Definitions

These days no one seems to be using the same definitions when engaging in this type of discourse. This often leads to a debate on semantics rather than actual economics which is an unfortunate distraction from the real topic worth consideration. The danger here is that people merely look at the surface-level views of certain terms and then pick sides with this limited understanding. In the process, they throw out genuinely impactful ideas on the basis of the name of the school of thought it comes from.

It is imperative that we re-examine the definitions we use and make sure everyone is on the same page about the language and concepts  when discussing economics. Otherwise, our conversations will remain mostly fruitless and provide no real solutions to the current economic situation. The only way to ensure progress is to carefully and thoughtfully understand our terms and work together to reach meaningful solutions.

First let us go through how Azadism understands these terms as determined by dictionaries, encyclopaedias, economic literature and lectures given by economists themselves to see the most common understandings of these definitions [1]. 

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Capitalism 

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Oxford Dictionary:

“An economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.”

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Merriam Webster Dictionary:

“An economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.”

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Cambridge Dictionary:

“An economic and political system in which property, business, and industry are controlled by private owners rather than by the state, with the purpose of making a profit.”

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Encyclopedia Britannica:

Capitalism, also called free market economy or free enterprise economy, [is an] economic system dominant in the Western world since the breakup of feudalism, in which most means of production are privately owned and production is guided and income distributed largely through the operation of markets.

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Socialism

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Oxford Dictionary:

1. “a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.”

2. policy or practice based on the political and economic theory of socialism.

3. (in Marxist theory) a transitional social state between the overthrow of capitalism and the realization of Communism [2].

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Merriam Webster Dictionary:

1: any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods

2a: a system of society or group living in which there is no private property

2b: a system or condition of society in which the means of production are owned and controlled by the state

3: a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done

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Cambridge Dictionary:

the set of beliefs that states that all people are equal and should share equally in a country's money, or the political systems based on these beliefs

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Encyclopedia Britannica:

Socialism, social and economic doctrine that calls for public rather than private ownership or control of property and natural resources.

Capitalism Vs Socialism

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So, some common terms and themes that seem to be popping up in these descriptions are:

• Private vs Public
• Individual vs Collective
• Free Market / Markets
• Profit

Let’s explain some of these as well since these also tend to be terms polluted with preconceived notions and it will also help uncover the main points of contention between the two ideologies.

We’ll begin by first defining what a market is. I will just list the Oxford dictionary definitions here for brevity's sake but feel free to explore the others as well yourself. They are all similar enough to get the idea across:

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Market

“a regular gathering of people for the purchase and sale of provisions, livestock, and other commodities.” (Oxford Dictionary)

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In economics, it is simply where things are bought and sold. A free-market is where the market is left unhindered and unrestricted by something like the government:

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Free Market

“an economic system in which prices are determined by unrestricted competition between privately owned businesses.”(Oxford Dictionary)

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Here the term “private” appears again, and this is what I want to focus on in more detail as it is the real crux of the debate between capitalism and socialism. Private refers to the individual rather than the collective or “public”. We will explore this distinction further later, but for now, it is important to understand that the “private sector” is that part of the economy that is not under state control or management:

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Private Sector

“the part of the national economy that is not under direct state control.” (Oxford Dictionary)

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It includes entities such as entrepreneurs, businesses, charities, religions, even the institution of the family. The “public sector” on the other hand is the opposite, where the state, or public, as a whole has collective ownership or control over aspects of the economy:

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Public Sector

“the part of an economy that is controlled by the state.”(Oxford Dictionary)

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For example, the National Health Service (NHS) in the UK is a public sector service provided by the government rather than private individuals. It may seem like a subtle difference initially as you may not see a big difference between individuals and the collective, since a collective is made up of individuals. However, the key difference here is who exactly has ownership or control. 

In the private sector, a private owner may own a business that is tied directly to them. The business relies on its ability to generate more income than the costs that go into generating that income (if anything is made at all). This is known as profit. If a private business uses up more resources than the value it outputs, it will not last very long. Hence why the primary goal of a business is to generate enough value to justify its existence. It does this by providing a good or service that others are willing to pay for. Under a system like capitalism, it seeks to leave society alone to engage in this as much as possible. If one private business can not maintain efficiency, or provide society with enough value, then it will be replaced by another that can. This is known as economic competition, and there does not always have to be one “winner” [4].

Conversely, socialism (applied at state level) seeks to do the opposite. Instead of allowing private entities to own capital and their own businesses to compete, it instead aims to bring all enterprises under the public sector. This is what was being referred to in the socialism definitions when private property is being replaced by state ownership. The issue with this is that there is no profit incentive as a state-provided institution does not generate income in the same way. 

A private enterprise must produce a product or service that other private individuals in the market are willing to pay for voluntarily. If it can provide a product and sell it for more than it cost to produce and/or distribute it, then it generates a profit (which is then used to buy other products in the market). This is society's way of communicating that a particular private enterprise is meeting consumer demand adequately and using the economy’s available resources in ways that people are willing to participate in. However, if it generates a loss, then this is communicating the converse. The loss signifies that if the private enterprise continues to use up resources in this way, there is not enough demand amongst the community of private individuals to justify it. It also shows that scarce resources are being used up in a way that could be better used elsewhere or by someone else. This profit/loss “signalling” ensures that only those goods and services are produced that the people actually want or need. Competition amongst many private enterprises ensures that this is then done as efficiently as possible, meaning that only those organisations that produce these items/services at the highest possible quality and the best possible price remain, whilst those who can not are filtered out.  

This is all flipped on its head with a public sector provider of goods and services since its income does not rely on its ability to convince the people (private sector) to buy from them over their competition. Often, state-provided, or what we call “nationalised” industries, do not have much competition at all (in some cases they are the only option). They are paid regardless of performance, efficiency or actual demand since their income comes from taxes. All the “business costs” of state-run organisations are passed off to the taxpayer too. Each private individual is forced to contribute to the state/collective so that the government of that state can redistribute it into its nationalised industries as it sees fit. This alternative to capitalist market systems is known as “central planning”, and it is one of the defining principles of a socialist economy. However, this is an extremely risky strategy to manage a state for two reasons: 

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1. 

One is that you must rely on the benevolence and competence of the state to manage these funds in your interest and hope that your interests align with the administration’s interests. If it does not, then you must doubly rely on their benevolence that they put your interests above their own. Anyone with even a basic understanding of history would see how this has turned out in reality. I will not labour this particular point further here, since the moral case for central planning is critiqued more heavily in the Azadist Manifesto [5].

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2.

The second reason is that it is actually impossible for a centralised government to allocate resources efficiently in the long run.

In a capitalistic market system, the pricing mechanism determines the most efficient allocation of resources. Instead of a central-planning committee of sorts, private individuals decide what should or shouldn’t be produced based on their willingness to spend money on different goods and services. When a consumer spends money, they are essentially trading a currency for something they want. The seller wants the currency, and the buyer wants what they are selling. How much currency the buyer is willing to give to the seller is based on the subjective value they personally place on it. The more they value it, the more they are willing to give up in exchange for it. The subjective theory of value makes the case that there is no one universal value on any one particular market good. It depends on each individual, and even then it fluctuates depending on their circumstances. For example, when it is raining a person may value an umbrella very highly compared to when it is a dry season. However, if they already have an umbrella, an additional umbrella wouldn’t be very valuable to them (if not detrimental) [6]. 

A market allows for many buyers and sellers to interact with one another to reach a consensus on what the average price for a particular product would be. This does not mean that some sort of economist comes along and calculates this average so that a uniform price is set throughout the economy. Instead, many sellers are competing with each other to offer a variety of prices and quality to attract buyers. If a seller is offering something in exchange for a currency amount that exceeds most people’s subjective values for it (and especially if it exceeds what other sellers are asking for), then they will receive very few customers and most people will trade with their competitors. This ensures that most prices tend towards a natural, market price which will adjust depending on shifts in supply and demand. Those who provide a good/service at a price closer to the natural, market price are indicating a higher degree of efficiency in resource management for that provision.

If something becomes more desirable (i.e subjective values increase), then suppliers would initially respond to this influx of demand by raising prices since more scarce resources are being used up. This allows them to raise extra funds to increase production by resolving the scarcity and bring up the supply. If those resources can not be acquired easily, then a raise in prices also helps manage the demand so that there is not a rapid depletion. These higher prices also attract new entrepreneurs into the market to supply that product since they are seeking to cash in on raised profits also [7]. Through this, supply-side restrictions are given more attention so that the scarcity can be alleviated quickly, as now there is a strong incentive for suppliers to provide this product in order to profit. As supply increases due to these efforts, there is less justification for prices to be raised. If there is enough competition, each private supplier will aim to undercut their competitors and offer that product cheaper and cheaper until the natural market price is reached once again. Therefore, over time the best possible price is pervasive in the market as well as increased availability of supply for that product so that more people can access it [8]. 

Unlike a central-planning committee, private buyers do not need to know about any of the supply-side logistics at all. The “price” itself contains information about availability and demand already embedded into it. If something is priced higher than usual, then this indicates that supply is limited at the moment or there is an increase in desirability for whatever simple or complex reason(s). This also signals to entrepreneurs an opportunity to make money by solving these issues either by resolving supply shortages or providing a new alternative, hence also why capitalist systems tend to bring about unparalleled innovation (however, this all assumes a free market with adequate levels of competition – see footnote [9]). The same is true in the case of surpluses where the pricing mechanism will just adjust the other way. Hence, a market system is a self-regulating one that adjusts prices to shortages/surpluses in supply and increases/decreases in demand accordingly [10]. It is the alternative to a government guessing one price for everyone based on what it thinks people (should) value different things collectively. 

Under socialism, markets are diminished (or removed entirely) as the economy is centrally planned by whoever manages the tax funds collected and elected/selected to allocate them – i.e. the government (more on this shortly). In a purely socialist economy where there is no private property, the government is the sole owner (public ownership) and it can not trade with itself as it already owns everything. Hence, without private owners transacting based on their own individual subjective preferences and informing demand and supply, there are no market prices, just government prices. No equilibrium market price can be set if there are no suppliers and consumers interacting in a market freely as that consensus between them can not arise. Without market prices, it is impossible to tell if a resource is being allocated efficiently or not. Efficient allocation is determined by the ability to meet the needs and wants of the private individuals living in the community/state/collective. The government can not physically know the individual preferences of every one of its citizens and how those preferences might change based on different circumstances (which it must also try to predict changes in). It also can not tell which projects to fund and which to reject based on its limited resources. The government isn’t Antarjami! Should it allocate resources and labour to a space program or sort out the agricultural industry? Without market prices to compare the costs, it has no clue which is more efficient. 

If the government tries to set prices manually without the market, it has no basis on which to calculate what they should be. Setting a price too low, below what the market price would have been and will diminish the incentive for producers and suppliers to make that product or offer that service. This leads to shortages. This lack of incentive doesn’t necessarily mean that people just don't want to do something without adequate compensation for their effort (which is completely valid), but often they simply can’t financially sustain the effort. If the price is too low, they can not raise a profit or even break even. It would cost too much in resources. More value would be used up than what it outputted. Conversely, setting a price too high redirects efforts to producing and providing that inflated good or service since there is a guaranteed above-market price income for it. This not only generates wasteful surpluses that won’t be consumed but uses up resources and labour that could have been used more productively elsewhere in the economy. The Indian minimum support price is a great example of the environmental damage that occurs when the state sets a price that guarantees an income for a crop that is so water-intensive (rice) it is turning Panjab into a desert. Farmers in order secure that income (to only just raise enough profit to cover their debts), just pump the land full of hazardous chemical fertilisers which further contributes to the ecological woes of the region [11].

Any “exchange” between different nationalised services are just internal transfers rather than market transactions too. All the costs are hidden and the inefficiencies that arise from this build up to where the government can not afford to sustain it. Historically, some governments have chosen to invade other regions to forcibly acquire more resources through war and conquest. However, more recently we see them more commonly accruing massive debt and even just printing money [12]! 

Hopefully, at this point, you will begin to understand how vital market prices are to the functioning of a healthy economy. Getting rid of private property and the freedom for private individuals to exchange what they own in markets has led to some of the largest-scale disasters in history [13].  

This criticism of central-planning was originally outlined in detail by Ludwig Von Mises theory of the “Economic Calculation Problem” in the 1920s which later thinkers like Friedrich Hayek would expand upon further. The ensuing debate has now raged for around 100 years since then, but despite attempts to counter it, it still stands undefeated as one the most condemning arguments against socialist central planning to date [14]. 

“The director wants to build a house. Now there are many methods that can be resorted to. Each of them offers, from the point of view of the director, certain advantages and disadvantages with regard to the utilization of future building, and results in a different duration of the building’s serviceableness; each of them requires other expenditures of building materials and labor and absorbs other periods of production. Which method should the director choose? He cannot reduce to a common denominator the items of various materials and various kinds of labor to be expended. Therefore he cannot compare them. He cannot attack either to the waiting time (period of production) or to the duration of serviceableness, a definite numerical expression. In short, he cannot, in comparing costs to be expended and gains to be earned, resort to any arithmetical operation. The plans of his architects enumerate a vast multiplicity of various items in kind: they refer to the physical and chemical qualities of various items in kind; they refer to the physical productivity of various machines, tools, and procedures. But all their statements remain unrelated to each other. There is no means of establishing any connection between them.”

– Ludvig Von Mises, Human Action: (Part Five) Social Cooperation Without a Market, Chapter XXVI – The Impossibility of Economic Calculation Under Socialism

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In simpler terms, a central planner has no idea what he is doing without prices to calculate the cost of doing things! He has no mechanism to decide what a society should do or not. Lastly, the reader is highly encouraged to consolidate this knowledge before moving on. Here is a video by “Anglo Libertarian” who breaks down the ECP very well:

The Economic Calculation Problem - (Austrian Econ Basics #3) - YouTube

Governance and Economics

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The specific government structure a collective or state is governed by should generally be excluded from the definition of socialism as a whole, however, these days many leftist-inspired socialists combine this ideology with democracy. Historically amongst economists, socialism has generally been understood as an authoritarian system of central planning by a government of administrators. Hence why many dictatorships of the last century were economically socialist by definition even though politically they were undemocratic autocracies. 

Azadism doesn’t see the difference between whether the state is democratic or totalitarian in this regard. It is irrelevant either way for the economics of socialism whether it is a democratically elected government or a dictatorship (including monarchy). The defining factor is that there is a government at all that centrally plans the economic activity of the whole community/state/collective, and all participating under that system must abide by its dictates. 

For a dictatorship, it’s obvious how they can apply socialism since all they have to do is claim ownership of all land, resources and the means of production under them as the state, and then allocate as they see fit. The confusion arises when modern leftist-influenced socialists incorporate democracy into their personal definitions of socialism and claim that it is the “community as a whole” that has the power, not a dictator. However, “...as a whole” is the key part here. This means that no one individual has private ownership or control over any part of the economy, and instead it is the collective, or more accurately whoever governs the collective, that owns everything. If they said community on its own, without the “as a whole” qualifier added on, then this is no different to what capitalism advocates, since a community is just a collection of private individuals. It only becomes a state when all in the community are forced to abide by a centralised will (government), which is what is meant by "as a whole". 

Even though this still applies to dictatorships (since the dictator and his crony band of advisors and ministers are the state, not private individuals), many seem to think of a democratically organised collective when the word community is used instead. But let’s look at this too.

If a community has a vote on a group of representatives to centrally-plan different aspects of the economy on their behalf, then whatever the majority decides affects everyone regardless if they voted for the “winners” or not. 

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“Democracy is merely a dictatorship of demagogues”

– Source Unknown, So I’ll claim it for Azadism [15]

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Essentially, democracy grants a dictatorship by vote to a group of “representatives” that only really represent the majority who voted for them. Whatever this “democratic dictatorship” decides is what is implemented. The argument is that they would have fixed terms and if they did things that went against the interest of the community/state/collective, they would be voted out and replaced. But all you have done by establishing such a system is create a convoluted and unnecessary middleman situation. 

If you as a people are going to try and make the representatives set the prices for things in accordance with your demand anyway, then why is this better than just having prices set by the market? In the market people are demanding these things from suppliers directly who can adjust supply to match consumer demand. You may say because the government of representatives can fix the prices to what the majority want it to be, but then this just feeds into the issue mentioned earlier regarding artificial price controls. Set it too low (below what the natural market price would have been), you will get shortages; set it too high, and you get surpluses [16].

Secondly, the majority may not have a clue about the supply-side factors that go into informing the price of goods and services. Self-interest is a key motivator for human behaviour and most people tend to serve their needs first. For example, let’s say the market price for a pack of pencils was £5 as determined by the supply and demand for this good. This is only known through having a market and can not be calculated otherwise (as explained by the ECP above). What do you expect the vote on the price for a pack of pencils would be if you replaced a market system with a democratic vote on its price instead? If there are fewer suppliers of pencils than buyers of pencils (as there usually are), then the majority would obviously vote for the price to be as low as possible. The suppliers would then be forced to lower the price and become unprofitable. Unless you force them to continue producing with the threat of death or imprisonment (could call them “gulags” perhaps), then the incentive to make this product diminishes. You would end up with a shortage. In fact, suppliers would leave that industry realising there is no incentive to remain, which would leave anyone who is left with a monopoly. Something that socialists assure you that they are ideologically against. They may be, but their hyper-democratic, anti-market policies would prove otherwise.

Nevertheless, this “vote” actually already happens in markets all the time. The only difference is that there is no one “decider” on what to produce and how much it should sell for (unlike this socialist democracy we are describing). The “deciders” in the market are the suppliers who must take into account the costs, consumer demand, and competition from other suppliers. Just like in the example above, the buyers want the lowest possible price, and the sellers want the highest possible price. Where they both compromise is what the market price (equilibrium) gets established as. 

The more suppliers there are also prevents any one supplier from hiking up the price too high. The only reason why a supplier could do this is if they were the only supplier (aka a monopoly) and so no other alternative for consumers. This is exactly what socialists aim to establish by promoting the nationalisation of industries. They make the government the sole supplier. Nationalising industry is forming a state monopoly! 

Capitalism and free markets are fundamentally against monopolies. They solve them through promoting more competition by reducing barriers to entry (set by governments) for entrepreneurs to enter the market to offer new alternatives and more choices to buyers. This puts pressure on suppliers to reduce prices to the market rate and increase quality in order to remain competitive. Socialists on the other hand promote monopoly formation by letting the state take over industries and remove private ownership. You may hear leftist socialists complain about monopolies but their solution is to replace one “private” monopoly with another state-backed monopoly [17]. If the left really are against monopolies, they would be more capitalist and want more competition, not less!

Again, it doesn’t matter if it’s a dictatorship or a democracy. If the government is a dictatorship that doesn’t listen to the people, they can set prices to whatever they want. If the government is a democracy that is merely a mouthpiece for the majority, then they set the prices to whatever the majority wants. Both situations are flawed since they are both still centrally planning the price to one level manually rather than allowing the market to reach an equilibrium. As the ECP explained, if there are no market prices, there can be no economy. It is the lack of markets and the central-planning component itself that defines socialism as an economic theory, not who it is that does the central planning.

Community / State / Collective

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You may be wondering why I have been using the terms collective, state and community interchangeably. It is often argued by socialists that socialism is against the “state” and instead wants to promote community ownership. Hence why I also touched on what is meant by the Oxford Definition of socialism when it mentioned “community as a whole”. However, observe the definition of the state:

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“a nation or territory considered as an organised political community under one government. (Oxford Definition)”

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The state is a community! Albeit a large one in most instances today, but unless socialists are expressing interest in establishing a little tribal village in their calls for revolution (which is perfectly fine as we will see shortly), then they are indeed promoting the increase of state influence in the economy. What we see the state doing when it interferes in an economy so heavily and diminishes the freedom of private entities interacting with each other in a market economy is indeed a form of socialism. But not all forms of socialism have to be this way.

I am not ignorant of the fact that many socialists today, influenced by leftist politics, do not overtly seek to support the state (despite their policy recommendations suggesting the opposite). Especially considering the left's role in anti-establishment activism in recent decades. Credit must be given where credit is due. Therefore, Azadism seeks to address this by splitting modern socialism into two camps: “State Socialism” and “Non-State Socialism” or ”Private Socialism”. 

Under Azadism, private socialists would have full freedom to organise systems however they want to. If they want to set up a tribal village, community farm, communes or worker co-ops, then they would be absolutely free to. As long as they buy land and equipment legally rather than take it from other private owners through violence [18]. If they even want a healthcare system where everyone pools money and can access its services for free, then they are more than welcome to set this up too. So long as all participants are contributing and accessing this voluntarily, and not forced under the threat of violence. What would not be permitted under the long-term vision of Azadism is any organisation using force or the threat of force to collect money to fund ventures. This is the difference between a voluntary donation (or a market transaction) and a tax.

State Socialism can only work through Force

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For example, the NHS is paid for by private individuals through National Insurance (compulsory payment, aka a tax) regardless if they use it or not. You must pay this even if you wish to use another (private) provider. If you don’t, the consequences are dire.

Compare this with something like Amazon. Jeff Bezos can not legally hire a gang of thugs to turn up in the middle of the night, break down your door, then proceed to kidnap you at gunpoint and lock you in a cage if you don’t buy an Amazon Prime subscription [19]. However, the government can legally do this exact thing if you refuse to pay taxes for a service you do not want to use or if you do not want to support a policy you disagree with (e.g. a war in Iraq). Only in this instance, the government calls their thugs “the police”, and the cage they throw you in is called “prison”. In fact, when I mentioned that the consequences were dire, what I mean is that you can die. First, they will send you threatening letters. If you ignore that or refuse to pay up, then they will send the police to arrest you. Resist that then the police may first try to use non-lethal methods to capture you depending on your government, but if you choose to defend yourself they will escalate the situation and eventually kill you. The state much prefers a dead person to an alive person that doesn’t want to pay into their protection racket.

Therefore, state socialism relies on the government's ability to murder its citizens to ensure adherence to its central planning. It aims to nationalise industries to bring them under state control, then it makes you pay for these often highly inefficient and largely ineffective state programs through taxes. You have no other choice. 

Free-market capitalism on the other hand can’t force you to do any of this. Businesses in this system rely on sales, not taxes. They have to provide goods and services that people are freely and voluntarily willing to pay for. If they can’t, they will be outcompeted by other businesses that can. There are no bail-outs in capitalism [20]. Capitalism and free markets are what is left when you don't have a state interfering or using force to manipulate the economy. It is the natural state of things. It is what is left when you remove state socialism.

Now, Azadism does not seek to have pure capitalism or a completely free market since it recognises the necessity for a government to restrict some undesirable markets arising [21]. Azadism loots a libertarian idea known as the “Non-Aggression Principle” (NAP) [21]. This is the idea that you can live however you want, as long as it does not impede the right for others to do the same. Hence the role of government in an Azadist system is to uphold a legal system based on the NAP. A purely capitalist or free market system can leave room for ambiguity about the legality of certain types of trade. This is where political science, law and even philosophy and theology comes in to clarify. 

For example, a market for people (i.e slavery or human trafficking) could exist if there is no standard to determine what exactly constitutes a private owner in an economy. Hence why, “sub traditions” within the umbrella terms of capitalism and socialism seek to address these specifics more closely. Azadism in particular solves this problem by recognising enslavement as a violation of the NAP. By making someone a slave you are acting like a state by diminishing their individual freedoms and right to private property (which  includes their own bodies). Hence, why under Azadism (and most capitalist sub traditions) you can’t have a slave trade. Even libertarianism or capitalism as umbrella terms can not ideologically allow for it either. If they are claiming that private ownership is fundamental, then this must apply to all private actors. You can’t make a private entity property of another private entity, since that former entity would no longer be private! This is what was happening philosophically in the early history of the USA. Groups like the Blacks and women were treated as subhuman so that all the freedoms assured in the constitution did not apply to them. Obviously, this was thankfully overturned as more rational minds eventually prevailed. State-socialist ideologies like communism on the other hand can not claim the same assurances against slavery, since they advocate for the state to confiscate private property and forces people to work allocated roles and accept their rations.

Capitalism and Socialism, together?

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Hopefully by now, the whole idea of a debate between capitalism and socialism in general starts to break down and it may indeed be a false dichotomy. Although state socialism is an idea rooted in authoritarianism, private socialism could be a more desirable option. The way to solve the economic and moral issues of state socialism is to privatise it. 

Instead of having one government that a private population must adhere to involuntarily, there are many, many governments in which a private population can choose which one they wish to participate in. Each one of these smaller governments could then apply the planning elements of socialism within their own jurisdictions in any governance style they like. If they want to establish a king with ministers and subjects, fine. If they want to have a completely democratic system where there is no hierarchy at all, then that’s fine too. So long as it is voluntary to participate and all the policy decisions only affect its members. Private individuals must be free to leave at any time, and they can choose and apply to whatever micro-government they prefer. 

Since this is not a collective decision, each individual can only choose an option that works best for them. This means that many options can co-exist catering to different groups of people. Each one of these “private kingdoms” or communities may have a unique goal or objective that may require certain skills, expertise, effort and time. In order to attract new “citizens” to help in this, they would then have to offer people a trade. They would need to make sure the terms of the trade are competitive, since the private individual may instead join with another community that may also have similar objectives and a need for the same help.

Does this all sound familiar? It should be because I am describing businesses! Most businesses today are similarly autocratic in structure. However, these days we call the (private) king a “CEO”, the ministers are the managers and the subjects are the employees. The goals and objectives are the goods and services that are produced. When a person leaves, that is called “quitting your job”. When the business wants new employees, it advertises a position and offers to trade a salary (+benefits) for a person's labour. 

The beauty of this is that the private individual is not forced to participate. If they can find a better deal from another “private kingdom” / business, then they are free to leave (or even start their own). More businesses mean more choices for people to choose from. This is from both the customer's and the employee's perspectives. This then keeps the incentive for the business to maintain high-quality, yet affordable products/services whilst also maintaining attractive opportunities and good working conditions for its employees. Over time, the market filters out businesses that are unable to balance this. Additionally, a business can’t  (legally) use violence to get what it wants either. If it wants money, then it must produce a good or service that people in society are willing to pay for voluntarily. The more value it provides to the market, the more it can get back from the market. 

Capitalism, therefore, is the “playground” in which these many private socialist enterprises can compete with each other. This is why a capitalist promotes competition (rather than monopolisation) so that more choices are available. Where the private socialism aspect comes into play is how exactly that business operates itself. Each business is a “mini-state” in a sense and the private government (management) centrally plans its resource allocation for a particular goal. Again, the difference between private socialism and state socialism is that under the former, anyone can leave at any time for a better offer. The latter relies on taxes and the threat of force to manually plan an economy. But importantly, capitalism itself relies on many private socialist units transacting and serving private individuals. The only way a government can implement capitalism is by granting greater economic freedom to its citizens. This is achieved by them doing less and leaving the people alone.

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(FIG A)

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(FIG A) Layer 1 is the Capitalism layer, on top of which sits Layer 2. This second layer is made up of many “private socialist units” represented by the black squares. Examples of what these units could be are businesses, communes, charities, places of worship etc.

The squares here are shown to be different sizes to represent the variety of business types and stages of their development. However, in a purely capitalist free market, it would be very difficult for any one square to become too much bigger than the rest since after a certain point the same issue of the ECP kicks in internally within large enough organisations as inefficiencies mount up. New entrepreneurs would be free to exploit that to set up new businesses that resolve those inefficiencies [23].

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(FIG B)

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(FIG B) Here we can see a visualisation of socialism completely applied at the state level. In its purest form, there is no private property so only one, governmental-owned layer is present. The outlined squares represent the various government departments and schemes. Some have vastly larger budgets and bureaucracies than others (e.g. the military), hence the size differences.

Where does Azadism sit in all this? It too inherits a capitalist framework, however, it just fills in the details on what policies exactly best achieves this vision and where it occasionally may need limiting:

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(FIG C)

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One potential way to implement Azadism is through a modernised Misl system. Essentially, instead of one central government, there would be many independent Misls who fulfil the functions of the state. In Azadism this primarily reduced to providing security and justice in order to ensure the market is free and fair to participate in. Economic activity is assessed and only intervened in by the Misls if something breaks the “non-aggression principle” (NAP). Again, this is a libertarian idea and it refers to the right for private individuals to live however they want to, so long as it does not impede the right for others to do the same. As represented by the blue squares on layer 1 of the diagram above; when there is a threat to the NAP the Misls become active to eliminate it or otherwise resolve it somehow. Violators of the NAP-based law can be either external to the system as shown in the diagram, or internal. This is a bit of a simplified overview of the Azadist conception of the Misl system it recommends, so if you wish to learn more about it and how to mitigate some of the potential risks, please read the Azadist Manifesto.

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In truth, capitalism can not exist without (non-state) socialism. If we understand socialism to be a form of centralised economic planning from a government of sorts (regardless if it's democratic or autocratic), then the real issue is one of scale or layering and the format for participation. If socialism is applied on a state level where industries are incorporated into the state (nationalisation), this is state socialism at work. However, if socialism is implemented privately and on a voluntary basis where people can leave and join different options, or even set up their own alternatives, this is private/non-state socialism and is wholly compatible within a capitalist framework.

Lastly, participation in private socialist organisations must be voluntary for them to maintain their private status. Employees need the freedom to leave at any time and join another organisation that offers them a better deal. Markets work in all aspects of the system here, not just business and customer, but business and employee also (labour market). If someone is not happy with any of their current options, a truly capitalist society would allow the freedom for individuals to start their own enterprise or venture.  Or if you don’t want to do anything, then you are free to as well. If there are charities willing to support you, then great. You may indeed have real justification why you can not work (disability, want to focus on bhagti etc). However, if you simply just do not want to work, then no one is obligated to fund your lifestyle [24]. Regardless of what you decide, you must be responsible for the consequences of your own choices.

Mixed Economies

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Before concluding this section, let’s quickly explore the idea of mixed economies.

You may have noticed that I prefaced the words capitalism and state-socialism in the diagrams above with the word “pure”. This is because in reality many nations that are labelled as “capitalist countries” by socialists and vice versa, are indeed not. They are actually what is known as “mixed economies”. Mixed, because they have elements of both central planning and market systems at play on the state level in different proportions. Hence why when assessing existing systems, care should be taken to filter out which policies represent the central planning or market components of the economy. 

You may think that having a balance of capitalism and state socialism is reasonable, and even Azadism technically also advocates for a mixed economy in the beginning. However, Azadism recognising the ethics and utility of capitalism and private socialism is heavily skewed towards a libertarian market approach rather than the authoritarian, state-socialist planned approach. Justifying any central planning to exist on a state level is similar to justifying having even just a little lime squeezed into milk. Ideally, Azadism seeks to phase out the concept of a central state altogether in the long run. By creating an environment where society becomes so detached from and less reliant on the state, there would be very little need for it at all by that point.

Lastly, most of the issues that people (including socialists) complain about in the mixed economies today are actually due to state interference in the market anyway. For example, monopolies are caused by a large bureaucratic state having so much regulatory power. This is exploited by large market share organisations who collude with politicians through corporate political activity (such as lobbying) to bring in regulations or policies that give them a special advantage or exceptions over their competitors and erect barriers to entry into industries which restrict new competition. This couldn’t happen in a free market since the government wouldn’t have the power to implement these sorts of policies in the first place, and under Azadism lobbying would be constitutionally banned. However, in a mixed economy, this sort of corruption is an inevitability.

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(FIG D)

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Individualism and Collectivism

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Given what has been discussed so far, a more accurate version of this debate may seem to be capitalism vs state-socialism. But even this is brittle since if you recall how the word “state” is defined, it refers to:

“a nation or territory considered as an organised political community under one government. (Oxford Definition)”

So far I have made a distinction between the state and the private sector that depends on voluntaryism. Azadism has so far, for the sake of ease, recognised the state as any institution where individual/private rights are diminished in order for the government of that state to enact policies that affect everyone irrespective of individual choice. However, although economists and even socialists themselves tend to use the term state in this way (sure, the left may rebrand it differently), the definition of state leaves room for ambiguity. Each one of the private socialist units mentioned previously could also easily be argued to be a state. Especially since even this write-up was likening a business to a monarchist form of state earlier.

Fundamentally, before we get into what the real debate actually is, we must define the parent traditions that all these ideas stem from – individualism and collectivism.

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Individualism

1. the habit or principle of being independent and self-reliant.

2. a social theory favouring freedom of action for individuals over collective or state control.

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Collectivism 

1. the practice or principle of giving a group priority over each individual in it.

2. the ownership of land and the means of production by the people or the state, as a political principle or system.

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From these, it may be tempting to categorise capitalism and its sub traditions as individualist, and class state-socialist ideologies like communism as collectivist. However, this may too be a false dichotomy. Since the Azadist thought process is based on Sikhi, let’s use some relatable examples to reveal why this may be the case. When you assess Sikh philosophy, both positions seem to be spoken to.

For example, you could point to examples like (as I have done) the 40 Mukte Sakhi where Guru Gobind Singh’s Sikhs sought to evade the field of battle and return home. The Guru respected their individual choices and let them leave freely. Ultimately they were initially shamed by their wives and returned to attain the honour of Shaheedi, but the point worth highlighting is the right the Guru gave each of his Sikhs to choose.   

However, you could also point to examples of GurSikh’s who gave up everything to serve the Guru and the community as examples of collectivism. Bhai Manj, a once powerful and wealthy individual, devoted himself to Sikhi. He demolished his own home, donated all he had and lived as a pauper providing firewood for Langar. Completely surrendering his ego to the Guru he was eventually liberated. Additionally, you could easily argue that Shaheedi itself is a collectivist ideal since a martyr quite obviously puts the community above themselves.  

Which one is correct? The truth may lie in a hierarchy of progression, similar to what the Guru does for the free-will vs determinism debate in “Sikhan Di Bhagat Mala”, or what Guru Gobind Singh themselves describe as the progression to Mukti through different levels of spirituality in “Gobind Gita” [25]. Sure, the initial starting point may be individualist, since the Guru doesn’t force you to become a Sikh, nor can anyone force anyone else to adopt spirituality anyway. It's something done out of love, not coercion. 

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Bhai Gurdas Ji in his Kabit Svaiye communicates the effort made by the Guru in order to reach his Sikh. However, the initial step in that direction is always down to the Sikh, thereby highlighting the voluntary, non-coercive nature of adopting the path of Sikhi.

– Excerpt from the Azadist Manifesto, (Section III) Private Vs Public, "Langar, Dasvandh and Choice"

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However, once you have committed to the path of Sikhi, the process of diminishing your ego begins. A major part of this is placing others above your own self-interest. Or perhaps, more accurately, it is reforging what motivates you by merging your self-interest with the collective self-interest of the community and mankind. But none of this represents a transition away from individualism towards collectivism. Instead, collectivism is born out of the initial individualistic desire to join Sikhi and the freedom you had, and still have, to walk that path. You can leave at any time, nothing is forcing anyone to stay. Since this right has been guaranteed by the Guru themselves, individualism has not been replaced by collectivism, it is still running alongside it in parallel. 

But what is the culmination of these ideals? What the Guru is doing through offering humanity Sikhi is the opportunity to transcend both the individual and collective – non-dualism! The Guru presents a choice to merge into oneness. The insight of this new perspective makes you realise the entire dichotomy of individualism vs collectivism is fake. Everything is a collective. Even the individual is a collective of individual organs, who themselves are collectives of individual cells, who themselves are collectives of individual organelles, who themselves are collectives of… you get the point. Even looking through the microscope (or telescope if you observe the macrocosm) like this breaks down the idea of a collective or an individual by highlighting its inherent duality. To have a collective, you must have many individuals. Nothing exists in isolation.  Even if someone goes and tries to live in a forest somewhere, they may have abandoned the collective of the society they were from, but now form part of the collective ecosystem of the forest. An individual can only be classed as such in comparison to another individual(s). And no individual can exist absent from some form of collective.

I'm sure you can see how convoluted it is getting to describe this. These terms are so intertwined when you recognise the different ways of viewing the same thing. In fact, we are falling into the danger of what was warned in the opening introduction of the Azadist Manifesto – “do not mix perspectives”. There has to be some level of a collective to start from where we all accept and call “the individual”.  Only from here can we then apply ethical standards and assess whether to be individualist or collectivist. But to get here there needs to be a decision made so as to avoid infinite philosophising. Azadism makes a decision for itself based on where it believes the level at which Gurbani speaks to an “individual”. That is the collection of organ systems that make up a commonly defined human being. It is here we can apply conversations of rights and ethics. No one complains about the authoritarianism of the brain that subjugated the other organs under its monopoly. Due to this lack of outrage, let us assign this point as what constitutes an individual whose right to freedom must be protected.

If an individual has the right and freedom to choose which collective he wants to join and leave at any time, then this is a clear display of individualism. Why? because your individual freedom (go back and read the definition again) is still more “sacred” than the collective will, and the Guru respects this, even in life and death scenarios. If the Guru was not individualist, then they may have forced the 40 Mukte to stay and help fight under the pretence that the collective had priority over their individual freedom in choosing not to participate. However, just like Bhai Manj, these individuals after freely deciding to devote themselves to their community and Guru, behaved very collectivisticly! Crucially, it was individuals exercising their freedom to choose that mattered more which is completely compatible with individualism. Collectivism on the other hand must be treated with more care since as the definition above stated, it is “the practice or principle of giving a group priority over each individual in it”. But who exactly is giving the group priority?

Libertarianism vs Authoritarianism

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This is the core issue underlying the debate between capitalism and state-socialism and is where the real debate actually is. Who exactly decides which group to give priority to, and who exactly must give that priority. 

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Libertarianism

a political philosophy that advocates only minimal state intervention in the free market and the private lives of citizens. (Oxford Definition)

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Authoritarianism

the enforcement or advocacy of strict obedience to authority at the expense of personal freedom. (Oxford Definition)

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It is here where we can categorise capitalism and state-socialism into the above ideologies. Capitalism and related market-based traditions (including Azadism) falls under the umbrella of libertarianism. On the other hand, state-socialism and it’s sub traditions like communism fall under authoritarianism.

Libertarianism places the aforementioned priority setting in the hands of the individual to decide for themselves (and only themselves) which collective they would like to prioritise. This decision can only be decided on behalf of themselves and no one else. Additionally, no collective can push it’s decisions on to anyone else that does not belong to it or do not consent to be effected by them. Whereas authoritarianism puts that power into a centralised government. The state decides which group or ventures to prioritise and forces all under it to follow their lead. For example, under state-socialism a government has the jurisdiction to levy taxes from every individual so as to appease the demands of a group (or state in this instance) of their choosing.  This is all conducted through force or the threat of force. Under capitalism, individuals can only appease the demand of a group through the voluntary interactions of the market system. No one can force another to do anything (and if they did, that wouldn’t be capitalist anymore). It is force itself that is the qualifier between libertarianism and authoritarianism.

Azadism stands on the libertarain side because it believes it is far more ethical. How can it say this? Because Azadism derives its ethics from Gurbani and Itihaas. It is Sikh philosophy and Khalsa values that provide the “measuring stick” when Azadism assesses all these different “isms” so that it can navigate towards its own unique position.

So much of Sikhi is about upholding the freedom to choose. The Guru is also giving people a choice by providing an argument as to why it is in someone’s best interest to sacrifice themselves for the individuals in their collective, or even in any other collective! Through doing something like this voluntarily, the ego is subdued and replaced by a greater sense of consciousness, naam. However,  the voluntary aspect is critical, just as it was for Bhai Manj who continued to endure the tests of the Guru even after the Guru told him to give up and go home! The only reason he stayed was because he wanted to by choice.

This is also why the Khalsa does not tolerate states or individuals violently forcing their wills on others either. Guru Tegh Bahadur himself being a principle example by laying down his own life in sacrifice to defend the freedom of others to believe in something that the Guru themselves did not adhere to! The Guru shows value in choice even in times of hardship. Singhs throughout history have laughingly stared death in the face and resisted the use of force by the state to make them conform. The Guru represents the bulwark against involuntary forced collectivism / authoritarianism present in history, and never employed those methodologies themselves. Hence also why they had no conquests forcibly converting people. Instead of forcing people to join or stay in their Sikh community, they instead offered people a trade. Their time in return for something of greater value to incentivise them to participate. What is that something? Well Sikhi of course!

It is all about choice. Choice is freedom. Freedom is the ability to choose between multiple options, establish new options, or not have to choose at all (which is technically also a choice).  When this is restricted by individuals it is deemed a crime under most systems. E.g. murder is removing someone’s freedom to live. Stealing is removing someone's freedom to own and use something in a way they choose etc. A state scales this up and systemises the curbing of freedoms and this is why it is inherently unethical. However, Azadism believes it to be impractical to get rid of the state overnight. Instead, it could be reformed as an institution and be reduced to being a service provider for four main functions:

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1. National Defence
2. Policing
3. Justice System & Courts
4. Tax Administration

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Over time as the population gets used to being less reliant on the government, this can decentralise even further until there is no need for a state at all. However, although Azadism has outlined 4 roles here, in something like communism, the state’s functions are far more pervasive. The more the state does, the less the people can do. The state monopolises certain industries and provides these services through itself using funds it acquires through force (tax). This means that the more freedom a government has, the less freedom the people have. Authoritarianism is the name given to those systems where a centralised authority holds so much power, individual freedom becomes suppressed. What is considered too much is the real debate.

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The smaller the size of government and the less state intervention there is in an economy, the more libertarian and less authoriatian it is. This is also where capitalism vs state-socialism comes back in. To the right, the size of government gets larger, and so more state-socialism is employed. The further right you go, the more nationalised an economy is rather than privatised as people are forced to choose between fewer and fewer choices. Totalitarianism is where there is just one choice (or no choice, depending on how you look at it), being the government. Azadism kicks in when a state is reduced to the four functions mentioned above. However, it also covers any further decentralisation all the way up to anarchism, which when the people become completely Azaad from any form of centralised state. However, that is for the very long-term and many necessary preconditions would need to be met before a society is ready for that. In the meantime Azadism seeks to avoid authoritarianism. I hope by contextualising these terms and revealing how Azadism understands them makes the parameters of war in this fight against tyranny clear.  I encourage you to join me in furthering this cause to promote freedom and prosperity by contesting all those who work to diminish it.