Socialism, Capitalism and Political Economy
 George Friedman
author/editor Walter Antoniotti 7/2/19 Source 

Socialism emerged from the French Revolution
 as a powerful political force to serve the dispossessed.
 It was relegated to the margins in the United States,
although economic conditions sometimes brought it to center court.

Economic Systems Solve the Scarcity Problem



collective ownership and management of equally distributed economic resources

Democratic Socialism
of Western Europe public ownership of key industries slike transportation/communication and increased concern for the disadvantaged.



Origin Stories

Socialism is a moral movement of intellectuals who loathed inequality, despised the intellectual shallowness of the rich, and sought to bring life to their visions.

Capitalism is not especially intellectual or
moral, it is a reality of the industrial revolution.

Socialist imagined a socialist utopian system.
Socialist believe political equality requires wealth equality. Production is for the common good.

Private control of investment flawed capitalism
as wealth creation went  to the rich who investing for their highest capital return. This meant the low return of social goods  were neglected.  Socialist believe this limited human possibilities.

The public, using a democratic process, controls the state. States should determine investment goals and resulting strategy. This is accomplished  by controlling property and investment capital. Production will be for the common good and not for state officials.

Capitalism Was Not Imagined or Planned
It was a reality emerging with the Industrial Revolution.
It required investment and the reinvested of profit.
Its wealth creation soon dwarf that of European aristocracy.

Unlike socialism, capitalist did not contemplate the virtue of wealth or the effects of industrialism on the human condition.
Not an ideology, intellectuals did not defend it until the 20th century when Hayek and Friedman, among others, sought did so.

Capitalism explainer Adam Smith wrote “The Wealth of Nations.” It described how individual decisions, driven by self-interest, would culminate in an increased wealth of nations. In “The Theory of Moral Sentiments,” Smith argument that moral development resulted from appropriate management.

Capitalism maximized wealth, it did not limit inequality.
Investments were based on capital return expectations.
Capital would move toward maximum creation of wealth.
The process left some serving the system, excluding others.

Basic Characteristics Described by Adam Smith

Private property-individuals own resources
Freedom of enterprise-own a business

Freedom of economic choice-work/not work, spend/not spend
Role of self-interest

Competitive Market System
Laissez-Faire Government let markets operate freely
Questionable Degree of Government Involvement a concern  

Source Basic Characteristics of Capitalism


Capitalists creates wealth for a few, allowing much suffering.

Reallocation of capital investment  to the state would eases suffering.
Capitalist investments comes from diversified investor decisions.
This limits the consequences and magnitude  of poor decisions.
Capital devastation, not annihilation is the worst possible result.
Protecting the investment process allows recoveries from devastation

Socialism places confidence in public control of the state because
they public understands needs, but they are not sensitive to cost.
The state is an abstraction so decisions are made by state officials.
Civil servants or elected representatives having no vested interest,
would make the good democratically approved public good investments.
Having minimal power and unbound by self-interest, they can
take the place of self-interested capitalistic investors.

Democracy a difficult fit for Pure Socialism because of the scale of modern economies makes . It evolves toward a Soviet direction or toward the oft-cited Swedish model which allows private investment while transferring tax money to the state for the public good.


The Soviets managed most civil servants with terror.
Sweden's democratic process manages the desire
for increased social benefits with the need to maximize
production resulting from private capital investment.

Diversified Investors Protects Capital
from making continuing poor decisions. When inefficiencies occur and affected industries adjust or lose to new efficient ones.
Joseph Schumpeter called this “creative destruction.” This efficiency may generate a rapid, intense crises which may lead to social unrest, chaos, and repression.
Will Politics protect top 0.1%

Abolishing Greed and State Minimization fantasies aside, the two systems have more or less merged.

Capitalists and socialists both accept private investment. Both expect economic growth and more taxes paid. Both capitalism and social democracy imposed taxes to cushion crisis dislocations.


Both Have Unhappy Voters

Regardless of system, paying taxes is hated and
receiving benefits loved. Political system decides who pays taxes and politicians pander to voters.

Politician differ on taxes and purpose but  fearing anarchy, must balance the system. As a result, modern capitalism
and social democracydistinctions are minimal.

Democratic socialism now a Democratic Party consideration.


Donald Trump  won the votes of our declining industrial workers. The Democrats had mistakenly replaced a New Deal cohort with many cohorts. Their  current Democratic Socialist approach to meeting cohort needs will determine their 2020 convention winner. Will the process allow a general election winner.

Discussion of socialism indicates a commitment to unspecified radical change. But the massive convergence between French Revolution socialists and capitalism means there is little economic system change available

The debate is functionally archaic


A Quarrel between a Federalist and a Republican in the House of Representatives













Quarrel between a Federalist and a Republican in the House of Representatives Foreign influence on Domestic Politics


Click to enlarge cartoon.