Copyright 1995 Robert M. Free - publishing rights reserved

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The following page documents some of my current thinking on a subset of economic systems. I am not an evangelist - I have no interest in converting you to my way of thinking. Writing this down simply helps me to delineate my opinions in these areas - I make them public to encourage debate and feedback. I am certainly open to expanding/modifying my points of view.


The following are my definition for terms that I use in this document. These definitions are not intended to be authoritative; they are provided to clarify my use of these words.

Social - Pertaining to the interaction of people.
Cultural - Pertaining to social customs of a given group of people.
Commodity - Valued resource: workforce, space, raw materials, information, energy.
Economics - A system of acquiring and transferring commodities.
Capitalism - An economic system based on "survival of the fittest".
Communism - An economic system based on "you put in your fair share; you get your fair share".
Socialism - An economic system based on "you get a share regardless of your contribution".

Critique: Capitalism

Capitalism is based on the Darwinian concept of survival of the fittest. While I am aware of no nation that practices a pure form of this economic system, several Western countries use a form of capitalism at the core of their economies. Scaled-down examples of capitalism are flea markets, bazzars and black market trading.

Properties of Capitalism

  • Social/cultural rules and political laws define the environment.
  • Supply and demand provide environmental pressures.
  • Those that best "fit" that environment survive and maintain the rules/laws.
  • Those that can't/don't thrive in the system, and otherwise lack participation, are culled.
  • Successful capitalistic systems tend to be open and competitive.
  • A healthy capitalistic system results in economic incentives.

Advantages of Capitalism

  • Capitalism is an internally stable economic system, in that it is consistent with human behavior. People understand that life is not fair - there's no "free lunch". You have to work to survive, and only the lucky who manage to thrive within the socio-economic matrix make it to the top. As long as there is a belief/hope that one can advance in the system, there is an incentive to participate.
  • Capitalism is also externally stable, in that survival in a capitalistic system requires innovation and flexibilty to keep up with the changes in supply and demand. Such a system is generally prepared to deal with the influx of competition from external sources.
  • Large populations are likely to be diverse, which is beneficial to healthy capitalistic systems.
  • Large, diversified societies tend to gravitate towards heirarchical social systems; capitalism easily adapts to such structures.

Disadvantages of Capitalism

  • It is not acceptable in most modern societies to allow portions of their population to be "culled".
  • Those in power tend to construct rules that limit diversity and competition, thereby weakening the flexibility and strength of the system as a whole.
  • Vast imbalances in opportunity encourages revolt, which disrupts and destablizes the system.

Remedies for the Excesses/Weaknesses of Capitalism

  • Create secondary social mechanisms to support those that do not "fit" in the socio-economic system.
  • Encourage the inclusion of all members of the population to compete, and open up competition to external markets, in order to maximize diversity and flexibility.
  • Educate the elite to the systemic benefits of resource distribution, and encourage incentives for such distribution.

Critique: Communism

Communism is based on the concept of shared effort and shared resources. No existent nation practices pure communism, and I know of no self-sustaining country that uses communism as a basis for their economy. Successful, scaled-down examples of communism include early Christian congregations, kibbutzes and cooperatives.

Properties of Communism

  • All members of the economy share both work and benefits.
  • Those that do not provide their share of effort and resources to the system are culled.
  • Successful communistic systems tend to be small and homogeneous.
  • A healthy communistic system results in a cooperative society.

Advantages of Communism

  • Communism is an internally stable economic system, in that those that participate benefit and those that don't are culled - creating an incentive to participate.
  • Communism requires common goals and agreed upon rules/laws to allocate responsibilities and resources. If successful, this leads to a spirit of sharing - which builds stronger social communities, creating a stabler economy.
  • Due to their sense of cooperation, healthy communistic systems are very efficient at distributing resources within their localized areas - particularly in times of need.

Disadvantages of Communism

  • Large or geographically broad populations tend to be diverse, making it difficult to maintain a common goal or set of rules for shared effort and resources.
  • Large, diversified societies tend to gravitate towards systems of heirarchy, reducing the perception of fair distribution of work and resources - which can destablize a communistic society.
  • Allowing an influx of external culture increases the likelyhood of destablizing the homogeneity of the society. As such, communistic systems tend to block out external cultures and exclude outside competition, weakening the system's ability to learn from, or compete with, external economies.

Remedies for the Excesses/Weaknesses of Communism

  • Keep the society small and homogeneous, and minimize hierarchies.
  • Block out external cultural influences and control external trade.

Critique: Socialism

Socialism is based on the concept of everyone gets their share. This economic system exists in those environments where resources are plentiful, or populations are extremely small (such as family units).

Properties of Socialism

  • All members of the economy share benefits, regardless of their economic value to the system.
  • Succesful socialistic systems depend on sufficient resources for the entire population.
  • A healthy socialistic system results in non-economic productivity.

Advantages of Socialism

  • In environments with plentiful resources, socialism provides all members with their survival needs, creating a stable social environment.
  • Members that cannot participate economically - due to disabilities, age, or periods of poor health - can still impart wisdom, emotional support and continuity of experience to the system.
  • Freedom from work provides opportunity for some societal members to explore non-economically-productive pursuits, such as pure science, math and non-popular arts.

Disadvantages of Socialism

  • Since there is no culling and no economic advantage to working harder, socialistic systems provide no inherent incentive to participate. This makes socialism internally unstable.
  • Due to a lack of incentives, socialistic systems tend not to be competitive, making them externally unstable.
  • In times of plenty, immigrants are drawn to the free resources offered by socialistic systems, while potentially adding nothing economically productive.
  • In times of scarcity, resentment of non-economically-productive members of society increases, causing a destabilizing effect on the society and economy.

Remedies for the Excesses/Weaknesses of Socialism

  • Avoid scarcity of resources.
  • Keep out immigrants.

Comparisons: Capitalism vs Communism vs Socialism

In an isolated world of plenty, socialism provides everyone with what they want and encourages creative exploration.

However, since external forces and internal disasters exist, socialism is unsuitable as the principal basis for a long-term economy.

In an isolated, homogeneous society with a common goal and belief system, communism provides all participants with a fair share of the workload and resources. This works well for small communities, particularly for non-diversified societies.

However, it is becoming increasingly difficult in this shrinking world to maintain cultural isolation; diversity makes communism unsuitable as a core economy for most modern nations.

For all its woes regarding class discrepancies, and the tendency of the elite to constrain opportunities to themselves, capitalism is the most inherently stable economic system - it benefits from diversity and external competition. A healthy capitalistic economy also provides built-in incentives to its members to increase their economic participation in the system.

However, to maintain its health, the power elite of a capitalistic society must encourage certain societal behaviors/rules/laws:

  • Diversity of cultures and methods.
  • Open competition and free trade.
  • Free/open access to public information and basic education/training.
  • In times of plenty: support for non-economically-productive creativity.
  • In times of need: distribution of resources.
The above system describes an economy based principally on capitalism, but with added aspects of socialism when resources are plentiful, and aspects of communism when the need arises.


I believe that capitalism is the most appropriate economic foundation for a large, diverse nation.

This must be accompanied by open competition and diversity - which I believe depends on freedom of expression, free access to information, and education.

Capitalism can be supplemented on a local basis by the communistic support of families and cultural/social/religous organizations. This increases preparedness for times of need, while encouraging the diversity of local cultures.

In times of plenty, capitalism should be tempered by socialistic mechanisms that aid the needy, support the arts, and encourages pure research.

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