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Introduction –
In this article, we discussed two major political ideologies. Political ideology affects the economic approach to society. On a high level, we can say right-wing politics is tied with Capitalism while left-wing politics is associated with socialism, communism, and other similar philosophies.
Outline of the Article
In order to understand the differences between Capitalism and Socialism, In the first section of the article, we will have a high-level introduction and basic characteristics of each of the ideology. Then in the next section, we will compare them and try to analyze the scenario from the USA, India, and the Rest of the world.
Capitalism
Google has this definition for this term.
Origin
It had been in society for ages with various forms of businesses among countries. Some experts think it is rooted in the feudal system in England. King/Queen gave land to landlords and landlords had some laborer living nearby. Laborers were not paid any wages initially but only provided with land to live and food. All profits would go to the landlords. After many protests, they started getting money, and after the Industrial Revolution, it became industrial capitalism and exists in the present economic setup.
Main Personalities – Adam Smith, also known as Father of Modern Economy. He gave the concepts of Demand and Supply. Then John Maynard Keynes emphasized state intervention in monetary and fiscal policies. Later this idea also became a significant tenet of capitalism.
Characteristics
- Private Property – Industry, companies are owned by private entities. No government intervention.
- Capital Accumulation – It is the process where an investment of any financial asset in order to get profit in terms of interests, royalty, rent, or capital gains are promoted.
- Wage Labor – It is a socioeconomic relationship between employer and employee where the former pays the latter based on some contract and market conditions. An employer may or may not share the profit accrued because of the service of the employee.
- Voluntary Exchange – It is about the willful engagement and collaboration of two entities in the market to benefit each other after the exchange.
- Price System – It means having an evaluation of any product in any form of the financial asset. It can be governed by the State, producer of the product, or demand-supply scenario.
- Competitive Market – Where any product manufacture tries to get a bigger share of consumers based on promotion, schemes, place, or offers.
Socialism
Google defines socialism in this way
History
It came to counter the issues created by capitalism. Capitalism leads to a huge gap in society between the rich and poor. It is also the umbrella term for other leftist ideologies like Communism, Marxism, Leninism, Maoism, etc.
Characteristics
- Everyone is the owner – In contrast to private ownership in capitalism, it accentuates that the whole society should be the owner of the means of production. They should control it and have equal profit sharing.
- Equality – No difference in society, rich and poor will get similar treatment and the same opportunities.
- Welfarism – State will be for the
welfare of everyone in the society without any discrimination on any ground.
When the concept of socialism surfaced in the
Communism
Here is Google’s definition for the communism
History
Communism derived from the concept of Socialism with a few modifications. Carl Marx is known as the father of Communism/Marxism.
Characteristics
- No money-based economy – No Money transaction as everyone is doing profit sharing. No concept of private ownership.
- No government – Everything is people owned and no need for government.
- Equality among all – No classes in society.
After that few more ideologies derived from communism.
Leninism
Till now, the above two philosophies were too ideal to adopt. No country ever implemented them. In original Communism, there was no concept of government as communism treats everyone equally and everyone has an
Characteristics
One Party System – After the Russian revolution, Vladimir Lenin introduced the concept of the
State Capitalism – This term was coined by many Capitalism supporters. Now, in the Leninism version, all industries are under state and few leaders were having control of production and other decisions, experts call it State Capitalism too.
This is reflected in the name of USSR (Union of Soviet Socialist Republic) and all communist countries call them as Socialist as Communism has no concept of government.
This became the first example of socialism been implemented in any country, so it became practical now, unlike communism was utopian.
After that, Marxism-Leninism and Maoism too came as the different variables into practice with changes.
Consequences of Socialism and Capitalism
- Capitalism is all about making a profit and in turn more production, so it encourages innovation and inventions in production.
- Socialism leads to no reward, no bonus and that is how it made the people stagnant.
- Capitalism provided a more competitive market and consequently, it gave an advantage to consumers with better products, promotions, offers, and discounts.
- In pure socialism set up, there were no incentives to work harder so it couldn’t motivate people. Extra production, over-time would not benefit workers by any means.
- Collectivism and state ownership lead to low morale of employees, workers, and farmers in socialism.
- Capitalism created a big gap in society between the rich and the poor.
- Capitalism enhanced entrepreneurship abilities.
- Communism follows the philosophy that everyone should get as less as they need and work as much as they can.
- Most important where Capitalism leads to Democracy with the multiparty system but Communism leads to pseudo-democracy by ONE-Party system.
- There had been many mass killings, politicides in communism regime all over the globe and that estimates over 100 million.
As we saw here in the political scenario, where no political party that can be labeled as an ideal left or right party. Similarly, in economic system perspective, no country can be ideal capitalism or communism.
In the following section we will see which countries adopted them and where are they.
USA
- The USA is the icon and representative of Capitalism since the beginning.
- Taking the best out of capitalism, the USA became the land of opportunities for entrepreneurs, investors, industrialists.
- People get incentives in many ways and remain motivated to give even more productivity.
- Most of the inventions happened in the USA because of capitalism.
- To some point, the US follows a few principles of Socialism as well. E.g. – Medical (getting similar treatment for everyone though a premium is different), Social Security (Some money to everyone if they lose their job or retired)
- In the USA, communism is so hated that it has one law against communism Communist Control Act 1954, and that leads to the criminalization of being a member of the Communist Party of the USA.
India
- After freedom in 1947, India adopted a non-alignment approach with either of the ideologies.
- In 1969, Indian PM Indira Gandhi did nationalization banks.
- All big industries were under government and known as Public Sector Units. 5 years plan was driven by Socialism theory.
- In another drift towards socialism, in the 42nd amendment of the constitution in 1976, India added socialism word in the preamble of the constitution.
- After Economic Liberalization in 1991, India shifted its gears towards capitalism. Though few private help companies were also there after this reform, private companies became more prevalent. Big corporates, foreign investment, low taxes, and free trade categorizes India as a capitalist country.
- MNREGA and similar programs, NITI Aayog, Modi Health Care programs, Unemployment allowance, reservation make this country socialist.
- In India, the communist party and its many branches are operating and the worst one in CPI – Maoist which relies on violence and they have now become a major threat to internal security for the country.
- Many regional parties like SP, BSP, claim to be socialist but they are not for welfare for the society, it is only family and self-prosperity for them.
In summary we can say, India is true mix of both socialism and capitalism but never communism.
Rest of the World
- USSR was the icon of socialist countries but due to basic shortcomings of socialism and communism, it collapsed. A similar story is true for many countries following communism.
- China says it is a communist country and it is obvious from their ONE Party system i.e. Communist Party of China but up to some extent, it is also promoting capitalism by private ownership. E.g – many private mobile companies and Alibaba.
- Nordic and many European countries follow socialism by providing free education at any stage, and many other socialist schemes.
- South Korea, Singapore got freedom after India but adopted capitalism and they became developed countries.
- North Korea, Cuba is an example of Why a country shouldn’t be communist. China can also be a case study for the same subject as human rights violations, dissent to the government, free speech, independent journalism lead to heavy punishment there.
- Most communist countries adopt violence to keep other ideologies away and some estimate over 100 million killed by the
communist regime. - After the second world war, many countries adopted socialism and communism, but they failed. Latest failed example of adopting true socialism in Venezuela.
I hope I could be able to explain the basic concepts of these famous ideologies. Please comment to compliment of feedback.
