The capitalism versus socialism debate is increasingly concerning more citizens. While I don’t necessary think we are at a peak of a crisis, I most certainly think we are hurdling towards it the less educated we are on it.
Another magazine, Teen Vogue, unsurprisingly attempts to tackle the issue with their ‘critical’ analysis on issues through utopian lens. While the article at least demonstrates some understanding of the issue at hand—perhaps more than the average person— the author evidently lacks multidimensionality to how they interpret history, culture, society, politics, and specifically economics.
Likewise, their cognitive biases do not go unnoticed.
Capitalism and socialism are economic ideologies—nothing more or nothing less.
Disputing how we will “defeat poverty” requires a basic understanding of how an economy works. In addition, an interdisciplinary approach for the social, political, and cultural implications based on economic circumstance is needed as well.
The author, on the other hand, failed to develop any economic rationale into her argument. It was solely based on social injustice, exploitation, and even bits and pieces of mainstream media arguments presented all over the Internet. Even if these are important issues to address, it is not enough to argue that capitalism is a failure.
Where did capitalism really come from?
She’s right about one thing— Capitalism never started as, or will it ever be, a perfect system.
….. but what ideology ever has?
While mentioning feudalism does provide some historical substance to understanding capitalism, how the author sees the implications of its history is flawed. She asserts that capitalism is what spread slavery and exploitation while the “death of feudalism” (so she calls it) is essentially symbolic to the death of American democracy.
That couldn’t be further from the truth.
Dualisms between capitalism and socialism were present throughout American civilization’s development. Capitalism has evolved since almost the 16th century and did not start reaching maturity until around the 1950s. The entire era of industrialization and modernization was a learning experience with both positive and negative consequences.
We are still learning on how to refine the system today. It takes time.
If we’re going to talk history and reference slavery and conquest to fuel capitalism: Monopolies were more than a business with all economic power; they were political entities. What allowed their behavior was zero market regulations, or nonetheless, regulations easily disregarded because the ones regulating were also the ones violating them—the government! Corporations expanded, with help from the government, into other places to fuel their activities for their profits which gave them power and mutual benefits.
While the author believes Republicans—modern day and in history—are to blame for all of it, it was a Republican (Teddy Roosevelt) who passed antitrust laws to restore competition and was notably the father of American progressivism. Neither party is holier than thou, but blaming one side really discredits the author’s argument.
Factories were the newly evolved slave plantations with immigrants, minorities, children, women, and yes—poor white men. It gets worse. Urban housing was (still kind of is) the equivalent to farm tenants seen in feudal societies—whereas feudalism more closely resembles socialism because they’re both based on collectivism.
In modern day, it’s not lords providing the absolute minimum for survival—it’s government subsidies. Which are also an instrument for social control. If anything, that is inconspicuously socialism.
It is absolutely insane to base socialism on the idea of human exploitation and assert by human nature we are incapable of letting people have their own power because people get “left out”, so to speak….. yet completely disregard the government will do the exact same thing.
What is capitalism, and how does it really impact you?
The author defines capitalism as “an economic system in which a country’s trade, industry, and profits are controlled by private companies, instead of by the people whose time and labor powers those companies”. This is a very misconstrued definition.
Evidently someone’s been reading too much of the Communist Manifesto and less of an economics book. Capitalism gives economic power to private businesses and individuals rather than the government.
Capitalism is absolutely defined by the labor and time invested into it. Note capitalism’s root word— capital-ism. Capital and profit are not the same thing. Human capital is the most essential ingredient to economic prosperity. Incentivized economics promotes education, skill building, and specialization. In turn, this produces multiple markets (therefore more opportunities) people can choose to be part of.
Any economist will assert that government controls and taxes hurt the economy. In contrast, socialism relies on subsidies and placing government controls on markets to “help” competition. It regulates the economy based on what it deems best rather than the basic laws of economics.
Capitalism ultimately distributes power to the people and helps minimize poverty.
Blaming capitalism for child poverty and saying it’s all due to self-interest is beyond ignorant. Capitalism, despite its negative aspects, has significantly reduced deep poverty globally over the last two centuries. In 1820 (when slavery was still legal globally), deep poverty sat at 94.4%. In 2015, 9.6% of the world is living in deep poverty.
Between 1820 and now has been the focal point of current debate regarding our history……. yet somehow with an 84.8% decrease in deep poverty worldwide and the fall of tyrannical dictatorships during this time window, people still believe capitalism is the culprit.
Capitalism vs socialism: which one is more corrupt?
Corruption has less to do with capitalism versus socialism as much as it does the individual country’s politics, culture, society, etc. This determines how economic systems are applied.
Let’s take a look at socialist versus capitalist countries:
The Nordic countries—New Zealand, Finland, Denmark, Norway—are the focal group for socialism proponents in the U.S….. and for good reason. These countries have excellent education, healthcare, living conditions, and rank highest (top 10) on Transparency International’s Corruption Perceptions Index (meaning they are least corrupt).
On the other hand, other socialist countries—Venezuela, Mexico, China, Russia, India, Iran, etc.—are in economic and political turmoil (except China; Mexico is slowly getting better). On the Corruption Perceptions Index, China ranks 80; India ranks 85; Mexico ranks 142; Venezuela ranks 173; Russia ranks 145. Many argue these are “mixed”, but based on other political and social indicators they lean more socialist than anything.
Now let’s look at capitalism: Capitalist countries—United States, Japan, United Kingdom, etc.—have stronger economies…. But are they more corrupt? According to the Corruption Perceptions Index, they are not. United States ranks at 16; Japan ranks 23; Germany ranks 15; United Kingdom ranks 14.
What does this have to do anything?
The “capitalist” activity where companies conduct foreign direct investment apparently leads to exploitation and poor wages and living conditions. Somehow the U.S. is to blame, but let’s look at how it really works.
First, southeast Asia is corruption-infested as concerns with unethical sweatshop conditions and labor. China, a mixed economy of socialist and capitalism while culturally proclaiming communism, is the key player in sweatshop exploitation. Companies don’t expand solely for labor—their manufacturing facilities are located to where the needed resources are.
No, this is not wrong. Globalization reveals the economic interdependence countries have and how trade can create market efficiency based on comparative advantage. However, the host country’s laws—including government controls on the economy— are what the non-host country is going to base labor wages on. This does not justify mistreating people, but it does reveal how capitalism is not necessarily at fault and how socialist countries have made hefty contributions to the mess as well.
China, to include countries such as Mexico, who are more centralized are the ones allowing other countries to exploit their citizens while they benefit from it themselves. Why? Their economies are has a strong socialist influence, so they have little incentive to put their prices at market price because they control the marketplace.
Using exploitative labor from capitalism as a justification for socialism is hilariously ironic.
The jobs recorded to have the most exploitation of cheap immigrant labor are the people fleeing from socialist countries to seek more opportunity here in the U.S., correct? People talking about $7.25 minimum wage jobs as exploitative is just ridiculous considering any job that requires more skill will be making more. I don’t disagree on raising it some, but not $15 an hour.
One commonly overlooked factor: population size.
Socialism, or even collectivism, is more likely to thrive in smaller populations. The Nordic countries all have a population below ten million while capitalist countries have significantly larger populations. Mixed economies such as China and Russia, who are more socialist than capitalist, rank higher in corruption due to their larger populations.
I am writing a whole separate piece detailing how population differences strongly contribute to a country’s economic system. For now, I am briefly mentioning it because it is extremely important.
Neither capitalism or socialism are exempt from globalization’s consequences. Likewise, neither are inherently evil. No matter the political or economic systems in place, the “everyone wins” mentality is idealistic. Truth is, everyone isn’t going to win with either system.
The author was intellectually dishonest about this fact. At the end of the day, people’s preference boils down to their personal situations and experiences that have shaped their worldview.
This is the premise of capitalism– if we are going to shape our worldview based on our personal situations, why not give people the power over resources and their life choices to create their own opportunities?