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    What does “Socialism” mean?

    “Is there ever going to be socialism in America?”

    Our misunderstanding of the term “socialism” is far too prevalent. This is an important discussion because countries with little understanding of Social Contract, and with weak Social Contracts as well, are suffering a very real economic impact globally today.

    This question above (“Is there ever going to be socialism in America?”) is one of the dozens of similar questions asked on every week. If you haven’t spent some time at Quora, it’s a frustrating place to visit once you’ve spent time conducting economic research. The incredibly low-level understanding of our monetary system – by the voters that support it and also by academics, is brutal.

    Consider for a moment that “Socialism is ownership of production by the state” – and that it means nothing else. I’ll explain why this must be true below.

    FDR (Franklin Delano Roosevelt, President of the United States from 1933 to 1945) built the American Dream – and largest economy ever; and he did it in our last mature capitalism – in a time very like today during the Great Depression of the 1930s. President Roosevelt’s Second Bill of Rights (1944) asked America to create a strong Social Contract within the Constitution – as it absolutely needs to be in any large democracy.

    Social Contract is a term first coined by Thomas Hobbes’ “Social Contract Theory” back in 1654 – but we don’t hear it as we should today.

    For one reason and another, 200-years of theorists since Leroux, Marx, and Engels have preferred to present the word “Socialism” instead – and have preferred to imbue the term with as many tangled meanings as was convenient at the time. Dozens of authors were inspired to spurn the Socratic Method’s best-practice of separating terminology (disambiguation) until Socialism came to combine discussions of:

    1. State ownership of business and production
    2. State ownership of property and personal housing
    3. Ethics and Empathy
    4. Fiscal and budget management
    5. Economic performance
    6. Social programs and Human Rights (Social Contract) – see examples Second Bill of Rights & U.N. Universal Rights
    7. Merit and equality
    8. Non-monetary systems of commerce – like Communism, Bartering, etc.

    Socialism means the first item on this list only; and none of the rest.

    See the disambiguation of our Monetary System’s terminologies at The USE CASE for Monetary Systems.

    Strong Social Contract nations have advancing economies almost 100% of the time – at all times in a monetary system cycle. The most successful-per-capita economies in the world, often rely on an 80%/20% mix of capitalism/socialism ownership to build their Social Contract infrastructures.

    So, in this article, I am going to explain the wildly-important difference between Socialism, Socialist Policy, Social Contract, and Empathy.

    First, you probably realize that there are socialist policies in America (as in every country) – the military, the Government, the Mail Services, administrative infrastructure, national parks, public transit, and similar. These are all productions owned by the state.

    “Social Contract” is different; social contracts are our good lives, human rights of food, shelter, education – and it’s also the stuff that builds strong economies. The mixture of socialist (public) or capitalist (private) owned productions – see the typical 80%/20% mix example above, which are needed to build a strong social contract, is actually a minor point.

    Capitalism works well at every stage of a monetary cycle – but, there is a “but”. Capitalism needs very few constraints during the early years of a new monetary system cycle’s abundant opportunity and balance, but – it does need “balancing” as the monetary system’s cycle matures (as reliable incomes and cost-of-living get out of balance; “starvation wages” is an example). Surely America’s economy would be the strongest in the world by 100-times every other economy – given its incredible lead and head-start by 1980. But today America’s growth is not as strong as others and it is being overtaken by economies the world over daily.

    To explain why America’s capitalist policies have not resulted in incomprehensible wealth today – later-on in our monetary system cycle, I have to correct the common misunderstanding of “What is Socialism” so that a smart answer to this Quora question can be possible. Answering the question as it is asked, does not solve the important social problems in fact.

    So what would a smarter Quora question have to be – rather than: Is there ever going to be Socialism in America?

    Medicaid – is public Healthcare – but to say that this is a “socialist policy” – versus private healthcare “capitalist policy” – is misleading. Why?

    Because healthcare is an essential of life – and as such, it is a needed part of our Social Contract. Rights of healthcare, shelter, access to income, security, healthy food & water, breathable air & energy, and basic goods (clothes, furniture) – are necessary – not only to sustain life but also to be a productive contributor to the economy.

    People who are too tired at the end of a day of barely getting by, don’t have the time, energy, nor means, to create export businesses and other important economic productions.

    Private healthcare, bottling plants, taxi services, etc. are privately-owned in capitalistic policy economies – but ownership models (capitalism and socialism) are just Actors in a monetary system. Social Contract is different; its an Output – and it’s an essential one. Social Contract is essential because it is causal to strong economies, as we see in this next TEP (Transition Economics Proof) chart.

    TEP charts are not a theory-based interpretation of how economies might work, they are actual surveys (of 158 countries in this example) that confirm that high-social-contract nations (nations with Social Contract scores greater than 5.0) advance 70% to 100% of the time.

    Calling public healthcare “socialist policy” is like calling a shiny red hotrod – “a communist noise-box with wheels”. The description is distantly accurate, but the derisive description of a “noisy, unAmerican, crate with wheels” fails to convey important context. Emperor Leopold of Belgium defended criticisms in Europe to his army’s killing of 10-million Congolese; his spin was to explain that he was “bringing Christianity to the heathens”. It was a true but irrelevant statement.

    Healthcare, food plants, taxi services, private housing, etc. are necessities of an essential Social Contract. The ownership model that produces the best social contract is the best ownership model mix – and as I mentioned above, most successful high-Social Contract nations build these with an 80%/20% ownership mix.

    A strong Social Contract is the American Dream – and the stuff that soldiers gave their lives for; as such its the “important thing” – if you see my meaning. When Robert Kennedy questioned GDP in 1968, he was noting its failure to report the important Social Contract Product of America.

    “The GDP measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything in short, except that which makes life worthwhile.”


    America’s Social Contract was the highest in the world – and so was their economy – until the 1980s. When America lost its strong social contract, its economy began to stall. Is it a coincidence that the economy and the social contract seem to be in sync? No.

    Early in a monetary system cycle (1950–1980), a capitalist ownership model was better at building strong social contracts (the American Dream), better than socialism – and no-one would disagree this point as we saw it play out.

    Now fast forward to this past 20-years; when neither ownership model (capitalism nor socialism) will support a strong Social Contract. Here, late in the monetary system cycle – in a “mature capitalism” – as monetary systems reach their later stages. In late capitalisms, governments have to maintain balance in monetary systems carefully due to compound interest mathematics.

    Why? Try folding a piece of paper in half more than 7-times; you’ll need a hydraulic press to make to 12 folds – until that “system” is exhausted. Monetary systems have lifespans just the same. 60-years of 1% to 14% inflation rates mean that world GDP is now 60-times higher than in the first year. So now a 1% inflation lift is like a 60% annual inflation-rate in 1960.

    “Freedom“ in a monetary system is what you can buy with the money left over after your stable incomes pay for your cost of living. In a perfectly-understood, and perfectly managed monetary system, we would ensure the cost of living and salaries remained in proportion – but instead, we didn’t teach our kids to vote for this – and we didn’t know any better so we voted for pretty faces and pretty (market-tested) messages – of “low-tax” trickle-down, small government, open-markets – and other lies that unbalanced the ratios.

    Economists like Ann Rice and Milton Freeman kept rich sponsors believing that “Greed is Good” in the 1980s by assuring them that no harm could befall the rights of the working class in an open market – despite Dicken’s and Lord Byron’s detailed explanations of the dystopia that open-markets actually look like and lead to.

    Each mature capitalism/great depression inspires authors, professors, presidents, philosophers, and economists to write about lessons learned – so 1640’s General Crisis inspired Social Contract Theory by Thomas Hobbes, the Seven Years (and First World War) which led up to the 1772 Panic/Depression was written about by Rousseau, Lord Byron’s Maiden Speech in 1826, Dickens’ Oliver Twist in 1837 – 1839 and A Christmas Carol in 1843’s – during a Great Depression. Woodrow created the model in World War I which corrected 1894’s ongoing Depression – which FDR followed and then added his own Second Bill of Rights to in 1944 during WWII. The strong Social Contract that FDR created went on to be called the American Dream and it built the strongest economy in history. Strong Social Contract nations still live the American Dream today and have most of the strongest per-capita economies in the world today despite mature capitalism elsewhere – confirm this with the SCP Report at

    Professors like Nicholas Taleb suggested that there is no way to predict future events based on past recurring events; suggesting that calamitous events, religions, and other significant social phenomenon are ever-unpredictable “Black Swans”. “Baloney Swans” or “Lazy Researcher Swans” – might have been better terms. Of course we can learn from lessons-learned – but my point here is that cannot be surprising that a din of academic professors, Gordon Gecko characters, multi-billion-dollar advertising campaigns, and self-designating “Economic Watchdog” organizations who each might be influenced to invent smoke and problems (rather than tackle the much harder work of establishing solutions scientifically). This free-for-all would be confusing to anyone.

    A fun and fitting excerpt from Thomas Frank‘s “Listen, Liberal” is:

    “Exhibit A of these interlocking pathologies is economics, a discipline that often acts like an ideological cartel set up to silence the heterodox. James K.Galbraith has written a classic description of how it works: Leading active members of today’s economics profession … have joined together into a kind of politburo for correct economic thinking. As a general rule—as one might expect from a gentleman’s club—this has placed them on the wrong side of every important policy issue, and not just recently but for decades. They predict disaster where none occurs. They deny the possibility of events that then happen.… No one loses face, in this club, for having been wrong. No one is disinvited from presenting papers at later annual meetings. And still, less is anyone from the outside invited in. Professional economists screw up again and again, and no one cares. The only real accountability they face is from their endlessly forgiving peers in economics departments across the country. Granted, economics is an extreme case, but its thoroughgoing application of the right to disregard criticism has made it a kind of fascinating anti-profession, a brotherhood of folly rather than of expertise.”

    By the actual survey presented in the Social Contract TEP Chart above, Social Contracts must be guaranteed to ensure strong economies – and they absolutely need to be added to the Constitutions of large democracies because large populations have diverse economies. Diverse economies mean that the unsustainable policies experienced by minorities can always be ignored by the majority – for decades at a time in most cases; until economies stall and living conditions become dystopic.

    Eleanor Roosevelt explained how to build the American Dream for every nation when she led the creation of the Universal Declaration of Human Rights of 1948 at the United Nations. “Evil” – is the systemic failure of empathy – explained the Nuremberg Diaries in 1946. After every mature capitalism (great depression), great philosophers documented the same lessons-learned – so that dystopia would never happen again – and then 60-years later, we ignore these lessons.

    Leviticus 25–26 (760 BCE) and the Code of Hammurabi (1763 BCE) 4,000 years ago, even explain ideas on how to reset economies preemptively, every 50-years – instead of waiting 60-years for hardships to begin to set in.

    The U.S. Constitution was created for a population of 2.5 million – and even today that model of democracy works well in small population nations like Norway, Denmark, and Ireland. Some large democracies, like Germany and Italy, have figured out that they need a strong social contract – and they are working to rebuild their’s with terrific financial results too.

    Strong social contract nations build strong economies 100% Social Contract Product (SCP) Report – 2019 – CSQ Research, Transition Economics, Social Contract SCP & ACT Parties. The SCP Report shows that weak social contract nations lose billions daily – the U.S. loses $37 billion a day; 13 trillion a year – to its crumbling social contract.

    Who cares if socialism grows? The last 20-years has seen capitalistic ownership explode to 50% of all wealth internationally, so socialism really isn’t a pressing concern today.

    A far better Quora question, therefore, would be: Will Social Contract grow stronger in America?

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