Reply To: Economics of State Sadism.

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Empty soul

Free market economics as it exist now and totalitarianism are not actually that different despite what the names suggest because totalitarianism is built upon a system that requires people to be completely subservient to the state and the free market is not actually very free at all because it is dominated by monopolies, cartels and money men all with huge bargaining power and therefore market influence wherein the average person is automatically made subservient to it.

In the above, both systems operate on supply and demand but that supply and demand is controlled and manipulated by those with the most influence. That influence comes in the form of financial clout within free market economics and in the form of political clout within totalitarianism.

In a totalitarian state like North Korea the people are made to work for very little money and have very little choice in their lives however a similar pattern is also seen within open market countries wherein the indigenous population are often on purposely made unemployed so that they can be replaced with cheaper foreign workers. Unlimited and uncontrolled immigration is also used to cause a glut in the jobs market so that the over supply of available labour pushes down wages as the competition for employment grows fiercer and people become more desperate.

The open market also allows richer countries to off shore their industries and relocate them to the third world wherein they can pay third world wages and not have to worry about workers rights and pensions etc. This also makes more of their own indigenous populations unemployed once again.

The above behaviour allows corporations to massively increase their profit margins whilst significantly reducing their cost of production. Now, under normal legal practices this greater wealth would also create more tax for the state. However, corporations often set their headquarters as being located in tax havens such as Gibraltar, Carmen Islands etc.

Another way Corporations often avoid tax is by channelling profits from one branch to another. Starbucks coffee for example got in trouble for not paying any UK tax on its operations for years because it channelled all of the profits from it’s UK chains into it’s Netherlands branch where tax is set at a lower rate thus officially declaring it’s UK operations as a financial loss hence no UK tax to be paid. The list of ways they often escape tax go on and on.

Greater indigenous unemployment and the pushing down of wages in general also means less income tax can be collected and since poorly paid people have less deposable income it also means less consumerism as well which once again means less tax for the state. The decrease in tax intake and the increase in state expenditure(social welfare), plus the increase in population levels via uncontrolled immigration causing necessary infrastructure expansion(borrowing which incurs debt and interest) also means you have an ever increasing state deficit which lowers the GDP which increases the cost of borrowing so on and so forth and the state can’t do much to offset it because most of the country has been sold into private hands as a result of free market economics.

You understand the point I am making?, in totalitarian states the governments are the ones that take everything and give very little back in return whereas in Capitalist states it is the corporations that take everything and give very little back in return, both types of state still require subservience to the model though for it to work.

People tend to prefer free market countries however because if you are lucky enough to come into money you can live like a King and enjoy whatever it is you seek and in free market countries the chances of coming into money are much greater than in totalitarian ones.

To answer your original question then,

If totalitarian states were to allow independent business growth amongst their population, allow their people to have more choice and more economic success whilst at the same time putting controls(laws etc) in place to prevent corporations from getting too influential and greedy they could create a system where corporate gains mean economic gains which means the state gains and this would benefit everyone at all levels of society.

Don’t get your hopes up though, human greed will make sure that it will never happen and we will soon be entering a new industrial revolution anyway where many jobs will be automated more than ever which means society will become more unequal and divided not less.