As the World Economic Forum in Davos draws to a close, and illustrious political and business power brokers leave the snowy town, one wonders where this leaves the rest of us. Although some NGOs also made representations, only a handful of small anti-globalisation protests took place. Have people suddenly got the answer to the question why is socialism bad and decided to stay away?
In recent times, socialism has become a dirty word, one associated with an unruly far left. Is this tarnish justified? Let’s look at the dictionary definitions of socialism and pitch it against the capitalism-definition.
This is the definition you will find in the Cambridge Dictionary:
noun [ U ]Cambridge Dictionary
UK /ˈsəʊ.ʃəl.ɪ.zəm/ US /ˈsoʊ.ʃəl.ɪ.zəm/
C2 the set of beliefs that states that all people are equal and should share equally in a country’s money, or the political systems based on these beliefs
Reading this definition, one wonders, what’s wrong with socialism? What’s wrong with equality? What’s wrong with sharing equally in a country’s money? Staunch capitalists will cite examples of countless failed socialist regimes and emphasize that socialism simply doesn’t work.
The current upheaval in Venezuela is a prime example of what divides the right and the left. While the US supports and recognizes the opposition leader and calls Maduro out as a undemocratic socialist leader, Maduro supports blame economic sanctions for the dire state of the Venezuelan economy.
How Did Socialism Get Such a Bad Name?
Capitalists don’t like the restrictions socialism places on economies. Instead, they propagate free market rules designed for growth and economic freedom. Needless to say, they also like low tax rates.
Perhaps one ought to take a brief look back at the history of socialism to understand how this political philosophy came about in the first instance. What’s more, it’s important to understand that socialism has many different applications.
The examples in the video illustrate the vast differences in the application of the socialist model. It appears that the nations combining capitalism and socialism like Denmark and Sweden have been the most successful in promoting economic growth while also ensuring a decent degree of equality.
A Brief Look at Capitalism
Let’s take a look at the Cambridge Dictionary definition of capitalism first:
noun [ U ]Cambridge Dictionary
UK /ˈkæp.ɪ.təl.ɪ.zəm/ US /ˈkæp.ə.t̬əl.ɪ.zəm/
C2 an economic, political, and social system in which property
, business, and industry are privately owned, directed towardsmaking the greatest possible profits for successful organizations and people
The USA and Europe illustrate the workings of capitalism, although some countries incorporate elements of socialism into their political system. Countries like Sweden have excellent public services to cater to those who may not be able to afford private healthcare or education.
The 2008 Financial Crisis – Capitalism Goes Socialist
After the 2008 global recession, countless financial institutions required state financial support in what appears to be a contradiction in terms.
If you wear your socialist hat for a moment, you’d have to ask yourself how financial institutions arrived at asking for and taking government bailouts. While sticking to strictly capitalist principles when profitable, the banks suddenly put on a socialist hat and gladly took the cash.
Many governments feared the mayhem that may have been associated with the collapse of the banking sector and jumped in to help without delay. Who footed the bill? The taxpayer, stupid!
The Basic Principles of Socialism v Capitalism in Brief
So, how do the two systems impact on the everyday workings of a society?
|Ownership||government or |
|individuals or |
|determined by |
people or companies
|Taxes||higher taxes for|
|lower taxes to |
|Equality||government ensures |
|Prices||less competition, |
|more competition, |
|limited government |
|Disadvantages||slower economic |
|Advantages||equality and better |
|stronger economic |
This is a simplistic view of capitalism and socialism. The real impact also depends on world economic factors, political stability, and international relations. Moreover, most economies combine the two political philosophies, each creating and implementing its own socialism&capitalism cocktail.
Socialism – Good or Bad?
In theory, socialist principles are worthwhile. Unfortunately, its pure application is nigh unachievable.
Capitalism – Good or Bad?
One only needs to bring to mind the ever-widening wealth gap to grasp the very serious and catastrophic downsides of pure capitalism. Only one year ago, the Guardian reported that 42 individuals held the same amount of wealth as 3.7 billion of the world’s poorest people.
Socialism v Capitalism
Socialism and capitalism are wide open to abuse. In its principles, socialism promotes equality and fairness – something that no one can argue with.
Smartly combining capitalism and socialism appears to be the best way to provide citizens with a decent standard of living while promoting economic growth.