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What is a better economic system: socialism or capitalism?

We are students learning about economics systems and we are curious about what the Ted community believes.

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    Jan 25 2012: Few Economic Models ... explained with cows Just fun facts . No hard feelings
    SOCIALISM You have 2 cows. You give one to your neighbor.
    COMMUNISM You have 2 cows. The State takes both and gives you some milk.
    FASCISM You have 2 cows. The State takes both and sells you some milk.
    NAZISM You have 2 cows. The State takes both and shoots you.
    TRADITIONAL CAPITALISM You have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell them and retire on the income.
    SURREALISM You have two giraffes. The government requires you to take harmonica lessons.
    AN AMERICAN CORPORATION You have two cows. You sell one, and force the other to produce the milk of four cows. Later, you hire a consultant to analyze why the cow has dropped dead.
    A FRENCH CORPORATION You have two cows. You go on strike, organize a riot, and block the roads, because you want three cows.
    A JAPANESE CORPORATION You have two cows. You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk. You then create a clever cow cartoon image called 'Cowkimon' and market it worldwide.
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      Jan 25 2012: this would be funny if it wasn't wrong. fix:

      socialism: the state takes both cows, and gives away milk to people according to convoluted rules that somehow favors leaders.

      communism: cows are commonly owned. at any time, you can approach a cow and try to milk it just to find out that someone else already did or the cows are nowhere to be seen.

      fascism: top cow owners form the Milk Producers Union (correction: more like Guild, not Union). the ruler grants them self-regulation rights. cow ownership is forbidden unless you are a member. small cow owners file bankruptcy, and will be employed by top cow owners. milk import is banned. a law is passed that not giving milk to children counts as maltreatment. goat milk is banned. soy milk is banned.
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      Jan 25 2012: That's what I'm talkin' bout ! You guys have an extra cows I could borrow?
  • Jan 24 2012: The one that works or the one that doesn't work the least or some of both. Different societies have different needs and different cultural heritages which determine how individuals interact with one another. Personally I think the labels are so loaded with baggage as to be worse than useless. Give me small, gradual changes with an eye on unintended consequences. Give me choices so that I can try out different systems and see what fits me the best. There is no "one size fits all" economy or government or even family structure.
  • Jan 27 2012: I would much rather have the option of working hard to increase my own wealth than of being expected to work hard to provide for someone else. I am not my brother's keeper.
    If a group of people who trust each other choose to share their resources, workloads and profits then I don't have a problem with that. If the state imposes such an arrangement I have a huge problem with it.
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    Feb 3 2012: In practice, countries have a balance of socialism and capitalism. Even the US has some government owned services and even China has some degree of a free market. The trick is finding the right balance.

    Some services work better as government services, such as education and health care. Others function much better in a free market situation (such as the high tech sector). Some work best with both options running simultaneously, such as private and public broadcasting. The trick to answering the question is sorting out where governments are useful and where they just get in the way.

    I would also like to comment on how this relates to governance. It is important to view the large scale private sector as part of governance. Some seem to think this is a real problem (and protest) and others seem to deny corporations have any power at all (as if they are subject to governments, or government is by it nature oppressive ). Essentially, governance is shared, and there isn't really any way around it.

    The reason I bring this up is because it is through government that democracy actually causes the will of voters to be felt by the power brokers of society. When balancing what services work best through capitalist or socialist models, one has to keep in mind that we are not just finding out what is more efficient, we are also talking about the nature of democracy.
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    Jan 30 2012: Both of them are good and bad economic systems, we just have to look at them from different perspectives for example:

    Socialism in developed countries you would say why I should work and pay tax to the state and those who are capable to work stay at home and get the benefit without getting to wake up on the morning and going to work all the day long.

    For economic students here: Pay as you go system would work here.
    This is one aspect of socialism, for example live experience if we ask our parents because we can not fully understand socialism just by learning about it, by asking our early generation that live in socialism all of them would say the live there was better, we had a better medical system, schools were free and so many other things where quietly better regulated because of the system in that perspective, but when we look the other perspective socialism produced lazy people of joint benefit one worked and 12 other stayed home, they could live that system because the expanse were not as high as it is now.
  • Jan 27 2012: It is curious how people seem to think that there are only two options. For my part, I neither support socialism nor capitalism and yet both. Why? Because both have ideas that sound good but neither of them seem to get it right when executing their ideas.
    Capitalism is the dominant system but as a system does nothing for the individual nor for living circumstances. Capitalism is like a factory, it's rationality (which is believed to be the key to profit) dominates and everything is fixed on the profit. There is no room for social or psychological reason. You can compare it with nursing homes for the elderly really. Since they have no economic value as production units they are symbolicly cast out of society and socially isolated.
    Socialism on the other hand, as I understand it and have seen it, gives the same social rights for everyone. They call it social but is it really so? Again, there is no real space for individual agency, people lose part of their individuality here. A true social system would not allow people to chose their own profession but instead choose it for them because it would render greater efficiency to the system and garantee a job.
    So really, perhaps it's time someone came up with an alternative to both systems. I think there should be more options then just these two.
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    Jan 25 2012: So can u guys please suggest what you think will be the most prosporus economy in all means .
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      Jan 25 2012: the greatest prolonged period of development was the era of the industrial revolution in the US. its essence was free enterprise and no government intervention in the economy.
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    Jan 25 2012: I think we need a social capitalism where people do the business but govt make sure that the growth is inclusive.
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    Jan 25 2012: I love this debate! I once worked for a city that required me to swear that I was not a Communist, and then sign a form (regarding Communism) that was included in all the other Human Resource forms.

    I think that using "Supply and Demand" to guide an economy is inherently bad for Humanity. Thus, I would give more points to socialism...however, when greedy people are in charge of a socialistic system...bad things still happen.

    I would tell you more, but it will cost you 39.95 per month for the first 12 months...some restrictions may apply.
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      Jan 25 2012: so we need an economy that disregards either supply or demand or it allows for discrepancy between the two?
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        Jan 25 2012: According to the nobel laureate Amartya Sen

        1.The importance of real freedoms in the assessment of a person's advantage
        2.Individual differences in the ability to transform resources into valuable activities
        3.The multi-variate nature of activities giving rise to happiness
        4.A balance of materialistic and nonmaterialistic factors in evaluating human welfare
        5.Concern for the distribution of opportunities within society
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        Jan 25 2012: In developing and developed economy, the most of the cases the scarcity of goods are artificially created . Some times it intentional some time unintentional.
        A prospering economy should support the freedom of busineess but before that a govt should ensure the basic human needs and control those factors by price cap , controled distribution etc.
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          Jan 25 2012: scarcity is the natural state of almost everything. nobody except a wizard can change that. governments can promise you solution, but they of course can not deliver. econ 101
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        Jan 25 2012: I am nither a supporter of communism as it doesnt promise freedom. Nor Core capitalism as it doesnt ensure inclusive growth . Dont you think there are enough food in this world so that 7 billion people can eat two times a day.

        20% of people enjoy 80% of world resources.

        So I think rationing of basic amenities should be ensured by govt .
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          Jan 25 2012: you didn't say enough food to feed 7 bn twice a day. you said no scarcity. no scarcity means that i can eat whatever i want whenever i want as much as i want. that is abundant food. and we still have scarcity in everything else, like clothing, housing, heating, healthcare, transportation, etc.

          there will never be an economy with no scarcity. econ 101
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        Jan 25 2012: Ya by no scarcity i meant that there is enough resorces for evrybody to live with their basic needs atleast food a roof and basic healthcare
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          Jan 25 2012: you can not mean something else than scarcity by scarcity. if you use economic terms, use them correctly.

          how do you plan to feed people in war zones?
        • Jan 27 2012: There is a basic flaw in this 'even sharing' scheme. A few really, but the big one is that populations are not constant. With time, population will grow to the limit of the most restrictive resource. Even if there is enough of X today for everyone to have some, that does not imply that the supply of X is sufficient to provide for everyone in the future.
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        Jan 25 2012: it shouldnt be like to afford a 10 car for a single person 100 people doesnt get basic needs
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      Jan 25 2012: I hope we agree Mr. Anderson that there is no perfect form of economic control of a society because society is made-up of imperfect people. In a head-to-head competition between Capitalism and Socialism the one that best rewards hard work will win.
      Socialism says you will work as hard as you are able and your reward will be to get what you need to exist.
      Capitalism says work, or don't work, your choice. Fiscal rewards are commensurate with the demand for the work you do. High demand=high earning, low demand=low earning. QUOTE: "The inherent vice of Capitalism is the unequal sharing of blessings; the inherent virtue of Socialism is the equal sharing of miseries." (--Winston Churchill).
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        Jan 25 2012: not sure I agree...I believe there is a perfect form of economic control out there somewhere...

        I also don't like Churchill's quote, because it's too darn cynical. It keeps people from working together and trying to find better ways.

        So, do you want to sign up for that monthly fee now? ha ha !
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          Jan 25 2012: Good Mr. Churchill was commenting on prevailing conditions. He was not trying to motivate people to find better ways. In context I admire his prophetic vision regarding the 1 percenters.A perfect form of economic control requires perfect people. You gather them all together and I'll be watching (along with the other ungathered). If it works I will subscribe. Best wishes and thanks for sharing.
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    Jan 25 2012: those who favor socialism will move to cuba, won't they? why not?
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      Jan 25 2012: Cuba is, arguably, communist. In 1976, their constitution stated they were a Socialist Republic; in 1992, they revised their constitution and aligned the country with a "purer" from of communism. I am not sure but I think they may have dropped the term "Socialist Republic."

      But I think the real reason "socialists" can not move to Cuba is that Cuba won't let them.

      China does define itself as socialist (not communist) and it is relatively easy to move here.
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        Jan 25 2012: it does not matter how do they call themselves. many socialist countries were called "democratic", but they were not democratic at all. in cuba there is state-socialism.
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          Jan 25 2012: It doesn't matter what they call themselves; it matters what you call them?

          They might call themselves "state-socialists" for all I know but, if they choose to call themselves communist or democratic, then that is what they are.

          Whether you or I agree with them is irrelevant.

          Do you know how they refer to themselves?

          I don't - not since they changed their constitution.
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        Jan 25 2012: thomas, your views are weird at least. every is what he calls himself? be serious. you say that we can not put a bank robber in jail unless he calls himself a bank robber. if he calls himself a nice guy, we have to let him go. ridiculous.
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          Jan 25 2012: No, Krisztián, your bank robber analogy does not follow. (And, by the way, I have met many bank robbers and murderers who really were "nice guys" ... I used to do volunteer work in prisons.)

          The point is, neither you nor I get to legitimately define a country based on our personal criteria. So if Cuba wants to call itself communist, they are communist. If China says they are socialist, they are socialist. If America defines itself as a republic, it is; and so on. They become the de facto definitions of the terms.

          You are correct, China was not, is not, and (very likely) will not be, communist.

          Under Mao, they were aspiring to be communist and saw socialism as a step in that direction. For them, communism was the utopian ideal they were striving for.

          It obviously did not work out and Deng introduced his market reforms in '78.

          They no longer aspire to be a communist state. The party name may be the last vestige of their idealistic ambition.
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        Jan 25 2012: oh, neither me nor you. how nice. we are not worthy, we are humble.

        but we can understand the definition most people agree upon. you know. that is a prerequisite for any conversations. do define terms. so if you have no objection to use wikipedia as our reference, i would declare the words "communist" and "socialist" (as well as "democratic") well defined.

        if you have problems applying those definitions, i'm sorry for you, but i'm afraid i can not help. for me, it is kind of clear that communist countries never existed, maybe in the prehistoric era, certainly not in the 20th century. socialist countries, however, existed, and still exist.

        it is also clear that many people argues for a more socialist kind of state. we are in fact moving in that direction. only a few, however, calls for communism.
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          Jan 25 2012: Hi Krisztián,

          It has nothing to do with being worthy or not (you seem to worry a lot about being worthy) nor does it have anything to do with being humble.

          The Chinese, for example, just don't care about your opinion.

          You can call them anything you want. But unless you are calling them what they call themselves, I wouldn't hold my breath waiting for them to agree with you.


          And if you would like to use Wiki as our source for our definitions, how does Wiki define China? Cuba? The US?

          Do you think they might change their definitions if you are not in agreement?

          I don't.

          You might not agree with me.
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        Jan 25 2012: whether china cares about my opinion is irrelevant. it does not change the fact what kind of system they have. btw i'm not entirely sure how did we end up defining what china is. china is a complex case. however, my example was cuba. and your point was that they consider themselves communist, so they are communist. no, they are still state-socialist dictatorship.

        i do not care about their definitions. i'm not talking to them. i'm talking to supposedly reasonable people on TED. so i use the commonly accepted definitions of terms.
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          Jan 25 2012: QUOTE: "i do not care about their definitions."

          Yes, I understand, Krisztián. You often assume your definition supersedes all others.

          My point is, it doesn't.

          And, again, you may not agree with me.
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        Jan 25 2012: i don't have a definition. i use commonly accepted definitions. and i said that two times already. this was the third.
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          Jan 25 2012: You don't have a definition?

          Sure you do.

          And what's more, you "do not care about their definitions" common or not.

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        Jan 26 2012: you've never heard of commonly accepted definitions? kind of pity. you should use them too.
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          Jan 26 2012: Krisztián, It is a pity that I have not heard of "commonly accepted definitions?" Yet, it is you who does not care what "they" use for what would be a rather "common definition."

          Ah, yes, I keep forgetting you interpret "commonly accepted" as "accepted by Krisztián the rest of the world be damned."


          I'll leave you to it.
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        Jan 26 2012: well, i would look up the common definition of "common". or you can choose to continue to publicly embarrass yourself.
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          Jan 26 2012: As I said, I'll leave you to it.
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    Jan 25 2012: Compile a list of three or four areas of "improvement" (human rights, economically, politically, environmentally, etc.) in the world where things really have gotten "better." Document and compare the contributions of capitalist and socialist societies. The one with more contributions is "better."
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      Jan 25 2012: QUOTE: "The one with more contributions is 'better.'"

      Not really. When we are sick, we need medicine; when we are well, we don't. Medicine might make huge contributions but we should not take it if we don't need it.

      Similarly, one system might be better at one point in time; another system might be advantageous at a different time.

      Right now, the most effective "system" at alleviating poverty is "Socialism with Chinese characteristics."

      In the last 35 years, China has orchestrated the largest increase in wealth and decrease in poverty in the history of the world.

      Do what works. Who cares what we call it?
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        Jan 25 2012: Every thing is very fluid and decentralized in today's economy even for communist country like China.
        And really speaking China may have made a lot of improvement but at the end of the day peoples happiness that matter a lot for long term (more than 100 years). If the peoples are not happy from where they will get motivation. When you are hungry and u don't have a place to stay you wont think about anything else. But people don't want jail where u will get food and shelter but cant do any thing u want. In socialism if u protest in wall street the army will fire and bomb the area. Or if u say that is don't support Obama u will be hanged.

        Now the the point is socialism is good for those countries who don't have food to eat . But after one stage it doesn't really work . you have to liberate the economy and decentralize it . China is no more a core communist country . They have rights to buy or sell their company . They can own a company & can decide what to produce .China is also slowly liberalizing their economy.Because a nations economy cant prosper in long term with out any motivation .
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          Jan 25 2012: Hi Arnab,

          China is not a communist country - it never was. It is a socialist country. The governing party is called the Communist Party. At one point, they aspired to be a communist country but they never made it.
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        Jan 25 2012: Ya but the way social republic of china works is like communist . They don't have any election . Polit Bureau is responsible to run the govt and they make the final decision . Unlike Indian 70's socialism.
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          Jan 25 2012: what is the definition of communism? is there such a thing as "communist government"?

          hint: when talking informally, it is okay to call the former soviet union a "communist country". but if you look the actual definition, you get a very different picture.

          hint: you can rarely hear people advocating communism. today, socialism, namely state-socialism is "trendy".
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          Jan 25 2012: Hi Arnab,

          China does have elections. They are not essential - meaning people are often appointed to, or selected for, particular positions - but elections are common.

          And it is not nearly as "centralized" as you might think. In fact, it isn't really centralized at all.

          [You do know I live in China, right?]
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          Jan 25 2012: QUOTE: "Ok ya its may sounds bit odd but i really doubt about the happiness of their people . At the end of the the it matters a lot"

          Hi Arnab,

          I assume you are talking bout the Chinese.

          Your doubts are about as valid as me saying everyone in India is spiritual.

          Do you think your perception of the Chinese political system has any bearing on how Chinese people experience their lives?

          Not even a little.

          There are 1.3 billion people living here and they do not live in the China you imagine, anymore than you live in the India that others imagine.
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        Jan 25 2012: Thomas,

        I agree that different systems may have relative strengths and weaknesses depending on the situation - time and place. Also suggest that the effectiveness of each system might depend on the quality of the leadership at any particular time and their policies. Also rule of law, free press tolerance of minorities, corruption levels, labour safety environmt laws etc are important.

        Perhaps the Chinese system is working reasonably well on some levels for some decades. Not so well during the great leap forward and cultural revolution etc.

        We seemed to have strayed from socialism versus capitalism. There is distinction between democracy/one party state and socialism/capitalism. China seems to be a one party state with a mix of private and state run enterprise. Perhaps any activity can be done better or worse under either system or some mix although one may be preferred in each case.

        I prefer democracy & a mix of private enterprise and government run services - with all the other bits that support a good society - freedoms, institutions, secular govt, equality under law etc.

        Suggest most of the armed forces and law enforcement are better state run, perhaps with private enterprise is some supporting areas. Not sure private armies or police forces on their own would be a good thing. Suggest private enterprise is better for most hospitality, retail, industry. Nothing motivates innovation like profit.

        The trick with capitalism is reigning in greed, corruption, having appropriate regulation and laws with some level of social support, tax, state run services. Business is not always the best approach for infrastructure given their short term approach, e.g. lack of investment in private electricity companies.
        Also for critical health and education services in disadvantaged areas.

        The trick with socialised industries is fighting waste, inefficiency, lethargy, bureaucracy etc.

        Whichever approach, the aim should be to do each as effectively as possible.
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        Jan 25 2012: Good points Mr. Jones. If I get an "A" in two classes but fail the other four my overall GPA will suck.
        Statistics are like bikinis in that what they don't reveal is more important than what they do. The big picture will show capitalism has the better GPA. Thanks.
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          Jan 25 2012: QUOTE: "The big picture will show capitalism has the better GPA."

          Some would argue the point ... at least for this graduating class ... and it is possible capitalism's day is done.

          Personally, I don't know.

          [There it is again.]
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          Jan 25 2012: Ok ya its may sounds bit odd but i really doubt about the happiness of their people . At the end of the the it matters a lot
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        Jan 25 2012: Technically speaking there is no country follows comunism . So for capitalism . There is not a single country that follows capitalism exactly . But for a benchmarking we can say china as communist and US as capitalist . Beacause we dont have a better live example than this two nation
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          Jan 25 2012: China is socialist. The US is a republic.
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          Jan 25 2012: china was not, is not and will be not communist. it is not their goal. china has a strong government. communism is a stateless form of society. or at least it aims to that direction.
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        Jan 25 2012: Ya China have developed drastically . But do you think at present global environment chinees socialism will be suited for all country .
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        Jan 25 2012: With no hard feelings for china , Tiananmen Square massacre or Taiyuan Massacre is a very bad side of socialism or a country with no democracy .
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        Jan 25 2012: From Mid 60's to 90's the structure of Indian economy was kind of socialist . The Govt started to control the business and ensure employment . But unlike china it backfired in India . And as present its a mixed economy the companies own by private sector work efficiently than public sector .

        I agree china is atleast 10 yrs ahed of India but still the Chinees or Indian economy is not working .
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          Jan 25 2012: The Chinese economy is not working?

          How did you reach that conclusion?
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        Jan 25 2012: EXPLANATION OF POSTING SEQUENCE DISORDER (PSD): I just keep scrolling up until I find one of your posts with a REPLY button. Lenin said this about socialism: "Under socialism all will govern in turn and will soon become accustomed to no one governing."
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          Jan 25 2012: Hi Edward,

          PSD? Sounds serious. We should organize a telethon.

          I am not sure what the Lenin quote is in reference to so let me just see your Lenin and raise you two Mao's:

          Democracy is indispensable to socialism. – Vladimir Lenin


          … all correct leadership is necessarily “from the masses, to the masses.” This means: “take the ideas of the masses (scattered and unsystematic ideas) and concentrate them (through study turn them into concentrated and systematic ideas), then go to the masses and propagate and explain these ideas until the masses embrace them as their own, hold fast to them and translate them into action, and test the correctness of these ideas in such action.” - Mao Zedong


          Let them go in for capitalism. Society is very complex. If one only goes in for socialism and not for capitalism, isn’t that too simple? Wouldn’t we lack the unity of opposites, and be merely one-sided? - Mao Zedong
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    Jan 25 2012: There are so many ways to look at this.."better" in terms of what?

    - Innovation and Hard work? Here's how China got transformed and moved from a more socialistic form to a capitalistic one (and how it helped them):

    - Economic equity and wealth distribution? Here's an article talking about disparities between capitalsm and socialism (warning: a biased political article but has some facts worth considering):

    There are many ways to look at the puzzle but I think many other things need to be considered: value systems, style of government, culture, natural resources available, globalization, etc.