Capitalism versus Socialism - Research Paper Example

? April Scicluna Dr. Elisha Gray SOC 100, Section #91955 20 September Capitalism vs. Socialism Introduction While there are multiple different forms of world government in existence today, perhaps there are none as diametrically opposed to one another as capitalism and socialism. Simply put, these two types of governments are more of an economic system than anything else, and they come from two completely different schools of thought. One might say that a debate over which system is ‘better’, or more economically effective for a country, rests in the two major issues of economic equality and the role of the government in setting such policies. At its most basic level, socialism would promote the viewpoint that economic inequality is harmful to society, such that the government should do everything in its power to set policies that equalizes all members of the citizenry. This is most commonly done through various government programs and subsidies designed to help marginalized groups. Capitalists, however, believe that private enterprises are far more beneficial to the overall health of the economy than government policies. They promote a free enterprise system where individual citizens are largely able to earn their own way in the world, within certain legal boundaries, without strict interference from the government. This is the basis for this paper and forms the basis for an informed discussion. The two forms of governments and economies will be briefly compared, followed by an analysis of six personal interviews. All of this is done in an attempt o solve the problem of which system is preferable for society today. Definition of the Problem It is difficult to make the claim that there is one best world system of economics. Through the ages, however, certain types of governments have failed society at various times and under certain situations. Two of the more common types of governments existent in the world today are capitalism and socialism. The problem is that, whereas capitalism promotes the independence of the citizenry, socialism can create reliance upon the government that is often irreversible and can have disastrous economic effects on the country over time. Hypothesis Socialism is a failed system that creates dependents, takes away the economic freedom of the people and, if not abolished, will bankrupt the economy. Capitalism Reviewed At its core, capitalism involves the private production of various enterprises for the express purpose of earning a profit. As opposed to focusing on the collective well-being society, each member of society under capitalism is afforded the opportunity to earn as much or as little money as the market (and their work ethic) dictates. As far as a governmental system is concerned, capitalism employs more of a Laissez-fair methodology in that government intervention is only evident in certain instances (Bjornskov and Paldam 469). Society, by and large, is left to produce the goods and services that are most beneficial for everyone. The government does not decide who to allocate resources or profit to, as this should be left up to the marketplace to decide in most every situation. This does not mean that the government does not provide services to society, particularly to those in need, but in terms of economic gain, people are left to create their own wealth. The capitalistic, or free enterprise system, is predicated on the importance of economic activity. The more wealth that an individual accumulates, the more goods and services they will demand. This system necessitates the continual reinvesting of profits in order to drive the economy and keep it growing in a positive direction (Bjornskov and Paldam 471). Private companies are minimally regulated by the government in order to encourage such growth and expansion. Under capitalism, the people largely determine what is produced for consumption and the services that are provided to the people. This can take place via the free market, a regulated market, and or can be the result of a combination of private and government directed economic planning. Since most companies under a capitalist system are privately owned and operated, individuals have a vested interest in the profit that is derived from the goods or services. This provides a further incentive to work hard, as the people who work the hardest (or smartest) tend to develop more wealth in the long run (Bjornskov and Paldam 471). Socialism Reviewed Socialism takes an entirely different approach to the responsibility that each citizen has in society. Rather than encouraging an ‘every man for himself’ mentality, each person in society is expected to work together to contribute to the overall economic well being of the country. Profits that are made by individual companies, for example, would be distributed in various forms to all members of the community. Each person would enjoy this windfall in the form of various government programs, in addition to the salary they receive for services rendered. The system, in essence, is designed to create a level playing field for all people whereby everyone has an equal opportunity to succeed, based upon his or her own abilities (Bjornskov and Paldam 472). Whereas companies in a capitalistic culture generally have a set hierarchy of management, socialist companies are much less rigid, preferring to give more of a voice to the rank and file worker. This gives everyone more of a voice in the daily operations of certain enterprises, but also necessitates more government oversight to ensure that everything continue to function properly. In the end, while there are certainly wealthy people in socialist countries as well, wealth is generally more evenly distributed amongst all people, such that individuals of a certain skill level generally receive equal benefits and enjoy a similar quality of life. One final item of interest about socialist countries is that most enterprises tend to be publicly owned and that the government tends to finance many of the services and welfare programs that are virtually non-existent in capitalist countries (Bjornskov and Paldam 473). Interview Analysis and Results To test the hypothesis for this paper, this student interviewed three people adhering to the socialist mindset, in addition to three different capitalists. Ten questions were asked of each, and a list of the questions is contained in the appendix. Naturally, each of the people interviewed has strong reasons why they believed in their chosen economic system. The capitalists in the group felt that society functions best when people are left to their own creative devices. One person remarked, “Capitalism sparks creativity. When people are given the opportunity to get as much or as little as they want out of life, they are likely to be more motivated to positively to contribute to society as a whole. Other forms of government teach reliance on others and the government, which stifles any such creative genius from coming to the forefront”. Socialists, however, had a different approach to this idea. One socialist in the group commented about this by saying, “A society that helps one another induces a strong bond that is difficult to break. By creative a sort of reliance on one another, society is actually strengthened as they work together for the common good. Capitalism invokes a ‘me first’ mentality, where socialism looks out for the common good, no matter how significant or insignificant a person may appear to be in society”. Capitalists responded to the second question by stating the wealthy people, if their money is derived via honest means, have nothing to feel guilty about. Capitalism rewards hard work, so those that become wealthy in relation to the rest of society are afforded many more opportunities that the general populace. Socialists, however, responded that this is a central problem with capitalism. There are a limited number of resources available to all members of society, so they should be equally allocated to each individual. This discourages greed and results in a more stable society overall. For the third question, socialists argued that hard work is actually encouraged under the system because each person must carry their fair share of the economic and productive burden. If certain people fail to perform their duties as expected, there will be outside pressure placed on them by other members of society, thereby creating a stronger desire to excel. None of the six people interviewed for this paper felt that the two economic systems and forms of government could be effectively merged together. One respondent said, “The two systems are simply too different. It would not be effective to, on the one hand propagate the notion that all members of society are created equal and should be allocated roughly the same division of profit, while also encouraging the option of individuals pursuing their own economic freedom separate from that of larger society”. Some of the weak and strong points of each system, as mentioned by the people interviewed, were quite telling. It was great to get an objective viewpoint, as it is helpful when conducting a sociological study to remember that no one societal system is perfect. Socialists, for example, did acknowledge that the government shoulders a large burden to keep society functioning while maintaining a healthy economy. There will be fluctuations in the state of the economy, which can adversely impact the quality of living that the people have come to expect. On the other hand, socialism promotes community bonds and nationalism unlike other systems. People work together for the common good and genuinely work hard in order to benefit all members of the community. It was mentioned that capitalism does have the propensity to promote greed amongst individuals. This leads to high amounts of unethical behavior, and the result is usually negative for those who are not in power. On the other hand, capitalism does promote a sense of entrepreneurship and a state of being that encourages continual growth. This is not existent in a socialist system, as there are few opportunities for true and actualized economic advancement. Conclusion Regardless of what one thinks about socialism, as demonstrated by the information in this essay and the comments made by the interviewees, does appear to create a reliance on government entities and programs. This does promote a sense of welfare entitlement that limits the desire of the individual to truly be productive on a grand scale. In this sense, people living under socialism do not have a sense of economic freedom. This can be said due to the fact that if the government begins to run out of money, or has a lack of other resources available, the citizenry will find themselves unable to cope at their current standard living. For this reason, socialism is likely a flawed system that fails to promote the economic independence of people, creates an unhealthy reliance on outside entities, and stifles the creative and innovative side of people. Works Cited Bjornskov, Christine, and Mark Paldam. The Spirits of Capitalism and Socialism. Public Choice 150.3-4 (2012):469-475. Appendix Interview Questions for Socialists and Capitalists 1) Why do you believe that either capitalism or socialism is the better economic system or form of government? 2) Many claim that capitalism makes a few people wealthy at the expense of the masses. What is your opinion about this statement? 3) Others claim that socialism encourages people to live off of other people and to not work hard for themselves. What is your opinion about this statement? 4) Can capitalism and socialism be mixed together to form a more perfect economic system? Why or why not? 5) In your opinion, what are the weak points of socialism? 6) In your opinion, what are the strong points of socialism? 7) In your opinion, what are the weak points of capitalism? 8) In your opinion, what are the strong points of socialism? 9) Should capitalists be a bit more focused on helping others economically? Explain. 10) Should socialists be a bit more focused on developing their own wealth and encourage less dependent on the government? Explain. Read More