By Viscount Francis K’Owuor,
October 23rd, 2017,
Decades after the fall of communism the debate as to which economic system is the best has not died. In fact, many countries are practicing different variations of capitalism as pegged on certain socioeconomic factors. The most successful ones are the welfare states of Denmark, Sweden, Finland, Netherlands, and Norway.
A welfare state is a concept of government in which the state plays a key role in the protection and promotion of the economic and social well-being of its citizens. It is based on the principles of equality of opportunity, equitable distribution of wealth, and public responsibility for those unable to avail themselves of the minimal provisions for a good life. The general term may cover a variety of forms of economic and social organization.
As an eclectic economic system the Welfare model takes a little good from capitalism as well from communism; allowing private ownership of the factors of production even as the state undertakes certain social policies that ensure equal opportunities and a life of dignity for all.
However, any economic system with inherent biases towards communism or socialism tend to fail in poor countries because of a number of reasons.
Firstly, social loafing ( the tendency of certain members of a group to get by with less effort than what they would have put when working alone) is a habit that is rampant among poor countries. Where the factors of production are communally owned certain individuals will mostly like become too lazy to work ,thus imepeding on production. In such a case , economic decline cannot be avoided.
Secondly, poor people have a problem embracing technology and change and instead rely on customs and traditions for the solution of contemporary challenges. In majority of cases they fail to find solutions and as a result grow poorer and poorer. One overriding feature of capitalism is mechanization. In the pursuit of more profits owners of capital rely on technology to quicken production in ways that is less costly. In contrast, poor countries who stick to obsolete ways are left to either begin embracing technology or grow poorer. Additionally, negative attitude towards innovations among the poor is one thing that impacts on production.
Thirdly, individuals tend to mismanage resources if such resources are communally owned. This is because the sense of personal responsibility diminishes as one acts within a group. This explains why private entities tend to thrive better than public entities.
Lastly, capitalism thrives on economic competition. Because there are no monopolies and market forces alone influence prices, producers endeavor towards quality and better prices to have a competitive edge over other producers.
In view of the foregoing, it is better that a nation starts off with a capitalistic system. Only after enough wealth has been produced and a country well developed should it begin implementing certain social policies that will reduce social inequalities which is an unavoidable side effect of capitalism. The experience of Tanzania is a case in point. That East African country is still smarting from its dalliance with Ujamaa in the 70s. Comparatively, Kenya is doing better despite accusations that social values have been sacrificed at the altar of economic development.
All these hold true even for communities.
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