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Freedom's Phoenix

Socialized Capitalism is a Failure

July 16, 2009 - 8:57am
Nick Coons by Nick Coons

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There are many names for it: Modified capitalism, socialized capitalism, regulated capitalism, government-controlled capitalism, corporatism, soft fascism. Essentially they're all the same thing, and they've all failed.



The real tragedy is that too many don't realize the differences between capitalism proper, and all the above-mentioned variants.  A pure capitalist system (one that's never been tried, and therefore cannot be called a failure), is one that can be explained briefly.  It allows for two consenting adults to make any exchange as they see fit.  No third party can regulate or control this exchange.  If I want to buy a pack of gum from you for a buck, and you want to sell it to me for a buck, then that's what we do, and no one can say anything about it.  Why has this concept been so difficult to grasp?

For example, no one can say "You can make the trade, but you are only allowed to do it this way," or "you can make the trade, but you need my permission first," or "you can make the trade, but you have to give me 5% of it."  The ONLY role that government has in a capitalist system is making sure that two individuals are allowed to transact as they see fit, such that neither can initiate force or fraud against the other, nor can a third party forcefully impose on the transaction.  This is the essence of capitalism, something that has never been tried in human history.

Even though it hasn't been tried, people still call capitalism "a failed system".  But something must have been tried before it can be called "failed."

What we have, and have had for a long time in the United States is corporatism, which is an economic system where, to put it bluntly, government and large businesses are in bed together.  Congress and the Federal Reserve constantly jab their wrenches into the economic engine.  In the late 90s, they decided that everyone should own a home, including people that can't afford one.  They created incentives for banks to make irresponsible loans.  To do this, they flooded the market with money, causing interest rates to plummet below what they should have been.  They made money cheap, which skyrockets real estate prices.  With cheap money, people make bad investment decisions.  The price of money should be set naturally by its supply and demand, otherwise people start using their homes as credit cards.  And when the artificially-created bubble bursts, as all bubbles do, they're upside down.

Look back at any so-called "market failure", and you will find government action at its roots.  You'll also find a countless number of politicians coming forward to blame everything but their own interference.



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Some Greedy Profiteers are More Equal Than Others - Alberto Arredondo


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