Demonstrators marched through London on today to demand action on poverty, jobs and climate change at the start of a week of protests aimed at the G20 summit in the capital. Above, they tell us another world is possible. They are correct, another world is possible. It is a far worse world than the one we have.
Greed isn’t a capitalist trait, it is a human trait and it will always exist no matter how we organize our society. Milton Friedman explained this concept to a befuddled Phil Donahue in 1979.
Greed will always exist as a part of the human condition. The organization of society has no effect in increasing or decreasing the human desire to promote self interest. Any system every created by man and every system that will ever be created by man, will be molded by people trying to improve their situation by working in their own self interest. Knowing that, the system best suited to channel greed into the good of society is capitalism.
Capitalism isn’t an invention of humans in the sense that people set out to create a system. Capitalism is a creation of the human mind in the same way language is a human creation. No inventor set out to create language and no inventor set out to create capitalism. Both language and market economics are self organizing creations of the aggregate “mind” of humanity. Like bees in a hive, humans create the market system without any individual having a real understanding of the enterprise.
Bees run their hives through an aggregate “consciousness” called “hive mind”. Bees have complex jobs. They search out pollen and bring it back to the hive and they communicate its location to other bees. They build wax cells and protect the queen. They both cool and warm the hive with the action of their wings and muscles. They make honey and nurture the larvae. They move the hive when needed and split into separate hives when they reach a certain population. Somehow the aggregation of bee “minds” can run a complex society in a way that no single bee can. No individual bee can organize a bee society. It takes the aggregate “mind” of hundreds to make it work. No single bee has the slightest understanding of how the hive operates.
Capitalism is like a bee hive. Everyday billions of economic decisions are made and billions of tasks are performed and the economy runs smoothly. Here in my small town, every morning, two or three types of fresh bread from at two different bakeries are delivered to our tiny store. Across the country thousands of stores, large and small, are receiving deliveries of fresh bread. Milk comes three days a week. Gasoline is delivered to our two gas stations. Beer trucks stop at the local bar and deliver kegs and cases of bottles and cans. Tens of thousands of deliveries of products are made every day.
We take it for granted that there is fresh bread at a small town store everyday, but it is no small thing. All across the world decisions are being made. Products are created, wholesalers sell to retailers, prices are changed to meet market demand, shelf space is haggled over, investments are made, debt is secured, marketing campaigns are run, competitors vie for customers, businesses are sold, services are offered, repairs are made… the list goes on and on and on.
Literally billions of economic decisions are made every day as people try to improve their lives by providing some good or service for other people. It is the aggregation of the minds of the people who make up the market that make the system work. As in the case of the bees, no human can comprehend the interrelated network of decisions and actions of hundreds of millions of people. No limited group of individuals can grasp its infinite complexity. No network of mainframe computers can recreate it. It is almost infinitely complex and most decisions include a component of unquantifiable human emotions and desires. The market economy of the capitalist system is run by a human hive mind.
Socialists think they can make a better system than that run by the aggregate mind of all market players. They believe that economic planners can do better than the aggregate mind of society in controlling investment, product development, production, delivery, pricing and sales. They believe that, through centralized planning, they can run the economy better than all the people together. They believe that a few of us can be better at running the economy than all of us. They are, of course, 100% wrong. The economy is simply too complex and the result of socialist central planning is always inefficient, clumsy and profoundly unfair.
If economic central planning is adopted, it never takes long before bread stops showing up daily in small town stores. The bread is delivered today because the baker, working in his self interest, ensures the bread is baked, wrapped, loaded, shipped and delivered each and every day. In the socialist system, the bureaucracy decides when and where bread gets delivered. In a nation with hundreds of thousands of stores needing delivery, and because bread is just one of tens of thousands of products, the planners cannot efficiently ensure bread is delivered.
Under central planning, bread deliveries become less frequent and shortages inevitably occur. Of course it isn’t just bread that is in short supply, bread, all goods and services are in a constant state of distribution confusion. Sometimes there are ridiculous surpluses but shortages are much more common. Of course when there is a shortage, some people will offer more money than the set price to get bread.
In the socialist system, the prices are set by central planners and prices do not rise with reductions in supply. The result is always a black market as people resort to crime to get what they want. The black market is really just the same old market, it is simply illegal in socialist systems where the state sets prices. Prices are still subject to supply and demand, but the state must prohibits market force to maintain the viability of the socialist program. The state cannot allow a return to the market based system so dealing in the black market is a crime dealt with harshly. As more and more of the citizenry becomes disillusioned with centralized planning and its constant shortages, more begin trading in the illegal black market. Since the black market undermines the centralized planning system, planners become more and more desperate to exert control over the economy and its players. They become increasingly intrusive and authoritarian. It plays out the same way in every socialist system. First there are shortages…
According to Chávez, food shortages are a matter of national security. “Any producer that doesn’t sell their milk to the nation will be treated as a traitor,” Chávez said last year. Now there’s a battle between the state and private food companies over price controls which has caused shortages of staple items like milk and rice. Chávez commanded his army to seize privately owned rice mills because the public has complained of the scarcity of white rice.
“We have state officials in our company now, observing production,” said sales and marketing manager for Arroz Mary, a rice company in Venezuela. “So far, government representatives aren’t making any production decisions.”
Chavez often threatens food suppliers he has accused of hoarding goods to sell on the black market for higher prices or waiting until price caps are raised. He first set his sights on Polar last year, calling it a “clear example” of the kind of business that is ripe for takeover.
On Saturday, Chavez warned that any rice processing company that threatened to halt output would be permanently seized by the government.
“I don’t have any problem expropriating,” he said. “And I’ll pay them with paper, too. Don’t think I’ll pay them with hard cash.”
Venezuela is seeking the arrest of top opposition leader Manuel Rosales on corruption charges, the latest move by President Hugo Chávez against opponents since he won new powers in a vote last month.
Prosecutor Katiuska Plaza said yesterday a tribunal would rule on issuing an arrest warrant within 20 days. But Rosales, a former presidential candidate, said the decision no doubt would come from the leftist leader.
It plays out this way every time. First leftists declare that market capitalism has failed and must be replaced with economic central planning. The planners, however, are unable to even approximate the efficiency of the market system and the clumsy inefficiency of socialist planning results in shortages of goods and services. Market forces, a part of human nature, still exist and threaten to undermine the planners’ program. Trading in the black market by citizens is dealt with harshly by the state. With the suppression of the black market, shortages become even more acute and the people begin to question the planners’ program. As a result of the unrest, the planners enact a cascade of laws giving them more power and more authority over all aspects of the economy. The people have fewer liberties and less freedom as the socialist system demands increasing obedience. It happens every time. Socialism is authoritarian; it can exist in no other form. It must get obedience or else it is quickly thrown out by the people.
Well, at least we have removed greed from the system, right? Wrong. Greed and self interest are hard coded into the human condition. Greed is always present and the way societies are organized has no effect on the natural greed of its members. In a socialist system, economic greed is simply replaced by political greed. Party members, apparatchiks and politically correct members of the society are able to garner power and wealth through politics rather than the economy as is the case in capitalism. In socialism there exists inequality, disparities in wealth and great differences in access to goods and services. Greed does not go away in a socialist system. It is just as omnipresent in socialism as it is in capitalism and people inevitably find a way to better their lot in life. Socialism is no less greedy than capitalism.
There is a big difference between greed, self interest and power in capitalist and socialist systems, however. In capitalist systems, economic power is distributed across tens of millions people who, while controlling industry, have no power to make arrests, imprison or execute anybody. In socialist systems, political power is held by only a few individuals who have the power to deny you work, arrest you, imprison you and execute you. In a capitalist system, if you don’t like one capitalist, you can seek work and buy products from another capitalist. If you are dissatisfied with the socialist system you have no other choice. There are no other competitors to turn to and, if you voice your dissatisfaction loudly enough, you may become a criminal and find yourself under arrest. No capitalist controls your freedom, livelihood or life. In a socialist system the state owns your freedom, livelihood and life.
That is what so terrifying about protesters with a sign telling us another world is possible. When socialists try to fix the world they will inevitably try to plan human nature as well. This, of course, is impossible. They don’t let the impossibility of changing human nature stand in their way. They just double down without regard to individualism, freedom or liberty. After all, what they are doing is making better world and that goal is far more important than your selfish desires. You will be happier once you submit to the new order anyway, they argue. “Relax, we are from the government and we are going to fix the world and you along with it. You might as well comply. It’s not like you have a choice in the matter.”