The Political Problem Of Capitalism Versus Socialism

Capitalism and socialism appear to be opposites, but are they? Each side aggressively biases its rhetoric. The problem is not which is correct, but rather, what is the problem they address? An example.

What is the best breakfast meal? The range is from a bagel and coffee in the car to a massive one of bacon, sausages, pancakes, fried eggs, home fries, juice, and coffee. Cereal is an option too. Everything from Frosted Flakes to Shredded Wheat and porridge is possible. Each of these choices is a tactic—a method to achieve some strategic goal. A strategic plan surrounding a vision of purpose is best.

Do you think the argument would be as intense over a strategy? The vision for breakfast could be to be healthier and more energetic. No one would argue for harmful. Evidence about what would help match our vision would be readily accepted and assessed. Once decided, we select a preferred tactic that fits our needs and preferences. We might experiment a little to find one that works better for us.

What would it take to have the same context supplied by each side in the capitalism and socialism debate? Not expert opinion. Not emotion. No “fair” or “justice” word arguments. Just simple evidence about the merits of each.

What would we have if the proponents of each presented argument and evidence?

What would we have? Nothing!

Why nothing?

It would be nothing because we are arguing about tactics, like bacon and eggs versus organic whole-grain cereal. Tactics are interminably arguable when there is no shared vision.

We have failed to notice the strategic vision of a helpful shared culture and society I want to be healthy and have enough money. I prefer to be safe. My children should be able to do better than I have. Other people should succeed.

Most crucial, I want governments to behave like good referees in a game – Even-handed, consistent and nearly invisible.

It is a simple planning issue.

It would be best if you noticed that capitalism and socialism are tactics for achieving some goal. They are each a method to allocate resources to particular problems or opportunities. How you solve a problem you understand is not as important as understanding what you are trying to do.

When the starting point is tactics, every plan fails. The best tactic attached to a weak vision and weak strategic goals will fail, sometimes quickly and spectacularly. Like “New Coke”

You cannot compare socialism and capitalism without purpose.

Since vision and strategy are never discussed in the same argument as the tactic, we must infer vision and strategic goals for each before going further.

  • Capitalism has a primary goal of increasing the aggregate wealth and liberty of the people. Many would argue that it is too narrow. While the freedom of people to pursue their interests is noble, is it humane enough? The argument in favour is more wealth provides more opportunities and better solutions to problems. You don’t need a massive government to let this work. Just some simple rules and a good referee.
  • Socialism promotes the idea of more equal outcomes for all. Many would argue that is not practical. Wealth is not infinite, and the socialist system reduces the interest of the people in earning more. A larger government must be in place to choose allocations and to direct traffic.

Create a shared vision

Suppose we said we want a country where given their choices, the people are as well off as possible. Their options might include career, level of education, place of residence, spending habits, respect for others, and dozens more.

That’s not the only possible vision, but at least you can set out the strategic limits and then decide on tactics.

The vision part begins large and may include several distinct fractions once understood.

Suppose the proposed vision was simple. We want everyone to be the best they can be at contributing to the well-being of each of us. A poet contributes, so does an engineer, doctor, or musician. The problem starts to become visible when we discover not everyone values contributions in the same way. Our value allocation depends on our circumstances. Often our momentary circumstances. If I have a heart attack, I will value an emergency room doctor and the EMS crew far more than I would appreciate an engineer working on making better batteries. A year earlier, it might have been the opposite.

The next step is tricky. Based on our infinitely variable understanding of what we value, how can we have a universal system of allocating wealth?

Capitalism follows the idea of price. People who have contributed time, skill, and effort get money to spend for what they want.

Socialism uses a different approach. Someone else allocates at least some of the value you have created.

It is a trying question with no perfect answers.

The strategic search involves many “W” questions.

What do people want? We might not all want opportunity, safety, health and so on in precisely the same proportions, but we all want some of those things.

What should the government supply? Free education might be one from the socialist side. Capitalists might agree for those who have shown ability and who keep up their progress. Those people will contribute more, and that serves us all.

Who should the government help? From the socialist side, everyone. From the capitalist side, anyone who contributes to society and culture. If the system of an artist, a poet, or a philosopher acquiring wealth tilts against them, perhaps subsidies or guaranteed income. The value is clear, but most people don’t know about the value. How should we address that would be a tactical decision.

Should need be an issue? Consider those who are damaged physically, emotionally, or by circumstances they do not control. From the socialist side, yes. From the capitalist side, yes.

Who decides need? From the socialist side, a remote central government sets standards. From the capitalist side, someone or some small group at the local level. People who can assess the situation and address it appropriately. Sometimes, often even, money is not the only need. Neighbourliness is not a value in socialism but exists in capitalism. Think about that.

When should it happen? As needed by the socialists. Help should happen as needed, according to the capitalists, too. They, though, have a further requirement. An effort will go into finding a workable method to reduce or eliminate the need. Socialists seem to like persistent problems; capitalists do not.

The difference

Differences are not so significant as we think. I think it’s fair to say that capitalists are more interested in doing right things and socialists are more interested in doing things right. That difference is not as big as it seems. Doing the right things the right way should not be a stretch goal. Perhaps if the conflicted politicians sat down and were forced to solve that puzzle, we might gain some traction in the next step.

If we had a clear vision, how would we go about implementing it?

Tactics

Tactics are the “How” question, and there are always many ways to address that step. “How” is impossible without a strategic vision and a complete assessment of resources available and needs to be addressed. Without that assessment, it is impossible to establish priorities. Without priorities, any plan is possible.

With a vision, strategic resources, and needs known, it is possible to discover or create methods to address the problems. And at the lowest possible use of resources. What you use in one solution is not available for any other.

Observations

  1. Money solves many problems. I have noticed that wealthier nations have cleaner water, cleaner air, a penchant to deal with carbon emissions, better medical care, and longer lives. It is a point of discussion, often loud that this result has only been the result of government actions. It is likely politicians contribute to that belief. You might want to consider investigating their premise.
  2. Not everything should deserve allocating resources. The question becomes, “At what cost?” Were there alternatives not selected? If so, which? Did anyone audit the outcomes and assess efficacy and efficiency? Where failing methods abandoned? When the problem is substantially solved, does the approach change to maintenance mode?
  3. The people in government want the power and resources to implement their choices. Sometimes they need both. Other times they use that power to narrow the choices. Eventually, the issue is who gets to choose? That seems to be what people are arguing about the most. I, for one, do not elect people for that sole purpose. I want governments to make decisions against a set of priorities arising from a vision, the resource inventory, and the needs of the people. The application of the solution works itself out over a predetermined time scale.
  4. I am willing to listen to or debate the resources and needs and the timeline for implementing solutions, but only in the context of the vision and strategic questions.
  5. I don’t believe any capitalist wants to see people treated harshly. I am reasonably sure they think everyone can and should contribute to the betterment of the whole group. I further think they are not interested in costly solutions to half-understood problems. Their view tends toward the objective.
  6. I don’t believe any socialist wants to see people treated harshly. I am reasonably sure they think everyone can and should contribute to the betterment of the whole group. I further think they are not interested in costly solutions to half-understood problems. Their view tends toward the subjective.

In 1993, in “Is Reality Optional,” Thomas Sowell offered an opinion on the subject. It seems to have more truth than makes me happy. It is especially threatening in that the quotation is nearly 30 years old and conditions are worse, if anything, today.

“Much of the social history of the Western world, over the past three decades, has been a history of replacing what worked with what sounded good.”

If socialists and capitalists presented their vision and their idea of tactics that could resolve the needs within the reasonable limits of available resources, none would choose “what sounds good.”

The moral of the story.

If you start with a vision and strategic understanding of it, the tactics will appear. We should not be arguing “How” questions in the absence of the “W” questions. Any tactic could work without an apparent reason for its implementation. In our political system, choosing seems to enhance the power and prestige of the person making the decision. It should instead solve a problem or seize an opportunity.

That tendency to focus on tactics ahead of strategy is true in government and also found in people selling widgets, financial services, or cars. If the vendor supplies the vision, you are being taken.

Planning works when the vision is clear, the resources are known, the problem carefully defined, and a timeline in place. Ideally, with intermediate measuring points. Presentation of potential tactics and logistics should be the work of the bureaucrats. Vision, strategy, and the choosing of a particular tactic should come from above.

What about political parties?

Under our system, they exist to argue about how to achieve some complex or invisible goal. Notice the tendency to argue methods, not vision.

In a vision-driven system, there could be some argument about the detail and possibly about ideal tactics. Still, I don’t think it would be as theatrical because the attachment to vision would clarify the reasoning. The differences that arise would solve in the context of the image desired.

Political parties that hold a non-negotiable vision not supported by a large segment of the population will disappear.

The takeaway

With no clear vision and assessment of limits, no tactic can be sure to work. It would be better to bet against it working on average.

Choosing a tactic is farther down the list of priorities than people think.

Tactics are easier to understand than vision and strategy, so charlatans begin there and sell their idea as part of the package. That vision is invariably very narrow, and none explain its limits. If you have a “received vision,” you are working in the dark.

If you sell tactics and deliver a consistent but limited vision as part of the process, you must necessarily suppress contrary visions and tactics.

People must develop the ability to think critically. Without that, people can sell you anything merely by creating a vision for you.

You can only spend money once. If you waste it or overspend on one problem, it minimizes your ability to solve others. Governments do not want you to notice that limit. Borrowing doesn’t solve it; it just restricts the future instead of the present.

Recall Herb Stein’s insight. “If a thing cannot go on forever, it will stop.”

Try to understand how continual deficits and borrowing works. The ongoing cost to borrow, higher taxation, and the resulting disincentive to produce wealth create a limit. To assume otherwise requires a belief in people working and risking their capital for little potential gain. People respond to incentives. Higher taxes and regulation are not incentives for producers. Can that go on forever? Higher costs and less revenue seem a difficult forever situation.

Who wins?

Choosing between capitalism and socialism is not an either-or question. The sad reality is you cannot find the best answer until you clarify vision and strategic limits. Think strategy first, then think about tactics.


I help people have more retirement income and larger, more liquid estates.

Call in Canada 705-927-4770, or email don@moneyfyi.com

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