Socialism versus capitalism 11

The forthcoming presidential election in the US is about socialism versus capitalism.

“Capitalism” was Karl Marx’s word for what Adam Smith called “the natural order of liberty”. To be for capitalism is to be for individual freedom. 

Obama, whether he admits it or not, is a socialist, and his agenda is to change America into a socialist welfare state. As the collapse of one after another of such states in Europe demonstrates, that is the road to economic ruin.

Romney is a capitalist. He would keep America the free market country it has always been. The free market is the only road to general prosperity.

Here’s Milton Friedman on Socialism versus Capitalism – as the short video clip is titled – in a 1979 Phil Donahue show:


  • Jillian Becker

    So, Bill, you are a libertarian? I have sympathy with libertarianism, but I know that freedom is only possible under the rule of law, which many libertarians fail to see. And I know that the US is an important player in world affairs, which many libertarians don’t like. The five great principles of our conservatism are: Small government, low taxes, strong defense, individual freedom, free market economics. 

    Starting from the position that all taxation is theft, we grant that government needs funds to perform the only function it is needed for: the protection of liberty. That means defense, and the maintenance of law and order to protect the individual and his property (which includes eg enforcing the law of contract, and the isolation of infectious diseases). To the extent that government does anything more, it does too much. And anything a government does, it does badly. Yes, von Mises is a great guide. So is Hayek. But we don’t agree with you about Friedman. (References please to his saying he is for welfare? And he’s for “fake” money – I suppose you mean government resorting to the printing press?) 

    See yesterday’s post on our Facebook page on the subject of the gold standard.  An extract from a speech by Jim Grant to the NY Federal reserve. (Click on the Facebook link in our margin.)   

    Romney made a big mistake with Romneycare. But he is a practicing capitalist. Ron Paul is good on economics. But he is absurd and dangerous on foreign affairs.  

    •  Milton Friedman’s “Negative Income tax” is one example:
      It does not abolish welfare, It is still socialist because it robs from the productive and gives to the unproductive. It is still a distribution of wealth from the can do types to the will not types.

      As for Ron Paul’s foreign issues, more and more Americans are realizing that we cannot afford to be the world’s policeman much longer. Sequestration is about to start in the Fall of this year. The neo conservatives are in a bind. They cannot have their government programs without massive tax increases. What President Obama is promising to do is veto any exception to the required defense spending cuts unless equivalent taxes go up. The real conservatives such as Ron Paul are strict constitutionalists. Although they are against paying higher taxes, they are not ostriches and they realize we cannot afford this 100 year old Wilsonian doctrine.

      • Jillian Becker

        William M – 

        In his reply to Bill, AAS has answered your point on Friedman and “negative income tax” so well I have nothing to add. I agree with him all the way.

        I agree with you that the US should not be the policeman of the world. The 1990s interventions by the US (and NATO) in ex-Yugoslavia were stupid policing wars. The war in Afghanistan, after the initial necessary attack and a quick victory, turned into a US policing operation. But the US should defend its own interests very strongly. Letting Iran become a nuclear power, for example, would not be in its interest. Quite the contrary. And it is absurdly naive to imagine – as Ron Paul apparently does – that talking to the mullahs will stop them. For nine years they’ve been talked to, and they’ve used the time to develop their nuclear capability.

        •  I am mostly in agreement with you. In fact I favored George W. Bush’s response in the first couple of years after the massacres by the terrorists in September of 2011. I’m not convinced Iran is a nuclear threat, particularly after reading ex CIA Michael Scheure’s Non-Interventionism web site. Mr. Sheuer resigned from the CIA in 2004 and was, IIRC, part of the group involved in the middle east affairs investigating Al Quaeda. So far I also found YouTube videos back ten or so years ago of Ron Paul talking before Congress and everything he said about the wars in the middle east was spot on. His predictions were correct. The man is more wise than the neo-conservatives (as opposed to real conservatives). It is no coincidence that Mike Sheurer endorses Ron Paul.

          In an unrelated subject, I think the best description about atheist conservatism you mentioned a few months back is that we have the healthy skepticism that leads us to better decisions and applicable also to our personal lives. I sometimes like to consider myself “liberal” in the Frederik Bastiat sense because I have been alienated from the Republican Party for over 30 years because of the religious fanatics that took it over from the likes of Barry Goldwater. I have issues over calling myself “libertarian” because it conveys to many people that I am a whim-worshiping pothead. And I am not.

    •  Thank you for the Jim Grant link on your Facebook page. Also noted an interesting book by Lewis Lehrman “The True Gold Standard: A Monetary Reform Plan without Reserve Currencies.” I’m thinking of getting the Kindle version (but I have a priority career-related Kindle book about Linux for Embedded Systems to finish first).

  • Bill

    Actually, America does not have a free market economy. It has what is known as a “mixed economy,” elements of free market and elements of socialism. In a free market economy no trade would be restricted. Prostitution is illegal. Drugs are illegal. Try competing against the U.S. Post Office and you will be stopped. Starting your own defense business is illegal (the US government claims a monopoly on defense). In addition, in a free market economy, since all exchanges are value for value, there is no middleman taking a percent of that value and calling himself “government” to pay for “services” you do not necessarily want. That is, taxation is voluntary in the real sense, not in the fake sense of what the IRS these days deems “voluntary compliance.”

    Milton Friedman was capitalist-light. We owe him a lot of thanks for promoting freer economies in his “Free to Choose.” Yet even he advocated welfare. He was a monetarist and proponent of fiat money, but a monetary policy on that fake money to control inflation. The real capitalist was Ludwig Von Mises of the Austrian school. The Austrian school is in favor of a gold standard.

    With that background, I cannot disagree more that Mitt Romney is a free market capitalist. Ron Paul is far more the free market capitalist than Mitt Romney. Isn’t ObamaCare modeled after RomneyCare?

    • Jillian Becker

      Bill – please see my reply above.

    • AAS

       Bill – I am very much in agreement with nearly all the ideas you have presented here. Mises was, really, the greatest and most complete advocate of the free market of all time. I do find myself in disagreement with you on a few of your points, however.

      Some clarification on the “welfare” that you attribute to Friedman is necessary. Friedman believed strongly that the negative income tax (NIT) was not a form of welfare – rather, as he put it, a form of relief. Indeed the government giving “relief” to some through money received (stolen) through taxation is yet another form of redistribution – and the deleterious economic consequences of redistribution are no different. Yet he was not attempting to promote economic equality through the NIT, which he claimed was what differentiated it from a welfare system. Of course, if we take the Mesian principle that human action is the ultimate given and that motivations of actions are economically insignificant, a policy of redistribution for the sake of economic equality and a policy of redistribution for the sake of poverty relief are really the same thing. Whether or not a negative income tax is welfare is debatable – but that it is redistribution is unequivocal.

      From a purely theoretical standpoint, therefore, the NIT is really in principle just as bad as the welfare system. But, practically speaking (though I would still argue against such a policy), it certainly is a vastly superior and perhaps politically viable alternative to the present welfare system. The bureaucracy, corruption, and, to a large extent, the disincentives for work and stable family formation would be greatly reduced. Certainly I would prefer an NIT to the present welfare system, though, given the latter, that is not saying much.

      Furthermore, Friedman strongly opposed the existence of a central bank. What he argued was that given that such an institution exists, it is a sensible policy to have a stable inflation of the money supply. This attempt to play with the devil is still vastly inferior to a gold standard or a free banking system. I would call Friedman a monetarist; I would not call him an inflationist.

      I agree with you that laws against drugs and other personal liberties are pernicious, immoral, and have disastrous economic consequences (Friedman was also a great advocate against these laws). But, with respect to your comment about the post office: Fed Ex is already in competition with USPS and has vastly out-competed it. It is a wonderful example of how the people are vastly smarter than the government.

      All this is really splitting hairs; expressing a few mainly semantic disagreements I have with you. Where I believe you are seriously wrong is in your comments concerning defense and taxation.

      Private security agencies are legally permitted to exist in many cases. That the US government claims a monopoly on defense is one of its fundamental functions as a state. The enforcement of law requires the monopoly of force or else there is anarchy.

      I am unsure, given your remarks on taxation, whether or not you are arguing against particular forms of taxation or all taxation in general. There has never been a “free market,” as you describe it, outside a state and therefore outside a system in which there exists some form of taxation. The rule of law must, somehow, be funded.

      Ultimately, the opinions you express lead me to hold a suspicion that you are, indeed, an anarchist. If so, you have left Misean territory and entered Rothbardian territory – the so-called “anarcho-capitalist” philosophy. Unless you believe that the state in general is fundamentally evil and an unnecessary impedance of the “natural” free market, I cannot see how you would justify your assertions concerning defense and taxation.

      Many of these arguments apply to William M’s comment as well.

      •  I understand your points. Essentially, Milton Friedman was a pragmatic capitalist. As for anarchism, yes, I have studied “The Market for Liberty” (by Morris and Linda Tannehill) and “No Treason: The Constitution of No Authority,” by Lysander Spooner and found I cannot argue against those writings. Murray Rothbard did mention Ireland from 700 to 1700 was a stateless society (“For a New Liberty”). I can accept the idea of minarchy as well. Ron Paul is certainly no anarchist. And I do vote, so I sanction the system we have. It may be splitting hairs to talk the Spooner theory and say no group of people labeling itself “government” has a right to force anyone who did not permit them via contract, written, signed, and witnessed. That is all theory which I agree with, but I gotta eat. And I have more important things to do than go out and let others know about Spooner. I posted both under “Bill” and William M.”

  • cheongyei

    Sad how foolish Phil Donahue appears.  Such a simpleton and a socialist lap dog.

    • Liz

      Yeah, Friedman pretty much makes him look that way!