Capitalism vs. Socialism (neither one works)

I believe that the worst enemy our "Free Market Economy" has to face is the "Killer Instinct."  Thinking back to the Adam Smith’s Wealth of Nations plan for the perfect economy, I see that their was some idea of fair play that must have been taken for granted, or assumed to be always present.  The Capitalist idea on it’s own assumes that people will be happier with better things so when new innovations enter the market people will pay more for the added value and lousy goods and services will vanish on their own because people wont desire them.  The losers will work for the winners or find other means of surviving economically.

It certainly would never be the case that the natural looser (in my quickly contrived case) would begin a slander campaign against the competition, or use predatory pricing tactics to strangle the cash-flow of the new entrant in the market, or a long list of other perversions of the fair play system that Adam Smith wrote of and hoped for.  Perhaps this is no place for sarcasm.

The simple fact is our ideal economic system is riddled with such perversions because the human species will never be rid of the killer instinct.  I believe the majority of us either don’t have it or suppress it very well only planning on using it in life or death situations, but some among us use it all the time to ensure victory for themselves at any cost.  It is this particular virus like perversion that will allow the sub-optimal product or service to rise to the top and dominate the market.  During the absence of any potential competitors these juggernauts of industry will price as they please and deliver product as they choose.  I believe that GM had 95% or higher market share at some point in their history near the 70’s-80’s; no surprise that the worst product they ever turned out was in the same period.

It took another entire country’s automotive industry with a far superior product at a lower price for about a decade to push GM down to 75% market share before they started to build great products again.  That was essentially a government intervention, albeit not our government, that caused the market to head back towards Adam Smith’s version.

During that time the American people lost in general, GM won in general.  The single large gain of GM was nowhere near the accumulated loss of value to the American people with respect to the value they would have had if the product produced was the best possible.  This killer instinct and greed gone wild activity in our recent past retarded our nation’s economy.

I rhetorically ask, what kind of ego allows people to retard a nation for their own gain?  People that cant control their own intense desire to dominate for their own personal gain.  People that are just as anti-social as common criminals but had a really good financial start in life, that’s who.

A more recent example is Microsoft.  How many times do you loose your mind at the computer when it won’t work right?  Other operating systems like UNIX, Linux, SunOS, and the Apple gang don’t suffer this type or level of failure.  How much time do you loose and what is it worth?  All attributable to a company selling a substandard product at exorbitant prices unchecked by any government entity for illegal monopoly practices.  Bill Gates gains at our unwilling and many times unknowing expense.

My point is, Capitalism (on its own) cannot work on humans with the laissez-faire policy.  It needs to be checked and intervened with.  Often times political pundits will decry, "let the market forces work," or they will try to equate capitalism with America and our freedoms, but I believe they either haven’t took the time to think about the results of what they are saying, or they are complicit with those despotic leaders of industry that run their business, not just lacking any altruism, but with gross disregard for all of society.

The good news is our government has worked fairly hard to institute barriers to most of the known perversions.

The bad news is the recently past six years or so we have seen the progress of all the anti-trust laws go by the wayside. Thanks Republicans for giving the newest generation the nostalgic economic experience of the Nixon Years.  Thanks to the 2006 Democrats for nothing.  Apparently this is a job for nobody! (see nobody’s job).  I hope I’m starting to do nobody’s job here; please feel free to do nobody’s job too.

Assume for the sake of argument that we had a device that could detect if a person running for a government office or applying for a government job was an honorable, selfless, and altruistic human being that was incapable of any wrongdoing and was also immune to corruptibility.  Also assume that during some prior election we voted overwhelmingly for a proposition allowing the government to own everything.  We would then be in one version of an ideal socialistic state.  The government decides how much of everything we should all get so that life is fair to all.  We all go to work for the same amount of time each day and put in equal effort and get equal rewards.

All this equality is great if humans were all identical or if at least we had a crystal ball to predict the weather or other problems that screw up production of goods and services in one place or deliver an over abundance to other areas.   Some people can’t eat dairy products, others have trouble from some kinds of meat.  Land and weather make it so that special needs exist in one place that don’t in others.  All these minor difficulties with defining equality make it obvious to the citizens at large that fairness and equality are arbitrary decisions at some point and cannot be measured accurately.  In Capitalist economies we use the dollar to reasonably estimate what one product or service is valued as in relation to another, but in Socialism the price mechanism isn’t market determined anymore, so it is not an accurate or consistent measure.  No bureaucracy could be set up to accurately assess this large of a problem and having complete social input would lead to infinite arguments.

So how do you as an individual take care of yourself and your family when faced with all these real inequities?  You stockpile a bit.  You hoard goods or are careful about who gets the time of your services in order to secure more of what you need, more than the person next to you needs it.  The Survival Instinct drives you to ensure that you have what you need plus some for emergencies.  If the government already decided how much everybody would need, and you took extra, then somebody else is going to come up short.  It wouldn’t be an option for the government to decide to make X% extra so that people could hoard equally because their would still be people hoarding at any level of production because somebody always thinks or feels they need more than everyone else.  Besides government decisions to make goods that weren’t needed would be taking man-hours and resources away from production that was needed.

In the left panel, I wrote about how the killer instinct prevents pure Capitalism from working as Adam Smith thought it would with the "invisible hand."  I believe in large numbers of people that there are few with that socially destructive killer instinct, but I believe that in those same large numbers that the Survival Instinct is very prevalent.  Perhaps a majority of any random sample of people will have this self-preservation instinct.  Thus it is not possible for any socialist economy to work on any large scale.  I’m convinced it would not even work properly for groups as small as 1,000 people.

A well regulated capitalist economy is the most ideal thing we can hope for.