This is a rather random concept that I actually just thought up today. It is a reference in part to the common socialist obsession with the evils of big business, rich people, and capitalism in general. A few months ago I read some article in the paper where some person was ranting against how evil large corporations (like Walmart) are, and how workers must form unions to fight against their oppressors. Conveniently, this author forgot that large businesses produce the jobs that allow the workers to be employed at all, and that riches (capital in general) are needed to grow businesses and increase productivity. Unions should not fight against corporations as if they are an enemy, but simply work with them to improve working conditions etc.

Of course, these concepts shouldn’t come as a surprise to most people, but I simply needed to put some background in place before I explained the rest.

As far as I can tell, the socialist attack on capitalism is actually caused by a misplace hatred of feudalism. After all, much of the socialist/communist movement could be tied to the overthrow of the aristocracy in countries such as France and Russia. The working classes were sick of the tyranny of the ruling class, who also happened to be rich, and henceforth socialists have associated being “rich” with being part of the “aristocracy”.

However, this ruling class consisting entirely of the rich and powerful – what I call “feudalism” for lack of a better term – is diametrically opposed to capitalism. While feudalism could be referred to as a government enforced monopoly of the rich, which destroys the free market, commerce, and the middle class, capitalism is the exact opposite. Although certain individuals and corporations inevitably rise to the top due to superior management, situation, or available resources, their superiority is not guaranteed, and they must continually work to maintain a competitive edge. This reveals the fundamental difference between these two competing ideologies. Under feudalism, the rich are permanently ensconced in positions of power, while under capitalism they are free to rise and fall with their own fortunes.

Unfortunately, the socialist misconception that capitalism is the same as feudalism produces a chain of very undesirable side-effects. The series proceeds something like this:

1. Socialists mistake the temporary capitalist rich for permanent feudal lords
2. Socialists attempt to destroy this ruling class by regulating capitalist enterprise into government-controlled services, such as socialized medicine, communications, utilities, transportation, etc.
3. Because of regulations, competition becomes impossible, and permanent monopolies form
4. Back to feudalism again!

Essentially, socialist attempts to destroy the rich capitalists – the “aristocracy” – actually creates a new and even more entrenched ruling class. Those that learn to control government policy in order to give all the business to certain corporations and crush others are actually furthering feudalism under the guise of destroying it! In actuality, capitalism actually does a far better job of preventing ingrown, despotic governments than socialism does, because the free-market and competition constantly rotate out the wealthy and inhibit any attempts to permanently seize economic superiority.

Well, that’s it for my first attempt at an economics related blog post. Hope you like it!

Also, if anyone can think up better terms than “feudalism” and “socialism”, I’d be glad to use them instead. I can’t help but think I’m using them wrong…