Socialism has simmered down to the advocacy of strong government, with this proviso: that that government is best which is run by socialists. Too many capitalists have made their peace with this system. FULL ARTICLE by Frank Chodorov
Source link: http://archive.mises.org/15642/how-capitalists-help-build-socialism/
How Capitalists Help Build Socialism
Previous post: Crazy and Evil Dictators
Next post: Libertarianism and Science Fiction: What’s the Connection?
{ 14 comments }
How timely. The white house released its white paper in ending Fannie Mae and Freddie Mac today. Here is the first paragraph:
Nearly eighty years ago, in the midst of the Great Depression, the federal government began
implementing sweeping reforms to the American financial system. These reforms – deposit
insurance, limits on the risks banks can take, better transparency and investor protections in
securities markets, a stronger Federal Reserve – helped build a financial system that provided a
solid foundation for America’s unprecedented prosperity.
The paper goes on to detail a host of unanticipated consequences that arose from its centrally planned mortgage monopoly (currently 90% of all originations). The don’t learn though; instead of originating mortgages, they will refocus on stricter regulation and over sight of a private mortgage industry that will arise from the ashes. They also think home ownership may not be ideal for all and they will work to make sure adequate and appropriate rental opportunities exist. Here comes your next boom, tens of thousands of rental units built in public private partnerships. Corruption and unforeseen consequences of warehousing people in rental properties to follow. After that they will decide that homeownership benefits the family unit. And so on.
‘capitalists make common cause with the State, unwittingly digging the grave of capitalism.’
Isn’t it the case that ever group of people contains those who seek benefits from the government, undermining our economy and civilization? Do not those called ‘poor’ seek benefits, as well as those called ‘middle class’ ?
Allen,
Not to take issue with you again…but you ask good questions.
Do not those called ‘poor’ seek benefits, as well as those called ‘middle class’ ?
Are we really to believe there is a coalition of poor people that are organized and politically adept…there isn’t…anymore than there is a middle class or any class of people…that are politically organized.
The benefits you speak of are bestowed upon the people… not at the request of the people but from those who wish to receive the benefits of political power.
PS>Over the years, on occasion, I’ve had students tell me while riding the bus (in CA) a person would approach them and ask if they needed financial help then proceed to give them information on how to contact their local welfare office.
People aren’t the problem…it’s the government.
Dagnytg, I respectfully disagree.
40% of the people pay no federal income tax, and another 20% pay little, so that in effect 60% pay almost no federal tax. Try passing a law where there is a head tax, wherein every citizen pays the same, or even a consumption tax where all pay the same percentage. There will then be massive resistance, not just by political organizations, but by demands from the population at large. Or try linking votes to taxes paid, such as if one is taxed twice as much as another, his vote counts twice as much. You will find that the demands of the ‘poor’ are then an immovable body.
If the public believed that wealth distribution was immoral, and destructive to the economy & to wage earners, we would not fall victim to Keynesianism. Since however the public believes that wealth distribution is moral and supportive, it is an irresistible force.
You write “People aren’t the problem…it’s the government.” Yet who chooses the government if not the people? I hold with those such as Étienne de La Boétie and Thomas Jefferson, who not only trace a government to the approval of the public, but claim that the public gets the government it deserves. If you think that government does not require acceptance by the public, advise Mubarak to stay in office. Similarly, tell George Allen that he can say “Macaca” and become president because public acceptance does not matter.
It is true that government corrupts its citizens but its is also true the citizenry goes along more than willingly. Ibsen’s “enemy of the people” depicts that relationship beautifully. His last lines, “the strongest man in the world is he who stands most alone” are a tribute to individual thought and action.
Dagnytg,
I disagree with your contention that “people aren’t the problem…it’s the government.” First I would say is there is not such thing as government without the people. The government is made up of people both elected and appointed. Based on what party is in power there can be difference of opinion on how government should operate.
The key to understand any government is to study the citizens in the country and what they are made of. I would say the citizens of the US were a lot different in 1776 than they are now. Their value system and perceptions of life were very different. Personal responsibility was dominate and served their lives well. I would say that even up to World War 1 the populace probably thought more in lines of James Madison and not FDR.
We have become parasites feeding off of the producers. The producers go to the government trough for competitive advandage. These are all people using what they call their values. The value to steal for power. Madison knew we are not all angels. He tried to establish a government that made it very hard to for some citizens to steal from others. It had lasted for a couple of hundred years. I totally agree with Allen and the current condition of our Republic. The only way to get back to where we were is to get back to the individual values we cherished and made this country one of the greatest on earth.
Wow, this article is spot on. It really helped fine tune my perception of free market capitalism vs. corporatism. I actually had one of those rare ‘epiphany moments’ after I read it.
One thing has bothered me about the discussion of the government granting privileges and how politics guides the decision making and not necessarily what makes sense from an economic standpoint, etc, etc. That is that the same process tends to happen inside of large companies. You hear it all the time, people hate the politics that goes on in many levels of management. Not that large corporations are equivalent to the government since they have a natural constraint that they can’t make decisions that could kill the company but they can make plenty of decisions that don’t make a lot of sense. Isn’t this the nature of bureaucracy? The government has it, big business has it. The only difference is constraint.
This all makes me think that it’s not necessarily the government by itself that is evil or large companies that are evil but the collusion of the two that is evil. And bureaucracies just can’t help themselves.
There are only two ways to obtain wealth – you must either produce it, or plunder it. Mises wrote a great book, “Bureaucracy”, available for download as a pdf on this website, which explains the immense difference between the bureaucratic and profit management methods. In a nutshell, bureaucracies do not produce wealth, they plunder it; whereas the one and only goal of profit management is to produce value, and thereby wealth.
There is no doubt that the bigger a business gets, the more bureaucratic its management becomes. The focus shifts from producing wealth to plundering it. Let’s face facts, it is far easier to plunder wealth than to produce it, provided, of course, that you have the power of plunder at your disposal. This is just human nature in action — satisfying one’s desires with the least amount of effort possible. In a truly free market, with each business standing on its own, the power of plunder is strictly limited. It is only big government, with its original constitutional checks and balances long since eliminated, which has been allowed to grow its monopoly of force far beyond reason, that has extended this power of plunder beyond its natural boundaries in a free market / society. This is the gravitational force that the other smaller powers are compelled to rotate around, willingly or not.
This brings to life the immortal words of Lord Acton: “Power tends to corrupt. Absolute power corrupts absolutely.”
Question your absolutism. Capitalism has thrived in America despite centuries of various programs of regulation, development, and welfare. Yet neither the capitalism nor the various ways in which we use the government to influence the market shows any signs of consuming the other. There is no slippery slope. All economies are a mixed bag, and it is a good bet they will continue to be in the future.
Robert,
That was a reasonable, productive comment. That’s a welcome change, thank you.
In response, just because economies have been mixed does not mean that it is better that they are. I could make the same comment you did using fleas instead of the economy… just because the fleas and the dog have not “consumed” each other does not mean that the dog is better off with fleas. The fact that the dog might be stuck with fleas in the future does not mean it should let them bite where they will.
A robber walks up to a man and puts a gum to his head and says “give me all of your money”. The man declines and the robber says “okay, I am willing to compromise, give me half”. The man once again declines and the robber responds, “why are you being an absolutist?”
Coercion versus voluntary cooperation Robert, therein lies the key.
“Yet neither the capitalism nor the various ways in which we use the government to influence the market shows any signs of consuming the other.”
In the US, govt spending as % of GDP has grown from less than 10% in 1913 to more than 45% today. The ongoing deficits are huge and the govt is bankrupt after having bailed out failed firms.
The level of govt vampires sucking the blood out of the US economy is very alarming. Besides, the President said that the free market is in such bad shape that it needs some saving now.
Yet, somehow you are really sure that the private sector is healthy? If so, why does the govt insist upon helping?Help me out here, Robert.
(P.S. are you Swedish? or Canadian? wondering why you are such a sucker for the middle path..)
Very insightful article. Our efforts are really funding socialism unfortunately. I believe this is why things won’t change until a total collapse like Greece or Egypt.
Comments on this entry are closed.