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Saturday 29 October 2022

The End Result Of Capitalism: The End Of Capitalism

Image: Unsplash

If the lie of Communism is that wealth can be spread evenly and everyone can be equal. Then the lie of capitalism is that everyone will get an equal chance to succeed. 

Communism fails for obvious reasons. It is a system that deincentivzes the worker, because no matter how much they contribute, they are only allowed the same share as those who barely contribute. Such a system crushes initiative, and stifles investment. 

Which is why China, a famously Communist nation, has taken the reigns off its citizens to allow them more chances to reap the profits of their endeavours. They worked out from observation and experience how stifling industry and initiative causes the collapse or developmental retardation of more dogmatically communist countries. In response they have created a very different, very Chinese version of creating wealth and sustaining their nstion. 

China is still not free market or capitalist. Wealth created must benefit the people of the nation, and when it no longer does the party can step in and take everything away from those they deem dangerous. The priority of the nation always comes first. Wealth can be created, but it must be done in ways beneficial to China. In doing this, they also show how to solve the issue of the downside of capitalism: it must be given limits. 

Because of the success of capitalism it is hard to highlight to many westerners that it does have inherent and dangerous flaws. Capitalism allows individuals and groups to compete for market share and success, relatively well. It rewards, for a time, initiative and individual creativity. Especially in new markets, such as colonies like early Australia, or new areas of business, like the tech boom of the 90's. But most ardent advocates of capitalism miss the "for a time" part. 

It does reward initiative for a time, but then, as all competitions do, it creates winners and losers. Those winners can get very rich and very powerful and those losers can find themselves having neither riches or power. In this situation you end up with an incredibly unbalanced playing field. It's the Hawks vs District 5 before coach Bombay gets them sponsored. It's the Melbourne Storm verse the Tigers. It's Maverick in an F14 verse anyone in anything else. 

This is not a big deal as long as you have new markets constantly developing. But eventually, as with the old world, the avenues to create wealth become entrenched and favour those who won the competition a generation ago, or more. There is a reason so many people fled Britain and other capitalist countries for the New World, because the old markets became entrenched and new fields needed to be sought out, literally, in undeveloped lands. 

But we are living in a day and age where colonizing new lands cannot happen as it once did (it can to a degree, just look at how Latinos are colonizing the United States, but not in the same way). So, the situation we are getting in the West is that wealth is concentrating into the hands of less and less people, and everyone else's share of the pie is shrinking. 

Not only can you not get the same opportunity as your fellow Aussie or American, anymore, you don't even have near the same opportunities as your parents or grand parents once did. The fields of new wealth creation are shrinking. This is the natural development of markets as they age and mature. 

This can be undone, but usually only through great disruption, like massive advances in technology freeing people from labor, or cataclysm, which breaks the system allowing it to be rebuilt and reshaped. But without such disruptions, the winners take and hold the field, and those able to compete at a high level become fewer and fewer. 

People need to realize this is a major flaw in the capitalist system. My thought, is that it does not mean we reject capitalism, just that we must recognize that God gave ancient Israel economic resets for a reason. Because inequality is a natural outcome of a healthy economy. Vast inequality is a direct result of it not being addressed, and a reset every generation or so levels the playing field again. A reset of the kind where people own their assets and can then build again from a solid, debt free, unencumbered base; a Jubilee. 

This idea might anger the radical devotees of free markets. But to not do something will likely see us end up in entrenched oligarchy with everyone becoming indentured servants like our peasant ancestors. The massive transfer of wealth from the middle class to the billionaire class during the pandemic shows that even major cataclysms (it matters not if they are man made or natural) can overwhelmingly benefit the entrenched wealthy, rather than stoke innovation, and shows the situation is exacerbating. Those with the keys of power and wealth have an ever increasing advantage. 

Afterall, if the goal of capitalism is creating wealth generated via competition, and the result of competition is to create winners and losers, then will not the winners eventually ensure their descendants remain winners at the expense of the descendants of the losers? In other words, the end result of capitalism is, and can only be, the end of capitalism, winners holding the field at the expense of everyone else, unless society politically intervenes to reset the playing field. If you love capitalism, you need to at least ponder this, because every day, this realisation is dawning on more and more people: that opportunity is becoming more and more scarce.

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