Socialism, as conceptualized by the classical Marxists refers to an economic system governed by social and collective ownership of the production machinery where workers democratically control economic resources as well as economic decisions (Hunt, and Sherman, 1990). The system is characterized by society-wide planning that helps in coordinating economic decisions at all levels putting emphasis on democratic ideals in determining the criteria of economic rationality (Yates, 2003). Capitalism, just like socialism, utilizes the willpower of the people, whose actions in a free market free from interventionists’ policies foment economic activity that is gainful to all. The system is based on the assumptions that individual operations within the economy are driven by self-interest that ultimately helps them and propel the wheels of the economy towards prosperity (Schweickart, 2002). Built on the premise of combined processes of national liberation and industrialization, the promises of more equality and increased well being was evident on the intentions of both systems. The ideas of Marxist or capitalist societies are very alluring. The notion of everyone being equal, even if it means forcefully taking from the rich to give to the poor seems to serve justice in every sense. However, the defects of both systems have ended up creating states of fear, exploitative society due greed resulting in a worse off state of affairs where inequality reigns supreme.
The systems as envisage by the core founders were dependent upon types of human characteristics that is hard to come by. The success of socialism was pegged on very little greed and jealousy among individuals. Apart from the foregoing, people must possess general philanthropic feelings and a willingness to work as hard they can for everyone else good. In the system, those with the greatest abilities and working the hardest must be satisfied with rewards that are equal to those with lesser abilities and not working hard or not working at all, which is very unlikely and unthinkable in the current society set-ups. Marxism ideals undoubtedly lead to free riding and slacking, which is rather unacceptable. The economic defense of a capitalist state engenders an impressive pedigree. From Adam Smith's perspective put in writing published in “Wealth of Nations,” the argument that a free-market economy increases the living standards of many at a much faster rate than a socialist economy closely monitored under the command of the state is appealing to some extents.
Why haven’t the systems delivered the promise of well being to all? Under socialism, the idea of incentives playing a critical role in informing market economics was ignored totally. Even though the soviet socialist republic deviated from state control of markets, creating some space for market forces, the economy was still largely centrally planned. Private property was still largely in the hands of the state. In effect, soviet socialism became a system without effective incentive mechanisms that could direct economic activities. The pricing system, though not appreciated by many is a fundamental aspect of the economy. A legitimate source transmits information concerning relative scarcity of commodities but coordinates proper functioning of economic activities. Price controls fixed by authorities oftentimes transmit misleading information on scarcity of goods and services. Socialism also failed due its failure to integrate profit loss accounting within its structural framework. The allure for profits effectively monitors economic performance by constantly evaluating business enterprises. Under central planning, Soviet socialism failed to determine programs that were useful and deserved to be expanded and those that were making losses that therefore had no moral justification of existing. The fatal defect that completely led to the failure of socialists’ ideals was the complete disregard of property rights. Publicly owned assets lacked the incentive of wise stewardship. Responsible use of property is completely absent and abandoned (Yates, 2003). In one of his books, Howard Sherman viewed the Soviet model as socialist, referring to the system as that in which the means of production are largely owned by the state (Sherman, 1972). In his release of 1987, Sherman decried the lack of popular control over the economy arguing that the Soviet model was full of flaw. The system lacked democratic ideals to which Sherman argue was a fundamental aspect of system they sought to create. He argued that economic democracy was not only desirable for soviet socialism but also essential to the system (Sherman, 1987, p. 260).
The Soviet economic model is the only system of socialism that gave birth to an alternative system to that of capitalism. The Soviets developed their system in the late 1920s and early 1930s (Sherman, 1972). Referred to as state socialism, the system was later introduced with variations in many countries of Eastern Europe, China, among other countries, Africa taking a share of the system (Zimbalist, Sherman, and Brown, 1989). That model of socialism were dismantled or rapidly retreated everywhere it had been adopted. The attempt to restore the Soviet state socialism under the guidance of Mikhail Gorbachev between the year1985 to 1991 led to the complete demise of the system and the subsequent disintegration of the Soviet state. The leadership of the successor states after the collapse of the former Soviet Union never looked back in building capitalist systems (Kullberg, 1994).
As explained by William Thomson in his rejection of the capitalist market concepts backed liberal ideals, individual pursuit of wealth encouraged by self interest is not only chaotic but creates five evils; all of which stems from the principle of competition (Yates, 2003). First, idea of market socialism fronted in capitalistic markets creates rivals rather friendly competitors as envisaged. Secondly, the system ended up creating the oppression of women. Within an individual family, the little domestic drudgery was left under the care of women. Third, was the anarchy of the market; as long as the concept of free will was to eliminate the capriciousness tastes of capitalists, the system remained a source of crises and depressions causing economic instability, massive unemployment through cost cutting machinery, wastes, and the general social suffering (see Hartmann, 2002). The wars caused the search for resources to replenish economies today serve to reinforce the real devil in capitalistic ideals (Heinberg, 2005). Fourth, the system has not only been a recipe of malfunction and numerous accidents to human life. Lastly, due competition, the system has concealed the dissemination of knowledge, making its acquisition primary based on personal gain and greed (Scherf, 1999). What is new is inaccessible to competitors.
Indeed, capitalism and socialism has ended up creating unequal society. In the United States, the poor are in constant dreams of hitting jackpots than creating a society of equals. Capitalism is relentless in its assaults of the common person. Television programs are full of commercials that do urge to buy or sell. The ideology of capitalism is ubiquitous and cannot be avoided. Its stunting features are everywhere (Yates, 2003).