Understanding Capitalism versus Socialism


Maybe you are a casual Agonist reader or an Agonista at heart but in any case you are probably asking yourself: what's the deal with socialism and why do I like capitalism?

OK, lets get started by defining socialism: socialism is, by definition, something you don't want. Its that simple and all you really need to remember but, of course, there is a complex academic explanation which goes like this: Americans don't want socialism because the government does it.

Now that you understand socialism, its really very easy to understand capitalism. The definition of capitalism is something that you do want. Again its that simple, Occam's Razor! Again, this being an academic sort of paper, I should add that capitalism is something that you want because the government doesn't do it. It's so simple isn't it?

Here's a trick for remembering the difference between socialism and capitalism: S is for Socialism and Satan and C is for Capitalism and Christ; Satan was a socialist and Christ was a capitalist or would have been if he wasn't under the thumb of that heathen Roman empire run by oligarchs.

Now, with such powerful definitions you may be asking: what else do I need to know? However, it is incumbent on me, this being a scientific paper and all, to provide some background data and some examples of what I'm saying.

Its very important to remember that when the government does stuff it get's big; that's called big government and that's bad. See, that's different than big corporations who don't get big doing stuff but get big earning money; so you can see that corporations are way more efficient because their bigness has an incentive.

We all know that big government workers are just wait'n around for their pension so they can retire with healthcare but workers for big corporation's don't have pensions or healthcare when they retire; they have to get those from big government evils like Social Security and Medicare. What I mean to say is that people who work at corporations can't wait around because there's really nothin' to wait for so you can understand their incentive; is just plain survival; easy right?

Big corporations, on the other hand, have big executives who get paid with bonuses and stocks and can go right to the Cayman islands and retire anytime they want to; so you can understand their incentive. The government doesn't have big executives but it has politicians who depend on big corporations for a nice retirement in the Cayman islands. So you can see that big government can't do it all by itself.

Maybe an example will help. Let's talk about how capitalism makes it possible for you to own and drive a car. First of all, as we are aware, the more people who buy cars makes the cars cheaper to produce; its the economics of mass production. That's why we had to get rid of all the mass transit systems during the 1950's so that people would have to buy cars. Its the same reason why Obama wants to get rid of the old healthcare and force everyone buy private health insurance. Its the economics of the masses makes everything cheaper to produce, thus better profits, and a better Cayman Island experience for the executives; you can see the incentives of capitalism working!

Back to our example, once all the private mass transit systems were dismantled, there was a great need for cars so the Capitalists had a situation that they could capitalize on! First step was to convince the politicians that the comforts of the Cayman Islands are a good reason for building roads all over the country. This was a big incentive so the government helped capitalism by creating the largest social project in the history of humanity by spending a trillion dollars on an interstate highway system. Now the capitalists were almost in business but cars need oil. What an opportunity for oil capitalists! The oil capitalists and the Cayman Islands convinced the politicians to use the US military to secure oil all over the world so these cars, built by capitalists, could be driven on the roads built by the government using petroleum secured by the government. So there it is, capitalism at work and socialism phooey.

Now we all have to pay taxes to the government. That's a big disadvantage of socialism; taxes. No one pays taxes to corporations because they get a margin on goods and services that they sell. Another big incentive! Getting as high a margin as possible from consumers is not a tax. You see how much better that is?

Now, this brings us to a couple of conclusions. First, something is probably not worth doing unless someone get's rich; kind of like, who needs to fix global warming unless a couple of us can make some dough? Second, the whole enterprise, doesn't have to be profitable as long as, again, a couple of us make some dough right? I hope I have broadened everyones understanding of Socialism and Capitalism; any questions?

Link part 2


Joaquin March 11, 2010 - 2:49pm
( categories: Humor & Satire )

Finally! Thanks, Joaquin, for explaining so succinctly what I have been trying to put into words for so long. Satan for the Socialists, Christ for the Capitalist- so beautiful!

'Freedom without socialism is privilege and injustice...socialism without freedom is slavery and brutality' - Mikhail Bakunin

Disconcerted March 11, 2010 - 6:42pm
Michael Collins March 13, 2010 - 3:06am

The problem with modern socialism is that there is no cultural control. Socialism pre-history meant that all the people in the tribe were doing something to contribute to the whole. Culture required this... people contributed.

Our modern culture doesn't require participation from all parties. Some parties feel that everybody else should do the work. It's great that I waste 40-60 hours of my life every week working, but what about people that feel there is no need to do anything? Some of these people can't even be bothered to take care of the children that THEY produced.

I know this is a tremendous stretch of reason, but if wealth is to be distributed evenly... is it too much of an expectation that work will be distributed at least close to evenly? If people choose to live like animals there isn't anything that providing resources can do to help them. Don't play the under-privileged card on me, I grew up in the slums eating government food surplus.

I am all for people being provided for, but they should be providing some service to the world at large. I don't love my job, but I do it because I need to live. I do it because it's the right thing to do.

I'm willing to bet that every single red party adherent out there will sign off on welfare if the people who get it are required to work... actual work, the kind us working chumps have to do every day. You get your check as long as you maintain a set of standards. The problem with this is that there are plenty of people out there that would rather live in slums and live in squalor than actually work for anything.

Aside from that... don't even get me started on global warming. Yeah, it's not worth doing unless somebody gets rich... like Al Gore and a bunch of people who are "forward-thinking" enough to create green energy. Who's out there pushing for energy conservation and why are there no tax breaks or grants for that? The problem isn't that we use energy ineffiecient methods... it's that we use too much energy and too many resources period. A sad fact that Americans don't want to face so they cling to the "green" energy movement.

Mattyb719 March 11, 2010 - 9:50pm

This essay is simply an attempt to turn the current rhetoric on its head. I'm afraid this is a very meager attempt.

That said, I believe we are all thinking within the box of a consumer culture and its hard to see outside of it. What would it be like if, as a rule, family and friends were the center of life and "stuff" was not?

There is no perfect solution, look at the present corruption of our government and the financial system; how did that happen? As with those people who, as you say, don't want to pull their weight there are also people who want more than their share and ruin it for everyone.

I do think there is some truth in what you are saying but I would encourage you to think carefully about our own history with welfare and the kind of rhetoric around that and the Soviet Union. The Soviet Union was a fine example of the people serving the state and it had to end. It was not socialism that killed it.

I remember Johnson's welfare state and, as you were intimating, there were a lot of people taking unfair advantage of that and it could not continue. Still it is a complex discussion and I am in favor of a discussion free of stupid rhetoric.

Oh and agree with you on the global warming thing. Al Gore is behaving like a profiteer.

Joaquin March 12, 2010 - 1:15am

I believe we are all thinking within the box of a consumer culture

Definitely. One passage that stood out to me in your post:

First of all, as we are aware, the more people who buy cars makes the cars cheaper to produce; its the economics of mass production.

The cars are cheaper to produce because more cars are produced over time and this experience with car manufacturing (and servicing) makes them cheaper. So, its the increased production that directly translates into savings. Of course, you can't keep producing cars unless someone is willing to buy them, so you're right overall.

But the cause-effect relationship is much more accurate (imo) when stated as production influencing costs of production rather than demand influencing costs of production. We're all stuck in the consumer mentality and its a hard habit to break :)

Bolo March 12, 2010 - 3:14am

As you point out there is an irony in the scaling of production; what I was trying to get at was the destruction of so much that was good so that production could scale and make the cars cheaper to produce. A lot of that destruction involved private transit systems; for example the little red trolleys in LA and the trolley system in San Jose.

Joaquin March 12, 2010 - 4:26am

You did a very good job. I'm not entirely in disagreement with you. I think things were much better (as for quality of life) prior to us becoming obsessed with things. Family and loved ones should be the core of our lives. In a culture where this is the central value the quality of life is much better. I can have ipods, playstations, expensive cars, and a big house, but without being cared for by other people I have nothing. I think everybody should be watched-over... loved... protected.

It was not socialism in and of itself that was the problem. It's the cultural expectations that make systems fail. In a tribal (local as some others who responded have noted) system there are different expectations. Certainly some work harder than others... it's just part of human nature. We need to think smaller, not larger.

Mattyb719 March 12, 2010 - 6:33pm

There will always be people who would rather not work and live off the labors of others. However, one has to ask the question "Would I rather provide for all out of a sense of shared humanity and dignity, or would I prefer instead to provide for only those I deem worthwhile?" If the latter part, then you need to figure out what makes someone worthy of receiving the benefits of a socialist system, other than simply living within it--and also why those not worthy of the benefits are deemed unworthy.

Frankly, I'm in favor of providing every living human being with food, shelter, and the opportunity for formal education. The only problem with this is that it requires some incentives to minimize free-riding, and determining those incentives is a big problem.

I really hate the 40+ hour work week too. We had it decades ago and we still have it today, yet average worker productivity has increased immensely since then. That seems to tell me that we shouldn't be working 40+ hours. Check out the argument at this link. I'd rather work 20 hrs/week and have time to pursue other interests, such as writing or coding.

Bolo March 12, 2010 - 3:28am

This almost succeeded in causing nasal accelerated tea mist to coat the glossy glow of my lazy box.

Gannon March 12, 2010 - 3:18am

It's very well written, entertaining, and ... wait, what am I to think;)
First rate.

Michael Collins March 12, 2010 - 3:40am

Think just a little more deeply beyond your own logic.

First, the goal doesn't have to be that wealth be "distributed evenly." How about just more balanced?

But most importantly you're obviously stuck on the idea of "even" contribution. "Our modern culture doesn't require participation from all parties. Some parties feel that everybody else should do the work."

You almost had me, I was like, damn right, some parties DO feel that everybody else should do the work! But then I realized we weren't thinking about the same parties. Just who are these "people (that)can't even be bothered to take care of the children that THEY produced?" And who chooses to "live like animals?"

Well, I though we were speaking of predator animals, like Joaquin's corporate executives who make their nests in places like the Caymans. Those predators definitely are not contributing equally.

Seriously, who chooses to "live like animals?" Our corporate overlords choose to be predators because they have the power. Scapegoating powerless poor people only does the master's bidding. I think you'll agree that we don't all have the same "choices."

You no doubt are contributing more than your fair share, because you must! I don't disagree with your basic premise Mattyb719. But the more important questions for those of us who want to create a more balanced and sustainable society (i.e. a return to a broad based middle class) is not simply who contributes more or less but who has the power and who does not. I'd think our goal should be more in line with putting the bastards in check, rebuilding a healthy middle class and providing everybody with the basic essentials to join that middle class. And that's were Joaquin's snarky post comes into play. It's not a choice between Christ and Satan, but rather how do we the people, as a democracy, take back the narratives and the power to choose which tools work best in particular situations. It is class war and you and I are loosing! Socialism for the wealthy and a cruel Darwinian race to the bottom for the rest of us. Let's move beyond the 19th century.

stuart noble March 12, 2010 - 4:30am

I agree for the most part. I tell people frequently, though they never seem to get it, that for every corporate exec out there flying in a private jet there are hundreds or thousands who are making a wage that does not allow them to maintain an acceptable quality of life. Money is a resource. For every dollar somebody makes somebody else is sweating that dollar out. The distribution of wealth in this world is getting more and more unbalanced. It's shocking and disgusting.

I would contend with your comment about people living like animals. I should also point out that I in no way meant to assert that animals are not worthy of our respect and care. I love animals and I volunteer at a wildlife hospital caring for sick animals. I work with people on a daily basis that choose to live like animals. If you have no job and stay at home all day what is to stop you from picking up your garbage and disposing of it properly? What is to stop you from being kind to others and being respectful of other people? Nothing. Being a good human being has absolutely nothing to do with how much money you have or what resources you have. Civility and kindness are not expensive. This goes for people with or without money. It's a mentality, but it does tend to be more predominant in the poor.

I'm not trying to scapegoat them, but I believe that there are choices we can make that are completely independent of our financial status and the resources available to us. I met a man last year who was obviously quite poor, mentally handicapped, and worked as a custodian at a daycare. He was so proud of his work and of doing a good job at it. I don't think I have met somebody since that day that I felt more proud to have the pleasure of interacting with. I honestly believe that if he won the lottery he would still be there picking up the trash that others carelessly drop on the ground because it's the right thing to do.

I suppose I may be a bit harder on the poor than some having grown up poor and clawed my way out of it. One of the things that stands out in my mind is that during the most desperate times, times when I didn't know where I would get my next meal, who I was became incredibly important to me. I had nothing, but I could still be good to others and I could still be a benefit to the world around me. It frustrates me that some people, people with nothing, don't seem to care enough to do even that.

I do hope that we manage to take back the power some day. We are most certainly losing right now.

Mattyb719 March 12, 2010 - 7:06pm

All animals are created equal, but some animals are more equal than others...like Wall Street bankers, they're created extra equal.

What a shame that in America socialism is confused with the Soviet Union and capitalism is confused with John Galt sociopathy. Worse is the significant number of people who want the benefits of socialism to accrue from the mechanisms of capitalism.

As a philosophical socialist, i loved this, Joaquin. Thanks.

Lex March 12, 2010 - 8:23am

Christ was more like another c, a communist (notice the lower case c). However, his form of communism was local, completely voluntary and self organizing, with a definite libertarian bent. You could also say his system is a monarchy with a king that forces nothing on anyone, and is the king by mutual and total acclaim of his followers.

The problem is that modern society has morphed into systems of scale where such small self-organizing groups cannot compete with their larger predatory competitors, nor can they protect themselves from their evil competitors. Corporatism or large scale Capitalism allows the pooling of resources for large scale endeavors, the likes of which are beyond the reach of small communities. An example would be the drilling of a large offshore oil well, or the fielding of a standing army.

Large scale Socialism, or more aptly called, big C Communism, where the state forces compliance of socialistic policy, is the opposing evil of large scale Capitalism/Corporatism/Fascism, (take your pick), and equally adept at pooling resources for large scale products, and also forcing their policy on the rest of the world.

I reject both of these models.

I did inhale.

Don March 12, 2010 - 9:09am

You described the small scale model you can support. You explained it's subjugation by large scale organizations. You described a counter large scale organization whose emergence you ascribe as opposition to the previous large scale organizations. You then reject both versions of large scale organization. And that's where you left off.

You did not suggest a version of small scale organization that could successfully oppose either version of large scale organization. You also did not opine on the quality of governance of your two versions of large scale organization.

I am asking: Could a large scale organization develop a structure of governance that could potentially gain a more favorable review from you?

Jeff Wegerson March 12, 2010 - 11:56am

But I don't think we can save what is already lost. Like a drunk, until we honestly assess where and what we are, there's no hope in changing.

We've a hard wall to hit first.

Then, perhaps, we have a chance. But not until then.

I did inhale.

Don March 13, 2010 - 12:41am

One was, as you are saying, "the weak shall inherit the Earth" is not exactly capitalism's holy cry. One can see conservative Christians trying to come to grips with this.

Joaquin March 12, 2010 - 1:28pm

In my opinion you've got Jesus figured out perfectly, Don. It's a strange story, how that Jesus got co-opted by Church and State and became the Jesus of today...all uber-capitalist holy warrior. (Strange, not inexplicable as the explanation is clear cut: the welding of Church and State.)

Like you, i reject both the big and opposing models of social organization. I'm not a believer in human rationality on the large scale, a necessary requirement for both models. It is only when the scale is reduced that people seem capable of making rational decisions. Moreover, i'm coming to the conclusion that at smallish scales, a certain style of socialism is quite natural. By socialism i don't mean "the state owning the means of production" but rather recognizing that the individual is part of something larger that's necessary for the individual's survival and ability to thrive.

I like to call it "philosophical socialism", because i haven't come up with a catchier name for it yet.

My best guess is that if power was decentralized whenever possible to the most local level possible, we'd see a fairly natural socialism evolve. And i don't think it would be a utopian, egalitarian model. So much of the socialism/communism model is based on resenting the have mores, but that is predicated on the behavior of the have mores.

It's quite possible to respect the have-mores and not resent their having more when the have-mores respect the have-less and behave in a way that benefits the society. To some degree i think it could still be seen when capitalism was represented by individuals rather than publicly traded companies with no name or face.

The actual capitalist exists within a society and recognizes his dependence on the rest of his society. For all his faults, Henry Ford realized that he would be unsuccessful in the long run if his workers weren't paid a wage that allowed them to purchase the product that they made. And for all the combined faults of the America's great capitalists, they were responsible for a fair number of institutions that benefit the public. My little city of 20,000 has a library that would do a city of 500,000 proud because a capitalist made it so...and because this community has recognized the benefits of it and maintained it.

It's really all about scale. Once thins are impersonalized, it doesn't matter what form we're working within. Capitalist, socialist or other...the majority of people will be left out and trampled upon.

Lex March 13, 2010 - 11:26am

For deciding how to give out bonuses and extras to people. But I strongly believe that: 1) there should be caps on the max wealth of any single individual, and 2) everyone should be given the resources to live a decent life; nobody should die because they don't have money and cannot pay for food or health care.

I don't care if it's achieved with socialism or capitalism.

creativelcro March 12, 2010 - 1:53pm

The question is how merit is to be defined. Most societies have considered themselves meritocratic. The French aristocracy believed merit was born in the blood. Harvard considers itself a meritocratic institution, but the only people getting in are those who have resume's packed with extra-curricular activities and hobbies. Have a job in high-school? Forget about it. Don't have money for special lessons of one sort or another? Too bad. That isn't even mentioning special tutors and prep classes for entrance tests. Even in this country, "merit" is usually dependent on access. A true meritocracy requires a truly level playing field.

'Freedom without socialism is privilege and injustice...socialism without freedom is slavery and brutality' - Mikhail Bakunin

Disconcerted March 12, 2010 - 3:42pm

If the government changed the way it calculated productivity to include the productivity of all individuals, whether they are stay at home for child care, have a disadvantage, or are in prison. What if unemployment statistics included all the unemployed. Then some people might be valued differently. Think if the statistics had to account for productivity that includes a growing prison population? Suddenly it would be all about prevention and merit would have to cast a very wide net.

Joaquin March 12, 2010 - 3:56pm

Limiting the amount of wealth an individual can accumulate (and not some ridiculous cap like 1B; more like 10M) and making sure everyone has a certain minimum, which includes health care, access to information, housing and food, could go a long way to leveling the playing field so that merit can be evaluated more objectively.

creativelcro March 13, 2010 - 6:44pm

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