College English Assignment- Capitalism’s Logic over Socialist Ideology

For a final college English assignment, we have to publish one of our writings on a website; I thought of no better place than my favorite website. Please comment as you will - disagree or agree. Be blunt and know that visitors from my class will be visiting to verify and read. With that said, here it is:

In the world of politics, as it relates to economics, there are two main systems. Whether intermixed, or taken to their extremes, as the political pendulum swings from left to right as it does in the United States, and because that political pendulum is usually fueled by the economy – or the public’s ignorance thereof – one of the two systems take hold until it is either proven a failure, or the public’s ignorance of natural, economic cycles swings the pendulum the other way. These two systems of economics are known as socialism and capitalism. Socialism and capitalism aren’t just two economic theories in their total definitions; they are also closely related to sociological patterns and policy-making driven by economic theories that support the two ideas. When compared in economies and societies that allow each to work to their fullest potential, capitalism has proven itself to be the most reliable economic and political system of the two; socialism is great on paper and in intention, but is a failure when it is compared, side-by-side, to capitalism.

Socialism is a socioeconomic policy in which the state controls most commerce and land. Joan Spero and Jeffrey Hart, in their glossary for The Politics of International Economic Relations, defines socialism as, “An economic and political system in which private property is abolished and the means of production (i.e., capital and land) are collectively owned and operated by the community as a whole in order to advance the interests of all. In Marxist ideology, socialism is considered an intermediate stage in the inevitable transformation of capitalism into communism. A socialist society is envisioned as being characterized by the dictatorship of the proletariat; the existence of a high degree of cooperation and equality; and the absence of discrimination, poverty, exploitation, and war. With the non-existence of private ownership, the private profit motive is eliminated from economic life. Consequently, market forces do not play a role in organizing the process of production. Instead, large-scale government planning is employed to ensure the harmonious operation of the process of production.” Since commerce and land are aspects of almost every person’s life, this tends to give the state almost total control of the lives of those governed by it. Although the argument for socialism is to redistribute the wealth to the masses instead of being held by a few, it ultimately leads to those, who govern, living lavish lifestyles at the expense of the governed, causing the people to be forced into abject poverty. Examples of this are the situations faced by the people of North Korea, Cuba, China, the former USSR, and the other countries who live under a communistic, socialist system. Of course, there are countries that live under lesser forms of socialism, such as Germany, France, Spain, and Canada, and that don’t live under the complete tyranny of the government. However, many of their rights and privileges are restricted and/or taxed as a means of supporting such a failed socioeconomic system of governing. Nowhere in the world has socialism stood the test of time when compared to countries that use the more logical socioeconomic system of capitalism, which is the champion of personal liberty, free markets, and personal responsibility.

Capitalism is a socioeconomic system in which free markets and personal financial choices dictate who succeeds and who fails. Spero and Hart also define capitalism as, “A socio-economic system characterized by private initiative and the private ownership of factors of production. In such a system individuals have the right to own and use wealth to earn income and to sell and purchase labor for wages. Furthermore, capitalism is predicated on a relative absence of governmental control of the economy. The function of regulating the economy is achieved largely through the operation of market forces, whereby the price mechanism acts as a signaling system which determines the allocation of resources and their uses.” Since the market forces the “vote of one’s wallet” – the hardest vote to obtain from anybody – the free market dictates policy and ideas based on the worth of the idea. Therefore, government has no role in your personal life so long as you don’t violate the same rights of others. Less governmental interference leaves less chance for abuse from those we hire to govern us. Capitalism leaves room for bad ideas and policies to fail, while awarding good ideas and policies with wealth and investment.

Below, I’ll outline a couple of the biggest economic issues facing Americans today, and show where capitalism proves to be the more logical, fail-safe theory of socioeconomics. I will leave out the views of the Republican Party and Democrat Party, for the most part, because I believe them to be almost one-in-the-same on most policy issues, although the Republican Party seems to lean toward capitalism, and the Democrat Party toward socialism. For clarity, however, I will use the platform of the Libertarian Party – the party of the United States that openly advocates for almost total capitalism, and I will use the platform of the Socialist Party USA – the party of the United States that openly advocates for almost total socialism.

Today, we are faced with an economic crisis that is the largest since the Great Depression of the 1930’s. The reason we are in this crisis, I believe, is because we haven’t had a voice for true capitalism since the days of Thomas Jefferson. Instead, we’ve become a two-party system in which both parties advocate large governments to further their ideals, although the intent of the Constitution and the founding fathers was to limit government to only where it was absolutely needed. Thomas Paine, one of the founding fathers responsible for the lead-up to our revolution in the mid to late 1700s, is famously quoted as saying, “Government, even in its best state, is but a necessary evil; in its worst state, an intolerable one.” With large government comes large spending and governmental interference. This stifles economic growth and personal freedom. The Republican Party used big government to battle moral issues such as drug use (the War on Drugs as implemented by President Nixon), and the Democrat Party used big government to battle poverty with programs such as “The New Deal,” as implemented by President Franklin Roosevelt, and “The War on Poverty,” as implemented by President Lyndon Johnson. All three of these programs, along with the many other large-government programs enacted by both parties, have created a massive increase in governmental interference and spending, and have accomplished little, with massive side effects to personal liberty and the economy. All three programs are socialistic in nature and prove, that even when implemented in the tiniest degree, socialism is well-intentioned – yet a failure in logic and practice.

Under a true capitalistic government, we would allow the market forces to go through their ups-and-downs, unfettered, knowing that the economy would be stronger because of it. Instead, we have falsely injected and propped up our economy with money we’ve borrowed from abroad, mostly from enemies such as China, and have further dug ourselves into debt, while weakening our stance in the world’s economy. This is akin to paying one’s mortgage off with a credit card. In addition, falsely propping the economy fails to allow bad businesses and ideas to fail, thereby leaving no room or capital for better ideas and businesses to grow. What if we had bailed out the ice-box industry and never allowed the freezer industry to grow? This is what we are doing today, and have been doing for decades.

Obviously I, being a champion of capitalism, agree with the Libertarian Party’s platform as it relates to economics. This platform states, “A free and competitive market allocates resources in the most efficient manner. Each person has the right to offer goods and services to others on the free market. The only proper role of government in the economic realm is to protect property rights, adjudicate disputes, and provide a legal framework in which voluntary trade is protected. All efforts by government to redistribute wealth, or to control or manage trade, are improper in a free society.” Contrarily, the Socialist Party USA states, “The Socialist Party stands for a fundamental transformation of the economy, focusing on production for need not profit. So-called fair trade is meaningless as long as the world economy is dominated by a few massive corporations. Only a global transformation from capitalism to democratic socialism will provide the conditions for international peace, justice, and economic cooperation based on the large-scale transfer of resources and technology from the developed to the developing countries.” Once again, the socialist theory on economics is well-intentioned, but illogical at best. If any country were to truly implement this theory, they would starve and eventually return to capitalism. Take China, for instance. China is moving toward capitalism at a rate never seen since their communist revolution. Even in Europe and Canada, where socialism is practiced to a lighter degree, many countries are gradually moving back toward a more capitalistic approach, as evidenced by recent elections giving greater power to more conservative candidates. On the other hand, the former-USSR failed to move in the direction of capitalism, and now no longer exists.

On April 15, 2009, people from across the nation rightfully protested the expanse of government recently implemented by President George W. Bush, and expanded upon by President Obama. Hundreds of thousands of citizens flocked to urban centers across the nation to protest governmental spending, tax-funded corporate bail-outs, and over-taxation. Although the Republican Party claims to be the taxpayer’s friend and the enemy of big-government, people across the nation are rightfully blaming both parties for the taxation and governmental largesse that is greatly to blame for the economic mess we are in today. The founding fathers would roll in their graves if they knew of the size of our government and the rates at which we are taxed.

Simply put, the higher the taxes, the less money that flows through the private sectors of our economy. The less money that flows through private hands, the less people spend and the less need for job creation. In a world economy, as we are today, companies will pay either high American wages, or high taxes. They will never pay both because they’ll be unable to compete in the world market. That is why companies are moving to China, India, and other developing countries. It is cheaper for them to pay high taxes and extremely low wages, than to pay American wages while paying American taxes. Of course there are other factors for relocation, but return on investment is usually the deciding factor. If I owned a company that had the means to relocate, and I had thousands of people investing their hard-earned money in my company that obviously expect to have a profitable return, wouldn’t I find a way to lower the cost of business so as to be attractive to more investment? Of course I would. It would be my ethical duty to be a good steward of the money people invested in my business. So, if I had stewardship of all of this money, and the workers I employ to make my product want high, American wages - which they should expect - but the governments at the local, state, and federal levels want a piece of my pie at the same time, and this causes my product to be more expensive than my competitor’s product that is made in India, who should take the loss? My employees? Or, should the overly-large government that had nothing to do with the production of the product take less? I believe the government should take less and scale back its size to allow those who work to take care of themselves. After all, most tax-funded welfare would be unnecessary if everybody had high-paying, low-taxed jobs. And, since companies would be in competition with each other for employees to fill all of the jobs open-for-hire, companies would offer the benefits necessary to attract quality workers.

The Socialist Party USA, in their platform on economics, calls for “a steeply graduated income tax and a steeply graduated estate tax, and a maximum income of no more than ten times the minimum,” as well as “the elimination of subsidies and tax breaks that benefit corporations.” They also advocate for “the restoration of the capital gains tax and luxury tax on a progressive, graduated scale.” Not only would this drive businesses to relocate overseas, this would also force the largest spenders in our economy – the wealthy – to consider moving to any country that opens their borders with lower tax incentives. And, of those that didn’t move, it would create a situation in which the wealthy would buy less luxury-items (those that employ thousands-upon-thousands of workers to build, such as cars, planes, and boats) because of the taxes incurred by purchasing them. Furthermore, any rise in the capital gains tax would stifle new investments in the stock markets, causing a lack in the funding of business ideas that are likely to pay off, and benefit, the American people.

It has been shown in modern history, during the administrations of Kennedy and Reagan, for example, that lower taxes actually bring in more tax revenue due to the economic stimulus provided by the money being taken from wasteful, governmental coffers and being released into the more-efficient, private economy, thus creating more tax payers. However, I believe we should go further and eliminate most taxes altogether, and tax only enough to keep the federal government running with just those programs authorized by the Constitution. What the taxpayers want to do with taxes at their local and state levels should be their collective decision via local elections or legislation. This would create competition among the states to be more business-friendly and to become better places for others to live and invest.

The Libertarian Platform states, “All persons are entitled to keep the fruits of their labor. We call for the repeal of the income tax, the abolishment of the Internal Revenue Service and all federal programs and services not required under the U.S. Constitution. We oppose any legal requirements forcing employers to serve as tax collectors. Government should not incur debt, which burdens future generations without their consent. We support the passage of a ‘Balanced Budget Amendment’ to the U.S. Constitution, provided that the budget is balanced exclusively by cutting expenditures, and not by raising taxes.” This idea, if implemented, would create an economic surge never before witnessed in American history. Businesses around the world would relocate to the United States in droves in order save on shipping costs to the United States, thus creating full employment, with high American wages. Also, with full employment, as well as less expensive products being made in the United States, Americans would begin buying American made products again, thus creating an unbreakable economic cycle almost independent of the global economy. As a bonus, our products would be within marketable price ranges for world consumption again, and the trade deficit would reverse from being against us.

When compared side-by-side, facts prove that the logical, capitalistic system of socioeconomics trumps the emotionally driven system of socialism. In a world filled with those that possess a Creator-given desire to live in freedom, and to the utmost of their potential, only capitalism will allow free commerce and the personal liberty to fail or succeed, while protecting the rights of all who’ve invested their time and wealth. Socialism, on the other hand, artificially props up bad ideas and businesses, suffocates new investment with high taxes and inefficient governmental spending, while creating an unfriendly atmosphere for new ideas and businesses to bloom.

Joan Spero and Jeffrey Hart. Indiana University. Glossary. The Politics of International Economic Relations. http://www.indiana.edu/~ipe/glossry.html

Thomas Paine Quotes. ThinkExist.com. http://thinkexist.com/quotation/government-even_in_its_best_state-is_but_a/225146.html

The Libertarian Party. The Libertarian Party Platform. http://www.lp.org/platform

The Socialist Party USA. 2008-2009 Platform: Economics. http://socialistparty-usa.org/platform/economics.html

I just skimmed it, but saw no mention of Adam Smith’s hidden hand, or Hayek’s (sp?)”Road to Serfdom.” These are key.

Selfishness is a part of the human psyche. Smith and others argue that Capitalism recognizes this characteristic inherently, and channels it to common good. Socialism ignores a basic aspect of human nature, and presumes to repress it. It believes man is malleable. It ignores the irrationality of man, which is irrational.

Libs attack Capitalism because it results in inequality. They cite oppression monopoly and unfair advantages of accumulated wealth. They compare this to an ideal of society, of which there has never been a single real world instance. Point this out—socialistic countries are repressive.

As to unfairness and inequality, the counter argument is that capitalism is better for all, that, as Reagan said, a rising tide raises all boats.” The accumulation of wealth allows those lucky enough to have this to concentrate on scientific and cultural pursuits. These languish when succeeding generations must concentrate anew on winning their subsistence. The result is greater, not less poverty.

Argue that acceptance of economic inequality is far better than repression for society as a whole. Say that confiscation of property is a serious disincentive to creative and productive effort—which raises the standard orf living. Men will work far less if unrewarded. Ask: is it fair to take what a parent has stored away for the benefit of their children? Point out that, fair or not, societies that regognize property rights are wealthier than autocracies.

Libs say “property is theft,” and try to mitigate this through theft. It’s a moral contradiction.

From an academic-rigor standpoint, I would say the paper is somewhat lacking. I realize it may primarily be because of length constraints, but, two main points:

1. You seem to confuse economic and political systems, and use them interchangeably. It’s possible to have a “fairly capitalist” system in which the government still strongly controls personal freedom but permits fairly open markets. China is increasingly an example of this, where they now allow private property ownership and private (and foreign) businesses, but have wound down a significant number of their state-owned enterprises (SEOs), while they continue to maintain tight political control of the country and tightly curtail personal freedom. Compare that with many countries in Western Europe that allow free press, voting, private property, etc., but also prop up a large number of SEOs. “Completely Planned-economies” have been shown to fail almost universally in practice, so that’s a valid assertion, but the degree of economic autonomy does not necessarily imply the degree of political/personal autonomy in a country.

2. You don’t do a very thorough job of handling the nuance of the way modern countries are run, and where they fall on the economic “spectrum” between “socialism” and “capitalism.” The former USSR was one of the only examples of an economy dominated by SEOs, but essentially all countries have always had SEOs to one degree or another. Even in the free-wheeling days of the 1800’s in the US, the government owned canals, roads, bridges, dams, etc., along with running public services like water, waste management/disposal, and to some degree education (and universities). Modern europe has countries at just about every point on the spectrum (in terms of domination of their economy by SEOs).

3. You make the assertion that lower taxes *always* equate to higher government income through increased economy activity. This is true over a range of taxation levels (and types of taxes), but from an academic standpoint, is not strictly true. Dropping taxes from the current ~30% to 1% would decrease revenue, dropping them further to .1% of .01% would decrease revenue further. For your assertion to be true, in the 30%-to-1% case for instance, the GDP would have to increase from the current ~$13 Trillion to $390 Trillion, which would obviously not be the case. This might be the case if you drop it from ~30%.

4. Additionally, your assertion that strictly lowering taxes would lead to a resurgence in manufacturing in the US ignores that taxes is only a single component of doing business in the US. As long as you’re not allowed to dump toxic chemicals in public waterways, for instance, that will always pose an additional cost on doing business here compared to, say, Mexico, China, or many parts of Africa or South America. Additionally, you don’t mention the extremely large differential in the cost of labor in the US vs. foreign manufacturing hubs (especially in a “full employment” situation which drives up wages extremely quickly). Say it costs a factory $40k to employ a worker in the US, and 25% of that cost is taxes (10K). In a zero-tax scenario, it still costs that company $30k to employ a worker at a reasonable standard of living in the US. Now if it costs them $10k to employ a worker in China, the cost of transportation of the final goods would have to cost $20k+ for the output of the worker to make up that price. Unless oil prices go to $200/barrel (and countries like China stop subsidizing oil), the cost of transportation will continue to be dominated by the cost-of-labor differential due to our different standards of living.

But hey, it’s a college paper, revise revise revise!

The content of the essay is reasonable. The defense of your position is, as stated above, somewhat superficial, but not bad. I would like to see more depth to the subject at hand. BUT

This is an english essay. What is the purpose of this from the english standpoint? If it is formal essay writing, you engage in FAR tom many colloquialisms for my taste. You often write from the first person persopective, and to boot utilize contractions. (I'll vs. I will.) If you are writing to show off your ability, this should be avioided. 'In your intro, for example, you say "aren't" make that are not to avoid being sloppy.

Your introduction is wordy, hard to follow, and full of run-on sentences. It should be cleaned up. In your intro for example, you say "Socialism and capitalism aren't..." make that are not. The next sentence is atrocious:

When compared in economies and societies that allow each to work to their fullest potential; capitalism has proven itself to be the most reliable economic and political system of the two; socialism is great on paper and in intention, but is a failure when it is compared, side-by-side, to capitalism.

This sentence is pretty atrocious. The first clause (When compared...fullest potential;) is an appositive, not an independent clause. Thereafter ought to be a comma. The second semicolon in a sentence, proper or not, tells you to use a period. This is a complete run on. I could live with it if you were tryinhg to use a semicolon for the great writing purpose that all great papers ought ot have one in it, but you butchered it pretty badly.

Were I grading this paper, I would give it a C, not on content, but on the fact that the writing generally hinders the expression of your ideas. If, however, the professor has encouraged this kind of writing style, or this is an opinion paper that is permitted to be more informal, I could see a "B" grade.

Best of luck.

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