Democratic Socialism and Comparative Advantage - Research Paper Example

Democratic Socialism The success of political and economic activities calls for a systematic and organized system that facilitates efficiency in the production processes. It is necessary for the various political and economic factors to interact in the environment in order to create an environment where economic activities continue unperturbedly. The association between democracy and socialism is a unique one as both traditions are based philosophically in the principles of equality. However, varying concepts of equality are emphasized (Bureau of propaganda 1). Democracy focuses on the political aspect. It entails political sameness, the rights of all people to participate in governance of which they are subject (Busky 312). Conversely, socialism highlights material fairness. It is not stern parity, but an end to the enormous discrepancies of earnings and affluence noticeable to the imbalances of rights of ways of production. Democratic socialists’ opinionated that both the economy and community should be ruled democratically to satisfy public needs and not fulfill wishes of a few (Busky 310). To acquire a more fair society, many compositions of governments and economies must be fundamentally changed through immense profitable and social equality so as the common persons can equally partake in making decisions that affect their lives. Socialism was first used in publications devoted to organizations in Great Britain. It was used to refer to a culture in which citizens’ work collectively for the benefit of everyone. Socialists have always believed that people are equal by natural rights and this was considered their highest value of people. Socialists hold democracy in high esteem. People in an independent socialist society have the right to express themselves and given due consideration. In a socialist society, the people vote in the government. The government is formulated through legitimate, fair and free elections. However, sometimes democratic socialists are mistaken with governments that are dictatorial and authoritarian. True socialism lives in a democratic society. Democratic socialism is based on humanistic ideals with the eventual objective of allowing each person the prospect and way for their personal development and satisfaction. This is made possible in a society where self-realization turns into a reality in supportive, non-competitive social situation. Several countries in the world employ this form of governance. They Include China, the second prevalent economy in the world after the U.S and Russia a super power as well as Scandinavian countries and France. Other third world countries embracing the concept involve Venezuela and Bolivia. They also include Burma, Vietnam, Cuba and North Korea. For instance, preceding to the Russian Revolution in the 1920s there were existences of socialist countries anywhere as well as fully grown democracies. During those times, women rights were still curtailed, and women were barred from voting. The prevailing capitalist states supervised in undemocratically customs over their colonial domains. The Russian revolution changed this equation significantly. As many people engaged in questioning the link between socialism and democracy, the existing socialism turned out to be anything but democratic. Socialism obliges an entity according to (Harrington 288), into societal collectives contrasting capitalism, which promotes individualism. People are deemed as social animals that reside in a society that has regulations to guide it. These rules demands a lot from an individual but as well gives the individual self-government, total control of their work freedom from poverty and freedom to pursue a better life. This contrasts the capitalist American concept that promotes separation from family and community as well as subjects an individual to high stress. The supposedly free individual in the concept is instead conformist and conventional. In the past socialism was considered an equivalent of totalitarianism while capitalist was equated to democracy. The communism in Russia was considered the results of socialism as The U.S and the U.S.S.R fought for supremacy and domination of ideologies. This led to the U.S supporting some authoritarian regimes in the world as long as they were anti-communism (Harrington 289). Comparative advantage David Ricardo’s theory of comparative advantage states that countries should trade among themselves as long as they can manufacture produce proficiently than each other. This theory was based on international of foreign trade (Huggins 182). The theory proved that even countries with absolute advantages are bound to benefit from trade. Ricardo’s theory surpassed the initial theory of Adam Smith of absolute advantage. Smith’s theory suggested that if a nation can provide commodities at cheaper prices then the commodity should be bought instead of manufacturing it locally. However, Ricardo’s theory is of the opinion that international trade was not based on the absolute advantage in price. A nation can benefit from trading certain supplies, even though; other countries can produce the same commodities more competent and cheaply using this concept. The comparative advantage applies if each nation has a product, which causes a better price for another State than it would at home (Huggins 182). Ricardo’s theory has been phenomenal in classical economy, but it is encountering criticism on its applicability in the modern economy. Ricardo believed in countries trading on goods that they were most proficient in producing. He argued that even if a country produce all commodities more resourcefully than another they should keep on trading with other nations. He believed that a country gained by trading on commodities that they were relatively most efficient at manufacturing (Kraay and Jaume 100). According to the theory each country should specialize in producing commodities which they have lowly opportunity cost, thus maximizing world output. This concept is essential in dealing with the problem of variations in factors of production. The land and labor, as well as enterprise and capital aspects of production, are not even in all countries. Many nations lack the suitable factor endowments to manufacture desired commodities. Ricardo was against the raising of taxes arguing that increases in food prices, would result in increasing the subsistence wage level and taking competitiveness out of the industry (Kraay and Jaume 100). He argued that if this were to happen the biggest losers would be the farmers. Ricardo used his famous example of deal between England and Portugal to explain his theory through the two countries trading in cloth and wine. He argued that countries trading together both stand to gain if each country specializes entirely in production of goods, which they have a comparative cost advantage in manufacturing, and then trade with the other nation for a different product. Ricardo’s theory entails that the labor theory of value is not presumed to hold across nations, as it should be (Kraay and Jaume 100). He argues that this is so because production factors more so labor are not mobile across the borders. He, however, summarizes that foreign trade promotes further accumulation and development, if wage goods are imported at a lower price that they cost nationally, thereby, cause a decrease in the actual income and rise in profits. The overall income is bound to rise in both nations (Bureau of propaganda 1). Conclusion Both democratic socialism and comparative advantage are essential in the modern economy. Countries have liberal rights and freedoms, to trade with whomever they like, and trading on the products that they are most efficient in producing as per the comparative advantage theory. Trade flourishes in a democratic and free market economy with few restrictions thus leading to trade partner countries benefiting from any venture. Works Cited Busky, Donald F. Democratic socialism a global survey. Westport, Conn.: Praeger, 2000. Print. Definition. "Socialism." Welcome to Bergonia, an imaginary country. Bureau of Propaganda Control Ministry and Courts of Communication Democratic Commonwealth of Bergonia, n.d. Web. Accessed on 29 Mar. 2012. From: . Harrington, Michael. Socialism. New York: Saturday Review Press, 1972. Print. Huggins, Robert. Competition, competitive advantage, and clusters: the ideas of Michael Porter. Oxford: Oxford University Press, 2011. Print. Kraay, Aart, and Jaume Ventura. Comparative advantage and the cross-section of business cycles. Cambridge, MA: National Bureau of Economic Research, 2001. Print. Read More