The key element in any political system is the material from which the system is moulded – that is to say: man. Man, on the whole, is not rational, nor in the individual cases where reason dominates is he rational all of the time. The blueprint of the ideal world is to be always implemented by the imperfect human hands, and so, as society begins to crystallize, the impurities are integrated into the process, transforming the product in unforeseen ways.
The fatal flaw in communism is the interplay of human nature with the structure of governance. After taking control of the market, the Party begins to designate positions of power, begins to pick the workers and their bosses. Because positions are assigned from top to bottom, the people who fill the managerial spots tend to be those on friendly terms with Party members, not those most capable of running a given enterprise. Additionally, because of the undemocratic power structure, those who rise to the top of the political ladder are those who are most connected, most cunning or most threatening, not those who are most capable of good governance, or those who best represent the will of their people.
Such a system always runs itself into the ground. In its early years, communism can still function and even thrive on its stolen riches, but as the years progress, the system gets gradually weaker and weaker. As Party bosses promote their friends to power, and those friends in turn hire their friends to run the factories and the planning departments, more and more inefficiencies and impurities are introduced into the system.
Steve Jobs once said that his most important job was to hire the right people. He hired A players – people he was sure were better than him – and those A players would in turn hire only A players. If you hired B players they would in turn hire C players, and then those in turn would hire D players, and so on. Once the standards for hiring are dropped even just a little bit, the chain of hires will suffer significant degradation, especially down the line where people are not prepared to hire those better than them.
The chain of bad hires activates a deadly loop. As badly managed factories churn out less and less produce, workers begin to steal the goods for themselves, leaving little or nothing for the shops. The shopkeepers lucky enough to get some produce also begin stealing and hoarding the goods, leaving nothing for the public. The only way to get hold of the goods is to be friends with the hoarders. In this way, a badly managed, state run market, starves itself to death – or pushes the people to revolt.
Capitalism solves the market problem by letting people run their own businesses, and so, in effect, having the market assign the workers and the bosses. Since the supply of money does not come from the top – from Party planners – but from the bottom – the market – the incentives are turned upside down. In a capitalist system, material success does not lie in working your way up the political ladder, but in fulfilling the demands of the market.
Wherever and whenever people have a need, a free market allows its citizens to work to meet it, by trade or by production, thus not only making money for themselves but also giving other people what they need. Not all needs are met all of the time, but in general, the system provides the people with a surge of necessary – and unnecessary – produce. In-fact, goods are sometimes made at such rates that production outruns demand, leading to shop stalls filled with unwanted stock.
There are three problems for capitalism that people most often bring up. The first is that the system encourages exploitation of the poorest and most unskilled workers. The second is that it encourages the production of products that are completely unnecessary, and even harmful – e.g. junk food – driving up demand for those goods by means of advertising. The third is that the richest use their wealth to gain power in government, and in turn, to give themselves unfair advantages over over other citizens not as wealthy as them.
Of these problems, only one is a real problem of capitalism. The first – the exploitation of poor workers – is not only present in capitalism, but in all economic systems. Poor, unskilled workers under a communist regime do far worse than they do under capitalism in regards to access to basic human needs. This is certainly also the case for the poor living under feudalism or other primitive regimes. Out of all the systems thus far tried, capitalism leads to most wealth, including wealth for the poor, and the fact that there are still many being paid next to nothing for heavy labor is not a reflection of a fault in the system, but a reflection of a fault in man.
The second problem – the problem of junk being sold to those who don’t need it by the forces of manipulative advertising – is even more to do with us than it is with capitalism. The market is a mirror reflecting our civilization at the current stage of its development. The junk you see as you walk through the shops or as you look at a television screen is a reflection of what we are prepared to make, and what we are prepared to consume. Every crime has two actors. The creator, looking to fill their pockets, produces addictive junk, while the consumer, wishing to satisfy their primal urges, is all too happy to take the bait.
You cannot force people to value something which they do not care for, nor understand. The only way to transform the market is to transform ourselves. As Ruskin once wrote, the point of Political Economy should not be to teach people how to make money, but to teach them how to consume – that is, how to value. Once we know the worth of a thing, once the consumer is more demanding and more discriminating, will the ugly facade begin to transform into something better, something more beautiful.
The third problem of capitalism is the political power that wealth can buy. This, like the problem with communism, is a weakness in the system that lets human imperfections seep through, letting bad actors slowly pollute the whole. In a fair system, justice is dispensed equally on all. Those who use their wealth to influence corrupt politicians bend the system in their favor, thus disrupting the equality of justice.
It is proposed by some in response to this problem that inequality of wealth should be made more equal, that the wealthy not be allowed to get so wealthy in relation to the poor. This may work, to some extent, but such solutions trade one injustice for another – the injustice of the wealthy gaining unfair advantage through pliable government officials for the injustice of the most productive and brightest (a subset of the wealthy) being fined for the ills of the corrupt.
Additionally, since the flow of money taken by taxation flows through the government, we arrive at the problem which I’ve outlined above for communism – namely: the politicians take charge of redistributing wealth rather than market forces, which inevitably leads to more and more inefficiencies that drag the economy down. I think instead it would be better to focus on separating state and business, much as today we separate state and religion – regulations that draw strict and clear boundaries between public service and the free market.
The choice of communism versus capitalism comes down to the choice of whether you wish to suffer injustices from the tyrants of the state, or from private citizens that gain government influence. The former ensures that everybody suffers and gradually leads to total collapse. The latter leads to an imperfect, but generally thriving society. I don’t know how the underlying flaws can be fixed, but I know under which system I would prefer to live.
Ultimately though, capitalism, unlike a centrally planned economy, is a mirror. It’s a mirror on the health of our society; it’s a mirror on the moral state of the citizens that make it; it’s a reflection of our needs, our wants and our desires, a reflection of the way we wish to be treated and the way we treat others. Don’t expect the product to be beautiful when the materials are flawed. You can’t force people to value something, just as you cannot force a blind man to see a beautiful painting, but you can teach them, you can give them the tools to help them see, and the guidance to help them discern and judge. The policies regulating capitalism can probably be improved, but at some point we have to consider what exactly it is that we are trying to improve – is our objective to build a comfortable cage for a wild society, or is it to transform it into something more beautiful, more rational, more kind and more just.
During crystallization, the atoms, molecules and ions making up the crystal arrange themselves in a certain special order, growing into many forms of beautiful geometric shapes and configurations. An impurity in the material interrupts the pattern, introducing various defects into the final product. Sometimes the shape of the crystal deforms, sometimes the impurities affect the crystal’s color, as is the case of boron atoms mixing together with the carbon atoms in the diamond, giving it a blueish tint. We can keep forcing people to go against their true natures, but in the end, those natures will still remain a part of our society, and, like impurities present in the formation of a crystal, will keep transforming society in their manner for as long as they remain. A political model alone will not lead to a healthy, prosperous and, above all, moral society; such a society can only be achieved through an active philosophy embedded in all layers of our life.