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Liberalism, Socialism, Feudalism - II

Socialism Exploits Liberalism’s Flaws

Plinio Corrêa de Oliveira

Another failure of the liberal democracy - with its liberty to do everything that is not directly a crime - lies in the economic realm. The law of competition in the free market, which is one of the basic tenets of Liberalism, has its defects.

Consider, for example, just one branch of industry, that of publishing houses. Suppose that in one city there are five publishing house. To attract clients to their business, the various companies enter into competition. The two basic ways to win new clients are to lower prices and to raise the quality of services offered. Now, the battle to reduce prices is quite advantageous for the clients, but not for the owners of the publishing houses. Lowering prices indefinitely cause some of them to fall into bankruptcy.

To avert this danger, the owners of any particular branch of business have the tendency - common in all of industry and commerce - to make agreements to protect themselves from this uncontrolled competition. They generally take one of these courses of action:
Walmart's low prices outcompete small stores

Giant chains lower their prices to force smaller stores out of business
  • The owners create a monopoly that controls the prices, preventing them from dropping so low that they lose money or break;

  • Larger enterprises purchase the smaller ones, which, because they are smaller and have less overhead, can offer lower prices to the public;

  • The wealthiest owner artificially lowers the prices of his products to cause his competitors to fall into bankruptcy. Since he is already rich, he can make his prices so low – temporarily losing money – that none of the others can stay in business. After they fail, he purchases the remnants of those companies for almost nothing. When the process ends, he controls the price market.
Even though some of these solutions are against Catholic Morals, they cannot – in their essence, as their first cause – be blamed simply on the greed of capitalists, as the socialists and the progressivists so often do. Rather, the cause is essentially a flaw inherent to the free market system, which obliges the owners to take one of these options. Excessive liberty in establishing prices and competing with others necessarily leads to these abuses.

Thus, you see that the system of complete liberty in the economic realm is not the perfect solution for society.

Socialism benefits from Liberalism

As a byproduct of the mentioned battles to control prices and break other businesses, salaries go down and workers are dismissed. The socialists take advantage of these social problems to promote class struggle, agitation, strikes and street demonstrations. They use these problems to impose equality.

A Wisconsin anti-capitalist demonstration

Communists ridicule the flaws of economic liberty to instigate class struggle - Street demonstrations in Wisconsin 2010

A communist manifestation in Wisconsin
What is the strategy of Socialism to impose equality?

The two initial concerns of Socialism are these:

1. Among the workers, its goal is to diminish any distinction between those who work with their hands and those who work with their heads in higher positions in the company. Let us consider an automotive plant, where there is a labor force that works principally with their hands on the assembly lines, and others who are the designers, managers and administrators of the company. These are two different levels of workers. The intellectual workers should have better benefits and higher remuneration than the manual workers because their work is nobler.

Therefore, by means of strikes and labor demands in laws proposed by union representatives, the first step of Socialism is to reduce the difference of treatment and salaries between the two types of workers.

2. Socialism’s second goal is to lessen the difference between the workers and the owners. This is done through a series of laws that increases worker salaries and diminishes the owner’s profits.

This attack against the fortunes of the owners is made on various fronts. But there are two principal laws Socialism pressures the State to approve in order to reduce the fortunes of families and individuals.

The first is the law of equal inheritance for all the children. Through this law, any great fortune disappears at the end of two or three generations.

The second law is the demand for those with greater fortunes to pay higher taxes to the government. I believe it is just for whoever earns more money to pay more taxes. There is no doubt about this. But Socialism wants to transform equitable taxation into a veritable extortion of money earned by the rich in order to end class differences. In some countries, the taxes paid each year by the wealthy have risen as high as 90% of their earned income. This is virtually a confiscation aimed at leveling the classes.

This socialist struggle of the workers against the owners has resulted in the creation of very powerful labor unions. Among other things, the unions support the workers during their strikes so that they can continue them indefinitely and not suffer the normal consequences: losing their salaries and essentials of living. Thus, when a strike takes place, it is the owner who loses money because his stores are closed or his factories lay idle.

These labor unions became so powerful that in most of the Liberal States they can coerce the State. They pressure the Congress to approve the laws that favor them and then oblige the government to enforce these laws to advance their program of proletarianization in industry and commerce. By these means factories, farms and other businesses that rely on employees see their natural hierarchy subverted and then destroyed.

These are some of the advantages Socialism takes from the defects of Liberalism. In effect, Socialism becomes a sort of cancer - almost impossible to extirpate - inside the economic system of Liberalism.

Continued

Posted March 17, 2012

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