Tuesday, August 30, 2011

Capitalism and Socialism


“There are two ways for an individual to gain wealth: create it, or take it from someone else who has created it.  Capitalism is a way of organizing economic activity where individuals are free to create wealth, but not to take wealth by means of force or coercion.” ( From The WKU Center for the Study of Capitalism link)


“generally involves the argument that economic production has an essential social as distinct from individual element, and this requires public investment and justifies a public share in and distribution of rewards.” from The Blackwell Encyclopedia of Political Thought (Oxford, 1987)   in Dictionary of Theories, Jenifer Bothamley Visible Ink Press,2002)

Two Patterns of Socialism: Communism and Fascism

“The Russian pattern of socialism is purely bureaucratic. All economic enterprises are departments of the government, like the administration of the army or the postal system. Every plant, shop, or farm stands in the same relation to the superior central organization as does a post office to the office of the postmaster general.”

 “The German pattern differs from the Russian one in that it (seemingly and nominally) maintains private ownership of the means of production and keeps the appearance of ordinary prices, wages, and markets. There are, however, no longer entrepreneurs but only shop managers (Betriebsfiihrer). These shop managers do the buying and selling, pay the workers, contract debts, and pay interest and amortization.

There is no labor market; wages and salaries are fixed by the government. The government tells the shop managers what and how to produce, at what prices and from whom to buy, at what prices and to whom to sell. The government decrees to whom and under what terms the capitalists must entrust their funds and where and at what wages laborers must work. Market exchange is only a sham. All the prices, wages, and interest rates are fixed by the central authority. They are prices, wages, and interest rates in appearance only; in reality they are merely determinations of quantity relations in the government's orders. The government, not the consumers, directs production. “

This is socialism in the outward guise of capitalism. Some labels of capitalistic market economy are retained but they mean something entirely different from what they mean in a genuine market economy.”

(from OMNIPOTENT GOVERNMENT The Rise of the Total State and Total War. Ludwig von Mises, Yale University Press 1944 p56 link )