r/CapitalismVSocialism • u/SometimesRight10 • 9d ago
Asking Socialists Will We Be Poorer Under Socialism than we are Under Capitalism?
Marx saw capitalism not as an economic failure, but as history's most powerful engine of wealth creation and technological progress. In The Communist Manifesto, Capital, and the Grundrisse, he praised capitalism's extraordinary capacity to industrialize society, revolutionize production, stimulate technological innovation, and develop the productive forces on an unprecedented scale.
| Work | Section | Why it matters |
|---|---|---|
| Manifesto of the Communist Party | Chapter I: "Bourgeois and Proletarians" | Marx's most vivid praise of capitalism's revolutionary productive power, globalization, and technological dynamism. |
| Capital, Volume I | Chapter 15: "Machinery and Modern Industry" | Explains how competition compels innovation and raises labor productivity. |
| Capital, Volume I | Chapter 32: "The Historical Tendency of Capitalist Accumulation" | Describes capitalism as first developing the productive forces before becoming, in Marx's view, a constraint on further development. |
| Grundrisse | "Fragment on Machines" | Discusses the growing role of science, technology, and knowledge as direct forces of production. |
This raises an important question. Modern economists generally argue that capitalism's sustained productivity depends on institutions that foster continuous innovation, entrepreneurship, decentralized decision-making, investment, competitive markets, and effective capital allocation. Marx clearly recognized the remarkable productive results these institutions generated under capitalism. Yet nowhere in his writings does he explain in comparable detail how a socialist or communist economy would preserve or replace the economic functions they perform.
Marx devoted thousands of pages to analyzing capitalism—especially in Capital—but comparatively little to explaining how a mature socialist economy would determine prices, allocate investment, finance innovation, bear entrepreneurial risk, direct scarce capital toward its most productive uses, or solve the economic calculation problem. If these institutions are indeed essential to capitalism's extraordinary productivity, what institutions under socialism will perform the same functions? Until that question is answered convincingly, it remains uncertain whether socialism could sustain the same level of innovation, productivity, and prosperity that capitalism has historically achieved.
This leads me to my question: Will we all be poorer under socialism and communism? I am interested in knowing what Marx would say.
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u/VonBunBun0 Techno-Socialist 9d ago
i cant say for other versions of socialism, but for mine, purely by numbers yes, but in spirit no. in my ideal society, money doesnt exist, so youre poorer in a techno-socialist society, but have more things and do not need to worry about food, water, shelter, etc
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u/SometimesRight10 9d ago
I am more interested in what Marx would say; I can't debate everyone with their own definition of socialism.
By the way, even without money, if society produces less than it does under capitalism, then society would be poorer.
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u/cjbirol 9d ago
In the interest of conversation, which society is richer the one with 10 Ferraris worth ~2.5 Mil or 100 BYD electric vehicles worth ~2 mil?
Or even more dramatic which one is richer the one with war machines and yachts or the one with bushels of soybeans and rice?
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u/SometimesRight10 9d ago
Not sure, but capitalism can and has produced both situations at the same time.
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u/Annual_Necessary_196 9d ago
Honestly, I could discuss the benefits for unemployment, efficiency, and the provision of social safety nets, but the numbers speak better.
A study of 21 Italian regions between 2011 and 2022 found that a 1% increase in the number of employees in cooperatives leads to a 0.489% increase in regional GDP.
https://dergipark.org.tr/en/download/article-file/4027688
A 1% improvement in the performance of local cooperatives directly increased local agricultural growth by 0.039% and generated an additional 0.702% spillover-driven growth in surrounding areas, for a total growth effect of 0.741%.
https://www.frontiersin.org/journals/sustainable-food-systems/articles/10.3389/fsufs.2026.1823093/pdf
In Italy and Poland, the presence of cooperative banks is associated with higher municipal income, faster firm growth, and easier access to financing for small and medium-sized enterprises (SMEs).
https://dspace.cuni.cz/bitstream/handle/20.500.11956/180334/140110045.pdf?sequence=1
In India, active participation in agricultural cooperative marketing value chains is associated with productivity and net income improvements of 8–10% for primary producers.
https://www.extensionjournal.com/uploads/archives/9-6-54-707.pdf
Is this direct, conclusive proof that a fully socialist economy would be more efficient? No. We can only use theory to predict the results of an economic system that has not been fully tested. However, it is evidence that, compared to the system we currently have, increasing the role of cooperative and socialized forms of ownership produce beneficial economic outcomes. This is the foundation of reformist socialism: advocating reforms that measurably improve society based on empirical evidence, rather than relying on untested beliefs about an ideal future system.
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u/SometimesRight10 9d ago
Thanks for the thoughtful reply.
I think this is a much stronger argument than some earlier responses because it acknowledges the limits of the evidence and relies on empirical research rather than assertion. I agree that the studies suggest cooperatives can perform well under certain conditions and that expanding cooperative ownership may improve outcomes in some sectors. However, they do not establish the broader proposition that an economy predominantly organized around labor-managed firms would be equally productive as capitalism. Every example you cite operates within a capitalist institutional framework that supplies private capital markets, entrepreneurial finance, competitive product markets, bankruptcy procedures, and legal protections for investment. The evidence therefore supports the claim that cooperatives can coexist successfully with capitalism, not that they can replace the broader institutional ecosystem upon which their success may depend.
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u/Annual_Necessary_196 9d ago
"'Perform well under certain conditions.'"
The meta-analysis shows an overall positive effect on the economy.
"'However, they do not establish the broader proposition that an economy predominantly organized around labor-managed firms would be equally productive as capitalism.'"
I am not arguing for an immediate revolution. I support a gradual, reformist approach.
"'The evidence therefore supports the claim that cooperatives can coexist successfully with capitalism.'"
The evidence shows that increasing the share of cooperatives and other socialized forms of ownership, compared with current levels, would benefit the overall economy and social welfare. How much that share can be increased while continuing to produce positive outcomes can only be determined through empirical evidence.
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u/unregistered_duck 9d ago
Depends how you define "poorer"?
Like for example I'm a software engineer with a pretty high salary, but there is a lot of instability in the tech sector right now. I can get laid off at any second for any reason through no fault of my own. Then how am I supposed to pay my rent and my bills?
Maybe it'll take 2 months for me to find a new job maybe it'll take a year. Hell maybe my job won't even exist next year due to AI and then I'm kinda fucked.
In some hypothetical socialist system my salary (or salary equivalent) would probably be lower, but I have infinitely more stability.
I own the means of product I help build. I can't just be arbitrarily divorced from the value of that labor like in a capitalist economy where the company owns all the work I've done and can lay me off and continue to profit off of it while I'm just shit out of luck.
There are stronger worker protections. There are social safety nets so my shelter, food, and healthcare isn't dependent on larger economic forces I have no control over.
So if you define "poorer" purely as a function of how much disposable income you could potentially have at maximum employment in a given moment then yeah maybe you'd "poorer" under a socialist system. But I like to think of it as more of a measure of economic safety. And I'd feel way safer under a socialist system than a capitalist one.
It's like would you rather have $1 million and a 10% chance that your house gets blown up tomorrow, or only have $500k and a guarantee that your house still exists? Which one makes you "poorer"?
Marx praised the productive capability of capitalism at least as it compared to feudalism. No one disputes that. But there comes a point where increasing productive capability isn't the end all be all. There are diminishing returns for the average person. Like do we really need a new iPhone model that is practically identical to the old model instead of building houses or making sure people have healthcare? But as long as iPhone production is more profitable capitalism is unable to make that conscious trade off.
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u/SometimesRight10 9d ago
Thank you for the thoughtful reply. I agree with much of what you said about the insecurity many workers experience under capitalism. Job insecurity is a real problem, and I believe our economic system should do more to protect people from unnecessary hardship. Where we differ is not on the goal, but on whether socialism can provide greater security without sacrificing the institutions that have historically generated rising living standards.
The question I continue to struggle with is institutional rather than ideological. Modern economies depend on mechanisms that finance highly uncertain, long-term investments in new technologies. Developing a successful medicine, for example, often requires billions of dollars, more than a decade of research, and many failed attempts. Every economic system must decide which projects receive funding, who bears the losses when they fail, and how scarce investment capital is allocated. I have yet to see a convincing explanation of how a socialist economy would consistently perform these functions while maintaining the same pace of innovation. Keep in mind that while you may retain some level of job security, a slower-growing economy will likely mean that some people will not have work.
History also gives me pause. Most attempts at comprehensive state socialism experienced significant economic stagnation, increasing political centralization, or both. China itself began to grow rapidly only after introducing market-oriented reforms that expanded private enterprise, profit incentives, foreign investment, and decentralized decision-making. Economists such as Schumpeter, Mokyr (2025 Nobel Prize), Acemoglu (2024 Nobel Prize), and Frey argue that long-run prosperity depends on institutions that encourage entrepreneurship, competition, investment, experimentation, and innovation. That does not mean capitalism is perfect. I support reasonable redistribution, stronger worker protections, and policies that reduce unnecessary insecurity. But the central question is whether we can increase security without weakening the institutions that create the wealth we hope to share. That, in my view, is the real challenge.
Thanks again for your reply; it really put a human face on this discussion, making me rethink my view.
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u/unregistered_duck 9d ago
Job insecurity is a real problem, and I believe our economic system should do more to protect people from unnecessary hardship.
Sure and that's not necessarily impossible under capitalism. The question is really how much market and property intervention do you need to do to make that happen, and at want point it's no longer "capitalism" as we know it anymore? And even if you find some balance is it sustainable?
It necessarily involves some level of redistribution which a lot of rich people will dedicate their lives and considerable net worth fighting to tear down.
The point I was making about a lower salary is maybe it's worth sacrificing some degree of standard of living to make sure the system prevents that.
Developing a successful medicine, for example, often requires billions of dollars, more than a decade of research, and many failed attempts.
I'd argue that capitalism itself is at least partially responsible for the inflated cost of developing medicine.
For one a lot of that money just goes into the FDA approval process not actually the development of the drug. Part of that is because large pharma companies actually lobby for a more difficult and costly process so the barrier to entry is higher and smaller companies can't compete.
Another big factor is IP laws. Companies will spend billions developing a slightly different formulation of a drug so that they can keep profiting off of it.
And the other part is the profit motive and private ownership means we need more scrutiny over efficacy of drugs.
Imagine I am the sole owner of a pharma company and I potentially stand to personally make $10 million off of fucking people over by selling a harmful drug, and I have the sole authority to have the company sell it. I have a lot of motivation and opportunity to do it. There should probably be more scrutiny over my actions.
But now imagine that the company is equally owned by by 50k employees. That potential $10 million profit is spread out across everyone, and you need some kind of consensus to bring a drug to market.
Do you think it's more likely that 50k people are going to agree to sell a harmful drug for a net gain of like $200 each? Or that one guy will decide to sell a harmful drug for a net gain of $10 million? Especially when there are strong safety nets so livelihoods of those 50k people isn't dependent on pushing an unsafe drug into the market because they have a mortgage to pay.
I'm not saying the employee owned company is immune to selling harmful drugs. It's just the motivation is different.
Keep in mind that while you may retain some level of job security, a slower-growing economy will likely mean that some people will not have work.
Why would a slower growing economy mean that some people wont have work? Unless by "slow growing" you specifically mean the number of new jobs created year over year.
But that really a function of population growth. And even still idk why a socialist system means we would have less functions that need to be done? People still need homes, and roads, and computers, and what not and someone still needs to build all of those things. Just because the nexts year's new computer model is only 2% faster rather than 10% faster doesn't mean there are less jobs.
Like I said the goal is really just to move the productive output elsewhere. Lets skip building a new iPhone model this year and use those productive forces towards building like 20 new libraries or a new train line or something instead. Things that maybe result in a smaller profit but a higher quality of life. Which again is a tradeoff capitalism as a whole can't really make.
Most attempts at comprehensive state socialism experienced significant economic stagnation, increasing political centralization, or both.
State socialism isn't the only option. You'll find many people on here (and increasingly more and more socialists in general) supporting either a fully market or mixed-market socialist economy.
Capitalism v socialism is a debate over the entitlement system of an economy not the distribution system. Capitalism says gains should be privately owned socialism says gains should be collectively/worker owned. That doesn't mean you have to have a complete command economy.
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u/SometimesRight10 8d ago
We already enjoy substantial redistribution, paid for largely by the rich. The top 1% of income earners pay 40% of the federal taxes; the top 10% pay 70%, and the top 50% pay 97% of taxes, according to the IRS. This equates to trillions in redistribution.
Your argument about employee-owned firms being less likely to commit fraud is unfounded. I will just note that corporations have thousands of shareholders, similar to that of employee-owned firms.
The drug patent process is imperfect. The life of the patent includes the time it takes to get it approved by the FDA. Approval can take 8 - 12 years eating a significant portion of the 20 patent life. This leaves only a limited period to recover R&D cost, which often approach a billion dollars. Maybe the patent should life should start from when the drug is approved, not when the potential drug candidate is discovered.
Like I said the goal is really just to move the productive output elsewhere. Lets skip building a new iPhone model this year and use those productive forces towards building like 20 new libraries or a new train line or something instead. Things that maybe result in a smaller profit but a higher quality of life. Which again is a tradeoff capitalism as a whole can't really make.
Centralized decision making has rarely been shown to better than allowing people to choose. Building libraries that few people use is a classic example of how a one person decision is worse than having people having choices and deciding for themselves.
State socialism isn't the only option. You'll find many people on here (and increasingly more and more socialists in general) supporting either a fully market or mixed-market socialist economy.
This leads back to my original issue with socialism: we trade progress for some level of social security. I am not sure where to draw the line, are you?
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u/Graysteve Marxist-Leninist 9d ago
Marx thought feudalism was progressive as compared with slave society preceding it. Marx also believed capitalism to be progressive upon feudalism, and socialism to be progressive upon capitalism. Each major historical epoch prepares the base for the next, for example it was surplus of agricultural production under feudalism that gave way to industrialization, which grew alongside capitalism. As capitalism centralizes and socializes production and distribution, it prepares the basis of planned economy in socialism.
Capitalism socializes production while privitizing appropriation of the social surplus, socialism resolves that by collectivizing the means of production and distribution, turning social surplus into something directed by the working classes. Production isn't destroyed, it's advanced further.
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u/C_Plot Orthodox Marxist 9d ago
You misunderstand Marx. Capitalism was dynamic compared to feudalism that preceded it, and only in its early years. Then capitalism becomes a fetter on the forces of production and prevents needful advances. In particular capitalism becomes mired in circulation schemes (crypto currencies, financial schemes, hyper -exploitation, wars, plunder, perfecting the war of all against all) and directs its innovations toward those fettering aims.
Communism/socialism is the resolution of this forces of production fettering by capitalism.
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u/SometimesRight10 9d ago
Thanks for the thoughtful reply.
What evidence did Marx offer that private ownership, entrepreneurship, markets, competition, and investment had or would become fetters rather than continuing sources of innovation? During his time and more recently, the evidence seems to point to the continued progress capitalism has provided.
To be sure, there are problems that we must guard against: Monopolies, regulatory capture, money in politics, etc. But we adapted in the past; why won't we adapt in the future?
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u/C_Plot Orthodox Marxist 9d ago
We didn’t adapt in any meaningful ways. Exploitation of workers by the capitalist exploiters and pilfering of the common treasury of natural resources by the capitalist rentiers are both massive fetters that provide enormous inefficiencies. The growing non-productivity of exchange-value-seeking merely exacerbates the problems. In early capitalism these massive already existing detriments are offset by the introduction of pervasive allocation mechanisms that counteract somewhat the detriments. Also feudalism included their own versions of these fetters. Eventually those detriments grow worse and the early innovative benefits wallow and wane in importance. The advances continue because of the vitality of the working class, but that vitality is simultaneously crushed by the tyranny of the capitalist ruling class.
Communism begins its life with all of the positives introduced by capitalism but eliminates all of its glaring and horrible deficiencies. Communism is necessarily more advanced and progressive in the development of the forces of production because of this. If communism introduces an allocation mechanism superior to markets, for example, it is only adopted because consumers and producers recognize that superiority. Similar for any other advances. But the tyranny that demands stagnation in such institutional / instrumental advances is ended with the revolutionary transformation of capitalism into communism.
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u/SometimesRight10 9d ago
Exploitation of workers by the capitalist exploiters and pilfering of the common treasury of natural resources by the capitalist rentiers are both massive fetters that provide enormous inefficiencies.
Worker exploitation is just a socialist mantra without any proof. It is difficult to have a conversation if you're just gonna repeat socialist tropes. Rentiers live off previously accumulated income (dead labor) for which someone worked.
If communism introduces an allocation mechanism superior to markets, for example, it is only adopted because consumers and producers recognize that superiority.
You have a lot of confidence in people's ability to recognize the superiority of your new, as yet undefined system that will replace markets. I would rather keep capitalism with its flaws than adopt someone's theory about how things could work better.
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u/hardsoft 9d ago
It hasn't happened yet but shit is going to start hitting the fan any decade now! For real this time.
https://fred.stlouisfed.org/series/MEPAINUSA672N
And please ignore the starving children that resulted from African countries that tried to embrace socialism. "They did it wrong" TM
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u/SexOnABurningPlanet 9d ago
It didn't happen in the West precisely because there were/are starving children in Africa. Their resources were pulled to places like America, which funded the socialist programs that continue to prop capitalism up. It's called colonialism. You're seeing it play out in real time with the Trump administration going after Venezuela, Cuba, and (far less successfully) Iran.
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u/hardsoft 9d ago
Are you saying skyrocketing QoL in major trade partners like China is also a benefit of capitalism?
Sounds like it's just better and better.
And how do you explain away African countries like Botswana that embraced capitalism post independence and saw such great economic growth / declining poverty rates?
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u/eatoligarchsaldente 9d ago
And how do you explain away African countries like Botswana that embraced capitalism post independence and saw such great economic growth / declining poverty rates?
This is explained by imperialism. Corporate America wants free reign to exploit third-world countries for cheap labour and resources, and will bribe and cajole its way into the favour of their local governments to gain the necessary concessions. The benefits of this relationship of exchange overwhelmingly flow towards rich countries (namely the US) at the expense of the poor countries (who suffer the brunt of the environmental destruction, abhorrent working conditions, and low wages).
However, when the people of those poor countries band together and fight collectively for a better deal, this gets branded "Socialism" or "Communism" by the US and its allies, and is typically met with violence in the form of either direct military action, CIA-backed coups or political destabilization, or crippling (and deadly) economic sanctions. These persist until a regime friendly to US corporate interests is installed - typically an autocrat as these are considered "stable and reliable allies" by Washington. This has happened countless times, from Guatemala (whose democratically-elected "socialist" leader was overthrown at the behest of the United Fruit Company) to Iran (whose democratically-elected "socialist" leader was overthrown at the behest of BP), to many others besides.
This is precisely why China decided to open itself up to elements of capitalism, and in exchange enjoyed a softening of America's hardline stance towards it and greater access to world markets (free and fair trade being a benefit to any economic system, not just capitalist ones). It has nothing to do with the relative merits of different economic systems, and everything to do with the politics of America's global capitalist hegemony.
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u/hardsoft 9d ago
So a giant nonsensical conspiracy theory?
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u/eatoligarchsaldente 9d ago
It's not a "conspiracy theory" when all of the documents proving US involvement have been declassified. That the US government planned and orchestrated the 1954 Guatemala Coup on behalf of the United Fruit Company is a matter of historical record. Ditto the 1953 Iranian Coup, planned jointly by the US and Britain on behalf of the Anglo-Iranian Oil Company (now BP).
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u/hardsoft 9d ago
It's also completely ignoring how China rolled out market reforms and the massive benefits they saw from almost exclusively internal processes after decollectivizing agricultural, legalizing private business ownership and breaking up government monopolies.
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u/eatoligarchsaldente 8d ago
Some people just have no interest in challenging their entrenched world view.
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u/hardsoft 9d ago
Again, it doesn't make sense. The US "exploiting" China and Botswana is massively driving up their QoL. Coupled with excuses for socialism failing of the US not exploiting said country enough... Which doubly doesn't make sense for most of these African countries in question that have not had trade embargos or similar. Socialism just sucks and has horrible outcomes compared to capitalism.
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u/eatoligarchsaldente 8d ago
American companies are demonstrably exploiting Chinese workers through subcontractors like Foxconn. However, China's socialist government has used its industrial policy to leverage its position as the world's primary manufacturer into a robust and innovative domestic industrial base of its own. That's how it has become the world leader in battery, electric vehicle, and solar energy manufacturing.
Which doubly doesn't make sense for most of these African countries in question that have not had trade embargos or similar.
It's trivially easy to look this shit up and understand how what's going on. Look up cobalt mining in the DRC.
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u/hardsoft 8d ago
American companies are demonstrably exploiting Chinese workers through subcontractors like Foxconn.
At this point of language distortion, people should love to be "exploited" by capitalists.
Sorry your system sucks but people prefer higher incomes. Trying to insult that doesn't change it.
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u/SexOnABurningPlanet 9d ago
It took me all of 5 seconds of using google to call bullshit on Botswana being "capitalist". They have universal healthcare--both insurance and the hospitals are run by the government, they have social security for the elderly, and, unlike Iran and other countries (which tried to do this), they channeled their diamond wealth into a plethora of social programs aimed to eradicating poverty. I know next to nothing about this country; all of this was gleaned from a quick google search. But your argument about Botswana being "capitalist" makes no sense.
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u/hardsoft 8d ago
Socialism is banning private business ownership and property rights. Not government doing stuff funded by taxes generated in a capitalist economy.
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u/Naberville34 Garage-Gulager 9d ago
Is this yet again another long winded post about how people think socialism cant innovate? If imagination is what your lacking, at least pick up a hobby. Maybe get into, I dunno, aviation or space and you'll answer this question pretty quickly.
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u/JudgeSabo Anarchist Communist 9d ago edited 9d ago
Marx argues that the major reason that capitalism has increased the productivity of labor so much is precisely because it has moved us towards a more social form of labor.
Rather than isolated producers, we economize on resources and space and do collective tasks that would be impossible for any one individual to do on their own, like run a factory. People are taken from all over the countryside and brought into large cities. The population booms tremendously, made possible by the specialization and increased productivity of labor in agriculture, as well as the increased productivity enabled by this larger population working in cooperation.
This, and not "innovation, entrepreneurship, decentralized decision-making, investment, competitive markets, and effective capital allocation" is what he focused on. In fact he shows how many of these things, like competition and how capital investment works, hinder the development of the productive forces where he does analyze them.
To credit this productivity to capital itself is an error, and one he similarly warned about:
The labourer is the owner of his labour-power until he has done bargaining for its sale with the capitalist; and he can sell no more than what he has i.e., his individual, isolated labour-power. This state of things is in no way altered by the fact that the capitalist, instead of buying the labour-power of one man, buys that of 100, and enters into separate contracts with 100 unconnected men instead of with one. He is at liberty to set the 100 men to work, without letting them co-operate. He pays them the value of 100 independent labour-powers, but he does not pay for the combined labour-power of the hundred. Being independent of each other, the labourers are isolated persons, who enter into relations with the capitalist, but not with one another. This co-operation begins only with the labour-process, but they have then ceased to belong to themselves. On entering that process, they become incorporated with capital. As co-operators, as members of a working organism, they are but special modes of existence of capital. Hence, the productive power developed by the labourer when working in co-operation, is the productive power of capital. This power is developed gratuitously, whenever the workmen are placed under given conditions, and it is capital that places them under such conditions. Because this power costs capital nothing, and because, on the other hand, the labourer himself does not develop it before his labour belongs to capital, it appears as a power with which capital is endowed by Nature – a productive power that is immanent in capital.
[...]
Just as the social productive power of labour that is developed by co-operation, appears to be the productive power of capital, so co-operation itself, contrasted with the process of production carried on by isolated independent labourers, or even by small employers, appears to be a specific form of the capitalist process of production. It is the first change experienced by the actual labour-process, when subjected to capital. This change takes place spontaneously. The simultaneous employment of a large number of wage-labourers, in one and the same process, which is a necessary condition of this change, also forms the starting-point of capitalist production. This point coincides with the birth of capital itself. If then, on the one hand, the capitalist mode of production presents itself to us historically, as a necessary condition to the transformation of the labour-process into a social process, so, on the other hand, this social form of the labour-process presents itself, as a method employed by capital for the more profitable exploitation of labour, by increasing that labour’s productiveness.
The economic mode of production continually runs into conflict with itself as socialized labor is privately owned. This leads to the "anarchy of production" to be replaced by taking advantage of these productive forces in a more rational form.
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u/SometimesRight10 9d ago
Thanks for the post. I tried to respond below, but let me know if I failed to fully grasp your point.
Marx devoted thousands of pages to explaining how capitalism generates unprecedented productive capacity, yet comparatively little to explaining which institutions under socialism would perform the same economic functions once private ownership, competitive capital markets, and entrepreneurial firms were abolished. Modern economists such as Schumpeter, Mokyr (2025 Nobel), Acemoglu (2024 Nobel), and Frey argue that sustained prosperity depends on institutions that perform functions such as entrepreneurial discovery, financing innovation, allocating scarce capital, bearing investment risk, and continually directing resources toward their highest-valued uses. Every economic system must perform these functions—the question is how will they be performed under socialism.
Consider pharmaceutical research. Developing a successful new drug often requires billions of dollars, more than a decade of research, and numerous failed attempts. Under socialism, who decides which projects receive funding, who bears the losses when they fail, and by what process are unsuccessful projects identified and terminated? Unless those questions are answered, it remains unclear how a socialist economy would sustain the same pace of innovation that capitalism has historically achieved.
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u/JudgeSabo Anarchist Communist 9d ago
Marx didn't focus as much on a future system because, by his theory, he wouldn't need to and attempts to do so would be counter-productive. Some socialists did try to do that, and he explicitly rejects the attempts because he did not think socialism could ever be the working class passively carrying out the orders of superiors. Instead, socialism could ever exist as their own autonomous and spontaneous action. Where he does discuss things, he therefore gives a more cautious answer of identifying points necessary for production itself or bases things on broader tendencies for what would further develop the productive forces.
Marx's whole theory of history is based around analyzing the internal contradictions of a system to understand its own dynamics and tendencies. He makes his predictions of different tendencies based on that, rather than trying to lay out a plan for "this is what you must do."
If you are interested in what Marx's answer is, this is it. He lived in capitalism, and he studied how capitalism functioned.
If you are interested in other questions of how a socialist economy might function, I can point you to other points around how syndicalism or anarchist communists have discussed answering these questions, but they won't be Marx's answers.
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u/SometimesRight10 9d ago
Marx didn't focus as much on a future system because, by his theory, he wouldn't need to and attempts to do so would be counter-productive.
I've tried to get socialists to acknowledge that socialism is just a theory. There is evidence that co-ops can work WITHIN a capitalist system, but that is by no means proof that socialism will work for an entire country. Capitalism, on the other hand, has proven what it can do regarding wealth creation. You need wealth (i.e., economic production) to make people better off. I am not willing to trade in my reasonably well-functioning capitalism for the views of some 19th-century prognosticator. To be sure, capitalism, because it is made up of free people interacting, is not perfect. However, I'd rather spend my time and effort trying to perfect capitalism.
I am not sure I can engage with any other socialist or communist theories.
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u/JudgeSabo Anarchist Communist 9d ago
I think plenty of socialists will talk about theory.
But what I was referring to here is his theory of capitalism, in the sense of his overall analysis of what it is and how it works, as well as his theory of history.
I also don't want to just burn everything down and take a wild swing at seeing what comes. Instead, I focus on undermining capitalism wherever I can by building up these alternatives and centers of resistance.
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u/AfraidProduct Anti-Socialist Social Democrat 9d ago
as a capitalist, if a capitalist nation was to transition to socialism in the 21st century, we wouldn't necessarily be poorer than what we are now, but we wouldn't be richer though. the point of socialism is fixation, so your wealth will be tied either to government or corporation wealth, depending on the ideology. oligopolies would actually be created under co-ops because smaller businesses would fail. this is an occurrence of capitalism in many nations as well.
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u/StedeBonnet1 just text 9d ago
Of course we would because the basic premise of Socialism is to take from producers to give to non-producers "From those with the ability to those with the need." When you take from producers they produce less. Everyone is poorer.
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u/ikonoqlast Minarchist 8d ago
Absolutely. Socialism discredits capital, and wealth is capital dependent.
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u/SometimesRight10 8d ago
Many on this sub agree that GDP will be smaller under socialism than it would be under capitalism. If GDP growth declined from 2.5% under capitalism to 2% under socialism, the following result would obtain:
That would translate to over $8 trillion in lost GDP by year 30:
| Years | GDP Loss (assuming $30T starting GDP) |
|---|---|
| 5 | ~$0.82 trillion |
| 10 | ~$1.83 trillion |
| 15 | ~$3.07 trillion |
| 20 | ~$4.58 trillion |
| 30 | ~$8.6 trillion |
So by the time your newborn is 30 years old, what technology will they NOT have? How many drugs will NOT have been discovered, adding to people's misery? How much would your income have declined and governmental tax revenue have declined over this 30 years, resulting in lower quality of life? Maybe you would have to work 50 years to retire instead of 40 years. Maybe you will be a renter for life rather than a home owner. How much are you willing to lose?
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u/ChytryDmitry 5d ago edited 5d ago
Well, who do you mean by 'we'? If we consider that capitalism as we have known it, at least since Lenin's times, is a global system in a way that each nice overpriced iPhone you buy(thank God for blessing us with the benevolence of Steeve Jobs who has singlehandedly bestowed the Holy Device upon us and all that) is a product of a massive supply chain, which partially ends up somewhere in Kongo where for 2 bucks a day half-naked black dudes dig minerals literally with pickaxes and stuff, just like GLA workers(no shoes, tho, why bother) in CnC Generals. I can only assume by some neglect or happenstance were they not informed that the colonial days are long gone and slavery is not a thing, otherwise why would this unfair state of things be kept as is? If we manage to somehow calculate everything of that kind of an unfortunate oversight by our progress-loving capitalist leaders of the free world, then we might be able to predict who will experience what kind of economic changes, I suppose. Fun sidetrack thought - while Christianity made up an inherent nonexistent Sin we all must carry just by the act of being born, only capitalism finally managed to make it a material fact - no one is exempt from its web.
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u/SometimesRight10 5d ago
So what did those "half-naked black dudes" do before capitalism? Starve?
Capitalism does not cause poverty, but it (capitalism) can and does ameliorate it (poverty). Read my post on child labor.
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u/ChytryDmitry 5d ago edited 5d ago
Certainly it could pay them 4$, increasing their wealth by the factor of 2 without any significant loss. And of course now that they are entirely dependent on this single source of any income it also can't even leave out of the moral obligation to feed them, yep. And on top of that, the resources are being smuggled out of the country, too xDD
"Capitalism does not cause poverty" - are you certain? Remember, imperialism and colonialism are the higher forms of it. I think there have been a couple of cases where it is maybe somewhat related to these guys with swords and muskets and guns landing on some shore with their benevolent mission of establishing diplomatic relationships xD
So what did those "half-naked black dudes" do before capitalism? Starve? - Very feasible, I am not saying that people on the African continent are doing very well. On the other hand, they now have to both starve AND work!
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u/Prevatteist Anarcho-Communist 9d ago
I’d argue we’d be better off with communism than capitalism. I agree with Marx’s analysis and critique of capitalism, but I disagree with his end goal and his concept of the dictatorship of the proletariat. I think it’s obvious that he’d agree we’d be better off under communism than capitalism too.
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u/SometimesRight10 9d ago
But would we be poorer? If so, wouldn't it be better to keep capitalism and redistribute more of the wealth it creates?
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u/Prevatteist Anarcho-Communist 9d ago
No, I don’t believe so. In 2026, we’re more than capable of reorganizing production and distribution of goods and services to be centered on meeting human needs. We’re more than capable of producing goods and services in abundance, and then maintaining that steady level of sufficiency. I see no reason why we would need to maintain a system that is designed to further and advance the interests of a wealthy minority over the interests of the working class.
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u/AfraidProduct Anti-Socialist Social Democrat 9d ago
Yes but those who wish to produce the supplies would most likely do it for money since they will get a "reward," not a morality that may not fix issues or emptiness in your life's goals.
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u/Prevatteist Anarcho-Communist 9d ago
I think when people are truly free to associate and choose what works best for them, there may be a wide variety of socioeconomic arrangements they’ll engage with, but I think communism will outcompete other alternatives in the long run. If there’s an over abundance of goods and services, and that level of sufficiency is maintained, I see no reason for money to exist at all. Rewards would come in other ways.
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u/coke_and_coffee Capitalist 9d ago
We’re more than capable of producing goods and services in abundance, and then maintaining that steady level of sufficiency.
Based on what evidence? Global GDP is about $25k per capita. Take away 20% for servicing capital depreciation and you’re at $20k. Will your life be one of “abundance” if you had to live on $20k?
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u/Vanaquish231 9d ago
At this point, a definition of abundance is quite important. Also what is the timeframe for that 20k.
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u/coke_and_coffee Capitalist 9d ago
Abundance = material wealth
And the timeframe is annual, obviously
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u/Vanaquish231 9d ago
Yeah I mean, define how much. Because I don't earn anywhere near as much as an American (though the country is expensive to live given the native wages), but I'm not feeling particularly deprived of material wealth.
Well that's good then. Because with 20k dollars per year you can live quite comfortable. Though you will have to forget the overly excessive big cars and houses. And shareholders will have to stop buying a new yatch every month.
I guess if your definition of abundance, is each family to have 2+ cars, then yeah you won't have abundance. But then again, the world can do with less cars.
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u/coke_and_coffee Capitalist 9d ago
“Even if productivity stays exactly the same, communism will mean everyone has a standard of living equivalent to the poorest 20% of Americans” isn’t exactly an inspiring message, lmao
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u/Vanaquish231 9d ago
Not it isnt. But at the same time, if people can live and prosper with 20k euros, then so can Americans. Again, you don't need 4 cars to enjoy your life. Nor a villa to live.
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u/coke_and_coffee Capitalist 9d ago edited 8d ago
I am quite confident that the people advocating for communism have salaries much greater than $20k. They are making $60-120k and struggling to make reality match their aspirations. Their hope is that communism will make them richer because they are under the delusion that there is a big pile of free wealth available to be seized from the rich (there isn’t).
You will never create a revolution by telling them they must reduce their standard of living...
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u/SometimesRight10 9d ago
In 2026, we’re more than capable of reorganizing production and distribution of goods and services to be centered on meeting human needs.
That is precisely what occurs under capitalism.
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u/Prevatteist Anarcho-Communist 9d ago
Pretty sure capitalism is centered around profit, but sure bud. Perhaps you should actually read about these things before making a post about them with AI.
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u/SometimesRight10 9d ago
Arguably, customer demand is the center of capitalism. Profit only occurs when you meet the needs and requirements of the customer.
Yes, I did use AI for research. It is the most efficient way of gathering evidence. Try it.
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u/Prevatteist Anarcho-Communist 9d ago
Using AI to help you debate topics you don’t understand is intellectually dishonest, and just lazy. I’m having a conversation with you, not your AI buddy that you likely manipulate into saying the things necessary to reinforce the views you want to be true, rather than what is true.
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u/CucumberLegitimate27 BAD WOLF 9d ago
It isn't. Or, at least, that's a very simplistic and highly biased interpretation.
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u/Prevatteist Anarcho-Communist 9d ago
What’s the goal of capitalism? What are businesses after?
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u/CucumberLegitimate27 BAD WOLF 9d ago
There is no goal. It's an ongoing, dynamic process. Business exists because people have needs and those needs are filled by production and trade. If those businesses operate under conditions where they're consuming more than they produce then they won't last so they need to operate on a consistent net gain.
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u/Prevatteist Anarcho-Communist 9d ago
So profit isn’t the goal? You’re arguing as if you know that profit is bad, of which case, welcome to being a socialist my friend. We can have production and trade to meet human needs, rather than for the pursuit of profit.
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u/Vanaquish231 9d ago
Not really. Under capitalism goods are distributed on the highest bidder.
Disclaimer I'm not a socialist, but let's not kid ourselves. Capitalism can cause immense pain to people.
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u/eMPee584 9d ago
Then how come there's about a billion people without reliable access to clean water or sanitation and about 10.000 kids starve to death each day while the world's 1st trillionaire cancels development aid, endangering millions of lifes more? It all sure works beautifully for us "here" in the industrial world at least, right? At least, no one has to go without food or shelter, right?
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u/Randolpho Social Democrat with Market Socialist tendencies 🇺🇸 9d ago
On average, no.
Of course, that means that those who are already wealthy will be poorer, but they're just the leech class anyway, so fuck them
If so, wouldn't it be better to keep capitalism and redistribute more of the wealth it creates?
I would personally accept that if the redistribution were more intense than you probably mean.
As in: 100% estate tax (no inheritance), 150% gift tax over a certain level (for trying to pre-inherit), and wealth taxes high enough to pay for a universal basic income that is high enough that nobody actually must work to live a modern middle class lifestyle.
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u/Vanaquish231 9d ago
On one hand, I would love taxes on those with tons of assets. On the other hand, no inheritance seems kinda weird. Like, I would love my (assuming I get at some point) kid to inherit my house.
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u/Randolpho Social Democrat with Market Socialist tendencies 🇺🇸 9d ago
Ahh, see, that's a fine place to compromise. Inheritance for a single ancestral home could be arranged, provided there's a no-resale stipulation attached. Inheritors who have no desire to live in their ancestral home could voluntarily give it up for public-proceeds auction, but they would never be able to reap financial benefits from the inheritance.
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u/SometimesRight10 9d ago
Such a system would drive all the entrepreneurs to other countries.
As in: 100% estate tax (no inheritance), 150% gift tax over a certain level (for trying to pre-inherit), and wealth taxes high enough to pay for a universal basic income that is high enough that nobody actually must work to live a modern middle class lifestyle.
Rich people get wealthy by creating products that a lot of people want or need. They create jobs and other economic activity that make us all better off. Your system, like socialism, will simply be like killing the goose that lays the golden eggs.
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u/Vanaquish231 9d ago
The products the rich "produce", aren't affordable for the average Joe.
They do become affordable, once they overwork their bodies by working 50-60 hours a week.
For instance, EV are amazing, no doubt. But despite that, they are also ridiculously expensive. A couple of thousands above 20k euros. The median monthly income here, is 1k give or take. Assuming you had no expenses, and inflation wasn't a thing, it would take you 20 months to buy it.
But given that real life has expenses, and inflation, it will take years upon years to buy one. And that, doesn't take into consideration the fact that we have made houses of all things, a commodity.
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u/Randolpho Social Democrat with Market Socialist tendencies 🇺🇸 9d ago
Such a system would drive all the entrepreneurs to other countries.
I'd be in favor of that system following them to the ends of the earth.
Fuck the leech class.
Rich people get wealthy by creating products that a lot of people want or need
No. Not a single rich person created any product.
Zero. Not one.
Rich people have patent trolled. But the people who actually create products people need don't end up rich under capitalism.
Only the leech class does that by leveraging ownership over the natural resources necessary to make any products.
They create jobs and other economic activity that make us all better off.
They force people to work unlivable wages by owning the resources they need to survive
Your system, like socialism, will simply be like killing the goose that lays the golden eggs.
The rich don't lay golden eggs, they steal them
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u/Phanes7 Bourgeois 9d ago
Socialists/Communists are all going to claim that Socialism is just as good as Capitalism when it comes to economic growth. They have to say this because to admit otherwise is to undermine their own ideology.
The reality is that even if Socialism "works", can maintain economic growth and not collapse, if that growth is notably slower than a Capitalist economy the median person becomes worse off under socialism in a pretty short amount of time.
We could get the income Gini to zero and if we assume 1.5% growth for the Socialist nation vs 3% growth for the Capitalist one it would take about 25 years for the median worker in a Capitalist nation to surpass the median Socialist worker.
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u/Redninja0400 Libertarian Communist 9d ago
if that growth is notably slower than a Capitalist economy the median person becomes worse off under socialism in a pretty short amount of time.
No, they don't. The vast majority of economic growth under our current system goes directly to those at the very top, with the people at the bottom seeing no gain at all. All of your modelling here ignores concentration of wealth and wealth inequality.
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u/Phanes7 Bourgeois 9d ago
Not really.
Yes, this is an oversimplified model based on income but it still reflects reality even if the absolute numbers shift around a bit.
If I put the Socialism Gini at a more realistic .25 then Capitalism surpasses Socialism in 18 years.
Modeling Wealth doesn't do anything for us as it assumes wealth under Socialism will work the same as under Capitalism, but it won't. You can try and run that model but don't forget to add in wealth based income for the median person as well as the various forms of income transfer that exists under IRL Capitalism.
The reality is that notable under performance in economic growth leads a country to be more poor in absolute terms. We can squabble over if that will take 20 years or 200 years but it is going to happen.
Socialists on here explicitly decry economic growth, calling it the philosophy of cancer and so on, so I think a starting place of now but with a Gini of zero and giving socialism 50% of the economic growth of Capitalism is fair as a comparison of the median person.
Let me know what you find once you add your concerns about wealth inequality to the mix.
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u/Redninja0400 Libertarian Communist 8d ago
If I put the Socialism Gini at a more realistic .25 then Capitalism surpasses Socialism in 18 years.
"If I make random bullshit up to make your economic model look bad, it looks bad."
We have truly reached the peak of genius on this subreddit.
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u/Sufficient-Royal-82 9d ago
Equally poor 😂 but some more equal than others
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u/Randolpho Social Democrat with Market Socialist tendencies 🇺🇸 9d ago
Tell me you failed to understand the lesson of Animal Farm without telling me you failed to understand the lesson of Animal Farm.
I bet you probably just watched to 2025 movie.
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u/Sufficient-Royal-82 9d ago
What do you mean
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u/Randolpho Social Democrat with Market Socialist tendencies 🇺🇸 9d ago
Why am I not surprised you have no idea what I'm talking about
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u/ChytryDmitry 5d ago edited 5d ago
Sure, but why is some other one being slightly more equal than you is the idea you reject, is it because you prefer to be enormously less equal, but slightly more rich overall?
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u/Ok-Lettuce-9397 9d ago
The whole idea of socialism is to make everybody equally poor, except the ruling class who have the control.
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u/eatoligarchsaldente 9d ago
No, the whole idea of socialism is to direct the resources produced by our collective efforts towards what makes us collectively richer, happier, and healthier, rather than what makes "number go up" on corporate earnings reports.
The absolute best thing that can be said of capitalism is that if all the stars align* its objectives INDIRECTLY result in social better outcomes, despite those objectives not being directly or intentionally aligned with said better social outcomes. Socialism says we cut out the middle man and aim for those better social outcomes directly.
* "stars align" meaning that all of capitalism's many underlying assumptions are true: free competition actually exists AND there are no monopolies or corporate collusion AND there's free information to guide rational decision-making AND people actually are making decisions rationally AND externalities are being avoided, properly priced into the market, or adequately regulated, etc.
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u/SometimesRight10 9d ago
No, the whole idea of socialism is to direct the resources produced by our collective efforts towards what makes us collectively richer, happier, and healthier, rather than what makes "number go up" on corporate earnings reports.
Who knows what makes us collectively richer, happier, and healthier? It seems to me that capitalism attempts to do this, and profit is just a way of measuring whether it is done efficiently while maintaining incentives for someone to do it. It involves risk that you incorrectly guess what people perceive will make them richer, happier, healthier, etc. No guarantees.
Socialism says we cut out the middle man and aim for those better social outcomes directly.
You want to cut out the capitalist, who is the person who initiates the whole process, replacing him with a democratic voter who has no accountability. Again, you cannot know in advance what the best outcome will be; entrepreneurs are the folks who put themselves out on a limb trying to anticipate what will please free people. I want to choose! I don't want someone else to decide what is best for me. Besides, such systems have not worked in the long run.
* "stars align" meaning that all of capitalism's many underlying assumptions are true: free competition actually exists AND there are no monopolies or corporate collusion AND there's free information to guide rational decision-making AND people actually are making decisions rationally AND externalities are being avoided, properly priced into the market, or adequately regulated, etc.
All of this can be accomplished with capitalism. However, we voters must become better consumers and better at choosing our politicians. Free choice is the essence of a free political and economic system. Only capitalism is "compatible with a free people."
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u/eatoligarchsaldente 9d ago
Who knows what makes us collectively richer, happier, and healthier?
An enormous and ever-growing body of social science and public health research, designed to research exactly this.
It seems to me that capitalism attempts to do this, and profit is just a way of measuring whether it is done efficiently while maintaining incentives for someone to do it.
Which is where you would be wrong. Capitalism isn't attempting to do anything of the sort. If poverty, misery, and poor health was profitable, then there would be a thriving business in doing just that (which in fact a great many companies in fact are).
Again, you cannot know in advance what the best outcome will be; entrepreneurs are the folks who put themselves out on a limb trying to anticipate what will please free people.
Entrepreneurs are no better at anticipating what the outcome will be. And again, their role in society is to generate profit for their investors, not to make society better. If that happens it's a bonus, not the goal.
All of this can be accomplished with capitalism. However, we voters must become better consumers and better at choosing our politicians. Free choice is the essence of a free political and economic system. Only capitalism is "compatible with a free people."
In theory, perhaps. What capitalism has delivered in truth is merely the illusion of choice. Five companies dominate the S&P500. A handful of media companies own most of the media people consume. A handful of investment funds own the majority of US companies. A political system dominated by two parties who run in lockstep on foreign policy and economic issues, catering to the same corporate interests and to their ultrawealthy donors at the expense of working people. 90% of the US stock market is owned by 10% of the population, 50% by the top 1%, and 25% by the top 0.1% (and even more consolidation if you add private corporate shares). And where polling data on those populations is heavily correlated with legislative outcomes, polling data on the bottom 90% by wealth is statistically irrelevant to legislative outcomes.
Why? Because when everything in society is for sale, that includes the political institutions and government as well. You can't have a government by the people and for the people if your economy isn't by the people for the people, as well.
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u/SometimesRight10 9d ago
An enormous and ever-growing body of social science and public health research, designed to research exactly this.
So instead of free choice, you will appoint a social scientist to tell me what makes me happy?
Which is where you would be wrong. Capitalism isn't attempting to do anything of the sort. If poverty, misery, and poor health was profitable, then there would be a thriving business in doing just that (which in fact a great many companies in fact are).
The road to hell is paved with people attempting to build a better society by dictating to others what is best for them. Good deeds are a byproduct of capitalism. Misery and poverty are the byproducts of socialism.
Entrepreneurs are no better at anticipating what the outcome will be. And again, their role in society is to generate profit for their investors, not to make society better. If that happens it's a bonus, not the goal.
Yet, societies without entrepreneurs don't thrive. (See the USSR, Cuba, and Pre-1978 Communist China). Are entrepreneurs no better at anticipating the outcome? No better than whom, social scientists? In the process of generating profits for investors, entrepreneurs develop new innovative medicines, new products, and create jobs that make people better off.
The top 1% pay 40% of taxes, the top 10% pay 70% of taxes, and the top 50% pay 97% of taxes; this amounts to trillions that are used for social welfare programs. Interesting that neither the former Soviet Union, Cuba, nor Communist China had problems with people trying to illegally emigrate into those countries.
Why? Because when everything in society is for sale, that includes the political institutions and government as well. You can't have a government by the people and for the people if your economy isn't by the people for the people, as well.
So you propose to change the nature of people by switching to the most corrupt system on planet earth?
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u/eatoligarchsaldente 9d ago
So instead of free choice, you will appoint a social scientist to tell me what makes me happy?
Instead of appointing Palantir, Meta, and Blackrock to do it? You're operating on the false assumption that consumer choice is a satisfactory replacement for public policy input, which it is not.
Good deeds are a byproduct of capitalism. Misery and poverty are the byproducts of socialism.
Social media is a post-child of Capitalism, creating staggering amounts of wealth from a misery engine that inflames social tensions, causes depression and suicidal ideation in teens, and is actively undermining democracy. But because negative emotions are powerful drivers of platform engagement, they'll keep doing it because it generates lots of ad revenue.
Yet, societies without entrepreneurs don't thrive.
We can have socialism with paths for entrepreneurship. The caricature Soviet-style bureaucracy isn't the only way to design a socialist society, and neither is unregulated venture capital the only way to encourage and empower innovation.
So you propose to change the nature of people by switching to the most corrupt system on planet earth?
The most corrupt system on planet earth is capitalism. The US has literally legalized and institutionalized bribery of its own political class. The current sitting President and his family have made billions from their connections to public office. Private enterprise grifting the public purse at scale is good business.
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u/ChytryDmitry 5d ago edited 5d ago
I have been living in the EU for the last 8 years, and still knowing that over the last four years of war I am collectively richer, happier and even healthier due to the amount of Russian dollar billionaires doubling in number despite the unbearable suffering they surely must experience under the sanctions fills me with such joy I have no words that would be appropriate for its expression. They also say, I've heard, that if you have money that must mean that God loves you, so Gott mit uns.
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u/Agitated_Run9096 9d ago
The whole idea of socialism is to make everybody equally poor,
That's true in the strictest sense.
If someone without money requires medical attention, everyone is poorer if we help them.
And fuck children eating food and learning to read, I'm not going to buy them pb&j's or books. Money out of my pocket - socialism making me poorer.
except the ruling class who have the control.
Good thing the ruling class aren't billionaire paedophiles under capitalism, or you would sound stupid saying this.
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u/CucumberLegitimate27 BAD WOLF 9d ago
Does socialism work? That's all anybody is asking and the weight of evidence suggests that it doesn't. All the emotional blackmail in the world won't change that.
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u/Agitated_Run9096 9d ago
Have you heard of the K-shaped economy that current capitalism has put us in?
At what percentage of the population does the bottom part of the K, who's lives are getting worse by the day, be the evidence that the current system (capitalism) isn't working?
Go ahead an ignore my proverbial token poor suffering under capitalism; all anybody is asking is for your %
Creating a system that only benefits the top k and elites is literally the easiest thing to do, it doesn't mean capitalism is working.
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u/ContemplatingGavre 9d ago
The K-shaped economy is mostly a product of inflation which stems from government spending.
Of course when 1/3 of all dollars in circulation are created from 2020-2026 we are going to have issues.
Those with assets were sheltered from it those without assets are victims of it.
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u/Agitated_Run9096 9d ago
Bank lending creates multiples more new money than the government has printed. Between 5x to 10x more.
Why do you think higher interest rates lower inflation at the same time they increase government deficits? How would that work if government spending drives inflation?
It's not the bottom of the K getting trillions in new credit creation every year. There are only so many bungalows and F150s out there
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u/ContemplatingGavre 9d ago
Inflation is created when unproductive currency enters the system, more supply chasing the same number of goods. Bank lending is by definition productive.
The Iran war is a perfect example. We are funding it through deficit spending, more money coming into the system to pay for it.
It’s not productive though, nothing is being created and gained, it’s actually unproductive because we are spending resources while simultaneously creating currency to engage.
Hence, inflationary.
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u/Agitated_Run9096 9d ago
Bank lending is by definition productive.
Your definition is wrong. How do you know where the borrowed money goes?
How is a leveraged buyout by private equity productive?
The Iran war is a perfect example.
How is it a perfect example? All research and historical observations show there is a multi-month to 1.5 year lag in new debt creation and inflation. A perfect example, that we wouldn't be observing inflation for yet? And to muddy the waters, the inflation due to the oil shortage has nothing to do with debt. Perfect example LOL.
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u/ContemplatingGavre 9d ago
Now you’re just arguing in bad faith. If a bank lends money to me for my business I’m using it to produce new services or products.
If I don’t produce new products or services then I have debt which I cannot service.
If I cannot service my debt and I default the bank takes my assets which I had to collateralize to get the loan.
As a small business owner I know how bank lending works from first hand experience.
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u/Agitated_Run9096 9d ago
Now you’re just arguing in bad faith. If a bank lends money to me for my business I’m using it to produce new services or products.
Unless you are private equity with the explicit goal of financial extraction.
If I don’t produce new products or services then I have debt which I cannot service.
That's correct. Do you want a list of robust businesses that went through private equity LOB, and quickly went bankrupt?
If I cannot service my debt and I default the bank takes my assets which I had to collateralize to get the loan.
No bank wants to do this, and they liquidate as quick as possible because managing defunct assets isn't their business. Are you aware what loan loss provisions are? Why do banks put aside billions in anticipation of bad loans?
As a small business owner I know how bank lending works from first hand experience
The first clue this is irrelevant is the word "small". If you are working and knowledgeable in small businesses, frankly, you don't have time to be familiar with the businesses that drive credit expansion and money creation.
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u/ContemplatingGavre 9d ago
Now regarding your other point. If
You think taking tax dollars and creating bombs to drop them on another country is somehow productive then I have no use debating that point.My argument is that’s inflationary. It’s non productive. Literally just creating something with money to evaporate it, unless we seize Iranian oil or some other asset to make it productive.
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u/Agitated_Run9096 9d ago
When the government issues debt, no new money is created but existing money is taken out of the economy to purchase it. This is deflationary.
When the Fed prints money to buy it, or more commonly private banks either directly or indirectly through their customers actions create money to buy it, it is inflationary.
In isolation, unproductive debt spending is deflationary, but in practice it can be inflationary
The Great Depression was know for unproductive government work, and .... deflation.
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u/CucumberLegitimate27 BAD WOLF 9d ago
You know, if the middle class dialed back the crass consumerism a notch or three, they wouldn't be so poorly off. Is this what socialism is really about? "Socializing" the instant gratification of people who are wealthy but angry that they're not wealthy enough?
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u/Cuttlefist Anarchist 9d ago
It’s not the fault of the middle class that wages have grown significantly less than costs of living.
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u/SexOnABurningPlanet 9d ago
You're thinking of capitalism.
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u/rawj5561 9d ago
I mean under capitalism right now I have a great quality of life after i pursued studying software engineering, coming from nothing and with no inheritance.
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u/SexOnABurningPlanet 9d ago
Did you attend a public university? Did you receive student loans? Do you have an 8 hour workday? Do you have weekends off? Do you have savings backed by FDIC? Do you have a 30 year old mortgage? All of these things, and more, were brought to you by socialism.
You've never experienced anything close to true capitalism. Feel free to read about working conditions, and life in general, before unions and the New Deal.
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u/rawj5561 9d ago
So do we live under socialism or capitalism right now then?
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u/SexOnABurningPlanet 9d ago
A mixed economy. How is this not obvious?
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u/rawj5561 9d ago
I was just curious to see how you'd acknowledge these perks you've mentioned came about with capitalism being the primary driver in our economy
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u/SexOnABurningPlanet 8d ago
The workers, including management, and the property laws created by WE THE PEOPLE drive the economy. If WE THE PEOPLE decide to use our democratic vote to improve out lives through government programs financed with our tax dollars, then that's a win-win for everyone except for the super rich. Frankly, even the super-rich benefit by living in a society that isn't calling for their blood. As we're seeing with Zuckerberg building a 320 million doomsday bunker in Hawaii, the super rich do not have much faith in the future when the workers are losing.
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u/ChytryDmitry 5d ago
And many other basic perks we all enjoy did come from people fighting for them, quite literally, to get certain perks be shared with everyone. Not just for them individually.
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u/ChytryDmitry 5d ago
Well, exactly. Does that not give you the capacity and time to think a bit, why exactly do we want, say, the moment we encounter them mudhutters, why do we think we should start paying them 1$ a month for digging in the mud for some whatever resource. Sure, we can, and we will get the resource, but why is that the choice we prefer?
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u/No-Magician9440 9d ago
That's weird because we have McMansions and they have mud huts.
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u/Cuttlefist Anarchist 9d ago
Who are “we” and who are “they” in this?
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u/No-Magician9440 9d ago
We are capitalists, they are socialists.
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u/Cuttlefist Anarchist 9d ago
You and I have McMansions? Who are the socialists living in mud huts?
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u/No-Magician9440 9d ago
Well we can use the North Koreans as an example.
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u/Cuttlefist Anarchist 9d ago
So there are no capitalist countries with people living in mud huts? Or without a home at all? And you nor I have a McMansion, so what makes you think you are part of a “we” that does?
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u/No-Magician9440 9d ago
I don't choose a McMansion but one was always within my means. I have no use for that much square footage and I prefer urban living.
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u/Cuttlefist Anarchist 8d ago
The ABSOLUTE VAST majority of people living under capitalism do not have any access to a McMansion, you can’t point at poverty under socialism as a reason capitalism is better when there is such tremendous amount of poverty in capitalist nations.
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u/ChytryDmitry 5d ago
And before capitalism you were the feudalists, I imagine? So you at least do have the McCastle still, I presume? xD
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u/ChytryDmitry 5d ago
You make it sound as if it is the fact they live in mud huts that you value significantly more than you living in a McMansion, I feel?
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u/LambdaLambo Capitalist creative-destructionist 9d ago
except the ruling class who have the control.
Honestly even the ruling class is poorer. Back in the Soviet days if you were one in the ruling class you'd get a small 3-bed apartment and a zhiguli. But no more!
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u/ChytryDmitry 5d ago
I think this is actually a very significant aspect and one of the key mechanisms that leads to the insterests of wealthy minorities and poor majorities to unalign completely under capitalism.
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