The mariner is intrigued by the likely integration, or perhaps conflagration, of capitalism and socialism in Cuba. In pure philosophical form, the two economic cultures are totally opposite to one another. In the broadest terms, capitalists believe in free enterprise, unbridled entrepreneurship, and fast-profit markets. Socialists believe in cooperative enterprises where the economic engine primarily provides profits for the good of the citizens.
Essentially, capitalists desire to keep the government out of its affairs unless government legislation is helpful in increasing profit. For example, Monsanto lobbied Congress successfully to pass legislation making Monsanto unaccountable for any form of liability; in other words, Monsanto cannot be sued for damages. This legislation slipped through as part of another bill. Monsanto pressed for this bit of favoritism to counter a significant number of citizens who believe gene-modified products are bad for them. If one is an American, one must not be angry with Monsanto. It is the way of capitalism to make every conceivable effort to improve and protect profit. Virtually every sector of private business garners special advantages of one kind or another. Many advantages are simply prevention of regulations and oversight which may be to the betterment of society but reduce profit margin. The reader knows the popular aphorism: “What are the three most important things to a corporation? Profit, Profit, and Profit!”
To one degree or another, socialists desire a classless society where the government assures that everyone is treated the same and in a fair manner. Socialists believe the government is responsible for shaping economic prospects for the nation; usually this means that key enterprises are owned by the government to assure continued prosperity for the citizens. For example, the reader may remember when Hugo Chaves, President of Venezuela, nationalized all foreign oil companies and other parts of the fossil fuel industry. He did this in an effort to keep more profit in Venezuela for use by the government. It also took Venezuela from a minority ownership with foreign owners to a 60% majority ownership. Unlike capitalism, which virtually forbids government ownership of profit-making companies, socialism builds a national business model across three sectors: state-owned, cooperatives, and self-employed.
Hugo Pons Duarte, director of Cuba’s National Economist and Accountant Association, says, “The policy is not to open up the country to just anybody who wants to come, the government has a strategy for guiding investment.”
To have a cultural view of the differences between capitalism and socialism, consider the following examples:
Capitalism – Airlines. Using buy-outs, bankruptcy and mergers, US airline corporations have reduced the number of airlines by more than half. Today there are only four large airlines left. In the process of merger, labor unions are shut out or, at best, are forced to take reduced salaries and benefits. Regularly, fees for every conceivable service increase. Remembering that power corrupts, four airlines make collusion much easier than 12 or 13 airlines. That many airlines will increase competition whereas only 4 can mimic one another easily, coordinate hub flights to assure every flight is full, and, in order to keep profits high, slip down the slippery slope to collusion.
In a capitalist culture, a portion of airline profits goes to individuals who own a share(s) of the corporation’s worth and receive dividends based on profit. This is perceived as a “sharing” of economic wealth. However, in the US today media tells us that 1% of the wealthiest citizens own 37% of all stock on American stock exchanges. In capitalism, money makes more money. “No money? Tough luck. You need to pull yourself up by your bootstraps.” In a purely capitalist economy, there would be no public schools, no state owned or maintained roads and highways, public works, welfare, unemployment insurance, workers compensation, Social Security benefits etc.
Technically, the government structure of the US is a constitutional democratic republic, that is, the ultimate authority over government is vested in the citizens who exercise their authority by voting. Certain rights, ideals and civic protection are within the constitution. It is the constitution that prevents the US from being a pure capitalist government.
The private sector strongly objects every time the government imposes on profit to support the lower classes that will never have sufficient income to sustain healthy lifestyles or afford to have financial security. This disparity has become so extreme in the US that the middle class, the vital component and profit maker in consumer-based capitalism, is badly damaged.
Capitalism depends on its class system to foster desire, commitment, creativity, efficiency, competition and profit. CEOs of the largest U.S. companies made 354 times what the average worker was paid in 2012 — the widest pay gap in the world — according to a new analysis by the AFL-CIO. At S&P 500 companies, CEOs received an average income of $12.3 million, while ordinary rank-and-file workers took home around $34,645 – clearly an example of enforcing a class system. See more information at: http://www.shrm.org/hrdisciplines/compensation/articles/pages/ceo-to-worker-disparity.aspx#sthash.WhZJXNTi.dpuf
Socialism – Almost too simplified, there are two types of socialism: communist and democratic. Communist socialism is run by a political party (Russia and China are the two largest examples); there may be some limited voting by the proletariat but any undesired outcomes are dealt with by the Communist Party changing rules of order and shifting authority. Further, the ruling class has a tendency toward totalitarianism or authoritarianism.
Most generally, socialism refers to state ownership of common property, or state ownership of the means of production. A purely socialist state would be one in which the state owns and operates the means of production. The private sector would be very small and would not determine market objectives. However, nearly all modern capitalist countries (“the West”) combine socialism and capitalism. Interestingly, the word “socialism” is a bad and scary word in the United States – much more than in any other full-function nation. Partly it is a bad word because the US by far is the most capitalistic nation in the world. Other than the dominance of capitalism, there is more to the plight of socialist representation in politics and why it is ostracized – but that’s for another post.