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From: welsch@houxu.UUCP
Newsgroups: net.flame
Subject: Some thoughts on Capitalism
Message-ID: <205@houxu.UUCP>
Date: Sat, 24-Sep-83 11:35:41 EDT
Article-I.D.: houxu.205
Posted: Sat Sep 24 11:35:41 1983
Date-Received: Mon, 26-Sep-83 20:36:21 EDT
Organization: Bell Labs, Holmdel NJ
Lines: 67

Here are some opinions to fuel the fires of the "capitalist -
socialist" flames.  

Lets start with the assumption that the "communist" countries
have nothing to nothing to do with socialism and posses what I
would call a "post-feudal industrial" economy. Consider the
communist party members to be the "knights and lords" who have
kingdoms to protect. Consider communist party leader to be the
king and the president to be his "prime minister" who takes care
of domestic concerns. The whole structure is reminiscent of
middle ages. There is hardly any room for movement and the
ruling is absolute. The difference between Russia today and
Russia under the Czar is industrialization. The government is
hasn't changed, except to adapt to industrialization.  I
therefore do not accept examples from the "communist" countries
as being examples of a "socialist" society.

Enough on the tangential arguments on to capitalism and
socialism. Lets talk about capitalism. A definition: Capitalism
is an economic system where the means of production (the product
may be a service) are controlled by individuals; the profits
derived from production are governed by the supply/demand model
of the market place; and individuals act in such a way as to
maximize profit. Pure capitalism is self defeating.

In order for capitalism to survive there must necessarily be a
common currency for people to deal in; there must be a means of
enforcing agreements; and a means of transporting products. The
only way one can have a common currency is to have the means of
the production of currency be controlled by a government. It
is immaterial whether or not a private company actually makes
the money as long as money is regulated by the government.

To move on to prices. They are not determined by the supply and
demand and if they were I claim capitalism would fail. One item
for which there is always a short supply and a high demand for
is "protection." The mafia takes advantage of this in a
primitive way and so does the military in a slightly less crude
fashion. Insurance companies are best at it. The point is the
demand for protection is so high that if protection were left to
private enterprise no one could afford the price.  The solution
is we don't let the price of protection be governed by the
market place and if it was capitalism would fail to survive. 

Finally lets see what happens when individuals act to maximize
profit.  Maximizing involves always investing past profits in
profitable ventures.  Unless the economy is expanding this path
leads to a few people who have large profits who cannot invest
anymore.  They can no longer maximize profits and so they simply
rule the economy.  No one else is allowed to make a profit.  The
solution is simple, regulate the size of a market that
individuals are allowed to have so that they are not allowed to
invest further.

I have argued that in order for capitalism to survive some
services and products must be directly controlled by government
and further the degree to which an individual can control a
market segment must be controlled by government.  Control of
production and/or services by government is socialism.  I
conclude that capitalism cannot survive without socialism.  It
is interesting to note that the way capitalism traditionally
survives tough times is through "socialist" reforms.  Most
notable were reforms of the great depression, when we could very
easily have been swayed to another economic system. 

						Larry Welsch
						houxu!welsch