Capitalism or Socialism: Which Way to Go

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By Rafa’yili

Capitalism has been in recent times said to be in the decline. I would beg to differ from this belief. Capitalism cannot and will not decline. It is practically entwined in humanity. Heck, in life. Charles Darwin stated in his notes and later book on the Evolution of Life that the species that survive are those that learn to adapt in changing environments. It is the strong and not the weak that survive. It is the dynamic and not the static that get to live on. Dynamism is the centerfold of capitalism.

Since the beginning of life, man has been a capitalist animal. Whatever beginning of lie one looks out to (theology or science) capitalism is rooted in our history as man. It is thus not surprising that man left his hunter gathering (read socialist) economy to start trading for scarce resources owned by other communities first through barter and later through the creation of money.

The economies of the most prosperous empires and civilizations in history have not been socialist. They most definitely have been capitalist. From Roman Empire, the Holy Roman [Catholic] Empire, the British Empire and todays United States of America. Oh, did I hear someone mention the Union of Soviet Socialist Republics! Well if you do not know what that is, it is because it died a natural death in 1988 when socialism finally succumbed to internal inefficiencies leading to the breakup of USSR to smaller nations which can be seen to be still struggling to this day.

In Africa, the same can be said of former socialist nations. They to this day still struggle to get their economies moving. Chief among them are Uganda, Tanzania, Zambia and a host of other countries which deteriorated into anarchy thanks to their socialist tendencies.

Socialism in its own right is genuinely appealing especially to most Africans who find themselves on the wrong side of the dollar (they spend it rather than earn it). When socialism is sold to people it is said to solve their most basic needs. Like provision of education, health services for free or much subsidized cost. However, no one knows how these subsidies are to be paid for.

It goes without saying that the governments will most definitely tax the “well to-do” to get the money needed to pay for these services. The increase of taxes on persons who earn income above a certain threshold is done worldwide and I am for it. However, I oppose taxation of persons solely so that income can be redistributed. This creates the very thing we do not want, people evading taxes by migrating to countries with cheaper or no taxes. Persons who gain from the government services will and have been known not to grow their economic status out of welfare so that they can continue getting these free services.

Why should I make money only for it to all go to a lazy chap in Rakai with three wives and eight children and did I mention he has one and half acres of farmland. This fellow is actually more prosperous than I am. He earns all my money when he sells his vegetables to a trader in Kampala. He however claims a pauper status and pays no taxes (the government doesn’t bother follow-up anyway) but all the while earning from his farmland but not doing enough to further his economic status.

The increased taxes I suffer (yes it is suffer!) significantly reduce my disposable income and thus my demand for certain goods diminishes. Retailers and producers of such goods suffer from reduction in sales revenue thus they lay off some staff to reduce their costs of sales in order to make a profit. The laid-off workers have no money thus gain pauper status further increasing their demand for free services and thus the need for government to increase taxes on the few remaining income generating populace. This ultimately leads to economic failure due to the country’s inability to sustain the increasing spending.

One of two things has to happen, the abandonment of the socialist stance or the change of government. The latter being what befell the USSR. The governments of former Soviet States are now fully fledged capitalist economies. The Russian Federation has since also made the switch to capitalism though its iron-hand on the economy is still very much visible.

The proponents of socialism and soothsayers predicting the demise of capitalism attest to the fact that the rise of China as a global economic power is vindication to their opinion. What the country of China is doing however is having the government participate indirectly through government owned enterprises and banks in the economy and using the profits earned to support and finance its free services projects in education, health care, transportation among others. This is what has been termed Government Sponsored Capitalism. China realised that the archaic model of socialism was hell-bent to destroy it as a nation and strip the political power from the ruling Communist Party.It changed strategy and liberalized the economy (somewhat) by allowing western companies to invest in China. It also remained in the economy through its vast network of State Owned enterprises. China currently has the biggest bank (per market capitalization) in the world. The achievement of this economic feat (and others) is not because China is socialist but rather because it has adopted capitalism.

3 COMMENTS

  1. Todays issue in Egypt is an example of what happens when you have capitalism in the center of a government. But i am sure that the revolt isnot bbecause the people wanted their leader to be a greedy dictator. Also, in your example of china, the circulation of what you called “Government Sponsored Capitalism” is being returned to the people in liberal or social avenues. so your example is a bad source of reference. I do respect your position and I do not disagree, i just take a position in that people dictate the best avenue of government leadership so there is no one perfect form of economic system.

  2. It’s funny that social intellectuals would want to adopt a market system and economic system based on choice and individual responsibility.

    It’s funny that you would want to erect a tall and proud building of individual freedom and choice.

    But the foundation of it all is absolute, total and violent coercion.

    Did you decide to born as a human, in your country of origin, in your time ?

    Did somebody ask you for your permission or opinion before you were made into existing ?

    How can you propose to build a tall and strong building of freedom when the foundation is violence and coercion ?

    Isn’t the structure doomed to fail because of incompatible foundations.

    You cannot pretend to live in a free market capitalism system if you are not free to opt-out of the system.

    Creation is even more violent and aggressive than destruction.

  3. I refuse to be profit fodder and to be a cog into the system. I want to be my own source of existence and report to no one but myself.

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