Saturday, 24 August 2013
Capitalism is better than communism
In a capitalist system individual firms are able to exist and trade. The proceeds are shared amongst the workers. This is similar to a communist system whereby the people work on a communal farm (not factory) and share the proceeds. With a capitalist communal factory (as opposed to a communist communal farm) the firm still needs to make a profit which protects the system from poverty and insolvency. With a capitalist farm the management must make sure the organisation is in profit (even if this means paying their employees poorly) otherwise they and their employees will go out of business. With communism there is no sense of the firm (farm) going out of business so the people remain despite the farm making no profit and people starving. (There is no incentive to leave.) In capitalism the communal factory is required to make a profit and people are attentive to the risks of insolvency moreso than in communism where there is no apparent alternative. In communism if there is no profit people (still) stay but with capitalism people leave since they realise there is a requirement to make a profit. There is a close analogy between the communal farms of communism and communal factories (or firms) of capitalism only in capitalism the profitability of the organisation is tested in the market. If the firm (or farm) is failing then people will need to leave. The only difference is that with capitalism profits (and transactions with other firms) are allowed so people will leave if the firm or factory is not profitable. It is like communism apart from the fact that firms can trade and people are free to move from firm to firm in order to maximise their profitability and happiness.
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