Hello,
Welcome to another article from Serfdom Road.
Do you think the world is broken?
Do you think there is too much suffering in the world?
Do you think life can be better for everyone than it is today?
Do you think we need more government, or do we need unregulated free markets?
In the grand debate of capitalists vs. socialists, both are wrong, but only because both do not know the meaning of either.
“There must be something rotten in the very core of a social system which increases its wealth without diminishing its misery…” Karl Marx (b. 1818, d. 1883)
“Accuse the other of that you are guilty.” Joseph Goebbels (b. 1897, d. 1945)
Economics 101
Why are some countries wealthy and others not?
How can a country be one of the richest in the world and in just a few decades be incredibly poor?
In the 1890s, Argentina was the richest country in the world. A hundred years later it was outside the top 20.
What really makes an economy grow?
What actually is an economy?
An economy is just a place where people transact with each other.
For an economy to grow, transactions have to be fast, benefit both parties and as time goes by, everyone starts to save for the future.
It used to take months to sail across the Atlantic, from Europe to the United States, now it only takes seconds if you use video conferencing software.
The speed of transactions grows exponentially faster as technology advances; a positive feedback loop starts and faster transactions lead to faster growth.
As technology has developed, people are able to save more and work less, thereby invest their savings into greater future benefits.
Why did Robinson Crusoe build a fishing net first and not a boat? Because he needed the fish today, not tomorrow.
He would have caught more fish with a boat but he also would have died before building the boat.
As he built up his island paradise, he could devote more time to tasks that would provide a greater benefit into the future.
The ancient city of Babylon was built of out nothing along the Euphrates river circa. 1900 B.C. - 500 B.C. in what is now southern Baghdad, Iraq.
The Babylonians were incredible engineers that had a philosophy of sacrificing satisfaction now, for greater satisfaction in the future.
Read: The Richest Man in Babylon, by George S. Clason (1926)
Work. Save. Invest.
Capitalism vs. Socialism
There still exists a debate between capitalism and socialism.
What people don’t realize is at the heart of both, they are the same.
Only in the sense that everyone keeps transacting with each other, whether they have private property rights or not - whether they own the fruits of their labor or not.
Admittedly, in some countries they have to be short-term thinkers (Robinson Crusoe) and in others they can be a Warren Buffet.
In some economies you can freely transact, in others you cannot do as well.
The West is often defined as being capitalistic whereas the East is described as being socialistic.
The U.S. vs. Russia.
The U.S. vs. China.
West Germany vs. East Germany.
However, like many divisions in the world, these are merely true at the surface. Another circus.
Do you really know what is meant by capitalism?
When you hear that word, do you only think of greedy bankers?
What actually defines a capitalist society?
“The most important central fact about a free market is that no exchange takes place unless both parties benefit.” - Milton Friedman (b. 1912, d. 2006)
“Capitalism is not an 'ism.' It is closer to being the opposite of an 'ism,' because it is simply the freedom of ordinary people to make whatever economic transactions they can mutually agree to.” - Thomas Sowell (b. 1930)
Capitalism is a society in which stuff capital can be freely exchanged for the benefit of those involved.
Both parties must benefit and agree to the transaction. If they do not, then it is not capitalism, it is something else.
In other words, capitalism is not an ‘ism’, it’s just freedom.
The freedom to own the fruits of your labor - socialism has a long history of failure because it is devoid of private property rights.
“In this sense, the theory of Communists may be summed up in the single sentence: Abolition of private property.” The Communist Manifesto (1848)
If you do not own the fruits of your labor, why would you be incentivized to work hard? Because of the commune spirit?
You cannot practice capitalism in a socialist society, but you can attempt to create a workers’ paradise in a capitalist society.
Everyone is free to create a cooperative, in which, all the workers share equally the production of the business, but they rarely do - because it is risky and it is difficult.
The reason why the capitalist earns more than the workers is because it is the capitalist that risked the capital in the first instance; to create the business, to provide tools for the workers to do the work, and to provide a safe working environment so the workers wouldn’t work for a competitor.
What Marx forgets is the standard of living of his proletariat, in the ghastly factories of the 1800s, was actually better than it had been for more than 1000 years, since the fall of the Roman Empire.
In communism, everyone eventually descends into behaving at the lowest level of society, instead of aiming for the highest standards set before them.
This is why socialist countries are rife with alcoholism, drug addiction and crime.
Below is a chart illustrating the drug problem in the socialist capitalist United States.
Competition breeds winners. Communism breeds… despair.
On the positive benefit of profit-seeking individuals and when profit-seeking becomes an act of evil, see the article below.
“Ah! What about those greedy bankers!”
“Occupy Wall Street!”
“Capitalism has failed!”
“Eat the rich!”
Wait…pause for a moment.
Banking does not mean you live in a capitalist society.
Banking can (does) exist in socialism too.
Just as a supposedly capitalist country like the United States can have the largest prison population in the world - similar to the 1.2-1.5 million estimated prisoners in the Gulag of the Soviet Union around 1939.
Remember, West vs. East is just a circus, an illusion…
West is East and East is West.
Let’s start with the financial institutions - those greedy bankers!
At the top sits the central bank - the lender of last resort and the monopolist of money creation.
In 1848, Karl Marx and Friedrich Engels wrote The Communist Manifesto - the founding doctrine of communism.
Well, what was one of the tenets of communism?
“Centralisation of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.”
A central bank was one of the key features of a communist society as described by the founding fathers of communism.
At the heart of the financial infrastructure of the United States and Europe, at least, is a communist entity.
By 1894, Karl Marx wrote volume III of Das Kapital, and by 1913, the United States had it’s own central bank - the U.S. Federal Reserve.
Fun Fact: Karl Marx was the son of Heinrich Marx and Henriette Pressburg; Henriette’s mother was Nanette Salomons Cohen; who’s uncle was Levy Barent Cohen; who’s daughter, Hannah Barent-Cohen, married Nathan Mayer Rothschild - the great father of communism was a third-cousin to one of the greatest banking dynasties.
What happened during the Great Financial Crisis (2007-08)?
Those greedy bankers were bailed-out by the communist entity, the U.S. Federal Reserve - in a truly capitalist economy, all those greedy bankers would have become bankrupt and destitute.
In fact, in a truly capitalist economy, they never would have grown to such a size in the first place. There would have been no excessive expansion of the money supply to fuel high-risk gambles on the stock market; nor would there have been corrupt credit rating agencies to hide the underlying problem; and all the sound banks would have bought the corrupt banks for pennies on the dollar (as they say).
Socialism for the rich. Capitalism for the poor.
Unfortunately, many so-called capitalists believe a central bank is a capitalist idea.
Just watch Bloomberg TV or read the Financial Times.
Talking-heads on TV pontificate about what the “Fed” will do next with interest rates and how this will affect the markets.
Greedy and corrupt bankers (that are rewarded) are not a feature of unregulated free markets, they are a product of socialism.
What was another tenet as described by Marx and Engels?
“A heavy progressive or graduated income tax.”
The income tax was introduced in the United States in 1913, as well as the central bank, one year before World War I - just a coincidence.
Even the idea for the Bank of England (1694) was as a result of a heavy defeat of England, by France, at the Battle of Beachy Head (1690). The English crown wanted to source funding for a large naval force to retaliate.
No central bank. No war.
Read: The Creature from Jekyll Island, by G. Edward Griffin (1994)
The first U.S. income tax started as a small percentage of the income of the top-earners of the day - 1% on income over $3,000 (about $90,000 today).
Now the income tax is 10% on income less than $11,600 and 37% on any income above $600,000.
What started as a small tax on the rich over 100 years ago is now outright theft for the lowest classes of today.
Yes, theft…“the physical removal of an object that is capable of being stolen without the consent of the owner and with the intention of depriving the owner of it permanently.”
Did you ever consent to the government taking away your salary, permanently?
What happens if you do not pay your taxes? You are threatened with imprisonment.
Pay is the wrong word here because pay implies you are a willing participant in a transaction that benefits you.
If you think the income tax benefits society, then why were there no world wars before it existed and there has arguably been one long global war ever since?
Do you really believe the government can spend your money better than you can?
Of course, most is wasted on administrative expenses before it does any good, if any.
Voluntarism, not a coercive government force, means each individual has more influence on a society and can freely allocate their own capital to a just cause that means something to them.
Unless you believe murdering 1,000,000 innocent Iraqis to topple Sadam Hussein during the War in Iraq (2003-2011) was a price worth paying for inadequate roads and a failing health care system?
Politicians as Gangsters. Government as Mafia. Taxation as Racketeering.
Do you know which country does not have an income tax? Saudi Arabia.
Is the absolute monarchy of Saudi Arabia more capitalist than the United States of America? Maybe.
Another tenet of communism.
“Abolition of all right of inheritance.”
You work and save all your life so your loved ones that outlive you can have a better life than yourself.
You lose what you could have saved through the income tax.
You lose on your investment gains through the capital gains tax.
Then, in the infinite wisdom of communism, you are to lose all that is left to the government, and leave none behind for your family.
The U.S. has an inheritance tax as high as 40% on assets worth over $13.61 million as of 2024 - do you think that threshold won’t be reduced over time to include the middle class?
The United Kingdom has an inheritance tax of 40% on any amount above £325,000 and the average U.K. house price is £285,000 - so a large amount of homeowners wanting leave their home to their family will have a significant amount stolen by the government.
Do you know what they mean by a progressive tax now?
It means the tax is progressively being laid against everyone.
The inherent (excuse the pun) problem here is that Marx and Engels are asking for each generation to start from square one - to start with nothing.
This goes against the need for savings to be invested in order for living standards to develop - each generational glut of savings is thrown to the wind by excessive and illicit government expenditure.
What else did Marx and Engels have in mind?
“Free education for all children in public schools.”
Well, free education is not free, it is funded by taxation.
Public schools are not public: they are not open to the public; they are restricted to children and so is the curriculum.
Public schools do not exist.
In fact, the founder of the modern curriculum was one of the so-called wealthiest capitalists of them all - John D. Rockefeller (b. 1839, d. 1937); founder of the Standard Oil Company.
JDR also founded the General Education Board (1903-1964) with the supposed intention “to foster “the promotion of education within the United States of America, without distinction of race, sex, or creed.””
Is it just a coincidence that many of his contemporaries, including; Henry Ford (b. 1863, d. 1947), Andrew Carnegie (b. 1835, d. 1919), E. H. Harriman (b. 1848, d. 1909) and J. P. Morgan (b. 1837, d. 1913), were all considered robber barons of their day?
Might it be that JDR’s education vision of the United States was actually a ploy to indoctrinate children to become good little factory workers?
The signaling of bells to mark the start and end of a shift class, the adherence to a strict schedule class timetable, the grading of their performance, and the introduction of a work school uniforms.
Public schools are state-owned indoctrination camps.
On the problems of state-owned schools, see the article below.
The central banks, the taxes, the “free” education…these all exist today, in our supposedly capitalist society.
Centralizing Power
“Give me control of a nation’s money supply, and I care not who makes its laws.” Mayer Amschel Rothschild (b. 1744, d. 1812).
Marx’s connection to the Rothschild banking dynasty is even more clear once you see the creation of a central bank as being a communist tenet.
Could it be that communism is just a conspiracy concocted by banksters to yield more control over the public?
Read: None Dare Call It Conspiracy, by Gary Allen (1971)
There was the First Bank of the United States (1791-1811), founded under the First President of the United States, George Washington (b. 1732, d. 1799), who also happened to be a shareholder of the Bank of England from before the War of Independence (1775-1783) - conflict of interest?
There was the Second Bank of the United States (1816-1836), then the National Banking Acts of 1863 and 1864 - all attempts to introduce a central bank in the Unites States.
Finally, there was the banking crisis of 1907, instigated by J. P. Morgan, as he spread rumors of the insolvency of the Knickerbocker Trust Company. Many bank runs ensued, and it was deemed necessary to have a central bank as lender of last resort - the U.S. Federal Reserve began in 1913.
To fully understand the power and consequences of a central bank, you first have to understand the role of prices.
How do you know how much to produce or consume in a year? Prices.
Prices are signals that inform you how much you can consume and produce - if prices are high, you buy less or you produce more; if prices are low, you buy more and sell less.
All the complexity of an economy, or in a supply chain, are condensed into a price.
You do not need to know about economic or weather forecasts to know how many widgets to produce - it is all there in the price.
We know instinctively that we don’t want the government to set the price of bread, milk, cheese, cereal, etc. because we know they will set it at the wrong price - either too high or too low; causing over or under supply.
So why do we let the central bank set the price of money?
Interest rates are just the price you pay for borrowing money.
If they are set too high then everyone will save and nobody will borrow.
Nobody would even invest because it would be deemed easier to leave cash in the bank.
What if they are set too low? What if they are set at near 0% for years?
Nobody will save. Everyone will borrow.
If there are no savings then there will be no investment in good businesses.
Businesses with bad operating models will attract most of the cheap debt in the economy.
If a society never saves, then it never invests, and if it never invests, it never works towards a brighter future.
The price of money should be set by the market, just like bread.
This has terrible consequences for society too.
What does it take to be a good saver?
You need discipline, motivation, and ambition.
You need to control your impulses.
You need to sacrifice satisfaction today, for greater satisfaction in the future.
Since 1980, interest rates have been travelling towards 0%, with each generation less disciplined, motivated and ambitious than the last.
Interest rates set by the central bank determine if people are; producers or consumers, savers or spenders, and investors or slaves.
Now the system is breaking as inflation takes hold in the global economy and there is a record amount of credit card debt in the U.S. - $1.079 trillion!
The only escape for world governments is to not just set the price of money, but to control how much money you have and when you can spend it.
There are millions upon millions of good and services available to you with prices changing by the second.
Imagine being in control of the prices of everything, every second of everyday.
Any miscalculation would result in immense over supply of some goods and under supply of other goods.
Famine would ensue.
This is exactly what happened in the Soviet Union.
During the Great Leap Forward (1960-62), by Chairman Mao Zedong (b. 1893, d. 1976), in Communist China, an estimated 30 million people died from famine.
Wait…imagine you are a communist leader.
What if you knew the second-by-second transaction data of every individual and business, every day?
What if there was a central bank digital currency that could do this?
What if you had AI tools to forecast the future spending habits of all individuals and businesses?
What if, to make your life easier, you limited the transactions available to individuals?
“Your social credit score is too low to purchase this product today.”
What if… you just limited the number of people?
Then it’s even easier.
Using CBDCs and AI, you could implement price controls and achieve the communist utopia.
You would arrive at Communism 2.0.
The Road to Serfdom
Since the dawn of time there have been slaves. Whoever had the most power and influence would be the slave master, and the rest would be the slaves.
Each slave would work tirelessly for most of the day, never able to keep the fruits of their labor.
Slaves, you could say, had a 100% tax rate.
This worked well for a while but eventually there would be slave revolts and the slave master would not always use the slaves efficiently.
Slaves still had to be clothed, fed and housed - their children would also need to be nurtured until the age they could work.
Slaves are expensive.
There is also no opportunity for innovation.
Some slaves were given some freedom - a plot of land to toil away, but they had to pay a tax to the king or lord…or a bushel of wheat.
They became serfs.
Some serfs used the little freedom they had to innovate, to dream, to paint, to write, to sculpt and to travel.
The dawn of the Renaissance (14th-17th century).
The fields of science, art, mathematics and astronomy brought new knowledge and understanding to the world…including the printing press (1440).
There was a problem.
Kingdoms, principalities and fiefdoms were too small to wage war on other lands…although they tried - not good for anyone with a God complex.
Kings were incentivized to increase the value of their lands over a lifetime, whereas politicians only work in a 4-year time horizon. A king would see his land save and invest over a longer time horizon, whereas a politician would seek to increase their wealth as fast as possible.
The Austro-Hungarian Empire (1867-1918), produced many great men of their time; Mozart, Schubert, Strauss (I, II and III), Freud, Schrödinger, Boltzmann, Doppler and many more.
Who are arguably the only famous exports of Austria since 1918? Adolf Hitler and Arnold Schwarzenegger (his father was also a member of the Nazi Party).
Kings needed to be replaced by democracies because according to Karl Marx…
“Democracy is the road to socialism and socialism ultimately leads to communism.”
A democracy will always demand their basic desires and impulses be met.
The will of the majority over the minority.
It is all too easy to ask for free gifts from the state, at the expense of future growth and prosperity.
Politicians love that.
Ever wonder why news anchors keep saying “…this is a threat to our democracy.”?
After the War of Independence, Benjamin Franklin was asked what the American people had, a republic or a monarchy. He replied…
“A republic, if you can keep it.”
Franklin was a keen historian and he knew how easy it was for the democracies of the past to descend into chaos.
So what happened during the aftermath of World War I (1914-1918)? It brought about the end of…
the British Empire,
the Ottoman Empire,
the Austro-Hungarian Empire,
the Kingdom of Bavaria,
the Kingdom of Saxony,
the German Empire,
the Russian Empire,
the Kingdom of Montenegro.
Democracy ensued in Europe.
Since the collapse of European monarchies at the end of World War I, the West has been on a slow but deadly march towards communism.
To illustrate, think about government spending as a percentage of GDP. In a society with a totalitarian regime government spending would be 100% of GDP - there would only be government spending!
In complete anarchy, there would be no government and therefore government spending would be 0% of GDP.
Below is a chart of U.S. government spending as a percentage of GDP. Clearly this is an uptrend since before World War II.
What does this tell you?
That since before the 1930s the United States has been on a path to a totalitarian state - government spending being 100% of GDP.
It’s a similar story in the United Kingdom.
In 100 years, western governments have doubled or even quadrupled in size - western countries have been on a path to totalitarianism for a long time.
Remember, what a government spends has to be taken from the citizens through taxation or inflation.
The only reason why most western countries have not yet experienced the horrors of the Holodomor or the Holocaust, is because capitalism has been there as a crutch, to enable a decrepit, violent and evil being to continue infecting the world.
If more capitalism existed, how could there ever be a majority willing to transact in such a way as to build weapons of mass destruction, how could there be countries large enough to escalate bloody wars, how could there be a banking system rigged so that there is socialism for the rich and capitalism for the poor?
This great debate between capitalism and socialism is a false one.
Yes, socialism clearly has a record of failure.
Freedom, free markets, free speech, free thought are the way forward.
However, free markets have been hidden behind a mask known as capitalism.
Many capitalists have not done capitalism a favor by confusing the socialist elements in the economy for capitalist ones.
The socialists have long been appalled at what they believe to be capitalist elements, that are actually socialistic.
So what is the real problem?
Both the West and the East has been infected by a different disease…fascism.
“Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power.” Benito Mussolini (b. 1883, d. 1945)
The leading figure of fascism quite accurately described fascism as corporatism.
Big Business. Big Pharma. Big Banking. Big Energy. Big Tobacco. Big Agra.
What Hitler and Mussolini realized is communism will always be a failure, but capitalism would not allow them the power they craved.
Fascism was the middle path.
It is false to believe the U.S., Great Britain and France defeated fascism and much later communism, during and after World War II.
The U.S., Great Britain and most of Europe have long been fascistic countries.
They have merged communist ideas, like the central bank, with the world of business.
At the pinnacle of the power pyramid sit the banksters.
You are a slave to the corporate elite.
You always buy the latest iPhone, you subscribe to Netflix, you buy your car on finance, you buy a mortgage, and you buy the most expensive clothes you can afford.
Not because you want to…because you must.
If your expenses equal your income, what does that mean?
You have an effective 100% tax rate… you are a slave.
The office is the modern plantation.
You vote every election cycle for a change…which never happens.
There is no right vs. left. There is no blue team vs. red team. It is all an illusion.
The West is no more capitalistic than the East and the East no more socialistic than the West.
Both are fascist.
When the “left” call for the unvaccinated to be ostracized from society, they are supporting Big Pharma - they are propagating fascism.
When the “right” calls for the central bank to help the economy, they are supporting a communistic entity.
Freedom does not deserve to go by another name: capitalism; and socialism deserves to be thrown into the dustbin of history.
Freedom is all.
I hope you have enjoyed reading this article.
Please feel free to comment below.
Kind regards,
Le Libérateur
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