Capitalism Vs Socialism: The Debate on Economic Systems

In the work “Capitalism Vs Socialism Essay” we will talk about different ideologies and how they influence n society. The political and economic worlds have always been reliant on each other, and neither one could survive without the other. A majority of Western countries are capitalist countries, but they have a level of socialist policies implemented that allow for a fairer distribution of the cost and profit of their society. Therefore, the world could not survive without either the political or economic worlds. 

Countries, empires, and dictatorships have competed in finding the best economic and political combination that brings their countries the power they need to lead the world for centuries. Firstly, using its strong military power, Europe conquered the world through force and sheer strength. This power was found in the form of the military, and religion such as the Church, and through the suppression of the people’s rights. But as things changed, and both the World Wars came to a halt, the political world, as it is known today, ended with it. As new ideologies started to emerge, Europe no longer stood in charge solely. 

The United States started to develop into a world power under capitalism, while Russia adopted a communist approach toward the world and started to amass countries under their own union, which would later be known as the Soviet Union. While all these systems have their flaws and merits, there must be a common ground on which system is the best for all citizens and works for the benefit of the people, not which is preferred, and that is why one cannot survive without the other. The principal difference between capitalism and socialism is the amount of government intervention in the economy. A capitalist economic system is described as private ownership of assets and business and a capitalist economy is reliant on free markets to determine the prices, incomes, wealth, and distribution of goods. A socialist economic system is best defined by greater government intervention to reallocate resources in a more equal way. This insinuates that all people are equal in worth and social status, a prime example of egalitarian thinking, a thought that prioritizes equality for all people. Egalitarian doctrines maintain that all humans are equal in fundamental worth or social status. 

One way in which capitalism and socialism are similar is that both systems consider labor and capital to be the primary economic forces. This means that both systems are labor-centric. Capitalists believe that market competition should direct the distribution of labor; while socialists believe that the government should have that power. But the main similarity found in both capitalism and socialism is that both strive for a successful nation. Socialism is not only an economic system, but also a social, political, and moral philosophy. It is best characterized as having ownership of the productions and establishment of the welfare state. 

Socialism stems back to the works of the Greek philosopher Plato, one of the first to mention the idea in his Socratic dialogue, Republic, where he writes about a society where goods are split and allocated between all the members, regardless of age or gender. Christianity in the Middle Ages in Europe also shared some of the concepts of socialism, including giving to the poor and the distribution of labor. Then, during the late 18th and early 19th centuries, Europe and America’s Industrial Revolutions introduced this perennial doctrine to the modern world. The tremendous toll on the quality of human life for factory workers made the idea of socialism appealing to the middle and lower classes. Socialism is the economic theory or system, in which the community owns the means of production, distribution, and exchange collectively, typically through the state. It is best characterized by production for use rather than for profit and more often than not by the government's choice of investment, prices, and production levels. Socialism is defined as collective because society can control production unlike in capitalism since production is for the common good rather than for individual profit. 

Capitalism, also known as a free market economy is an economic system dominant in the Western world since the breakup of feudalism, in which most of the means of production are privately owned and production is guided and income is distributed largely through the operation of markets. During the Cold War and the battle to demonstrate which political economic theory was better, Capitalism was most favored at first. One of the chief characteristics of Capitalism is that the means of production and capital, are not owned or controlled by the proletariat, the working class. The major shift that occurred in the transition from Capitalism to Socialism was that the expropriators seized the proletariat which now owns the means of production. However, under Socialism, a remaining vestige of Capitalism is that economic activity is still organized through the use of incentive systems: “rewards must still be given in order to induce people to labor.” On the other hand, the form of Capitalism that was developed by Adam Smith is a system based on private ownership of the means of production. Capitalism is essentially defined through the pursual of material self-interest under freedom. It rests on the foundation of the cultural influence of reason. Based on its infrastructure and essential nature, Capitalism is further characterized by financial self-interest and economic progress. 

A majority of ideologists, predominantly in capitalist nations, have accentuated Capitalism’s ability to advocate economic growth, measured by GDP, Gross Domestic Product, capacity utilization, or standard of living. The crafting of this argument was critical to Adam Smith’s promulgation of letting a free market control the production and price, and allot resources, as he stated in his book, Inquiry Into The Nature And Causes Of The Wealth Of Nations, that “The division of labor, however, so far as it can be introduced, occasions, in every art, a proportional increase of the productive powers of labor.” Many economists have noted that this increase in global GDP over time corresponds with the emergence of the modern world capitalist system. On the other hand, according to the capitalistic point of view of labor, in his book The Wealth Of Nations, Adam Smith said, “the greatest improvement in the productive powers of labor and the greater part of the skill, adroitness, and judgment with which it is anywhere directed, or applied, appears to have been the effects of the division of labor.” 

With the highest GDP in the world, a life expectancy of 80 years, and one of the highest standards of living in the world. According to the Statistics Times, America’s GDP, which is almost 21 trillion, is the highest in the world. After adopting capitalist ideologies during the Industrial Revolution, America’s GDP has been growing at a steady rate, making it the biggest economy in the world. The American government has a free market system where privately owned businesses determine the prices of the products according to the New York Times. Therefore, supply and demand is a huge factors in the American marketplace. That allows businesses to compete against each other and to innovate more. Ultimately, all of those capitalist factors of a private means of production and a free market system allow the United State’s economy to continue to grow. The high life expectancy and high standard of living are due to many programs such as social security, Medicare, and Medicaid built in for citizens with low incomes. These programs are all funded by taxes from American citizens. These government-owned and citizen-funded programs lessen the divide between the rich and the poor. In other words, money is taken from the upper and lower middle classes and spread evenly among the poor to ensure that everyone is able to have a decent standard of living in America. 

America is one of the most successful first-world countries in the world because of its use of both capitalist and socialist ideologies in its government. In the current world, there is a debate over politics and which economic system runs the best. There is also a debate about how needs and wants should be allocated, and who should be the ones doing the allocating. It is arguably one of the most highly debated topics in present-day society. There are many suggestions in the air, be it Communist dictators defending a command economy, a free-market Conservative defending a market economy, or a European liberal defending Socialism, everyone has an opinion on what they believe is the correct political system. Looking at the financial well-being of all the citizens, it is apparent that a majority of market economies fall short of securing that the vital needs of all citizens are satisfied and met. 

Comparing liberty and individual freedom, it is palpable that most command economies, an economy in which production, investment, prices, and incomes are determined by the government, have a tendency to oppress their citizens. Consequently, Socialism, which allows for the basic needs of people to be met and personal freedoms to be upheld continuously, is the best economic system for every citizen and person residing in a country. Looking at market economies as a whole, they inherently and inevitably will lead to poverty and a large class disparity. In history, the class disparity has never had a positive outcome, in fact, it was one of the primary causes of the weakening of Rome, ultimately leading to its downfall. In a capitalist society, it is most often the people who supply labor, the very people who work the hardest that are paid the least. In conclusion, workers and laborers are paid much less than the value of the labor that they contribute to society. As Karl Marx said, this is stealing, or in his words, “exploitation of labor.” Both socialism and capitalism have their benefits and disadvantages. Capitalism promotes innovation which grows economies, but at the same time, it hurts lower-class citizens who are “exploited.” While socialism lessens the gap between the upper and lower classes, there is no incentive to compete and develop which promotes a lax atmosphere. The healthiest economies and countries have to use aspects of both socialism and capitalism, and it is evident in the world today that economies that incorporate traits of both are the most successful.