Day 25 – Q 4.Do you agree with the socialist argument that society’s inequalities in income and power stem from the capitalist system that dominates the world today? Critically comment.
4. Do you agree with the socialist argument that society’s inequalities in income and power stem from the capitalist system that dominates the world today? Critically comment.
क्या आप समाजवादी तर्क से सहमत हैं कि आज दुनिया पर हावी पूँजीवादी व्यवस्था से समाज की आय और शक्ति में असमानताएँ हैं? समालोचनात्मक टिप्पणी करें।
Capitalism and Socialism are the two primary economic systems used to understand the world and the way economies work. Their distinctions are many, but perhaps the fundamental difference between capitalism and socialism lies in the scope of government intervention in the economy.
The capitalist economic model relies on free market conditions to drive innovation and wealth creation and regulate corporate behavior; this liberalization of market forces allows for the freedom of choice, resulting in either success or failure.
In capitalist economies, people have strong incentives to work hard, increase efficiency, and produce superior products. By rewarding ingenuity and innovation, the market maximizes economic growth and individual prosperity while providing a variety of goods for consumers.
The socialist-based economy incorporates elements of centralised economic planning, utilized to ensure conformity and to encourage equality of opportunity and economic outcome.
Following factors can be considered in understanding the socialist critique of capitalism with regards to society’s inequalities:
- Under capitalism, because market mechanisms are mechanical, rather than normative, and agnostic in regard to social effects, there are no guarantees that each person’s basic needs will be met.
- Markets also create cycles of boom and bust and, in an imperfect world, allow for “crony capitalism,” monopolies and other means of cheating or manipulating the system.
- According to socialists, Capitalism makes possible universal abundance through focus on productivity. But its central features—market competition, the pursuit of profits, and private property—ensure that this possibility will never be realized.
- Socialists argue that Capitalism misallocates resources towards producing what is profitable rather than what is needed. Though what is needed can sometimes be profitable. But often the two categories come apart. For example, production of luxury goods.
- Further, capitalism is also inefficient in its use of human labor power. Capitalism functions best when there exists a “reserve army of the unemployed,” in Socialist terminology. The credible threat of unemployment reduces workers’ salary demands and increases their work effort.
- Socialists want democracy to have very broad scope where they want citizens to be highly involved in democratic processes and they want citizens to have roughly equal opportunities to influence these processes. Further, that the democratic ideal, understood in this rich and demanding way, militates against capitalism
- According to many socialists, one of capitalism’s central moral failings is that it is exploitative. Exploitation is “a kind of coercive prying loose of unpaid labor”. This may appear counterintuitive as capitalism provides choice but in the absence of alternative, choice becomes dependency which leads to exploitation.
- Socialists posit that capitalism market logic leads to deeply anti-social relations where community life is sacrificed at the altar of individual interest. This further leads to inequality in material and social sense.
- The rise of giant multinational corporations has been a topic of concern among scholars, intellectuals and activists, who see the large corporation as leading to deep, structural erosion of such basic human rights and civic rights as equitable wealth and economic distribution, equitable democratic political and socio-economic power representation and many other human rights and needs.
At the same time, it is necessary to consider that socialism’s solutions to capitalism’s ills have been ineffective and created more issues in society in the form of centralization and negation of choice.
According to socialism everyone must be equal, one way to do this is to ‘level down’ the better off, but this is morally repugnant. So socialism is generally rejected.
In the present world context, classical capitalism has faded into the background after the emergence keynesian model and further, economies have tended to combine elements of both systems where capitalism has developed its safety nets, while countries like China and Vietnam are edging toward full-fledged market economies.