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Greg S
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The Siren-song of Welfare State

- Hugo Salinas Price - Plata.com

Excellent article Mr. Salinas Price. Keynes, so sadly mistaken (or a deliberate facilitator of the fiat money paradigm) on so many issues, was correct, if somewhat hyperbolic, in his observation of the way inflation works so insidiously that "not one man in a million" understands how it robs him of the fruit of his labour. What he did not give expression to was the fact that in our fiat currency world, this is a deliberate process which serves the "relatively small group of individuals" you refer to.
It seems that only Austrian school adherents/economists really understand this and the implications with regard to socialism vs capitalism.
Much criticism of capitalism and support for socialism arises from ignorance of the consequences of the principles underlying these modes of social arrangement. They are often as wrongfully contrasted as are left wing and right wing when in fact extremes of left wing and right wing both share extreme reverence for the all-powerful state. Both are re-distributionist and killers of wealth creation, they differ only in who is favoured by the state. In contrast, while socialism is often equated with the "left" and capitalism with the "right", this is a faulty categorization. Socialism is potentially possible in a system based on cooperation for "the common good" but in practice is absolutely dependent upon making the rights of the individual subject to the wishes of a coercive authority, whether that authority is the bureaucratic apparatus sanctioned by a democratic majority, or by a benevolent dictator or a tyrant. The inevitable consequence of even the 'cooperative' form of socialism is diminished property rights and diminished freedom because human desires and priorities are not and cannot ever always be in complete agreement, and this inherent reality means that the sum of achieved preferences and the gross production of goods and services will be less than that achieved in a free market. The greatest value can only be achieved when all transactions represent the priorities of every single person (economic actors).
The system which comes closest to maximizing the sum total value of all activities is one in which capitalism exists in a framework absent of any kind of coercion. By definition this rules out the forms of crony capitalism formerly so obvious in banana republics and now ubiquitous in every country. This crony capitalism is as dependent upon a powerful coercive state as any socialistic system, monarchy or oligopoly. In its past extreme expressions it was recognized as fascism.
So, we are not looking at a happy medium between capitalism and socialism, as commenters posit. That is a one dimensional model which fails to recognize the multidimensionality of reality. There is a need to recognize at least one other axis, and that is the one proceeding from indenture to freedom, from no property rights to full property rights, from slavery to ownership of self and one's production.
Socialism is usually proferred with good intentions, but these are the same intentions which pave the road to Hades. The provision of social security creates dependency. Unemployment insurance, government retirement systems, social medical systems all become tools of government power, creating bureaucracies more interested in their own benefits than those whom they ostensibly serve. They are the tools used by politicians to bribe an electorate with other people's money, with little concern for the long-term financial sustainability of the systems. All too often, the "other people's money" is borrowed from the future and thus the social programs evolve into Ponzi schemes, with the current and prospective beneficiaries developing a wildly optimistic expectation of benefits. A recipe for serious social discord, not just in the future, already evident in many developed nations.

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Beginning of the headline :Our world is run – and has been run for some time now – by a relatively very small group of individuals who have it in their power to manage, as they think, the economies of nations. Managing the affairs of a nation implies making people behave in ways in which they would not otherwise behave. National management of an economy thus means making millions of individuals do what they wouldn’t do if left to themselves. There is not one single national economy in the world today whose people a... Read More

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