The topics of socialism, communism, and capitalism can be hard to describe to most people because of their complexities, definitive terms, and the purposeful vagueness that is attached to each. The simplest and yet profound way of describing each I found is what I call the “Two Cow Method.” The theory goes like this.
Imagine You Own Two Cows
Socialism declares, “It’s not fair that you have two cows when there are people out there who have no cows.” In the name of equitable outcomes, fair shares, and “Milk For All” campaigns, they would confiscate one cow and redistribute it to someone else. Those with a socialist worldview would have us believe they leveled the playing field by reducing inequities, limiting the concentration of wealth into the hands of the few, and elevating someone in need by giving them a hand up.
Communism, on the other hand, aims to control all means and modes of production and eliminate private property ownership. The communist would confiscate both cows, yet with a promise to provide milk for your family and for all the people. The “People’s Milk” would be concentrated into the hands of the state and can then be more equitably distributed.
Capitalism or the free market, by contrast, recognizes your sole ownership of the two cows and grants you the freedom to do with them as you please. You could slaughter one for meat, sell the milk, or use the curd to make cheese. The decision about what to do with the cows is entirely yours. One might decide to sell one of the cows and use the money to buy a bull, thus over time creating a herd of cows. The new addition of cows could lead to endless possibilities and wealth creation despite the added demands of the expansion and new risks accumulated by the owner.
The news of an abundance of cows would enrage the socialist as they could staunchly proclaim, “It’s not fair that one person should own all those cows!” In return, they would feel compelled to lobby legislators to regulate the number of cows one person can own or simply confiscate any “fair share” of the flock to redistribute them more equally to people they deemed to be in need. Such social activist groups may also demand that the new influx of cows be declared as one of leading contributors of climate change, through their excess land use and foul methane flatulence. To the socialist, the farmer’s expansion of cows is not sustainable and a danger to the environment.
The communist, on the other hand, would see the evil capitalist as a bourgeois privileged menace that is purposely withholding milk and cheese from “the People” to prop up he and his friends’ illustrious lifestyles. To these collectivists, someone must intervene to stop the exploitation of excess and put these cows in the hands of a state where the poor and most milk deprived have access to the basic necessities each cow provides. But this raises a critical question: What does the state know about raising cattle?
Despite the differences in opinions, there is a huge observation that goes unseen. Look at all the new cows created! Someone decided to take the risk and the result is more milk, more cheese, and more hamburgers available to be accessed by everyone. Wealth was created where there were simply two cows.
Since the farmer obviously can’t consume the whole herd, an effective economic system must be in place to distribute the necessities and products the cattle provide. Free market capitalism is the only system that allows ideas, talents and industries to thrive because of freedom of exchange. The people know what they need and, out of their necessity, come the milk, cheese, meat, and cattle byproduct industries that provide opportunities and work for a vast number of individuals and companies. Tractors, trucks, and tools must be obtained, new workers hired, and new markets must be created to meet the demand of the excess stock. One man’s wealth has produced wealth opportunities for others. Entrepreneurs create markets and industries to respond to the people’s wants and needs. This means the consumers come first.
The public may want more yogurt, ice cream, or cheeseburgers, and the businesses that strive to provide the best service to their constituents will, in the end, win. The profits rewarded are a byproduct of a job well done. The people flourish as scarcity is mitigated.
I’ve often been asked why socialist societies fail. My response is always the same: socialism takes the second cow! It removes the very asset that is used to produce a herd of wealth. Without the second cow, there would be no bull. In the name of equity, it simply moves one man’s cow to another man’s yard. Nothing is created and scarcity remains, and even worsens.
But what about fascism? Fascism has been historically described, up to its current rebranding, as a form of socialism where the state heavily regulates every aspect of the society, but business titles are still technically owned privately. This command-and-control system would tell the farmer how many cows, how many gallons of milk, who to sell it to, and when. It’s owning the cows without the freedom to do with them what you want. Think Schindler’s List: Oskar Schindler owned the factory, but the Nazis told him what to do with it.
I asked the question earlier, “What does the state know about raising cattle?” Probably the same as refining oil; just ask Venezuela. Communism relies on bureaucrats, technocrats, and so-called “experts” to properly redistribute goods in a rapidly ever-changing market. Their knowledge is limited to market demands and the individuals they intend to help are usually excluded from the decision-making process. The people know what they want and need.
Bureaucrats are always the last to find out and it takes “an act of Congress” to make the necessary adjustments. In the meantime, the so-called “experts” carve out the “prime cuts” for themselves first and make the welfare of the citizens secondary (or below). Communism and socialism are systems that exchange free market, voluntary exchanges, which they call “exploitation,” only to replace it with exploitation. The herd becomes depleted, and the people starve. Only free market capitalism allows an expansion of the herd, while socialism forbids its wealth creation and communism squanders it.
