You are hereFailures of our Age: Capitalism and Communism

Failures of our Age: Capitalism and Communism

By john - Posted on 16 January 2010

MOST AMERICANS have grown up under the erroneous assumption that capitalism and communism are polar opposites, because the former system provides for private ownership of property, whereas the latter does not.

Like most effective lies, this misconception is promulgated through the absence of full information, thereby leading to false conclusions.

On its face, capitalism allows for the ownership of private property; but upon closer examination, that ownership is illusory and conditional.

Under capitalism, most significant individual property - such as real estate - is purchased through loans which, if unpaid, serve to relieve the borrower of ownership of the property without even a court proceeding, even if the borrower has already paid the lender several times the amount originally borrowed.

Even if the property is owned outright, it can be seized by just about any lawyer. If, for example, someone slips and falls while on the property, a lawyer can quickly relieve the property owner of any ownership rights unless he has previously agreed to make large and lifelong payments to the insurance corporations. But insurance comes with myriad clauses and exemptions, including a long list of things the insured must do - and must not do - on his property in order to be protected. Thus, the owner is compelled to give up many of the assumed rights of ownership in exchange for imperfect protection.

Of course, no insurance protects property against government seizure. The IRS seizes 10,000 homes a year; and civil property forfeiture - where the owner of the property need not even be charged with a crime - is used some 3,600 times a day in America to seize everything from cash to cars to real estate.

In practice, then, ownership is illusory since there are a bunch of government agencies, insurance agencies, and mortgage contracts that tell people what they can or can't do with their property; and it is conditional in that missing just a couple of payments, getting sued, or getting in the crosshairs of the government will terminate even the illusion. What an owner really has, instead of ownership, is temporary exclusive use within a set of guidelines established by mortgage companies, insurance companies, and numerous governmental entities.

Capitalism, in effect, has very little to do with ownership of private property by ordinary people; and everything to do with their enslavement by an elite. A closer look at the finances involved in the preceeding hypothetical house reveals quite a lot.

An important thing to understand is that various governmental and banking machinations distort the free market and artificially raise the price of housing. Unlimited immigration - even if the immigrants aren't going to the particular neighborhood in which a particular house exists, still serves to raise the price because of the phenomenon of White Flight which raises demand. The deductibility of mortgage interest serves to increase the price of homes, as does the existence of mortgages at all.

Mortgages raise the price of housing by placing buyers who plan to pay back loans over a period of thirty years in competition with buyers who have saved up their money to buy the house outright. A person can much more easily come up with a large loan than actually save money; and the amount of money accessible by financing far exceeds what the average person is able to save in a reasonable amount of time. Likewise, the availability of financing raises demand, and thus prices. Since not all houses go up for sale simultaneously, just a small proportion of buyers using mortgages can raise the price of houses outside the range of people who are trying to save the money to buy a house without a mortgage. In practice, then, wide availability of mortgages causes prices to rise at a rate faster than the rise in wages, meaning that saving to buy a house outright without a mortgage is impossible for most people. So the mechanism of mortgages in and of itself serves to raise the price of housing high enough that mortgage loans are required in order to purchase a house at all.

Here is a case where capitalism in the form of banking is obviously in play, but the actual free market is distorted rather than facilitated by capital, and the distortion is to the detriment of people who wish to own a house, both in terms of absolute price, and in terms of the excessive costs incurred through purchasing via a mortgage.

In practice, using a mortgage to purchase a house destroys, in absolute terms, any financial benefits of ownership.

As an example, take the case of a house purchased for $170,000 using 100% financing at an interest rate of 7.5%. The average person stays in a particular home for five years. Assume that the price of the property appreciates at 4% compounded annually, which is double the rate of inflation, so that the property sells in five years for $206,830, at which point he still owes $160,850 on the mortgage - netting the owner $45,980 in cash, minus the 6% real estate commission of $12,400 for a net profit of $33,580. Not including any upkeep and maintenance requirements, what did the owner have to invest in order to net $33,580?

First, he paid about $9,000 in closing costs for the loan. Then he made sixty monthly payments of $1,189, for a total of $71,340. Then, he paid $3,100 a year in property taxes for a total of $15,500. Finally, he paid homeowner's insurance of $710/year for a total of $3,550. The grand total of his investments over five years, from which he has netted $33,580, is $99,390. So, over a five year period, even with the value of his house increasing at a compound rate double the rate of inflation, he has actually lost $65,810.

So, if the owner has lost - who has gained? Mainly the bank. Over the same five year period, the bank has collected about $80,000 including closing costs. The bank's cost for the money from the Federal Reserve was only $8,500, netting the bank a cool $71,500 without ever breaking a sweat. Since the property owner needs to earn about $62,000 yearly in order to afford such a large mortgage, that means that over the prior sixty months, he has worked fifteen months for the bank - or fully 25% of all of his productive effort has gone to producing $71,500 in free and clear profit to the bank and $8,500 to the Federal Reserve. At the end of the five years, he still has no practical ownership since, if he gets injured and misses just a couple of payments, the bank will simply take ownership of the property, sell it themselves for $206,830, and distribute far less than the $33,580 to the erstwhile owner since they get to deduct all of their "reasonable" legal costs. In practice then, after sixty months of hard work - the bank has everything, and the owner has nothing.

This is the "ownership of private property" of which capitalists are so appreciative. In practice, private ownership only serves to force people to invest 25% of their productive effort into the banks, while reserving for the banks all of the real power so that anyone who finds himself injured or out of work for even a relatively short time is quickly reduced to absolute destitution. The only difference between such Capitalism and Bolshevism is that the illusion of private ownership serves to keep the workers more motivated, so they work harder. But they are still slaves in that they have no real claim of ownership to most of the results of their productive labor. In the one case the Politburo members lived large, while in the other case the bankers live large. But in both cases, at the end of the day, the workers on the global ant farm end up with nothing. Capitalism and Bolshevism are both, therefore, alternate means to the same end.

Private ownership of businesses is very little different. Communism is often described as a system in which ownership of the "means of production" is vested in the state as a proxy for the people; which in practical terms means that control of the means of production lies in the hands of a powerful elite. Capitalism is supposed to be different in that ownership, and therefore control, lies in private hands. In practice, though, this is not the case since control lies with government rather than the "owners." In a democracy, elections are controlled through media perception; so whoever controls the media controls elections in the main; and so, in practice, control by government also translates into control by a small elite.

Control of private business becomes vested in the government through the clever mechanism known as "incorporation." Unincorporated businesses vest liability in the individuals within that business, especially the owner. Long ago, lawyerly notions of tort and "joint and several liability" created an environment in which no individual would be able to do business productively since all of his profits - and then some - could be gobbled up by lawyers at the drop of a hat. Thus came the idea of incorporation - in which the state created a corporation - an artificial person - in law which, at least in theory, the owners could control as a proxy while limiting their civil liability. The problem lies in the fact that a corporation is actually a creation of government rather than the creation of an individual, and therefore, once created, has to live under laws of government that would affect corporations but not individuals. Natural persons have rights, however imperfect; but corporations do not. Likewise, the laws for corporations were crafted by the very same lawyers from whom people seeking to gain some protection through incorporating were trying to shield themselves. As such, incorporation is just another scheme for vesting all important control in the hands of an elite, while reserving all the liabilities for the owners.

This has even had an appreciable effect of the separation of church and state, whereby churches which incorporate in order to shield themselves from liability from an attendee slipping and falling on the front steps, have found themselves forced to follow government dictates that would conflict with their religious views. Government laws against discrimination on the basis of religion, for example, force incorporated churches to hire individuals who don't even subscribe to their religion.

So, as a result of government regulatory control of corporations, they serve, in practice, as extensions of government power rather than as the portrayed bastions of private initiative and free choice. Corporations collect federal withholding taxes, enforce affirmative action laws which take away choice in hiring, enforce political correctness with an iron fist against people who express disallowed views even when outside the workplace, and otherwise act as a proxy for government rather than individuals. They serve as a mechanism for applying economic pressure to individuals in order to make them conform to societal standards generated by an elite.

Once a company has become publicly traded, the matter gets even worse in that, through the action of numerous regulations, the original creators of the enterprise can be forced out entirely and replaced with individuals who work better within the corporate framework. This can also be done simply through a cabal purchasing enough corporate stock. In this way, corporations can be perverted from their original goals; as happened when Michael Eisner took over the Disney Corporation and started cranking out pornography and propaganda destructive to Western peoples and values. Controlling a huge media empire, corporations such as Disney can also control the fate of other corporations and even legislators through selective and biased reporting giving them enormous power.

The concept of ownership is tightly linked with the idea of control. If someone owns something, they control it in nearly every respect that doesn't harm others. But in the case of corporations, the idea of ownership has been separated from the idea of control; leaving the least important decisions in the hands of the owners, while all of the important policy decisions are made by government. On top of this, the original shield against liability has long since been compromised, particularly in matters related to political incorrectness and taxation for which individual employees can be held liable, along with the corporation.

All of the foregoing should put the capitalist notion of private ownership of the "means of production" into better perspective. In the case of both Capitalism and Bolshevism an enterprise's most important decisions are controlled by the state, thus vesting effective control, and thus ownership, in the state. In both cases the personnel running the enterprise serve at the pleasure of the state, and can be removed from that control at any time. In both cases, enterprises serve to extend the supervision and power of the state into the lives of the workers. The only practical difference is that in a capitalist system, as long as participants play by the rules, they can derive greater profit without having to hide it from the workers; but in all other respects it serves the same end in both systems, with only a difference in methodology.

Capitalism is likewise advertised as promoting competition and thus lowering prices for consumers. In practice, this is not the case. What actually happens is that large corporations establish a sort of feedback loop with politicians who need money for campaigns. This feedback loop creates an environment in which regulations which prevent competition are passed. These regulations serve to create such insurmountable barriers to entry into the market that only the largest of corporations that have surplus cash for a large contingent of lawyers and regulatory compliance officers can even hope to compete. Thus, capitalism serves to stifle free enterprise and creates artificially restricted economic environments that serve to raise rather than lower prices.

Since the only thing that Capitalism provides over Bolshevism is the ability to openly profit; it stands to reason that the drive of capitalists is purely a profit motive.

While benefitting from one's efforts cannot be said to be inherently evil, and can actually be quite just; corporations are not individuals and the decisions they make are totally devoid of the considerations of an individual; serving only to further profit at any price. In other words, while an individual's ethical system may hold any number of things as a supreme value, a corporation's supreme value has to be profit; because that is its precondition for survival.

Two notable examples of this are the fact that many corporations that notoriously pollute the environment will move manufacturing facilities to countries with fewer environmental regulations rather than invest the money to comply with stricter regulations in their home country. Likewise, corporations have no loyalty to the people of the nation in which they were formed, and seek to reduce the cost of labor through any legal method, which increasingly puts the people in Western nations in direct competition with low wage or even slave labor in the Third World; with devastating long term effects in terms of both national wealth and labor displacements. Corporations even sponsor the importation of alien labor, forcing domestic wages lower, stressing social service systems, and placing the genetic continuity of the domestic population at risk. All for a profit.

These examples, again, show no difference between Capitalism and Bolshevism in that, in the end, both systems have the same effects and therefore only differ in methodology. Legislation in Capitalist systems serves to create de-facto state enterprises in important sectors such as media and electricity, while pollution, wage depression and globalization without regard to cultural preservation or preservation of human bio-diversity work the same in both instances.

How can these systems be so similar in their results?

The first answer lies in their remarkably similar fundamental premises. Fundamentally, both systems see man in a purely economic or materialistic sense, with humans being interchangeable with each other as long as productive work is accomplished in the most profitable fashion for whomever is in charge. The very term "Human Resources" used in so many corporations spells this out pretty clearly. Aesthetic, historic, evolutionary and spiritual aspects of humans aren't considered by either system except insofar as they affect production and the maintenance of control by an elite. (Elite in terms of position, not necessarily merit.)

The second answer lies in the matter of control. All economic systems, no matter whence derived or their ultimate motivation, are run by humans; and will tend to take on the character of the humans running them. The cabal which runs today's capitalist system is a continuation of the same cabal which ran the early USSR. In fact, many of the capitalists exercising ultimate economic control in Russia today and funding section 527 political groups in the United States today were tightly connected with the communist and underground criminal apparatus during communism. The fact that the original funding for the Bolshevik revolution was provided by bankers in the United States should speak volumes about the true nature of what is going on; and the fact that Capitalists and Communists are actually allies rather than foes. When the New York bankers funded the Bolshevik revolution, they were making an investment - but it was not an investment in purely economic terms. Rather, like all banking investments ultimately turn out, it was an investment in the control of human beings.

The complementary nature of the two systems can be further seen in that Americans considered themselves to have been the victors in WWII, in which they aided the Communist USSR in taking control of all of central and eastern Europe, which went on to plunder and murder by the millions. The communists, lest it be forgotten, murdered approximately 65 million people in the USSR and Eastern Europe. Even before WWII, it was widely known that they had murdered 20 million people, yet our capitalists and media establishment readily allied themselves with that murderous regime, referring to Joseph Stalin publicly as "Uncle Joe."

Back during the Carter administration, many people were scratching their heads over the decision of that administration to send grain and food to the USSR. Why send food to your enemies? That sounds crazy! But it is only crazy when it is assumed that communists and capitalists are diametrically opposed. Once it is understood that they are actually two sides of the same coin - the provision of food to the USSR makes sense.

So, both capitalism and communism treat humans who are not part of the controlling elite as resources for production and achievement of the goals of the elite. It simply turns out that capitalism is the more efficient system for that purpose.

Capitalism, like Democracy, is an idea that was foisted upon Western peoples through linguistic subterfuge. The word "Democracy" never appears in the U.S. Constitution, and neither does the term "Capitalist." The United States was designed to be a Republic, in which the responsibility of the government was to secure the blessings of liberty for the posterity of the country's founders. The founding fathers abhored democracy as a horrible system that would allow the best and brightest - who are always fewest in number - to be dominated legally by mob rule. They so abhored the notion of debt that is so integral to modern capitalism that they mandated a gold currency in the constitution, and even wrote bankruptcy as relief from debt and the abolition of debtor's prisons into the constitution as well.

Over time, the elites who now run things have managed, through clever lies a little at a time, to pervert our system of government into a pluralistic democracy, while having people believe that such a concept is "American." These same elites have managed to pervert our economic system of free enterprise into a capitalist system in which the element of freedom is distinctly lacking, while convincing people that capitalism - even when it ships jobs overseas in droves - is "patriotic."

However, as demonstrated above: it is a lie. Free enterprise is not an outgrowth of capitalism. Rather, capitalism squashes free enterprise and subjugates people, just as does communism. Simply looking around with wide open eyes should reveal this to anyone not glued to the television.

As a final example, one should recall that the Bolshevist system labeled people who uttered politically incorrect thoughts as ‘mentally ill,’ and forced them to be treated for that ‘illness’. Under capitalism, when John Rocker gave voice to his candid thoughts regarding the New York City subway system, his corporate employer forced him to undergo ‘therapy’ as a precondition for keeping his job.

The Greek playwright Euripides noted that "A Slave is he who cannot speak his thoughts." John Rocker couldn't speak his thoughts any more than a resident of the USSR.

The portrayal of capitalism as a road to freedom, just as Bolshevism's portrayal as a road to freedom, is a lie. It is just a different road to the same envisioned global slave plantation ruled by an elite. The good news is that lies - all lies - have a limited lifespan before they, and their promulgators, are revealed, rejected and reviled.

The time draws nigh for the revelation of the lies and the unmasking of the liars. The time draws nigh for free enterprise, true ownership of property, and freedom from control by purveyors of philosophical poison. The time draws nigh when, once again, an American can speak his thoughts without fear; which means that the slippery ones will have a great deal to fear, and had best be packing their bags.