What's So Wrong with Socialism?

thrombomodulin
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Re: What's So Wrong with Socialism?

Post by thrombomodulin » Fri Nov 27, 2015 6:14 pm

Paidion,
I am coming from the point of view that socialism is never good. I have two questions. First, when you use the term free enterprise and capitalism what difference are you trying to communicate? Second, it seems impossible to say that socialism does not interfere with free enterprise. For any given ownership decision is either in the hands of private persons or the State. Can you explain how you see the possibility of no interference between them?
Pete

steve7150
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Re: What's So Wrong with Socialism?

Post by steve7150 » Fri Nov 27, 2015 6:50 pm

BTW Canada has a modified Socialist system but keep in mind it has only 25 mill folks in an area as big as the U.S. and it has huge natural resources, so even socialism can work in this scenario, similar to Australia.

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Paidion
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Re: What's So Wrong with Socialism?

Post by Paidion » Fri Nov 27, 2015 7:57 pm

Hi Pete, you wrote:I am coming from the point of view that socialism is never good. I have two questions. First, when you use the term free enterprise and capitalism what difference are you trying to communicate?
Hmmm... I thought I explained that. Free enterprise is a system that allows all people to start businesses either large or small. Capitalism is a system in which big business crowds out small businesses that cannot compete, and thus big business achieves a monopoly. Monopolies prevent the full bloom of free enterprise.

Second, it seems impossible to say that socialism does not interfere with free enterprise. For any given ownership decision is either in the hands of private persons or the State. Can you explain how you see the possibility of no interference between them?
Only in extreme socialism, such as Communism is ownership in the hands of the State. Less extreme forms actually promote free enterprise—private ownership, and small business. They oppose large business only when it becomes a monopoly.

At one time, there was a political party in Canada known as "The Social Credit Party." It was NOT a socialist party, but a right wing party. In that system, only credit would be social in the sense that it would be governed by the Bank of Canada, so that money would exist in the quantity which would balance with the goods and services available in the country. Many people think it's that way now, but it isn't. Presently money comes into existence as a debt. When you go to the bank and borrow $10,000, they don't have that money stored up somewhere. They are not permitted to loan you the depositors' money. The chartered banks just issue you a cheque for $10,000 or indicate that it is deposited into your account. The money is created out of nothing! When you pay it back, it goes out of existence. If every cent of the money in the country were applied to the National Debt, there would be no money at all to purchase goods and services, and the country would still be deeply in debt!

The Social Credit Party promoted free enterprise, but opposed capitalism as well as socialism.
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mattrose
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Re: What's So Wrong with Socialism?

Post by mattrose » Fri Nov 27, 2015 9:12 pm

Paidion wrote:Free enterprise is a system that allows all people to start businesses either large or small. Capitalism is a system in which big business crowds out small businesses that cannot compete, and thus big business achieves a monopoly. Monopolies prevent the full bloom of free enterprise.
I don't think big business crowding out small business is inherent to capitalism (nor monopolies for that matter). Small business naturally has some competitive advantages in a capitalist system (while large businesses have other advantages). It seems to me that you are defining capitalism based on its abuses, not based on any actual dictionary definition.

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Re: What's So Wrong with Socialism?

Post by Paidion » Fri Nov 27, 2015 9:58 pm

I looked up "capitalism" in a number of dictionaries and encyclopedias, Matt, and it appears that you are right and I was wrong. "Capitalism" and "Free enterprise" seem to be almost synonymous.

What I was describing as "capitalism" others call "monopoly capitalism" and it seems that Marxists and Communists viewed all capitalism as monopoly capitalism. I have never studied Communism, but perhaps I received my conception of capitalism indirectly from their influence. Here is an article on monopoly capitalism:

http://www.encyclopedia.com/topic/Monop ... alism.aspx
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Homer
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Re: What's So Wrong with Socialism?

Post by Homer » Fri Nov 27, 2015 11:06 pm

A couple observations:

1. I have felt for some time our country will never be the same once more than 50% of the people have become net receivers of government largesse. I am afraid we have passed the tipping point.

2. Perhaps I am too cynical, but I think many favor socialism so that they will feel no obligation to help others; they want to force everyone to bear the burden equally.

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Re: What's So Wrong with Socialism?

Post by thrombomodulin » Sat Nov 28, 2015 10:37 am

Paidion,

Thanks for your reply.
Paidion wrote:Free enterprise is a system that allows all people to start businesses either large or small. Capitalism is a system in which big business crowds out small businesses that cannot compete, and thus big business achieves a monopoly. Monopolies prevent the full bloom of free enterprise ... Less extreme forms actually promote free enterprise-private ownership, and small business. They oppose large business only when it becomes a monopoly.
I do not think this is a problem. If, in some sector of the economy, a large business provides goods to the public at lower prices than small businesses would otherwise have done, then this should be viewed as beneficial not detrimental. The argument has to be that after less efficient small businesses are eliminated, then the large firm would increase prices to a value higher than the small businesses had formerly delivered. But the nature of a free market is dynamic, and the large firm cannot raise prices of its goods to such levels without bringing competing producers into the market. A number of examples of failed attempts to monopolize utilities could be given. Therefore, I think the involvement of the State to prohibit monopolies is unnecessary.
At one time, there was a political party in Canada known as "The Social Credit Party." It was NOT a socialist party, but a right wing party. In that system, only credit would be social in the sense that it would be governed by the Bank of Canada, so that money would exist in the quantity which would balance with the goods and services available in the country.
I had read about the social credit theory a few years ago after you had mentioned it in another thread. I read a little more about it today to refresh my memory, I have forgotten much since then. Douglass was correct in observing a problem with the nature of fiat currency and banking as mentioned in your post, however, the correct remedy is prohibiting the State from issuing any form of money or currency at all. The natural monies, such as gold or silver, are not subject to these problems. Douglas's economic theory (e.g. overproduction, A+B theory, and concerns about machinery replacing labor) is, to my understanding, unsound and it should be rejected along with the policies he proposed based upon it.

Pete

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Paidion
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Re: What's So Wrong with Socialism?

Post by Paidion » Sat Nov 28, 2015 4:47 pm

Pete, gold and silver are not "natural moneys." It is but a possible medium of exchange, not anything that has intrinsic value. Anything can be used as a medium of exchange—coins, specially designed paper that is difficult to copy, clam shells, etc. "Natural money" would be that that has consumer value value such as sugar, whiskey, blueberry pie, etc.

In order that a country may exchange goods with a standard currency, money must be created. Ideally its value should balance the goods and services available, and that is what the Social Credit system would do. If that should occur and that balance be maintained, then inflation and deflation as well as depressions, would no longer occur.

Which book by Clifford Hugh Douglas, did you read? The Monopoly of Credit? I see nothing in that book in which Douglas expresses concerns about machines replacing labour. Though Social Credit is studied at universities as one of the theories of economics, few understand it. I don't claim to fully understand it myself, though I ran as a candidate for the Party in one of the federal elections in Canada.

In 1935, William Aberhart became premier of Alberta, his Social Credit Party winning 56 out of 63 seats in the provincial parliament. Contrary to federal law, he issued a form of currency in Alberta that brought the province out of the Great Depression.

But for Social Credit to really work, it must operate in the whole country, and this has never happened anywhere in the world except in the island of Guernsey, a British possession.

In 1935, there were 17 Social Credit members of the Canadian Parliament. In 1962, when R.N. Thomson led the party, 30 Social Credit candidates were elected to the Canadian Parliament. That was the most ever elected. The final year in which there were Social Credit members of the Canadian parliament was 1979 when Fabian Roy led the Party. At that time 6 Social Credit candidates were elected.

I think the demise of the Social Credit Party came about under the leadership of evangelist Ken Campbell during the years 1990-93. Ken advised people NOT to vote Social Credit.

The U.S.A. and Canada continue to operate under the social debt system. This results in a huge national debt. If every cent of money in the country were applied to the National Debt, there would be no money left with which to buy goods and services, and the country would still be deeply in debt.

The Social Credit system was tried in the island of Guernsey. Permission to do so was obtained from Britain. Previously Guernsey was in dire economic straits. After the Social Credit system was implemented, Guernsey became prosperous. There were no income taxes. Many people from England wanted to move there, but there had to be limits on the number of immigrants. I'm not certain the status of Guernsey now, but I think the Social Credit system of economics is no longer used.
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thrombomodulin
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Re: What's So Wrong with Socialism?

Post by thrombomodulin » Sat Nov 28, 2015 8:53 pm

Paidion,
Paidion wrote:Pete, gold and silver are not "natural moneys." It is but a possible medium of exchange, not anything that has intrinsic value.
Thanks for your reply. I agree gold and silver lack intrinsic value. However, this is true of all things including sugar, whiskey, blueberry pie, paper money, etc,.. I would affirm these are natural monies on different grounds than asserting that they have an intrinsic value. Those grounds are that one or both have been the primary choice for a medium of exchange throughout history in almost all times and places because of their unique properties, and not because the compulsion of the State was used to make them become money. The reason they have been so often used is that men typically do find value in it (not intrinsic), and that they have certain mechanical properties suitable for a money - for example corrosion resistance, transportable due to the high value to weight and volume ratio, it is divisible into arbitrary quantities, it has ease of recognition, and it is difficult to counterfeiting.
Paidion wrote: Ideally its value should balance the goods and services available, and that is what the Social Credit system would do. If that should occur and that balance be maintained, then inflation and deflation as well as depressions, would no longer occur.
Why do you perceive a need that the value of money has to be matched to goods or services? My present understanding is that no balancing at all is necessary because the monetary prices can freely change to accommodate any overall quantity of money. For example, if suddenly overnight an angel replaced everyone's money with double what had been there before, then I expect we should find that the next day prices have doubled and no other effects occur (neglecting transients induced by some people recognizing the new situation faster than others).
Paidion wrote: Which book by Clifford Hugh Douglas, did you read? The Monopoly of Credit? I see nothing in that book in which Douglas expresses concerns about machines replacing labour. Though Social Credit is studied at universities as one of the theories of economics, few understand it. I don't claim to fully understand it myself, though I ran as a candidate for the Party in one of the federal elections in Canada.
In so far as I recall I had read several articles describing his views several years ago, but I have not read his books. To refresh my memory today, I only read the entry on Wikipedia about Douglass his theory. Perhaps this description was inaccurate, and I am lacking in my diligence by not having reading a primary source. The following is written there, is it wrong?
wikipedia wrote: Douglas proposed that unemployment is a logical consequence of machines replacing labour in the productive process, and any attempt to reverse this process through policies designed to attain full employment directly sabotages our cultural inheritance. Douglas also believed that the people displaced from the industrial system through the process of mechanization should still have the ability to consume the fruits of the system, because he suggested that we are all inheritors of the cultural inheritance, and his proposal for a national dividend is directly related to this belief
Paidion wrote: The U.S.A. and Canada continue to operate under the social debt system. This results in a huge national debt. If every cent of money in the country were applied to the National Debt, there would be no money left with which to buy goods and services, and the country would still be deeply in debt.
I agree this is a consequence of having a fiat currency system and am of the opinion that this system should be abolished. A commodity based currency would not succumb to this problem, whether it is gold, silver, whiskey, or some other medium.

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Paidion
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Re: What's So Wrong with Socialism?

Post by Paidion » Sun Nov 29, 2015 6:43 pm

Hi Pete, you wrote:Why do you perceive a need that the value of money has to be matched to goods or services? My present understanding is that no balancing at all is necessary because the monetary prices can freely change to accommodate any overall quantity of money.
If that were only so, it would be great! And C.H. Douglas would have had no need to come up with his social credit economic theory. But it doesn't happen. I know of no case where there was a scarcity of money and prices went down significantly (except in the case of the Great Depression). The problem when there is insufficient money to buy the goods and services available is that everyone loses. There may be plenty of goods and services available but people don't have enough money to buy them, and sellers are not getting sufficient customers. Douglas would have provided dividends for everyone in order to balance the money supply with the quantity of goods and services available.

By the way, I did find in Douglas's book "The Monopoly of Credit" a reference to machines replacing labour. But Douglas did not oppose that in itself. What he opposed is the way the then present money system operated in conjunction with machines replacing labour. If the result was manufacturers reducing their prices accordingly because they wouldn't have to pay so many workers, there would have been no problem. But instead, they kept the much greater profits for themselves. The net result of all this is that manufacturers got richer and manual workers got poorer, and in general the rich became richer, and the poor became poorer.

But what if the manufacturers with their useful machines, instead of laying off workers, had them working fewer hours, maybe even half-time or less, while paying them only a little less than when they worked full time? It would have to be somewhat less or the manufacturers would have obtained no increased benefits from the use of their machines.
Paidion

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