Capitalism and Socialism - Essay Example

Capitalism and Socialism Varieties of capitalism arise from a number of al characteristics that prevailin the developed economies of the globe. Such institutional characteristics include; education and vocational training, industrial relations, inter-firm relations, corporate governance and intra-firm coordination (Soskice & Hall 23). These characteristics differentiate two forms of capitalism, coordinated market economies- CME’s and liberal market economies- LME’s. Aside from differing in their institutional characteristics, these two forms of capitalism differ in certain macroeconomic aspects especially industrial specialization and comparative advantage. The table below pinpoints the differences between the forms of capitalism based on the institutional characteristics; Institutional characteristic Liberalized markets (LME’S) Coordinated markets (CME’s) Education and training Formal learning from high schools and colleges Apprenticeship, bestowing industry specific skills Inter-firm relations Competitive Coordinated/collaborative Industrial regulations Deregulated, anti-tax, tax breaks Motivates information sharing and coordination among firms Comparative advantage/specialization High-tech and service Manufacturing Income distribution Largely unequal Generally evenly distributed Mechanism Competitive market arrangements Non-market relations An example of a ‘humane’ capitalist country is Germany. Such capitalist countries get referred to as ‘humane’ due to the characteristic of their institutional set up. As much as their capitalist economies get based on profit making, accumulation, and direct competition; these economies value their human population through their institutional set up (Soskice & Hall 65). ‘Humane’ capitalist economy setup aims at attaining equitable income distribution for each individual in the economy. They try to create a sustainable and equitable economic environment for every player to make their contributions through their policies. ‘Humane’ capitalist economies gear their policies towards efficient service delivery for the people. An example of a ‘brutal’ capitalist economy is the United States. Such countries get considered as ‘brutal’ as they advocate for direct competition among its economy players. This competition leaves a percentage of the population vulnerable to poverty (Soskice & Hall 123). ‘Brutal’ capitalism represents a man eat man society where the more an individual has, the more the individual is likely to accumulate more and take part in the economy. ‘Brutal’ capitalist countries are more likely to place profits over the people. A ‘humane’ and ‘brutal’ capitalism cannot exist together. This is so because if they do, then it would revert to the general capitalist economy which contains strains of both forms of capitalism (Soskice & Hall 133). These forms of capitalism cannot compete directly but rather, indirectly. 2 Einstein argues for a socialist future over capitalism. This is so as Einstein believed that a socialist future would help cure the evils of capitalism. He suggests that there be a socialist economy that works in tandem with an education system that tailors towards achieving social goals (Soskice & Hall 204). He believed that such a system would ensure that the means of production become owned by the society itself and thus make sure the get utilized in a controlled fashion. A socialist economy would require that every individual becomes guaranteed of a livelihood. He believed that the education system provided by a socialist economy would help to inculcate a sense of responsibility among humans in favor of a system that glorifies power and success as the capitalist economy. A socialist society would help bring back humanity to the globe. Socialism focuses on providing every human being an equal opportunity towards living a better life. The vast resources owned by the society should get used to attain the needs of the people. With a socialist economy, all factors of production get owned by the society and thus all products become equally shared among people (Soskice & Hall 200). This will help to curtail on evil deeds such as greed, which provide an unfair advantage to owners of capital in other forms of economies. The sense of responsibility inculcated by socialism assists people to share responsibility as well as problems. Sharing forms the basis of humanity. Human beings need to share during the good, bad, and rough times too. Socialism would inculcate humanity to the people in the society. A socialist economy gets planned and controlled, not left to the free market choices or direct competition of the capitalist economy. This means that resources would get carefully planned and not left to waste (Soskice & Hall 300). Money would be put to good use to meet the basic needs of people such as healthcare, food, ad shelter. Under socialism, there would be an inclusive and democratic process of people deciding on how to produce, what to produce, and how to utilize the products. 3 Capitalism helps to generate more wealth for an economy compared to other economic forms. Through direct competition, owners of the factors of production get to outdo each other and in the process generate wealth by maximizing on their means of production (Soskice & Hall 83). The availability of a free market also ensures that production factors do not become controlled by the government. Lack of control ensures that people can trade freely and thus generate wealth. Capitalism helps inculcate a working mantra into the society. Through capitalism, an individual gets to earn what he or she works for. This implies that everyone gets to work to ensure they do not get left empty handed or rely on someone else for their survival. This helps to punish negative traits such as laziness and theft. Capitalism requires that everyone makes use of what he or she has to earn their living (Soskice & Hall 98). This eventually ensures that everyone in the society works hard for their survival. Capitalism encourages innovation and invention. Competition brought about by capitalism helps to bring up new ideas and creations. Since every individual caters for his or her needs, it implies that survival becomes a vital goal in such a system. Survival calls out that people have to be creative and generate new ideas that make them remain relevant in such a system. Direct competition offered by such a system ensures that there is a varied range of produce in the market too (Soskice & Hall 72). Competition makes the owners of production to better their production methods to develop different products to their competitors. A capitalist economy also ensures that there is minimal interference by the government. It ensures that the society is freer. People are free to decide on what they produce, how they produce, and how they spend their produce. People become accounted for their own actions and thus control their destiny (Soskice & Hall 56). People are free to choose how to utilize their various factors of production without coercion from the government or anyone. It is for this reason that capitalist societies get considered as free markets. Free markets ensure that capitalist societies become more efficient as a result of minimal interference by the government. 4 The incarceration rate in the US has exponentially risen since the 1970’s (Soskice & Hall 145). Recent data shows that the US has one of the leading incarceration rates in the world. The rise in the number of people jailed is common among black male youth and high school dropouts. 37% of black youth males and high school dropouts are in jail. These statistics back up racial inequality in the country (Soskice & Hall 309). It is the youth that are meant to contribute greatly towards a country’s economy. If a great number of youths become incarcerated, it robs the country of manpower. Lack of manpower negatively impacts the country through reduction in labor and entrepreneurial force. Lack of labor and an entrepreneurial force means that the country does not maximize on its ability to generate wealth. On the racial front, if a high percentage of black male youths is in jail, then a large number of black families experience income disparities compared to the other races in the country. The incarcerated black youth fail to contribute to the income baskets of their families leading to income disparities. Racial gaps in education also contribute to inequality in the country. Hispanics experience the highest numbers of high school drop outs while whites experience it least. An uneducated society contributes little to the economy. This is so because they lack the required training to engage in employment or other meaningful income generating activities. A lack of education locks out most people from the job market. A society that lacks in education also engages in other vices that are non- beneficial such as drug use and crime. Such a society increases a country’s unemployment levels (Soskice & Hall 272). They contribute to the crime rates since their energy becomes misappropriated due to a lack of employment. These racial gaps in education contribute to the country’s inequality in terms of employment and income. A particular race becomes more affluent than other races due to opportunities accorded to it by education. As such, it is likely to find more whites in employment compared to Hispanics. This implies that whites are likely to earn more income compared to their Hispanic counterparts (Soskice & Hall 391). This transcends across other races in the US too, and thus creates to a rise in inequality. Works Cited Peter A. Hall, David Soskice. Varieties of Capitalism:The Institutional Foundations of Comparative Advantage. Oxford: Oxford University Press, 2003. Print Read More