Socialism and capitalism are on either side of a debate about which system is best for us humans. I’m here to set the record straight: they both stink.
Take the costs. The enemies of capitalism will tell you that the profit incentive that drives it causes companies to care only about profits. Personally, I don’t buy this, but trust me, even though they might not only care about profits, it’s a pretty big concern.
The socialist will say that if we removed the incentive to profit, the costs of goods and services would drop.
The enemies of socialism will tell you that it is precisely this motive for profit which obliges companies to be competitive. In the absence of a monopoly, competing firms will reduce their costs to attract buyers in order to make more profit.
Without this competitive nature, the costs would be an afterthought, which is why the goods and services of a socialist structure end up costing more.
What about the availability of goods and services? Supporters of capitalism will say that if the market demands it, corporations will provide it. Everything balances out perfectly.
Socialists will tell you that is true, at least for products and services that maximize profits. But if you have a need that only affects a few people, then businesses will ignore it because no profit will be made.
Socialism is the answer because they will provide everyone because they don’t care about profits.
The capitalists will retaliate by explaining that such inefficient waste will permeate socialist systems. So while they will want to provide for everyone, they simply will not have the resources to do so.
Maybe motivation is the key. Capitalists love to talk about how everyone is so in love with money that their system gets the best out of every worker as these workers try to improve their position in society.
Socialists are appalled by this idea. No, being guided by your portfolio can work, but it then creates a system of have and have nots that grows stronger from generation to generation.
They will go on to say that if you have a society that truly provides for all the needs of its citizens, they will not be hampered by worry and will indeed be able to realize their true potential.
“No,” said the capitalist. For the socialist system does not reward risk taking without which some of the greatest achievements would never have taken place. Give someone what they are owed for the effort and daring they show – let them share in the rewards of success.
“But isn’t the accomplishment of one really the culmination of the accomplishment of all,” asks the socialist, “Shouldn’t all share the glory of an individual?
“No,” said the capitalist, “It’s their job, let them profit from it.”
So, is there still a choice of fame for the few or mediocrity for the masses?
Ultimately, people may look at both systems with awe or disdain (or both). Business or government masters… who do you trust to have your interests as motivation?
This is the catch. Who controls? And that’s the real reason we really don’t like either system. We want to be able to control ourselves.
Gary Silverman, CFP® is the founder of Personal Money Planning, LLC, a Wichita Falls retirement planning and investment management firm and author of Real World Investing.