Tuesday, 9 February 2010

Capitalism or Socialism; Shouldn’t it be our choice?

Socialists proclaim they want to resolve the ills of modern life – reducing coercion by individuals and by the State, the removal of class, privilege and tackling inequality, they profess that they want peaceful co-operation and mutual respect in society. They claim they thoroughly reject the bureaucracy, the concentration of power into the hands of the few and the barbarity of countries that call themselves socialist but in fact practice state socialism or worse. And those friends I have that profess to live and strive for a socialist society are genuinely willing to debate the issues although at times I confess I’m quite dumbstruck by the power dogma has over them on certain points of order that arise.

But I have three major gripes about socialism.

First, is the tendency of these idealists to confuse their own idealistic world they want for us all with I their ‘opponents' real one we all live in. True they are driven to socialism by the iniquities of the real world, like the huge wealth of the Duke of Westminster for example, the existence of monopolies, unemployment, and wasted resources like boarded-up houses when there are so many homeless. But you can't blame capitalism for creating these things. The Duke's wealth came from historic privilege, and the same privilege of passing on their own accumulated wealth to offspring is something they would not relinquish without a fight, I know because I’ve asked them to donate it to charity in their Wills. Monopolies are fostered, promoted and bolstered by the self same reams of regulation invariably socialists introduce to counter such practices, even more evident in the social engineering of “equality” and “diversity” legislation that frankly creates more in-equality and social exclusion because it coerces rather than motivates through mutual benefit. And of course do not forget that the latent potential for human and physical capital we have and have achieved are allowed to go to waste only because (I would argue) competition is not active enough or allowed to be so because of State interference via legislation and regulations.

Second, I just cannot get my socialist friends to understand the ‘knowledge’ problem. They need to read their Hayek. There are frankly millions of production possibilities and millions of ways of producing widgets and services that generate wealth. Capitalism is in fact a daily referendum on what should be produced: people 'vote' with their cash for the goods and services they want and prefer – encouraging entrepreneurs to produce more of the same; ergo more wealth is generated as cash moves around an economy, and the inevitable spin off from such activity is evident in that support products and services grow from the transfer of the original products and services that are in such high demand.

In agrarian societies, the production possibilities are limited of course by the availability of cultivated land, climate, weather, labour demands and supply, and of course unique local factors. In small groups, sharing or true socialism is easily managed and easily negotiated and of course a sense of fairness and value for all is more easily achieved. However In a technologically advanced world of endless innovation, with instant communication and populated by six billion people, knowing what to produce and how to produce it leaves socialists with a real problem. There will inevitably be disagreements: so the socialist solution is the exercise of power, i.e. State sanctioned coercion, to resolve these disputes.

Third, while I genuinely share many of the same ideals as socialists in that I feel a sense of rage at the injustices in this world, I think the prospect of personal gain is a more powerful driver of co-operation towards mutual benefit than just the homogenised top down imposition of the ‘ideal’ of the general good on us all, reinforced with the heavy handed power of the State to enforce such.

In exchange scenarios both sides benefit – or they would simply not do it.

No one will part with money for a product or service if they feel it does not offer ‘fair’ value and genuine benefits and no one will provide such a product or service unless they deem the payment for such to be ‘fair’ and of genuine benefit to them also. This is the basics of true wealth generation. In other words we only gain personally if we can make someone else better off too.

Exchange, even though motivated by self-regard or self interest, spreads benefit far and fast across the planet. It encourages people to build up and look after their productive resources, allowing goods and services to be produced ever more cost-effectively. It’s a simple fact that this principle works, even despite the best efforts of politicians to divert it for their own ends or increasingly control the wealth generated (by punitive taxation, which in fact stifles its growth) by taxing it, in that the State feels it knows better how to spend this wealth than we the individuals who created it.

We don’t get up at six in the morning 5-6 days a week to get prepared for an 8-10 hour working day because there is no direct personal benefit from doing so, do we? Just as we would never get up at the same time and toil for 8 hours or more, day in day out motivated only by the goodness of our hearts for the benefit of others?

Either way; shouldn't it be our choice?

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