Wednesday, December 16, 2009

Blog 8

Capitalism brings wealth to a nation. The competition between businesses assures the public of a best quality product at the lowest price. Without the competition the government is left to control: what is being produced, how much is being produced, and how much the good will sell for. Because of bureaucracy involved with the government there is always a surplus or a deficiency in goods. A privately owned business can control the levels of goods being produced.

My favorite example of this can be seen in communist Russia. In 1921, Vladimir Lenin saw that Soviet industry fell over 14 percent after initiating socialism. Every citizen had a quota for grain production once this quota was met these people had no incentive to produce any more grain. However, Lenin came up with the NEP or the New Economic Policy. This was just a fancy word for capitalism.

When a person in Russia would meet its grain quota he or she was then allowed to sell the excess on the open market. This spurred agriculture production in Russia. . “Within a well-defined legal frame-work, the economic mechanism (NEP) worked without confusion, and the economy as a whole was capable of reasonable efficiency and growth.” Socialism is an alternative to capitalism because capitalism brings wealth to a nation, many socialists believe that only the wealthy elite are making money.

While the wealthy may be making money, they create jobs for the majority of society. These innovative hard working people also create innovations that effect the lives of everyone in the world. Take Henry Ford for example, his innovation of a cheap car for the masses amassed him great wealth but his wealth dwarfs the effect he had on the world.

If you would like a explanation of why capitalism works ask one of the thousands of immigrants who risks their lives in a homemade raft to live in the United States.