No. 36: Capitalism vs. Socialism
March 12th 2009 16:40
Driving for Inspiration
CAPITALISM as defined in 1971, in Webster's New Twentieth Century Dictionary the World Publishing Company: "The economic system in which all or most of the means of production and distribution, as land, factories, railroads, profit, originally under fully competitive conditions; it has been generally characterized by a tendency toward concentration of wealth, and, in its later phase, by the growth of great corporations, increased governmental control, etc."
SOCIALISM as defined in the same dictionary: 1. "The theory or system of the ownership and operation of the means of production and distribution by society or the community rather than by private individuals, with all members of society or the community sharing in the work and the products. 2. (a) Political movement for establishing such a system..."
I chose a dictionary from 1971 because it was printed right in the middle of the Vietnam War when we had half a million Americans (and others) sacrificing limbs and lives defending the first definition, while millions at home protested the purpose for the sacrifices.
Today, the U.S. is in an ideological battle once again. What direction should we follow? We have watched as many European countries have leaned toward the second system at a time when Asian countries have migrated more toward the first system. Which system seems to be creating more upward mobility for its people by increasing their standards of living? It is obvious that capitalism--or at least a system to the right of the bell curve--which has capitalism as its mean. Why is this?
Socialism has its points. There is no denying the attractiveness of having all share in equal ownership of all collective pies. Having no one denied health care, food, employment, education, etc. certainly looks good on paper, and to some, behind a cigar, in an armchair discussion.
Time and time again, history has shown that socialism only works in modest ways. What is throwing the "monkey wrench" into this political system? I submit that it is caused by two things--INCENTIVES and MOTIVATION.
On a simple level, if you know for certain that your employment is secure with no fear of losing it, then why work harder? If you do not feel you have a chance at promotion or advancement, then where is the incentive to keep you from slowing down, and to increase your output?
Socialistic and communistic states have tried covering these necessities by preaching the advancement of all to ever higher standards of living through multi-year production plans, and propaganda hoping to influence people from the individual level upward. When these plans fail, incentives are lost and motivation decreases. Place these on any graph you like, the results are the same. Less incentive and motivation=less production=less to distribute=lowering of standards=-the opposite of the goals=-the opposite of the theory.
Capitalism, on the other hand, elevates production by increasing incentives and motivation, thus providing more to lift standards of living. It is not without its faults, however, as has been exemplified lately by greed, corruption and vice.
On a simple level, if you know that you will have more by working harder and/or smarter, then most people will make the adjustments, for a duration, in order to either elevate his own, or his family's upward mobilities. Place these on any graph and the results will almost always show an increase in production=more to distribute=elevating of standards=in line with the goals=in harmony with the theory.
Greed, corruption and vice are possessed by both systems, and both systems are adept at stealthily hiding them. Capitalism, through its internal need for competition, and open media, forces the eventual exposure of such, at least in theory.
It is like walking a tight rope. On one side lies bureaucratic bloat, "nannying" us to a choke hold. On the other side is the "Wild West," open seas, dog eat dog. In order to lessen our chances for the first, we must do as Teddy Roosevelt admonished us, internationally: 'Walk softly, but carry a big stick." In order to keep more of our own pie, through incentives and motivation demands constant vigil and bravery.
Is there an ideal system for governance and economic delivery. Who really knows? Theories abound and most often rise to the visibility pinnacle during economic downturns such as we are presently within. My opinion is that the less governmental control and interference, the better, except wherein it can be proved to remove more "monkey wrenches."
Please keep it between the lines.
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Comment by S.L.
The Political Brief
Comment by Edward Allen
Sanity Road
Comment by Janet Collins
Acceptable Etiquette
The Social Critic
Janet Collins Blog
Do they want intervention or don't they? Maybe you can exlplain it for me.
Comment by S.L.
The Political Brief
It wasn't the capitalist system that failed, but government taking too big a bite of the private sector (Fannie Mae and Freddy Mac) and lying to us. It was huge government programs (war on poverty and community action) that caused the toxic loans, not capitalism or private enterprise.
Comment by Edward Allen
Sanity Road
In 1999, our then Florida Department of Insurance screamed to the high heavens that allowing banks, insurance companies and brokerage houses to merge would create huge monolithic financial corporations, that if one failed, it could topple the others. This is what has caused the banks to have such problems because they could buy up derivatives which sectioned out mortgages into separate investments. This permitted a bank to not only buy the interest half of a mortgage, but let its other entities buy up the principal with clever accounting. Most of them showed "paper"' profits that were none existent--similar, in some ways, to what
Enron and its accounting firm were doing. Lay was charged with multiple felonies while those to today with their political connections remain free. Go figure!
Comment by S.L.
The Political Brief