While almost everyone in today’s society despises the Communist system, very few people seem to be able to say why. People talk about its incompatibilities with human nature and liberty, but this is subjective and is often only validated using fancy, ideological wordplay, which masquerades as depth of thought. The same wordplay can be used to argue that ‘man is debilitated by the unnatural shackles of a class oriented society’, or something along those lines. Many of Communism's critiques are most likely true, but are subjective none-the-less. I believe there are fatal, mathematical flaws inherent in socialism, contrary to the common myth that Communism is a great idea, but it just can't work. It can't work, and its failure can be explained.
Communism, along with Manorilism and Mercantilism is based on the understanding thatwealth is finite, and that prosperity is dependent upon a favourable balance of trade. While earlier systems, based on this flawed premise, sought to construct, for themselves, a favourable balance of trade, Communism is built on the belief that others seek such an advantage, and that commerce should be harnessed by the state to create a sustainable, equal balance of trade.
Prior to Adam Smith, iron-clad import duties, major industry propped up by the government through infant industry protection and exclusive business rights, and often, centralized political authority, all culminated in an imputes for territorial expansion, as the market is confined by borders.
When goods can't cross borders, after all, soldiers will.
This only benefited self-serving autocrats.
Then comes Adam Smith, David Hume, and the physiocrates, the first real analytical economists that I know of. They wrote that wealth was not some concrete, finite resource; that everyone could stand to become richer. When the government does not restrict the market through tariffs or domestic, self-serving regulation, it becomes wider. A wider market means that there are more opportunities for business, as foreign consumers and helpful imports become more accessible. Capital flows then, are increased; people buy for cheap what they need, and sell to others their finished product at an increased rate, people can specialize in one field or another because there is enough wealth in the market, and enough needed goods, to support business ventures. A more substantial consumer base and more competition resulting in faster production, as seen in the industrial revolution, means that productive enterprises cannot simply hope to toss their produce into a limitless vacuum of a market because the market becomes bloated, they need to further specialize. People are needed to market products, to provide services, to delegate labour and resources, state-paid education becomes almost necessary to fuel industry and *shazzam*, you have middle class people talking about all this over the internet, when only centuries before their ancestors were probably struggling subsistence farmers (who's goods were useless, when everyone else was doing it after all).
If I may, I’d like to use a long winded example to demonstrate how wealth is not concrete. Our example takes place in a village of farmers, at first, almost every farmer grows wheat. Their wheat cannot be exchanged because it is worthless on the market, where everyone else has wheat already. Some of the farmers had resolved to us glass beads as a currency, but of course, their beads were useless as they represented a valueless commodity. One farmer discovers how to get honey from bees. Some of the other wheat farmers discover that their wheat is enhanced by the honey, and the bee farmer knows that he needs the wheat to sustain himself. Alas, the bee farmer cannot generate enough wheat to survive, so he reverts to just growing wheat. Some of the farmers go to other villages, where honey is sold, and steal it at gunpoint; erecting massive walls around their own village to prevent the same from happening to them. Eventually, a road is built between our village and another village that grows mostly staple foods, and the bee farmer can now sell enough honey to make a living and enjoy many diverse goods. The wheat farmers, enticed by the variety of the crops from the village down the road, sell wheat for spices and garlic and onions and other vegetables. Some farmers stop farming all together and build service stations along the road. The glass beads now are useful because they represent wanted items, and some people make a go at just collecting them and trading them for foods. The villagers decide to tear down their village wall, as maintaining it proves more costly than simply exchanging goods, and along with other nearby villages, they engage in commerce which adds value to all of their crops and beads.
Now in a real life example, the success of these farmers is passed on to you and I in the form of goods and employment opportunities. Also, now that farmers are profiting from each others labour, there is an incentive for innovation. The technology that spurred the industrial revolution wouldn’t have happened if, like with the bee farmer, there was not a wide enough market for steel and textile products.
The flaw with Communism is that it disregards these phenomena, and treats wealth as a single pie that needs to be divided. In reality, Capitalism increases the size of the pie exponentially, while doing an okay job of dividing it (we've seen, since the demise of Mercantilism, a decrease in the extreme poor from almost one hundred percent, to around twenty; capitalism cannot function without a consumer base after all). Perfect Communism divides the pie perfectly, but the size of the pie is depreciated until all that is left is the crust.
And that is what happens with communism, wealth disappears, there are shortages in the markets (governments are not omnipotent); employment often becomes an obligation of the state, not a representation of actual capital gain; see China’s Iron Rice Bowl, or the old Soviet workers joke, “we pretend to work, and the government pretends to pay us”. Therefore, in an effort to both meet basic needs and employ the masses , the government becomes inefficient, labour becomes less diverse and therefore less valuable...and to sustain this model of employment without a diverse consumer base requires a mass, artificial destruction of produce in order to justify this mass employment (in 1984 this is the entire reason for warfare).
Prudently regulated capitalism creates relatively stable, immense capital flows which provide people with varying forms of valuable employment. The invisible hand may sometimes need encouragement, which is where Keynes comes in, but socialism attempts to hack it off entirely.
Communisms absolute, zero-sum view of capital is understandable; economics was relatively new during Marx’s life, and Mercantilist policies still wreaked havoc. Many people confuse modern Capitalism with Mercantilism, when the two could not be more antithetical to each other. And the idea that everyone can become richer is very counter intuitive, which often drives civilization to the wrong conclusions and disastrous outcomes.
Redistribution aside, another common cause of the Communist is the removal of the "bourgeoisie", the owners of large business. Many non-communists even, in lieu of the recent banking catastrophe, support income restrictions. Anarcho-socialists believe that industry can be governed solely by the industrious, the working class. These people should ask themselves why it is that the investors behind these corporations opt to pay CEO's so much, often more then they themselves profit from the particular investment. It's not out of the goodness of their own hearts. Owners don't want to pay someone beyond their productivity, and the same applies to CEO's and Executives. If a CEO makes one hundred-million dollars a year, he is expected to save the company billions, a profit that is passed on to the employees through continued employment and perhaps, higher wages. Investors simply would not, well, invest in these people if industry were so easily controlled that the workers themselves could do it. In order to strengthen the division of labour, for industries to intertwine in a way that maximizes employment opportunities for the working class, there needs to be an efficient delegation of resources.
Having worked in a poultry plant, at the receiving dock for a tiny maintenance department for a small poultry plant, I understand the kind of complex relationships between even small companies that are necessary. In order to oversee these relationships, even for one department, requires management, and to make sure that different departments themselves interact coherently requires further management.
If the managerial of the poultry plant were removed, eventually another would ascend out of necessity. All too often, this new bourgeoisies has direct legal authority; they may pretend to be a party for the people, but an autonomous entity with a monopoly on power cannot be held accountable by a middle class already financially devastated by impediments to business, and consequentially, dependent upon a separate authority.
A good example of this is Hollywood. Carpenters who help construct movie sets may be embittered by the enormous salaries of famous actors and actresses, but the fact remains, these actors and actresses are paid enormous salaries because they generate enormous profit, which benefits the carpenters.
Another proposition is that currency should be abolished. Workers at the poultry plant where I work produce poultry of course, they then sell it to the corporate heads for, say, thirty dollars an hour, who then sell it on the market for fifty dollars an hour. If currency were abolished, this would remove the need for the thieving middle man.
The same poultry plant example can easily explain the flaw in this model. When purchasing the various maintenance related services and parts, often costing in the thousands of dollars, is the plant supposed to do this with Tandoori flavoured chicken wings? That's a lot of chicken wings, in case you don't know. Not to mention the couriers, their trucks would be too overloaded with chicken to fit their cargo. Even if the plant could miraculously sustain production, how would it pay its workers? A silo of chicken that would be used to pay off our bills? I would certainly not be better off producing poultry products myself. If the economy recalibrated towards a simplified, pre-Smith model, you can say good bye to variety, innovation, and decent wages.
I have to conclude that Capitalism, moreover the modern "Keynes at home, Smith abroad” variant, is the only mathematically coherent economic system. The failure of Communism can't be satisfactorily explained through simple, presumptuous insights into the human condition as is so often attempted. It can be logically refuted however because of a set of inherent, and fatal, mathematical errors.
For most of human history, the vast majority, almost ninety nine percent of the human race, lived in extreme poverty. In just two hundred years of on and off free trade and free enterprise, that figure has been pulled down to twenty percent, ending in doing so ten thousand years of historical certitude. When centralized, self-interested governments attempt to coerce commerce into localizing so as to create a favourable balance of trade, not only does the economy stagnate, but a simplified division of labour makes it easier for government to govern. The resulting atrocities lend credence to Thomas Paine's belief that "the best government is that which governs least". The imaginary lines that crisscross our world are the relics of an old age of economic insanity, near incessant warfare and political corruption and oppression; even international socialism will inevitably lend impotence to these arbitrary barriers, as government would centralize in different centers of production. We are living in the most peaceful* and (were, until last October, living in) the most prosperous period in human history. I fear that a revival in economic nationalism would inevitably lead to a resurrection of all other forms of national, not individual competition. Capitalisms greatest triumph would be, if it does happen, the complete dissolution of the nation-state phenomena, which is already irreconcilable with economic realities. Communisms greatest flaw is that, despite its international intentions, it cannot feasibly act on an international level if the powers of the invisible hand are neglected; the economy would recalibrate to a local level despite any legislative attempts to encourage the opposite, much to the detriment of the peace, the prosperity being of man and any sort of environmental stability.
Maximizing capital flows, sometimes through tactful government encouragement, is the cheapest and most effective way of multiplying wealth. As Smith theorized, a larger market, both geographically and financially, will create wealth, which of course expands the market opportunities for business. Once this cyclical model is established, it can be projected forward indefinitely, while pre-Smith societies were mainly Malthusian; with flat growth rates, chronic poverty, near universal under nutrition and snail like innovation. Secondly, a division of labour creates a division of interest, making it near impossible to rule by decree; the uprising of the exploding middle class in Asia will, like it had in the West, challenge their centralized government, which is incapable of ruling over such a complex society.
• This according to Steven Pinker in his book, “The Myth of Violence”, which was very well and widely received.
Communism, along with Manorilism and Mercantilism is based on the understanding thatwealth is finite, and that prosperity is dependent upon a favourable balance of trade. While earlier systems, based on this flawed premise, sought to construct, for themselves, a favourable balance of trade, Communism is built on the belief that others seek such an advantage, and that commerce should be harnessed by the state to create a sustainable, equal balance of trade.
Prior to Adam Smith, iron-clad import duties, major industry propped up by the government through infant industry protection and exclusive business rights, and often, centralized political authority, all culminated in an imputes for territorial expansion, as the market is confined by borders.
When goods can't cross borders, after all, soldiers will.
This only benefited self-serving autocrats.
Then comes Adam Smith, David Hume, and the physiocrates, the first real analytical economists that I know of. They wrote that wealth was not some concrete, finite resource; that everyone could stand to become richer. When the government does not restrict the market through tariffs or domestic, self-serving regulation, it becomes wider. A wider market means that there are more opportunities for business, as foreign consumers and helpful imports become more accessible. Capital flows then, are increased; people buy for cheap what they need, and sell to others their finished product at an increased rate, people can specialize in one field or another because there is enough wealth in the market, and enough needed goods, to support business ventures. A more substantial consumer base and more competition resulting in faster production, as seen in the industrial revolution, means that productive enterprises cannot simply hope to toss their produce into a limitless vacuum of a market because the market becomes bloated, they need to further specialize. People are needed to market products, to provide services, to delegate labour and resources, state-paid education becomes almost necessary to fuel industry and *shazzam*, you have middle class people talking about all this over the internet, when only centuries before their ancestors were probably struggling subsistence farmers (who's goods were useless, when everyone else was doing it after all).
If I may, I’d like to use a long winded example to demonstrate how wealth is not concrete. Our example takes place in a village of farmers, at first, almost every farmer grows wheat. Their wheat cannot be exchanged because it is worthless on the market, where everyone else has wheat already. Some of the farmers had resolved to us glass beads as a currency, but of course, their beads were useless as they represented a valueless commodity. One farmer discovers how to get honey from bees. Some of the other wheat farmers discover that their wheat is enhanced by the honey, and the bee farmer knows that he needs the wheat to sustain himself. Alas, the bee farmer cannot generate enough wheat to survive, so he reverts to just growing wheat. Some of the farmers go to other villages, where honey is sold, and steal it at gunpoint; erecting massive walls around their own village to prevent the same from happening to them. Eventually, a road is built between our village and another village that grows mostly staple foods, and the bee farmer can now sell enough honey to make a living and enjoy many diverse goods. The wheat farmers, enticed by the variety of the crops from the village down the road, sell wheat for spices and garlic and onions and other vegetables. Some farmers stop farming all together and build service stations along the road. The glass beads now are useful because they represent wanted items, and some people make a go at just collecting them and trading them for foods. The villagers decide to tear down their village wall, as maintaining it proves more costly than simply exchanging goods, and along with other nearby villages, they engage in commerce which adds value to all of their crops and beads.
Now in a real life example, the success of these farmers is passed on to you and I in the form of goods and employment opportunities. Also, now that farmers are profiting from each others labour, there is an incentive for innovation. The technology that spurred the industrial revolution wouldn’t have happened if, like with the bee farmer, there was not a wide enough market for steel and textile products.
The flaw with Communism is that it disregards these phenomena, and treats wealth as a single pie that needs to be divided. In reality, Capitalism increases the size of the pie exponentially, while doing an okay job of dividing it (we've seen, since the demise of Mercantilism, a decrease in the extreme poor from almost one hundred percent, to around twenty; capitalism cannot function without a consumer base after all). Perfect Communism divides the pie perfectly, but the size of the pie is depreciated until all that is left is the crust.
And that is what happens with communism, wealth disappears, there are shortages in the markets (governments are not omnipotent); employment often becomes an obligation of the state, not a representation of actual capital gain; see China’s Iron Rice Bowl, or the old Soviet workers joke, “we pretend to work, and the government pretends to pay us”. Therefore, in an effort to both meet basic needs and employ the masses , the government becomes inefficient, labour becomes less diverse and therefore less valuable...and to sustain this model of employment without a diverse consumer base requires a mass, artificial destruction of produce in order to justify this mass employment (in 1984 this is the entire reason for warfare).
Prudently regulated capitalism creates relatively stable, immense capital flows which provide people with varying forms of valuable employment. The invisible hand may sometimes need encouragement, which is where Keynes comes in, but socialism attempts to hack it off entirely.
Communisms absolute, zero-sum view of capital is understandable; economics was relatively new during Marx’s life, and Mercantilist policies still wreaked havoc. Many people confuse modern Capitalism with Mercantilism, when the two could not be more antithetical to each other. And the idea that everyone can become richer is very counter intuitive, which often drives civilization to the wrong conclusions and disastrous outcomes.
Redistribution aside, another common cause of the Communist is the removal of the "bourgeoisie", the owners of large business. Many non-communists even, in lieu of the recent banking catastrophe, support income restrictions. Anarcho-socialists believe that industry can be governed solely by the industrious, the working class. These people should ask themselves why it is that the investors behind these corporations opt to pay CEO's so much, often more then they themselves profit from the particular investment. It's not out of the goodness of their own hearts. Owners don't want to pay someone beyond their productivity, and the same applies to CEO's and Executives. If a CEO makes one hundred-million dollars a year, he is expected to save the company billions, a profit that is passed on to the employees through continued employment and perhaps, higher wages. Investors simply would not, well, invest in these people if industry were so easily controlled that the workers themselves could do it. In order to strengthen the division of labour, for industries to intertwine in a way that maximizes employment opportunities for the working class, there needs to be an efficient delegation of resources.
Having worked in a poultry plant, at the receiving dock for a tiny maintenance department for a small poultry plant, I understand the kind of complex relationships between even small companies that are necessary. In order to oversee these relationships, even for one department, requires management, and to make sure that different departments themselves interact coherently requires further management.
If the managerial of the poultry plant were removed, eventually another would ascend out of necessity. All too often, this new bourgeoisies has direct legal authority; they may pretend to be a party for the people, but an autonomous entity with a monopoly on power cannot be held accountable by a middle class already financially devastated by impediments to business, and consequentially, dependent upon a separate authority.
A good example of this is Hollywood. Carpenters who help construct movie sets may be embittered by the enormous salaries of famous actors and actresses, but the fact remains, these actors and actresses are paid enormous salaries because they generate enormous profit, which benefits the carpenters.
Another proposition is that currency should be abolished. Workers at the poultry plant where I work produce poultry of course, they then sell it to the corporate heads for, say, thirty dollars an hour, who then sell it on the market for fifty dollars an hour. If currency were abolished, this would remove the need for the thieving middle man.
The same poultry plant example can easily explain the flaw in this model. When purchasing the various maintenance related services and parts, often costing in the thousands of dollars, is the plant supposed to do this with Tandoori flavoured chicken wings? That's a lot of chicken wings, in case you don't know. Not to mention the couriers, their trucks would be too overloaded with chicken to fit their cargo. Even if the plant could miraculously sustain production, how would it pay its workers? A silo of chicken that would be used to pay off our bills? I would certainly not be better off producing poultry products myself. If the economy recalibrated towards a simplified, pre-Smith model, you can say good bye to variety, innovation, and decent wages.
I have to conclude that Capitalism, moreover the modern "Keynes at home, Smith abroad” variant, is the only mathematically coherent economic system. The failure of Communism can't be satisfactorily explained through simple, presumptuous insights into the human condition as is so often attempted. It can be logically refuted however because of a set of inherent, and fatal, mathematical errors.
For most of human history, the vast majority, almost ninety nine percent of the human race, lived in extreme poverty. In just two hundred years of on and off free trade and free enterprise, that figure has been pulled down to twenty percent, ending in doing so ten thousand years of historical certitude. When centralized, self-interested governments attempt to coerce commerce into localizing so as to create a favourable balance of trade, not only does the economy stagnate, but a simplified division of labour makes it easier for government to govern. The resulting atrocities lend credence to Thomas Paine's belief that "the best government is that which governs least". The imaginary lines that crisscross our world are the relics of an old age of economic insanity, near incessant warfare and political corruption and oppression; even international socialism will inevitably lend impotence to these arbitrary barriers, as government would centralize in different centers of production. We are living in the most peaceful* and (were, until last October, living in) the most prosperous period in human history. I fear that a revival in economic nationalism would inevitably lead to a resurrection of all other forms of national, not individual competition. Capitalisms greatest triumph would be, if it does happen, the complete dissolution of the nation-state phenomena, which is already irreconcilable with economic realities. Communisms greatest flaw is that, despite its international intentions, it cannot feasibly act on an international level if the powers of the invisible hand are neglected; the economy would recalibrate to a local level despite any legislative attempts to encourage the opposite, much to the detriment of the peace, the prosperity being of man and any sort of environmental stability.
Maximizing capital flows, sometimes through tactful government encouragement, is the cheapest and most effective way of multiplying wealth. As Smith theorized, a larger market, both geographically and financially, will create wealth, which of course expands the market opportunities for business. Once this cyclical model is established, it can be projected forward indefinitely, while pre-Smith societies were mainly Malthusian; with flat growth rates, chronic poverty, near universal under nutrition and snail like innovation. Secondly, a division of labour creates a division of interest, making it near impossible to rule by decree; the uprising of the exploding middle class in Asia will, like it had in the West, challenge their centralized government, which is incapable of ruling over such a complex society.
• This according to Steven Pinker in his book, “The Myth of Violence”, which was very well and widely received.
