Capitalism and Socialism: The Good, The Bad and The Ugly

[Joe]

.

Increasingly, the fruits of a national economy's production are not redistributed within that country but pooled into a 'global economy' that redistributes it to transnational corporations, an 'offshore archipelago' where taxation doesn't exist, and 'world cities' - micro-regions of the new planet-wide 'country' of Globalistan. No wonder sizeable portions (most?) people in major cities from L.A. to Dubai to Sydney think everything's hunky-dory, while most 'outside' in more peripheral regions are lodging protests in ever more pronounced and revolutionary ways.

Project that forward and you start to get the image portrayed in many dystopian future movies, where most people live like robots in totally unnatural and controlled megacities while the rest live outside in the wastelands, destroyed by some natural or man-made catastrophe.

 

[Pierre]

But similar policies, when instituted in the U.S., for example, seem not to work as intended, or to create additional 'unforeseen' problems. There's probably the cultural element

Definitely. As described in my previous message, redistribution (a cornerstone of socialism) can't work in a group dominated by individualism.

universal health care - countries like Canada and the Nordics are great in a lot of ways, or at least better than the U.S. system for instance (while using technology developed in the States) - but wait times and lack of specialists causes many to travel to other countries for treatment,

Public healthcare doesn't necessarily mean wait time or lack of specialist. In France until the 1990's the health care system was totally public and "free" but there was no wait time and plenty of competent specialists were available. Then economic liberalism started to prevail and politicians deliberately destroyed the universal health system through chronic underfunding and infiltration of unions. It became so bad that even citizens begged for private health institutions (which was the goal all along).

Next, there's public education, which is a good idea on the surface of things,

Same as universal health system. In France the public education system was very good. Then deliberate politicians maneuvers destroyed it through chronic underfunding, infiltration of unions and ideologically biased modification of school programs.

An example from Seattle: after minimum wage increases, employment in high-quality restaurants remained the same, but lower-quality restaurants shut down. In other words, some employees got more wages, but others lost their jobs, and fewer new restaurants opened, thus providing fewer chances for employment in that industry.

Minimum wage is an attempt to reduce the dis-balance between capital and wage. It makes sense in large corporations where there is plenty of capital and profit but it is a nonsense to enforce it in small businesses where there is no excess capital that can be redistributed. In a small business context, minimum wage measures should be accompanied with a proportional reduction in tax wages.

One of the reasons for the housing bubble crash was the US regulators forcing banks to give out loans they knew couldn't be paid back in order to meet quotas.

Do you really think that banks are forced to anything in our debt-based world? Don't you think it's rather the opposite where big banks dictate "regulations"?

In 2008 (like most other engineered crisis), large banks were instrumental in over-lending, hyping the booming real estate market, making trillions out of the growing bubble, then they pierced the bubble and repossessed the houses that were used as collateral, got a massive bail out from the taxpayers money and bought the smaller bankrupt banks for nothing. Cherry on the pie, they sold the repossessed houses for a lot of money a few years later when the real estate market had recovered.

Regarding high tax rates, again that might be country-specific - how much citizens are willing to pay and what they get in return. But even in Sweden the richest Swedes evade over 30% of their taxes through moving money offshore

The richest evade taxes because the system is designed for them to evade it. The map of Europe is covered with micro states that incidentally are also tax heavens. Why in a continent that is marked by wars and invasions, were those militarily insignificant states systematically spared?

Monaco, Lichtenstein, Luxembourg, Switzerland, Andorra, Jersey are the result of deliberate political choices. But the entry ticket is quite high, so while the richest evade tax, others (especially the dying middle class, working class, independant workers and small business owners) have to pay full blown taxation.

The single mom is better off earning gross income of $29k with $57,327 in net income & benefits than to earn gross income of $69k with net income & benefits of $57,045.

Again this is a very deliberate political move, where the state clearly choose through strong financial incentives, to favor some kind of behavior (being single, being unemployed) over other behaviors (being married, working). It illustrates the attempt to destroy two fundamental values: family and work.

Favoring unemployed people is an ideological but also a political choice, it creates a class of parasites that depends on the state and are unlikely to rebel. A case in point: most Yellow Vest protesters are poor workers, not unemployed subsidized individuals.

Most political interventions are not thought through to see if they'll actually work. They just do whatever sounds good and sounds palatable to their voters.

That's a small part of the problem. Thousands of politicians are demagogues (telling people what they want to hear) but only a few get elected. Why do some demagogues get elected and most of them don't?

It's not because they are better demagogues, but because they got the support of the media and got promoted, because they got the support of large corporations and banks to massively fund their campaign, because they got the support of the administrative establishment to rig the elections in their favor.

Once elected the candidate has to implement a policy that favors the ones who put him in place. That's the only reason why he got elected!

Coincidentally at the top of media organizations, large corporations, banks and administrative establishment you find the same clique of greedy psychopathic individuals, who are the true rulers of our great Western "democracies" for decades.

 

[Zasino]

I think it comes down to the fundamental misconceptions about human nature that are part and parcel of all these theories, which is then easily exploited by pathologicals to fool the masses. Garbage in, garbage out: if your theory is totally flawed and simplistic in its assumptions, and you build a system based on it, the results will obviously be garbage.

Exactly. Consider this bit of garbage input to most economic models and simulations, the “homo economicus”. Despicable really, here’s its definition (by www.businessdictionary.com):

“A term used in economic theories to describe humans as rational and self-interested beings capable of making judgments towards subjectively defined ends (such as accumulation of wealth and resources). This is used as a basis for the majority of economic models, where they assume that all human beings will act like homo economicus.”

The sad thing is that the output of such models and simulations will be used to drive policies and political decisions - garbage again.

 

[genero81]

Coincidentally at the top of media organizations, large corporations, banks and administrative establishment you find the same clique of greedy psychopathic individuals, who are the true rulers of our great Western "democracies" for decades.

And on and on it goes...

Again this is a very deliberate political move, where the state clearly choose through strong financial incentives, to favor some kind of behavior (being single, being unemployed) over other behaviors (being married, working). It illustrates the attempt to destroy two fundamental values: family and work.

Favoring unemployed people is an ideological but also a political choice, it creates a class of parasites that depends on the state and are unlikely to rebel. A case in point: most Yellow Vest protesters are poor workers, not unemployed subsidized individuals.

Great commentary. I think you're exactly right.

 

[whitecoast]

This is an important point. Socialism is based on redistribution of wealth. In a group, for redistribution to be accepted, you need cohesion, trust, solidarity, altruism. Patriotism along with religion and communities can instill this kind of moral values through the sense of belonging where the group is at least as important as the individuals who constitute it (see Haidt about those group dynamics).

Interestingly, Proudhon directly emphasized this point when criticizing capitalism. He saw that capitalists gave each worker a wage on a individual basis, although when hired collectively the group of workers was much more than the sum of its individual constituents.

Proudhon was an man of the XIXth century when the above mentioned group cohesion, trust, solidarity, altruism were very present. Of course the capitalists never acknowledged those factors and never retributed them.

Coincidentally or not, these are the very same traits that are denied by darwinism (the selfish genes). That's why in a previous post I wrote that "Darwinism is to biology what capitalism is to economics". Both are ideologies reducing life to selfish, materialistic and mechanistic individuals.

This is a very interesting discussion, especially with regard to how group identities affect the success of social policies. While I agree that individualism and disregard for one's community definitely makes socialism impractical, I also think that a similar issue occurs when there are too many individual group identities. You can see this play out in the growth of identity politics (whether racial, gendered, class-based, religious, etc), where you have these broad democratic coalitions where decisions are made procedurally and there's so much mutual back-scratching, tit-for-tat negotiation and compromise that public policy becomes progressively less coherent and more about short-term gains than long-term strategic domestic/foreign planning. It's like a person with too many little i's, I think.

I recall a number of cases where larger countries that have a lot of regionalized diversity (say Yugoslavia, the Soviet Union, the USA, India, etc) need to have more authoritarian and less organic structures imposed from the top-down, since the tendency of states was to otherwise organically fragment (or otherwise decentralize) into smaller, more homogeneous states where trust bonds (and therefore effective social democracy) became easier.

Patriotism in artificially large nations, I think, needs to be imposed from above through educational, entertainment, media, and cultural programming, as it was in the United States during the reconstruction period and gilded age. I think patriotism is a decent solution to the problem of scaling with increasing amounts of group identities, but I think there can be a problem if it's just a bunch of rituals, symbols, pomp, and the like. Because none of those things on their own can really tell us how to live together.

How to live together seems to be the sort of thing that people need to figure out on their own organically, say like in Lebanon where Christians have been living alongside Muslims for over a thousand years. They have their own separate understandings of one another, and that doesn't immediately translate into better Muslim-Christian relations elsewhere on the globe, but I think it may just characterize the importance of forming organic community bonds across cultures and not just within out own. Trust I think is something that must be earned and developed within a group, and is never the sort of thing that can be rushed. A good example of the violation of this principle is how rapidly the elites of Brussels eschewed democratic processes in favor of more autocratic imposition and integration into the EU. Europe could, in principle, be united under a federation or confederation, just as Germany was eventually united in all its principalities. But that had to happen slowly and organically. That's the pace of democracy. There was a time when Catholics and Protestants were at each other's throats in Europe, and thankfully that is no longer a significant dividing line, centuries after the Treaty of Westphalia, except maybe in Ireland.

Here is an informative quote from Political Ponerology:

One obstacle to the development of a society’s psychological world view, the building of a healthy societal structure, and the institution of proper forms for governing the nation, would appear to be the enormous populations and vast distances of giant countries. It is just precisely these nations which give rise to the greatest ethnic and cultural variations. In a vast spreading land containing hundreds of millions of people, individuals lack the support of a familiar homeland and feel powerless to exert an effect upon matters of high politics. The structure of society becomes lost in wide-open spaces. What remains is narrow, generally familial, links.

At the same time, governing such a country creates its own unavoidable problems: giants suffer from what could be called permanent macropathy (giant sickness), since the principal authorities are far away from any individual or local matters. The main symptom is the proliferation of regulations required for administration; they may appear proper in the capital but are often meaningless in outlying districts or when applied to individual matters. Officials are forced to follow regulations blindly; the scope of using their human reason and differentiating real situations becomes very narrow indeed. Such behavioral procedures have an impact upon the society, which also starts to think regulations instead of practical and psychological reality. The psychological world view, which constitutes the basic factor in cultural development and activates social life, thus becomes involuted.

It thus behooves us to ask: Is good government possible? Are giant countries capable of sustaining social and cultural evolution? It would appear, rather, that the best candidates for development are those countries whose populations number between ten and twenty million, and where personal bonds among citizens, and between citizens and their authorities, still safeguard correct psychological differentiation and natural relationships. Overly large countries should be divided into smaller organisms enjoying considerable autonomy, especially as regards cultural and economic matters; they could afford their citizens a feeling of homeland within which their personalities could develop and mature.

If someone asked me what should be done to heal the United States of America, a country which manifests symptoms of macropathy, inter alia, I would advise subdividing that vast nation into thirteen states – just like the original ones, except correspondingly larger and with more natural boundaries. Such states should then be given considerable autonomy. That would afford citizens a feeling of homeland, albeit a smaller one, and liberate the motivations of local patriotism and rivalry among such states. This would, in turn, facilitate solutions to other problems with a different origin.

Society is not an organism subordinating every cell to the good of the whole; neither is it a colony of insects, where the collective instinct acts like a dictator. However, it should also avoid being a compendium of egocentric individuals linked purely by economic interests and legal and formal organizations.

Any society is a socio-psychological structure woven of individuals whose psychological organization is the highest, and thus the most variegated. A significant scope of man’s individual freedom derives from this state of affairs and subsists in an extremely complicated relationship to his manifold psychological dependencies and duties, with regard to this collective whole.

Isolating an individual’s personal interest as if it were at war with collective interests is pure speculation which radically oversimplifies real conditions instead of tracking their complex nature. Asking questions based on such schemes is logically defective, since it contains erroneous suggestions.

If people are different from you somehow (linguistically, culturally, racially, religiously, whichever), and they do something that seems odd, wrong, or alien to you, I think it can be harder for you to tell if that just amounts to a normal human difference, or if it is a genuine article of ponerisation or pathological thinking. So in a community with a lot of diversity it can be harder to identify pathological thinking in your out-group, and you kind of need to depend more on the decent people who are different from you to do the psychological policing within their own community. Again, that requires bonds of trust to develop across community lines, and can never be forced.

I sort of see a parallel between this requirement and Paul's anthropology, where after self-work and coming to a certain understanding we dispense with our individual I (which can also be tribal in nature) and place ourselves in the care of a higher authority, X. In making this X front and center we build a society (S) with others who do the same. The X could be patriotism in the US, ideology in the Soviet Union, or religion as was the case in medieval Europe with the Catholic Church. I tend to think the more comprehensive the worldview (X) is, the more trust can be accrued, because people's behavior is more predictable the more understanding they share with one another. I think that's why I prefer to see people forming societies on religious lines moreso than ethnic lines (although those can be blurred), since the worldview can extend beyond your ethnic tribe to others who embrace the religious principles.

 

[Pierre]

While I agree that individualism and disregard for one's community definitely makes socialism impractical, I also think that a similar issue occurs when there are too many individual group identities

I agree. For centuries the communities (families and villages) were the core social unit, but this time is long gone. Now that the main cement of communities (families and religions) has been destroyed, the only source of belonging left is the nation.

Most nations are too large too exhibit all the proper collective dynamics of a reasonably sized community. However, even in large homogeneous nations, citizens can share a lot of value, interest and goal.

In any case, the nation is a lesser evil compared to the borderless multicultural dystopia envisioned by the globalist.

To illustrate why large nations can hardly exhibit the cohesion and congruence of a proper community, here is a local example based on the two most massive social movements that happened in France over the past years.

On one side you have the Yellow Vest, typical poor workers, living in 'peripherial' France and having a limited academic education. They oppose the neoliberal economic ideology and ask for a more just repartition of wealth. Somehow they embody the best of the left: its social side.

A few years before the YV, there was 'La manif pour tous' that brought literally millions in the street, typically rich educated families living in urban areas. They opposed the LGBT craze and asked for a respect of 'traditional' value. Somehow they embodied the best of the right: its societal side.

Those two movements have very legitimate claims, it remains to be seen if they will they ever convergence, if they they ever bring the best of the right and the best of left together. In other words will the national belonging, the common good be stronger than their fundamental cultural, geographical, financial and educational differences.

Such an unlikely alliance of the extremes happened once in France when the communists joined the nationalist traditionalist right in the resistance movement. In this case the political divergences were transcended only because of a major external: the invasion of the country by Nazi forces.

It is this same resistance movement that accessed to political power at the end of WW2 and implemented most of the social and societal changes that we still benefit from today.

 

[Approaching Infinity]

Do you really think that banks are forced to anything in our debt-based world? Don't you think it's rather the opposite where big banks dictate "regulations"?

In 2008 (like most other engineered crisis), large banks were instrumental in over-lending, hyping the booming real estate market, making trillions out of the growing bubble, then they pierced the bubble and repossessed the houses that were used as collateral, got a massive bail out from the taxpayers money and bought the smaller bankrupt banks for nothing. Cherry on the pie, they sold the repossessed houses for a lot of money a few years later when the real estate market had recovered.

To answer your question, yes I do. Not all regulations are for the banks' benefit, but others definitely are. But note that I said "one of" the reasons. The situation was not simple, and there was no one specific identifiable group on which it can all be blamed, from what I can tell. It sounds like you're starting the story in the middle. You've got to go back at least to 1977 with the Community Reinvestment Act and the pressure to make housing affordable to low-income black families. By the 90s there was a lot of outcry about two hot-button "crises": the lack of affordable housing, and the banks disproportionately rejecting loan applications from black applicants. In fact, housing was only expensive in regions with extreme government restrictions on land use (like California) and overall housing costs were proportionally the same as they had always been in the rest of the country. And the majority of black applicants were approved - those who were rejected were rejected based on the same criteria whites were rejected: lack of collateral and creditworthiness, for instance. (Asian Americans were accepted at a higher rate than whites, but no one focused on that.)

But it became a big issue, led by Congressmen and activist groups. Maybe I just haven't found it, but I haven't seen any evidence of the banks steering the process at this stage. In the early 90s the evidence for lower approval ratings for blacks led to quotas on banks to approve these loans and penalties for not doing so, because the banks were NOT giving out these loans previously precisely because they were too risky. In '93 HUD started taking legal actions against banks not meeting their quotas. Banks not meeting the quotas were denied permission to sell investment securities, for mergers, opening new branches, or to expand into affiliating with securities and insurance firms after previously existing prohibitions were removed. And community activist groups protested branches until they agreed to demands to accept more loans to low-income applicants (by now expanded to all races).

As all this was going on, Fannie Mae and Freddie Mac were also influenced to buy these loans from the lenders. That's what gave the banks an incentive to approve them. (Maybe the banks exerted some pressure here - it would make sense, but I haven't seen anything to suggest it, and either way the result is the same.) In '96, HUD set a target of 42% for the number of low-income mortgages to be bought from lenders by the FMs. As a result, from 2001 to 2006, subprime and other nontraditional loans rose from 10% to 33% (traditional 30-year fixed-interest loans dropped from 57% to 33%).

So for sure, at no point did the banks say, "You know, this is really unethical and will result in a disaster." Neither did the politicians or the regulators. But it was government intervention in the name of affirmative action that created the conditions in the first place (inflating housing prices in certain areas and promoting the approval of bad loans), facilitated by the bank-government incestuous relationship that protected everyone from harm except the taxpayers.

The richest evade taxes because the system is designed for them to evade it. The map of Europe is covered with micro states that incidentally are also tax heavens. Why in a continent that is marked by wars and invasions, were those militarily insignificant states systematically spared?

Monaco, Lichtenstein, Luxembourg, Switzerland, Andorra, Jersey are the result of deliberate political choices. But the entry ticket is quite high, so while the richest evade tax, others (especially the dying middle class, working class, independant workers and small business owners) have to pay full blown taxation.

Yep, which to my mind shows that it's a massive, complex, international problem. Not something easily solved with the policies on offer by existing parties and movements.

That's a small part of the problem. Thousands of politicians are demagogues (telling people what they want to hear) but only a few get elected. Why do some demagogues get elected and most of them don't?

It's not because they are better demagogues, but because they got the support of the media and got promoted, because they got the support of large corporations and banks to massively fund their campaign, because they got the support of the administrative establishment to rig the elections in their favor.

Once elected the candidate has to implement a policy that favors the ones who put him in place. That's the only reason why he got elected!

Coincidentally at the top of media organizations, large corporations, banks and administrative establishment you find the same clique of greedy psychopathic individuals, who are the true rulers of our great Western "democracies" for decades.

That's one of the points I was trying to make earlier. The problem isn't politicians per se, or even capitalists per se. But the two of them combined are cancer. Fascism, according to Mussolini's definition. The right is right to protest "big government". And the left is right to protest "big corporations". Because when it comes down to it, they are essentially the same. Find a way to lock the revolving door and things would at least be marginally better, as far as I can tell. But unfortunately, that would probably only happen as a result of a major disaster. Or things will have to get worse to the point where the the system cannot sustain itself any longer. At which point a revolution is in order, and statistically there is a low likelihood that it will result in a peaceful change of regime.

 

[Joe]

So for sure, at no point did the banks say, "You know, this is really unethical and will result in a disaster." Neither did the politicians or the regulators. But it was government intervention in the name of affirmative action that created the conditions in the first place (inflating housing prices in certain areas and promoting the approval of bad loans), facilitated by the bank-government incestuous relationship that protected everyone from harm except the taxpayers.

I've read this theory, and my problem with it is the idea that banks would have acquiesced to government-mandated policy to give loans to people that were unlikely to be able to pay them back without the understanding that those bad loans would be covered...by the government, or rather, taxpayer. The idea that the banks were forced to 'do good' by the people at the expense of the banks doesn't make any sense (from what we know of the banking sector) and it is not borne out in terms of the result of the whole fiasco: banks made out like bandits and people lost their shirts (and their houses). It was all 'accidental' though. Yep, and I've got some ocean-front property in Arizona to sell, and the bank will give you a loan for it too!

 

[Joe]

Just to add to the above. Many people have swallowed that claim that banks were forced to give loans to poor people so they could get on the housing ladder, and that this was essentially a humanitarian move. But the fiat banking system doesn't work that way, and neither does government for the most part. When banks give loans to people who are unlikely to be able to pay them back, this is a net benefit for the banks because it allows them to create debt out of which they create capital and that is ultimately secured by the homes for which the loans were given. There was never any chance of a loss, except for those who could not pay back the loans. It seems unnecessary to have to say that when you give a loan to someone who you know, or strongly suspect will not be able to pay it back, it is not a benevolent or compassionate move on the part of the lender, because it is and will remain, a loan, i.e. to be paid back, one way or another.

 

[Joe]

The problem isn't politicians per se, or even capitalists per se. But the two of them combined are cancer.

This point has already been made a few times, so I don't think there's much to be gained in repeating it. A better approach might be to consider capitalism and socialism in their 'naked' forms, i.e. remove the influence of corrupt humans and psychos and assess the two economic/social systems/ideologies on the kinds of societies they might produce if they were implemented based on their theories alone. In my estimation, socialism is a better system for the way that it encourages cooperation rather than the focus on the more self-serving inclinations of the individual that is a core aspect of capitalism.

 

[Pierre]

But it was government intervention in the name of affirmative action that created the conditions in the first place

I've read this theory too. To me it seems to miss the crux of the matter. It was not lending to poor households (with collateral), which represents a small fraction of banking activities, that is the cause of the 2008 crisis but the financiarization of risky debt by the banking industry (particularly through CDO and MBS), and the deliberate dissemination and speculation based on those toxic financial assets.

Yep, which to my mind shows that it's a massive, complex, international problem. Not something easily solved with the policies on offer by existing parties and movements.

Tax evasion can be addressed at a national level in many ways. Take France for example, the impunity of big tax evaders here is striking: no prison sentence but negotiations behind closed doors at the ministry of finance, very limited financial police personnel that mostly focuses on small cases, deafening silence of the mainstream media about most major evasion cases.

The problem isn't politicians per se, or even capitalists per se. But the two of them combined are cancer.

If we removed political influences from capitalism, which is a purely theoretical approach, I think still that capitalism is a toxic ideology that appeals to materialism and individualism.

 

[Joe]

Most Americans, on both (or all) 'sides' today still drink deeply from the well of liberty, unaware that it has long since run dry, and yet still they believe that can be 'nourished' by the air in their cups, an illusion of liberty tailored to their respective 'taste buds'.

It's not easy to get through to a person who believes that there is still real 'liberty' to be safeguarded at a social level when for the past 17 years that same person has accepted that the draconian legislation passed as a result of the WOT - that clearly eviscerated fundamental civil liberties - was actually safeguarding or increasing their liberty.

 

[Approaching Infinity]

This point has already been made a few times, so I don't think there's much to be gained in repeating it. A better approach might be to consider capitalism and socialism in their 'naked' forms, i.e. remove the influence of corrupt humans and psychos and assess the two economic/social systems/ideologies on the kinds of societies they might produce if they were implemented based on their theories alone. In my estimation, socialism is a better system for the way that it encourages cooperation rather than the focus on the more self-serving inclinations of the individual that is a core aspect of capitalism.

Sounds good. What do you say we split this thread and move the relevant posts to a new one, since it's getting clogged up with stuff unrelated to intelligent design?

 

[Joe]

Sounds good. What do you say we split this thread and move the relevant posts to a new one, since it's getting clogged up with stuff unrelated to intelligent design?

Good idea. Hannel it!

 

[Beau]

Joe said:
In my estimation, socialism is a better system for the way that it encourages cooperation rather than the focus on the more self-serving inclinations of the individual that is a core aspect of capitalism.

Encourages, or is mandated and enforced by the State? See, I read the term 'wealth redistribution' and all I think about is the government taking my money and giving it to other people. So maybe we ought to define what some of these things mean, because I could very well not be understanding some of the aspects of socialism. I think most people's problems with socialism really come down to more government control over people's lives. We're already decrying the loss of liberty in the West since 9/11. Why would we want a different system that has even more government control over people's decisions?