It’s confusing, these social-economic policies. What do they mean? Doesn’t capitalism just mean those who work harder are valued more and thus, earn more? Isn’t socialism just hand-outs? No. They are a lot more complicated than that.
But using over a decade of storytelling experience, I’m going to share with you the differences between them in simple, understandable terms.
Basically, they are like schools and textbooks. Let’s set them as measured by ‘Education Points’ (EP). This determines your ability to access education. The higher EP you have, the smarter you generally are.
At first, everyone is given 1EP. This EP is everyone’s basic access to schools. And after that, well, that’s where everything changes.
Let me set the scene.
There’s a sudden need and want for schools in the world. Everyone wants to go to school. It is the ‘in’ thing. What? It can happen. Education can be cool! And because of this influx, every school is filled to the brim, and more schools are being built to accommodate everyone. Basically, everyone goes to school.
In the real world, this is what we’d call a ‘revolutionary period’. Industrial, market, digital, agriculture, all of which falls under this category.
So, everyone have schools and have 1 EP. And a few different types of schools opened up. Now what?
In the capitalistic school, everyone is told that the top 10% graduates at the school will be able to get 2 free textbooks (2EP) and the top 50% gets 1 free textbook (1EP). The 1st generation of students are ecstatic. Everyone works hard to get to the top 10%. Everyone is working equally hard.
But because we are humans, and no two humans are exactly alike, there is a gap, and not everyone gets to the top 20%. Everyone graduates an A student, because everyone worked hard.
But the top 10% got better paying jobs after that, because they had more textbooks to read. Same thing with the top 50%. They are now separated into three groups. The upper class (10%), middle class (50%), and lower class (40%).
The EP distribution now between the three groups are:
A strong middle class is not a normal outcome of capitalism.
Now, so long as the ratio continues as a 3:2:1, society is relatively ‘stable’. They each earn that amount of money, 3000:2000:1000. The cost of education at this time is $500. Everyone has more than enough money.
So, the 1st generation of students now graduate, and money is not a problem.
20 years later, the 2nd generation of students come in. They inherited their parents’ EP and they start with their own 1EP. So, the current ration should be:
But that’s not the case. The same thing happened again, where the top 10% gets 2 free books, and the top 50% gets 1 free book. And because the upper classes had more education points than their lower counterparts, they once again, do better, despite everyone working equally hard. The overall ratio is now:
Prices go up, doubling, and the cost of education is now $1,000. Everything is fine, as everyone seems to be doing better than their previous generation, and can still afford everything. But for how long?
By now, it is the turn of the century. Technology goes up, and everyone gets a little smarter. All of them start with an addition 1EP every generation.
However, the lower income families can no longer afford to go to school, so they drop out, losing their starting 1EP from schooling. Because of the lowered needs, market price for education drops to 1.5x instead of 2x. The drop outs are the equivalent to our poverty line. Schools shrink, charging higher per person to keep up their profit margin.
20:14:13 ($12,000) 7 (Drop outs)
24:17:15 ($18,000) 8 (Drop outs)
The schools continue to award higher scorers, and a new “lower middle class” is formed to separate them from the upper middle class”. Education price drops to 1.25x rate.
28:20:17 ($22,500) 16, 9 (Drop outs)
The middle class is split further. Upper-middle-lower. Education price continues to drop. Now, it is at the 1.125x rate.
32:23:19 ($25,312.50) 18, 17, 10 (Drop outs)
Rate at 1.0625x.
36:26:22 ($26,894.53) 20, 19, 18, 11 (Drop outs)
Normally at this point in society, the level of intellect starts increasing as another century turns. As you can see, now, two groups need to drop out. Say best case scenario, the upper-middle class keeps half their student. By the 11th Generation, this is the scene.
41:30:28 ($28,575.44) 24, 22, 21, 20, 13 (Drop outs)
At this point, those who are in school are the top 3/8 of the wealth classes. They are able to afford to stay in school because their extra EP gained through each year’s bonus textbooks have kept them up with society, along with the wealth of knowledge past down by their parents. It is now near impossible for the lower income families to catch back up to afford school.
The original ‘middle class’ has been split 6 times. Because they percentage roughly the same, each time they split they do so in halves (50%). Of the original class, less than 1% of of them are left in the “highest middle class”, meaning that, including the upper class, only 11% of the population are still in school, at best.
The total amount of EP amongst everyone? 193. The amount of EP owned by the top 11% of the population? 96. The top 11.25% owns nearly 50% of the wealth of the country.
This is capitalism in a nutshell, where those who are valued more are paid more, and those who are valued less are paid less. The lower valued people also start with less, meaning loss of opportunity like schooling. The market manage itself through profit margins, earnings, and supply and demand.
This is best exampled by America, where a grotesquely small number of people holds a similarly high percentage of the country’s wealth.
The timeline is also about the same. At the start of the 19th century, the Industrial Revolution happened, similar to the Education Revolution I used in the example above.
The only difference is that in real life, there were 3 more ‘revolutionary periods’ to hold up the model, stretching the time a little, but the end result is still the same. Every time a revolution happens, everyone gets 1 free EP and the cost of education drops, allowing more people to go back to school.
The 3 revolutionary periods I speak of are the New Deal of the Great Depression, the Space Race during the Cold War, and The Digital Revolution of the 21st century. In Singapore, we had our own version, called The Move.
Without these great historical events, the capitalistic market would have reached the outcome I’ve described above much sooner.
In fact, in the worst case, the bottom earners are so poverty stricken, they might even lose the access to free EP that the new centuries have brought them. These are seen as a lack of access to basic information rights like speech, internet, and news.
Because capitalism throughout history has never been capable of producing a strong middle class consistently. They have always ended up separating the rich and the poor over periods of time.
Sure, at the beginning of the production craze, capitalism works wonders. Everyone has more than enough, and everything is working. But it has never been sustainable. Simply looking through the history books will show that when production ‘stabilizes’ and becomes a norm, this structure will fail.
A strong middle class is not a normal outcome of capitalism. The only time when a middle class is created by capitalistic nations are during periods of profound, historic changes, when a boom of jobs or industry leads to more positions, work and opportunity (EP) for everyone.
What is Capitalism?
Capitalism is, as its name suggest, the value of a person by their capital. Their capital being their worth determined by the market. This capital is made up of many aspects of your life, from education to work experience, even market value and family history and background.
You are basically valued by what you are in the eyes of the market, not as an individual being with variety, but rather as what you are now along with your past and future possibilities.