Helphia
05-01-2005, 23:45
Socialism, at its core, is a utopian political/economic philosophy. It started out during the late period of the Industrial Revolution when rampant "abuses" by industrial firms against their workers spawned wide spread resentment amongst workers. Socialism, at its heart, was the dream of unskilled industrial workers who were the most ruthlessly exploited, since skilled industrial workers were harder to find and had to be payed more as a result (and were the first to organize unions.) Socialism, however, split into two forms. One was "romantic" socialism, or one in which socialism would advance as a general will of the workers which would overturn the evil capitalist system (or so it was claimed.) The other system, "scientific" socialism, also known as communism, believed that it was historicaly inevitable that a proletarian revolution would occur and that capital would be destroyed and workers would live in a happy paradise till Earth ended. In fact, the two have much in common save that Communism is a militant socialism, and romantic socialism is a more or less "populist" form of the ideology. Both decided that the state would benefit the people the most if popularly elected and that if all industries were state owned, then explotation would not occur.
To understand these beliefs, you have to realise that there was something called the "Iron Law of Wages" at the time. The Iron Law of Wages simply stated that workers were to be payed the minimum living wage, but only that and nothing above it, for if you did, then they would buy alcohol and become problems. While it was harsh, it kept costs down, but not enough. In fact, wages went up as the industrial revolution reached the 20th century, when it was about to end in Europe and the US (we are in the "information" age at the moment) since, to sell their goods, they had to pay their workers more. Hence, the minimum wage pretty much came into effect when labour prices were already starting to go for the worker since the massive population spurts were begining to end and workers became not as numerous as they once were. Still, Socialism still persisted, mainly in countries where the labour markets had not yet stabilized, such as in Germany which had the highest population growth rate of all of Europe at the time (western europe that is.) However, the funny thing is that the first "socialist" country was not in a major industrial strong hold at the time. In fact, it was in the most backward state of all of the European Countries: Russia. The "Peoples Revolution" turned into a dictatorship rulled first by three people (Lenin, Stalin, Trotsky) then by two (Stalin and Trotsky) then finally by the most ruthless of the two remaining ones, Stalin. All three of them advocated "red terror" to keep the revolution alive, and all three wanted to "export" the revolution via amred invasions of other countries (such as Poland) and revolutions (as in Germany.)
Meanwhile, the Europeans, after their mauling in WW1 and WW2, turned to socialism since their economies had not yet recovered. It made a certain sense because there was very little industry left and a strong central authority would be needed to jump start industries. However, by the 1960s almost all of Europe (save Great Britain) was heavily entrenched in the socialist system. Employment was high and it seemed as if things would go well. Then the recessions hit. Socialism, unlike Capitalism, is not very resistant to recession. Unemployment began to rise again and pretty soon the system began to crumble. Modest reforms were made and Europe stabilized. However, the US by this time had become the greatest economic power in the world, as well as military power. The Soviet economy, at most, was 1/3 of the Snited States, while Europe was around 7/10ths (all of europe, save the east block and soviet union.) By the 1980s, the US knew about the economic troubles Russia was in, and began to squeeze the Russians by producing more and more weapons. The Russians, wanting to keep their image up, did the same, but soon destroyed their dying economic system. By the 1990s, Socialism was in recession world wide, save for a few countries (such as the Europeans, Cubans, and a few other minor nations.) Socialist pratices do occur still (wellfare and things like that) but the actuall economic system is dying. In fact, the latest victim of the socialist policy are the Nordic Countries when their tax rates (as high as a hundred percent!!!) destroyed what little growth they had.
So what brought socialism down so quickly in its life while Capitalism simply adjusted to global pressures?
1: Central planning. Socialist countries are great believers that the government should decide how the economy should work, so they force markets to do things that markets in that situation should not do.
2: No Competition. Competition both brings the best and worse out in people, but for markets, it brings out the best. Competiting companies will often lower prices and increase quality to appeal to consumers. Socialist countries do not have to worry about competition, thus they produce not as high quality goods (such as Volvo.) Hence, when competition does occur, they are generaly destroyed by lower prices that foreing producers offer.
3: High tax rates. The average tax rate in the US is around 36%. The Average tax rate in europe is around 40 to 50%. Most of the taxes in the US are based upon Income (a more stable form and not as affected by recession) while the Europeans base theirs on consumption (heavily affected by consumer spending, imports and exports, and other such things.)
4: Protectionist policies. To prevent state industries from being destroyed, the Europeans adopted stringent policies on steel and car imports. In the end they shot themselves in the foot when their higher priced goods did not sell in other countries, thus causing their industries to falter anyway.
5: Ultra-Powerfull Labour Unions. Strikes in Europe are holidays now. Labour unions constantly form political power blocks to force what they want through, while hamstringing corporations. Britain had the same problem, till good old Margret Thatcher destroyed the labour unions, thus causing British economiy productivity to increase.
There are many other minor flaws, but most of them revolve around trying to stop natural economic processes from occuring. Europe will try to keep its system as long as possible, and thus continue to stagnate. Russia, on the other hand, seems to be the up and comming economic power in Europe along with Ireland and a few Eastern European nations. Only time will tell if Europe decides to join the bandwagon or not, but by the time it does, it might have become a redundant region of the world.
To understand these beliefs, you have to realise that there was something called the "Iron Law of Wages" at the time. The Iron Law of Wages simply stated that workers were to be payed the minimum living wage, but only that and nothing above it, for if you did, then they would buy alcohol and become problems. While it was harsh, it kept costs down, but not enough. In fact, wages went up as the industrial revolution reached the 20th century, when it was about to end in Europe and the US (we are in the "information" age at the moment) since, to sell their goods, they had to pay their workers more. Hence, the minimum wage pretty much came into effect when labour prices were already starting to go for the worker since the massive population spurts were begining to end and workers became not as numerous as they once were. Still, Socialism still persisted, mainly in countries where the labour markets had not yet stabilized, such as in Germany which had the highest population growth rate of all of Europe at the time (western europe that is.) However, the funny thing is that the first "socialist" country was not in a major industrial strong hold at the time. In fact, it was in the most backward state of all of the European Countries: Russia. The "Peoples Revolution" turned into a dictatorship rulled first by three people (Lenin, Stalin, Trotsky) then by two (Stalin and Trotsky) then finally by the most ruthless of the two remaining ones, Stalin. All three of them advocated "red terror" to keep the revolution alive, and all three wanted to "export" the revolution via amred invasions of other countries (such as Poland) and revolutions (as in Germany.)
Meanwhile, the Europeans, after their mauling in WW1 and WW2, turned to socialism since their economies had not yet recovered. It made a certain sense because there was very little industry left and a strong central authority would be needed to jump start industries. However, by the 1960s almost all of Europe (save Great Britain) was heavily entrenched in the socialist system. Employment was high and it seemed as if things would go well. Then the recessions hit. Socialism, unlike Capitalism, is not very resistant to recession. Unemployment began to rise again and pretty soon the system began to crumble. Modest reforms were made and Europe stabilized. However, the US by this time had become the greatest economic power in the world, as well as military power. The Soviet economy, at most, was 1/3 of the Snited States, while Europe was around 7/10ths (all of europe, save the east block and soviet union.) By the 1980s, the US knew about the economic troubles Russia was in, and began to squeeze the Russians by producing more and more weapons. The Russians, wanting to keep their image up, did the same, but soon destroyed their dying economic system. By the 1990s, Socialism was in recession world wide, save for a few countries (such as the Europeans, Cubans, and a few other minor nations.) Socialist pratices do occur still (wellfare and things like that) but the actuall economic system is dying. In fact, the latest victim of the socialist policy are the Nordic Countries when their tax rates (as high as a hundred percent!!!) destroyed what little growth they had.
So what brought socialism down so quickly in its life while Capitalism simply adjusted to global pressures?
1: Central planning. Socialist countries are great believers that the government should decide how the economy should work, so they force markets to do things that markets in that situation should not do.
2: No Competition. Competition both brings the best and worse out in people, but for markets, it brings out the best. Competiting companies will often lower prices and increase quality to appeal to consumers. Socialist countries do not have to worry about competition, thus they produce not as high quality goods (such as Volvo.) Hence, when competition does occur, they are generaly destroyed by lower prices that foreing producers offer.
3: High tax rates. The average tax rate in the US is around 36%. The Average tax rate in europe is around 40 to 50%. Most of the taxes in the US are based upon Income (a more stable form and not as affected by recession) while the Europeans base theirs on consumption (heavily affected by consumer spending, imports and exports, and other such things.)
4: Protectionist policies. To prevent state industries from being destroyed, the Europeans adopted stringent policies on steel and car imports. In the end they shot themselves in the foot when their higher priced goods did not sell in other countries, thus causing their industries to falter anyway.
5: Ultra-Powerfull Labour Unions. Strikes in Europe are holidays now. Labour unions constantly form political power blocks to force what they want through, while hamstringing corporations. Britain had the same problem, till good old Margret Thatcher destroyed the labour unions, thus causing British economiy productivity to increase.
There are many other minor flaws, but most of them revolve around trying to stop natural economic processes from occuring. Europe will try to keep its system as long as possible, and thus continue to stagnate. Russia, on the other hand, seems to be the up and comming economic power in Europe along with Ireland and a few Eastern European nations. Only time will tell if Europe decides to join the bandwagon or not, but by the time it does, it might have become a redundant region of the world.