Capitalism Vs Communism: Practical Question

[daniel]

Hi,

I've been discussing the disadvantages of capitalism and communism with someone and he thinks that the reason why in the end communism is more efficient than capitalism is because being a planned economy resources arnt used up too quickly.

As he writes: 'free markets lead to using up too many valuable resources, while in planned markets, the government can organise a more effective use of the resources. At the moment this has not affected free markets. But that is because resources are still in large supplies. In the future however, certain valuable resources that the capitalist businesses were relying upon in order to satisfy the demand will completely run out. This is why I believe Communism will prove to be a more efficient system in the future'.

What do others thinks? What arguments should i use to counter?

[Captain Nate]

Hi,

I've been discussing the disadvantages of capitalism and communism with someone and he thinks that the reason why in the end communism is more efficient than capitalism is because being a planned economy resources arnt used up too quickly.

Actually, in a communist economy resources aren't used efficiently either, so they may actually be used up more quickly.

As he writes: 'free markets lead to using up too many valuable resources, while in planned markets, the government can organise a more effective use of the resources.

A communist economy doesn't have many valuable resources. For example, an item like oil only has value if a person needs it, otherwise it's useless sludge. The soviet Union's oil would have been worthless if not for all the technological innovations (cars, power plants, electricity etc.) of the West, so its a moot point.

Edited June 18, 2005 by Captain Nate

[danielshrugged]

First of all, this person talks about organizing a more efficient use of resources. Ask him not to speak in euphemisms. What exactly is he referring to? Kicking down the doors of the rich and demanding they provide rooms to people who are more liked? Usings the threat of a gun to take factories from people?

His argument is premised on the idea that there is a fixed amount of resources and the only question is how to allocate them. Sound right to you?

He should look a little at history, too. Russia, for instance, was all about organizing a more efficient use of resources.

[daniel]

he should look a little at history, too. Russia, for instance, was all about organizing a more efficient use of resources.

Yes, ive pointed out lots of hisotrical examples but his response is always this: communism is not to blame, rather the leaders are. If communism had of had good leaders not corrupt one's it would have succeded is his claim.

Edited June 18, 2005 by daniel

[softwareNerd]

What does he mean by "a more effective use of the resources" ? I do not understand the manner in which he uses the term "effective".

If he means that governments can extract more value from existing resources, he's delusional. He might have had an excuse even twenty years ago; not now, after the clear collapse of communist economies.

If he means that governments can ensure that resources are used more slowly, via government rationing, then that is an approach I have not heard before. It's a clever trick though. That way he isn't actually saying that Communist nations will be richer. In fact, he is saying they will be poorer, and that that is their virtue!

Or, finally, perhaps he means that resources will be used more "fairly". However, if that is all, it does not address his fear of resources running out.

The facts are:

1) Resources are not in short supply. I challenge anyone to name one resource in short supply where the following conditions are met: the supply of that resource and its replacements will clearly run low in (say) 1000 years.

2) Governments are notoriously bad managers of anything. Even in their essential functions like the U.S. Army, there are huge examples of government waste. Unfortunately, non-profits have a problem with this because their goals are not monetary and thus they face a problem of "how does one measure effectiveness?".

Of course, the worst offender here are the communists. They were also completely callous about human life and were what an environmentalist would call "extremely poor stewards of the environment". Remember Chernobyl?

3) Finally, "fairness"... what can I say: you know the Objectivist position.

[danielshrugged]

Yes, ive pointed out lots of hisotrical examples but his response is always this: communism is not to blame, rather the leaders are. If communism had of had good leaders not corrupt one's it would have succeded is his claim.

You have to wonder why corrupt American leaders never cause as much damage as corrupt communist leaders.

[JMeganSnow]

Yes, ive pointed out lots of hisotrical examples but his response is always this: communism is not to blame, rather the leaders are. If communism had of had good leaders not corrupt ones it would have succeded is his claim.

Communism by its nature CREATES corruption. It is NOT POSSIBLE to have a non-corrupt Communist leader.

Why? Because all rational standards of determining who gets what are thrown out in favor of meaningless platitudes such as "the public good". But when you have one loaf of bread and two starving people, how do you decide which one is "the public?" The same way anyone that throws out reason does: by feeling, instinct, tradition, blood, "proletarian" status, what-have-you.

Rule by pull IS corruption, and under Communism there is NO OTHER WAY to decide anything. His complaint amounts to "If Communism were exempt from the law of identity, it would work!"

Bah.

Edit: or you could take the Egalitarian approach and give each starving person half the bread, so they can both starve more slowly.

Edited June 18, 2005 by JMeganSnow

[Justino]

It sounds like your friend's real objection to capitalism is that there seems to be no organized structure for planning. Marx called it "market anarchism."

There are a couple of steps to take. But first you should challenge the idea that the failure of socialism is the fault of its leaders, and not the system, by pointing out that it is the nature of totalitarian governments for corrupt people to rise to the top in those organizations--just as in organized crime.

Hayek made this point in "The Road to Serfdom" nearly 60 years ago. This is a little refresher.

To the main point, the two best arguments are the lack of incentives and the inability to calculate costs in a state-run economy, which became very popular after Ludwig von Mises published the idea. (I don't believe he came up with the theory first.)

The first one is rather easy to understand. Marx discusses this. He counters that a capitalist-free people will make goods so abundantly that the problem will be come mute and dissolve away. In other words, he completely dodges the issue.

The second point takes some time. First, capitalist economies thrive partly because information is more easily understandable and readily available--the main focus here is prices and profits.

Both give information as to what is demanded, how well it is served, as well as how is best to provide the product, if at all, and tons more.

Further, socialist governments are unable to know the opportunity costs of their actions because there are no prices once money is outlawed. Money provides for common "language" to speak in terms of. In socialist nations, you are literally comparing apples and oranges, with nothing meaningful in common to compare them to.

Also, with no private property, any money that did exist would be useless since it is the state that would be both buying and selling the product inputs, rendering the transaction meaningless. It would be like taking money from your left pocket and putting in your right.

It is utterly ridiculous to claim a particular economy is superior if it is unable to calculate costs of an act. It is even more surprising someone would be using that line anyhow; most focus is on more egalitarian motives to support the various branches of collectivism.

Then there’s the issue of the division of labor, commerce promoting peace, balance of economic powers; the list goes on.

I like the following articles myself:

Proof That Socialism Cannot Work

Socialism vs. Market Exchange

National Socialism

Edited June 18, 2005 by Justino

[Capitalism Forever]

I've been discussing the disadvantages of capitalism and communism with someone

You've been taking the wrong approach. You should be discussing the advantages of capitalism!

and he thinks that the reason why in the end communism is more efficient than capitalism is because being a planned economy resources arnt used up too quickly.

Okay, so your opponent is saying that capitalism has the disadvantage of "using up resources too quickly." More generally, the objection is that irrational behavior is possible under capitalism. Your response should be:

• That, if someone acts irrationally in a capitalist society, it is HIS fault, not a failure of the "system."
  
• That irrationality is possible under ANY kind of social system, not only under capitalism, so this is not a disadvantage that capitalism has relative to other systems.
  
• That capitalism is actually THE system that discourages irrational behavior and encourages the individual to act rationally. Under communism, the leaders decide what you have to do; the leaders have no incentive to make the best decision for you; therefore, it is not only possible, but very LIKELY that they will make the wrong decision for you.
  
• That several million minds have several million times the "computing" capacity of just a couple of minds. In a society where everyone is free to think, there is a lot more thinking going on than in a society where only a few leaders are allowed to make decisions and the rest just follow orders.
  
• MOST IMPORTANTLY, that material wealth is not everything. If you are not allowed to use your mind and decide what is good for you, all the finest luxury goods man can make won't mean anything to you, as you will not KNOW they are good. Under a system where thinking is forbidden, your mind will atrophy and you'll be reduced to a mere lump of matter--you won't be alive.
  

One of the most important decisions in an individual's life is whom to marry. Imagine this decision being made for you by the Communist Party. "Comrade Peter, tomorrow you'll marry Comrade Natasha, whom the Marital Planning Commission deems to be the best match for you." You don't marry her because you've fallen in love with her; you marry her because a committee thinks it to be the most efficient use of your and her "spousal resources." The highlight of your wedding is not the phrase "You may now kiss each other" but "You must now kiss each other." You do not smile at her and hug her because you have known her, looked at her, observed her personality, and come to think and feel that she deserves being smiled at and hugged--but instead, you smile at her and hug her because the Party has ordered you to perform those activities as the most efficient use of your time. And you know that when SHE does those things, she does them because she's been told to and she'll be sent to Siberia if she doesn't.

Ask your debating partner if he'd be excited at the prospect of this kind of a marriage. A positive answer is a testament of being a complete loser who feels incapable of ever deserving the love of any woman.

[Capitalism Forever]

Yes, ive pointed out lots of hisotrical examples but his response is always this: communism is not to blame, rather the leaders are. If communism had of had good leaders not corrupt one's it would have succeded is his claim.

After the dozens of times that Communism has been tried in various countries, one would think it would dawn on him that the lack of "good leaders" in every single case might not be a mere coincidence.

Ask him to define "good" and "corrupt."

[Hal]

There's no "government" under Communism to allocate resources, so I suspect he doesnt know what he's talking about. Maybe he means socialism or something similar.

Edited June 18, 2005 by Hal

[y_feldblum]

Resources are not valuable on their own. They are valuable only insofar as people value them, and people can only value them insofar as they are free to use them gainfully to their own benefit and to discover how to do so.

Natural resources are the most plentiful things that can be, for a very simple reason: it's the stuff that makes up the whole universe. Everything that exists, and that is within the reach of people, is a natural resource. It is up to people to discover how they may be gainfully used in the betterment of their own lives, and then to use them in that way.

Under communism, natural resources are, yes, protected from human "plunder". But that is only because people are forbidden from using anything found in the world around them to their own benefit. That is the nature of state slavery. Under capitalism, however, people are free to do whatever they want, provided they do not aggress against others. Thus, they are free to discover the uses of and to use the material of the world around them.

Under capitalism, as the most easily accessible and cheapest to use resources are consumed, people begin to turn to the slightly less accessible and slightly more expensive resources. However, at the same time, free people invent new - better and cheaper - ways of accessing and using natural resources, and so, on net, natural resources progressively become more and more accessible and less and less expensive to consume.

[daniel]

I told him the von Mises and Hayeks arguments about how central planning and said this 'socialist governments are unable to know the opportunity costs of their actions because there are no prices once money is outlawed. Money provides for common "language" to speak in terms of. In socialist nations, you are literally comparing apples and oranges, with nothing meaningful in common to compare them to'.

This was his response:

'Who said money is outlawed? There was money in the USSR. What are you talking about? The government can calculate anything that capitalists can calculate without much of a problem'.

He mantains that money is still around so the government could still calculate costs.

How would you counter this?

[Hal]

Under communism, natural resources are, yes, protected from human "plunder".

No they arent.

[Capitalism Forever]

He mantains that money is still around so the government could still calculate costs.

If the prices and wages are not objectively determined by supply and demand, but set by subjective and arbitrary government decrees, any calculations based on them will be equally arbitrary and therefore useless.

The efficiency of a capitalist economy is ensured by the objectivity of the market mechanism. The signals sent by prices are useful because the prices reflect reality. A person who does not like the market prices and proposes to replace them with what HE THINKS the prices should be, is a person who does not like reality and wants to rewrite it. If his definition of "efficiency" is "an outcome I like," then yes, a communist country run by HIM will be more "efficient" for him than a capitalist one--for a while, at least.

This also sheds some light on what he means by "good" vs. "corrupt" leaders of communist countries. A "good" leader is a leader who runs the country the way *I* like it.

[Justino]

He mantains that money is still around so the government could still calculate costs.

How would you counter this?

Money is explicitly prohibited under Marxism. To the extent that money-substitutes are used, they are limited only to final, consumption goods.

The planners of production and distribution have a monopoly over these input resources, so there is no need for any transactions. Thus, there is no use for any medium of exchange in the production stages of the economy. Even virtually-intergraded companies run up against the same problems to less of an extent.

But they evade this by having adopted the labor theory of value as a guide, but that isn’t relevant yet in the debate with your friend.

Edited June 20, 2005 by Justino

[softwareNerd]

This was his response: 'Who said money is outlawed? There was money in the USSR. What are you talking about? The government can calculate anything that capitalists can calculate without much of a problem'.

Money and prices would not be relevant to this fellow's utopia. They are relevant to a free market because they "drive" decision-making.

[BlackSabbath]

Hi,

I've been discussing the disadvantages of capitalism and communism with someone and he thinks that the reason why in the end communism is more efficient than capitalism is because being a planned economy resources arnt used up too quickly.

As he writes: 'free markets lead to using up too many valuable resources, while in planned markets, the government can organise a more effective use of the resources. At the moment this has not affected free markets. But that is because resources are still in large supplies. In the future however, certain valuable resources that the capitalist businesses were relying upon in order to satisfy the demand will completely run out. This is why I believe Communism will prove to be a more efficient system in the future'.

What do others thinks? What arguments should i use to counter?

Ask him if the state can nationalize a mind.

That is more than enough. All other economic arguments are secondary to this.

[the tortured one]

I would point to your friend as being a modern day merchantilist. Merchantilism, in it's essence, is a political system that holds that a nation's wealth is directly proportional to the amount of natural resources under it's control. Therefor, a nation can become richer by accumulating natural resources, hoarding them, and slowing their consumption.

However, this is not wealth. Spain, for instance, thought that it could become wealthy by hoarding gold from the new world and keeping it for itself. Instead the opposite happened. the value of gold decreased, thus destroying Spain's primary investment. Without an adequate infrastructure to create wealth, it became an empty husk of a nation, all too easily defeated at sea by the young upstart England.

ask him this if you will. Would he be in favor of a system where everyone has enough to eat, but with less overall food, or would he favor a mass imposed famine to preserve food stocks? Communism has done this several times in the past 100 years. the USSR did it with Ukraine. China did it under Mao Tse-Tung. In fact, North Korea right now is having a self imposed famine, to "preserve natural resources" of course, and the death estimates are in the millions.

If you want some in depth arguements against these type of debates, I would read the classics. Wealth of Nations goes without saying. Frederic Bastiat is a good author as well. Though contemporary, Andrew Bernstein's "The Birth of Plenty" specifically explores the fallacy that a nation's wealth is determined by it's amount of natural resources. I do not have it on hand, but I will later tonight, bidding that I can get my wireless internet to work. Nevertheless, this is very elementary economics, talk to anyone you know with any sort of education in the field, and they can easily help you.

Edited June 21, 2005 by the tortured one

[The Guru Kid]

Under capitalism, as the most easily accessible and cheapest to use resources are consumed, people begin to turn to the slightly less accessible and slightly more expensive resources. However, at the same time, free people invent new - better and cheaper - ways of accessing and using natural resources, and so, on net, natural resources progressively become more and more accessible and less and less expensive to consume.

A good example would be the oil situation. Because of the low supply of oil, the prices will most likely continue rising. Consequently, cars such as hybrids that get higher mileage will be in higher demand.

Also, a communist economy *might* handle resources more efficiently but in the end when oil does run out, a capitalist economy has a better chance of having innovative ideas that will get them out of such a situation.

[nimble]

I want to reiterate what someone else pointed out. Marx was kind of an anarchist. He believed that government should seize control of the capitalist society, force it into his ideal, and then after a while the government would have to grow and grow to keep things under control, until it got so big that it just kind of collapsed upon itself and left the world with a marxist-government-free society or basically his utopia.

Also, without market mechanism how does the government know who and how many people want milk and in what quantities? Do they take a public poll everyday? With a market, prices will be the measurements by which someone producer can determine whether he better milk that cow more or less because of what demand for milk dictates. (I am drinking milk, that made me use that for an example. HA!)

[y_feldblum]

Oil is a terrible example. Because of government-enforced restrictions on whom the oil companies may purchase crude from, oil companies are forced to buy crude from cartels such as OPEC at monopoly prices far higher than it should sell for. Because of government regulations, the oil companies are forced to refine oil in certain ways which are quite expensive and, incidentaly, insane. Finally, government taxes the sale of oil.

In a free economy operating under laissez faire capitalism, the cost of a unit of oil, in terms of a fraction of a person's yearly income, would be many times lower than it is in this economy.

Moreover, the supply will not run out anytime in the foreseeable future. Those dire predictions the frauds put out to scare pink mothers into buying envirohybrids are absolutely useless. That the known reserves of oil will last only X number of years means nothing, because there so much moil in as yet unknown deposits. These deposits are as yet unknown because right now, given the current state of technology, they are marginally too expensive to find. When technology improves and currently-known reserves are slightly tapped, it pays to find new oil deposits.

Edited June 22, 2005 by y_feldblum

[liutas]

I've been discussing the disadvantages of capitalism and communism with someone and he thinks that the reason why in the end communism is more efficient than capitalism is because being a planned economy resources arnt used up too quickly.

As he writes: 'free markets lead to using up too many valuable resources, while in planned markets, the government can organise a more effective use of the resources. At the moment this has not affected free markets. But that is because resources are still in large supplies. In the future however, certain valuable resources that the capitalist businesses were relying upon in order to satisfy the demand will completely run out.

Well, you can find some arguments in the news from Russia. "After decades of merciless Soviet chopping(woodland), the taiga(Siberia), once dense and practically impassable, has been cleared down...Chaotic exploitation (of natural resources) means that wise guys and foreigners are the main ones reaping the rewards."

"Spreading the Wealth" and "Rough Capitalism"(The St.Petersburg Times)

http://sptimes.ru/secur/542/news/c_wood.htm

[studentofobjectivism]

Ask him if the state can nationalize a mind.

That is more than enough. All other economic arguments are secondary to this.

This is a good point. Before any economics and politics can be discussed, one must first discuss the premises behind it. (i.e. dialectical materialism, altruism, etc.) Discuss how these dichtomies are false and will ultimately lead to a person's (and a country's) spiritual death and eventually lead to it's physical death.

[y_feldblum]

The relation of economics to philosophy here is the same as the one between the practical and the abstract. Admittedly, economics is quite abstract. However, philosophy maintains that men can and will flourish in a society dedicated to reason, while economics shows how it happens in all of its details. Philosophy maintains that socialism is destructive to the flourishing of men because it rejects the mind, while economics shows all the grisly steps and all the sequences of events. How exactly does philosophy explain all the effects of, say, price controls? It doesn't, except to say that the effects are dire. Economics explains them in detail.

Of course, economics depends on philosophy: economics is practical deductions from philosophy, which itself is inductive. In fact, economics as a sound science depends on the first four branches of Objectivism; without philosophy, the science of economics has no basis. The political branch of philosophy is, equivalently, the philosophy of economics, in the same sense in which one has a philosophy of mathematics or a philosophy of any science.

The practical and the abstract ought to be considered together.