Howdy, gang! Glad to have you back for another round of literary discussion on the types of economic theory that exist in the world around us. It’s a constant struggle to really, truly define our economy as being something definitive, but as you hopefully learned last week, we tend to lean towards a more Keynesian economic model with a small bit of Classical theory thrown in here and there. The spirit of Adam Smith thrives in the minds of millions, but Keynes has made sure that thick roots keep us from ever having a chance at a free and unfettered market again.
As mentioned in my last blog, it’s been a long, long time since we could really claim to have a “free market economy” because of certain economic, fiscal, and monetary policies that have been created. Once we allowed the Federal Reserve to have a say in our monetary policy it really changed the future possibilities we had access to. Combine that with leaving the “gold standard” and then allowing dozens of “stimulus” policies to take root and we’ve pretty much said “buh-bye” to any semblance of a free market economy garnered by Classical theory. Such is life, as they say! Such is life.
As of this writing (2017), there seems to be a growing approval for what many like to call “socialism”. I put that in quotations because I truly believe that a large majority of socialism proponents don’t have a clue about what it really means to be a socialist OR what America would look like under a socialist rule. The “meat and potatoes” of socialism eludes most people and instead, they’re enveloped by the “romance” of the idea rather than the realities it presents.
Before I delve into socialism, allow me to explain the theory presented by a man who lived from 1818 to 1883 and presented the world with his ideals, which still flounder through the minds of many today. His name was Karl Marx and he was a spectator of the Industrial Revolution. He sought to unravel modern industrial capitalism and theorized that every commodity (something produced for sale and consumption) has both a use value and an exchange value. For example, the computer or device that you are using to read this has a use value (you’re able to touch it, use it, learn from it, conduct business on it, etc…) and a monetary value (you had to spend money in order to secure its use). Marx used this obvious theory to argue that labor was also a commodity and was integral to the growth of capitalism.
The laborer’s use value is the ability to create and produce commodities and in return the laborer is provided with a wage, which (ideally) meets his/her basic costs of living. I say “ideally” because there are some jobs that are labeled as “minimum wage”, which is not an accurate label since the obvious minimum wage is literally ZERO…but I digress. The “minimum wage” jobs in our economy are not meant to sustain a family of four. Heck, it’s really even too much to ask a minimum wage job to sustain a single individual! These types of jobs are meant to help a specific demographic obtain experience and value through the work involved. The employee then uses that experience to gain access to higher paying jobs in the near future. I don’t understand why this is such a hard concept for so many people to understand?! Anyways…back to Marx!
Combine the use value created by the laborer and the machines (technology) owned by the employer and you now have commodities that have a worth more than the laborer’s exchange value, which in his mind (Marx), created a surplus…but in the minds of business people, created profits. Marx argued that the creation of profits equaled negative “exploitation” of the labor force that was used to create the profits. If this “exploitation” continued at the expense of the laborers then this would lead to perpetual profits and an expansion of capitalism.
It was Marx’s idea of this “exploitation” combined with perpetual profiteering that led him to believe that within such a system, the workers would eventually be antagonized into revolution, whereby they would seize control of the means of production (the actual machines, technology, factories, etc…) and establish a socialist economy. Straight from the horse’s mouth, here is a direct quote from the writings of Karl Marx: “In one word, for exploitation, veiled by religious and political illusions, capitalism has substituted naked, shameless, direct, brutal, exploitation.”
I have argued in the past that modern-day progressivism (and the American version of socialism) is equal to Marxism without the revolution. You’ll hear some key words during debates with modern-day progressives that gives it away. Words and phrases such as “for the greater good” and “social justice” are staples in the lexicon of socialism. We have never been a country hell bent on removing private property rights from the individual, but you’d have to be living under a rock to not notice the shift in a high percentage of the American electorate who are favoring these kinds of ideas. Socialism doesn’t have a very good track record throughout history, but a devout socialist would tell you that it’s because the “right people” were not in charge during all of those failed instances. Their arguments are convincing to some…especially the young and impressionable.
I do NOT begrudge anyone’s favorable opinion of socialism. I will, however, fight to my dying breath to educate and debate as many people as I can about the tenets of central planning because it does frighten me as an ardent capitalist. I will also admit to the many faults of capitalism, but will wait until next week to expound on that. In the meantime, keep working hard, put your shoulder to the wheel, and get it done!
Be good. Do good. Know good.
Columbus, Indiana (Follow me on Twitter: @KnowGoodThings)