3) voluntary monetary exchange ( buying food at the super market )
4) coercive monetary exchange ( taxes )
#1 is great, but unfortunately is does not scale. It works very well among family, friends, and small communities, but it quickly breaks down in larger economies.
Of the remainder, #3 seems obviously the superior way to engage in transactions. And #3 is free market capitalism. Capitalism is not good because greed is good. Capitalism is good because it forces greedy people to actual produce something of value and exchange it, rather than just taking it from others.
The financial crisis is not an example of #3 but of #4. The "too big too fail" and "lender of last resort" policies have been in place for decades. They allowed banks to take huge risk, and then when the risks failed, the government uses its coercive powers to tax the public and bail out the financial system, thus encouraging even more risk taking.
1) voluntary in-kind exchange ( Christmas presents, buying each other rounds of drinks)
2) coercive in-kind exchange ( corvee, slavery, conscription, bound serfdom)
3) voluntary monetary exchange ( buying food at the super market )
4) coercive monetary exchange ( taxes )
#1 is great, but unfortunately is does not scale. It works very well among family, friends, and small communities, but it quickly breaks down in larger economies.
Of the remainder, #3 seems obviously the superior way to engage in transactions. And #3 is free market capitalism. Capitalism is not good because greed is good. Capitalism is good because it forces greedy people to actual produce something of value and exchange it, rather than just taking it from others.
The financial crisis is not an example of #3 but of #4. The "too big too fail" and "lender of last resort" policies have been in place for decades. They allowed banks to take huge risk, and then when the risks failed, the government uses its coercive powers to tax the public and bail out the financial system, thus encouraging even more risk taking.