by: Thomas Lee Abshier, ND

From: Thomas Lee Abshier, ND
Sent: Friday, May 28, 2010 11:39 PM
To: John
Subject: Looking Backward

John, I’ve spent a few hours today reading the book you recommended, “Looking Backward”, published in 1888, which you said is the Socialist’s best presentation of the problems of capitalism and the utopian solutions of socialism.  I’m only a few chapters into it, but could not resist the temptation to comment on the concepts introduced so far.

Julian West, the narrator of the book, who had slept for 113 years from 1887 to 2000, has just begun to listen to his new 21st-century friend, Dr. Leete, talk about how the world had transformed from a grim and dirty capitalistic world, into a socialistic workers’ paradise.  Dr. Leete has just given a critique of the “old capitalistic world”, and attributed the problems of capitalism as being due to the concentration of capital.

In real life, Looking Backward reached great popularity after its publication in 1888.  In response to its socialist/utopian vision, a political movement called “Nationalism” sprang up, and the book was referenced in many Marxist writings of the era.

At your recommendation, I have taken on reading this book as an exercise in identifying the errors of the philosophy of socialism/communism/statism.  If in fact these systems do not produce as much prosperity, freedom, or joy, then there must be reasons either in human nature (i.e. drives that cause men to act/not act), or in the rules/consequences that are active in the relationship between God and man (i.e. God has embedded organizing forces in nature and men which oppose pure collectivism).

The concentration of Capital under Control of the State:
As an opening critique and solution, Looking Backwards posits that the problems of capitalism are due to the impersonal nature and power of large corporations.  They can demand long hours and low pay due to their domination of the market.  Looking backward sees no relief in the trends of capitalism because of the natural progression of mergers and acquisitions to produce an ever-greater concentration of capital in ever-fewer companies.

Looking Backward presents the solution to the problems of capitalism by as taking the progression of corporate mergers to its logical conclusion and concentrating all capital production and distribution enterprises in one point under the control of the State/nation.

But, mergers will not proceed to completion to form the one large corporation controlled by the State.  Nevertheless, Looking Backward proposes this counterintuitive method as the solution to the problems of capitalism.  Concentrating capital in the State is simply a method by which all activities of life and all people in the society, can be directed by the State.  Thus a solution deemed right and good by central planners is imposed upon all people.  The socialistic solution gives those who imagine they have the solution to the problems of a free market the power of the State to impose their hypothetical solutions on the masses of humanity.

On its surface, it seems plausible given that all the problems associated with capitalism, such as monopoly, overwork, underpay, strikes, corruption, inequality, illiteracy, delinquency, and war would disappear when government took over, and mandated solutions that countered these problems.  The socialist argues that brute animal passions dictate the free market and produce a system characterized by chaotic inequity.  Whereas, the socialistic solution solves all these problems by the direction of intelligent and rational men.  Labor, goods, and investment move according to the direction of learned men and thoughtful policies.  Sadly, a structure which allows for total power over a people attracts the worst of men, and their economic-political systems end in oppressive regimes that require force to maintain the order they impose.

“Governments need armies to protect them against their enslaved and oppressed subjects.”  – Leo Nikolaevich Tolstoi (1828-1910)

The urge to merge:
Assuming that corporations will naturally choose to merge to form larger and larger entities is a somewhat plausible conjecture on its surface, but deeper analysis shows that this trend will reach a point of maximum merger size and concentration in a free market.

The natural draw of business to expand is plausible because the owner/entrepreneur is driven by the prospect of personal enrichment.  The owner who draws a fixed percentage from his business can increase his personal wealth if his company’s net income increases.  Owners, executives, and boards see that net total revenues can quickly increase by a merger or acquisition with another profitable entity.  If their operations provide synergy, the sum may be greater than the parts, or at least increase the market share by the combination.  The natural drive for riches is satisfied by concentrating capital, at least in some conditions.

But, the assumption of a natural progression toward an ultimate concentration of all capital in the State must be questioned, as the actual experience of history has proven it false to date.  Over 120 years of actual history, we see that a freely ordered, self-organizing economy, has chosen to remain divided into a spectrum of micro, small, medium, and large capitalization business entities.  In other words, the market does not have a necessary natural evolution from small to large.

Rather than being a natural progression to a single corporate entity, the ever-increasing size of corporations into a single government corporation will only come about by government command.  The socialist has decided this is a good and desirable end since government is then authorized to impose good behavior upon everyone in the society.  The socialist/utopian goal is the elimination of all the bad aspects of life (e.g. unemployment, poverty, professional confusion, crime, war…) by ordering the lives of mankind by a set of rules that properly order and direct humanity.  This is a noble goal, the end is desirable, and the method is plausible, but there are errors of assumption that make this method of perfecting society unworkable.

A Metaphor from Chemistry – The Natural Size of Corporations:
Using a chemical metaphor, consider two chemicals mixed and reacting in a flask.  In a reaction that does not go to completion, there is a portion of the reactants that react and form products and a portion of the products break up and form reactants.  This is an example of an equilibrium concentration being formed between reactants and products.  In general, reactions in real-world conditions do not go to completion (i.e. there is still a portion of reactants that do not proceed to form products when the reaction comes to equilibrium).

Generalizing from this example, systems that both form and break apart come to an equilibrium concentration of reactants and products for any given environment.  In other words, at a low temperature, the reaction may go to near total completion, but at high temperature, there is sufficient energy to break apart the product and the reaction does not go to completion.  Thus, the environment of the reaction is extremely important in computing the equilibrium point, as it changes drastically as the environment changes (e.g. pH, temperature, pressure…).

Examining the dynamics of the free market, there is a force pushing business toward concentration by mergers and acquisitions, but there is also a reverse process too, where businesses split and divest themselves of inharmonious divisions.  Thus, the centripetal concentration force driving mergers and acquisitions is opposed by a competing centrifugal tendency toward spin-off in the presence of internal disharmony.

To bring this metaphor down to its the relevant economic specifics, small companies can react together by merging and forming a larger corporation, or a larger company can break up or spin off parts/divisions and proceed as two separate entities.  In a free environment, companies will merge and concentrate to the point at which they maximize their profitability (profit/share).  When their profitability drops due to their increase in size, they may break apart or spin-off to return to profitability.  In any given free market environment, a balance forms between the concentration of small, medium and large industrial-business-service-manufacturing-materials entities.  The key to capitalism is its flexibility in adapting the production solution to meet the consumer’s needs, which will change dynamically to optimize in each consuming and producing environment.

The utopian solution to the problems of production and allocation of wealth is to place the State in charge of all capital.  Here, size and profitability no longer correlate to optimize productivity.  The state-corporate leviathan simply directs production to satisfy the projected needs of the market.  Bureaucrats, central planners, politicians, economists, and executives direct the productive and consumptive flow by command and judgment of what they believe is good and optimal.  In this environment, one that requires concentration of capital under penalty of the State, there is no equilibrium between large and small sized corporations, only the uniformity of top-down direction regardless of the needs of the micro-environments.

The Purpose of Life, Freedom, and Utopian Selfless Service:
God created the creation, mankind, and society to function around the principles of reward for merit and consequence for error.  The pattern of the Kingdom of Heaven is illustrated in Jesus’ parable of the man with 10 talents, 5 talents, and 1 talent.  The men who performed well received a reward and those who did nothing were punished.  This is a divine pattern and the society that violates it will suffer.  Men must be rewarded according to their productivity.  Being paid the same as all others, at a rate that is adequate to meet an average standard of living, and given an acknowledgment for being an extremely productive worker, is not adequate compensation to inspire outstanding performance.

The Declaration of Independence declares that all men were given the inalienable (God-given) rights of Life, Liberty, and the Pursuit of Happiness.  But, the utopian wishes to guarantee happiness, and to deliver this promise, he expects that all men will overcome their animal tendencies to sloth and greed.  “Looking Backward” posits that mankind will respond with self-sacrificial, potential-maximizing effort in return for security and prosperity for self and group.  But, since Looking Backward was penned in 1888, all the socialist experiments have met with abysmal failure.  The Leninist and Maoist regimes tried to change human nature and produced horrific human suffering.  Rebellion against the government was met by imprisonment and/or execution.

The socialist revolution sought to replace the passions of men, and cycles of the free market, with a constant flow of predictable production.  But the cost of eliminating choice and risk resulted in a regimentation of men’s lives.  Life with assured security and prosperity loses its dimension of risk and challenge.  When total provision is made for all, men lose the opportunity to overcome their demons in real life testing.  The soul longs to purify itself and overcome the demons of fear, greed, lust, anger, and pride, and only an environment containing true risk can develop and test a man’s character.  Freedom implies the opportunity for failure, and men long for, and fear, an environment that offers both choice, accountability, risk and reward.  Life at its finest offers both rewards for success and consequences for failure.

The free market allows for real-world testing and feedback that appeals to our inner drive to test and purify our character.  Service of the group is good and noble, but it should be done out of choice, not compulsion.  Virtue can be recommended, but cannot be forced.  The socialistic philosophy is seductive because it commands all men to live with good and Godly principles such as service, charity, and industry, but the boundaries imposed on men put them in chains.  Requiring men to serve under the direction of the State removes freedom and places every man in a place of option-less servitude to the state – a place little different than the slavery against which we have rejected as a nation.

Inequality has reached the pinnacle of modern social-economic evils that the new socialist utopia promises to overcome.  The disparity between rich and poor is presented as axiomatic evidence of the evil of inequality.  And using this justification, governmental programs that enforce equality are enacted.  The progressive income tax and inheritance tax are two obvious examples of wealth redistribution/equalizing measures.  The concept of enforcing equality may have already become a majority opinion, as the 2008 presidential campaign promised a redistribution by “spreading the wealth around” as a right and proper concept of “social justice”.

But, inequality cannot be eliminated without eliminating freedom.  Wealth will necessarily, and appropriately, be unequally distributed as long as wealth reflects a disparity of talent, productivity, skill, training, risk, effort, invention, blessing, and luck.  In fact, inequality is good, since a life with gradient gives the possibility of freedom, movement, and overcoming.  The hope of greater wealth, pleasure, luxury, comfort, or efficiency motivates men to work harder and smarter.  The possibility of failure inspires those who are not producing to faith and works in the hope of reward.

The trap of wealth is the illusion that it will provide happiness and those who have attained the heights of fortune uniformly attest to the insufficiency of wealth to fill the heart adequately.  John D. Rockefeller, when asked once, “How much money is enough money?”  He replied, “Just a little bit more.”  Still, wealth is better than poverty, but by itself is not enough to be worshiped and pursued as the goal that will make life satisfying, full, and complete.

The problems and reformation of capitalism:
The problems of capitalism such as greed, hedonistic excess, white collar crime, poverty, monopoly, unfair competition, insecurity, immobility, long hours, boring work, difficulty of entrance, and cycles of boom and bust, would all appear best solved by a communal effort to create adequate wealth sufficient to provide for everyone’s comfort.  But, every experiment attempting this seemingly noble equalization of benefits has produced less aggregate wealth than our current system of freedom and its associated inequality.  The question is actually, how to modify the free market to produce the maximum wealth and mitigate the pain of its abuse.  It is tempting to pass laws that outlaw the negative aspects, and mandate the positive, but then we return to the problems of demotivation associated with a command economy.

The reformation of capitalism will only come with the reformation of men’s hearts.  When men sanctify their personal and public sense of fair play and righteousness, and take that into the marketplace, and refuse to bend to the pressures of quick profits that unfair and unrighteous tactics offer, the cycles of business will smooth, and the general welfare will gradually improve.  The lure of quick wealth is the snare that ends in poverty for all.  The consumer is the enabler of unethical business practices, and he must be willing to boycott and thereby punish those who engage in prurient or false advertising.  The consumer is king in the market as long as there is competition, and he should use that power to discipline those who stray beyond the bounds of the highest ethics.

The solutions offered in Looking Backward are based upon the producing and consuming public adopting charitable and industrious behaviors, but the socialist/utopian solutions are unworkable because they attempt to control human natures by the mandates of government.  The same excellent results desired by the utopian could be manifested by the capitalist if each man in industry and consumption were to sanctify his soul with relationship to money, work/consumption.

Reforming a nation by changing individual minds of an entire people is a large task, and will no doubt require an element of the miraculous.  The problems of poverty will not resolve with socialistic solutions, nor with unfettered capitalism as their only tools.  But, capitalism sanctified will usher in an era of continually increasing prosperity with freedom held intact.  The requirement for this success depends upon men as a society, choosing to bridle their passions and be charitable as well as industrious.  Putting on Godliness in the realm of money, consumption, and production will solve the problems of poverty, merit-based distribution of wealth, pollution, innovation, opportunity, and crime.  The socialistic or government mandated solutions result in pain and chains.

Theft and Corruption:
Men need goods and services to survive, and when basic needs are satisfied, they begin in earnest the pursuit of comfort, relaxation, or thrill that wealth can bring.  Greed drives men to lie, murder, take large risks, and work without a proper balance.  Greed may drive men to steal to obtain the personal benefits/enrichment that comes with greater wealth.  The spirit of greed tempts men with animal passions to pursue unearned wealth, and will relentlessly challenge him if those spirits and actions are not confronted, resisted, and replaced with a sanctified version of the temptation.

Charity is good, and providing for the basic needs of survival or comfort to the homeless man, gang member, ignorant, foolish, or addict is noble, but will only produce a curative solution to the extent that the basic patterns of truth are also taught along with the aid.

Men need an outlet to exhaust the beast inside the soul.  Without a real-life challenge to push against, a percentage will choose to express themselves by pushing inappropriately against boundaries – “rebellion for the hell of it.”  “Rebel without a Cause.”  Without a direction, without a focus, the entire purpose of life comes into question.  All the propaganda about equality and service to the State and general welfare becomes meaningless pabulum when the heart is unsatisfied in a world of enforced mediocrity.

The utopian hypothesis of theft, graft, and corruption fading into obsolescence in a world where the State has taken on the role of provider of the basic necessities has shown itself trivially untrue.  Men always desire more comfort, thrills, or pleasure.  A nation of people satisfied with the status quo stagnates.  Thus, the real solution manifests in a society where the individual can fully pursue his desires and engage his passion by sincerely applying talent, will, and vision to accomplish dreams.

And yes, there are those who have little passion for extreme achievement.  Some men are satisfied by repetitive tasks and predictable schedules, and this is an acceptable choice for those who wish to pursue it.  But, others require more challenge, and to organize society around uniform compensation, and expect outstanding achievement, is to create a fantasy world equivalent to cartoons, fairy tales, science fiction, and myth.

As for those who are willing to violate Godly interpersonal boundaries, there must be an intra-societal policing that prevents men from advancing their personal gain by criminal efforts.  The quick and obvious solution is to dedicate the role of policing, judging, and enforcement to government.  But, in a free society, each person must dedicate a measure of time and effort to judging those around him.  Everyone is his brother’s keeper to a degree, we are all related by the fact that our actions influence the web of life, we cannot separate ourselves completely from the actions and effects of others.  Thus, if nothing more than a requirement of self-preservation, must all take the responsibility of judging and confronting those who violate the laws of righteous, fair, good, and Godly law.  If we do not take that responsibility, then the State or God will take that role and judgment and enforcement will be imposed upon us.

Part of assuming one’s place as an adult in society is taking on the role of teacher, parent, guardian, or owner.  If all participate in this responsibility, we each have many corrective forces act upon us.  No one becomes God to another, but God can speak through the group voice with such volume, clarity, and uniformity that the conscience and soul can be rightly directed.  Peer pressure has power, and while not irresistible, a group allied together in a direction is not easily resisted.  In such a world, none escape the rebuke and group judgment that comes when all participate in sharing their perception of violation.

In such a system, the judge also receives feedback.  Each man’s perception and delivery of right judgment is sharpened by confrontation and counter-confrontation.  The result is fair pay for work, pleasant and appropriate relationships, and a level playing field that rewards effort and allows entry based on qualifications and character.

We all have the right to voice an opinion, and we all have a right to oppose or object to an opinion.  We can oppose someone who is attempting to pursue an unrealistic or imprudent dream, and the dreamer has the right to oppose the counsel and continue his growth and preparation to manifest the impossible dream.  Those who violate the sacred boundary of a man’s soul and prevent him from pursuing a Godly passion by force receive confrontation.

Bribery, cronyism, and petty kingdoms corrupt justice and Godly judgment.  Exposing the violator to an endless stream of gentle to harsh personal/group censure will defeat the will of those who violate the boundaries of property and soul.

Barriers to Entry:
The utopian criticizes the capitalistic system as closing the door to manifesting a dream to all who wish to enter the entrepreneurial arena without a large capital deposit.  This is truly a hurdle one must cross to enter the realm of business.  But, is it bad or wrong for life to have barriers?  Should there be a different standard for entry to challenge the inventor, businessman, manufacturer, or banker?  What is the more optimal test of worthiness?  How should society instead select who proceeds on with the authorization of the capitalist?

The capitalistic system uses the test of wealth accumulation (from self or others) as a requirement for initiating a small business.  And, this is an appropriate standard, as per Biblical standards.  We see scripture command us (paraphrased) “do not despise small beginnings,” and “How can a man be trusted with true spiritual/eternal wealth, if he has not shown himself faithful in the care of earthly riches.”   The initial startup capital usually comes from personal savings, venture capital, angel gift, friend/family loan/investment, or saving from labor in another enterprise to devote to establishing the new one.  But, in some way, the executive, the entrepreneur, the small businessman has shown himself trustworthy by executing other tasks faithfully first.

Society and economy in this realm mimic one of the most pervasive of all metaphors of nature – the activation energy.  The initial capital investment into a business is the equivalent of the activation energy that must be brought into a system before a reaction can take place.

Using chemistry as an example, two atoms will not react and bond unless they have adequate activation energy.  The two atoms must have enough kinetic energy available to overcome the repulsive force of their outer electron orbitals.  In so doing, electrons from the two reactant atoms can intermingle and form a bond of mutually shared electrons.  A great deal of energy can be released by forming a structure of lower potential energy.

Adding to this concept of bonding atoms, we introduce the concept of the enzyme or catalyst.  The presence of a catalyst reduces the amount of energy needed by the reactant atoms to form the bond.

First, the entrepreneur needs the activation energy of startup capital to bring him into contact with the process of forming the business entity.  The business entity once formed is the catalyst for the formation of wealth from two reactants – raw materials and labor.  In the case of entrepreneurship, the setup energy is large, but once the activation energy of organization, invention, training… is complete, a much larger output results.  The business functions in the metaphorical role of enzyme or catalyst.  It takes a great deal of manufacturing energy to form the enzyme/catalyst but once formed/created, it can with relatively little energy input (compared to production without the organization of the machine) produce a continuous stream of wealth at low cost.

The owner/entrepreneur can then take a portion of the energy output of the machine as a reward for having invested the pain, intention, sacrifice of time, and divining the invention.  Without the possibility of reward for the work and risk of building the catalytic business entity, little innovation would occur.

Capitalism vs. Socialism; State vs. Soul:
God wants man to prosper, and to love Him.  God treats the State as a secondary consideration, more as a reflection of the hearts of men, rather than as a primary love-relationship.  God rewards men with a good State when as a group their souls are pure and aligned with His will and way.  Without righteous hearts, men struggle in vain for peace, happiness, and prosperity.  Men have eternal spirits, and the spirit is clothed with the soul, and the soul energizes and enlivens the body.  Man has a relationship with God on all levels, body, soul, and spirit, and God blesses individuals according to their righteousness and relationship with Him.  The blessings of the State flow secondarily from the righteousness of its people.  The organization and prosperity of the State are of secondary importance to the state of men’s hearts.

The Achilles heel of the socialist/utopian State is the lack of individual reward given to those who develop new and witty inventions.  Without reward, men will not be motivated to invest the hard work of developing new machines/enzymes/catalysts for converting labor & resources into useful goods and services.  Without the incentive of personal profit, some (Few? Many?) will not have sufficient motivation to engage the hard work of manifesting these new inventions.  Others may be facilitated or encouraged by government programs that support invention.  The experience of previous socialistic experiments gives evidence that the State will sink into the mediocrity of old technology or slowly advancing innovation.  The lack of personal reward for innovation is a major deficiency in the utopian/socialist world.

So, that’s the book report and analysis for tonight.

I like your analysis.  Parts of it are said better than I thought about.  But my advice is to resist the temptation to analyze until you are finished with the book.  The author presents more interesting arguments (anecdotal evidence) toward the end of the book. I am glad you are reading it!  We will have lots to talk about.