Posts Tagged ‘Adam Smith

18
Feb
10

The Trickle-Down Theory

Though it the term originated in the 1930s, the “Trickle-Down Theory” has come into increasing use over the past year (largely due to the global financial meltdown). Essentially, the theory holds that by cutting taxes on the wealthy and/or allocating wealth to the upper classes, the money they save will be spent on luxury items that will provide work and profits to the middle class, who in turn will buy products that provide work and profits to the working class.

Obviously, this theory is complete and utter tripe.

Firstly, the theory is based on the assumption that the items the wealthy buy will somehow benefit the middle-class. In reality however, when an oil tycoon buys a diamond necklace for his wife, he isn’t benefiting anyone. If he walks into a store to buy the necklace, is he somehow benefitting the clerk behind the counter? Of course not- her wages are the same whether or not he buys anything. The profits of the sale go to the diamond magnates who own the store. In short, the wealthy get wealthier- the middle class simply facilitates the process.

Now you might say, “Hey, doesn’t the oil tycoon’s purchase help the middle-class? Without customers, the store couldn’t operate and the clerk would be out of a job! And if the clerk is out of a job, she isn’t going to be able to spend money and produce profit for the working class!”. Now that’s partly true- but only partly. The clerk’s job does depend on the store being successful, however, let’s look at the big picture. If the store is already running, then it has enough business to provide the job. Whether the tycoon has a few extra thousand dollars isn’t going to make the slightest difference. Again, you might argue “But an increase in the demand for diamonds means that more diamonds must be mined, producing work and profits for the proletariat!”. Again, this is only partly true. Now if there was a massive increase in the demand for diamonds (and let’s face it, it’s not like diamonds wear out and need to be bought by the dozen), there would indeed be more work for the proletariat. There’d be more work, not more profit. The owners of the mines can simply increase the workload- they have no reason to increase wages. Unionizing? The majority of the world’s diamonds are mined in third world countries where (1) unionizers can be beaten, tortured, or killed and where (2) the general populace is so poor they’ll take whatever wages they can get. In short, an increase in wealth for the wealthy does not equate an increase in wealth for the entire social system.

Ok, maybe that isn’t entirely true. There are certain (rare) situations in which the trickle-down theory seems to work (which brings us to the second issue). Imagine a wealthy man decides to build a sports stadium- the advocates of the trickle-down theory will argue that this will provide jobs and profits for the local community. Now this will in fact provide jobs- as food vendors and janitors. Whatever extra money they have will be spent on things too insignificant to boost the community out of poverty. I wouldn’t call that “benefiting” the working class anymore than I would call a dew-drop in the Sahara a “water-supply”.

Now I’ve stated that the origin of the term “trickle-down theory” originated in the 30s- but the actual practice has been going on since the beginning of time. It’s what they used to do with hunting dogs. Sic them on rabbits and, after the dogs catches the prey, they wait patiently under the table while the master eats the meat. When the master’s done, he throws the scraps to them. Now it might work for dogs, but if you treat a human like an animal, then it is only a matter of time before he becomes one- and an animal and has no issue with ripping your throat out.

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23
Nov
09

A Brief History of Communism

It is commonly assumed by the public that Communism (also called “Marxism”) was created by the German philosopher Karl Marx. Nothing could be further from the truth. In reality, a young Marx joined the already existing Communist movement and, after publishing several works on the subject of Communism and Capitalism (a term he coined), he became such a central figure that the term “Marxist” became synonymous with the term “Communist”. In much the same way Adam Smith did not create Capitalism but rather created the authoritative work on Capitalism (The Wealth of Nations) and yet is still considered the “founder” of Capitalism.

So who did create Communism?

Like most things in life, there is no short and simple answer. Communism, or at least the primitive ancestor of Communism has existed for thousands of years. At the dawn of man, humans lived in tribes, working together for survival. What one man killed was food for everyone, the spear or hammer made by one person could be used by another. The concept of private-property did not evolve until much later in human history- the reason being that selfishness and individualism simply could not mesh with the harsh realities of the time. One human could not survive on his own, the tribe as a whole could not waste time and energy on creating twenty individual hammers for the twenty men of the tribe when one could be shared just as easily. At the same time, the shared property (combined with the need for everyone to pull their own weight) eliminated any chance of a class system evolving. Without any difference in wealth or workload, society was more or less egalitarian.

So what happened?

As humans became more settled and as the barter system emerged (to be discussed in a later post), shared-property died slowly out and the class system arose. While today the vast majority of hunter-gatherer, pastoral, horticulturalist, and nomadic people groups still live in classless, shared-property systems, the majority of the world’s population began moving away from this system after the establishment of permanent agricultural communities. By the fall of the Roman Empire, most of the world’s people groups practiced Capitalism in some form. It was not until 1516 when Thomas Moore, one of Henry VIII’s closest advisers, published his work Utopia that the concepts of shared-property and classlessness were reintroduced into society (albeit merely as subjects of intellectual discussion). Only in the early 1800s were the concepts developed into actual political/economic theories. Henri de Saint-Simon, a member of the French aristocracy, created several works on the subject and while never implementing them in any major way, laid the foundations for what would become known as the Communist movement. It was not until 1848 when two young Prussian authors named Marx and Engels published their collaborated work The Communist Manifesto that Communism (or “Socialism”- at the time the two words were more or less interchangeable) became a concrete theory. Between the two men’s works, the entire Communist philosophy was created, though it was not implemented until 1871, when Parisian Socialists revolted against the imperial French government and established a short-lived attempt at a Communist government until the Commune (revolutionary government) was wiped out by the French military. While Communist philosophy spread across much of the Western world, there were no major attempts at Communism (baring the establishment of Amish, and later, Hutterite, communities- which are closer to the primitive classless/shared-property practices of various tribal societies). There was a brief attempt at Fabianism (a British Socialist movement), however it quickly devolved into a philosophy, rather than a physical attempt at the implementation of Communism. It was in Russia in 1917 that the first major attempt at a Communist revolution (since the 1871 revolution) took place. The Bolsheviks (the Russian Communist party and revolutionary movement), led by Vladimir Lenin, overthrew the Russian monarchy and the feudal system. After Lenin’s death in 1923, a split ensued that left the USSR divided between the followers of Leon Trotsky (creator and commander of the Red Army and Lenin’s second-in-command) and the followers of Joseph Stalin (the General Secretary of the Communist party). Stalin, despite the efforts of Trotsky and his followers, assumed control and eventually exiled Trotsky in 1929. Under the despotism of Stalin, the USSR, while maintaining the facade of Communism, devolved into a semi-Socialist dictatorship (Trotsky referred to it as a “deformed workers’ state). While Trotskyism grew in popularity in the West, the general Communist movement was marred by the atrocities committed by Stalin and the imperialists policies pursued in Eastern Europe after his death. In China, Mao Zedong led what is generally considered to have been a Communist revolution, but the later policies of Mao have caused many other Communists to doubt whether China could be counted as true Communist country since the mid 1950s. While the revolution itself is considered to be beneficial, the vast majority of modern Communists hold that contemporary China is no more a true Marxist country than Stalin’s USSR (this opinion is viciously opposed by Maoist factions of the Communist movement). While Communism was quickly becoming popular in the third-world (due largely to Western neo-colonialism) the next major advancement of Communism occurred in Cuba after Fidel Castro and Che Guevara defeated the dictator Batista. Once again Communists are split on the subject of whether Cuba may be considered a true Marxist government- much like China, there is popular that the revolution was a positive event but the movement is split on whether Cuba did or did not devolve into another deformed workers’ state. Indeed, the same could be said for almost every country where a Communist revolution has taken place (though almost all Communists are united in believed that North Korea is not a true Communist country). While the collapse of the USSR in 1990 has led many to believe that Communism has been defeated, the Communist movement is technically as active as it ever was.

In short, the history of Communism is far from simple. Much of its history can be interpreted depending on your sympathies and opinions.

Then again, the same could be said for any aspect of history.

 

Author’s Note: Since Communism isn’t merely an economic or political or social theory but rather a combination of all three, you can see how describing the theory itself- let alone its history- is a massive undertaking that could easily fill a book. Considering my space and the attention span of the reader is sorely limited, I have been forced so skim over the major events of Communist history. Don’t be ticked off at me if I missed some (though if I have something that might be wrong, please correct me).

26
Aug
09

Vox Populi… (Part 1)

It has been said that “the customer is always right”. That seems to make sense- after all, in a Capitalist society, supply-and-demand (with the emphasis on the “demand” part of the equation) is the driving force of the economy. Companies, corporations, businesses, entrepreneurs- everyone caters to the consumer. Naturally this sounds like an excellent system- the people demand a product or service and the companies develop and create it. Simple, efficient, and like most things in the Capitalist system, deeply, deeply flawed.

It has also been said that “the voice of the people is the voice of God”, essentially an earlier, Roman version of “the customer is always right”. The problem with that phrase however (and indeed, the entire supply-and-demand theory) is that humans are far from divine. Supply-and-demand looks great until we look at the things we demanded over the past ten-thousand years or so. Slaves, narcotics, war, segregation, excess, genocide, nuclear arms- just to name a few. Let’s use war to study the issue a bit more. Humans love war- we can’t get enough of it. Since the dawn of time we’ve been trying to find quicker and more efficient ways of clubbing each other. Obviously with such a massive demand for war, there are those who- like the good Capitalists they are- make a living off of conflict. They sell mercenaries, arms, guns, knives, mines- anything and everything to anyone willing to pay for it. Naturally, this only intensifies the horrors of war, it perpetuates the violence and weakens the chances of peace and diplomacy. If guns are used to slaughter minorities, or if grenades are pushed into the hands of child soldiers- who cares? If weapons are demanded, then they are supplied- the voice of the people is the voice of God!

Now obviously we can see that this is horribly wrong. Now I am not attempting to argue that any demand is wrong- humans have, after all, basic needs. Catering to humanity’s baser appetites doesn’t satisfy them, it only creates a greater hunger. Regulations? Regulations are an interference with the free market system- a form of “corruption” as Milton Friedman is attributed with saying.

Is supply-and-demand such a great idea? I submit that we cannot have our every whim met, that to supply every human demand would be the equivalent of granting a three year-old’s every wish. Anyone even remotely familiar with human history can tell you that we as a species have a difficult time figuring out what’s good for us.

Quite simply, we can’t always get what we want.

28
Jul
09

Why I’m Still a Communist

I became a Communist because I believed that it was the only viable political/economic system capable of providing liberty, justice, and security for everyone, rather than just those who can afford it. I have remained a Communist for much the same reason. While one might expect (and many have hoped) that experience would lead me to leave Communism, it seems the more I see of life, the universe, and everything, the more I become confident that my views are correct.

For example, when I was seventeen I took a course on mainstream worldviews (Christian, Humanist, New Age, Marxist). The class turned out to be a series of hyper-Conservative, dogmatic lectures and the textbook wasn’t much more than a seriously biased collection of arguments against any view other than Conservative Protestantism. Despite the waste of time, effort, and money that the class was, I nevertheless found myself affected by it (or at least, an event resulting from the class). While the textbook was full of little cartoons advocating various right-wing stances- one stood out to me in particular. It showed two frames, one in which a wealthy man giving a handful of coins to a poor man, the other depicted the poor man robbing the rich man. The caption claimed (roughly) that in Capitalism, when the rich give to poor it is called “charity” and- no matter what Communist word you use to describe it- when a poor man takes from the rich it is called theft. When I saw this cartoon, it took a while for me to fully digest what it’s implications were. Granted, it seemed reasonable- giving is accepting, taking isn’t. But when one thinks about it, if this were to be applied, the poor would be reliant on the wealthy giving out a steady stream of spare change. Of course, this would mean that the wealthy are willing to give out a steady stream of spare change (and they say that Communism claims humans are basically good). Quite simply, charity doesn’t work- the people need a better way to survive than aid, pity, and welfare. All in all, as a result of reading a simple political cartoon, I became even more entrenched in the idea that Communism offers the solutions for the problems Capitalism simply can’t solve.

Another example would be the game of monopoly (yes, even Communists play monopoly). You gather the players around the board, they compete and trade and make wild gambles but in the end, there is only one winner. Now disregarding the amount of pain and suffering caused by running every competitor out of business, one must consider what it would be like to live in a country with a monopoly on- let’s say- iron. If you want to make anything with iron, you have to pay the monopoly’s price. If your looking for quality, then it’s more or less a game of chance- the monopoly has no reason to sell anything better than its lowest quality product. If you try to import, then it’ll probably a baffling and expensive ordeal- the monopoly has a hefty lobby at the capitol and there aren’t many senators and congressmen and even presidential candidates who wouldn’t mind taking contributions from the monopoly. Regulation laws? This is Capitalism- regulations are, as Milton Friedman is attributed with saying, “corruption”. Communism averts a disaster that Capitalism leads to.

Or yet another example would be that of airplanes. Nowhere is the class system so pronounced as on a transatlantic flight. The same distance is being traveled, the same plane is being ridden, but the differences between the 1st class and coach cabins are massive. Now we must keep in mind that the people in coach are just as human as those in 1st class. Yet, due to a simple lack of money, those in coach have a dramatically different flight from those in 1st class. The food is inedible, the seats are cramped, the cabin is crowded. Why? Because some people are poorer than others and therefore less valuable. The class system is the greatest example of social injustice since the days of segregation and religious persecution. Communism does away with the class system and ensures equality for all- not only those who can pay for it.

In short, while it was the massive tomes of Marx, Engels, and Smith that convinced me to become a Communist,  it is the little things in life- cartoons, board games, traveling- that convince me to stay Communist.

27
Jul
09

How I Became a Communist

It seems that if you were born before 1990, you were born to one of two worlds, Capitalist and Communist. If you were born in the West, you were supposed to be a Capitalist, inherently opposed to any and all things leftist. If you were born in the so-called Marxist countries, you were raised to believe that the Communism, country, and party came before anything else. Life was simple: if you are A then you are against B, if you are B then you are against A.

I was born after the collapse of the Soviet Union, when the stereotype of the Red Menace was trite and the US hadn’t picked Arabs to be the next bogeyman. Communism was dead (or at least, the Soviet Union was) and I was an American so I wasn’t expected to be anything other than Capitalist. While I had never been actually educated on the tenets of either system (most eleven year olds aren’t), I had a basic grasp of the two concepts. Capitalism- everything owned, Communism- everything shared. Again, being an eleven year old I didn’t spend too much time contemplating the subject until I began reading and old children’s book from the 70s. It was called The Girl Who Owned a City and it was, to the best of my knowledge, the event that set my down the path to Marxism. Set in a post-apocalyptic world where a plague has wiped out everyone above the age of thirteen, the hero of the story, a girl named Lisa, manages to keep her town safe from roaming gangs by creating an semi city-state in the local highschool. Throughout the story, the lesser characters complain that they want a say in how the “city” is to be run but Lisa simply states that it is her city, and that everyone else is only allowed to live there in exchange for their services. She makes the argument that eventually, Jill (her medically inclined friend) will be able to operate her hospital which will belong to her and no one else. Of course, the subtle Any-Rand style society that was advocated in the book was only part of the story, but it got me to think. A bad habit of mine is that when I read a story, I’ll go through a few chapters and spend the rest of the day putting myself in the place of the main character and trying to figure out what I would do in his or her place. As I read through the book I couldn’t help but feel that there was a major flaw in the arguments the characters made. “Sure,” I thought, “if Jill wants to be a doctor and there’s an abandoned hospital nearby then she could take it and make it her hospital and that’s all fine and well. But what happens when the hospitals run out? What happens when there isn’t any more canned food to go around? If I were in Lisa’s place, could I believe in this system?”. I would try to argue Lisa’s case from every angle I could imagine but I kept coming back to the same conclusion. In a world where everything is individually owned, there will be eventually a group of those who have everything and a group who have nothing, and the group that has everything will have no reason to give anything to those who have nothing, leaving the nothing-group to starve or turn into brutalized, thieving gangs. No matter what reasoning I applied, what rationale I used I found myself inevitably ariving at the same conclusion: Capitalism doesn’t work- there will always be someone left behind simply because he’s unlucky!

Naturally one can imagine it’s not easy for an eleven year-old to cope with the discovery that a major tenet his worldveiw is seriously flawed. For a breif while I looked for a better system, reading up on monarchies, dictatorships, anarchy, and theocracy (I even tried to create my own political system only to give it up once I found that the name I wanted to use had already been taken). No matter what system I looked at, it seemed that the problem (though I wasn’t sure what the exact problem was) would be either simply moved or exacerbated. I concluded- disappointed- that Capitalism as it existed now was as good as it was going to get. I didn’t give much throught to the subject again for three years.

When I was fourteen, I had my first formal introduction to the Capitalist/Communist conflict. My family was looking after a friend’s house and I, sitting upstairs in the ornate library/study, was bored out of my mind. To pass the time, I pulled to random books off of the shelf, determined to read through both of them before the day was over. Setting both tomes on the table in front of me, I flipped open the covers to see what I had picked: The Wealth of Nations by Adam Smith and Das Kapital by Karl Marx.

It was probably one of the longest afternoons of my life. I poured over each paragraph, each word, measuring the arguments individualy and against each other. I read the biography’s of the authors in the back of the books, to understand their histories and biases. The Wealth of Nations wasn’t much of a read- I had gotten more or less the same philosophy from The Girl Who Owned a City, but Marx- Marx was enthralling. Whatever preconceptions I had about Communism, whatever images of Stalin’s Russia and dark police states, faded away. Here, I thought, was an actual solution to the problem- which I realized was property and the class system. While I had been becoming a leftist for years, it was on that day I became a Communist.

Naturally my family wasn’t exactly thrilled when I told them, but at the time I believe they thought I would grow out of it. As Otto von Bismarck once said, “Anyone who isn’t a Communist before eighteen has no heart, anyone who is a Communist after eighteen has no mind.” Whenever I told people I was a Communist I got the same condescending nod, the knowing smile, and obnoxious comment “You’ll change your mind when you’re older…”.

Obviously that hasn’t happened.

24
Jul
09

The Many Faces of Communism

Like Capitalism, Communism is not a single political, socio-economic system but a term used to denote any number of systems based around the abolition of private property and the establishment of a democratic, classless system. Listed below are some of the more major forms of Communism.

Classical Communism/Marxism

A common misconception about Communism is that it was created by Karl Marx. In reality, however, the concept of Communism existed before Marx’s time and it was a young Karl Marx who became Communist, rather than Karl Marx founding Communism. Nevertheless, Marx did for Communism what Adam Smith did for Capitalism. Marx, by writing the first authoritive Communist works (particularly The Communist Manifesto) will be forever credited with establishing the basic principles of Communism (also called Marxism). The fundamentals of Communism, as discussed in previous posts, is that the working class, after ages of exploitation by the upper classes, will revolt and establish a new world order in which all property is shared, the concepts of royalty and nobility are abolished and democracy is instated, and the entire class system is destroyed in place of a single, working class. While this might appear more or less straightforward, the exact details of the Communist society were never stated by Marx, and as a result, many have built off of Classical Communism and combined it with other political and economic theories.

Christian Communism

Perhaps the earliest known Communist society was the primitive Christian Church. According to early records and the Christian bible, the Christian community (though technically the word “Christian” had not yet been created) shared all property and had a government specially created to facilitate the distribution of property. As Christianity grew and became more institutionalized, Christian Communism died out and was not revived until the early 1600s, when religious separatists began colonizing America (the most famous of these groups to instate Christian Communism was the Plymouth colony). Again, as Christianity became more established in the New World and as more and more settlers arrived, Christian Communism withered away again (though some groups, such as the Amish and Hutterites, have kept it alive in certain parts of America). Aside from a brief period in the 1700s when many Catholic Missions cooperated with the local Native American population as isolated Communist societies, the actual practice of Communism has died out among most Christian sects- partly because of the spread of Capitalism and partly because of the religious persecution instated by the Soviet Union, China, and North Korea (motivated by Marx’s rather disparaging attitude towards religion). Nevertheless, many Christians have combined Christianity and Marxism, stating Marx’s anti-religious comments were the result of corruption within the church at the time. Indeed, in many parts of the world Christianity and Marxism have been combined as the basis for anti-Capitalist revolution (take the Palestinian PFLP, or the Catholic “Liberation Theology” for example).

Leninism (Bolshevism)

Leninism is the political/socio-economic plan that was in the process of being instated in post-revolutionary Russia. Pioneered by the revolutionary leader Vladimir Lenin, Leninism (sometimes called “Bolshevism” after Lenin’s party) was more or less the same as Classical Marxism with a few added modifications. Firstly, Leninism holds that in order to effectively redistribute property and manage the national workforce, a strong centralized (federal) government was required. Secondly, Leninism focused on industrialism, factory workers, and production- attempting to make industry the backbone of the Communist society (though it should be noted that some hold that the Leninist focus on factory work was a result of Russia’s involvement in WWI, not ideology).

Maoism

While most Communists hold that Mao Zedong was nothing more than a dictator and a narcissistic megalomaniac who used Communism as a Trojan horse to seize control of China, there are a number of those who believe that before Mao came to power he was a genuine believer in Communism. Using Mao’s early actions and teachings, “Maoism” has been developed as a Communist philosophy acting almost as a counter-balance to Leninism. Unlike Leninism, Maoism demands a strong provincial (state, local) government rather than a massive central power. Also, Maoism puts emphasis on peasants, farmers, and agriculture as the foundation of a Communist society (as opposed to the Leninist focus on industry).

Trotskyism

Created by Leon Trotsky after his exile from Russia by Joseph Stalin, Trotskyism is what one might call “the left wing of Communism”. Trotskyism focuses on the revolutionary aspect of Communism. While most other schools of Communism believe that the revolution must occur before the establishment of the Communist society, Trotskyism holds that a Communist society and the revolution will be happen almost simultaneously. Trotskyism is also perhaps the most anarchic form of Communism, focusing heavily on localized government and state/provincial rights (extremely similar to the Jeffersonian of the early US). Another major aspect of Trotskyite Communism is the belief in circular-revolution, the concept (originating in ancient China as the “Mandate of Heaven”) essentially states that all governments- including Communist governments- will become inevitably corrupt over time, therefore it is not the right but the obligation of the public to revolt and instate a new government each time this happens (a principal also found in The Declaration of Independence).

Luxemburgism

Established by Rosa Luxemburg, this form of Communism is perhaps the middle-ground between Leninism and Maoism. Lexemburgism focuses on the importance of ensuring Democracy, and calls for a balance between local and centralized power. Luxemburgism also calls for populism and general abolition of political parties (extremely similar to the philosophy of George Washington and- with the exception of the call for the balance between federalism and provincialism- Andrew Jackson).

Green/Eco/Environmental Communism

Perhaps the youngest form of Communism, Environmental Communism holds that Capitalism is destroying the planet’s ecosystem and devouring its resources and that Communism is the only viable solution. Eco Communism (as it is sometimes also called) focuses on low-consumption levels through shared property, controlled levels of production, and a lack of corporations blamed for damaging the plant. While most Communist contemporary Communist systems espouse some form of ecological protection, Eco Communism differs in that the protection of the environment is the primary goal, rather than establishing a Communist society based on agriculture or religious principles.

Revisionary Communism

The term “Revisionary Communism” does not refer to a specific philosophy or class of Communism but rather an aspect. While Revisionary Communism can be applied to almost any non-Classical Marxist ideology, it is most often used to describe various fringe groups who believe in amending some or all of Marx’s teachings, particularly on the subject of the Proletariat revolution or class system. While technically Communist, these groups are often motivated by the belief that Marx’s revolutionary ideology is too harsh or unnecessary for a Communist society to be implemented.

Pseudo Communism

Technically, this category refers not to Communists but to various groups, individuals, or philosophies claiming to be Communist but in reality functioning as something else. The best example of this would be the post-Leninist Soviet Union, which claimed to be Marxist but in actuality was simply a Socialist dictatorship. “Pseudo Communism” is, of course, a derogatory name most often given to Stalinist and Contemporary-Maoist groups. It is also used by some to mock Revisionary Communism.

24
Jul
09

The Many Faces of Capitalism

Throughout the blog I have been discussing various aspects of Capitalism, however, one must keep in mind that Capitalism isn’t so much an economic theory in and of itself but rather a general category of economic theories based around capital (money). For one to describe Capitalism without making note of the various schools of thought within the system would be the equivalent of describing Christianity without mentioned the beliefs of Catholics, Orthodox, and Protestants, or describing warfare without noting the invention of gunpowder. So, in the interests of clarity, listed below are the descriptions of the major classes of Capitalism.

Classical Capitalism

While the actual term “Capitalism” was coined by Karl Marx, the first comprehensive work on the subject of Capitalism (or “commerce”, as it was simply known as) was penned by British economist Adam Smith, in his The Wealth of Nations (considered by many to be the “Bible of Capitalism”. Smith’s essential argument was that humans ought to work in their self-interests which would create a strong and healthy society. Smith stated that if one person owns a product and attempts to sell it, the purchaser will buy it for whatever he deems it to be worth, leaving both seller and buyer richer and happier than before their transaction. Throughout his work, Smith advocates this concept of self-interest as the foundation of commerce, stating that “We address ourselves, not to their humanity, but to their self-love, and never talk to them of our own necessities, but of their advantages.”. Additionally, Smith claimed that it is in the best interests of the economy and the government for the government to interfere as little as possible with the economy (see “Free Trade” below).  Today, Adam Smith is viewed by many as the founding father of Capitalism and one of the most important economic theorists in the history of the world.

Laisseiz-Faire

Laisseiz-faire (literally “Hands-off” or “Let-do”) can perhaps best be described as an aspect of Capitalism (Classical Capitalism, to be precise) rather than a school of Capitalism. Based on the works of Adam Smith, Laisseiz-faire is a philosophy that states that the government should never interfere or attempt to regulate the economy which- according to the advocates of Laisseiz-faire- functions best without outside influence. While developed separately from Adam Smith, the philosophy of Laisseiz-faire and Classical Capitalism are often combined or associated with each other. While Smith primarily objects to government tariffs, Laisseiz-faire has historically opposed government interference in the form of anti-monopoly laws, minimum wage, and unions.

Christian Capitalism

While the US and much of Europe has never had any theocratic rule since the end of the Renaissance, it is undeniable that in the West, a Christian concept of Capitalism has existed for some time. Of course, this “Christian Capitalism” by no means applies to all Christians, but the fact remains that this philosophy does indeed exist. Christian Capitalism attempts to reconcile the self-focused, competitive tenets of Classical Capitalism with the rather community-focused, anti-materialist teachings of the Christian religion. The end result is what one might call a “moralistic Capitalism”, where competition and materialism do exist, but are tempered by ethics. Those within the system are free to make a profit, but gouging the buyer, deceiving the competition, or tricking the seller is considered to be unacceptable. Charity is advocated but not mandated (as opposed to other religious economic theories to be discussed later). While this form of Capitalism is often considered to be the ideal, there are many split on issues of what is and is not moral (what are the limits when trying to outsell a competitor, for example).

Regulated Capitalism

Contrary to common belief, regulated Capitalism is not a form of Communism or Social but simple government interference. Regulated Capitalism, like Laisseiz-faire, isn’t so much a theory of Capitalism but an aspect of Capitalism. Teaching the very opposite of Laisseiz-faire, regulated Capitalism states that economies require some form of control in order to flourish. This “control” can range from basic laws on minimum wage and worker-safety (such as in post 1940s America) to major government control (as in 1920s and 1930s Italy). While regulation is often confused with Socialism, one must keep in mind that so long as the state does not own the company, the products it sells, and the revenue generated, it does not count as Socialism.

Keynesian Capitalism

British economist John Maynard Keynes could perhaps be described as the most anti-Capitalist Capitalist the world has ever known. Keynes held that Capitalism is “the astounding belief that the most wickedest [sic] of men will do the most wickedest of things for the greatest good of everyone.”, and yet was himself a Capitalist. From a philosophical standpoint, Keynes despised Capitalism and yet saw it as the only option. As a result of this, his economic theory (known as “Keynesian economics”) attempts to protect the public from Capitalism’s costs while maximizing its benefits. Keynes advocates government regulation to protect the public while stating that the public, in order to prevent recessions and depressions, should spend their money without excessive investment or saving. Currently, Keynesian economics are often criticized by other schools of Capitalism as requiring too much collective and government interference.

Ayn Rand Capitalism

Also called “tooth-and-claw Capitalism” “Anarchist/Anarcho-Capitalism”, and “Social Darwinism”, this form of economics focuses on individualism to the point of egotism (or as Rand dubbed it, rational self-interest). Theorized by novelist Ayn Rand (most famously in her books The Fountainhead and Atlas Shrugged), this form of Capitalism is perhaps the most brutal. Rand’s philosophy vehemently opposes all forms of government interference, charitable aid, altruism, and religion. While never explicitly stated in her works, Rand’s economic theory holds that the wealthy and privileged are wealthy and privileged because they earned it, while the poor and proletariat are at the bottom of the economic food-chain because they are lazy or simply choose to be poor. In her book Atlas Shrugged, Rand submits that the wealthy and powerful are the most productive and useful members of society, capable of bringing the world to a sudden halt by going on strike. While Rand’s theories are essentially Capitalist, many other schools of Capitalism look down on Rand’s theories as barbaric, excessively anti-charity, and basically flawed. Despite public criticism, many hold that Rand’s Capitalism is by far the most pure form of Capitalism.

Free Trade

Free trade, like regulated Capitalism and Laisseiz-faire Capitalism, is a concept- not a theory. Free trade essentially is the belief that international trade should not be regulated or controlled by governments. Outsourcing, the import/export of resources and goods, multinational corporations, and international investment are all aspects of Free Trade that its advocates state will produce higher profits, lower production costs, more jobs, more demand, and generally stronger economy.

Protectionism

Protection (perhaps more of a political concept than an economic one) demands the very opposite of Free Trade. Protectionists believe that jobs should go to citizens of the country the company is in, that resources and products should be obtained and produced locally and that massive export and import tariffs should be maintained for the purpose of preserving jobs for the citizens of the country. Protectionists will often also oppose immigration for the same reason.