Albert Einstein talks about socialism

[Atomoa]

http://monthlyreview.org/2009/05/01/why-socialism

...written in 1949. More true than when written it seems.

Let us first consider the question from the point of view of scientific knowledge. It might appear that there are no essential methodological differences between astronomy and economics: scientists in both fields attempt to discover laws of general acceptability for a circumscribed group of phenomena in order to make the interconnection of these phenomena as clearly understandable as possible. But in reality such methodological differences do exist. The discovery of general laws in the field of economics is made difficult by the circumstance that observed economic phenomena are often affected by many factors which are very hard to evaluate separately. In addition, the experience which has accumulated since the beginning of the so-called civilized period of human history has—as is well known—been largely influenced and limited by causes which are by no means exclusively economic in nature. For example, most of the major states of history owed their existence to conquest. The conquering peoples established themselves, legally and economically, as the privileged class of people country. They seized for themselves a monopoly of the land ownership and appointed a priesthood from among their own ranks. The priests, in control of education, made the class division of society into a permanent institution and created a system of values by which the people were thenceforth, to a large extent unconsciously, guided in their social behavior.

But historic tradition is, so to speak, of yesterday; nowhere have we really overcome what Thorstein Veblen called “the predatory phase” of human development. The observable economic facts belong to that phase and even such laws as we can derive from them are not applicable to other phases. Since the real purpose of socialism is precisely to overcome and advance beyond the predatory phase of human development, economic science in its present state can throw little light on the socialist society of the future.

Second, socialism is directed towards a social-ethical end. Science, however, cannot create ends and, even less, instill them in human beings; science, at most, can supply the means by which to attain certain ends. But the ends themselves are conceived by personalities with lofty ethical ideals and—if these ends are not stillborn, but vital and vigorous—are adopted and carried forward by those many human beings who, half unconsciously, determine the slow evolution of society.

For the sake of simplicity, in the discussion that follows I shall call “workers” all those who do not share in the ownership of the means of production—although this does not quite correspond to the customary use of the term. The owner of the means of production is in a position to purchase the labor power of the worker. By using the means of production, the worker produces new goods which become the property of the capitalist. The essential point about this process is the relation between what the worker produces and what he is paid, both measured in terms of real value. Insofar as the labor contract is “free,” what the worker receives is determined not by the real value of the goods he produces, but by his minimum needs and by the capitalists’ requirements for labor power in relation to the number of workers competing for jobs. It is important to understand that even in theory the payment of the worker is not determined by the value of his product.

Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.

Production is carried on for profit, not for use. There is no provision that all those able and willing to work will always be in a position to find employment; an “army of unemployed” almost always exists. The worker is constantly in fear of losing his job. Since unemployed and poorly paid workers do not provide a profitable market, the production of consumers’ goods is restricted, and great hardship is the consequence. Technological progress frequently results in more unemployment rather than in an easing of the burden of work for all. The profit motive, in conjunction with competition among capitalists, is responsible for an instability in the accumulation and utilization of capital which leads to increasingly severe depressions. Unlimited competition leads to a huge waste of labor, and to that crippling of the social consciousness of individuals which I mentioned before.

This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career.

I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child. The education of the individual, in addition to promoting his own innate abilities, would attempt to develop in him a sense of responsibility for his fellow men in place of the glorification of power and success in our present society.

[Atomoa]

How many human-man-hours and billions of dollars went into convincing humanity that Coca-Cola is better than Pepsi - or vice versa?

Pure waste.

[WhenWhatWho]

How many human-man-hours and billions of dollars went into convincing humanity that Coca-Cola is better than Pepsi - or vice versa?

Pure waste.

It's their money, as a private entreprise, to 'waste' their money as they see fit. Not yours, mine or anyone else's (except the shareholders).

None of your business.

[Atomoa]

Global government debt is about 53 trillion.

None of our business?

The conquering peoples established themselves, legally and economically, as the privileged class of people country. They seized for themselves a monopoly of the land ownership and appointed a priesthood from among their own ranks. The priests, in control of education, made the class division of society into a permanent institution and created a system of values by which the people were thenceforth, to a large extent unconsciously, guided in their social behavior.

We all share this planet and it's getting smaller by the second.

[WhenWhatWho]

removed.

[maryjane48]

It's their money, as a private entreprise, to 'waste' their money as they see fit. Not yours, mine or anyone else's (except the shareholders).

None of your business.

oh really? and how much in kickbacks and dirty deals happen with these so called corporations? you do remember wall street and 2008 right?

[hobbyguy]

Pretty complex topic.

Einstein makes some good points, but there is one critical part of the topic that he does not address. It relates to personal freedom and to actual reward for production.

On a micro level, most of us have seen situations where we worked along side Sammy Slacker. Or Ingrid Incompetent. Or worse, Sally Incompetent-Slacker.

Money is supposed to be a proxy for the inherent value of goods/services produced. If you produce 10 widgets, and Sammy Slacker produces 4, then the total is 14. Under a full blown socialist extreme - communist - system, you each get paid 7. After a while, It is highly likely that either you will give up and move on, or you will give up and drop your production to Sammy's level.

That is an inherent problem with unionism that unions generally ignore, and arguably is at the base of the decline of unionism. In a capitalist system, there is a counterbalance to that problem - provided that there is competent management (unfortunately that is all too often not the case).

In a communist system, that counterbalance is much weaker. Management tools are much weaker, and the options to move on, which in a capitalist system means moving from competitor A to competitor B, are much fewer - if possible at all.

However, in a capitalist system, if the supervisory management and/or yourself manage to get Sammy slacker to raise his production to 10, the tendency has become for the pay to stay the same at 7, with ALL of the difference (6) going to the possessor of the capital. And that's where the capitalist system has gone wrong.

The other subtlety not addressed in his thinking, and this may not have been as readily apparent at the time, is the difference between active and passive capital.

If capital generated (a proxy for excess production) is primarily put to use in advancing the society, then all is OK. That is a situation where indeed "a rising tide floats all boats". If capital generated instead becomes "passive", that is it passes into dormancy in the hands of a few (funding personal excess etc.), then "a rising tide floats only a few boats" and all is not OK.

The power of "western democratic capitalism" was that it generally directed excess production (capital) into improving the society. Things like Eisenhower building the interstate highway system and W.A.C. Bennett building BC Hydro. Within that scenario, the competent and productive got rewarded on a personal level, and as productivity (a measure of excess production - capital generated) rose so did the rewards for everyone - the standard of living went up.

Unfortunately, that situation has changed - a lot. We now live in a society where the majority of capital (excess production) is immediately transferred into the passive capital column. Symptoms of this: 1% of the population own 38%+ of all stocks. Income inequality is rising. Corporations have become massive, country sized organizations, with the attendant Geo-political power.

What changed it? We went from a democratic system that recognized that neither communism (the extreme of socialism) nor laissez-faire corporatist capitalism (the extreme of capitalism) is workable. The checks and balances that kept us away from either were removed. The simplest one being being very high top personal income tax rates. Another has been the destruction of anti-trust laws. These items have been exacerbated by the encouragement of passive capital through various "tax exemptions and deductions" that remove the bulk of taxation from passive capital - resulting in the situation where Warren Buffet pays a lower tax rate than his secretary.

When did it happen? All graphs showing divergence between rising productivity and real wage growth traces back to about 1980. Sorry fans of Ronald Reagan and Margaret Thatcher and Brian Mulroney (et al) - but that's where the problem has it's roots.

Why did it happen? Simple enough, OPEC happened. OPEC was the justifiable response to exploitation, and the price jump was going to mean that western democracies were no longer going to be able to have cheap oil. Politicians "ran for cover" and flailed for solution to the insolvable. Reality said that the citizens of western democracies were going to see a downward adjustment in their standard of living. Rather than follow "free market" principles, and realities, we had simplistic nonsense peddled - like "government is the problem" and "supply side economics" and "lower taxes will generate MORE government revenue" and "income redistribution is bad" - and worst of all, so called "free trade" (a euphemism for libertarian trade). And away went all the government controls on the economy that redirected excess production back into the society.

Unfortunately, with that went the fundamentals of democracy. We are now functionally living in an oligarchy.

Communism, the extreme of socialism has failed everywhere it has been tried. China only survives as a "communist" country because they have abandoned communist economics.

Similarly, the extreme of capitalism is failing more and more of the citizenry, and that really shows up in places like Greece.

If you look at the country that scores the highest in the Legatum Prosperity Index http://nortonsafe.search.ask.com/web?q=Legatum%20index&o=15527&prt=NIS&chn=retail&geo=CA&ver=21&locale=en_CA&tpr=111 the consistent top performer is Norway, a country that melds capitalism with socialism in a democracy. Canada does well at 3rd place, well ahead of the US at 11th over. Canada is 4th economically (the US has fallen to 24th due to rapidly growing income inequality etc.). Canada has fallen to 8th in terms of governance and 16th in terms of entrepreneurship and economic opportunity (both troubling signs).

The strongest factual arguments are for a centrist position that takes the best from socialist positions and the best from capitalist positions. The extremes of either are failing or failed, both leading to essentially an oligarchy, but from different directions. I am reminded of the rising prosperity of British Columbians under W.A.C. Bennett, whose policy positions (like including dental care in MSP - which never happened, "nationalizing BC Hydro etc) would make him way too far left for today's so called "free market" parties.

What is really clear is that the "supply side" economic rhetoric coming of the US (which leads to so called "free" trade) is factually not in the interests of the majority of the citizenry.

The best results come from a democratic government that assumes the responsibility for determining when, how and where 'free enterprise" will operate, and when it is in the interest of the country to have a state owned enterprise. That's how Norway got to the top - think Statoil as a generator of capital to pay for social programs.

That makes sense. Two of the least democratic organization types out there? Die hard communist parties, and corporations. Democracy is the key - a mechanism for benefiting the highest proportion of the citizenry. Lose that, and you lose everything.

The arguments about which is better, capitalism or communism (extreme socialism) are a red herring.

[Captain Awesome]

If we as a society didn`t have to chase profits, we'd probably cure cancer by now and established bases on the moon. If people didn't focus so much on consumerism and getting latest and greatest, everybody would be able to retire at 40 and enjoy life while young.

[hobbyguy]

CA - that is a good point. And really, if we could get our politicians on board with using other measures than stupid GDP, like say the OECD "better life index" or the "Legatum prosperity index", then a lot of issues get resolved.

Quality over quantity.

[WTTG]

Neil Postman talks about the modern capitalist ideology circa 1985 in his book, Amusing Ourselves to Death.

. . .

By bringing together in compact form all of the arts of show business – music, drama, imagery, humor, celebrity – the television commercial has mounted the most serious assault on capitalist ideology since the publication of Das Kapital. To understand why, we must remind ourselves that capitalism, like science and liberal democracy, was an outgrowth of the Enlightenment. Its principal theorists, even its most prosperous practitioners, believed capitalism to be based on the idea that both buyer and seller are sufficiently mature, well informed and reasonable to engage in transactions of mutual self-interest. If greed was taken to be the fuel of the capitalist engine, then surely rationality was the driver. The theory states, in part, that competition in the marketplace requires that the buyer not only knows what is good for him but also what is good. If the seller produces nothing of value, as determined by a rational marketplace, then he loses out. It is the assumption of rationality among buyers that spurs competitors to become winners, and winners to keep on winning. Where it is assumed that a buyer is unable to make rational decisions, laws are passed to invalidate transactions, as, for example, those which prohibit children from making contracts. In America, there even exists in law a requirement that sellers must tell the truth about their products, or if the buyer has no protection from false claims, rational decision-making is seriously impaired.

Of course, the practice of capitalism has its contradictions. Cartels and monopolies, for example, undermine the theory. But television commercials make hash of it. To take the simplest example: to be rationally considered, any claim – commercial or otherwise – must be made in language. More precisely, it must take the form of a proposition, for that is the universe of discourse from which such words as “true” and “false” come. If that universe of discourse is discarded, then the application of empirical tests, logical analysis or any other instruments of reason are impotent.

The move away from the use of propositions in commercial advertising began at the end of the nineteenth century. But it was not until the 1950’s that the television commercial made linguistic discourse obsolete as the basis for product decision. By substituting images for claims, the pictorial commercial made emotional appeal, not tests of truth, the basis of consumer decisions. The distance between rationality and advertising is now so wide that it is difficult to remember that there once existed a connection between them. Today, on television commercials, propositions are as scarce as unattractive people. The truth or falsity of an advertiser’s claim is simply not an issue. A McDonald’s commercial, for example is not a series of testable, logically ordered assertions. It is a drama – a mythology, if you will – of handsome people selling, buying and eating hamburgers, and being driven to near ecstasy by their good fortune. No claims are made, except those the viewer projects onto or infers from the drama. One can like or dislike a television commercial, of course. But one cannot refute it.

Indeed, we may go this far: The television commercial is not at all about the character of the products to be consumed. It is about the character of the consumers of products. Images of movie stars and famous athletes, of serene lakes and macho fishing trips, of elegant dinners and romantic interludes, of happy families packing their station wagons for a picnic in the country – these tell nothing about the products being sold. But they tell everything about the fears, fancies and dreams of those who might buy them. What the advertiser needs to know is not what is right about the product but what is wrong about the buyer. And so, the balance of business expenditures shifts from product research into market research. The television commercial has oriented business away from making products of value and toward making consumers feel valuable, which means that the business of business has now become pseudo-therapy. The consumer is a patient assured by psycho-dramas.

. . .

Neil Postman, Amusing Ourselves to Death: public discourse in the age of show business, Penguin Books USA Inc. New York, New York, 1985, pp 126 – 128.

[Atomoa]

If we as a society didn`t have to chase profits, we'd probably cure cancer by now and established bases on the moon. If people didn't focus so much on consumerism and getting latest and greatest, everybody would be able to retire at 40 and enjoy life while young.

That's just it.

Humans didn't get where we are by competing. We cooperated.

Capitalism forces us to compete - often wasting huge amounts of money and human-time in the process. For what end? To make one king richer than the other. Hundreds of thousands, if not millions of people, working for one persons material acquisition lust.

There is more than enough for everyone.

[logicalview]

How many human-man-hours and billions of dollars went into convincing humanity that Coca-Cola is better than Pepsi - or vice versa?

Pure waste.

LOL and how many hundreds of billions have been wasted "fighting" the man-made climate change myth? Hundreds of billions!!! And almost all taxpayer cash, not the cash of a private corporation. What a massive waste. Speaking of curing cancer and having bases on the moon, we could be a long way down the path to both of those goals with all the money that has been wasted on a complete fairy tale. That's the real shame, that so much has been wasted on such a useless and stupid goal.

[maryjane48]

LOL and how many hundreds of billions have been wasted "fighting" the man-made climate change myth?

just vecause few people on here hink this way hardly makes it a myth

[Captain Awesome]

CA - that is a good point. And really, if we could get our politicians on board ...

Oh, this is where you lose me. You'll never get politicians to get on board with anything. I'd rather focus on my own life (and my family life) and forget about the rest. Who cares what they do.

[Atomoa]

So, the exact opposite of cooperation? Build fences and a house on a mountain top?

We elect politicians. One man - one vote, and we still scare the kings to death with that little fact. That's the only thing that keeps them awake at night.

(leaked)Citigroup Plutonomy Report Part 2
Mar 5 2006

RISKS -- WHAT COULD GO WRONG?
Our whole plutonomy thesis is based on the idea that the rich will keep getting richer. This thesis is not without its risks. For example, a policy error leading to asset deflation, would likely damage plutonomy. Furthermore, the rising wealth gap between the rich and poor will probably at some point lead to a political backlash. Whilst the rich are getting a greater share of the wealth, and the poor a lesser share, political enfrachisement remains as was -- one person, one vote (in the plutonomies). At some point it is likely that labor will fight back against the rising profit share of the rich and there will be a political backlash against the rising wealth of the rich. This could be felt through higher taxation on the rich (or indirectly though higher corporate taxes/regulation) or through trying to protect indigenous [home-grown] laborers, in a push-back on globalization -- either anti-mmigration, or protectionism. We don’t see this happening yet, though there are signs of rising political tensions. However we are keeping a close eye on developments.

As Einstien said, business does not want people talking about cooperation. Hence our "right wing army of nonsense" deflecting, deranging and obscuring the issues.