The Importance of Socialism to Economic Balance

The Iowa caucus marks the beginning of the US presidential election cycle and this particular election is imperative to our future as a nation.  One candidate in particular is causing a stir because he blatantly speaks of socialism, an important balancing element to any economy.

 

The Laws of Dichotomy and Balance

Nature is always, tirelessly, constantly, and ceaselessly striving for balance.  This is because it is comprised of endless pairs of opposites:  matter/anti- matter, light/dark, positive/negative, on/off, high/low, male/female, animus/anima, ad infinitum.

There are two kinds of balance at work in Nature. We might immediately think of the scale kind of balance as in the ‘scales of justice’, similar to a teeter totter.  A scale balance is an either/or situation:   the energy on one side outweighs the other, or it is of equal weight and importance to balance perfectly.

There is also a bell curve balance, where two extremes or opposites exist but the majority of the energy falls in the middle, creating a ‘bell shape.’ This inherently makes for a flexible, more stable kind of balance.  The energy can shift slightly to one side or the other, but the system will remain viable and functioning. Since the dynamics of the bell curve balance place most of the energy in the middle, we can therefore perceive balance of this kind as belonging in the ‘middle.’ Our language is teeming with this particular terminology.  We use the term ‘middle ground’ to indicate compromise, coming to an agreement, and moving forward.  The term ‘middle class’ defines the bulk of a nation’s economic, social, and labor energy.  The wisdom of the Buddhist concept of ‘The Middle Way’ encourages moderation instead of the extremes of asceticism and self-indulgence.

Examples of both kinds of balance abound.

On a scale kind of balance, we know there had to be just the right amount of gravitational balance on our planet in order for Life to have developed; if it were slightly more or slightly less, Life could not have formed.  Atoms, the building blocks of all matter, are comprised of protons and electrons, positively and negatively charged.  This dichotomy allows them to bond together to form molecules as their charges join to balance each other out.  The wind that blows in our hair is the direct result of a low pressure system and a high pressure system meeting and striving to achieve atmospheric balance. (Incidentally, the wind is a perfect example of the benefit of Nature’s law of dichotomies:  often the struggle to achieve balance between two extremes results in the creation of…..energy.)

An example of a bell curve balance can be seen in the age distribution of any animal group, there are a few youngsters and a few oldsters (technically termed outliers), but the majority of the group is middle age.  If the energy of the system shifts too far one way or the other, let’s say there becomes an abnormally high elderly population; then Nature will ensure that a correction is made; an illness, an unusually harsh winter, or an abundance of predators so that balance is achieved once again.  This very situation is occurring in Japan in human form at present, so much so that it is affecting new marketing and sales development. For example, the industry of robotics is gaining ground as life size robots are being used as caretakers for the elderly.   It will interesting to watch this situation over the next few years to see what elements become involved in dealing with the imbalance.   In another example (perhaps not exactly a true ‘bell curve’),  Nature ensures that there is just the right balance of light and dark, warmth and cold, on most of the earth so that we enjoy an efficient cycle of seasons for growing food and sustaining our population.  Light and warmth aren’t divvied out in equal parts consistently, we only have two days labeled ‘equinox’ on our calendar, but over the course of the year, there is enough to sustain us.

Nature is obsessed with balancing the millions of dichotomies inherent in its makeup.  We humans are as subject to this peculiarity as every other part of the Universe, whether we realize it or not, it is ingrained within our very cellular structure. Our physical bodies are constantly adjusting themselves so they stay a toasty 98.6 degrees.  Bookstores are loaded with self-help sections designed to help us with something we call ‘life balance.’  We try to eat a ‘balanced diet’.  Consequently, all the things we create – our institutions, our social frameworks, our cultural elements, and even our personal lives – are subject to Nature’s law of balance.   When an imbalance occurs, whether from a germ that causes a fever in an individual, or greed that has caused a nation’s economy to become imbalanced, Nature will ensure that it is resolved.

Applying Nature’s Law of Balance to Economics

The foundation of the science of economics operates on the simple struggle between the dichotomy of supply and demand and the market’s ability to find a balance with the two:  neither too many widgets, nor too few; neither too high a price or too low.  But the market alone doesn’t keep the economy balanced and national economies aren’t as simplistic.

We can observe from history and current events that the healthiest systems operate on a bell curve balance; with some living in poverty, some living in wealth (the outliers), but the majority of the population or the “middle class” lives… in… the….middle.  This kind of economic structure works well for a number of reasons.  First, the middle class provides the backbone of a nation’s workforce:  educators, health providers, first responders, law enforcement, laborers, construction workers, and small business owners. The consequence of this means that the middle class really defines a nation’s personality as it tends to dictate cultural trends, support political movements, and operate local communities. The emerging middle class in Brazil, for instance, is having a huge effect on the evangelical church there. Brazil has typically been Roman Catholic but with a bit of financial security, the middle class is supporting a protestant movement to the tune of billions of dollars and several mega churches, causing a noticeable cultural shift in the country.  A healthy middle class also supports consumerism which keeps an economy vibrant.

For many years the United States was the epitome of a nation whose middle class was idyllic; specifically during the 60’s and early 70’s.  There were some reasons for this. Taxes were high on both corporations and individuals which meant redistribution of monies, enabling us to do achieve some great things. We invested in education which became paramount since we were striving to prove our space dominance.  Correspondingly, we were advanced in medicine and other areas of science as well.  The Cold War spawned a large military along with its research and development. We became, and still are, the largest militarized nation in the world.  Wages kept up with production which meant that the economy was expanding because the bulk of the population was able to spend what they were making.  Debt ratios were manageable. The economy was balanced according to Nature’s law. It was healthy.

Similarly, following World War II, South American nations such as Chile, Argentina, and Uruguay began a project of nationalizing indigenous resources, investing in education, transportation, and industrialization. By providing these foundational needs, these countries developed a thriving middle class which meant a balanced, healthy economy.

In both cases a disruption in economic policies caused the middle classes to shrink and national economies to grind to a halt.  In the United States the Financialization Revolution, marked by years of gradual erosion of Wall Street regulations combined with increasing control over economic policies by financial markets and corporations is largely responsible for the imbalance the US and Europe is experiencing currently.  The result has been an obvious upward shift in wealth, increased debt ratios, stagnant wages for most workers, and very little economic growth.  The bulk of our workforce energy has shifted downward from the middle, leaving us with an economically imbalanced society which will require amelioration at some point, not unlike the time of the Great Depression.

In the South American countries, politicians began to subscribe to Milton Friedman’s economic philosophy which meant privatizing national resources and drastically cutting back on social service programs A few got rich, most became poor.  Eventually the middle class disappeared and the economy became stagnant- symptoms of imbalance and illness.  National leaders were required to re-instate social programs, nationalize instead of privatize and invest again in infrastructure. The result: a gradual, but slow recovery of the economy, better balance and economic stability(see Naomi Klein’s Shock Doctrine).

Balance is everything according to Nature and man made national economies are as subject to this premise as the wind. When the middle class disappears from a nation’s system an imbalance occurs, economies stagnate and shut down.  Socialism brings the necessary balance needed in order for national economies to once again conform to Nature’s Law.

#vote2016

Yours,

Frankie

 

 

 

 

 

 

 

 

 

 

 

 

Applying the Law of Balance to Economics

The foundation of economics operates on the simple struggle between the dichotomy of supply and demand and the market’s ability to find a balance with the two:  neither too many widgets, nor too few; neither too high a price or too low.

Further out in perspective, say along the lines of a national economic system, we can observe from history and current events that the healthiest systems operate on a bell curve balance; with some living in poverty, some living in wealth (the outliers), but the  majority of the population or the “middle class” lives… in… the….middle.  This kind of economic structure works well for a number of reasons.  First, the middle class provides the backbone of a nation’s workforce:  educators, health providers, first responders, law enforcement, laborers, construction workers, and small business owners. The consequence of this means that the middle class really defines a nation’s personality as it tends to dictate cultural trends, support political movements, and operate local communities. The emerging middle class in Brazil, for instance, is having a huge effect on the evangelical church there. Brazil has typically been Roman Catholic but with a bit of financial security, the middle class is supporting a protestant movement to the tune of billions of dollars and several mega churches, causing a noticeable cultural shift in the country.  A healthy middle class also supports consumerism which keeps an economy vibrant. Since the middle class provides the majority of the workers, the middle class also provides the majority of consumers.  If they are making a healthy wage and underpinned by certain social services, they can spend money on all kinds of widgets, thereby keeping an economy prosperous, balanced, and growing.

For many years the United States was the epitome of a nation whose middle class was idyllic; specifically during the 60’s and early 70’s.  There were some reasons for this. Taxes were high on both corporations and individuals which meant redistribution of monies, enabling us to do achieve some great things. We invested in education which became paramount since we were striving to prove our space dominance.  Correspondingly, we were advanced in medicine and other areas of science as well.  The Cold War spawned a large military along with its research and development. We became, and still are, the largest militarized nation in the world.  Wages kept up with production which meant that the economy was expanding because the bulk of the population was able to spend what they were making.  Debt ratios were manageable. The economy was balanced according to Nature’s law. It was healthy.

Similarly, following World War II, South American nations such as Chile, Argentina, and Uruguay began a project of nationalizing indigenous resources, investing in education, transportation, and industrialization. By providing these foundational needs, these countries developed a thriving middle class which meant a balanced, healthy economy.

In both cases a disruption in economic policies caused the middle classes to shrink and national economies to grind to a halt.  In the United States the Financialization Revolution is largely responsible for the imbalance we are experiencing at the time of this writing (2013), caused by a shrinking middle class.  This Revolution is marked by years of gradual erosion of Wall Street regulations combined with increasing control over economic policies by financial markets and corporations. The result has been an obvious upward shift in wealth, increased debt ratios, stagnant wages for the backbone of America’s workers, and very little economic growth.  The bulk of our workforce energy has shifted from the middle, leaving us with an economically imbalanced society which we are still trying to ameliorate.

In the South American countries, politicians began to subscribe to Milton Freidman’s economic philosophy which meant privatizing national resources and drastically cutting back on social service programs.  A few got rich, most became poor.  Eventually the middle class disappeared and the economy became stagnant, symptoms of imbalance and lack of health.  National leaders ended up re-instating social programs, nationalizing instead of privatizing, and investing again in infrastructure. The result: a gradual, but slow recovery of the economy, better balance and economic stability.

The lesson is that Nature will have her way and balance will be reclaimed – even with our economic systems.   Whenever disproportion becomes too great, whenever a middle class has joined the ranks of poverty and inequality stifles growth, then leadership reacts by implementing the very elements they eliminated:  regulations, social services, and nationalization. In other words, they utilize socialism in order to bring stability and balance.

I realize this particular word has a poor reputation in the United States.  There is a lot of fear associated with it left over from the Cold War era when socialism and communism were entwined together as our nemesis. We wanted nothing to do with either, and perhaps rightly so since we were witnessing the devastation wrought in the Soviet Union by both. What we didn’t understand at the time, what we do not understand even now, is that socialism as it evolved in the United States actually allowed us to become the world’s leader.

Before I delve into that mess though, a quick definition of socialism and a brief history of its development are in order.  I choose to keep it simple for the sake of discussion, your local library and Google can help with the details.  Simply put, socialism is government interference with economic systems. It is a doctrine that directly conflicts with notion of free reign capitalism and privatization. The idea of socialism emerged fully with Karl Marx and his gang during the mid-nineteenth century when corporate owners were exploiting workers with long hours, unsafe working conditions, and a pittance for wages.  Marx tended to view history through the lens of the economic struggle between the rich and the poor. His philosophy was that the poor should rise up and overtake the rich to implement a change toward communism – a utopian ideal where private property was abolished and everything was distributed equally by the state. In order to get from the free capitalist market that was in place at the time of Marx’ observations to his perfect society there was the necessary step of a socialist period, where government took over the production and distribution of goods.

As it developed in the Soviet Union, socialism ended up being a big failure. There were many contributing factors to this, one of which was the obvious disorganization in the way its government controlled the production and distribution of goods. Prices and demand were arbitrarily set by the government, instead of allowing the market to follow its Natural inclination to find a balance between the two.  Workers were unskilled and paid little, which meant no incentive to spend or the mentality to innovate. The world watched and learned as the concept that government interference with the production and distribution of goods proved to be a poor one indeed.

The vital difference between socialism in the United States and socialism in the Soviet Union is this:  in the Soviet Union government controlled the production and distribution of goods – in the U.S. and Europe, government control is largely dedicated to the production and distribution of services: local police and fire, national defense, public transportation, infrastructure, energy production, education, retirement supplement, unemployment benefits, and healthcare. Our leaders don’t need to mess with Ford, GM, or other widget makers; they manage to follow the market and demands just fine thank you. However, private ownership could not meet these basic needs of the majority of the population, as we found out in the early twentieth century.  Such a system eventually led to a massive imbalance in economic structure so that government decided to step in and implement programs to effect health and balance again.   Also, and practically speaking, the services that we centralize are simply necessary in order for the production and distribution of goods to be successful – roads and power for instance.

By implementing social services (and filling some of the needs that strict capitalism failed to fill) the United States became a world leader.  Recall my earlier mention of the 60’s and 70’s when our economy was strong – we were pouring money into education and infrastructure, creating a strong middle class and a national synergy the likes of which we’ve not seen since. Our social services, provided by the government with our money, allowed the majority of the population to thrive and innovate because many of their primary needs were being met by these services.  Socialism, as it developed in the United States, plays a key role in keeping a nation’s economy balanced and healthy.

That is not to say that we are an entirely socialist nation, in fact the capitalist component is ingrained in our very fabric.  Remember that our nation’s first settlement, Jamestown, was founded for capitalist purposes.  And then let’s consider how we’d feel if the government did interfere with Ford or other widget makers, telling them what models to make and what color to paint them.  We Americans would have a fit – we like our widgets and we have grown accustom to choosing what color, make, and model we want without the government controlling which ones are produced.  We therefore needn’t fret over whether or not capitalism would ever be abolished or taken over somehow by socialism; it is part of the very bedrock of our nation.

It would be a healthy choice to come to an understanding of socialism and its positive benefits so that we can dismiss the fear associated with it once and for all.  In doing so, we free ourselves to enjoy the luxury of the mixed economy that we really have: a strong capitalist market with social services provided by the government.  We have enough experience and history under our belt to know that this combination works well to keep an economy balanced and healthy – exactly as Nature would have it.

While our experience with government run services has a proven success record, there are still many who would prefer to see them privatized, that is corporately owned rather than government controlled.  Here again history and current events demonstrate that privatization of government services leads to disaster. Many South American countries determined to privatize their natural resources, which resulted in a shrinking middle class and a blatant upward shift in wealth to a few. The result was an imbalanced system that leaders were forced to correct (the government had to interfere) in order to bring health back to their country.  In New Jersey, where water of all things has been privatized, residents are choking on high bills and unaccountability to the point that one senior had her home foreclosed upon. A glaring problem inherent with private businesses is that they are not subject to the same regulations and limits as a government run entity, this means there is no accountability.  When the senior I spoke of tried to fight her two thousand dollar water bill, she had little recourse. The private company did not need to provide any proof for the high bill, no meter readings, no common sense – it wasn’t as if this woman filled a swimming pool with all that water she allegedly used. Conversely, a government controlled utility is mandated to account for its numbers so there’s less room for contention or mistake.  Privatization also often leads to various forms of corruption – did ya hear about the Pennsylvanian judge who sent thousands of kids to private prison for……money?

It behooves us to keep in mind that any private enterprise has but one aim:  to make money.  This goal becomes obsessive when we figure in a few other elements such as stocks and shareholders.  One of the biggest advantages to privatizing social security is the obscene hundreds of billions of dollars in fees that a relatively few will receive from the stock market – there is little or no advantage to the majority.   Within the corporate parameter shareholders become a powerful influence over the end product or service. Board members aren’t concerned so much about the quality of service or product being offered, so long as it’s good enough to sustain a demand and keep the stocks rising.  On the other side of that thought, government run enterprises aren’t focused on squeezing every possible dollar out of their consumer – instead there is the idea of fulfilling a social need:  educating our future, providing local protection to our neighbors, helping our elders, or transporting fellow workers to their destinations. While there are innumerous benefits of having a free market of privately owned businesses producing and distributing goods, some national provisions are best left to the more co-operative environments fostered by government run social services.

There is one more aspect to socialism that is important to comprehend.  Keeping in mind my simple definition of the word as meaning ‘government interference,’ socialism also includes creating and enforcing…. regulations.   I know this ‘r’ word gets a real beating, but let’s consider a couple of things before you throw your Nook out the window. Firstly, without regulations we wouldn’t have safe food to eat, safe hospitals to lie in, or safe airways to travel.  Without government regulation we wouldn’t be able to eat; all our farm land could potentially be used to produce the hugely profitable corn plant rather than less profitable yet important food substances.  In fact, during our infant Jamestown days; local leaders mandated that tobacco farmers set aside a certain amount of land for growing foodstuffs because they were utilizing their land resources only for the cash crop. Government interference has been around since our inception as a nation.

The second reason that regulations are an important part of the system is that they keep us safe from ourselves.   If we stopped to think about for a moment, we would realize the stark, simple truth that we humans can be greedy bastards.  We need boundaries. Those boundaries come in the form of regulations.   Without them, balance is difficult to maintain.  We can look at the 2007 disaster as an example since the largest contributing factor to this infamous event was a combination of relaxing Wall Street regulations and outright defying them. This resulted in a noticeable shift in wealth to a few and a severe contraction of the middle class instigating an incredibly precarious imbalance.  (As a side note, those few who made billions of dollars by ignoring and breaking regulations have yet to be held accountable for their wrongs.)

There is nothing wrong with having and enforcing common sense regulations, they keep us accountable to one another, and ourselves. I will admit that we have a propensity to over-regulate in some cases. The adoption process in the United States comes to mind, as does the No Child Left Behind gig.  This is where we can utilize Nature’s law of balance in a conscious manner by keeping in mind a balanced approach to regulations – neither too stiff, nor too lax, and certainly not too cumbersome.

Nature will have her way; balance will be achieved – even within the parameters of a nation’s economic system. We have enough experience between past and current events to know that a combined economy with elements of socialism and capitalism is ‘best practice’ because it promotes an economic balance.  At some point we Americans need to come to terms with this concept and accept a more relevant definition of socialism.  We’ve nothing to fear and we will be unable to refine and perfect our nation until we do.  Most importantly, we must remember that we’ll always have the choice:  mind our economics in the way that focuses on achieving balance, or allow imbalance to occur and pay the excruciating consequences. Proactive or reactive, take yer pick.

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About Frankie Wallace

Frankie earned her BA in History from CSU Chico. She lives in northern California with one husband, two dogs, and three boys. Frankie is an avid cooker, reader, hiker, and napper.
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