The Rise of Socialism in America (Part 1)
I love capitalism.
That's not just my preference. The right to privately own the means of production and politically participate has proven time and time again to be the most successful ideology for human development throughout history.
So when I say this, I want you to know this is not something I'm particularly excited about... but I don't see it happening any other way.
The rise of socialism in America is inevitable.
I'm sorry if that upsets you. But that's just the way it's going to be.
Now, let me say that I do not believe capitalism will disappear all together. Instead, I see more and more socialist ideologies making their way into the American system.
That's probably not what you want to hear. But I've got to call it like it is. None of your politicians can stop the rise of socialism. And all the arguing in the world will only be useful in slowing it down.
Fact is, there are lots of things in life we don't want but have to deal with. This is going to be one of them. I don't want my hair to turn grey. But it is.
So... we should just go ahead and lay down to die, right?
No, absolutely not. But there's nothing to gain by resisting the inevitable.
Here's the situation: A storm is slowly rolling in... slowly. And you have two ways to deal with it now:
- Stand outside yelling at the clouds to go away.
- Build a shelter and protect yourself from the rain.
I'm recommending the latter.
And I want to show you some of the tools and materials you'll need to build that shelter. But first let me explain why I believe the rise of socialism in America is, in fact, inevitable.
A Red Dawn
The truth is, positive views on socialism are already on the rise. According to a recent Gallup poll, 43% of Americans now embrace some form of socialism. That's compared to a 2018 Gallup poll that reported 37% of Americans had a positive view of socialism. And that's a trend that will continue.
Well, for that answer, I want to direct your attention to a German philosopher born in Stuttgart in 1770.
Please meet Mr. Georg Wilhelm Friedrich Hegel. Prussian idealist, possible vampire.
Georg Hegel wrote some very famous and very long books. Among them were The Phenomenology of Spirit, The Science of Logic, and Elements of the Philosophy of Right.
For most people, these books are impossible to read. Trust me. I'm an avid reader. I was a literature major in undergrad. And today I read economic books for fun. Hegel is still one of the most difficult authors to read.
And that's a shame. Because that has made it very difficult to hear some of the important lessons Hegel has to teach us.
Among those lessons: Learn from ideas you don't like.
Hegel believed we should learn from our intellectual enemies and counter-perspectives. That's because he believed that parts of the truth are found distributed among all points of view and that we should dig those parts of truth out to reach logical conclusions. You might say Hegel was smart enough to know he didn't know everything.
In his lecture on the philosophies of world history, Hegel teaches another very important lesson: Human progress is not linear.
The march of human progress does not go in a straight line. Instead, human development zigs and zags in all directions. Nevertheless, Hegel reminds us, progress does go forward.
Hegel believed human history moves in a back-and-forth manner like a pendulum or the ebb and flow of a tide and that it moves forward by what is known today as the Hegelian dialectic. (If you want to sound smart at a party, drop this on your buddies.)
The Hegelian dialectic is a method of reasoning made up of three parts that, when visualized, remind me of Doc Brown's Flux Capacitor:
Although he didn't invent the model, Hegel said the Thesis and Antithesis are directly opposing arguments that contain parts of the truth.
But they are also great exaggerations and distortions of the whole.
Hegel said the Thesis and Antithesis are the extreme sides of a perspective and that they must interact and clash in conflict until the best elements find resolution in the Synthesis.
Hegel saw this back-and-forth pendulum pattern throughout world history. He observed that the world makes progress by swinging from one extreme to another as it constantly struggles to overcompensate for previous mistakes.
For example, the ancient Greeks celebrated individual liberty. But there were mostly blind to the need for discipline and organization.
The ancient Persians, on the other hand, were very authoritative. That gave them a huge advantage on the battlefield, which they used to defeat the Athenians. Yet the Persians were also despot enemies of free thought, which created problems of its own and led to their demise.
Nevertheless, from these two extremes, a balanced synthesis between liberty and discipline was formed as the Roman Empire.
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So what does this tell us about our situation today?
Well, I think we can very clearly relate Hegel's Thesis and Antithesis to the dynamic between extreme economic and political ideologies in America today — that being the struggle between anarcho-capitalism and socialism/communism.
As we speak, the pendulum sits on the side of crony capitalism, with Mr. Trump as our current president. But the pendulum arm is very clearly swinging to the other direction as people desperately try to overcompensate.
Fact is, we've been witnessing this swinging action between laissez-faire capitalism and socialism for more than a century.
In the midst of the capitalist-led industrial revolution, the socialist ideals of Karl Marx and Friedrich Engels were born. Those ideals eventually swung their way into the American system in policies such as FDR's New Deal.
Then the pendulum swung in the other direction. In post-WWII America, socialism was highly condemned. Socialism was so condemned, in fact, that the FBI and other government agencies investigated leftist activities.
By the late 1980s, Gordon Gekko was telling us “greed is good.” That philosophy has seemingly reached its peak with the election of Donald Trump.
So we've swung from the right to the left, then from the left to the right.
Where do you think the pendulum swings next?
Now, let me say this also: I don't believe there's any reason to fear that socialism will lead to any type of system collapse in the near term as seen recently in places like Venezuela.
Please be clear on that: I do believe socialism will continue to be on the rise in America. But it will take very small steps forward over a long period of time. I don't even expect a noticeable difference in America for several years. Hell, I don't even expect Trump to be out of the White House until 2024.
Please remember the Greco-Persian Wars lasted decades. And that was a hot war. Any swing to a mostly socialist system in America could take a century or more.
The most damaging effects of socialism in America are most likely a problem for future generations, not you and me. As mentioned, that storm is slowly rolling in... slowly.
In the meantime, I think it's best to take as much advantage of the changing tides as we can. If a Venezuela-like collapse is, in fact, in the future for America as a result of the rise of socialism, profiting as much as we can in the meantime will enable us to avoid the most damaging effect or escape if we have to.
And yes, we can make a profit from the rise of socialism in the meantime, which I'll tell you more about on Monday.
For now, I just want you to consider what I've said today.
You may not be happy with the swing left. I'm not, either. But history keeps showing us that progress is not linear. And I think it's better to profit from the swing than to fight it.
As mentioned, I'll bring you more on this on Monday, with specific ideas on how to profit from socialism.
Please, don't shoot the messenger.
Until next time,
As an editor at Energy and Capital, Luke’s analysis and market research reach hundreds of thousands of investors every day. Luke is also a contributing editor of Angel Publishing’s Bubble and Bust Report newsletter. There, he helps investors in leveraging the future supply-demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor’s page.
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