Socialism against capitalism
Only for a short time did the collapse of the Soviet Union silence Marxism. The fatal attraction of Karl Marx's thoughts has returned—not because they are right, but because they are wrong
"All according to their abilities, each one according to his needs"—who wouldn't agree with that? Who didn't want a society that guaranteed prosperity for all, but didn't require any special performance from anyone? Yet the error of this proposition lies in the assumption that the productive forces can be maintained even if the state directs production and distributes the result according to political categories.
Socialism promises equality for all, with the addition that everyone is richly supplied, regardless of whether they individually contribute much, little, or nothing to valuing creation. According to the ideology of socialism, this promise, however, must not be understood as an invitation to parasitism and laziness, since, according to this thesis, a "new man" would emerge under socialism. Socialists believe that unlike capitalism — where people act for their individual benefit — socialism would create a type of person who abandons selfishness and behaves in an altruistic and supportive way according to the demands of society.
The dispute about the possibility of a change in human nature can go on forever. However, the problem of why socialism doesn't work lies elsewhere: Rational economic calculation is not possible under socialism. Even if something like a "new man" should emerge that behaved like an angel, socialism would fail. The problem with the socialist economy is not egoism versus altruism, but that without individual property and competitive markets, it is impossible to calculate in an economic rational form and thus to work productively.
Socialism, as soon as it begins to put this ideology into practice, automatically leads to an economy of command. Where there is no private property, the state must dictate the use of the resources. Even in the case of “moderate socialism”, be it in its green, social-democratic, or nationalistic form, such an erosion of economic rationality also cannot be avoided.
Marx completely misunderstood the role of the capitalist in the market economy. He identified as a capitalist someone who, as was the case with his sponsor Friedrich Engels, owns a fortune and receives dividends and interest payments like a rentier earning coupons of interest payments from assets without any own contribution.
Biographers of the leader of the Communist International note that Karl Marx never saw a factory from the inside and avoided any contact with the workers. Friedrich Engels, the financial supporter of the Marxist project to conquer the world, was the heir to a fortune his father had amassed. Engels used his financial legacy not only as a supporter of the socialist movement but also as a playboy. Engels kept Karl Marx afloat with monetary benefits, especially in the time after the mentor of socialism squandered his father's inheritance and then his wife's.
To understand the role of capitalists in the market economy, it is necessary to take into account that each product goes through a long production process until it reaches consumers. This process extends from planning to the various processing stages to the receipt of goods in the warehouses and showrooms and sales and to the marketing of the goods for sale. Final payments are made only with the sale of the finished product.
Until the capitalist receives an income from the consumer for advanced finance capital, time passes and the whole process is exposed to many risks and uncertainties. Capitalists and entrepreneurs receive their reward for waiting and enduring risks and uncertainties, while wage earners receive their compensation regularly and even before the product reaches the end user and is finally paid for.
Marx and his successors ignore the fact that capitalists pre-finance and preserve the capital structure of the economy. Capital formation requires abstention from consumption. Capitalists are the ones who pre-finance the production process until the commodity reaches the consumer as a finished product.
The inequality of income and wealth under capitalism as injustice is a constant reproach of socialists. Marx misunderstood the nature of inequality in a market economy and placed capitalist property in the same category as he did with imposing wealth under feudalism. Marx did not realize that the market process creates inequality because failed projects disappear.
Socialists see those who have amassed a fortune. They bemoan inequality and ignore the fact that the capitalist process is a process of elimination that causes the losers of the game to leave. In the competitive market economy, the term "successful entrepreneur" is a pleonasm. Entrepreneurs who are unsuccessful are forced to leave their projects. They provide space for those entrepreneurs who serve their customers better.
Market competition works as a continuous process of correcting errors. In market competition, only successful entrepreneurs who master the challenges of satisfying customer needs remain in business. Companies that go bankrupt disappear. Bankruptcies make capitalism productive and are a sign that markets are working, at least insofar as they are not compelled to do so by misguided policies.
In the reality of the market economy, the Marxist construction of a "capitalist class" does not exist. Every company has to fight every day to survive in the market. In free capitalism, the exits are as open as the front doors. Capitalists and entrepreneurs have to prove themselves in competition on a daily basis. There is no guaranteed membership.
Marxism serves to turn resentment into a social problem. Marxist ideology is attractive because it offers an arsenal of bile to provoke personal anger and turn frustration into a political agenda. Socialists are excellent propagandists because they have to hide their intellectual weaknesses. They appeal to emotion and in this way, they gain their brainless followers.
Socialism comes not only in red and brown. Its modern fashion dress is green. The errors remain the same. One can be a socialist only as long as one has not yet understood how either socialism or capitalism functions.