From capitalism to communism, explained

Everything, from your clothes to your phone to the train you last caught, has gone through what economists call ‘the means of production’.

This is the way a commercial good or service is created and sold, all the way from its raw materials to how it arrives in your hands… or to your platform.

Most of these things (also referred to as capital) can only be created as a result of collective effort. No individual can reliably ensure everyone in a country of twenty-five million has a safe way to dispose of their waste or a place to go to when they’re sick. One person can’t even meet the most basic requirement of that population and ensure sure everyone is fed.

Of course, these things cost money to maintain. Whenever cost is involved, people want to know who pays. This is where it gets hairy. If one person owns ‘the means of production’, they have to pay for everything – and keep any and all profit made. If everyone involved owns ‘the means of production’ collectively, they share the cost – and any profit.

This is where the branches of different economic systems begin.

Capitalism

Capitalism is an economic systemwhere the ‘means of production’ and resulting capital are owned by private individuals and businesses. It is based on voluntary relationships of supply and demand instead of centralised (usually government) planning.

This system is rooted in classical liberal philosophy and its conception of the rational, freethinking, autonomous individual. It claims market competition forces people to act in a way that benefits others, regardless of their intention.

Socialism

Socialism is an economic system borne out of opposition to capitalism where the ‘means of production’ are collectively owned and shared. It prioritises production for use rather than profit and achieves this through centralised planning – like a government.

The value of whatever is produced is determined by the amount of time and labour required, not market supply and demand. Socialism claims sharing resources and work according to need, rather than competition, creates a more equitable and secure society.

Communism

Communism is a utopian political economic system where a society is reorganised without hierarchy, states, money or class. The ‘means of production’ are shared communally and private property is non-existent or severely restricted. Karl Marx and Friedrich Engels published the seminal political pamphlet on this, A Communist Manifesto in 1848.

Communism’s modern adherents claim it has not happened yet, while its critics cite Maoist China, Stalin’s Soviet Union, the Cold War, and many other historical crises to signal its danger.

Fascism

Fascism is an economic system based on self-sufficiency of the state, ethnic purity, and one-party ownership over the means of production. There’s usually a dictatorial leader and little to no tolerance of political opposition. Fascism claims the strength of a nation comes from unity and unity depends on fixed identities.

Though commonly associated with Nazi Germany, many other countries have been considered fascist at some point too, such as Brazil, Iraq and Japan.

Laissez-faire

Laissez-faire translates to ‘leave alone’ or ‘let them do’. Laissez-faire is an economic system that leaves transactions and trade free from government regulation, subsidies, tariffs, and privileges. It claims the economy is a natural system and the market is an organic part of it. Government interference hinders something nature can mediate.

Which economic-political system is best?

When discussing what economic system we prefer, it’s important to know what we’re talking about. The economies of most modern countries today are rarely pure capitalism or pure socialism. Most have a mixed capitalist system where private individuals or businesses make profit off labour, while operating within government regulations.

At the bare bones of economic theory, you find philosophy. Questions like ‘What is the purpose of government?’, ‘What is a human right?’, ‘What can we expect from our relationships?’, or ‘What does equality and justice look like?’ inform the different perspectives that manifest into policy.

Which one would you stand for?

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