Archive for the ‘socialism’ Tag

Capitalism vs. Socialism   Leave a comment

Several recent polls, plus the popularity of Sen. Bernie Sanders, demonstrate that young people prefer socialism to free market capitalism. That, I believe, is a result of their ignorance and indoctrination during their school years, from kindergarten through college. For the most part, neither they nor many of their teachers and professors know what free market capitalism is.

Found on Lew Rockwell

Free market capitalism, wherein there is peaceful voluntary exchange, is morally superior to any other economic system. Why? Let’s start with my initial premise. All of us own ourselves. I am my private property, and you are yours. Murder, rape, theft and the initiation of violence are immoral because they violate self-ownership. Similarly, the forcible use of one person to serve the purposes of another person, for any reason, is immoral because it violates self-ownership.

Tragically, two-thirds to three-quarters of the federal budget can be described as Congress taking the rightful earnings of one American to give to another American — using one American to serve another. Such acts include farm subsidies, business bailouts, Social Security, Medicare, Medicaid, food stamps, welfare and many other programs.

Free market capitalism is disfavored by many Americans — and threatened — not because of its failure but, ironically, because of its success. Free market capitalism in America has been so successful in eliminating the traditional problems of mankind — such as disease, pestilence, hunger and gross poverty — that all other human problems appear both unbearable and inexcusable. The desire by many Americans to eliminate these so-called unbearable and inexcusable problems has led to the call for socialism. That call includes equality of income, sex and race balance, affordable housing and medical care, orderly markets, and many other socialistic ideas.

American Contempt for …Walter E. WilliamsBest Price: $11.23

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Let’s compare capitalism with socialism by answering the following questions:

In which areas of our lives do we find the greatest satisfaction, and in which do we find the greatest dissatisfaction? It turns out that we seldom find people upset with and in conflict with computer and clothing stores, supermarkets, and hardware stores. We do see people highly dissatisfied with and often in conflict with boards of education, motor vehicles departments, police and city sanitation services.

What are the differences? For one, the motivation for the provision of services of computer and clothing stores, supermarkets, and hardware stores is profit. Also, if you’re dissatisfied with their services, you can instantaneously fire them by taking your business elsewhere. It’s a different matter with public education, motor vehicles departments, police and city sanitation services. They are not motivated by profit at all. Plus, if you’re dissatisfied with their service, it is costly and in many cases even impossible to fire them.

A much larger and totally ignored question has to do with the brutality of socialism. In the 20th century, the one-party socialist states of the Union of Soviet Socialist Republics, Germany under the National Socialist German Workers’ Party and the People’s Republic of China were responsible for the murder of 118 million citizens, mostly their own. The tallies were:

No such record of brutality can be found in countries that tend toward free market capitalism.

Here’s an experiment for you. List countries according to whether they are closer to the free market capitalist or to the socialist/communist end of the economic spectrum. Then rank the countries according to per capita gross domestic product. Finally, rank the countries according to Freedom House’s “Freedom in the World” report. You will find that people who live in countries closer to the free market capitalist end of the economic spectrum not only have far greater wealth than people who live in countries toward the socialistic/communist end but also enjoy far greater human rights protections.

As Dr. Thomas Sowell says, “socialism sounds great. It has always sounded great. And it will probably always continue to sound great. It is only when you go beyond rhetoric, and start looking at hard facts, that socialism turns out to be a big disappointment, if not a disaster.”

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A Hero of Modern Liberty   Leave a comment

I thank my friend Mila for sending me this information. I had never heard about this man before she emailed me.

Международная Леонардо-премия 38.jpgAlexander Yakovlev was a man of humble origins, born in 1923 in Korolevo, a small village near the city of Yaroslavl, 160 miles northeast of Moscow, to a peasant family of loyal communists. After finishing secondary school in 1941, he was conscripted into the Red Army, where he fought until he was discharged in 1943 following an injury. He then joined the Communist Party, studied history and was offered to work for the Party at the local Department of Propaganda and Agitation. His career really took off upon his transfer from Yaroslavl to Moscow in 1953, where he rose through the post-Stalin party ranks. In 1969, he was appointed head of the propaganda department.

1958, Nikita Khrushchev gave a secret speech denouncing Stalin which Yakovlev personally attended. Yakovlev became doubtful of Marxism after this and tried to resolve its numerous inconsistencies. Following this speech, Yakovlev asked to study at the Academy of Social Sciences, where he recounts studying “feverishly” and reading “copiously” in search of an answer.

Eventually, he realized the Marxist ideology itself was flawed:

“It was at the academy, while immersed in studying primary sources, that I became fully conscious of the hollowness and unreality of Marxism-Leninism, its inhumanity and artificiality, its inherent contradictions, its demagogy and fraudulent prognostications.” Yakovlev, A Century of Violence in Soviet Russia.

He concluded that the only system viable of being an alternative to Marxism was one based on freedom of choice, private property, and morality which, according to Yakovlev, necessarily accompanies individual freedom.

On the eve of the half-century founding of the USSR, Yakovlev published an article attacking Russian nationalism, ending his illustrious career in as the Soviet propaganda minister. He was exiled to Canada as an ambassador.

In 1983, while still stationed in Canada, he held a long conversation with Mikhail Gorbachev, during which they formulated the ideas of perestroika (restructuring). Within two months, Yakovlev was back in Moscow, placed at the helm of an economic state-run think tank, and in 1985 (upon Gorbachev becoming general secretary) moved back to his familiar territory of propaganda.

Perestroika, accompanied by glasnost (openness), entailed a gradual introduction of freedom into Russian society and economy. This process allowed for some market-like independence of state companies, such as more flexibility in contracts and even retaining a part of the profit within companies. Glasnost showed the importance of ideology. Once in charge of it, and with the daily support of Gorbachev, Yakovlev was able to lift the suppression of political, cultural, and media discussions.

Soviet censorship was relaxed, and previously banned works such as Orwell’s 1984, Nabokov’s Lolita, and Pasternak’s Doctor Zhivago became freely available to Russians. It is primarily thanks to Yakovlev’s ideas and his role in implementing them that Gorbachev would be awarded with the 1990 Nobel Peace Prize.

 

Yakovlev pointed out the numerous flaws of Marxism, especially its underlying idea of class struggle:

There is a harmony of opposites: cooperation of classes, solidarity of classes. And only because of this does society thrive and develop. Any organization is harmonious cooperation; any division of labor is a mutual complement of diverse and opposite functions.” Yakovlev, The Fate of Marxism in Russia, (1993)

Marxism wrongly believed human nature may be altered by changed social relations. It is not capitalism which leads to alienation, as Marx predicted, but Marxism, wrote Yakovlev, since the abolition of private property alienates the workers from the fruits of their labor.

Marxism did bring about liberation, but it was liberation from responsibility, as it bred laziness and corruption. According to Yakovlev, the expropriation:

[D]eformed the psyche, people’s consciousness. It undermined the motivation for constructive labor and reduced people’s responsibility for their own welfare and lives.” In turn, this resulted in bureaucratic dictatorship.

When confronted with the failings of the realization of their ideology, Marxists were (and are) armed with various excuses: either the timing for the revolution was “wrong”; or the Russians mistakenly implemented the ideas of the “false” Marx, rather than the “true” Marx; or the problem was Stalin rather than Marxism; or as Yakovlev attests,

The theoretical legacy of Marxism ought to be judged today, not by its moral and intellectual intentions, but by what was accomplished on its basis and its ability to see the contemporary world as it is. Neither criteria proves the efficacy of this doctrine.” Moreover, when Marx’s “ideas became reality, they revealed their futility as well as their destructiveness.”

The consequences of this destructiveness shook Yakovlev to his core. In 1988, Yakovlev was put at the helm of a recently established Commission on the Rehabilitation of Victims of Political Repression, charged with studying the materials of repression during Lenin’s and Stalin’s reigns. As he recounted in A Century of Violence in Soviet Russia,

The task has been a weary one. To descend step by step down 70 years of Bolshevik rule into a dungeon strewn with human bones and reeking of dried blood is to see your faith in humankind dissolve.

The Commission disclosed the diabolical crimes against the “unnecessary” peoples of the USSR: the decimation of seven million kulak households; the widespread hostage-taking, special orphanages, and even concentration camps for “socially dangerous children” of families targeted by repression; the deportation to forced labor camps of the “twice betrayed” prisoners of war of Soviet origin; the repressions of merchants and intelligentsia.

As Yakovlev reveals, particularly horrifying was the terror against the clergy:

“The documents bear witness to the most savage atrocities against priests, monks, and nuns: they were crucified on the central doors of iconostases, thrown into cauldrons of boiling tar, scalped, strangled with priestly stoles, given Communion with melted lead, drowned in holes in the ice.”

All the while, Lenin agitated that the level of murders was too low, instructing his followers to “launch merciless mass terror against kulaks, priests, and White Guards” (Lenin, quoted by Yakovlev). It is precisely these foundations of fear and violence that made the USSR incapable of reform.

Perestroika and the subsequent collapse of the Soviet Union liberated the Russians from communism – yet according to Yakovlev this had to be complemented with a spiritual liberation, Russian repentance for the sins of communism, and a legal trial of Bolshevism. He urged:

The twentieth century has come to an end. For Russia, it was the most terrible, the bloodiest century, shot through with hatred and intolerance. It would appear to be time to come to our senses, repent, ask forgiveness of the still-living survivors of the concentration camps, kneel before the graves of the millions of people who were shot or who died of hunger, and realize, at long last, that we lived in a criminal state, helping it to enslave us – all of us together and each of us separately.”

Alas, his calls fell on deaf ears, and Yakovlev himself was soon dubbed a traitor and Judas, as he constantly received threats, had funeral wreaths laid on his doorstep, his son shot at, and daughter’s car incinerated.

Unlike thousands before him, Yakovlev could not have chosen to lead a comfortable life and enjoy the rich privileges of the communist elite, because he had realized the only alternative to Marxism was individual freedom. Being a humble man, he most likely did not have himself in mind when he wrote:

Society does not become enlightened all at once, especially a society that is living in non-freedom but does not know it. Enlightenment begins with solitary individuals and then becomes massive and irreversible when life and circumstances begin to give birth, to reproduce on a mass scale the bearers of new consciousness. Such processes are produced from the coming into being of the individual.”

Communism in the USSR would have fallen with or without Yakovlev, but his wise guidance and intellectual rigor ensured that the most brutal regime in humankind’s history ended with a miraculous lack of bloodshed and violence. Today, humanity would prosper if other Yakovlevs would inspire the leaders of Venezuela, Cuba, North Korea, and – once again, unfortunately – the unrepentant Russia.

Posted January 2, 2018 by aurorawatcherak in History, Uncategorized

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Myth Busting – Hitler WAS a Socialist   Leave a comment

The National Socialist German Workers Party (Hitler’s party) were socialists. How do I make that claim? It’s right there in their title, for one, but also because Hitler’s henchman Goebbels never doubted that he was a socialist. He considered Nazism to be a better and more plausible form of socialism than that espoused by Lenin. Instead of spreading itself across different nations like dandelion seeds, it would operate just within German-speaking countries, thus assuring cultural victory.

Image result for image of hitler as a socialistFor the modern Left not to know this shows gross historical illiteracy. That they try to explain the connection away would be laughable if I believed most people in the US were educated enough to know the Left is stupid.

Hitler boasted that “the whole of National Socialism” was “based on Marx.” Hitler thought Marx had erred in fostering class division rather than national unity. By setting the workers against the industrialists Marx had, in Hitler’s view, missed an opportunity to unite them to the same goals. He meant to “convert the German Volk to socialism without simply killing off the old individualists.” He thought the bankers and factory owners could serve socialism better by generating revenue for the state.

Yeah, the national socialists  and the international socialists loathed one another and rushed to put each other in prison camps or before firing squads, but that was merely a territorial food fight between two tribes that hated free-market individualists. They were brothers and brothers tend toward rivalry, but they were still brothers, more alike than not. Both were evil forms of statism … one attracting people who envied the wealthy and the other seeking recruits by demonizing non-Aryans.

Somewhere along the line we’ve forgotten what Nazism really was and we’ve allowed leftists to define it as a more extreme form of conservatism. The myth revolves around the idea that left-wing means compassionate and right-wing means nasty and we all know fascists are nasty.

Does that sound silly worded like that?

That’s because it is. The media calls all sorts of groups “right-wing”. The Taliban, for example, is “right-wing” according to the media. Yet, the Taliban, while being conservative Muslims, want communal ownership of goods. The “right-wing” Iranian revolutionaries seized industries and destroyed the middle class.

So let’s step back and consider this. Both ideologists favored authoritarianism as a means to their ends. So do, for that matter, the Iranian revolutionaries and the Taliban. Authoritarianism is the believe that state (government) compulsion is justified in pursuit of a higher goal. That goal might be scientific progress or great equality or the protection of religion. It was traditionally a characteristic of social democrats and revolutionaries, as pointed out by the very progressive HG Wells, who in 1932, told the Young Liberals they must become “liberal fascists” and “englightened Nazis.”

Wells wasn’t not advocating for embracing Hitlerism, which didn’t actually exist in 1932. He was describing government interventionism. A lot of people in the United States at that time were pro-interventionism, having not yet recognized the racism and anti-Semitism that were part of the fascist program. They didn’t know what they didn’t know.

What is the excuse of modern people who excuse communism today? We know where it has always led and we should know that it will lead there again, but some of Americans romanticize an ideology that killed tens of millions of innocent people. Do you not realize that T-shirt of Che Guevara champions the vicious enforcing of Cuba’s totalitarian regime.

Socialism = Many-Headed Hydra   Leave a comment

I got into a kerfuffle with some socialists (Bernie supporters) on Twitter recently because I know what Bernie is advocating and they are so enamored of all the free stuff he’s offering that they are blind to the economic, social and political realities of socialism.

As the New Republic’s John Judis explains:

In the early 1970s, I was a founding member of the New American Movement, a socialist group… Five years later, I was finished with…socialist organizing. …nobody seemed to know how socialism—which meant, to me, democratic ownership and control of the “means of production”—would actually work… Would it mean total nationalization of the economy? …wouldn’t that put too much political power in the state? The realization that a nationalized economy might also be profoundly inefficient, and disastrously slow to keep up with global markets, only surfaced later with the Soviet Union’s collapse. But even then, by the mid-1970s, I was wondering what being a socialist really meant in the United States.

He then noted that socialism is making a comeback and he’s pleased that socialism seems to have a future in American politics once again.  He hopes Sanders can make socialism relevant to Americans in the 21st century.

The old nostrums about ownership and control of the means of production simply don’t resonate in 2017. …In the 2016 campaign, however, Sanders began to define a socialism that could grow… I think there is an important place for the kind of democratic socialism that Sanders espoused.

In analyzing the many flavors of socialism, Judis ultimately distilled them into two camps – Marxist Socialism with its apocalyptic abolition of capitalism and Keynes’s Liberal Socialism, which works more gradually toward the incorporation of public power and economic equality within something that pretends to be capitalism. Most of the leftists I know believe in “liberal democracy” and “liberal socialism”, which are both good when you compare them to Marxist socialism which requires totalitarianism to work, but what Obama and Clinton want is still bad compared to small-government capitalism.

American leftists are content to allow capitalism so long as they can impose high taxes on “economic surplus” to finance lots of redistribution. They are certain such policies will have no significant negative economic impacts. Punishing success and subsiding dependence doesn’t encourage long-term prosperity and demographic trends make their policies increasingly unsustainable, but at least these folks don’t want to enforce their ideals through totalitarianism … yet. They’ll leave that to a later generation, I suppose.

Judis suggested that there is no definitive definition of “socialism”, but throughout the 19th century and much of the 20th century, all socialists condemned and called for the abolition of private ownership of the means of production and imagined it replaced with some form of socialist central planning directed by the government in the name of “the people.” The only great debate among socialists and communists in the 19th & 20th centuries was over how the socialist utopia would be brought about … whether by violent revolution or the democratic ballot box. The Russian Marxists insisted only revolution and the “dictatorship of the proliteriat” would bring “the workers” to power and assure their permanent triumph over the “exploitive” capitalist class, while the German democratic socialists opted for democratic means to power and rejected dictatorship. Well into the post-World War II period, the dispute was over political means and not ideological ends. The goal was, for both ends of the spectrum, the abolition of capitalism and the imposition of socialist central planning. How they got there differed, but both ended up with centralized government direction of economic affairs and social change.

By mid-century, “democratic” socialists in Western Europe grudging accepted the failure of socialist central planning in the Soviet bloc, Asia, Africa and Latin America. The brutal tyranny of Soviet-style socialism made it ethically indefensible. They changed their message to a “social justice” message without mentioning the nationalization of the means of production or centrally planning all economic activity.

With the opening of Cuba to tourism, leftist social justice warriors are planning to go and study what worked there. Of course, they won’t tour La Cabana prison where Che Guevara acted as unrestrained judge, jury and executioner.  They probably won’t tour the forced labor camps or talk to anyone who spent 20 years in one of them for holding ideas that weren’t allowed. No, they prefer to bask in the moral satisfaction that the few remaining communist regimes are still trying to make the “better world” they promised. Censorship of ideas, music, political views and imprisonment of “the people” who don’t have the “right” ideology will mostly not be spoken of. And, note, the social justice warriors who so admire the murderer Che prefer to live in Western countries where the rule of law has thus far protected them from their “liberal socialist” dream.

So, what do my not-so-friendly leftist friends on Twitter want from this “Liberal Socialism” they fervently advocate for? It’s the same “utopia” that Western countries have been pursuing since the end of World War II, though it has different degrees in different places.

Mr. Judis wants the government to intensively regulate, command, restrict and direct various aspects of private enterprise in society while ensuring that American society can still take advantage of the self-interested incentives and innovations that work to improve the material conditions of life. He just wants the direction, form and extent to which private businesspeople are allowed to innovate and produce to be confined and constrained by “non-market” values to conform to the purposes of “society.”

Matching the regulatory and interventionist state will, of course, be the redistributive welfare state. Excessive and unnecessary income held by businesses and investors must be heavily taxed to assure greater material egalitarianism, to fund all manners of social safety nets, and bring benefit to ordinary Americans. They use that word “economic security” a lot.

I’m not really certain what differentiates Mr. Judis’ “liberal socialism” from what already exists in the United States. It appears it’s a fine line involving intentions and the recipients of the goodies. Modern liberals like Bill and Hillary Clinton lost their way and started sleeping with the enemy (Wall Street et al). What is needed, according to Mr. Judis, is for modern American liberals to take a giant step to the left and use the Democratic Party to propagandize and persuade more in society to believe that socialism is best for them.

Just move the existing welfare state to the ‘right’ elected hands and watching things change.

Of course, what we really have in the United States is not a free market “neo-liberal” capitalism. It’s more of a “bourgeois socialism” where a system of government regulation, redistribution, favors and privileges benefit many in the private enterprise sectors of society … what we now call “crony capitalism.” What Judis is calling for is “proletarian socialism” where government more directly takes from the “rich” to give to “the workers” and “the poor.”

How likely is this to come about? Well, the call for “participatory democracy” is telling. Politics in an unrestrained democracy always becomes a tug-of-war among special interest groups capable of gaining concentrated benefits from State intervention and redistributation at the diffused expense of the rest of society. Think about special interest groups who succeed in offering campaign donations and votes to politicians who then fulfill their campaign promises to those groups once in power. The “classless” Soviets used a hierarchial system of privilege that beguiled one of the most intricate social webs of power, privilege favoritism and plunder ever seen in human society. Turned out that the notion of “the people” owning, controlling, regulating and overseeing the collective direction of an economy was pure illusion.

What far too many peole who share Mr. Judis’ views about capitalism and socialism fail to comprehend is that ANY and ALL forms of planning, regulation and political redistribution takes power and decision-making away from “the people” and gives it to government administrators who then use it for their own benefit.

What do you want to be when you grow up, little boy? You can be an engineer or an engineer. Soviet Era Joke

Only in the open, competitive market economy does each and every individual exercise liberty over his own personal affairs. The market enables us to make our own choices concern the professional, occupation and productive calling we wish to pursue. It leaves us free to make our own choices on how to earn income and spend that income on what we value or desire or believe will bring meaning and happiness to our own lives. In a free society where individual liberty and voluntary association are protected, we have true opportunities to form groups of almost any type to make our lives outside of the market materially, socially, culturally and spiritually better in our estimation.

 

Posted September 19, 2017 by aurorawatcherak in economics, Uncategorized

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Relying on “Experts”   Leave a comment

I have emerged from the writer’s cave once more. I hope you’ve enjoyed the various reblogged articles. Thank you for your patience and I should probably even be back on Twitter when this runs. Lela

 

For April Fools Day of 1957, the British Broadcasting Corporation broadcasted a short segment about a bumper spaghetti harvest in southern Switzerland. The “documentary” explained that the bumper crop was due to “an unusually mild winter and to the virtual disappearance of the spaghetti weevil.” The television audience “watched video footage of a Swiss family pulling pasta off spaghetti trees and placing it into baskets. The segment concluded with an enthusiastic “for those who love this dish, there’s nothing like real, home-grown spaghetti.”

Related imageThe BBC reports that “hundreds of people phoned the network wanting to know how they could grow their own spaghetti tree.”

Okay, did you know that the word “gullible” is not in the dictionary?

Apparently, 7% of the American public believe chocolate milk comes from brown cows. Yeah, some of us are really that ignorant.

But, wait ….

I know a little bit about a lot of things. Writers research and we’re curious. But I really wouldn’t know how to build a car or manufacture a toaster. So while ignorance can be alarming, is it really so surprising? Few Americans live on farms anymore and most urbanites have never gardened. Many of us use appliances and gadgets with no idea how they are constructed and work. Without the skills, knowledge, and efforts of others, most of us would quickly perish. None of us would enjoy our current standard of living.

Conversely, one of the advantages of living in a modern society is that we don’t need to know how to construct the things we take for granted. We don’t even need to understand how they work. This frees us up to be “experts” in other fields while enjoying the benefits of what others know.

In 2008, British artist Thomas Thwaites set out to make a toaster from scratch. After nine months of mining, smelting, and assembling raw materials, he succeeded in making a rudimentary but extremely expensive and single-use toaster. When he used it for the first time, it melted.

Matt Ridley (The Rational Optimist) summarized the lesson of Thwaites’s toaster:  

To Thwaites this illustrated his helplessness as a consumer so divorced from self-sufficiency. It also illustrates the magic of specialization and exchange: thousands of people, none of them motivated by the desire to do Thwaites a favor, have come together to make it possible for him to acquire a toaster for a trivial sum of money.

Our state of boundless ignorance leads directly to “the case for individual freedom,” Hayek argues in The Constitution of Liberty. Achieving “our ends” depends upon us recognizing that we are ignorant of much of what we need to flourish. Hayek writes:

It is because every individual knows so little and, in particular, because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it.

We live comfortably in a state of ignorance because, in a modern economy, others are free to cooperate and provide for our needs without necessarily even knowing we exist.

The possibility of men living together in peace and to their mutual advantage, without having to agree on common concrete aims and bound only by abstract rules of conduct, was perhaps the greatest discovery mankind ever made. (Hayek in Law, Legislation and Liberty, Volume 2)

 

Of course, nowadays, our ignorance is used as an argument insisting we need to be directed by the self-proclaimed wisest among us. Listen to the “experts” because they aren’t ignorant. Really? I’m willing to bet that any expert you look at is personally ignorant in some field in which you are expert. Expertise is usually in a narrow field and outside of that field, the “expert” is just an ordinary ignorant person. So why do we act as if their expertise in some narrow field makes them expert in all fields? Einstein was a great mathematician, but he once lost his ticket on a train and had no idea where he was going.

A part of the push toward technocracy has to do with our desire to control others through government force.

“Humiliating to human pride as it may be, freedom means the renun­ciation of direct control of in­dividual efforts,” Hayek explained. When we renounce controls, “a free society can make use of so much more knowledge than the mind of the wisest ruler could comprehend.”

I may be ignorant in many areas, but when I encounter a field where my ignorance will be a problem, I take it upon myself to become educated on the subject. That’s one reason that I feel free to offer my opinion on so many topics. I may not be “an expert” in that I lack a license and haven’t spent four years studying it in an accredited college, but I know enough on some subjects to know what works and what doesn’t. I can see, for example, that old-fashioned supply-and-demand economics makes more sense in reality than Keynesian voodoo. By and large, I am comfortable with making my own decisions, secure in the knowledge that I can educate myself, weigh the value of the advice derived from “experts” and take the hits if my analysis fails.

There is evidence that a declining percentage of Americans believes that uncoerced cooperation is the best way to satisfy our needs. “According to an April 2016 Harvard University pollsupport for capitalism is at a historic low.” The Harvard poll echoes a 2011 Pew Research Center survey, in which 46% of 18- to 29-year-olds had a positive view of capitalism, and 47% held a negative one. Many of these young people would prefer if the government controlled the economy at the level of individual interactions because they believe people other than themselves are just too ignorant to make their own decisions.

Being ignorant that spaghetti is produced by processing wheat is not inherently a problem, but ignorance of how markets work can become one. The cornucopia of food that predictably appears on supermarket shelves today is the product of a market process in which farmers, manufacturers, trucking companies and supermarkets spontaneously cooperate on our behalf. It’s been feeding us very well for many years. Government would only complicate the functional system. If Americans are ignorant of these invisible market processes, they may support socialism and policies that interfere with the freedom of others to cooperate and create. Just look at how the thriving Venezuela of yesterday became the impoverished, chaotic, socialist Venezuela of today.

Were we directed from Washington when to sow and when to reap, we should all want for bread. (Thomas Jefferson, Autobiography, reprinted in Basic Writings of Thomas Jefferson, 1944)

Not knowing how spaghetti or chocolate milk gets made won’t cause starvation, but socialistic inference in the market is causing it in some countries today and could cause it in the US if we don’t curtail our human arrogance and desire to control what others do.

Mises on Economic Calculation   Leave a comment

I’m concluding my series on Ludwig von Mises’ 1920 essay “Economic Calculation in the Socialist Commonwealth”, appropriately enough, with his conclusion of the essay. I highly recommend you read it for yourself to get a fuller understanding of why socialism was a bad idea in 1920 and a bad idea nearly a century later.. Lela

 

He called for socialists to consider their position on a rational basis and realize that socialism does not  match reality. Their system has no way of determining the natural value of anything. Prices must be arbitrarily derived by bureaucrats in a socialist system, while in a capitalist system, supply and demand operate automatically to provide a “market value” price derived through exchange relations. The purchasers of a product determine the price depending on their personal choices.

Ninety-seven years after Mises wrote this essay, he’s still right and the Soviet Union and China have both proven his critiques. The Soviet Union is no more and Russia and the former Soviet bloc countries are largely market-based economies. Many of them are much more capitalistic than the United Kingdom or the United States. Meanwhile, China has taken a halfway position in state capitalism. Lenin thought of state capitalism as an intermediary step toward the paradise of socialism, but having tried social for several decades, China decided to introduce some capitalism.

Image result for image of american socialismName a socialist society that is doing well. There are a few capitalist societies that have a great admix of socialism — the United States, for example. Alaska too. The United States has suffered under a slowing economy for more than a decade now and is currently $21 trillion in debt. Alaska almost didn’t pass a budget this year. Socialism sounds good from the perspective where it hasn’t been tried yet, but inevitably it can’t operate without some market-economy features and so …. The United States has spent many decades slowly becoming more socialistic and our economy is teetering on the brink of collapse. Some observe that we appear to have been coasting on the dynamism of our past capitalism and that is now running out. Just look at the pace of inventions in the US between the end of the Civil War and now. You can see that we had a huge burst of activity and then we slowly fell away in an inverse ratio to the amount of government interference in the economy. So, what does that mean for us now? Is the solution perhaps reintroducing capitalism to the system?

Responsibility and Initiative in Communal Concerns   Leave a comment

This is a series based on Ludwig von Mises’ essay “Economic Calculation” I’m only hitting what I think are the highlights and suggest you look the essay up to read it in full if you’re curious. Lela

Image result for image of the failure of socialist businessesMost socialists ignore this or they believe they can remedy it by setting up pretend business structures. They still don’t own the means of production, but occasionally enterprises have flourished under their control, so they see this as proof that if society owned the means of production, there would be no issues over the lack of ownership.

Mises acknowledged that there are two different kinds of business. Most small companies are run by proprietors or small boards of directors who all have direct interest in the company. They may be corporations, but they act like small businesses. Think Hobby Lobby or Chik-fil-A.

Then there are the large scale corporations where only a fraction of the shareholders have any direct control of the firm. The firm’s control is in the hands of people who don’t own it and are sometimes at variance to the people who own stock in the company. Sometimes the management follows a course that injures the shareholders. Why? Because their agenda for the company is their own best interest rather than the shareholders.

The same holds true for banks and large financial institutions. It’s best not to trifle with the public’s interests because sooner or later, it will come back on you, the manager, and end up harming you in the long run.

Image result for image of the failure of socialist businessesBut when an industry is nationalized, this motive disappears because private individuals no longer have material interests in the enterprise they are employed by. By Mises’ era there were already decades of evidence on State and socialist endeavors. There were no internal pressure to reform or improve products and socialist enterprises had no incentive to adapt to changing conditions of demand. Companies grow moribund. Managers lose interest in doing great work, because they get paid the same whether they do pedestrian work or excellent work. It doesn’t matter, so they don’t care.

If the managers of these enterprises were interested in the yield, it was thought they would be in a position comparable to that of the manager of large-scale companies. This is a fatal error. The managers of large-scale companies are bound up with the interests of the businesses they administer in an entirely different way from what could be the case in public concerns. They are either already owners of a not inconsiderable fraction of the share capital, or hope to become so in due course. Further, they are in a position to obtain profits by stock exchange speculation in the company’s shares. They have the prospect of bequeathing their positions to, or at least securing part of their influence for, their heirs.

This ignores the obvious fact that most people are diligent, enthusiastic and hard working only when it benefits them. Socialists believe they can construct a socialist commonwealth on the basis of the Categorical Imperative alone. How lightly it is their wont to proceed in this way is best shown by Kautsky when he says, “If socialism is a social necessity, then it would be human nature and not socialism which would have to readjust itself, if ever the two clashed.”

But let’s say we live in Utopia and that people really will exert the same zeal for the collective as they do for themselves and those they love. We’re still faced with the problem that the lack of economic calculation means that individuals can’t ascertain how well they’re actually doing in their jobs.

Bureaucracies typically lack initiative. We know that. Government agencies spend a lot of money trying to remedy this by organizational changes. It almost always fails.

Socialists resist placing their ventures entirely in the hands of a single person, because they suspect he’ll permit errors that damage the community, so instead they rely on committees. But committees rarely introduce bold innovations.

One cannot transfer free disposal of the factors of production to an employee, however high his rank, and this becomes even less possible, the more strongly he is materially interested in the successful performance of his duties; for in practice the property-less manager can only be held morally responsible for losses incurred.

The property owner himself bears responsibility. He must primarily feel the loss arising from unwise business practices. This difference in the sense of ownership is a characteristic difference between market-based and socialist production.

Lyndell Williams

Author * Writer * Stoker of Flames

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