A Historical Case for Capitalism Part 2

In part 1, I covered the criticism that capitalism is a flawed system because it creates economic inequality within the society.  But the analogy that the capitalist “tide does not raise all boats equally” actually has two parts; one expressed and the other implied.  By not going beyond the initial critique of capitalism, the opponent of the system is silently implying that the alternative he is proposing will address this flaw.  In this article, I will examine the past performance of the alternative systems to determine if they can produce the implied result of creating wealth for all.

To do this, we need to understand that all the alternative economic systems that are being pursued have their roots in Marxism.  This in itself does not make it good or bad.  It only means that we have about a 150 year track record to assess.  To some it may seem unfair to make a determination on the effectiveness of these alternatives, much less compare them to a system that has had 700 years to develop, but in those 150 years, the Marxist-based philosophies of communism, fascism, Nazism, and socialism have left an indelible mark.  Furthermore, that mark has been extraordinarily consistent in the results that are produced.

Last century marked the high point of the experiment with Marxism.  By the early 1900s, progressives around the world were aggressively promoting their versions of the Marxist dream.  Russia was their first success and after the Revolution of 1917 full-blown communism was established.  This was followed by success in Italy, which established the fascist version in 1922.  The depression of the 1930s offered the critics of capitalism a crisis to exploit and a chance to spread the Marxist philosophy to other countries.  They successfully convinced the people of many countries that capitalism was flawed and that their system was better by being more scientific, more enlightened, more perfect.   Although their greatest success was in Germany, with its own version called Nazism, many other countries of the world fell for the claims and embraced or adapted Marxist alternatives, including France which adopted the milder socialism.  

These Marxist-based, big government systems initially had some extremely remarkable success.  This was especially true of Nazism, which created what was hailed as the “German Miracle.”  At the height of the depression, Germany had almost 11 million unemployed; by 1938, unemployment was almost nonexistent.  Similar, though less dramatic, results were being achieved in Communist Russia (renamed the Soviet Union) and Fascist Italy.  This brought worldwide acclaim, especially from celebrities, academics, and media elites.  Many, jumping onto the Marxist bandwagon, flocked to view for themselves the new “workers’ paradise and utopias.”  They eagerly claimed that man had created the ideal economic system and that the antiquated, flawed, and cold-hearted Capitalism was dead.  The enthusiasm was so widespread that even the stalwarts of free-market economics, Britain and the Unites States, incorporated aspects of Marxism into their economies.

The fact is that the admirers of Mussolini, Stalin and Hitler had been thoroughly duped.  These ruthless leaders understood that their admirers (or “useful idiots” as Lenin would call them) would see only what they wanted to see. This voluntary blindness meant that those praising these dictators refused to recognize that the immense economic achievements of communism, fascism, and Nazism had more to do with the tyrannical practices of the government than it did with their economic systems.  In Germany, for example, women and Jews were excluded from employment and were replaced by male, non-Jewish workers.  Furthermore, since they were prevented from working, women and Jews were excluded from the unemployment count.  Soviet Russia’s success relied heavily on the slave labor of its Gulag system, and Stalin’s collectivization and industrialization programs resulted in the death of tens of millions of people.  Although it did result in a better standard of living for those who survived the “Great Terror,” that prosperity was paid for with the blood of its victims.

Winston Churchill was one of the few who were not blinded by the charade.  From the very beginning, he wailed against and warned of the dangers these systems posed to the world.  He recognized what insiders, such as the architect of the Nazi economic plan, Dr. Hjalmer Schacht, knew; that the Marxist economies could not be sustained since they could not generate the required wealth.  Once all the current wealth had been redistributed the society would begin to descend economically.  The only way to stave off such an outcome was to find new sources of wealth.  This set these three countries, plus fascist Japan, upon a course of imperialism and exploitation that makes capitalist imperialism look benign.  Within a decade, Marxist-based imperialism would kill, enslave, exploit, and pillage more people than the British Empire ever did in its almost 400 year history.  By the end of fascist Italy in 1944, Nazi Germany and fascist Japan in 1945, and Soviet Russia in 1989 over 100 million individuals would lose their lives to the wars, starvation, deprivation, and genocide these economic-political philosophies caused.

With such a conclusion, one would think that Marxism would be discredited and discarded forever.  But its supporters were quick to point out that the problem with communism, fascism, and Nazism is that they took Marxism too far to the extreme.  What was needed was capitalism mixed with the perfect amount of Marxism.  This hybrid system, called socialism, would use capitalism to create wealth and Marxism to distribute it.  In other words, capitalism would create the “tide” and Marxism would ensure that the tide “raised all the boats equally.”  It was perfect since it incorporated the best of both systems while eliminating their flaws.  

After the deprivations of the Second World War, the democracies of Western Europe were eager to restart their war-torn economies and Socialism appeared to be the ideal system.  By the 1950s, every country in non-communist Europe, from Spain to Sweden and Italy to Britain was socialist to one degree or another.  Once again, the new system showed promise.  In quick time, the war savaged economies rebounded and had growth rates on par with the United States.  The prosperity of these countries was considered proof of what could be accomplished with Socialism.  

Unfortunately, once again, the system demonstrated that it was not the panacea it promised to be.  The main flaw was that if the perfect combination of capitalism and Marxism could be found it could not be maintained.  One of the by-products of socialism is that the people became dependent on the government.  As that dependency grows the people feel more and more entitled to government services.  This sense of entitlement results in people placing more demands on the government.  In turn, the government feels compelled to meet the demands of its citizens, and the perfect balance between capitalism and Marxism is lost.  Additionally, the dependency on government means that once the balance is lost it is almost impossible regain.  (This last point is painfully evidenced by the riots and civil disturbances that have recently rocked Britain, France, Spain, Italy, Portugal, and, of course, Greece.)

Over time, this results in the decline of prosperity and societal wealth.  At a recent lecture Nobel Laureate and economist Robert Lucas points out that, for the first 70 years of the 20^th century, the economies of Western Europe grew at nearly the same rate as the United States.  That changed in the 1970s when the negative effects of socialism started to be felt.  During that time, Socialist Europe’s GDP per person dropped 30 percent, thus resulting in a 20 to 40 percent income gap between it and the United States.  This coincides with what Daniel Hannan writes in his book, The New Road to Serfdom.  In the book, he notes that Western (Socialist-based) Europe’s share of the World’s GDP shrunk from 36 percent in 1969 to 26 percent in 2009 and is projected to be only 15 percent in 2020.  During the same period, the United States share had remained steady at around 26 percent.  Additionally, in 1970 the unemployment rate of Western Europe was just above 2 percent while in the United States it was about 5 percent.  By the end of the decade the rates flipped and, for the rest of the century, Europe’s unemployment rate ranged from 2 to 3 percent higher than that of the United States. Today, several of the socialist economies of Europe are on the verge of total economic collapse.  Any attempt dial back the Marxist component of their economies is met with resistance by their government-dependent populations.  This opposition is often expressed with violent protests, civil disturbances and rioting that threatens to undermine the society as a whole.

  

History shows us that the claims of the critics of capitalism are valid.  That capitalism does not benefit all members of its society equally.  But there is nothing in history that indicates that their Marxist alternatives offer anything better.  The 20^th century experiment with Marxism ended as a complete and catastrophic failure.  The death, destruction, and deprivation it created resulted in the century being the most bloody and brutal in the history of man.  Even the socialist hybrid, by slow draining of wealth, has proved itself more of a bane than a boon for the societies that embrace it.  So, while the “tide” from the sea of wealth that capitalism creates does not “raise all boats equally,” it does raise all boats.  Whereas, the alternatives, rather than being oceans of wealth, create landlocked seas that, once drained, leave all boats stuck in the mire and muck.

Modern Liberalism: The great deception

I remember that it was during the early part of the Clinton presidency when I first heard of ‘political correctness.’  Although I was still in my early twenties, I instantly recognized the term represented something to be despised for its wickedness.  My first instinct—and fear—was that it originated from my side of the political spectrum as I could not imagine anyone who consciously considered themselves as being ‘liberal’ embracing it, much less developing this contemptible concept.

Yet, two decades later, the intolerant and illiberal ‘liberal’ reaction to a person expressing his personal opinion, as evidenced in the recent Dan Cathy/Chick-Fil-A uproar, did not surprise me at all.  

The difference in my reaction to these two events is that I have come to realize that what is termed ‘modern liberalism’ is not liberal at all and is one of the greatest deceptions perpetuated on the American electorate.

Before I can explain what I mean by this, we need to examine what real liberalism is.  

Real or true liberalism evolved out of the enlightenment period that swept Western Europe in the 16^th, 17^th, and 18^th centuries and is considered by many to be the zenith in the history of liberty and the governance of man.  It is based on the belief that the average man could rule or govern himself without the oversight of some aristocratic lord directing his behavior.  This belief found a welcome home among both the enlightened intellectuals and the common people of England.  Over those three centuries, the English developed a political system based on this conviction.  At the heart of this form of governance, which has been conveniently renamed ‘classical liberalism’ by leftist academics, are four basic principles.

• Limited Government
• Individual Rights
• Private Property
• Free Contract Economics

The first two preserved political freedom while the last two guarded economic freedom.  [I should note here that Free Contract Economics refer to the freedom that individuals have to willfully engage with each other without approval of an aristocratic overseer.  It is not a license to rob, cheat, swindle, defraud, or steal.]

It is this philosophy and these principles that are represented in the Declaration of Independence, The Constitution of the United States, and, especially, the Bill of Rights.  Hence, it is also referred to as ‘Jeffersonian Liberalism.’ It is also the version of liberalism that I understood when I first reacted to hearing of the non-liberal concept of ‘political correctness.’

[If you doubt this understanding of liberalism, then please read the platform of the Liberal Party of Australia, which, to their credit, has remained faithful to the principles of true liberalism.]

The Deception Begins

As I noted above, in the early part of the 20^th century true liberalism was renamed classical ‘liberalism.’ This allowed Marxist-based Progressivism to usurp the name and the great accomplishments of true or authentic liberalism.

Unfortunately, modern liberalism has none of the trust in the average man that true liberalism does.  In fact, at its core is the belief that the average man cannot be trusted to make the correct choices or decisions.  Like the serf of the Middle Ages, the average person must be guided, controlled, and tempered by the ‘wisdom’ of the more educated, cultured and civil members of society.  This is why Faux-Liberals (my term for illiberal modern liberals) can not only embrace but can also originate concepts that are, at their core, the anti-thesis to the principles of true liberalism. 

I do not make this accusation based on their words since the manipulation of the language is the basis of deception, and, as the redefining of liberalism illustrates, Faux Liberals are very competent in language manipulation.  It is their actions and the results of those actions that provide basis of my charge.  All one needs to do is to compare some of the core objectives and policies of Faux-liberalism to see that it has very little in common with being liberal and is more akin to ideologies that have lead to tyranny and despotism:

•  From the support and acceptance of ‘political correctness’ to the practice of silencing opposing opinion we see the disdain Faux Liberals have for the rights of the individual, including the freedoms of thought and expression.
• By using government as an instrument of change, often referred to as ‘social engineering,’ we see a complete disregard for the principle of limited government
• Through the redistribution of wealth schemes we witness complete contempt for private property. 
• The attempt to regulate all business and control economic activity violates the principle of Free Contract Economics

Now, I do not have a problem with people supporting or being in favor of these policies—after all, disagreement is the product of a free society—but I do take exception with people who are deceptive about their beliefs and ideology. This is exactly what Faux-liberalism does. It is an ideology claiming to be liberal when its actions are the complete opposite. Additionally, its adherents continue the deception by chastising others for lacking tolerance, understanding, and compassion when they continually fail demonstrate those values themselves.  This leads to some very interesting questions:

Why must a political ideology or movement use deception in order to gain support for its objectives?

Why must it feel compelled to usurp the title of a political philosophy that is the anti-thesis of everything it stands for?

Why did its adherents not choose a label that properly reflected the ideology’s true values and principles?

Why must it resort to language manipulation to get people to support its causes?

And, more importantly,

Why the deception?

What is it hiding?

I know at this point you may be thinking, “Well, conservatives are no better” and to a degree you are right since both sides have done an exceptional job of eliminating true liberalism from America’s political landscape. The difference is that conservatives did not take the term and redefine it to suit their needs or to mislead people. On the contrary, conservatives tend to use phrases, such as traditional values, American values, free market economics, etc to accurately reflect their ideology and beliefs. This is what makes modern or faux-liberalism the greater of the two evils.  Its use of language manipulation, which is designed to deceive a well-intentioned, although not well-informed, electorate, is by any measure loathsome and should generate the feeling of revulsion in anybody who truly values freedom, liberty, and individual rights.

References:
http://www.ncpa.org/pub/what-is-classical-liberalism
http://www.whatisliberalism.com/
http://www.liberal.org.au/The-Party/Our-Beliefs.aspx#FederalDirector

The Occupy Wall St Movement: The Marxist Corruption of Liberalism

Like many Americans, I have been watching the Occupy Wall St. protest spread across the country.  I have been reading the signs and listening to the slogans the protesters carry and chant.  I have also watched as celebrities, politicians, and the MSM line up in support of the movement.  Through all this, I am struck how much Liberalism has been corrupted by Marxism.  I cannot help recalling the words one of my favorite essays:

              
                     My Creed

I do not choose to be a common man.

It is my right to be uncommon...if I can.

I seek opportunity...not security.

I do not wish to be a kept citizen,

humbled and dulled by having the state look after me.

I want to take the calculated risk;

to dream and to build,

to fail and to succeed.

I refuse to barter incentive for a dole.

I prefer the challenges of life to the guaranteed existence;

the thrill of fulfillment to the stale calm of utopia.

I will not trade freedom for beneficence

nor my dignity for a handout.

I will never cower before any master

nor bend to any threat.

It is my heritage to stand erect, proud and unafraid;

to think and act for myself,

enjoy the benefit of my creations

and to face the world boldly and say,

this I have done.

This essay could have been written by a TEA Partier or other Conservative “Right-winger.”  But it wasn’t.  It was written by Dean Alfange.  During the Great Depression of the 1930s, Mr. Alfange was the leader of the American Labor Party and in 1944 formed the Liberal Party.  Additionally, he held a chairmanship in Franklin Roosevelt’s successful campaign to be a three-term president.  He fervently opposed the GOP and ran several campaigns against them.  By any sense of the word, he was no “Right-Winger.” 

Now compare the words of this traditional Liberal (before the infection of Marxism) and those of the Occupy Wall Streeters and their supporters.  How far has Liberalism moved from its original principles!  The modern version has nothing to do with Liberating people and everything to do with enslaving them under the Marxist yoke.  That is why I call Modern Liberalism “Faux Liberalism.” 

The Road to Hell is Paved with Good Intentions

In a previous article, “Alternatives to Capitalism”, I offered the proposition that Socialism and the welfare state it produces eventually destroys the wealth of the society.  The reason for this is that the Marxism it is based on creates a situation where citizens become dependent on the government.  With each generation, that dependency grows and ever greater demands on placed on political leaders.  The result is that even if the government can create the ideal mix of capitalism and Marxism the redistribution of the wealth will eventually overcome the production of that wealth.  This can be clearly seen in the economic decline of Western Europe since the introduction of the welfare state 50 plus years ago, which has left most of those countries on the verge on economic collapse.

Unfortunately, we no longer need to look so far away to find further proof how even limited Marxism, in the form of the welfare state, grows uncontrollably until it threatens to destroy its host economy.  In a highly informative article called “The Road to a Downgrade” (July 28,2011) the Wall Street Journal details how Marxist-inspired programs, once introduced into America’s predominantly capitalist economy, grow beyond all expectations and projections.  Two examples are Medicare and Medicaid.

·         When Medicare was established in 1965, it was projected that the program would cost $12 billion in 1990.  The actual cost was $110 billion or almost 1000% more than projected.

·         In 1966, the cost of the Medicaid program was $4 billion or just over one-half of 1% of GDP.  By 1986, it had grown to $41 billion (just under 1% of GDP); last year it was $243 billion (1.67% of GDP).

As the article points out, it is more than rising medical costs that have increased the price tag of these programs.  Just like in Europe, Marxism has resulted in an increasing number of Americans becoming more dependent on government.  They demanded more benefits or entitlements and politicians, willing to trade taxpayer money for votes, were more than eager to oblige.  Over the years, the programs were expanded way beyond their original intents.  Even Social Security, initially designed to provide a safety net for those few seniors who were unable to provide for their own retirement, became a pension plan for all seniors.  In 1960, the cost of the plan was approximately 2% of GDP; in 2008, it had doubled to just over 4%. 

In 1965 total spending on entitlement programs made up about 35% of the federal budget.  Forty years later they have grown to be about 60% of the budget.  This clearly shows that if, by a miracle, politicians are able to create the perfect economy by introducing the ideal amount of Marxism into capitalism it does not stay that way for long.  Marxism will grow and slowly deplete the wealth of the society.  Now America, like its European counterparts, is facing an economic meltdown as Marxism takes its toll.  The question is do we, as Americans, continue to go down the Marxist road to perdition or do we return to the economic system that, for 700 years, has created wealth for its societies?