Socialism vs. Capitalism

[Bry]

Hey, I hope you don't mind my doing this, but this post from Eric seems worthy of a separate thread, especially since we continually come back to this issue in other threads, but never really address it on its own. If anyone is interested, it comes from the Iraq War forum and the The Truth, the Whole Truth thread, which curiously enough seems to have been overcome by discussion on race and bad spelling. (Can't for the life of me figure out how that happened )

I won't actually get to it tonight, but I figured I'd open up the conversation, and perhaps inspire myself to address it more specifically when I'm not so sleepy.

Cheers!

Bry, I am not going to attack you personally, but I do believe your views can be a little too philosophical sometimes. Keep in mind that philosophy needs to be tempered by reality. Let us take Captialism as an example; in theory it may not be the most ideal economic system, but in reality it works. Let us make a comparison to socialism, which many intellectuals have embraced.

Now the worldwide discrediting of socialism has left our intellectual leaders in an odd dilemma. The system that they hailed for decades as a moral and philosophical ideal has been shown to be disastrous in practice, leading to stagnation at best and starvation at worst. Meanwhile, capitalism has led to the creation of unprecedented wealth, advanced technology, and widespread prosperity. Yet capitalism is denounced by these same intellectuals as a system of greed, materialism, and ruthless “dog-eat-dog” competition.

So it would seem that the system that enforces virtue leads to poverty—while the system that encourages vice leads to prosperity.

There must be a trade-off, in this view, between being moral and being practical. Given this alternative, the cynical "realists" choose the practical. They conclude that some degree of vice must be tolerated in order to achieve the higher "social good" of prosperity, so they seek a “third way” compromise between the moral ideal of socialism and the practical necessity of capitalism. But the "idealists" will have none of this, so they conclude that if capitalism leads to prosperity, then prosperity itself must be evil. They declare that affluence is a disease and join the environmentalists.

But there is another answer to this dilemma; there is a solution to this apparent contradiction between the moral and the practical. That solution is to re-examine the premise that capitalism is immoral. If we do this, we can see that every characteristic that makes capitalism practical is also a principle that makes capitalism moral.

Capitalism is practical, many economists have argued, because it allows individuals to act on their own thinking rather than being forced to obey the decrees of bureaucrats. Under capitalism, every problem of economic production is tackled by thousands, even millions, of minds. The people whose thinking is successful will thrive. They succeed because they find opportunities that others don't see, because they develop new products that no one else has thought of, or because they discover more efficient production methods that have never been tried before.

In a free market, where everyone is free to start a business, raise capital, and place his product on the market—each individual thinker has the opportunity to put his ideas into practice, and to succeed or fail based on the merits of his idea. Those who succeed bring us new and improved products at an ever lower cost, creating economic progress and prosperity.

In the regulatory state, by contrast, the edicts of politicians and bureaucrats override the thinking of individuals. The result is that political expediency, rather than the truth or falsity of an idea, determines who gets to put his ideas into practice. Thus, for example, a popular health scare about silicone implants or electric power lines is backed by judicial action, in defiance of provable scientific facts; the congressional districts in which ethanol is produced are regarded as more important than the fuel’s economic value; a union leader's ability to deliver votes trumps the employer's judgment concerning what he can afford to pay; and so on.

Stated in more fundamental terms, it is the rational thinking of individuals that causes the production of wealth. But government regulation acts to stymie individual thought, subordinating the knowledge and creativity of millions of individuals to the edicts of public officials.

Thus, the practical value of capitalism flows from the need to protect the creativity and freedom of thought of the individual. But isn’t this also a profound moral principle? Most of today's intellectuals still recognize that we need to protect the thinking of the artist or the scientist—but the same principle applies equally to the worker, the executive, and the industrialist. Only capitalism fully recognizes the moral right of the individual to think and to act on his thinking—not just in his personal life or intellectual life, but also in his economic life.

Economic production is not just a matter of thinking; it is also a matter of motivation. Thus, according to economists, the practicality of capitalism also stems from the fact that it allows individuals to set their own plans and pursue their own goals. Individuals are allowed to decide what career they would enjoy most; what products would give them the best value for their money; what opportunities would give them the best return on their investment; and so on. And capitalism does not merely offer the individual the freedom to pursue his own goals; it also rewards him for doing so. It offers him, as an incentive and reward for achieving his ambitions, the prospect of making money. As a result, people in a free market will work harder, longer, and smarter; they will take more risks and endure more hardships—so long as the work is theirs to choose and theirs to profit from.

In a state-run economy, by contrast, the central planning of government officials wipes out the plans of individuals. Since they don't own the business, can't control the course of their own careers, and don't stand to gain or lose from their actions, the workers' predominant attitude is apathy. And why should they care? If they succeed in increasing production, the extra wealth will be used to support those who haven't succeeded. "From each according to his ability, to each according to his need" is the motto of the welfare state. But in such a system, who would want to be the man of ability, conscripted into a life of unrewarded drudgery so that others can consume the product of his labor? It is no surprise that every society that has approached this socialist ideal has found few volunteers to be the men of ability who keep the economy running.

Stated in more fundamental terms, capitalism is practical because it relies on the inexhaustible motive-power of self-interest. Under capitalism, people are driven by loyalty to their own goals and by the ambition to improve their lives. They are driven by the idea that one's own life is an irreplaceable value not to be sacrificed or wasted.

But this is also a crucial moral principle: the principle that each man is an end in himself, not a mere cog in the collective machine to be exploited for the ends of others. Most of today's intellectuals reflexively condemn self-interest; yet this is the same quality enshrined by our nation's founders when they proclaimed the individual's right to "the pursuit of happiness." It is only capitalism that recognizes this right.

The fundamental characteristics that make capitalism practical—its respect for the freedom of the mind and for the sanctity of the individual—are also profound moral ideals. This is the answer to the dilemma of the moral vs. the practical. The answer is that capitalism is a system of virtue—the virtues of rational thought, productive work, and pride in the value of one's own person. The reward for these virtues—and for the political system that protects and encourages them—is an ever-increasing wealth and prosperity.

 

[Bry]

Bry, I am not going to attack you personally, but I do believe your views can be a little too philosophical sometimes. Keep in mind that philosophy needs to be tempered by reality. Let us take Capitalism as an example; in theory it may not be the most ideal economic system, but in reality it works. Let us make a comparison to socialism, which many intellectuals have embraced.

;There is no dichotomy between philosophy and reality. One good definition of philosophy would be "the study of reality". Perhaps you wanted to say that I'm too abstract.
;That Capitalism "works" would depend on what you wanted it to do.
;obviously, many intellectuals have embraced capitalism as well. Let's not make this a problem of Intellectuality.

Now the worldwide discrediting of socialism has left our intellectual leaders in an odd dilemma. The system that they hailed for decades as a moral and philosophical ideal has been shown to be disastrous in practice, leading to stagnation at best and starvation at worst. Meanwhile, capitalism has led to the creation of unprecedented wealth, advanced technology, and widespread prosperity. Yet capitalism is denounced by these same intellectuals as a system of greed, materialism, and ruthless “dog-eat-dog” competition.

;what worldwide discrediting of socialism are you referring to? Most economic systems, including our own, are a mix of socialism and capitalism.
;"stagnation"? "starvation"? The only country in the world with a higher rated economy than the US is Finland, and their system is substantially more socialist than ours. Perhaps you are talking about Communism, but there too, I would argue that Communism has never been tried. The Soviet Union especially never got beyond a military oligarchy. So I'm not sure what you're referring to. If a successful society is measured only by quarterly growth reports and advanced technology, (though the Soviet Union beat us in practically every breakthrough with their space program, right up to the moon landing) you would be correct. Personally I expect a little more from society.
;capitalism, unbalanced by social programs (i.e. socialism) is unmitigated competition. Humans (according to some philosophers) entered the social contract in order to escape the lawless competition of the state of nature, and unbridled (or less bridled, as is our case) capitalism threatens to throw us right back into the state of nature.

There must be a trade-off, in this view, between being moral and being practical. Given this alternative, the cynical "realists" choose the practical. They conclude that some degree of vice must be tolerated in order to achieve the higher "social good" of prosperity, so they seek a “third way” compromise between the moral ideal of socialism and the practical necessity of capitalism. But the "idealists" will have none of this, so they conclude that if capitalism leads to prosperity, then prosperity itself must be evil. They declare that affluence is a disease and join the environmentalists.

;say something about this "third way" that was sought by so called cynical "realists", even though you plainly state in the sentence before that they opt directly for purely practical considerations. I cannot follow your argument here.
;here, you have set up your false enemy, an overly simplistic view of "idealists", whom you lump without further ado with environmentalists. Really, "we" are a bit more complex than this. Yes, I consider myself an environmentalist, which is to say I believe that any action taken my humans should be taken with a view toward protecting the integrity of the natural systems. Nature functions according to very delicate balances, and it has been our habit to upset these very important balances. Why is it important to respect these balances? Because we have to live here, and it is these balances which maintain the planet as inhabitable. I don’t see this as “our” planet, we are only one of the species which live here, and as such we should limit our activities in so much as they make the survival of the other inhabitants of the planet, as well as our own, untenable. But the statement that the idealists “declare that affluence is a disease and join the environmentalists.” is a bit absurd.
;according to your chronology, idealists first decide that Capitalism is evil. This couldn't be further from the truth, as any criticism of capitalism has come from criticism of actual capitalist system. "They" look at capitalism and criticize it for what it is, not for some de facto concept of evil.
;then of course, there is no link between capitalism and prosperity. Any "prosperity" that may be claimed for capitalism is relative, and certainly not an all-encompassing prosperity. And idealists, at least any half-serious ones, do not approach any conclusions like "prosperity is evil". To suggest otherwise is to be satisfied with a very comic-book understanding of those who you consider your ideological opponents, a dangerous proposition at best.

But there is another answer to this dilemma; there is a solution to this apparent contradiction between the moral and the practical. That solution is to re-examine the premise that capitalism is immoral. If we do this, we can see that every characteristic that makes capitalism practical is also a principle that makes capitalism moral.

;Yes, of course. All we have to do is see the rich getting richer and the poor getting poorer as moral, and the problem is solved! jejeje. I love how our political system has become so complicit in the corporate game that it no longer makes any difference whether we have a Republican or Democratic president! It's so... so... moral!!!

Capitalism is practical, many economists have argued, because it allows individuals to act on their own thinking rather than being forced to obey the decrees of bureaucrats. Under capitalism, every problem of economic production is tackled by thousands, even millions, of minds. The people whose thinking is successful will thrive. They succeed because they find opportunities that others don't see, because they develop new products that no one else has thought of, or because they discover more efficient production methods that have never been tried before.

;there is (to my mind) a rather obvious difference between "obeying the decrees of bureaucrats" and accepting some limitations in business practice for the good of the society.
;the people whose thinking is successful will thrive? couldn't disagree more with your use of the word "successful". If by successful, you mean competitive in its most unlimited and violent sense, then you are correct, but that would be far from my own ideas about success. The winner, in our system, is not he who has the best innovations, but rather he who stamps out the competition quickest. And now that most industries are already dominated by no more than two or three major players, there isn't even competition in that sense, as it is all too easy for big business to stamp out new technologies or innovations which threaten their market share. And it is also Capitalism which has witnessed a dramatic downturn in the quality of products, with such cool ideas as planned obsolescence. For Capitalist interests, many new technologies were not released for years simply because the corporations hadn't reaped all the benefits of the older technology that would be made obsolete. Those who "succeed" at innovating usually get bought or competed out the door by big business which is always willing to take a short term loss in order to usher smaller competition into bankruptcy.

In a free market, where everyone is free to start a business, raise capital, and place his product on the market—each individual thinker has the opportunity to put his ideas into practice, and to succeed or fail based on the merits of his idea. Those who succeed bring us new and improved products at an ever lower cost, creating economic progress and prosperity.

;while it is true that everyone is free to try to raise capital and place a product on the market, the success of such a proposition is another matter, and in any case is almost never based exclusively on the merit of the innovation or idea.
;the necessary emphasis on the bottom line jeopardizes such important values as quality, the measure of prosperity on a societal level, and harmony with natural systems. Obviously, market forces do not take these values into consideration. Socialism works with market forces, but denies the infamous bottom line the place of honour that it receives in purer forms of Capitalism.
;it often occurs that those who “succeed” bring us inferior products. Or they bring us products at higher cost. Or they bring us products that are produced at the expense of the labour force or natural systems, etc. The statement that “those who succeed bring us new and improved products at an ever lower cost, creating economic progress and prosperity,” is to my mind an unacceptable generalization.

In the regulatory state, by contrast, the edicts of politicians and bureaucrats override the thinking of individuals. The result is that political expediency, rather than the truth or falsity of an idea, determines who gets to put his ideas into practice. Thus, for example, a popular health scare about silicone implants or electric power lines is backed by judicial action, in defiance of provable scientific facts; the congressional districts in which ethanol is produced are regarded as more important than the fuel’s economic value; a union leader's ability to deliver votes trumps the employer's judgment concerning what he can afford to pay; and so on.

;I think it would be more accurate to say that in a "regulatory state", the edicts of politicians and bureaucrats (I would argue that these edicts should be determined, apart from certain basic precepts, by direct democratic participation rather than a priveleged ruling class) ensure that business and competition are conducted in a way that does not jeopardize the interests of the community.
;there are real health concerns about silicone implants, and those concerns should be addresses completely without any consideration of profit and loss while the question remains unresolved. The "scientific" findings are conflicting, and that is not an acceptable resolution. The same is true with regard to electrical power lines, though the scientific evidence with regard to that question appears a little more conclusive. In Spain now, there is an interesting case in which five different children which attend the same school have all developed the same strain of cancer. Investigation has focused on the presence of high power radio transmitters on a building next to the school. Studies have been inconclusive, but something is obviously wrong, and in the mean time those students need to be protected. My only real response to you here is that investigation of such problems should be conducted without any consideration for profit and loss. In such cases, the apparent danger to human life does override the interest of business / competition.
;I don't follow what you're saying here about congressional districts where ethanol is produced are "more important" in a way not relative to the market value of the fuel. Can you say more about this example? ( I would in principle agree that a clean technology should receive preferential treatment regardless of cost or demand.)
;I'm also not sure what is meant by a "union leader's ability to deliver votes" trumping pure bottom line considerations of the business administration. The relationship between unions and management is far too complex for a one line blanket statement, in any case.

(to be continued.)

 

[Bry]

Stated in more fundamental terms, it is the rational thinking of individuals that causes the production of wealth. But government regulation acts to stymie individual thought, subordinating the knowledge and creativity of millions of individuals to the edicts of public officials.

;as I stated above, this is to my mind an overstatement. There is no direct connection between a generalized "rational thinking" of individuals and production of wealth. The "rational thinking" to which you refer is a very specific type of rational thinking, namely competitive tactical.
;government regulation does not "stymie" individual thought, but chanels it in other directions than simple competitivity. Subordination is not to "edicts of public officials", but rather to a broad conception of social / community benefit.

Thus, the practical value of capitalism flows from the need to protect the creativity and freedom of thought of the individual. But isn’t this also a profound moral principle? Most of today's intellectuals still recognize that we need to protect the thinking of the artist or the scientist—but the same principle applies equally to the worker, the executive, and the industrialist. Only capitalism fully recognizes the moral right of the individual to think and to act on his thinking—not just in his personal life or intellectual life, but also in his economic life.

;I agree that the protection of creativity and freedom of thought is a profound moral principle, but I believe this value is better defended by Socialismist values, which to a certain extent "free" human thought from the prison from a simple individual level cost / benefit analysis.
;it is simply untrue that only capitalism recognizes the moral rights of the individual. The Socialists system, by freeing its citizens from such dominating practical concerns as medical care, housing, transportation, and food provides this to a greater extent to a greater number. (are you familiar with the phychologist Abraham Maslow? His heirarchy of needs, though not a formula to be strictly applied, is a helpful model. The general premise is that individuals must answer to their bodily needs first: food, shelter, security, before they can occupy themselves with higher-order needs. Socialism starts people out at second tier needs.) The individual is not a supreme value in and of itself: it must be balanced against the collective. Obviously, these are different conceptions of Freedom. Certainly, I would not agree that individuals should be permitted to act on their thinking without regard to the consequences beyond profit. Hence, it is illegal in most societies for an individual to jeopardize the lives or quality of lives of others. What I am suggesting is an extension of this same principle.

Economic production is not just a matter of thinking; it is also a matter of motivation. Thus, according to economists, the practicality of capitalism also stems from the fact that it allows individuals to set their own plans and pursue their own goals. Individuals are allowed to decide what career they would enjoy most; what products would give them the best value for their money; what opportunities would give them the best return on their investment; and so on. And capitalism does not merely offer the individual the freedom to pursue his own goals; it also rewards him for doing so. It offers him, as an incentive and reward for achieving his ambitions, the prospect of making money. As a result, people in a free market will work harder, longer, and smarter; they will take more risks and endure more hardships—so long as the work is theirs to choose and theirs to profit from.

;obviously, I would argue that motivation in a more socialist system must be differently motivated. Are we incapable of taking pleasure from knowing that our work is contributing to the greater good? I don't think so, though to disagree would be a fundamental and perhaps irreconciliable difference.
;I disagree that in a capitalist system at the stage at which we find the US allows people to freely choose enjoyable careers: our posibilities are always limited by our circumstances, and I believe that in capitalism as we know it, those circumstances are more often than not more limited than in a Socialist system. And capitalism does not reward ind.s for pursueing his own goals, it rewards for more aggressive competing. It maybe people will work harder, longer, and smarter in our system: I believe by and large we have misjudged our values, and mistakenly believe that we will achieve some skewed version of success if only we sacrifice ourselves more thoroughly for the corporation (which receive the only true benefits of this sacrifice.)
;interestingly, the idea of success is that if we work hard enough, eventually we won't have to work anymore. That is happening less and less in our society, as people see the need to continue working after normal retirement age just to survive. Of course some people do arrive, but not the majority.

In a state-run economy, by contrast, the central planning of government officials wipes out the plans of individuals. Since they don't own the business, can't control the course of their own careers, and don't stand to gain or lose from their actions, the workers' predominant attitude is apathy. And why should they care? If they succeed in increasing production, the extra wealth will be used to support those who haven't succeeded. "From each according to his ability, to each according to his need" is the motto of the welfare state. But in such a system, who would want to be the man of ability, conscripted into a life of unrewarded drudgery so that others can consume the product of his labor? It is no surprise that every society that has approached this socialist ideal has found few volunteers to be the men of ability who keep the economy running.

;why do you feel the need to present Socialism in such stark terms? Where do you see such a system that "wipes out the plans of the individual"? How many people in the US own businesses and so as you say can control the course of their own careers? If you are in that position, I congratulate you, but it is certainly not a generalizable characteristic of capitalism.
;I agree there must be some reward for ability. In Socialist systems, this happens. It may be that the individual rewards are somewhat diminished.
;"conscripted into a life of unrewarded drudgery so that others can consume the product of his labor?" Does this happen in our society? it is the rule, not the exception. In the US, except in cases of prodigous ability, only a specific type of ability is rewarded.
;the fact is, great figures have emerged from socialist societies in equal proportion to those who emerged from Capitalist societies. That many of the truly able people of the world are drawn to the US, I do not deny, and this is perhaps the most powerful argument in favour of Capitalism. And it is not only that they go to the US for personal profit, but frequently because there are more resources to fund research. (As seen in the Universities, which for a student, carries an average pricetag of over 10,000$ a year, and much of that money is inverted in funding the research of investigators. So you can see that the exceleration of research is done at the expense of the masses, who find themselves going deeper and deeper in debt just to achieve an acceptable minimum of education.)
;to a certain extent, I am able to avoid some of your criticisms of Socialism by being an Anarchist: I don't belive in a large clunky centralized government. I believe in local control, which would allow for greater facilitation of individual ideas and projects.

Stated in more fundamental terms, capitalism is practical because it relies on the inexhaustible motive-power of self-interest. Under capitalism, people are driven by loyalty to their own goals and by the ambition to improve their lives. They are driven by the idea that one's own life is an irreplaceable value not to be sacrificed or wasted.

;I see no reason to think that community interest couldn't be just as motivating. In general, the people of Europe have a much greater level of concern for the community than in the US, and there is no shortage of motivation here. I am not a proponent of the social-democracy that is predominant in Europe, and most of them suffer from the clunky, demotivating, central government. There is a lack of jobs in Europe, and an overabundance of qualified workers, and this is a problem, but part of the problem is also the invasive competition of American corporations. For example, I would not say that Coca Cola is by any means a superior product, but local products have not been able to survive in the face of the advertising blitz and exclusionary supply aggreements they look for. When a business agrees to sell Coca Cola, they frequently also agree not to sell the products of Coca-Cola's competitors.
;"They are driven by the idea that one's own life is an irreplaceable value not to be sacrificed or wasted." I don't think this is an accurate description of the motivation of most people in the US. They might be convinced that the all mighty dollar is an irreplaceable value, and to achieve it in as great a quantity as possible, they sacrifice and waste their lives.

But this is also a crucial moral principle: the principle that each man is an end in himself, not a mere cog in the collective machine to be exploited for the ends of others. Most of today's intellectuals reflexively condemn self-interest; yet this is the same quality enshrined by our nation's founders when they proclaimed the individual's right to "the pursuit of happiness." It is only capitalism that recognizes this right.

;your principle that each man is an end in himself and not to be exploited for the ends of others is by far better defended by socialism. Socialism better defends the rights of the workers, and guarantees basic rights like access to medical care.
;I don't condemn self-interest, but only recognize that in most cases what is good for the community is good for the individuals that comprise it. My goal is to balance self-interest, not do away with it.
;it is not only capitalism that recognizes the right to the pursuit of happiness, though I can only think that if the founding fathers saw fit to modify Locke's original phrasing from the pursuit of property to the pursuit of happiness, it was for a reason: the potential for happiness is not exhausted by a fat bank account.

The fundamental characteristics that make capitalism practical—its respect for the freedom of the mind and for the sanctity of the individual—are also profound moral ideals. This is the answer to the dilemma of the moral vs. the practical. The answer is that capitalism is a system of virtue—the virtues of rational thought, productive work, and pride in the value of one's own person. The reward for these virtues—and for the political system that protects and encourages them—is an ever-increasing wealth and prosperity.

;capitalism does certainly sing the virtues of rational (competitive) thought, productive work, and pride in the value of one's person, though this is largely part of the myth of the American dream. The truth is only a few truely benefit from the production of the masses which live according to these falsely realized virtues. The reward for these virtes, I would argue, is not an ever-increasing wealth and prosperity, but rather an ever increasing DISPARITY of wealth and prosperity.

Thanks for your post. Perhaps (perhaps not) it goes without saying that I present my response with the utmost respect for you and your arguement.

 

[tybalt]

I think the difference between Socialism and Capitalism can be stated succinctly. In Socialism, the government owns the means of production. In Capitalism, the banks own the means of production. Same game, different landlord.

the practical value of capitalism flows from the need to protect the creativity and freedom of thought of the individual

Companies that dominate most U.S. industries strive to stifle creativity and technological advances in order to extend their product life cycles and maximize ROI. Although there are mechanisms in place to protect intellectual property, such as the U.S. Patent Office, the current administration, under strong-armed guidance by our country’s largest corporations, has endeavored to erode such protections. Current plans call for raising the costs of patent protection to make it prohibitively expensive to individuals and small companies, while giving large corporations substantial fee reductions. Furthermore, big business interests have manipulated the legal system to protect intellectual property thieves from victims who lack the financial resources to assert their rights. The current state of intellectual property protection makes it profitable for wealthy organizations to steal innovations from individuals.

“In a free market, where everyone is free to start a business, raise capital, and place his product on the market—each individual thinker has the opportunity to put his ideas into practice, and to succeed or fail based on the merits of his idea.”

The merit of an idea is one of the least significant indicators of success. One’s ability to make the proper business connections, including the ability to raise capital, is paramount. On a list of ten most important things that a venture capital firm looks at when considering where to make an investment, the merit of an idea or technology ranks about 15th. In the marketplace, few superior ideas ever succeed. In all cases, the merit of ideas is trumped by capital expenditure issues. Proper execution of an idea depends on one’s connections. Success in the marketplace depends on the proper connections and the money to market and distribute your product. The ability to get these connections typically depends on who the person is who has the “idea” rather than the capability and determination of the individual to succeed. That is why you will never see someone from the Bronx with a middle-class background build a company that gives Intel a ride for their money, even if they can makes computer chips out of plastic. Capital is the great equalizer. It allows the priveledged mediocre to compete with the genius.

I’m not saying that what we have in the U.S. is capitalism. I think it more closely resembles feudalism. Same game, different landlord.

 

[Bry]

Very nice post, tybalt. Welcome to the board.