Thursday, December 4, 2014

How can you explain capitalism and communism?and how do they relate

Capitalism is an economic ideology that promotes a profit oriented economy. You are able to sell a product based on the demand for it.  If there is a high demand but a low amount of product, the price may be higher.  If the product is plentiful, demand must be created to drive up the price.  The business owners are private individuals or corporations.  This model began to take precidence around the middle ages 1300s or so and really took off during the age of exploration 1600s through 1800s. The problem with capitalism is the ups and downs of the markets are not cushioned by the government.  There is no concern for the "common welfare" or common good.  It's just business.  Lay-offs, bankruptcies, bank failures etc...are all just a part of the fluctuations of the market economy.


Communism was established as an ideology to help the working class gain wealth and power. It was developed during the Tsarist era in Russia to allow the workers to have a voice, ownership, and ability to live well on their wages.  The totalitarian rule of the Tsars in Russia gave rise to the ideologies espoused by Karl Marx and Friedrich Engles.


In a purely communistic form of government, there would be no private ownership of land, production, or goods. Everyting would belong to the government (ie workers or laborers), and the government would then equitably distribute the rewards of the labor to the workers.  Workers would be compensated according to their "value" to the overall benefit to society. There would be no health care shortages, no housing shortages, and everyone would have what they needed to live.


But no worker would be paid very much more than any other worker.  There would not be any getting rich while making another poor.  The ideal communist society would eliminate poverty by providing for the "common welfare".


The problems with communism in practice are that it does not encourage creativity or working to improve a system because the wages are not going to encourage more effort.  Because the government runs everything, not all areas of an agricultural country will be able to have "planting day" on the same day.  Finally, party members became the "privileged class" rather than the egalitarian society that they espoused.  The party members were just as corrupt as the Tsarist regime that they overthrew to gain power.

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