The debate between capitalism and socialism has leaned unevenly towards capitalism in the past decades, after the threat represented by communism has silenced the voices of pundits and academics almost entirely. However, history has shown that global capitalism does not necessarily answer the economic problems of poor countries, and even developed nations, such as the United States, are struggling in this economic environment. While some authors argue that the precepts of capitalism and socialism are too different to be combined, and capitalism and socialism only make sense in their purest forms, others believe that socialist ideas must be engrained in a capitalist system in order to obtain a fair and equitable system. Still other authors believe instead in market socialism, as illustrated in China. While an ideological division between socialism and capitalism is expected, the fierce rejection of each other illustrates the goals and ambitions of the stakeholders, for whom the political system represents the best possible way to control the masses and to elevate to a position of power.
The capitalist ideology has been promoted as the basis of democracy, the hailed system which saved the world from the claws of totalitarian leadership. However, capitalism is not fit anywhere and the consequences of this system, particularly when it is led to extremes, can be extremely poor. In her book, Klein examined the situation of Chile, where the experiment in pure capitalism conducted by Friedman and the country’s leader, General Augusto Pinochet, led to extreme poverty. By privatizing all businesses, and even the social security system, the health system and education, Friedman and Pinochet, together with the group of Chicago Boys who were in charge of creating a purely capitalist “free market” in Chile, have led the country to economic downfall. As Klein showed, “Pinochet’s economic team went into more experimental territory, introducing Friedman’s most vanguard policies: the public school system was replaced by vouchers and charter schools, health care became pay-as-you-go, and kindergartens and cemeteries were privatized” Thus, this experiment in capitalism led to the impoverishment of the already poor citizens, while the wealthy became even more wealthier. Many critics argue that these consequences were unintended, while the purpose of this experiment were objective, and aimed at creating a free market economy, where inflation would drop, and the economic system would get healthier by itself. However, Klein showed that in fact, creating a globalized capitalist system had intended consequences, because it helped the country’s elite to create a corporatist state. This technically eradicated the middle class and created a large gap between the rich and the poor.
This argument falls under the intended consequences argument, according to which the negative effects of global capitalism are carefully planned in order to benefit corporatist interest. If relevant, this argument shows that global capitalism is no better than pure socialism, where the power is concentrated in the hands of privileged elite. The idea that the consequences of global capitalism are not unintended is also supported by Davis, who showed how the colonial powers exploited the peoples of the third world and ignored their deaths due to famine, in a time when the grains which were stored in their countries, had become too expensive for them, and were transported to the western world instead, while they were starving to death. Davis thus claimed that the application of global capitalism in these colonies led to the deaths of millions, while the western countries became global powers.
The development of Europe as a capitalist market however was a result of chance, Abu-Lughod explained in his work. According to the author, as a result of the Black Death, and other problems in the Orient, Europe which had lagged behind in the centuries before, suddenly rose to power. As Abu-Lughod also showed, “this delivered the coup de grâce to a world system that had existed for centuries” This shows that the rise of global capitalism is not necessarily a result of its superiority, but a result of circumstance. This is also supported by Klein, who explained in her work that presently, ‘free people’ in democratic countries began to reject free markets, which brought about “savage capitalism”, which brings about the diminishing of the middle class.
While the socialists in present-day America accuse Obama of being a defender of corporations, because his policies benefit large business owners the most, capitalists accuse him of being a socialist instead, because of the policies which are intended to increase the support extended towards the poor. According to Gregory, Obama’s beliefs fall into the mainstream of contemporary socialism. This is because his policies emphasize the duty of the state to care for the disfavored groups of the society by favoring the universal access to health care and education progressive taxes on the rich and collective responsibility”. These policies agree with what most people believe to be just.
Most people do not favor pure capitalism, and are happy with the insertion of socialist principles, which create a fair economy, do not allow the majority of wealth to concentrate in the hands of elite, and support the disfavored groups of the society. However, capitalists fear that too much power in the hands of the state can lead to corruption and state coercion on businesses and people alike. Capitalism as the basis of democracy is necessary for the government not to become too powerful. However, on the other hand, the duty of the state to protect the disadvantaged groups in the country and to maintain a strong middle-class cannot be denied. Therefore, the aims of capitalism and socialism are both justified and when carefully balanced and combined, they can lead to a fair system. Any extreme approach is likely to lead to abuses of power and economic disaster.
References
Abu-Lughod, Janet. Before European Hegemony: The World System A.D. 1250-1350. New York: Oxford University Press, 1991.
Davis, Mike. Late Victorian Holocausts: El Niño Famines and the Making of the Third World. New York: Verso, 2001.
Finlay, Anita. A Real Socialist Explains Why Obama Isn’t One of Them”No Quarter, April 18, 2010. http://www.noquarterusa.net/blog/44318/a-real-socialist-explains-why-obama-isn%E2%80%99t-one-of-them%E2%80%A6/
Gregory, Paul Roderick. “Is President Obama Truly a Socialist?” Forbes, January22, 2012. http://www.forbes.com/sites/paulroderickgregory/2012/01/22/is-president-obama-truly-a-socialist/#958e50037170
Klein, Naomi. The shock doctrine. New York: Henry Holt & Company, 2007.
Schweickart, David. “Market Socialism: A Defense”, in Market Socialism: The Debate among Socialists. Eds. Bertell Ollman &David Schweickart. Routledge: New York, 1998.
