Each of the three great systems of economic organization is destined to fail. What can we do?
Communism
Wealth resulting from people’s work is controlled by the government and is distributed to the people based on each person’s need. A moral imperative helps to ensure an equal distribution of wealth among the people.
In theory: Nobody can be rich.
But:
- Decisions are made by committees of the people to benefit everyone. However, such committees are usually hampered by lack of good data and management by committee is usually inefficient and unrealistic.
- Communism fails to take into account the selfishness of most people. For most people in a communistic society, there is little incentive to work, particularly at an unpopular job.
- The system lasts for some time because a moral imperative to do right by all results in greater happiness for all. However, it does fail eventually because good work is rare and because of the inherent inefficiencies and bad decisions by committees.
- In a failing communistic system, the people suffer. Committee managers, meanwhile, become jaded and corrupt — and powerful and rich.
In reality: Committee managers can be rich.
Socialism
Wealth resulting from people’s work is controlled by the government, often a democratically elected government. Wealth is distributed to the people based on each person’s ability and contribution. A moral imperative to ensure the welfare of the people mitigates the harshness that would result from providing only for those who are capable of contributing.
In theory: Anybody with ability can be rich.
But:
- Decisions are top down, made by successful entrepreneurs to benefit everyone. However, top-down management is inherently inefficient and unrealistic and often cannot properly evaluate every person’s ability and contribution.
- There is some incentive for people to work, but less than there would be if every person’s ability and contribution could be measured accurately.
- The system lasts for some time because some good work gets done and because a moral imperative to do right by all results in greater happiness for all. However, socialistic systems fail because of the inefficiencies and bad decisions inherent in top-down management.
- In a failing socialistic system, everyone has less to share. Meanwhile, successful entrepreneurs become jaded and corrupt — and powerful and rich.
In reality: Successful entrepreneurs can be rich.
Capitalism
Wealth resulting from people’s work is controlled by anyone who can take control and is distributed mostly to those who have taken control. The moral imperative is replaced by a profit motive.
In theory: Anyone can be rich.
But:
- Decisions are bottom-up, made by the people through voting. However, the wealthy control who can vote, what information voters are exposed to, and who gets elected to carry out decisions (or prevent them from being carried out).
- There is little incentive for people who are not wealthy to work hard (though there is no incentive not to work).
- When the wealthy are threatened by competition from an up-and-coming entrepreneur, they create monopolies and temporarily set prices so low that no competition can flourish. Through their ownership of the media, they control the demand for many nonessential products. Through their ownership of manufacturing processes, then make a product unavailable when they want to drive up its price.
- The system lasts for some time because the wealthy can convince the poor to believe in conspiracy theories and to hate and fear each other rather than taking notice of the real problems they face. However, it does eventually fail because good work is scarce, because any system that actively oppresses the majority of its people tends to fail, and because bad decisions are made by people who are duped by propaganda and not exposed to facts.
- In a failing capitalistic system, everyone has less to share. Meanwhile, a wealthy few become jaded and corrupt — and more powerful and even richer.
In reality: Only the rich can be rich.
Combinations of the Three Systems
There are no countries that exist today that are purely communistic, socialistic or capitalistic. Most countries are some combination of the three.
The United States, for example, is primarily capitalist in that the already wealthy have taken control of almost everything. They now simply complete with each other to see which of them can continue to make the most money or have more adventures. The profit motive reigns, and there seems to be nothing to stop the wealthy from becoming more wealthy and finally most wealthy. On the other hand, the people do benefit from roads and bridges in good repair, a functioning internet available, maybe eventually, to all, social security for the elderly, libraries with books to read, public schools all can attend, and a host of other benefits of socialism.
The U.S. is generally considered the most capitalistic country despite some socialistic measures the Republicans, working for the most wealthy, are currently attempting to do away with. Other countries, in Western European for example, are mostly socialistic with wealthy entrepreneurs. The most communistic countries are China, Cuba, Laos and Vietnam, though their managers claim to be moving their countries forward to socialism.
All Fail
But what’s the difference? Committee managers, successful entrepreneurs, or the already wealthy — somebody gets rich and everybody else suffers or at least has less to share. Even in situations in which brand new technologies create new wealth, the rich benefit more than the poor.
Solutions?
Are there other systems—other than communism, socialism and capitalism—without a sad ending? Do the combination systems seem guaranteed to succeed? Or are there any other systems, even theoretical ones, that might allow humanity to become what we’d all be proud of to call “human”?
