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Capitalism has some fundamental flaws, as does Socialism. The question is which one can permit a society to survive and flourish long-term.

The United States economy is built upon one key premise: growth. The DJIA rises: good! The Gross National Product rises: great! The population expands, more sudivisions are built. Excellent! Of course, pure, unchecked capitalism leads to a truly dramatic chasm between the rich and the poor, and fortunately today that is not precisely the case.

The key thing is to look at the big, big, big picture. Growth can't go on forever. No, it can't. Like wise Agent Smith said in The Matrix:

Every mammal on this planet instinctively develops a natural equilibrium with the surrounding environment. But you humans do not. You move to an area and you multiply and multiply until every natural resource is consumed and the only way you can survive is to spread to another area. There is another organism on this planet that follows the same pattern. Do you know what it is?...A virus.
From the mouths of bots come truths, I suppose.

Capitalism's fundamental tenet is impossible to sustain. However, it works fine for now as long as we believe it is Somebody Else's Problem. Additionally, it is perhaps worth noting that very little is a cooperative endeavour within pure capitalism. For example, take the commercial radio station. My objective is to listen to music. Their objective is to play enough music I like to lull me into listening to advertisements. We are working to cross-purposes. Then again, perhaps that is the necessary root nature of bartering.

However, Socialism is not necessarily the cure for these ills. With Capitalism, there is the incentive to improve services, systems and products because it will make a company more successful, which is the desired end. With Socialism, however, besides faith in being a cog in a greater system, there is no push to improve in any way. The Soviet Union attempted to boost the idea of the noble worker, by repressing a doubting free press and deluging its citizens with propaganda and misinformation. In the end, the Soviet expression of Socialism (however ideologically impure), too, was unsustainable, but more rapidly so than the United States.

So which is more logical? I think, perhaps, a mixture, with effective central planning combined with a good, carefully watched, very very slowly expanding economic engine, would be most successful.

For more reading see the Capitalism VS Communism metanode (note that Socialism and Communism are hardly the same though!)

Although absolutes don’t tend to do well in general, I support Socialism over Capitalism in general principle. After all, the whole purpose of Society and of a nation is to work together to achieve what cannot be achieved alone, and the ideals of Capitalism would throw all this away in the name of competition and a "better life for all", forgetting that competition is ultimately self-defeating because it results in one group, company, whatever, being slightly better than all the rest and consequently destroying its competition and establishing a monopoly, which when unregulated can never be good for the general public.

After all, most capitalists would still agree that certain regulations are necessary to prevent monopolies forming and abuses of corporate power from occurring, yet in a pure capitalist society these would not exist; the capitalist advocates the principlemay the best man win”, which when carried to its logical conclusion results in the doing away with government altogether, allowing ultimate competition and “user-pays” philosophy to reign.

However, when examined such a system obviously does not provide much benefit to the majority of people in that country. For example, with privatized police forces, only those who can afford it would have protection from crime of any sort, while the monopolies that the most aggressive and dishonest companies would eventually form in the absence of regulation would be able establish a virtual dictatorship, likely resulting in conditions for the average worker not unlike the early industrial revolution.

And although capitalism would be more efficient at first, in the end it would result in massive redundancy and inefficiency, as monopolistic corporations price-gouge and every citizen is forced to do everything in their lives for themselves, or pay others high rates to do it. Instead of paying a small portion of their taxes to fund a FDA-like organization to make sure their food was not contaminated, they would have to hire someone to do the job for them personally instead of the nation as a whole, costing a lot more overall if they didn’t want to risk an early death due to food contaminants. This massive inefficiency, combined with the fact that unrestrained capitalism tends to move wealth from the many to the few, is why I support Socialism.

Rather than fighting against the basic tenants of society, those of cooperation and specialization, Socialism works with them. Corporations are run by the government, and rather than attempt to merely make the most money possible, they attempt to do their best for society. Capitalists claim that the competition inherent in early-stage Capitalism drives innovation and better services, and while that is partly true, it also drives devious advertising, dishonest business practices, and corporate warfare; anything to prevent lowering prices and spending money on improving products, while still retaining market share. Because of these effects, the beneficial effects of Capitalism are greatly overestimated.

Skeptics also claim that in a Socialist society workers will lack motivation, but this can easily be overcome by having the government primarily pay people on the basis of how much energy and thought effort they expend in their work, on a linear scale (ie work twice as hard, get twice the money), with a bonus for especially creative or useful work such as new inventions or good art. This results in motivation for hard work and creativity, while not paying people of out proportion to how hard they actually work. Do CEOs really work 20 times harder than a typical example of their workers? Capitalism seems to think they do, but all that achieves is unequal, wasteful distribution of money and discouragement of effort in “less important”, but still economically vital, jobs.

Instead, by paying people for the actual difficulty of their work (and how hard they work), Socialism encourages even people in what are traditionally considered “bad” jobs (such as a janitor) to work hard, increasing overall efficiency. Efficiency is also retained in society in general by means of specialization, resulting in less time wasted. You don’t have to go around checking prices, because you know that in buying from the government provider you are already getting a good, fair price designed to pay for production and innovation, and help keep the country running, rather than to transfer wealth to an agressively greedy few. Because Socialism works with, rather than against, the purpose of society in these ways, I feel it is, in the long term and with proper implementation (ie not like the USSR), a much better economic system than Capitalism.

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