Re: Let's discuss
Um, sorry, I was reading a book and straight away jumped in the topic yesterday without thinking much. Okay, first thing, Socialism does not lead to privatism, in fact it says everything is to be controlled by the government itself.
@5:
You say there is difference between socialism and Communism. Yes there is. But Socialism leads to Communism, that is why the Soviet Union disintegrated.
The last stage of Socialism is communism, where the State itself disappears and all property is held in common.
Both socialism and communism are just excuses for a small group to expropriate the vast majority and treat them as cattle.
The most common definition of socialism is that it is whatever its defenders want it to be. In particular, given the bias of the general media, socialism is anything perceived to be kind or sensitive to the promotion of rights and the general welfare of people.
The real-world definition of socialism is simply an authoritarian political regime where a giant State controls everything with an iron hand and is itself controlled by a few people for their own benefit and profit, all under the disguise of being a "people's government".
The countries that are, or were, communist jumped straight into it from capitalism or, in some cases, feudalism (think Russia and China). Again, this contradicts Karl Marx, who said that capitalism was a necessary stage before socialism and communism.
But the fact that socialism does not lead to communism does not reduce the negative impact that socialist ideas have on society and the general welfare of mankind. Socialism always involves a powerful state and powerless citizens, and the equality it promotes applies to everyone but to those who run the state (Example, animal farm).
Socialism has failed now. And I think the countries will not move towards it. That is because-
Socialism collapsed because of its failure to operate under a competitive, profit-and-loss system of accounting. A profit system is an effective monitoring mechanism which continually evaluates the economic performance of every business enterprise. The firms that are the most efficient and most successful at serving the public interest are rewarded with profits. Firms that operate inefficiently and fail to serve the public interest are penalized with losses.
Under central planning, there is no profit-and-loss system of accounting to accurately measure the success or failure of various programs.
By rewarding success and penalizing failure, the profit system provides a strong disciplinary mechanism which continually redirects resources away from weak, failing, and inefficient firms toward those firms which are the most efficient and successful at serving the public. A competitive profit system ensures a constant re-optimization of resources and moves the economy toward greater levels of efficiency. Unsuccessful firms cannot escape the strong discipline of the marketplace under a profit/loss system. Competition forces companies to serve the public interest or suffer the consequences.
Under central planning, there is no profit-and-loss system of accounting to accurately measure the success or failure of various programs. Without profits, there is no way to discipline firms that fail to serve the public interest and no way to reward firms that do. There is no efficient way to determine which programs should be expanded and which ones should be contracted or terminated.
Without competition, centrally planned economies do not have an effective incentive structure to coordinate economic activity. Without incentives, the results are a spiraling cycle of poverty and misery. Instead of continually reallocating resources towards greater efficiency, socialism falls into a vortex of inefficiency and failure.
A pyramid scheme is ultimately unsustainable because it is based on faulty principles. Likewise, collectivism is unsustainable in the long run because it is a flawed theory. Socialism does not work because it is not consistent with fundamental principles of human behavior. The failure of socialism in countries around the world can be traced to one critical defect: it is a system that ignores incentives.
Under socialism, incentives either play a minimal role or are ignored totally.
In a capitalist economy, incentives are of the utmost importance. Market prices, the profit-and-loss system of accounting, and private property rights provide an efficient, interrelated system of incentives to guide and direct economic behavior. Capitalism is based on the theory that incentives matter.
Under socialism, incentives either play a minimal role or are ignored totally. A centrally planned economy without market prices or profits, where property is owned by the state, is a system without an effective incentive mechanism to direct economic activity. By failing to emphasize incentives, socialism is a theory inconsistent with human nature and is therefore doomed to fail. Socialism is based on the theory that incentives don’t matter
Another fatal defect of socialism is its blatant disregard for the role of private property rights in creating incentives that foster economic growth and development. The failure of socialism around the world is a “tragedy of commons” on a global scale.
If everyone owns an asset, people act as if no one owns it. And when no one owns it, no one really takes care of it.
The “tragedy of the commons” refers to the British experience of the Sixteenth century when certain grazing lands were communally owned by villages and were made available for public use. The land was quickly overgrazed and eventually became worthless as villagers exploited the communally owned resource.
When assets are publicly owned, there are no incentives in place to encourage wise stewardship. While private property creates incentives for conservation and the responsible use of property, public property encourages irresponsibility and waste. If everyone owns an asset, people act as if no one owns it. And when no one owns it, no one really takes care of it. Public ownership encourages neglect and mismanagement.
Since socialism, by definition, is a system marked by the “common ownership of the means of production,” the failure of socialism is a “tragedy of the commons” on a national scale. Much of the economic stagnation of socialism can be traced to the failure to establish and promote private property rights.
As one Peruvian economist remarked, you can travel in rural communities around the world and you will hear dogs barking because even dogs understand property rights. It is only statist governments that have failed to understand property rights. Socialist countries are just now starting to recognize the importance of private property as they privatize assets and property in Eastern Europe.
As for Capitalism, it provides incentives which leads to production of desired outcomes. It is a type of system which increases the growth and freedom.
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