Friday, November 6, 2009

Capitalism vs. Communism, part 2


(Continued from Capitalism vs. Communism, part 1, picture found on The Public Choice Capitalist)

Last week, I began this discussion by talking about how both communist and capitalist societies deal with resource scarcity.  Today, I want to talk about power: specifically, who holds it?  In communist societies, the ideal is that nobody holds the power.  Everyone does their job, and provides the fruits of their labor willingly to whoever needs it.  Likewise, everyone takes whatever they need from whoever produces it.  However, on a scale larger than a small town, this becomes very difficult: how to you organize the transportation of food from the country to the city, for instance?  How do you determine how much of every resource is needed to keep everyone supplied with their necessities?  How do you deal with thieves, murderers, or people who refuse to give their product or service to one or more individuals?  Enter the government: a body of officials whose job it is to organize the efforts of the populace into a cohesive, functioning machine.

As we have seen in pretty much every communist society to date, the government holds a great deal of power.  It controls the production and distribution of products.  It makes and enforces the laws.  It handles foreign relations.  It handles education.  What doesn't it do?  This is starting to sound like a bad infomercial: buy yours today!  Question is, does the government need to handle these things?  I would argue that it does: at least, a central organizing body is necessary for production and distribution.  A central organizing body is necessary for law and order.  A central organizing body is necessary for education, and ensuring that all necessary jobs are filled (tying into production and distribution).  Who better than the government?

In a capitalist society, the main difference is that production and distribution are not controlled by the government.  This is because, as opposed to a communist society where all give away their products and services essentially for free, in a capitalist society those who offer goods and services can (and usually do) ask for some compensation in return.  Barter, money, whatever.  This means that, should there be a huge demand for something, those that supply the thing hike up their prices and gain material wealth.  This means that if there's a demand for something that isn't being supplied people will find a way to supply it; the first that do supply such a thing will demand large compensation and gain material wealth.  So, based on the desire for material wealth (which provides you, in addition to everything you need, everything else you can ask for), people will go out and do what needs to be done.  They will do it not out of altruism or to better their fellow man, but because such trade is mutually beneficial.

So, as people in a capitalist society do what needs to be done, the infrastructure of production, transportation and distribution will create itself.  Thus, the government does not need to be involved in this.  Also, the government no longer needs to be involved in education: as people do what needs to be done, so will they learn how to do what needs to be done.  The government in the capitalist society is now only responsible for law, order, and foreign relations.

Let's look at the implications of these differences.  In a communist society, the people live more or less beholden to the government.  They depend on the government for their everyday needs, and in the absence of the government would not be able to function.  Because of this, power is directly concentrated into the hands of a relatively small number of people who run the government.  In a capitalist society, the people still need the government, but they do not depend on the government for their everyday needs.  In capitalist societies, the government smooths the road, so to speak: things would be a lot bumpier without it, but you would still be able to get from point A to B.  Because of this, when the government does not do what the private infrastructure wants, the infrastructure (or, those responsible for it) becomes angry with the government.  In a communist society the government is still beholden to the people, but how it decides to get from point A to B is entirely up to those running it.

To sum up the above, in communist societies power is concentrated into the hands of relatively few people who run the show.  In a capitalist society the power is spread out over an infrastructure supporting the movement of goods and services.  While I certainly have not gone over everything, this is the core of how each system gets things done.  Other questions, such as what forms of government are better suited to/more likely to form in each system, I'll leave up to you for the time being.  There is certainly more to talk about, so I'll hold that for the next edition of Capitalism vs. Communism, coming up next Friday.  If you have specific questions, comments, or things you would like to talk about, please let me know!  I'd be happy to discuss, debate, or include your thoughts in later posts.

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