A Look at the ESP Spectrums – Economic Part 1

As I did with the social and political spectrums, I’m going to start this look at the economic spectrum by copying exactly from my first post in this series.  From my previous column:

“We don’t typically see a global economic spectrum, but I’d contend it looks like Figure 4.

Free-Market Capitalist				Socialist		Communist

Note the lack of partition and higher concentration of more solid colors in Figure 4 versus Figure 3.  Also, note the absence of anything to the right of socialism shown in Figure 2.  The reason is that these (republic, democracy, monarchy, theocracy, and fundamentalist) are generally considered more to be social and political structures than economic structures, and as such, these structures can, in theory, appear throughout the economic spectrum.  So, we have free-market capitalist, socialist, and communist economic structures.

But Figure 4 is flawed.  It creates a perception that if one is not a full-on free-market capitalist, one is a socialist or even a communist.  This is why I’d like to change the economic spectrum in Figure 4 to look more like Figure 5.

Free-Market Capitalist	Capitalist		Neutral	Socialist		Communist

As you can see, there is much less solid color and two new categories have emerged, namely capitalist and neutral.  This distinction is necessary because it creates a new category, the capitalist, for people who believe the economy should mostly be left to its own devices, yet sometimes requires the government to act as a referee or a guide.  Such people are often and unfairly demonized by free-market capitalists, socialists, and communists alike.” 

We’ll spend Part 1 looking at the red side of the spectrum and Part 2 looking at the green side (along with the grey).  Before we start, let’s just acknowledge as a basic premise for the sake of this post that both true free market capitalism and communism are very difficult (arguably impossible) to achieve in the real world on larger scales.  We could spend a while discussing why, but that’s way out of scope here.  The various examples that I’ll mention ultimately do not reach the far ends of the spectrum.  Mao-era China, the USSR, North Korea, Cuba, etc. all fall short of the communist ideal, just as the United States, South Korea, Hong Kong, etc. fall short of the free market capitalist ideal.

I mentioned in the political spectrum discussion that the major differences between socialism and communism are economic in nature.  I put those off until now, so here they are. 

The first question is about what to do with the remaining capitalist spirit once the socialists/communists take over.  They hold divergent views, but both loathe the capitalist spirit.  In the eyes of a communist, capitalism and communism cannot coexist.  Communists believe that the capitalist system must be destroyed.  There is no compromise, as only the total destruction of all things capitalist will satisfy the communist.  However, a socialist doesn’t necessarily embrace this mutual exclusion.  In other words, socialism and capitalism can coexist in the eyes of a socialist.  The socialist contends that the capitalist spirit need not necessarily be destroyed because the socialist can use it to advance socialist goals.  If communists wish to destroy the capitalist spirit, socialists wish to tame and control it.  It’s almost a question of hatred versus merely contempt.

Socialism and communism both have a more collective view of property ownership.  The difference here stems from the strength of private property rights, which are generally stronger with socialism than communism (in a communist model, private property rights are virtually nonexistent).  Because of this shared collective view of property ownership, socialism and communism are actually both an economic structure and a political structure.  In both cases, the government would generally directly own the means of production.

Considering the differences, you can now see why I commonly refer to socialism as communism-lite.  We could even go so far as to say that any type of government could embrace a socialist or communist economic structure.  Indeed, we see socialism and communism used quite frequently (and correctly) to describe both economic and political models.  We see the government in say the old USSR, Mao-era China, North Korea, or Cuba referred to as communist regimes. 

There may be questions about why fascism isn’t on here.  Similar to the political spectrum, fascism is something of a blend, this time between socialism and communism.  Also, like socialism and communism, fascism can be considered both an economic and political system. 

In a socialist economy, we’d be more likely to see the government directly own the means of production, but allow the people to retain property ownership.  In a fascist economy, production and property ownership are more likely to be officially in private hands, but unofficially controlled by the government.  Either way, the result is a somewhat tight grip on the economy by the government (versus the death grip communism would have on an economy, a looser grip for neutral and looser still for capitalism, and really no grip for free market capitalism, as I’ll detail later). 

This willingness to hijack the capitalist economy versus destroying it is the key factor that differentiates socialism/fascism versus communism.  Fascism would generally have a tighter grip on the economy than socialism.  On this spectrum, fascism would reside right at the border between socialism and communism.  I’m toying with the idea of amending both the economic and/or political spectrums to put fascism as its own category.  Fascism and socialism are similar enough to be reasonably combined for general discussion, but they have certain key differences that prevent them from being used interchangeably.  This is part of why I struggle with how far to separate fascism and socialism.  After all, Nazi Germany was fascist, but Nazi is shorthand for “National Socialist”.  Of the three, I would contend that present-day China is more akin to a fascist economic and political structure than socialist or communist.

In Part 2, I’ll discuss the rest of the spectrum and present what I think is a good metaphor to understand the concepts.