Socalism versus Capitalism?

On my work travels I encountered again this ole chestnut by Yunker (2007, A Comprehensive Incentives Analysis of the Potential Performance of Market Socialism, Review of Political Economy, Vol 19 Issue 1, pp 81-113) and thought I'd share:

This article evaluates the performance of contemporary capitalism relative to that of a hypothetical alternative designated ‘profit-oriented market socialism.’ In most respects, profit-oriented market socialism would closely mimic contemporary market capitalism. The major difference would be that most profits and interest generated by the operations of publicly-owned business enterprises would be distributed to the general public as a social dividend proportional to household wage and salary income rather than in proportion to household financial assets. The basis of the comparison is a small-scale but comprehensive computable general equilibrium model, termed the ‘els model’ because it encompasses three primary factors of production: capital management effort e, labor l and saving s. Numerical solutions of the model suggest that the critical issue is the numerical value of a parameter (ν) representing the output elasticity of total capital management effort in the aggregate production function. If this parameter value is relatively low, then profit-oriented market socialism out-performs capitalism. If this parameter value is relatively high, then capitalism out-performs profit-oriented market socialism. The fundamental implication of the research is that the relative performance of a profit-oriented market socialist economy is an empirical question and not a theoretical question.

Any thoughts?

Socialism or Capitalism?

That was a question that bugged me for most of my teen years.


Part of me wanted to be a gold water/Ron Paul conservative, I found so many of those types of ideals appealing, peace though strength (that's one i still won't give up), don't spend more then you make, keep the federal government out of our personal lives, leave moral issues up to the states. It's not our business, let people do what they want. Look how we defeated communism with our economy, if the federal government gets too big we will turn into tyranny.

Then there was the other part of me, that wanted to make the federal government stronger, after all, with a weak federal government who will take care of the elderly and disabled?, Who will raise orphans taken away from unfit parent? Who will make sure the poor learn how to read and write? Corporations are evil, we have to regulate them or we will go back to the way things were (1904). With a stronger federal government, we can crack down on violent crimes allot harder.

Even after i decided, I still find the other side appealing. When my guy dropped out on the democrat side before it got to my state, I voted for Ron Paul.

I would have to say, there where a few factors, although, I still consider the Ron Paul way of doing things to be a valid way to run a government, unlike the neoconservative style, which I consider broken. I just think that a social democracy does things better.

So, what were the deciding factors?

Who is going to take care of the poor, the disabled, and the orphans? I don't trust private corporations to do stuff like that, if there are the ones doing it, they have to be making money off it somehow, and therefore, by definition, be taking advantage of them.

If we were allot more religious, and had a better main stream religion then Christianity, then i might trust the churches to do it, in some countries with weak governments the Buddhist temples will take in orphans... But i don't trust Christians to do something like that, I hate Jehovah too much, he's killed too many people, if we raised children under him, then they might turn out like the Jihad Muslims...

The only major criticism of democratic socialism that i could find, tyranny of the majority.

It's such a weak argument in my eyes, it sounds like something anarchists would made up to scare Libertarians at a camp fire.

And finally, we have seen what unregulated factories look like, I would never willingly go back to that.

The only question for me now is to go partial or all the way, sometimes I think that if we socialize out health care and keep welfare and minimum up to standard, that it would be fine. But sometimes i feel like it would be better to do away with businesses all together...

Democratic Socialism, or Social Democracy?

Despite what I put off in my debates, I'm leaning towards Social Democracy. If we allow corporations to exist and compete with the government, then that could only be a good thing right?

Mentork said:

Democratic Socialism, or Social Democracy?

Despite what I put off in my debates, I'm leaning towards Social Democracy. If we allow corporations to exist and compete with the government, then that could only be a good thing right?

Click to expand...

Compared to the analysis in the original post, I come from a rather different angle. My work has convinced me of the inefficiency of the capitalist labour market (summed up as unemployment, underemployment and underpayment). Whilst social democracy is able to maintain a stable capitalist system with much lower poverty rates (ensuring benefits for the majority of the population), it is insufficient to eliminate these inefficiencies

Forgot to give a more specific example of inefficiency in social democracy. So here goes...

To further demonstrate the limitation of social democracy, consider the consequences of the insider-outsider approach to the labour market. This divides labour into two groups: the insiders (defined as those employed in protected industries) and outsiders (defined as those unemployed or in jobs with low salaries and poor employment rights). The social democratic government supports the interests of labour. However, it is prone to supporting the goals of the insiders, given outsiders are less politically motivated and therefore less important in the democratic process. This can discourage the implementation of sound active labour market policies, such as policies required to reduce unemployment rates. Benefits are skewed towards the 'less important' outsiders, with the insiders likely to find any higher taxes or increased labour competition (which can threaten wage growth) unpalatable. Thus, with social democracy, we are likely to see capitalist inefficiency go unchecked.