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Capitalism and Socialism

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Jason King

on 12 November 2015

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Transcript of Capitalism and Socialism

Capitalism and Socialism
A Tale of Two Economic Systems
Capitalism Defined
An economic and political system in which a country's
controlled by private owners for profit
, rather than by the state.
What that really means is that all the money stuff is controlled by people who have not been elected and whose sole interest is making as much money as possible. This sounds pretty cold, but the theory goes that given this level of freedom, an economy will be so robust and healthy that it will produce an enormous of amount of wealth that can then be accessed by anyone.
Socialism Defined
A political and economic theory of
social organization
which advocates that the means of
production, distribution, and exchange
should be
owned or regulated
by the
as a whole.
This one can be quite a bit thornier and tricky to understand because it's not a system we really live under. For starters, socialism and communism are often confused and the words are used interchangeably. They are pretty similar, so this is understandable. However, it may help to think of communism as an extreme form of aggressive socialism.

Secondly, socialism and communism are both associated with a loss of personal freedoms. And communism was that system used by the Soviet Union during the cold war. For both these reasons, "socialism" has been a dirty word in the United States for much of their history. And since our cultures are so intertwined, we tend to pick up on that attitude a bit.
Capitalism Pros:
Equal Economic Freedoms
- In theory, if you want to make an enormous pile of money, you can go ahead and do that any way you like
Rapid Production of Varied Wealth
- Because anyone can do anything, there is an enormous amount of innovation. Also, competition drives rapid growth
Socialism Pros:
Wealth Equality
- By definition, socialism is meant to ensure there is virtually no wealth disparity. Imagine what this would do for crime rates if there were no poor people.
Resistance to "Booms and Busts"
- Because there isn't any of the speculation (gambling) on new ventures and massive over-production of consumer goods, there tends not to be crashes like "Black Tuesday."
Capitalism Cons:
- Prone to booms and busts
- The profit motive tends to blind investors and producers to long-term consequences in favour of short-term profit
- Prone to Wealth Disparity
- The saying goes that it takes money to make money. Therefore, wealth tends to become increasingly concentrated in fewer and fewer people
Socialism Cons:
- Little Economic Freedom
- The nature of a socialist system is such that collective needs are placed above the individual
- Stagnation
- Without the incentive of hoards of money, socialist systems don't tend progress into new, unexplored areas
It's important to understand that all throughout the Cold War, both sides thought the other's victory would mean the end of civilization as we know it.
The communists in the Soviet Union believed that the reckless speculating and worker exploitation of the capitalists was deeply unjust.
Meanwhile, the capitalists in the Western World believed the brutal oppression of communist regimes was an unbearable insult to freedom.
The Spectrum
Hardcore, straight up, brutal "Stalinism." Zero economic freedom. In fact, if Stalin says you gotta go farm unbroken ground in Siberia because Mother Russia needs more wheat, you better pack your bags, boy-o. 'Cause if not, he will kill you, your entire family and anyone else who looks at him funny.
Current Northern Europe. I'm talking Sweden, Norway, etc. These are pretty socialist countries. Not all the way there, but, the taxes are pretty high and the social services are AMAZING. Like, free post-secondary education amazing. These countries tend to wind up in the top spots of the United Nation's "highest quality of life" index.
Canada. Here we are. A little right of center. Here in the great white north, our tax burden is fairly high, but we do have a pretty well-funded education system and universal healthcare. So that's good.
The United States of America. Oh, America, why are you so insistent that universal health care and more regulations on your banks will IMMEDIATELY result in a Stalin-esque distopian nightmare? Oh, and stop shooting each other too.
Chile in the 1970s under Augusto Pinochet. You don't know anything about this yet. But you will shortly. Long story sort: Pure, uncut capitalism! If your house is on fire, you'd better hope you paid your firefighter bill this month.
When we get into "The Shock Doctrine" next week, keep this in mind: during the Cold War, the West (capitalists) were always on the lookout for countries that were "falling to communism." It was as though it was an illness that could sneak in. Whenever a government talked about
a resource like power generation, it meant they were flirting with socialist tendencies.
To "nationalize" something is to take control of it away from a privately owned corporation and make it the property of the nation. It is therefore no longer being run for profit, but to provide the citizens of that nation with whatever the thing is. Electricity, fire prevention, police, health care, etc...
After WWII, the world was literally divided into the East and West. In the East were the
"Warsaw Pact"
countries; nations that were allied with the
Soviet Union
and therefore communist. In the West were the
countries; a mainly military alliance of capitalist countries. What could possibly go wrong?
Full transcript