Worse than Socialism

Socialism is generally defined as holding in common the means of production and labor in an economy.

State socialism is when the government owns those means. This economic construct is laden with inefficiencies and lack of freedom and potential for oppression and force. Besides, it doesn’t work.

There is, however, a worse economic construct than socialism, and that is corporatism. Corporatism is the situation in which taxpayers support, via subsidy, private corporations and entities.

Every bailout is corporatism. It is taking taxpayer dollars to support failing private entities. AIG received $85 billion a few months ago (which ballooned its way to $150 billion in the subsequent months — for one company). It’s now on its way to the worst quarter in American corporate history: a loss of $61 billion.

Keynesian economics is unwise and doesn’t consider the economic principles of “cause-and-effect” that should govern economic decisions, and the stimulus package will almost assuredly be a total waste of money. However, the American public might actually get something out of it.

From the bailouts, however, we will get nothing except placing more companies on life support when they are in persistent vegetative states.

Where is the money going?

Catherine Austin Fitts is a former investment banker and Assistant Secretary of Housing and Urban Development. She explores the route money takes that comes from taxpayers, both in direct taxation and in stock investment in her e-book Dillon Read and the Aristocracy of Stock Profit.

Besides using taxpayer money to bailout failing multinational corporations (MNCs) and mandating retirement funds be invested in the stock market for tax deferrement purposes, corporatism also ends up bilking the taxpayer of billions of dollars in scientific research and development.

After our taxes are used to do research and development via the military, or in universities, or the National Institutes of Health, the profitable ideas and products are sold off for a pittance to private companies who then profit from the marketing and sales of what you and I paid to research and develop.

There are other venues of corporatism besides these three. The military-industrial complex that President Eisenhower warned American about profits from war, “shock and awe”, and fear.

Economic Hitmen” are employed by corporations to assure that countries receiving international aid from the World Bank and International Monetary Fund are unable to pay back their loans and thus become indebted to MNCs and the interest of the elite of Western nations.

Some of you may argue that this is just the worst form of socialism, and to a degree it is. But instead of pointing a finger at the stimulus package and how we as a nation are “moving towards socialism,” consider that our current system of corporations enriching themselves with the tax dollars of the American people is the one described as the glorious “capitalism” by the opposition party.

Published concurrently at The Cause of Liberty.

6 Replies to “Worse than Socialism”

  1. It might be true that some companies are “too big to fail,” and that there is a risk to the whole economy if these fail. It seems to me that the solution would be to not allow any company to become “too big to fail,” but I have no idea if or how that could be implemented.

  2. What’s THIS?!? You mean there is not a simple continuum between capitalism and socialism? Mitt (does he need a last name? He’s like Madonna, Prince, Sting, and Lassie) says, “the only economic system which has been proven to work in the history of mankind is the free market and capitalism, and any efforts to move us toward socialism will not be successful in our society.” Are you implying there are more options than these two? Are you saying the prevailing rhetoric, especially from the right, tries to establish a false dichotomy, a false limitation on our selection of economic principles, objectives, and practices? What kind of crazy talk is this? Impeach the Idealist!

  3. Christian

    I think that true free market (Bastiat, Smith, Mises) answer would be that those companies who get too big will fail and to prop them up due to fears that they are too big is likely the worst form of market manipulation there is because it doesn’t allow competition to weed out the inefficient. Are there truly 19 banks in this country that are “too big to fail”? It seems that there are plenty of conservative lending institutions who managed there money wisely who are on solid fiscal ground who could then take up the slack for those who have gotten too big.

    So I guess that the only way to freely (without significant government intervention) keep corporations from getting too big is let them die their bloated death once they reach the point of being untenably inefficient instead of keeping them on life support in there persistent vegetative state.

    In the physical world, there are natural limits to the size of objects, no? Perhaps it is the same in the corporate world?

  4. Dave W.

    LOL. I agree with Mitt (maybe he should get his own symbol–$) that free enterprise (again as discussed and explained by Adam Smith and Bastiat and Mises) is the most powerful economic system for developing wealth and wide-spread prosperity. However, that system hasn’t existed historically except in a few times and places (colonial America in some colonies and in the northern states after the Revolution until 1826). The rest of the time and in all other places, corporatism and merchantilism have choked out free enterprise and replaced it with a bastardization of free market principles. This leaves the right in an untenable position: socialism doesn’t work, but corporatism is worse and they get most of their funding from these corporate interests. So the right continues spouting about free market principles while they are in bed with the corporations and the military-industrial complex. And they give the true free market a bad rap.

    This creates a huge opportunity for true free marketeers who actually love liberty and freedom (in a J.S. Mill and L. von Mises vein) to promote the ideas of a truly level playing field where no one has the advantage, except what their efficiency and productivity has earned them. If Ron Paul weren’t so quirky….

  5. Yes, corporatism is evil (there shouldn’t be any question of that) but I don’t see how corporatism is any worse than socialism. Both use the force of government to violate our God-given rights. Socialism and corporatism are two sides of the same coin and both are fundamentally evil because the seek to violate the laws of God (our rights).

  6. Mike, After reading your next post (“The Natural End of Economic Structures”) and then re-reading this post, I realize that I jumped to a conclusion that I shouldn’t have. As you stated in the first sentence “Socialism is generally defined as holding in common the means of production and labor in an economy” and that has nothing to do with the state or its use of force. Whether socialism to a large extent could ever be attained by voluntary means it a different question. So, I’m going to revise my statement above to read “state socialism”. Voluntary socialism does not our rights.

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