The balance between socialism & capitalism could be the best economic system
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If you divide Socialism by Capitalism you'll get a well balanced economic system.
We are all familiar with these two terms by now. If we didn't learn them in school, the election between the president & senator McCain surely exposed these terms to us. President Obama is often accused of promoting socialism, as if this was the worst thing that could happen. I think it's fair to say that any president who encourages competitions among members of society couldn't possibly be promoting socialism.
Socialism is based on egalitarianism and total government control. Apparently this president wants to create an economic platform in health care system that will discourage the need for any company to monopolize the market. This by no way discourages competitions, if anything it enhances it. It is a plan that will promote fairness, but at the same time, it allows insurance companies to maximize their means of productions as long as they follow the rules like everyone else.
This will leave the people with more options, providing us with alternatives so that we can purchase affordable insurance at reasonable price. Once this plan is in place, the government will be able to hold insurance company accountable for the insurance plan that you have signed, and thereby restricting the insurance companies from denying you health coverage for pre-existing conditions.
If the president plan is not a method of capitalism, it is obviously the economic balance which exists between socialism and capitalism. And that economic balance is that which I intend to talk to you about today, because obviously they must be something wrong with capitalism since it hasn't been proven to work efficiently.
The capitalistic system is the capital of laissez-faire. It permits less restriction among the transactions of private sectors. It served as a stepping stone to economic inequality, and it allows the economy to stagnate long enough to be confused with real economic growth.
The capitalist system welcomes deviations of profits, and yet has no control over the formation of monopolies. It allows the country’s wealth to be purchased, but has no clue who truly own those wealth. After all, we have realized that the capitalist system needs help, and social capitalism is here to give a helping hand.
To some people, the term capitalist mean rich people. Although some of us could argue otherwise, the meaning of the word is undeniable, it is impossible to remove capital from the word “capitalist”. In retrospect, folks with the most capitals were those with the most cattle, lands and properties. Therefore, why should we believe now that the word capitalist has a different meaning?
As stated on Wikipedia, in 1753 the word capitalist appeared with the narrow interpretation of "The state of one who is rich". Now we have been led to believe that capitalism offers us a plain field of fairness. Meanwhile, poor whites & blacks are struggling to survive, fighting over the last piece of the pie.
I believe it was Michel Moore who gave this example, where he compared ten pieces of pizza as the capital. In the example Moore illustrated how in a society of 100 people, one rich guy takes possession of 90% of the pie and leave 10% for the 99 people to share between themselves.
Michel Moore emphasized that this is the direct result of the society we now live in, a society where 5% of people own 90% of the wealth. However, what Michel Moore had fail to elaborate on, was the consequence of the choices that the 99 people had to make in order to share that one slice of pizza among them.
Well, the most obvious, to say the least, is that one slice of pizza is not enough to be shared among 99 people. And because of this, more people will be left hungry, crimes will escalate, jails will be overcrowded, and the need for society to reproduce will be discouraged.
They are those who can dispute that capitalism is not the cause of these effects, but what they can't disproved is that monopoly is the result of capitalism. And it is part of the reason why we have unfairness in our economic system.
Now in terms of socialism, we don't think that's good either, although socialism offers some sort of egalitarianism for its people, it can also diminish the strengths of an economic system. Therefore, it is that middle ground of both economic systems that we're looking for.
Socialism discourages productivity because it doesn't offer any incentive for us the workers to want to work. We don't work because we love to work; we work because we need money. Money is the CNG which makes us work, without it productivity will run out of gas. The employer will get less productivity when the incentives are not there.
On the same token, productivity is not the first priority for every company. To some companies, safety is their main priority; productivity is only the after math, until safety has been assured. However, it is all depends on the nature of the business; safety may not even be an issue.
The problem with capitalism is that it encourages a monopolistic system, because it is obvious for the rich to get richer, they must have control over greater amount of capital. Otherwise, they'll stay average with very minimal political power. What’s not obvious to some people is that whenever the rich get richer, the middle class crushes.
This in turn decreases the strength of the economic system of the country, because the middle class is the support beam of the economic system. A high amount of middle class people in any country signifies a strong economy.
As it is known, the more middle class people there are in a country, the better off is the economic system of that country. Since the middle class is afraid of big investments, their monies are more likely to stay in the country of origin, which thereby decreases the capital flight of that country.
And since the middle class isn’t going anywhere, that money will also stay in the county. The middle class will stay in the country until he is departed from it, while the rich is forever traveling, investing in all market segment. Therefore, any president who invests in the middle class of his country is a president who wishes well for the economic system of his country.
Aristotle thought that the household was the middle ground for a good life, and all economic system must be judged by whether it enables the household to perform its duties as locus and support for the human good. Aristotle never envisioned how this capitalistic system would change the value of the household. Money which Aristotle did not hold in high regard has become the epiphany of all living organism.
It is also the need to compete that has caused our daily consumption to increase so much. Competition defines capitalism, a system that doesn't allow the possibility to compete among individuals of the same society, is off - course not capitalism. The rich wants to get richer because their colleagues are getting richer.
Capitalism is based on a competition principle, because it allows individuals under a capitalist society to trade freely as they wish. Under a capitalist society, government has limited control over the economic system. And it is because of this laissez-fair capitalist ideology that our economic system has become unfair.
This is why we the people think that a middle ground economic system is necessary. A system by which government can have more control over trades, and business conduct of corporations. We not asking for socialism, we simply want our government to place our interest first before that of the corporation.
The profit that a corporation generates should coincide with the level of employment. What should not be is when you have a corporation who has doubled their profit margin in one year and yet they've hired the same amount of people the following year. As if the reason for this increase in profit is not part of employee’s efforts. If they're increasing their profit margin, the amount of people they hired should also increase. We're only asking for our government to monitor fairness, we don't think that's too much to ask.
The rich guy doesn't believe in country, the world is his country. Within an hr he can be in Texas and two hrs later he's picking up his girlfriend in Japan to go have a cocktail in France. So when you say country to these guys is like you speaking in parables, they don't understand you. Their monies are invested worldwide; they don't believe in American market, they believe in the world market. Where ever they can maximize on their investment, that's where you'll find them. So it is these guys who add meanings to the word capitalism, because within capitalism exist the word “capital” and capital is exactly what they have.
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Coolbreezing - what a novel idea: sensible compromise! I agree with the concept, and with your assertion that most people actually want such a left/right fusion. The problem is that such reasonableness is so often shouted down by the extreme positions. I hope this hub is widely read. Thumbs up.
What we need is less competition and more cooperation. We have only one place to live, our spaceship called planet Earth, and more competition leads to more destruction of our spaceship!
Very informative hub on socialism and captalism. thanks for sharing. creativeone59
Thank you guys for commenting.
Pgoundy you're right economics is treaded like religions. However, I think people do realized what's going on - they must know, they think they can secure their interest by not talking about it. But sadly the more our economic system shrink they will be force to talk about it.
Paraglider I havn't heard from you in a while buddy - NOW i'm sure this hub is good.
Next YOU RIGHT compatition creates conflict. IF you don't like compatition i guest you must not like the capitalist system because this is what its based on.
Thanks Creativeone
This is good writing. Well reasoned and clearly stated.
One of the most important points of this Hub is that Corporations and their executives have no country, the world is their country and they will move wherever profits can be maximized. These companies can up and move to another country with no problem, because we allowed the middle class to loose the power it once had. If our country continues to go on its current path we will loose more Corporations to other countries and we will be talking about 30-50% unemployment.
Americans already have lots of features in their country that are "socialized" -- public schools, police departments, fire departments, libraries. Who would seriously want to do away with these? Who would want a privatized police force running the streets? Capitalism is important, but for a nation to thrive, it will always need a combination of free markets and well-run public services funded by taxes.
Hey there, just wanted to quickly comment on the example given by Michael Moore about pizza.
Moore grossly misunderstands how the system works. His example is nothing short of flawed. In his example, there is just a giant pizza that can not ever be increased in size, and can not be decreased in size. This is NOT the way the world works - if a man has the foresight to see a way to make a profit, and he does so, and he does so repeatedly to the point that he is rich, we don't say that he gets a larger piece of the pie, we would say that he made the pie bigger so that everyone can eat more.
Let me explain very briefly. Trade benefits everyone involved. If X trades an apple to Y for a banana, then X HAS TO want the banana more than the apple, and Y HAS TO want the apple more than the banana - otherwise they wouldn't agree. In this simple and vague statement, we see that wealth WAS CREATED through trade. As wealth is created, the pizza gets bigger.
Unfortunately socialism -the government control of wealth - does not perform this trade fairly. Sure, if the government trades 3 billion dollars for health care, then surely it values the health care more than the money ... but how did it get its money? By forcibly taking OTHER people's money (if you don't believe this statement, g'head and stop paying taxes and see what happens!). Thus, the statement that "well, if government does it, then surely everyone agrees that the money should be spent this way!" is inaccurate! In a democracy it just means that the majority of voters MIGHT agree.
Hi! Evan - Let's split the logic evenly - Let say it cost me 20 million dollars annually to run a business -Let say i find a way to reduce cost, but the only thing is - I have to spend an extra 10 million dollars to make it possible. Some would say well, if you're spending more than you not reducing cost. That would be for the short sighted guys which you're not. However, the extra 10 million would put my annual spending at 30 millions,but I realized if I spend that extra 10 on commercialize my business with CNN instead of ABC that my advertisement cost will increase but my return on investment may double if not triple ( $ 120 M). Therefore, that investment would be wise for me because although my annual spending would increase 10 M - the return on CNN investment would have off set my over all spending comparatively, because i now retained $60 M after debiting cost of operation. Therefore, we can say that I've cut on total cost of operation.
Suppose this is Health care, can we say by spending 3 billion to regulate health care, to prevent careless spending, give people more choices while lowering doctor's mall practice insurance, that the 3 billion dollars that you mentioned is not wisely spent. It would appear to me that the 3 billion you mentioned is an investment that is aim to reduce cost in the long run. Which means in the long run the tax payers would have contribute less in health care than before - isn't that a great idea. Nice chatting with you.
This is from the Obama site. It appear that my assessment was right on track.
The bill I just signed puts Americans in charge of our own health care by enacting three key changes:
It establishes the toughest patient protections in history.
It guarantees all Americans affordable health insurance options, extending coverage to 32 million who are currently uninsured.
And it reduces the cost of care -- cutting over 1 trillion dollars from the federal deficit over the next two decades.
To ensure a successful, stable transition, many of these changes will phase into full effect over the next several years.
good thinking - good Hub!
Breezing- You are one able to look into a deep pool of water and see what lays at its bottom.I do agree with your analysis ! Could it be that competition generates fools in order to support capitalism???
You are right Niall - I could not have come up with a better idea for the moral of the story.
Great observations Coolbreezing. Capitalism is normally the optimum economic system. The problem is excesses occur due to competition and greed. Socialistic remedies are needed to regulate the capitalists and provide for citizens that are hurt in the process. If FDR had not initiated so many social programs in the thirties, the U.S. could very possibly had fallen to some sort of demagogue on the left or right. Unions are a necessary control on management. Social programs funded by a progressive income tax help those who have been hurt by capitalism or some other misfortune. I look forward to reading more insightful writings from you.
It can work
Socialism + Capitalism = Canada
There is some point where we allow government to intervene but I do not think it is the midpoint of capitalism and socialism. First, there is no midpoint. To propose such a midpoint would be to say for example that someone could overeat just enough sugar to stay between healthy and diabetic. Socialism is a degenerative disease. (Yes, I am aware it did not yet destroy Norway and Sweden, but they have not benefited as claimed by the left, and other countries have suffered dramatically.) (Not everyone who eats sugar perishes immediately.) Anyway, I want to make only one small point and it is rather educational in nature:
Lets look at the big picture. If all economic relationships are essentially freely entered as in Lassez-faire capitalism then how is it that people are somehow made slaves as in your pizza analogy? This is simply not accurate. Assuming monopolies to be not allowed certainly does not require socialism. All it requires is not allowing monopolies. I have no problem with that but I think if you properly prevent companies from engaging in force or fraud that would be sufficient to stop monopolies from emerging. People under capitalism are always free to engage in any economic relationship, by definition. I think your whole idea is really based on a Marxist fallacy.
I am not trying to accuse you of being Marxist for personal attack purposes. I am just saying the reasoning is the same. My argument is that if people are free to choose their economic relationships then they only choose those that they have an advantage to enter. That is they will always select the best product or service for the money. And capital will always flow to those who provide the best value in products or services. And capital is just that. It is capital and it is used to efficiently produce products and services. Most of societies consumption is not done by the rich. You could take all their money and redistribute it. They would be poor and within months so would everyone. Capital accumulation is necessary and it is not an evil. Many of the worlds most productive people divert only minuscule percentages of their production to personal enjoyment. I can't stand Bill Gates but lets use him as an example. Consider what percentage of his production does he spend on personal consumption. Surely less than 0.001%. Meanwhile the socialists in their redistribution schemes keep MOST of the money for their own luxurious use.
Much of the worlds suffering results from socialist style economic models. Chinese have endured endless suffering at the hands of a socialist model. I was there and witnessed the absolute destruction of culture that the cultural revolution produced. Without capital and free economic relationships people suffer greatly.
Hi! berrtus - your reply is long but interesting but not surprising.
First, we have to come with an understanding as to what it means to have a Lassez-faire Capitalist system. Once we have come to an understanding we can then proceed that way the protocol which governs our argument is relative to each other.
Lets step into wiki for a minute “ Lassez-faire It is describes an environment in which transactions between private parties are free from intervention, including restrictive regulations, taxes, tariffs and enforced monopolies. The phrase laissez-faire is French and literally means "let do", but it broadly implies "let it be", or "leave it alone."
My argument will be base on that definition – if you disagree with wikipedia’s definition of lasses-faire I totally understand but you must provide a replacement that is reasonably acceptable through reasons.
How is it that people are made slaves under a capitalist system when it is recognized as a lasses-faire capitalist system? You see my friend – it obvious that we’re looking at the economy from different lens, because no one who have come from the bottom and make they way up would ever ask such question.
You might as well tell me that you believe in equality and while at it in equal justice – better yet equal opportunities for all. The bottom line of all this is that the competition is from the top not the bottom. Did you ever heard of the term the rich is getting richer while the poor is getting power – why do you think that is?
You need capital to start a business my friend and in a lasses-faire capitalist system only those who already have the money can take advantage of the opportunities that a recessive economic system provides. We become slaves for the rich because the money they pay us is never really enough to finish paying our mortgage. Therefore, we spend our entire lives working to pay a property that we partially own. Now we have a reason to want to work – The American Dream is the ultimate catch –
The system is corrupted my friend – I’m sorry to say but if you cannot see that – you are certainly living in a different world. Look for me in the field – there are many of us – you might need a telescope to point me out.
You can accuse me of being a Marxist all you want if you wish – that doesn’t do anything for me. The best way of balancing ideas is to scale them – we select the best ideas out of the bunch and when the scale has been leveled we say we have reach an understanding.
We look at economic issues from an advantage point of view – those at be bottom provides ideas to bring about a level plain field – they only want a little more than they already have . The rich have it all they is nothing to gain from his end if he allows other to take from his great fortune.
They’re looking at the economy from a different view – one that is in their interest regardless the circumstances – from this outlook what you have is an uneven plain field, especially given that the rich makes the decisions – economic policies.
What you should have done before addressing your question was to take a close look at our economic policies, our education system. On that note it is becoming worst – no average citizen can run for certain office position in most of our states – you need $ backup – what does that mean
? What are we setting ourselves for – these are the question we need to ask ourselves so that we can understand the slavery system.
“My argument is that if people are free to choose their economic relationships then they only choose those that they have an advantage to enter. That is they will always select the best product or service for the money. And capital will always flow to those who provide the best value in products or services.”
If people are not educated to make rational choices, than they won’t be able to differentiate between a good service and a bad one. If you can control knowledge than you can certainly direct people’s choices, in which case capital would only flow in greater abundance to those who already possess much of it. I think that you’re a smart guy but you are looking at this thing from the top down – that’s only a one way street - you need the bottom up perspective to arrive at a greater understanding. Just as you need to look at the advantage of both economic system socialism and capitalism and extract the best ideas to create a system where we can all benefit from.
Some economists have said that China is a socialist country because production and distribution are controlled by their government. However, that statement within itself is debatable, because we’ve noticed that Chinese businessmen have invaded our markets on all segments; in they’re not doing it in behalf of their government. If China is a socialist country to its citizens, than the country’s fortune five hundred companies operate on a capitalist format, for they have polarized the world market with their marketing gimmick.
In the United States, we live under a capitalist society; production and distribution are controlled by our corporations. However, citizens under a capitalist society are divided by different income levels which are described by some as a form of social class. Nevertheless, when a product is marketed, it’s promoted to target a particular class of people with a certain income level.
Thanks for your reply – good thinking – we can learn from each other.
This: "If you divide Socialism by Capitalism you'll get a well balanced economic system." Is the dumbest thing I've ever read.
No, socialism does not work, will not work, cannot work, and it gaurantees bankruptcy.
the social classes thing, to me anyway, is inaccurate. everyone has equal opportunity. that's why we have free public education. you don't have to be rich to get an education (although you could argue that the rich have more options in schooling, but that doesn't take away the poor's ability to learn, nor does it guarentee the rich will do the work required to get a good education). just because you are born poor, doesnt mean that you will remain poor. it just depends on the choices you make. if a poor child decided to take all the advanced classes while a rich child decided to nap all day, who do you think would earn better jobs in the future? if the poor child did really well in school, he/she could earn full scholarships and go to the finest colleges and get a high earning job in the future. the rich kid may be able to pay his way into college, but if he/she still decides to slack, they will fail and most likely get a less paying job. your wealth is determined by your choices (not getting into trouble, not slacking in school, not getting into drugs/gangs, not blowing all their money away on credit cards, etc.) and by your drive to work hard. america is the land of opportunity remember? those immigrants that came and suffered poverty and endless hours of work did so because they believed it was for the good of their children, because their children could move up the social ladder if they worked hard. the poor are poor because somewhere along the line, they made a bad choice (im sure it was hard, i am a pretty understanding person), whether it was just from slacking in school, or digging themselves into a hole of debt (my own family's situation, im just a teen working very hard to make my future better :)
anyway, i probably should have kept my mouth shut, because there is still alot of stuff i don't understand (maybe my reasoning is off somewhere, i realize there's alot of stuff beyond human power to control), but we all have the power to change our lives, no one is truly forced into poverty the way you make it seem. i'm just speaking my mind, not really looking for an arguement. peace :)
HI! Weholdthesetruths
Well, in this case I'm goring to say that you couldn't possibly hold these truths to be self evidence if you are incapable of providing a reasonable explanation for your claim.
Your statement hold no value if you can't defend it, you may very well have a valid point but none of us knows what it is if you can't explain it.
Thanks for your reply - Check me out at http://peoplebreeze.com
This article is a joke. There were so many fallacies in this article. The ONE source he cited was from wikipedia...are you serious?! For years school teachers have been telling sudents not to get their information from wikipedia! Again, what a joke.
at the comment above! lol I know its you Dustin! I already sent you an email about it. Stop listening to Glenn Beck and Fox news they are bullshit. You need to become more open minded about whats REALLY going on in this country.
awesome stuff guys: Evan G Rogers,weholdthesetruths,berrtus. Finally a few posts from people that have an idea! Kieth, wut the hell, I already told you, i make my political and economic analysis from the education i'v received from college, doing my own research and yes, from watching fox news and glenn back( who i beleive is a very smart man). stop accusing me of being closeminded about world views!
Please explain the fallacies stated within his arguments!
pgrundy 2 years ago
I agree with you. You explained this perfectly. Sadly, many people now have a sort of religion out of economics and there is no rational discussion to be had with them. But I have a feeling you'll find that out in short order. Thank you for the hub. :)