I
- Cooperation and other economic systems- Capitalism, socialism and communism
Capitalism
Capitalism is a system
wherein the entire means of production and distribution of goods and services
are vested in the hands of the private individuals.
Capitalism is a system of economic
organization in which business and industries are organized and carried on for profit by private
individuals and enterprise with a minimum of Government interference.
Features of Capitalism:
1. Private ownership of means of production or factors.
2. Management of means
of production for private
gain
3. Freedom of contract and
enterprise
4. Class conflict between labour
and capital
5. Non-intervention of government
in the economic matters
6. Exploitation of man, by
man
7. Class conflict and
resultant Class struggle
8. Competition in the market
as the regulator of price and business activities
9. Wide gap between ‘haves’ and ‘have not’s’
Thus capitalism as a system depends for its existence on
certain fundamental points such as:
1. Right of inheritance
2. Right of free
enterprise
3. Right of contract
4. Right of private
gain and personal freedom
5. Free competition and
guaranteed privileges.
Advantages of Capitalism:
a. The reward is apportioned on
merits.
b. The individual
initiative and personal
freedom is the best motivation for advancement of business.
c. As production is
carried on according to the wishes of Consumers, the consumers are happy.
d. Capitalism has
survived many crisis and it is flexible in the sense that it is easy to adapt to changing
economic conditions.
e. It is also open to a
certain amount of
regulation by the State
Disadvantages of Capitalism:
a. Permitting private
individuals to exploit
every situation.
b. Capitalism fosters
too much of individualistic outlook and operates without any definite plans as
to production, resulting in mal adjustments of supply and demand.
c. Individuals or the
capitalists obtain all private gain at the cost of the community to its great
detriment. d. The centralization of power in a few hands in regard to
production of goods leads to accumulation of power with few elite people.
e. In capitalism there
is unfair, unequal
distribution of income and wealth.
f. There exists cut throat competition
which result in waste of resources and manpower resulting in overproduction of
certain classes of goods. Sometimes there is underproduction to create artificial scarcity
and increase price and profit. g. Human values and ethics are not at all taken
care of.
h. The workers are merely
treated as a part of factor
of production.
i. Capitalism leads to a division of society into
working class and the capitalist.
DIFFERENCE BETWEEN CAPITALISM AND
CO-OPERATION
1. In capitalism capital has a pivotal
role to play in the business whereas in co-operation, it has a secondary role.
2. The capitalistic
economy is dominated by profit
motive whereas service is the motto of co-operatives.
3. In capitalism there is union
of capital and in co-operatives there is union of persons.
4. Share capital determines the
voting rights in capitalism whereas in co-operation, one man has one vote irrespective of
their capital contribution.
5. Capital owns men in a
capitalistic economy while in a co-operative society, men own capital.
6. In capitalistic
system business tends to concentrate
wealth in the hands of a few capitalist whereas in the co-operative
system wealth is
decentralized.
7. In capitalism there
is cut throat competition
whereas there is no such
competition in co-operation.
SOCIALISM
Socialism is a system
wherein all means of production and distribution is owned and controlled by the state. It is a
socio economic system in which material means of production are owned by public
authority or the community and operates not for profit but for the services of
the community at large. Socialists are of different types and they are Marxism socialism or scientific socialism State
socialism Guild socialism; and Evolutionary and revolutionary socialism
The principles common to all socialist are substitution of collective ownership
for private property in all instruments of production which permit exploitation
of labour and the substitution of a central authority controlling production in place of the
present competitive environment.
FEATURES OF A SOCIALISTIC ECONOMY
1. State alone has the power
to organize and conduct production.
2. Nationalization of all
the means or instruments of production ie., land, factories, mines, railways
and their ownership to be transferred to the state.
3. Controlling Boards
would be established in each industry and the state would pay wages fixed by such boards.
4. State would provide work for everyone.
5. The state itself would be
capitalist, the landlord and the organizer of industry and thus interest
and rent would disappear.
6. Remuneration for work would vary
according to one’s ability and everybody is assured of an equal
opportunity to rise in life, irrespective of rank.
7. The state would undertake production
and distribution and pay costs of production and annex profits as well.
Profits arising out of production would be spent by the state on education, medical
relief, recreation and entertainment of the poor.
8. Private property in
capital goods like residential house, furniture and fixtures and other consumer
goods would be allowed.
9. Private ownership of means of
production is prohibited.
10. Each individual is
assured of fixed income.
11. The entire surplus or profits
belongs to the state.
12. There is no class difference or class struggle; and
13. Balanced Economic development
MERITS OF SOCIALISM
1. As the State runs the entire operations,
considerable fund is
accumulated with the State which can be used for amenities like
education, medical facilities, free milk for children and for entertainments.
2. The productive resources are
utilized in an effective manner.
3. Jobs neglected by
people would be given to machinery and they would be free to pursue higher aims
in life.
4. As equality of opportunity
is afforded to all to rise to higher positions in life, considerable uplift of
uplift of the masses is brought under a socialistic state
SIMILARITIES BETWEEN CO-OPERATION AND
SOCIALISM
1.
Both aim at the abolition of class struggle, profit economy and
poverty in the midst of plenty, which militate against the norms of a
welfare state.
2.
Both maintain economic equality and offer no opportunity for the
development of glaring inequalities of income and wealth.
3.
In both the forms, actions are directed
towards the elimination of
competitive forces and their substitution by the principles of
co-operation.
4.
Both aims at the welfare of the community and the promotion
of social justice and progress.
5.
Both oppose individualism and seek to replace
it by collective ownership
and collective action.
6.
Both lay emphasis on distribution of wealth.
7.
The aims of both are rendering of service rather than earning
profit.
8.
Both the systems are based on moral foundation and believe in
human brotherhood.
9.
Both try for eliminating the evil effects of competition.
DIFFERENCE BETWEEN SOCIALISM AND
CO-OPERATION
1.
System
Socialism is a system of government
which seeks to move towards its objectives by changing the prevalent economic
order. But co-operation is a system of thought which is compatible with all
forms of economic and political systems. A better philosophy is enunciated
within the system itself to help the common man to gain strength.
2.
Type
of Remedy
Socialism is a political remedy for economic
evils and it is effective through the active involvement of the Government. On
the other hand, co-operation is a non-political alternative to the economic
problems.
3.
Supremacy
Under socialism, the state is supreme
for it participates in and exercises control over production and distribution.
The state interferes in all matters and the individual freedom cannot be exercised.
Under co-operation, the individual is supreme, he enjoys freedom of action. The
members direct the activities of the organization.
4.
Capital
Socialism is against the idea of the
accumulation of capital by individuals. The co- operatives do not discourage
accumulation of capital by its members. But in co- operation takes care to
ensure that they are not controlled by it.
5.
Role of
the State
Socialism operates under state domination,
which is both the deciding authority and the directing agency. But
co-operatives seek to avoid state control
6.
Type
of Property
Socialism is associated with State
Ownership. All the means are owned collectively by the community. On the other
hand, co-operation is characterized by, the co-existence of private and
collective ownership.
7.
Politics
Politics in socialism, finds a top place
in socialism, but the creed of co-operation is free from politics or it is
politically neutral.
8.
Control
In socialism, economy is controlled by the
State while co-operative organizations are managed democratically.
9.
Surplus
In socialist economy the surplus goes to the
state. But in co-operatives it goes to the members on the basis of patronage
dividend.
10. Object
The objective of socialist economy is to
protect the welfare of the people where as in co-operation the basic objective
is service to members.
COMMUNISM
Communism is mainly the product of Marxian philosophy contained in
the book Communist Manifesto, which was published in 1848 in collaboration with
Engles.
Communism is a term which is used “to
denote a system of social organization based upon common property, or an equal
distribution of income and wealth”.
Communism as a form of socialism in
which, the evils of capitalism are mitigated by resorting to revolutionary methods.
