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KNOW GOOD THINGS – Capitalism vs Socialism: Part Two

August 7, 2017

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Howdy, gang! We left off last week’s blog with a bit of a monologue (from yours truly) regarding central planning/socialism. I am trying to lay out the basic tenets of socialsm so we’re all on the same page and in order to do that I had to first start with the philosophies of Karl Marx. He was a big time hater on capitalism because of what he perceived as “exploitation” and profiteering. Yes, capitalism requires profit, and profit requires some measure of exploitation. I suppose it hinges on how you really look at and understand (interpret) the word “exploitation”. Are workers in a factory exploited any more than a professional athlete? Some would say, yes. Some would say, no.

A better question would be to ask if the workers in a factory are paid an amount equal to their set of skills and the specific demand for said skills because, for the most part, a professional athlete is paid the amount he/she is worth based on the demand for his/her set of skills. The biggest difference is that there is a ceiling on how much a professional athlete can make in the NBA and NFL (called the “salary cap”). How would you feel if there was an absolute maximum you could earn in your job and once you reached it then you’d never be able to earn a penny more than that? A doctor is paid more than a grocery store clerk because the demand and skillset for doctors is higher than the demand and skillset for grocery store clerks. One of the beautiful things about living in a semi-capitalistic society is that if you don’t like your current situation (job, for example) then you can always try to develop new skills and find a new situation! Bottom line, it’s up to you!

The ugly little cousin of Marxism is what we refer to as, socialism. I think the idea of socialism is much more intriguing (especially to the young and impressionable minds of Americans) than actual socialism. Most of these young supporters of socialism don’t realize that it’s really an economic system whereby the means of production and distribution are wholly owned by the workers…but mostly by the state. Prices of goods and wages are determined by the government (central planners) instead of being determined by the market.

There are some forms of socialism that allow for the market mechanism of supply and demand when it comes to wages of special instances, like doctors and athletes, but there’s usually always a wage ceiling (ex., Europe). The basic tenet of socialism is public property instead of personal property. In fact, one could very easily argue that socialism strives to strip all individuals of ALL property rights because the central planners are able to use whatever property more efficiently and effectively for the common good. That’s a phrase you tend to hear a lot of when someone is referring to socialism: the common good…or, the greater good. The problem with “the greater good” is that it minimizes the individual and maximizes the group. Newsflash…groups would not exist without individuals, right? So, it remains to be seen how anything in a socialistic society could possibly increase efficiencies when it completely destroys and eliminates the individual!

The sexy thing about socialism that piques the interest of the young and impressionable is when individual leaders (Bernie Sanders, Elizabeth Warren, etc..) begin discussing free stuff. They mention “free school” and “free healthcare.” which sounds amazing, right? I mean, who wouldn’t want free stuff? The reality check comes when the impressionable youth turn into responsible adults and realize that nothing comes for free. Remember, we discussed how governments accumulate money. It’s not through business ventures, but rather through taxation. Free schooling and free healthcare would never, ever, ever be free. It would be provided at the expense of the taxpayer, which would necessarily mean that the taxpayer would have to end up paying more…and more…and more. The demands of the state never subside.

As mentioned last week, socialism (and modern-day progressivism) is essentially Marxism, but without the revolution. It’s highly idealistic and based on the notion that a utopia is something that can and will be easily achieved. Capitalism is flawed, for sure. It is, however, the most efficient method the world has ever seen. Just take a look at the poor in America and compare them to the poor of El Salvador. Even some of the poorest of Americans are considered to be extremely rich by global standards!

Education is the answer. If we wait for our kids to be educated on things like this until they go to college then it’s too late. Individuals need to learn this stuff in middle school and high school. They need to see it implemented by being urged to start their own lawn mowing service during the summer months, for example…and they need to pay for the lawn mower, fuel, oil, and maintenance themselves! They’ll soon learn that the more lawns they can mow the more money (profit) they’ll make by exploiting themselves!

Be good. Do good. Know good.

~Kleiny

3 Replies to “KNOW GOOD THINGS – Capitalism vs Socialism: Part Two”

  1. RonBurkey says:

    Sheez Kleiny, these articles are great stuff! You are so right, this education is valuable, not just for traders. Yup, everyone should have an understanding of this stuff, starting with kids.
    Progressive, now there’s a word. I want to be progressive, right? Oh, wait, that means something else now….
    Thanks

  2. PATRICIAROBSON says:

    Thanks Kleiny great article. As a person growing up during socialism in Eastern Europe could not have explained it any better. The only thing I would add is that in socialistic society in order to reap the benefits everyone must work . If everyone and everything suppose to be equal then everybody should share the workload.

  3. TOMASFLORES says:

    This is a great article. Based on my own experience visiting social countries I can say that to understand socialism first you need to remove the existing concept of value and value of money, and understand that real value is translated into social capital. For socialism real value translates to liberty, solidarity, honesty, kindness, Liberty should not be purchased with labor or money. Reason socialism is not welcome into our ideology is purely due to remains of a Cold War waged 50 years back.

    Furthermore, there is a misconception about capitalism where it is said capitalism promotes individuality. Instead Adam Smith states that “…it seems that the purpose of the masters of mankind…” is to make individuals to work for their own interests and benefits, but it is not necessarily the purpose of individuals. There is a owner of society which controls wealth supply through money and that is the reason why money becomes such a valuable asset in the economy as we know it. Both Capitalism and Socialism handle the idea of “wealth”, not money.

    If markets would exist in socialist countries, prices of financial assets would never fluctuate since value of goods obey purely to a social benefit and not supply/demand.

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