When thinking about global economic systems, you often see it represented as a scale with capitalism on one extreme end and communism on the other. Capitalism is strongly tied to libertarian concepts of an unfettered market and minimal governance, save for what is necessary to preserve negative rights such as the first amendment. On the other extreme are the communist beliefs of equality over equity and utilitarian sentiments echoing statements like Spock’s “the needs of the many outweigh the needs of the few.”
Directly in between communism and capitalism is a grey area dubbed Socialism. In a socialist society, there is still a thriving private sector, but taxes are used to among other things, prevent the wealth gap from growing out of hand. In a socialist country, the idea is to give people an even starting point and use governmental redistribution of wealth to provide several basic positive rights, such as education and healthcare. This is based on the philosophy of positive freedom. This is where instead of freedom simply meaning that you are free from governmental interference in your life (as it does in a capitalist society), it is argued that you cannot be truly free without certain basic human rights being guaranteed for you. If you are living in poverty, you are not truly free to pursue your interests or contribute to society. If you are sick or uneducated, you are not truly free to engage in society in the same ways that people with those liberties are.
Of course, my definitions of both Capitalism and Socialism are extremely constricting, which makes it at once easier to debate their relative merits, and also harder to find real-world cases of their implementation. America, for instance, is not a purely capitalist society. If it were, there would be no taxes, and certainly not taxes which increased based on income. There would be no government-based healthcare, like Medicaid or the Affordable Care Act. There would be no government-funded education.
If America were to become purely capitalist, it would benefit the upper quintile of our society, while forcing those on the other side of the wealth-gap further down, suppressing their access to medical assistance and even basic education. It would lead to a quick increase in economic development, matched only by skyrocketing poverty rates in the lower quintiles. The ideals of capitalism are meant to motivate each person’s contribution to society with monetary incentives. The free market would govern itself with the laws of supply and demand, ensuring that (in the absence of monopolies on living essentials) prices would directly reflect how much the population valued that item or service.
If, on the other hand, America followed the examples of its northern-European cousins such as Finland and Norway and embraced a more socialist economic system, you would see many of the things described above swing in the other direction. The wealth gap between the top and bottom decile would shrink dramatically. Healthcare and higher-level education would be paid for by the government, and tax rates would increase to pick up that cost. Since socialism espouses equity over equality, those tax increases would be much more dramatic in the upper economic quintiles. Disparities in economic distribution would all be in favor of those in the lower quintiles. The government would pour more money into lifting people out of poverty, instead of just saying that it is their fault that they are poor.
So which works better? While that is not black and white, here are a few good indicators: according to the UNdata, more socialist countries have longer life expectancies, lower poverty rates, and better primary and secondary education. This is where capitalism enthusiasts often point to GDP, but the GDP per capita in the US is not consistently higher than that of other first-world socialist countries. In conclusion, while both capitalism and socialism have their pros and their cons, it is likely that socialism is better in the long run for all but the upper decile of a country.
Directly in between communism and capitalism is a grey area dubbed Socialism. In a socialist society, there is still a thriving private sector, but taxes are used to among other things, prevent the wealth gap from growing out of hand. In a socialist country, the idea is to give people an even starting point and use governmental redistribution of wealth to provide several basic positive rights, such as education and healthcare. This is based on the philosophy of positive freedom. This is where instead of freedom simply meaning that you are free from governmental interference in your life (as it does in a capitalist society), it is argued that you cannot be truly free without certain basic human rights being guaranteed for you. If you are living in poverty, you are not truly free to pursue your interests or contribute to society. If you are sick or uneducated, you are not truly free to engage in society in the same ways that people with those liberties are.
Of course, my definitions of both Capitalism and Socialism are extremely constricting, which makes it at once easier to debate their relative merits, and also harder to find real-world cases of their implementation. America, for instance, is not a purely capitalist society. If it were, there would be no taxes, and certainly not taxes which increased based on income. There would be no government-based healthcare, like Medicaid or the Affordable Care Act. There would be no government-funded education.
If America were to become purely capitalist, it would benefit the upper quintile of our society, while forcing those on the other side of the wealth-gap further down, suppressing their access to medical assistance and even basic education. It would lead to a quick increase in economic development, matched only by skyrocketing poverty rates in the lower quintiles. The ideals of capitalism are meant to motivate each person’s contribution to society with monetary incentives. The free market would govern itself with the laws of supply and demand, ensuring that (in the absence of monopolies on living essentials) prices would directly reflect how much the population valued that item or service.
If, on the other hand, America followed the examples of its northern-European cousins such as Finland and Norway and embraced a more socialist economic system, you would see many of the things described above swing in the other direction. The wealth gap between the top and bottom decile would shrink dramatically. Healthcare and higher-level education would be paid for by the government, and tax rates would increase to pick up that cost. Since socialism espouses equity over equality, those tax increases would be much more dramatic in the upper economic quintiles. Disparities in economic distribution would all be in favor of those in the lower quintiles. The government would pour more money into lifting people out of poverty, instead of just saying that it is their fault that they are poor.
So which works better? While that is not black and white, here are a few good indicators: according to the UNdata, more socialist countries have longer life expectancies, lower poverty rates, and better primary and secondary education. This is where capitalism enthusiasts often point to GDP, but the GDP per capita in the US is not consistently higher than that of other first-world socialist countries. In conclusion, while both capitalism and socialism have their pros and their cons, it is likely that socialism is better in the long run for all but the upper decile of a country.