Capitalism vs Socialism

Discussion in 'Economics' started by plyka, Aug 3, 2012.

  1. plyka


    It seems to me that people get lost in the philisophical battle. Socialism just "sounds" good. Help out your brother and all that. Of course, when you get to the principles, capitalism trumps socialism in all respects, even when you're talking about socialism light which is Keynesian economics. However, most people don't really understand the principles or take time to learn them.

    So, i think the best layman's argument is empirical evidence. Two ways to make the argument is:

    1) compare the most socialist countries versus the most capitalist countries and ask yourselves, in which are the people, the average man, better off?

    2) How do people vote with their feet?

    The 2nd one is easy to answer. Ask yourself, where you have the exact same people, where do they attempt to escape to? Did someone have to put up a wall to stop people in West Germany fleeing to east Germany or was it the other way around? Was the iron curtain put up to stop all those people living in the West from escaping into the USSR, or was it the other way around? Do people flee from North Korea into the South, or are people killing themsevles to flea to communist North Korea? Are people from Mexico fleeing to the USA or are people from the USA fleeing to Mexico? DO people in Florida risk their lives to sail over to communist Cuba or is it the other way around? The empirical evidence is all around you.

    The 1st one is made easy by the Heritidge foundation. They use objective evidence in order to rate which countries are most capitalist versus which countries are most collectivist/socialist. They call it their index of economic freedom. Below, I'm going to list their top 10 freest economies (most capitalist countries) and their 10 least free economies (most socialist countries), and you decide, which ones are the people best off in?

    Top 10 Capitalist countries with the freedom index score:

    1) Hong Kong 89.9
    2) Singapore 87.5
    3) Australia 83.1
    4) New Zealand 82.1
    5) Switzerland 81.1
    6) Canada 79.9
    7) Chile 78.3 (now the richest per capita in Middle/South America)
    8) Mauritius 77
    9) Ireland 76.9
    10) USA 76.3 (so sad, #10)

    Top 10 Socialist countries in the world:

    1) North Korea 1.0
    2) Zimbabwe 26.3
    3) Cuba 28.3
    4) Libya 35.9
    5) Eritrea 36.2
    6) Venezuala 38.1
    7) Burma 38.7
    8) "Democratic" Republic of Congo 41.1
    9) Iran 42.3
    10) Equatorial Guinea 42.8
  2. hughb


    The World Bank ranks countries by how friendly to business, and even though I don't remember all of the specific criteria they use, they ranked the USA as number 4 in the most recent survey. Singapore was number one, and I see they are number one on the Heritage Foundation survey as well.

    Notice that the lowest ranked countries on the Heritage Foundation's list are not only socialist, they are as far as communist as possible while still maintaining a state.

    Myself, I prefer that they allow themselves to wallow in the muck of socialism. They can have their nationalistic pride in their "revolution", we can have all the gold, oil and other resources to keep prospering. While North Koreans are having parades for their Dear Leader, the USA is inventing new drugs. While Cubans sit around smoking cigars, the USA is mass producing automobiles. I don't want those guys to get busy and start competing with us for resources.
  3. One problem you will face in any responses to this thread is that people believe that you can keep a modern economy running even after a transition to socialism. So, the US will stay rich forever, even if we went to a socialism or social democracy style economy.

    Nonsense. At first, there would be little difference, but year over year and decade over decade, decline would be inevitable and inexorable as more and more people lost the incentive to make investments in productivity and efficiency. In a couple of generations, there would be a revolt similar to the one that took down the Soviet Union. It would all be a grand waste of time and resources in the pursuit of folly.

    Even still, because there are enough people without the ability to foresee this, it could happen.

    It would be awesome if, like in Charles Dickens' "A Christmas Carol", there was a "ghost of socialism future" to show people what it would really be like beyond the rhetoric. Unfortunately, no such supernatural entity exists.
  4. plyka


    Your line of thinking, unfortunately, is the main problem with socialist or the far left in the USA as far as i can see. They seem to believe that the pie is fixed, that it's a zero sum game and for one to prosper the other has to be hurt. Believe me, resources don't become resources unless there is progress and invention. The combustion engine was not created and then they said, look at this, what luck, we created the the engine and by luck, it uses gasoline! It was created to use gasoline because gasoline was available at an incredibly cheap price. In fact, gasoline used to be a by-product of kerosene. Crude oil was processed for the kerosene to be used in lamps and the like, while gasoline was a by-product, too combustable for lighting purposes, and was thus a hazardous by-product of the production process (garbage). Until there was an invention which made use of gasoline.

    If there was no oil on the planet, believe me, we would still have cars, they would just use a different resource for fuel.

    My overall point is, production//invention/innovation/etc is the engine for prosperity. And EVERYONE can be richer, it's not a fixed pie. Believe me, if Mexico had a higher per-capita income than the USA due to all their inventions and production, the USA and its people would be MUCH better off, not worse off. We would take advantage of their drugs/automobiles and other inventions. When a man like Bill Gates becomes super wealthy, he did not become super wealthy by taking from people, he become super wealthy by GIVING to people. The products Microsoft created have helped advance the human race, they made BILLIONS of other people wealthier, not just in the USA but around the world. Becuase of their invention, productivity increased accross the planet.

    It's not a fixed pie, believe me, there is no difference between Washington state versus California, or the USA versus China or Mexico. If Washington state creates new things and produces more, it helps California, it doesn't hurt it. Just like if the rest of the world were free and capitalist and prosperous, it would help us not hurt us here in the USA.
  5. plyka


    I agree with most of what you say, except the point about at first there would be little difference. Believe me, you would see the collapse immediately if the USA turned 100% socialist. It's not just about incentives, it's mainly about the allocation of resources. The most prosperous economy is one in which the resources of that economy are allocated most efficiently. How many resources should be dedicated to consumption of food, or investment of drugs, or mining for minerals, etc. How much corn versus soybeans should be planeted, etc. That's why government spending as "stimulus" is so detrimental. All it is doing is redirecting resources from somewhere else to where the government says it should go. Most of the time it comes from investment and savings (money in the bank that is loaned out to start up companies for instance) and is directed into consumption (stimulus). This is a misallocation of resources which causes tremendous long term harm at the expense of extremely short term bump in GDP and MAYBE employment.
  6. Mexico is one of the most right wing countries in the world. They damn sure aint fleeing to get away from socialism. You want to see what USA would look like without socialism, spend some time down in Mexico.
  7. Yep.

    No system based on "experts" can do any better than the market price system already does, so what's the point of switching over when the only direction to go is backwards?

    Plus, I'd love to know what role the typical supporter of "socialism" in the West thinks he will play in that future society? Would he be an "expert"? On what basis? Whoever has developed sufficient knowledge of the material facts of the current global economy is probably far more qualified than the typical "Occupy" cretin at dispensing direction to the ways in which commodities should flow to their most efficient use, yet those people with that knowledge tend not to support "socialism". So, we would end up with a bunch of people who know nothing about anything, but have the "right" political views, telling people with actual expertise how things should run? Who in their right mind would think that would work better than what we have now? "Socialism" is a bunch of pie in the sky theory peddled by petty tyrants who wouldn't know their ass from their elbow when push comes to shove.

    "Fundamentally, in a system in which the knowledge of the relevant facts is dispersed among many people, prices can act to coördinate the separate actions of different people in the same way as subjective values help the individual to coördinate the parts of his plan. It is worth contemplating for a moment a very simple and commonplace instance of the action of the price system to see what precisely it accomplishes. Assume that somewhere in the world a new opportunity for the use of some raw material, say, tin, has arisen, or that one of the sources of supply of tin has been eliminated. It does not matter for our purpose—and it is very significant that it does not matter—which of these two causes has made tin more scarce. All that the users of tin need to know is that some of the tin they used to consume is now more profitably employed elsewhere and that, in consequence, they must economize tin. There is no need for the great majority of them even to know where the more urgent need has arisen, or in favor of what other needs they ought to husband the supply. If only some of them know directly of the new demand, and switch resources over to it, and if the people who are aware of the new gap thus created in turn fill it from still other sources, the effect will rapidly spread throughout the whole economic system and influence not only all the uses of tin but also those of its substitutes and the substitutes of these substitutes, the supply of all the things made of tin, and their substitutes, and so on; and all this without the great majority of those instrumental in bringing about these substitutions knowing anything at all about the original cause of these changes. The whole acts as one market, not because any of its members survey the whole field, but because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated to all. The mere fact that there is one price for any commodity—or rather that local prices are connected in a manner determined by the cost of transport, etc.—brings about the solution which (it is just conceptually possible) might have been arrived at by one single mind possessing all the information which is in fact dispersed among all the people involved in the process."
  8. zdreg


  9. slacker


    The problem with any kind of utopian collectivism it that it will ALWAYS end violently. It may begin peacefully, but end with blood and anarchy.

    Wait till there is a collective population there will always be a small group or several small groups who insist they have a better idea or 'different values'. The Collective must repress their activities or lose control. The small 'better idea' war tribes take to an insurgent role to undermine the Collective leadership. Rule of law and personal freedoms are the first to go in the name of 'general good' and 'temporary application of power' during exceptional times.

    Out of the destruction will grow small communities that restore basic work values and respect for personal property and free speech.

    Sad, but this has to be learned again and again at the cost of millions of lives.

    With internet and computer technology the cycle may take less and less time and be more violent than anything seen in the past.

    This cycle should be taught in every school in a free society instead of the 'something for nothing' lies being promised in exchange for votes.

    Good luck to us...
  10. hughb


    I'm going to go ahead and break my rule of not getting into the back and forth of internet food fites, but it just gets so exasperating seeing my words twisted into something I never said.

    I re-read my own post to see if I had written it poorly. That could have been the only way that you could have responded that my "way of thinking" is the problem of the left in the USA, (especially since I don't consider myself a member of the "left", and how you could have gotten that in my pro-capatilist post is indeed mystifying).

    I clearly said that there are limited resources on the planet that all humans have to compete for which resulted in a reply from you that "It's not a fixed pie", hardly even relevant to my point. My point was clear and unambiguous - if the people now wallowing in socialism were added to the free market capatilist marketplace, their increased need for resources will compete with ours. I never even implied that Bill Gates harmed anyone, I'll just have to assume you threw that in there as a little extra stinger to make me appear stupid and make yourself appear insightful.

    Anyway, I already broke my own rule and sunk into the mire of an internet food fite simply by responding, so the fault will be mine if the thread devolves into another P&R Forum-like mess of insults and name calling back and forth ad nauseum. You will get the last word - I just ask that you respond to what I actually write.
    #10     Aug 3, 2012