Why Capitalism works and Socialism doesnt work:
Why does capitalism get a bad rap when it works so well and why does socialism get too much undeserved attention? These questions I hope to answer and enlighten those who believe we should be changing economic policies from a powerful economic system towards a tried and failed system.
Capitalism is an economic society which we currently thrive in, where anyone with the courage and innovation to be successful, can do just that. Its economic system is the true definition of how economics works. A system in where the financial platform is controlled privately, and not by the state. And as any system, there are merits and flaws, but mostly merits, as it drives innovation, creates more jobs, and income potential is only limited to the supply and demand model of economics.
Socialism is an economic platform in which the production, exchange, distribution, and income are determined by the collective community. So what does this mean in laymen terms? Its a community of people decide what you should have or own instead of yourself. So in some aspects, its good as it provides shelter, food, education, and health benefits for all, but it also promotes those who are less willing to be productive to benefit off of others hard work.
So lets break down the key components of socialism. Free or inexpensive healthcare, education, shelter, and food. This is the basic premise of a growing society that everyone needs. Now what about other luxury items, like boats, cars, jewelry, etc? Who would determine if anyone should get these extra perks of life? If socialism is about spreading the wealth, then everyone would have a pretty luxurious lifestyle. But there is a fundamental flaw in the ideology.
Motivation is key to a healthy working society. Captialism gives everyone an equal opportunity to become wealthy with hard work and determination. Socialism would do just the opposite of this, taking money that you worked hard for, and giving it to the lazy, unmotivated, drug addicted populace. Now thats good news for those who aren’t being productive members of society, but not good for those that are working hard to earn every penny they make.
The flawed thought is that if the people were not poor, uneducated, or lazy, that they would be productuve members of society, and helping to fuel the country’s economy. It sounds nice on paper, but the key that not everyone has the motivation or drive to become successful or even productive enough to contribute to society. Who is to motivate someone that wants to sit at home, smoking pot, playing video games, or criticising others via social media all day, to be more productive?
Are we to elect a government to make these people do more or force them to be productive? I can understand wanting to take care of them, but forcing them to do something they dont want to? The saying goes “giving a man a fish will feed him for a day, teach a man to fish will feed him for a lifetime”. This is so true and the reason why we shouldn’t just give homeless the salary of a software engineer, when all they do is beg.
There are also flaws in capitalism, the significant one being greed. Now greed can be a healthy attribute if used correctly, but if used way too selfishly, then it benefits nobody. The fundamental driver in economics is that the desires of an individual are greater than what they are capable of obtaining. The statement may seem flawed, but let me explain the meaning. An individual has the innate desire to want more than what they currently have. The reason why this is healthy is it drives an individual to look for their niche. Someone that looks to make things better to make a profit is healthy for both society and the economy. But if you are hording your money, you will not grow the economy. Allowing other people to be a part of your success is what fuels economic growth.
You hire workers at a decent wage, and they in turn purchase goods and services, fueling economy and future growth. Crony capitalism is certainly a problem, but considering how much worse socialism is for the economy, it is merely a thorn that we have to fight against to give people a fair wage.
Capitalism is the essence of how supply and demand works. Lets take some examples that we have seen over the years. Ebay is probably one of my favorite examples of a business providing a service to the consumer and the seller. So a seller has a need for cash to buy something other than the items he or she currently has. So they check their inventory of items to see what may be of value to another person. They post the item, and provide the lowest price they are willing to take for the item and then let the auctioning process begin. The highest bidder wins the item and both the seller and the buyer get what they want, for a price. Ebay, being the moderator and facilitator of the auction gets listing, and other fees associated with the auction.
This is all possible because of capitalism. Capitalism allowed a system of auctioning items that are valuable, to those who wanted or needed them. Would this be possible in a socialistic society? If the government provides our food, shelter, and healthcare, would they also provide you with funds for miscellaneous items? My guess is that you would have to earn what you desire. How do we get what we want? We have to either have money or something of value that another person either wants or needs, or break the law and steal it. Lets stay within the bounds of the law and look at the first two. If I have money, I can simply pay for it, given the supplier has the item on hand. If I don’t have the money, I would then trade my services to obtain it.
So it’s easy to see logically why socialism would cause a collapse of a prospering nation. Sure I could provide factual occurrences from other countries who fell behind in several categories to a country with a capitalist economy, but really, it just takes practical thinking to come to the conclusion that America is great because of capitalism.