Why Has Socialism Failed Economics Essay Professor: Course Number: Introduction For years, a debate that has aroused so much passion and bitterness has been the question of capitalism versus socialism. Which is better? Theories and different approaches have been devised in support of these economic systems others have proved to work, and others have been doomed to fail. There are various ways that an economy of a country can be organized, depending on the cultural values and principality of a given society. So why does capitalism work in countries like America, and why has socialism failed to work in countries like China? Capitalism Capitalism, the basis of the U.S economy, is an economic system based on the principle of market competition, personal property and the quest of profit. Under the capitalism, the means of production is privately owned. To say that, in a capitalist society, some people own the means of production does not simply mean that people own property, it means some people control the natural resources and own the industries in which goods are produced and sold. This essay is an example of a student’s work Disclaimer This essay has been submitted to us by a student in order to help you with your studies. This is not an example of the work written by our professional essay writers. Essay Writing Service Dissertation Writing Service Who wrote this essay Place an Order Within capitalist society, stock holders hold together own corporations each owning a share of the corporations’ wealth. Under capitalism, owners keep the profit and revenue that is generated. Profit is created by selling a merchandise for more than the expenditure of creating it, thus; owners pay workers less than the value of what they produce. Under capitalism, workers produce the goods and provide the services, whereas the owners disproportionately consume goods and reap the profits. This class relationship is what defines the system of capitalism. The capitalist basis of society in the United States shapes the character of the nations and other institutions. Health care institutions, for example, are administered on a profit-based system. In other industrialized society, health care is regarded as a human right that is paid for and administered by state agencies, a more socialist model. Other institutions shaped by capitalism are public schools. The United States is not purely a capitalist society, however, in that government bailouts for failing industries or government support for agribusiness provide socialism for corporate interest (Fried man15-17). Socialism Socialism is an economic society distinguished by government ownership and supervision of the basic industries, that is, the means of production are the basic industries, that is, the means of production are the assets of the state. In many nations, the global forces of capitalism mix with the socialist principles. Many European and Asia countries have strong elements of socialism. Another nation that has held strongly to the idea of socialism is China, although it is not that immune from the penetrating influence of global capitalism. The people’s republic of China, former a strongly socialist society, is currently undergoing transformation to a mix of socialist and capitalist principles. This change occurs with state encouragement of a market based economy, the introduction of privately owned industries, and the increased engagement in the international capitalist economy (Keith 44). Many developing nations have pledged socialist principles, but socialism in the developing world has frequently met with considerably hostility from the capitalist world powers. In a world context dominated by capitalism, it is difficult for any nation not to become part of this global economy (Giddens 185). Communism is sometimes described as socialism in its purest form. In pure communism, industry cannot be the private property of an individual. Instead, the government is the only holder of the systems of production. A critical feature of communist economics has been the centralization of the economy in which administrators declare prices, quotas, and production goals for the entire country. This is the most striking difference between communism and capitalism. Communist philosophy argues that capitalism is fundamentally unjust because powerful owners take more from laborers than they give and use their supremacy to uphold the inequalities between workers and owners (Dorn 167). Why has socialism failed? Communism in theory, great: in practice it just does not work. Communism has failed, however, this is not due to a primary fault in the theory, and rather it is due to a imperfection in its implementation. While socialism promises equality, security and prosperity it has instead delivered misery, poverty and sickness. The only equality that it has brought is the equality in poverty and misery. Imagine a system whereby the government has to make decisions and solve all the problems for all individuals, male, female and even donkey. This is an economy with no market price or profits where all operations of the economy are controlled by the state. For an economy to thrive, there has to be forces that drives that economy. That is why most countries that have relied in this system have transformed to a capitalist system since they have realized that the socialist system has made them poor. An economy without competitive forces of the market cannot be able to sustain itself for long since it has no mechanism for regenerating itself (Dedelow 183). Why Capitalism Works Better Today capitalism is the economic system that guides most of the global operations, having overcome continuous rational opposition as well as the military hostility. Most countries of the Asian origin like China has pledged to try free market economies as they have witnessed its productivity. Capitalist systems are not strict, nor are they all the same. It is an exceptional way in authorizing change and adjustment, so different communities tend to establish different rules and approaches, often relating to their cultural needs. Ownership of the means of production by individuals in this system means to remain relatively free to choose activities, where they work, what to buy and sell, and what price. As an institution for producing goods and services, capitalism success rests on a foundation of rules, which protects individual privileges to property, and, in the first case, support rewards to values produced. Working together with the statute of regulations, capitalism gives its member encouragement to act as their culture wishes, naturally satisfying hard work, brainpower, determination, and creativity. If too much regulation works against this, capitalism may experience distraction (Wallerstein 235-245) Capitalism encourages competition rewards to those who build value, and offer buyers choices and competitive prices. Its incentives encourage honest dealings, and since it involves competition it induces honest behavior more often than other system. Capitalism, therefore, has a means of removing failures as it brings choice and improved services. Competition eliminates less efficient activities and strengthens survivors by encouraging them to adapt to change. Capitalism can also be termed as a moral system that is ethically right for people to use their own resources as they choose. Unlike any system, capitalism has success since it is the only structure known to humanity that enhances both development and independence (Welch 61). Conclusion The failure of the socialism has transformed many countries to adapting the capitalist system. As capitalism has stretched throughout the world, a global economy has been created. Trade among nations has led to globalization. In a global economy, economic transaction, including investment, manufacture, organization, markets, labor, information, and technology cross and penetrate international borders, and nations become increasingly interdependent. The system has played a significant role in development of prosperity and liberty among nations. It has also enhanced human innovation as through its powerful system of incentives it promotes hard work, efficiency and these results to wealth. 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The Capitalist World Economy: Essays. Cambridge [u.a.: Cambridge Univ. Press [u.a., 1984. Print.235 Giddens, Anthony. Capitalism and Modern Social Theory: An Analysis of the Writings of Marx, Durkheim and Max Weber. Cambridge [U.K.: University Press, 1971. Print.185