The Problem of Theory and Practice

I recently saw this image in my Facebook news feed and re-posted it (as I do many things I feel interesting or shareworthy):

10978708_868047603257744_4551964331425788439_nIt drew up a debate between myself and a couple of my friends who regularly like to debate me about politics and philosophy, all in good, robust fun, particularly the 5th statement, which reads: “I don’t hate rich people.  I hate the system of capitalism that creates an elite 1% at the expense of the rest of us.”  And that is essentially the definition of a zero-sum game–for me to have a gain, someone else has to have a loss.

The debate itself began with two comments.  They read:

imageI jumped in at this point, interested mainly in the second comment, which was mainly about what motivates people to do anything, and stumbled into the greater question of how what we do and why we want to do it are two different things when exercised in practice.  I will explain those points in a moment, but first my initial response:

imageTo be clearer, I meant that it is not the effort in itself that makes you feel good about doing something, thus motivating you to do more, it is the actual accomplishment that has the meaning to you.  The effort required to achieve that accomplishment is just context as to why the accomplishment is worthy of being justified.  If we lived in a fair world where, indeed, the amount of effort you put into doing something translated proportionately into how much reward you received upon completing the task, then the effort would indeed be the determining factor.  But that’s not the world we live in.  That’s not the system of society in which we live our daily lives, at least here in America.


Think of it like a REM sleep cycle, or a 401k.  Sleep, as it relates to the functioning of the brain, is exercised through what is called REM sleep, and this comes in a cycle–falling asleep, deep sleep, waking up–which generally takes about an hour and a half.  You go through several of these cycles every night, and these cycles are what refreshes the brain to function normally and effectively the next day.  However, if you interrupt one of those cycles by, say, waking up after only one hour instead of the hour and a half, then that same hour isn’t worth as much as it would have been worth had you gone through the whole cycle.  In fact, it is worth less.

But perhaps this concept is better illustrated by the 401k.

In a 401k, generally speaking, you put money into an account, agreeing to a set amount of time in which the money accrues interest, before you can take it out, which is what you do when you retire.  You have entered into an agreement that, in exchange for promising to let the investors use your money for a set amount of time, you will be rewarded by getting more in return than you had put in.  For example, if you put $500 in now, in ten years it will be worth $750, and by retirement in 35 years, that original $500 will be worth $1000.  But if you want to take money out early, you take on a penalty for doing so, and that same ten year period in which, had you let it sit until the end would have been worth an extra $250 instead gets penalized, through interest payments and fees from removing it early after the same amount of time (10 years) and ends up only being worth $350.

In theory, 10 years should be 10 years, and the money should be worth the same because the same conditions existed during the same time.  But life happens, and bills have to be paid, and you are forced to take money out early and therefore accept the loss of future gains because of the necessity of now.

And that’s illustrative of how it’s not the effort that makes the achievement satisfying, but the achievement itself.  You can put the same amount of effort into doing something, and feel good when you succeed at it, but if you don’t succeed, even though you put in the same amount of effort, the satisfaction is not there.  If life was fair, and we lived in a fair system, then yeah, effort would translate into satisfaction.  But we don’t live in a fair system, and you don’t always succeed at a task you are trying to, therefore the effort can’t be what satisfies you, and thus be what motivates you to want to work hard.

And now we come around to Michael’s main arguing stance: the system in which we work.

image2The main issue I have with this, I think, mainly falls into the difference between the theoretical theory or definition of a system of doing things, and how it is practiced/exercised in reality or the commonly assumed definition of that system.  I think Michael has confused capitalism and corporatism as being two different, separate, distinct systems, when in fact, one is just the way we have chosen to execute the other.  Capitalism is the theory, corporatism is the practice.

And I think many people would make this mistake.  The problem is the definitions we ascribe to these words when we hear them in discussion as opposed to what they actually are.  For example, when we hear the world “socialism”, here in America (at least), we automatically associate it with Hitler, because, yeah Hitler was a Nazi, and Nazi’s were bad, and the Nazi’s title is literally ‘national socialism’.  Just the same with communism:  when we hear that word, we automatically define it with Soviet Russia, which in practice, exercised it in a bad way.  People know China is a communist country, but don’t ascribe it the same stigma as Stalin earned it.  And that’s because China goes about it in a slightly different way than Stalin and the Soviets did.  Ironically, China is more capitalist.

Let me illustrate this difference by explaining the technicalities of our own system of government here in the United States.

America is a free country, we are a democracy, the people rule and decide.  That’s what everybody ascribes to the word democracy when they hear it being tossed around.  But it’s not entirely correct.  The United States was set up as a Republic, which is a form of democracy.  Democracy is, indeed, government by the people.  Republicanism is where those people choose representatives to exercise that power.  We elect senators and representatives that we think agree with what we think we want done, and we let them go about doing all the work and making all the actual decisions.  The only decisions the people make is choosing who gets to make the decisions.  So the people don’t directly rule, but have directed the system under which all the rules are made.

England is a constitutional monarchy.  The king (or queen) is the ruler of the country, but long ago, they agreed to make a deal with the people in which the royals agree to operate under a certain set of rules and guidelines, one of which allows the people to be involved in government, and they called it parliament.  The parliament is divided into two chambers, just as the United States is, but the make-up of those chambers are slightly different than our Senate and House of Representatives.  They have the House of Lords, in which seats aren’t elected, but inherited through the generations of the aristocracy.  Whereas the House of Commons is elected by the people.  The ruler of the country, in those agreed upon rules, gives over it’s decision making power to Parliament to run the government for them, just like we choose a group of representatives to operate our government for us.  The Queen is head of State, but the Prime Minister is head of government.  The queen essentially has no real decision making power.  And so, this is essentially a form of democracy (because people get to help and decide what the government does).  But it’s not like our democracy.  And they have chosen socialism as a form of operating their government and economy, whereas we in the United States have chosen to be a republic (government) with the economic system of capitalism (economy).

Getting back to capitalism and corporatism, though, we must realize that capitalism is like democracy (the theoretical system) and corporatism is like republicanism (the form in which we actually execute that system).  Capitalism in itself is not a bad thing, just like communism or socialism, in and of themselves are not a bad thing.  But, in practice, we give them different definitions (communism=Soviet, socialism=Hitler).

Originally, the capitalist and free market economy of Adam Smith that this country adopted when established didn’t have corporations as we know them today, or a central banking system–The Federal Reserve–as we do now.  Just the same, they didn’t operate in the post-Industrial Revolution world that we now live in where all of the sudden through technological evolution translating into higher efficiency and lower costs to achieve the same production (and better) meant huge profits and fortunes could be amassed.  Under original capitalism, the greater part of those profits should be used as capital and reinvested to produce greater efficiency and profits in the future.  That’s what capitalism is, investing profits to ensure future profits.  And in a fair system, because there would be greater profits generated in the future you could pay the workers more as time went on, improving their lives, while still gaining profits for business owners to have for themselves and to use as capital again.  But definitions change over time and what those definitions mean to those who use them to justify their actions changes, too.

It used to be that corporations were formed as an association of a few people, chartered and authorized by the government, with the goal of achieving a single defined task (like the building of the Erie Canal), which upon completion would end in that corporation being dissolved and ending.  They weren’t meant to exist forever.  In time, however, this changed (because of a few distinct reasons) into the corporations we know of today, whose purpose is not to accomplish a single task, but to gain the most profit for the owners/shareholders of those corporations.  And fairness, sadly, doesn’t get you the most that you could have otherwise.  If you don’t have to pay as much to the people in your factories, but can still sell the products they make at the same price, then your cost goes down, and your profit goes up.  Sure, the workers get less, and their conditions and lives suffer accordingly, but since the main goal is to make as much money as possible, this pesky, irritating fact can’t be part of consideration if you can get away with it.  That’s what makes the system unfair.

The thing is, though, that this is shown by history to not be the best way to go about things in a capitalist society.  And that history is pretty much exemplified with the story of industrial manufacturing and raging, untethered capitalism (free market) and the coming of Henry Ford’s way of going about things.

Like I said, the best way to generate the most profits (if that is the goal) for the people who are entitled to them as owners of business is to pay the least cost to produce whatever it is you sell (this includes materials and the labor needed to create your product) and then to sell it at the highest price you can get away with selling it.  And this focus generates terrible separations between the greater proportion of people involved in the production (the workers) and the much smaller proportion of people who are entitled to claiming the profits from the production.

But if the focus is changed from acquiring the greatest possible profit to the best economy that can be realized through capitalism, instead, then things would have to work a little differently.  And Henry Ford realized this.  He is most remembered, generally, for his system of the moving assembly line, which was a much more efficient way to produce manufactured products.  For our purposes though, we should look at how he operated his business.

If your focus is the most profit, then the efficiency of Ford’s manufacturing process would mean it would cost him less to produce more, and therefore have more to sell, and therefore generate more profit.  But Ford’s focus was broader.  At a time when everyone was paying their workers as little as they could to get the work out of them they required to operate as a profitable business, Ford chose to sacrifice some of what would have been his profits and pay his workers more than the other companies.  In turn, while he still made great sums of money for himself, his workers had more money themselves to spend, therefore improving their living conditions and the conditions of all the other businesses where they spent that money, who in turn could have more money to pay their employees.  As the tide comes in, all boats rise.  The difference of goals being best profits and best economy makes all the difference in the world.

As time went on however, and the corporations got a lot of the same legal rights as natural citizens, and their focus, legally, became to aim for getting the most profit possible for their investors, the system became unfair again.  And if the corporations want to generate the most profits, they will aim for the lowest cost.  While, in the meantime, getting to use the power of those profits in exercising the rights of citizens in the determination of our government and how it operates allows them to make the rules under which they operate, allowing them to generate even lower costs (and consequently higher profits).

They have thus turned it into a zero-sum game.  For them to gain, someone else has to lose.  And a zero-sum game is inherently unfair because it requires there to be a losing side for there to be a winning side.  This is what corporatism has become.  And corporatism is the way our economy has come to be exercised under capitalism, just the same as a republic is how we have chosen to exercise the governing of our democracy.

Henry Ford showed that it didn’t have to be that way, though, in order for him to become a very wealthy person.  You don’t need to take the most that you can get in order to live as successfully as you should realistically need to.  If you only need 5 million dollars to live the rest of your life as comfortably as you want to live it, the fact that you have 10 million makes no difference to the experience you have.  And that extra 5 million could give someone else the same quality of life that you want for yourself, without costing anything of you, because you already have all that you need.  This is a non-zero-sum game (in order for you to gain, it doesn’t mean that somebody else has to lose).

And that is the difference between our system of capitalism (corporatism) and socialism.

The problem then, with Michael’s position was that he separated corporatism and capitalism into two separate things, when in fact one is just a way of doing the other.  And for corporations to get the most profit, they need to find the cheapest way of doing things.  But it’s the employees who do the work of the company for the employer, and they are part of the cost of doing business.  Therefore, if you can pay them less, you can get more.  But you need them to work just the same, and to get them to do that while also suffering lower and lower standards of living (because they have less and less money), you have to get them to believe that it is effort that will get them satisfaction and not the accomplishment.  Because if how hard you worked translated into how much reward you got for that work, you would want to work harder and get more.  But you can work as hard or, more times than not, harder than the people receiving the profits from your labor and receive less than they do.  Because you receive less than you should in a fair system, you don’t feel a sense of accomplishment because you’re not accomplishing the goal you’re seeking.  So it doesn’t matter how hard you work, you’re not achieving as much satisfaction for it as you would if the same amount of effort would have gotten you your goal.  The people with the money don’t have to work as hard as the multitude does to get more of a reward than they do, yet they still get the reward.  And that is the reality of the situation.


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