Understanding Socialism

  • Early Socialists were simply critics of Capitalism that was born out to the French and American Revolution and had proponents like Adam Smith, who strongly believed the if everyone looked out for their self interest, all would be good.
  • The early proposed alternate to Capitalism, which had failed to provide the Freedom Equality and Fraternity that it had promised, by imagining a system where the means of production and decision making and consequently profits were in the hands of the people…
  • To bring about this system ie to replace capiralism with socialism, they saw 2 ways. First was revolution and second evolution (ie creating political parties and winning election).
  • Once socialists get into the Govt power, the idea is that they would create policies that would being about socialism.
  • In Germany, in the early 1900s, the German Socialist party won and brought about socialism that way, whereas in Russia, in the post WW1 environment, when the country was in shambles, Lenin captured the Govt by Revolution and brought about socialism that way, so did Mao in China and Fidel Castro in Cuba, Che Guevara in Argentina etc. Lenin called this State Capitalism coz the state was now the Capitalist. Stalin labelled this as Socialism later coz the people had sacrificed immensely since the revolution in 1915 to 1930s (when he came to power), to transition from private capitalism to state capitalism in order to maintain order in society and fulfill basic needs, and so Stalin wasn’t in the position to say to them that State Capitalism is just the start of the journey to socialism, and that they would need to sacrifice more to bring about the true reform of Socialism. So he simply pandered to the people and said that what the people had revolved for was achieved and that this is what Socialism is ie when Govt owns most things and is in charge, it’s called Socialism and when it’s completely in Charge, its called Communism
  • In Russia and other socialist/communist economies, the actual reform that Marx talked about where the People would be in charge of the decisions and profits of their labor, NEVER HAPPENED anywhere.
  • Also this rift between the means of taking control of Govt. to bring about socialism, divided the socialist world and the Russian method of doing it via Revolution was termed Communism to distinguish it from the other evolutionary path to Govt.control that Germany followed.
  • So, “Seizing the state”, became the definition of Socialism (evolutionary) and Communism (revolutionary), instead of it being the “Means to the transition to Socialism”
  • Hence Socialism became to be defined as the “Govt. being in charge”, instead of it’s original definition of “People being in charge”
  • Just as there was Private Feudalism and State Feudalism and Private and State Slavery systems in the past, so is there Private Capitalism (US) and State Capitalism (Russia). This has nothing to do with Socialism at all…
  • Socialism is the eternal critique and anti of Capitalism and so wherever Capitalism spreads, Socialism will spread too, albeit few years behind, waiting for Capitalism to destroy the society and for people to look for alternates.
  • State Capitalism can be better than Private Capitalism in certain sectors but not so for others.
  • When State Capitalism is used for other sinister objectives, it becomes “Fascism”
  • Socialism in one line is “Equality in Wealth and Power (Democracy)”
  • Marx, in his study of the failures of Capitalism concluded that the only way to ensure income equality is to change the production system from the Capitalist Employer- Employee and Boss/Manager – Managee hierarchy to a Worker Cooperative where everyone is equal in Power and Contribution and Income (fruits of labor and profit).
  • As long as you leave in place a production process where some people produce a surplus for other people, who use it to maintain themselves in a dominant position, you will eventually have inequality in the system.
  • The startups that are born out of the intention to move away from capitalism and call this act as entrepreneurial innovation are actually socialists living out marx’s dream without knowing it.

BBC Genius of the Modern World: Marx

  • Marx saw first hand the negative consequences of Capitalism like child labor and long working hours and worker exploitation and income equality.
  • Though he was born in an aristocratic family, his life was hard. Due to his political work, he had to constantly move, first from Prusia (Germany) to Paris, to Brussels and finally to England. He had no steady job and hence was poor and unable to support his family of 5. He also suffered a painful skin condition.
  • In searching for the reasons for this, he found that the Capitalist system is designed to lead to this coz it depends on profit and profit comes from surplus labor ie Profit is the difference between a worker’s industrial output in a day’s work AND his wages.
  • Hence, he argued that the business owner has to squeeze max profit to expand and compete in the market and for that he has to exploit the worker or else someone else will do it and his business will fail due to inability to compete.
  • Marx was left distraught seeing the effects of capitalism in 1840s England. He wrote the Das Capital over 60 yrs to  explain this problem and propose Communism as an alternate solution.
  • He argued that man cannot be happy if he’s distanced from the fruits of his labor, and that’s what capitalism did, by reducing workers to machines.
  • He also argued that man is inherently creative and that capitalism, in it’s demand for workers in form of machines kills man’s drive and passion.
  • Stalin’s ideas were later construed by Stalin to justify his authoritarianism and subsequent killing of thousands


Mauritius route


Per Indian treaty with Mauritius, if a Mauritius Company invests in India, it doesn’t have to pay any income tax in India.

This is faulty as with all other countries, the double tax avoidance law says that eg. a US citizen earning in say Canada, has to pay Canadian tax of say 30% and then back in US, he has to pay the difference, so if US has 40% tax, he has to pay 10% tax in US.

But Indian treaty with Mauritius is such that FDI into India requires no tax to be paid in India.

So black money of corrupt indian A goes out to Mauritius using Hawala etc. and then the A sets up a company there and invests the black money in India, hence converting it to White and Not paying any Tax at the same time.

Another loophole is that NRIs (People living abroad for >180 days) don’t have to pay any tax in India. So actors etc. show that they are NRIs, by shooting abroad, and so are saved from paying tax.