Socialism vs. Capitalism. What's the Difference and How Do They Work... or Not?
American History, Socialism, Capitalism, Fascism, Marxism, Philosophy, Economics, Christianity
Socialism vs. Capitalism. What's the difference, and why do we Americans care? There's plenty of talk about a Socialist agenda in the USA and it seems a lot of younger people think Socialism is hip and cool. Maybe that's because they think Socialism is an altruistic way to run a nation. But what is Socialism about, really? It turns out the essence of Socialism, Communism, Marxism and even Fascism are all the same. Here's the story.
The Labor Theory of Value is Socialism's Foundation
Socialism, like Communism, Marxism and even Fascism is based on The Labor Theory of Value which says physical labor is what makes things valuable. Does that make sense? What about non-physical labor that adds value? Things like singing which is a talent, leadership and managerial skills that guide groups of people, inventiveness that creates new products, teaching that educates, investment that provides money to create new businesses. Lenin, the father of Socialism, didn't take any of those things into account. Well, everyone knows that doesn't sound right. Lots of value is created by those intangibles, actually most of the value. And much of that value takes the form of self-worth within the person doing the work. Have you ever done something that really makes a difference and you feel great about yourself afterward?
Let's Dig a Hole in a Remote Corner of Nevada
The Labor Theory of Value gets better or worse, depending on how you look at it. Let's say we dropped you in the middle of Nevada, a hundred miles from anywhere. Not even a road in sight. We gave you a shovel. You stood there for a while, but then, you got bored so you started to dig a hole in the middle of that dusty plain. You fought hard and got down about 4 feet. It took you hours of work to penetrate the rocky desert floor. You were exhausted from your labor.
Socialism says, because of your hard work, that hole has value. But does it? No one asked you to dig the hole, no one needs the hole, no one is there to use the hole, no one can even get to the hole. So does the hole really have any value at all? A Socialist would say, "Yes, I did the labor! And you should pay me for that hole no one wanted." Think about it. How would that make you feel? Valued or not valued? Not valued of course; you just got a few dollars, but wasted your time on a hole no one cares about.
The Truth About Socialism
Many people think Socialism is about helping society, helping other people and equality. It's really not. It's the opposite. The hole you dug served no one, except you with your hand selfishly outstretched, saying, "Pay me for my labor! I added value." It's a me first model, whether I made anyone's life better or not. It's a model that is designed to make you feel unempowered too, like a loser who takes in a little cash doing meaningless work. Feeling like a loser comes in very handy for dictators trying to control society. The last thing dictators want are people feeling strong. That's very dangerous.
Fascism, Communism, Marxism and Socialism all use this Labor Theory of Value model. It's written throughout the texts of the leaders of these movements. People like Hitler, Stalin, Marx and of course Lenin. This is not the who's who of goodwill toward men and peace on earth! They were more about how to keep society down, keep it under control.
The Truth About Capitalism
Let's talk about Capitalism. It's been around forever and was not invented in the USA. This economic theory was put forth by a Scottish philosophy professor, not an economist, named Adam Smith. Smith was concerned with ethics, and with doing what was right. In 1764, he wrote a book called The Theory of Moral Sentiments focused on ethics and morality of his time. Later he wrote his most famous book, The Wealth of Nations in which he looked at a theory of Capitalism and the free markets.
His premise of this book and of Capitalism is, "Have you served your fellow man today? What have you done to make your fellow man's life better today?" This is why Elon Musk is a Capitalist and not a Socialist. He creates (labors) to make products that improve people's lives. He doesn't labor to create a hole no one wants and puts his hand out to get paid. Elon creates value and wealth, not a hole.
Capitalism is Servant Leadership
So in a Capitalist economy, to be successful you have to ask yourself, "What can I do to make my fellow man's life better?" When you come up with an answer, you can work for someone doing that or start your own business. It's a very purposeful way to think about work. The very basis of Capitalism is UNselfishness. That's the opposite of what some people might have you believe. They say Capitalism is based all on greed. Actually, Socialism is the philosophy based on selfishness and greed. Gimme, gimme, gimme even though I did nothing for society. "I drew this picture." (Well no one wants the picture.) "Doesn't matter, pay me anyway!"
In the Bible, Jesus said, "Give and it shall be given unto you." That's Capitalism. Give of yourself, your time, your gifts, your talents and combine all that into something others value, and you will be rewarded. Socialism is the opposite. It inverts Jesus' words by saying, "I'll take first, do what I want to do regardless of others' wants or needs and still get a reward." Socialism, despite what others say is unChristian and self-serving by definition. Capitalism follows the Christian morals of serving first, just as Jesus did. Capitalism is Servant Leadership.
Capitalism is Not a Guarantee
In Capitalism, there's no guarantee of a reward. It's not an insurance policy. Socialism by contrast IS an insurance policy. No matter what you do, how bad you do it, or how worthless the outcome, you get a reward. Capitalism is like Christianity, you have to sacrifice first. You have to invest your money, buy supplies, hire people, work lots of hours, all with no promise of any kind of reward. But when your efforts pan out and you create something wonderful, that people love, all that effort, all that sacrifice makes you feel great about yourself! Capitalism is about high-fives. It's about empowering people.
Socialism can't have a population of people feeling good about themselves. No high-fives, no way! People feeling strong, having ideas, taking charge, that's a recipe for overthrowing a dictator! Heavens! Can you see now why one of the first tenants of Socialism--and Communism, Marxism and Fascism--is to destroy Christian Servant Leadership thinking and belief? Replace it with the religion of these doctrines to keep people down. Keep people living purposeless, meaningless lives that serve no one except the self. Talk about a recipe for depression. What a horrible life!
How Do We Know We Served Someone?
In society today, the way we know we served someone by adding value is through money. Money is evidence that you have done a worthwhile service. Money is a physical manifestation of value. That's all it is. And it is the only manifestation of value.
Money, therefore, is not an evil thing, contrary to what many people have been taught. Not at all. When you help someone who needs their house painted and that person pays you for doing the work, the money represents the value you delivered. When you help someone learn a foreign language by being a tutor and that person pays you for your abilities, the money represents your value. Money is an exchange for value. Capital is another word for money. Thus the term Capitalism, the system that is based on delivering value to others.
Creation and Abundance
We've met some young people who don't like the term Servant Leadership because they believe the word "servant" is demeaning. Well, in Christianity, and in life, serving others is the highest privilege one can have. It is the forerunner of any kind of success and of living a life of meaning. What exists without the Capitalist basis of Servant Leadership? Socialism and the me-first mindset of "First I do for me." Finally, no society has ever lasted under a Socialistic me-first way of living. It always collapses under its own selfishness. But selflessness is infinite, like God. There's never a shortage of ways to give, add value and be grateful for the opportunities in the world. It is the definition, like Capitalism, of creationism and abundance.
This blog is adapted from Larry Schweikart's Wild World of History VIP content. Known as America's History Teacher, Larry is the author of the New York Times number one bestseller, A Patriot's History of the United States along with dozens of other books including his latest, A Patriot's History of Globalism. To order Larry's books and many other titles visit the DecisionUSA Bookshelf. The Wild World of History is the nation's premier home school history curriculum website. Click here to learn about become a Wild World of History VIP and to give your young students the best history curriculum available anywhere.
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