The Economy Is Key for More Than Economics – Part I of II

Let’s Do A Bit Of Economics 101

This Is A Two- Part Discussion

Even the basics of what constitutes a “good economy” gets a bit complex and takes more words than are suitable for a format like a blog. So today, Part I, laying out some groundwork and definable terms. Next week, some conclusions on where we might go from here.

Remember Carville’s Famous Phrase? It Is Still True

James Carville was the author of the famous phrase “It’s the economy, stupid” that led to Bill Clinton’s election to the presidency. The phrase is as powerful as ever. An amazing number of people voted for Trump last time because they felt the economy was bad and Trump had the expertise to make it good for them. Never mind that the US economy was the envy of the world under Biden. The fact was that coming out of a deep, deep recession with any speed inevitably means some degree of inflation results. Ours was better than most and began cooling as quick as one could hope, but inflation hurts people directly, so they were angry.

Never mind that Trump had a terrible economic record in every category in his first term. Never mind that he increased the US deficit more than all his successors combined (and is doing even worse this time around). Never mind that he had multiple businesses go bankrupt and he often failed to pay his debts in the private sector. People, amazingly, bought his line that he could do better with the economy. How’s that working out for you, Trump voters?

So, the economy counts – in people’s lives and in politics. There is a lot of yelling going on these days throwing around economic terms. Let’s take just a few moments to nail down what key economic terms actually mean in the real world. As we go through these terms, remember always that economics is also about politics and social progress (or the lack thereof).

 Seems A Good Time to Clarify Terms: Definitions Matter

There are a lot of people around these days who have come to think that Socialism may be “the solution.” There are also a lot of people who think Capitalism is the only logical way to go. No small percentage of both groups have a clue as to what these terms, and others of importance, mean. So before we start talking problems and opportunities, let’s take a moment to define the relevant terms.

• Capitalism– An economic system in which the means of production and distribution are privately or corporately owned, and development occurs through the accumulation and reinvestment of profits gained in a free market. This is based on predominantly private (individual or corporate) investment in and ownership of the means of production, distribution, and exchange of goods and wealth.A socio-economic system based on private property rights, including the private ownership of resources or capital, with economic decisions made largely through the operation of a market. Capitalism generally resists government regulation; more extreme versions see no value in any government regulation, which moves this from just an economic philosophy to one of social and governmental impact. Throughout history, capitalism has been an amazing economic engine. It has also proven to have powerful social consequences, good and bad – more on that shortly.
• Socialism– Any of various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy. A theory or system of social reform which contemplates a complete reconstruction of society, seeking a more just and equitable distribution of property and labor.It has not actually happened anywhere as a complete system. In general, such a system can make room for some private equity/capitalist elements, but may not choose to do so. It is a system too easy to corrupt, as it lacks competition and independent oversight. It is not one that self-corrects with any ease or consistency, a result of over centralized economic and political power. It has pretty well failed as a pure system everywhere it has been tried in its purest forms.

   

• Communism– This is a philosophy based on the control by government of the distribution of wealth and no private ownership of all property. In particular, it calls for the control of the means of production, such as manufacturing and agriculture. Contemporary communism is an offshoot of socialism economically but is more extreme politically. It generally allows no private enterprise capacity as a matter of philosophy – it practice there have been exceptions to this limitation. Rather universally, communism has been an economic and social failure on a spectacular scale.
• Democratic Socialism– Lots of definitions out there, as a philosophy still largely under development. In general terms, democratic socialism is a political ideology that advocates for a largely socially owned economy while maintaining political democracy and allowing continued private property and capitalist entities. It emphasizes economic democracy, workplace democracy, and workers’ self-management, aiming to achieve a more equitable society by reducing rather than eliminating the influence of capitalism. Fair to say it sees capitalism as an economic engine but not acceptable as a governing philosophy.

Next Week

An admittedly short set of conclusions of where we are as a socio-economic community, the rise of the K economy, and what might be a path to choose. See you in a few days.

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