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Capitalism and Communism - Two Economic Systems With the Same Goal

By Chris Agnos / chrisagnos.com
Mar 22, 2017
Capitalism and Communism - Two Economic Systems With the Same Goal

For the majority of the past century, a battle has been waged between two dominant ideologies – capitalism and communism.  Both competing economic systems focus on how best to allocate goods and services to the population.  Capitalism uses democracy and “free markets” to efficiently allocate capital to its most efficient use with little regard to economic equality.  Communism focuses instead on massive state run “planned” economies allocating resources equally with little regard to personal ambition or incentive.

What have been the human costs of this ideological battle?

Capitalism and Communism Actually Have The Same End Goal

This battle caused many wars that cost millions of human lives causing a massive armament industry to be built on both sides.  Witch hunts were carried out, people were demonized, and nations were carpet bombed all for believing in the other ideology.  But what exactly is the fight about?  Economic systems like capitalism and communism are not ends unto themselves.  They are means to an end. They are systems, or a set of rules, for governing the allocation of resources. The question we should be asking is “what is the end?”

And this leads us to the irony.  Both capitalism and communism argue that their method for allocating resources will actually achieve the same end goal – namely, a higher standard of living for every person based on ownership – more efficiently.  In a capitalistic economy, people compete in a marketplace to secure as much wealth as they can for themselves and therefore increase their standard of living. Communist societies put a higher value on equality and believe that by allocating equally, people will live at a higher standard of living.

Now that it appears that capitalism has won the battle for best method, perhaps it is time to revisit the common goal and ask if it is even possible. The ultimate common goal for both capitalism and communism was to produce enough goods for every man, woman, and child to have one.  One of everything.  Each person would have their own house, their own car, their own lawn and lawnmower. They will have their own movie theatre, perhaps their own bowling alley, or their own yacht. They would, in short, have their own “American Dream”.

News flash: There are now 7 billion people living on the earth. This is a 700% rise in population in just two centuries.  When John Locke and Adam Smith were wandering the earth, the earth’s resources seemed both mathematically and conceptually infinite. “No way could we exhaust these resources.  I mean, the economy would have to grow 63,000 times bigger than it is today for us to approach any environmental limits (US GDP has grown from $220M in 1792 to $14T in 2012),” they must have thought.  And so began the era of exponential economic growth. How much of the economy do we really need?

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The Economy Is Trying To Grow Larger Than What Earth Can Support

What Capitalism And Communism Have In Common

So what do capitalism and communism have in common? They both assumed nature’s resources to be infinite and placed value on extracting resources at faster rates distributing them through an ownership-based model.  With infinite resources, you can meet everyone’s needs through individual ownership since there is enough, in theory, to make one for everyone. However, many (especially the youth) see the futility of the idea that nature is limitless, that the earth has an infinite capacity to absorb our pollution or hide our waste.

In a world with finite resources, the goal of one of everything for everyone is impossible – not for 7 or potentially 10 billion of us.  Therefore, just like their goal, growth-based capitalism and growth-based communism are both inherently invalid.  When the pie doesn’t get any bigger, ideologies that champion growth strategies to solve hunger and poverty issues lose their appeal.

Capitalism Can Not Solve Problems For People With No Money

We Need A New Economic System

New economic systems must emerge that allow us to share the world efficiently but also justly. A world in which some people die systematically from malnutrition while others throw away the necessary food to feed them will not work any longer. Values must change to base one’s self-worth on the quality of one’s relationships and experiences instead of the number of their possessions. Access to quality resources for all of the world’s people must take precedence over satisfying insatiable desires of the few.

These are just some of the changes that will likely result from the realization that growth cannot occur forever. At the very least, it is time to stop arguing over which map to use and instead ask ourselves what direction we are heading.

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