Socialism, Capitalism, and Geoism

Comparing Systems

“Socialism” is a much used and misused term. The word was coined around 1830 to indicate any doctrine that tries to rationally organize economic and social life.

The American Heritage Dictionary offers two definitions:

In its most frequently used sense, socialism is a system of social or governmental ownership and control of the means of production. Marxist theory teaches the coming of socialism through class struggle and revolution, in preparation for the final historical stage of “communism”, in which all private property and other vestiges of capitalist production are abolished.

A little Socialism here, and a little Capitalism there; a concern for the public sector here, and a concession to the profit motive there; a sop to the “underprivileged” here, and a bow to incentive there — put them all together, and what have you got? Nothing but a great big rag-bag, a haphazard pastiche of odds and ends without any bones and without any guts! Nevertheless, there is a Middle Way. There is a body of socio-economic truth which incorporates the best insights of both Capitalism and Socialism. Yet they are not insights that are artificially woven together to form a deliberate compromise. Instead, they arise naturally, with a kind of inner logic, from the profound ethical distinction which is the system’s core. They arise remorselessly from an understanding of the meaning of the commandment: “Thou shalt not steal.” — Robert V. Andelson

Robert V. Andelson

Socialism is usually discussed in opposition to “Capitalism”. Normally that is taken to mean a system in which the factors are privately owned and economic decisions are made by a market that is free of government intervention. In the hysterical political climate that characterized the cold war, the meanings of these terms tended to become squashed under the excessive ideological weight that they carried. Each “ism” became identified with the diabolical plot of an enemy. Meanwhile, their use to describe economic policies was by no means clear, as “free-market” economies developed more and more “socialistic” government programs — and “socialist” economies granted more “market freedom” to producers. Eventually the terms came to have about as much ideological content as the names “Red Sox” and “White Sox”.

But the term “socialism” does mean something, and it is often identified with the quest for economic justice. The basic assumption underlying it is that the market place, under conditions of laissez-faire competition, is incapable of securing to society an equitable distribution of wealth. Socialists assert that if the market is left alone to decide who is to get how much of the world’s goods, the result is a division of society into classes and the emergence of a struggle between the exploiting class and the enslaved working class. Competition becomes “cutthroat competition”, fostering trusts, cartels and monopolies. Instead of making earnings proportional to service rendered, the market place gives the highest rewards to the most unscrupulous exploiters.

However, many are proud to rally behind the banner of “capitalism”. They contend that free competition makes the fullest possible use of the gifts of nature and human ingenuity. When the admirable efficiency of the market is hindered by do-gooders trying to secure their idea of fairness, the result is unemployment, stagnation and corruption.

Capitalists and socialists may appear to disagree about everything — but on one crucial point of political economy their views are uncannily similar. Both tend to lump land and capital under the single heading of “capital,” and many even include money as capital. This confusion prevents socialists from seeing the possibility of a beneficial free market without the element of monopoly. And it prevents capitalists from seeing the fundamental role of the public sector in a just and prosperous market economy.

It may seem odd that both “capitalists” and “socialists” speak of the justice of their system and the vile in-justice of their opponents’. (Of course, the emotion behind such discussions is often heightened by a kind of home-team fervor.) Is there any universal standard of justice upon which economic policy can be based?

The answer lies in clarifying the question of the rightful basis of public vs. private ownership. For the thorough-going free-market capitalist, “public ownership” of anything is anathema: the community’s interests are best served by the unhindered interactions of self-interested producers and traders. But the poverty, suffering and environmental destruction that come under such a “private property” regime cannot be denied. Because of this, the great bulk of social-policy debate revolves around how much of the efficiency of free enterprise must be traded for public interference, imposed in the name of equity. The question of the rightful balance between public and private control becomes one of expediency and political fashion, lacking any guiding principle. Indeed, modern neoclassical economics denies that any such principle exists.

For Henry George, however, the principle was clear. The value of natural opportunities belongs entirely to the community, and the production of wealth by labor, using capital, should be entirely unhindered by the penalty of taxation. For George, the important question was not the amount of wealth that should be taken by the community, but the kind of wealth that should rightfully go to the community, because it is a value that the community has created.

In recent years, this understanding of the distinctive character of natural opportunity (land) as a factor of production has led to the coining of a new term: Geoism, indicating a philosophy based on the rightful understanding of the place of the Earth (Geo-) in economic life.

People own what they

Produce.

The rest belongs to
all of us.

Henry George’s bold insight: land value is created by society, not by landlords — so it should benefit everyone, not just those who own it.

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