Socialism is the biggest lie of our times. While it promises prosperity, equality, and security, it delivers only poverty, misery, and tyranny. Equality is achieved only in the sense that everyone is equal in his or her misery.
Socialism, a socialist economy, is characterized by the government ownership of all means of production. They own the big factories, the transportation industry, the steel industry and all other significant business. The government decides what to produce, what size and shape and how many, as well as the non-negotiable price. They also set worker salaries and wages.
In capitalism, practiced in Denmark, Norway, Sweden, Germany and the U.S., the businesses are owned by private entities. They decide what to produce, what quantities and what sizes. The price is determined in the open marketplace. If people don’t like the product, they don’t buy it and the company does something else or folds. Yes, many of these countries provide wide benefits to their citizens, paid for by their high rates of taxation. But this is not socialism. Listen to the words of the Danish Prime Minister at a Harvard Business School address: “I know that some people in the U.S. associate the Nordic model with some sort of socialism. Therefore, I want to make one thing clear: Denmark is far from a socialist planned economy. Denmark is a market economy.”
Communism, a paper system devised by Karl Marx, states one of the basics of communism is the complete abolition of private property. His major pronouncement was when communism existed, the state would wither away. This has never happened.
Milton Friedman, perhaps the greatest economist of the 20th century, stated that capitalism is the only system that has improved the lot of those in dire poverty. And, “there is no alternative way so far discovered to improve the lot of ordinary people that can hold a candle to free enterprise.”
What is amazing is with the world’s largest experiment with socialism having failed — the Soviet Union — that anyone would advance it as a viable economic system.
Venezuela is the latest country to fall for the deception of socialist bureaucrats. Now the Venezuelan population is forced to go hungry – some call it the ‘Maduro diet’ (named after Nicolas Maduro, the president of Venezuela). Socialism is a dangerous global ‘virus’ that if left unchecked, can cause widespread poverty and misery on a grand-scale.
The only cure for the socialist scourge is to actively fight it through all means possible – online media, newspapers, TV, social media, etc. The continued struggle against the socialist menace is the only way forward as a people – no matter the race, background, income level, ethnicity – we all must fight these brainwashed socialist activists.
Capitalism may not be perfect, it has its flaws. However it is the ONLY effective economic system that is proven to work and provide wealth and a high standard of living for the vast majority of citizens. Why is it that Western nations, Japan, the Four Asian Tigers, Israel and the GCC Gulf States are the only truly wealthy regions on the planet? Because they all have successfully adopted free-market capitalist systems. The proof is in the pudding.
Even former communist states such as the Czech Republic, East Germany, Slovakia have caught up to their Western neighbors after implementing capitalist economic systems.
In the same way that a Ponzi scheme or chain letter initially succeeds but eventually collapses, socialism may show early signs of success. But any success quickly fade as the fundamental issues of central planning emerge. It is the initial illusion of success that gives government intervention its vicious, seductive appeal. In the long run, socialism has always proven to be a deadly formula for tyranny and poverty.
A pyramid scheme is ultimately unsustainable because it is based on faulty principles. Likewise, collectivism is unsustainable in the long run because it is a flawed theory. Socialism does not work because it is not consistent with fundamental principles of human behavior. The failure of socialism in countries around the world can be traced to one critical defect: it is a system that ignores incentives.
In a capitalist economy, incentives are of the utmost importance. Market prices, the profit-and-loss system of accounting, and private property rights provide an efficient, interrelated system of incentives to guide and direct economic behavior. Capitalism is based on the theory that incentives matter!
Under socialism, incentives either play a minimal role or are ignored totally. A centrally planned economy without market prices or profits, where property is owned by the state, is a system without an effective incentive mechanism to direct economic activity. By failing to emphasize incentives, socialism is a theory inconsistent with human nature and is therefore doomed to fail. Socialism is based on the theory that incentives don’t matter!
2. The strength of capitalism can be attributed to an incentive structure based upon the three Ps: (1) prices determined by market forces, (2) a profit-and-loss system of accounting and (3) private property rights. The failure of socialism can be traced to its neglect of these three incentive-enhancing components.
3. By their failure to foster, promote, and nurture the potential of their people through incentive-enhancing institutions, centrally planned economies deprive the human spirit of full development. Socialism fails because it kills and destroys the human spirit–just ask the people leaving Cuba in homemade rafts and boats [and those waiting in long lines today in Venezuela struggling, and often failing, to buy food].
4. The temptress of socialism is constantly luring us with the offer: “give up a little of your freedom and I will give you a little more security.” As the experience of this century has demonstrated, the bargain is tempting but never pays off. We end up losing both our freedom and our security.
Socialism will remain a constant temptation. We must be vigilant in our fight against socialism not only around the globe but also here in the United States.
The failure of socialism inspired a worldwide renaissance of freedom and liberty. For the first time in the history of the world, the day is coming very soon when a majority of the people in the world will live in free societies or societies rapidly moving toward freedom.
Capitalism will play a major role in the global revival of liberty and prosperity because it nurtures the human spirit, inspires human creativity, and promotes the spirit of enterprise. By providing a powerful system of incentives that promote thrift, hard work, and efficiency, capitalism creates wealth.
The main difference between capitalism and socialism is this: Capitalism works.