First, let's differentiate among the three basic economic models,
Capitalism, Socialism and Communism. Most people lump Socialism and
Communism as being synonymous, but Karl Marx would beg to differ.
True Communism, as defined by Marx, is an expansion of the commune approach to a national economic model whereby everything is shared, i.e "
from each according to their ability and to each according to their
need". There is no need for money in this system as everybody is selfless and contributes to society for the good of the whole. (Lots of luck with that). Because some nation adopts the name of Communist, doesn't make them one by Marx and Engels definition. Marx envisioned that mankind would go through an evolution, socially, and true communism would be achieved. He also believed that communism was inevitable, but we would have to go through a phase which he called, "The Dictatorship of the Proletariat".
Communist states such as China, the USSR, and others are really Socialist states run by dictators.What distinguishes the Communism we know and Socialism, is that Communism is a political position and Communist nations work to expand their influence into a world wide Communist state by any means necessary. Socialism, taken by itself, is strictly an economic model.
Socialism is the
model where the government either owns or directly controls the
principle means of production. Most all services, including medical, are owned by the government, or at least controlled by government, and it's practitioners are paid directly by the government. Central planners decide on the needs of the population and shift resources as needed. In general, private ownership and control of small businesses and even small farms are allowed
but, are regulated by the government. It is the system that college students in the liberal arts, their college professors and way too many public school teachers, think is the correct and proper form of government. It espouses that all of societies ills are caused by evil capitalists who prey upon the working class and only government control of the economy can provide the benefits they so richly deserve.
It is a sirens song to the uninitiated. Everybody lives a life of comfort and free of nagging problems: lots of free stuff. A warm fuzzy safety blanket is wrapped around the whole population. You are taken care of from cradle to grave. What could be better than that? A
socialist system, in concept, provides benefits such
as free medical care, paid retirement, free education through a
university for those qualified and other perks, whether they are done
well or not. There is no such thing as a private enterprise labor union, as that would be in conflict with the central planners.There is no unemployment in a socialist system as every one is given a job, whether there is a need or not. In the ideal system, for instance, one parent is paid to take care of a child, because that is defined as a job.There is no competition among producers of goods in this system, which by the way, is one it's biggest weaknesses.
This economic system was
tried by several large countries, with disastrous results. This system, by it's very nature, demands a tight control over the economy and therefore it's citizens. The government will decide where labor is needed, what is being produced and wages and other benefits of the workers. The prices of goods and services are also controlled by a central committee. The task of overseeing a vast economy results in a huge bureaucracy.
Socialism fails for a number of reasons, but mainly because human being are charged with running it. And, guess what, human beings are prone to get stupid, greedy, lazy, power hungry, and some of the other sins that hamstring a government and it's economy. Anyone who has ever come into conflict with a government bureaucracy can appreciate that a system that depends on the planning and control by a bureaucracy, will be a failure. Bureaucracies always degenerate into self sustaining organizations whose main goal is to expand their control and maintain their positions. If you think that the American bureaucracy is bad, image what a socialist economy would end up looking like.The EPA will never be satisfied that the environment is healthy enough. The endangered species folks will always find another species that needs their protection, be it a rat, butterfly, insect or something else. Each Bureaucracy will find a reason for their slice of the public pie to be continued and even to expand. Their primary goal will be to stay in business.
In a Socialist system there really is no motivation to succeed, except within the party structure. The resources to support the population within such a system is never large nor diverse enough to meet all the demands. Goods that are produced in this system are usually inferior, because the workers have no real motivation to be productive. Workers are hired where there is no need and can not be fired. Quotas for production are set and managers must meet them or face the consequences. Ergo, incomplete and inferior products are rushed out the door in order meet those quotas. In general the Socialist nations never export any consumer goods. The products just don't match up to the quality of goods produced by the capitalists.
They don't draw talent from other countries, as there is no motivation for top talent to enter such a system. (Except, of course, at the point of a gun as was done to the German scientists after WWII). And, there is no competition to spur improvements in currently produced products or the development of new ones. An old Soviet workers saying "The pretend to pay me so I'll pretend to work" is emblematic of the attitude among the working class. A black market typically thrives in this type of system, as it is the only way to get some products that people want and even need; paradoxically from the Capitalist countries.
Attempts at socialism has
always been based on a central committee that exercises dictatorial power. China, the USSR, and Cuba are
examples of the attempts to embrace a socialist system. Some South
American countries have flirted with it with disastrous results. There
really is no other way that the system can work. But, economic reality
finally set in for China and Russia and they had to greatly modify their
systems in order to survive. They still have an essential dictatorship,
but they allow a limited free market to exist. They have adopted a form of Capitalism as their economic
model. China and Russia have a lot of millionaires today and a middle
class of professionals. They, especially China, have stepped up their technology of war making and now surpass the United States in space capable warfare. And, at least, match the west in Cyber warfare. That makes China and Russia an ever growing threat to the west and the democracies.
Capitalism is simply the model whereby the means of production and
services are owned and managed by private capital. That can be a single
individual or a group of investors having a small group of selected
people perform the management function. There are many variations on this economic model, with government regulations and taxes interfering with the free trade of goods, services, and intellectual properties to a lesser of greater degree, but the essential theme of private ownership of the means of production holds.
Of all the economic systems that have imposed on, or adopted by it's citizens, the one that generates the greatest wealth and national prosperity is the system of free market capitalism.. It produces the greatest exploitation of any national resources available, encourages the growth of new business and generates more, and higher paying jobs than any other system of economics. It produces the most advanced medical treatment by the best and most highly trained doctors. It generates the greatest breakthroughs in medicine, drugs, and basic science. And why is that? In the grosses terms--GREED. The engine that drives capitalism is the desire and pursuit of profit and higher incomes in critical professions. This system encourages that pursuit.
It's the magnet that draws the best researchers in medicine and science. It encourages and rewards achievement. It's the reason that companies are formed and are expanded. It's the reason investors risk their own money to finance the start of a new business or to expand a current one. They hope for profit on their investment. It drives pharmaceutical companies to invest millions and even billions
of dollars in the research of new drugs. It encourages the brightest
minds to pursue higher education in all kinds of fields, because the
rewards are great. Every advanced country in the world today has embraced some form of capitalism as it's basic economic system. The United States leads the way in free market capitalism.
A free market will also produce a ever improving product in fields where the free market exists. Look at the performance and reliability of the automobile today compared to just a few years ago. Competition has driven the auto makers to constantly fight for market share and have forced them to invest billions of dollars into improving reliability and performance for their product. This is true for all kinds of products. Of course it means that the organizations that can't keep up fall by the wayside. Remember the Hudson, Nash and Packard Motor Companies. That's what happens in a free market if you can't compete. Think of the TV of today as opposed to the CRT based systems. In fact, where the free market exists there has been a wave of improvements in all products. The freer the market, i.e. the less government regulation, the greater the incidence of entrepreneurship. In addition, of course, new products have been introduced. Think about the personal computer, a product that likely would never have come about within a socialist system. After all, no one except the Apple founders saw any need for such a device. We have cell phones, fresh fruit and vegetables in the winter, the internet, social media and a mountain of other things available to us that we take for granted, because individuals conceived of the idea and invested their money and time to make it happen. It has been proven over and over that the free market is the best judge of what is needed and wanted by the population and is the best system for adjusting to that need.
But: as one of our Presidents, I think it was Harding, who said "the only problem with Capitalism is Capitalists". When you think about it, all the depressions and recessions we have experienced, have been directly caused by out of control speculation in some critical market, driven by the desire to make a profit in that segment of the market. The stock market crash of 1929/1932, the housing bubble, driven by investment banks and loose credit requirements of the mortgage companies, are prime examples of what can happen.
And, unregulated capitalism will not remain a "free" very long. Look at the history of our own country. Before Teddy Roosevelt came along, trusts and cartels abounded. When a company gets large enough, or originates some product or service, it will take steps to block any competitor it see's that might threaten it's dominance of it's market. There are many ways that can be achieved, not the least of which is to buy up the competition. Look what happened to Westinghouse when the Edison Company, with the backing of the J. P. Morgan banking empire, forced the sale of all the patents it held on alternating current devices and formed General Electric. Westinghouse just didn't have the resources to fight the banking empire. Of course legislators can be "bought" to support the monopolies. Most of you don't remember the Tucker automobile. It was an innovative concept that pushed into new ideas of what a car could do. But, the big three, with their "bought" Senators got the government involved, held numerous hearings concerning a private enterprise and essentially killed the automaker and his concept. The big three didn't want the competition and had it squashed. And, if the market is controlled by just a few large corporations a little price fixing is not unheard of.
Industrialists will work to increase their profit and if left unchecked many actions they take will be unethical, even illegal. When the
labor market, which after all is just a product, is driven only by supply and
demand factors, and certain segments create a supply of labor that far exceeds the demand, labor can and
will be exploited. Companies will get rid of it's waste products the cheapest way it can in order to maximize profit. Rivers are polluted as waste products are dumped. Workers are injured, or even killed, because safety measures are expensive. The water supply is tainted, even poisoned, because there is no effort to control the contamination of the soil and subterranean water supplies. It's too expensive. All these things have happened in the past. Some of them were actually illegal, but far the most part they were not forbidden under the current laws at the time. Of course, these type of actions are not limited to capitalists.
Enter government. Here we have a dichotomy. To maintain a free market, government interference is actually necessary. Only the government has the power to prevent the establishment of monopolies and trusts, to monitor and prevent companies from merging and buying up competitors in an effort to control the market, and to prevent price fixing among the principle players within a given segment of the market. I.e. to keep the market free.
Government,on the other hand, is the principle player in maintaining some monopolies that would fail if not for the governments support by law and by regulations. Some of those monopolies are generally desired and beneficial to most of the public. As an example, the Medical profession is pretty much controlled by government by the severe restriction on who can practice in that field. The practice of law is restricted in the same way. Your utilities enjoy a monopoly on the products they deliver, protected by Government. Patents are registered with the government and the force of the government protects competition for a period of 17 years. This only a couple of examples, there are many government protected monopolies. Some are not questioned by the public at large, but many are purely political in nature.
But, government regulators have a tendency to believe that regulations are an end in themselves, and they often produce regulations that inhibit the free market and business in general, especially small business. They have a history of turning out new regulations by the volumes every day. Those regulations are the greatest impediment to the establishment and growth of business, especially small business. Each bureaucracy feels it has a mandate to accomplish some task and they bull their way though to that end, no matter the consequences to the economy, or even to another bureaus agenda. Big business has the resources and capabilities to cope with the mound of regulations at a huge cost, but small business is simply overwhelmed. The only reason that Apple and Uber, for instance, got off the ground and running, was that the regulators hadn't caught up to them when they were launched.
While a free market system opens the door for the achievers, by it's very nature it leaves a certain segment of the population out of the flow for a number of reasons. This can be as the result of exporting the manufacturing of goods to a foreign country or, of late, the introduction of robotics to replace the human worker. In either case the worker now has no place to market whatever skills they have.This situation is not going to change. Even if you could bring back all the manufacturing that has been exported to foreign lands, only the labor intensive processes, which usually carry low wages, will supply significant jobs. Manufacturing opens up new jobs, but not in the old areas. The new jobs, that pay well, will require training, and a lot of it.
Look at the auto industry. Detroit has laid off thousands of auto workers, but there are more American cars being built today than ever. Robotics are here to stay and will become more intrusive in the future.There really is no place for the worker, whose skills have been bypassed by the advancement of technology. He/she retrains to fit into the new market, or goes on welfare.
New fields have been opened and those who have acquired the necessary skills to move into them make out like bandits, but those who haven't just sit around and wonder what happened. The advance of technology has made the STEM occupations well paid and the workers in high demand.The capitalist system is very dynamic. Change is constant and sometimes rapid. Of course it has made billionaires out of people who are are involved in the financial markets. It will always produce a market where almost all the wealth is concentrated in a very few people. Lately that has become a significant political issue as the wealth gap has become greater than any time in recent history.
If one looks at the history of the United States there has always been about 10 to 15 percent of the population, at least, that live on the edge of minimum subsistence. That usually means that there is always a subset of people who have not, or can not, achieve the skills necessary to compete in the society at that time. That number grows and shrinks, depending on the conditions at the time. But, it's always there. And, the free market system allows no aid for the under achievers.
Thus, the growth of government instituted welfare programs that purport to help those who get caught in the advance of technology, or other factors, beyond their knowledge. Many people talk of the welfare state as being tied to Socialism, but
it really is a product of the capitalist system and is financed
by taxes drawn from the achievers. After all the ideal Socialist system has everybody working or being paid for some service to the state. But, welfare is a yoke that ties the recipient to the government. It stifles the desire to get ahead, to achieve, to work. Once welfare starts it has tied a portion of the population into never ending servitude to the welfare handouts that proceed through generations.
The people are demanding and getting many of the perks of Socialism in a Capitalist system. Especially in Europe. In a lot of developed countries medical services are essentially or completely free to the consumer. Canada has a one payer system whereas England has a government run medical system where the professionals are employees of the government. The universities are free, but it takes a bit to qualify for entry. They enjoy extended paternity leave, government paid vacations and various perks that smack of socialism. The price they pay for these types of perks are high tax rates on all it's citizens. In some countries as high as 80% of their income ends up going to taxes.
That seems to be the direction that the United States is headed. We have Social Security, Medicare, Medical, all Socialist ideas. One administration after another seems to be trying to tackle the problem of medical care, mostly unsuccessfully. Obamacare is the latest attempt. College tuition has become so expensive that students are graduating with student loans so large they will be paying on them for years. Many economists blame the huge rise in tuition on government sponsored loans. In effect the government is paying the tuition and the student is stuck with paying it back. Given this fountain of available money the colleges just keep raising their fees and paying themselves more. If you haven't noticed the increase in medical expenses over the last few decades, you haven't been paying attention. Here again government financed insurance has opened up a gold mine to the medical profession and they are mining it. And the beat goes on.
