Capitalism vs. Socialism - The Real Story

Written by Ray Peach


On January 11th 2012, Stuart Varney from the Fox Business Network defended Mitt Romney’s career at Bain Capital in a report called Capitalism vs. Socialism. However, when Texas Governor Rick Perry claimed that Obama was a socialist, the Socialist Party USA claimed that Obama wasn’t a socialist at all saying, “Socialists know what Obama is: another corporate funded politician placed in the White House to protect the wealth and status of the 1 percent.” Others deny Obama is a socialist by quoting the dictionary definition, and then asserting he doesn’t meet that definition.

In another twist, the GOP strategist Frank Luntz attacks Capitalism saying, “[The] use of the term ‘Capitalism’ is not healthy to conservatives and the term should be removed from the Republicans’ vocabulary.” So the question is: who is right?

This is the first in a series of articles, which will answer that question. To understand that answer, we will begin with the first known example of socialism – and it’s earlier than you may think.

The Birth of Socialism

Totalitarianism_by_A_R_PeachIn 1892, archaeologists uncovered a large cemetery of more than 3,000 graves on the west bank of the Nile River. These graves were different from what had usually been found in Egypt, because they were all basically the same.  They were about the same size, and contained the same kinds of grave wealth, consisting of pottery, combs, spoons, and flint knives.  What had been discovered was an ancient civilization dating back to about 4000 BC.  These people became known as the Naqada.

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What became interesting is that as the Naqada progressed over time, the size and number of the graves began to change. As more and more wealth became concentrated into fewer and fewer hands, the graves of commoners became communal graves, with little grave wealth, while the graves of the elite became larger and more ornate.  By about 3200 BC there emerged the first dynastic state, or a state run by a powerful ruling family.  This period represents the earliest known aggrandizement of politics supported by bureaucrats, where the control and distribution of strategic materials came to be controlled by the state. By this time elite burials contained large quantities of exotic grave goods, sometimes made of gold or lapis lazuli (a semi-precious stone), while workers were buried in mass graves with little or no fanfare.

After decades of research, archaeologists found that between 3000 BC and 1069 BC, Egypt went through several periods of expansion and contraction. Kingdoms would grow, consolidate power, build wealth and large bureaucracies, and then fall into corruption and economic collapse. When this was applied to other civilizations from around the world, a pattern emerged. Civilizations historically begin with a belief in a personal monotheistic deity, and while the civilization is growing, it develops science, art, literature, and economics. During this growth period, artifacts show that people believed in personal responsibility, and that all men were created equal in opportunity.

Over time, these civilizations became more tolerant of animism, demonology, polytheism and pantheism.  As power and wealth moved into the hands of the elite, powerful families (aristocracy) began to see themselves as gods, and surfs as their personal property – something less than human. When the craftsmen and small business owners were destroyed, the advancement of science, art, literature, and economics was also destroyed.

In Egypt, different pharaohs were either considered to be gods or representatives of gods, so that when they died their graves became towering monuments, adorned with incalculable wealth. Ideologically this becomes what the German sociologist Franz Oppenheimer (1864 – 1943) called the “Idolatry of the State,” and the deification of the rulers.


The Egyptians believed that the idols, statuary, and artwork, buried with them in the tomb would hold the soul or Ka of the pharaoh and his servants.  So when pharaoh died, his wives and slaves were buried with him, so that when he was reawakened in the land of the dead, the servants would also be reawakened to serve him for eternity in the after life. This is the complete opposite of the Christian faith, where everyone is equal in the eyes of God.

In the Egyptian pantheon, the moon god Thoth was also the god of writing and learning – the mind ofRâ. Additionally he was the chief deity of Hermopolis, the Egyptian city of the Sun, appearing in archaeology down to Roman times as the patron of scribes. Because of Thoth’s connection to Hermopolis, the ancient Greeks called him Hermes; and today the Egyptian belief system is called Hermeticism – the basis of all pagan faiths. While details differ, such as the names of the deities, all pagan belief systems are fundamentally the same. This includes ancient Greece and Rome where it is called Hellenism, India where it is called Brahmanism, China where it is called Buddhism and Taoism, and in Arabia where it is called Mohammedanism. These belief systems have no concept of equality or otherworldly sin; and morality is based on how well one pleases his or her betters in this life. In pagan societies there is no concept of freewill, as we are all part of a cosmic mind where Thoth controls everything people think, do, and say. Hermeticism will also play a role in the Renascence, meaning the reawakening, along with elements of Hellenism and Brahmanism.

In ancient Egypt, currency had not been invented yet, so pieces of silver and gold served to facilitate trade. Like other resources, precious metals were owned and controlled by the state, and were stored in temples where they were managed by the priests. This would mark the crude beginning of a central banking system that forms the heart of pagan societies. Today the Federal Reserve is often referred to as the Temple.

The Roman Empire

The politics of early Rome was built around of a group of families or gentes that had descended from common ancestors. These gentes formed into paternal organizations called gens where “clients,” a kind of serf, remained under the authority of the father of each gentes (family). Clients worked with, and for, the father but had no personal possessions of their own, not even small articles such as combs.  Everything was furnished by the gentes, and remained communal property. Geographical areas were divided into wards, which were controlled by individual assemblies where only the heads of the gentes could deliberate. Kings were chosen by the Senate, which then continued as his council until the King’s death.  The heads of the families, called patricians (the source of the word aristocracy), created and had sole access to the Senate.

Outside of these families was a group of people called the plebs.  These were a people who were not members of the gentes and were not particularly welcome. While technically not slaves, the plebeians had no rights at all. They could not acquire property, make binding contracts, or legally marry.  The patricians treatedplebs like pariahs, even though it was the plebian lands that the patricians had occupied. King Servius Tullius (578 – 543 BC) sensed that the plebeians, who greatly outnumbered the gentes, were becoming a threat and enacted a set of laws giving the plebeians some rights. These laws also allowed Tullius to bring the plebeians into the army to defend Rome against her enemies. His main motivation was to remove the temptation for the plebeians to rebel against the patricians not to improve the lives of the plebs.

Over time the condition of the plebs deteriorated and in 494 BC again threatened to revolt; so the Senate negotiated with the plebeians making several changes.  Among other things, the plebeians were allowed to choose representatives from among themselves (Tribuni, or Tribune), forming the Plebian Council to act as champions for the “people,” thus creating a Republic.

In 451 BC, ten men wrote a set of ordinances called the Twelve Tables by an act of semi-divine power, which they granted to themselves.  This set of laws dealt with the facts of rural life, referring to trees that were cut down and how to handle animals that had run off. The Twelve Tables also confirmed the far-reaching paternal power of the father over all of his children. No matter how old or successful his sons became, they needed his permission to enter into a contract. A father could kill his children at anytime and for any reason, and infanticide was common. Although the laws supposedly guaranteed uniformity, they were archaic and administered by officials who mostly ignored them; and as corruption grew, the Tribuni came to represent themselves at the expense of the people they were supposed to protect.

Eventually wealthy members of the Plebian Council and the Senate merged, creating a tremendous plutocracy, which wouldn’t be surpassed for its terror and bloodshed until the Soviet Union. Central to this plutocracy was a system of large slave labor estates called the Latifundia.  This institution would allow the ruling class to live in luxury, while ultimately contributing to Rome’s collapse, much like globalization is doing to America today. While all this was happening, the aristocracy acquired increasing wealth and power through the systematic exploitation of the state and by usury, adopting an ostentatious lifestyle more lavish than the world had ever seen.

The Roman Economy

Rome created a central banking system, where bankers were appointed by the state to receive taxes and to settle debts called the “Tabernce Argentarice,” or “Mensce Numularice.” As in Egypt and Greece, silver, gold, and precious stones were stored in the temple, under the protection of the priests.

The actual word, bank, would come from the Hebrews, which is derived from the Italian word bancoor bench. Hebrews provided the only private banking services and, like all private enterprise in Rome, private bankers were held in disrepute. Major centers for the acquisition and production of strategic materials were all in the hands of the state.

Credit played a part in the Roman economy, but Rome remained an agricultural society based on war and land. The Roman farmer may have been attached to the land, but when called into the army, the farmer had to fight. While he waged war, the soldier was obligated to pay for his own equipment and weapons. In his absence, he still had responsibilities to his family, needed to feed his slaves, and pay his taxes.  The only way to meet all these obligations was to borrow money from the aristocracy, usually through the central bank. Credit became the great weapon of the ruling class against the working class, whose lives they controlled through tax and property rights legislation. Bankruptcy laws gave creditors guarantees, allowing them to seize the debtor’s property, and press him and his entire family into slavery. It is important to note that today’s concept of using credit to purchase capital equipment did not exist in the pagan world, as there was no capital equipment – industrialization would change the nature of credit.

The Latifundia

As the plutocracy grew richer, the plebeians grew poorer, as the “herds” of slaves that had been captured in foreign lands, were brought back to be used in the Latifundia.  These large slave labor estates tilled the soil and produced goods at a price, and under conditions, that no plebian could compete with.  The production of grains, olive oil, and other goods in the Italian peninsula eventually came to an end, as imports from Sicily and Egypt destroyed local business.

The foreign trade, privileged monopolies, and the Latifundia that supported the elite had destroyed the market for labor.  However, during the first century BC, the plebs and what little remained of their guilds had some rights, and their social status required that they be fed. The Roman welfare system was called the Annona, and the people living off the Annona became known as the proletariat, consisting of poor citizens who possessed nothing but their family name. Karl Marx would eventually take ownership of this term and redefine it for his own purposes.

When the free guilds sought redress, laws were enacted to keep them from voicing their political opinion. Rome became an oligarchy of Nihilists, who exploited tens of millions of people, and subjected them to permanent pain and suffering so as to provide for their own personal needs. As an army of disenfranchised and unemployed workers flocked to the capital, the aristocracy relied on a combination of the military and spectacle to protect them. The generals took advantage of the unrest and used their legions for their own gains.  The result was a hundred years of civil war and dictatorships.

Servile Wars

While the Roman army raped, pillaged and squandered the known world, Rome herself was in revolt.  In Italy, the laws of the Twelve Tribes were ignored and replaced with the force-of-will, as exercised by the leader of the biggest army. The result was that the first century BC consists of one long Italian civil war. The most famous of these was known as the Third Servile War (73 – 71 BC), led by a gladiator named Spartacus. The myth says that Spartacus, and his fellow slaves, escaped from a school for gladiators and led a slave army against the Romans as a moral revolt against treating men as property. The truth is, the recorded history during this period is fragmentary at best. What we do know is that this uprising did not occur in a vacuum, Spartacus was not born a slave, and many of his followers were not slaves either.

Spartacus was most likely a deserted Roman soldier.  This wouldn’t have been all that rare, as mass desertions were common. Around 76 BC, Lucius Licinius Lucullus tried to force his army to remain in his service, even though their enlistments had expired. His entire army deserted him and signed on with Pompey who paid more. Gladiatorial schools were also used to train Roman soldiers, and many gladiators were paid professionals. In fact, the word gladiator means swordsman, from the Latin word gladius meaning sword. Private games were often held so that lobbyists could entertain and bribe public officials.  This became such a public scandal, that accusations of corruption forced the practice to be made illegal, but the laws were never enforced.

As it turns out, Spartacus and about seventy of his fellow gladiators did raise havoc throughout the Italian Peninsula; but this could hardly be called a general servile uprising. Many of his recruits were slaves, but many were not. Some slaves refused to participate and many plebian masters deliberately freed slaves so they could participate.  The rebel force was composed of so many different types of people, from so many different backgrounds that Spartacus had trouble getting them to fight as a single unified unit. Crassus eventually defeated Spartacus with help from Pompey, who cut off the rebel avenue of retreat. To do this, Pompey used the same army that had deserted from Lucius Licinius Lucullus some five years earlier.

The fate of Spartacus is not actually known, but he is believed to have died in battle. While some 6,000 survivors were crucified, most of the rest were sold into the slave market.  This market was so big that the sale of additional slaves had little impact on their price.  An important point is that the morality of slavery was not an issue in these revolts. Spartacus and his followers enslaved the Romans they captured, and forced them to fight against one another. Slavery may have been evil when described in the Hebrew faith, but it was still a ubiquitous part of the pagan worldview.

In 63 BC, the plebs and their schools were implicated in what became known as the Catilinian conspiracy. This was an effort by the Roman politician, Lucius Sergius Catilina and a group of plebs to overthrow the aristocracy that failed.  For a while, some plebs who were deemed to not be a threat to the state were allowed to remain; but Julius Caesar would soon abolish all vocational associations.

By 44 BC, the entire Italian population depended on foreign wheat for its survival, because domestic production had become so unreliable. Julius Caesar responded by making drastic cuts to the number of people who could receive free food by rationing it to the best 200,000 people, letting the remainder starve. Eventually disease, starvation, corruption, and the Latifundia brought the Roman Empire to its knees. By AD 400, the western empire succumbed to hordes of barbarians, not so much by military conquest, rather the barbarians just walked in and took it. Today, we see the same forces at work as foreigners just walk in, and the modern Latifundia is at the heart of what is now called Free Trade. It should be pointed out that Free Trade is not synonymous with Free Market Economics.

There is a common myth that the rise of Christianity brought down the Western Roman Empire, but the Eastern Byzantine empire was Christian, and lasted for nearly another thousand years.

“What has been will be again, what has been done will be done again; there is nothing new under the sun.”  Ecclesiastes 1:9

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Ray_PeachMr. Peach (visit his website) ·is a retired engineer who spent a great deal of his life traveling the world to solve problems for fortune 500 companies and the U.S. Government.·After serving 8 years in U.S. Naval Air he went to work for Litton Guidance Systems as a field engineer, working in the Middle East and Asia. For the next 12 years he worked as a systems engineer for Hughes Aircraft where he was involved with the F-14D, F-15E, and the F/A-18 tactical aircraft...........read more

Part 2 will begin with the rise of Christianity.

(Note: this article is documented in Volume 2 of Totalitarianism due for release in August)

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