Personally, I believe in equal opportunities, not equality of incomes. Capitalism, Socialism and Communism are the three main types of economic systems/models we have in the world today. Economic systems can vary widely in terms of unemployment, taxation, income inequality, economic growth and many other factors. These factors don’t just affect our financial resources, they also have a profound impact on how societies are structured.
Economic systems helps in solving economic problems such as what to produce, how to produce, for whom to produce and efficient use of resources.
Capitalism is an economic model which is controlled and owned by private individuals. In a Capitalist society, products and services are provided by individuals. These individuals employ workers and they are allowed to keep the profit to themselves. They can decide to create products and services excessively or not.
This model encourages individuals to come up with ways of creating wealth for themselves. Inevitably, rivalry comes in between similar businesses whereby leading to more productivity, generates more wealth and economical growths. Capitalism is the most just economic system in the today’s world. Majority of countries in the world run a Capitalist economic model.
Socialism is an economic model whereby the government own and operate all means of production i.e land, industries, natural resources, banking, etc. The citizens only get wages and what they need (food, clothing, shelter and education). Every citizen gets an equal share of the general returns no matter how much work each person does. Allocation of goods and services are left in the hands of the central authority.
The major objective is to provide for people’s welfare, equality between all people and the elimination of social classes. Therefore, private ownership of wealth and resources is prohibited. All they focus on is being healthy and happy.
Communism is very much similar to Socialism, but there are so much differences. In communism, only the working class get the share of general returns and it is shared out according to their needs and ability. Only citizens in the working class gets their share of the general returns according to how much work is done unlike Socialism whereby everyone is equal (Either working or not).
It is either controlled by an organization or the government. In communism no private ownership is allowed, every property belongs to the organization or government including houses and businesses. Communism aborts all rights of inheritance.
Karl Marx, a german philosopher and ecoconomist predicted a sharp divide between the wealthiest citizens and the poorest citizens in Capitalism. He believed the system was exploiting the worker and he was supporting the socialist model which he hoped would later become communism.
Marx felt that capitalism creates an unfair imbalance between the workers and the capitalists whose labor they exploit for their own gain. This abuse, in effect, causes the employees to see their jobs as nothing but a means of survival.
I believe only habitually lazy people believe in Socialism. This economical model does not reward individuals for going extra mile to find ways to create more means of production and the development of wealth. This model then leads to excessive poverty in a country.
Former United Kingdom Prime Minister, Late Margaret Thatcher (Iron Lady), quoted that “The problem with Socialism is that you eventually run out of people’s money”. That is very true because in a Socialist economy, every citizen has a share of the general returns either working or not. Indirectly the non-working class feeds from the productive returns of the working class.
In Socialism and Communism, governments and organizations tend to misuse power and embeezle collective funds. In these types of economic systems, there has been consistent corruptions with people in power abusing their positions.
Capitalism also has it flaws such as encouraging monopoly in businesses, inequality among citizens, economic instability, encouragies greed and exploitation of the working class. With these flaws, governments that run a Capitalist economy now rely on taxes to improve the standard of living of low income earners.
These governments now enforce high taxes on businesses and high-income earners to be able to cater for free social amenities mainly for the low-income class and every citizen in general. Well, rich people don’t pay taxes, that’s a story for another day. But still, the rich get richer and the poor remain poor.
Capitalism enables creative thinkers to thrive. The system creates incentives for citizens to come up with ways of creating wealth for themselves. It encourages people to improve their lives by satisfying the needs of others and that is how the free market works. Today we now have businesses from capitalist economies that have now shaped into globalization such as Google, Facebook, Amazon, McDonald’s, etc.
In today’s world, no country runs a true definition of Communism is about only a few countries practise it but not in its truer sense. Countries that practice it are China, Cuba, Laos. North Korea and Vietnam. We still find out there are few citizens that thrive than other citizens in these countries. Every Communist country is actually a strict Socialist country in which the government has control over employment and the economy to some degrees. Therefore, Socialism is a precursor to Communism once the government has control over society and the economy.
Nevertheless, we have successful Socialist nations such as Canada, Czechoslovakia, Yugoslavia, Hungary, Romania, Norway and other northern European countries.
Some countries run a Mixed economy which is the combination of Capitalization and Socialization. A mixed economic system protects private property and allows a level of economic freedom in the use of capital, but also allows for governments to interfere in economic activities in order to achieve social aims. Countries that run a Mixed economy are France, the US, Sweden, Russia, etc.
So what type of economy does your country run? Drop your responses below.