Response to theocapitalism, Law #4 - Continued
Repeating from the quote I made in the previous post, McLaren writes:
My friend Rene Padilla offers an interesting analysis of the two systems from a Latin American perspective. Communism, he says, specialized in distribution but failed at production. As a result, it ended up doing a great job of distributing poverty evenly. Capitalism, he says, was excellent at production but weak at distribution. (220)
I actually think Winston Churchill had a better observation:
The inherent vice of Capitalism is the unequal sharing of blessings; the inherent virtue of Socialism is the equal sharing of miseries.
Plotting income and wealth distribution on a graph for ancient societies up to the time of the industrial revolution reveals a very common theme: Widespread subsistence living (poverty) with a handful of very wealthy elites. (See the red line on the graph below.) Social mobility from generation to generation was glacial. Some socialist economies did marginally better at improving the lot of the masses but they all still lived in a narrow range of income and wealth with very little social mobility.
Societies that have adopted capitalist models have experienced distributions the look more like a bell curve, with the high end of the tail much higher than the high end of ancient or socialist societies. (See the blue line in the graph below.) But the stark difference is the high social mobility of people up and down the economic scale.
It is also critical to ask what constitutes a just distribution. Most people would agree that as people have more experience they should earn more. Imagine a society where people in their twenties earn $20,000 a year, people in their thirties $30,000 a year, and so on through the age brackets. If there is roughly the same number of people in each of these age groups, then there is going to be significantly uneven distribution. Is this just?
Now let’s add to the formula differences in innate ability, work ethic, training (a one year program to become a Ford mechanic vs. years of medical school and residency to become a doctor) and demand for particular skill sets. Is justice paying all these folks approximately the same amount? The economy is not a zero-sum game.
Making much money in one occupation is not offset by low pay in another. As long as there is a basic level of support for those at the margins (and that is the critical question) is there injustice? If the economic distribution is a house, with wealth at the ceiling and poverty as the floor, is the height of the ceiling or the distance between floor and the ceiling the paramount issue? Isn’t the real question “How high is the floor?”
The only countries that have accomplished (at least temporarily) a comparatively level distribution of relatively high income are the Scandinavian socialist countries of Sweden, Finland, Norway, Denmark and Iceland (with a combined population of less than 20 million people.) These highly homogenous countries embraced a socialist model at a point in their histories when there were very high rates of literacy and education, and low natural population growth. However, over recent years, per capita GDP has been slowing, the institution of the family has been badly damaged, and excessive dependency has been created. The inability to achieve a birthrate at even the replacement rate places the future of the system in peril. It is questionable whether such a system could be replicated in other countries and it is not even clear that the system is sustainable in Scandinavian countries.
Contrary to McLaren's claim, capitalist systems have been far more equitable (but far from perfect.) in their distribution than other economic models, if by equitable we mean people rewarded relative to their economic contribution Just distribution has not developed Latin America countries, as well as in many other emerging nations, for many of the reasons I presented in my previous post.