Capitalism has never been dead and will be here for at least the next century. In a world where the market is filled with imperfections, it is in order for the government to interfere to restore order in the market. Increased concerns over the 2008 market collapse prompted the government’s to take charge of their responsibility and act. Capitalism is a system of government that favours individual growth with minimal government interference. The opposite of capitalism is communism, where the property owner is the state, and the main aim is social welfare enhancement. A mixed economy embraces the two and balances between the extremes. Many countries across the globe have adopted a mixed economy as it reduces the losses suffered by the countries that practice the extremes. Capitalism has been known to be responsible for growth of economies among them, the United States, Britain, and other developed countries. In this essay, we shall examine the future and nature of capitalism in the light of a mote communist future.

Background

Keynesian school of thought has been widely in application in the modern day. The markets have frequently veered off the rail and necessitated governments to interfere (Fazzari, and Variato, 1994). John Maynard Keynes is one of the most influential economists of the modern day. In his book on the general theory of employment, we realize that the private sector decision making sometime leads to imperfections in the market and, therefore, there is a great need for the governments to interfere to correct them (Keynes, 1937). Some of the imperfections that we witness in a market controlled by the private sector include monopolies, unemployment, black markets, cartels as well as hoarding. There is thus a need for the government to come in and rectify this imperfection for the general welfare of the consumers.

Capitalism is a system of market management that is centred on the individual rights (Fazzari, and Variato, 1994). This is in the light that a certain group of people own the factors of production while others work/sell their labour to make a living. This system encourages inequality widely and favours the growth of the capitalists at the expense of the poor peasants (Fazzari, and Variato, 1994). Critics against this theory have presented arguments that have had a ground-breaking impact on the effects of communism. Karl Marx is one of the very influential sociologists who strongly argued against capitalism. The origin of capitalism goes back in the early years of civilization when the mercantilist theory of trade was in place. The theory favoured the accumulation of gold and silver as a symbol of economic and military strength for the states (Perrotta, 1991).

The mercantilist theory led to the colonization of the American continent, the African continent and Asia. It is important to note that the states involved had a sole aim of producing goods and services in order to exchange for the gold and silver (Perrotta, 1991). Alternatively, they would acquire new mines of gold and silver and accumulate them as a measure of their wealth. Colonization was a way to acquire new mines or free labour for production of goods and services, paid for under the gold or silver denomination. The capitalism found its roots on this theory and developed along individualism. The cradle of money as a means of exchange formed a basis for capitalism where individuals enriched themselves through various means and developed their wealth into various sectors in the economy.

The colonization and slavery era saw the rich Britons form their camps into the fertile South American soils and do relatively well in the cotton and sugar industry, becoming the rich industry owners in the colonial America. Capitalism had already formed a basis in Europe and was now taking shape in the American continent. Since then, capitalism has been a major economic principle, with the states favouring individual growth, with individual property rights and self-development.

Communism was doing very well in the Soviet Union (Brzezinski, 1989). A strong opponent of capitalism Karl Marx developed the communist school of thought. The Marxist theory advocated for a classless society, and a non-monetary state that had the sole aim of maintaining social order (Brzezinski, 1989). No one owned the resources, but the state did. Everyone worked for the state, which in turn fed them and provided all the necessities. The dissolution of the Soviet Union saw the death of communism (Brzezinski, 1989). However, the remnants of communism were adopted by states such as China, which adopted the practice of communism to a limited extent. However, communism did not die off. There are countries that have strongly stuck to capitalism while others have preferred to remain at the centre. Some of the countries that still favour communism include China, Cuba, Laos, Vietnam and North Korea.

Capitalism in the modern day has been blamed for the increasing levels of inequality (Miller, 1997). A very small proportion of the world owns more than half of the world’s wealth. While developing countries struggle to bridge the gaps between the rich and the poor, the developed nations are suffering from the effects of the class stratification. Capitalism has led to a state where there are people who live in the ghettoes while others reap heavily from their massive investments (Miller, 1997). The state has been a major actor, put in place to attempt and bridge this widening gap. Neo-classical economists and the Keynesian economists have argued in favour of state interventions. This is the only way to reduce the gap between the capitalist and the poor peasants.

Capitalism or at least the extreme capitalism is dead. There is a wave of social welfare where, states are concentrating more on the development of the welfare of all citizens. Increasingly, there have been calls for corporate social responsibility, where companies are asked to take care of the environment, give back to the society and adhere to the international standards. Governments are taxing big companies heavily to ensure that there is increased government spending on the welfare of all other parties. In the past few years, there has been increased regulation by the governments on non-favourable development sectors and more incentives to others. For many states, there has been a tobacco ban imposition, as it causes more social welfare loss than good. The United Kingdom was recently on the verge of banning the Khat sale in their markets. The governments have increasingly dictated which companies they want set up in their backyard and which have no room in their states. The future for a smooth business is set but faces strong regulation by the states; that hide behind the masks and impose sanctions on willing investors. The era when a capitalist would set up whatever company he/she desired, exploit the workers and reap heavy profits is no more due to the recent labour unions activities (Miller, 1997). Modern labour unions are a bitter herb for the employers to swallow. They have organized themselves in relation to the theory by Marx, to topple the capitalists and reap good rewards for their labour.

Main Discussion

After the market meltdown in 2008 and the government billing out on big multinationals and banks who could not survive the crisis, the governments have moved to put in place more international trade regulations. The world financial sector is no longer market controlled. States have much more influence in the modern financial markets as compared to the past periods (O’Connor, Orloff and Shaver, 1999). The major reasons as to why the governments must intervene in both a catalyst capacity, and a regulatory role is because, most of the industrialized societies especially the western world have had a high concentration of power that is accompanies with an increase in the levels of uncertainty, performance failures as well as uncompensated costs (O’Connor, Orloff and Shaver, 1999). These effects have later effects that include distributional effects. When capitalism is viewed from a Mountain View perspective, it is important to understand that regulations present in the communism or in a mixed economy seek to promote the overall efficiency and greater choice for all people, unlike what it promotes. Through the anti-capitalism policies, the emergent issues are better converted to allocative decisions, which act in favor of the social needs for all. Most of the regulations imposed in a capitalistic economy; as accorded by Keynes have a sole purpose of promoting the public interest and social values in a nutshell (O’Connor, Orloff and Shaver, 1999). Additionally, the rules that imposed by the state or the interventions put in place by the state are in place to enable the market do well in that particular time.

One reason as to why the government may engage in the market includes the reduction of transaction costs (The Hindu Business Line). This is in the light that, in a capitalistic economy where the government is less involved in trade; there may be a tendency to high costs of transactions. In most economies where the government is less engaged, and the institutions less regarded business does not flourish. This is because there is a need to preserve the individual property rights and protect them as much as possible. Another major perspective is that there is a higher chance of fraud where the capitalist economy is involved. There is no proper way to transfer property and people may tend to sell-off property that does not belong to them. The risk gets higher and thus, the need to hire lawyers and investigators before a person buys a piece of property. This is the case in the developing countries where, there are less developed property management systems. Property sale is risky and purchasing more risky because of the chance of fraud. Hence, the purchase of property is met by other higher costs that include that of a lawyer and property firms.

Another reason as to why governments need to be involved in the global financial market is to ensure that there is a proper and reliable payment system (The Hindu Business Line). Moreover, the government also ensures that the clearing system is efficient and that there are standardized accounting procedures, and a uniform legal code with which the transactions can be enforced. With this in mind, for markets that are less developed, there is a high need for the government to engage in the market operations as a streamliner of the activities. Capitalism is not possible at this stage as the markets are very lowly developed and imperfections arise from all scopes of the market. There is need for the government to get involved to ensure that the fiscal and the monetary authorities function together as the major determinants of the development in a country.

Governments must be involved in trade to ensure that there is smooth flow of capital (The Hindu Business Line). This is in the light that, if the market system is left to determine the exchange rate, then the system may tend to favour the developed countries’ currencies due to the reliability and stability of their currencies. If this happens, the capital inflows in the developing countries reduce and investors are pushed into investing in other countries that are more stabilized in terms of their currencies and risks are lower. There is a need thus, to involve the government to enable the terms of trade in a country to balance with the market and to avoid big currency fluctuations that would destabilize the market.

The era of equitable distribution of income and increased social welfare is here (Olson, L. 1982). All the stakeholders are pledging of equality among the people and hence, there is no way to do that in a capitalistic economy. Capitalism must be replaced with a mixed market economy for this to happen. The governments have played a critical role through the various methods such as the universal healthcare act that aims at ensuring that all Americans have access to medical care. It is also imperative that the government has adopted measures such as taxation to ensure that there is equity for all. On this note, there are various redistributive measures by the government, example the investment on universal education, which aims at educating all Americans and reducing the success gap. Another major approach is the school feeding program that ensures that the schoolchildren are fed. Through such initiatives, the effects of capitalism are better mitigated and people are presented with a better chance for equality.

Some of the solutions or recommendations in place are that, there is need to let go off strong capitalists believes for all economies. It is apparent that an extremely capitalistic economy is not as fruitful as one that adopts a mixed economy or one that has begun to adopt more of social welfare policies after a long period of capitalism. Nations that have embraced such trends such as the United States have had a tendency to enjoy common social welfare, where the rich are heavily taxed to take care of the poor in the society. Through such undertakings, the parks are well maintained, the law well enforced and most of the people can afford necessities.

Another recommendation is that there is also need to abstain from the extremes of communism (Olson, 1982). Extremes of communism are a mode of economic setup that promotes laziness (Brzezinski, 1989). Most of the people depend on the state for their livelihood whether they work or not. It is thus not a very innovative economy. In a world that is increasingly getting competitive, there is need to maximize on the individual gains, yet, adopt redistributive policies that are aimed at ensuring that the market is set right for optimal gain of all the people. Despite the fact that extreme capitalism is dead, there is also need to protect the individual property and promote self-development where the person who works hardest is highly rewarded. On this note, the country will do well in terms of innovations, exports and acquire more wealth in the face of other countries in the international markets.

Trends

With the increased globalization, capitalist economies are encouraged to benefit more from the effects of expanded opportunity sets. However, this has been regulated by the states in that, states are doing a lot to bring people together to produce for export and reap from collective action. Through collective action, the capitalism suffers immense setbacks and increasingly loses to the upcoming group’s competition. International trade has also been made very easy by the governments such that anyone can now trade online. With the advent of the electronic money transfer services, it has become apparent that the capitalism on the international platform has lost.

The 21st century is not a time where capitalist extremes may thrive. Due to the increased government involvement, the transaction costs have reduced significantly making it very affordable for traders to take part in the international trade. For the developing countries, the governments have taken a role in the fixing of price ceilings and floors on domestic currencies to reduce the effects of fluctuations. Through such ventures, the government has increased the local citizen participation in trade by promising them stability in exchange rates.

Conclusion

The extremes of capitalism and communism are ending. This is because countries have realized that there is a need to take care of the overall societal welfare as opposed to concentrating on the welfare of a few, or many people who do not work and wait upon others to work and feed them. There will not come a time when capitalism will be completely gone. However, a day is coming when there will be equality of opportunity and people will be able to determine how much they earn from how they work. Additionally, there will be increased social welfare where, all people will have access and will afford necessities just as is the case in the developed countries. Deficits will be by choice since people will be accorded a chance to flourish and make the best of their efforts. Unlike in capitalism where the system favours a few people, one will have a chance to compete from an all-equal platform.

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