1 week, 1 day ago
          Thanks for highlighting this paragraph. With fealty to the original meaning and purpose of the text being primary, my goal here was to integrate a concrete example with an abstract concept and do it in 75 words. That is what gives Objectivism all of its teeth. In this case, the private capital of railroads directed by profits and the morality of capitalism vs. any form of collectivism.
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