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Learning Objectives

The two major economic systems in modern societies are capitalism and socialism. In practice, no one society is purely capitalist or socialist, so it is helpful to think of capitalism and socialism as lying on opposite ends of a continuum. Societies economies mix elements of both capitalism and socialism but do so in varying degrees, so that some societies lean toward the capitalist end of the continuum, while other societies lean toward the socialist end. For example, the United States is a capitalist nation, but the government still regulates many industries to varying degrees. The industries usually would prefer less regulation, while their critics usually prefer more regulation. The degree of such regulation was the point of controversy after the failure of banks and other financial institutions in 2008 and 2009 and after the BP oil spill in 2010. Lets see how capitalism and socialism differ.

Capitalism is an economic system in which the means of production are privately owned. By means of production, we mean everythingland, tools, technology, and so forththat is needed to produce goods and services. As outlined by famed Scottish philosopher Adam Smith (17231790), widely considered the founder of modern economics, the most important goal of capitalism is the pursuit of personal profit (Smith, 1776/1910). As individuals seek to maximize their own wealth, society as a whole is said to benefit. Goods get produced, services are rendered, people pay for the goods and services they need and desire, and the economy and society as a whole prosper.

One important hallmark of capitalism is competition for profit. This competition is thought to help ensure the best products at the lowest prices, as companies will ordinarily try to keep their prices as low as possible to attract buyers and maximize their sales.

As people pursue personal profit under capitalism, they compete with each other for the greatest profits. Businesses try to attract more demand for their products in many ways, including lowering prices, creating better products, and advertising how wonderful their products are. In capitalist theory, such competition helps ensure the best products at the lowest prices, again benefiting society as a whole. Such competition also helps ensure that no single party controls an entire market. According to Smith, the competition that characterizes capitalism should be left to operate on its own, free of government intervention or control. For this reason, capitalism is often referred to as laissez-faire (French for leave alone) capitalism, and terms to describe capitalism include the free-enterprise system and the free market.

The hallmarks of capitalism, then, are private ownership of the means of production, the pursuit of profit, competition for profit, and the lack of government intervention in this competition.

The features of socialism are the opposite of those just listed for capitalism and were spelled out most famously by Karl Marx. Socialism is an economic system in which the means of production are collectively owned, usually by the government. Whereas the United States has several airlines that are owned by airline corporations, a socialist society might have one government-owned airline.

The most important goal of socialism is not the pursuit of personal profit but rather work for the collective good: the needs of society are considered more important than the needs of the individual. Because of this view, individuals do not compete with each other for profit; instead they work together for the good of everyone. If under capitalism the government is supposed to let the economy alone, under socialism the government controls the economy.

The ideal outcome of socialism, said Marx, would be a truly classless or communist society. In such a society all members are equal, and stratification does not exist. Obviously Marxs vision of a communist society was never fulfilled, and nations that called themselves communist departed drastically from his vision of communism.

Recall that societies can be ranked on a continuum ranging from mostly capitalist to mostly socialist. At one end of the continuum, we have societies characterized by a relatively free market, and at the other end we have those characterized by strict government regulation of the economy. Figure 13.1 Capitalism and Socialism Across the Globe depicts the nations of the world along this continuum. Capitalist nations are found primarily in North America and Western Europe but also exist in other parts of the world.

Figure 13.1 Capitalism and Socialism Across the Globe

People have debated the relative merits of capitalism and socialism at least since the time of Marx (Bowles, 2007; Cohen, 2009). Compared to socialism, capitalism seems to have several advantages. It produces greater economic growth and productivity, at least in part because it provides more incentives (i.e., profit) for economic innovation. It also is often characterized by greater political freedom in the form of civil rights and liberties. As an economic system, capitalism seems to lend itself to personal freedom: because its hallmarks include the private ownership of the means of production and the individual pursuit of profit, there is much more emphasis in capitalist societies on the needs and desires of the individual and less emphasis on the need for government intervention in economic and social affairs.

Yet capitalism also has its drawbacks. There is much more economic inequality in capitalism than in socialism. Although capitalism produces economic growth, not all segments of capitalism share this growth equally, and there is a much greater difference between the rich and poor than under socialism. People can become very rich in capitalist nations, but they can also remain quite poor. As we saw in Chapter 9 Global Stratification, several Western European nations that are more socialist than the United States have fewer extremes of wealth and poverty and take better care of their poor.

Another possible drawback depends on whether you prefer competition or cooperation. As we saw in Chapter 3 Culture, important values in the United States include competition and individualism, both of which arguably reflect this nations capitalist system. Children in the United States are raised with more of an individual orientation than children in socialist societies, who learn that the needs of their society are more important than the needs of the individual. Whereas U.S. children learn to compete with each other for good grades, success in sports, and other goals, children in socialist societies learn to cooperate to achieve tasks.

More generally, capitalism is said by its critics to encourage selfish and even greedy behavior: if individuals try to maximize their profit, they do so at the expense of others. In competition, someone has to lose. A companys ultimate aim, and one that is generally lauded, is to maximize its profits by driving another company out of the market altogether. If so, that company succeeds even if some other party is hurting. The small Mom-and-Pop grocery stores, drugstores, and hardware stores are almost a thing of the past, as big-box stores open their doors and drive their competition out of business. To its critics, then, capitalism encourages harmful behavior. Yet it is precisely this type of behavior that is taught in business schools.

The economies of Denmark, pictured here, and several other Western European nations feature a combination of capitalism and socialism that is called democratic socialism. In these economies, the government owns important industries, but private property and political freedom remain widespread.

bobthemagicdragon Majestic CC BY-NC-ND 2.0.

Some nations combine elements of both capitalism and socialism and are called social democracies, while their combination of capitalism and socialism is called democratic socialism. In these nations, which include Denmark, Sweden, and several other Western European nations, the government owns several important industries, but much property remains in private hands, and political freedom is widespread. The government in these nations has extensive programs to help the poor and other people in need. Although these nations have high tax rates to help finance their social programs, their experience indicates it is very possible to combine the best features of capitalism and socialism while avoiding their faults (see the Learning From Other Societies box).

Social Democracy in Scandinavia

The five Scandinavian nations, also called the Nordic nations, are Denmark, Finland, Iceland, Norway, and Sweden. These nations differ in many ways, but they also share many similarities. In particular, they are all social democracies, as their governments own important industries while their citizens enjoy much political freedom. Each nation has the three branches of government with which most people are familiarexecutive, judicial, and legislativeand each nation has a national parliament to which people are elected by proportional representation.

Social democracies like the Scandinavian nations are often called controlled capitalist market economies. The word controlled here conveys the idea that their governments either own industries or heavily regulate industries they do not own. According to social scientist Tapio Lappi-Seppl of Finland, a key feature of these social democracies economies is that inequality in wealth and income is not generally tolerated. Employers, employees, and political officials are accustomed to working closely to ensure that poverty and its related problems are addressed as much as possible and in as cooperative a manner as possible.

Underlying this so-called social welfare model is a commitment to universalism. All citizens, regardless of their socioeconomic status or family situation, receive various services, such as child care and universal health care, that are free or heavily subsidized. To support this massive provision of benefits, the Scandinavian nations have very high taxes that their citizens generally accept as normal and necessary.

This model has been praised by political scientist Torben Iversen, who lauds its goal of achieving full employment and equality. This attempt has not been entirely free of difficulties but overall has been very successful, as the Scandinavian nations rank at or near the top in international comparisons of health, education, economic well-being, and other measures of quality of life. The Scandinavian experience of social democracy teaches us that it is very possible to have a political and economic model that combines the best features of capitalism and socialism while retaining the political freedom that citizens expect in a democracy. (Berman, 2006; Iversen, 1998; Lappi-Seppl, 2007)

Berman, S. (2006). The primacy of politics: Social democracy and the making of Europes twentieth century. New York, NY: Cambridge University Press.

Bowles, P. (2007). Capitalism. New York, NY: Pearson/Longman.

Cohen, G. A. (2009). Why not socialism? Princeton, NJ: Princeton University Press.

Iversen, T. (1998). The choices for Scandinavian social democracy in comparative perspective. Oxford Review of Economic Policy, 14, 5975.

Lappi-Seppl, T. (2007). Penal policy in Scandinavia. Crime and Justice, 36, 217296.

Smith, A. (1910). The wealth of nations. London, England: J. M. Dent & Sons; New York, NY: E. P. Dutton. (Original work published 1776).

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13.2 Types of Economic Systems Sociology

I was at the Indian Institute of Management Calcutta, commissioned to head a team studying the domestic and export prospects of Indian machine tools. These were real machine tools not the abstract sector of the Mahalanobis K sector model. I was working with the famous Indian industrial designing company, M N Dastur.

The Dastur engineers went to some countries. I went to Czechoslovakia and later joined a Dastur engineer in Africa, where they were buying HMT tools. Czechoslovakia prided itself on being an advanced European country. Bata was their best-known brand, but there were many other firms, especially in the machine tools section. Following Marshal Titos Yugoslavia, which had moved out of the sphere of influence of the Soviet Union earlier, it had overthrown the Bear and was going to be an independent socialist state. Meanwhile, it had an interim government. This was the Prague Spring of 1968.

In the late spring of 1968, everybody and his uncle had landed up in Prague. The Czech capital had around 10,000 hotel rooms but 1,500 people were arriving there daily. My hosts said no rooms were available. But do you have a driving licence, they asked me. I said, yes: My American driving licence was still valid. They were happy with the American licence. A room was arranged for me at Horovice, near Plzen from where Pilsner beer comes, and I was given a Skoda car on daily rent. I was to drive down to Prague every day.

The inn at Horovice was actually a bar with two nicely furnished rooms on the first floor. I was given one. I would go to the bar at around 7 pm and start with a Pilsner. The locals were there a very friendly lot to the visiting Indian. I found it difficult to pay for a round. After eating sausages and goulash, at around 11pm, I would climb up to my room, yearning for some well-earned sleep. When I came down for breakfast early the next morning, looking forward to my toast and black coffee, to get over my hangover, my friends were back for more beer and sausages, before going to work. I would then drive my Skoda through the beautiful Bohemian countryside in lovely weather to Prague, stopping on the way for some fresh strawberries. Everything was fine and the Lord was in his heaven.

In Prague, the men and women I worked with were very proud Czechs. They took great pleasure in explaining to me the countrys industrial and economic history and that their economists, who had migrated to the US, like Paul Rosenstein-Rodan, were referring to the Baltics for examples of backwardness, for the Big Push and Balanced Growth theories, and not Czechoslovakia. They showed me Czech art forms, both in galleries and in public places like parks, railway stations and in their cathedrals, and got passes for tables at overbooked restaurants for gorgeous meals with me.

Their machine tools were still some of the best in the world. I admired the advanced material used, the flexibility built in the design to incorporate additional auxiliaries to take care of what would now be called multi-tasking. They knew HMT and were quite keen to cooperate in joint ventures. They had the confidence to share and prosper, rather than be secretive in IPR tyranny. Again, a characteristic that the teacher in me liked.

I left the country with the cockles of my heart warmed by Horovice, the beauty and warmth of the Prague Spring, and my admiration for good mechanics. When I landed in Calcutta, visualising another visit to the Howrah, the newspapers had headlines, Soviet tanks in Prague. The Prague Spring was over.

One evening with the breeze flowing in, my friend, the economist K N Raj, sitting in his lovely home on a hill in Thiruvananthapuram, built by Laurie Baker with local material, told me how difficult it was to convince our socialist friends of the need to combine freedom and social institutions. Prague then, Kyiv now, another beautiful city where I have stayed. The problems of democratic socialism remain. Also in the Homeland. Everything changes, but nothing really does.

This column first appeared in the print edition on March 16, 2022 under the title Prague spring, Kyiv winter. The writer is an economist and a former Union minister

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Prague then, Kyiv now: Problems of democratic socialism - The Indian Express

The TAKE with Rick Klein

A party remade by former President Donald Trump is in the process of being remade again.

Republican officeholders and office seekers aren't keen to admit it, but for most of them Russia's invasion of Ukraine has them publicly agreeing more on the substance with President Joe Biden than with Trump.

That comes through in the raucous bipartisan reception Ukrainian President Volodymyr Zelenskyy got in front of Congress and also in Biden's agreement with a unanimous Senate that Russian President Vladimir Putin is a "war criminal."

The crisis has been coursing through GOP primaries in unexpected ways. Ohio Senate candidate J.D. Vance -- among those pursuing Trump's endorsement in the May 3 primary -- labeled the invasion a "tragedy" after first saying on Steve Bannon's podcast last month that "I don't really care what happens to Ukraine one way or another."

Former President Donald Trump speaks to the crowd during a rally at the Florence Regional Airport, March 12, 2022, in Florence, S.C.

In North Carolina, Trump's favored candidate, Rep. Ted Budd, is on the receiving end of a harsh attack ad from a rival Republican featuring a clip with Budd calling Putin "a very intelligent actor." (Some quotes in the ad are taken out of context, though the issue only came up because Trump called Putin "pretty smart" for trying to overrun Ukraine.)

Even where Republicans are offering sharp critiques of Biden -- blasting the president for not moving enough lethal aid quickly enough to Ukrainians -- there are limits that speak to how the GOP is changing. Virtually no major Republican figures are calling for perhaps the most hawkish action Zelenskyy wants -- American enforcement of a no-fly zone.

It has fallen to some of the staunchest Trump loyalists to offer major differences of opinion. Rep. Madison Cawthorn, R-N.C., on Wednesday blasted "neocons both on the left and in my party who clamor for war at every chance they get" -- a week after calling Zelenskyy a "thug."

The RUNDOWN with Averi Harper

A couple of House progressives are taking the Biden administration to task for its treatment of Haitians who seek asylum in the United States.

In a letter, Reps. Mondaire Jones, D-N.Y., and Ayanna Pressley, D-Mass., have called on the Department of Homeland Security to halt deportations and expulsions of people to Haiti. The Biden administration has continued to invoke Title 42, a policy started under the Trump administration, which allows migrants to be turned away without a chance to have their asylum claims heard.

Rep. Ayanna Pressley addresses demonstrators participating in the "Stand with Ukraine" march in Boston, March 6, 2022.

The pair of lawmakers cited the July 2021 assassination of Haitian President Jovenel Mose and the aftermath of the 7.2 magnitude earthquake that rocked the island nation in August as reasons they believe returning migrants to Haiti is dangerous. Homeland Security Secretary Alejandro Mayorkas has previously claimed it is safe enough for asylum-seekers to return.

The lawmakers contrasted the ongoing expulsions to policy changes intended to welcome Ukrainian refugees.

"Recently, on March 3, Immigration and Customs Enforcement suspended deportation flights to Ukraine in response to the 'ongoing humanitarian crisis' there a justified and important exercise of your enforcement discretion," wrote the lawmakers. "There is every reason to extend that same level of compassion and exercise that same discretion to suspend deportations to Haiti."

The Biden administration has deported or expelled more than 20,000 migrants to Haiti since Biden was inaugurated, according to the advocacy group Washington Office on Latin America.

The TIP with Hannah Demissie

The idea of disgraced former New York Gov. Andrew Cuomo making a political comeback is starting to look like a real possibility.

After he resigned last year amid multiple allegations of sexual harassment, Cuomo is now considering a run for his former job against the very woman who replaced him, Democratic Gov. Kathy Hochul, according to reporting by CNBC published Wednesday.

Aides of Cuomo have been conducting internal polling on how he would perform against Hochul in the New York primary.

Governor Andrew Cuomo holds press briefing and makes announcement to combat COVID-19 Delta variant in New York, Aug. 2, 2021.

Cuomo entered 2022 with a $16 million campaign war chest. But even though his supporters are encouraging him to run for office, many leaders in his own party do not support the idea.

New York Democratic Party Chair Jay Jacobs told CNBC he thinks "it would be a bad mistake."

Talk of a Cuomo bid comes as an audit released Tuesday shows the Cuomo administration did not publicly account for the deaths of nearly 4,100 nursing home residents during the pandemic.

NUMBER OF THE DAY, powered by FiveThirtyEight

18. That's the number of districts where Latinos constitute a majority of the voting-age population in California, which marks an increase of five districts since the 2010 redistricting cycle. This makes California by far the biggest source of new Latino seats in the country. More broadly, it underscores the growing political clout of Latino voters in this redistricting cycle, accounting for more than 51% of the country's growth from 2010 to 2020. But as FiveThirtyEights Nathaniel Rakich writes, thats essentially the extent of this redistricting cycle's gains when it comes to the representation of people of color. In fact, there are many districts where nonwhite voters' power -- particularly Black voters' power -- has been eroded.

THE PLAYLIST

ABC News' "Start Here" Podcast. Start Here begins Thursday morning with ABCs Mary Bruce on Ukrainian President Volodymyr Zelenskyys emotional address to Congress. Then, ABCs Elizabeth Schulze breaks down what to expect from the first interest rate hike in more than three years. And, ABCs Christine Theodorou details the aftermath of the strong earthquake that hit Japan. http://apple.co/2HPocUL

WHAT YOU NEED TO KNOW TODAY

Download the ABC News app and select "The Note" as an item of interest to receive the day's sharpest political analysis.

The Note is a daily ABC News feature that highlights the day's top stories in politics. Please check back tomorrow for the latest.

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Ukraine revealing GOPs drift from Trump: The Note - ABC News

Some members of City Council want to punish former President Donald Trump, and we get it.

Trump is a playground bully with a big ego and a cult-like following, despite being voted out of office. His ongoing attempts to perpetuate the Big Lie that he won the 2020 election are not just indefensible and a threat to democracy, they are tiresome.

But he thrives on attention. Dont give it to him.

Which is why that proposed City Council ordinance intended to stop Trump from doing any future business with the city because of his role in the Jan. 6, 2021 attempted insurrection at the Capitol seems a waste of time and energy.

City Council should move on, to the many far more important matters facing our city.

The ordinance, sponsored by Ald. Gilbert Villegas (36th) and approved by the Committee on Contracting Oversight and Equity, says the permit for that Trump sign downtown which must be renewed annually shall be denied, or such permit shall be revoked, if the applicant or any controlling person of the applicant has been convicted of a crime of treason, sedition or subversive activities.

Dont hold your breath for that conviction, despite the ongoing investigation by the House select committee on Jan. 6.

... [W]hether you are Donald Trump, or one of the many traitors who stormed the United States Capitol on Jan. 6th, the City of Chicago is not interested in doing business with traitors or those who perpetrate hate crimes, Ald. Brendan Reilly (42nd), co-sponsor of the ordinance, said. Will the ordinance have a sweeping effect? No. But I think it sends a clear and important message to two groups that are doing great harm to our country today.

Sending a moral message is a fine idea. But as a mayoral spokesman confirmed to us, the citys Law Department says convicted felons already cannot do business with the city.

Besides, anything that keeps Trump in the news or gives him the chance to puff out his chest and play the victim is counterproductive.

Fight the Big Lie, not just the liar.

Send letters toletters@suntimes.com.

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Dont feed the bully Donald Trump - Chicago Sun-Times

Weeks after the 2020 election, at least one Trump White House aide was named as secretly producing a report that alleged Donald Trump lost to Joe Biden because of Dominion Voting Systems research that formed the basis of the former presidents wider efforts to overturn the election.

The Dominion report, subtitled OVERVIEW 12/2/20 History, Executives, Vote Manipulation Ability and Design, Foreign Ties, was initially prepared so that it could be sent to legislatures in states where the Trump White House was trying to have Bidens win reversed.

But top Trump officials would also use the research that stemmed from the White House aide-produced report to weigh other options to return Trump to the presidency, including having the former president sign off on executive orders to authorize sweeping emergency powers.

The previously unreported involvement of the Trump White House aide in the preparation of the Dominion report raises the extraordinary situation of at least one administration official being among the original sources of Trumps efforts to overturn the 2020 election.

The publicly available version of the Dominion report, which first surfaced in early December 2020 on the conservative outlet the Gateway Pundit, names on the cover and in metadata as its author Katherine Friess, a volunteer on the Trump post-election legal team.

But the Dominion report was in fact produced by the senior Trump White House policy aide Joanna Miller, according to the original version of the document reviewed by the Guardian and a source familiar with the matter, who spoke on the condition of anonymity.

The original version of the Dominion report named Miller - who worked for the senior Trump adviser Peter Navarro as the author on the cover page, until her name was abruptly replaced with that of Friess before the document was to be released publicly, the source said.

The involvement of a number of other Trump White House aides who worked in Navarros office was also scrubbed around that time, the source said. Friess has told the Daily Beast that she had nothing to do with the report and did not know how her name came to be on the document.

It was not clear why Millers name was removed from the report, which was sent to Trumps former attorney Rudy Giuliani on 29 November 2020, or why the White House aides involvement was obfuscated in the final 2 December version.

Miller did not immediately respond to a request for comment.

The Dominion report made a number of unsubstantiated allegations that claimed Dominion Voting Systems corruptly ensured there could be technology glitches which resulted in thousands of votes being added to Joe Bidens total ballot count.

Citing unnamed Venezuelan officials, the report also pushed the conspiracy theory that Dominion Voting Systems used software from the election company Smartmatic and had ties to state-run Venezuelan software and telecommunications companies.

After the Dominion report became public, Navarro incorporated the claims into his own three-part report, produced with assistance from his aides at the White House, including Miller and another policy aide, Garrett Ziegler, the source said.

Ziegler has also said on a rightwing podcast that he and others in Navarros office seemingly referring to Trump White House aides Christopher Abbott and Hannah Robertson started working on Navarros report about two weeks before the 2020 election took place.

Two weeks before the election, we were doing those reports hoping that we would pepper the swing states with those, Ziegler said of the three-part Navarro report in an appearance last July on The Professors Record with David K Clements.

The research in the Dominion report also formed the backbone of foreign election interference claims by the former Trump lawyer and conspiracy theorist Sidney Powell, who argued Trump could, as a result, assume emergency presidential powers and suspend normal law.

That included Trumps executive order 13848, which authorized sweeping powers in the event of foreign election interference, as well as a draft executive order that would have authorized the seizure of voting machines, the Guardian has previously reported.

The claims about Venezuela in the Dominion report appear to have spurred Powell to ask Trump at a 18 December 2020 meeting at the White House coincidentally facilitated by Ziegler that she be appointed special counsel to investigate election fraud.

Millers authorship of the Dominion report was not the last time the Trump White House, or individuals in the administration, prepared materials to advance the former presidents claims about a stolen election and efforts to return himself to office.

The House select committee investigating the January 6 Capitol attack revealed last year it had found evidence the White House Communications Agency produced a letter for the Trump justice department official Jeffrey Clark to use to pressure states to decertify Bidens election win.

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Trump White House aide was secret author of report used to push big lie - The Guardian