Summary

Economic Definitions? Really? How could that be important, or even not crashingly boring? In a world where we are seeing headlines that appear--appear--to advertise the clash between socialism and capitalism, we need to have at least basic definitions of those deeply misunderstood terms. And we are seeing more people and organizations wanting to abolish profit. Try these thoughts on for size: 1. Capitalism is necessary for democratic socialism to have anything to redistribute and 2. Profit is necessary to make any economic system’s engine run.

How are money and wealth created? All individuals and societies need both. Individuals and private groups must generate profits in order to make money and create wealth. Governments tax that money and wealth.

Links and References

Socialism Works

Killing the Golden Goose

Moral Compass

Contact

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Transcript

Economic Definitions? Really, Will? How could they be important, or even not crashingly boring? In a world where we are seeing headlines that appear--appear, mind you--to advertise the clash between socialism and capitalism, we need to understand at least the basic definitions of those deeply misunderstood terms. And at the same time we are seeing more people and organizations wanting to abolish profit. Try these thoughts on for size: 1. Capitalism is necessary for democratic socialism to have anything to redistribute and 2. Profit is necessary to make any economic system’s engine run.

How are money and wealth created? All individuals and societies need both. Individuals and private groups must generate profits in order to make money and create wealth. Governments tax that money and wealth. The exceptions are communist governments and governments that use the classic definition of socialism. And we’ll get to that. In both types, the government owns the means of productions. But no matter who owns what, the enterprise producing the goods and services that a society consumes must take in more money that it costs to produce those items and services. That’s called a profit.

Here are the key definitions:

Democratic Socialism: I believe that Senator Sanders and others are talking about something other than the traditional definition of socialism. They are not talking about the government owning the means of production. They are not talking about the government owning entities like Ford and Facebook. Not yet, anyway. Democratic socialists are talking about massive income and wealth redistribution. Even more than we have now. The Scandinavian countries are an example. Democratic socialism is capitalism with heavy income redistribution.

Traditional Socialism. See above, democratic socialism, with the government owning Ford, Facebook and most everything else of size. You can keep your ice cream store if you have one. See Venezuela, Cuba and others.

Communism: Traditional socialism with the addition of prohibiting any private property.

Capitalism: A system wherein people, individuals or groups, including corporations, own the means of production and engage in voluntary exchanges of money for goods and services.

Profit: Selling things, taking in income, for more than it costs to make them, drives everything; capitalism, democratic socialism, traditional socialism, communism, no matter. We are not talking about taxes or what you do with taxes; we are talking about how you make the money and wealth that is taxed in the first place. The gozindas have to exceed the gozoutas or nothing works in any system.