Individualist Economics vs. Collectivist Economics

There is an continuous debate over whether an economic system based on individual merit is favorable, or one in which collective ownership commands and controls society. The first is what we describe as a "Free Market" in which collective ownership of means of production (and special recognition in the form of limited liability) is limited to absolute necessity. Such limitation is described by Adam Smith in his Wealth of Nations as follows:

"To establish a joint stock company... for any undertaking merely because such a company might be capable of managing it successfully; or to exempt a particular set of dealers from some of the general laws which take place with regard to all their neighbours, merely because they might be capableof thriving if they had such an exemption, would certainly not be reasonable. To render such an establishment perfectly reasonable, with the circumstance of being reducible to strict rule and method, two other circumstances ought to concur. First it ought to appear with the clearest evidence, that the undertaking is of the greater and more general utility than the greater part of common trades. and secondly that it requires a greater capital than can easily be collected into a private copartnery."

Sadly, rather than adhere to such limitations on government interference in markets, we instead took the road to collectivism, as described as follows by Karl Marx in his Capital Vol. 3

"Capitalist joint-stock companies as much as cooperative factories should be viewed as transition forms from the capitalist mode of production to the associated one, simply that in the one case the opposition is abolished in a negative way, and in the other in a positive way."

So long as the means of production and of providing services becomes increasingly collectively owned by the workers through 401k accounts and other passive investment schemes, it seems that the best way to protect the fruits of individual labor and the wealth of the nation is to render such a system more democratic.