Social Economics

Whats the big hype about communism and capitalism? somewhere my gut feel tells me that its not the economic theory that i can find my answer. so i looked for facts and started thinking about them.

let me tell you what i thought about. think of a family where one brother earns 2 million. the other is a wastrel. both get 1 million according to the communistic system. the spoilt brother spends all money on drinks, gambling and girls. the good brother works harder, just to gather the money with which he could have bought some comfort for his wife. if he didnt share his hard earned money, he could have kept his wife so happy but he cannot. i could identify with the good brother. one day he quits and the family breaks. the spoilt brother can just beg and die an anonymous death.

this made me very uncomfortable. then i thought from a different angle. what if i was the guy who was on the receiving end of the goods. i pray to god everyday that give me my daily bread, my clothes and my shelter. i wont work at all, but if you have given birth to me fulfil my basic needs atleast. all people should be equal right? i pray everyday on my knees in front of a picture. one day i get the chance to see that the picture is not of the god but of the communist leader of my land. and i am looking like a beggar in front of him. i feel a disgust for my being. in my fit state of mind and with my two hands with me, i wont ever beg, be it god or the government.

even if i look at facts, i see that the average living standard of communist countries is lower than that of capitalistic ones. yes, the variation in the max and min of living standards is not much, say ranging from 48 to 52. coming to capitalist states, the average living standard is high, but with a higher variation, say ranging from 90 to 110. which one do i prefer?

i am surely against communism, but still not in favour of capitalism. money begets more money, that is a fact. and with money comes power to buy anything of value, anything you want giving you greater power. and responsibility doesnt come as a package with it. so there you are, some people with loads of money and power and lack of responsibility. there begins exploitation of the down-trodden. but yeah, at the same time i cant deny that some are very responsible too.

so what model should the society go with??? in simple economics, pick one of the two:
1. lower level of incomes but lesser standard deviation
2. higher level of incomes but higher standard deviation

it definitely has to be a mixed economy. but which component should be more, communism or capitalism? or in simple words, mixed economy prefers equality or efficiency?

what i dislike about communism from the idea i have is the fact that is it overly rosy... everyone works for everyone... so everyone is satisfied and reasonably happy... that is never so... it goes against our instincts... wont you feel the pinch if you see a dumbass person working beside you and earning more just because he has a year more of experience??? there will always exist a problem of "free-riders" in any communistic society... in fact, hard working people are rare and exploited gems in the communistic world where the focus is on receiving value not giving work. NEVER READ A COMMUNISTIC BOOK WITH A PERSPECTIVE EXISTING IN YOUR MIND. THINK ON YOUR OWN. Usually the books are written to play on the mind of the lazy risk averse individual in you who doesnt want to face competition. The language of the books also strive to touch an altruistic chord in you. you might think altruistically, everyone does... but how many of them do not act with selfishness when the time comes?

every individual has some needs and wants... lets look at only the needs, the needs of food, clothing and shelter... all these are material needs... there might be some comforts too, like good education or gifts or toothbrushes say... they are also material... and luxuries like AC cars are surely material... the point to note here is that all three are wants... one want called need is at the level of instincts... the want called comfort is at the level of emotions... the want called luxuries usually are at the level of the mind... we need to satisfy these "wants" in the right proportion

but before we do that we need to accept two things:
1. the basic human needs are material
2. there can be no society without a difference... we are all born with differtial abilities...

now to bring in that proper proportion of want satisfaction, we need money... unless you have money, you cant share it, let alone sharing equally... so the capitalists bring in money... the growth because of efficiency... and when the disparity grows huge... the equality of society kicks in and the money is redistributed... so what happens is cycles of capitalism and followed by communism and again capitalism... in the process look at the average standard of living... it rises continuously due to capitalism... communism just reduces the gap between the min and max of the living standard...

there is this natural equilibrium that comes about... it comes about because the society always shouts for equality but prefers efficiency... the mixed economy has to be more of capitalism, moderated with some amount of communism... selfishness moderated with altruism... efficiency with disparity in control... i call this "societal capitalism", which is again very different from socialism... it is this societal capitalism that we can see all the markets heading towards across the globe.


(Written on 10th October 2007, after a chat with my close friend shaurya. thanks bhavna for inspiring me to write this piece)