There seems among our younger citizens to be a growing disdain for capitalism with more and more embracing the socialism peddled by many university professors. I hope to shed some light on the two and differences therein
What is free market capitalism? I have seen it said that capitalism is the worst economic system available, except for all the others. In other words, capitalism is not a perfect system. If a perfect system of any kind exists I have yet to see it. Beyond that, free market capitalism is defined by Merriam-Webster as “an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.”
Notice that nowhere in this definition are the words “with government approval” or subject to any other restriction. Today’s capitalism in the U.S. is more a system of crony capitalism whereby government laws, restrictions, and spending determine more of a company’s success by currying favor rather than actually producing something competitive. A good example is the housing and mortgage market, where home prices are greatly influenced by mortgage rates, which are keyed off of 10-year U.S. Treasury rates, and by government’s direct and indirect involvement in the mortgage industry. Is that good or bad. I don’t know, except that it is not free market capitalism.
Some say capitalism has failed. I don’t know why, because we still have one of the most robust economies in the world despite government’s efforts to ruin it. Capitalism in and of itself is neither good nor bad, it just is. Capitalism can’t get you a bigger house or a job. It does create an environment that allows you to more easily seek those things. It is only when government interferes, no matter how well intentioned, that things go awry. A good example are large national banks.
During the 2007 downturn, numerous banks were on the verge of collapse, as well as Fannie Mae and Freddie Mac. Some of their difficulty was brought about by previous government meddling and the rest was all their own doing. Yet they got bailed out. Guess what? Since there is no consequence for bad behavior, as free market capitalism would inflict, they are doing the same things again.
Socialism is defined by Merriam-Webster as “an ideology or system based on the collective, public ownership and control of the resources used to make and distribute goods or provide services. This involves ownership of such things not by private individuals but by the public (the community as a whole), often in the form of a centralized government.” In other words, the government that brought you the Postal Service, Amtrak, and Fannie Mae and Freddie Mac are better qualified to run your business than you are.
A novel way of thinking about the differences is to think of capitalism as a bundle of positives and socialism as a bundle of negatives. Capitalism gives you the chance but not the obligation to take action. Socialism restricts or restrains the chance to take action.
But what about democratic socialism, you ask? Democratic socialism is defined as having a socialist economy in which the means of production are socially and collectively owned or controlled, alongside a democratic political system of government. That is eerily similar to just plain socialism. And the U.S. is not a democracy, it is a republic. More on that at another time.
So when you are confronted with those who support socialism, here are five questions to ask them.
First, what is the difference between democratic socialism and socialism? The only real difference is that people choose democratic socialism while socialism is imposed on them. Democratic socialism will soon become socialism as human nature prevails.
Second, where has socialism ever worked? Nowhere. Even France, Demark and Sweden have rolled back their experiments in socialism.
Third, who pays for all the free stuff you get? Sooner or later, the money runs out. There will be no more rich or middle class.
Fourth, what stops democratic socialism from becoming socialism? Nothing.
Five, why would we want that here? If the democratic socialist utopia becomes plain old socialism, what is the benefit?
Steve Jobs once opined that in today’s business and political environment (this was in the early 2000s) Apple could not have created. That is a sad commentary of today’s government foot on the neck of business.