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Capitalism: The Best Option
The current American economic landscape has been less than perfect for several years. The stock market has seen substantial losses, the banking industry has been dealt crippling blows, and the government has financially bailed out many major corporations out of taxpayer monies and the economy as a whole is suffering. From this, protests have begun across the nation. Some protesters, such as the Tea Party movement activists, are upset with government spending and demand it be stopped. Others, including the members of the newer Occupy Wall Street movement, blame the American capitalist system and state that a newer economic framework must be used if America is to continue as the prosperous superpower it once was. The question of the time is this: Is the American capitalist system preferable to alternative economic models?
When the question of capitalism's sustainability comes up, there are a couple of obvious alternatives that come to mind, and also a couple of lesser known options. The main contenders that should be looked at as alternatives to capitalism are fascism, communism, welfare statism, and fascism. There are other economic models out there, but these are the more realistic contenders as alternatives to the current American system. After a thorough comparison of these models to capitalism, it is certain that the American capitalist system will emerge as the preferable choice.
Before a comparison of capitalism can be made to any other economic model, it is important that capitalism itself is clearly defined. Meyer Weinberg gives a complicated, yet informative definition of capitalism:
The basic characteristics are: (1) private ownership of the means of production, (2) a
social class structure of private owners and free wage-earners, which is organized to
facilitate expanding accumulation of profit by private owners; and (3) the production of
commodities for sale. Conditioning elements are: (a) a certain division of labor; (b)
institutional arrangements to insure a dependable supply of wage labor; (c) a degree of
social productivity sufficient to permit sustained investment; (d) commercial
organization of the market - including banks - whose scope is adequate to the
productivity of the community; (e) a political process whereby economic power can
become translated into governmental policy; (f) a legal structure that is protective of
private property; and (g) a certain toleration - at the least - of new ways of making a living. (1)
Weinberg's definition of capitalism may seem a bit complicated, but the subject of economics is just that - complicated. A simpler way of defining capitalism may be that it is a free marketplace in which private business owners may make a profit and free individuals may earn wages. The government does not control what the individuals opt to do for work in order to earn wages, nor do they own and control the businesses. The capitalist system can be characterized as a system of freedom. Every individual has the freedom to succeed, but also the freedom to fail. Weinberg's definition, while complicated, serves as a basis for comparison against the other economic models.
One of the most commonly known alternatives to capitalism is communism. Communism was at one time so feared by Americans that wars were fought as a means to protect America from something called "The Domino Effect". Communism was created through the vision of Karl Marx in the 1800's and caught on like wildfire through much of Eastern Europe and Asia through the 20th century. It is described by the business dictionary as, "An economic or social system in which all (or nearly all) property and resources are collectively owned by a classless society and not by individual citizens." (lines 1-3) In this economic structure land and capital belong to the people as a commonwealth, or as a whole. Everyone is to be an equal without class categorization and the boundaries between white collar and blue collar disappear. True communism even abolishes money, prices and wages. This plan sees unlimited potential for the individual through belonging to the commonwealth. Unfortunately, this plan appears to look great on paper but work poorly in practical application. When compared to capitalism, there are some marked differences. Communism provides a failsafe for the individual. They will never fail, lose land or lose capital. Conversely, the individual under a communist economy will never have the opportunity to prosper, amass property, and succeed. Furthermore, the promise of equality for the commonwealth withers away when applied to a real society. No matter how hard an individual works, they will not succeed any more than their laziest neighbor. Greed and corruption have overtaken the government and other sectors, leaving the classless societies a feeling of class structure that is against the common citizen. This system where the many own the business interests and individuals have no control over anything is not akin to freedom, and thus, would not work when applied to America. A final point of proof that communism is not preferable to capitalism can be found in looking at some currently communist countries. Citizens of Cuba and North Korea defect from their countries to live elsewhere almost daily. People from Cuba risk their lives smuggling themselves and their families to America's southern coast in boats daily. Americans are not fleeing to North Korea or Cuba. This is testimony to capitalist economies being preferable over communism.
Another form of economy which is a contender for replacing capitalism in America is Welfare Statism. A welfare state is one in which the government is responsible for the well-being of its citizenship. It is the sole responsible party, and individuals, corporations and local communities have no say or power in the matter. This is done by ensuring a minimum standard of living is available for everyone. This standard of living is inclusive of universally available free education and medical care, disability insurance, unemployment, income supplementation, and pensions for retirees. Although America does seem to be trending towards this type of a society in the past century, it is still not a welfare state system. (Business Dictionary, Lines 1-6) In our capitalist system, the local community, the individual and corporations assist with many of the items which fall under a federal government in a welfare state. Universal and free education, free medical care, and other items are not available under a capitalist system. These items sound like a great idea, but need further scrutiny. These additional government perks are provided at a cost. The cost is higher taxes paid by the individuals within the society. Whether these individuals take advantage of free education or free unemployment or not, they must pay for them. In all fairness there are some societies who seem to make welfare statism work rather well. These are inclusive of Denmark, New Zealand and Canada. A major difference between getting something that is universally offered free of charge versus a service provided in a competitive market is customer service. (Knapp, Para 3) Canadian citizens who get free healthcare and dental care often find themselves in such a long wait to get treatment that they come to the United States and pay out of pocket for it in order to get prompt and professional treatment. So, a service that is free for all but lackluster in practical application may be less desirable than a top notch service provided through a competitive marketplace. Although welfare statism does have a lot to offer, it would be a tough sell for most of America, because of the unpalatable loss of freedom of individual choice.
A final contender to be highlighted as an alternative to capitalism is fascism. Fascism, as defined by The Concise Encyclopedia of Economics is, "Socialism with a capitalist veneer...in its day (the 1920s and 1930s),fascism was seen as the happy medium between boom-and-bust-prone liberal capitalism, with its alleged class conflict, wasteful competition, and profit-oriented egoism, and revolutionary Marxism, with its violent and socially divisive persecution of the bourgeoisie." (Richman) A main departure from communism that fascism has is that the individual owns property, but owners are required to use their properties in the national interest. Instead of having a free market, or an abolition of free markets, fascism walks the line in between allowing an appearance of market relations while the government is able to plan all economic activity behind the scenes. fascism does not get rid of money and prices for services like communism does, but the fascist government controls the money, prices, wages and other monetary items of economic concern. The entrepreneur does not exist in a fascist system. Under fascism, the state controls everything and there is merely a "puppet marketplace". In comparison with capitalism, this system matches up only marginally better than communism. Fascism is the communism which is more palatable for a capitalist, but only because it somewhat mimics a capitalist economy. Where it departs from true capitalism is in the government having control of all wage assignments, the entrepreneur's nonexistence, prices of goods and services, as well as the individual's freedoms. These freedoms would include the freedom to fail or succeed in business (i.e. pursuit of the "American dream") and the freedom to own property without government intervention on what uses the land would have. Examples of fascism would be in Mussolini-controlled Italy and to some extent Nazi Germany. Both of these economies fell, and since it was at time of war, it is not possible to say whether or not the economies would have been fine had they not been ran by madmen. It is certain, though, that the American capitalist economy is preferable to fascism if only for the reason that capitalism retains the freedoms that the individual loses to fascism. Constitutionally, fascism would not work for America.
Fascism, Communism and Welfare Statism have all been contrasted against the American capitalist economy. They have each been defined and discussed for what they are, their attributes, and societies utilizing these systems have been named. In the end, the only system that was able to stand up to capitalism was welfare statism. The fact that a welfare state society garners some freedoms from the individual makes it more costly a system than capitalism to the individuals and society as a whole. In the end, it is apparent that capitalism is preferable to other economic models. No model is perfect all of the time and the crisis in the American marketplace have certainly shown the darker side of capitalist economies, but even in its darkest hour, capitalism has something about it that makes it inherently better than any other economic model. That is the freedom of the individual.
Works Cited
Burrows, Paul. "Is There An Alternative to Capitalism?" The New Colonist. The New Colonist, 11 April 2001. Web. 23 Feb 2012.
Business Dictionary. "Communism." and "Welfare State." WebFinance, Inc, 2012. Web. 18 Mar 2012.
Faiola, Anthony. "The End of American Capitalism?" The Washington Post. Washington Post, 10 October 2008. Web. 22 February 2012.
Knapp, Alex. "Socialism vs. Welfare Statism vs. Free-Markets vs. Corporatism." Outside the Beltway. Outside the Beltway, 26 March 2010. Web. 25 February 2012.
Richman, Sheldon. "Fascism." The Concise Encyclopedia of Economics, n.d. Web. 25 February 2012.
Thompson, Bradley. "Socialism vs. Capitalism: Which is the Moral System?" On Principle, v1n3. Ashbrook, October 1993. Web. 25 Feb 2012.
Weinberg, Meyer. A Short History of American Capitalism. New History, 2003. Web. 21 February 2012.
Wheeler, Rob. "The Two Faces of American Capitalism." Harvard Business Review. Blogs.hbr.org, 7 October 2011. Web. 24 February 2012.
