Economics is a funny thing. Like other kinds of science, in economics it’s easy to go back and look at what has happened and say, “Oh, this must have happened for that reason.”
The hard part is predicting what will happen next. Unlike other sciences like physics, chemistry or even other social sciences like psychology, getting the same results in similar situations is, in practice, very difficult in economics, especially macroeconomics. There are armies of people out there whose job it is to predict what the market will do next. Millions of people everyday look at charts and graphs and say, “The last time they looked like this, that happened.” Sometimes they’re right, and sometimes they’re wrong. That’s why they call it playing the stock market.
Analyzing the strength of companies, considering what they’re going to do next, is the predictable part of playing the stock market. The unpredictable part is the human element. And that’s the problem with any economic system I’ve ever heard of. They never seem to take into account how people tend to act.
The most familiar economic system for Americans is the system of privatization called capitalism. It’s what our nation claims to be, not that we really stick to it. Basically, the theory behind capitalism is that if the market can work itself out free of government interference, then in the end the consumer will win out, purchasing the best product for the cheapest price. The current American economic system is certainly more capitalist than not, though many would say otherwise.
Capitalism doesn’t really take into account a fact that’s true of humans in general: We are greedy bastards who have no qualms about taking advantage of other people, given the chance.
On the whole, people are decent, good individuals who will try to help out their neighbor if they can. But there are many people who will do whatever it takes to succeed. Unfortunately, capitalism breeds this sort of person. Our society puts a lot of emphasis on success. While it’s sad, our society does recognize the ability to make money as being more important than good personal relationships and helping others.
True there are those we recognize as being incredibly successful in other areas. Mother Teresa and Gandhi are prime examples. But, in general, those we idolize are also those who are rich. How many kids want to “be like Mike?” How many people look up to Oprah? Who doesn’t want to be monetarily rich? Deep down, I know I do, and anyone who tells you they don’t is lying.
There isn’t necessarily something wrong with wanting to be successful, though. In fact, capitalism depends on it. The great thing about capitalism is that it takes advantage of the human desire to be the best. We will work very hard to do some very great things, and this often works out for the best for the regular person.
When things go wrong is when making money becomes more important than other people. Industry in the 1800s is a good example of how capitalism can go wrong. Making people work for 14 hours, employing children in coal mines and railroad monopolies are just a few ways in which people are willing to take advantage of others just to make a little more money.
Capitalism seems to work better than most other economic systems that have been tried, though. When partnered with democracy, at least, capitalism seems to correct itself when things go wrong.
Capitalism is certainly better than socialism. The opposite of capitalism, socialism calls for the government to control everything, equitably handing out the resources of the State to all its citizens. When paired with democracy, the idea driving socialism is that the people own everything; the government just takes care of it for the people.
I like the idea of socialism. It’s probably the nicest idea I’ve ever heard. It would be great if everyone would be willing to share all their possessions, and help their neighbor when he was in need as they would want their neighbor to help them when they were in need.
Of course, socialism forgets about that pesky human element. Humans are greedy bastards, and helping each other goes against our nature. When we do help each other, we’re far more inclined to help those we already know than those we don’t, even if the people we don’t know are obviously more capable than the ones we do.
That’s why socialism fails in the end. It just doesn’t give the most effective people in the society the motivation, the carrot at the end of the stick, to work hard enough to make innovations like capitalism can.
The best system would be one that has the best characteristics of capitalism and socialism. We need to reward innovation, thrusting those who are the best to the forefront of society, while protecting those who would fall through the cracks without the help of their fellow man.
We’re trying to do that right now. Beginning with the introduction of Roosevelt’s “New Deal” programs in the 1930s, America has gotten closer and closer to the midway point between capitalism and socialism. We try to keep everyone safe, through our system of police, try to make sure everyone has food on the table, through welfare and unemployment, while trying to encourage those who are successful to keep being successful, which usually takes the form of tax cuts for corporations and the upper class.
The problem, of course, is finding the perfect balance between the two. At the moment, we keep fluctuating between socialist and capitalist ideas, unable to decide which one is more important to us. Our resources, symbolized by the debt inherent in our budget, can’t take being both socialist and capitalist.
I don’t think we’ll be able to find that balance anytime soon. It’s incredibly contradictory, but the best we can do right now is be socialists in a capitalistic society, giving of ourselves to others even if they won’t give of themselves to us. Until we’re able to have enough resources to completely take care of everyone while rewarding those who excel with enough perks to make it worth their while, we will always be chasing a dream.
But I say hold onto the dream, because, at the moment, it’s all we have.