Law and moral sentiments

Mainland Europe and the Anglo-Saxon world, and most notably, the United States, are culturally related but have significant differences in views on law and morality that underpin their societies. These differences greatly influenced history, but their causes also lie in history. In the Middle Ages, individualism was already strong in Western Europe. While England developed its law system, the bureaucracy of the Catholic Church introduced Roman civil law on the continent. It had the following outcome:

• Common law has become the basis of law in Great Britain and many of its former colonies, including the United States. Individuals are sovereign. Common law works bottom-up by generalising rules from judges’ verdicts in individual cases.
• Civil law has become the basis of law in mainland Europe and most other countries. The lawmaker is sovereign, thus the king or the people as a collective via parliament. It works top-down by applying general rules to individual cases.

Common law resulted from the efforts of English kings to build a coherent law system based on local practices. In 1215, the Magna Carta limited the power of the English kings. England then had a strong state where the rule of law limited the king’s power. There also was individual liberty in Western Europe. There were few strong states while merchants ran independent cities. Still, the rule of law later came from the state’s power because of the differences in law foundations. These differences relate to views on ethics:

• In Great Britain, philosophy, including ethical philosophy such as David Hume’s, is pragmatic. It says moral rules are an agreement in society, so good and evil depend on popular sentiments, freedom is being able to do as you please, and outcomes matter more than intent.
• In continental Europe, idealism dominates philosophy, including ethical philosophy, such as that of Immanuel Kant. It says good and evil are absolute, freedom means liberating yourself from your lower urges, thus becoming rational and morally upright, and intent matters more than outcomes.

If ethical rules are relative, they emerge from popular sentiments, thus bottom-up, and if they are absolute, they come from principles and work top-down. The English philosopher John Locke imagined the state as a voluntary agreement of individuals to cooperate for mutual benefit. If you believe in individual sovereignty and moral relativism, that must be why there is a state. But it is incorrect. We will not voluntarily agree to a state if there is none but fight each other until there is one.

These differences later shaped the debate on the economic system, hence the intellectual battle between capitalism and socialism. Adam Smith wrote a practical recipe for running an economy in the British tradition. In continental Europe, the debate became fundamentalist and infused with moral sentiments. Frédéric Bastiat claimed socialism is an organised plunder of private property, while Karl Marx argued that capitalists steal the value workers create.

In the United States, with its moral pragmatism founded on individual freedom, the collectivist ideology of socialism never caught on. Still, progressives in the United States pursued reforms to rationalise the government according to modern bureaucratic principles, and there were unions. Great Britain became caught in the middle as Brits had a more favourable view of government than Americans and a strong socialist movement.

When, after World War II, the Soviet Union became an existential threat to the United States because the communists planned to overturn the capitalist order with violent revolutions and were building a large army, the defence of individual autonomy and moral pragmatism itself turned into an idealist moral crusade, also because the Soviets aimed to end religion and persecuted religious people. Most US citizens identified as Christians, so they came to see the Soviet Union as an evil, godless empire.

Hegelian Dialectic and Marxism

Around 1807, the German idealist philosopher Georg Wilhelm Friedrich Hegel devised a theory of how history would unfold according to God’s plan. It would occur by challenging the prevailing ideas and social order. The French Revolution had just swept away the old aristocratic French regime. The French adopted revolutionary new ideas from the European Enlightenment, modernised their government and introduced an army of conscripts, allowing Napoleon to conquer Europe and spread these ideas and reforms. Hegel was the proverbial fly on the wall, taking it all in. He was impressed. That was progress! Modern ideas wipe out old ones. A bureaucratic government with conscripts eliminated an aristocracy with mercenaries. The German Christian idealist philosophers like Kant and Hegel, and later, atheists like Marx, Nietzsche, and Heidegger, dedicated themselves to hard questions pragmatic people would never bother to spend a lifetime on.

As a profoundly religious man, Hegel thought that our knowledge and ideas progressed and that God’s plan worked like so. He believed humanity had a collective consciousness in which these ideas reside. He surmised we are progressing towards our final destination, God’s Paradise, by replacing our prevailing ideas with better ones. An example is our views on slavery. Slavery existed since time immemorial and was generally accepted, but most of us now see it as evil. These views we all share are what Hegel meant by collective consciousness. It evolves over time and thus progresses according to a stylised scheme called Hegelian dialectic. It works like this:

(1) there is a status quo (the thesis)
(2) new ideas or conditions challenge the status quo (the antithesis)
(3) from the challenge emerges a new status quo (the synthesis)

A synthesis is a more profound truth rather than a compromise. You can’t bargain on the truth. Hegelian dialectic is a ruthless pursuit of truth and accepting its consequences. Hegel is the philosopher of progress, not economic or scientific, but progress in society and its institutions. It is nearly impossible to overestimate his influence on politics in the centuries that followed as it often was about progressives versus conservatives, thus applying new ideas from philosophy and the sciences versus keeping things as they are. Not all new ideas are better, so the outcome can be that nothing changes. Ideally, the synthesis is the best solution that emerges from the challenge of the status quo. If the new ideas are superior, they wipe out the old ones. That requires revolution and violence, such as the French Revolution and the Napoleonic wars.

Being more pragmatic, the British reformed in smaller steps. The principal problem with Hegelian dialectic is that the scheme can have disastrous consequences if you don’t know everything. Your logic can be perfect, but if your assumptions are not, a small oversight can cause ruin, as in Barataria. Chaos theory says why. The leading conservative British thinker, Edmund Burke, aimed to improve the government, but only if necessary, because changes have unpredictable consequences. The British could do that because they already had a government open to reforms, while the French did not. A revolution was their only option to rid themselves of the corrupt old regime and clean the slate.

Karl Marx took the bait. We could achieve paradise ourselves here on Earth, he claimed. Scholars had already found out that much of the Bible was fiction, and Charles Darwin had just published On The Origin of Species with evidence indicating plants and animals emerged in a competition between species that has lasted millions of years rather than being created in six days 6,000 years ago. The sciences had proven religion wrong, so Marx thought religion keeps people dumb. Christians would wait for Jesus, who hadn’t shown up for over 1,800 years, and not take matters into their own hands. Marx also noted that Christians had betrayed their religion by adopting the ethics of the merchant. According to Acts, early Christians lived like communists.

Marx claimed capitalists profit by stealing some of the value workers create. He based his allegation on the labour theory of value, which economists of his time considered valid. The theory says that the price of an item equals the cost of labour required to make it, thus including the labour to produce the raw materials. If making a pair of shoes takes twice as much labour as making a pair of trousers, shoes cost twice as much as trousers. Marx then asked, ‘If that is correct, how can there be profits?’ It is because the theory is wrong. There is no objective measure of value. In a market economy, the price of an item depends on what people are willing to pay for it, not what it costs to make it. Otherwise, you could work a year on building a better mousetrap and sell it for € 50,000. Perhaps, after spending another € 50,000 on building a brand in a marketing campaign, you can sell it for € 200,000. That is how markets work.

Value is what we believe it is. Nothing is sacred. Everything is for sale, including the rainforests and even the Earth. The so-called owners think it is all theirs and can do with it as they please. In the market, a message becomes true if you can sell it. It works with advertisements or denying climate change. It is the evil in the ethics of the merchant, and because money represents power, we stare into the moral abyss. If you ever wonder why communists called their newspapers The Truth, that is why. But in a world without God, there is no truth, and communism is just another message on the marketplace. The communists appealed to the workers’ self-interest. And that was a poor sell because workers were worse off under communism. It is why communism was doomed to fail, not because it is impossible to live like communists. Early Christians did. Rather than concluding he had just proven the labour value theory wrong, Marx claimed capitalists stole from their employees.

Marx further said that producing for markets alienates us from what we make. Many workers experience this. It is why Dilbert comics are so successful. Marx claimed we could be free, creative beings, but the modern, technologically developed world dictates our lives. Marx believed ending the market mechanism and replacing it with democratic planning would liberate us. So if workers received what they owed and we replaced capitalism with democratic planning, we would live in a paradise where we can do the jobs we like and have everything we need. That is a silly idea. Many want to be a Hollywood star, but few want to be a cleaner. Immigrants do those jobs. Communes don’t attract farmers and construction workers but artists and reiki healers. We need food and homes, not art and quacks. Work is doing something useful, and if it isn’t useful, it isn’t work. And even if everyone contributes, planning will never do as well as markets. You could live with that if you have enough. You might want a pear, but you could settle for an apple. And you have heard of oranges but never tasted one.

Marx also claimed that capitalism causes misery as adding capital means doing more with fewer workers, which reduces the need for labour, pushing wages below the subsistence level and leaving workers to starve. At the time, most economists believed wages would remain close to the subsistence level. If wages increased, more people survived, expanding the labour supply. And so, wages would decrease, and more people would starve. The market would keep population levels in check. Marx argued that making more stuff with fewer people was impossible because the unemployed couldn’t buy it, and capitalism would bankrupt itself. It didn’t happen because of Say’s Law, as things became cheaper. And we can create money from thin air. When capitalists produce more, they must sell their merchandise, and you can make people borrow money, so the general level of opulence rises. Marx vastly underestimated human ingenuity in finance, marketing and job creation in the services sector and government, the so-called bullshit jobs in the bullshit economy. These jobs make sense because they solve problems in our complex society, but we could do without many of them when we live simpler lives.

Marx believed he was scientific and rational. He devised a theory of history using Hegel’s dialectic, arguing that power structures in society reflect economic conditions. To Marx, it was not new ideas challenging the status quo but economic conditions driving change in history. He would say that the status quo of serfdom in Europe ended because towns challenged it by providing alternative jobs for serfs. Lords had to compete with them for their labour. And so, employer-employee relationships replaced serfdom, which became the new status quo. Marx also believed nationalism was a temporary phase, as economic conditions imposed it on us. Industrialisation required larger markets, thus societies rather than communities. Nationalism allowed the elites to divide and rule the working class. And because capitalism would eventually bankrupt itself, Marx predicted, as if it was a logical certainty, communism would replace employer-employee relationships, and everyone would become free and equal. In reality, people aren’t free or equal under communism, and a new elite of party bureaucrats replaced the capitalists.

Marx’s plan for the future included violently overturning the existing capitalist order in revolutions like the French Revolution and Napoleonic wars. Karl Marx became the prophet of the most successful cult in recent history. Despite the failure of communism, the capitalism-socialism debate continues because Marx raised pressing concerns that are still valid today:

• Instead of saying capitalists steal value from workers, you can argue we work to make the rich richer. Despite stellar economic growth in the United States, many workers still can hardly get by. And that is not because they are all lazy or stupid.
• Instead of saying the system alienates us from what we produce, you can argue we are part of a system over which we have no control. We can’t democratically decide on issues like implementing artificial intelligence.
• Instead of saying capitalism causes misery, we can argue it improved billions of lives, but it probably ends in a total disaster. We may know for sure once the ecological or technological apocalypse materialises.
• Instead of saying we will enter the communist paradise as a historical necessity, we may argue the script is that we are about to enter God’s Paradise, which could be a Hegelian synthesis of Marx’s challenge of the existing capitalist order.

The moral void

European moral idealism and American moral relativism have consequences you might not think of. German philosophers from the Frankfurt School, knowing our religion, if we have one, depends on our birthplace, that Jews invented the Abrahamic God and that much of the Bible is fiction, sought more absolute foundations of morality, such as equality or preventing harm to other people. They embrace LGBT rights like marriage, as there is no objective moral reason to deny them. Even if you think gay marriage is unnatural because a gay couple can’t produce offspring, there still is no objective moral reason to deny them these rights, no matter what the Bible says. Idealism also drove Germans to endanger their energy security by closing nuclear plants and betting on solar and wind.

American moral relativism drives conservative Christians to impose their views on others, as they don’t ask hard questions, ignore evidence contradicting the Bible, and think they can do as they please rather than act as a rational, morally upright person. Critical theory, thus cultural Marxism or Woke, comes from German philosophers daring to ask hard questions to seek the absolute foundation of morality. Critical theorists also indulge in speculation. Many of their theories lack solid evidence. Believing, like Marx, that their ideas are superior, the Woke use Hegelian dialectic to attack conservative Christianity and impose their views on society. That is why Woke people are so annoying. In recent years, that debate has escalated rather than synthesised. It has turned into a culture war.

Conservative Christians, most notably those in the United States, are a peculiar bunch. Humans are the most destructive species that ever roamed the Earth, and there are far too many of them, so it is evil to ban abortions. If there is a moral objective measure for preserving a life, it is its degree of sentience. A human newborn can only suck milk, and no one remembers being born, while cows, horses and pigs stand upright and walk after birth. A cow or a pig is more conscious than a ten-week-old fetus, yet we slaughter them by the millions after treating them horribly in conditions as miserable as concentration camps. It is a Holocaust. You can better be dead long before you are born. Christians corrupted Jesus’ teachings to take away women’s rights and claim trans people are evil after giving God a sex change. They harp about an alleged conspiracy of Satanic child molesters in government while electing a sex offender who regularly attended Epsteins parties.

Liberals might think many Christian conservatives are crazy to believe raving nutcases like Qanon, but we cooperate using shared imaginations, so it is perfectly normal human behaviour. How do you think religions survive despite the facts disproving them? And the only measure of success is success. Truth hardly ever is the reason why beliefs prevail. Even scientists have invisible imaginary friends like gravity. Believing that gravity exists makes you succeed in engineering. The foundations of liberalism and socialism are also incorrect, like human nature being inherently good. We like to think we are good, so these ideologies have been successful. And success breeds stupidity. If you fail, you might ask the correct questions, but when you are successful, you have no reason to. And so, rational government is an uphill battle against our inner nature, and real change is only possible after complete failure. Christianity is much closer to the truth. We are morally depraved, incapable of fixing ourselves, unworthy of God’s grace, and in need of a saviour.

Liberals are wrong and foolish because the evolution theory they believe in says the struggle for existence is brutal. They should have reasoned, like Friedrich Nietzsche, that God is dead and that the strong should rule the weak. Somehow, they couldn’t rid themselves of their Christian slave morality. The former right-wing Dutch politician Pim Fortuyn called them the Leftist Church. Without God, we get lost in the moral void, and it is pointless to try to achieve Paradise on Earth. After several wars to impose liberal Western values on countries like Vietnam, Iraq and Afghanistan, we can say good intentions usually make things worse rather than better. Why send money and weapons to a corrupt country like Ukraine to let it fight against an even more corrupt country like Russia? And why do liberals support the corrupt establishment of big banks, big pharma, the mainstream media and the military-industrial complex they objected against in the past? But many Christian conservatives don’t even make a small effort to become slightly less evil, like skipping meat one day per week. Appeals to moral reason infuriate them. And now the crazies organise a witch hunt against science and the rule of law. The road to hell may be paved with good intentions, but being intentionally evil is a shortcut.

Suppose Jesus was human like us with the knowledge of his time, which non-religious biblical scholars would agree on, and someone else finds himself in his position today. What could he do? He could wait for God to tell him, but if God doesn’t, he might think, like Marx, that he has to figure it out himself. As far as we can infer from the scriptures, Jesus acted independently but according to God’s will. He was like an actor following a script. His successor has the benefit of today’s knowledge, including the simulation hypothesis and the sobering outcome of the communist experiment. He might grasp the greater picture. The Marxist challenge of the existing order could have been God’s way of showing us the choices we face, our alternatives, their consequences, and what the synthesis might look like. That makes Hegel one of the greatest prophets of modern history.

Most people in the West now believe there is no alternative to capitalism, even though we may need some socialism or government to contain its ills. That could make our economy less competitive, which could cause us to lose the competition. So, in the end, there is no alternative, not because we can’t live happily in another economic system but because other systems can’t compete. Other ethical systems can’t compete with the ethics of the merchant either, which says you can do as you please and take what you can. It is much easier to break a collective effort like combating climate change than to build it. Only one major country needs to step out. In competition, those with the most depraved ethics win. The Dutch would say the merchant always wins from the vicar.

Only there needs to be an alternative. The profit motive is the severest threat humanity has ever faced. It pushes for permanent innovation, a process of creative destruction over which we have no control. We have started a fire in our midst that grows until it consumes us. Our greed is its fuel, and we can’t stop it. We may soon destroy ourselves creatively. We can’t kill the beast, the system, and the beast within ourselves, our greed. Communism is oppressive, kills creativity, and promotes stagnation by eliminating the profit motive. That sounds awesome because that is precisely what we need.

It looks like a cure. If your disease is cancer, and the cure is chemotherapy, you take the poison, and you accept becoming sick and losing your hair. Otherwise, you die. You could visit a witch doctor or a quack, and you also die. Many fall for snake oil salespeople because science doesn’t always have the correct answers. But despite their limitations, the sciences and the evidence from history are our best knowledge. If capitalism and communism are the only options, a sensible person chooses communism. Communism has brought a lot of misery, and we haven’t seen the end of civilisation yet, so we can still believe it will work out fine as long as markets remain operational and bring together supply and demand. That is perhaps the biggest lie ever.

If you don’t get by now why the ethic of the merchant is the greatest evil of all times, you are a moron, and there is no point in trying to convince you. By electing Donald Trump, Americans demonstrated their willingness to let Satan run their country. If following Satan seems the lesser evil, then something must be profoundly wrong. The corrupt old order of the military-industrial complex, big pharma, big banks and other interest groups seeking to profit from the state has ended the legitimacy of the US government. The other candidate and the billionaires backing her believed they could buy the presidency by spending billions on her political campaign. And for the record, Donald Trump isn’t Satan, not even the Antichrist, but just a huckster with the most depraved moral values and the ultimate embodiment of the ethics of the merchant, the ultimate evil.

In a world without God, there is no justice. And we can’t halt our descent into the moral abyss. And we have the ultimate proof. Once the technology is there, some of us will become like gods, live for thousands of years, make virtual worlds in which they force everyone to comply with their wishes, and murder people for merely standing in the way or for any other arbitrary reason. It is why we exist. God is an individual from an advanced humanoid civilisation who wants to have some fun. You are nothing, even less than a worm, as a genuine worm decides for itself how to grovel and when. Let that be a warning. And you own nothing. Believing you are entitled to something is thinking you can steal from God. With these words, I conclude my sermon. Now, let us pray.

In a world without God, there is no justice. And we can’t halt our descent into the moral abyss. And we have the ultimate proof. Once the technology is there, some of us will become like gods, live for thousands of years, make virtual worlds in which they force everyone to comply with their wishes, and murder people for merely standing in the way or for any other arbitrary reason. It is why we exist. God is an individual from an advanced humanoid civilisation who wants to have some fun. You are nothing, even less than a worm, as a genuine worm decides for itself how to grovel and when. Let that be a warning. And you own nothing. Believing you are entitled to something is thinking you can steal from God. With these words, I conclude my sermon. Now, let us pray.

Third ways

There have been several attempts to come to a synthesis of capitalism and socialism, which is often called the Third Way. The challenge of Marxism, the antithesis of capitalism, fuelled a lively debate about economic systems in the second half of the 19^th and the first half of the 20^th century. Silvio Gesell, who wrote Barataria, was one of the central figures in this debate, as was Henry George in the United States. Since the Cold War, the debate has narrowed down into a struggle of communism versus capitalism or individual freedom versus enforced collectivism. With the collapse of the Soviet Union, the discussion in the West ended with the conclusion that Marx may have had valid concerns, but we can’t fix them, and his solutions are counter-productive. The Chinese government, however, kept innovating and remained determined to make socialism work.

You can’t compromise with ultimate evil. That reasoning made the Soviets replace markets with state planning. And it made their repression so ruthless and bloody. Millions died of starvation, and millions more ended up in concentration camps. In the end, it is better to be a slave in Paradise than a free man in hell, except when hell looks like Paradise and Paradise is like hell. But profit and greed corrupt everything. Self-regulation under neoliberalism, thus allowing corporations to set and enforce their rules, demonstrated why corporations need a tight leash and operate for public benefit rather than private profit. So, the question remains whether a third way is possible at all. Or can we only make socialism work better and more agreeable?

Such a change requires the support of a large majority of the people. The Russians lost faith in the Soviet experiment as central planning produced poor outcomes. Still, the Chinese economy has baffled the proponents of capitalism. The Chinese allow the profit motive to exist as long as businesses conform to the Chinese Communist Party’s objectives. State ownership of enterprises further ensures that. Similarly, you can allow profit motive within society’s goals and place large corporations in sovereign wealth funds. To clarify the discussion, as there is confusion in terminology, it may be best to provide you with definitions of economic systems. Their differences centre around ownership of resources, capital, and labour.

	resources	capital	labour
communism	state	state	state
socialism	state	public	private
third way / mixed	varies	varies	private
capitalism	varies	private	private

Under communism, the state owns everything, including your labour. You can’t even decide on the job you take. Under socialism, you can choose your occupation, but capital is public, thus owned by workers or the state, and the state owns the natural resources. In mixed economies, ownership of natural resources and capital varies. You may own the ground, but if oil is underneath, it may belong to the state. There may be state-operated corporations like railways alongside private corporations. And you are free to choose your occupation. Under capitalism, everything is private. There may be public services, but there are no public corporations. And few countries give their resources away for free, and governments nearly always want a piece of the action. Not even the United States is fully capitalist. Libertarians think that is the problem, so if we gut the government and make everything private, the invisible hand, thus greed and competition, will fix things as if being foolish doesn’t help, being more foolish might.

The same model still gives different outcomes under different circumstances. A crucial factor is the culture or spirit of the nation. There were substantial differences in living standards in the Soviet Block. Czechoslovakia did relatively well. Yugoslavia suffered from high unemployment, but the Slovenian unemployment rate never exceeded 5%, while Macedonia and Kosovo had rates of over 20%. These were extreme differences within one country and the same system. China has developed its economic model, a state-run socialist market economy, which now outcompetes the West. Its success depends on the Chinese people’s hard work and ingenuity, China’s long-standing tradition of a modern bureaucratic government, and Confucianist ethics, making the government work in the public interest. The Chinese had a modern bureaucratic government on rational principles 2,000 years before Europe. And so, this economy wouldn’t have emerged elsewhere.

Making idealism work still requires pragmatism because good intentions can give horrible outcomes. Americans are pragmatic and gung-ho, thus eager to get things done. So once they realise God’s vision for the future goes against some core principles of American society, like individual liberty and capitalism, they might reverse course and take up the challenge with zeal. Europeans are not like that. They have a wait-and-see attitude at best. The Germans will try to engineer an even better system. The Dutch will deliberate the proper procedure and hire consultants to write reports. The Italians will bumble. And the French will go on strike. Many Americans are also more religious and more willing to embark upon an outlandish plan if they believe it is the way forward.

Free Economy

There are other options than communism or socialism. They can be safe as long as the ethic of the merchant doesn’t reassert itself. As soon as you allow it, the moral depravity spreads like cancer and will destroy society, like in the tale about the imaginary island Barataria. Only communism and brute repression are 100% safe. Religion can inspire us to stay public-spirited and be content with what we have. So if God exists and sends a messiah, we could play it less safely because whatever happens is God’s will.

For a while, Barataria had an economy with free enterprise and private ownership of homes but without capitalists, bankers, and merchants. Barataria had no income taxes, but the lands were public, and farmers rented them, which paid for the small government. Because the Baratarians were public-spirited and helped each other, and most notably, because there were no merchants, they didn’t need much government. That might be as close to Paradise as we can get. But it will only work if we live simple lives.

Silvio Gesell believed in economic self-interest as a natural and healthy motive for satisfying our needs by being productive. He aimed for free and fair competition with equal chances for all. He proposed the end of legal and inherited privileges, so the most talented and productive rather than the most privileged would have the highest incomes without distortion by interest and rent charges.

After experiencing an economic depression in Argentina in the 1890s, Gesell found that economic returns sometimes didn’t meet investors’ minimum requirements. It caused investors to put their cash in a vault like Scrooge McDuck, emptying the money flows and collapsing the economy. A holding fee can keep the currency in circulation, as low returns are more attractive than paying that fee, which amounts to a negative interest rate. Gesell’s economic system was well-known in Germany as the free economy.

European Union

European economies are mixtures of capitalism and socialism. Many Brits found the union too socialist and bureaucratic, so they left. These sentiments relate to the age-old differences in law and morality. The European Union tries to tame the beast of capitalism with regulations, which may fail if the competition continues and intensifies, but many Europeans now live a good life. Well-being is hard to measure, but European societies are among the world’s most agreeable if you believe the rankings. And if every country kills innovation with legislation like the bureaucrats of the European Union, we wouldn’t need to fear artificial intelligence, genetic engineering or any other new technologies.

Europe has a collectivist tradition with Christian and socialist roots with worker and consumer protection laws. Europeans live longer than Americans, partly because the European Union has banned unhealthy foods available in the United States. At the same time, governments run the healthcare systems, so most healthcare is for the public interest rather than private profit. In Europe, it is harder for corporations to pass business-friendly legislation by bribing politicians. That is also because Europeans believe in the common good more than Americans do. Like the invisible hand, our imaginary invisible friend, the common good, has a few magical powers.

As in the United States, immigrants do much of the hard manual labour in Western Europe, often for lower wages, without these protections and crammed in poor housing. There is a profit in dodging regulations for shady merchants. Western Europeans may be lazy because they work 36 hours per week and have five weeks of holidays each year. Still, their lives are the closest to what life should be in Paradise, except that European energy and resource consumption require a drastic 75% cut to make their economies sustainable. But if we dismantle the wasteful bullshit economy and set the right priorities, we could work fewer hours than Europeans do today and still have an agreeable life.

Nazi Germany

The Nazis produced an economic miracle during the Great Depression. The success came from deficit spending for rearmament and limiting trade with the outside world, so the expenditures boosted the German economy while not causing trade deficits. It is similar to Keynesian economics. It worked like the miracle of Wörgl, except that the German government accrued a large debt while the council of Wörgl did not.

Factories were idle, and many people were unemployed, so the scheme didn’t result in high inflation. Price, wage and rent controls also helped keep inflation in check, but it hurt small farmers. The Nazi economy was a mixture of state planning and capitalism. Germany was rearming and preparing for war. It was a war economy. Countries organising for war take similar measures to mobilise their industries for warfare.

Yugoslavia

Yugoslavia was socialist rather than communist. It combined state planning with markets and decentralised decision-making or worker self-management. The Yugoslav economy fared much better than that of fully communist countries. The country was more open, and living standards were higher. However, it began to suffer from mass unemployment, and the economy collapsed in the 1980s as it couldn’t compete with capitalist economies. Generous welfare spending further contributed to Yugoslavia’s economic demise.

The oil crisis of the 1970s magnified the economic problems, and foreign debt soared. The country implemented austerity measures like rationing fuel usage and limiting the imports of foreign-made consumption goods. Unlike the Soviet Union, Yugoslavia had been able to feed its people until then. From the 1970s onwards, the country became a net importer of farm products. Yugoslavs were free to travel to the West. Emigration helped the economy by reducing unemployment and bringing in foreign currencies as emigrants returned money home to support their families.

Its openness to foreign competition contributed to the collapse of the Yugoslav economy. Yugoslav consumer products were often inferior to Western products. To compete, businesses laid off workers to become more efficient. The Yugoslav economic system might have worked if all countries had operated their economies like Yugoslavia. Yugoslav products would have sufficed if there were no better alternatives. Mass unemployment might not have materialised in that case, and Yugoslavia could have managed, perhaps, with less generous welfare. That is a few maybes, but it is plausible.

China

The stories of Airbus and Boeing demonstrate that state ownership of large businesses can work better than private ownership. Boeing was the industry leader but ruined itself by focusing on shareholder profits. Reducing quality brought short-term cost savings, boosted the stock price, and generated management bonuses. That seemed all fine until the Boeing aeroplanes began dropping from the sky. The largest holders of Airbus stock are European states, allowing the corporation to focus on long-term goals. The state-owned aeroplane industry is one of the few areas where Europe is still at the top.

Traditional communism gave subpar results, but the Chinese managed to get it right. The Chinese socialist market economy (SME) has private, public and state-owned enterprises (SOEs). China is not capitalist, as the Chinese Communist Party (CCP) retains control over the country’s direction. It is a command state-market economy like Nazi Germany was. Unlike Nazi Germany, which aimed for maximum self-reliance and ran on military spending, the Chinese economy integrated into the world economy and ran on exports. It resembles other Asian Tigers, such as Japan and South Korea.

The CCP’s vision behind starting market reforms is that China was underdeveloped and that a fully developed socialist planned economy would emerge once the market economy fulfilled its historical role, as Marx prophesied. Thus, the CCP believes it has incorporated a market economy into the Chinese socialist system. Others call it state capitalism, as the SOEs that comprise a large portion of the economy operate like private-sector firms and retain their profits without returning them to the government.

China eliminated extreme poverty, which declined from over 90% in 1980 to less than 1% today. It also became the world’s leading manufacturing economy and the world’s leading producer of unnecessary items that end up in our landfills. Despite its leadership in renewable energy and electric cars, China has also become the world’s leader in pollution and carbon dioxide emissions. However, China’s status as an exporter distorts the picture. By importing from China, other economies appear to be less pollutant.

The Chinese economic model forces corporations to align with society’s goals and make profit secondary. At the same time, it achieves acceptable living standards. It is modern and outcompetes the US and European models. If our society’s goals change from growth to sustainability and happiness, the Chinese economic model can help align corporations with public policies. China is a dictatorship, but its economic model will also work in democracies. Airbus provides the evidence.

State control and ownership of businesses, like China’s, also seem to be the only viable way to pursue political goals such as protecting nature and reducing poverty. Business objectives like profit should be secondary to these political goals. With state ownership, you can ban products or subsidise others without harming or favouring private entrepreneurs, thereby removing the incentive for corruption. China is on the right track as political objectives precede profit. And so we have evidence. China’s economy produced spectacular results, so we can have confidence that it will bring us acceptable living standards while allowing us to live in harmony with nature and end poverty.

Latest revision: 24 December 2024