5. The alternative economic systems

In order to avoid capitalistic exploitation, injustice and inequality, in the 19th century was found a socialistic alternative. Karl Marx (1818-1883) and Friedrich Engels (1820-1895) propagated a communistic economic society without exploitation. It should be a society without the permanent struggle of the classes about the distribution of the income of private companies. A big fan of Marx was Wladimir Iljitsch Lenin (1870-1924). He was convinced that a market economy is not possible without exploitation. Private ownership of means of production is in his ideology the main characteristic of capitalism and the condition for exploitation. He requested and propagated the end of private ownership of means for production. The way to realize socialism was in his opinion a revolution. After a successful revolution he hoped for a society with a central public management for the whole economy. Privatization was the biggest political and social evil for him. He maintained that the reason for an upperclass of proprietors and a lower class of workers is privatization of the means of production.
Not self-government was the resolution for him but central government. Centralization of the management through a political economy was his way to finish economic injustice. The political way to reach this aim is in his doctrine the dictatorship of the proletariat with the help of a communistic party.
He said that all other economic and political problems are small problems in relation to the main questions of justice. Therefore he didn' t give precise rules and laws for the socialistic economy and the belonging political system. He was successful with his ideas in Russia since 1917 and later the founder of Soviet Union. During and after World War II the communistic ideas and principles were realized in Eastern Europe, in the Peoples Republic of China and in many other countries.
In the communistic society the people paid the rents for housing to the government and they got interest from the government for their savings. In socialism the industrial companies had even to pay taxes to the central political government. It was money from the management of a people owned company to the central government. Hence the socialistic tax system should be a tool to assist the central steering and control of the economy.

The tax structure in the former German Democratic Republic
Although in the communistic theory no taxation was necessary, the communistic societies used taxes for their money distribution. Some tax rates had the task to confiscate the most private earned money in order to support the socialized economy.

So it was possible to realize an economy without unemployment and without the permanent struggle about the allocation of the income. Because of the central administered prices of all products they established theoretically an economy without inflation. A strength of the socialistic sociaty was social security without bureaucracy. In comparison with the capitalistic economies they did need only a few loans. Especially for young families they offered credits. The loans for the industrial companies were like their taxes a tool for remote control.
On the other hand, the communistic societies suffered under many weaknesses and principle problems. It was very difficult to organize and manage agriculture without private property. The trading with industrial and other products became very difficult, because of administered prizes without any flexibility. Motivation of the workers in the factories developed to a big problem and also to keep a level of quality for their products.
In comparison with a market economy in a communistic economy the consumers have no chance to give a feedback to the producers about preferences or about quality. The absence of such an information system about the true value of a product for the consumer is a fatal deficit of all socialistic economies.
Since 1989 we all know much more about the destinies of socialistic economies. Since those times it seems to be that we know more than enough about socialism. It is no more modern to discuss socialistic ideas. But it is not a  fiction that since the crash of socialism the economic problems in capitalistic countries were ascending and not descending. In the most western economies the money allocation through stocks and bonds is growing in relation to the distribution through wages and salaries. The management of private companies get more and more money through stock options of their own firm. The dismissal of workers is a well-tried method for the increasing of the exchange rates of the shares. And even if it is no more possible to keep solvency for the firm, their management save the rest of the money from the banks through settlements for themself.
The accumulation of shares is the reason for the centralization of power in capitalistic companies. Democracy is in socialistic and capitalistic companies a fiction, an utopian vision.
The management of a capitalistic company must represent sometimes the interests of the workers, sometimes they have to represent the interests of the shareholders and don' t forget, that they represent first of all their own interests. Such managements are not elected from the workers and they are not elected from the shareholders. Mostly they represent only a few shareholder who keep the majority in the supervisory board. All members of a company desire to maximize the income. But later the money must disintegrate in wages and salaries for the workers and in profit for the shareholders and their representatives. The consequence is a differential of money allocation and the distribution of economic power. That means the economic incomes are in a bad relation to the personal economic performances. This differential would be bigger without the activities of the labor unions. But they can' t avoid the differential. The trade unions way to minimize the differential of money distribution and economic power distribution includes also a big disadvantage. The wage agreements negotiated between the trade unions and the employers can' t be paid for all people who seek a job. Hence unemployment is an unavoidable feature of such an economy. Another characteristic is low wages for people who look for a new job. It is usually difficult to change the job or to leave the school in order to start a profession. Especially for older workers it is nearly impossible to find a new job with to the education and the skills adequate conditions. Then they are one of the minorities with more job problems than the average. Other minorities are foreign people, less educated persons, women after bringing up children or people with a handicap.
The resumé of this chapter is, that we have a dependance between the distribution of money, the allocation of work and of economic power. Private economic power and the private distribution of work is not the true problem. And also the private distribution of economic income is not a real problem. But there is another dependance. The dependance between the private distribution of gross income and the public distribution of net income. This feature of market economy was for Karl Marx, Friedrich Engels and Lenin and their follower not important. Even the most famous representatives of the capitalist economy do not know the features and the possibilities and the consequences of a fair tax system. Fair money distribution is unthinkable with an unfair tax system. The core of economic justice is beginning with a fair financial system. Therefore we must learn more about justice in the tax system.
In the next chapter we discuss

6. The consequences of capitalistic money distribution