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Capitalism And Socialism

Issue 30, July 21, 2010

Siddhi B. Ranjitkar

A friend of mine wishing to know about the benefits of capitalism and socialism asks about the difference between the two systems. In reply I told him capitalism means you work for a capital whereas socialism means you work for a society. In the capitalist system you care for the people because you need to extract the money from their pockets. You do everything to please the people. In the socialist system you work for the state. You work for a salary; you don’t need to worry about the customer satisfaction and so on.

In the capitalist countries, people work for capital. With the money they earn they buy everything they need. They buy services from various service providing companies, goods from the retail stores, and keep the savings in a bank or buy shares in various companies in the stock market. For sharing the risk of major health problem they buy health insurance, and for sharing the risk of car accidents they buy the automobile insurance. For the care of their old age they buy the old-age pension paying tax to the state.

Market plays a great role in the capitalist economy. Every seller tries to be competitive selling better goods and services with cheaper prices. So competition becomes fierce among the sellers making the consumers benefits. Market encourages spending on everything even if you don’t want to. Credit cards, sale on installments, bank loans for buying homes and other sorts of credits stimulate you to buy even if you don’t have money. Only the risk is you lose everything if you lose your job, as you cannot go on paying your debts.

Large companies try to maximize profits. To this end, they cut costs to their goods and services. They don’t care of the national benefits or losses if they have the profits. So, you find so many companies shifting their manufacturing and service sectors to the countries where they have the advantage of cheap labors and where they don’t need to comply with the hard environmental rules and regulations.

In the capitalist countries if they don’t have a multi-party democratic system then the capitalists or large corporations would rule the country make the majority of the people vulnerable to their rule. Wherever, a strong democratic system works and people have a say in the governance through their ballots, then capitalists alone cannot rule a country.

In the truly multi-party democratic system, the state administration does not provide them with anything except for the security. The government runs only the administration for protecting the people from thugs and so on. The state administration makes sure the protection of consumers so that service-providing companies, retailers and other companies don’t cheat the people. The government enforces the rule of law strictly for the benefits of the people. In fact, the government treats the people as their customers and provides them with services to their satisfaction.

The elected people’s representatives called legislators in other word lawmakers make laws to the benefits of the people. They make sure that the people enjoy every conceivable right to live as humanly as possible. They make laws ensuring the rights of the people to freedom of speech, to have private property and use them as they like.

They have the independent judiciary. Nobody can influence the law court and judges. No matter who you are if you go against the law the court will punish you. The court is very powerful and judges work on the facts and evidences to come to verdicts on court cases. People enjoy human rights following the constitution of their country. Human rights violation and abuses are grave crimes.

They have also the free press in other words the independent media. Of course, some newspapers, TVs and radios might favor one political party or anther and might even cover only the favorable news but many newspapers, TVs, and radios report impartially and report facts and figures. People prefer to read, watch and listen to impartial radios, TVs and newspapers.

So far, the socialist countries we know have a one-party system of governance. The government will be of the people elected by the party. You don’t vote for the president or Prime Minister. You simply vote for the candidate the ruling political party has chosen for you. You don’t find any choice of candidate. Like it or not, you vote for him or her. If you don’t go to the polling center then the police will come to knock your door and take you to the polling center to vote. The decision of the ruling political party becomes above all.

The socialist system also has the judiciary but not so independent. Judges works under the directions of the high-level politicians and the government officials. You don’t get impartial rulings of the court on most of the cases particularly concerning the political and human rights abuses; politicians or the high-level government officials determine what should be the final verdicts on such cases. Human rights violations and abuses become the regular cases in the so-called socialist countries we know. It is the fact that we cannot live humanely if we don’t enjoy human rights.

You cannot have the private property as much as you wish for in the socialist countries. The state determines for you what you can have what not. You don’t have a choice of living as you like. You have to live, as the big shots want you to live. Recently, People’s Republic of China has been exception for owning unrestricted private assets.

Forget about the press freedom. The state owns every possible means of communication such as newspapers, TV stations, radios and telephones. So, you read, watch, and listen to whatever the state wants you to do so. You don’t find any other news other than the state versions of the news reporting by the state-run media. The choice is just to boycott everything without the knowledge of the state officials.

The state runs all sorts of businesses. The state does not worry about the profit-maximization and the product quality. None of the manufacturing or service-providing companies worry about the quality of their products and the profits they earn. In other words they don’t need to compete with any other companies. They have the least interest in quality improvement and cost reduction of their products.

Every person works for a salary not for the customers. Nobody knows what the customer satisfaction is. Consequently, services are very poor; and service and goods delivery are uncertain. You cannot ask any questions to the service provider: the state. You accept whatever the state provides you.

You cannot move from one place to another and live wherever you like in the so-called socialist countries. If you are in a rural area, you cannot move to an urban area. To do so, you need the approval of the local branch of the political party and the administration. Unless you are very influential political worker you won’t get any approval of moving from one place to another. However, if the state asks you to go to a certain area you cannot say no to it. Thus, your destiny is in the hands of the political decision-makers at the various levels of the political party.

One interesting case is during the Soviet era, the Soviet experts working for the UN or for its different agencies receive salaries in dollars. They turn over the salary checks to the Soviet embassy in the country they work and the embassy in turn provides the experts with goods and services required for the experts and a small amount of money for local expenditures. They can keep the things the state provides them nothing else. The Soviet people had lived 70 years under the state control like that.

The Soviet leaders did everything for the glory of the Soviet state but very little for the people’s satisfaction. They built atom bombs; they put men on the orbit of the earth and built a huge army for protecting the interest of the Soviets not only in the Soviet Union but also elsewhere in the world.

They put off the uprising in Hungary in 1957 and Czechoslovakia in 1968. The local people wanted to have a little bit of freedom from the Soviet Union but even that much of freedom became the threat to the apparently mighty Soviet Union and did not permit the local people to enjoy it.

In the early 1960s, the then Prime Minister of Soviet Union Nikita Khrushchev said in one of his speeches delivered to the national legislature aired by the state-run radio and TV that the Soviet Union was going to build a base for communism by 1980s. To this end, he wanted to make the economy grow fast through liberalization.

However, Khrushchev became the victim of his own policy of partial liberalization; the Politburo of the Soviet Union unceremoniously removed him from power. His successor Leonid Brezhnev neither thought of building a base for communism nor of making the Soviet Union economically prosperous but had kept the economy stagnant for two decades making the Soviet Union vulnerable to supplying even basic-need goods to the people.

By the time Michael Gorbachev came to power in mid 1980s, the Soviet state economy has been in the doldrums; the socialist system of governance the Soviet Union has adopted has failed and the word ‘communist’ has been derogative in the socialist world of the Soviet empire. President Gorbachev struggled to remedy the ailing economy. He put forward the policies called ‘reconstruction’ and ‘transparency’. He wanted to reconstruct the economy that has been off-track and not transparent. These things have been too little too late. He could not keep the Soviet Union intact. Gorbachev presided over the disintegration of the Soviet Union in 1990. Most of its disintegrated member states resorted to the status of developing countries or the so-called third world countries.

Now, if you take a look at the People’s Republic of China also a socialist country, it gives you a different picture than the Soviet Union. As a socialist country, the single party rule prevails in China, but the visionary leader called Dong Hsiao Ping had turned its economy to the capitalist system while keeping the one-party political system intact in early 1980s. During the last 30 years, China has achieved the tremendous economic achievement, and continues to grow at the speed other countries could hardly match.

You find not only the Chinese people but also the foreign investors enjoy owning unlimited private property, making money and keeping it privately. Multi-national companies have moved their industries to China to capitalize on the cheap labor China has offered. During the last 30 year, China has moved to the third largest economy and moving to be the second largest economy, and competing to be the largest economy in the world by 2020. You find China-made goods elsewhere in the world.

The political system has not changed so far in China. One-party rule has continued. The Chinese rulers don’t listen to the world opinions not to mention the local people on the fundamental human rights violations. Freedom of expression has been rare. Independent judiciary has been non-existent. Free press is only a dream. Even the foreign reporters are prevented from reporting independently and freely.

Any Chinese attempting to speak about the fundamental human rights such as the lack of democratic traits and human rights violations in China lands immediately in jail. The state-controlled judiciary sentences the human rights activists harshly. The prosecutors charge human eights activists with subverting the communist government. As a result, they get the highest possible punishment the communist laws permit. Such human rights activists might never see again the light of freedom in their lives.

The Chinese rulers don’t hesitate to take the lives of the people rallying peacefully. Recently, the Chinese authorities have killed many Tibetans peacefully protesting against the Chinese authorities that have imposed their language and destroyed the Tibetan culture in Tibet. The Chinese authorities in Tibet indiscriminately arrested many Tibetans including monks suspected in helping the protestors for no reasons and made forced disappearances. They charge the Tibetan spiritual leader the Dalai Lama with being the secessionist because he simply wants to return to Tibet and have autonomy for the self-rule.

In 1989, the Chinese authorities ordered the army to suppress the students’ rally held at Tiananmen Square in Beijing. Thousands of students peacefully rallying lost their lives under the army tanks moved in on the square. Human rights activists all over the world and all peace-loving people denounced the killing of students but the Chinese authorities cared of them a little.

In China if you pronounce ‘democracy’ you are sure to be landed in a jail. The Chinese authorities have been so allergic to democracy that they would order its flunkies to jail anybody speaking or writing about democracy. They have jailed the intellectuals that have written something about democracy in China. These poor intellectuals have been serving jail sentences.

After China if you go to India and try to see it through your impartial eyes, you will find that India has the multi-party democratic system with the so-called mixed economy: socialistic plus capitalistic economy. You will find mostly the privileged class of the people enjoyed the Indian democratic system. The Indian democratically elected rulers and legislators have successfully kept the majority of the Indian people poor reaping the harvest of the democracy for themselves for so long.

A democratic system of governance is supposed to empower the people and alleviate the poverty but these things have not happened in India. Most of the rural people are powerless and often subjugated by landlords and high caste people. The recent media report has it that India has 400 millions poor living under the poverty line defined by any standard of poverty. It is more than the total poor people in Africa the media report says. Democracy has not reached them.

Caste system has deeply rooted in the Indian society. Despite the Constitution of India has done away with the caste system, the elite rulers of India has kept it indulging in the contempt of the rule of law. Low caste people are not only poor but also they have very low status in the Indian society.

Indian democracy is a largest democracy in the world in the sense a large number of people go to polling centers to vote during the periodic elections held for electing parliamentarians. However, the constitution of the Indian Congress makes the president of it a dictatorial vesting most of the decision-making power in her/him. The Indian constitution in turn makes the Prime Minister of India dictatorial.

The then Prime Minister Indira Gandhi had expropriated the private banks in India thus having the monopoly on the banking business. The government of India has the monopoly on several goods and services. For example, only the government can do the business of petroleum products, fertilizers and sugar. Consumers often find it hard to find those commodities in the market, as the government delivery system cannot keep up the market development.

The Indian state employees enjoy the control on anything. People needed the licenses from the government for anything they do. Some people have even labeled the Indian government as a licensing government. Consequently, the economy moved at the snail’s pace. However, population growth has remained quite high increasing the number of poor people every year.

The Indian administration has been very corrupt. This is the result of the administration enjoying the control on the state affairs. The state employees don’t move your paper until you make appropriate payments to the concerned paper movers. Recently, the government has introduced the rights to information on your case. If you ask the concerned state employee in writing for the information on the status of your case then s/he needs to provide you with the information on such a case. This has improved the administration to some extent.

The police have been the most corrupt. The police have been for protecting the rich and privileged people. If you are in the rural areas you find that the rural elites control the police. If you go to the police to complain against the local elite the local police don’t record your complaints fearing the reprisal from the local privileged people supported by the state or central ministers and so on. This has helped the local elite to keep the poor as they are and enjoy all sorts of things brought by their wealth and the status obviously build by the poor whereas millions of people suffer from the caste discrimination and other kinds of discrimination the local elite has introduced.

If you are a foreigner and traveling along the Nepal-India border, you need to be careful not to step in the Indian Territory even by mistake. The border is open to Nepalis and Indians.  Some foreigners erroneously travel to the border towns in India along with the Nepalis. When you are crossing the border, the Indian custom officials don’t stop you even knowing that you are foreigners not to mention asking the visa for entering the Indian Territory but when you return they stop you and ask you visa and then they start off making troubles to you. This they do for extracting a few hundred rupees from you. They might bring a law book to show you what punishment you might need to face for crossing the Nepal-India border without visa. However, if you make a payment of few hundred rupees to the custom officer sitting on the border of the Indian side you get freedom from such corrupt custom officials.

Indian security personnel don’t respect human rights in dealing with the insurgency. Often they stage fake encounters just to massacre the suspects. Thus, they have killed many innocent villagers in the areas where rebellion has been active. Most of the rural people are illiterate consequently they cannot seek justice either from the killer security forces or the established judiciary favoring the rich. India still has the largest illiterate population. So, it is likely that the mock democracy will flourish in India for many years to come.

Both the capitalism and socialism have merits and demerits. However, democracy alone can remedy their shortcomings. If you don’t have democracy then someone would ruthlessly rule over you. So, democracy in its true meaning will save people from the tyranny of both the capitalism and socialism. Democracy means elected legislators and government, independent judiciary and impartial press working independently of each other at the same time cooperating with each other on the matters needed their cooperation. Take care of such democracy.

July 24, 2010.

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