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Saturday, April 20, 2013

Capitalism and socialism are both social- economic systems applied to the social economic organization of different countries. Identify and critically analyze the major distinguishing features of these systems.

To give a meaning of capitalism is to understand that it is the social system which now exists in all countries of the world almost invariably. Under capitalist order, the means for producing and distributing goods - technology, factories, transport system, the land, etc  that are owned by a small minority of people at the cost of majority. We refer to this group of people as the capitalist class and to Marxist they are otherwise called bourgeois class. The majority of people must sell their ability to work in return for a wage or salary; who we refer to as the working class and in Marxist terminologies as proletariat.
On the other end of the specter; socialism refers to a broad array of ideologies and political movements with the goal of a social and economic system in which property and the distribution of wealth are subject to control by the community for the purposes of increasing social and economic equality, freedom and cooperation.
Socialism and capitalism are the two dominant forms of social organization in most part of the world among all communities. In fact both the words have been probably the words in social theories which could have received the most of criticism and acceptance among all people all over the world. It is better to identify and critically examine the rich implication of the two words in separate reference so as to make a real understanding and its far reaching implications in modern life.


Socialism is an economic system characterized by public ownership and centralized planning of all major industries per se; services, manufacturing, energy, banks and insurance companies, transportation, agribusiness, medical facilities and the media. In capitalism; the gigantic and giant enterprises dominate the economy but are privately owned and operated for the purpose of generating wealth for their owners by extracting it from working people who are paid only a small fraction of what their labor produces and are thoroughly exploited. So Socialism bring this up side down; so that the class that produces the wealth can collectively decide how it will be used for the benefit of most of people in a given society.
Contemporary bourgeois thought which looks only at the individual in society is unacquainted of or does not take into consideration the fact that all societies are composed of classes and social groups made of rich group interest. Because man in isolation is powerless and easily overcome in the struggle for existence and struggle, he join with other men who have the same interests and in this way forms a class opposed to the other classes who have opposite or opposed interests and concerns altogether. Ancient society was made up of armed property owners and unarmed slaves who worked under the lash for their masters or slave owning class. There were also other intermediate classes. The slave was a possession of the slave owner and only lived and worked for his benefit and utility. The master had full control of the life and family of the slave and his self has been absent from himself. The slightest sign of resistance to the powerful masters was cruelly punished even wiped out. The owner was everything and the slave nothing. Every age has some sort of class against each other. Each one of these periods corresponds to a ruling class and an oppressed class.
Society in order to live must produce and land, mines and machines were used for production. It is inevitable that production turn into means of domination when they are not at the disposal of society as a whole but are the private property of one class. So the fact is that each class which owns the means of production seeks to obtain political power and control of the State; in addition the armed forces in order to safeguard its exclusive property and maintain its monopoly of ownership. The fact is that Economic power brings political power in every society.
Capitalist society cannot exist without the working class. It is the working class which makes in motion all the machinery and production apparatus. The idea is that modern production is mass production by any means. But without doubt it is clear that profit there from is individual and that is to say the riches collectively produced are appropriated by individual capitalists or otherwise say appropriated. As soon as the proletariat becomes conscious of this fact of exploitation, of this permanent scandal of capitalist society and its vandalism, it will begin to revolt against a state of things which ensures for the capitalist class the major share and will demand its rightful due. This is the reason why there is the demand of the workers that is for social property or more exactly the common ownership of the means of production; to put more specifically the land, organization, factories, railway, etc. This is to suit collective work that is collective property.
However the capitalist class will not admit defeat of its power through goodwill towards the working class. Therefore, to bring about alteration in the ownership of property, it is necessary to take political power away from the bourgeoisie through some kind of revolutionary uprising. In fact, Socialism is then from every point of view desirable and pleasing. Socialism is possible now by any means. In addition, it is possible because it corresponds to the interests of all since it satisfies the goodwill and the desire of well being; the common interest of the producing class which forms the immense majority in all countries across all continents.
At the same time the opponents of socialism probably proponents of capitalism say that socialism is not practical philosophy that is Utopians, dreamers, visionary men. The ardent opponents confront socialism with human nature.  To understand more about, it is desirable to learn a bit about

Capitalism is freedom. In other words, capitalism is a social system based on the recognition of individual rights, in which all property is privately owned[1]. In the words of Ayn rand “In a capitalist society, no man or group may initiate the use of physical force against others. The only function of the government, in such a society, is the task of protecting man’s rights, i.e., the task of protecting him from physical force; the government acts as the agent of man’s right of self-defense, and may use force only in retaliation and only against those who initiate its use; thus the government is the means of placing the retaliatory use of force under objective control[2].” George Reisman says “capitalism develops insofar as individuals are free to exercise their rights and choose to exercise them. In addition to being based on individual rights, capitalism is further characterized by the pursuit of material self-interest, saving and capital accumulation, exchange and money, the profit motive, the freedoms of economic competition and economic inequality, the price system, economic progress and a harmony of the material self-interests of all the individuals who participate in it[3]”.
Capitalism is the given name of the power structure that currently direct and controls all human society and which has done so for the last five hundred years. Capitalism is a system based on ecological and social exploitation for the profit of the rich and affluent minority.  Sometimes; some people with an extreme position refer to it as a global system of abuse since the people that are related to capitalism  is based on violence and submission to free play of market forces even though the system would like people to believe that it has our best interests at heart in deed and belief.
The word capitalism sounds like the tag for a philosophy rather than a system of distributing, producing, and consuming of goods and services. In fact, but capitalism is just a type of economic system. The fact is that what distinguishes it from other economies in the words of economist Thomas Sowell is that it is not run by political authorities[4].
Unlike the economy of the household; the economies of our community, neighborhood and nation are characterized by specialization and the division of labor. Therefore, people acquire different skills and enabling them to work in groups to produce a relatively narrow range of goods in large quantity. Goods and services can be exchanged on a regular basis thereby increasingly with people who are not household or community members of the producer.
Exchange creates the problem of coordination. So the question how much should be produced and on what terms should it be exchanged for the products of other producers? More customarily societies give that authority to individuals or groups by virtue of their birth into a caste or ascension in a tradition defined hierarchy. In Militaristic or totalitarian societies, that will be given authority to dictators or elites who enforce their will through the exercise of force or terror.

Capitalist societies use freedom to solve the coordination problem altogether. There are three institutions stand at the center of a capitalist economy that is markets   the Rule of Law and private property. Private property in a capitalist economy there people have rights to the fruit of their labour and whatever other property they acquire through legal means. This means property includes a person's life i.e., we own our own bodies and liberty as well as physical possessions in total. Alienable property that is possessions can be sold or leased to others. On the other side, Inalienable property that is life and liberty cannot be sold at any price to any one. Markets are where goods and services are exchanged by people or by buyers and sellers. Producers that are sellers and consumers that are buyers who meet in markets to negotiate mutually agreeable prices for the goods and services that are exchanged in a given situation. In a free market the fact is that no outside authority determines or fixes those prices. In addition, Rule of Law; an important mechanism of capitalist order requires that rules defining property rights and the duties and rights of citizens be established and made widely known, in addition being enforced. The more central aspect of this legal system is equality of laws to all manner of persons or what we call the Rule of Law. More obviously capitalism depends on the Rule of Law to forbid coercion and fraud in the market places. Without the Rule of Law, the aspects like long-term agreements and contracts would be dangerous or unfeasible since people could not be prevented from dealing dishonestly with each other.
Human life cannot be condensed to market transactions and human beings cannot only be treated as economic actors by any understanding. When the power of the market increases as time pass on, human beings will always try to protect themselves by certain means. Given the differences that exist in social and cultural traditions in every society, these protective responses are likely to differ from one society to the other and that is reason why even in a global market situation diversity is always likely to persist. But the real question is capitalism able to survive the test of diversity?

The clash of two ideals: who survives?

In the present day, there is an enormous economic gap between the rich and the poor. As per an estimate by the International Labor Organization one billion people are unemployed or underemployed globally. Up till now; six of the world's richest people have a combined wealth of $134.6 billion. That means these six people have more money than nearly everyone else will see in their lifetime what a surprise and a contradiction[5]!
Modern capitalists accumulate their vast fortunes by legally owning and profiting from the products created by wage workers and in fact the working class. The difference between the social systems is the mode of exploitation that along with the relations between the ruling class and the exploited class. So the fact is that under capitalism; the capitalist class and the working class are the two main classes in modern time. The interests and needs of these classes are not the same and are contradicting.  The capitalist class owns the wealth and means of production, while the working class produces everything for society. So quite interestingly most people in the world belong to the working class sections altogether. Workers may own things such as a car or house but they do not own capital. So the point to remember is that capital is property that produces surplus value by exploiting labour.
Possession of capital by one class and not the other results in an ever increasing polarization between the capitalists and the workers now a day in modern world.For instances see the Wal-Mart gives a prime illustration of the great polarization between workers and capitalist class. Wal-Mart employs around 1.4 million people in the U.S and most employees make $7.50 an hour on an average. Suppose if every employee worked 8 hours a day for five days a week altogether, then Wal-Mart would pay a little over $20 billion each year in wages to the workers. But to the dismay, in 2002, the Wal-Mart sales totaled $217 billion and their costs were $207 billion that is including the wages paid to workers; leaving an additional $10 billion in the account of the company. Where did that extra $10 billion come from and no doubt workers? It came from the hard labour of the workers. But in its place of giving it to the workers, all those extra earnings go into the pockets of Wal-Mart owners as profit. A basic principle of economics is that labour produces value[6].
However there are equal criticism being leveled against socialism in modern world. Once the banner under which millions of working people resisted the horrors of the factory system and demanded a new society of equality, justice, freedom and prosperity, socialism has become identified in the modern world with monstrous, bureaucratic regimes that deny even the most elementary democratic rights[7]. At its birth, socialism promised the emancipation of labour, a society founded on workers' control in which work would be transformed from drudgery done in the pursuit of profit to collective activity done in the service of human needs. Yet workers in the 'socialist states' today cry out against the same kind of alienation and dehumanisation denounced by the earliest critics of industrial capitalism. Indeed, so demeaned have workers become in the world's largest 'communist' country, China, that the Chinese government has offered to lease out its labourers to western corporations, promising docility and labour discipline in exchange for foreign currency[8]. Meanwhile, all the states of Eastern Europe, the Soviet Union included, have seen the emergence of mass workers' movements that are demanding basic rights and freedoms. Such working class resistance has exposed the pretence of the claims by these regimes to be workers' states that are charting the course to a new society of freedom[9].
What passed itself off as 'socialism' was generally an elitist and authoritarian doctrine strongly resembling the anti-democratic visions of socialism from above. There were, of course, major national liberation struggles, such as those in China and Cuba, which freed colonial nations from the oppressive grip of a major world power. As victories against imperialism, these movements were justly deserving of support. But the claims of the Chinese and Cuban regimes to be 'socialist' have stained the image of genuine socialism everywhere. Once again there are signs that the international working class is flexing its muscles and making its power felt. Perhaps on a small scale but whether it be Solidarity in Poland, a general strike against the military in Chile, miners' strikes in South Africa or Britain, workers testing their strength in North America or Australia, the workers of the world are again moving towards the centre of stage of world history. In the crisis-ridden decade of the 1980s, are confronted once again with the choice presented over sixty years ago by Rosa Luxemburg: socialism or barbarism.[10]
But there are hope from many parts of the world about a new future. The specter of socialism is again haunting the minds of the corporate elite, from the Americas to Europe and beyond. This, after decades of pro-capitalist campaigning from the corporate media, which has always confused “capitalism” with “freedom.”  But of course freedom and democracy cannot exist alongside tremendous inequalities of wealth — or next to corporations wielding absolute power over elections and governments[11].     These facts helped form the social movements in Latin America that now advocate 21st Century Socialism, a name that implies the prior century’s experiments needed either updating or improving, while also implying that the general socialist “project” was progressive[12].
To put in the praise of socialism in 21st century Across the United States, the multi-trillion dollar bailout of the banks and financial institutions at the expense of the jobs and livelihoods of the broad mass of the working people, the ruthless assault on wages—spearheaded by the Obama administration in the auto industry—and the massive cuts to all levels of public service are an historic political experience. They have established as an indisputable fact of political life that, to use Marx’s words, “the executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.” In Europe, what remains of parliamentary democracy has been virtually dispensed with in Greece and Italy with the appointment of “technocratic” governments, headed by former employees of US banks, to impose the dictates of finance capital for the impoverishment of the working class[13].
Socialism is not a form of government at all. Rather it is an economic system much like or feudalism capitalism or mercantilism. The People support the basic idea of socialism for different reasons and for different arguments.  For economic reasons that one might support socialism as a means to rationalize the economic system by eliminating the boom and bust cycle inherent to capitalism and to allow for full employment, the efficient use of resources and public ownership over large industries so that the profits can be distributed more evenly amongst the population and societies.  Consequently Socialism may also be supported by those who criticize capitalism on cultural and moral grounds and in that sense it is hospitable to culture and identity.  Philosophically, the principles socialism is advocated for greater equality and individuality as defined as enabling a greater scope for self actualization and the expansion of democratic decision making into the economic aspects of society.


[1] See (http://www.capitalismislife.com/capitalism_is_life/Proper_Human_Survival_Depends_on_Capitalism.html), accessed on 21-03-2013.
[2] Ayn Rand, 1982, Capitalism: The Unknown Ideal; “What is Capitalism?”, New York:Signet, p.19.
[3] George Reisman, Capitalism: A Treatise on Economics; “Chapter 1: Economics and Capitalism” (Ottawa, Ill, Jameson Books 1998.) p.19.
[4] Joseph Bast and Herbert J. Walberg (July 1, 2003) What Is Capitalism?, (http://heartland.org/policy-documents/what-capitalism), accessed on 21-03-2013
[5] What is capitalism?, (http://www.pslweb.org/party/marxism-101/02-what-is-capitalism.html), accessed on 21-03-2013.
[6] Ibid.
[7] INTRODUCTION:THE CRISIS OF SOCIALISM,( http://www.anu.edu.au/polsci/marx/contemp/pamsetc/socfrombel/sfb_int.htm) accessed on 21-03-2013
[8] Ibid.
[9] Ibid.
[10] SOCIALISM FROM BELOW, (http://www.anu.edu.au/polsci/marx/contemp/pamsetc/socfrombel/sfb_8.htm) accessed on 21-03-2013
[11] Shamus Cooke, The Origins of Modern Socialism: Freedom & Democracy cannot exist alongside tremendous inequalities of wealth
[12] Ibid.
[13] Nick Beams ,23 November 2011,  David Harvey and the Occupy Movement (ICFI) (https://wsws.org/en/articles/2011/11/harv-n23.html) accessed on 21-03-2013




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