Theory of Economics and Energy Flow

Communism Vs Socialism Vs Capitalism

There seems to be a consistent debate of Communism vs Socialism vs Capitalism in modern society. As a programmer, I look to create solutions which help create clarity, understanding and efficiency.

History of Economics and Civilization

First, a quick understanding of the history of civilization.

Modern Civilization was created when we created advanced agriculture and food storage.

Before modern civilization – what did economics look like?

Let’s pretend we are prehistoric people – “cavemen”. One group of people makes shoes, another shirts, another food, and another wheels.

This type of economic is a trade and barter economy. You trade one item directly for another item. Economics is as old as time itself – trading for goods and services (to save time and energy).

When a society gets big enough, money is introduced to facilitate the purchasing of goods and services. (A persons who is selling shoes might only need one wheel – so money is used to trade for other goods and services more efficiently).

Modern society uses money on a large scale so individuals can purchase items that they need; this capitalism is born!

Communism Vs Socialism Vs Capitalism

One of the topics we see today is about which economic model is superior. Many people today are begging for socialism and are studying communism to disprove the economic excellence of capitalism.

Many would be surprised to realize that we are already operating under socialism.

Entrepreurship in the United States is at an all time low; less than 10% of the population run their own businesses. Using math, if 10% of the population are generating independent income, that means most of the money supply is being generated through the Government (printing money, high taxes, spending on government budget / bloat, inefficiencies (waste)).

Overtime, when government becomes the largest producer of goods and capital (seizing of production), we become a socialist society. A society which is dominantly governed by a few people making the decisions. Private capital becomes less and less, while government and it’s services becomes larger to the ever increases needs for budget and growth.

The issue with a socialist government (a government which controls most of the policy and spending) is that it lacks the necessity for efficiency. There is a lack of need for efficiency because the government can always raise taxes to address the lack of capital for goods and services. Raises taxes stresses the population as it leaves them with even less capital / energy than before with the promise of providing all the things they need. (A better idea would be to have less taxes and allow people to purchase the things they need – things aren’t free, someone is paying for it and government is extremely inefficient in producing items).

Entrepreneurs study business and economic theories to become efficient business experts to address the needs of society. A capitalistic economic model encourages free thought and rewards creative solutions. (Energy in, Energy out).

Sodalists believe that money is finite and that no person should be able to gain as much wealth as they would like. This is incongruent with the universe due to the fact that numbers are infinite, as it the universe itself.

Since numbers are infinite, capital is also infinite. When a person or number of people decide that there is a cap on how much wealth you can have, they are governing (capping) your total economic and personal ceiling.

Why should any individual or group of individuals have the ability to cap your own personal growth? (money is energy, money is numbers, numbers are infinite. The people in charge of a socialist and communist society have made them selves the arbiter of what is good, right and just in society – who made this decision and why?)

If you think about reality creation, the American dream and living life to your full potential (life, liberty, and the pursuit of happiness) – you should ask yourself; which economic model can I fully realize my own potential and maximize my growth as an individual.

When a governing body (which is a group of individuals) have decided that you cannot have a certain amount of wealth either through personal restriction or taxes, they are literally limiting your personal growth and the growth of the whole.

The leading argument is that high ceilings lead to lower floors – meaning that when someone can generate hundreds of billions or even trillions of wealth, they have essentially “stolen” wealth (energy) from individuals who are on the “floor” (aka poverty).

What socialists and communist’s fail to understand is the concept of value creation. When a new idea takes hold (society deems it has value ((aka the market))) new value has been created – correct fiscal policy can print / generate new money to address the growing demand or need.

For example: If a person creates a document or piece(s) of art that has value (meaning other people will trade value / energy for the value being offered), new value has been created – value has not been “stolen” from anyone else.

If a governing body is printing money to address inflation needs (inefficiency, bad policy, waste, greed), new value is not being generated; money is being printed to address the lack of efficiency in the markets (inflation -> leading to hyper inflation).

Money / energy / value is being stolen when markets are being manipulated to create artificial recessions and depressions to weaken and lower the value of investments (401ks, pensions, housing market, etc) so that those with higher amounts of wealth purchase cheap investments to grow their wealth when markets recover at the expense of the individual (poor and middle class).

Those with wealth will find it easy to weather inconsistent economic storms. This is what is actually hapening when people believe (correctly so) that people’s wealth is being stolen. (Incorrectly attributed to successful entrepreneurs – keep in mind, politicians do not create products, they create policy, which can be corrupted to increase their own wealth. Entrepreneurs create products, goods and services and are rewarded for their hard work.)

Entrepreneurs are being targeted as the ones who are greedy and taking wealth from the nation when they are the ones offering solutions to address the ever growing needs of the population.

People are begging for socialism and communism because the overall wealth and health of a society is being degraded through mechanisms which cause recessions, inflation, depressions and stagnation (greed of a few people at the top).

The governing body, instead of taking responsibility for their actions, place the blame on value creators (who are the ones are creating the products we need on a daily basis – the very things which keep an advanced civilization together) – so they can continue to keep their positions of power and continue to be praised by the people for saving them from the “evil” capitalists (who are providing the economic growth for the entire country).

Using diagrams below, I have illustrated the differences between the three economic models.

I have developed a concept called “money pipes” that shows how money / energy flows.

With communism, there is a singular group of people which control all policy. The money pipelines are using to illustrate the inflow and outflow of money / energy.

At the bottom left, i’ve noted a 1:1. Since this governing style prefers complete economic control, there is one monetary pipe in, one monetary pipe out.

Here is the issue: A society can crumble very quickly due to fear, disease, illness, greed, anger, anicety, depression, etc.

An entire nation and it’s economic model can become distressed and diseased very quickly. Money is an energy, an energy which we use to improve our lives. The source of the money itself carries an energy. If the governing body is sick, depressed, angry etc then the money / energy will carry that energy to the entire population – essentially creating a depressed society with “bad” money.

Smaller amount pipes, higher risk for economic slow down and uncertainty.

Using this visual, we can see that there are more pipelines than the communist economic model. This is a 1:N relationship, however, the N, meaning many, could be only a few. Based on the percent of the degree of socalism, would be a factor in how many the N could be.

The government controls policy and some industry. High taxes and the government taking over certain industries creates a society which is lacking in creativity and incentive.

Government takes individuals at a rate of 50-70% with a promise of providing everything they need, including free healthcare. What if the healthcare answer is incorrect? What if an individual wants to create a business and build a giant house, with big boats and a lot of travel?

The growth, free well and personal development of the individual will be limited due to the limiting nature of the socalist government.

The promise of a socalist government is to have an equal distribution of wealth, however, there will always been an unequal distribution of “stuff” – which is proved through large numbers, probabilities and statistics.

Socalisism infringes on free will, and will limit the personal development of the individual. Society as a whole is limited while the governing body is free to enjoy the finer things in life (who are not the people who do the value creating)

Capitalism encourages free though, free will and individuality. The American dream is supported by capitalism. 1:N relationship with capitalism actually has a higher ceiling (technically unlimited in pipes) which will keep a society healthy.

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