Capitalism is the best economic system in today’s world.
Chairman: Guus de Vries
In Favour: Mitchell Greven, Benjamin Srijindarat and Jamyl Jonker
Against: Zhenghao Xia and Bram Dieperink
Guus de Vries
Everyone has his or her own opinion about Capitalism. For example Margaret Thatcher, who was in favour of capitalism once said: “We have been ruled by men who live by illusions … the illusion that there is some other way of creating wealth than hard work and satisfying your customers.” However capitalism has also opponents, for example Pope Francis who said. “The promise was that when the glass was full, it would overflow, benefitting the poor, What happens instead is that when the glass is full, it magically gets bigger, but nothing ever comes out for the poor.” Modern capitalism finds it roots back Europe, mainly the Netherlands and England, during the Middle Ages. Where innovative merchants started practicing capitalism. The capitalistic system has a lot of benefits and is one of the fundamentals of a democratic society.
Even though most countries use the capitalistic system, anti-capitalism protests become more and more frequent. Not so long ago at the opening of the new European Central Bank headquarters in Frankfurt there was a massive anti-capitalism demonstration, which ended up to be a really violent one. Therefore our motion: Capitalism is the best economic system in today’s world. Capitalism is based on the facts that every mean of production is owned by a private individual. This creates enormous amounts of economic freedom, as the government has little to almost no interference in certain markets. This could results in more political freedom and economic growth. However, today’s world is a very globalizing one. A lot of experts say that it is a challenge for capitalism to succeed in a rapidly globalizing world. Therefore some economists even suggest that modern capitalism as we know it becomes too obsolete, and are already proposing intentional changes to the modern system.
Arguments in favour of the motion
At first, Enhancing an economic system with the help of Capitalism will lead to Economic growth.
An economic system with the help of capitalism creates a climate of innovation and economic expansion, which is something that we need in these still economic turbulent times. According to Pettinger it gives firms and individuals the incentives they need to be innovative and it creates willingness to work hard. Economic expansion will increase wealth, enables a higher standard of living and eventually everyone can benefit from this.
Secondly, an economic system with the help of Capitalism will improve efficiency.
According to Lombardo a capitalist society rewards efficiency and everyone benefits from this. Producing goods that are in demand in the most efficient way is what capitalism is often reliant on. Also, because the economy is more dynamic, it gives companies the chance to cut costs, which is important in todays’ economic situation. Without capitalism, firms are often state owned. This leads to inefficiency and this is due to lack of creativity and innovative practices in the workplace, which is a result of the fact that there is no need to be creative or innovative because there is no competition in this situation.
And finally, an economic system with the help of Capitalism will lead to economic Freedom.
The economic system of capitalism is a free-market system and it leads to a political system that is based on freedom. According to both Pettinger and Lombardo an economic system without capitalism often has a government that owns the entire production, which leads to too much political control that extends to all areas and aspects of life. In Ukraine, a former communist country, we can still see that some people in the government have total control and are extremely rich, while the majority of the people have not much to say and are poor.
Free trade reduces poverty.
Free trade reduces poverty, it creates direct “pull up” because it creates demand for a country’s good and industry and thus employs the poor and expands jobs. A research has estimated that poverty has been reduced by 50 million people in the developing world during the era of free trade, since 19871. Hong Kong, Singapore, South Korea, and Taiwan have been liberalizing trade for the past 40 years and have not suffered from one-dollar-per-day poverty in the last 20 years. Free trade promotes the necessary monetary flow and demand for goods to increase jobs and sustainably grow an economy to reduce poverty. Prices are lower, more products are available, and the poor are able to achieve a higher standard of living.
Free trade promotes growth in all countries.
Through global competition, specialization, and access to technology, free trade and openness allow countries to grow faster—India and China started in the 1980s with restrictive trade policies, but as they have liberalized they have also improved their growth enormously. The International Trade Commission estimates that a free trade agreement between just Colombia and the US would increase the US GDP by $2.5 billion. Because of free trade, prices are lower for everyone. Free Trade offers benefits to both developed and developing nations by encouraging competition, efficiency, lower prices, and opening up new markets to tap into.
At first Perhaps the strongest argument why Capitalism is the best economic system in today’s world the argument is that there is no alternative politico-economic system which has proved itself to work in our modern age. Almost every attempted implementation of communism has failed for example, look at China – they abandoned total communism long ago and are slowly creeping towards capitalism, as we all know china has been and is still going through big economic growth in the modern age. also any central government which isn’t at capitalism risks large amounts of corruption. What’s more is that if, for example, America became socialist and imposed many strong measures on corporations to regulate their behavior, profits will lack. As Winston Churchill, ‘“It has been said that democracy is the worst form of government except all the others that have been tried.’ A similar statement could apply to capitalism.
Secondly capitalism works perfectly with the human nature or, more specifically, greed. Greed is rewarded duly with large amounts of money and the entire economy is fuelled by people working hard to furnish their own needs. This hard work is promoting individualism and innovations of working force. In addition, greed causes competition, which is an essential part of advancing the economy.
My third and final argument is that a capitalistic economy is Cost effective and the allocation of resources Being the ‘invisible hand of the market’, capitalism ensures that resources are distributed according to consumer choice. No firm is rewarded for producing goods that people don’t desire.
Arguments against the motion
Monopoly of Power
Capitalism is often linked to freedom, but it is also seen as the monopoly of power by those at the top of the companies. Privately owned firms have the ability to gain monopoly power in certain industries and labor markets. Which allows them to charge high prices and take advantage of the people. This can happen because the state does not entirely influence the setting of the prices. For example, the company Procter&Gamble own more than 75% of the entire men’s razor market, which basically means that they can set their own high price.
Inequality of Wealth
With private firms taking control of wealth, it will lead to inequality of wealth. Those at the top stay in the top by inheriting the wealth of past generations. This makes moving up in a capitalist society increasingly difficult. The legal right to privately own property is the basis of capitalism, but the rich simply keep inheriting wealth and being born into the privileged class is a matter of chance. Equal opportunity is not something that is seen in a capitalist society. This leads to social division that can spur resentment within a society. According to French economist Thomas Piketty the inequality of wealth in a country like the US keeps increasing because the rate of return for owned capital exceeds the overall rate of the economic growth
Capitalistic businesses tend to harm the environment more. With the search for profits as the goal that overrides all other, adverse effects on the environment are inevitable. Pollution of water, air, and soil are natural byproducts of production systems organized for the single goal of maximizing profit. Most organizations do not put enough effort into minimizing the impact on the environment. Which causes environmental crises. For example, new chemicals that are found to to produce manufactured goods are routinely introduced without the slightest assessment of whether or not they cause harm to humans or other species.
Capitalism creates poverty
If you look at the numbers it says a lot. In the United States, the center of the “best” economic system, over 16% of the population is living in poverty. Poverty is defined as living on $23000 for a family of four, that is not even €2000 a month! Of course you might attribute that to personal failure, but when you look at the system you can’t deny that it also plays a role. Because the means of production are in private hands it means that the other people need to work for wages. This leads to inequality because of the amount of wage workers against the capital owners. Furthermore, capital owners have to continually lower wages to maintain their profits and pay private investors. Because of this, the wealth does not trickle down to the workers like it’s supposed to, it stays with the top elite. With the capitalist system in the US for example, there are few regulations and a lot of tax loopholes, this leads to more and more wealth staying at the top.
Capitalism hinders effectivity
Capitalism is mainly based on three key principles; the majority of ‘the means of production’ (land, resources, capital) are in a concentration of a minority of private hands, markets are used to mediate between producer and consumer (set prices etc) and the majority of us work for a wage (i.e. for other people) and do not ‘own’ the outputs of our work. The first one creates a big problem, because the majority of ‘the means of production’ is in private hands it leads to the drive for profit maximizing. Take the privatization of the US health care system for example, costs per capita are about twice the OECD (an economic group consisting of 34 member nations) average and more than forty million people are completely uninsured. The ones that are insured face high costs.
Despite that, the US still lags behind many other countries on health quality, showing how bad the privatization is for the normal people.
The profit mentality has led to people not being insured, care not being improved and unprofitable patients and situations being avoided.