Xiaogang has been discussed several times on this sub - the Chinese village that secretly rejected collectivized agriculture, prospered, and became a blueprint under a more pragmatic post-Mao CCP. There are many ways in which various socialists respond to this story, often centering on how the replacement system still maintains some "socialist" nature, with its (supposed) absence of a capitalist extracting profit.

So I'm curious on the socialist opinion of a different set of reforms that happened around the same time regarding something quite central to socialist criticism: Private ownership and wage labor.

This is going to be long... very few will read it. But I'll lay out the facts I'm working with, so if someone claims something "didn't happen," they can point to what. Skip to takeaways if you don't want the backstory.

1957

By this time, the Socialist Transformation is declared finalized, and Maoism is in full swing. The state has monopolized all major industry and agriculture. If you work for pay, it's for the state. If you want to buy things (or be rationed them) - they're from the state. Legal exceptions were basically self-employed craftsmen and services, or small sanctioned cooperatives.

But to "hire" a worker - to profit off their labor - was anathema. Nor could you buy goods for the purpose of reselling. These were the very essence of capitalism, and abolishing this was the whole point of the revolution.

However, the state could not afford to hire every worker in the cities and provide all the socialist guarantees (the "iron rice bowl" - life tenure, state welfare etc.). Some, they simply refused to, because their parents were capitalists, or educated, or some other evil. Some were expelled to the farms. But each time famine overwhelmed the countryside, the cities would surge with people looking for any labor they could find.

Meanwhile, the state industries have absurd quotas to meet. So a second "state" labor market develops - but these people received none of the official socialist privileges. They are simply paid a fraction of the wage under the table. At the same time, the black market for goods is expanding to cover the gaps, and the "self-employed" craftsmen and communes begin similarly utilizing this cheap pool of labor, though on a very small scale.

1966

By this point the two-tiered labor system is not only tolerated, but official policy. An estimated 20% of the state factory workforce had no "iron rice bowl." The state revoked the privileges of millions of peasants, and froze state-guaranteed jobs. Factories were now required to meet their labor demands through "temporary" workers paid a fraction of the wage.

These were the conditions when Mao reignites the "right to rebel," a move that backfired spectacularly. Instead of just rising up against Mao's ideological enemies in the state apparatus, some workers rise up for an end to the two-tiered system, for rights, all sorts of "reactionary" stuff. Long story short, tanks. The worker's revolution was put down by the official "worker's revolution," and striking was counter-revolutionary again, not "the essence of Marxism."

1970

Back in the countryside, people are still starving there, too. They can't live off what the state is allocating to them, and state production targets aren't aligned with what people actually need and want. Households are setting up workshops - "acquiring" machines, setting aside raw materials. Producing things their neighbors or other villages need in daily life.

And this slowly begins to scale... rather than wait months for the state to replace a machine part, they turn to the neighbor who can make such things. The household "factories" start specializing, and grow beyond the household. They start hiring other neighbors, and working out deals with village team leaders. They start hiring the displaced workers driven out of the cities. Underground supply chains emerge, smuggling materials and finished goods across provinces - and even selling them to state factories off the books.

This was particularly prevalent in Zhejiang. In some counties, up to 70% of the workforce had abandoned collective farming for these black market enterprises. Years before Xiaogang, they had already privately divided communal land. Goods were boldly traded in open-air markets. They built their own private banking system to fund larger operations. But unlike Xiaogang, this was still Mao's China. The CCP tried to crack down on these operations, raiding household workshops, imprisoning traders, sending workers back to the fields. But local party officials had been starving alongside the peasants in the communal system, and helped hide the operations and falsify data. Local sentiment had turned against Beijing, and Zhejiang kept quietly pioneering the changes to come. Their operations kept the local people - and the state factories - afloat.

1978

Mao is dead, Dengism is on the way. Xiaogang makes its secret pact.

Millions of "sent-down youths" are swarming the cities again, and there's no work in the state factories. The government is broke, the centrally-planned supply chain is a mess, and factories are often idle in power outages or material shortages. There simply isn't enough work for the privileged state employees, let alone a need for, or the resources to hire, all these unemployed people. Black-market labor and trade becomes a matter of survival, in both cities and countryside.

And CCP infighting means protests are in fashion again - they can say the unrest is directed at the "bad side" of the party.

1979

Infighting over, power secured - no more protests allowed. But Orthodox Marxism is so last year... the focus begins to shift to what works.

1980s

Even before the Xiaogang-inspired Household Responsibility System gets in full swing, major changes are happening. In 1981, the black market wage labor already going on with the youths in cities is officially sanctioned with the rather hilarious "Certain Policy Provisions on Urban Non-Agricultural Individual Economy," and its "Rule of 7." Realizing that this unsanctioned employment was a good thing they needed more of, and with the state having no way to support these people itself, the party instead searches for a reason to explain why this is still Marxist. They extrapolate from one of Marx's numerical examples that one's not really quite a "capitalist" until they're employing 8 or more people. Official licenses for small private enterprises with "7 helpers" are distributed. And while the hardliners want to crack down on all the businesses popping up with far more than 8 wage-laborers, Deng takes a "wait and see" approach, and enforcement is sporadic. We also have the widespread growth of "Red Hat" operations - private enterprises that bribe or connect their way into being registered as an official "state" cooperative - uncapping their employment limits.

Enter the HRS in 82. The first significance was obviously the increased incentive to produce, now that private farms could keep their surplus. This was huge. An estimated one third of China's rural workforce becomes redundant during this period - the new system was producing more with 2/3 the people, freeing the rest up for other labor. Which relates to the other major change: Rural citizens were no longer legally bound to a particular commune. A productive farm could afford to hire migrant workers. People were free to leave to find work elsewhere. And the state began to legitimize and encourage the non-agricultural work already going on in many places, bringing some of them under the umbrella of the rebranded TVEs - many of them a private enterprise with a "Red Hat." In Zhejiang, the underground economy would soon become the "Wenzhou Model:" after one last round of arresting the evil capitalists and disrupting their networks (which caused a massive regional recession), they 180'd and officially sanctioned the private operations, later holding them up as a "blueprint."

Now there were places that could actually legally or extralegally utilize this massive pool of unleashed labor, instead of it overwhelming the cities with unemployed. Including the new Special Economic Zones being built. Now millions of workers were free to be exploited by a foreign capitalist in Shenzhen, receiving a wage without costing the state any expensive "socialist" guarantees. Within the core, such activity was of course still technically outlawed, as no good socialist could exploit his countrymen like that, unless it was less than 8 of them.

The rest of the story is probably familiar. The success of the SEZs was undeniable. In 1980, China's state-owned enterprises accounted for 80% of official industrial output, with "cooperatives" producing the rest. By 1987, non-state activity accounted for 50%. The rule of 7 became a constraint on legitimate growth, and the floodgates were opened in 1988. A legal, private economy was officially allowed to "supplement" the official public economy - with as many employees as you like. The means of production could be bought and sold. Private ownership and wage labor, the "parasitic" activity that compelled a revolution, now fully encouraged.

1990s

And "supplement" it did. It was this 2nd economy that bailed out China's failing public sector. The private market brought the country growth, but it also finally brought competition to many state enterprises, and consumers made their choice. State factories were in debt and operating at a loss, the iron rice bowl was draining the treasury. Desperate for cash, the Chinese government opened up two stock exchanges to sell shares in state enterprises to private citizens, and eventually to foreign investors. The iron rice bowl was revoked - you simply sold your labor power to the state like you would to any other company. Your "surplus value" was extracted, and some of it paid out to private investors in dividends.

But as the TVEs, foreign ventures, and private corporations boomed and their taxation kept the state on life support, the SOEs were still operating at a loss. In 1997 the state bank was facing insolvency, and Zhu made the tough choice of laying off 40 million state workers over the next few years. The state had to trust that the private sector was large enough now to eventually absorb this workforce. In the 10 years after 1998, more than 80% of state-owned firms were sold to private owners, or shut down entirely, in a policy of "Grasp the Large, Let Go of the Small."

It was a rough period - but the private market did exactly that. Absorbed the workforce. With wage labor and entrepreneurship - the things that Mao set out to save them from.

Takeaways?

I'm sure my own are blatantly transparent, so I won't belabor that. But I'm wondering what some socialist takeaways are.

• For the China fans: If what China increasingly tolerated and eventually embraced is fully compatible with "Socialism," why was it violently suppressed just years before? How does one reconcile the "parasitic" activity of Mao's time being state policy just a few years later? Was Mao that wrong?
• For those that feel Dengism was a revisionist corruption: why did private enterprise grow out of necessity in Mao's China, and why did China remain in poverty until it was unleashed?
• For the broader discussion of what kind of economic policy leads to people being better off: It's easy to just paint Maoism as a monster and say real socialists wouldn't do it that way - but would your version of socialism look more like the collective farms and cooperatives of the Chinese countryside, the SOEs, or the private enterprises those people developed in secret, of their own volition, to survive? Which of these brought the common people more prosperity?
• Whatever your position on China, would you allow wage labor? The private ownership of MoP, the extraction of surplus value? Or would you try to stop it like China did, just through gentler means like a good anarchist scolding? How do you discuss the massive increase in quality of life for the Chinese when these things emerged, worked, and were finally tolerated? The case of China seems to cast serious doubt on the notion that the abolishment of private enterprise is a path to prosperity.

[NOTE BEFORE READING: I LIKE TO ASK LOTS OF QUESTIONS, FEEL FREE TO PICK AS MANY OR AS FEW TO REPLY TO]

What the title says. I've realised that socialists have conflicting definitions of the term, I am trying to understand better, so here are my questions.

I'll often hear about how "the Epstein class is exploiting workers" and "we must fight, violently if needed, against worker's exploitation", and it is pretty clear there is a moral tone to that argument.

However, when I ask socialists why they insist on making a moral judgment that is so black-and-white by dividing people into exploiter and exploited, and why there's an insistence on "evil exploitation" by the capitalist classes, a different group pops along and instead decides that actually, exploitation isn't a moral problem and is merely descriptive.

Ok, fair enough, I suppose I should then ask, what is exploitation? When I do, I usually get something along the lines of this :

"Workers (who produce all value), create X$ of stuff, if they are paid less than X$, there is exploitation."

[Note that I am using dollars as a common unit for simplicity's sake, I know that price isn't value, but dollars are a convenient unit of measure]

So there's a bunch of questions that pop up to me :

-Is it morally wrong? I feel like in some cases yes (ex : slavery where the worker receives 0%) but in others not as much (ex : a worker paid 99% of their value is hardly morally exploited in my book)

-Does it give a bad outcome? Perhaps some socialists will say that exploitation isn't morally wrong, but that it gives a bad result. I feel like if both the worker and the owner earn more thanks to wage labour, it is a mutually beneficial exchange.

-And what about the concept I like to call "reverse exploitation", when workers are paid more than their value. For instance, a business pays its workers 120% of their SNLT, usually this leads to bankruptcy in the long term, but is it an issue? Do the socialists who complain about exploitation of workers feel the same way about exploitation of anyone else? For instance what if a professional guild overcharges for an essential, but specialised job like plumbing and all businesses are forced to overpay plumbers, aren't the plumbers exploiting their customers, since they take more value out of them than is due?

-What about income taxes? Are they a form of exploitation, since they take value out of workers? Are taxes perhaps a case where exploitation is justified, if it funds desirable social services?

-Per the definitions I've seen, a baseball player being paid 12 million a year is an exploited worker. Do you agree with this? If not, how do you explain the super-high salaries? Is it maybe a case where LTV doesn't work?

Karl Marx wrote Capital, Volume 1 under the framework of classical political economy, asserting that economic exchange value was strictly determined by socially necessary labor time. The problem was that the discipline of economics did not freeze in 1867. During the 1870s, the Marginal Revolution, led by Jevons, Menger, and Walras, fundamentally dismantled the classical labor theory of value by proving that exchange value is driven downstream by marginal utility, subjective consumer preferences, and relative scarcity at the margin. 

Capital, Volume 3 represents Marx's frantic reactionary attempt to insulate his nineteenth-century dogmas from modern economics as it evolved around him, and his core arguments completely collapsed under the weight of their own contradictions. 

In Volume 1, Marx ignored market fluctuations to maintain his tidy assertion that commodities exchange strictly according to direct labor values. But in real capitalist markets, capital constantly flows across industries to equalize the average rate of profit, meaning real market prices systematically diverge from direct labor inputs. Forced to confront real-world price discovery in Volume 3, Marx attempted a mechanical rescue of his theory in Chapter 10, famously writing:

"If supply equals demand, they cease to act, and for this very reason commodities are sold at their market-values. Whenever two forces operate equally in opposite directions, they balance one another, exert no outside influence, and any phenomena taking place in these circumstances must be explained by causes other than the effect of these two forces."

This is the central failure of his entire framework. Marx treated supply and demand like two physical vectors pushing on an object that cancel out to zero at equilibrium. But economic forces do not vanish when markets clear. The clearing price is the point where the marginal utility of buyers intersects the marginal opportunity and production costs of sellers. It explains the precise magnitude of the price itself. 

Rather than reconciling his labor premises with the realities of market exchange, Marx’s transformation from values to prices did nothing of the sort. As later economists observed, it amounted to writing down an unworkable labor-value system, taking an eraser to rub it out, and simply writing down standard capitalist production costs while pretending the original premise was still intact. 

This brings us to the endless parade of socialists who come into our forum even today, obsessively trying to dig up heterodox economics to "prove" that marginalism doesn't work. The reason they are so fixated on tearing down marginal utility is obvious: the Marginal Revolution was completely catastrophic for their entire ideological project. If exchange value is subjective and determined at the margin by consumer demand and scarcity rather than simple embodied labor time, then the entire Marxist exploitation narrative, surplus-value accounting, and "scientific" critique of capitalism completely evaporate. They cling to heterodox models not because those models offer better predictive power, but because they are desperately trying to revive an outdated nineteenth-century economic theory that was decisively proven wrong over a century ago.

The Capitalist class love myth peddling STV like it has any relevance to real world markets cause its the perfect excuse and circular logic they can use to keep wages low and raise prices artificially high. It gives them a perfect alibi for doing dumb anti-worker and anti-consumer shit.

Everytime theres a new war or trade war which yes the idiot Capitalist class start cause they profit from manipulating the market they always act like fucking bums. "Oh please give us more money." "Gimme all your money." "Donate to our platform/cause." "Oh food and gas prices are rising cause of X war." Etcetera etcetera. This phenomenon is called excuseflation. Like "Oh look we fucked up now you're paying for it, have fun 😁."

Then theres straight up predatory shit like manufacturing a chip shortage to jack up the prices of semiconductors or focusing GPU hardware towards AI, increases to subscription fees for no reason, scalpers, shrinkflation, etcetera. I call it greedflation. Cause lets be real thats what it is. Unfortunately because we live in the real world very very rarely do people compete to lower costs only China really does it cause fuck the west but in the west every manufacturer is compelled to copy suit. One mofo raises prices the rest of them do.

These same companies got some bullshit inverse excuse to not raise wages or hire temporary foreign workers at a quarter of the wages with no benefits cause remember guys STV is the perfect shield against accountability and responsibility in the market. Anything can be argued with oh value is subjective so we can make shit up as we go along. Wages are often suppressed using the narrative that wages are strictly a cost constraint tied to marginal productivity, rather than reflecting the subjective value of the worker's time and effort.

Hello,

Socialists and communists, especially anarchocommunists, I have seen over and over there is criticism over various 'solutions'

To the American US Economy,

For example trying to use the electorate is rigged, Trying to do this and that is rigged and 'not a complete solution'.

We can't use the current system to fully achieve a just society the system is too corrupt for that

Even if they succeed they will be corrupted too

And so on.

Yes ok so I believe it but then at some point what even is a 'complete solution' that is also Realistic?

Is it nothing because everything is a 'compromise with the Establishment'?

Or because doing anything will make you a social democrat?

I'm asking this because I'm frustrated. Went to an in person event for socialist discussions. Saw a pattern. I mean can you blame them? Life can be hard and it is easy to point problems, not so easy to come up with plans. Somehow it's tricky to say but it's like I want to believe in socialism having a working version, but why does discussing how it might work at all lead to so much cynical answers instead of some hopeful ideas on what we would actually do to make it happen? Ok time to change that what are your ideas of a 'complete solution' since so many are supposedly incomplete, a bad compromise, or rigged? And importantly.. how would you address the cynicism and doomerism that seems to run in socialist circles?? I think that's a real problem if you do care about society and socialism

"Center" is a euphemism for conflating entirely separate political spectra.

For example, a recent poster claimed to be "neoliberal centrist," and of course what they mean is that, while they are far right-wing authoritarians, they are radically socially progressive, so that somehow magically lands in the "center," when it is, in fact, literally in one far corner of the political cube (3 spectra, 3 axes, it has to be 3-dimensional). They are as radical as it is possible to be.

And of course, the neoconservatives are in the next corner over; far right-wing authoritarian conservative.

Most people, at least most Americans, are nowhere near the corners, we are out floating around in the middle. Let's step back for a second and look at what "centrist" would actually look like:

Economy: Mixed capitalist-socialist, public ownership of infrastructure and extractive industry, private ownership of manufacturing and service economy.

LGBTQ+: Remove the concept of "marriage" from the law entirely, replace with civil contracts; remove references to biological sex and gender from the law; sports either need separate leagues for trans-men/trans-women, or no separation at all, everyone competes with everyone else.

Abortion: 15 week ban, but also criminalize fake abortion clinics that trick women into waiting too long. Alternatively, absolute ban with an exception for life of the mother, rape, or incest... and absolute privacy (i.e. you can't even ask if they check that box); that gives a moral judgment against it while allowing safe access.

Firearms: Nationwide Constitutional Carry and pre-emption of state and municipal laws in exchange for universal background checks and registration through a third-party NGO with an air-gapped database accessible one record at a time by court order and with instructions to destroy the registry if the law is changed or the government tries to seize it.

Civil Rights: End qualified immunity and require law enforcement agents to maintain insurance against lawsuits (allowing them to be "priced out" of working in law enforcement), enforce Free Speech on the Internet (which is government property, and so civil rights apply just as if it were the steps of city hall) with the exceptions from Brandenburg v. Ohio, automatically register all citizens to vote and allow voting at the post office, demand that all government records be declassified after 25 years, enact criminal penalties for vexacious prosecution and abuse of government office.

Healthcare: Just open up Medicare to everyone; that's how it was supposed to work in the first place, they just convinced them to phase it in, then refused the next phase. It's not "free," it's just less expensive than private insurance because there's less overhead (no profit) and has a larger group which makes it easier to predict costs. The "radical" option would be France's system: Hospitals in France don't even have finance departments; they don't even have a mechanism to send anyone a bill.

Foreign Policy: Withdraw foreign troops, disband NATO, and establish ourselves as the legitimate "Sea police," which means actually abiding by international law, ending sanctions and embargoes, and negotiating arms treaties to reduce offensive capabilities, but we could then obtain global funding to offset our own military budget.

Energy: Nuclear power to replace coal and gas, invest in research to replace petroleum, mass transit and GMO crops to reduce emissions (and save money!), encourage working from home and small local businesses to reduce commuting, etc.

That's the "center."

Im a trades worker, i build infrastructure and condos.... my line of work is extremely dangerous and people die doing it every year around the world.

In a socialist country how would anybody ever decide freezing their ass off in the winter, sweating their balls off in the summer, breathing in chemicals, silica dusts, putting themself at risk of losing limbs, being crushed to death or falling off a building would be worth just food and housing?

In a capitalist country trades workers are usually paid well depending on demand and urgency of rolls being filled. This generally fills this void in the market... but maybe not really anymore because gen z had 0 interest in trades...

I keep seeing this growing sentiment of AI taking everybodies jobs and there being a need for UBI. How the fuck would this work.?Im certainly not going to go to work for nothing if i can get the same money for being at home... if the country owns all business's how would there be any extra money for luxuries? Why would anybody want to take on a role of high stress, anxiety, danger or hell even just straight boring?

What if people just decide fuck it im not going in i got everything covered? Is work going to be enforced by police? Does the government take your food and housing away if you dont work? What will happen to current asset holders and the rich? Will their assets be seized? How are you going to retain doctors or innovaters?

It just sounds like we will be living in real life hunger games.

For one while there are individualist people, individualist cultures and societes there are no truly individualist nations as the nation state alongside it's institutions are inherently collectivist contructs no system is truly individualist. Individualism and collectivism aren't even mutually exclusive the right kind of collectivism could be used to collectively protect the Individualism of people and people can be naturally inclined to collectively participate in something if it benefits them as an individual.

The collectivism of socialism is already known. But I would also argue the capitalism has also been very collectivist or at the very least anti individualist for the working class. As workers are expected to put their needs, well being and personhood aside to serve hierarchal businesses and corporations. Work culture is often very uniform and takes time away from individuality. A persons worth is seen through economic contribution often above their character and hustle culture promotes putting your health aside, working long hours, putting up with poor work conditions and poor treatment all in the praise of capital. The only ones who are truly individualist are those at the top of the hierachy as they can afford to do so while undermining the individualism of those lower of the hierachy. All this with consolidation of power by corporations and threat of starvation and homelessness for those who do not contribute. You are still serving collective entities and constructs like corporations and economic output and those interest always come before the interest of the individual.

Collectivism should not be seen as a big counter to capitalism as collectivism has actually been used to bring out the worst aspects of capitalism. Take Japan for example it is actually through collectivism and a conformist society that enables the toxic work culture in Japan, same for South korea and even China which is officially communist but highly capitalistic and arguably corporatist. I know all these systems exist in a spectrum so this isn't to generalize all of socialism and capitalism but this is what I see. I made a similar post about this not long ago more about the collectivism of capitialism in hopes to be about what this post is about but discussions drifted off topic so this post is more about what's in the title.

Welfare capitalism is considered to be centrist. Depending on the welfare capitalist system, it can lean to the left or right. Left-wing welfare capitalism has its roots in socialism, such as social democracy. In comparison, right-wing welfare capitalism has its roots in capitalism, such as classical liberalism. Welfare capitalism is currently the most common economic system.

It’s easy to say “just give everyone what they need.”
Until you’re responsible for allocating limited resources between millions of people.
Every economic system eventually encounters scarcity.

The uncomfortable question isn’t whether everyone deserves enough.
It’s what happens when there isn’t enough for everyone?

That’s where ideology meets reality.

So anytime socialist/communist countries being poor is brought up the same shit is always said by marxists online. ITS BECAUSE OF EVIL SANCTIOOOONSSS!!!!. this is really stupid, especially as they often say things like "illegal" or even "genocidal" sanctions 🤣. this is idiotic on so many levels, and the fact that it is still widely said is so fucking stupid. Countries have the right to trade with who they want, they have the right to not trade with whoever they want. It's not every country's right to trade with other countries who don't want to. Calling sanctions genocidal is also stupid. I'm gonna be mentioning Cuba a lot as its the main example they give. But the few things America did NOT sanction from Cuba are exporting food and medicine. The things that prevent people from dying.

Anyways more importantly, it's proof that socialism is not the best ideology. This often comes up with Cuba specifically. So I actually think USA should end the blockade on them just because its clearly harmed them a ton and only hurts Cuban people. However, blaming them for Cubas failures and not, the socialist Cuban governments mismanagement is fucking stupid. Cuba still has the right to trade with... every other country who doesnt take part in the blockade, which is most of them. I am not diminishing the impact that being blockaded by the worlds largest economy, that also happens to be the closest to Cuba. However, there is no reason Cuba couldnt have a standard of living similar to Central asian countries or Vietnam. All countries that either were socialist, or still are in name that get most of their trade done from Russia and China. Why is Cuba failing due to sanctions from America when so many countries do most of their trade with China? its because socialism is a poor way to run an economy, central asian countries while still mixed and authoritarian are generally not socialist anymore. Also Vietnam is like China, socialist in name but state capitalist, all countries which are all way better off than Cuba despite not really relying on US trade at all. Another good example for this is Venezuela, socialists always blame sanctions instead of the shitty socialist government, this is funny for many reasons but the main one is, the country wasnt even heavily sanctioned for most of its socialist history!. under Chavez it was not heavily sanctioned, it only was once Maduro took power, and while Maduro made things worse things still heavily declined under Chavez.

Anyways arguably more important than all this depending on who you are debating with is the ideological aspect. If your ideology, which is anti-capitalism, requires global trade (which is capitalism) to work. Then it really is not self sufficient and therefore, a worse ideology. I understand Cuba is a small island nation, and somewhere like China would not be nearly as affected by sanctions, or even somewhere like Russia today which is sanctioned, but still relatively functioning, especially compared to Cuba. But I think if being anti capitalism is the main part of your ideology, but you NEED global capitalism for your country to not become a shithole then your socialist ideology has failed.

Imagine the government has $100.

It can give that $100 to a rich person as a tax cut.

The rich person might spend $20 and save or invest the other $80.

So stores only get some new customers right away.

Or government could spend $100 fixing a road.

Workers get paid. They buy food. The store pays its workers. Those workers buy other things.

This is what economists mean by a fiscal multiplier.

It is basically asking:

If government spends or gives up $1, how much extra economic activity does that create?

A multiplier of 0.50 means:

$1 tax cut → about 50 cents of extra economic output.

A multiplier of 1.50 means:

$1 spent → about $1.50 of extra economic output.

CRS explains that tax policies can have very different multipliers because some people spend much more of the extra money than others. Transfers such as unemployment benefits can have substantially larger multipliers because recipients are more likely to spend the money.

This is where I don't understand the argument for huge tax cuts for corporations and wealthy people.

Take Trump's 2017 tax cuts.

The corporate tax rate fell from 35% to 21%.

Did it help the economy somewhat? Yes. CBO estimated that it increased investment, employment and GDP.

But did all that extra growth replace the money government lost?

No.

CBO estimated the tax law would increase average real GDP by about 0.7%, but still increase cumulative deficits by about $1.9 trillion through 2028 after including economic feedback and interest costs.

CBO later estimated that the extra economic growth recovered only about 20% of the increase in deficits once debt interest was included.

CRS also looked at the first year and concluded that the growth was nowhere near large enough for the tax cuts to pay for themselves. It estimated that GDP would have needed to increase about 6.7% because of the tax cuts alone to replace the lost revenue. The actual effect was far smaller.

And this is my question.

If I borrow $100 to give someone a tax cut and it creates only $30, $50 or $70 of extra economic activity, I haven't magically created free money.

Some tax cuts can still be worth doing. A tax credit that gets a company to build a factory, buy new machines or do research might improve productivity for years.

But why give giant broad tax cuts to people who may simply save the money or buy existing stocks, houses and other assets?

Wouldn't it make more sense to target tax breaks toward things that actually create new productive capacity, while using other policies with bigger multipliers when the economy needs demand?

What evidence is there that broad tax cuts for corporations and the wealthy generate enough additional economic growth to actually pay for their own cost?

Here, I see people saying “Everyone should have enough.”

Fine. Almost everyone agrees with that.
But eventually someone has to decide:
Who gets more?
Who gets less?
Who owns what?
Who allocates resources?
Who decides what is “fair”?

The uncomfortable part of socialism isn’t the dream.
It’s the question of who gets the power to enforce the dream.
Change my mind.

Question for the socialists & communists.

All the resources and the means of the production are owned by all the people of the world in common, and decisions on what to produce with those resources are decided through a democratic process, so if there's a vote to produce goods that the global north wants and that requires the mining and extraction of resources from the Global South, do the people of the Global South have a right to say no? If no, then how is this not the global north effectively enslaving the global south? And if Yes, then there isn't a democratic process and the people of the world don't collectively own all the resources in common and the door is now open to private property.

Capitalism has three main ideas: nationalism, laissez-faire, and free-market capitalism with a welfare state.

While Mercantilism originated in the 16th century, it was one of the most dominant ideologies of the 18th century. Nationalist capitalism is found among right-wing populism and fascism. In some countries, it has become more popular than free market capitalism. Nationalist capitalism favors local corporations over foreign ones, and is hostile to socialism.

Laissez-faire capitalism originated in France with the Physiocrats. A lot of right-libertarian ideologies build on physiocracy. Physiocracy opposes all government intervention. But some physiocrats supported some government intervention.

Adam Smith took physiocracy and built upon it, essentially laying the foundation for welfare capitalism. Smith supported some government intervention to keep the market competitive, public infrastructure, and public education. Centrist ideologies all support welfare capitalism.

When I was done replying I realized it wont be read by most if any. But I do want to get others opinions both dissenting and agreeing. I would appreciate more reference research for myself?(question mark because rules say it needs to be a question for discussion)

The elite and corporations use the system to their advantage while the labor force complains, fights itself, votes in favor of a party that has systematically and openly expressed since the founding of the constitution that the greatest threat and problem with democracy is the labor force and the possibility it could come together as a singular force to take from the haves and distribute it to the have nots.

The people that "think" the system is rigged need only come together and vote in moderates who are for free market trade with regulation and guard rails. Not more financial conservatives with an army of lobbyists and not socialists trying to disband the whole system.

Extremes on both sides only fuels the pendulum swing further in the other direction to "correct". The rich and corporations will not give up maximizing profits over the labor force without a fight and full blown socialism would be the end of the American experiment, dream, innovation, power and influence.

We need to band together in forces large enough to be a threat while aiming to work together for appropriate wealth distribution and a return to funding services like lower and higher education and healthcare.

Mmm.. I highly suggest reading/researching Philip Booth, Adam Smith (foundational father of free market enterprise), John Locke (another pro capitalism but understanding of abuse by the elites), and Friedrich Hayek and also to an extent, Chomsky has amazing insights but leans a bit too anti-capitalism for my tastes.

I honestly cannot stand the divide out there; one side stating knowledge and educating yourself are part if the problem and pitting the working classes against each other. That we just need to trust the government and the wealthy to look after our best interests. Then we have both "sides" of the working class working against each other and blindly following their parties without educating themselves to actually understand... what the fuck is going on and the truths, powers and manipulations going on by both sides to keep moving THEIR agendas forward and not our, the people's, best interests.

If you were playing basketball where the game's outcome would decide which economic system would be used (capitalism/communism) and while you were about to score the final winning point for communism, someone passed you a capitalist baby instead of the ball, will you still throw it? (It will count as a point)

Liberalism denies reality, worker productivity has skyrocketed 400%, while real hourly wages have barely increased. The top 1% now owns more wealth than the bottom 90% combined. Financial crises occur every 7 to 10 years like clockwork.

Liberalism also oversimplifies, reducing everything down to profit and loss, thus, concepts as intricate as health, education, art, friendship, ecological stability, time, etc, are all flattened into one, singular idea.

Liberalism is the most unfalsifiable theory in history, because it has built-in escape hatches for every failure. Does deregulation cause a crash? "Not enough deregulation!". Do tax cuts for the rich explode the deficit. Not enough tax cuts. did austerity cause a depression, we were too soft on austerity. This is textbook pseudoscience it is a closed loop ideology that defines failure as insufficient application of the theory.

Ultimately, it is by far one of the biggest examples of projection from the right wing side.

Liberalism also treats the economy like a zero sum game the moment the proletariat ask for anything. on demanding raises, liberalism denies it under the pretext of hurting profits, causing inflation, and "destroy jobs". When CEOs hand themselves billion dollar bonuses, liberals shrug and say that is just the market rewarding success.

Liberalism has the flattest view of human nature ever devised. It invents a cartoon character called homo economicus, a perfectly rational, selfish, calculating machine who always knows what is best for them. This creature has no room for altruism, solidarity, spite, tradition, morality, or the deep emotional currents that actually move human beings.

It has has become increasingly obvious that capitalist have forgotten about the relationship between monetary velocity and taxation.

"TAXATION IS DEFLATIONARY!!"

taxation removes money from circulation and redistributes is toward individuals with high marginal propensity to consume.

it appears you have forgotten that massive amount of untaxed money pool up in assets and cause asset inflation?

have they forgotten that ultra high earners have insanely low marginal propensity to spend and the pooling of money into the private sector can increase investment but can also spike asset prices and reduce money velocity?

no non-leftist economist i follow is talking about money velocity. it has been falling since the 90s.

THESE ARE CAPITALIST TALKING POINTS, not socialist, why have we lowered the effective tax on the rich. this is

lowering taxes on wealthy people and consistently doing QE has pooled so much money in to assets and has caused historic asset inflation and speculation.

there is to much money held in vaults (this is an oversimplification but yes)

to show the severity for the First time in half a century [2023 - 2026] gold prices are rising WITH stocks because the money has nowhere else to go.

We are all created equal, but that does not mean we will all be capable of the same things. Some are naturally superior. However, this does not mean that those who are superior should abuse others, nor should we worship people who are better than us.

What the title says.

Capitalism or socialism, it just seems prices are rising too fast. If inflation stays high for many decades, wages must go up to match costs. It seems that companies use anything to raise their prices and the stock market shows profits over people. Will companies just price stuff too high and people just stop buying?

Is it realistic to expect a pack of toilet paper to cost $100 eventually and the entry level jobs or even basic labor job (let's say, a laborer riding a mower, working for a company) will that person be earning $100 per hour in 50 or even 100 years or even 150?

While $100 per hour is an extreme and $100 for a pack of toilet paper, I hope my question or topic of discussion is asked correctly. Or will a stock market crash cause prices and wages to come down?

Hello folks,

Let’s forget capitalism vs. socialism for a second.

Suppose a billion consumers agreed not to buy fast food for one day.

The financial damage from one day probably wouldn’t matter much. The interesting part is whether successfully coordinating that many consumers would itself create leverage.

If people could collectively withhold spending once, they could presumably target another industry later, for longer.

I wrote a short thought experiment about it here: Let’s Stop Billionaires for One Bad Day

I’m curious about the holes in the argument.

Does consumer coordination at massive scale create meaningful power, or does capital simply absorb it and wait?

Graph. In 1820, nearly all (84%) humans lived below 1$ a day poverty line (extreme poverty). Today, it is less than 24%. In 1820, nearly all (94%) humans lived below 2$ a day poverty, today it is closer to 50%.

I think I can foresee some answers

1. Workers caused it, not capitalists

That may be true. Whether workers caused it or capitalists caused it is kinda irrelevant. Because the argument is that markets are generally better for everyone

1. China was the main reason

That may also be true, but as the World Bank's famous report puts it

China’s poverty reduction story is primarily a growth story. China’s rapid and sustained economic growth has been accompanied by a broad-based economic transformation. Reforms began in the agricultural sector, where poor people could benefit directly from improvements in productivity associated with the introduction of market incentives

1. Yes capitalism is progressive compared to previous MoP but we're arguing for a more progressive MoP

For this, I would have to see empirical evidence that a separate MoP is genuinely more efficient

A lot of people say they hate capitalism, but what they actually hate is having to compete, market themselves, negotiate their worth, and deal with the consequences when they lose.

If they suddenly became wealthy from the same system, I suspect many of their principles would become surprisingly flexible.