An Everyman's Guide to Basic Economic Theory
By Lee Estrada
These 3 political/economic theories can be best illustrated on a continuum.
At the left is communism, simply stated; From each according to his ability, to each according to his need.
At the right is capitalism, simply stated; Winner takes it all, Loser takes the fall.
In the middle lies socialism, simply stated; He's got the whole world in his hands...
Pros and Cons (Whether these aspects are Pro or Con is a personal choice)
Communism - No reason or incentive to produce or excel. Government controls all aspects of your life..) There are no taxes as there is no income. Production and innovation are severely limited.
Socialism - Government controls most of the major aspects of life. Education, Medical, Retirement, and Housing to large extent. Taxes (60% -80%) are very high and the demand for services often exceeds the supply, resulting in excessive waiting periods, shortages and/or rationing. There is some incentive to produce, however, there is little reason to as all or most basic needs are taken care of.
Capitalism - Government controls few aspects of everyday life. Supply and Demand governs all economic functions and survival of the strongest/smartest is the rule for most other aspects of life. Taxes are low with proceeds designated for defense, law enforcement, and administration. The citizen has the most to gain but also the most to lose. Innovation and Productivity are maximized.
In a perfect world all 3 of these systems are sound and will have a large measure of success. It is not a perfect world which has shown each of these systems wanting. Attempting some type of amalgamation has had some success, but requires a delicate balancing act.
Current events would seem to indicate that several of the world's economies are out of balance. The US and the rest of the world are trying to walk the fine line between providing a basic safety net yet still providing a reason and an incentive to excel.
In summary
COMMUNISM: You have two cows. The state takes both of them and gives you a portion of the milk.
SOCIALISM: You have two cows. The state takes one cow plus a portion of your milk and gives it to someone else.
CAPITALISM: You have two cows. You sell one, buy a bull and start a ranch.
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