Socialist Delusions, Capitalist Illusions, IV: The State from Which All Blessings Flow?

We ended yesterday’s posting with the eternal question, Why, if private property in capital is so important to the establishment and preservation of the rights to life and liberty (to say nothing of pursuing and securing happiness and safety), how is society to survive if so few people have it?  Which leads to another question, Since private property in capital is so important, how are people to get it?

      For the last couple of hundred years or so, people have had it drummed into their heads that the only legitimate way to become an owner of capital is to sell your labor, spend less money than you make, save the surplus, and finally — when you’re too old, sick, and tired to work — let somebody else borrow your money and that of all the other small savers, pay you a pittance so you can eat dog food, and get rich by paying other workers too little and charging other consumers too much.

Do you really "own" the taxes you paid in to the system?

Naturally, it is up to the government, the Source of All Good, to set things straight.  It does this by mandating that employers pay workers more so they can have a decent income, collects money from workers to invest for them in their Social Security Accounts, and imposes price controls so that consumers don’t have to pay too much for essential goods and services.

There are just a few things wrong with this scenario — like everything.

Let’s take the most obvious things first.  Does all good come from the State?  Sure — if the State is a god.

The State, however, is not a god.  It is a human creation; the State is made for man, not man for the State.  If there is any good at all in the State, that good comes first from the people who organized and created the State, and then back to them.  This is, in fact, the whole reason for forming a State — to come together in a manner consistent with the political nature of the human person to establish and maintain such institutions as will create the environment suitable for preserving the equality of opportunity essential for each one to become more fully human.

This is the theory of government embodied in the founding documents of the United States, especially the Constitution, greatly admired by a number of the popes, especially Leo XIII.  As Alexis de Tocqueville explained,

Alexis de Tocqueville

In some countries a power exists which, though it is in a degree foreign to the social body, directs it, and forces it to pursue a certain track. In others the ruling force is divided, being partly within and partly without the ranks of the people. But nothing of the kind is to be seen in the United States; there society governs itself for itself. All power centres in its bosom; and scarcely an individual is to be meet with who would venture to conceive, or, still less, to express, the idea of seeking it elsewhere. The nation participates in the making of its laws by the choice of its legislators, and in the execution of them by the choice of the agents of the executive government; it may almost be said to govern itself, so feeble and so restricted is the share left to the administration, so little do the authorities forget their popular origin and the power from which they emanate.  (Alexis de Tocqueville, Democracy in America, I.iv.)

As for the State mandating certain minimal levels of pay for labor, there is nothing more harmful to the interests of those who have only their labor to sell.  For one thing, it persuades people that, even in an economy in which the bulk of production has been taken over by capital, labor should be able to produce enough to generate an adequate and secure income without owning any capital.

 Does this mean that workers who don't own enough capital to generate an adequate and secure income should not receive a wage sufficient to meet their reasonable needs?  Of course not — but that is an expedient on the way to a more just society in which everyone has the opportunity and means to own capital.  Paying labor more than it is worth is at best a tolerable stopgap.  It is not, and can never be a solution — and is self-defeating in any event.

Thus (to take an extreme example), the owner of a machine that produces 2,000 widgets a week at the push of a button and the total cost of 50¢ per widget, must pay the worker who comes in once a week to push the button $1,000 a week because the government has determined that is what that worker is due — leaving the owner with nothing.  Obviously, the owner of the machine is going to fire the worker, and push the button once a week him- or herself, move the machine to a lower wage area, or just go out of business.

Don't worry — it'll sell if they think they still own it.

As for that money workers pay into Social Security?  News flash: despite all the rhetoric and the careful governmentalese to make it sound as if people pay into an account and the money is invested for them in government bonds, that is not “your money.”  FICA is a tax, not a contribution.  You don’t own that money any more than you own any other taxes the government collects.  Just look at the original Social Security Act of 1935 and the decision of the United States Supreme Court in Fleming v. Nestor, 1960.  It isn’t “your money.”

And the trust fund?  It’s filled with government debt.  The government will have to collect more taxes in order to redeem that debt and pay out benefits.  Do the math.  For every dollar paid out of the Social Security trust fund, the government has to collect more than two dollars in taxes.

Price controls?  Can you say “Black Market” and “Shortages”?

No, human labor alone is not sufficiently productive to generate enough goods and services to meet consumption needs, even at a minimal level.  Human beings are tool makers and users — which makes production more efficient, and gives people the time to think and develop more fully as human beings instead of spending all their time trying to scrounge enough to eat.  Other creatures may use tools incidentally, but only human beings do so as a usual thing, and only human beings make tools that make tools, and create social tools — institutions — for specific tasks.

Is human labor really more powerful than a locomotive?

This is, in fact, where the basic problem lies.  People have made tools to produce marketable goods and services, and even tools to produce the tools to produce the tools to produce the tools (and so on) to produce marketable goods and services.  The problem is that human beings have not put enough work into developing, refining, and reforming the social tools essential to ensuring that the social order operates to the optimal benefit of everyone.

People have developed advanced systems for production, but have not yet organized properly and established or reformed institutions that will connect actual people to those systems through ownership so that they operate to everyone’s benefit.  Machines and other capital exist that have the potential to provide a more than comfortable life for everyone on earth, but people are not connected to capital through the institution of private property.  People are divided into two groups: an increasingly tiny elite that owns, and the growing number who do not own.

Why?  We’ll look at that tomorrow.

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