Opus 35, Socialism and Capitalism

History has seen many different forms of government and economics.  Some, such as democracy are only concerned with government.  Some, such as capitalism are only concerned with economics.  Others, such as feudalism, mercantilism, and socialism are concerned with both.

Many systems have seen their day, such as feudalism, and are a part of history.  Today, there are two different systems that are struggling with each other to be the wave of the future.  They go under the generic names of Capitalism and Socialism.  In the purest sense, neither of these terms is accurate.  Neither exists in a pure form.  What we tend to see is a combination of the two that is called Fascism.  We don’t like to use the term because it is associated with the Nazis of World War II era Germany.  The Nazis are to the Fascists like the IRS is to the Federal Government.  Fascism is international socialism.  The Nazis were National Socialists with a special taste contributed by Adolf Hitler.  The Fascists allow private business but it works hand in glove with the government, much like we see happening in our country.

But lets consider for our purposes the two pure ideals of capitalism and socialism.  I want to examine some thoughts on why capitalism is a better system to live under than socialism.  Both systems have elites.  Those elites live extremely well compared to those at the bottom of the pecking order.  The difference is that in capitalism the entire boat rises instead of just the first class cabins.

Socialists believe that the economy is a zero sum game because in their system it is.  No new wealth is generated and in order for those at the top to maintain their privileged life style they must take from the resources required for survival at the bottom.  There is no extra generated so those at the bottom have less than is necessary to thrive and so they suffer, weaken and die.  It is a self fulfilling prophecy.  They are victims of “false profits” so to speak.

Capitalism, on the other hand, generates new wealth.  This new wealth allows those at the top to live in luxury, true.  It also allows those at the bottom to thrive.  In capitalism the people at the top are not stupid.  They want to get richer.  That means they want more money.  To make more money, they need to sell more products.  To sell more products, people need to buy them.  To buy them people need money.  So it is in the best interests of the people at the top for the people at the bottom to have extra money to spend.  Thus everyone is benefited.  It isn’t planned that way.  The people at the top are selfish, but so are the people at the bottom.  It just works out that everyone rises together.

If you don’t believe this principle, look around you.  Create a chart comparing the living standard of the people in the lower half of the world.  You will find that those who are the closest to a capitalist economy, or in the past had a strong capitalist economy, are much better off than those who have a history of socialism or any other form of government.  The average Joe lives better under capitalism than under socialism.

The elites differ also in qualifications.  In socialism it is those who think of themselves as superior intellectually and are able to arrange power to endorse their superiority.  In capitalism it is those who work and produce wealth and that wealth gives them a position of superiority.  They both have power but in socialism it is the coercive power of the government and its guns while in capitalism it is economic and the power of advertising.

This is obviously simplistic and focused.  I understand that, but to me the basic truth is easy to see.  Average people do better under free market capitalism and suffer under government controlled socialism.

homo unius libri