It is a thought provoking and a deep-sea dimensional analysis. Hence, it is bound the boggle the mind of the person who asked the question, and who ventures to answer it !!
This should have been analysed and answered in the 17th or 18th century. Then the whole world should have functioned in an entirely different politico-social infrastructure !! I feel it is worth to have this in the archive of this 21st century bibliographic collections, to help many developing & under developed nations (which are “still” having a strong faith in the “ancient” Communism), to formulate an appropriate strategy to “Accelerate the pace of their socio-economic development”.
A) Survival and the pedigree
Charles Darwin (1809-1882), British naturalist, revolutionised the science of biology by his demonstration of "evolution by natural selection". In 19th Century, he pondered over the survival and extinction of biological species. He said "Survival of the Fittest" alone inducts any species to grow and continue to survive in any given geographical and environmental infrastructure in the world. (Note : He did not say “Survival of the Biggest, Fastest, Healthiest, Mightiest, Smartest or Toughest” etc.. !!). He inferred that the organism that best “fits” into its environment, puts up with sufferings, adjusts and continues to progress, had the best chance of survival in the world.
Human species are very well a part of this survival concept on the earth. However, human beings are provided with an additional attribute of intelligence. Hence, they have acquired an extra “economic” and “social” survival dimension. This is in addition to the natural environmental and physical magnitude, shared in common with all other species.
All human beings, hence try to fit into a 3 dimensional survival concept namely the (a) the geography and environment (b) the social status and (c) the economic infrastructure.
Within these frames of reference, all the species in the earth build and protect their pedigree (family tree), to grow and flourish over the centuries
B) Socio-economic strata
The human generation over the past many millennium aimed, worked and fitted themselves into certain mixture of socio-economic level saturations.
1) To get the basic needs only (food, shelter and clothing) for the day to day survival. (Category –C. Least effort economic survival)
2) Acquire, store and hoard the basic needs for a limited future period. (Category – B1. Lower level effort economic survival).
3) Enhance the comforts by acquiring the luxury needs, in addition to the basic needs (Category – B. Medium effort economic survival).
Only certain human beings apply the “extra” economic and social concepts of “Intelligence” and “Risk taking”, for certain escalated economic and social acquisitions as below –
4) Invent new ideas, gadgets, social motivational techniques and technical processes, to attain a “Human Leadership” in the world. All actors, politicians, scientists, sports men etc… belong to this group. (Category – A1. Higher Social + Economic survival).
5) Take risk by sacrificing the acquired and hoarded wealth in (b) and (c) above, towards an “Economic Leadership”. Business men, Gamblers, Investors, Producers (Entertainment, Products or Process), Traders etc.. format this set of people. (Category – A. Highest economic survival with Social leadership as a by-product).
Inference – Wealth and economic prosperity of an individual is directly proportional to their objects and efforts, classified as C,B1,B,A1,A above
Note – The basic human tendency is never to share the self wealth with others, but share other’s wealth wherever possible, for the individuals in all the above classifications C,B1,B,A1,A !!
C) Capitalism - wealth divider
Human generation from Stone age, analysed the continuity of their self existence, and formed groups. These developed into societies. The basic needs of these societies were food, shelter and clothing. Sub groups of the society members decided to work exclusively for each need, and produced agricultural products for food, cotton based garments for clothing and wood/earthen structures for shelter. This included the construction of wooden carts dragged by bulls or horses, for transportation. All these materials and the animal were under the superiority of human, the master behind them. In this ancient world environment, there were no significant variation in the wealth or “economic richness” between people.
The industrial revolution was responsible to create a wedge between the eternal unity between the man and the materials/animals. Starting from 1563 with Rev. William Lee, born at Woodborough (near Nottingham, England) inventing the Stocking Frame, a mechanical device for knitting stockings, till 1801, when Robert Trevithick (Cornwall, England) demonstrated a steam locomotive. Then the productive brain + work functions of the human groups were taken over by the mechanical machines. (Subsequent inventions at accelerated pace are classified as a Scientific Research and Development)
Machines produced the goods needed for basic+higher needs of the human beings in large quantities, in better quality and at lower costs.
In 1800s when machines became superior to the human beings Persons who can take risks and acquire the machines (which needed a substantial investment) became the risk taking Capitalist (Category - A).
They considered the non-capitalist minded manpower like a commodity, and started hiring and firing them. By utilising the enhanced machine productivity, they paid a far less wage to the human operators and supervisors of the machines, to turn over a large volume of products with an advantageously higher price per unit, because of the cost reduction.
This created more people to look for only the basic needs, with limited power to think about other higher needs, and nil risk taking ability (Category B and C). Capitalism divided the pattern of wealth possession, among the people. However due to competition, capitalists felt the need for labour participation in management, labour training and incentives for the work force. It diluted the capitalism with more justifiable wealth share among the labour, and ended in a concept of “Socialism”.
However, Capitalism became a rule of the world in early 1880s, by making the rich richer, poor poorer. It initiated a Capitalist (A) versus the Labour (C) struggle between a few rich and a large poor groups. This environment made some polotico-economic personalities to think and find an early solution to control and eradicate the growing “Capitalist” trend.
D) Wealth acwuisition - birth of communism
If any body mentally think and arrive at the number of people in the world belonging to the above categories A, A1, B1, B and C, arithmetically and logically, the inference should be as below :-
A = Very few. A1 = Few. B1 = Some.
B = Many C = Very large
This provides a guideline for answering the question “Why a large quantum of wealth is possessed by a very few people at one end, and why very large people are poor at the other end, in this world of economics !!!!”. This is the foundation QUESTION on which the communism originated and survived in the world.
INFERENCE#1 – Wealth acquisition is directly proportional to the “Risk taking” ability and Partially proportional to the utility of “Intelligence”.
INFERENCE#2 – Luxury acquiring, crossing the limit of the basic need acquisition, is directly proportional to a wrap around and medium economic wealth status (All the White collar and managerial professionals in the world – Middle class people in B category).
INFERENCE#3 – Limited economic survival thought, and prime orientation only towards the day to day economic need is directly proportional to a wrap around poor economic wealth status. [Over 70% of the population in the world are poor (B1) and below poverty line (C)]
In 1897, a Paris-born engineer named Vilfredo Pareto showed that the distribution of wealth in Europe followed a simple power-law pattern, which essentially meant that the extremely rich hogged most of a nation's wealth (New Scientist, 19th August 2000, p 22). Economists later realised that this law applied to just the very rich, and not necessarily to how wealth was distributed among the rest. But mathematically, a Pareto distribution has often been used to quantify the distribution of wealth in the world It is called an “ABC analysis” or a Power law (a polynomial relationship - an expression that is constructed from one or more variables and constants, using only the operations of addition, subtraction, multiplication, and constant positive whole number exponents). It exhibits the property of the probability distribution that coincides with social, scientific, geophysical, and many other types of observable phenomena.
It is well known that wealth is shared out unequally and unfairly. People on the whole have normally distributed attributes, talents and motivations, yet it finishes up with unequal wealth distributions, disproportionate to the real talents of the people
LESSON : Wealth equalisation is a marathon task in the world. It is because every human being has an unique saturation level in the socio-economic strata, between A to C. Very few aim towards A. But most get stagnated at B or C level.
E) Communism - wealth equalizer
Karl Heinrich Marx (May 5, 1818 – March 14, 1883), a German philosopher, political economist, and a revolutionary, was a pioneer in addressing the dominating role of Capitalism in the 1880’s world.
Marx addressed a wide range of issues. He was most famous for his analysis of history, summed up in the opening line of the introduction to the Communist Manifesto (1848) as "The history of all hitherto existing society is the history of class struggles". Marx believed that capitalism would be replaced by communism, over a period of time, by the people’s revolution.
Vladimir Ilyich Ulyanov, better known by the alias “Lenin” (April 22, 1870 – January 21, 1924), was a Russian revolutionary, a communist politician, the main leader and the first head of the Soviet Union (USSR). Lenin introduced Communism into Russia. This changed the history for Russia as well as the rest of Europe. Lenin’s applied Marxist ideas in Europe and Russia, posed a threat to Europe and the rest of world. In developing his plan of socialism in Russia, Lenin followed the examples of Karl Marx and Friedrich Engels [November 28, 1820, - August 5, 1895, a 19th-century German social scientist and philosopher, developed communist theory alongside his better-known collaborator, Karl Marx, co-authoring “The Communist Manifesto (1848)”, and the original developers of the communist theory]. Lenin explained in his economic theory, called “Imperialism”, the first step was to gradually move into a joined monopoly with the capitalist phase, which later became communism. He considered that Monopoly and Capitalism are complete opposites to each other, and should cause problems to the survival of the human beings.
F) The communist approach
Both Marx and Lenin were revolutionist “Social leaders” and composed an “Economic leadership” theory under the assumption that, a large volume of human beings in the lower economic strata (B, B1 and C) will revolt to share the wealth of a few in the upper economic strata (A and A1). This was like “water will find its level” when poured into a large reservoir.
The other European politico-economists like Marx and Lenin, thought in similar formats. It lead to the formation of Communist dominated “East Germany (GDR)” by building the great wall of Berlin on 13th August 1961, and the formation of the world’s largest communist empire, the “USSR - Union of the Soviet Socialist Republics", in 1922 with Russia + other 14 like minded Communist countries in Europe and North Asia.
But the communism centralised all the national wealth with the “State” in the Apex, so that any individual do not own any wealth. At the same time all individuals own all the national wealth aggregated at the state level. The state controlled and curbed all the individuals below, to take any type of risk, or utilise their brain power to innovate or have any say in the wealth utilisation at the state level apex. In this environment the only rich was the State (A) and all the people below were wage earning workers (C), but protected by the state to meet all their basic needs. This situation heated the urge among the people for individual freedom and urge to upgrade their self economic and social level.
Marx and Lenin assumed that the large volume of people in lower economic and social strata will revolt and attain an equal wealth satisfaction level like “water will find its level” when poured into a large reservoir. But what happened was that the people revolted to have the freedom to decide their own economic and social strata, by getting out of the reservoir (the state), holding them tight. As a result, the Communism crashed in the world by 1991.
* The Communist Germany in the Eastern side dwindled down in their Socio-economic set-up, broke the wall on 9th November 1989, and merged with the Capitalist West Germany.
* USSR dwindled into pieces of several smaller nations (and officially dissolved on 31st December 1991), each diluting their Communist principles (full State control), towards Private entrepreneurship, as well as associations and collaborations with the Capitalist dominated Western USA.
G) Why communism failed?
It is a million dollar economic question !!! The reasons are carried forward from the originator’s assumptions, the application methodology and the survival orientation of the people.
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The originators of communism in the world, both Marx and Lenin were revolutionists or “Social leaders”. Any social leader in the world lacks “futuristic management thoughts”. They had an ambition to share and equalise the wealth among all people. But they never thought on how the shared wealth could be put into productive use, create a surplus and recycled to grow more and more.
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Both East Germany and USSR pooled all the assets of their nation and made their “State” as the sole owner. Hence it assisted the state to grow as a monopoly and all the people as simple labour, without any self possessions. The state utilised the labour like a commodity, without any motivation to use their original ideas and any incentive to improve the productive contribution spirit.
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These in turn, created more deception and frustration into the minds of a large volume labour groups spread all over the nation. The state met the physical needs and the basic needs (food, shelter and clothing). But it failed to meet the higher economic and social needs imbedded into the human minds. Nobody can have a surplus economic holdings or be a leader of the local groups. These in contrary to the belief of both Marx and Lenin, the human economic urges and social freedom needs revolted against the State and the “care-takers” of the state.
It ended an era of 69 years (1922 to 1991) of communist domination in the world. Because the communist principles were applied with emphasis on STATE orientation and not with PEOPLE orientation.
H) How communism could have flourished?
It is an equally a million Euro question !!! If communism had a bit of futuristic management touch, it could have emerged as an international guideline for the human survival, prosperity and peace.
The communist nations, should not have pooled all the wealth of the nation, entrusted it to the state, to be managed by their elected care takers. This created a head weight monopoly in the apex.
The state and the elected leaders should not have considered all the domestic public as a labour, without any role to play in the management and operations of the national wealth, pooled at the apex.The methodology for the continued survival of communism, should have been to “consider domestic population and their economic/social survival aspirations” as superior to the “head heavy state orientation”. Without diluting the concept of equal wealth share, the approach should have been to:
a. Form groups domestic holds ranging from 1,000 to a maximum of 10,000, to manage and progress ear-marked wealth-pool segments.
Example.
* Pool cultivable lands in 1,000 acre plots. Allot it to a domestic group of 1,000 agricultural expert people to work, cultivate, produce ear marked crops in each season, sell/export and deposit the revenue in the Central Bank. (Mass farming assist to get a high volume output at reduced cost). The central treasury should provide all the needed materials, over head expenses etc.. on justified and supported requests from the group members. A target sales quantum should also be fixed.
* Build automobile plants say with an investment of 1 million domestic currency each. Allot each unit to a domestic group of 5,000 auto expert people to work, manufacture, assemble, test, sell/export and deposit the revenue in the central bank. The central treasury should provide all the needed materials, over head expenses etc.. on justified and supported requests from the group members. A target sales quantum should also be fixed
* Same is applicable to aeronautical, chemical, hospital, shipping, textile etc… industries. The entire population should be members of some group work and nobody should be unemployed.
b. The state should take care of the housing, food, clothing, children’s education, recreation, health care etc… for all the members in the groups.
c. The central bank should pay a fixed salary to all the members of the group, irrespective of the type of their group membership (agricultural, industrial, health etc..). An adjustment amount could be given to some groups justified on the location and other acceptable exception criteria.
d. The sector groups who have not achieved the target sales quantum should be questioned, the reasons should be analysed, and actions should be taken by fixing the achievable targets and root cause against the achievement should be eradicated.
e. A justifiable sum of the net total surplus (or profits – losses) arising out of all group works in each year, shall be retained by the Central bank for further investment/development activities, and the balance shall be distributed equally among the group members in all sectors, as an incentive.
f. If the net total is a loss, in any year, it should be bourne by the central bank, analysed for the reason by sector, and corrective action should be taken for the non occurrence of the same in the next year.
The communist principles should be applied with emphasis on PEOPLE orientation as primary and STATE orientation as secondary
g. In addition the productivity concept should be oriented towards “Socio-economic development (SED)” output as a major evaluation tool than “Quantum” measures. Accordingly the “management decision” methodology should also be tuned.
h. Socio-economic development acceleration drive has to come from inside a nation, than as a command/motivation from outside. This is possible if the “Domestic investments are from Domestic savings” (even if it is with a foreign assistance to start with) and “Domestic technology” (latest technology moderated to suit the domestic conditions) should be manned by the “Domestic labour”
See the book “SED BY DRVSRS” and “SOMA BY DRVSRS“ (SOMA = Social management) at http://www.lulu.com/drvsrs
I) Summary
a) Human generation try to fit into a 3 dimensional survival concept comprising the environment/geography, economic and social dimensions, over centuries and their pedigree progress .under these guidelines.
b) Because of the divergent level of survival targets in the economic and social strata by each human being, wealth accumulation flows unequally among the people.
c) Industrial revolution mechanised the human work, with cost reduction and quality/volume optimisation. This planted Capitalism in the world, created a wedge in the wealth accumulation process. This further inducted a class war. between the owners of wealth versus the workers, hired and fired by them. Competition made the capitalist to realise the importance of labour and diluted the concept as “Socialism”.
d) The disproportionate wealth accumulation among people seeded the concept of communism in the world.
e) Communism originated by Marx in Germany, spread to Russia and was promoted by Lenin. Both assumed that the large volume of people in the world belong to the low wealth possessing worker class. Hence, they will revolt towards equal wealth share, and Communism shall dominate the whole world, soon.
f) But both Marx and Lenin were “Social revolutionists” and lacked “futuristic management thoughts” on how the shared wealth will be recycled to grow more and more and result in prosperity to the equally share population ? With this limited thought, the USSR (1922) and the East Germany (GDR-1961) and were created, with the entire wealth of the nation pooled on the apex “State”, representing the entire population !!
g) The state became a monopoly and all the people were simple labourers, without any self possessions. The state utilised the labour like a commodity, without any motivation to use their original ideas and any incentive to improve the productive contribution spirit. As aresult, the GDR collapsed in 1989 and the USSR dwindled in 1991, bringing an end to the 69 year old Communist concept. Over and above that, both started promoting the diametrically opposite Capitalist approach and established cooperation with the (imperialist) USA.(Because, State orientation was primary and People orientation was secondary) .
h) Communism could have survived and continued as a guide for wealth and prosperity for all the nations in the world, if the domestic population was considered as “superior” to the “state”. The national wealth owned by the “State” should have been invested in sectorial projects and entrusted to optimum group of people to work, manage and meet a targeted sale. State should have met all needs of these group of people. A reasonable share of the net gains should have been distributed in equal proportion to all, as an incentive. Below targets and loss should have been questioned and corrective action should have been taken. .(People orientation should be primary and State orientation should be secondary).
In addition ,the productivity and management decision should be oriented towards ‘socio-economic Development units”. The domestic investment should be made from domestic savings and domestic technology should be manned by domestic labour
J) References
The entire matter is created and presented by the original thoughts, know-how, innovative ideas, research and development orientation of DR.VSRS, with additional support from :-
1. http://www.drvsrs.com/polifina.htm