This is a companion discussion topic for the original entry at https://www.zeitgeistmovement.cz/2023/10/26/proc-je-socialismus-k-nicemu/
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The debate between “Capitalism” and “Socialism” has been a longstanding topic in discussions about economic and social organization. In relation to socialism, terms like Marxism and Communism are often used interchangeably in popular culture, but for the purposes of this article, we will not delve into nuanced semantics. There is no need.
The utility of any concept depends on a shared understanding. If we were to ask random people on the street to define capitalism and socialism, we would receive a range of definitions. Though, you would find that definitions of socialism would be far more subjective and varied compared to definitions of capitalism. There is a reason for this.
To achieve a meaningful understanding of these terms, we must first determine the context of use. In this, we are going to take an economic perspective as opposed to a philosophical one and we are going to use the lens of systems analysis or system dynamics – the science of organization.
Systems analysis in the context of economics involves understanding the emergence of dynamic individual and institutional behavior within a set economic structure, in an effort to understand outcomes - also known as functions. What does the system do and not do based on empirical observation and formal understanding of its mechanics?
While the term “system” can apply to any form of organization, an economic system is distinct and particular in the same way the design of a mechanical engine is distinct and particular. It is dynamic and analysis is focused on real, measurable, unfolding behavior rather than ideology or wishful thinking.
An economic system is defined by its structure, fully understood or not, which guides and controls actions within its boundaries. For example, the engine in a car is a specific system with defined functions, composed of parts and their dynamic interrelationships, ultimately serving the total purpose of enabling transportation.
Although the capitalist system is significantly more complex and has evolved over generations in an adaptive process rather than from a direct human design, it is still a dynamic machine with inherent properties - a defined system structure with specific behaviors, constraints, and functions — and it is not neutral. Just because humans engage in an economic system does not mean the whims of human action create infinite potential for that system or change the system in real time. Outcomes are fundamentally constrained by its structure no matter what people do.
In this, there is a tendency to use adjectives like “crony capitalism” or “state capitalism” to qualify things; such distinctions are highly subjective and obscure the foundational structure of the system, creating confusion as to what the system is actually doing, endogenously. This obscuring prevents people from recognizing the functions of the system as they truly are, rather than as they may wish them to be, with apologist parties often making up excuses as to why not.
In the language of systems science, capitalism and its dynamics are part of what we refer to as a complex adaptive system. The history of capitalism has no definitive beginning. While classic economic literature often categorizes different economic modes throughout history, from hunter-gatherer behavior to mercantilism to the supposed socialism of the USSR, with blurred distinctions including perhaps fascism and beyond, we can first begin to understand the foundation of the capitalist structure by examining the fundamental determining behavior of market trade.
Simply, a clear distinction can be made between a capitalist system and a non-capitalist system: The use of markets.
Markets are indispensable to capitalism and define its very nature. From the act of market trade, the structure develops in a self-organizing manner. For instance, markets can only exist if there is property or ownership. Ownership leads to the idea of capital, which in turn creates group competitive incentives, resulting in hierarchies, power imbalances, inequity, and other common features. These features also generate responses such as legal regulation against property crime, etc.
Such links extend from the core mechanism of trade to the establishment of institutions and structure, including the basic nature of government itself and beyond.
In other words, the mechanism of trade is the seed that has given birth to the defining structure of our economy and, in many ways, our very understanding of normality today — a self-organizing process of institutional and system development. If we created a new earth tomorrow and threw a bunch of humans in and introduced them to this economic system of market trade, it would just be a matter of time before the basic nature of their society mirrored our own. Hence, there’s a fundamental structural determinism based on this root behavior.
In fact, the term “capitalism” is somewhat redundant. What we have is a market economy, which possesses inherent features that form the basis of the capitalist conception we are taught.
Capitalism is simply the manifest academic conception of dynamic market trade and its systemic outcomes in the context of institutional, cultural and governmental development and whatever variations/differences we have seen on this planet since the advent of trade have actually been deeply minor compared to the similarities shared.
That noted, the market system is hence a dynamic system with structure and not a blob of malleable philosophical incentives as many would like to think with people defining the system’s character though collective mass behavior. The system tells us what to do and not the other way around.
It also has properties inevitably shared with other dynamic complex systems found in nature, involving self-regulation through feedback processes and adaptive (or maladaptive) behaviors as they interact with a changing external environment. These concepts are well-established in the field of systems science and literally every country in the world that uses a market economy – which is every single one – is utilizing the same foundational structure regardless of how it’s administered or regulated.
The only variation we observe within this basic system structure is the extent to which external forces attempt to manage or control it. This intervention does not alter the system structure itself but rather influences its endogenous behaviors, reorienting outcomes within certain limits. An example of this is the degree to which a state legally regulates its markets, such as with price controls, as opposed to the laissez-faire approach which rejects such intervention on a philosophical basis.
There is an immature, purist notion in modern economic thought that advocates for minimal interference or regulation of the market economy, promoting “free” markets, as they call it. Although this romantic ideal has been debunked in terms of ensuring system stability within the societal context, it remains persuasive to many who fail to objectively assess the actual behavior of the system and its endogenous gravitation towards instability which must be countered. In a kind of religious ideal, they wish to assume the market is pure and can determine everything with equilibrium. Not so. The system simply does not have the requisite variety to maintain stability in the real world.
In fact, historically, economic analysis conducted by prominent so-called economists very often superimpose abstract notions of what the system should be doing rather than observing what it is actually doing. In this, often focus is even on intervention itself as the cause of economic-related problems, with proponents once again assuming a total “free market” is the solution. This is an unfortunate but expected view, once again avoiding objective analysis of the system in and of itself, promoting wishful thinking in the hope for endogenous system integrity - which does not exist.
On this, it is evident that two critically negative, foundational functions of market economics are: (a) the creation of poverty and inequality, as well as the (b) unsustainable growth-consumption pattern that operates like a cancer, necessitating constant sales/turnover. Instead of recognizing these outcomes as inherent to the system’s structure, blame is placed on not only external intervention as noted – but commonly the moral shortcomings of people or groups. This moral argument assumes that the system is essentially neutral and does not possess structural incentives that inevitably lead to negative and immoral outcomes (which it does). In fact if you examine common discourse today, from unfair pay scales to environmental decline, most people still argue that this is a moral failure rather than a structural one. It’s an unfortunate problem of perception.
In the end, a truly objective system analysis of capitalism reveals that poverty, deadly inequity, and environmental destruction are built-in functions of the system, as natural to the system as the production of a good like a smart phone. The only options to address these negative issues are either to completely move away from the trade-based system or to attempt strategic regulation to slow down these outcomes, although never completely eliminate them, of course - they are built in.
And this brings us to the concept of “socialism.” Socialism essentially builds upon the idea of regulating the inherent features of market economics to create a more sustainable and equitable world. It involves micro-level interventions, such as the state taking control of healthcare to ensure more equitable access. This is a common understanding of socialism in popular culture, deviating from the natural, self-regulatory nature of markets by using bureaucracy/law to compensate for market failures and ideally produce more balanced outcomes.
At the macro level, socialist ideals become more philosophical, with definitions such as "public ownership of the means of production.” However, this definition lacks a universally agreed-upon understanding and is often conflated with state power rather than democratic or true social/public control. The interpretation varies depending on individual perspectives which contributes to the uselessness of the idea even though most can identify with the value orientation (democracy).
It is essential to recognize that socialism is fundamentally an interventionist reaction to capitalism and does not exist as a formally defined system that can be implemented uniformly. Its characteristics are primarily interventionist at the micro level and philosophically reactionary at the macro level. In fact, the very lexicon used in socialist discourse, such as the common distinction between “workers” and “owners,” is inherent to the structural nature of capitalism to begin with!
In other words, socialism is a (a) moral ideology and (b) reactionary means that can only exist as a response to capitalism; any characteristics attributed to socialism are interventions within the capitalist (or market) structure. Even this phrase “public ownership of the means of production” exists solely as a response to the natural development of power and resource concentration within market dynamics, where the “ownership class exploits the working class,” as the so-called Marxist saying goes.
This understanding is crucial because the false dichotomy of capitalism versus socialism limits the potential for improved economic and social organization. Arguments have persisted throughout generations, portraying socialism as a defined economic model or system – when it is not - and any historical failures or atrocities in so called socialist nations are then used as “evidence” that market capitalism is the only viable social system there is and could be and socialism is a failed “construct.” It can’t be a failed construct because there is no construct.
In reality, there are numerous systems designs unrelated to money, markets, and hence capitalism that can be explored and should be, with true features of an organized, complex, self-regulating system. However, the general public’s conception remains limited with this repeated notion of socialism and its association with totalitarianism, etc. creating a communicative challenge by which it has become pathologically accepted that anything that isn’t capitalism can only be worse – with no actual evidence – fostering a major limit of debate.
Once again, the only consistent definition of socialism is its opposition to capitalism. Remember this when engaging in arguments with individuals who present the cliché question, “If you don’t like capitalism, what do you propose? Socialism? Socialism has never worked!” In essence, they are asking, “If you don’t like capitalism, what do you propose? Non-capitalism? Non-capitalism has never worked!” … as if we have automatically exhausted any other potential alternative, which is just as absurd as saying “Only hydrocarbons can be a useful form of energy. There is no other choice.”
All this highlights the circular nature of the debate. To analyze the inefficiency or inhumanity of seemingly non-capitalist systems in history, such as Soviet communism, one must examine the specific characteristics of the governing organization/design in and of itself, rather than simply labeling it socialism and dismissing it on that basis, then implying any future conception that deviates from capitalism can only be socialism and hence like the USSR, etc. The Soviet Union, Cuba, Venezuela, and other examples are/were unique, novel manifestations, combining state bureaucracy with economic controls. They do not share the same system… assuming they have/had a true dynamic system at all. Socialism is not a system.
Some of these instances loosely drew upon Karl Marx’s philosophical writings, which were primarily rooted in an anti-capitalist framing once again – not a concept of inferential economic design. In fact, if you thoroughly read Karl Marx, his entire contribution was based on trying to understand the complex adaptive system of capitalism, not promoting any kind of solution to it.
And so, those who identify as socialists today are essentially moralists with an anti-capitalist philosophy, demonstrating a lack of creativity in effect. It is a near pointless label and misguided pursuit. Do we need to regulate capitalism? Yes. But that is not a long term solution. We need to dissolve the system-produced problems we face by true change.
We need intelligent inferential sustainable economic redesign and that process of thought requires no historical orientation or adversarial label or response to the current unfortunate state of economic normality.