Welcome to the underbelly

Speaking quite generally but based on intrinsic differences, a direction of cash flow can be determined for each economic philosophy. In times of duress, for example Covid-19, the Great Depression and the collapse of the Soviet Union, the direction of cash flow is clearly visible.

Capitalism. The cash flow is always upward toward the core wealth of the economy. If suddenly cash flow ceases, it will not deter the upward flow – it simply will slow down. The end result is those at the bottom have little if any cash because what’s left of the flow is always toward the core wealth of the economy. In other words, if a citizen has no means to generate cash, that person is dispensable; nothing is owed to them.

Socialism. The cash flow is circular. The core wealth of the economy is always in flux. The end result is that no one can truly tilt the flow toward them so they can be unendingly wealthy. On the other hand, the extraordinary political power that can emerge from the inordinately wealthy is not available in a socialist economy. As well, no citizen is limited in his worth because he does not contribute to the flow of cash.

Communism. The cash flow is similar to the ocean tide. It moves in and out according to the overall moment in history. Ebb and flow is not a good way to run an economy; it is difficult to generate economic flow to purposefully produce economic leverage. Everyone suffers the moment together – good or bad. A common repair is to move toward authoritarianism. Note China in the last century.

Authoritarianism. This includes any form of dictatorship, monarchy or its clubby version, plutocracy of which corporatism is a subset. Cash flow is not toward the core wealth as it is in capitalism; it is an extraction of wealth from the economy altogether. Eventually, there is not enough cash flow across the economy as a whole and national bankruptcy ensues. Note the state of oil-rich Venezuela.

The way to test which direction cash flows is to introduce a great calamity, for example, a worldwide pandemic. In the US, public sources of cash flow have stopped. No rent, no restaurant, no transportation, no mortgage, no factories, etc. The reader should note that the relative impact between holders of labor income and those holding the core wealth is not a similar experience. Hence, cash flow moves upward. The US must be a capitalist nation.

Ancient Mariner


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