MBA 740 Business, Society and Government
Case Paper 2(Individual)
Is socialism dead? Is market capitalism in ascendency or decline? Will the future economy going to be controlled by an ever-shrinking economic elite? Or are we on the precipice of some massive technology-driven democratization of capital and production? Or are we on the verge of violent revolution?
Prepare a short paper (approximately 5 pages) addressing the following questions:
What is the future the economic system? How will the role of government and business in society continue to evolve? How will this evolution impact the success of business (and how success is measured)? How will it affect innovation and entrepreneurship? How will it affect economic growth and economic development?
In addition to other class resources from Unit 7, review two older arguments in favor of particular economic points of view: “Socialism Yes” (McReyonlds, 1993) and “Three Cheers for Capitalism” (Fo
es, XXXXXXXXXXWhile the examples given may be dated, the points made are not.
Fo
es, M XXXXXXXXXXThree cheers for capitalism. Imprimis XXXXXXXXXXhttps:
imprimis.hillsdale.edu/three-cheers-for-capitalism
McReynolds, D XXXXXXXXXXSocialism yes. Progressive, 57(4), 24.
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References
McReynolds, D XXXXXXXXXXSocialism yes. Progressive, 57(4), 24.
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WHAT'S LEFT?
SOCIALISM YES
Socialism dead? An idea whose time it never was, a "project" of elitist intellectuals ending the century
as ideological trash? Not quite so fast. Permit me, as one who consistently opposed the Soviet
perversion of socialism, to say a few words over the body of this fallen dream.
I know the failure of the Soviet experiment has left the impression that socialism itself has been tried,
and that it failed. It is not much good to mutter, "Yes, but it wasn't my kind of socialism," or, "it wasn't
eally socialism." It was sold to the world as socialism, and public opinion bought it. All socialists
suffered in consequence.
But why should socialists give up their dreams? Think of the Christians, who practiced torture,
urned heretics, engaged in the killing of "witches," expelled and hounded Jews, and gave thei
lessing to slavery and war (not to mention capitalism). What Christian leader would say there is no
hope for Christianity in the future because the message of Jesus, the "experiment" he launched, has
een so distorted?
We know communism failed in the Soviet Union, but look at the United States. Our unemployment
ate has been rising by about I per cent a decade since 1950. When I was at UCLA about forty years
ago, our economics courses taught that for the labor force to be "mobile," we had to have an
unemployment rate of 3 per cent. That was one of the reasons I became a socialist; it seemed like an
awful lot of people out of work just to keep the work force ,'mobile" and disciplined. But the figure has
gone up: Today we not only have an unemployment rate of about 7 per cent, but our economists
would be happy if that were an accurate statistic. Actual unemployment is substantially highe
ecause people have given up looking and are not counted as unemployed, and many Americans
are in the "underground" economy, paid "off the books" for a variety of reasons. Many economists
elieve the true unemployment rate is well above 10 per cent.
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And what kind of employment" In the past fifteen years, we have seen a startling shift downward in
the living standards of most Americans, including, for the first time, "middle-class" Americans. While
the rich have, indeed, gotten a great deal richer, it isn't just the poor who have gotten poorer',
everyone except the rich has suffered a decline in real income. People are being forced out of
productive work where wages had been high (steel production, for example) into service industries
where wages are low (fast-food service, for example). The number of Americans who subsist on food
stamps, or who have lost their medical coverage, or their homes, or who are actually living on the
street (or in their cars) is higher than it has been since the Great Depression of the 1930s.
The Los Angeles "riots" after the Rodney King verdict were not about race but about class, as some
Federal officials admitted at the time. People were hungry. A friend of mine reported seeing
neighbors going back and forth from a store that had children's supplies, taking boxes of diapers o
food.
But we have also seen a sharp increase in racial tensions in the u
an areas-not just tension
etween black and white, but also tension among groups in the minority; Latino and Asian
populations in conflict with each other or with the African-American population.
Our capitalism has, in the past fifteen years, failed to provide jobs, housing, and medical care for an
increasing number of our people. 'Me men who run this country can trot out academics to explain
how well-off we are. Certainly most of America is in far better shape than the former Soviet bloc. But
given the fact that the American experiment in capitalism suffered very little from the two world wars
that devastated Europe, the reality here is grim for too many of our people-and with no economic
excuse. If the homeless on our streets, the beggars who wordlessly shake their cups asking fo
change, were victims of some war or natural disaster that had demolished much of our industrial
ase, that would be one thing. But this social
eakdown comes at the end of a century when war did
not directly touch this country and when the capitalist experiment faced few constraints.
it is time to try something different.
Capitalism is a system of enormous energy. It has a remarkable ability to mobilize productive forces.
It is flexible and inventive. But it contains what Karl Marx called "contradictions," one of which is that
the free market inevitability becomes less free, property becomes concentrated in fewer hands, the
means of production become more highly centralized and collectivized.
On those points, Marx was co
ect. A free market is one that anyone can enter with a little help from
his or her friends. But I doubt there is a single reader of The Progressive who is in a position to start
a daily newspaper, a steel mill, or an airline. Those are enterprises that require enormous amounts of
capital-far more than any combination of ordinary people can supply. Thus, as capitalism develops,
more and more capital is required by anyone who seeks to enter the market, and the market
ecomes less and less "free." Competition continues, but usually not in terms of price; style,
packaging, and advertising are decisive. Profit margins are artificially protected because the market
has ceased to be free.
One area in which capitalism may be superior to socialism is its ability to generate "new things,"
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some of which are quite useful. While I doubt that we need thirty-seven colors of tooth
ushes, I don't
elieve socialism would so swiftly have developed such advanced electronics that persons of even
modest means could afford a television set. (Consider the humble digital wrist watch which, for a few
dollars, gives to any person a timepiece whose accuracy would have been available in 1950 only to
those of great wealth.)
Many socialists have underestimated the desire of people for variety a desire that is human, not
merely a result of capitalist advertising. To some socialists, it is enough that every citizen have a
good gray dress or pair of pants, and a good gray blouse or work shirt, and good gray shoes. But
people like variety and color, and socialists must take that human desire into account. So we must
have a socialism in which the market plays some role, so that "central planners" can't impose a
single model or a single color.
I support forms of socialism that are organized from below and involve workers in owning and
unning local factories-forms that involve setting up councils in which consumers and workers decide
where plants should be located, what should be produced, and at what price.
Socialists have made several e
ors. First, we relied too much on the assumption that if the "State"
took over a factory the result would be socialism. It wasn't. it only shifted the employer confronting
the worker from a private to a governmental bureaucracy. It did not lead to an increase of worke
democracy. "State ownership" of the means of production is not at all the same as social ownership,
which involves the workers and the community.
Second, socialists have too often spoken as if our job was simply to seize the wealth of the handful of
multimillionaires and parcel it out to the poor. But distributive socialism would involve very marginal
increases in anyone's wealth; we might be a few dollars richer for a year, but that is all. That is not
what socialism is about. It must be about finding effective ways of organizing production and
distribution of useful goods in a democratic way.
Third, we tended to think that everything could be planned-that the market played no role that
couldn't be met by rational planning. However, as capitalists know, the best of planning can go
haywire-and capitalists plan far more carefully than we may think, using market surveys, compute
models, and other sophisticated techniques.
There are problems, of course, with allowing the "market" to determine all of our decisions. The
"market" may have little demand for decent low-cost housing. People may want it most urgently, hut
a ,'market economy" supplies what people have money for, not what they want or need. Capitalist
economists concede the free market cannot provide low-cost housing-construction costs are too high
for a profit. But the society as a whole can afford low-cost housing because if we don't pay for it with
a tax subsidy we end up paying in other ways-through increased costs of police, prison, and welfare
services.
Socialists have not always fully understood there is no such thing as a free lunch.
There is never enough money to do all the things we want done. That is just as true of us as a
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society as it is for us as individuals. Sometimes the choices are luxurious-I may not have enough
money to choose both a new car and a new television set. Sometimes the choices are te
ible-
Cubans must choose today between medical care and new housing, between education and decent
uses. But rich or poor, there are always choices.
The socialist wants those choices made democratically, by as many people as possible. Socialism is
not about destroying the wealthy but about empowering the poor. The society we are out to build is
one which would stress relative economic equality.
Capitalism has failed us on at least three counts. First, it is built on the assumption that "things are in
the saddle and ride mankind." We are cogs in the corporate wheel, disenfranchised when it comes to
such major decisions as whether a factory should leave our town-or be built there. Our communities
have been polluted without consulting us. The cost of repairing the damage to the environment has
een passed along to the consumer because there was no "profit" to be had in pollution controls. (In
the old Soviet bloc, there was no civil society able to protest destruction of the environment.
Planning, because it was centralized and not community-based, left no one to watch out for damage
to the environment. We learned that simply removing "private profit" from production does not solve
such problems.)
Second, because all basic economic decisions are based on what turns a profit for a sector of the
economy, capitalists have not been concerned about the "profit" of the overall society. How do we
weigh the shifting of a plant to Mexico, with the sharp increase in unemployment payments (a social
cost to the whole society, not paid by the plant that moved), against the cost of saying that the plant
should be worker-owned and controlled and might well accept a much lower net profit if it meant the
jobs