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Current events

We are seeing many discussions about what kind of economy Russia has. Much problematic oversimplification has been revealed. Some people imagine that Russia has a free-market capitalist economy while some believe it is socialist or communist. Neither of these ideas are correct.

Russia obviously isn’t attempting Communism. Their economy is an eclectic, changing amalgamation with elements of Feudalism, Laissez-fair capitalism, mixed economy capitalism – and we mustn’t discount elements similar to Korean Jucheism. Like the leader of North Korean, Vladimir Putin has not and desires not any specific economic system. Rather, Putin is an absolute dictator who wants a flow of money and goods to benefit himself and those oligarchs who aid his political ambitions.

There are varying degrees of what appears to be capitalism, but without enough legal guardrails to create genuine free trade, economic opportunity, or an effective social safety net. The laws we see at any given moment are only stable so long as the flow of money and goods serves his and the state’s goals; laws change on Putin’s whim.

“Imagine a huge country occupying 1/6 of the Earth’s land. Imagine 220 million people who have been building factories, power stations, roads for 70 years. And now imagine two dozen people who, during the collapse of the USSR, “privatized” all the wealth of this country. Now you have an idea.”

Quote from Roman Kutuzov, Deputy Editor in Chief at Vademecum Magazine

Not just capitalism of communism: What kinds of economic systems are possible?

Manorialism – the manor system – was a social-economic system of and ownership (“tenure”) in England, western Europe, and parts of central Europe, during the Middle Ages.

Its defining features included a large manor house in which the lord of the manor and his dependents lived and administered a rural estate; next was a population of labourers who worked the surrounding land to support themselves and the lord. They fulfilled their obligations with labour or giving produce at first. In later centuries labourers gave cash payments to the manor.

Manorialism originated in the Roman villa system of the Late Roman Empire. An essential element of feudal society, manorialism was slowly replaced by the advent of a money-based market economy and new forms of agrarian contract. For the most part it ended by the time of French Revolution.

Some critics of capitalism lump manorialism in with capitalism to create what they say is a millennia-long pattern of economic oppression. However, historians do not agree that manorialism is capitalism.

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Mercantilism –  An economic system in many Europe nations from the late Renaissance to the early-modern period (15th to the 18th centuries)

It is based on simple, intuitive economic theory – but had to be modified because over time people realized that simple intuition fails to understand how economies actually work. The basic idea is that national policy should encourage trade which increases exports to other nations. The aim is to create a trade surplus. They convert the surplus into precious metals, and hinder the transfer of money and precious metals to other countries. The country thus obtains more wealth.

The early form of this idea was called bullionism, focusing on a nation hoarding gold bullion. It soon evolved into a more flexible form, mercantilism, viewing money/currency as more important than focusing on stores of metals.

The Austrian lawyer and scholar Philipp Wilhelm von Hornick detailed a program which sums up mercantilism:

• every little bit of a country’s soil be utilized for agriculture, mining or manufacturing.

• all raw materials found in a country be used in domestic manufacture, since finished goods have a higher value than raw materials.

• A large, working population should be encouraged.

• All exports of gold and silver should be prohibited and all domestic money be kept in circulation.

• All imports of foreign goods be discouraged as much as possible.

• When certain imports are indispensable they be obtained at first hand, in exchange for other domestic goods instead of gold and silver.

• As much as possible, imports be confined to raw materials that can be finished in the home country.

• Opportunities should be constantly sought for selling a country’s surplus manufactures to foreigners, so far as necessary, for gold and silver.

• That no importation be allowed if such goods are sufficiently and suitably supplied at home.

Some critics of capitalism lump manorialism in with capitalism to create what they say is a millennia-long pattern of economic oppression. However, historians do not agree that mercantilism is capitalism.

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Marx and Engels Socialism

Marx and Engels had a utopian dream for what they claimed to be was scientifically proven ultimate form of society, communism. They also clearly recognized that there was no way to transition a society from what it was, in the mid 1800s, to communism, in one step. Their communist manifesto outlined a series of changes that people would gradually need to go through to create such a society. Socialism is the word they chose to describe an intermediate economy and society.

In communist-aimed socialism, the state owns and operates all industries and land. There is a centrally planned economy. Private property is permitted for consumer goods, clothes, books, art, etc. But land and property, almost all buildings, and all industries, are owned by the state.

A semi-capitalist market exists, as people earn money and spend it. In various ways this form of economy existed under Lenin, Stalin, and Nikita Khrushchev.

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Marx and Engels Communism (final stage, aka Utopian)

In their imagination, someday the entire world will be politically and economically one unified entity. The one world state owns and operates all industries and land. There is a centrally planned economy. The state and even the economy wither away, and eventually become almost non-existent, as the social order, allocation of goods and services, becomes virtually perfected.

Communist nations admit that no communist nation ever actually came near this goal, although on an official level they maintain that this is still the plan.

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Jucheism – North Korean communism

Originally North Korea followed Marxism–Leninism until juche was declared a distinct ideology by Kim Jong-il. Now it is a set of principles: political independence, economic self-sufficiency, and military self-reliance. The state owns and operates all industries and almost all land. Centrally planned economy. Private property permitted for consumer goods, clothes, books, art, etc. Some private land ownership is now recognized by the state.

North Korea seems to be experimenting with allowing small private businesses as well, but, as far as I can tell, this isn’t really a coherent, ideological system. More like a top-down, absolute dictator who doesn’t care much about whether things are communist or capitalist so much as wanting absolutely everything under his control, with less or more capitalism as long as it serves his and the state’s goals.

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China style communism (pre 1980)

The state owns and operates all industries and land. There is a centrally planned economy. Private property is permitted for consumer goods, clothes, books, art, etc. But land and property, almost all buildings, and all industries, are owned by the state.

A semi-capitalist market exists, as people earn money and spend it. In various ways this form of economy existed under Mao Zedong, Liu Shaoqi, Deng Xiaoping, and Li Xiannian.

China’s economic system was changed in a remarkable way by Deng with his Four Modernizations program in 1977. It was a program to energize China’s economy following the death of Mao Zedong.

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China style communism (post 1980)

Politically everything is run by the Communist party. No democracy. But economically China has allowed private enterprise to have much more leeway, and as a result, has more a rule in the overall national economy. Private property permitted for consumer goods, clothes, books, art, etc.

An increasing amount of land and housing is totally private. Anyone have any idea how much of China’s houses and buildings are private? Seems like an almost capitalist market exists, as people earn money and spend it.

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Anarchism

Total or almost complete total absence of the state. Order is derived from ground-up, self-governing groups and communities. There is no private land or businesses. (What does anarchism say about private belongings?)

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Anarcho-Capitalism

Total or almost complete total absence of the state. Order is derived from ground-up, self-governing groups and communities. People can own private land and businesses and property. A capitalist market exists, as people earn money and spend it. Utilities and essential services are provided almost entirely by self-governing groups.

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Fascism

Most people assume that Nazi Germany and Fascist Italy had right-wing economic systems. While fascism is a political and socially right-wing dictatorship, it doesn’t specific any particular economic system.

In practice Fascist economies allowed people to own private property and belongings, homes, businesses, etc., and encouraged capitalism. This is actually a centrist, populist economic system.

David Brin writes:

Their rule was one of unparalleled horror, but Nazi opinion about personal property was indisputably far more centrist… than old-line Marxists would have us believe. This at once illuminates a lesson which the old model conveniently disguised, and yet one of vital importance to us all — that the center, too, can go mad.

Communists perpetually repeat the assertion that Nazism grew out of the political right wing. The notion has been repeated so often that it is taken as gospel, even by fierce opponents of communism… Nazi leaders claimed that they were the sole defense of the common people against the contrivances of both the “Bolsheviks of the east” and the “capitalist plutocrats of the west.”

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Libertarianism (strict form)

The strict Libertarians I have read seem identical to Anarcho-capitalism. Some Libertarian writers openly say that their goals are ultimately the same as anarcho-capitalism. This is the philosophy of Ayn Rand. In this form of government all utilities and essential services are provided entirely by private businesses.

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Moderate Libertarianism (Is there a better name for this?)

A system in which the state is reduced in size and political power as much as possible, but still recognizing the need for a state to exist, to create rules for the welfare of society. People can own private land and businesses and property. A capitalist market exists, as people earn money and spend it. Complete separation of government from the economic sector. Utilities and essential services are provided almost entirely by private businesses.

Question: Is there any significant and consistent difference between this and laissez-faire capitalism? See next entry:

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Laissez-fair capitalism

In this economic system, transactions between private groups of people are free or almost free from any form of economic interventionism. Almost no government regulation and no government subsidies.

Rests on the following axioms: “the individual is the basic unit in society, i.e. the standard of measurement in social calculus; the individual has a natural right to freedom; and the physical order of nature is a harmonious and self-regulating system.”

State activity is limited to maintaining order and security, providing public goods and services, and providing the legal framework for the protection of property rights and enforcement of contracts. Utilities and essential services are provided to a large degree by private businesses.

This economic system is often mistakenly attributed to Adam Smith in his “The Wealth of Nations,” but see below for Smith’s true views.

Question: Is there any significant and consistent difference between laissez-faire and moderate Libertarianism?

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Mixed economy

The view that capitalist market economies are good and necessary, but not stable in the long run without some government regulatory oversight and interventions into markets. John Maynard Keynes is one of the advocates of this system. Capitalist aspects include private ownership of land, homes, businesses; encouragement of profit-seeking enterprise.

Markets are subject to government regulatory control through fiscal and monetary policies. The goal is to counteracting capitalism’s history of boom/bust cycles, unemployment and often massive income disparities. Some public utilities and essential services are provided by the government. The state provides most education, funding for healthcare, creates national and state level physical infrastructures.

This contrasts with laissez-faire capitalism, where state activity is limited to maintaining order and security, providing public goods and services, and providing the legal framework for the protection of property rights and enforcement of contracts.

Here is a two-dimensional systems for showing political and economic beliefs

Or we could show various ideas like this

Some hopefully non-partisan commentary:

The mixed economy system is the system closest to the teachings of Adam Smith. Smith was aware that unregulated markets don’t always produce the best outcomes. His idea was that creative free market competition merges with compatible notions of public responsibility.

This is typical American style capitalism, like what is promoted by people like an Eisenhower or Romney Republican or moderate/centrist Bill Clinton and Barack Obama Democrat.

America’s economy in practice, however, is largely controlled by billionaires and companies that have become oligarchies. Their campaign donations sway politicians to create policies that they favor. There is always lip-service to the idea of competition and free markets, but we have instead increasing monopolies and centralization of economic-political power in megacorporations .