Point to Ponder: Capitalism and Socialism

“I think the debate for the new generation is instead of ‘capitalism or socialism’ is ‘we’re going to have both, and which proportion of each should we have in order to make this work’?” – Howard Dean.

The quote just looks awful in print – he made it during some speech to a small group and was a little meandering in his discourse. Still, I wanted to try to get the text right. Howard Dean has now declared that we will have to have some capitalism and some socialism. I think this is a bad idea. Let us consider the issue from a “moderation of bad behavior” standpoint.

CAPITALISM. Here, I mean free-market capitalism. People are free to buy and sell and produce as they please within the framework of laws designed to protect individual human rights (and nothing more). Capitalism rests on the notion that people will inherently do what is in their best interest. (Even if they seemingly do not, out of altruism, it can still be argued that they felt that personal sacrifice was in their best interest – it is a free choice.)

Some will call capitalism greedy, and greed is bad. Maybe it’s more clear to say that unscrupulous business dealings (even if legal) are bad. Bitter, over-the-top, self-centeredness; this is what we hear as the bad side of capitalism (think Robber Barons).

But I argue that in its pure form, capitalism can moderate this behavior. Nastiness is moderated by the free actions of individuals. If you are a ruthless business person, I am free to decide to shop elsewhere. I’m free to start my own business to compete with you, hopefully drawing away customers with my “kindler, gentler” approach. It is this freedom of association and even market entry and competition that moderates bad behavior.

In capitalism, you make your own way, and if you run afoul of good graces you have nobody but yourself to blame.

SOCIALISM. In socialism, the state controls the means of productivity and the economic behaviors of the people (and then some). With this control, the state can then mandate non-greedy behaviors from businesses. For instance, the state can enforce a pricing structure that gives discounts to the needy, or maybe just enforce a “zero profit” policy on businesses giving all excess to the workers (or the state, as is more likely the case).

In socialism, the state assumes responsibility for your success, and ensures that you do not mistreat your fellow man.

Now, these are two different approaches to the same intended end. (One of them is WAY more economically productive, but that’s not really the point just now.) They each have a different mechanism to supposedly moderate negative economic behaviors. So what happens when we have some of this and some of that? Well, this is where it gets ugly.

We start with a quasi-capitalist base. Industries spring up, companies do business, everything goes along. As is bound to happen, some companies begin to act unscrupulously, taking advantage of customers or “the common man.” What happens next is rather insidious. Instead of facing the reprisal of the free market, the corporatists turn to the government. They hand out appropriately summed bribes to politicians who enact regulations and legislation (for the good of the people, mind you) that address problems in the given industry. [side note, we just left the free market.] Whatever the talking heads may say, the end result of these policies is always the same – it inhibits the free market response. Where we should have seen new businesses springing up to overthrow the old, we now see barriers to market entry. The corporatist is safe.

The legislators are only all-to-willing to continue with this little project – it makes them a handsome living. We have moved now into what has been called “crony capitalism” or “corporatism” – personally I think it looks quite a bit like fascism, but that has such a negative connotation that it’s hard to use anymore.

And what are the offshoots of this approach? More and more bribes. More and more regulation to “fix” the problem. Soon enough we see “too big to fail,” which is even more nefarious. When the corporatists do fail in their attempts to rip off the public, their buddies in the legislature step in and actually rip off the citizenry for them. That’s harsh.

This is the current mix of capitalism and socialism. I say it is untenable. We should pick one or the other. I prefer capitalism, as it is the system that can be based in freedom. But even if you prefer socialism, then I say prefer it in totality, not in part. Point out the failings of the current system and argue that your system is better. I think you’re wrong, but it’s an argument worth having.

As for Howard Dean, man, could he be any more wrong?

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5 Responses to Point to Ponder: Capitalism and Socialism

  1. Kristin says:

    I like this. Capitalism in and of itself is not bad. It is the abuse of all ( Wall Street , Banks, Lending that has set up this current mess and economic perfect storm—Oh and spending!!!!!! ) I am not a fan of Obama by any means, but in particular I am sickened how this administration has allowed the current system and the one that works when not abused, to be demonized. They ( his admin) really despises the system that brought them to where they are today ( Michael Moore types, but more intelligent!) Anyway, it is late, but like your blogs. Mom likes them too. 35 days until the election—Thank God! It is a start.

  2. jessee says:

    So what is the path from “crony capitalism” to pure capitalism? Strike all legislation and regulation of American markets? How do we make that happen when the very people with the power to do that have a vested interest in the status quo? It seems the only way to keep a free market is to have a powerless government.

    • nomasir says:

      The path is likely the subject of another post. The end goal is not a powerless government, but a government that is empowered to meet its proper function (collective defense of individual rights) rather than trying to live lives for us.

      I’d say the first, reasonable step is to cut government spending (maybe in half). Just choking the thing a bit might help bring it down a few pegs. Perhaps next the citizenry could unite to agree to vote against politicians who have acted in a conflict of interest in the legislative process. Getting the government to behave would moderate corporate behavior as well.

  3. Pingback: The Fabian Window and the Pawns of the Game | Freedom at Bethsaida

  4. Pingback: The “All or Nothing” Mode of System Conflict | Freedom at Bethsaida

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