I’ve been thinking about communism and capitalism and I found a nice image to explain one of the crucial differences and inherent mechanisms.
The yin-yang image from Taoism explains things by ratios of yin and yang, and the thing is, those never exist in a pure state: in the yin half-circle, there’s a dot of yang, and in the yang half-circle, there is a dot of yin. Essentially, this means that in perfect stillness there’s an aspect of activity, and in pure activity there’s an aspect of stillness.
In capitalism, in its pure and perfect form, where the vast majority of the population is wealthy, there is a minority that languishes in poverty. In communism, in its pure and perfect form, where the vast majority of the population languishes in poverty, there is a minority, the officials and dignitaries of the Communist Party, who are wealthy and powerful.
There must be a poor minority in capitalism, because they serve as a warning to others, of what could happen to them if they fail. They are a much greater motivation for success than the few super-wealthy, who can be seen as completely beyond reach. However, everybody sees the homeless people on the streets and they are an omnipresent warning: get your shit together or that’s where you will end up. So, in capitalism, there is widespread wealth and localized misery; it’s really unimportant that some are super-wealthy and can afford their own jet planes, if the majority is wealthy enough to be able to afford a good house and a nice car. Eventually, as the entire country becomes super-wealthy, someone compassionate says “let’s eradicate poverty altogether”. Let’s raise the taxes for the wealthy, and elevate that tiny minority above the threshold of poverty. And people agree, because it’s hard for them to see how it could harm, since everybody is so well off. However, as they raise the taxes in order to funnel the money into welfare, the state bureaucracy grows, the difficulty of doing business grows, the taxes grow exponentially because you no longer have only welfare as an expense, but the price of bureaucracy, and in a generation the result of attempting to remove that tiny dot of yin in the sea of yang you actually expanded the dot. You made poverty widespread and wealth localized. Unfortunately, as that happens people vote for more socialist measures because they feel impoverished, and point at the rich thinking that they are who stole their money, either by not paying enough taxes or by outright exploitation. However, the thing is, nobody needs to steal your money in order for you to be poor. Money can simply vanish, by destroying the environment in which it can be created. Wealth is not a given, it’s an emergent property. If you have very few laws, for instance to assure that the contracts are honored, that the patents are obeyed and that the offenders are punished, but nothing more than what is essential, you will have a thriving society and wealth will be created. If you create a situation where people need to fill paperwork whenever they wipe their ass, and they are taxed so much they never get to have any money to spare, you don’t shift wealth elsewhere, you destroy it. What was once a machine of capitalism that produced prosperity and wealth, now becomes a quagmire of socialism that produces only bureaucracy, discontent and more socialist measures to combat the rare situations where anyone managed to have any money. So, by trying to eliminate that localized speck of poverty from a capitalist society, we destroy the capitalist society and turn it into a cesspool of poverty and socialist incompetence and ideological warfare.
In communism, there’s something called “corruption”, which basically means that the communist party leadership always manages to be well off, even in the countries where most of the population is starving. However, if you try to change anything, you will destroy the communist system. If you try to fight “corruption”, you end up decapitating the communist system, as it happened in Romania, and the entire country transforms into something else, it’s no longer communist. If you try to elevate the majority of the population into the middle class, as it happened in Yugoslavia, people start thinking in capitalist terms. They see socialism as restrictive, because if they can’t earn money for building a house at home, but they can do so in Germany, there’s something seriously wrong with the system at home. They are no longer the impoverished masses who are willing to embrace communism because it promises equal misery to all where at least they will have some food, they are the middle class who wants nicer cars and bigger homes. As a result of draining the swamp of poverty, communism turns into capitalism.
The conclusion is that it’s quite easy to destroy any system by destroying its foundations. In capitalism, you need to have minimalistic rules, no glass ceilings for the winners and no safety net for the losers. Then, as a result, you get widespread wealth and localized misery. Never attempt to remove this dot of misery in the pool of wealth because you will destroy the pool of wealth, and the misery will drown us all.
Are there any examples where capitalism actually is the way you described it, in practice? Would you say it was in the USA, at some point in the past?
Because I look at their system and freeze in horror. I’m not sure the dot of poverty is ever as small in capitalism as you view it. Anecdotally, I know many people who weren’t born rich and didn’t do well for themselves, despite having many good qualities. I don’t know anyone who was poor and managed to get significantly ahead in life. I know some who would’ve been comfortably middle class in a less cutthroat and cruel system, but got completely ruined by the lack of basic safety nets.
If you’re born poor in the Bible Belt, you can count on having a shitty life and little to no upward social mobility.
In my view, capitalism works best in combination with some basic safety nets. It did work well for northern Europe, until they started importing culturally incompatible people. The concept of the free market works well, but does it really have to be as cutthroat and punishing as in the USA? From what I can tell, it makes the dot of poverty bigger, not smaller.
There is also the fact that they have a lot of violent crime. This happens when people are desperate and have nothing to lose. Some parts of the US (Detroit, cough, cough) are almost worse than third world war zones. The reasons behind it are likely very complex, but I am guessing there are some economic causes as well.
There might also be something about the disparity in size. The USA is huge, and the systems that work for smaller European countries might not scale so well.
I think back to some guys I knew from the southern states. One of them was hit by a truck while riding a bike, injuring him and knocking out his front teeth. No health insurance, so he got patched up by a friend whose qualifications were a Bachelor’s degree in biology. Close enough! But dentistry work isn’t cheap so he looked for a job with front teeth missing and never found one. A highly capable, intelligent friend moved them all to a northern state, because the university there offered generous scholarships (it’s cold as fuck there so they have to incentivize). But even after that, they couldn’t find good jobs. One of them was smart enough to publish math papers, got a degree but ended up doing physical labor. And the toothless guy? Well, he’s a woman now. A woman with a beard and a bald patch, because no one can tell him he’s not allowed to be trans, even if he doesn’t want to actually transition.
Maybe if he’d been able to fix his teeth after the accident, he wouldn’t be a transwoman today.
When was the capitalism as I described it? Well, the Germany after WW2 was a very good example, but all Western countries, without exception, are within 10% of the described. America is a very weird example, because it acts as if it invented capitalism and should be seen as the best possible example, but it wouldn’t actually make my top 10. China, for instance, is a good measure-stick for capitalism because in its transition to capitalism, it consistently produced increasingly larger middle class. According to studies, 76% of China’s urban population will be considered middle class by 2020. There are wealthy Chinese tourists all over Europe as an example, and this is a phenomenon that used to be exclusive to the wealthy European countries and America. Japan, also, is a good example of capitalism. In all cases, you have huge pool of wealth and localised poverty.
Regarding your examples, if you are born poor anywhere where there’s no industry, competition and urban pooling of human resources, you’ll probably not have a great life, but those aren’t really the places that showcase capitalism. Also, individual examples are completely worthless for such an analysis because they are a speck of dust in a storm, a singular datapoint that needs to be put somewhere on a histogram.
Regarding accidents, health insurance and safety net, if you have a bad enough accident anywhere, you’re fucked. However, there are many ways to handle accidents. In my opinion, having the state do it is about the worst thing you can do, because this introduces tax overhead on the entire population and industry and chokes down the engine. Also, the state routinely mismanages everything and wherever the state manages health insurance, it becomes shit. In Croatia, there are waiting lists up to half a year long for everything, as a rule. In private practice, the situation is the opposite – the doctors are polite, the service is quick, and the prices are not that high. In America, the prices of medical interventions are so unreasonably high because of all kinds of collusion between the medical profession, big pharma and the lawmakers, so it’s not a very good example; it’s like that famous $500 hammer that their military buys.
The safety nets work best if done at the community level. An example: a tech youtuber, Austin Evans, some time ago had an accident; a residential house his apartment was in burned down, together with all his stuff. He posted a video with his phone and went back to his parents’ place. The other tech youtubers got organised, collected money and bought him all his expensive gear back, and he managed to have his own place again in a few months, and now they are all collaborating on videos.
https://www.youtube.com/watch?v=KUA5no2vAZs
That’s what I’m talking about.