Chapter 1: Cars (Are a Metaphor)
Imagine if cars had, rather than windshields and windows, TV screens that displayed a feed from a camera on the outside of the car, and that feed had a 10 second delay. How do you think your driving would be affected?
That is the metaphor that economist Antony Davies uses to describe government fiscal policy. They are trying to run the economy the best they can, but by the time they get the data upon which to make their decisions in front of them, the data in the real world has changed.
I think that is a reasonable metaphor, but I want to give both sides of the argument fair weight.
So imagine an average city. Either:
- All the cars on the roads have regular windows, but are being driven by unlicensed 16-year-olds.
- All the cars on the roads are being remote controlled by a small team of skilled drivers experienced in driving many cars at once with the 10-second delay.
Which option, in your opinion, would result in the best situation for efficiency and safety?
The socialist movement could be conceived of as the search for a more fair, more generous, and more democratic economy. However, the economic foundations of capitalism are the best foundations for such a socialism.
Capitalism is fair, generous, and democratic.
Unfortunately, “capitalism” is a loaded term. It is important to clarify that the capitalism most worth defending is the lowest resolution picture. At the lowest resolution, all economic systems exist on a spectrum between the two tools we use to make economic decisions: markets and bureaucracies.
Market economies use markets to determine what is produced in what quantities and for what price. Markets are run by money. Think of dollars as votes. Anyone who has dollars can vote on any decision in the entire economy. The only way to get votes is to get other people to vote for you. The more votes you receive, the more votes you can turn around and cast.
Command economies use bureaucracy to determine what is produced in what quantities and for what price. Instead of voting directly on each decision, everyone gets one equal vote to cast for a person who will hire a team that will make all the decisions.
Market economies are subject to manipulation by deception. People can trick each other into turning over votes. Command economies are subject to manipulation by force. Until a majority is able to come together to vote explicitly for a candidate who promises to fire the bureaucrats, and then that elected official does as promised, every decision the bureaucracy makes is enforced by the police and the army.
Command economies struggle because there is no possible way that a bureaucracy could possibly know exactly how much of each natural resource is available, exactly how difficult each is to extract, exactly which needs those resources must be divided between, exactly how much labor each individual is capable of accomplishing, and exactly which and how many resources each laborer needs. And there is no possible way that a bureaucracy will be fast enough to react to the fact that each of those quantities changes every second of every day.
Market economies struggle because no matter how equitably economic decision making is distributed, as markets operate, the people who do well always end up accumulating an inordinate amount of economic influence. Just like a bureaucracy, as the number of people making the economic decisions shrinks, the accuracy and adaptability of those decisions stagnates.
And let’s be perfectly fair, a market is just a really, really big bureaucracy. The decisions are still made by fallible humans who lack data.
This is where Davies’ metaphor comes in. Markets are like 16-year-olds driving all the cars: no knowledge, no skills, no experience, just doing the best they can with what is in front of them. Governments are like expert drivers trying to drive multiple cars with a 10-second delay: all the knowledge, skills, and experience a person could possibly have, but having to perform multiple operations simultaneously, based on an outdated picture of the world.
In the real world, all economies are mixed economies, pitting bureaucracies against markets in some way to try to mitigate the shortcomings of each. So in reality, there is a mix of 16-year-olds and 10-second delays.
At the lowest resolution, capitalism refers to economic systems that err on the side of market control and socialism refers to economic systems that err on the side of bureaucratic control. For purposes of this essay, a Capitalist would rather ride in an Uber driven by a 16-year-old and a Socialist would rather ride in an Uber with a skilled remote controller and the 10-second delay.
I maintain that capitalism is the best socialism because an economy that gives everyone autonomy is more fair, an economy that produces immense wealth is more generous, and an economy in which each individual has the opportunity to vote on every economic decision is more democratic than any economy run by a bureaucracy.
Chapter 2: Economics Is Just Economics
In simple terms, economics is what we do with the limited stuff that exists to make as much as possible of what people want. Stuff is an important part of human flourishing. Stuff includes food and shelter and medicine. You can be blessed with all the peace, love, and happiness in the world, but if you don’t have enough food, you die. The end.
But human flourishing is not only about stuff. It’s also about family and relationships, spirituality and philosophy, sometimes even biology.
Economics can’t touch the human soul. Robin Williams, Anthony Bourdain, Tony Scott, and David Carradine each had mind boggling economic success. And each committed suicide. Because economics is just economics.
The economy turns stuff that exists into stuff people want. The economy doesn’t provide happiness. It doesn’t provide fulfillment. It doesn’t provide relationships or family or love. The economy can’t even give you the stuff you need if you don’t want it first. The economy turns stuff that exists into stuff people want.
I’ve listened at length to as many prominent self-identified socialists as I could find, and a leading argument I have discovered is that capitalism is a failure because people are unhappy. We can all agree it would be great if there was an economic system that provided everything we all need and made us happy and gave us fulfillment and provided relationships and family and love, but there isn’t. There never will be. That’s not how it works.
No matter how far we advance as a species, what we do with stuff will never answer life’s biggest questions or give meaning to existence.
Economics is just economics.
Chapter 3: Capitalism is Fair
We’ve all heard since childhood that life ain’t fair. Some people are tall, some people are short. Some people are healthy and some people are sick. Some people were born to rich parents, some people were born to poor parents. Martin Heidegger called it “thrownness.” We’re all just thrown randomly into the world and we land where we land.
How many Beatles songs do you know? Would it surprise you to learn that they wrote and released nearly 200 original songs before they broke up?
Roughly 20% of songs by The Beatles are played 80% of the time Beatles songs are played. Roughly 20% of lions kill 80% of the prey killed by lions. Roughly 20% of waterfalls have 80% of the water falling over waterfalls at any given moment. Roughly 20% of stars in the galaxy have 80% of the mass of stars in the galaxy. This is known as the Pareto distribution. It is a staggeringly consistent statistic found throughout all of nature.
For all of human history, roughly 20% of people have possessed 80% of the wealth, which is in accordance with the laws of nature.
I have searched long and hard for a Socialist argument about the unfairness of Capitalism that doesn’t boil down to “Capitalism is unfair because it doesn’t make the world fair.” But there isn’t one.
They say Capitalism is unfair because, when people are unlucky, it doesn’t always save them.
They say Capitalism is unfair because, when people can’t take care of themselves, it doesn’t always take care of them.
They say Capitalism is unfair because some people have more power than others.
But Johnson and Johnson makes millions of dollars on the cure for tuberculosis, which compels them to save millions of people from tuberculosis. Capitalism fights human suffering.
Amazon made billions of dollars by breaking the monopoly of Walmart. Capitalism fights monopoly.
Racist homeowners in apartheid South Africa made money by breaking the law to sell or rent to black people. Capitalism fights racism.
Capitalism makes the most of the limitations in the real world by being a strict meritocracy. No matter the inherent limitations everyone must live with, no matter the entrenched interests from the past, no matter the prejudices of the imperfect humans operating in the economy, the more an individual does to serve his or her fellow people, the higher that individual can rise in society.
Life ain’t fair. The world is not perfect. But Capitalism has done more to fight poverty and injustice than any system in human history.
Capitalism is fair.
Chapter 4: Capitalism is Generous
In hunter-gatherer societies, early humans decided that it was worthwhile to hunt and gather. The problem with hunting and gathering is that it increases inequality. Before hunting and gathering, every single member of society has a precisely equal share of nothing. But after hunting and gathering, there is an issue of distribution. And, no matter how things are distributed, it will be unequal. Even if the quantity is equal, not every cut of meat is equally tender and not every berry is equally juicy.
While it is human nature to be jealous of those who have more, so too it is human nature to celebrate achievement and to respect hierarchies of competence and effort. Hunter gatherers, on the whole, were happy that the most successful hunters and gatherers would get an outsized share of the fruits of their labour, because without those individuals, the rest of the tribe would suffer.
We have an abundance of brilliant hunters and gatherers today, and they are so good that we forget that food doesn’t magically appear on our supermarket shelves. And when we forget that, when we take the production of such immense wealth for granted, we could be forgiven for the mistake of focusing too highly on wealth distribution.
The fact of the matter is, if generating wealth is priority 1, the best way to do it is for every person to produce, and for every person to produce, every person must benefit enough to make themselves productive. Distribution follows naturally from generation. But if distributing wealth is priority 1, the best way to do it is to stop producing, because every bit of wealth generated is more that must, somehow, be distributed.
No socialist seriously denies that Capitalism, in whatever form it takes in the real world, has generated more wealth than any system in the history of mankind. And the more wealth that is generated, the more is available to be distributed.
Wealth distribution is incredibly important, and we can and should continue to try to do it better. But no one of any political, philosophical, or religious persuasion can distribute wealth that has not been generated.
And, even imperfectly, Capitalism does distribute wealth incredibly well. In 1820, 117 million people lived above today’s poverty line. Today, 7 billion people live above the poverty line.
And in 1820, the richest person on Earth had no car, no indoor plumbling, no electric lighting, no cell phone. Today, more than half of people on Earth have access to all of those incredible advancements.
Capitalism is generous.
Chapter 5: Capitalism is Democratic
In ancient Athens, the birthplace of Democracy, all decisions were made by the Ecclesia, the Assembly. Every single citizen had the right to appear at and vote in the Assembly. Laws were voted on, legal disputes were voted on, declarations of war were voted on, citizenship for foreigners was voted on. Every citizen had the right and opportunity to vote on every decision the government made.
One of the most misunderstood elements of capitalism is its use of democracy to set every price.
Professor Richard Wolff constantly repeats, “Capitalism is undemocratic.” His argument is that big, powerful, rich companies decide what their prices will be. We don’t get a vote. In a democratically controlled economy, we could elect someone to decide the price of things, then we could afford them.
The problem with this plan is that, if we vote for something to cost less than it is worth, it will not be produced, and will not be available at any price.
And would the winner of a popularity contest really set better prices than company owners?
In a direct democracy, each of us would have the right and responsibility to vote on the price of every good and service, and we would have the right and responsibility to vote on them again each day as inflation, new technology, red tape, and competition change what the correct price would be.
Capitalism has found a genius way of making that constant vote manageable.
First, every single citizen is considered the “producer” of their own labor, as well as any materials they own.
Second, every “producer” is in charge of setting the price for their labor and materials, permitting everyone in the entire economy to simply vote “yes” or “no” on that price.
Third, every person who does not vote on any particular price is listed as an automatic “no.”
Fourth, every person is allowed to cast no more “yes” votes than they receive for their own labor and materials.
And finally, every producer gets to interpret the vote and choose whether or not to change their price.
Capitalism is democratic.
In conclusion, Socialism is about building a more fair, more generous, and more democratic economy.
Though the world ain’t fair, capitalism is as fair as the world will allow.
Though the world is marked by privation and inequality, capitalism is as generous as the world has ever seen.
And though no one has the time or interest to involve themselves in every one of the googol of decisions being made at any given moment, capitalism gives the most people the most opportunity to have their voices heard on the most possible economic decisions.
Capitalism is the best socialism.
