Libertarianism and capitalism versus socialism and communism

July 17, 2021. A quick aside from this raving capitalist: Just received confirmation of the $0.02 in interest earned this month from my checking account, not quite as lucrative as the $0.05 earned this month on my savings account.

The ongoing idiocy as to the differences among capitalism, socialism and communism brings me to present my perhaps simplified version of these fundamental elements of the organization of societies, states and countries today. For illustrative and historical purposes, I will refer to my understanding of these concepts as expressed by the people most associated with each, namely Ayn Rand for libertarianism, Adam Smith and Milton Friedman for capitalism, and Karl Marx for communism. I am hard pressed to identify socialism with a single, key person or to pinpoint its origin in history, but it might have some relationship to some of the Utopian practices of more than two hundred years ago.

To paint in broad strokes, it is best to think of libertarianism, capitalism, socialism and communism in terms of a continuum or spectrum, with libertarianism at one end and communism at the other. Along this continuum, capitalism is much closer to libertarianism than to socialism, which itself is quite close to communism.

A device I used in teaching these ideas to business students was to describe capitalism as not so much a complex theory -- which it can be -- as a system based on two essential principles, namely the rich to own and the right to trade. This underscores the critical nature of private property and the ownership not only of lands and goods, but also of one's labor and ideas. The 'trade' portion entails the idea that people can offer their time and labor in exchange for money, that companies can sell stock on a 'stock exchange' in exchange for money, and that consumers can exchange their money for products and services. The role of government in this system is to maintain public order and to protect the borders, while ensuring that contracted agreements for the ownership or exchange of assets or other goods are honored. This is basically the job for police, armies, and the courts (not necessarily lawyers, but that is another subject).

Libertarianism, as it relates to economics, is an extreme form of these principles, 'pure' capitalism if you will. Capitalism, as practiced for the past two hundred years or so in many different countries, has never existed in a 'pure' form, meaning that politics, culture and social mores place some restrictions on the 'no holds barred' form of capitalism. Laws against prostitution, the sale of body parts, and drug and other substance abuse just a few of the 'practical' limits a collective society poses on individual behavior. So are things like public education and public pension plans, e.g., Social Security. These are not socialism, just limits on capitalism. Nonetheless, the system of capitalism or libertarianism sees government as the player of last resort in the economy, and the economy as the product or billions of not trillions of individual trades or transactions, mostly unfettered by the government. The Uniform Commercial Code, which prescribes some basic elements of these daily trades, is more of a method for creating some structure or consistency, and not to restrict freedom. Libertarianism and capitalism seek to ensure the maximization of individual freedoms, not to allow chaos or anarchy.

The preceding paragraph provides a valuable contrast to socialism and communism. Under communism, there is no right to trade, nor to own. All resources, assets, wealth, property and the like are owned by the government. The government then also prescribes how these resources are distributed or shared among the population, i.e., "From each according to his ability, to each according to his need." Some minor assets may be allowed to be in the possession of individuals, but even they are subject to confiscation if the central governing authority so dictates. And even if there some elements of 'free' elections, under communism, the central government and not the individual has final and complete authority. Socialism tempers these restrictions, and the degree to which they are tempered is what causes people to equate socialism with communism or to claim that capitalism can exist within (or overlap with) socialism. What some call 'Democratic socialism' is an effort to pretend that elections to positions of government authority somehow limit the potential tyranny of a socialist government. Even if the people can 'vote the government out,' under socialism, politicians usually put their greatest efforts towards staying in office, in making their tyrannical powers into restrictive laws, and to expand the role of the government in the economy, especially in the taxation and re-distribution of both wealth and income.

Among the Democrat party today, the 'progressive' elements of the party espouse aq type of socialism that leans more and more towards communism with each passing executive order, government restriction, lockdown, or abrogation of individual rights, all in the name of 'social justice,' term that once meant equal opportunity and equal treatment before the law and has now eroded to where it means 'equity' (equal outcomes, independent of effort or merit), diversity (minority rights have standing over the majority and diversity of thought is prohibited), and inclusion (including special, self-defined identity groups to make a claim against the resources of the majority).

Immigration further clouds the debate. If immigrant minorities have special rights by their minority status, the concepts of majority rule or capitalism become obsolete. If you can not prevent an immigrant from occupying/entering your country, there are property rights, especially if the immigrant can make claim to government resources and benefits.

Of course these are simplified explanations. Yet it should iffier the reader a basis for understanding the debate, for challenging the claims by any person claiming to speak for any of these four '-isms,' and to apply the reader's own critical thinking to the issue.