Archives for category: Comparative Economic Systems

“The big lie about capitalism is that everyone can be rich but capitalism works only if the majority are kept poor enough to never quit working and accept distasteful jobs society cannot function without. If everyone were a millionaire, who would empty the trash or repair the sewers?”
Do you agree or disagree? Why?

…as answered on Quora….

Many distasteful jobs are well paid. Do you want to be a proctologist? I do not. And yet people who probe around in others’ anuses for medical purposes are not kept artificially poor.

Many, many high-paying jobs are jobs our society cannot function without. And not a few are distasteful to many, if not most. One reason many smart people do not go into politics, despite this profession’s long history of high spoils rates, is because it is disgusting work. Tedious. Morally ugly. Dehumanizing. And most people say politics is absolutely essential to modern society.

I would rather drive a garbage truck or sling cowshit in a dairy farm than serve in the Oval Office.

Or probe around in the above-mentioned orifices.

And let us say, arguendo, that more and more people found garbage collection and sewerage repair just too disgusting to hire themselves out for. If these jobs’ products remain demanded by people, the customers would indeed pay higher prices — and with a tight supply and higher demand, we can expect wages to rise in those fields.

It is worth noting that many dirty jobs actually pay pretty well. See Mike Rowe’s once-popular show, Dirty Jobs. Consider “the trades.”

To answer the original question in the affirmative is to take a conspiratorial view of wages. Those who believe such things should study economics, learn about “marginal productivity,” and put away silly hunches and prejudices.

But let us return to the first phrase: “The big lie of capitalism is that everyone can be rich. . . .” If by this one means “equally rich” (which probably is what is meant) I have to say: I’ve never heard anyone assert that this is what a market economy offers us. Equality of wealth is not possible — unless you flip that around: equality of dire poverty is possible.

And in societies geared to be extremely anti-capitalist — that is, in socialist societies — caste divisions and great disparities of wealth become quite large. Just think of Venezuela’s richest woman, the former president’s daughter, and contrast her with the masses of that beleaguered-yet-resource-rich country. Now starving, they no longer line up for food, they line up at the border, trying to exit the country.

Equality is not a function of nature. No society but the simplest and poorest sports material equality. Even in hunter-gatherer tribes there tends to be some startling inequalities. Markets reward performance on merit through that amazing filter, supply and demand. It is not equality that markets produce, but quality in general. And, as others have stated, we are a lot wealthier now than we used to be. There has been awesome material progress.

It is a pity that a progress in wisdom has not been nearly as marked. But, to some extent this is to be expected: education has been monopolized in public schooling as well as in limited-accreditation higher ed, to an amazing degree for well over a century — monopolized in the non-capitalist sector of society.


Photo: Ralf, Flickr, some rights reserved
Why do most Americans consider Marxism evil?
…as answered on Quora.

Is that true?

If it isn’t true, it should be. Hundreds of millions of people died because of attempts to create socialist utopias by men who were inspired by Karl Marx, and who identified themselves as Marxists. Karl Marx, in his day, cooked up an alternative to liberalism and the rule of law. He ridiculed the very idea of “bourgeois freedom.” Hating the idea of private property, he believed that “society” should own the means of production. Though he said the ideal, end product of the revolution he promoted was a “stateless society,” he believed that there would first have to be a “dictatorship of the proletariat.” He advocated slaughter as well as expropriation to carry through on his “revolution.”

Power corrupts, you know: once power becomes concentrated in a dictatorship, of all things, it is really hard to dissolve it. The socialist tyranny quickly proved a palpable reality, in the case of its first instantiation, the USSR, while the promised stateless utopia has been shown up to be a mere fantasy. It never happened.

It could not happen the way Marx conceived it.

I need to repeat: the dictatorship notion — the “state socialism,” as it came to be called — was a recipe that could only end in disaster, with outrageous moral horror. And it did.

Liberalism’s rule of law establishing decentralized power structures and a distributed system of social organization is the main foundation of nearly everything good in modern life. The institution of private property that the rule of law protects allows human being to avoid tyranny as well as to advance out of poverty.

The communist idea of erasing the boundaries between people (by abolishing private property and the rule of law) and centralizing power in a unified State inevitably leads to murder and totalitarianism.

Besides, Marx’s crackpot notions — I do not think he was right about much of anything, really — are so off-base that attempts to enact his program can only lead to perverse results.

Anyone who knows the history of the Soviet Union and Red China knows enough to regard Marxism as pure poison. And if Marx’s contemporary Mikhail Bakunin could recognize the entelechy of authoritarianism in Marxian communism, we who possess the history as well as the theory to explain why have no excuse.

America was more resistant to communist ideas than most other countries in the last century. Americans, who inherit a form of government founded squarely in the liberal tradition of John Locke and Montesquieu have been immunized against the pernicious doctrine.

The only people of any significance who do not follow this line are those who have been baptized in the intellectually shallow waters of the modern university, where Marxism still thrives under taxpayer subsidy (what suckers taxpayers are). The universities do not let Nazis teach. For the same reason all the Marxists should be fired.

Yes, Americans should stop subsidizing the most murderous ideology ever cooked up by the mind of man. But though most Americans have little truck with communist ideas, they are so badly educated that they cannot see what is at stake — they do not understand how wrong it is to even pretend that Marxism is intellectually respectable in the slightest.

I define as “evil” all intentional harm done with malice aforethought. Karl Marx hated the rich and sought their destruction and expropriation; Marxists today are no better, and in one sense worse: they ignore the history that Marx himself could not know — though he should have foreseen, for it was not just Bakunin who saw it.* You have to be a fool not to see the inanity of the Marxian system. Or the evil.

Alas, fools there are aplenty — and some follies, such as socialism, turn fools into knaves, into terrorists and tyrants. Some follies are quite dangerous. And none is more dangerous than Marxism.

Most Americans have enough common sense to see through the communist buncombe. But I understand: our quasi-socialistic public schools and cult-ridden, subsidized institutions of higher learning can and have programmed many thousands of youngsters to grow up notseeing the obvious, even praising evil as though it were Goodness and Truth.

It is one reason I feel more at home among normal Americans than with the “college trained.” There is so much nonsense among the so-called “educated.”

Still, at least until recently, even most leftists could see though Marxism. But because they valorize collective action and state coercion over individual responsibility and voluntary community and free association, they have lacked the intellectual equipment to resist Marxism strongly enough.

And so that old evil doctrinal farrago seems to be coming back.

What a horror show.

* Consult Eugen Richter’s eerily prescient Pictures of the Socialistic Future (1893) for a fine example.

If communism is so bad, then how come the USSR was able to increase industry to match or beat that of the Western powers?

…excerpted from an answer on Quora….

We might want to distinguish ‘communism’ from ‘Communism.’ That latter is sort of trade-marked (‘“anti-trade” marked’?) by the political implementers of the Marxian paradigm.

Karl Marx, you may remember, prophesied a classless, stateless future of communism, share and share alike, and all that. He was quite vague on how it would work out. But he did think the capitalists first had to be expropriated by the workers, and the economy run by ‘a dictatorship of the proletariat.’ This gave the Bolsheviks and their later imitators an excuse to set up state socialism, where the Communist Party runs the unitary state which in turn runs everything else. It is ‘communist’ only by an association of ideas and by tradition. But no utopian-minded communist in her right mind wanted that.

Besides, as others have noted, a moneyless industrial society didn’t work. So the Bolsheviks quickly backpedaled, adding markets back in under the New Economic Policy. As Michael Polanyi and others have shown, the Soviet Union engaged in a lot of fakery to make their central planning seem to work.

Ludwig von Mises explained why it couldn’t work. Capitalism is mass production for the masses. Market societies use dispersed knowledge gleaned especially from private markets in production goods and the firms that make up the productive sector to distribute resources to their most valued uses. Without private property and real market signals, socialists find themselves in a sea of arbitrary decisions, without guide. The Soviets never succeeded much in mass production for the masses, but by hook and crook and a rigid class system, the USSR succeeded in making hydrogen bombs and rockets for a pretty good space program (it helped that they were willing to risk cosmonauts’ lives to an extent NASA never found acceptable). But that isn’t mass production for mass consumption, it is mass production for Big Projects, which we know the ancients mastered in the megalithic period. Pyramids and all.

Slavery and the organization of a religiously oriented (ideologically controlled) servile population can indeed do amazing things. But not beat capitalism at its own game.

So, what of communism? The communal production of a limited set of goods for common needs can work in small groups. That this manner of economic organization produces a great abundance of consumer goods or can be carried on in an egalitarian fashion are fantasies of romantics who cannot think very well. Human being run up against calculation problems, as Mises explained, as well as the Dunbar number, and similar problems.

Few tribes actually engaged in communism for all goods produced. Individual and family property was a commonplace throughout the primitive world. But some things were done communally. But in societies more complex than mere tribes, some method of organization had to develop, and these included honor standards, allowing the adulation of Big Men — chiefs — whose vigor, intelligence, and social skills allowed for elaborate hierarchies to expand economies out of rudimentary forms. Some of the most successful of these chiefdoms became conquerors, and found ways to grift off of sedentary populations, after conquest, and civilization with their states were born.

In all the upward progress and sideways motions of societies and their histories, communism haunted the imaginations of poets and sages and shamans and priests, probably for reasons that psychologists have theorized: as lingering dreams expanding on the yearning of strapped adults for their lost childhoods, when benevolent parents and other adults provided all and made everything work like magic.

Communism of that sort is a dream and a yearning, and deserves, in most cases, little more than eye rolls.

Communism of the Soviet variety deserves a finger on the trigger, for Communists lie about what they are doing, and the contradictions of their own ideas mean they are always one small step away from mass murder.


Why is capitalism not liberalism?

…as answered on Quora….

Which capitalism? Which liberalism?

What came to be known as “capitalism” grew out of mercantilism and the freeing up of such systems in part by liberals — “classical liberals” — who sought to limit government interference in the workings of markets. Arguing for a generally ‘laissez faire’ approach, and persuaded by economic reasoning that most of the goals and methods of mercantilists achieved socially negative results — often the opposite of the promised results of the traditional advocates of private-public partnerships — these liberals helped spur the astounding economic advances of the agricultural and industrial revolutions.

But almost no country has ever sported pure laissez faire — such a policy seems austere to folks in government, whose power is limited under such a policy — and Actually Existing Capitalism has always been to some degree mercantilist, filled with goofy and exploitative favoritism, transfer payments, deceptive and slippery regulations, tragedies of the commons, vast public work projects, and persistent rent-seeking manias. Self-proclaimed liberals fought this for many decades of the 19th century, but the popularity of socialist ideas infected the class of people who called themselves liberals, and this class of people reverted to a kind of neo-mercantilism, dubbed ‘progressivism’ in America and ‘social democracy’ in Europe, often pushing to dirigisme — sometimes called fascism and other times called national socialism and often pitched with eulogistic, sloganeering brand names, like The New Freedom and The New Deal.

It is time to take back the term ‘liberalism’ from the advocates of some jury-rigged ‘third way’ between laissez faire and state socialism. But we may have to stick with alternates, like ‘libertarianism’ or Benedetto Croce’s ‘liberism.’

It would be easy to argue that ‘capitalism’ has almost always been used as a pejorative, and should be dropped like a scorched spud. Worse yet, naming a system of private property, free production, free trade, free labor, and free banking by only one of the three traditional factors of production — ‘capital’ (instead of by land and labor as well) — makes capitalism unsuitable for those who wish for any sort of precision. But we are probably stuck with it, too. In my nitpickier moments I sometimes talk up The Catallaxy — the emergent order of all voluntary exchanges (Richard Whately defined economics as ‘catallactics,’ or the Science of Exchanges, nearly two centuries ago, and F.A. Hayek coined the above term for the liberal system sometime in the 1960s or 70s) — but that isn’t going to fly.

When someone says they are for or against ‘capitalism,’ we must ask for clarification. When folks call themselves a ‘liberal’ but are only liberal in spending other people’s money, laugh in their faces.

Today’s critics of capitalism must not be allowed to get away with their most characteristic legerdemain, pretending that every problem in our mixed economy is caused only by the ‘free market’ aspect of the system, and not the government part. And conservative defenders of capitalism have got to stop calling the current system ‘free enterprise.’ Wake up and throw out the coffee grounds.

In my opinion, liberals are those who advocate laissez faire capitalism. They oppose the neo-mercantilists of all varieties, and socialists even stronger.

So, back to the question. Why is capitalism not liberalism? Capitalism is an economic order; liberalism is an ideology.

Alas, we are almost always stuck with the tedious job of disambiguating both terms.