MOTION #8: THIS HOUSE BELIEVES
THAT CAPITALISM IS BETTER THAN SOCIALISM
This article will focus on some of the disagreements between capitalists
and socialists, the debate will be located in a loose general framework between
these two viewpoints and illustrate a couple of the most common propositional
and counterarguments in the discourse. The core of the capitalist doctrine will
be defined as the belief that the means of production and distribution should
be owned privately in order to gain profit: private ownership and free
enterprise are believed to lead to more efficiency, lower prices, better
products and rising prosperity. Socialism will be stipulated as a theory which
advocates that ownership and control of the means of production should belong
to the community for the common good: under these premises the community is
assumed to be both more just and humane.That capitalism is the presiding
economic system of today's world is indisputable, however the fact that it is
dominant does not necessarily imply that it also is the supreme. The 20th
century has been marked by fierce debates challenging or justifying the
validity of capitalism; world powers have disagreed and still disagree about
the benefits and drawbacks of the system and the dispute's considerable
consequences can amongst others be felt through the relics of the cold war.
According to many the question was settled with the dismantlement of the Soviet
Union in the late 1980's, it ostensibly seemed that the capitalist system had
proven its victory over socialism when compared to the economic failures and
horrors of the former Soviet countries. However, despite a dip in interest
during the late 80's and 90's, the debate has not lost its relevance and was
vividly revived with the 2008 financial crisis; due to the crisis' severe
consequences of mass-unemployment there was a renewed urge in questioning the
validity of the western capitalist economic system. The debate's importance and
actuality cannot be stressed enough as it has a force which can re-/shape the
very fundamental cornerstones of our society.
Pros
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Cons
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The market should determine the price of products and
services. A free market gives the power
to the people to choose and decide what products and services should be
offered to them. If many people want the same thing the demand will be higher
and it will be profitable to offer them on the market since it will sell,
therefore the people are in command of what products are being offered to
them through their own want. The market is thus decided upon what people need
and therefore there will be no excess products or services offered e.g. let
us presume that many people want to see high quality basketball, a person
like Michael Jordan who has a talent for basketball and has honed his
basketball skills would in this case be much in demand. People are ready to
pay for the service he offers (excellent basketball) and consequently his
high wage will be justified. On the other hand a mediocre basketball player
would not be paid at all since there is no demand to see mediocre basketball,
his service does not have an attraction on the market and will thus be
eliminated. This is all part of what could be called a "dynamic
capitalist system" which values individuality (honing your basketball
skills), rewards ability (having basketball skills) and risk-taking (risking
that you will succeed with it).
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Often when consumers buy things they might ostensibly
believe that they have a choice, when in reality they do not, since they are
presented with several options; I could e.g. either watch this blockbuster
movie or that blockbuster movie on the cinema. However, there is no option to
watch anything else than a blockbuster movie and consequently there is no
real choice offered. Capitalism has already decided what is going to be
produced and the consumer is left with nothing else than purchasing whatever
is provided. Another example could be that there might be a whole range of
food options in the supermarket, but the good food is expensive and therefore
the people with less income end up eating unhealthy food since they cannot
afford the good food, therefore in practice there is no real choice since one
of the options is not available for the people with less income because it is
too expensive. An additional counterargument might also be to question the
validity that a product/service's price should be determined by the pure
fancy of the market, is it really justifiable that Michael Jordan earns much
more than e.g. a nurse? The nurse provides a service which saves lives while
Michael Jordan only supplies entertainment, even if it is only Michael Jordan
who can play a certain kind of high quality basketball and many more people
are qualified nurses, it does not justify at all the wage difference between
the two.
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Each man has a right to private property. The right to own property is central to man's
existence since it ensures him of his independence of survival. It provides a
means to sustain himself without relying on others inasmuch as he has control
over a property and can make a living from it. However in order to acquire
property the person must gain it from his own labour, if he takes the fruit
of someone else's labour without consent that would be plain stealth.
However, this is not the only requirement which must be fulfilled in order to
gain property: imagine a scenario where I pour out tomato juice into the
ocean, I have mixed my own labour with nature and made an "own"
creation, but could it be said that the ocean is my property? Most people
would certainly say no and therefore one of the following two provisos must
also be met before one can fully acquire property:
1.
It does not impact on others chance of survival/ comfort of life
2.
Leaves the others better off than before.
Let us presume that we have a wasteland which generates
very little harvest since it is uncultivated. If I privatise and cultivate a
bit of this land it will generate more harvest since I have put work effort
in it. Presuming that the privatisation does not leave the others worse off
than before e.g. there is plenty of other wasteland they can cultivate on
their own and does thus not harm anyone else's opportunities/chances to
cultivate their own land, privatisation is allowed for the individual good.
Alternately, others are better off if they do not have the skill to cultivate
land themselves and can lease their labour working on my privatized land,
they would win on the deal since the wage I pay them would be better than
what they would have gained on their own.
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Under capitalism property is privatised under the
presumption that it will not harm anyone or even that it will benefit
everyone. This is not the case and what actually takes place is that property
becomes concentrated into the hands of a relatively few well-off people
leaving the rest more or less without property. The capitalist's bargaining
position is far superior in comparison to the worker's (since he is a
capitalist) and he can use it as an advantage in order to concentrate wealth
for himself. If the capitalist has everything and the worker nothing it
leaves the worker with nothing more than the mercy of the rich for work,
charity, etc. Even if the capitalist offers the worker a salary on which he
can survive (in comparison to unemployment a salary on which he can survive
"makes him better off') it is a forced contract out of necessity from
the worker's part. Consequently private ownership is by no means on par with
the possibilities of owning goods in common and is thus contradictory to the
capitalists premise of not harming others. Capitalism makes the majority more
dependent on a minority than they would have been if property were shared.
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The capitalist society enhances personal freedom. The Western democratic capitalist system protects
individual's rights and liberties through freedom from of interference by
other people. Mature adult citizens are believed to have the capacity to
choose what kind of life they want to lead and create their own future
without paternalistic coercion from the state (Berlin, 1958). The capitalist
society's ideals could perhaps be best exemplified with the American dream
where everyone has an initial equal opportunity to reach their full
potential, each individual being choosing their own path free from external
coercion,. James Truslow Adams defines the American Dream as the following in
1931 "life should be better and richer and fuller for everyone, with
opportunity for each according to ability or achievement". The current
President of United Stated Barack Obama is a typical example of a person who
has achieved the American dream. Barack Obama did not start his life with a
traditional "fortunate circumstance" previous presidents had
enjoyed (e.g. George Bush). Nevertheless he succeeded in transcending his
social class, his race etc. and became the president of United States. Thus
capitalism provides everyone with a fair chance to reach great achievements
in their life if they seize the opportunities.
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Capitalists often disregard the fact that people,
although being individuals, also are formed by their social circumstances.
People's class belonging, sexuality, sex, nationality, education etc. have a
major impact on people's opportunities; there might be cases of individuals
achieving the American dream like Barack Obama despite their social
background, however this is not applicable to the majority of people. In
capitalism the people with the most opportunities are usually the people who
have the most capital, take the example of university students: universities
in many countries such as the United States and United Kingdom charge
students high tuition fees, if one is not wealthy enough to pay for these
fees the likelihood to continue into further education is much lower (if a
loan is provided one would have to risk to be indebted for a long period of
one's life, or not have the opportunity to study at university at all). This
can by no means be called an equal opportunity for everyone. It is not enough
to provide opportunities; people must also be in a position to grab them.
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Incentive in form of profit benefits society as a
whole. The strongest motivational force a human being can
feel towards work is a potential reward for their effort, therefore those who
work hard and contribute most to society should justly also gain the most in
form of increased wealth (e.g. private property). When work is uncoupled from
reward or when an artificial safety net provides a high standard of living
for those who do not work, society as a whole suffers. If those who work will
benefit equally as the ones who do not there will be no reason to work and
the overall productivity will be lowered, which is bad for society.
Incentives are therefore necessary since it increases the overall standard
for the whole society in form of material wealth, the fact that individuals
are driven to succeed and earns what is rightfully theirs is thus in all our
interest. With an overall higher productivity even the worst off may benefit
more than they would have if the productivity had been low e.g. through
charities etc.
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According to Karl Marx work should not be regarded as
just a means to achieve a reward in the form of profit, work should (i) be
directed to the need of their fellows, (ii) be an enjoyable, meaningful
activity which develop human capabilities. In the capitalist system labour
becomes distorted e.g. industrial work tends to be monotonous and dulling
without any enjoyment at all. People are more or less coerced to work for
their survival and accept even the most horrific work conditions; work is
only performed on the capitalist's terms1/2. If workers did not have to fight
for their survival and labour was directed to the meaningful activity of
helping others instead of profit making for capitalists, incentives in the
form of profit would be without value. The want to share wealth and material
amongst the community is inscribed in the human essence and constitutes
meaningful activity. It is not merely possible.
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The reasons behind the poverty gap are not purely
because of a capitalist expansion; a clear example may be seen at the
development of the African region between the 1960
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Socialism leads to a more humane equal society. The gap between poor and rich countries has never been
as great as it is today, Warren Buffet's wealth was estimated to be a net
worth of approximately US$62 billion in 2008, this while one in seven people
on earth goes to bed hungry every night and 6.54 million children die of
starvation and malnutrition every year. The absurd inequality between
people's wages is because of the capitalist system, since the capitalist's
only aim is to generate profit there is no reason to keep anything other than
a minimum wage for the workers. In a globalized world, rich countries can
outsource industries to poorer countries where workers will not expect so
high a wage. The lower the wages a capitalist can pay to the labourers, the
more profit he can generate. A capitalist does not care whether his
labourers' living standards are good, acceptable or bad (although he does
want to maintain a level where the labourers will not die or rebel), as long
as they deliver the work for the lowest wage possible. Therefore a company CEO
can gain an absurd amount of money since he will reap all the profit made
from all the labourers in his company while the lowest worker in the
hierarchy will only earn enough to survive. The ordinary worker does not have
a free choice whether he wants to work or not since he is at such an inferior
bargaining position that he has to accept the capitalist's offer in order to
survive.
According to socialism this inequality is atrocious, it
can by no means be justifiable that an ordinary labourer who works equally as
hard, or harder than a CEO should struggle for his survival while the CEO
lives in unimaginable luxury. In socialism, production and wages are directed
to human needs, there is consequently no need to maximise profit and thus
this gross inequality would be evened.
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In practice capitalism and environmentalism do not
necessarily have to clash with each other as can been proved by small
enterprises that can directly implement green criteria by, for example, using
renewable energy sources, avoiding toxic chemicals, repairing or recycling
used products, and minimizing reliance on long-distance shipment for either
supplies or sales. Because the free market is directed ultimately by its
consumers if the consumers demand more eco-friendly products the suppliers
will also increase its efforts to be eco-friendly, thus the two of them don't
have to be incompatible. Here are a few suggestions of how capitalism and
environmentalism could go hand in hand: (i) energy-saving and other
cost-cutting measures are advantageous to companies; (ii) compliance with
whatever regulations may be enforced by a government to avoid fines (iii)
maintaining good public relations with consumers involves having an
eco-friendly policy.
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Socialism provides a more sustainable way of living. Capitalism always acts on the cost of nature and its
ecological balance. With its imperative to constantly expand profitability,
it exposes ecosystems to destabilizing pollutants, fragments habitats that
have evolved over time to allow the flourishing of organisms, squanders
resources, and reduces nature to the exchangeability required for the
accumulation of capital. Socialism requires self-determination, community,
and a meaningful existence. Capital reduces the majority of the world's
people to a mere reservoir of labor power while discarding much of the
remainder as useless. The present capitalist system cannot regulate, much
less overcome, the crises it has set going. It cannot solve the ecological
crisis (e.g. global warming) because to do so requires setting limits upon
accumulation
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In order to avoid economic crisis there is a need to
return to a separation of commercial banking from investment banking which
was e.g. implemented as legislation in the U.S.A. under the 1933
Glass-Steagall Act (scrapped under President Clinton in the 1990s). It is
dangerous to allow banks to get into a position where they can be shut down
by pursuing exciting, but high risk investment banking activities such as
real estate speculations. The rationale for this separation is that it was a
commercial banking crisis which posed the systemic risk, investment banks
should be left alone from state interference and left to the influence of the
market. "This leaves a much more limited, and practicable, but still
absolutely essential, role for bank supervision and regulation: namely, to
ensure that the core commercial banking system is thoroughly sound and
adequately capitalised at all times. The crisis can thus be resolved through
a separation of the banks since the commercial banking won't be affected when
investment banks go bust, the whole system will not be dragged down if only a
few investment banks misbehave since commercial banks are the backbone of the
economy. Financial crisis doesn't have to be something "inherent"
in the capitalist system due to overproduction but can be accommodated
through some regulations.
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Socialism is a more secure system than the free market
in Capitalism. 'Credit bubbles'
and resultant credit crunches (financial crisis) are inherent in the capitalist
system. The economy undergoes a crisis whenever productive economic sectors
begin to undergo a slowdown resulting in falls in profits. The recent crisis
was caused due to the fact that there was an inflated investment in real
estates. It was invested in with the purpose of keeping up profits which lead
to a rise in the price of properties. Because of the increased price in
property many people took out loans on their house and bought goods for the
credit, thinking they could easily pay back their loans since their house
would be more valuable at sale. However, since the rise of price was
fabricated and not corresponding to an actual need (it was a bubble), house
prices had to invariably go down at some point. When the prices eventually
went down people could no longer afford to pay back what they had bought on
their loaned houses and the installed payments were the trigger of the
financial crisis. It could perhaps be said that the economy was surviving on
money which did not exist (thereof the name 'credit bubble'). The result was
that there were countless goods which no one could buy because no one could
afford to pay for them, in turn this lead to a stagnation in the economy and
hence to a crisis. A socialist system would not produce overconsumption since
its aim is not profit but human needs, it would not have a reason to
fabricate an investment for the sake of keeping up the profits and would
therefore not cause a capitalist crisis.
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