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Can Someone Explain the Economics of Socialism To Me?

I get that it starts by taking from the rich to give to the poor, redistribute the wealth. That lasts a year, because the next year there are no rich. So how does this plan sustain itself?

anonymous 7 Dec 12

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First of all, I am not an economics expert, so consider my explanations as to not be 100% accurate in my understanding of details, but just an understanding cobbled together from what I do know.

Well, Carl Marx was not perfect. he manged to correctly identify the excesses of capitalism, but got the solution pretty much totally wrong.. Since Marx wrote "Dos Capital" Socialism has evolved into the successful Democratic Socialism which is mostly practiced in Northern European countries.

They pretty Much implemented what FDR wanted to do. You have a democracy for government and regulated markets. The tax system is like what he U.S. had from the end of World War II through the early 1960's, where the mor eyou make the higher the tax bracket. Then add in tht by law the minimum wage also has to be a living wage, meanign anyone employed full time can support themselves. Taxes are higher, but once th taxes and living expenses are paid, because wages are higher they still have more discretionary money left over than most people in the U.S. do. Thus every country that has Democratic socialism has a higher rating for general happiness than the U,.S. has. They also have universal healthcare and free college tuition right up to a Phd. (which is part of what those higher taxes pay for.) So, basically modern Socialism is just highly regulated capitalism.

Everything evolves over time for its best survival and economic philosophies also can evolve towards what works best rather than rigid dogmatic thinking like in the old USSR, which would not stray from a rigid Marxist system.


Yes, the Federal Reserve controls the amount of currency that enters the system. If too much enters, inflationary pressures will impact the economy negatively. Now, there is the multiplayer effect of money which is: for every dollar spent, that dollar in effect should pass through 4 users hands; thus, creating $4 of economic wealth to the society. Once that dollar hits the end of the road (off-shore tax haven's), the money is removed from the system. The money would be better spent for social programs that inject the money back into the system.


To use an analogy, bitter organs are a bitter and inedible citrus fruit. But one should not characterize all citrus fruit by bitter oranges. To do so would be to deny oneself of the pleasure of mandarin oranges, tangerines, grapefruit, lemons, limes, etc. One should never make the mistake of characterizing all citrus fruit by bitter oranges.

You make the same mistake by characterizing all forms of socialism and social democracy by the bitter flaws of Marxism, Bolshevism, and Communism.


The first section of the link is a good crash course. You can find tons of more detailed resources online.

Socialism has worked in several historical cultures as has democracy. A serious problem for both are tyrants and oligarchs.

Up until the 80s we appeared to be moving toward a social democracy. Public services were cheap and abundant, infrastructure was maintained, we had solid secular education and the masses (of Americans, anyway) were happy.

I'd say the same for most of our European Socialist counterparts and even many in Communist countries though they didn't enjoy the freedoms and opportunities we had.

But the WORLD economy was working so well then!


The "nutshell" is it would depend on the level of socialism. Here is another concise article.



I'm sorry, but what you depict is a false characterization of socialism, created and spread by the extreme right. European government and economies are mixed economies (a mixture of free enterprise and socialism) and social democracies and many of them function very well -- with less racism, ethnocentirm, and domination by the culture of greed that we currently have in our government and economy.

Be careful that you are not one of those good people who is spreading false tripe that you have been fed by less honest and moral people.

On some points we agree spot on. Very well stated!


This one’s tricky … as there are so many interpretations of ‘Socialism’.. I describe Capitalism at one end - Communism at the other -- with Socialism in the middle. The far-wrong for decades have tried to confuse Socialism with Communism, in an attempt to discount the recovering governments and nations of WW2.

Capitalism works until resources run out, which is why the USA has had an impressive run, with it’s main promoters now desperately scrambling to extract the last of them. Communism fails far sooner … human greed and laziness prevails there. In the middle lies Socialism, as imperfect as humanity and in constant need of tweaking, it’s by far the most durable and, IMO, the only hope for the continued progress of humanity.

Socialism provides for the needy at their time of need: healthcare, childcare and education. During the productive years, you pay both back and forward, leading to guaranteed retirement pensions and life-long health care. It’s what Senator Sanders had recently promoted in his failed attempt at the US presidency…

Varn Level 8 Dec 12, 2017

Socialism - “a political and economic theory of social organization that advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.” -- note, ‘owned or regulated.’

Communism - “a political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs.”

to jwin031h: There are many different forms of socialism going back to well before Mars. Those forms of socialism based on Marx -- Marxism, Bolshevism, and Communism are dangerous total system ideologies. To really understand them and what they do, the one source you will find that provide detailed answers is the book THE NEW CLASS by Milovan Djilas. Read that and you will understand Marxism and its true dangers.

More modern, non-Marxist forms of democratic socialism are not what you seem to think.


People are consumers. Goods cost money. There is a limit on money. When more people have expendable cash, the more goods they consume. Capitalism, by the way, works best when everyone is involved. You could say capitalism needs socialism and socialism needs capitalism. It is the extreme of both sides that is deadly for an economy.


“If socialists understood economics they wouldn't be socialists.”

? Friedrich A. Hayek

BD66 Level 7 Dec 12, 2017

Nice to see a few people on this site with a basic understanding of Economics.

BD66 Level 7 Dec 12, 2017

It doesn't. It fails every time. Look at Venezuela. Largest oil reserves in the Western Hemisphere, and the people are living in extreme poverty.

BD66 Level 7 Dec 12, 2017
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