It’s our longest-running mailbag theme… But here’s what you’ve been missing about the capitalism vs. socialism debate… In the mailbag: “Barring a catastrophic event, socialism will reign”…
Here at The Daily Cut, our mission is to try to put you on the right side of history.
Each weekday, we bring you the big trends shaping the markets… and society… so you can grow your wealth and preserve your personal freedom.
For example, we’ve written about the crypto revolution. We’ve also put the rise of the digital surveillance state on your radar… along with the coming age of AI… the End of the European Union… and our self-driving future.
But nothing has stirred more controversy among readers in our mailbags than the debate that kicked off after we began asking questions about the rise of socialism in America.
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Take this snippet from reader Brendan V. in Monday’s mailbag…
Take a look at how almost every socialist state ends, not how they begin. The real question is do you think a world full of people can actually run well if we are not all pulling our weight?
My frank answer is, “Hell no!” If someone doesn’t want to get on board, and work to contribute, they don’t deserve to benefit… certainly not to the same degree as those who do. That doesn’t mean we have to be callous and hang people out to dry. But we certainly shouldn’t reward them for it.
But it’s not just defenders of capitalism who are fired up. Take this piece of feedback from last Wednesday’s mailbag…
For far too long, our capitalism rewards those who are already rich and powerful. The rest of America survives on scraps. Socialism makes sure that everybody benefits from the country’s wealth. That is why it is attractive to the young people.
Hundreds of similar emails have hit our inbox over the past few months.
In fact, the mailbag debate over the merits of capitalism and socialism is the longest-running since we launched The Daily Cut last August.
But in today’s dispatch, we’ll show you why this focus on socialism vs. capitalism is hiding a much deeper truth about the way the world works.
And for that, we’re turning to Legacy Research cofounder Bill Bonner.
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He’s a pioneer in the newsletter business.
And he’s the guy who started the ball rolling on what would eventually become Legacy Research – the new publishing alliance between Bonner & Partners, Casey Research, Palm Beach Research Group, and Jeff Clark’s Delta Report.
In 1978, Bill set up a small publishing company in a row-house in Baltimore. He named it after the agora, the public square in ancient Greece where citizens would gather to exchange and talk about ideas.
Today, The Agora has more than 2.6 million paid subscribers worldwide. That’s more digital subscribers than The Wall Street Journal and The Washington Post.
You just don’t get that in the mainstream news.
Watching the mainstream news is like watching a bad opera. You can tell from all the shrieking that something important is supposed to be happening.
But you’re missing the plot entirely.
And that’s the way it is in the debate over capitalism versus socialism… It distracts from the real battle, which is between what Bill calls win-win and win-lose deals. Here’s Bill with more…
The capitalism versus socialism debate is a red herring. There are only two ways to get what you want – win-win deals or win-lose deals. There is no other way. You either cooperate or you defect. You either give to get… or try to get without giving anything in return. It’s either reciprocal or it’s not. It’s either voluntary or it’s forced.
What people call “capitalism” is, in essence – but not always in practice – a system that runs on win-win deals. Bill…
Win-win deals are winners because they are always voluntary. So they allow people to decide for themselves what they want. Then, through the information carried in market-set prices, these deals help businesses and individuals maximize their satisfaction.
The baker does not light his oven at four in the morning for the love of baking. Neither does the bakery patron share his wages with the baker out of compassion. Rather, both are engaged in a win-win deal of mutual benefit and voluntary exchange.
Win-lose deals are different. They’re involuntary… and one side always comes out on top.
In a win-lose deal, one side imposes the deal on the other side. Bill again…
In win-lose deals one side reaps where someone else has sown… one side takes the profit where someone else has taken the risk… one side enjoys capital it never saved and drinks it never poured.
Some people do their win-lose deals outside the law – petty stick-up men and counterfeiters. More of them use the law itself – the administrative, regulatory, and crony apparatus of government – to get what they’re after.
You could call that “socialism.” But there are plenty of win-lose deals happening in “capitalist” America.
Bailouts… quantitative easing (“QE”)… zero-interest-rate policy… trade wars… the Green New Deal – and all other Washington boondoggles – are win-lose deals… even though they’re all policies of a supposedly capitalist system.
In short, these are all ways to transfer wealth from ordinary folks to the insiders and elites that run the show.
We’ll leave Bill with the final word on what’s at stake…
Real wealth is created by robust networks based on win-win deals. You can live with win-lose deals. But you will live in poverty and backwardness.
And if you get enough of those win-lose deals over a long enough time, you’ll end up walking on all fours… with the win-win guys throwing you scraps of food.
The debate over socialism vs. capitalism continues. But today, we’re hearing from readers who all believe there’s one problem – the government…
Barring a catastrophic event which greatly disillusions the lives of the greater portion of American people, socialism will reign. The general spirit of indifference is simply too great at this point to overcome.
The government continues to grow in size, burden, and boldness underneath the façade of battle lines. Only the working class will wake up to this once it’s too late. (Is it already too late?) Major malignant societal changes are inevitable and are most likely imminent. If you’re not already, then get ready.
– Nick F.
The choice is not capitalism vs. socialism. Maybe that was the choice in the 1920s to 1970s, but it’s not relevant in the 21st century. Today, there are three options on the table, with shades of grey between…
Unregulated Capitalism – The U.S. and UK are not exactly unregulated but are the closest to this.
Social Democracy with Liberal Capitalism – This is the path Germany and Nordic countries took to great success in the post-WWII era, where most of the EU currently is, and where some “leftist” or “Progressive” Democrats want to take the U.S.
Unregulated Cronyism – This is where Russia is, as well as a number of other countries that participate in the global economy but have internal economies that are not defined by rule of law. Instead, they’re defined by who has money and connections to bend the “law” to their own purposes. This is also what much of human history has been.
Today’s problem is that No. 1 (Unregulated Capitalism) and No. 3 (Unregulated Cronyism) are becoming a little too close for comfort – with the former beginning a slippery slope into the morass of the latter.
The question now is whether the U.S. will, or even can, “stay the course” with Unregulated Capitalism.
– Parker H.
The real problem with every system is compulsion. Some people want to control others, and some apparently like to be controlled. But neither of those groups wants to leave any latitude for the live-and-let-live individuals who want to go their own way, supporting themselves, and neither imposing on others nor being imposed upon.
I would propose that ALL associations should be voluntary – we join if we want, and we leave when we want. Clearly, joining might involve a contract, and leaving might have consequences imposed by that contract, but if we accept the contracts and consequences, we should be free to do as we choose.
The legal monopoly on the use of violence to enforce its will within a given geographic limit – which is the real definition of every government – is the problem.
– Gordon F.
What do you think of Bill’s big idea? Is it the key to understanding the capitalism vs. socialism debate? Or is Bill missing something important?
Have your say at [email protected]. We read every piece of feedback you send us. And we love to make this a two-way conversation. So don’t be shy.
Regards,
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Chris Lowe
April 18, 2019
Dublin, Ireland
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