Dear Friends,
It seems to me, there are really only three ways to order an economic system. One is the free market, where property is owned for the benefit of the owner. The next is fascism, where property is owned for the benefit of the State. Finally we have communism, where the State owns all the property for its own benefit. So when I use the term fascism, communism/socialism or capitalism, these are the definitions I am using. Two of these systems require central planning, fascism and communism, while a free market needs little government. Indeed, oversight in capitalist economies tends to evolve a free market into fascism and socialism… to benefit the State, corporations, and monopolies. We have a choice which system we live under, the elites would pretend we don’t, but it’s not their choice to make.
Free markets, capitalism, or free enterprise is a system where individuals vie to meet the needs and wants of other people. Those who meet the most needs or wants of the most people become the richest. In free enterprise, the merit of the job doesn’t determine wage, but the demand for it. That’s why a baseball player who ostensibly gives no actual value is paid so much… while a teacher who provides much societal value is paid little. Because many can teach but few can play baseball at that level. Everything in free markets comes down to supply and demand. Some argue this is unfair. They would prefer a system where their morality decides who gets paid what, and how much people pay for goods and services outside the free market. They are often communists and socialists.
Socialism and communism are systems of organizing an economy by pure central planning. The central planners decide everything and own everything. The people are cogs on the sprockets of the machine. Workers then have the same agency as a bolt. Everyone becomes part of the machine, doing their part for the whole. This allows those who are offended by free market agency to bend it to their will. The trouble is, supply and demand is practically an economic law. Break it and there are consequences that even the power of government can’t solve. The incentive for a cog to work hard, be honest, and maintain itself is nonexistent. That means the economy eventually crumbles along with the workers. This has been illustrated by many communist regimes in the past, including China.
China went from full communist/socialist to fascist, where the means of production are privately owned but benefit the State. This allowed China to adopt the efficiency of distributed knowledge. This opened up terrific efficiencies. In addition to those productivity gains, the State exploited its international power to get favorable trade deals. Then it subsidized exports to drive competitors out of business. This established monopolies in rare-earth metals and other commodities. Fascism then is more effective than communism and socialism economically, but it has issues. The incentive structure of fascism creates wars of expansion, a perpetual enemy, and tyranny that eventually rots the system from the inside. Communism and fascism then drive people to be immoral.
None of these systems is innately moral. Only capitalism provides a feedback mechanism to make people moral. The others with their all-powerful states become unaccountable, so have incentives to be immoral, arrogant, and manipulative. Communism has the benefit of allowing some people to bypass the law of supply and demand for a short time but costs tyranny, prosperity, and a collapsing standard of living. Fascism is better economically but costs, wars of expansion, a perpetual enemy, and a stagnant standard of living. Meanwhile, free enterprise costs moral outrage at market behavior but the benefits are freedom, prosperity, and a rising standard of living. These pragmatic costs and benefits should be considered when choosing economic systems. Choose wisely.
Sincerely,
John Pepin
