Einstein, the Dangers of Pure Capitalism, and "Goldilocks Freedom"

Socialism – the mere mention of the word brings fear and loathing to conservatives all across America. When we were young, we all just knew that there's no such thing as individualism and constitutional rights in a socialist country – and all the proof we needed was the Soviet Union a.k.a. The Union of Soviet Socialist Republics. But what is socialism? Here's one definition:

Socialism is an economic and political theory advocating public or common ownership and cooperative management of the means of production and allocation of resources. A socialist society is organized on the basis of relatively equal power-relations, self-management, dispersed decision-making (adhocracy) and a reduction or elimination of hierarchical and bureaucratic forms of administration and governance; the extent of which varies in different types of socialism. This ranges from the establishment of cooperative management structures to the abolition of all hierarchical structures in favor of free association.

Now most of us who were raised in capitalist democracies are aware that such political structures – like true communism, true anarchism, and true libertarianism – sound nice in theory, but are simply unworkable on a macroscopic scale. Why are these political philosophies, these 'isms' doomed to fail? Because in order for society to function under such regimes, the great majority of people must be like-minded. The populace must by and large be okay with everyone having a say in such 'dispersed decision-making', with management and leadership being minimized or eliminated altogether. The problem with this is that (1) society as a whole is suddenly run by committee, and (2) the leadership positions that remain will then expand to fill the power vacuum left by the departure of the other management.

In other words, due to the fact that humans tend to either lead or follow, any political structure that by design leaves a leadership power vacuum will lead unerringly to dictatorship. This is true not only of pure socialism, but also of pure forms of communism, anarchism, and libertarianism.

But does that mean that pure capitalism is the best and most effective solution for society? It turns out that Albert Einstein had some very interesting, indeed, even prophetic warnings about 'pure' capitalism. Now some might question his wherewithal to speak on any subject other than high-energy physics, but I strongly feel it would be a great error to ignore his opinion. Why? Because those of high intelligence are not limited to one interest or field of study. Here is what Einstein had to say about capitalism:

Private capital tends to become concentrated in few hands, partly because of competition among the capitalists, and partly because technological development and the increasing division of labor encourage the formation of larger units of production at the expense of the smaller ones. The result of these developments is an oligarchy of private capital the enormous power of which cannot be effectively checked even by a democratically organized political society. This is true since the members of legislative bodies are selected by political parties, largely financed or otherwise influenced by private capitalists who, for all practical purposes, separate the electorate from the legislature. The consequence is that the representatives of the people do not in fact sufficiently protect the interests of the underprivileged sections of the population. Moreover, under existing conditions, private capitalists inevitably control, directly or indirectly, the main sources of information (press, radio, education). It is thus extremely difficult, and indeed in most cases quite impossible, for the individual citizen to come to objective conclusions and to make intelligent use of his political rights.

 

Einstein goes on to note where this would ultimately lead:

Production is carried on for profit, not for use. There is no provision that all those able and willing to work will always be in a position to find employment; an "army of unemployed" almost always exists. The worker is constantly in fear of losing his job. Since unemployed and poorly paid workers do not provide a profitable market, the production of consumers' goods is restricted, and great hardship is the consequence. Technological progress frequently results in more unemployment rather than in an easing of the burden of work for all. The profit motive, in conjunction with competition among capitalists, is responsible for an instability in the accumulation and utilization of capital which leads to increasingly severe depressions. Unlimited competition leads to a huge waste of labor, and to that crippling of the social consciousness of individuals which I mentioned before.

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Article Author: Glenn Contrarian

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  • 1 - Doug Hunter

    Mar 20, 2011 at 7:36 am

    Alot of time spent is arguing over the proper mix, thanks for at least admitting there is another side to the coin. 'Pure' socialism, or at least leaders under it's guises, can lead to dictatorship, see Libya, Venezuela, etc.

    People pick sides based on what is comfortable for them, all the very important aspects of the 'safety net' that you hold dear have never really applied to me. I was raised by the self employed/small business owners: no unemployment, no retirement, no sick leave, no overtime or limits to working hours, pay your own healthcare, no workers comp, no union bargaining on your behalf, no minimum wage, no one cared whether you had a degree or an education only if your product was good, no telling when or how much the next paycheck was just whatever you can agree a job is worth. Other than my little jaunt in the military I haven't spent much time outside of very competitive industries in the business world (I'm not getting corporate welfare, no bid contracts, of government sanctioned monopolies... although it's on my to do list!) and I like it. I think it teaches you not to take things for granted, to live within you means, and plan for the future... qualities that portions of the general US population seem to be lacking.

  • 2 - Arch Conservative

    Mar 20, 2011 at 8:13 am

    It's foolish to believe that any society based solely on any single "ism" could ever be a well balanced, well adjusted, generally healthy society.

    As someone who recently on another post responded to a love of George W. Bush that I've never professsed, you don't know shit about me Glenn.

    Yes I am a conservative. Fundamentally this means that I believe all able bodied and able minded adults should do as much for themselves as possible and be entitled to as much of the fruit of their effort as possible.

    It does not mean that I do nt have compassion for others.

    It does not meant that I don't get angry when I see greedy, ammoral businessmen and business practices.

    It does not mean that I don't believe in some form of socialist conecpts in our modern American society. (I actually do Glenn.)

    However at this point in time it's become more than obvious that neither big business nor big government gives a damn about doing what's best for this nation or it's people. In fact you could say that more often than to they are working together to F- us in the A.

  • 3 - Cindy

    Mar 20, 2011 at 8:40 am

    Socialism â€" the mere mention of the word brings fear and loathing to conservatives all across America.

    The nuclear industry (often supported by those who hate socialism), the military, and all large too big to fail business enterprises benefit from socialism. So, I disagree (sort of), I think really they only dislike socialism for people.

    Personally I don't think they have any more room to complain about social programs. The way I see it, they've spent their allotment on war, banks, welfare for the rich, and nuclear energy.

    They are hereby dismissed.

  • 4 - troll

    Mar 20, 2011 at 8:53 am

    ...seems to me that we'd do well to focus on the 'fatal tendency' to lead or follow - the egoism that Einstein pointed to


    Death to Gurus (and speed typists)


  • 5 - Cindy

    Mar 20, 2011 at 9:00 am

    It's foolish to believe that any society based solely on any single "ism" could ever be a well balanced, well adjusted, generally healthy society.

    I agree! And I think it is about time we base our society on something other than narcissism.

  • 6 - Glenn Contrarian

    Mar 20, 2011 at 9:16 am

    Doug -

    I can understand and appreciate your preference for the life you've experienced...and that's much like what I've heard from many conservatives, that because it worked for you, that it should work for everyone.

    But that's why I included Einstein's warnings about 'pure capitalism' and unregulated competition. Since the advent of 'trickle-down economics' thirty years ago, the rich have profited mightily - even after allowing for inflation, their income has risen something like 400% in that time. The income level of the rest of us, however, has stayed largely stagnant.

    And that's what I try to point out again and again - look beyond what you have personally experienced. Look instead at the BIG picture, at how the conservative fiscal policies (like deregulation is the cure for all that ails us) has greatly benefited the rich...but has NOT greatly improved the lot of the rest of America.

    And this is precisely what Einstein warned against.

  • 7 - Cindy

    Mar 20, 2011 at 9:32 am

    Let me correct this:

    "...most of us who were raised in capitalist democracies [were taught to believe] that such political structures sound nice in theory. [Because, of course our capitalist system would not survive for a minute if we used our brains to question it's religious teachings, so we've been inoculated against thinking that anything but 'our' system could work.]"

    There you go.

  • 8 - Cindy

    Mar 20, 2011 at 9:33 am

    Which is farking hilarious when you think that we all spend practically every day arguing about why 'our' system does NOT work!

  • 9 - Arch Conservative

    Mar 20, 2011 at 10:04 am

    Capitalism, when taken to its extremes can encourage greed, selfishness, callousness and an "i got mine so screw everyone else mentality."

    Socialism, when taken to its extremes, can encourage laziness, stifle creativity and entrepenuership and lead to the mentality that one should not do for oneself what one is capable of doing for oneself but rather wait around for someone else to provide.

    Neither extreme is very appealing or desirable.

  • 10 - Glenn Contrarian

    Mar 20, 2011 at 10:09 am

    Arch #9 -

    Is that not PRECISELY what I'm arguing, what I'm proposing?

  • 11 - Doug Hunter

    Mar 20, 2011 at 10:15 am

    #8

    Yes, that is quite hilarious. Our system is so miserable, so pathetic, so unfair, so enslaving, that we can barely manage to fit in bitching about it all day long every day on the internet from the comfort of our home... ooh, the humanity... capitalist life is so unfair!

  • 12 - Arch Conservative

    Mar 20, 2011 at 10:16 am

    Glenn, when you author an article on the evils of "Pure socialism" and acknowledge some of the beneficial aspects of capitalism then maybe I'll believe that you truly recognize the benefits of a multiism society.

  • 13 - Glenn Contrarian

    Mar 20, 2011 at 10:29 am

    Arch #12 -

    Did you read the article? Did you not see where Einstein - even though he KNEW the dangers of 'pure socialism' - still supported it? And did you not read where I said quite plainly that he was wrong?

    Indeed, Einstein himself sees the danger inherent in his proposal:

    A planned economy as such may be accompanied by the complete enslavement of the individual. The achievement of socialism requires the solution of some extremely difficult socio-political problems: how is it possible, in view of the far-reaching centralization of political and economic power, to prevent bureaucracy from becoming all-powerful and overweening? How can the rights of the individual be protected and therewith a democratic counterweight to the power of bureaucracy be assured? [Einstein quote ends]

    Is this 'enslavement of the individual' not the same danger of socialism RIGHTLY WARNED AGAINST against by conservatives? Yes, it is.


    (all caps added for emphasis - in other words, I'm pointing out that I AGREED with conservatives that pure socialism is dangerous)

    Did you not read this?

    As Einstein so eloquently illustrated, pure capitalism will unerringly lead to an oligarchy that is disastrous for the populace...but he was wrong about the necessity of the wholehearted embrace of socialism. We need to accept the most beneficial tenets of capitalism and combine these with those facets of social democracy that ensure the rights of the people are protected.

    Pure socialism - like pure capitalism - is a BAD thing, Arch...you said as much in comment #9, but I had already said it in so many words in my article!

    You and I are BOTH saying the same thing, Arch - but it's as if since I'm a commie pinko liberal, you can't believe that I actually said something that you would agree with!

  • 14 - Glenn Contrarian

    Mar 20, 2011 at 10:31 am

    And Arch -

    Did you not read the following in my article?

    We need to accept the most beneficial tenets of capitalism and combine these with those facets of social democracy that ensure the rights of the people are protected.

  • 15 - Cindy

    Mar 20, 2011 at 10:37 am

    #11

    Doug,

    You don't need to be told why that comment is crap. You either already know or you never will.

  • 16 - Doug Hunter

    Mar 20, 2011 at 10:47 am

    I thought you did good Glenn, as fair and balanced as it gets (without actually switching over to the dark side of course). It's refreshing to see you acknowledge a somewhat logical reason why someone would oppose socialism, this is not good versus evil, these are opinions on the best way forward in which everyone has a vested interest (I don't want a polluted third world slum for my children either, believe it or not). Also, I hate it when I get lumped in with 'Conservatives', but that's just the nature of our binary political system... gotta be one or the other I suppose.

  • 17 - Tommy Mack

    Mar 20, 2011 at 11:06 am

    "Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are even incapable of forming such opinions."

    Albert Einstein

  • 18 - Doug Hunter

    Mar 20, 2011 at 11:22 am

    #15

    I'm going with 'never will'. You're welcome to try and enlighen me though, I love the insight into how you see things as it's fairly foreign to me...

  • 19 - Arch Conservative

    Mar 20, 2011 at 11:25 am

    No I didn't read the article. I skimmed through it.

    My apologies. You did acknowledge the potential benefits of the capitalist approach.

    Creating a healthy society is like creating a really killer spaghetti sauce. You need all the ingredients in just the right amounts to make it work. Stay away from the chef that only uses one ingredient.

  • 20 - Cindy

    Mar 20, 2011 at 1:27 pm

    #18

    Your implication there is that capitalism financially deprives everyone. It seems obvious that if it did not work for anybody at all it would not be supported.

    So to look at you and I and judge the deficits of capitalism based on how we fare is ludicrous. We are among those privileged within the capitalist system.

  • 21 - Cindy

    Mar 20, 2011 at 1:29 pm

    So, to disprove the theory that man lives by greed alone...just because capitalism has been to my benefit does not make it acceptable.

    Some people got seats on the lifeboats when the Titanic went down. That doesn't mean it was a great cruiseline.

  • 22 - Dan

    Mar 20, 2011 at 1:55 pm

    We probably need to dial back socialism a bit in favor of a more pure capitalism. We now allegedly have "jobs Americans won't do" because the social safety net is too generous.

  • 23 - Glenn Contrarian

    Mar 20, 2011 at 2:49 pm

    Dan -

    We started 'dialing back socialism' when Reagan took office, and we've had 'trickle-down economics' ever since. After allowing for inflation, the wealthy have seen their income rise an average of 400% since then, while everyone else has watched their wages virtually stagnate with little growth.

    And you want MORE capitalism? What we've watched with Reaganomics is the largest transfer of wealth - wealth redistribution, really - in all human history...and it was from the American middle-class and the American poor to the benefit of the rich.

    And you want MORE of this????

  • 24 - Glenn Contrarian

    Mar 20, 2011 at 2:53 pm

    Arch -

    No I didn't read the article. I skimmed through it. My apologies. You did acknowledge the potential benefits of the capitalist approach.

    Don't sweat it - that's nothing that I haven't done on BC many times before (and yes, it was embarrassing)...

    ...but I will say I sincerely respect any man who's strong enough to apologize...and I strongly distrust those who are too weak to do so.

  • 25 - Cindy

    Mar 20, 2011 at 5:43 pm

    22 You mean like pick fruit for below minimum wage? I guess people should be willing to lie down and be raped for pennies an hour. Whatever The Market bears, eh? Why does the market always insist that those with money make all the rules and have totalitarian power over those who don't have it? How did this get to be supported by 'freedom fighters'?

    I am thinking that the Libertarian (and the right wing) ideology with its freedom and liberty guise is really about something else. It has a recurring theme a projection of 'laziness' onto people. This is the most consistent belief I have found among people who do not think this system can change or who believe this system is the best. They belief in human 'laziness' and its ultimate evil.*

    How 'bout, "we have benefits that capitalists aren't willing to pay." Doesn't pack as much punch, does it. Doesn't seem ike it comes with any same at all. This is what I tried to explain to Dave Nalle. he didn't get it. We are so conditioned to believe that individuals should be willing to do ANYTHING for a wage even one that won't support them, that it sounds ludicrous to put the shoe on the other foot. Guess we know who holds the upper hand in the free world. Money rules freedom drools.

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