Capitalism vs Socialism, Essay Example

Capitalism might be termed the theory and practice of private property. Its opposite, socialism, might be termed the theory and practice of public property. These are nutshell descriptions but the point is that they are two different systems with one thing in common.

Critics of capitalism say that it is heartless because it really only rewards the making of money — specifically capital, which is money available for investment in profitable enterprises. Those enterprises then generate more capital. It pays workers as little as it can and gives to owners and stockholders as much as it can. Karl Marx, the first modern critic of capitalism, readily admitted that capitalism could work wonders of production, but that it was fundamentally unsustainable because wage-earning workers would increasingly be unable to purchase the products that they helped make, and that runaway production would destroy earned capital.

Critics of socialism say that it really is just capitalist investment and labor in disguise. Instead of private individuals taking private risk for private and public gain, the state does so, but in so doing sees to its own political needs first, which are different from private needs. As a result, socialist economies are wasteful and inefficient: their primary goals are political, not economic. Earnings are diverted from increased productive investment to satisfy an insatiable demand from politicians who themselves take their cues from their constituents, ever eager for subsidies and welfare in the form of generous unemployment insurance, pensions, and workman’s compensation. Adam Smith, one of the first economists of the modern world, readily admitted that people left to themselves were basically selfish, but that such people, if left alone to pursue their own selfish ends, would benefit their nations as if guided by an “invisible hand.”

Probably the most famous hybrids of capitalism and socialism were National Socialism as practiced by Adolf Hitler; and Fascism, as practiced by Benito Mussolini. Both ended in 1945.