Socialism Vs. Capitalism

[fatdogs12]

in socialism society,they will put me in a job according to my ability and interest. if you want to use all your free time to paint or do some other creative activity, you can do it and work a low paying job and live in a not very good place according to the socialism principle.

What do you do if half the country wants to be movie stars and a quarter of them have the ability?

yes, it is United States not China or India. Now in china you can't find a decent job even if you got the bachelor degree or master's (degree). when you are in university, you can't change your major freely.we'v spent much money in having high education while we have no money to be in another 2 years get a college degree that will allow you to a ton of other things when we found our major doesn't meet the need of the market.

It's possible that a person can go to college in the United States and thier major doesn't match what is needed in the market. That is completely posssible. The thing is in the United States people are responsible for making that decision themselves (maybe in China as well). There are many basic degree's in the United States that have a wide application. In the United States you are responsible for finding out what there is a demand for, then getting a degree on the basis of that.

Going back to my girlfriend, she just went and got a simple 2 year business degree. Nothing special, it's not even from a great college. Just a simple community college.

i would say she is lucky. it is still USA not China or India. i think there is also no central planning in india. does india perform very good like the USA. it is difficulty for me to answer the question about how to carry out central planning but i think the market economy doesn't perform very well as well.

There is some degree of luck in her success but it's not based upon luck alone. Because she is very productive she can make that money. What she does is valuable and she is paid for it. She is far from the only exception. I know 3 people who came to the United States without hardly even a dollar and have become millionaires, one of them many times over. In the United States it's entirely possible for a person without a college degree at all or even high school to become a millionaire or even just make a decent living.

I think it's not just hard for YOU to figure out how to central planning would work it's hard for anyone. And it's truely impossible for a small number of people in a government to know about everything that millions of people who specialize in a specific thing.

I don't know why you say that you don't think a market economy works well. When I go to the store I can pick from Tens of thousands of items. If I want cups I have hundreds of cups to pick from, if I want bread I have a ton of varieties. Why doesn't a market economy work? Even the poor people in the United States are very rich compared to most socialist countries.

can you tell me how a company works. i think there are "central planning" to decide what products should be made. can you conside a country to be a company?

In a company there is a planning by the owners of what to make, that's true. However those people are very specialized in what they do. They know thier markets well and they decide how to allocate money that they have. You cannot really consider a company a country because in a country there are two crucial differences. In a country where the people are working for the government they are motivated not by producing the best product but rather keeping thier jobs. Therefore you get products that are not as good. Secondly how on earth could a group of central planners in China lets say figure out what the markets are for different things? How can they be aware of what 1.2 billion people need? Even if you had one million central planners they would still be responsible for over a million people each. How on earth could they figure all that out plus they have to know all the intimiate details of all the industries.

It's just not a humanly possible task.

it depends on the "production capability" not the capitalism system as the other country are in the same system at that time (the Soviet Union etc.the they are state capitalism)

I don't know what you mean by that. Another thing I should mention though is innovation. If there are central planners planning the economy who innovates? Right now in the US anyone can innovate and therefore we are WAY more productive than otherwise. Any time you have an idea in the US you can put it into action! You can patent it and make money on it.

Again it's a rare person in the United States that worked very hard, make intelligent decisions and is still poor. On occasion people do go bankrupt, I know a few myself. Some of them had a lot of money but for one reason or another lost it. Still because of America's productive capacity they were able to raise money, start a new company and make a lot of money again.

i envy you!

I almost envy people who live in free/capitalistic countries myself.

[Lathanar]

yes you are right on. people or workers' decision means the most to socialism. in capitalism, it's not the people but the capitalists who make the decision to produce things according to the profit principle and what job the worker should have actually, although you think the workers are free to select the job.

Think about this concept right here. Do you REALLY think it's the capitalist factory owner who decides what to make? No, he doesn't. Who REALLY decides is that workers democracy that you keep trying to push. They vote for what they want by buying it. If they buy it, the capitalists will produce it, otherwise they go out of business by making what people don't want. THAT is the democracy you keep looking for and will never find in socialism. It does not take some central planning office, all it takes is people buying what they want.

[~Sophia~]

June 1995

Why Socialism Failed

by Mark J. Perry

Socialism is the Big Lie of the twentieth century. While it promised prosperity, equality, and security, it delivered poverty, misery, and tyranny. Equality was achieved only in the sense that everyone was equal in his or her misery. In the same way that a Ponzi scheme or chain letter initially succeeds but eventually collapses, socialism may show early signs of success. But any accomplishments quickly fade as the fundamental deficiencies of central planning emerge. It is the initial illusion of success that gives government intervention its pernicious, seductive appeal. In the long run, socialism has always proven to be a formula for tyranny and misery.

A pyramid scheme is ultimately unsustainable because it is based on faulty principles. Likewise, collectivism is unsustainable in the long run because it is a flawed theory. Socialism does not work because it is not consistent with fundamental principles of human behavior. The failure of socialism in countries around the world can be traced to one critical defect: it is a system that ignores incentives. In a capitalist economy, incentives are of the utmost importance. Market prices, the profit-and-loss system of accounting, and private property rights provide an efficient, interrelated system of incentives to guide and direct economic behavior. Capitalism is based on the theory that incentives matter! Under socialism, incentives either play a minimal role or are ignored totally. A centrally planned economy without market prices or profits, where property is owned by the state, is a system without an effective incentive mechanism to direct economic activity. By failing to emphasize incentives, socialism is a theory inconsistent with human nature and is therefore doomed to fail. Socialism is based on the theory that incentives don't matter! In a radio debate several months ago with a Marxist professor from the University of Minnesota, I pointed out the obvious failures of socialism around the world in Cuba, Eastern Europe, and China. At the time of our debate, Haitian refugees were risking their lives trying to get to Florida in homemade boats. Why was it, I asked him, that people were fleeing Haiti and traveling almost 500 miles by ocean to get to the "evil capitalist empire" when they were only 50 miles from the "workers' paradise" of Cuba? The Marxist admitted that many "socialist" countries around the world were failing. However, according to him, the reason for failure is not that socialism is deficient, but that the socialist economies are not practicing "pure" socialism. The perfect version of socialism would work; it is just the imperfect socialism that doesn't work.

Marxists like to compare a theoretically perfect version of socialism with practical, imperfect capitalism which allows them to claim that socialism is superior to capitalism. If perfection really were an available option, the choice of economic and political systems would be irrelevant. In a world with perfect beings and infinite abundance, any economic or political system--socialism, capitalism, fascism, or communism--would work perfectly. However, the choice of economic and political institutions is crucial in an imperfect universe with imperfect beings and limited resources. In a world of scarcity it is essential for an economic system to be based on a clear incentive structure to promote economic efficiency. The real choice we face is between imperfect capitalism and imperfect socialism. Given that choice, the evidence of history overwhelmingly favors capitalism as the greatest wealth-producing economic system available.

The strength of capitalism can be attributed to an incentive structure based upon the three Ps: (1) prices determined by market forces, (2) a profit-and-loss system of accounting and (3) private property rights. The failure of socialism can be traced to its neglect of these three incentive-enhancing components. Prices The price system in a market economy guides economic activity so flawlessly that most people don't appreciate its importance. Market prices transmit information about relative scarcity and then efficiently coordinate economic activity. The economic content of prices provides incentives that promote economic efficiency. For example, when the OPEC cartel restricted the supply of oil in the 1970s, oil prices rose dramatically. The higher prices for oil and gasoline transmitted valuable information to both buyers and sellers. Consumers received a strong, clear message about the scarcity of oil by the higher prices at the pump and were forced to change their behavior dramatically. People reacted to the scarcity by driving less, carpooling more, taking public transportation, and buying smaller cars. Producers reacted to the higher price by increasing their efforts at exploration for more oil. In addition, higher oil prices gave producers an incentive to explore and develop alternative fuel and energy sources. The information transmitted by higher oil prices provided the appropriate incentive structure to both buyers and sellers. Buyers increased their effort to conserve a now more precious resource and sellers increased their effort to find more of this now scarcer resource.

The only alternative to a market price is a controlled or fixed price which always transmits misleading information about relative scarcity. Inappropriate behavior results from a controlled price because false information has been transmitted by an artificial, non-market price. Look at what happened during the 1970s when U.S. gas prices were controlled. Long lines developed at service stations all over the country because the price for gasoline was kept artificially low by government fiat. The full impact of scarcity was not accurately conveyed. As Milton Friedman pointed out at the time, we could have eliminated the lines at the pump in one day by allowing the price to rise to clear the market. From our experience with price controls on gasoline and the long lines at the pump and general inconvenience, we get an insight into what happens under socialism where every price in the economy is controlled. The collapse of socialism is due in part to the chaos and inefficiency that result from artificial prices. The information content of a controlled price is always distorted. This in turn distorts the incentives mechanism of prices under socialism. Administered prices are always either too high or too low, which then creates constant shortages and surpluses. Market prices are the only way to transmit information that will create the incentives to ensure economic efficiency.

Profits and Losses Socialism also collapsed because of its failure to operate under a competitive, profit-and-loss system of accounting. A profit system is an effective monitoring mechanism which continually evaluates the economic performance of every business enterprise. The firms that are the most efficient and most successful at serving the public interest are rewarded with profits. Firms that operate inefficiently and fail to serve the public interest are penalized with losses. By rewarding success and penalizing failure, the profit system provides a strong disciplinary mechanism which continually redirects resources away from weak, failing, and inefficient firms toward those firms which are the most efficient and successful at serving the public. A competitive profit system ensures a constant reoptimization of resources and moves the economy toward greater levels of efficiency. Unsuccessful firms cannot escape the strong discipline of the marketplace under a profit/loss system. Competition forces companies to serve the public interest or suffer the consequences.

Under central planning, there is no profit-and-loss system of accounting to accurately measure the success or failure of various programs. Without profits, there is no way to discipline firms that fail to serve the public interest and no way to reward firms that do. There is no efficient way to determine which programs should be expanded and which ones should be contracted or terminated. Without competition, centrally planned economies do not have an effective incentive structure to coordinate economic activity. Without incentives the results are a spiraling cycle of poverty and misery. Instead of continually reallocating resources towards greater efficiency, socialism falls into a vortex of inefficiency and failure.

Private Property Rights A third fatal defect of socialism is its blatant disregard for the role of private property rights in creating incentives that foster economic growth and development. The failure of socialism around the world is a "tragedy of commons" on a global scale. The "tragedy of the commons" refers to the British experience of the sixteenth century when certain grazing lands were communally owned by villages and were made available for public use. The land was quickly overgrazed and eventually became worthless as villagers exploited the communally owned resource. When assets are publicly owned, there are no incentives in place to encourage wise stewardship. While private property creates incentives for conservation and the responsible use of property, public property encourages irresponsibility and waste. If everyone owns an asset, people act as if no one owns it. And when no one owns it, no one really takes care of it. Public ownership encourages neglect and mismanagement. Since socialism, by definition, is a system marked by the "common ownership of the means of production," the failure of socialism is a "tragedy of the commons" on a national scale. Much of the economic stagnation of socialism can be traced to the failure to establish and promote private property rights. As Peruvian economist Hernando de Soto remarked, you can travel in rural communities around the world and you will hear dogs barking, because even dogs understand property rights. It is only statist governments that have failed to understand property rights. Socialist countries are just now starting to recognize the importance of private property as they privatize assets and property in Eastern Europe.

Incentives Matter. Without the incentives of market prices, profit-and-loss accounting, and well-defined property rights, socialist economies stagnate and wither. The economic atrophy that occurs under socialism is a direct consequence of its neglect of economic incentives. No bounty of natural resources can ever compensate a country for its lack of an efficient system of incentives. Russia, for example, is one of the world's wealthiest countries in terms of natural resources; it has some of the world's largest reserves of oil, natural gas, diamonds, and gold. Its valuable farm land, lakes, rivers, and streams stretch across a land area that encompasses 11 time zones. Yet Russia remains poor. Natural resources are helpful, but the ultimate resources of any country are the unlimited resources of its people--human resources. By their failure to foster, promote, and nurture the potential of their people through incentive-enhancing institutions, centrally planned economies deprive the human spirit of full development. Socialism fails because it kills and destroys the human spirit--just ask the people leaving Cuba in homemade rafts and boats.

As the former centrally planned economies move toward free markets, capitalism, and democracy, they look to the United States for guidance and support during the transition. With an unparalleled 250-year tradition of open markets and limited government, the United States is uniquely qualified to be the guiding light in the worldwide transition to freedom and liberty. We have an obligation to continue to provide a framework of free markets and democracy for the global transition to freedom. Our responsibility to the rest of the world is to continue to fight the seductiveness of statism around the world and here at home. The seductive nature of statism continues to tempt and lure us into the Barmecidal illusion that the government can create wealth. The temptress of socialism is constantly luring us with the offer: "give up a little of your freedom and I will give you a little more security." As the experience of this century has demonstrated, the bargain is tempting but never pays off. We end up losing both our freedom and our security. Programs like socialized medicine, welfare, social security, and minimum wage laws will continue to entice us because on the surface they appear to be expedient and beneficial. Those programs, like all socialist programs, will fail in the long run regardless of initial appearances. These programs are part of the Big Lie of socialism because they ignore the important role of incentives.

Socialism will remain a constant temptation. We must be vigilant in our fight against socialism not only around the globe but also here in the United States. The failure of socialism inspired a worldwide renaissance of freedom and liberty. For the first time in the history of the world, the day is coming very soon when a majority of the people in the world will live in free societies or societies rapidly moving towards freedom. Capitalism will play a major role in the global revival of liberty and prosperity because it nurtures the human spirit, inspires human creativity, and promotes the spirit of enterprise. By providing a powerful system of incentives that promote thrift, hard work, and efficiency, capitalism creates wealth.

[marxist]

marxist said;

One has to believe in the dubious concept of "luck" before they would agree with you. Saying someone is lucky totally robs them of the credit they deserve for hard work, accomplishment, vision and foresight, intelligence, etc. Me, I would say she saw what her lot was and took successful steps to improve it by her own work and efforts. "Luck" is always what the unsuccessful say of the successful.

sorry! but what i mean is just that she maybe couldn't be so sucessfull if she was still in idian.

[marxist]

Think about this concept right here. Do you REALLY think it's the capitalist factory owner who decides what to make? No, he doesn't. Who REALLY decides is that workers democracy that you keep trying to push. They vote for what they want by buying it. If they buy it, the capitalists will produce it, otherwise they go out of business by making what people don't want. THAT is the democracy you keep looking for and will never find in socialism. It does not take some central planning office, all it takes is people buying what they want.

yes!i think the market means the most to the capitalism. everyone in capitalism are ruled by the market. i got to know little about what happen to USA now. In china, we (most of us)have no enough money to buy the House in the city while there are so many houses(real estate) that can't be sold. maybe you would say it is because China is a "communist" but the fact is there is a market as well in real estate field and any other fields.it is how the market economy works!

[marxist]

What do you do if half the country wants to be movie stars and a quarter of them have the ability?

Maybe you would ask What do you do if half the country wants to be a king and a quarter of them have the ability?

It's possible that a person can go to college in the United States and thier major doesn't match what is needed in the market. That is completely posssible. The thing is in the United States people are responsible for making that decision themselves (maybe in China as well). There are many basic degree's in the United States that have a wide application. In the United States you are responsible for finding out what there is a demand for, then getting a degree on the basis of that.

so the market rule you. you should take the risk of doing something. if you major doesn't match what is needed in the market, you have to be responsible for making that decision yourself.in china, that means you have to be unemployed and go bankrupt because you have spent all your money in getting the degree.

Going back to my girlfriend, she just went and got a simple 2 year business degree. Nothing special, it's not even from a great college. Just a simple community college.

There is some degree of luck in her success but it's not based upon luck alone. Because she is very productive she can make that money. What she does is valuable and she is paid for it. She is far from the only exception. I know 3 people who came to the United States without hardly even a dollar and have become millionaires, one of them many times over. In the United States it's entirely possible for a person without a college degree at all or even high school to become a millionaire or even just make a decent living.

it is said there are "the American dream" in USA.

I think it's not just hard for YOU to figure out how to central planning would work it's hard for anyone. And it's truely impossible for a small number of people in a government to know about everything that millions of people who specialize in a specific thing.

yes, i agree with you. now central planning wouldn't work , but can you say it wouldn't work 300years later.

I don't know why you say that you don't think a market economy works well. When I go to the store I can pick from Tens of thousands of items. If I want cups I have hundreds of cups to pick from, if I want bread I have a ton of varieties. Why doesn't a market economy work? Even the poor people in the United States are very rich compared to most socialist countries.

market economy doesn't work very well in undeveloped country and it doesn't work very well in 1990s' Japan.

In a company there is a planning by the owners of what to make, that's true. However those people are very specialized in what they do. They know thier markets well and they decide how to allocate money that they have. You cannot really consider a company a country because in a country there are two crucial differences. In a country where the people are working for the government they are motivated not by producing the best product but rather keeping thier jobs. Therefore you get products that are not as good. Secondly how on earth could a group of central planners in China lets say figure out what the markets are for different things? How can they be aware of what 1.2 billion people need? Even if you had one million central planners they would still be responsible for over a million people each. How on earth could they figure all that out plus they have to know all the intimiate details of all the industries.

to some company like the transnational corporation, it is so big, even bigger than a small country. it has diversified management.why there is a planning while the country can't have a planning?

It's just not a humanly possible task.

I don't know what you mean by that. Another thing I should mention though is innovation. If there are central planners planning the economy who innovates? Right now in the US anyone can innovate and therefore we are WAY more productive than otherwise. Any time you have an idea in the US you can put it into action! You can patent it and make money on it.

Again it's a rare person in the United States that worked very hard, make intelligent decisions and is still poor. On occasion people do go bankrupt, I know a few myself. Some of them had a lot of money but for one reason or another lost it. Still because of America's productive capacity they were able to raise money, start a new company and make a lot of money again.

i think it can be done in socialism society as well

I almost envy people who live in free/capitalistic countries myself.

[RationalBiker]

everyone in capitalism are ruled by the market.

They aren't ruled by the market, they ARE the market...there's a difference. In capitalism, one person can conceiveable be a "market". If he/she wants something unique, there's probably a person out there who will produce it.

sorry! but what i mean is just that she maybe couldn't be so sucessfull if she was still in idian.

Which is part of my point. It sounds as though she was smart enough to recognize that India was not a place she could be successful in what she wanted to do.

[marxist]

This would boil down to capitalism, where you get paid in proportion to the value you create for others.

So you mean that everything will be dealt with by direct democracy? This is an even bigger hassle . And what makes you think that a cab driver has enough knowledge to decide which technology to use for a nuclear power plant. You'll end up with some sort of representative democracy in the end and you'll have all the problems they had in Russia and China.

but the companys belong to us not belong to the factory owner although we get paid in proportion to the value we create for others. can you tell me how a big company works without CEO and other managers?

And what happens if you want to do one job and democracy has made the decision that you're not allowed to do it. You have then given up the right to choose what you want to do with your life for the right to meddle with the lives of others. You still don't belong to yourself and if three people vote that you should do work you hate you have to do it, because you only have one vote.

sometime you give, sometime you get, it is the democracy. can you tell me how democracy works in USA. and the democracy(one of the factors) makes USA so strong and so rich.

The problem remains even if you had direct democracy, because you were breaking with the fundamental principle of freedom: The fact that your life belongs to you.

if there was no democracy,what would happened to USA?if you want to reduce tax but another two persons don't agree, what should you do( if there are total 3 persons in USA) ?

No. There is no fundamental class split. You can start a company in capitalism. There's nobody stopping you. The profit principle just means that you want to be paid as much as you can for your work, which in the end means that you want to be as productive as you can be, which is very similar to "From each according to his ability", only that it is chosen freely and not ordered by a collective or its representative.

There is no split like: "you are born poor, therefore you remain poor" or "you are born rich therefore you remain rich".

yes, you can start a company in capitalism but you have no money to do so. if you are born poor,so you can't get education without the state support and no bank and the like would like to lend you money, can you tell me how can you get enough money to start a company.

It has taken me a while, too, to get this, so I'll try to explain this a bit:

The only way to make money in capitalism is if you produce and sell products or services that people (the masses) actually want.

You can't dictate people what they should want or not. They hold the money they have earned in their hands and they decide what they buy or don't buy. So if you want to get anywhere in capitalism you have to make your products as good and as cheap as you can.

But you also have another problem:

If you want to hire people to do work for you, you have to give them enough money and/or better working conditions or they will work for the competition as they can freely choose where they want to work.

So the only way to actually start a successful company in capitalism is by doing the following:

Offering better and/or cheaper products and services to the masses while offering more money and/or better working conditions to your workers.

If you don't do the first, you can't sell anything and go bankrupt. And if you don't do the second, you can't even produce anything.

And the only way to do this is by increasing productivity and sharing the benefits this brings with your workers and customers. Any other way will not work. Either you can't start or you end up bankrupt.

There is no "class" which controls production. The market controls what it produced or not. Everyone is free to start a company on his own and offer new jobs and new services. So if it's profitable to start a company that pays more to its workers and creates the same products, it will be done. If it's profitable to start a company that pays the same to its workers but offers superior products it will be done.

There is nobody who can control what people do in capitalism. The only measuring stick you have is: What the masses want.

And even this is not quite correct as you can produce products for any group of people depending on their particular needs and wants. You don't need to appeal to everyone with your product.

the market controls what people do in capitalism, is that true?

Edited June 27, 2006 by marxist

[marxist]

Democracy violates individual rights.

Just because the majority of people voted to do something doesn't mean they have the right to have the government point a gun at anyone and make them go along with it. This violates individual rights.

Capitalism is founded on the principle that it is wrong to violate individual rights. Capitalism is incompatatble with Democracy.

The USA was founded as a constitutional republic, with many individual rights (capitalist principles) established by law. It was both implicit and explicit that the majority cannot simply vote for anything they want. (that would be a democracy)

Democracy is evil because it has no respect for rights. If the majority votes to violate rights, then the rights are violated. Think of it: if the majority votes to murder everyone with dark hair, then a democracy will let that happen. Do you think that would be right, Marxist?

if you were "robinson" in the island, your actions wouldn't affect others.Democracy violates individual rights?

would individual rights violate the society as your actions in the society will more or less affect others. if the effect is positive, it is ok! but if the effect is negative, what is your comment? to your point, the society is just the side-product, is that true? your actions just like the Democracy violate other people's individual rights while you can't be very conscious of it.

[Inspector]

if you were "robinson" in the island, your actions wouldn't affect others.Democracy violates individual rights?

would individual rights violate the society as your actions in the society will more or less affect others. if the effect is positive, it is ok! but if the effect is negative, what is your comment? to your point, the society is just the side-product, is that true? your actions just like the Democracy violate other people's individual rights while you can't be very conscious of it.

You don't seem to understand what "individual rights" are. If I do something that has a negative effect on someone, that doesn't necessarily make it a violation of individual rights. It could be good or bad (it depends on the action), but as long as it does not use force, then it cannot be as bad as an action that uses force.

Only if I use force against someone (who was innocent; who hadn't used force against me), is there a violation of individual rights.

Individual rights are the right to be free from the initiation of force. Nothing more. There is no right to food, or water, or jobs, since these things must be produced. If you had a right to them, then who would provide them? That person who provided them would be your slave. There is no such thing as the right to enslave.

Marxist, what do you think of a Democracy that votes to make it a law that you must be a Muslim? That they will kill you if you are not a Muslim? (This is the law made by Democracy in Afghanistan, so this is a real example) Is that wrong?

Edited June 27, 2006 by Inspector

[RationalBiker]

would individual rights violate the society as your actions in the society will more or less affect others. if the effect is positive, it is ok! but if the effect is negative, what is your comment?

You are thinking of "society" as a separate entity from the individuals that make up that society. "Society" is not an entity, it does not have rights. Only individuals have rights. There is law that would exist in a Capitalist society that would protect individual rights, not from simply being "affected", but from being violated or denied.

If I raise the price of my goods or services, that may "affect" other individuals in the market, but it's not violating their rights. Those other individuals (not society) do not have a right to my goods or services, and they do not have a right to have them provided to them at a certain price. The only right they have is to decide whether or not to utilize the goods or services I offer at the price I set. If I set my prices too high (or too low), I suffer. Yes, other people may be affected "negatively" by the pricing I set, in that perhaps they cannot afford to buy what I'm selling, but my price setting also affects me if I fail to judge the market properly.

The thing that you have to get your mind around is that while individuals have a right to their life, they do not have a right to have their life provided for them at the expense of other individuals. They only have the right to pursue their life by means of their own ability and at their own expense.

The only way to violate an individual's rights is by the use of physical force, something Socialism accomplishes when it employs the gun to make men work in a particular fashion for the sake of other men instead freely allowing them to work (or perish) for their own sake.

[Bold Standard]

to some company like the transnational corporation, it is so big, even bigger than a small country. it has diversified management.why there is a planning while the country can't have a planning?

The essential difference between a corporation (private business) and a country (government) in capitalism is this: a business is forbidden from using force, and the government holds a monopoly on the (retaliatory) use of force.

The ability of the government to use force (in retaliation against those who initiate it) is not a bad thing. It is how we eliminate force from human relationships. If one person attacks, threatens, or defrauds another person, the government intervenes, the offender is given a fair trial, and (if he is proven guilty) the government forces some type of retribution, whether it is a financial compensation to the victim, or jail time for the criminal (as a form of justice).

But it is this monopoly on force which makes it immoral and impractical for the government to be involved in managing the economy. In America we have a principle called "The Separation of Church and State," which forbids the government from being involved in religion, endorsing any particular religion over another, or forbidding any particular religious beliefs. This is to prevent a State Religion from being forced on the people against their will and their better judgment. In the same way, and for the same reason, in laissez-faire capitalism, there would be (although no government has ever had this so far) a "Separation of Economics and State," to prevent State Programs from forcing products and services on people against their will and better judgment.

This is what happens when the government becomes involved in "managing" an industry.. Suppose the government nationalizes the railroads, which had been private. Suddenly the State Railroad is being paid for with tax money. If the State Railroad is being run inefficiently, they just take more tax money. They never go "out of business," they just maybe increase the national debt. If a private entrepreneur has an idea for a better railroad, and tries to put it into operation-- he can't compete with the State Railroad, because they have an artificial income from the taxes. And the only way that enough taxes can be generated to pay for programs like this is if they are compulsory. That means taken by force from the people (upon threat of being thrown in jail and/or having their property seized if they don't pay up). So in order to compete, the entrepreneur has to make more money by voluntary trade with the market than the government can make by robbing and enslaving people.

If you think it's hard to make it in a free market, try making it in an unfree market (in fact, that's what you are trying to do)! And the greater the scale of government economic programs, the greater the scale of the evil they create. It doesn't matter if you look 300 years back in history, or 3,000 years in the future-- these are universal principles. China will continue to have problems and a hard struggle until it completely rejects all forms of State Socialism. Only then will it be free to "develope." Why was Hong Kong able to develop so fast (with very little "natural resources") while China, with its abundant resources remained undeveloped? You say it had nothing to do with the systems of government? But that was the essential difference between the two!

[marxist]

QUOTE

June 1995

Why Socialism Failed

by Mark J. Perry

(article edited out)

i would like to ask several questions:

1.per Marx's works, do you really think the Soviet Union, China,North Korea, Cuba are socialism society?MAYBE you would say it is to compare a theoretically perfect version of socialism with practical, imperfect socialism? But if you don't have the idea of what is socialism, you can say nothing about it!

2.Do you think the Soviet Union, China,North Korea, Cuba will work very well like the USA if they carried out the same system like the USA and do they have the same conditions to do so?maybe you would say please take a look at the South Korea, Taiwan,Japan!but do you know the USA(market economy) is the master of the world economy and it is the USA that do economic sanctions againist (1949-1976)China,North Korea, Cuba while support the the South Korea, Taiwan,Japan! otherwise what would happened?

3. as to North Korea, Cuba, do you think they will work better if the USA and EU etc don't do economic sanctions againist them.

4.can you explain to me why the market economy doesn't work very well in developping countrys

5. do you think the human nature will never change according to the changes of the history conditions. per Maslow's Need Hierarchy Theory, the person (when he is rich)would like to get a commitment to others, they will do something without money or profit! human are productive naturally! you are differnet from the person in primitive society.

6. do you admit that the market experience creates the market consciousness?

7.the natural social human desire is limited not like the "market desire".you will not need 100 houses! is that true?

[Edit - Edited out the lengthy article requote - RC]

Edited June 27, 2006 by marxist

[Bold Standard]

Democracy violates individual rights?

The classical definition of "democracy" is: "unlimited majority rule." The closest a country has come to this type of democracy is probably Ancient Greece.

When modern people (like American President George Bush) say "democracy," nowadays, they usually really mean "representative government." I believe that the student protesters in the Tiananmen Democratic Movement of 1989 were primarily arguing for a more representative government.

Many modern people have forgotten the difference between representative government and democracy, but there are important differences. Real "democracy" leads to "tyrany of the majority" because the majority can demand whatever it wants. But a representative government which is limited in its actions by a constitution, and which contains a Balance of Powers to prevent it from becomming tyranical, is able to represent the consent of the governed (through majority votes) while at the same time respecting minority rights (and the smallest minority is the individual).

[marxist]

Yes. Here is the definition of Capitalism: http://capitalism.org/

Be sure to take the tour, and look at the FAQ.

thank you for your recommendation. i browse it and i see what is the definition of Capitalism. we are free as well but not rich now in China. can we difine our society as the capitalism .if the capitalism means the freedom(nobody or the government use gun to force us to do something), we are in capitalism. if the capitalism means the developped society, we are not the capitalism. the definition of Capitalism is not the definition in marxism.in additon, The initiation of physical force is forbided in the capitalism. if someone insult you in words, does it include in the physical force.? can the government force you not to do something,such as to criticize the government or other person?

Edited June 27, 2006 by marxist

[Felix]

"The problem remains even if you had direct democracy, because you were breaking with the fundamental principle of freedom: The fact that your life belongs to you."

if there was no democracy,what would happened to USA?if you want to reduce tax but another two persons don't agree, what should you do( if there are total 3 persons in USA) ?

Why would you have a tax in the first place? The very fact that you have a tax would mean that you have given up a part of your economic freedom.

But this is a good example to explain what I mean:

Let's say you have only three people. Let's say there is no tax. Everyone may keep 100% of what he earns. The only way to deal with one another is through free trade. Now one of the three people is way more productive than the others. He works longer and he works smarter. He saves and builds tools to increase his productivity. Now the two others come along and say: We want what you have. Let's start a tax. He who earns more than average should be taxed and the taxed money should be distributed to those who don't earn it. That's democracy. It's still rule by force. That it "benefits" most people creates its appeal. What you don't understand is the difference between individual rights and democracy. These are completely different terms. If the two people vote to kill that man, they can. What protects him and gives him freedom is not democracy. His freedom comes from his rights. And these rights actually hinder the ruling of democracy.

What made America big was not democracy, but respect for individual rights.

the market controls what people do in capitalism, is that true?

In a certain sense, yes. What you have to understand is that there isn't "the workers" on one side and "the market" on the other. They are the same thing. "the market" is just another term for "all the people in a country" (or on the planet). You are part of that market, so am I. No matter where I am born or how. As long as I am alive and have needs and wants, I am part of a market and people have a reason to produce what I want to get my money in exchange. The same is true for you. Wherever there's a need, there's a market and an incentive to produce something that fills that need.

yes, you can start a company in capitalism but you have no money to do so. if you are born poor,so you can't get education without the state support and no bank and the like would like to lend you money, can you tell me how can you get enough money to start a company.

You can still get a job. And you don't need state support to learn useful skills to then get a better job. I would also challenge your statement that no bank would lend you money.

Of course you have advantages if you start out with a lot of money. But the point I am trying to make is that your fate is not determined by the cards you are dealt. The good thing about capitalism is that it's possible to work your way to the top if you want to. Wealth is not inherited, it is created. And if you can do good work, you get paid good money as companies will seek those who do good work.

And don't forget that poor people are a market by themselves, so companies produce goods that are as cheap as possible so that even poor people can afford them and they constantly underbid each other regarding prices to get increased market share.

Edited June 27, 2006 by Felix

[marxist]

The classical definition of "democracy" is: "unlimited majority rule." The closest a country has come to this type of democracy is probably Ancient Greece.

When modern people (like American President George Bush) say "democracy," nowadays, they usually really mean "representative government." I believe that the student protesters in the Tiananmen Democratic Movement of 1989 were primarily arguing for a more representative government.

Many modern people have forgotten the difference between representative government and democracy, but there are important differences. Real "democracy" leads to "tyrany of the majority" because the majority can demand whatever it wants. But a representative government which is limited in its actions by a constitution, and which contains a Balance of Powers to prevent it from becomming tyranical, is able to represent the consent of the governed (through majority votes) while at the same time respecting minority rights (and the smallest minority is the individual).

yes, i argued for a socialism representative government under workers(salary-man) democracy.an elected governmental council in a socialism country---soviet.

Edited June 27, 2006 by marxist

[Inspector]

if the capitalism means the freedom(nobody or the government use gun to force us to do something), we are in capitalism. if the capitalism means the developped society, we are not the capitalism. the definition of Capitalism is not the definition in marxism.

I understand your confusion, as the Marxist definitions are a little different. Capitalism, as we use the term here, means a system which by law abolishes the initiation of force (including by the government). This includes, but is not limited to: no nationalization of industry, all property is privately owned, no regulation of business, no taxes (this one has yet to happen, but some have very low taxes), no confiscation of wealth or property. If it does that, it does not matter if it is rich or poor; it is capitalist... although if a country does this, it will become rich, because that is the secret to growth and prosperity.

Although that is totally not true that "in China the government does not force you to do anything (apart from refraining from violence)." In fact, the government of China uses force on its citizens all the time, especially to censor. Of course, they go to great lengths to hide this, so I don't know if you know anything about that.

if someone insult you in words, does it include in the physical force.? can the government force you not to do something,such as to criticize the government or other person?

No, unless those words include a threat of physical violence.

yes, i argued for a socialism representative government under workers(salary-man) democracy.an elected governmental council in a socialism country---soviet.

What do you think of the example of the three person democracy? Suppose the two lazy people voted to kill the hard working person and take his things. Democracy would say that this is valid, since two votes beat one.

Do you think that this is right? That people can vote to do anything they want, and that is okay? Or do you think that is wrong, and that they don't have the right to kill that hard-working man even if they vote to do so?

Edited June 27, 2006 by Inspector

[Olex]

we are free as well but not rich now in China

Btw, how come Chinese ISP's aren't blocking our forums from you?

http://en.wikipedia.org/wiki/Great_Firewall_of_China

I'm pretty sure, we have phrases like "human rights," and "democracy". Wouldn't that mean you are breaking your country's laws by visiting our forums?

[LaszloWalrus]

The Chinese government, so far, is somewhat inefficient in blocking certain sites. I was able when I was in China to access many sites I thought would be forbidden.

[RationalBiker]

The Chinese government, so far, is somewhat inefficient in blocking certain sites. I was able when I was in China to access many sites I thought would be forbidden.

This is one of those cases where the success isn't as scary as the attempt.

[LaszloWalrus]

I remember I had to fill out a form saying (I quote from memory, so it's probably not completely accurate) "I am not transporting any literature or documentation contrary to the doctrines of the People's Republic of China." Little did they know, I was wearing my Ayn Rand Institute shirt. On the bright side, I saw Atlas Shrugged (and some other Ayn Rand books, I think) in Hong Kong, where the free speech restrictions don't apply.

[marxist]

Btw, how come Chinese ISP's aren't blocking our forums from you?

http://en.wikipedia.org/wiki/Great_Firewall_of_China

I'm pretty sure, we have phrases like "human rights," and "democracy". Wouldn't that mean you are breaking your country's laws by visiting our forums?

no, i am not breaking my country's laws by visiting your forums, to the extent that we are free. no thoughts but the idea of down a government are forbided in china.yes, it's difficulty for us to visit the VOA website and maybe some websites that go againist the chinese government. your forum are not forbided in china at all. we are discussing the "human rights," and "democracy" as well. sometime we criticise USA's violation of the "human rights," in Iraq.

Edited June 28, 2006 by marxist

[~Sophia~]

1.per Marx's works, do you really think the Soviet Union, China, North Korea, Cuba are socialism society? MAYBE you would say it is to compare a theoretically perfect version of socialism with practical, imperfect socialism? But if you don't have the idea of what is socialism, you can say nothing about it!

do you think the human nature will never change according to the changes of the history conditions. per Maslow's Need Hierarchy Theory, the person (when he is rich)would like to get a commitment to others, they will do something without money or profit! human are productive naturally! you are differnet from the person in primitive society.

In theory, you could create an imaginary world, populated by creatures different than humans which could cooperate selflessly for the common good.

In practice, these societies are miserable places where people need to be forced to behave like the idealists imagined them to behave, which is against their own nature.

Socialism failed in many countries around the world, across many cultures not because it was 'imperfectly' implemented - but because it is incompatible with human nature.

Humans are naturally selfish and competitive (there are biological reasons for it). It is impossible to get people as a whole to work together to their mutual advantage because humans are by nature acquisitive. Humans will not work efficiently if their personal economic incentives are taken away (why would you ever do more and produce more if what you get in return will always be the same?). There is an inherent human interest to be free. Optimal fulfillment of human nature lies precisely in the condition of freedom.

Socialism is incompatible with individual rights and personal freedom.

As it happens, Socialism, to me, is not just a theory I have read about in a book and concluded it was evil. I was born and raised in Poland. I have moved to America at the age of 17 (15 years ago) without knowing a word of English. So, I have been on your side of the fence.

I do know that "classless society based on cooperation and equality" is just a fancy wording for reduced form of slavery. In reality the 'cooperation' means - forceful use of one person's ability and effort to serve the purposes of another and 'equality' means economic rewards are not based on merit (do not reflect person's productiveness in /contribution to society). Under socialism workers can not get the best price for their skills; they can not withhold their skills if the pay is too low or working conditions are too bad. That is slavery - that is not freedom.

There can be no prosperity under those conditions.

It is a heaven for the looters and a hell for those who are producers of the world. It does not matter if the force is applied by a dictator or the rule of majority. The end result is the same.

[marxist]

The Chinese government, so far, is somewhat inefficient in blocking certain sites. I was able when I was in China to access many sites I thought would be forbidden.

where have you been in China?

I am living in SuZhou which is a beautiful chinese classical garden city nearest from the ShangHai.

if you come to Suzhou, i think i can be your guide.haw-haw!