Communism vs. Capitalism

Just read part of the 1848 Communist Manifesto and Adam Smith's Wealth of Nations for my Business Ethics class. Below is part of my essay in response.  I didn't have time to write as much as I wanted. :)

"Newton, Englehardt, and Prichard (2012) stated, “Adam Smith was absolutely correct if he is taken to be describing capital formation; but when it comes to the distribution of the wealth the free market has created, his mechanisms have no way of ensuring justice” (p. 3). So capitalism is indeed an excellent way to create capital. So why doesn't a society adopt a Marxist approach to the distribution of the wealth that capitalism has created? There is a significant problem with the communistic approach to re-distribution of wealth. The re-distribution methods espoused in communism undermine the motivating forces behind capitalism. In other words, while in the process of re-distributing wealth, communism eliminates the very mechanism that is creating wealth. The result is that capital creation will diminish, eventually dropping the standard of living of everyone in the economy, but most often the poor, who are the very people communism claimed to be trying to help.

When working with theories and models, it is of crucial importance to know if the model accurately represents reality. Capitalism and communism are both models for the handling of economy. Which represents reality best? Capitalism is based on the observation that humans are generally self-seeking. Self-interest motivates a willingness to work in people who otherwise would be unwilling to work. Hyeonseo Lee is a woman who escaped from North Korea. She described an incident that had a profound impact on her. She saw people dying from lack of basic needs, and everyone else just passed by them. “Nobody helped them, because they were so focused on taking care of themselves and their families” (Hyeonseo, 2013). Sometimes, those of us who live in a very prosperous society where taking care of others seems like second nature can forget about what happens when everyone is suffering. The model of capitalism fits what we observe of basic humanity. People are willing to work to better themselves. In the Bible, Proverbs 16:26 observes, “The appetite of laborers works for them; their hunger drives them on”. But if others will take care of them, their motivation for work lessens. The Bible warns against handouts. Thessalonians 3:10 says, “The one who is unwilling to work shall not eat.”

Communism, on the other hand, argues that people are willing to work for a common good, even at a relative loss to themselves. “True communism depends on human nature being basically altruistic” (Communism vs. Capitalism, 2013). There may be some truth observable in this to a point. But as I studied in other textbooks, people assign value to their altruistic work, thereby actually gaining personal value in exchange for what they give away. What happens when this personal value is gone? One can observe that people are generally unwilling to make sacrifices that hurt themselves unless they can see some gain from it. For example, if everyone in a society works an 8-hour job each day, and all are taken care of by the government with an equal “wage”, it is likely that everyone will continue happily. However, would someone in this situation be willing to work a 12-hour day while everyone else works only an 8-hour day? Not unless he can see a benefit from doing so? That benefit may be personal betterment, (such as overtime in capitalism), betterment of another, avoidance of punishment, etc. But if he cannot see any result from it, and if he is given a choice, human nature indicates that he will avoid it. However, capitalism appeals to this specific element of human nature. A person is willing to make a sacrifice for the betterment of himself or the betterment of another from which he derives personal value.

Therefore, the model of capitalism best matches reality and human nature. It may not be the perfect model, and it certainly does not solve all the ills of mankind. But capitalism meets the reality of human nature. It understands human nature, and builds upon it a system proven to generate wealth.

I would add however, that the best implementation I am aware of is capitalism guided by Biblical / Christian morality. Capitalism alone certainly allows for certain groups of people to take advantage of other groups of people (communism also allows for this). Capitalism guided by moral principles may be the best approach. The best examples of the implementation of capitalism that I am aware of are where capitalism operates inside a set of cultural expectations that are distinctly Biblical / Christian morals. People may not realize the origin of the values they hold, but they happen to match. These values help to keep the selfish tendencies of mankind in check. For example, the United States has a highly-developed business ethics system which brings capitalism and biblical morality together into a society and economy that has been one of the strongest on earth."

Quoted block from Module 1, Completed Assignments. David Lorimer. 560 – Business Ethics. Aspen University. Professor Sherrie Campbell. Submitted 03/23/2013.

References:

 Newton, Englehardt, Prichard. (2012). Taking Sides: Clashing Views in Business Ethics and Society, 12th/E. McGraw-Hill ISBN: 9780073527352 .

 Lee, Hyeonseo. (2013). My escape from North Korea. Retrieved March 22, 2013 from http://www.ted.com/talks/hyeonseo_lee_my_escape_from_north_korea.html .