There’s been a long going debt as to why capitalism is better than socialism. Although the US favors a capitalist economy, over the decades, socialism has been on the rise. However, those who support socialism do not understand the harmful effect it does to individual liberty and economic freedom.
Capitalism is better than socialism in so many economic ways. In this article, I am going to explain why we should continue to remain a capitalist country. I’ll start by comparing two capitalist countries (U.S. and Chile) against two socialistic countries (Russia and Venezuela), and we’ll see which of them fair better.
Capitalism Create the Most Economic Growth
One of the leading proponents of why capitalism is better than socialism is due to economic freedoms it provides to individuals. According to the 2019 Index of Economic Freedom, the U.S. and Chile rank at number 12 and 18, while Russia and Venezuela rank 98 and 179.
The Index of Economic Freedoms measures the impact of liberty and free markets around the globe. It’s a greats source to review which countries provide the most economical living standards for individuals.
If we review the chart, the top 35 countries are capitalist, with the top 8 providing the most individual freedom for those living there. Some capitalist countries are slowly declining down the ranks. However, those are the countries that either are or have been gradually shifting towards socialism, countries such as Spain, Portugal, and France.
Let’s take a look at another measurement that indicates why capitalism is better than socialism, GDP per capita. I like to use GDP per capita over GDP because the per capita GDP is a better indicator of a nation’s living standards since it adjusts for the population. After all, we’re trying to determine which economic system is best for the general population.
GDP Per Capita
We’ll use a comparison of the four countries I mentioned earlier with the first two being the per capita GDP of the US and Chile and the latter being Russia and Venezuela.
U.S. GDP per Capita
Chile GDP per Capita
Russia GDP per Capita
Venezuela GDP per Capita
It’s interesting to note that the capitalist countries are doing better than the socialist countries. However, I wish to elaborate on some essential details for Chile, Russia, and Venezuela.
We’ll start with Chile first. In 1973 Chile became a capitals country after Pinochet came to power. If you take a look at the chart, you can see that Chile’s GDP per Capita begins to rise after 1973, eventually surpassing Russia and Venezuela.
Another interesting data point is to look at Venezuela’s GDP per Capita. In 1998 Hugo Chavez overthrew the capitalist structure and turned Venezuela into a socialist government. As you can see GDP per Capita crumbles but rises just shy of the previous highest.
Unfortunately, the data for Venezuela ends in 2014 as the country’s socialist state descends into economic chaos. The socialist country has yet to recover from its crisis, and with Maduro in power, there doesn’t seem to be a recovery in sight.
Capitalism Allows Individuals to Pursue Their Dreams
Another reason why Capitalism is better than Socialism is access to private wealth. Private wealth encourages individuals to provide more goods to society. Everyone desires to accumulate wealth; naturally, a few individuals turn into entrepreneurs.
The best way to gain wealth is to provide products or services that benefit society. Consumers are willing to part with their wages for a capital good or service that will help them. In turn, businesspeople acquire more personal wealth and are the reason why innovation comes from capitalist countries.
Socialism, on the other hand, discourages innovation as individuals are not able to reap the benefits of their ingenuity. There’s a good chance that If an individual creates something beneficial, the social collective may confiscate it for their use.
Innovation is key as more innovation leads to better standards of living. Of course, this is another reason why capitalism is better than socialism. As capitalism leads to more innovations that benefit society.
The Socialist Death of The First Pilgrims
In May 1607 the first 104 pilgrims arrived in Jamestown as indentured servants for the Virginia Company. Within six months all but thirty-eight of the pilgrims were dead, having starved to death.
Two years later, 500 pilgrims arrived in Virginia, transported there by the Virginia Company, and a shocking 440 of them died from starvation or disease, and 440 of them died to starvation.
The settlers died not because of the harsh weather but rather because the workers were not producing any food. The problem was that the pilgrims were indentured servants, who had no financial stake in the fruits of their labor.
Everything they produced went into a shared pool that was used to generate profits for the Virginia Company. In the end, the social collective had failed and claimed the lives of many.
The Last Take
The world has seen many innovations due to capitalism. We’re able to enjoy the freedoms and prosperity that were discovered through the means of private ownership and liberty, whereas socialism, has caused nothing but poverty and destruction. It’s a shame that many individuals do not see the unforgiving nature of socialism.
Instead, they turn a blind eye to the truth and ignore the devastation that is going on right now in many socialist countries around the world. Why do they want socialism? I do not know, however; I do know that if we go down this path, there’s no turning back from the devastation that awaits.