Each month I look at my salary slip and sigh at the single biggest deduction – Taxes. Further, every necessity in my life has indirect taxes levied on it, making almost half of my income disappear! Leaving aside the debate of inefficiencies of government in allocation of funds – I could not help but wonder if we are all living in economies that are confused between the efficiencies of capitalism and empathic logic of socialism.
Socialism believes that while capitalism brings enormous economic progress, it is fundamentally unstable. Marx thought that wealth would become constantly more concentrated in the hands of a small number of capitalists, which would make the antagonism between workers and bourgeoisie ever clearer and sharper.
Capitalism, on the other hand favors the most efficient and thereby leading to fast growth of economies. It has an intuitive appeal that makes instant sense. Consider this – If your organization is not merit-driven, would you want to work for that company? In a capitalist economy, inefficient organizations (even people) would systematically go out of market (cease to exist!)
The classic Pareto’s 80/20 rule seems to apply in our world. Just 1% of the wealth owned by the 200 richest people in the world would pay for primary education for all. They should go right ahead and do that, shouldn’t they? Well, Bill Gates and Warren Buffet aside – most would say – Why? It is their hard work, which has lead them to be where they are today – and if the same is re-distributed where would be the incentive for innovation and hard-work?
Socialist thinkers would however argue that millions of people around the world live below the poverty line, often endangering their very existence and that re-distribution of wealth would be the only ethical thing to do. The provocative title of Ayn Rand’s “The Virtue of Selfishness” questions this very logic of “Ethical thing to do”. To quote her — “Self-interest, properly understood, is the standard of morality and selflessness is the deepest immorality.”
Back in the Stone Age, people were not much different from animals. The fittest ones survived and lived while the weaker ones got eliminated. It was the nature’s law which led to a natural balance. If you carefully observe, you may wonder – Is twenty-first century any different? But then again – should it really be any different?