Tag Archives: Socialism

A problem with Socialism & Capitalism in America

As strange as it may sound both Socialism and Capitalism suffer from the same problem in America. This is not to say both suffer other problem/issues, just that they both suffer from the same one in America. In America we seem to think that both Socialism and Capitalism are well defined and thought out economic systems. Unfortunately they are not. They aren’t even well formulated economic theories. What they are are two, in practice, economic systems with many many different systems in practice.

People also think that Capitalism is a 18th century development an Socialism is a 19th century one. What is true is that those were when economic systems that had been going one for many centuries started to be both studied and, sometimes, formalized. When Adam Smith wrote “The Wealth of Nations” he was describing the economic system system he found around him in 18th Scotland. He both gave it a name and did try to formalize it into a theory. An for an 18th century philosopher he did quite well. But he wasn’t the last word, not by a long shot.

The same can be shown for Socialism. The economic philosophers of the early/middle 19th century were describing an economic system that they could observe practiced by natives in the soon to be colonized Africa and Americas.

So just what is the problem these two Izums share? When discussed they are in an idealized form. This is something done quite often in science. We will create an ‘idealized’ model to simplify the tremendously complex system we are studying. The thing to remember that it is an idealized sample we are looking at and therefore subject to errors. What will work in the idealized system doesn’t work, or works in strange ways, in the real world.

A great example of this is something I learned in a Macro Economics class, the concept of elasticity. All too often people think that you can buy, or refrain from buying something depending on how much it costs. An for a lot of things this is true. But somethings you must have to live, like food an water. If either or both of these become scares people will do what ever is needed to get them. These are what are called inelastic commodities. In an idealized economic model commodities will either be all elastic or all inelastic, not a mix. Nor will you have a commonality that is usually elastic that can become inelastic do to non economic forces.

Another thing that is often done in idealized economic systems is to limit the number of reasons a person will do something to strictly economic reasons, excluding religious , moral, and/or philosophical reasons. We even do a lot just for emotional reasons, because it will make us feel good, or to get back at someone/something that hurt us? These reasons for making economic decisions are difficult or impossible to quantitize much less predict.

So the next time someone brings up Socialism or Capitalism take a moment and ask them just what they mean by that word. You just might be surprised.

Capitalism and Wealth Redistribution

Today I’m going back to logic or the lack of it in our political discussions.  For over a hundred years the ‘Right’ of American body politic has lambasted the Socialist ‘Left’ for being anti-capitalism and pro Wealth Redistribution.  For anyone who is pro Capitalism, in all it’s myriad forms, to be against the redistribution of wealth is flatly illogical.  Capitalism is the foremost wealth redistribution economic system.  It is all about moving in wealth around from one place or person to another.

“WHAT????? That’s not possible.  It’s Socialists and Socialism that wants to take wealth from the rich and give it to the undeserving poor.

An your right, Socialism is interested in moving wealth from the wealthy to the poor.  But that does not mean that Capitalism doesn’t move wealth around.  In fact classical ‘Adam Smith’ Capitalism was/is all about moving wealth from the landed nobility to the much poorer tradesmen and craftsmen. Capitalism is a system of moving wealth from one person to another in such a way as to reward the hardworking and innovative person and to punish the lazy and stick in the mud person.  Unfortunately the society that enables Smithian Capitalism hasn’t existed for over a hundred years.

The kind of Capitalism that exists now, what I call Mega-Corps Capitalism is not anything like Smithian Capitalism.  The Capitalism we live with now is still interested in the moving of wealth, but unfortunately it is moving the wealth from people in the middle class to the top 1%.  This is still wealth redistribution, it’s just not trying to spread it around, it is trying to concentrate it more and more.

So next time someone says you’re supporting Wealth Redistribution, smile and say yes, I’m a Capitalist.