Which best supports the claim that capitalism provides more benefits for individuals than socialism?

Figure 4. The economies of China and Russia after World War II were both based on a communist system. (Photo courtesy of Wikimedia Commons)

Socialism is an economic system in which there is government ownership (often referred to as “state run”) of goods and their production, with an impetus to share work and wealth equally among the members of a society. Under socialism, everything that people produce, including services, is considered a social product. Everyone who contributes to the production of a good or to providing a service is entitled to a share in any benefits that come from its sale or use. To make sure all members of society get their fair share, governments must be able to control property, production, and distribution.

The focus in socialism is on benefitting society, whereas capitalism seeks to benefit the individual. Socialists claim that a capitalistic economy leads to inequality, with unfair distribution of wealth and individuals who use their power at the expense of society. Socialism strives, ideally, to control the economy to avoid the problems inherent in capitalism.

Within socialism, there are diverging views on the extent to which the economy should be controlled. One extreme believes all but the most personal items are public property. Other socialists believe only essential services such as healthcare, education, and utilities (electrical power, telecommunications, and sewage) need direct control. Under this form of socialism, farms, small shops, and businesses can be privately owned but are subject to government regulation.

The other area on which socialists disagree is on what level society should exert its control. In communist countries like the former Soviet Union, or modern-day China, Vietnam, and North Korea, the national government controls both politics and the economy, and many goods are owned in common. Ideally, these goods would be available to all as needed, although this often plays out differently in theory than in practice. Communist governments generally have the power to tell businesses what to produce, how much to produce, and what to charge for it. There are varying practices within and between communist nations; for example, while China is still considered to be a communist nation, it has adopted many aspects of a market economy. Other socialists believe control should be decentralized so it can be exerted by those most affected by the industries being controlled. An example of this would be a town collectively owning and managing the businesses on which its residents depend.

Because of challenges in their economies, several of these communist countries have moved from central planning to letting market forces help determine many production and pricing decisions. Market socialism describes a subtype of socialism that adopts certain traits of capitalism, like allowing limited private ownership or consulting market demands. This could involve situations like profits generated by a company going directly to the employees of the company or being used as public funds (Gregory and Stuart 2003). Many Eastern European and some South American countries have mixed economies. Key industries are nationalized and directly controlled by the government; however, most businesses are privately owned but regulated by the government.

Organized socialism never became powerful in the United States. The success of labor unions and the government in securing workers’ rights, joined with the high standard of living enjoyed by most of the workforce, made socialism less appealing than the controlled capitalism practiced here.

Figure 5. This map shows countries that have self-proclaimed to be a socialist state at some point. Most of these followed Marxist-Leninist socialism and were also considered communist. The colors indicate the duration that socialism prevailed. (Map courtesy of Wikimedia Commons)

As with capitalism, the basic ideas behind socialism go far back in history. Plato, in ancient Greece, suggested a republic in which people shared their material goods. Early Christian communities believed in common ownership, as did the systems of monasteries set up by various religious orders. Many of the leaders of the French Revolution called for the abolition of all private property, not just the estates of the aristocracy they had overthrown. Thomas More’s Utopia, published in 1516, imagined a society with little private property and mandatory labor on a communal farm. A utopia has since come to mean an imagined place or situation in which everything is perfect. Most experimental utopian communities have had the abolition of private property as a founding principle.

Modern socialism really began as a reaction to the excesses of uncontrolled industrial capitalism in the 1800s and 1900s. The enormous wealth and lavish lifestyles enjoyed by the propertied classes contrasted sharply with the miserable conditions of the workers.

Some of the first great sociological thinkers studied the rise of socialism. Max Weber admired some aspects of socialism, especially its rationalism and its emphasis on social reform, but he worried that letting the government have complete control could result in an “iron cage of future bondage” from which there is no escape (Greisman and Ritzer 1981). Pierre-Joseph Proudon (1809−1865) was another early socialist who thought socialism could be used to create utopian communities. In his 1840 book, What Is Property?, he famously stated that “property is theft” (Proudon 1840). By this he meant that if an owner did not work to produce or earn the property, then the owner was stealing it from those who did. Proudon believed economies could work using a principle called mutualism, under which individuals and cooperative groups would exchange products with one another on the basis of mutually satisfactory contracts (Proudon 1840).

By far the most important influential thinker on socialism is Karl Marx. Through his own writings and those with his collaborator, industrialist Friedrich Engels, Marx used a scientific analytical process to show that throughout history, the resolution of class struggles caused economic and cultural changes. He saw the relationships evolving from slave and owner, to serf and lord, to journeyman and master, to worker and owner. Neither Marx nor Engels thought socialism could be used to set up small utopian communities. Rather, they believed a socialist society would be created after workers rebelled against capitalistic owners and seized the means of production. They felt industrial capitalism was a necessary step that raised the level of production in society to a point where it could then be reconfigured so as to produce a more egalitarian socialist and then communist state (Marx and Engels 1848). Marxist ideas have provided much of the foundation for the influential sociological paradigm called conflict theory.

In the 2008 presidential election, the Republican Party latched onto what is often considered a dirty word to describe then-Senator Barack Obama’s politics: socialist. (Watch clip from the History channel on Socialism to learn more about the history of the word “socialism.”) It may have been because the president was campaigning by telling workers it’s good for everybody to “spread the wealth around.” But whatever the reason, the label became a weapon of choice for Republicans during and after the campaign. In 2012, Republican presidential aspirant Rick Perry continued this pitch. A New York Times article quotes him as telling a group of Republicans in Texas that President Obama is “hell bent on taking America towards a socialist country” (Wheaton 2011). Meanwhile, during the first few years of his presidency, Obama worked to create universal healthcare coverage and pushed forth a partial bailout of the nation’s failing automotive industry. President Obama is not the first president to be called a socialist. Franklin D. Roosevelt, 32nd president of the U.S., was attacked as being a socialist when he proposed his New Deal, which included Social Security and unemployment insurance, both of which Americans still enjoy today .

In 2016, Bernie Sanders ran for president on the Democratic party platform as a self-described democratic socialist. Two prominent democratic socialists were elected to Congress during the 2018 midterm elections: Alexandria Ocasio-Cortez, from New York’s 14th congressional district, and Rashida Tlaib, representing Michigan’s 13th congressional district. They are all part of a broader movement within the Democratic party to address inequality in the United States with the goal of instituting some socialist policies alongside existing democratic features.

In Donald Trump’s 2019 State of the Union address, he said, “Here, in the United States, we are alarmed by new calls to adopt socialism in our country. … Tonight, we renew our resolve that America will never be a socialist country,”

Are Rick Perry and Donald Trump correct? Is America headed towards socialism?

Socialism can be interpreted in different ways; however it generally refers to an economic or political theory that advocates for shared or governmental ownership and administration of production and distribution of goods. Often held up in counterpoint to capitalism, which encourages private ownership and production, socialism is not typically an all-or-nothing plan. For example, both the United Kingdom and France, as well as other European countries, have socialized medicine, meaning that medical services are run nationally to reach as many people as possible. These nations are, of course, still essentially capitalist countries with free-market economies.

It seems as though the complicated past of the word socialism, especially as that term has been confused with the repressive totalitarian communism of the Cold War period (1945-1991), has many people worried that any sort of socialist policy, such as universal healthcare, is also an attack on personal freedom. Watch this clip from a Washington Post opinion piece that explains how socialism today is not “your grandfather’s concept of socialism.” Do you think the term means the same thing that it used to?

Convergence Theory

We have seen how the economies of some capitalist countries such as the United States have features that are very similar to socialism. Some industries, particularly utilities, are either owned by the government or controlled through regulations. Public programs such as welfare, Medicare, and Social Security exist to provide public funds for private needs. We have also seen how several large communist (or formerly communist) countries such as Russia, China, and Vietnam have moved from state-controlled socialism with central planning to market socialism, which allows market forces to dictate prices and wages and for some business to be privately owned. In many formerly communist countries, these changes have led to economic growth compared to the stagnation they experienced under communism (Fidrmuc 2002).

In studying the economies of developing countries to see if they go through the same stages as previously developed nations did, sociologists have observed a pattern they call convergence. This describes the theory that societies move toward similarity over time as their economies develop.

Convergence theory explains that as a country’s economy grows, its societal organization changes to become more like that of an industrialized society. Rather than staying in one job for a lifetime, people begin to move from job to job as conditions improve and opportunities arise. This means the workforce needs continual training and retraining. Workers move from rural areas to cities as they become centers of economic activity, and the government takes a larger role in providing expanded public services (Kerr et al. 1960).

Supporters of the theory point to Germany, France, and Japan—countries that rapidly rebuilt their economies after World War II. They point out how, in the 1960s and 1970s, East Asian countries like Singapore, South Korea, and Taiwan converged with countries with developed economies. They are now considered developed countries themselves.

Figure 6. Sociologists look for signs of convergence and divergence in the societies of countries that have joined the European Union. (Map courtesy of the European Union)

To experience this rapid growth, the economies of developing countries must to be able to attract inexpensive capital to invest in new businesses and to improve traditionally low productivity. They also need access to new, international markets for buying and selling goods. If these characteristics are not in place, then their economies cannot catch up. This is why the economies of some countries are diverging rather than converging (Abramovitz 1986).

Another key characteristic of economic growth regards the implementation of technology. A developing country can bypass some steps of implementing technology that other nations faced earlier. Television and telephone systems are a good example. While developed countries spent significant time and money establishing elaborate system infrastructures based on metal wires or fiber-optic cables, developing countries today can go directly to cell phone and satellite transmission with much less investment.

Another factor affects convergence concerning social structure. Early in their development, countries such as Brazil and Cuba had economies based on cash crops (coffee or sugarcane, for instance) grown on large plantations by unskilled workers. The elite ran the plantations and the government, with little interest in training and educating the populace for other endeavors. This restricted economic growth until the power of the wealthy plantation owners was challenged (Sokoloff and Engerman 2000). Improved economies generally lead to wider social improvement. Society benefits from improved educational systems, and more broadly shared prosperity will ideally allow people more time for learning and leisure.