Is Socialism The Same As Capitalism?


( You will, very likely, obtain moralistic, and therefore meaningless answers. I will try to give you the most scientific answer that I can.)

We have to define some terms here, because your question confuses economic systems (means of allocating control over property) with political systems (means of making decisions).

  1. Socialism: an economic system where the state (a corporation wherein all citizens are equal shareholders) owns all property, means of production, and production is managed by central control.
  2. Social Democracy: a political and economic system that employs representative democracy, but retains limited private use of property, but public claim on the profits of employing that property.
  3. Representative Democracy: a political system where administration is rotated by the election of representatives by one of a various number of allocations of means of determining the winner.
  4. Classical Liberalism : A political and economic system that employs representative democracy, retains private use of property, with limited claims one the profits of employing that property.
  5. Capitalism: an economic system where private property is held entirely by individuals with no corporeal  involuntary claim on the property of the individual or the proceeds from using it.


  1. No capitalism and socialism are not the same. They are opposing economic models.
  2. Elected bodies are corruptible under both social democracy and classical liberal democracy, because they are both representative democracies.  And the problem of corruption is a function, not of the economic model, but of the democratic political model used by both systems.
  3. So representative democracy, in the forms of social democracy or classical liberal democracy, and indeed any in form of elected, representative government, will eventually produce similar results. With the only differences determined by (a) how homogenous or heterogeneous the population is, and (b) the structure of the family, from the extended family to the family to the individual.



The problem with any system of representation is that the incentives of politicians are counter to the voters desires. And our mistake is in creating  institutions that require saints but we people them with ordinary men. THe greeks used lottocracy (random assignment to administrative positions). Others have recommended direct voting for initiatives (like ebay for policy).  Others have recommended economic democracy, where we allocate our tax money ourselves to particular uses. 

But the more or less redistributive a country is has very little to do with its system of electors. As much as we might wish to think it does.


The practical difference that separates whether these systems of government can be implemented appears to be nothing more than the HOMOGENEITY of the population in terms of kinship, language, and norms. The more homogenous the looser control, the higher the trust and the more redistributive.  The more diverse the more authoritarian, the lower the trust and the less redistributive.

There are various mathematical estimates of the maximum redistribution possible without the production of negative externalities.  As much as 75%. The willingness to redistribute varies from group to group. in-kin redistribution is quite high. Cross kin redistribution universally meets resistance.


Socialism isn’t possible because (a) economic calculation is impossible, (b) coordination of people without prices is impossible, and (c) incentive to produce is impossible without money and prices. That is why the world has abandoned socialism. It’s an impossible system. It CAN’T work.

In a division of knowledge and labor capitalism is a logical necessity.  It is impossible to coordinate complex means of production without property, money, prices and incentives. It’s not POSSIBLE. 

The entire point of capitalism (property rights) is to force voluntary exchange: service of the self thru service of others. “Trade” is voluntary. It is impossible to obtain through trade anything involuntarily, since property and voluntary exchange are dependent terms just as are prices and incentives. It’s a contradiction in terms.

Complex names like “Catallaxy” have been given to this process of self organization by voluntary exchanges, but self-organizing-systems is the current common terminology.   This is because (see “I Pencil”) the knowledge necessary to coordinate activities, and the incentives necessary to entice people to act in a coordinated fashion, are not possible to organize by other means than self organizing methods, while still adapting to multivariate changes in resources, technologies, demands, and competition.

There are technical reasons why anarchic capitalism cannot work that are too complex for this context. However, the world has adopted the capitalist economic system almost universally. Except in those countries where oil allows countries to be less a division of labor and more of family feeding from the wealth produced by oil. This combination isn’t possible to change that we know of.

Capitalism will persist largely because it must.  Redistribution will persist because it must.  And Corporatism with ceremonial rotation of electorate in european countries, and little rotation elsewhere, appears to be the standard of government that the world is settling upon.

Everything else is just like sports teams – entertainment for the masses and not much else.

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