Capitalism vs. Communism
“Who will make the better decisions, knowledgeable investors and business owners/managers who will suffer the consequences of making bad decisions or corrupt, power-hungry, elitist politicians and bureaucrats who got their job by knowing the right people or greasing the right palms? This is the fundamental difference between capitalism and communism.” – Roger Thoney.
The fundamental difference between capitalism and communism is who makes the decisions relating to business investment/job creation and pricing? In capitalism, these decisions are made by investors and business owners/managers. In communism, these decisions are made by politicians and bureaucrats.
In capitalism, decision-makers suffer the consequences of making bad decisions. Consequently, they educate themselves and work extra hard to ensure that they make good decisions. This “pursuit of self-interest” leads to better decisions and a more efficient economy overall, meaning less unemployment, lower prices, and less poverty. Excessive self-interest, or greed, is controlled by competition and can be controlled even more by government regulation if necessary (anti-monopoly laws, etc).
In communism, decision-makers are appointed by the political hierarchy. They get their jobs, and keep them, by knowing the right people or greasing the right palms. Performance and good decision-making are of secondary, or lower, importance. There is no control over corruption and greed, which is one reason why communist economies do not perform well. Corruption and poverty go hand in hand. Unemployment is higher and living conditions worse for more people. The effects of bad decisions accumulate, making the economy increasingly inefficient until it fails.
In a communist society, there still are “evil” businesses and the hated “rich,” except the businesses are controlled by politically-appointed bureaucrats and the elite “rich” are members of the ruling party, the Politburo in the case of the Soviet Union. The rest of the people are economic slaves for communism is economic slavery. Instead of working for a landowner, the people work for politically-connected, corrupt, and greedy politicians and bureaucrats.
The overall purpose of economic activity is to distribute the basic necessities of life – food, clothing, shelter, healthcare, etc. – throughout a population of people. The question is which system will be most effective (efficient) in accomplishing this objective? The answer boils down to who will make better decisions, people who know their business and will suffer the consequences of making bad decisions or greedy and corrupt politicians and bureaucrats with a lust for power?
The Soviet Union failed because its corrupt Politburo-appointed bureaucrats could not put food on the grocery shelves. People had to stand in line for hours to buy groceries. (Think about this the next time you enter a mega grocery store.) People in Canada have to wait months to get operations unless they pay extra money to move up on the list (“the rich” will always come out on top in any social system). Many Canadians come to the U.S. for operations. China and the socialist countries in Europe are becoming more capitalist. The answer seems to be very clear. People who suffer the consequences of making bad decisions will do a better job than politicians and bureaucrats.
The human spirit yearns to be free. The capitalist economic system harnesses that spirit and puts it to productive use. Communism tries to stifle and control that human spirit with endless rules and regulations backed by fear of government power, making people slaves of government bureaucrats and politicians. Capitalism accommodates human nature, which is why it works well. Communism tries to change human nature, which is why it works poorly and ultimately fails. Human nature will prevail in the long run.