‘Socialism for the rich’: the evils of bad economics
S E E D E D C O N T E N T
‘There’s been class warfare going on for the last 20 years, and my class has won’ … US billionaire Warren Buffett.
Kevin Lamarque/Reuters
Inequality inevitably rises. Attempting to reduce inequality via redistributive taxation is likely to fail because the global elite can easily hide their money in tax havens. Insofar as increased taxation does hit the rich, it will deter wealth creation, so we all end up poorer.
One strange thing about these arguments, whatever their merits, is how they stand in stark contrast to the economic orthodoxy that existed from roughly 1945 until 1980, which held that rising inequality was not inevitable, and that various government policies could reduce it. What’s more, these policies appear to have been successful. Inequality fell in most countries from the 1940s to the 1970s. The inequality we see today is largely due to changes since 1980.
In both the US and the UK, from 1980 to 2016, the share of total income going to the top 1% has more than doubled . After allowing for inflation, the earnings of the bottom 90% in the US and UK have barely risen at all over the past 25 years. More generally, 50 years ago, a US CEO earned on average about 20 times as much as the typical worker. Today, the CEO earns 354 times as much.
Any argument that rising inequality is largely inevitable in our globalised economy faces a crucial objection. Since 1980 some countries have experienced a big increase in inequality (the US and the UK); some have seen a much smaller increase (Canada, Japan, Italy), while inequality has been stable or falling in others (France, Belgium and Hungary). So rising inequality cannot be inevitable. And the extent of inequality within a country cannot be solely determined by long-run global economic forces, because, although most richer countries have been subject to broadly similar forces, the experiences of inequality have differed.
The familiar political explanation for this rising inequality is the huge shift in mainstream economic and political thinking, in favour of free markets, triggered by the elections of Ronald Reagan and Margaret Thatcher. Its fit with the facts is undeniable. Across developed economies, the biggest rise in inequality since 1945 occurred in the US and UK from 1980 onwards.
The power of a grand political transformation seems persuasive. But it cannot be the whole explanation. It is too top-down: it is all about what politicians and other elites do to us. The idea that rising inequality is inevitable begins to look like a convenient myth, one that allows us to avoid thinking about another possibility: that through our electoral choices and decisions in daily life we have supported rising inequality, or at least acquiesced in it. Admittedly, that assumes we know about it. Surveys in the UK and US consistently suggest that we underestimate both the level of current inequality and how much it has recently increased. But ignorance cannot be a complete excuse, because surveys also reveal a change in attitudes: rising inequality has become more acceptable – or at least, less unacceptable – especially if you are not on the wrong end of it.
Inequality is unlikely to fall much in the future unless our attitudes turn unequivocally against it. Among other things, we will need to accept that how much people earn in the market is often not what they deserve, and that the tax they pay is not taking from what is rightfully theirs.
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Yes, some of us have been warning what the outcome of supply-side economics would be. But the idea of government redistributing income through social support programs is also supply-side economics. The purpose of taxing the rich isn't to give to the poor. Robin Hood economics doesn't turn out well and is incompatible with the culture of the United States.
Taxes aren't just about revenue. The idea that the only purpose of taxation is to raise revenue for the government was the myth that served as the foundation for the supply-side house of cards. Taxes are also incentives, disincentives, and motivators. The purpose of high taxes on income is to motivate the wealthy to increase wealth through equity. The rich still become richer but the incentive is to do that by increasing the value of businesses rather than bank accounts.
Lower taxes on income is an incentive to take money out of businesses as income and transfer that income into financial instruments. Lower taxes on income means workers are a liability since labor costs lower income potential for the rich.
Higher taxes on income is an incentive to keep money in businesses to build equity. The rich become richer through increases in tangible value of productive economic activities. Workers become an asset because labor costs are an investment that increases equity in factories and businesses.
Simply taxing the income of the rich so that government can provide social support only increases the need for the rich to become richer through income. While that obviously lessens income inequality, it is still based upon the idea of supply-side economics with incentives favoring financial instruments and disincentives for increasing the capital value of productive economic activities. Robin Hood did not increase anyone's wealth and certainly did not establish an economic system that could sustain itself.
Never was !
The countries with less income inequality need to ask themselves why they are doing so poorly compared to the far more successful countries with less income equality.
How do you define "success", Dean?
The DOW?
I see GDP, labor productivity and average income compared to all other countries as factors that go into evaluating what is a successful country. I see a successful country as one where a man has unlimited potential for financial success.
Factor in healthcare costs. Also factor in the happy factor, who is most satisfied and happy with their lives. It's not all about money (not that average Americans have an opportunity to pry the economic gains from the elite, which have been getting most of the prosperity).
Where is the USA? Doesn't even make the cut.
What does finance produce?
The goal for many appears to be equal outcomes, not equal opportunities.
Where do you find people arguing for equal outcomes?
Also, if equal outcomes were desirable (and they most certainly are not) how would anyone propose to accomplish this magical feat?
People simply earn different amounts. That is called life. Why should income be distributed equally?
To me, success is better expressed as the ability for all persons to pursue their ambitions. To me it is much better to enable the potential for success for all rather than focus on providing no upper limit (unlimited) for the very few uber successful members of society.
One thing is incomes for people working in the financial sector. It provides a vehicle for obtaining capital for high risk individuals that build there businesses on debt rather than profit. Those businesses produce goods and provide services.
You really should read a post before replying to it. You and I agree that equal outcomes is a bad idea yet you seem to presume that I think it is a good idea. I asked you two questions:
Ok.
Let's take a look.
GDP is a terrible indicator. It measures financial churn: you sell me a house for a million dollars... then I sell it back to you for the same price... and GDP has risen two million dollars. I'm not sure what, if anything can be proven, using GDP. Close attention required.
Since most measures of productivity use GDP, the same precautions are required.
Average revenue means little. Median revenue is more significant. Median revenue after redistribution is better still.
Then there are the indexes of "Happiness".
What do you think the article is about?
Income inequality.
I feel people earn what they earn. Want to earn more, obtain skills that pay more. Start a business of their own. But I don't feel as though anyone is owed anything because they exist.
If you are talking income equality, then you are talking about people earning different amounts. What is the point of talking about it if one isn't advocting for more "equal" distribution?
People have proposed all sorts of things. A guaranteed income is one such proposal.
I did read it. Keep your snark to yourself.
Social mobility is higher in the EU than in the US.
Why does anyone need to be limited in what they earn?
And?
I know of no one who desires this. Could you cite someone?
So, finance provides income by producing debt obligations? Doesn't that mean financial success depends upon redistributing wealth instead of producing wealth?
How is that different than any other type of welfare?
Or?
Bob, the whole premise of the article is for that "income equality".
No.
It is against egregious inequality.
No I don’t see that at all. If one is able to meet there debt obligations and use there capital investment to provide goods and services there is no welfare or redistribution of wealth. The creditor and debtor are working together to provide something the consumer desires and benefits from. It is a win win for everyone.
My comment was on emphasis. Here we go again, this is what I wrote:
I am suggesting that success is better stated in terms of everyone being enabled to be successful rather than simply granting no upper limit.
In other words, my comment is not that there should be an upper limit but rather that enabling everyone with the potential to succeed is a much better focus.
Then you substituted your own thoughts and ignored what I expressed. Same difference.
I do not support income equality. Never made any statement that even remotely hints that I think that equal outcomes is a good idea. Indeed, I stated the exact opposite:
You claim you read my post yet continue to demonstrate that you do not know what I wrote. It gets old having to constantly quote oneself so that the other person actually reads what was written.
Because income diverts money away from economically productive activities. That's true for all levels of income. But that income is also a source of revenue for economically productive activities.
The result is a self sustaining cycle of production and consumption. Consumption provides revenue for income that supports consumption. When workers are consumers and consumers are workers then people are essentially paying each others' wages.
When too much income is diverted into non-productive accumulation which does not provide revenue for consumption, then the self sustaining cycle of production/consumption is disrupted. When someone takes the baseball then no one else can play.
A creditor does not produce anything. A creditor performs the same function as a truck driver. Truck drivers do not contribute to the economy by driving around in empty trucks. Someone, somewhere, has to produce something to fill the truck.
It is the cycle of production and consumption that establishes economic growth. When more economic output is diverted toward middle men then more of the revenue from consumption is diverted into non-productive activities. Too many middle men is not a basis for a healthy economy. When financial success increasingly depends upon redistribution of revenue for non-productive activities, that is a harbinger of a failing economy.
Which is why the function of a creditor is the same as the function of a truck driver. The value of the contents of a shipping container doesn't change between pickup and delivery. The necessity of trucks and truck drivers doesn't alter the economics of the activity. Creditors and truck drivers add cost without adding value.
The economic incentive is to lower the cost of that necessary middle man.
It is against egregious inequality
Well then it becomes a moral issue, but who is to be the judge of that
The idea that taxes are theft is also a moral issue. Saint Reagan turned the principles of economics into a religion of moral beliefs.
The people, I would hope.
The creditor aides the producer in his ability to produce a good or service. Many times the producer would be unable to build a product or provide a service without the help of the creditor. Sometimes a creditor is used to secure funds for materials used in the completion of a project or meeting the payroll requirements of the producer. Sometimes without the help of the creditor the producer would not be producing anything or employing anyone.
And the truck driver aides the producer in their ability to generate revenue. Without the truck driver the creditor won't be paid. The creditor and the truck driver are both middle men costs for the producer. So who is more important to the producer?
That depends on the situation. Truck drivers are easy to find and for some businesses acquiring credit can be difficult. You will not find many businessmen that cannot find a truck driver but you can find many that went bankrupt because they could no longer meet their financial obligations.
Egregious in the opinion of the author.
I have no problem with anyone earning just as much as they can.
If someone agrees to work for a certain wage, how is that unjust or unfair?
At least in this country, you can sell your labor to the highest bidder if you choose to.
In America, you can become virtually anything you wish provided you work for it and get the right education and training.
I think people who want to succeed will succeed.
Compared to most other nations. In absolute terms, opportunities even within our admirable system are vastly unequal. Your phrase " and get the right education " is a key factor. We certainly can do better to nurture and enable all the talent in the next generation.
Attitude is critical. There are those who break through barriers largely due to their attitudes and will. But I think it is incorrect to generalize as if this is easily accomplished or to suggest that anyone with the will to succeed has an equal (or even remotely equal) opportunity to do so.
Now, back to the point I made:
To me, success for the USA is a function of how well we have nurtured and enabled our national talent for success; not by how wealthy the most successful become. In other words, I would prefer to see a thousand people earn a $ million each due to their accomplishments rather than have that $ billion be yet another tick mark in the wealth of a billionaire.
There are scholarships, Pell grants, and loans all available to help pay for school. What more do you want--free tuition?
Sure, attitude is probably the single most important factor. I didn't say it was easy or that anyone will be able to do it. I stated everyone has the chance to do it. What people do with their chance is on them.
We now have a higher percentage of the population listed as millionaires than ever before. People ARE succeeding. And without the really rich to pay the lion's share of taxes, everyone else would have to pay more or we would have to cut back on spending.
We are talking about equal opportunity, right? I stipulated upfront that the USA offers good opportunities compared to most other nations. So listing the opportunities available in the USA is redundant - we already agree on those points.
We most definitely have opportunities but the opportunities are vastly unequal. If you think a child brought up in a healthy environment (clean, nutritious, etc.) who has gone to the best private schools and has the means (if academically earned) to get an Ivy League education and then tap family connections for employment is on equal footing with an ambitious lower-middle income child who most likely did not grow up in a clean, nutritious environment and most likely attended less than spectacular public schools and is working their way through a community college supplemented by loans then you are painting with a very wide brush. Not even remotely close to equal opportunity. (And I am not suggesting there is a solution to this.)
There are no easy answers, but denying the disparity is irresponsible.
Good, we agree on something. No need to act as though I accused you of the opposite.
Yes people are succeeding, I am talking about the mix, the distribution of success. Look, here is what I wrote:
I stated my preference ... I would prefer to see more people succeeding over successful people being more successful. As I stated in the quote, to me it is better to have a thousand people earn a $ million each than one person earn yet another $ billion.
Good grief. The tax revenue from 1,000 people earning $1 million in a year will be net better than an additional $1 billion by a single individual. Goldman Sachs, et. al. are there to ensure that the more you have the better your chances to minimize your tax liabilities. (And these petty millionaires do not have access to these resources.)
That is your preference, but it isn't realistic. How can you stop people from earning more? You just can't. Even if it is your preference.
heck, I would prefer to be 6 foot tall and weigh 180, but it ain't happening!
My oreferene is that govt. doesn't get overly involved in the redistribution of wealth.
Texan, you never seem to fail to miss the point no matter how many times it is repeated.
To emphasize, I compared the scenario of 1,000 people earning $1 million vs a single individual earning another $1 billion. That was intended to illustrate what I am talking about. Given the choice of many people raising their incomes (earned: through their own productive work) vs. a single already extremely wealthy individual raising his/her income, which do you think is healthier for the nation?
What does redistribution of wealth have to do with what we are discussing?
Can you tidy that up a bit? The condescension because someone dared to hold a different view than you do is starting to drip.
The problem is not a different view, it is your apparent refusal to address the point I actually made.
As I just explained @3.1.39:
So your question @3.1.38 of "How can you stop people from earning more? You just can't. Even if it is your preference." totally misses the point and is basically a strawman.
Given the choice of many people raising their incomes (earned: through their own productive work) vs. a single already extremely wealthy individual raising his/her income, which do you think is healthier for the nation?
There are a couple of errors here.
First, the ultra-rich do not "earn" anything.
Second, "just as much as they can" implies some sort of regulating mechanism. There is none. The phrase is effectively equivalent to "without limit"... to the detriment of all others.
That was once true. No longer.
Today, there are lots of countries where social mobility is greater .
... but not compared to other advanced countries.
"Land of opportunity" is an outdated myth .
Yep, that explains why so much money is being thrown at building self-driving trucks. Seems to me it would be far easier to automate the creditor's job than the truck driver's job. Computers are really good at spreadsheets, after all. But that is not where the effort has been focused.
Whatever rationalization is used, the economic facts are that creditors and truck drivers are dependent upon someone, somewhere, producing something so that someone, somewhere, can consume something. While both creditors and truck drivers are necessary for a healthy economy, neither adds value to the economy. Both creditors and truck drivers are an economic cost charged against production and paid for by consumers. The economic cost of creditors and truck drivers really isn't any different than the economic cost of a tax.
And the data really does indicate that creditors have become a larger drag on the economy than have truck drivers.
The pay of the CEO has the same economic impact as wages for line workers. Just because someone owns a business doesn't mean that draining money away from productive activities is an economically healthy thing to do. Incomes can become so large that it negatively impacts the potential for economic expansion and growth.
That is demonstrably false. Becoming over qualified establishes severe limitations on opportunity. Too much education, too much training, and too much experience begins limiting job opportunities. In today's economy, becoming over qualified forces people to compete for menial work.
Overall, USA economic mobility is indeed waning —it is not as grand as we perceive it to be— but plenty of opportunity remains in the USA. I was focusing on the lower quintiles (albeit likely ignored) in sections like this because this is where I believe we have the biggest waste of human potential:
Here is a study by Pew which correlates with your link. This is an argument in favor of social democracy, but one must recognize that the USA is a massive ship and is far more complex than Canada and the Nordic nations.
In general, the skills required of executive management justify very high compensation. The decisions made at the top have substantial impact on the success (or failure) of the entity. So when a CEO, as an example, gets it right the company will prosper (think of the iPhone and Jobs). And if the CEO gets it wrong (e.g. Schwartz of Sun Microsystems) the results can be miserable. But in many cases executive compensation is out of control (e.g. Duperreault of AIG).
Not disagreeing with your point, but the much worse problem, IMO, is under qualification (untapped potential in the lower quintiles).
Granted a CEO carries more responsibilities than does a line worker, so higher pay is not unreasonable. There are economic limits to the benefit accrued by the business from significantly higher pay. The problem is when that higher pay becomes so large it begins negatively affecting the business. The same arguments against union negotiated higher pay also applies to the CEO.
However, the hiring preference is for under qualified candidates to control labor costs. Under today's supply-side driven economic thinking labor is a liability and not an asset. Under qualified employees can always be replaced which keeps labor costs down. A qualified employee (or worse yet an over qualified employee) poses a threat of becoming irreplaceable.
True. But the big ship has in fact changed route over the last few years. In the wrong direction. The rigidity of the American caste system is getting worse.
Americans are insular. They are not very aware of anything elsewhere in the world. This fact isn't shocking. Most Americans have little contact with foreigners. But one consequence is that Americans vigorously retain myths about both America and other countries, with very little basis.
The first step in any improvement process is a good analysis of the existant. Americans need, badly, to get past their myths. For example, "land of opportunity".
A lot of the under-qualified candidates represent untapped human potential. That is, their potential does not match their qualifications.
Stay tuned, with robotic process automation clerical labor will be under massive pressure.
Beliefs tend to follow desires.
Certainly.
Therefore, we all must make an effort to explode the myths that prevent the ship from turning in the right direction.
Agreed. It is always best to have a clear understanding of reality ... good or bad. Nothing good comes from wishful thinking.
What clerical workers? The computer has already replaced clerical workers.
Robotics will replace middle management the same way computers replaced clerical staff. Robots won't need human resources, health insurance, retirement planning, performance reviews, labor relations, hiring decisions, or anyone to plan work schedules.
Computers and automation replaced blue collar workers. Robotics and artificial intelligence will replace white collar workers.
Hardly. There are tons of jobs where human beings are manually completing business processes by copying and pasting info, typing info on paper into the system, etc. Those jobs are the target of RPA.
Consider many government jobs to get fine examples of human beings doing clerical tasks.
The balance of your post correlates with what I wrote thus I agree but not at the extreme you describe.
The trick is to have marketable skills. Unfortunately for some, skills that were valuable in the past can become obsolete in our ever-changing environment.
And that has been stifled in modern times …… WHEN ?
"Property" is not a right. This is logical, because all "rights" have a common characteristic that "property" does not have: one person's rights do not limit any other person's rights.
This is not the case for property. One person's property very definitely does limit another person's property.
Sam Walton's six heirs - who have never done anything to "earn" their inheritance - possess greater wealth than one-third of all Americans. The property the Walton heirs possess is not available for others.
Property is theft.
Crucial: "have never done anything to "earn" their inheritance". Gates, in contrast, did quite a bit to earn great wealth (albeit much of his wealth is a result of achieving critical mass; substantial wealth yields the accumulation of more wealth).
Gates had a lot of help.
Gates had the correct vision, executed his strategy and it worked. To his credit. Of course he had help, but he led the charge. Entrepreneurial insight, tenacity and drive is a very good thing.
Now compare Gates, Jobs, Page & Brin, etc. to the Walton heirs.
Yes, and he deserves getting a lot of money.
He ceased working for Microsoft quite a few years ago, to spend time on his philanthropic actions. At the time, his fortune was 60 billion.
It's now 100 billion.
I'm not sure that's reasonable.
Did you not read the balance of my original post @4.1 where I noted critical mass?
Microsoft achieved critical mass.
Did Gates? Forty percent of his fortune is "post-retirement".
Not sure why the disconnect; ‘critical mass’ refers to the level of wealth where most is used as investment capital. So at least 40% per your comment is a result of having achieved critical mass.
My point is that Gates's wealth has continued to grow at a head-spinning rate after he left the company.
This demonstrates that there's very little relation between revenue and activity. Serious wealth is unearned.
So do you think your point is different than the one I made?
I don't know. I've made it clear that I think unearned revenue is unhealthy for our society. I don't know where you stand.
I do not know why:
Emphasizing your point the it is crucial that wealth be earned.
Offering Gates as an example of a person who earned great wealth. To emphasize that earning great wealth is not the issue, but rather the issue is inheriting great unearned wealth.
With the caveat that much of his later wealth was the result of achieving critical mass wherein his wealth grew without him actually earning it (in the conventional sense).
You might have missed this (and similar items) from the prior thread:
So you don't think I should be able to leave money to my children? What about the estate tax - does that satisfy you when wealthy people leave money to their heirs?
And I shouldn't be able to invest in the stock market so that I can hopefully retire some day? I consider investment income to be earned, personally.
I wouldn't put it like that. I prefer:
A society should take good enough care of all its children... ensuring that they all have an equal opportunity to succeed... that inheritance is unnecessary.
There are many ways to ensure a good retirement - not necessarily the stock market. In fact, in a society of employee-owned companies, there would be no stock market. There would be a bond market, though.
I waited for you to respond before weighing in since katrix replied to you.
However, per katrix @4.1.11:
Family owned businesses certainly should be passed along as inheritance and even wealth well beyond that. In our current system it makes great sense to pass on your estate to your children. And the estate taxes are essentially yet another means for the government to grab tax revenue that it will then abuse.
In contrast, enormous estates (take the billionaire class for example) pass great power over others to individuals who have not earned the power. It is much like royalty rule where the next king or emperor is the heir of the current regardless of qualifications. Similar also to the feudal lords where the offspring become ruling lords regardless of suitability for that level of power. The problem manifests at the uber wealth level (massive leveraged control over others).
In our current system, I am not sure there is a good solution to the leveraged power of uber inherited wealth. Taxation does not appeal to me because our slimy politicians will take it as new revenue and then waste it. Maybe allocating the taxation to paying down the national debt, but our slimy politicians will just borrow more. No clear solution, so until there is I am not in favor of attempting to address uber power via taxation.
Under our current system we necessarily all must invest in securities (even with good pensions). Retirement is founded on the idea of principle generating spendable income. So under our system it makes excellent sense to save a retirement nest egg, invest it wisely and live off the investment returns. Far better than working until one drops over to supplement an anemic social security income.
We cannot make wholesale changes to our system overnight. So the problems we see will continue likely far into the future. If we eventually achieve a better (and no doubt different) system then it will necessarily be the result of evolution and likely (hopefully) it will be a result of operating the way the people (of the time) desire it to operate.
I hope I made it clear that I was speaking of an ideal.
Zero inheritance is reasonable only in a context where parents are tranquil and confident in the future of their children without it.
There could be lots of intermediary stages, the most obvious being a cap.
To my mind, the important thing about inheritance is that it discourages participation in any social needs for children other than one's own. The blatant case is education, where the well-to-do send their kids to private schools and then cut public education to the bone.
(Full disclosure: I got a little help with college expenses when my mother died - I was seventeen. I got nothing when my father died - I was sixty-five and already retired.
Our one child - now a well-to-do forty-year-old - will get our real property. Modest house in France, condo in the US. The grandkids will get my (leather-bound) comics. Our son needs nothing from us, but the law applies.)
nearly 100 years of FDR's marxist statist forced collectivism and the abandonment of capitalism has led us to this state. And the left's solution is to make the control even more massive. In socialist states including the so-called "social democracies", there are basically two classes, the rich and the poor. Marxist countries never lack for the very wealthy who consider themselves the rightful rulers of the people.
Nearly 40 years ago St. Reagan declared war on collective labor. Reagan and Clinton tied a bow on the US economy and gifted it to the financial sector. Don't blame FDR for the asinine idea of neo-liberal supply-side economics.
Reagan and Clinton gave the country persistent trade deficits, that wasn't FDR. Reagan and Clinton tried to trickle down prosperity by giving it all to the rich, that wasn't FDR. Reagan and Clinton turned a blind eye to the excesses and abuses of the financial sector, that wasn't FDR.
We live in a supply-side economy created by Reagan and Clinton. Now that everyone has figured out that neo-liberals screwed the pooch, don't blame FDR.
Total nonsense
FDR implemented a Marxist fascist state modeled after Mussolini’s Italy. It is has never been rolled back, only expanded
we haven’t had supply side economics for over 100 years
In the North American Review in 1934, the progressive writer Roger Shaw described the New Deal as “Fascist means to gain liberal ends.” He wasn’t hallucinating. FDR’s adviser Rexford Tugwell wrote in his diary that Mussolini had done “many of the things which seem to me necessary.” Lorena Hickok, a close confidante of Eleanor Roosevelt who lived in the White House for a spell, wrote approvingly of a local official who had said, “If [President] Roosevelt were actually a dictator, we might get somewhere.” She added that if she were younger, she’d like to lead “the Fascist Movement in the United States.” At the National Recovery Administration (NRA), the cartel-creating agency at the heart of the early New Deal, one report declared forthrightly, “The Fascist Principles are very similar to those we have been evolving here in America.”
Roosevelt himself called Mussolini “admirable” and professed that he was “deeply impressed by what he has accomplished.” The admiration was mutual. In a laudatory review of Roosevelt’s 1933 book Looking Forward, Mussolini wrote, “Reminiscent of Fascism is the principle that the state no longer leaves the economy to its own devices.… Without question, the mood accompanying this sea change resembles that of Fascism.” The chief Nazi newspaper, Volkischer Beobachter , repeatedly praised “Roosevelt’s adoption of National Socialist strains of thought in his economic and social policies” and “the development toward an authoritarian state” based on the “demand that collective good be put before individual self-interest.”
. In 1935 former President Herbert Hoover was using phrases like “Fascist regimentation” in discussing the New Deal. A decade later, he wrote in his memoirs that “the New Deal introduced to Americans the spectacle of Fascist dictation to business, labor and agriculture,” and that measures such as the Agricultural Adjustment Act, “in their consequences of control of products and markets, set up an uncanny Americanized parallel with the agricultural regime of Mussolini and Hitler.” In 1944, in The Road to Serfdom , the economist F.A. Hayek warned that economic planning could lead to totalitarianism. He cautioned Americans and Britons not to think that there was something uniquely evil about the German soul. National Socialism, he said, drew on collectivist ideas that had permeated the Western world for a generation or more.
In 1973 one of the most distinguished American historians, John A. Garraty of Columbia University, created a stir with his article “The New Deal, National Socialism, and the Great Depression.” Garraty was an admirer of Roosevelt but couldn’t help noticing, for instance, the parallels between the Civilian Conservation Corps and similar programs in Germany.”
Both National Socialist Germany and Fascist Italy were welfare states that spent heavily on public works. A former school teacher, Mussolini’s spending on the public sector, schools and infrastructure was considered extravagant. Mussolini “instituted a programme of public works hitherto unrivalled in modern Europe. Bridges, canals and roads were built, hospitals and schools, railway stations and orphanages; swamps were drained and land reclaimed, forests were planted and universities were endowed.” [255] As for the scope and spending on social welfare programs, Italian fascism “compared favorably with the more advanced European nations and in some respect was more progressive.” [256] When New York city politician Grover Aloysius Whalen asked Mussolini about the meaning behind Italian Fascism in 1939, the reply was: “It is like your New Deal!” [257]
By 1925 the Fascist government had “embarked upon an elaborate program” that included food supplementary assistance, infant care, maternity assistance, general healthcare, wage supplements, paid vacations, unemployment benefits, illness insurance, occupational disease insurance, general family assistance, public housing, and old age and disability insurance. [258] As for public works, “the Mussolini’s administration “devoted 400 million lire of public monies” for school construction between 1922 and 1942, compared to only 60 million lire between 1862 and 1922. [259]
Hitler and the German National Socialist spent large amounts of state revenues for a comprehensive social welfare system to combat the ill effects of the Great Depression, promising repeatedly throughout his regime the “creation of a socially just state.” [260] In 1933, Hitler ordered the National Socialist People's Welfare (NSV) chairman Erich Hilgenfeldt to “see to the disbanding of all private welfare institutions,” in an effort to socially engineer society by selecting who was to receive social benefits. [261] Under this state-operated welfare structure, Nazi administrators were able to mount an effort towards the “cleansing of their cities of ‘asocials.’” [262] Nonetheless, the NSV instituted expansive programs to address the socio-economic inequalities among those deemed to be German citizens. Joseph Goebbels remarked about the merits of Hitler’s welfare state in a 1944 editorial “Our Socialism,” where he professed: “We and we alone [the Nazis] have the best social welfare measures. Everything is done for the nation.” [263]
Gonna let this single quote make my point for me.
Fascism has had complicated relations regarding capitalism, which changed over time and differed between Fascist states. Fascists commonly have sought to eliminate the autonomy of large-scale capitalism to the state. [191] Fascists support the state having control over the economy, although they support the existence of private property . [192] When fascists have criticized capitalism, they have focused their attacks on " finance capitalism ", the international nature of banks and the stock exchange , and its cosmopolitan bourgeois character. [193] Under fascism, the profit motive continues to be the primary motivation of contributors to the economy. [192] That policy abruptly changed in Italy by 1934 when Mussolini “reiterated that capitalism, as an economic system, was no longer viable.” [194] Mussolini went so far as to proclaim that the economy of Fascist Italy was to be “based not on individual profit but on collective interest.” [195] Originally, Fascists theoreticians supported limited private property, individual initiative and market economy because it was, as expounded by Sergio Panunzio , a major theoretician of Italian Fascism, “the only economic system that allowed a socialism for the entire nation,” since it was believed to encourage “productionism.” [196] Most Fascist theoreticians and revolutionary syndicalists followed Karl Marx 's admonition that a nation required “full maturation of capitalism as the precondition for socialist realization.” [197] Fascist intellectuals were determined to foster economic development in order for a syndicalist economy to “attain its productive maximum” that was identified as crucial to “socialist revolution.” [198] Italian Fascism's position towards capitalism adjusted over time; the Italian Fascist movement in 1919 was radical and anti-capitalist, where he continued to campaign for “nationalization of land” and to have “workers’ participation in the running of factories”, [199] but became more moderate in the 1920s when it sought to consolidate power, and then grew more radical again during the 1930s under its entrenchment of power, and by 1940 again emphasized anti-capitalism.
Mussolini praised the historic developments of " heroic capitalism " - what Mussolini considered the first stage of capitalism, which he found had provided useful economic developments, but he claimed that capitalism had deteriorated, and criticized the contemporary stage of capitalism that he termed " supercapitalism ". He argued,
I do not intend to defend capitalism or capitalists. They, like everything human, have their defects. I only say their possibilities of usefulness are not ended. Capitalism has borne the monstrous burden of the war and today still has the strength to shoulder the burdens of peace. ... It is not simply and solely an accumulation of wealth, it is an elaboration, a selection, a co-ordination of values which is the work of centuries. ... Many think, and I myself am one of them, that capitalism is scarcely at the beginning of its story. [200]
Years later in a November 14, 1933 speech, Mussolini decidedly rebuked economic liberalism and laissez-faire . In the United States, the Hearst Press printed his speech under the headline: “Mussolini Abolishes the Capitalist System.” [201] Mussolini declared:
To-day we can affirm that the capitalistic method of production is out of date. So is the doctrine of laissez-faire, the theoretical basis of capitalism… To-day we are taking a new and decisive step in the path of revolution. A revolution, in order to be great, must be a social revolution. [202]
To Mussolini, the capitalism of his time had degenerated from original capitalism, which he called dynamic or heroic capitalism (1830–1870) to static capitalism (1870–1914) and then finally to decadent capitalism or supercapitalism, which began in 1914. [203] Mussolini, in 1933 amid the Great Depression , announced that modern supercapitalism was a failed economic system that was the result of the long-term degeneration of capitalism. [204][205] Mussolini denounced supercapitalism for causing the "standardization of humankind" and for causing excessive consumption. [206] Fascists argued that supercapitalism "would ultimately decay and open the way for a Marxist revolution as labor-capital relations broke down. [207]
Mussolini claimed that supercapitalism resulted in the collapse of the capitalist system in the Great Depression . [208] Mussolini claimed that fascism would preserve those elements of capitalism that were deemed beneficial, such as private enterprise provided that it would be supervised by the state in fascist economics. [209] However Mussolini claimed that fascism explicitly rejected the typical capitalist elements of economic individualism and laissez-faire . [209] Furthermore, Italian Fascism also acknowledged socialist influences, such as revolutionary syndicalism . [210] Mussolini claimed that in supercapitalism, "[it] is then that a capitalist enterprise, when difficulties arise, throws itself like a dead weight into the state's arms. It is then that state intervention begins and becomes more necessary. It is then that those who once ignored the state now seek it out anxiously." [211] Due to the inability of businesses to operate properly when facing economic difficulties, Mussolini claimed that this proved that state intervention into the economy was necessary to stabilize the economy. [211]
Not long after the creation of the Institute of Industrial Reconstruction, Mussolini boasted in a 1934 speech to his Chamber of Deputies that “Three-fourths of Italian economy, industrial and agricultural, is in the hands of the state." [159][160] As Italy continued to nationalization its economy, the IRI “became the owner not only of the three most important Italian banks, which were clearly too big to fail, but also of the lion’s share of the Italian industries.” [161]
During this period, Mussolini identified his economic policies with “state capitalism” and “state socialism,” which later was described as “economic dirigisme,” an economic system where the state has the power to direct economic production and allocation of resources. [212] Earlier in 1922, Lenin employed the same phrase to favorably characterize “state capitalism” as an appropriate economic system for Soviet Russia that would encompass “a free market and capitalism, both subject to state control," where, according to Lenin, every state-owned enterprises had to operated on a "profit basis." [213]
By 1939, Fascist Italy attained the highest rate of state–ownership of an economy in the world other than the Soviet Union, [162] where the Italian state “controlled over four-fifths of Italy’s shipping and shipbuilding, three-quarters of its pig iron production and almost half that of steel.” [163]
Far from it. FDR did not nationalize anything. And FDR certainly didn't impose central planning onto the United States. The rich became richer while FDR was President, too. The biggest gripe against the New Deal was that the rich couldn't scrape it all; although the rich have been trying to take it away ever since.
I submit that the distinction between nationalizing industry (Mussolini's Fascism) and privatizing government (Hayek's feudalism) is more semantic than economic. Both achieve the same result of making the rich the ruling class that enriches itself. The ultimate goal for both is to socialize costs while privatizing profits.
If neo-liberals were as opposed to collectivism as they claim, the New York Stock Exchange wouldn't be dictating monetary and fiscal policy. How often does the NYSE need to use government to bail itself out of problems it has created for itself? Mussolini's Fascism was actually more capitalist than has been neo-liberal monetary and financial capitalism. Fascism actually produced tangible value rather than floating worthless paper using asinine neo-liberal monetary policy.
Here's a little insight into the relationship between neo-liberalism and Fascism. (the link opens a PDF)
The legacy of Friedrich von Hayek: Fascism didn't die with Hitler - Executive Intelligence Review
(BTW, the EIR was founded by Lyndon LaRouche which should be a familiar name.)
There are no Marxist nations. The social democracies, however, are real.
Statism is generally bad; and so is aristocracy.
Your notion that only with ideological purity can a nation be considered Marxist defies common understanding by historians, political scientists, and lay people.
Even the US has been driven by incremental Marxism for more than 100 years. It has already implemented many of Marx’s steps to transition from capitalism to communism
As I noted, you use the term 'communist' to equate to statist authoritarian rule. Equating that with the ideas of Marx is a total disconnect.
I suppose that depends on what you mean by incremental Marxism. As it stands, the USA is firmly capitalist. If you wish to argue that increasing interest in worker coops is incremental Marxism then I would not object. But if you argue, as you typically do, that incremental statism (which indeed is occurring in the USA) is incremental Marxism then I will again note that you are 180° off base.
The USA has been slowly growing more into social democracy: FDR started this ball rolling. If we see the USA expropriating businesses we could then argue that we are growing increasingly towards State Capitalism. Crying socialism or communism is simply ill-informed emotion.
Was Lenin a Marxist?
The US has not been capitalist since FDR. We have had the crony capitalism of Marxist fascism which is not capitalism
Yes. He considered himself a Marxist and was well read on Marx.
The better question is: did Lenin implement Marxism?. The next question is: when did Lenin realize that he was not going to be able to transform pre-industrial Russia into a socialist system and that he had to first implement a capitalist economy?.
The term Leninist-Marxism is used for a reason. It refers to Lenin's attempts to force-feed socialism into a system that was nowhere near ready to make such a transition. No way to know how far Lenin might have succeeded with his plan because he died before he could put it into motion. Stalin was not with the program, but he was quite happy with the positive popular view of the nomenclature.
That is such a ridiculous claim. What do you hope to accomplish by redefining words as you do. The USA is solidly running a capitalist economy. To deny that is like claiming a flat Earth.
Do you not understand that Marxism is, in effect, the opposite of capitalism? Crony capitalism is entirely at odds with what Marx proposed.
How did FDR end capitalism? Social programs are not inherently socialist. There is a difference between a capitalist consumer cooperative and a socialist producer collective. A consumer cooperative leverages the buying power of consumers. A socialist collective leverages the monopolistic power of producers.
Socialism/communism fails because it is just another form of supply-side economics that collectivizes the monopolistic potential of producers and controls supply.
The economic principles of supply and demand were thrown out the window when Milton Friedman convinced everyone in the 1970s that monetary policy, alone, could provide a Goldilocks economy. Friedman separated monetary policy from the economics of supply and demand. Monetarism regulates the economy by controlling the money supply and transforms the Federal Reserve into the central planning authority for the economy. When Reagan and Clinton adopted monetary policy as the primary means of regulating the economy they gifted the US economy to the financial sector. Alan Greenspan bears a lot of responsibility for killing capitalism.
Supply-side economics collectivizes producers and supply into a monopoly. Since Reagan the collective monopoly that has been controlling the money supply is the private financial sector, not the government. By privatizing government, the United States has become more socialist and less capitalist.
Crony capitalism is Marxist socialism. The distinction is semantic rather than economic.
Nationalizing industry or privatizing government both achieve the same result of establishing a monopolistic collective of producers that utilize government to socialize costs and privatize profits. Industry becoming government functions the same way and serves the same purpose as government becoming industry.
Marx's socialism collectivizes production and supply into a monopoly. A worker's paradise is all about production and supply. Marx's socialism is another form of supply-side economics.
It will be entertaining to watch you and LFOD debate with your ‘interesting’ views of Marxism.
Everyone overlooks the fact that Karl Marx focused his attention on the supply-side of the economy. At its core, socialism is about collectivizing production. Isn't that what workers owning the means of production is really about? The debate between 'capitalists' and 'socialists' have been about who controls production and supply.
If one closely scrutinizes democratic socialism it is really about focusing attention on consumption and establishing an economic cooperative that leverages the buying power of consumers. While that may be viewed as a collective, the result is collectivizing consumers rather than collectivizing producers as Karl Marx advocated.
Walmart makes money by leveraging the buying power of consumers and exerting some control over production. By leveraging the aggregate of unorganized consumer demand Walmart becomes a super consumer that exerts more influence over price, quality, and quantity of production. Economically that is what retail businesses do. While retailers represent a collectivization of consumers, retailers are not considered socialist because their sphere of influence is consumption rather than production.
Karl Marx's socialist ideas weren't about consumers owning the means of consumption. Marxist socialism is another form of supply-side economics.
A lot of very smart people have studied Marx for a century and a half. You might want to think twice... or thrice... or much, much more... before posting a sentence with "everyone overlooks..."
Really? The counter argument is to declare a contravention of semantics? How very consistent with the modern use of identity politics to focus on trivialities rather than substance.
Could you cite an example of socialist proponents promising a consumer paradise? Seems to me that everyone really has overlooked that Marx focused attention on the supply-side of economics. The purpose of producing anything is to consume what is produced. Producing something that is not consumed serves little purpose; it's a waste of resources and labor. The purpose of money, factories, and jobs is to allow consumption. Consumption is the controlling influence in economics. What did Karl Marx say about the controlling influence of consumption?
It is fair to interpret Marx as being more focused on supply-side but not to the point of labeling his views as supply-side economics.
Marx saw production and consumption in a natural symbiotic relationship :
But going here ...
... misses the profound point that Marx was after proletariat level control whereas crony capitalism is minority control.
Illustrating the silliness of some of your comments:
Where do you find Marx advocating a class system wherein the wealthy (the aristocracy) are the preferred rulers?
In your 60 years of research on Marx, did you ever stumble across terms such as bourgeoisie and proletariat? If so, where did you get the idea the Marx sought bourgeoisie dominance of the economy?
Show me single communist or socialist country where the leaders are not wealthy
where did I say any of this is what Marx advocated or sought.
I’m stating that this is the real world outcome of socialism and communism. Forget about ideological academics. Power corrupts even in Marxist utopias.
Note this from you:
If you label a country 'Marxist' you are stating that it has implemented what Marx offered. If you do not think that a 'Marxist country' is following what Marx advocated or sought why would you call them 'Marxist'?
What you define as communist or socialist is basically statist, authoritarian nations. Since that is the opposite of what Marx outlined labeling them as such is a misnomer.
However, I can answer your question anyway. Virtually every nation on the planet is controlled by aristocracy. It does not matter what system they are using, the leaders, the rulers are typically rich and powerful. That is how things have worked for all of recorded history and likely how things will work far into the foreseeable future.
There are no Marxist nations. Never have been, likely never will be.
Again, historians, political scientists, nation states, and lay people would profoundly disagree with you
Hitler and most German political ideologues were students of Marxist ideology
“In his youth, Hitler studied how the Marxist-oriented Social Democrats manipulated the crowds in his native Austria. From that observation he developed his own method of crowd psychology. Hitler, of course, was a gifted orator who could ‘whip the masses up to a frenzy of faith and enthusiasm’.[25] And yet, in both public and private conversations Hitler was fully able to acknowledge his great debt to Marxist ideology.[26] In a November 1941 speech Hitler even declared: ‘Basically, National-Socialism and Marxism are the same’.[27] On another occasion, Hitler commented:
I have learned a great deal from Marxism as I do not hesitate to admit … The difference between [Marxists] and myself is that I have really put into practice what these peddlers and pen-pushers have timidly begun. The whole of National Socialism is based on it. Look at the workers’ sports clubs, the industrial cells, the mass demonstrations, the propaganda leaflets written specially for the comprehension of the masses: all these new methods of political struggle are essentially Marxist in origin. All I had to do is take over these methods and adapt them to our purpose.[28]
As can be seen, there are important commonalities between National Socialism and Marxism. It is therefore deeply fallacious to argue that Nazism is the polar opposite of Communism, or that the Nazis were some sort of ‘reactionary capitalist counterrevolutionaries’.[29] In truth, the Nazis were revolutionary socialists who received no support from the German industrialists, even from of those who later benefited from the country’s rearmament. The Krupp family, for instance, financially opposed Hitler at the 1932 German presidential election.
Because of ideological similarities the German Communists were happily prepared to faithfully collaborate with the Nazis against the Weimar Republic. The Nazis were greatly assisted by the Communists when the latter refused to make common cause with the Social Democrats.[30] Working under strict orders from Moscow, the Communists regarded the Social Democrats as their major political opponents, and not the Nazis. Such a position weakened any resistance against the Nazi movement and ultimately paved the way for the Nazi takeover from which the Communists themselves became one its first victims. In the clash between Social Democrats, Communists and Nazis, writes Richard Pipes:
Moscow consistently favored the Nazis over the Social Democrats, whom it called ‘social Fascists’ and continued to regard as its principal enemy. In line with this reasoning, it forbade the German Communists to collaborate with the Social Democrats. In the critical November 1932 elections to the Reichstag (Parliament), the Social Democrats won over 7 million votes and the Communists 6 million: their combined votes exceeded the Nazi vote by 1.5 million. In terms of parliamentary seats, they gained between them 221, against the Nazi 196. Had they joined forces, the two left-wing parties would have defeated Hitler at the polls and prevented him from assuming the chancellorship. It thus was the tacit alliance between the Communists and the National Socialists that destroyed democracy in Germany and brought Hitler to power.[31]”
Although Hitler condemned the incarnation of Marxism in Soviet Russia, he had no problem to describe his party as socialist in nature. What Hitler despised in Marxism was not its economic doctrine, but rather the idea that ‘working men have no country’. Indeed, the great divide between Nazism and Communism is not so much over economic particulars, but over the specific kind of socialism to be adopted. Whereas Communism embraces the idea of International Socialism, the Nazis dreamed of a National Socialism which despises everything deemed ‘supranational’. For example, in a 1935 article published in the daily Völkischer Beobachter, the Nazi Propaganda Minister, Joseph Goebbels, described his party as ‘a party of revolutionary socialists’.[35] The only incompatible difference between the Nazis and the Communists, Goebels argued, was the supposed internationalism of the latter as compared to the fierce nationalism of the former.[36] Even so, Goebbels wanted to work with the Soviets against, as he saw it, ‘Jewish power in the West’”
Hitler developed much of his anti-semitism ideology from Marx (ironic due to Marx being a Jew who hated zjudaism)
Whereas Hitler saw ‘race’ as the primary instrument of social struggle, Marx saw class as the key to such a struggle. And yet, Marx wasn’t entirely averse to the idea of a ‘master race’. On the contrary, as Marx himself pointed out: ‘The classes and the races, too weak to master the new conditions of life, must give way … They must perish in the revolutionary holocaust’.[50] Marx supported English imperialism in India simply because he thought the Indians were racially inferior to their colonizers. Although ethnically Jewish, Marx often resorted to racist phrases such as ‘dirty Jew’ and ‘Jewish Nigger’ in order to describe his political adversaries.[51] Of the German socialist Ferdinand Lassalle, Marx commented:
It is not perfectly clear to me that, as the shape of his head and the growth of his hair indicates, he is descended from the Negroes who joined in Moses’ flight from Egypt (unless his mother or grandmother on the father’s side was crossed with a nigger). This union of Jew and German on a Negro base was bound to produce an extraordinary hybrid.[52]
In On the Jewish Question Marx endorsed the anti-Semitic leader of the Hegelian Left, Bruno Bauer, who demanded that the Jews should immediately abandon Judaism. In his essays Marx attacked free enterprise for apparently ‘Judaizing’ the whole of Europe, and, in effect, ‘dissolving earlier forms of solidarity and turning the Christians of Europe into this own caricature of Jews’.[53] For Marx, the ‘money-Jew’ was ‘the universal anti-social element of the present time’. ‘To ‘make the Jew impossible’, Marx contended, it was necessary to abolish the ‘very possibility’ of the kind of money activities which allegedly produced Judaism.[54]
Marx believed that Judaism would have to disappear before capitalism could be finally eradicated. For the Communist utopia to become a reality, Marx thought, it is necessary to eliminate ‘the Jewish attitude to money’. ‘In emancipating itself from hucksterism and money, and thus from real and practical Judaism, our age would emancipate itself’, Marx proclaimed.[55] Such a theme is repeated over and over throughout Marx’s writings; and so much so that it is perfectly possible to demonstrate that modern anti-Semitism is actually a derivative of Marxist ideology. According to Paul Johnson:”
I think I see the problem. You do not look at the dynamics and objectives of a system, rather you look for people who have views you like and deem them truth.
In today's world, for any position one can find someone who disagrees and holds the opposite view. If one simply operates on the basis of which authority he or she will blindly follow then one can pretty much believe anything.
A far better approach is to engage in analysis. If one were to do that, honestly, one would never make a ridiculous claim such as:
Which is wrong in that there are no Marxist countries and that a Marxist country, if one were to exist, would not be an aristocracy. Marx promoting aristocracy is like LFOD promoting gay marriage.
Decades of Analysis tells us.....Folks ain't unanimously flocking to China, Russia, Iran, Iraq, Venezuela, Guatemala, Mexico, Sweden, Switzerland....etc.....
Why is that ?
Is there really a need to debate "Socialism" or "Marxism" or "Communism" at all ?
Trump seems pretty impressed by Russia, NK and China and their autocracies. And as usual you just throw out meaningless babble like 'socialism marxism communism leftist' with no context. Can we debate details and examples? Can we debate problems and solutions? Or will be be stuck with the babble?
What are the defining characteristics of a 'Marxist country'?
Your comment was generic and vague. No way to know unless you offer something specific to qualify your implicit sarcasm.
Why ?
Neither of the four you site are worth a hill of beans. They don't work "For the People", Only the Leaders !
Decades of actual "History", tells us so !
Continue the meaningless babble, by all means.
Meaningless to whom ?
History isn't the fickle thing. Only those that ignore History are "Fickle" !
Neo-liberals?
How absurd.
Anyone who thinks the average person was better off in 1980 couldn't have been alive then. Start by spending thousands more per year on food.
Are you kidding? It was a lot better back then! Salaries were able to handle family expenses, college was affordable, medical coverage wasn't nearly the problem it grew to, and food was cheaper. We went through some godawful inflation in the mid 1980's and mortgage rates were over 10%. But we didn't have nearly the worries we do today. And I've got all my budget books to prove it.
Start with food. The average family paid about 15% of their income to eat. Now it’s about 10%. That’s thousands per year in food alone.
People have more disposable income to spend on much better goods. now then in 1980.