Caution! Childbirth Produces a Liberal.
All the posturing of political candidates about who is more or less conservative or who is the real conservative might be funny if it weren't so basically silly. There are natural progressions in life from young to old, from liberal to conservative, from capitalism to socialism and so on.Everyone is born one hundred percent liberal. The baby has no inhibitions whatsoever. To the extent it can think it thinks only of food, sleep and sex. It has no sense of limitations or that anything is impossible. It is totally dependent and contributes nothing. It wants exactly what it wants and right now. Those who think of liberalism in the classical sense of supporting liberty may object to this description of a liberal, but it fits as the Rush Limbaugh movement and the lunatic right would describe liberalism today.
Parents and society immediately begin to instill inhibitions in the child. If it develops normally, it learns most everything it wants to have or do is wrong, bad for it, impossible or offends someone which is not tolerated. Children are to be seen, only in clean perfect dress uniform, and not heard. Eventually everyone ends as the perfect conservative, a corpse, completely inhibited from any action. In between childhood and death people function somewhere along the axis from liberal to conservative. Posturing by politicians and propagandists not withstanding, the most successful people are those who are able to shift most along the axis as is appropriate to the task faced.
As much as it may pain ideologues to admit it most successful businesses today move from capitalism to socialism. If it looks like a duck, walks like a duck and quacks like a duck, it's reasonable to call it a duck. Since big corporations today look like socialist organizations and act like socialist organizations, it is reasonable to call them socialist organizations. Eighty years after publication of Socialism by Ludwig von Mises it still is one of the best studies of the nature of socialism.
Space does not allow for much detail some of which I've discussed in Capitalism or Socialism. Basically von Mises associated capitalism with liberalism, properly considered as embracing individual freedom. By division of labor production would increase, wages would increase and the individual would increase in prosperity. Under socialism production is run by officials with no regard for the market, the individual is robbed of freedom and considered a mere tool and production stagnates. Therefore prosperity wastes away.
Friedrich Hayek, a student of von Mises, wrote The Road to Serfdom. While he wrote it based on what he observed during the rise of Nazi power, it is more descriptive today to describe the relation of the individual to the corporate state than the political state. However, corporate officials exercise sufficient power over politicians they can use them to take still more freedom from the individual. While Hayek is often held up as an idol by conservatives, it is interesting to note he would never allow himself to be called a conservative because he saw the same authoritarianism developing in conservatives as he saw in the Nazis.
Where the great work of von Mises is out of date is that he did not foresee that socialism would shift from attempt to take over nation states directly to becoming giant corporations that function largely independently of nation states and are increasingly gaining power to control them. Today businesses that are successful incorporate to remove capitalist risk. When the risk is removed they aren't really capitalist organizations any more. Corporations are run by officials as socialist societies are. As Mauldin and Tepper showed in Endgame, they become net job destroyers.
Von Mises writing in 1947 thought western countries were moving toward the German model of socialism. He failed to anticipate that corporations originating in America would follow the model established by Stalin. They attempt as he did to avoid unions and to give employees no voice. Stalin borrowed enough of the theory of division of labor from capitalism to make some difference in pay for various skills, but all decisions were dictated by officials. The real money was reserved for officials who were paid based on rank in the Communist party as corporate executives today are paid based on rank in the hierarchy. In a capitalist free market society executives could not make hundreds or thousands of times what producers do. While capitalist can lose everything they have in the event of failure, socialist officials are rewarded based on rank as we saw with the handouts to AIG and bank executives.
A knee jerk reaction from those with memories of the cold war might be that socialism is evil and we should destroy these corporations. But would we really want to give up Walmart or McDonald's to name two that are most illustrative of successful socialist models? As is typical of socialism they are very conservative. Rush referred to an article, I think in WSJ, that told of the writer going through the Walmart hiring process. It involved extensive psychological testing the purpose of which was to weed out any possible tendency toward insubordination to authority.
As Charles Wheelan pointed out in Naked Economics what McDonald's really sells is consistency. If you pull into town and are feeling liberal and adventurous you might stop at the capitalist Benny's Burger joint. It might be a great experience or not. Even if you ate there before and liked it, the current shipment of meat might be different. Any number of things might have changed. If you are feeling conservative and want no risk, you go on to the Golden Arches. You know the meat there will be exactly the same, prepared exactly the same; the place will even smell exactly the same as any other McDonald's because it will use the same cleaning materials.
McDonald's is particularly interesting in showing as in China socialism has developed some ability to adapt. McDonald's officials are smart enough that somewhere they keep a wildlife refuge of liberals to supply new ideas to meet changing conditions. Rush Limbaugh blames it on the terrible health nuts, but the real explanation is money. As baby boomers, the core customers of McDonald's, have seen their waistlines expanding and health concerns increasing, McDonald's needed to offer some new menu items to keep them coming back. So they need some liberals.
As mentioned above people tend to settle somewhere on the liberal to conservative, capitalist to socialist axis. Most are sort of around the center of the bell curve with some ability to shift. Artists, inventors, entrepreneurs, the really creative and risk taking people generally hang far to the liberal and capitalist side, often with little ability to shift to the center. That is where you go for new ideas, new companies, job creation and so on. For the cautious careful always dependable plodders or inflexible totalitarian leaders you go to the other end of the curve.
We really wouldn't want to get rid of all socialist businesses because they bring some benefits capitalism can't such as huge economy of scale and consistency. Walmart can destroy capitalist businesses and destroy jobs because of its size, but that lets it sell us some things cheaper if it wants to. We do sacrifice customer choice. Just today I went to Walmart meaning to get another water dispenser for our pets. They no longer had the one I bought before, only a smaller flimsy piece of junk I wouldn't buy. I recently wanted plastic wallboard anchors. There and in other big box stores the Chinese have decided to force us to buy a combination pack including screws which I don't need. At another store I have since seen anchors alone, but in a pack of a variety of sizes which I don't want. When capitalist hardware stores existed I could buy a faucet washer. Socialist store offer only a pack of twenty containing one of the size I want.
Rush Limbaugh rants about the horrible environmentalists forcing us to buy compact fluorescent lamps, but again the clue is in money. Why should the Chinese may a lamp that sells four for $2 if for a few cents more they can make one that sells four for $10? They get help from the electric power corporations who want to hold demand down to where they don't have to make gigantic investments to expand the capacity of their distribution system. Our Congress is their willing tool with environmentalists happy to take the blame.
The arguments liberalism versus conservatism, capitalism versus socialism will never be settled. Liberals will always see some way things could be changed to make them better. Von Mises has proved correct that socialism and massive government spending as began under Ronald Reagan will result in declining real wages and standard of living. The momentum of that debt is running us into disaster. The power of corporate states is beginning to endanger the nation state. At the very least we need to find a way to stop them from destroying capitalist companies which are the source of our prosperity.