Guest Post by Jeff Thomas
Capitalism, whether praised or derided, is an economic system and ideology based on private ownership of the means of production and operation for profit.
Classical economics recognises capitalism as the most effective means by which an economy can thrive. Certainly, in 1776, Adam Smith made one of the best cases for capitalism in his book, An Inquiry Into the Nature and Causes of the Wealth of Nations (known more commonly as The Wealth of Nations). But the term “capitalism” actually was first used to deride the ideology, by Karl Marx and Friedrich Engels, in The Communist Manifesto, in 1848.
Of course, whether Mister Marx was correct in his criticisms or not, he lived in an age when capitalism and a free market were essentially one and the same. Today, this is not the case. The capitalist system has been under attack for roughly 100 years, particularly in North America and the EU.
A tenet of capitalism is that, if it’s left alone, it will sort itself out and will serve virtually everyone well. Conversely, every effort to make the free market less free diminishes the very existence of capitalism, making it less able to function.
Today, we’re continually reminded that we live under a capitalist system and that it hasn’t worked. The middle class is disappearing, and the cost of goods has become too high to be affordable. There are far more losers than winners, and the greed of big business is destroying the economy.
This is what we repeatedly hear from left-leaning people and, in fact, they are correct. They then go on to label these troubles as byproducts of capitalism and use this assumption to argue that capitalism should give way to socialism.
In this, however, they are decidedly wrong. These are the byproducts of an increasing level of collectivism and fascism in the economy. In actual fact, few, if any, of these people have ever lived in a capitalist (free-market) society, as it has been legislated out of existence in the former “free” world over the last century.
So, let’s have a look at those primary sore spots that are raised by suggesting that collectivism will correct the “evils” of capitalism.
Prices Are Driven From the Top Down
This is unquestionably the case in the aforementioned countries, however, it is not so under capitalism. Under capitalism, each producer tries to get as much as he can for his product, but, as others are also creating the same product, those with the lowest price are the ones who will succeed. Therefore, the consumers effectively set the prices, based upon what they’re willing to pay.
But in any country where cronyism exists between big business and government, regulations can squeeze out the competition, allowing a monopoly for a given product. The definition of this marriage between business and government is “fascism.” The government makes it increasingly difficult, through regulation, for the small producer to compete with the larger producer (who gives kickbacks to the government).
Capitalism Only Benefits Those at the Top
Capitalism benefits those who produce the most, but it also benefits all others, as they have a free choice to purchase whatever products they wish, at a price they’re prepared to pay. If the producer demands too high a price, consumers instead buy his competitor’s product, putting him out of business. The consumer is therefore in charge of the price of goods. A producer only rises to the top if he produces the most affordable product (as did Henry Ford, 100 years ago, with his Model T. Through the free market, he lowered his price repeatedly and, in so doing, put America on wheels).
Capitalism Impoverishes the Masses
The free market offers more goods to more people at lower prices, which enriches the lives of all consumers, no matter how rich or poor. In so doing, it raises up the masses over time, providing them with more and better goods, education, health care, etc., enabling them to rise out of poverty. By contrast, overregulation and entitlements enslave those same people to poverty.
The whole idea of the free market is that it’s free from interference by others—most importantly, governments. If left alone, the free market will produce the goods the public are most willing to pay for, which results in an ever-self-levelling of products and prices. As soon as regulation enters the picture, the free market is compromised. What exists today is not a free market, as Adam Smith would have recognised it, but a bloated, dysfunctional socialist/fascist/capitalist mongrel of a system. Of course it doesn’t work.
Fascism is capitalism in decay.
—Vladimir Lenin
Quite so. Regulation is a cancer that slowly eats capitalism until it morphs into fascism.
Do not their leaders deprive the rich of their estates and distribute them among the people; at the same time taking care to preserve the larger part for themselves?
—Socrates to Adeimantus
What was true ca. 400 BC in Athens is true today. Fascism (or corporatist cronyism) results in 99% of the population coming under the diktat of the 1%, which is made up of government leaders and corporate leaders, working in concert, to the exclusion of all others. This is, in fact, the opposite of a free market.
The creation of new wealth is the only functional weapon against poverty.
—Doug Casey
New wealth comes from the bottom up—it’s as simple as someone building a better mousetrap, or building the old one more cheaply. In such a market, both the producer and the consumer benefit.
In a fascist system, the wealth gravitates to the top, eventually choking out the middle class and expanding the poorer class, and that’s just what we’re witnessing today. The solution is not to go further in this direction, but rather to try something new… or at least new to anyone living under the fascist system. Although it still retains some capitalist overtones, it is unquestionably not capitalism.
A last word—capitalism does exist today, but it lives in select countries that have not yet given in to overregulation. In those countries, the average person thrives and has opportunities far beyond what’s allowed in the former “free” world. Should the reader conclude that his present country is unlikely to go in the direction of capitalism, he may choose to vote with his feet in order to prosper the way his ancestors did 100 years ago.
Editor’s Note: Today, Washington’s dangerous fascist policies have pushed the US economy to the tipping point.
Years of overregulation, corporate bail outs, manic money printing, and artificially low interest rates, have bloated and warped the economy.
Now it’s about to unravel…
That’s why New York Times best-selling author Doug Casey and his team just released an urgent video. Click here to access it now.
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A special note on communism. Both communism and capitalism are unnatural commercial models invented by monetary and political scientists and forced upon the world through conquest, revolution, legislation, incrementalism, and subterfuge. Capitalism is no more a natural and evolutionary progression from mercantilism as is communism a natural and evolutionary progression from capitalism. As capitalism is not a natural commercial evolution, it follows that neither is communism. When one compares the nature of both commercial models using the definition of capitalism provided earlier, one finds that in both systems investment risk is not wholly borne by entrepreneurs or state entities and their creditors, but instead spread over the entirety of society through the deployment of fiat money connected to a fractional reserve banking system. The aggregate accumulating gains or losses in fiat money from commercial activity in both systems never puts the underlying reserves of gold held by either capitalist or communist central banks at risk. Furthermore, both systems employ opaque central banks to set monetary policy and both systems have fiat empires attached to their home countries. Additionally, as both systems issue loans at interest, the accumulating amount of loans grows much faster than the underlying value of reserves held in “trust”, and this widening disparity depreciates the “value” of each systems fiat money equally. This depreciation generates the inflation required in each system to simulate economic “growth” and the illusion of “prosperity”. All aggregate losses from individual or state commercial activities are socialized to both participants and non-participants of commercial activity through this process of inflation. Both systems tax their subjects, both systems rely heavily on war for economic “stimulus”, and both systems will tolerate no rival to their fiat empires. Both see the other as the enemy, both strive for the destruction of the other, and both claim the moral and righteous prerogative. Despite nearly 100 years of animosity, wars both hot and cold, and entire military infrastructures designed at the ready to destroy the other, there is at their fundamental cores no operating difference between communism and capitalism, and for all practical purposes they are identical systems. Thus communism and capitalism are, in fact, the equivalence of choice between baked and boiled potatoes in political economy.
– Financialization and the Road to Zero
And what is capitalism?
Capitalism is specifically defined here as a commercial model whereby investment risk is not wholly borne by entrepreneurs and their creditors, but instead spread over the entirety of society through the deployment of fiat money connected to a fractional reserve banking system. Fiat money acts as the mere representation of some physical underlying store of value held in trust by the controllers of this fractional reserve banking system. Under capitalism, investment losses transacted in fiat money do not jeopardize the physical holdings of real value – stockpiles of gold and silver – but only depreciate the perceived exchange “value” of that fiat money relative to some unit price, again in fiat money, of the underlying gold and silver reserve assuming a transparent and impartial banking system. Thus as credit based business ventures in the aggregate progress into “profits” or “losses”, in the transparent and impartial banking system, fiat money will either appreciate or depreciate in purchasing power relative to the underlying unit reserve of real value held in gold and silver. For those who control this fiat money, capitalism is a risk free proposition as the real value – gold and silver held in “trust” – never leaves their possession as fiat money losses accumulate. It is instead the populace and especially the peripheral fiat empire satellites that bear the full effects of inflation and inevitably “pay” for aggregate commercial losses through their erosion of purchasing power. Unlike mercantilism, losses are pushed onto both participants and non-participants in commerce which makes capitalism the ultimate “heads we win, tails they lose” banking hedge. This hedge against any real value loss is the core mechanism of modern “free enterprise” as it is indeed enterprise free of risk and loss at the highest level of its system – the central bank cross-ownership nexus. So unlike mercantilism where creditors lose physical gold and silver, under capitalism entrepreneurs lose chits of paper and credibility, and the central banks lose only chits of paper and continue to hold their gold and silver reserves regardless of all aggregate gains or losses transacted in fiat money.
– Financialization and the Road to Zero
Spreading risk over the entirety of society is not capitalism.
Using Fiat money is not capitalism.
Therefore, you are attacking a straw man.
Sorry Ice,posted before I read.you are much more concise….upvote!
Yeah, capitalism with fiat money. Sure dude.
You can’t have capitalism until the (((Federal Reserve System))) is relegated to the dustbin of history.
The terminology is needing a drastic change also…….
The whiskey tax, which was passed by Congress and became law in 1791, may have made sense to legislators from the East. However, members of Congress representing frontier populations, realizing how it would impact their constituents, objected to it. When the tax bill became law, it wasn’t popular anywhere in the country. To settlers along the western frontier at the time, comprising regions of Pennsylvania, Virginia, and North Carolina, the tax on whiskey was particularly offensive.
Life for the western settlers was notoriously difficult. In the 1780s, as Americans headed across the Allegheny range of mountains, they discovered that much of the good land was already in the hands of wealthy land speculators. Even George Washington, in the years before he became president, had invested in thousands of acres of prime land in western Pennsylvania.
The families who had traveled into the region to settle, who were often immigrants from the British Isles or Germany, found themselves having to farm the least desirable land. It was a hard life, and the danger from Native Americans unhappy about the encroachment on the land was a constant threat.
In the early 1790s, the new tax on whiskey was viewed by the western settlers as an unfair tax designed to aid the financial class living in the cities of the East.
https://www.thoughtco.com/whiskey-rebellion-4797408
Good one.
Whiskey WAS currency!made excess corn storage much easier
So how does this fit in? I’m no echoconomist.
Check it out: “The promise of a fat new tax cut may be one reason why business executives at last week’s World Economic Forum in Davos were eager to predict a Trump victory in media interviews last week, and investors could be forgiven for salivating over the possibility after their experiences with the 2017 tax cut.” That’s WEF for those that don’t know. Not anyone here for certain.
Trump tax cut 2.0: How slashing the corporate rate again could boost stocks
Hold on to those stocks. Right?
Lucy is waiting with the football……
I believe the term “capitalism’ is just that,money for moneys sake.
Free market is NOT the same thing!
Participation because I want to,not because money is monopolistic in todays society….
Currency/money has been made the primary means of gaining anything today,particularly out of ones labor.Having been reduced to a value you don’t control or have a say in……
The diff between a teacher(classic def.)and a football player.
One is needed to advance society,the other plays a game!
Capitalism always turns into crony capitalism, and crony capitalism always turns into socialism.
Eventually a revolution is needed to start capitalism over.
I think that’s about right .Most people would find reprehensible my observation that only those who are net contributors to the treasury ought to have any say in how the money is spent . But they just aren’t seeing it for what it is and the gradual corrupting effects it has visited upon us . “Certain “politicians simply quid pro quo votes promising free shit out of the treasury essentially in exchange for political support . Yeah , no shit , similar to that definition of ” democracy ” whereby two wolves and a sheep vote on whats for dinner .