Capitalism vs Socialism

by Gordon Jones

The present COVID-19 crisis is going to present us with plenty of lessons before it runs its course, but a news item I saw the other day offers an opportunity to highlight, in a concrete and specific way, one of the advantages capitalism offers over the currently-popular socialist ground-wave. I have no reason to think that it will be impressive to the up-coming generation, but maybe it will stiffen the upper lips of the generation that is still (thankfully) in charge.

The item was that management at an auto manufacturing plant, seeing a decline in demand for its product (nowhere to go), realized that it could, fairly easily, convert to the manufacture of ventilators, for which the demand is great and growing exponentially.

In a capitalist economy, such a change is easily made. Indeed, it is dictated by a need for both workers and management to make a living.

In a socialist economy, such is not the case. Since in such an economy the plant is owned by the people, and the workers are employed by the people, permission would have to be obtained by whoever is deemed to be the representative of the people, which in practice means the bureaucrat in charge of auto production.

What incentive does that bureaucrat have to approve such a change? He or she knows nothing of auto production and would have to learn. Besides which, as an employee of the state, his or her compensation would continue whether or not he or she (yes, I get tired of it too, but it is de rigueur these days) approved the change.

For that matter, what incentive would the plant manager have to suggest, or even consider, such a change? Under the socialist system, he or she would continue to get paid just the same whether the change was made or not. Most likely, the plant would go on producing automobiles for which there was no demand, under the economic plan established from above before the plague hit.

My guess is that the suggestion in this case actually came from the floor, where some bright employee, seeing the writing on the wall, thought to herself “my grandmother needs a ventilator and can’t get one. I wonder if we could make them here at the plant since the boss has hinted that we will probably all be walking down the road kicking a beer can this time next week. Hey, boss! What if we switched over to making ventilators…” and that’s how it would go.

In a capitalist system, that change could happen. In a socialist system it is easy to see what the response from management would be.

It’s a small example, but one that makes me profoundly grateful that I live under a system that rewards creative thinking and – yes provides an incentive for it.


After 40 years at the nexus of politics and policy, Gordon S. Jones founded Mount Liberty College, a liberal arts college in Utah, featuring a Great Books-oriented, Socratic method-driven school. The school will opened in August 2019 and is now recruiting its 2020 freshman class.

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