Thursday, February 22, 2018

Let's Teach Communism





This is actually hilarious.  Underlying all this is a profound failure of a foundational theory of economics and the general management of State Sponsored monopolies.  The State in fact does a terrible job of managing such monopolies even when they do not directly own them.  It inevitably throws up a fence of regulation managed by lifers with zero stake in success or failure along with a revolving door of overseers from the regulated industry.  How might this ever work out?


The first step to a resolution needs to be the outright elimination of poverty implimenting the rule of twelve in order to produce local fiat banking and a natural demand for general government debt.  This also deepens demand in all sectors as well.


I would then apply a scaled insurance charge against all enterprises against failure.  The charge would increase as the size climbs.  The idea that large is safe is utter nonsense and particularly in banking.  Real risk can still be funded through investment banking as has been done forever.  The debt product is sold on to smaller banks who need the product.  The fact is that many failures are financial failures, rather than operational failure and a fund can easily step in to resolve the problem by buying out the capital at an insured amount.

This has been done on an ad hoc basis with governments but rarely satisfactorily.


Let's Teach Communism


01/15/2018 

Frank Chodorov

[A selection from One Is a Crowd by Frank Chodorov]:

https://mises.org/wire/lets-teach-communism

This is a defense of our universities. As they open their doors for another year of business they teach under a widespread suspicion of teaching communism. The suspicion is unsupported by fact; it is pure witchcraft. There is reason to believe that some in the faculties advocate communism, but none teaches it. The distinction is important. To illustrate the point, in the field of religion there are many who are intellectually incapable of comprehending Christianity, and therefore of teaching it, but who are quite adept at advocating (preaching) it. So with communism; it is a pattern of ideas following from basic assumptions, and unless one has made a critical examination of these assumptions one is incapable of evaluating the superimposed ideas. Our colleges are debarred from examining the basic assumptions of communism because, as I will attempt to show, these basic assumptions are part and parcel of what is called capitalism, the going order, and it would hardly do to bring this fact to light.

If it is the business of universities to expose students to ideas, they are not doing the job properly if they neglect to include in their curricula a course in communism, simply because as a system of thought, a philosophy, communism is in the ascendancy these days. A graduate ought to be thoroughly at home with the ideas he has to live with, he ought to understand the basic postulates of his ideological environment. It might be difficult to dig up professors able to brush aside the seductive phrases of communism so as to get to its roots, seeing how the subject is beclouded with war hysteria, and expedience might tell against the introduction of such a course of study. This is regrettable. For, lacking the opportunity to investigate communism, the students will come away from their education with the popular notion that it is indigenous to an “enemy” nation or an “inferior” people. To illustrate the kind of course I have in mind—this is not an application for a job; perish the thought!—I present herewith a few samples of communist theory that are equally the marrow of current “true Americanism.” At random, we will begin with a conception of wages.

It is an axiom of communism that wages are a fraction of production given to the workers by those who own the means of production. Boiled down to its essence, this idea can be expressed in three words: capital pays wages. But, is that so in fact? If we define capital as the tools of production, this conception of wages becomes silly, for an inanimate object is incapable of paying anything. If, as the communists do, we include in the definition the owners of capital, we are faced with another reductio ad absurdum: competition between these machine owners for the services of machine users automatically fixes the level of wages; capitalists are without the means of affecting the ups and downs of that level.

The capitalist, of course, speaks of the wages he “pays.” But, he is quick to point out that the wages do not come out of his capital, but are derived from the sale of his products; if the market does not absorb the output of his plant he ceases to be a “payer” of wages. This means that the envelopes he hands out to his employees are filled by the consumers, and these are, in large part, the workers themselves. Thus, the employer of labor is labor, and the wage earner is the wage payer. It follows that the general level of wages is determined by the general level of production—leaving out, for the moment, any purloining—and neither capital nor capitalist has any part in fixing it.

It follows also that political power can in no way affect an increase in wages; nor can capital by itself do so. Wages can go up only as a result of increased production, due to an increase in population or improvement in the skill and industry of the current population. That elemental fact will be admitted even by professors of economics, and it is possible that some legislators will recognize it. Yet, if you dig into some standard economics textbooks or examine the labor legislation of our land you will find ideas that stem from the communist notion that capital pays wages and that the hardheaded capitalist keeps them low. A minimum-wage law, for instance, is based on that notion; the law assumes that cupidity is at the bottom of the marginal worker's low income; the capitalists must be compelled to disgorge. All of which is silly, for the legally enforced increase is simply passed on to the consumer, unless it can be absorbed by increased production arising from technological improvement. Yet, in the course I suggest, it would have to be pointed out that minimum-wage laws—that all legislation dealing with labor-employer relations—are concessions to the communist conception of wages.

Our immigration-restriction laws pay homage to this idea, for these laws, translated into economics, simply say that there are just so many jobs that capitalists have at their disposal, that any increase in the working population will lower the wage level by simple division; the idea that the immigrant makes his own wages is rejected offhand. Birth control is likewise advocated as a means of raising the wage level, and Malthusianism borrows all its economics from communism. And, if you go to the bottom of our “social welfare” enthusiasm you will find the capital-culprit notion.

Space does not permit an examination of all the facets of current thought traceable to this basic bit of communism, but it is evident that the proposed course could do quite a job on it.

This brings us to the communist indictment of private property. The inherent power of capital to fix the level of wages will be used by its owners to defraud the laborers. They will see to it that the laborers receive just enough to keep them alive and on the job, retaining all above that level for themselves. Here communism introduces the doctrine of natural rights, although it denies that doctrine vehemently later on; it says that the laborers have an absolute right in all that is produced by virtue of the energy put into production; energy is a private possession. If this is so, then what the capitalist keeps for himself amounts to robbery. The word generally used is exploitation. This iniquitous arrangement brings on a host of evil social consequences and should therefore be stopped. How? By outlawing private capital. Everything that is produced should belong to the community as a whole (which, by the way, is a flat denial of the original right of the laborer to his product), and the state, acting for the community, must be made sole owner and operator of all capital. The state, particularly when manned by communists, will have no interest in exploitation and will pay wages in full.
[ ultimate indictment of communism is this circular argument - arclein ]

The holes in that indictment are many and serious, and we can leave it to our professor in communism to point them out. It would then be incumbent on him also to point out that capitalism, in practice, accepts the indictment in large chunks. A number of institutions have grown up under capitalism that are obviously concessions to the charge brought against it by communism. The absorption by the state of large parts of the electric power business was facilitated by moral fustian about the “power trust,” while political participation in the banking, housing, insurance, and several other businesses is justified on the inadequacies, if not villainies, of private capital. Thus, while capitalism carries on its word battle with communism, it pays its adversary the high compliment of accepting its doctrine in practice.

Our professor of communism could, and should, emphasize this point by an analysis of taxation, particularly the direct kind. Income taxes unequivocally deny the principle of private property. Inherent in these levies is the postulate that the state has a prior lien on all the production of its subjects; what it does not take is merely a concession, not a right, and it reserves for itself the prerogative of altering the rates and the exemptions according to its requirements. It is a matter of fiat, not contract. If that is not communist principle, what is? The professor would have to point that out. And he should, in all conscience, show that the considerable amount of capital now owned and operated by the “capitalistic” state was siphoned out of pockets of producers by means of taxation.

But right here the professor would find himself in a mess of trouble. On the other side of the hall the professor of taxation and the professor of political science would be telling their students that the right of property is conditional, not absolute, that the owner is in fact a trustee answerable to society as a whole. They would deny that this is a concession to communist principle; but it is. The professor of philosophy would pitch in with an outright rejection of the theory of natural rights, asserting that what we call rights are but privileges granted to his subjects by the sovereign. The board of trustees would also take notice; the university and its supporters hold a lot of government bonds which are dependent on the power of taxation, and it would hardly do to question the propriety of this power. And, if the professor presumed to point out that communism is quite consistent in advocating taxation as a means of destroying private capital, he would have the whole house of respectability on his head.

A few more topics that our course in fundamental communism should touch upon—and then we can close up shop.


Reverting to the concept of natural rights—basic in capitalistic thought—we find that its taproot is the will to live. Out of this primordial desire for existence comes the idea that no man may lay claim to another man's life. How does that idea line up with military conscription? It doesn't, and the only way you can logically support conscription is to invoke the communist principle that the right to life is conditioned by the needs of the state.

Take the subject of monopoly. Communism makes much of it, although by a strange twist of logic it sees in state monopoly all the virtues lacking in private monopoly. Capitalism, in theory at least, equally condemns monopoly, on the ground that any restriction of competition lowers the general level of production and is a deterrent to human aspirations. An examination of the anatomy of monopoly reveals that its vital organ is the power to restrict production, and the source of this power is the state. Without some law favorable to its purpose every monopoly would disintegrate. Hence, the very fact of monopolies under a regime of capitalism—sometimes called “free enterprise”—lends support to the communist assertion that the state is a committee managing affairs for the benefit of monopolists.

In discussing monopolies the class would most certainly hit upon the topic of exploitation; that is, any legal means for getting something for nothing. Having disposed of the untenable proposition that the ownership of capital is in itself a means of exploitation, the professor, being a man of intellectual integrity, would be compelled to admit that the object of monopoly is exploitation, and that the state, in establishing the special privileges which spawn monopolies, is the guilty one. He might go so far as to declare the state—even the “dictatorship of the proletariat”—the only exploitative factor in any economy.

And so on and so on. In dissecting communism and exposing its vital parts to view, this proposed course would demonstrate the unpleasant truth that capitalist practice too often squares with communist theory. That might prove disquieting to the established departments of law, social science, history—to say nothing of the mahogany office up front. It might also disturb the students, inured as they are to a quasi-communist quasi-capitalist environment.

Under the circumstances, no college could entertain the idea of introducing into its curriculum a course in communism, and the charge that they are teaching the subject is unfounded. That they make concessions to communist theory in many of their courses is true, but that is a requirement put upon them by the as-is capitalism. And I might add that I have no fear of being asked by any college president to offer the proposed course.


Frank Chodorov was an advocate of the free market, individualism, and peace. He began as a supporter of Henry George and edited the Georgist paper the Freeman before founding his own journal, which became the influential Human Events. He later founded another version of the Freeman for the Foundation for Economic Education and lectured at the Freedom School in Colorado.

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