Capitalism as a Framework for Society
Introduction
Over the ages, different economic models have been developed. However, the primary economic models that are heavily utilized among several countries include capitalism, communism, and socialism. In a capitalistic economy, the factors of production are privately owned and individual players have economic freedom. Karl Marx one of the great philosophers the world has ever had and the farther of communism stated that “private ownership of factors of production encourages greed and motivates individual players to knock out the competition without considering the consequences of their actions (Herrmann and Alexander, 694).” Through this, Marx encouraged the government to exercise ownership of factors of production. Additionally, socialism calls for empowering the individuals within the society to control the factors of production either through the government or directly. It is fundamentally channeled to ensure equal distribution of resources and wealth, a fundamental belief held by the communists.
Through all these, the greatest difference between capitalism and the other two types of economic models is the private ownership of factors of production. Both communists and the socialists believe that promoting economic freedom in an economy where factors of production are privately owned results in income inequality and imbalance in resource distribution within the society, which have been cited as major causes of anti-social behaviors among individuals (Dalton and Andrew, 13). What communists and socialist ignore is that the far this world has got in relation to the effectiveness and efficiency of products and services is a result of the capitalistic nature of the majority of its economies.
Milton Friedman is one of the most renowned economists around the globe and has proposed several models for ensuring efficiency and effectiveness within organizations, including the need for participating in corporate social responsibilities CSR (Scott, 8). At one point he said and I quote, “Nobody spends somebody else’s money as carefully as he spends his own. Nobody uses somebody else’s resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property (Dalton and Andrew, 17).” — Milton Friedman. This supports the need for instituting capitalistic economies. This study will primarily major on presenting arguments for capitalism other than communism and socialism.
The innovative aspect of capitalists
Elon Musk is one of the greatest entrepreneurs in the contemporary world and heavily invests in innovative business operations. This has placed him as the CEO of Tesla Inc. which produces electric cars as a substitute for the normal cars that have been identified to contribute to the damage of the ozone layer. At one point he said, “when something is important enough you do it even if the odds are not in your favor (Kennedy, 54).” By this statement, Musk was stressing on the need for innovation among individuals within the society.
The world has enjoyed great success from innovation. Through innovation, the production process for different products and services around the globe has gone different changes which include the heavy utilization and reliance on human labor before the emergence of the 20th century Herrmann and Alexander, 694). During the 20th century, the world witnessed several technological inventions and innovations. One invention that significantly changed the course of all systems and procedures around the globe is the invention of the computer in the 1930s. It allowed for innovation and inventions of better systems and procedures that can be incorporated within the production system to realize effectiveness and efficiency. During the 20th the incorporation of computerized machine systems was primarily to enhance the effectiveness and efficiency of human labor. However, in the 21st century, these have been used in replacing human labor, which has further resulted in cost-effectiveness for individual organizations and also the availability of better products and services to the consumers at a relatively lower cost (Alami and Adam, 87). Several sectors and industries enjoy the numerous benefits achieved through innovation and invention.
Invention and innovation cannot be realized in a communist or a socialist economy. These two economic models fundamentally believe in harmonization and equal sharing of resources as well as government intervention. These conditions cannot quite effectively foster innovation since they polarize the existing systems and procedures. Innovation thrives where individual players within the economy have the freedom to formulate their competition strategy in the best manner they perceive to be effective in outwitting their competitors (Malik, 8). It is the intense competition that organizations face within their respective industries that push them to invest in research and development; hence adopt the innovative culture.
This explains why the United States as a country has several multinational co-operations that value innovation as their competitive edge as compared to Russia. Moreover, the innovative culture within the United States has enabled it to be regarded as the leading superpower nation. The country has adopted a capitalistic economy that promotes private ownership of factors of production and economic freedom among players within several industries in the country. Ayn Rand on of the few Russia-American philosophers and writers at one point stated that “America’s abundance was created not by public sacrifices to ‘the common good,’ but by the productive genius of free men who pursued their own personal interests and the making of their own private fortunes. They gave the people better jobs, higher wages, and cheaper goods with every new machine they invented, with every scientific discovery or technological advance (Alami and Adam, 84).”
Effective Satisfaction of human wants
Naturally, human wants are insatiable which requires individual businesses to perform extra analysis to ensure they channel their products and services to at least get close to individual needs presented by customers. Similarly, human needs also do evolve with time in which individual consumers experience differences in tastes and preferences, which further requires close attention from individual businesses (Kennedy, 54). Steve Job is also one of the renowned CEOs in the 21st century and a co-founder of Apple, at one point he said, “Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves (Holcombe, 547).” Ensuring personal attention to individual consumers has been linked to effective competition by ensuring higher customer retention rates. All these are to ensure the production of better goods and services that create value for the stakeholders involved and in a cost-effective manner. On the same note, Indra Nooyi, another famous business leader in the 21st century and the CEO at Pepsi Co. ltd also stated that “The basic of business is to stay as close as possible from your customers, understand their behavior, their preferences, their purchasing patterns, etc.” this also emphasizes on the need of building close bonds with consumers to ensure quality services and products.
Additionally, human beings are rational in nature in which each individual has an order of preference for similar goods and services. Through this, they can grade similar products and services in accordance with their preference. Businesses have to ensure they also accommodate this aspect of rationality among individual consumers. These are unique characteristics that cannot be easily accommodated by communists and socialists. Further, the contemporary world is also witnessing the emergence of several health conditions which hampers individuals from consuming specific goods and services. As a result of this, there is a need for developing products that suit the health needs of each individual within the society.
Communism and socialism primarily aim at achieving equality among their population through the standardization of systems and procedures as well as products and services. Through this, individual consumers have to make do with the available products and services even if such products and services endanger their lives. Additionally, Ayn Rand also stated at one point that “Imagine standing in line for hours, like they used to do in the anti-capitalist Soviet Union, to get stale bread and sandpaper-rough toilet paper. That’s what happens when you reject capitalism (Lechevalier, 4).” This illustrates the ineffectiveness of communism as an economic model used in achieving equity among the population.
The existing competition within a capitalistic competition always pushes individual businesses to diversify their products and services by paying attention to customer preferences and tastes for them to maintain the intense competition. Similarly, businesses also have to develop specific products that address some of the tastes and preferences among individual consumers to form a market niche that favors their effective competition (Musacchio, Musacchio and Sérgio, 7). Through all these a capitalistic economy accommodates the existing diversity in relation to consumer preferences and health needs, thereby fostering the general well being of the population.
Its harmony with the natural law doctrine
The natural law doctrine asserts that everything standards under the test of an individual’s reasoning capacity grounded in reality. In regards to entities, the natural law requires particular actions to be performed if they are to attain the desired end. The interaction between entities and human beings results in arrangements that lead to the achievement of the desired ends. The laws of nature also determine the consequences of each action performed and reasoning as well as verification of what is right and what is not (Musacchio, Musacchio and Sérgio, 13). It further highlights the significance of the pursuit of liberty and happiness among individuals within the society, which ensures individuals participate in what thrills their sole and maintain their general well being. It also requires individuals within the society to control their energies and thoughts to ensure they only engage in highly constructive.
From all this freedom from man-made constraints is a necessity in ensuring individuals fulfill their potentials. In accordance with natural law, individuals are not to be forced into the utilization of their resources in a manner that does not conform to their voluntary consent. Natural law believes in individuals using their resources and abilities in a manner that satisfy their individual interests to maximally realize the fruits of their efforts. Capitalism fits the requirements within the natural law doctrine.
Further, the state can be viewed as concerned with the common good of its population when it protects an individual’s rights in relation to seeking their happiness when it institutionalizes a capitalistic economy. Through all these, capitalism promotes the general well being of the society by ensuring adequate satisfaction of all individuals. Individual consumers are to attain a high level of satisfaction when they have access to diverse products and services that serves their rational nature. O the other hand, owners of factors production are to attain their high level of satisfaction when they are able to exercise their entrepreneurial abilities and capacities to their full satisfaction.
Human beings are imperfect in a finite world
The imperfect nature of human being is unchangeable and will remain so forever. These can be seen in regards to the levels of integrity, knowledge as well as level of respect and love individuals have to their fellow human beings. Through these, it is always to accept the disparities and shortcomings among individuals and not to expect these to improve in the future. Similarly, human beings are self-centered (Holcombe, 547). However, through the use of constraints like incentives such as punishments and rewards, this can easily be improved. Considering all these imperfections and existing human limitations mankind cannot change society. The only bests thing that mankind can achieve in such limitations and constraints is their individual desires.
Similarly, individuals cannot flourish unless they have control over what happens to them and a significant influence on their environment as well as utilizing their ability and capacity to direct their actions. Through this individuals have the ability to alter the existing natural order within the society by exercising their free will, which also gives them the power to treat others rightly or wrongly. Natural law only considers the reality within the natural order and ignores the ethical aspect of an individual’s actions. Natural resources are always available to satisfy the needs of each individual (Lechevalier, 6). Given the uniqueness in human beings individuals always try to enrich their self-enhancement with the available scarce resources, which results in disparity in regards to the level of access each individual has to these resources.
This state is further caused by the differential in tastes and abilities, which results in specialization and division of labor. These can only be achieved in free markets presented in a capitalistic economy. They further result in the differential in the usage of resources. Through all these, the natural order of human society is diversity, variety, and inequality, which human beings have little ability to changing. Consequently, utilizing communism and socialism as a means through which inequality can be bridged is all but a futile effort. Capitalism is the only economic model that offers the true reflection of human beings in reality.
Conclusion
Though some individuals within the society prefer communism and capitalism given their perceived ability to ensure equal distribution of the available scarce resources, these two models offer a way for overlooking the fundamental principle of ensuring the general well being of the society, which is the happiness of individuals. Capitalism creates an environment for innovation through increased competition, which is essential in offering quality goods and services. Additionally, it ensures the availability of diverse products and services that meets the specific needs, tastes, and preferences of individual consumers given the rational nature of human beings. Similarly, capitalism operates in harmony with the natural law doctrine and offers a solution to navigate around the limitations in mankind to ensure the happiness of individuals within the society. Milton Friedman once said “Well, first of all, tell me: Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? What is greed? Of course, none of us are greedy, it’s only the other fellow who’s greedy. The world runs on individuals pursuing their separate interests (Scott, 8).”
Work Cited
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