Bill Matthies

CEO, Coyote Insight, LLC

This conversation is closed.

Do most people differentiate between forms of government and economic systems? How does what they think impact what they do?

Communism, socialism, fascism, capitalism and a few more variations of one or more of these, are all economic systems. Democracy, dictatorship, republic, and anarchy, also with variations and degrees, are forms of government. Any economic system can be put in place by a democratic government, or imposed by a dictatorship.

Do you think most people understand this or do they confuse economic systems and forms of government? In other words do most think communism only comes with dictatorship, capitalism only with democracy?

To the extent they are confused, how does this impact what they do both politically and economically?

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    Nov 20 2012: When I was on my first course of economic, lecturer told us that studying economic would give us a chance to be an informed voters during the elections and I think that he was right, but think about people who hasn't any information about economic system or they even do not know what the forms of the government are.
    My answer is that: Of course it is necessary to be an educated and informed citizen of your country, there is no doubt.
    The key factor is that always and everywhere result is the most important thing no matter if it is communism, capitalism, democracy or something else
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      Nov 20 2012: Very nicely stated.

      Could you say that the educated can correlate rhetoric and results?
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    Nov 14 2012: these things are intertwined. fascism (stripped from its historical ideological baggage) is as much a social construct as an economical one. and it is no surprise at all. the economy is not a separate entity from life in general. it is part of it. there can not be, for example, economic freedom without all other kinds of freedom. such distinctions are artificial.
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      Nov 14 2012: Let me see if I have this right?

      These different forms of government are not theoretical, but are in my face even though I don't see them?
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        Nov 14 2012: i'm not sure about that. i'm not convinced that the classification the o.p. made is actually correct. how would communism not be a form of government?

        so please ask more precisely what do you have in mind
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          Nov 14 2012: I guess I'm the "o.p."? Not sure but I'll attempt to answer your question Krisztiån just in case.

          First of all the disclaimer. My questions and this response are my opinions. I'm not saying that anyone who feels otherwise is wrong or that I'm even right. This is just what I believe.

          A "form of government" is how a nation creates its laws, not what those laws are. The form of government in the US is representative democracy with citizens voting for individuals to represent them, who, in theory, create laws under which its citizens wish to live. For the most part our economic system is capitalism (I'm putting aside the nuances of what that means) but we could vote for individuals who, in turn, would vote for a different system of economics. Indeed, with the re-election of Obama, the country is moving somewhat to increased socialism, although how much so remains to be seen.

          Over the years there have been many openly communist political party candidates in the US, none of which have done very well in elections. However had a sufficient number of them been elected at the same time, they could have passed laws changing the US economic system from capitalism to communism. We would have still been a democracy but with a different economic system.

          We see this now in Venezuela with the re-election of Hugo Chåvez. Most would agree that Venezuela is a socialist economy, one democratically elected, allegations of election abuse aside. Likewise the People's Republic of China has a hybrid economic system of state controlled capitalism, which, in many sectors, is much more capitalistic than it is communist. However unlike the US and Venezuela the citizens of PRC did not have a direct say in their form of government or the economic system under which they must live.

          None of this is meant as a comment of "right" or "wrong", just my opinion regarding definitions and examples of the differences between the two.
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          Nov 14 2012: Krisztian

          What I had in mind is the question do people have any idea that this stuff effects them and their lives?


          My question is what is your definition of somewhat?

          and the definition of remains?
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        Nov 14 2012: what we actually have is a mixture of all these, and the "new" ideas proposed are usually too. alas, we don't learn that in school, and thus don't recognize it when we see it. most people think that socialism is the thing when you are taken to the gulag for dissent. in fact, socialism is all around us, especially in europe.
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          Nov 14 2012: So would an example of this be that the European's main concern in life is what they are going to do on holiday and the hours they have to work or how their medical insurance is free?

          Where as the denizen of the free market is more concerned with purpose and goals and how he can serve his customer? How else do you explain that the denizen works more hours with less security yet is happier more determined and infinitely more productive and creative?
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        Nov 14 2012: Pat you asked "Bill My question is what is your definition of somewhat? and the definition of remains?"

        I assume you're asking that in relation to my statement "Indeed, with the re-election of Obama, the country is moving somewhat to increased socialism, although how much so remains to be seen."

        If so I have no idea and don't believe anyone does. There are too many unknowns and variables, too many assumptions yet to be proved/disproved. Stereotyping (always dangerous) President Obama based on his rhetoric, I believe he will push for more social centric legislation but how much and how successful he will be is unknown.
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          Nov 14 2012: Bill, I don't think that the current administration is overly concerned with legislation as they are implementing White House Rural Sustainability Act with includes the Cap and trade, education, and significant green programs. This is essentially United Nations Article 21 and all it took was Executive Orders and no in fighting to prevent implementation or concerns about funding.

          Businesses and states are ramping up for the implementation of Obamacare. As a CEO the amount of your employees will make a difference but by in large you will certainly, like others, make some trade offs to stay afloat. The decision of many is to reduce hours to 29 per week or to assess the fines involved and choose the lesser of two evils.

          With Obamacare, cap and trade, and rising costs of electricity, raw materials, and fuel your position is in for a rough ride even with the best of decisions.

          I wish you well. Bob.
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          Nov 14 2012: Bill

          You are more euphemistic than I.

          I don't think it takes too much guess work to project what is going to happen. LBJ instituted medicare with a projected cost of 9 billion for part A by 1990 but ended up costing 67 billion in 1992. This is just example of many of how much the cost is going to geometrically increase. If I were to guess I would say the single biggest drain on the UK economy is their healthcare system which is the second biggest organization in the world second only to the Chinese army.

          Who knows how much Obama's consumer protection legislation is going to cost but an example of something similar is Sarbanes Oxley they estimate the cost to the economy to be around 1.5 trillion dollars per year. This is cost in regulations on business not tax revenue. In 10 years they have yet to find one single financial irregularity.

          Not to mention that just the debt service is 250 billion at 1.5% interest when it returns to a more normal 5% it is going to be 750 billion or 30% of the revenue

          I don't think you have to be a prophet to project bad things?
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    Nov 15 2012: I think, that most people do not care about the difference between them
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      Nov 19 2012: Could be Charlize. If so does it matter that they don't?
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    Nov 14 2012: most people don't........

    Most think capitalism and democracy to be synonymous, similarly communism to dictatorship.
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      Nov 14 2012: I suspect you're right Salim, or if they do know the difference, they unknowingly make the connection you've suggested they do.
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        Nov 15 2012: Hi Bill
        That's what my observation is, even here in TED as well.
        Media propaganda is responsible to a great extent for this kind mass misconception.
        Take the example of so called "arab spring" ....economy there is fully capitalistic under tyrranic dictatorship.......but the tag of dictatorship is always with socialism (we never saw communism in modern time anywhere).
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          Nov 16 2012: I think true communism, or anything close to it, has been shown to be unworkable. But it will be back. Someone somewhere sometime will think it is a wonderful idea, not knowing how completely it has failed in the past. Maybe Venezuela in the not too distant future.
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        Nov 16 2012: I feel it worked only in pre-historic time, before human went in to modern context I feel it to be utopia

        We have lot reasons in hand to supress others.....and we are displaying that relentlessly.
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    Nov 16 2012: Not unexpected but soooo sad.
  • Nov 16 2012: I think bast the majority of people are just unable to tell the difference between communism, socialism and left, the same way there will be few people capable to tell the difference between capitalism, democracy and right... though most people will be able to tell you the difference between dictatorship, republic and anarchy. Yes, I agree, at least in theory it is possible to have a democratic government under a communist economic model, however there are inertial effects that are not easy to evade, for example, a communist economic model may push government officials to have a central control of everything which may eventually lead you to a dictatorship. A capitalist economic model, on the other hand, can be easily married to a democracy or to a dictatorship, we have seen examples of both all over the world during the past centuries.... Anarchy by definition cannot mix with a capitalist economic model and I have serious doubts it can blend properly with a communist economic model, so in practical therms anarchy is just not economically viable in either way.

    Now, from my point of view, the impact of this confusion is purely political and if it has any economical effect it is so small and so long therm, that you can just ignore it. The political impact can affect the results of an election, but its effect depends mainly on the number of undecided voters.
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    Nov 15 2012: Predictably the discussion has wandered off on a tangent so let me restate the original question.

    Do most people differentiate between forms of government and economic systems? And regardless how does what they think impact what they do?
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      Nov 15 2012: Bill, how do you think it impacts people when they do not make distinctions between economic systems and political systems?
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        Nov 16 2012: Sorry for the delay Fritzie. I've been thinking about your question and conclude, I don't know. I suppose the first question still is, do they even understand there is a difference? Based on some of the responses here I'd say some many don't.

        I believe most people in the US, often including me, vote for icons of what they hope will be true, with little to no idea concerning the policies that will likely come from who they vote for. And if so it's hard to fault them for that. Our campaigns are long on image, short on substance.

        So do I think most know the difference between forms of government and economic systems? Since "most" would be 51% I'll say yes at least when they are forced to think about it.
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          Nov 16 2012: There is another issue also and that is a word may mean something but typically be used differently in public life. Some people use any one of these words simply as a synonym for good or bad.
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        Nov 19 2012: Responding to your comment below.

        I agree that people often do mistakenly use the wrong label. Growing up in the US during the 50's, for many "communism" was a synonym for "dictatorship". I now see there's no reason an electorate could not willingly elect politicians they know will institute a communist economic system. Not likely I suppose but it is possible.
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      Nov 15 2012: I think that the distinction between forms of government is easier as the media, movies, and fear tends to make these things more obvious.

      We become aware of economics of a country when they possess what we need or want. The most obvious is oil. We under stand that many products are made in China .. but we only are aware of that because of ipods all have made in China on the back.

      The sad truth is that we do not educate students in economics either macro or micro. Until Pat brought the subject of QE3 to the TED table how many of us had heard of it. If you asked the man on the street about the fisical cliff you would get a lot of answers from aware to never heard of it. How many would answer any questions on balance of trade or the Fed.

      More people vote for the American Idol than for president ... top stories on the news are about the latest stupidity of actors .... stories about serious impactors like the economy are dumbed down for the viewers.

      Schools should incorporate poli Si, economics, and stats into a course and show the relationship to history. I am pretty sure that until that occurs most will be given the mushroom treatment ... kept in the dark and fed crap.

      Is that closer to what you were looking for.

      All the best. Bob.
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        Nov 16 2012: I "thumbs up'd" your reply Bob because I like your suggestion about schools doing more to make sure people do understand the political and economic systems they live under. And too the comment about more voting for AI than president.

        That reminds me of the man on the street interviews you occasionally see where otherwise seemingly intelligent people are asked basic questions like who is the VP, who are their senators, what is the difference between the House of Representatives and the Senate, etc. Unless they use very selective editing showing only those who get it wrong, way too many people don't know, which is very sad given all that is at stake when we vote.
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          Nov 16 2012: Bill, I work with my State Senator and invited her to our school district for a tour and fact finding. We went into several classes and when we went into the overnment class (all seniors) she ask them who their State Senator was. Even though they had been briefed that she was coming and I introduced her as Senator Allen .... no one could answer the question. The Principal and Superintendent accompaning us were red faced.

          I think we have problem on many levels ....

          Thanks for the reply. Bob.
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          Nov 17 2012: Don't you think state senator is aiming a little high? I would think you would be doing good if they knew their U.S. senators? I mean you have to walk before you can run type deal.

          It is like one of those Jay Leno interviews like Bill said.

          You guys have some provocative people in politics in Az, keep up the good work.

          It just occurred to me that a mention of guns in Az might be taken the wrong so I edited the above.
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    Nov 14 2012: Most people simply don't understand the definition of the words, so they confuse the whole subject in all sorts of ways. Can they define:




    Fascism (by the way how is Fascism different than Socialism)

    Democracy (by the way what is the tyranny of democracy which seems to be opposites?)

    Is the U.S. a democracy?

    Republic (by the way is the U.S. a republic?, but so is China and the USSR?)(I hear that the USSR had a great constitution, what is up with that?)

    Anarchy (by the way I have heard many Libertarians say they believe in some sort of Anarchy) but in Anarchy don't people just voluntary trade with each other? but on the other hand I assume their is very little voluntary in Somalia?

    Etc, Etc,

    The definitions have to be weighed against other definitions and concepts to come to conceptual understanding. Conceptual understanding is pay dirt that is when the student can really work with the ideas. Parroting back words and ideas is fools gold.
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    Nov 14 2012: Most people in the US learn this distinction between economic and political systems in high school but then come to associate concepts that typically seem to appear together. That two things are different does not mean they are independent in this sense.

    In Europe, I believe, the subject and term "politic economy" has been used for a long time. Some people over time have argued we should intentionally become more interdisiplinary in our thinking, acknowledging and studying the interconnections that often make themselves apparent in a way that challenges boundaries.
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    Gail .

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    Nov 14 2012: Fiscal systems depend on governments (with their armies and police states) to sustain the perceived value of the money.

    A fiscal system is really a social system, and it impacts every moment of our outwardly-focused lives.

    And since when does capitalism accompany democracy? I live in the USA. We have neither capitalism nor democracy. I live under the tyranny of a plutarchy. (Plutarchy is the fusion of plutocracy - rule by a cabal of wealthy people, and oligarchy - rule by a cabal of powerful people known as the Supreme Court).

    Because of government subsidies, it in inaccurate to call our fiscal system capitalism. Economics is about conserving. Our fiscal system rewards those who ravage our natural resources and are best at depriving the most people of their ability to survive. It is more accurate to call our fiscal paradigm anti-economics or diseconomics.

    Our educational systems, that exist to support our fiscal system, intentionally diseducate students (indoctrinate). This means that most Americans (and most of the world) are the sheeple who beg to be fleeced and butchered, and who battle fiercely to preserve their right to be victimized.

    "1984" is upon us.
  • Nov 14 2012: Good point but I don't fully understand what you are saying except with definitions This becomes apriori and much clearer.