Wednesday, July 24, 2013

Business Socialism

I find the persistent sniping between socialists and conservatives rather boring. The reality is that socialism died fifty years ago. The experiment in Soviet Russia proved that state ownership of the means of production leads to disaster (this was not a surprise for people who understood Ludwig von Mises teaching on the role of prices). The post mortem was complete when the Chinese Socialist Party embraced capitalist activity.

All that is left in most western countries of socialism is a social welfare system to support the poor and debates about how much resource should be channel to it.. These systems are far from ideal, but the conservatives do not have anything better, and society is not willing to jettison the poor. (Christians do have a better system, but they have never been that serious about trying it).

The predominant species of socialism these days is business socialism, and conservatives are strangely silent about it. In the last few decades, businesses have captured the political process and milked it fairly effectively. The biggest dole out to bludgers of taxpayer largess have gone to finance companies and participants in the banking system. These businesses have made huge mistakes over the last few decades, but they are protected from the consequences by a myriad of laws, regulations and hand-outs. If a person on the unemployment benefit does not turn up for a job interview, they get their benefit docked for several weeks. If a business fails, limited liability kicks in and assets in the family trust are protected.

I do not like socialism, but the most virulent form of socialism these days is business socialism. David Stockman’s book explains how strong it has got in the United States. He calls it "crony capitalism", but that gives capital a bad name. It would be more telling to call it as it is: business socialism.

The garden-variety socialism uses political power to shift resources towers the poor and weak. Business socialism using political influence to shift resources and legal privilege towards business.

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