Socialist Economics vs Capitalist Economics
Since the end of the Cold War, it’s been believed that result was a victory of capitalism, personified by the United States, over communism and the Soviet Union. People thought of the collapse of the USSR and its economic slowdown in its final years as evidence that socialist economic theories are internally flawed and inoperable due to corruption and fundamental opposition to human nature.
But today, as prominent politicians like Bernie Sanders openly declared themselves as socialists in the United States - one of the most outspokenly anti-socialist countries on Earth - the issue and the debate between socialist economics and capitalist economics has re-emerged. Before discussing its contemporary ramifications, it is crucial to talk about the history of this contentious matchup.
Interestingly enough, socialism actually came about as a direct answer to capitalism as a newly invented economic ideology in the end of the 19th century. Socialists such as Karl Marx argued that overreliance on the invisible hand would only work for the upper class and would not improve general welfare for the people. They believed that people are intrinsically selfish and capitalists who controlled the society would not want to distribute their wealth to the proletariat around the world.
Thus, socialists advocate for greater government involvements in economic matters. Since governments are supposed to represent everyone, socialists believe that it is necessary for governments to play a greater role in economics. For example, they think government planned economies are superior because they can better address the needs of the middle class and the lower class. They think governments are fair because everyone has equal political rights in a democratic political unit.
Given this historical background, socialists tend to think that since socialism came later than capitalism, it is therefore an improved version of it. However, as good as it sounds in theory, socialism did encounter many problems in practice. Many of these problems were demonstrated in the economic collapse of the Soviet Union.
First, it is hard to construct efficient checks and balances on the government when it has that much power. In a socialist country, the government usually has an enormous amount of political and economic power because it can put regulations and promote state-owned businesses in any economic sector deemed appropriate. This discourages private companies and businesses from expanding and maximizing their profits.
Government intervention can sometimes serve as an incredibly disruptive force because governments cannot always make a properly informed decision. Just like private enterprises, governments are ultimately run by people; and if private businesses owners are inherently selfish, there is absolutely no guarantee that government owners are any better. This is always the case and explains the phenomenon that most socialist governments end up being more corrupt than their capitalist counterparts. Therefore, oftentimes these socialist government officials try to cover up their corruption scandals by restricting people’s freedom of speech.
In conclusion, socialism in the 20th century was less like an equality revolution and more like a shift of power from one group of people (private business owners) to another group of individuals (people in the government). This is not saying that there have never been true altruistic believers of socialist equality in socialist governments, but just like socialists said, most people are inherently selfish including the people in the government. However, unlike private business owners, those people in the government are elected to eradicate such selfish behaviors but they cannot truly be altruistic. Thus, they would have to sugarcoat their selfish gains. In many occasions, their way of sugarcoating can become violent when they run out of other options.
