Communism, Socialism, Capitalism, Aargh!
Each of the three great systems of economic organization is destined to fail. What can we do?
4 min readAug 4, 2021
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Communism
Wealth resulting from people’s work is controlled by the government and is distributed to the people based on each person’s need. A moral imperative helps to ensure an equal distribution of wealth among the people.
In theory: Nobody can be rich.
But:
- Decisions are made by committees of the people to benefit everyone. However, such committees are usually hampered by lack of good data and management by committee is usually inefficient and unrealistic.
- Communism fails to take into account the selfishness of most people. For most people in a communistic society, there is little incentive to work, particularly at an unpopular job.
- The system lasts for some time because a moral imperative to do right by all results in greater happiness for all. However, it does fail eventually because good work is rare and because of the inherent inefficiencies and bad decisions by committees.
- In a failing communistic system, the people suffer. Committee managers, meanwhile, become jaded and corrupt — and powerful and rich.
In reality: Committee managers can be rich.
Socialism
Wealth resulting from people’s work is controlled by the government, often a democratically elected government. Wealth is distributed to the people based on each person’s ability and contribution. A moral imperative to ensure the welfare of the people mitigates the harshness that would result from providing only for those who are capable of contributing.
In theory: Anybody with ability can be rich.
But:
- Decisions are top down, made by successful entrepreneurs to benefit everyone. However, top-down management is inherently inefficient and unrealistic and often cannot properly evaluate every person’s ability and contribution.
- There is some incentive for people to work, but less than there would be if every person’s ability and contribution could be measured accurately.
