There are so many buzz words flying around the political debates, often with no context or real meaning, so it’s little wonder that most Americans are a little confused if not misled by what is said. Let’s take the two most used words in the current debates, socialism and capitalism. The first thing to understand about these “..isms” is what they mean.
Let’s take socialism first. Here we should understand that many political science and economic texts and courses in our educational system are full of muddled and contradictory definitions, but in general they agree that socialism is a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.
Now there are further definitions to differentiate types of socialism. For example in the USSR and PRC there was communism, loosely defined as a totalitarian socialism wherein the state is in essence the “community”, ultimately managing every facet of a society. Then there are various European and South American versions that prefer to be called Democratic Socialism defined as having a socialist economy in which the means of production are socially and collectively owned or controlled, alongside a democratic political system of government; the problem with the latter is who actually represents these interests of a democracy; directly or indirectly, it comes down to the government, so such distinctions between these two types often lack a credible difference.
Capitalism as defined by the philosophers of the Enlightenment such as Adam Smith and David Ricardo (both of whom were actually sociologists as the term economist had yet to be defined as a separate discipline) was a natural economic system wherein a free market was allowed to function organically, providing for spontaneous interaction via trade among people, as opposed to the mercantilist regimes of most monarchies. In essence, it was seen as independent of and free from government meddling, what the French economist François Quesnay called Laissez Faire, basically meaning let it be.
Now we know from history that even the most so called free states had some degree of political capitalism, a polite way of saying cronyism, wherein the state and its power associates in business and finance colluded to game the system to their benefit, much as we have seen happen overtime in America. This corruption of the organic and spontaneous nature of a free market has been euphemistically called a “Mixed Economy” to make it a more politically correct concept; however, the damage is done as a little cancer will metastasize overtime to destroy a free market.
One of the differentiating characteristics between socialism and capitalism is that the former requires a political power base in creation and to function whereas the later does not; this is an essential concept to understand given the logic tree for true capitalism:
- A free society is based on the natural basic right that all men are free, starting with owning their own lives, which includes the fruit of their labor and how they use that, i.e. property rights.
- In order to protect this basic right against all aggression to subvert it, society needs the means to defend it.
- The essential role of government is to defend this basic right.
- To insure that this basic right can’t be subverted is the essential law that government must create and enforce as all other rights evolve from this basic right, i.e. to be a nation of laws and not of men.
- This basic right and the laws to defend it require a separation of the ownership of self as defined above from all other aspects of society.
- It also follows then that a basic right means all men are equal before the law; they may not be equal in industry, intelligence, productivity, or just luck, but in respect to this basic right they are immutably equal.
- As the basic right includes property rights, essential for a free, civil and productive society, it follows logically that man needs to be productive in order to not just survive, but to thrive.
- It is empirically obvious that free men will thrive, meaning they will produce in excess of need.
- This excess is called capital; it’s not necessarily money but can also be tools, land, shelter, excess grain or livestock, etc.
- This excess creates the need and the ability to trade, the essence of an economy.
- Capital and trade create spontaneous interactions throughout society, seeking the most productive use organically, a functional efficiency known as division of labor.
- The essential word defining this system is called capitalism, the use of excess production applied for future need rather than immediate consumption, thereby providing growth of the wellbeing of society.
Socialism on the other hand requires a political power base that obviates individual liberty because it can’t afford such a luxury and survive; here’s why:
- As it is neither organic nor spontaneous, and does not emanate from any natural basic right, it requires the artificial and arbitrary phenomenon of political power.
- This political power can arise democratically via popular mandate, through evolution with gradual subversion of basic rights and subsequent imposition of rule, or through revolution replacing basic rights.
- There will be a plan, as there’s always a plan, to replace the natural phenomena resulting from a free economy with the structured agenda of an invented one.
- Logically you can’t have competing plans within the same system so coercion is required to enforce whatever plan the current powers to be dictate.
- Without protection of man’s basic right, the functionality of a free market will eventually give way to the dictates of politics, which is the rule of men and not the rule of law.
- Eventually such systems collapse on themselves as they are inherently unsustainable, creating the ultimate chaos, such as what happened with the USSR, and other socialistic regimes over time. It’s not nice to fool Mother Nature.
The essential lesson for Americans is that you can’t have a free market without a free society. When you have the corruption of such basic rights as expressed in our constitution, you have the subversion of a free society, a political process essential for socialism to take hold. This process is chaotic, creating in America what we call a “Mixed Economy”, responsible for the boom and bust cycles we myopically take for granted, but that’s just an insidious means toward the same end.
When you hear a politician offer something for free, understand that in order for someone to get something for nothing, you have to take it from someone else; we usually call that theft, but let’s not be politically incorrect, let’s just call it socialism.