Introduction To Captilism

At its root, capitalism is an economic system based on three things:

wage labour (working for a wage), private ownership or
control of the means of production (things like factories,
machinery, farms, and offices), and production for exchange
and profit. While some people own means of production, or
capital, most of us don't and so to survive we need to sell
our ability to work in return for a wage, or else scrape by
on benefits. This first group of people is the
capitalist class or "bourgeoisie" in Marxist jargon, and the
second group is the working class or
"proletariat". Capitalism is based on a simple process
money is invested to generate more money. When money
functions like this, it functions as capital. For instance, when
a company uses its profits to hire more staff or open new
premises, and so make more profit, the money here is
functioning as capital. As capital increases (or the economy
expands), this is called 'capital accumulation', and it's the
driving force of the economy.
Introduction to socialism
Socialism is a range of economic and social systems characterised
by social ownership and democratic control of the means of
production,[10] as well as the political theories, and
movements associated with them.[11] Social ownership may
refer to forms of public, collective,
or cooperative ownership, or to citizen ownership of
equity.[12] There are many varieties of socialism and there is
no single definition encapsulating all of them.[13] Social
ownership is the common element shared by its various
forms.[5][14][15]
Socialist economic systems can be divided into non-market
and market forms.[16] Non-market socialism involves the
substitution of factor markets and money, with engineering
and technical criteria, based on calculation performed in-
kind, thereby producing an economic mechanism that
functions according to different economic laws from those
of capitalism. Non-market socialism aims to circumvent the
inefficiencies and crises traditionally associated with capital
accumulation and the profit system.[25] By contrast, market
socialism retains the use of monetary prices, factor markets,
and, in some cases, the profit motive, with respect to the
operation of socially owned enterprises and the allocation of
capital goods between them. Profits generated by these
firms would be controlled directly by the workforce of each
firm, or accrue to society at large in the form of a social
dividend.[26][27][28] The socialist calculation debate discusses
the feasibility and methods of resource allocation for a
socialist system.
METHODOLOGY TECHNIQUE
THINKERS IDEAOLOGY ON CAPTILISM
1- ADAM SMITH VIEWS ON CAPTILISM
One of Smiths initial observations was that production was enhanced by the assigning of
specific tasks to individual workers. This division of labor would maximize production by
allowing workers to specialize in discrete aspects of the production process. He saw in the
division of labor and in expanding markets virtually limitless possibilities for the expansion
of wealth through manufacture and trade.
Smith also argued that capital for the production and distribution of wealth could work most
effectively in the absence of government interference. Such a laissez-fairethat is, leave
alone or allow to bepolicy (a term popularized by Wealth of Nations) would, in his
opinion, encourage the most efficient operation of private and commercial enterprises. He
was not against government involvement in public projects too large for private investment,
but rather objected to its meddling in the market mechanism.
He also held that individuals acting in their own self-interest would naturally seek out
economic activities that provided the greatest financial rewards. Smith was convinced that
this self-interest would in turn maximize the economic well-being of society as a
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One particularly radical view in Wealth of Nations was that wealth lay not in gold but in the
productive capacity of all people, each seeking to benefit from his or her own labors. This
democratic view flew in the face of royal treasuries, privileges of the aristocracy, or
prerogatives doled out to merchants, farmers and working guilds. It is not coincidental that
such democratic, egalitarian views arose simultaneously with the American Revolution and
only just preceded the French Revolution of 1789. Smith believed that the true wealth of a
nation came from the labor of all people and that the flow of goods and services constituted
the ultimate aim and end of economic life.
Modern capitalism traces its roots to Adam Smith and his Wealth of Nations,which has
served, perhaps more than any other economic work, as a guide to the formulation of
nations economic policies. Subsequent theories have altered governments role in economic
policy, particularly the Keynesian ideas of the 20th century. Notwithstanding, Smith and his
theories continue to occupy an important position in the development of economic thought.
DAVID RICARDO

David Ricardo maintained that the economy generally moves

towards a standstill. His analysis is rooted in a modified version of
the labor theory of value. He held out the belief that the rate of
profit for society as a whole depends on the amount of labor
necessary to support the workers who farm "the most barren land
that can still maintain agriculture" This model breaks land down into
categories based on average fertility rates. The most fertile land
naturally produces more food than land of poorer quality. As a result
it commands a higher rent. The poorest land utilized for agriculture
receives no rent, with all of its earnings going to cover labor and
capital costs. The difference between the output from the least
fertile land which can still be farmed and that of a higher quality
constitutes the source of rent on the better land. As the population
grows, poorer land must be cultivated in order to meet the growing
demand. The cost of rent for good land then increases. This, coupled
with the fact that poor land necessitates increased labor input to
maintain minimal output results in falling profit levels. As rents rise,
profits fall. Essentially, rent costs gobble up profits as the population
increases. Since profits lead to reinvestment and thus growth rising
rent costs indirectly prevent economic progress.
In Ricardo's model the interests of landowners directly oppose those
of general society. Ricardo preempted Karl Marx in describing
adversarial class relations. Marx, in fact, based a great deal of his
economic theory on Ricardo's writings. Although Marx identified
capitalists, not landlords, as the source of societal grief he co-opted
Ricardo's labor theory of value. Marx also utilized Ricardo's forecast
of economic stagnation in predicting a working class uprising.
When capitalism eroded its own underpinnings the resulting misery
was expected to bring social strife and revolution. It is unlikely that
Ricardo would have supported Marx's revolutionary brand of
political economics, but the ties between the schools of thought are
undeniable.
It is ironic that although Ricardo's ideas helped provide a basis for
Marxist critiques of the capitalist system, he own policiy
recommendations, like those of Thomas Malthus, are grounded in
the doctrine of free trade. Ricardo believed that the Corn Laws, in
particular, constituted a burden to the agricultural economy. He
believed that these trade barriers kept food prices artificially high
and encouraged a bloated rent rate. In Parliament Ricardo actively
campaigned against the Corn Laws as well as other government
interventions. Essentially this economic stance mirrors Adam Smith's
teachings: the market, although imperfect, is best left untouched.
Government action only prevents the economy from righting itself.
Although Ricardo did not share Smith's complete confidence in the
market he recognized that tampering with the system would only
result in further economic stagnation.
Thinkers views on socialism
Bhagat singh on socialism
There is no doubt that Bhagat Singh is one of the most
celebrated martyrs of the Indian freedom struggle. He
has left behind a legacy that everyone wants to
appropriate, yet most do not wish to look beyond the
romantic image of a gun-toting young nationalist.
Perhaps the reason is that this is the image that was
created in the official colonial records partially, an
image we inherited and conveniently accepted as
truth. The colonial records told the common masses
that revolutionary activities were dastardly crimes,
committed for the gratification of money and
bloodlust. In fact, this is clearly reflected in the
contemporary consciousness, particularly the youth,
who visualize Bhagat Singh as someone who
terrorized the British through his violent deeds. His
daring spirit is lauded, which has turned him into an
icon. His posters are sold on pavements; stickers with
his photo are pasted on car windscreens. It may be
heartening to see that Bhagat Singh is still loved and
venerated, but the question we need to ask is: do we
really have any clue to his politics and ideas? In history
the pen has not always been mightier than the sword,
but at least, it has been as potent a weapon as the
sword. Bhagat Singh remains one of the best examples
in the Indian revolutionary movement of using the pen
instead of the sword.
Bhagat Singh underwent numerous changes to master
the understanding of world events in spite of the
insane restrictions. He was an actor, singer, swimmer,
newspaper vendor, cyclist thus making him an
individual with many common traits but also blessed
with an extraordinary caliber. His biographical
sketches of eminent revolutionary martyrs always took
a center stage. He was vocal against the nexus of
casteism-communalism. A pioneer thinker to put
these two concepts on one platform his
understanding of class consciousness in order to
resist communalism through the unity among the
working class people remains the crux of his
understanding of scientific socialism.
Karl marx
Marx's concept of socialism follows from his concept of
man. It should be clear by now that according to this
concept, socialism is not a society of regimented,
automatized individuals, regardless of whether there is
equality of income or not, and regardless of whether
they are well fed and well clad. It is not a society in
which the individual is subordinated to the state, to
the machine, to the bureaucracy. Even if the state as
an "abstract capitalist" were the employer, even if "the
entire social capital were united in the hands either of
a single capitalist or a single capitalist
corporation," [89] this would not be socialism. In fact,
as Marx says quite clearly in the Economic and
Philosophical Manuscripts, "communism as such is not
the aim of human development."\
CAPTILISM VS COMMUNISIM DURING COLD WAR
The Cold War consumed almost half a century of global
history; the end of World War II was only the beginning
of this 45 year-long international crisis. Americas defeat
of Japan in 1945 marked the beginning of this turbulent
era, which only ended upon the dissolution of the Soviet
Union in 1991. This ongoing global conflict, based on the
fight between Capitalism and Communism, was centered
on the relationship between the United States and the
Soviet Union. Fundamental disagreements over
government power and social structure divided the
formerly allied nations and sparked an intense battle for
world supremacy. These two superpowers were the
major players in the Cold War; however their battles
were fought like a game of chess with smaller third-world
countries being used as pawns by the careful chess
masters of the United States and Soviet Union, who
never actually directly confronted each other in battle
(Metcalf, 2003).
During World War II the United States and the Soviet
Union joined together as allies against the Nazi regime in
Germany; however this alliance was forged out of
necessity and was quickly broken after the defeat of
Germany and Japan in World War II. In fact, the state of
global affairs at the end of World War II was not much
better than when the war began. Once the threats of
German and Japanese control were no longer concerns,
the Soviet Union jumped to take their place in the global
race for domination. America viewed the USSRs
subsequent expansion through eastern Europe as the
newest threat against their safety and freedom. For the
next 30 years Communism and Russia were seen as the
greatest risks to American interests, both domestic and
international. Most of the significant events of the
second half of the 20th century stemmed from the feud
between the US and the USSR: the Arms Race, Space
Race, Korean War, Cuban Missile Crisis, the wars within
Vietnam, and the building of the Berlin Wall are only
some of the examples of the conflicts between these two
great nations (History.com, 2012).
While the threat of nuclear devastation was a constant
fear for American citizens, the United States didnt
actually experience any kind of foreign attack or battle
on American soil after the bombing of Pearl Harbor until
10 years after the end of the Cold War when the Taliban
attacked the World Trade Centers in New York City on
September 11, 2001. The real threats to American
citizens during the Cold War were aimed at their
freedoms and way of life. Everything that defined the
American nation and its citizens was being threatened at
its very core. The ideologies, values, and comforts
Americans were so proud of were under attack by
communist nations, with Russia at the helm.
The ultimate threat accomplished by Americas enemies
during the Cold War was the fear instilled in the
American people. After the victory of World War II,
America was almost euphoric in its gains from post-war
life; the depression was over, affluent suburbs were
sprouting up around the country, and the economy was
in a better state than it had been in several decades;
material wealth defined the prosperous lifestyle of the
new America (Farber, 1994). The communists potential
to destroy this new lifestyle, and its continuous threats
to do so, broke Americas pride and spirit leaving a wake
of fear and paranoia throughout society. The only battle
fought on American soil during the Cold War was
internal: American vs. American. The McCarthy witch
hunts and blacklisting can be seen as a communist
victory in America during the history of the Cold War.

This image was selected as a

picture of the week on the Malay Wikipedia for the 44th
week, 2009. (Photo credit: Wikipedia)
As the Cold War waged on, Americans began to prepare
for the possibility of nuclear war. Bomb shelters popped
up in the basements and backyards of the new suburban
havens. Food and supplies were stockpiled and kept at
the ready in case a long-term stay in the shelters was
necessary due to radiation after a nuclear attack. Duck
and Cover drills were practiced at school and home and
families had emergency plans in case of separation
during an attack. While being as prepared as possible for
a worst-case scenario is always best, in this instance the
best possible preparation still would not have been
enough for the majority of Americas citizens in the event
of an actual nuclear attack. These tactics and drills
served more as a panic prevention mechanism than
actual protection from nuclear harm. Being prepared
and having a plan for a disaster scenario gives people
something to do and think about during an emergency,
rather than panic and act irrationally, making a bad
situation worse. The best preparations one could make
for their families were psychological provisions to soothe
fear and anxiety and help maintain a normal lifestyle in a
world filled with fear and chaos.
Upon reflection of the patterns and events of the Cold
War and those that have transpired since, specifically in
the Middle East, a primitive question remains: Could
human-kind ever really just give peace a chance or is
there no end to the search for global domination and
national supremacy?
CAPTILISM VS SOCIALISM
Formal and Informal Economies
'Economy' is defined in this lesson as the wealth and
resources of a region in terms of the production and
consumption of goods and services. There are two types
of economies: formal and informal. Formal
economies consist of those driven by the market or
government, while informal economies exist without
formalized policies or regulations.
This lesson will discuss formal economy systems in terms
of capitalism and socialism and the underground
economy, which is considered an informal economy. We
will cover the key characteristics, advantages, and
disadvantages of these types of economies.
Capitalism vs. Socialism
Formal economies operate within limits of established
and monitored policies and regulations. Capitalism and
socialism are formal economies.
The major differences between capitalism and socialism
revolve around the role of the government and equality
of economics. Capitalism affords economic freedom,
consumer choice, and economic growth. Socialism,
which is an economy controlled by the state and planned
by a central planning authority, provides for a greater
social welfare and decreases business fluctuations.
Capitalist Economy: Key Characteristics
Capitalism is characterized in the following ways:
It is a market-based economy made up of buyers
(people) and sellers (private or corporate-owned
companies).
The goods and services that are produced are
intended to make a profit, and this profit is
reinvested into the economy.
The government should not interfere in the
economies of the free market, meaning, the market
determines investments, production, distribution
and decisions, and government interference is only
allowed when making and enforcing rules or policies
governing the conduct of business.
There is a need for continual production and
purchase for a capitalistic economy to operate
efficiently.
 Capitalists believe that government does not use
economic resources as efficiently as private
enterprise.
The U.S. is considered to be a capitalist economy, along
with most of the modern world; however, economists
are quick to point out that almost every society has a
socialist aspect or program within it.
Capitalism: Advantages and Disadvantages
The advantages of capitalism include:
Consumer choice - Individuals choose what to
consume, and this choice leads to more competition
and better products and services.
Efficiency of economics - Goods and services
produced based on demand create incentives to cut
costs and avoid waste.
Economic growth and expansion (which is possible in
the capitalist economy system) - This increases the
gross national product and leads to improved living
standards.
The disadvantages of capitalism include:
A chance of a monopoly of power - Firms with
monopoly power (when a specific person or
 enterprise is the only supplier of a particular
commodity) can abuse their position by charging
higher prices.
Inequality - A capitalist society is based on the right
to pass wealth down to future generations. If a small
group of people hold all the wealth and that wealth
continues to be passed down to the same groups of
people, inequality and social division occur.
Recession and unemployment - An economy based
on the market of consumers and producers is
invariably going to experience growth and decline.
Socialist Economy: Key Characteristics
Socialism is characterized in the following ways:
The means of production are owned by public
enterprises or cooperatives (the state), and
individuals are compensated based on the principle
of individual contribution.
There is equal opportunity for all. Large-scale
industries are cooperative efforts, and thus, the
returns from these industries must be returned to
and benefit society as a whole.
 Economic activity and production are planned by the
central planning authority and based on human
consumption needs and economic demands.
Socialists believe economic inequality is bad for
society, and the government is responsible for
reducing it via programs that benefit the poor.
For example, in the U.S., we have Medicare, social
security benefits, and social nutrition assistance
programs that are considered socialist in nature.