Peter, thank you for your thoughtful response. You bring up good points.
Just a couple notes:
- You make the assumption that government can adequately counterbalance the natural phenomenon of "bad luck." How does the government adequately determine who really deserves a handout (who is unlucky) vs who is willfully unproductive?
That's what the democratic process is for. We, as a society, have to determine how much inequality we are willing to tolerate -- as the result of a fair and legal process all sides have a say in.
I'd say most of the time, this works quite well. At least in Germany, I don't have the impression that results in absolute, radical demands by either side, as extreme lobby groups and parties from both ends of the spectrum are marginal. There is a large center that acknowledges both employers and employees have legitimate demands and try to find compromises.
- You assume that dignity is a function of economic means. I know many working class people who are very dignified, and many wealthy people who are anything but. Giving a poor man money will not bring him dignity, that is something he either has, or he doesn't have. I would go so far as to say that accepting charity causes one to lose dignity.
The latter sentence is crucial: It's undignifying to force people to rely on charity, forcing them to be beggars, by denying them other options. I also think it's undignifying when people have to work in several low paid "McJobs" to even survive -- think of that single mom living in a container, working 18 hours per day, without any time left to properly raise her child.
That's why I think the ideal is to create a situation where everybody can make a good living of a good job. Unemployment is bad, so is wage dumping.
But since markets alone cannot provide that, I'd say we need certain social safety nets, such as unemployment support. Such a system wouldn't be "handouts", but basically an insurance: When you have a job, you pay into this system, and the moment you're unemployed, you get money out of it.
- you claim that, in capitalism, you are paid for your possessions. I would argue that you are paid for your net capital contribution to society, in other words, you are paid for your production.
Okay, let's not debate about semantics -- point being, you can easily make money without much work when you have much (capital, factories, tools, land).
- You claim that, in socialism, you are paid for your work. What mechanism exists, within the socialist construct, to determine the value of one's labor?
You are right, there is no sound mechanism to determine that. That's one of the reasons why I don't think genuine socialism is a feasible system. The market is superior in determining the value of labor -- but as it often yields undignifying, unfair results, it should be cautiously corrected here and there.
- You explore the hypothetical that if everyone were equally talented and hard-working, there would still be stratification in the labor market. First, what value is a hypothetical situation to us? We will never all be equally talented or hard working. However, that you bring it up highlights the very real observation that while capitalism is pragmatic and based on the accumulated knowledge of the realities of human experience, socialism is an impractical fairy tale dreamed up in the ivory towers of lala land.
Yes, socialism is impractical. Capitalism may be realistic, but normatively problematical. That's why I think the best system is a capitalism that gets regulated and complemented by a reasonable level of social systems, ideally efficient social systems that target people who are really in need, does not eliminate good incentives and doesn't burden the economy too much.
Second, even if this hypothetical situation were somehow reality, you show a lack of understanding when it comes to capitalist labor markets. If everyone were equally valuable to the labor market, the demand curve for labor would be perfectly elastic. In plain English, what that means is that every stock broker, doctor, lawyer, or CEO would be easily replaceable... Therefore they would not be paid a single penny more than your local janitor.
Good point.
At any rate, I guess my point is that everybody should participate in our common wealth to some extent, even when he has a "bad" job. That's a demand based on the normative idea of the equal value of human life and dignity; capitalism is just an efficient system, but does not care about this value we attach to human life because of moral and ethical considerations.