The
Pyramidal Theory of Capitalism Explained in Simple Terms.
Originally
published 1.07.2010
Capitalism[1]
is mostly misunderstood and is not popular with people who cannot participate
in this natural trade system. Capitalism is “unfair” and only the greedy can
play the game and these tenets are solid political platforms for leftist
politicians and policies we are told. Theories of government and other social structures
often describe the capitalist process using the pyramid as an illustration of
how it appears to function.[2]
The pyramid has, as its most important feature, an apex at the very top and a
broad base with steep sides offering the impression that it is a long and
arduous clime to the top where the power resides and represents a corporation
or a collection of corporations in the advanced stages, but smaller pyramids
spontaneously form even in primitive societies. The climb to the top is indeed
difficult, expensive and even the slightest mistakes can collapse the pyramid
into several pieces. Few pyramids survive for more than a few decades and most
corporations fail within a mere 5 years of operation.
Modern
capitalism is actually a complex confluence of “isims” rooted in basic human
nature and conduct and demonstrated clearly in history as a process that is disciplined
and operates mostly in a nonpolitically slanted manner. This is because
political “thinking” is not truthful or sound in the business world. The
leaders reside at the top of the pyramid, enjoy a disproportionate share of the
benefits and retain their position at the apex until the system fails to
perform to standards then the pyramid collapses or waits for new leadership and
they lose their jobs or are given other assignments with less power. The detractors
of capitalism cite a plethora of negative performance factors including but not
limited to mercantilism, unfair trade mechanisms, barter, black markets, greed,
discrimination, economic imperialism, smuggling, war mongering, excessive
wealth accumulation and more. The many other accusations and condemnations are
mostly directed at attacking the uneven power distribution of this system using
observations and complaints focusing on how capitalism fails to treat all individuals equally or even at all either inside
or outside the pyramid. [3]
This essay provides a simplistic discussion of the core attributes of
capitalism in lecture form and shows its benefits contrasted with other social systems
that employ control and command structures by governments. The descriptions are
given in the simplest terms and without caveats. It is amusing, in contrast,
that Marxism, Fascism and socialism, among others, only permit a few citizens,
usually 3-5%, or sometimes much fewer, to enjoy the full benefits of their
society thus establishing an elite control group that objectively attracts all
the complaints that the detractors use to criticize capitalism and their
complaints are even stated directly in their very same terms. Thus hypocrisy is
an inborn attribute of those who attack capitalism with limited complaints and blindly
offer an alternative system that is less efficient. Most socialist and other
leftist organizations mostly select certain people that would be quickly
demoted in the capitalist world for their manifold failures in numerous areas.
Failure to provide minimal goods and services for their citizens [or frequently
known as victims] is usually not a sufficient criterion to demote politicians. Thus
Castro’s Cuba North Korea
Capitalism
is a subset of local governments and does not pretend to govern in its pure
form. Many socialist governments closely control capitalist pyramids for their
benefit as did Italy Germany North Korea Cuba USSR Eastern Europe or just about anywhere in Africa . Those forces must dismantle or prevent commerce
from operating in free markets to be successful then they have to provide for
their citizens what capitalism could have provided and frequently they cannot
do so. Capitalism is self-regulating and continuously improving—two attributes conspicuously
absent in many forms of government. The profits from capitalism are viewed as
evil and greedy until one realizes that such wealth is useless if not used to
form new pyramids or to buy goods and services or build real estate. Capitalism produces capital as its product
and this is usually money at risk for expansion or held to be used later. The
theory that capital is used to create new jobs is offensive and mysterious to
many in the leftist political camps who believe that government can create
jobs, and it cannot. Many liberals cannot bear to think about the fact that 99%
of the tax revenues in the US California Cuba Africa .
Capitalism
creates efficient jobs by definition and when those jobs become inefficient
they are summarily eliminated or the job holders retrained or given new assignments.
Marxism is a failed ideological system that originally attempted to capture and
redirect profits from the capitalists and return them to the masses with
government control and ownership of the means of production, but that was never
the case in practice. Mao demoted corporate executives to menial tasks such as
sweeping floors in their own factories and placed political hacks with no
business skills in charge and even selected a person who had no college
education to run the University
of Peking Asia , but not South American or Africa .
Socialism, much like unionism, requires that the citizens depend on the state
for nearly everything; capitalism requires that individuals contribute much
more than a single individual could do in another setting for the general
benefit of both the pyramid and the individual. Capitalism is thus positive and
productive whereas socialism and its variants are destructive and negative.
There
is no equality[8]
in this world although such a nostrum is the enduring foundation for grand speeches
and maudlin politics and majestic welfare systems that purport to change the
world in such a manner as to achieve this unattainable attribute for all of
us. If we inspect a randomly assembled
group of humans in a cluster no larger than 10 it is difficult to show that all
members are equal in any respect. It is even more difficult to find two
specimens in this cohort that are ‘equal’ in more than a few basic attributes.
The physical differences and age range of the members are enough to demonstrate
that equality in any form cannot exist for long. If the cohort was expanded to
10,000 and sorted to form smaller groups of the same age, weight, cognitive
skills or any of a host of attributes these smaller groups would, again, show
that although many are similar there is no broad equality in this biased selection.
People have different gifts, learned skills and desires. Capitalism naturally
accommodates most of these differences into different strata and directs people
to perform diverse essential tasks according to their attributes to the mutual advantage
of the group. Socialism strives to have only two groups: the masses and the
elites. Strangely, success in economic terms is not that important in Marxist
and socialist governments.
Since
there is no equality that can be demonstrated in even small groups we then come
to the abrupt and perplexing question: who, then, can work the levers of
capitalism [or any other system such as socialism or Marxism or a feudal system]
and provide the leadership and successful structure for the group? The answer
to this question is really not very amenable to description or even analysis
and cannot be answered in detail because of the variations in human society
itself. Much of this is trial and error especially in capitalism. Pyramids are
trial balloons and rise and fall when current results are compared to the mandatory
business plans. Those who can make this natural process function successfully
stay in leadership positions in capitalism and conversely in socialism where
failure is tolerated at the top.
Some
theoretical and somewhat whimsical examples follow to examine the process of
capitalism: If we inspect a primitive society that consumes mostly, say, fish
for food and their health and future depends upon gathering fish using boats or
nets or spears in some water space then we quickly notice that some are skilled
in one or more aspects of the fishing process. Here, equality is not even
desirable because if the group only had one basic skill it might not survive
due to various critical tasks not being accomplished to a level of standards
that would support the ongoing existence of the group. Such a group needs net makers, menders, fish driers, boatmen or spear
throwers and cooks and many other tasks so only a few will actually catch fish.
Every task in this sequence from living fish in the waters to food for
consumption is essential and any break in this progression may be fatal leading
to starvation.
Such
a group as this spontaneously forms a pyramidal structure as there is a need
for a central planner and work force director and a need to distribute tasks
with some efficiency so that the output of the group exceeds the sums of the
collective harvest of individuals who would have to do every fishing task by
themselves. The antithesis of this would be that everybody catches their own
fish and this is not observed even in the most primitive societies. Thus, by
sharing diverse duties in a cooperative group the means of production is made
more efficient and all potentially benefit from the supportive work process. This
is obvious if one views the process where individuals would have to provide
their own food and other necessities for a long term. No equality is implied in
this theoretical primitive world. None is needed in this and numerous other
contrived examples because people are not equal and neither are jobs and other
factors.
This
fishing group example thus forms a small pyramid where essential skills are
sorted out by some leader or similar leadership process and applied to the
necessary tasks to streamline the means of production and produce goods and
services. This model seems to persist as the group is enlarged although the
model changes somewhat as the size increases to incorporate large numbers of
participants. For larger and larger groups with more diverse production the
model now must incorporate an ensemble of pyramids that may cooperate in the
production of many different goods and services. Now, inequality is again
delineated as the ‘values’ of the various items of production are not equal. In
the example above, if fish are abundant then the value of the fresh fish above certain survival maintenance
levels is not very high and production of more fish even with drying and other
storage mechanisms may not increase the collective ‘wealth’ of this group. A
different group, such as one that makes huts or tree houses may produce
products with much higher intrinsic ‘value’ and attain a higher standard of
living so to speak for its members. Makers of jewelry or clothing or priests or
entertainment specialists or doctors form pyramids, even of a single person as
in medicine, and these collective pyramids collaborate to form a unit
cooperating society that supplies most of the needs of the entire group. Thus
whole villages can manage to supply most human needs by matching skills with
production duties for the benefit of the group.
This
capitalism process normally grows or expands according to the supply and
demands of food and other needs and must change to accommodate new items or
challenges. There is an abrupt change in the habits of a tribe when they, even
for a few weeks or months, decide to give up the hunter-gatherer mechanism of
obtaining food and such and live for a long time in one place in some suitable
region. Here, the amount of natural food sources tends to diminish as the inverse
square of the distance away from the central camp with time. Game and berries
and such are quickly depleted so the stationary tribe must have an abundant alternative
supply of these or work long-range foraging teams. Also, new jobs are created
because wealth is now created in terms of fields, caves, wells, fences and cultivated
produce and other sources of food and includes the important new factor that
these assets must be defended from marauding tribes or predatory animals. The
concept of long-term food storage now becomes a new and important factor. The
concept of defense becomes a top priority for a stationary group. The skill set
requirements of the group thus expands and such an expansion produces essential
jobs for many people.
If
several tribes merge into a larger tribe or clan for any of many reasons such
as security then two adjacent larger clans might be in competition for food or
shelter hence conflict may occur over certain assets or products. Here, the
concept of the military is established and defensive techniques or a bunker
mentality first appear. Since all the
landmasses or seas are not equivalent in providing resources and assets, the
selection of the most promising or highest yielding areas promote competition
among the groups in order to occupy and control such places. This eventually leads
to war or some conflict equivalent thereof. Food supplies may vanish in hours
if not protected from attack thus forcing the careless or losing tribe or clans
to regress to foraging or hunter-gathering techniques or starve. Eventually
some group of tribal leaders assembles to work out problems in resources and assets
and the defense of the entire region occupied by an ensemble of clans. As the
clans cooperate this effort leads to the feudal system or something approximating
that form of central government.
Leadership
ladders routinely range from the head of household to the clan chief or
patriarch or extended family leaders to a hamlet chief and onto regional chiefs
ultimately leading to regional leaders, vassals, kings and other forms of
royalty. Here, inequality in its highest form is observed as most royal groups
stay intact and retain leadership authority by hereditary mechanisms and most tend
to promote the eldest son as the next potential leader. This system usually
metamorphoses into a formal feudal system consisting of only four roles:
royalty [or gentry], serfs, merchants and artisans. No feudal system is large
enough or sufficiently skilled to provide all its needs and must trade with
skilled persons who can supply scarce items or products impossible to obtain or
build for the feudal group. Artisans and merchants travel among these new
duchies or kingdoms or extended clusters of clans and trade various items or
skills for a profit and now capitalism is running at full throttle. The law of supply and demand thus appears and
governs the price of good and services from the demand and supply curves. Merchants
are differentiated from artisans in the role they play with goods and such in
that merchants bring in the goods from afar and artisans build or create
structures and other facilities using materials at hand in the kingdoms. Any hint of equality vanishes when the feudal
system is operating. It is clear at this point that of the four classes of clan
members the serfs cannot perform the duties of any of the other three roles
unless trained to do so. Artisans and merchants also have no replacements among
serfs or gentry in such cases and tend to form closed societies with trade
secrets and guard special arts and recipes. At this point it is amusing to
think of some socialist council or authority that could select the individuals
and match them to appropriate jobs with any efficiency or success. Here the
political processes of persuasion and promises may be quickly viewed with
disdain if any of the essential processes of the group are mishandled. Capitalist
systems tend to promote successful individuals to positions of leadership and
skill-matched jobs while political systems tend to select those with
interpersonal skills.
In
terms of wealth, land, structures and control of resources like bridges and streams
and access to lakes and seas the small collective system now resembles a large
pyramid but is actually an ensemble of operating parts each with their own
pyramidal structure. Tiny kingdoms with their little pyramids are in
competition with other frequently larger kingdoms and wars and other factors
may lead to a growth in the power and wealth of merged pyramids or the converse
if disease or war destroys a larger pyramid. In either case, events that tend
to influence the amounts of food and other assets will force pyramids to rise
and for many to quickly collapse. A characteristic of all pyramids is that those
people with the least skills, retain the smallest share of power and wealth and
are at the bottom of the pyramid and conversely. Thus, unlike political systems
where leaders need few skills other than political ones the capitalist system
continually refines the role of their leaders and rewards performance quite
unlike the political system which tends to make excuses for failures and retain
the current leadership and control at all costs.
Wealth
now becomes power so groups or clans within one pyramid may take their skills
and assets and leave and form a more efficient new pyramid thus becoming more
powerful or independent. The temptation is now for larger pyramids to assimilate
smaller ones by business forces and purchases and discard the uninteresting or
inefficient parts and improve efficiency. This is a key feature of capitalism in that
the lack of efficiency in some business or production process frequently stimulates
change and forces a restructuring of the pyramid. Somewhere in this process the
ability to generate wealth by skill and wit becomes more important than
hereditary factors that led to royalty owning and controlling everything. Here,
peasants and serfs and other menials may start their own capitalistic
businesses and through trade or barter accumulate wealth and if an ensemble of
these folk is successful then they may posses more wealth hence power than the competing
feudal leaders and choose to revolt or break away and become independent. Thus
in the industrial revolutions in Rome and England and most other places those
with wealth-generating skills gyrated to positions of leadership and control
and the aristocracy lost power if they lacked the skills to compete thus
upsetting the feudal system and replacing it with other forms of government and
those successful ones were those who could accommodate and complement capitalism.
Eventually, the other forms of government tend to depend only on taxes from the
capitalists for their total survival and power base and abuse of taxation
frequently leads to voluntary folding and dissolution of a pyramid and a
transfer of their assets and skills to another locale with lower taxes. California New York
Due
to wars, famine and shifting fortunes pyramids inevitably and routinely collapse
or unwind based solely on their inability to efficiently generate desirable
goods and services and the pieces are scattered. Unlike artificial governments
based on socialism or other systems, the pieces tend to spontaneously rearrange
into new pyramids discarding old methods and enlisting new leaders and ideas and
the process continues to improve. Alternately, when artificial governments like
Marxism or utopias collapse they do not spontaneously regroup into new
governments—they tend to collapse and vanish as an entity and are replaced by
new governments and new capitalistic pyramids form naturally from the chaos. Marxism
is responsible for more death, destruction, lost business opportunities and
economic failures than any other known system. Marxism destroyed or damaged
several dozen countries in the last century and caused the deaths of 100
million people. Still, the anti-capitalist basis of Marxism is a major
political vector even today.
Thus,
in this example capitalism is shown to be self-erecting and self-streamlining
and tends to refine the aggregate economic system while other artificial
systems usually tend to promote leaders who are only accomplished in political
skills and not business or capitalism or any other useful art. Socialist or
similar systems tend to seize capitalist assets and squander them by frivolous dissipation
or war by their leadership thus minimizing and corrupting the beneficial
processes of the means of production. Utopias have never worked out and all
have collapsed spontaneously. Plato’s Republic is a mystical place where some
philosopher king can make all decisions for a group although such a person has
never been identified and Plato failed to tell us where we could find or even train
one. This point of his essays, missed by socialists, was a direct attack on
democracy which failed miserably in Greece Cuba North Korea USSR USSR Eastern Europe , The People’s Republic, Viet Nam
On
the macroscopic view, Marxism and socialism have failed to produce enough goods
and services for their citizens and many such political systems are
inefficient, brutal and retain the available wealth only for the top echelons
of their political leadership. Fascism is a middle case where the corporate
pyramids are tolerated as long as they produce goods and services and profits
that suit the leadership which is usually militaristic. A better case appears
to be the People’s Republic where the totalitarian government tolerates a
hands-off approach to the practice of business and allows capitalists to do
what they do best and then share in the proceeds thus we view a unique and mutually
non-interfering separation of powers: business and politics. So far, the fate
of the ‘bottom 15%’ in the PRC is probably favorable in terms of subsistence
although criminals and drug addicts are summarily executed thus offending
socialists.
Socialism
or one of its variants cannot supply the needs of a society as their leadership
is always selected from a group that excludes people who can produce goods and
services. Thus socialism acts as a predator and a compromiser of capitalism and
usurps the fruits of this superior system until both collapse, usually
financially or economically. Capitalism thus spontaneously reforms and,
unfortunately, so does socialism some time after in too many places. The poor
and others remain unequal as before with no chance for success under either
system. In many leftist states capitalism is outlawed or severely dominated by
political cadres to the point where they cannot be successful and cannot
contribute to society as in Cuba North Korea
The
ultimate system would be for individuals to choose capitalism or some social
government where business decisions and policies are directed in command
fashion. This is not possible because if people can choose then many will exit
the social environment and leave the state with fewer effective resources. This
would not matter, theoretically, to the state if people were ‘equal’ as those
who remain could be trained to replace those who left. In practice, however,
the ‘best’ continue to seek fortunes for themselves in pyramidal clusters thus
depriving the state of essential taxes and services, a process known as brain
drain. Socialist states deselect leaders who can efficiently solve problems and
prefer ideologues that can follow some stale and unyielding social plan based
on dogma. This usually leads to disaster. It is interesting and amusing that
military systems all around the world employ a capitalist pyramidal structure
where decisions are made by a few skilled at the top and orders flow down the
pyramid. Corporate and military officers frequently have the same rank and
privileges in their respective organizations e.g. officers do not work but make
decisions and give commands.
The
eventual solution to the problem is the hybrid capitalist state, unknown at
this time to the full extent, where business decisions would also apply to
state functions and it is possible that the People’s Republic may be close to
this optimum. We shall see if that
hybrid system survives after a few more pyramidal collapses.
A
proper treatment of human inequality might provide a form of equality for all—even
for the bottom 15%--, but those in the leftist world owe their existence to
criticizing the cases of inequality in capitalism or other systems with various
vain promises and thus encourage
economic failure or stagnation in their own camps. Perhaps this lesson can be
broadcasted around the planet until the citizens of the world awake to reality
and demand that their political leaders abandon this inefficient process. We
shall see. Those who pursue success through capitalism will find their dreams
come true as long as they can avoid the treachery of leftist governments. Those
who believe in the demagogic proclamations of their leftist leaders are doomed to
mediocrity or extinction if they finally learn the truth and object too loudly.
rycK
[3] Variants
on capitalism include anarcho-capitalism, corporate capitalism, crony
capitalism, finance capitalism, laissez-faire capitalism, technocapitalism,
Neo-Capitalism, late capitalism, post-capitalism, state capitalism and state
monopoly capitalism. There are also anti-capitalist movements and ideologies
including Anti-capitalism and negative associations with the system such as
tragedy of the commons, corporatism and wage slavery. http://en.wikipedia.org/wiki/Capitalism#Variants_of_capitalism
[4] The Road to Social
Success, Peace and Justice: California
Revised
and originally published 6.26.2008
[5] As Predicted: California
[6] Copulating
with Coprolites: The Unveiled Mechanism of Governance by Progressive Liberalism
in California
Revised and originally published
6.23.2009
[7]
“Statism (or etatism) is an economic position that includes a major state role
in directing the economy, either directly through state-owned enterprises and
other types of machinery of government, or indirectly through economic
planning. It may also refer to a political philosophy that
sovereignty is vested not in the people but in the
national state, and that all individuals and associations exist only to enhance
the power, the prestige, and the well-being of the state. The fascist concept
of statism, which as seen as synonymous with the concept of nation, and
corporatism repudiates individualism and exalts the nation as an organic body
headed by the Supreme Leader and nurtured by unity, force, and discipline.” http://en.wikipedia.org/wiki/Statism
[8] The Futile Attempt of
Forcing Equality Among the Masses.
Posted by rycK on Thursday,
April 30, 2009 9:06:57 AM
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