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OpEdNews Op Eds    H3'ed 4/8/20

Democratic Socialism Will Soon Replace Capitalism

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Theory and logic indicate Socialism's possible superiority. If centralized planners, especially in the technological age of data mining and artificial intelligence, responsibly control the processes, allocate resources, create an agreeable work ethic, and capably enter into the international trading system, Socialism might succeed. Apparently, except for China, which is more of an authoritarian mixed or semi-fascist economy (government and industry working together), this has not occurred. The public views Socialism as a totally failed concept.

Despite numerous failures of theoretical inferiority, Capitalism sustains, going through crises of fall, revival, and survival. "Can Socialism's failures be ameliorated, can Capitalism contue to revive and survive, and can Socialism replace Capitalism?" are questions arising from the debate between Socialist and Capitalist competition. Answering the questions allows changes in qualifications for reception. Enhancing quality of life, increasing material wants, and augmenting Gross National product are becoming lesser qualifications. The future portends more importance to meeting challenges posed by climate change, pandemics, greenhouse gases, and other potential crises. The future portends more importance to survival, to having sufficient means to meet the next day in a gracious and inviting manner.

In a capitalist system, the capitalist owns means of production, invests profits to regenerate more profits, and increases capital from this constant reinvestment. An outgrowth of the industrial revolution, Capitalism promoted industrial progress and greatly increased the material wants of much of the world. Stagnating through recessions, depressions and panics, Capitalism periodically breaks down, retreats, and petitions government rescue. From another perspective, pure Capitalism had a short life, needed to be constantly resuscitated, and finally evolved into neoliberalism Capitalism, a sub-system to a mixed economy that uses capitalist structures. Severity of forecasted global problems indicates that neoliberal Capitalism cannot meet the challenges, and a new socioeconomic system is demanded.

Pure Socialism is an economic and political system, where the government owns much of production and controls most prices. Considered, from historical attempts, to be a liability, Socialism has two primary built-in failures ─ inability to properly allocate resources and to motivate workers. The former occurs from industries hoarding to meet quotas, which creates waste, and from other industries being unable to meet commitments, which creates production bottlenecks. The latter is a product of workers having lifetime employment and not requiring motivation to maintain security. Although they occur in the capitalist system, Socialism also allows a more sinecure and corrupt system, where close associates are favored.

Democratic socialism has many definitions. For this conversation, Democratic Socialism defines an economy and society that is politically democratic, allows private enterprise to generate surpluses and uses government controls to assure profits are optimally reassigned for both business (profit reinvestment) and public needs (taxation). Government policies, such as subsidizing, regulating, and distributing, help shape the economy. Social ownership of businesses is encouraged. These include worker-owned cooperatives, publicly owned enterprises managed by workers and consumer representatives, and workplace democracy, where workers sit on corporation boards. Some inefficient and vital industries necessitate some form of state ownership, but most industries are best run as private enterprises.

Democratic Socialists consider central planning for major public industries mass transit, housing, and energy and permit market mechanisms to determine the demand for consumer goods. Mainly, Democratic Socialism attempts to combine the positives of Capitalism and Socialism and eschew the faults of both systems.

Failures of Capitalism and its neoliberal doppelganger ─ free enterprise
Behind the appearance of Capitalism's (free enterprise) success in providing material wants to vast population, lie failures economic depressions, world wars, civil strife, and inability of the private sector to respond quickly to catastrophes, as shown by western response to the corona virus.

Periodic economic recessions, depressions, and panics gripped the United States since its beginnings. Government actions to repair the defects and readjust the failures proceeded from recognition that Capitalism becomes comatose every few years and must be constantly revived. A plethora of laws, regulations, agencies, government deficits, and other ameliorations have provided stitches, transplants, band-aids, and surgical operations to patch up and rescue a constantly ailing patient, reviving the collapsed after each fall. The history of Capitalism reveals a system that ignored the nation and a nation that did its utmost to maintain free enterprise.

From 1867 to 1929, the U.S. economy exhibited a shock every several years. Seven severe depressions or financial panics occurred during that 62-year period. One of these started in 1873, and is considered to be the Long Depression ─ a period of bursts of prosperity and contractions from 1873-1896.

Constant economic disturbances and sputtered growth prompted lawmakers to socialize capitalism, and correct the excesses of "rugged individualism capitalism," in which a few financiers exercised control of the economic system and used it for their private gain ─ essentially robbing banks by owning them. Establishment of the Interstate Commercial Commission in 1887 for regulating the railroads, passage of the Sherman Antitrust Act of 1890, which "declared illegal all combinations in restraint of trade," creation of the Federal Reserve System in 1912 to regulate the money supply, stabilize the financial system and subdue inflation, passage of the Clayton Act in 1914 in order to further restrict anti-competitive practices and enforce the earlier Sherman Antitrust act, establishment of the Federal Trade Commission in 1914, an agency with powers to "prevent business practices that are anti-competitive or deceptive or unfair to consumers," and formation of The Federal Communications Commission , by the Communications Act of 1934, to "maintain jurisdiction over the areas of broadband access, fair competition, radio frequency use, media responsibility, public safety, and homeland security," are a few examples of government attempts to rectify Capitalism's problems. They did not halt the calamities ─ "boom" and bust" persisted; speculation remained rampant; mergers tending to monopolies continued; banks went bankrupt.

The call for regulatory legislation proved that the capitalist system, which had its moments of genuine success, was, as constituted, insufficiently effective or efficient ─ it could not exist without government intervention. Legislators, in their ardor to preserve the system, neglected to realize that the capitalist system had survived with special advantages. How far would the capitalist system in the United States have advanced without a century of slave labor, land and resource appropriation from the Native Americans, constant wars to seize territory in North America and command global markets, and tens of millions of immigrants working at subsistence wages? Government attempts to stabilize the erratic free enterprise system with regulatory capitalism served as a temporary palliative, which eventually became co-opted and could not prevent the Great Depression.

Hunger and unemployment in the land of plenty drove the New Deal toward the rescue plan of welfare capitalism ─ government sponsored programs and legislation that fostered institutions to re-distribute wealth and enable all citizens to escape poverty and gain equal opportunity. Soon more rescue was needed, such as government construction of transportation, communication and power infrastructure ─ interstate highways, airports, hydroelectric and nuclear power plants, and ARPANET (the first wide-area packet switching network). Equal opportunity laws, subsidized mortgage loans, and direct coordination in research and development between the defense department and private industry drove free enterprise toward a mixed economy. Extensive cessions of public lands made to states and to railroad companies, between 1850 and 1872, promoted railroad construction; government defense contracts developed the electronics and aviation industries; Eisenhower administration's interstate road system magnified the automobile and steel industries.

The role of the defense department in providing sustenance to the free enterprise system is insufficiently considered. Entire industries defense, armaments, electronics, shipbuilding, aviation, space exploration and parts of some industries airlines, plastics, chemical, metallurgical, Internet owe their existence and prosperity to defense department developments, funds and contracts. Airplane designs and manufacture are direct outgrowths from defense industry warplanes. Airline growth relied upon government subsidies, mail and freight deliveries, and airport constructions. Despite the assistance, the airline industry, until recently, consistently showed bottom line losses and most of the many airlines have gone bankrupt. Without government assistance, the free enterprise economy would have permanently collapsed decades ago.

OPEC's higher oil prices challenged a troubled Capitalism with inflation, ultra-high interest rates and a 1981 recession, which invoked the final rescue plan ─ pump the economy with government deficits and easy credit ─ the final attempt to rescue the system.

Since the Reagan administration, the Gross Domestic Product (GDP) has closely followed an almost continually increasing sum of public and private debt. Growth in the Capitalism system became allied to and dependent upon growth in debt.

Excessive debt enabled the Reagan administration to emerge from its incipient recession. Escalated private debt offset budget surpluses during the Clinton administration. A combined whammy of private and public debt during the Bush term soon hit a wall and caused the huge 2008 recession. Wisely, Obama pursued slow growth policies that needed slow accumulation of debt and prevented any downfall during his entire administration.

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Dan Lieberman is the editor of Alternative Insight, a monthly web based newsletter. His website articles have been read in more than 150 nations, while articles written for other websites have appeared in online journals throughout the world(B 92, (more...)
 
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