Andrew Schroeder Jr.

Mr. Thomas

Social Studies 30-1

November 23, 2014

Position: Opposed

SOURCE: An economic system based on private property turns citizens against each other. The interests of those who “have” are in conflict with the interests of those who “have not.”

The 20th. Century WarThe war between Capitalism and Communism for Global Dominance

The 20th century was a battleground between two opposing ideologies that sought to exert their influence across nations and continents. It was a struggle of cosmic proportions that began as the fallacies of classical liberalism were being exposed and new ideologies were emerging to challenge it. This conflict outlived a revolution, a Great Depression, and two world wars. It was a war that had the potential to extinguish civilization. The source above advocates for a system of governance whereby private property is prohibited and is instead consolidated into the hands of the government to be distributed through a centralized system of production. The disparity in distribution of wealth in a society is stated to result in conflict and instability and as a result wealth must be equally distributed to avoid jealously and discontent permeating through the general populace. The father of this ideology, with its brazen disregard for basic human motives, Karl Marx, simplifies his plan to bring about the dialectic by tersely stating, “The theory of Communism may be summed up in one sentence—abolish all private property.” Contrary to the beliefs of the utopian socialists, such as Robert Owen, it is impossible to appease the interests of all members of society. No system devised by man is infallible in this regard, including communism and there is no justification for adopting a system so riddled with fallacies and illogical assumptions about human nature

Socialism, a form of which would later mature into Communism, was an anti-liberalism movement that originally manifested itself in the forms of the grassroot Luddites and Chartists. During the Industrial Revolution it became apparent to the workers that despite the liberal ideology in place, they were not free. While the workers had the freedom to cease working in the factories they risked losing their livelihood as the factories had a monopoly on employment. Thus they could choose abysmal working conditions in a factory or death by a thousand cuts through lack of means to pay for necessities. A key criticism of liberalism is its lack of conscious and worker’s rights. The rich lined their coats and obtained government positions to transform society for their benefit while the poor remained in squalor. The Socialists argued that the principles of capitalism and liberalism were inhumane and unjust, requiring dramatic reform. Karl Marx, a German philosopher, sought to understand

the progression of civilization through scientific terms. He described history predominantly as class conflict which creates new systems that would inevitably lead to a classless communist society. He coined the process by which this would occur the Dialectic. At each stage of the Dialectic the thesis would be confronted with the antithesis and form the synthesis; the final stage involved communism confronting capitalism in a violent worldwide-revolution of the proletariat to usurp the bourgeois. The Communist Manifesto, co-authored by Friedrich Engels and published in 1848, proposed abolition of private property, centralization of state industries (including transportation and communication), heavy taxes, industrialization of agriculture, abolition of child labour, and free education. These would be the founding principles on which the communist nation of Russia would be built and which would ultimately lead to its downfall.

At the turn of the 20th century the Russian population was subject to the tyrannical rule of the Romanov family. They were, ironically, conservatives obsessed with maintaining their power which resulted in an inefficient system that was incapable of competing with the industrializing nations in the west. What economy they possessed was stagnant and failing. Obstinate refusal by the Czars to implement changes incited uprisings which were unmercifully crushed. After a war of attrition with Germany, the Russians were severely impoverished and starvation was rampant. During 1917 rebellions broke out while soldiers mutinied, forcing the Czar to relinquish his position to a provisional government. Vladimir Lenin with the aid of the Bolshevik Party provoked further rebellion and violence and used it to their advantage to stamp out resistance and seize control of the government in October. While Marx believed that a revolution would inevitably erupt, Lenin believed that the revolution must be ignited by a group of full time revolutionaries. The vanguard would dispose of the Czarist government and then relinquish the power to the people. This never occurred and the promises of land and bread to the workers was quickly forgot. A period of unrest followed during which Lenin imposed War Communism to enforce obedience and in 1924 Russia became the Union of Soviet Socialist Republics. Despite the discipline, obligatory duties, and state control of industry, War Communism could not combat the failing economy and in 1921 Lenin introduced the NEP which implemented capitalist policies such as the right to own a business, free trade, and labour unions. Immediately the economy began to recover. As demonstrated by this example, communism fails to provide a stable and efficient economy and can only function under the indomitable rule of an authoritarian dictator. The situation became much more desperate, however, under Lenin’s successor, Joseph Stalin.

Despite Lenin’s admonition concerning Stalin before his death in 1924, the communist party was unable to halt Stalin’s ascent to power. As supreme despot, Stalin was preoccupied with rivaling the west in industry and technology. Negating the NEP, he tightened state control of industry and began to set largely unattainable production quotas that were to be met at the conclusion of five years. Agriculture was nationalized and the farms were brought under a quota system. The peasant farmers despised the new system and became intractable until the government retaliated and forced them into obedience. During this time millions

were killed or executed. The Holodomar—an artificial famine caused by the Soviets in an attempt to eliminate the Ukrainian Independence movement and condemned as genocide—killed millions of the Ukrainian USSR citizens during a peacetime catastrophe unprecedented in the history of Ukraine. Stalin’s final move to consolidate powers into his own hands was to eliminate any political opposition. Similar to McCarthyism in America during the Cold War, the Great Purge of 1936-1938 persecuted and condemned to death any political member seen as a threat to Stalin in show trials where the verdict was predetermined. Forced to admit to imagined crimes and called enemies of the state, 681,000 were shot during the Great Purge. Throughout his dictatorship, Stalin continued with this ignoble attitude that human lives are expendable. Such blatant disregard for human life is unparalleled in modern history, not excluding even Hitler’s Third Reich. Russia serves as a portent of calamity for communism. Through two reigns of terror in Russia, it was proven that the system of centralization and state control removes all individual impetus for work—motivation ceases to exist. Thus society must be forced by means of propaganda, violence, and terror to work. The rise of a dictator is inexorable and something to be feared above all else. The source has the audacity to proclaim it would represent all individual’s interests by the abolition of private property and adoption of communism. Only one individual’s interest is being represented in such pernicious and desolate circumstances as that of communism.

The deficiencies of liberalism were not just experienced in Russia, however. On the other side of the world the citizens of United States of America were also demanding reforms to the system. They desired to preserve the fundamental aspects of liberalism while also tempering the more brutal aspects of it. As workers became discontent with the exploitation they suffered and demanded better working conditions, employers acquiesced and began to offer benefits. Labour unions began to permeate through the nation as worker’s realized that by refusing to work they could bargain with their employers. Initially, labour unions were seen as a threat by the government and entrepreneurs and were often the targets military and police action. In 1912, frustrated that the old parties, “have become the tools of corrupt interests which use them impartially to serve their selfish purposes” President Theodore Roosevelt established the American Progressive Party: a left wing political party determined to create a welfare state and appease the demands of the working class. The party pledged to work unceasingly for the prevention of industrial accidents, minimum safety and health standards, the prohibition of child labour, minimum wages, the eight hour day, employment insurance, universal suffrage, mandatory education, and universal healthcare. Notice how similar these goals are to Marxism. However, rather than discarding liberalism completely as the communists did, the Americans modified it to so that it could respond to the challenges that the working class experienced. But even this system was not infallible and would experience an economic catastrophe unprecedented in the world as a result unrestrained market forces.

During the 1920, America was caught up in a period called the roaring twenties during which the economy was bubbling, there was limited government interference, consumerism was rampant, and everyone was engrossed in

purchasing stocks. Building on post-war optimism, many rural farmers moved to the cities to participate in the expanding industrial sector while the agricultural sector was neglected and created widespread financial despair among the remaining farmers. Despite the dangers in speculation, the stock market continued to rise unabated. The economy was beginning to flounder as steel production decreased, construction was lethargic, automobile sales plummeted, and Americans built up debt due to easy credit. As top investors began to recognize the ominous signs of recession they withdrew their money and sold their stocks, causing a wave of panic in the middle class as each man scrambled to sell his stocks before they plummeted and ceased to hold any value. On October 29, 1929, Wall Street crashed and GNP was slashed in half from 100 billion to 50 billion beginning the Great Depression that rippled throughout the world and spanned a decade. Thousands of banks went belly-up eradicating the life savings of many. Severe drought in the mid-west only exacerbated the issue. International trade was reduced as each country suffering from depression increased tariffs on imported goods to encourage purchase of local goods. Meanwhile in England, a brilliant economist named John Maynard Keynes began theoretical work on the relationship of money, unemployment, and prices in the 1920s. At the height of the Great Depression, Keynes published The Means To Prosperity which devised a plan for battling unemployment and recession. It was not until 1936 that he finished his magnum opus, The General Theory of Employment, Interest and Money, which justified increased government intervention in the economy to combat recession. In it he proposed increased government spending to raise aggregate demand during stagnant economic periods and by reducing interest rates which made barrowing easier. It was crucial that spending remain high, even deficit spending on infrastructure projects. After the bust subsided spending should be cut and interest rates raised to pay back the debt accumulated and to stabilize the economy. In 1932 Franklin Delano Roosevelt became president of the United States and immediately took reign of the situation and introduced the New Deal which would provide welcome relief to citizens, recovery for businesses, and a system reform. With the support of Keynes’ General Theory and the sanction of congress in 1933, billions were spent to provide food and shelter to the unemployed, public work programs were set up to create jobs, and government contracts were given to private companies for the construction of roads, railways, bridges, dams, etc. Disaster was averted transiently but only through WWII would spending be extreme enough to stop it completely.

During WWII, Western governments began to plan their economies which proved to be extremely efficient and stable. Because planning was a viable option during war many governments considered it to be viable during peace and the welfare state grew in popularity. Keynesianism was the dominant economic philosophy from the end of the war until the 1970s. The economy was seen as an intangible and complex machine that—when manipulated correctly—had the potential to function perfectly under any circumstances. However in 1970 an economic downturn occurred that was deemed impossible by Keynes. In England and the USA inflation rate was increasing, the economic growth rate was decreasing, and unemployment was at its height. The situation was desperate and enigmatic since actions designed to lower inflation could exacerbate unemployment

and vice versa. On November 17, 1965, Iain Macleod, the United Kingdom’s spokesman on economic issues, issued a pretentious statement concerning the gravity of the issue, proclaiming, “We now have the worst of both worlds—not just inflation on the one side or stagnation on the other, but both of them together. We have a sort of “stagflation” situation. And history, in modern terms, is indeed being made.” This situation caused serious criticism of Keynes’ General Theory and many began to take notice of an Austrian’s ideas concerning the economy. Friedrich August Von Hayek, called F.A. Hayek, was an Austrian, later English, economist and philosopher best known for his defense of classical liberalism. He argued that the government should abstain from interfering in the economy and should increase the supply of money by reducing interference in business, reducing both personal and corporate taxes, and cutting government programs. Cutting taxes would primarily benefit the rich but trickledown economics would also benefit the poor. Consumption would increase and income tax would bring in more money for the government to ameliorate the deficit. His idea relied on actual savings, rather than deficit spending and easy credit which would simply create a bubble and begin the cycle again. In his magnum opus, The Road to Serfdom, Hayek warns against the dangers of a government controlled economy proclaiming that it would inevitably, through a progression of stages, lead to a dictatorship which he witnessed occurring in both Russia and Germany. He did not obstinately rebuke any state control but stated that, “Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself nor make the provision for the consequences, such communal action should undoubtedly be taken.” Not only did he believe the economy should not be controlled, he believed it was impossible to control, that the economy was not a machine but an organic whole where the motives and actions of individuals could not be accurately predicted. The ideas of Hayek and Keynes fought for the commanding heights of the economy for a century, each experiencing success and failure. They were examples of progression and reform of the classical liberal system, rather than the stagnant enforcement of useless directives typical of the communists

Communism and Welfare Capitalism were both responses to the fallacies within the classical liberal system. They each observed the suffering of the workers as a result of being exploited by the industrialists and proposed a solution. While Communism adopted complete state control and a dictatorship, Welfare Capitalism sought to preserve the fundamental principles of liberalism while adopting policies to temper the inhumane aspects of it. Universal suffrage, legalization of labour unions, minimum wages, and employment insurance were all socialist policies that were necessary to counter the effects of unfettered liberalism. Keynes and Hayek proposed their plans for combating the instability of a free market to further progress the reform of liberalism. There is a progression here where when a problem is encountered, the ideology is modified to make allowance for it. No system of governance is perfect and indeed capitalism is the worst system except for all those other forms that have been tried from time to time. Capitalism is constantly evolving and adapting to respond to modern issues whereas the communist ideology is stagnant in its professed perfection. As seen by the disastrous attempt by Robert Owen to establish the town of New Harmony, even on

the most minimal scale, communism fails because it ignores human nature and motives and thus it must invent ways to change the nature of human beings, often by employing the use of violence. On a national scale Lenin failed to revive the economy through war communism and was forced to concede to the principles of capitalism to halt the decay. Though it was a worthy attempt on behalf of both Owen and Lenin at bringing about a new era of prosperity and equality, communism was doomed to fail from the beginning. No ideology can create a system where every individual’s interest is represented. However it is possible, through a free society, to maximize the interest’s represented by encouraging creativity and progress. Welfare Capitalism and the ideas of Keynes and Hayek are the quintessential examples of constant progress and innovation. Communism is the epicentre of conceited perfection, for behind the façade of radical new ideals, it is an extreme conservative ideology. It is seen as the last and perfect stage of the Dialectic and thus will refuse to adapt. It must therefore be fought with every sinew in a man’s body because if he succumbs to it he will find his interests not preserved as a result of communism, but surviving in spite of it.