The Crisis That Need Not Be, III: Transcending Greed and Envy

Yesterday we asked the eternal question, How can ordinary people who lack existing savings and don’t have the capacity to cut consumption in order to save acquire capital ownership without taking anything from existing owners?  Of course, regular readers of this blog know the answer, but we might get someone who came in to get out of the rain and got interested.  It bears repeating in any event.

Marx: socialism is the abolition of private property.

To those trapped in the past savings paradigm, the answer to how ordinary people are to get ownership of capital is simple: redefine property so that its private aspect is abolished.  This, the chief characteristic of socialism (at least according to Karl Marx and Pope Leo XIII), is the principal way that the slaves of past savings try to liberate the human race by riveting on more chains.

Of course, your typical socialist — especially those who don’t want to be known as socialists — will instantly say that socialism is not the abolition of private property.  This is what is known as a “straw man argument”: “a common form of argument and is an informal fallacy based on giving the impression of refuting an opponent's argument, while actually refuting an argument that was not advanced by that opponent.”

Well . . . yes — and no.  To define socialism as the abolition of private property is both correct and incorrect.  That is why Marx qualified his definition of socialism (understanding communism as the “purest” form of socialism) by explaining,

Yes, even people like this have rights you can't take away.

The distinguishing feature of Communism is not the abolition of property generally, but the abolition of bourgeois property. But modern bourgeois private property is the final and most complete expression of the system of producing and appropriating products, that is based on class antagonisms, on the exploitation of the many by the few.

In this sense, the theory of the Communists may be summed up in the single sentence: Abolition of private property.

We Communists have been reproached with the desire of abolishing the right of personally acquiring property as the fruit of a man's own labour, which property is alleged to be the groundwork of all personal freedom, activity and independence.

Hard-won, self-acquired, self-earned property!  Do you mean the property of the petty artisan and of the small peasant, a form of property that preceded the bourgeois form?  There is no need to abolish that; the development of industry has to a great extent already destroyed it, and is still destroying it daily.

Or do you mean modern bourgeois private property?

But does wage-labour create any property for the labourer?  Not a bit.  It creates capital, i.e., that kind of property which exploits wage-labour, and which cannot increase except upon condition of begetting a new supply of wage-labour for fresh exploitation.  Property, in its present form, is based on the antagonism of capital and wage-labour.  Let us examine both sides of this antagonism.

To be a capitalist, is to have not only a purely personal, but a social status in production.  Capital is a collective product, and only by the united action of many members, nay, in the last resort, only by the united action of all members of society, can it be set in motion.

Capital is, therefore, not a personal, it is a social power.

When, therefore, capital is converted into common property, into the property of all members of society, personal property is not thereby transformed into social property. It is only the social character of the property that is changed. It loses its class-character.  (Karl Marx, The Communist Manifesto.  London: Penguin Books, 1967, 96-97.)

Now, do you see where Marx’s fundamental error lies?  The real, substantive definition of socialism?  The functional definition of socialism, of course, is “the abolition of private property.”  The substantive definition of socialism, however, is the idea that the collective, “society,” has inherent rights, which it may or may not grant to individuals . . . and which “society” has the right to take away at any time it deems necessary or expedient.

Leo XIII: community of property is the main tenet of socialism.

In other words, the abolition of private property is simply the most immediate and obvious characteristic of socialism, the “main tenet,” as Leo XIII put it in § 15 of Rerum Novarum.  Socialism also abolishes life and liberty as inherent rights when taken to its logical conclusion, although socialists who don’t want to be called socialists as well as many other socialists frequently insist that only private property is abolished . . . except when it isn’t.

This is critical, because socialism is based on a false assumption: that human beings are more powerful and greater than God . . . and that the State is greater than any human being. The State, therefore, is greater than God, even for a Christian socialist.

It works this way.  (To make this easy to understand, just remember to keep in mind that it always boils down to a question of power.)

First, God didn't create the State.  Human beings did.  God didn't create the collective.  Human beings did.  God didn't create capitalism, or socialism, or any of those things.  God didn't even create humanity or any other abstract concept.  He doesn't have to create abstractions because He knows everything.  It's called "omniscience" — "all-knowing."  He (or however you construe the Creator) created human beings.  Human beings then created humanity and all other abstractions to get a handle on things that they can't know in every single detail.  Imperfect beings abstract.  Perfect Beings know.

Here's the socialist error.  A socialist believes that God either granted or built rights into the collective, an abstraction created by human beings, or that the collective self-generates rights just because it's the collective.  When the collective acquires form as the pólis — the community — it somehow hands out rights to human beings, thereby turning them into persons.  (A "person" is "that which has rights.")

See the problem?  Politically speaking, the source of rights is the source of power.  For the socialist, the source of power shifts away from human beings, to the abstraction of the collective.  Human beings become "mere creatures of the State," and the collective becomes a de facto deity, with absolute power over the whole of human life, even to the ability to change what life — or anything else, such as private property — means.  As Keynes claimed, the absolutist State has the power to "re-edit the dictionary."

Thus, if you define socialism functionally as the abolition of private property, the socialist has a double line of defense.  The first line of defense is to attack the functional definition by pointing out that many forms of socialism permit private ownership as a right.  “Permit” is the key word here.  To permit something is not to recognize it as a natural right that cannot be taken away.

The second line of defense is to assert the substantive definition of socialism as if the substantive definition refutes the functional definition instead of expanding and explaining the functional definition.  Generally this involves confusing the meaning of property, right, duty, and a host of other key concepts.  Redefinition of fundamental principles is the technique in operation here, violating the first principle of reason in its aspect of the principle of identity.

This is why, for example, Pope Pius XI said that “Socialism, if it remains truly Socialism, . . . cannot be reconciled with the teachings of the Catholic Church because its concept of society itself is utterly foreign to Christian truth.”  Actually, to any kind of truth; truth is true . . . something with which modern Academia and politics struggles every day in an effort to circumvent the obvious.

Why are we repeating all this about socialism?  Because the only way people trapped in the past savings paradigm can see for most people to own capital is to redefine what “ownership” means, and shift the source of rights from the human person to the State.  This is true whether we speak of the condemnation of the abolition of private property by the greedy capitalists, or the approval of it by the envious socialists.

Capital Homesteading for Everyone

So how do we transcend the errors of both the capitalists and the socialists and turn people into capital owners without violating anyone’s rights?  In two words, “Capital Homesteading.”

Briefly (we’ve gone into this many times before), under Capital Homesteading, a citizen’s tax-sheltered capital asset accumulation account, similar to an Individual Retirement Account (IRA).  Each capital homesteader’s account would be able to receive annual allocations of interest-free, productive credit and new asset-backed money issued by the central bank and administered by local commercial banks — understanding, of course, that no new money is created until and unless a financially feasible investment (i.e., one that pays for itself out of its own future earnings) is identified, and the capital goods of the investment back the new money; “instant” asset-backed money.

This new money and credit would be invested in feasible private sector capital formation and expansion projects of businesses that would issue new shares to be purchased and sheltered in the citizen’s Capital Homestead Account.  After the “future savings” (future profits) generated by the productive assets paid off each year’s Capital Homestead investment (loan), the citizen would continue to receive in the form of dividends the incomes generated by those capital assets.

Tomorrow we’ll look at what you can do to advance the effort to implement Capital Homesteading.

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