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60 Second Refutation of Socialism, While Sitting at the Beach
Coyote Blog--Dispatches from a Small Business ^ | December 2, 2004 | Warren Meyer

Posted on 11/18/2012 5:36:57 AM PST by 1rudeboy

Last week [Nov. 2004], there were several comments in Carnival of the Capitalists that people would like to see more articles highlighting the benefits of capitalism.  This got me thinking about a conversation I had years ago at the beach:

Hanging out at the beach one day with a distant family member, we got into a discussion about capitalism and socialism.  In particular, we were arguing about whether brute labor, as socialism teaches, is the source of all wealth (which, socialism further argues, is in turn stolen by the capitalist masters).  The young woman, as were most people her age, was taught mainly by the socialists who dominate college academia nowadays.  I was trying to find a way to connect with her, to get her to question her assumptions, but was struggling because she really had not been taught many of the fundamental building blocks of either philosophy or economics, but rather a mish-mash of politically correct points of view that seem to substitute nowadays for both.

One of the reasons I took up writing a blog is that I have never been as snappy or witty in real-time discussions as I would like to be, and I generally think of the perfect comeback or argument minutes or hours too late.  I have always done better with writing, where I have time to think.  However, on this day, I had inspiration from a half-remembered story I had heard before.  I am sure I stole the following argument from someone, but to this day I still can't remember from whom.

I picked up a handful of sand, and said "this is almost pure silicon, virtually identical to what powers a computer.  Take as much labor as you want, and build me a computer with it -- the only limitation is you can only have true manual laborers - no engineers or managers or other capitalist lackeys".

Yeah, I know what you're thinking - beach sand is not pure silicon - it is actually silicon dioxide, SiO2, but if she didn't take any economics she certainly didn't take any chemistry or geology.

She replied that my request was BS, that it took a lot of money to build an electronics plant, and her group of laborers didn't have any and bankers would never lend them any.

All too many defenders of capitalism would have stopped here, and said aha!  So you admit you need more than labor - you need capital too.  But Marx would not have disagreed - he would have said it was the separation of labor and capital that was bad - only when laborers owned the capital, rather than being slaves to the ruling class that now controls the capital, would the world reach nirvana.  So I offered her just that:

I told her - assume for our discussion that I have tons of money, and I will give you and your laborers as much as you need.  The only restriction I put on it is that you may only buy raw materials - steel, land, silicon - in their crudest forms.  It is up to you to assemble these raw materials, with your laborers, to build the factory and make me my computer.

She thought for a few seconds, and responded "but I can't - I don't know how.  I need someone to tell me how to do it"

And that is the heart of socialism's failure.  For the true source of wealth is not brute labor, or even what you might call brute capital, but the mind.  The mind creates new technologies, new products, new business models, new productivity enhancements, in short, everything that creates wealth.  Labor or capital without a mind behind it is useless.

From the year 1000 to the year 1700, the world's wealth, measured as GDP per capita, was virtually unchanged [link is now dead].  Since 1700, the GDP per capita in places like the US has risen, in real terms, over 40 fold.  This is a real increase in total wealth - it is not money stolen or looted or exploited.  Wealthy nations like the US didn't "take" the wealth from somewhere else - it never even existed before.  It was created by the minds of human beings.

How?  What changed?  Historians who really study this stuff would probably point to a jillion things, but in my mind two are important:

  1. There was a philosophical and intellectual change where questioning established beliefs and social patterns went from being heresy and unthinkable to being acceptable, and even in vogue.  In other words, men, at first just the elite but soon everyone, were urged to use their mind rather than just relying on established beliefs
  2. There were social and political changes that greatly increased the number of people capable of entrepreneurship.  Before this time, the vast vast majority of people were locked into social positions that allowed them no flexibility to act on a good idea, even if they had one.  By starting to create a large and free middle class, first in the Netherlands and England and then in the US, more people had the ability to use their mind to create new wealth.  Whereas before, perhaps 1% or less of any population really had the freedom to truly act on their ideas, after 1700 many more people began to have this freedom. 

So today's wealth, and everything that goes with it (from shorter work hours to longer life spans) is the result of more people using their minds more freely.

Look around the world - for any country, ask yourself if the average person in that country has the open intellectual climate that encourages people to think for themselves, and the open political and economic climate that allows people to act on the insights their minds provide and to keep the fruits of their effort.  Where you can answer yes to both, you will find wealth and growth.  Where you answer no to both, you will find poverty and misery. 

TOPICS: Business/Economy; Education; Science; Society
KEYWORDS: capitalism; freeenterprise; freemarket; socialism
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1 posted on 11/18/2012 5:37:02 AM PST by 1rudeboy
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To: 1rudeboy
The mind was trapped in an Aristotelian/Christian trap until the Great Minds came along during the Renaissance. The mind was freed and many contributed after that. Some of my favorites were Descartes and Newton.

Atlas Shrugged is an excellent fictional homage the the "Men of the Mind."

2 posted on 11/18/2012 5:46:36 AM PST by Aevery_Freeman (The trouble with the "masses" is that they never achieve the "m")
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To: 1rudeboy


3 posted on 11/18/2012 5:46:58 AM PST by cantfindagoodscreenname (I really hate not knowing what was said in the deleted posts....)
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To: 1rudeboy

Nice article.

In my experience talking with Marxists I have found that they think (wrongly) wealth is like energy, it cannot be created or destroyed, only transferred. (They would never say it this way, having taken no science.)

In this world view, if someone has wealth, they must have gotten it from others. Those others are the workers.

They tend to argue that they should be able to hire the “thinkers” at a “fair” wage to design the computer and the plant. That fair wage may even be slightly higher than the workers wage, but not appreciably higher, and that the thinkers would just happily fill their role in society. Voila - Utopia!

They totally drop the concept of risk, reward, incentive and human nature. In fact they want to change human nature to achieve their socialist goal. They will go so far as to kill you if you don’t want to play in their happy little utopia.

4 posted on 11/18/2012 6:00:02 AM PST by Triple (Socialism denies people the right to the fruits of their labor, and is as abhorrent as slavery)
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To: 1rudeboy

Did Marx not recognize the value of intellectual labor?

5 posted on 11/18/2012 6:12:18 AM PST by Yardstick
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To: Triple

Yes, Lefties all seem to assume the world is a zero sum game. It’s really a pathetically stupid worldview since it cannot account for why we live better than cavemen.

6 posted on 11/18/2012 6:25:21 AM PST by drbuzzard (All animals are created equal, but some are more equal than others.)
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To: Yardstick
Good question. I no longer remember the exact distinction, but possessing intellectual capital pretty much made you a member of the bourgeois.

I don't remember whether he thought it was intellectual capital that led to property-ownership, or if he separated the two.

7 posted on 11/18/2012 6:29:28 AM PST by 1rudeboy
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To: Triple
I think the modern equivalent is the insistence that operating systems be open source. Would Bill Gates have invented Windows if he had to put his code out there for everyone to download and play with? One can only profit from the unique quality of one’s product.
8 posted on 11/18/2012 6:32:38 AM PST by Excellence (9/11 was an act of faith.)
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To: Triple

Bump for ponderance after church.

9 posted on 11/18/2012 6:34:06 AM PST by knarf (I say things that are true ... I have no proof ... but they're true)
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To: 1rudeboy

Excellent post, well worth the read. Bumping back to the top.

10 posted on 11/18/2012 6:36:17 AM PST by usconservative (When The Ballot Box No Longer Counts, The Ammunition Box Does. (What's In Your Ammo Box?))
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To: 1rudeboy

One day a group of scientists got together and decided that man had come a long way and no longer needed God. So they picked one scientist to go and tell Him that they were done with Him.

The scientist walked up to God and said, “God, we’ve decided that we no longer need you. We’re to the point that we can clone people and do many miraculous things, so why don’t you just go on and get lost.”

God listened very patiently and kindly to the man and after the scientist was done talking, God said, “Very well, how about this, let’s say we have a man making contest.” To which the scientist replied, “OK, great!”

But God added, “Now, we’re going to do this just like I did back in the old days with Adam.”

The scientist said, “Sure, no problem” and bent down and grabbed himself a handful of dirt.

God just looked at him and said, “No, no, no. You go get your own dirt!”

11 posted on 11/18/2012 6:45:06 AM PST by Walmartian (I'm their leader. Which way did they go?)
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To: 1rudeboy
Wealthy nations like the US didn't "take" the wealth from somewhere else - it never even existed before. It was created by the minds of human beings.

This is at the heart of liberal economic idiocy and it's maddening. It's as if they believe that there's one big pile of money somewhere and the rich are able to get there with their wheelbarrows first, to the great harm of the poor. It's asinine. But, they really do believe that whatever I have had to have been pilfered from someone else. My prosperity = another's poverty. Idiots.
12 posted on 11/18/2012 6:54:25 AM PST by youngidiot (God help us.)
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To: 1rudeboy

Both pure socialism and capitalism are unpleasant extremes and has never existed. A well balanced system is between it, but it has to be much closer to capitalism. Think of 1950s America as close to ideal.

13 posted on 11/18/2012 7:08:42 AM PST by cunning_fish
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To: Triple

They downplay the role of thinking, while telling us their “brilliant” thoughts. If thinking is so trivial, one wonders why we should even listen to, much less accept their theories. Such people should be shushed as soon as they say, “I think....”.

Maybe they only say this stuff and hope to make workers believe it. It is their only path, with their mediocre minds, to rule over those who have been given superior intellect.Look to where they want complete fairness, you see where they feel inferior.

14 posted on 11/18/2012 7:09:42 AM PST by Anima Mundi (Envy is just passive, lazy greed.)
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To: 1rudeboy
Finally, someone who has clearly stated what i have suspected all these years.

The true source of wealth is the unfettered human mind. When this is joined to a political system that encourages new ideas you get an economy that is capable of extensive and prolonged growth.

Why is this so strongly discouraged by multiple political forms? IMHO, no established politician in any political form likes instability. It scares them beyond belief. A read of history since the American Revolution shows an unending list of boggy men that are violent threats to the established order. I don't think that I have to enumerate the worse examples of the 20th Century.

15 posted on 11/18/2012 7:17:02 AM PST by Nip (BOHEICA and TANSTAAFL - both seem very appropriate today.)
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To: Aevery_Freeman

“If you ask me to name the proudest distinction of Americans, I would choose- because it contains all the others—the fact that they were the people who created the phrase ‘to make money.’ No other language or nation had ever used these words before; men had always thought of wealth as a static quantity- to be seized, begged, inherited, shared, looted, or obtained as a favor. Americans were the first to understand that wealth has to be created. The words ‘to make money’ hold the essence of human morality.” ~ Francisco’s “Money Speech” from Atlas Shrugged by Ayn Rand

16 posted on 11/18/2012 7:23:22 AM PST by Vigilantcitizen (Dave Mustaine for president.)
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To: Aevery_Freeman

Christianity was not a “trap”. In fact it freed many people. Anytime someone talks about “dark ages” I refer them to what the whole of Europe was like BEFORE Christianity took over. THOSE are the dark ages. Savages in huts without any real accomplishment. Rome was the only base of learning but no savages really changed until Rome fell and Christianity had taken hold.

17 posted on 11/18/2012 7:38:09 AM PST by the OlLine Rebel (Common sense is an uncommon virtue./Technological progress cannot be legislated.)
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To: Aevery_Freeman

*****The mind was trapped in an Aristotelian/Christian trap*****

Jesus’ words prove that you are dead wrong.

Matthew 25:14-30

King James Version (KJV)

14 For the kingdom of heaven is as a man travelling into a far country, who called his own servants, and delivered unto them his goods.

15 And unto one he gave five talents, to another two, and to another one; to every man according to his several ability; and straightway took his journey.

16 Then he that had received the five talents went and traded with the same, and made them other five talents.

17 And likewise he that had received two, he also gained other two.

18 But he that had received one went and digged in the earth, and hid his lord’s money.

19 After a long time the lord of those servants cometh, and reckoneth with them.

20 And so he that had received five talents came and brought other five talents, saying, Lord, thou deliveredst unto me five talents: behold, I have gained beside them five talents more.

21 His lord said unto him, Well done, thou good and faithful servant: thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord.

22 He also that had received two talents came and said, Lord, thou deliveredst unto me two talents: behold, I have gained two other talents beside them.

23 His lord said unto him, Well done, good and faithful servant; thou hast been faithful over a few things, I will make thee ruler over many things: enter thou into the joy of thy lord.

24 Then he which had received the one talent came and said, Lord, I knew thee that thou art an hard man, reaping where thou hast not sown, and gathering where thou hast not strawed:

25 And I was afraid, and went and hid thy talent in the earth: lo, there thou hast that is thine.

26 His lord answered and said unto him, Thou wicked and slothful servant, thou knewest that I reap where I sowed not, and gather where I have not strawed:

27 Thou oughtest therefore to have put my money to the exchangers, and then at my coming I should have received mine own with usury.

28 Take therefore the talent from him, and give it unto him which hath ten talents.

29 For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath.

30 And cast ye the unprofitable servant into outer darkness: there shall be weeping and gnashing of teeth.

18 posted on 11/18/2012 7:40:37 AM PST by ResponseAbility (The truth of liberalism is the stupid can feel smart, the lazy entitled, and the immoral unashamed)
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To: youngidiot

Liberals also view almost all commercial transactions as coerced. That the seller is in some way cheating the buyer. What they don’t understand is that there is a differential in how buyers & sellers value a product, and that when trade occurs, both sides benefit and overall wealth increases.

19 posted on 11/18/2012 7:45:32 AM PST by Tallguy (Hunkered down in Pennsylvania.)
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To: cunning_fish

I don’t understand this mentality. It’s exactly like saying both being cancer free and having cancer are unpleasant extremes so what is better is a mix of some healthy tissue and some cancer.

Socialism is evil and it is demonstrably so. It violates man’s rights. It is metaphysically wrong. It is wrong in its view of reality and man’s nature. There is no such thing as a proper mixture of good and evil.

The world has never seen a system of Laissez faire capitalism put into practice. The closest anyone has ever come was America at its founding and we see the results in the wealth created. But even from the first it was a mixed system and included glaring contradictions such as slavery. Yet despite the flaws it produced undreamed of wealth.

The World has never seen a system of pure Socialism either. The closest anyone has come is probably in North Korea and we see the results. Still it is a mixture of capitalism and socialism as the secret police can’t catch every illegal trade of goods that goes on since people’s will to live is so strong that they will risk death in an internment camp to raise an illegal head of cabbage and trade it with their fellows.

America had a brilliant start and could have moved more and more towards a system of laissez faire or towards Socialism. For a brief shining time we did after the Civil War but then In the late nineteenth century we took a turn. The cancer of Socialism is well advanced now and we see the results.

20 posted on 11/18/2012 7:49:24 AM PST by albionin
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