Policies Capitalism vs Socialism

Published on December 6th, 2012 | by Chris Milton

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The Misconceptions of Capitalism vs Socialism | Building a Sustainable Economy

Capitalism vs SocialismThanks to a couple of communist revolutions during the 20th Century the economic map  of the world has been polarised between capitalist and socialist thought.  Now, at the start of the 21st Century, we’re faced with the problem of how to build a sustainable economy and the whole capitalism vs socialism issue raises its head once again.

The first thing to take on board is that sustainable economics has nothing to do with either of these two great -ism’s.

Their foundation is all about who owns and profits from the mechanisms of production and distribution: capitalism says it should be private wealth, socialism says it should be society as a whole.  Capitalism does NOT say it has to be investment in the form of debt and socialism does NOT say it has to be the state which holds the reins.

If you take a look around today’s business environment you will see this all around you.  Crowdsourcing is a purely capitalist endeavour where people use their private wealth to invest in enterprises, yet there is not a shred of systemic debt in 99.99% of projects.  Co-operatives and B-corporations are rooted in social ownership and benefit, yet there is barely a crumb of state control in them.

This fundamental error has led to confusion around the role of banks and the state.  Capitalists want big banks and small states whilst socialists want big states and small banks … at least that’s what the politicians who profit from polemics would have us believe.

In fact the size of banks and the state (should) bear very little relevance to whether the economic system is capitalist of socialist.  Banks are needed under both systems as a safe place for capital and a channel through which it is invested; the state is required in both in order to regulate all aspects of society, including business and commerce.

That’s not to say that you can’t get a bloated state under socialism or top heavy banks under capitalism.  Of course you can, all I’m saying is that an interfering state and unstable finance system are not requirements of these forms of economy.

What, you may be asking, has any of this to do with building a sustainable economy?

The answer is Lots, because sustainability has nothing to do with either of these -isms.  It’s all about ensuring we live as a species, culture and individuals in a manner which can be sustained financially, ecologically and socially.  Whether that is implemented using capitalist or socialist principles is almost beside the point, if it wasn’t for one very important thing ….

Both have failed.

The horrors of communism show that if you put too much emphasis on society as a whole the individual becomes so repressed the economy finally dies; and decades of western capitalism have resulted in debts so large that governments now face decades of austerity (read: economic repression) to pay them back.

Just as the publishing laws for yesteryear’s newspapers are inadequate for global social media, so last centuries economic philosophies are inadequate for the challenges of this century.

So the final misconception about capitalism and socialism is that they will help to create a sustainable economy and politicians will rehash these old and misconceived arguments as they battle for control of sustainability.

What they don’t understand is that people want to share and generate personal income: they want to co-operate as well as compete.  That’s the way the economy is going at the grass roots and it’s what will be the foundation of sustainability.

All capitalism and socialism have to do is get out of the way.





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About the Author

is a seasoned sustainability journalist focusing on business, finance and clean technology. His writing's been carried by a number of highly respected publishers, including The Guardian, The Washington Post and Scientific American. You can follow him on twitter as @britesprite, where he's one of Mashable's top green tweeters and Fast Company's CSR thought leaders. Alternatively you can follow him to the shops... but that would be boring.



2 Responses to The Misconceptions of Capitalism vs Socialism | Building a Sustainable Economy

  1. p says:

    Milton, laissez faire capitalism does not incur debt, in fact it is antithetical to debt to the point that it is “unkind”.
    Debt is incurred when governments tinker with economy to make things “fair” destroying the ecosystem like balance of the mechanisms of production and distribution.

  2. I published a ‘braindump’ on ‘social capitalism’ the kind of possible society where the there is no polarization based on economical processes … Just An idea http://excellencebydefault.blogspot.be/2012/05/social-capitalism-2035.html?m=1

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