Economic systems attempt to meet the needs of the people. Capitalism, as described by Adam Smith and Wealth of Nations and communism, as described by Friedrich Engels and Karl Marx in The Communist Manifesto are the two most well known types of economic policy. Capitalism attempts to meet the needs of the people by relying on a laissez-faire government policy on the economy, while communism gives the government total control over the economy. These approaches led to varying success at actually meeting the economic needs of the people.
Capitalism is outlined in Adam Smiths Wealth of Nations. The capitalistic system relies on a laissez-faire government approach to a nations economic system. Ralph Waldo Emerson describes the systems of checks and balances that a capitalistic economy runs on. According to Emerson, the government should remain laissez-faire because the economy is already being run by a series of checks and balances. The basis of a capitalist economy is the self-adjusting meter of supply and demand. Opportunity is opened to those with talent and virtue, those who will work hard to gain wealth. This way, the wealth is not given to idle and imbecile people, but flows to the industrious and persevering members of society. It is essentially a survival of the fittest approach to the economy, where every member of society must make a living by themselves and fend of competitors. Adam Smith in The Wealth of Nations said that the government should intervene as little as possible in economic affairs and leave the market to its own devices. Capitalism, he said, advocated the liberation of economic production from all limiting regulation in order to benefit the people. The theory was that individual self-interest would fuel the economys growth.
Communism had a contrastingly different, almost opposing the way of achieving its goal. Friedrich Engles describes how communism will work in a country. The government would have control of industry and all branches of production from competing individuals, and instead, institute a system as a whole for a common good. By doing so, competition, unemployment, and poverty would be eliminated. Harry Schwartz wrote about the standard of living of people in communist nations in The New York Times in 1952. He notes that the communist workers standard of living is raised by several benefits the government provides. A worker receives free medical car, a permanent job, social insurance when he becomes sick or old, and nurseries and kindergartens for their children. The idea behind communism was for the governments control over the economy to benefit the people by eliminating unemployment and establishing equal pay for everyone. The government also provided social benefits. However, this method of governing was not as successful as the capitalist method.
The capitalist was overall successful. However, one of it biggest problems was that unemployment and poverty were commonplace. Capitalism tended to benefit a few and leave the majority of the people behind. Katia from Moscow describes the problem, even though her view is exaggerated from government propaganda. She believes that people cant find any kind of job, and the economy is a real mess. Karl Marx and Friedrich Engels point out what they believe was the capitalist fault in The Communist Manifesto. They believe that capitalism led to crowded factories, with masses of laborers slaving away at the machinery to benefit the factory owner. The workers however, would only sink deeper and deeper into poverty. This was exaggerated, as even though some people were left behind, the idea was that those people were unskilled and lazy. The people with the wealth had earned it, according to capitalists, while the poor were suffering from their own idleness. Under the capitalist system, there are some extremely rich and some extremely poor, but the majority of the people are middle class. The competition of opposing companies for the same consumers fueled the economys growth.
Communisms system was idealistic. It relied on the willingness of the people to help other people. Collectivized farming is an excellent example of how communisms fundamental ideas were idealistic and ended up as failures. T.P, Whitney, in The Russian Peasant Wars on the Kremlin records the faults of collectivized farming. The people of a village all live on the collectivized farmland. Most of the food they grow is given to the government, while a very small amount goes back to them. Since families always received the same amount of food, the people of the village began to slow down, or not work hard. They had no will power to work for other peoples food. This lack of competition hurt the economy, as the farms produced less and less amounts of hay. The cartoon shows the failures of the communist system in a humorous but accurate way. It shows a man on a tractor cutting down a thriving field of wheat growing on a field known as Free Enterprise. However, the cartoon also shows five peasant cutting down a dying and weak field of wheat. The people are extremely poor, and use scythes to harvest wheat growing on Five Year plans. The Five Year Plans were the economic plans that Stalin used during his rule. Communism did not work in meeting the needs of its people. Competition is needed for economic growth. The faults of man make communism impossible to employ.
Capitalism and communism were both very good ideas for an economic system. However, the communist system was idealistic and relied on the virtues of man, while capitalism relied on mans selfish interests. Capitalism creates a few rich, a few extremely poor, but mostly middle class population. Communism however, makes the entire nation poor.