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July 19, 2007

Sociocapitalism

There are many forms of capitalism, including merchant capitalism, laissez-faire capitalism, industrial capitalism, finance capitalism, and market capitalism.

 Sociocapitalism is an improved version of capitalism that corrects its weaknesses. It has the following guidelines:

1. The mechanism is based on the self-regulating supply and demand (the "invisible hands") in general except those stated in items 6-8.

2. The basic principle is free competition and seeking profit (the principle of "survival of the fittest"). But it also adopts social policy to help the disadvantaged through universal healthcare, low income subsidy, etc.

3. It normally requires private ownership of capital and properties.

4. It favors free market, deregulated rather than centrally planned economy, and minimum government intervention in general except those stated in items 6-8.

5. It prevents excessive uneven wealth distribution through social policies such as ceiling of wealth or accumulative tax.

6. It adopts some regulations in regard to international trade to reduce the disadvantages of developed market due to its higher cost and to protect the emergent market from imperialism.

7. It utilizes government intervention in a mixed economy to prevent "market failure" such as the Great Depression.

8. It adopts regulations to prohibit immoral business practice, poor labor treatment, imperialism, etc. It also uses regulations to protect the environment from profit-driven pollution or abuse.

 

December 03, 2006

The Ideal Society

Rick Leeland

December 3, 2006  

   What is the best form of society? The dream of building utopia has propelled human beings to try all sorts of political and economic policies.

   On the political side, most of the societies in early human history are governed by monarchies. Each society’s value lies on the military strength and the ruler’s wisdom. But an unfortunate phenomenon was observed: the qualities of those individuals who conquered and built societies were seldom inherited by their heirs. Noble blood seemed to flow randomly and renders monarchy hopelessly inept to be the form of utopia. Nobles were born in adversaries, not in comfort.

   In the 18th century, the United States became the first liberal democracy, where most men can vote to shape the form and direction of politics. Shortly after, France also adopted liberal democracy. From that point on, democracy replaced monarchy to become the political framework of choice.

   On the economic side, The ancient economy was mainly based on subsistence farming. In the 18th century, industrial revolution replaced subsistence farming with machinery based industries. The mass production enables a new form of economics: capitalism. The name indicates that the driving force of this kind of economy is the capital that is needed for the machinery. Mass production created massive wealth for the capitalist, and the mass populations share the wealth by working for the capitalist.  

   The nature of capitalism causes excessive uneven wealth concentration that is not sustainable for a functioning society. All sorts of remedies were quickly proposed to prevent catastrophic outcome of the society.

   Several forms of socioeconomic policies surfaced during this period of debate. The government sometimes side with the big companies and operate in a form called fascism. In this kind of society, the right of labors are suppressed and the excessively uneven wealth distribution is allowed. To balance the injustices presented by the capitalism, intellects proposed socialism, where the fruit of capitalism is to be curtailed with the redistribution of wealth through accumulative tax or social welfare. Some even proposed a radical form of socialism called communism, where all the production and properties are to be shared by all citizens. This ideal has been tested in Soviet Union and Communist China and suffered complete failure. It became evident that without competition the production decreases.

   After two hundred years of chaos, some mixed form of capitalism and socialism has been accepted as the choice of socioeconomic policy in Europe and United States. To avoid repeating the same mistake of communism, this policy should be called sociocapitalism to emphasize that capitalism should always be part of the socioeconomic polities because free competition always improve the production.

   The ongoing task is how to curtail the excessively uneven wealth distribution. The principle of sociocapitalism is very simple: free competition is encouraged, but the wealth distribution is controlled to prevent the natural result of capitalism – unsustainable overconcentration of wealth.

   The main method to achieve this goal is accumulative tax, where the range of income discrepancy is reduced. The drawback of this method is that the goal is not explicit. The constant complaint by the rich and the disguised fascist elected government often change the policy secretly.

   The only way sociocapitalism can work in the long run is to create an explicit policy of wealth distribution. A government can for example, announce that a target of  100 times the average wealth for the richest. Anyone who are not satisfied with this level of wealth is free to pursue happiness in another society. The overproduction in modern society has rendered everyone to be replaceable. The 100 times average income can provide more than luxurious life style. And for every rich man who lives in this level, most others will be forced to live in below-average condition. This target though seem unfair to the poor, it is necessary to keep the spirit of capitalism going.

   Sociocapitalism will create the largest portion of middle class in human history. Social injustices will all but disappear. Due to the selfish nature of human kind, the future of sociocaptialism is rocky ahead. No matter what form of social policy is to be adopted, there will be fierce opposition by those who already have too much.

   But we are so close to the ideal society that we must not give up trying.

December 01, 2006

The Success of European Sociocapitalist Policy

Rick Leeland

November 30, 2006 

The main objective in applying social policy on top of capitalism by most European nations is to maintain social stability. The excessive uneven distribution of wealth - the few possess most of the wealth - is the primary cause of war and the downfall of a society.

After two savage World Wars, people in Europe witnessed first hand the cruelty of war and unconsciously/consciously decided to avoid war with all means. One of the main goal of social policy is to reduce the poverty and thus reduce the chances of civil instability, revolution, and ultimately, war. This is why Europeans have been supportive of their governments' social policies so far.

Though many people view taking money from the rich "immoral," in reality there is no greater sin than war. If social construct can keep most people from falling into poverty, and thus greatly reduce the chance of human slaughter through war or revolution, then it can not be "immoral."

Granted, there are many causes of war. But many wars are waged by the poor fighting for greater share of resources and wealth. The next World War is most likely to be waged by an underdeveloped nation who possessed nuclear power.

Many economists believe that the Europe can not sustain its social policy. I certainly hope not. Europe is one of the best societies in human history. Not only does it maintain a more balanced environment for its people, but also achieved great scientific success in physics (CERN), airplane (Air Bus), train (Super Train), etc. Who says capitalism is the only way to inspire creativity?

There are many similarities between U.S. and ancient Rome. U.S. consumes eighty percent of the World's savings. Using a large portion of the resources of the world, U.S. has yet to face the problem of poverty like most of the world. And as a result of the known effect of capitalism, smaller portion of the U.S. is getting greater share of the wealth every day. Sooner or later the world will take their share of the wealth back and the rich will take most of the rest. By the way, at the end of the Rome civilization, ninety percent of its citizens were under poverty line. Can such civilization sustain itself?

It is possible that Europe will slowly forget about the pain of War and abandon their current social policy. This will be a big mistake. I think adopting some adjustments is enough to cure temporary problems and maintain its original goal of social stability.

U.S. on the other hand, need to develop some kind of oversight on the social policy. Without being destroyed by war, it is unlikely that U.S. citizens will support similar social policy of Europe. But if U.S. has reached its peak and can no longer enjoy the disproportional share of the world's wealth, then there will be choices ahead. Either It can let the capitalism run its course until the fittest grab most of the wealth (and result in revolution or civil war), or it can bypass the inevitable and adopt some form of social policy like Europe.


November 23, 2006

The Cycle of Socialism and Capitalism (November 23, 2006)

The economic policy of society goes in cycles. We utilize capitalism to stimulate economy through free competition when the wealth is relatively evenly distributed. Then we adopt some socialist policies when the distribution of wealth is  lopsided and destabilizes the State.

Near the end of the capitalism cycle, superrich people who control big firms often use fascism to prolong the cycle and protect the excessive wealth of the superrich. The fascism controls the State and the Church with state sponsored projects, propaganda, secret police (internal control), and war (external distraction).

On the other hand, the intention of socialism is to give some of the excessive wealth to the poor to make everyone more or less happy, in turn stabilizing the society. No one is irreplaceable in a society. Excessive wealth acquired through inheritance, lucky investment, should be given to the State when poverty becomes problematic. In turn, the State uses this money to help those do not have inheritance, wiped out by bad investment, or do not get the lucky break in business. In the end, the rich (the "Haves") will still be much richer than the poor (the "Have-Nots"), but not much more. We set a limit to the game of competition.

The method of Socialism includes social warfare, accumulative tax, or even state-sponsored public works programs that employ many workers. Another possible method is setting a limit of income for all the people in a society.

The fundamental spirit of Socialism is to guaranteed a basic standard of living for all people. With socialism, people can choose to share rather than to compete. The advantage of this concept is that radical sadness is taken away from the society and the danger of revolution is lessened; the disadvantage is that unwillingness to work can lead to the decrease of wealth and living qualities of the society. Thus leads to the end of socialism cycle and the State needs to encourage Capitalism again to stimulate growth.

November 22, 2006

The Limitation of Capitalism (November 22, 2006)

Rick Leeland

November 22, 2006 


If the capitalism is credited for the socioeconomic up-cycle, shouldn’t it be blamed for the socioeconomic down-cycle as well?

T
he socioeconomic cycle is different from the “business cycle.” The former gauges the overall growth, wealth distribution and other social aspects, while the latter only gauges the overall growth of economy as measured by the growth domestic product (GDP).

T
he socioeconomic cycle focuses on an important factor – the wealth distribution. The concept is very simple: if the majority of the people – normally means the middle-class – are worse off in an economic period, then for the society as a whole, it should be viewed as a down-cycle.

Capitalism by its free-competition nature speeds up the wealth concentration process. One perfect example occurs in China. Twenty years ago the communist China decided to open its economy to private business. In a shockingly short twenty years, .5 percent of the people now control 95 percent of its wealth. Capitalism in the 21th century is more effective than ever – it can give the bulk of the wealth to a few hands in unprecedented speed.

So it all comes down to what is more important in a society. Is the benefit and happiness of a few more important than the majority? The myth that there is a “trickling effect” that the wealth of the superrich always flows to the rest is simply a delusion – it seldom happens.

Capitalism has its flaws, the main one being its tendency to create excessively uneven wealth concentration. Unless we acknowledge its limitation, we will face the inevitable in the future social unrest and revolution. The cycle of wealth concentration and revolution has repeated many times in the human history. We just never learned.

We must a
ct now before it's too late.