Tuesday, December 12

The Truth About Capitalism And Socialism

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               A free enterprise economy is an economy in which individuals and businesses are free to make their own economic choices; also, it is called a market economy. The best example of a free enterprise economy is the United States.

               A few of the strengths of a market economy are a much higher GDP(gross domestic product), also it is much easier to collect taxes in a market economy than in a command economy due to the fact that people in a market economy generally are richer and have more goods than their command economy counterparts. More tax money for the government, if used wisely and is not too oppressive on the people, can be used to pay down or eliminate the national debt, increase its military power, be invested in new technology to further expand efficiency of production, and many other good things.

                Weaknesses of the market economy are so few and minor that I will neglect to mention them. (Not as a result of bias, but rather expediency).

                A command economy is an economy in which a centralized authority controls production, distribution, and consumption of goods, as well as savings, investments, and prices. Some examples of command economies would be Saudi Arabia, China, and Vietnam.

                Some of the advantages of a command economy are few and minor and are highly questionable: Resources are supposedly distributed more evenly, almost no money is used for advertising, while all the time and money are used in producing something (regardless of how valuable to the consumer it may be).

                The disadvantages and weaknesses of the command economy speak the loudest: A command economy lacks entrepreneurship because people have very little incentive to create their own products and businesses while the government puts so many restrictions on virtually everything regarding business, and people who do make their own businesses receive no personal profit from them because the government robs them of all profits and distributes it to everyone(robbing the rich and giving to the poor). Also the quantity and quality of every single product that is made from such countries is significantly less than the same products produced under a free market economy. The reason is this: because workers in command economies have absolutely no reason to work because they receive no personal benefit from working hard. If they worked hard they would get no more benefit than if they worked slowly and inefficiently. Another major setback to command economies is that government sets the prices for goods based on nothing but their own imaginations. The prices that these governments set could be significantly higher or lower than the equilibrium prices, thus creating either shortages or surpluses. There are many more but I will stop here. I think you get the idea that the weaknesses FAR outweigh the strengths.

                Anyone with an honest opinion can clearly see the better choice. A command economy in its professed aim to create complete “equality” of condition for its people actually does the opposite, with the leaders and “expert planners” benefiting most from the labor of the people and the people living in utter poverty. A free enterprise economy, on the other hand, may not be totally perfect, but it certainly provides its people with more prosperity and a chance to better their economic condition. The natural workings of the market, namely market signals and competition, tend to put supply and demand into equilibrium, thus creating a healthy economic environment for all people.  

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