Table of Contents
For a long time, socialism and capitalism have been two of the hottest topics of debate in such fields as sociology, philosophy, and, nowadays, political science. The point of focus of these arguments has always been which one of two concepts is better. For some people, socialism is better because it evens out wealth distribution and prevents individuals or given groups from having full control and leaving others with nothing. On the other hand, those supporting the use of capitalism perceive it to be the best because it allows people to make their own decisions without much government intervention, which is essential in achieving economic growth. Early proponents of socialism define it as a theory or system of social organization that is based on ownership of property in a communal manner. In this case, the ownership of the property is ascribed to workers, lower and middle class people. However, capitalism is taken to be a system of social organization that is structured on the basis of a free market and privatization of property in which ownership is ascribed to an individual. The issues that constitute socialism and capitalism have changed over time. Today, both concepts have come to be dependent on a more political perspective. However, their impact on the economy and social structures cannot be underestimated. It is imperative to note that despite current interest in socialism and capitalism, these ideals no longer exist. The most extensive use of socialism and capitalism existed in the period of 1960s and 1970s. China, North Germany, Mongolia, Japan, USSR, US, and Brazil were among the most known countries in the world to implement the ideals of socialism and capitalism in their political and social structures. However, as it currently stands, whenever socialism and capitalism are used, these concepts are not usually in their purest forms. This means that, in most instances, various aspects of both ideals are incorporated together and implemented in the political, economic, and social structures of the nations today. For example, Nordic countries comprising of Norway, Denmark, Sweden, and Finland have been known to blend socialism and capitalism with the goal of improving the standards of living.
Thesis: Socialism and capitalism have an effect on social and economic structures in terms of shaping the politics of a country and its economic performance based on the nature of business interactions within the economy.
Effect of Socialism on Social and Economic Structures
To gain an understanding of the effect of socialism on both social and economic structures, it is significant to note that this will be done by examining socialist countries during the period of 1960-1970s. Further on, the effect of socialism on social and economic structures will be done independently. Consequently, the effect of socialism on social structures will be discussed in terms of its effect on economic structures first. The Union of Soviet Socialist Republics (USSR) was the country most associated with socialism. It existed between 1922 and 1991, when it finally collapsed allowing each state that the USSR was encompassed to break away and attain its individual sovereignty. Other nations that are known to have practiced socialism include People’s Socialist Republic of Albania, which used socialist doctrine from 1976 to 1992. Cambodia was also famous for its socialist ideology in 1979-1989. Finally, Czechoslovakia, East Germany, and Hungary also represented socialist countries.
A significant effect of socialism on the social structure lies in the fact that it creates class differentiation. This happens despite the fact that socialism’s main goal is to promote fairness and equality. The difference in class emanates from the ideology placing a few people in charge of the process of its implementation. For instance, in the governments’ attempt to control businesses, political appointees are usually chosen to be in charge of a number of these businesses' components. The designated people become bureaucrats, and their influence spreads to large industries essential for the well-being of the whole country. Differentiation comes in as a result of these bureaucrats forgetting the reasons behind their appointments. They become greedy and start thinking about enriching themselves; thus, the concept of even wealth distribution loses its meaning to them. Further on, they start caring less about social perception of the products and services they offer from the businesses where they are in control of. Therefore, to be more precise, the effect of socialism on social structures causes and brings about moral decay through introducing corruption, a factor that makes bureaucrats use the resources available to them in order to enrich themselves at the expense of the society.
Socialism gives the government great power over its people. The effect of this aspect of socialism is that it tends to make leaders feel threatened and consequently drives them into fearing their power will be taken away from them. This has an impact on the social structure in the sense of leading to various social disruption. Thus, in a bid to protect their powerful positions, these leaders implement unethical and harmful measures such as arbitrary arrests of those believed to be threatening their positions. For instance, when the USSR was still a strong socialist state under the leadership of Joseph Stalin, in a bid to protect his position, Stalin committed the Great Purge. This was a move in which he get rid of his opponents from the national Communist Party. The process was accomplished through mass arbitrary arrests of opponents who were then taken to correctional labor camps while others were sentenced to death. The social disruption occurred as a consequence of increased levels of tension in the country as people worried about their own safety. It further increased suspicion, thus preventing social gatherings and interactions as people avoided being associated with individuals considered to be the enemies of Stalin.
Social integration is also an effect of socialism on social structures. The main purpose of socialism is to facilitate wealth distribution in a manner of ensuring that everyone has a chance to benefit and enjoy it. This is fostered by the belief that socialism discourages economic inequality since the latter is a negative outcome for the whole society. For this reason, the government is charged with the task of reducing this inequality through the implementation of various programs that are meant to benefit the poor members within society. Equal opportunities are presented to all. For example, large-scale industries in a socialist society are operated through the process of cooperative efforts. As a result of these efforts, the returns from the industries are usually given back with the aim of benefitting society as a whole. It is vital to note that while socialism encourages equal distribution of wealth among the people, its impact on social structures is not only integration, but also achievement of greater social welfare. This can be demonstrated by the government’s role in establishing programs meant to oversee and to bring social wealth into realization. For instance, in the USSR, health care was controlled by the state, and it was available to citizens for free. The article 42 of the Soviet Constitution, which was appended in 1977, provided the citizens with the right to receive healthcare protection. This included free access to health institutions within the Soviet Union.
To tackle the second part of the discussion, the effect of socialism on economic structures and the growth of the economy should be taken into consideration. Therefore, one relevant effect of socialism on the economic structure is that it retards economic growth because socialism prevents competition between businesses as a result of lacking free market where businesses can compete against each other in a healthy and professional manner. The government controls the entire economic system instead of a free market only. Businesses are hence unable to succeed because the lack of competition prevents them from pushing themselves into producing better goods or inventing profitable modifications to production in a bid to stay ahead of other businesses and match customer preferences. The end result here is stagnant performance by businesses with nothing unique to offer the economy. For example, the use of socialism in countries such as Cuba and North Korea has not been effective in bringing about economic growth since the citizens of these countries have been mired down in abject poverty for many years. The growth of the economic structure is further stifled as a consequence of the bureaucrats being ignorant of the wants and needs of the people in terms of the economy. The fact that these bureaucrats insist on retaining their positions in the control of the economy despite their incompetence makes the situation even worse. This can be demonstrated by the election of Hugo Chávez in Venezuela. Despite being elected in a democratic manner, his only purpose was to retain his power and protect his personal interests despite the damage it does to the economy.
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Reduced efficiency is another effect of socialism on economic structures. This is brought about by state ownership and control of the main means of production. The inefficiency is as a result of workers and managers in charge of production lacking sufficient training. It is especially significant in the process of cutting costs. Most of these state workers do not adhere to common business practices. They control the factors of production under their care in a manner that promotes over-indulgence. Reduced economic inefficiency is also brought about as a consequence of many of these workers and managers lacking qualifications to oversee the factors of production. Consequently, many of them hold the positions they do due to the fact that they are political appointees chosen because of their social connections. Therefore, without proper education or professional experience in overseeing the national factors of production, it is inevitable for the economic structures to become inefficient. Furthermore, it is vital to point out that many of workers and managers have the habit of issuing conflicting demands. These demands are known to make economic structures inefficient since they usually increase pressure on them.
Socialism continues to impact economic structures by reducing incentives. The incentives are significant because the economic price sought by implementing socialist ideal cannot be realized without them, because the incentives play a critical role in promoting productivity of people. Furthermore, its absence agitates an economic blow. Therefore, the income sharing concept of socializing reduces individual’s incentives to work. People fail to see the significance of putting in any effort in their work since they receive similar rewards due to the fact that everyone holds equal wealth. According to economist John Galbraith, the communal form of socialism supporting equality of wages is completely unrealistic since it makes false assumptions concerning human motivation.
Effect of Capitalism on Social and Economic Structures
After the previous discussion of the effect of socialism on social and economic structures, this discussion will equally make use of examples of countries that were known to have utililzed the ideal of capitalism in 1960-1970s. Similarly, the effect of capitalism on social structures will be covered by its effect on the economic structures first.
Capitalism has had multiple effects on the social structures of the nations where it has been practiced. For instance, one outstanding effect of capitalism on the social structures is the promotion of individualism in society, because practicing capitalism entails such aspect as consumer choice. This refers to consumers having the power to choose what to consume. Secondly, capitalism promotes individualism in society by encouraging private ownership of property. The one’s property is his/her own once a person acquire it and as a result, and he or she is not obliged to share it out with anyone else. Therefore, an individual can choose to use it as desired. The private ownership of property extends to factors of production. The disadvantage of this sense of individuality is that it encourages individuals to share less responsibility in societal problems. People have become more concerned with meeting their own individual needs and, as a result, have turned a blind eye to social problems, e.g. an increased levels of poverty. Further on, the gap between the rich and the poor has continued to widen and has brought about class separation. In this sense, the interaction between the wealthy and the poor has been reduced in most social contexts. For example, the rich have their own schools, churches, and recreational facilities while the poor have their own. This has all been brought about by capitalism through individuality that has led ones to amass more wealth compared to others making it nearly impossible for the two formed groups to socially interact in a comfortable manner.
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Exploitation is the resultant effect of capitalism on social structures. This occurs due to the existence of monopolies. These are brought about by capitalism because of its ignorance in terms of the role of the government in regulating markets and consequent industries. When factors of production are collected in the hands of a few, these people gain power to control how the factors will be used or distributed as argued by Karl Marx and Friedrich Engels. Naturally, they will be driven by ambition of ensuring their well-being. Moreover, having this kind of power will push them towards taking the opportunity of such power bringing as much profit as possible. Monopolies, therefore, end up exploiting people by setting high prices for the products and services without fear of repercussions.
The social problem like high rate on unemployment is the resultant of the effect of capitalism on social structures. The reason for this is the fact that capitalism is destructive towards resources because the doctrine tends to be unplanned and chaotic. The destructive nature of capitalism moves onto resources such as workers and other issues linked to well-being impacting the growth by undermining it. The result of this is the decreased rate of job creation that causes many people to become unemployed. Moreover, the fact that capitalism is associated with free markets makes one to expect that there is going to be growth and decline. Unemployment is one aspect of decline that is likely to be experienced.
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An effect of capitalism on economic structures is that it promotes economic growth. The reason for this is the capitalism allowing for the concept of free markets. This makes it possible for businesses to engage in competition, which is essential in ensuring that they focus on being effective as a main way of surviving this competition. As a result, most businesses embark on the processes that will help them minimize their costs in manufacturing products and offering services. In addition, they undertake the step of researching on consumer preference. This competition is essential in determining pricing of goods and services in a manner that will oversee economic returns to business. The income received from businesses operating in this market is injected back into the economy to fuel further economic growth.
Another significant way through which capitalism impacts economic structures is its support of incentives. The support is realized in the following ways. First of all, capitalism asserts that those individuals with the best and most creative business ideas, plans, and schemes are the only ones with the right to be compensated with profits. On the other hand, those who lack any of these essential business capacities will not be able to keep up with competition and eventually lose the place in the market as well as the profits as they have not worked for them. Secondly, in the continued support of incentives, which are necessary in driving economic structures, the ideal of capitalism affirms that those individuals with desire to succeed will put forth more efforts compared to those who lack the motivation for success. The fact that capitalism allows individuals to make their own decisions and make earnings on their wages on the basis of the amount and quality of work put forth is a point of incentive being effectively motivating business owners in order to put forth more effort. This is significant in supporting one of capitalism's main idea that private ownership and acquisition of wealth belong to an individual alone. Therefore, the impact of incentives on economic structures is encouraging their optimal use in the pursuit of economic growth.
Increasing the effectiveness of economy is another aspect of capitalism in terms of economic structures. This is achieved through a number of ways. The first way is the profit and loss system. In this case, for the businesses that fail to make profits and instead make losses, there is no choice but to stop operations. The fear of having to make such a choice drives businesses to effectively make use of economic structures in order to gain profits that will ensure their survival. The second way is the fact that capitalism is a flexible system. Therefore, it allows businesses to adapt to new and constantly changing economic cycle. For this reason, when businesses cultivate the ability to adapt to the ever-changing economic cycle such as increasing consumers' demand for products and services, they will be in position of effectively using the available economic structures. Moreover, this will encourage technological advancements. Further, it will be essential for increasing the effectiveness of economic structures in bringing about positive economic change in the long run.
Capitalism also has an impact of concentrating national economic structures in the hands of a few necessitating redistribution of wealth, because when some people gain tremendous wealth, they use it to influence the government in order to become even richer. Despite the fact that the government has limited influence in the economic market, it still has the responsibility of enacting laws and regulations meant to promote economic stability in this market. Therefore, when the wealthy people take advantage of such role of the government to further enrich themselves, the economic structures will not be effectively used for advancing the economy given that all power will be concentrated in the hands of those who influence their use. This can be illustrated by a capitalist country, the United States.