Incentives: Capitalism Vs. Socialism

By Andrew Friedrick

10/16/2020

Do you remember that feeling of great satisfaction and fulfillment you got when you received your first paycheck? Then you have experienced one of the many products of capitalism. Quite simply, capitalism gives individuals incentives to work. To make a living in America, you must learn the value of a strong work ethic, something Socialism does not advocate for. Socialism produces a dependency on the government to provide, which creates a society without personal motivation.


Mark J. Perry, an economics professor, and scholar, explains how capitalism generates incentives to work and how it differs from socialism in his article Why Socialism Failed. “Socialism does not work because it is not consistent with fundamental principles of human behavior. The failure of socialism in countries worldwide can be traced to one critical defect: it is a system that ignores incentives,” Perry writes. In sharp contrast, capitalism does the opposite. “In a capitalist economy, incentives are of the utmost importance. Market prices, the profit-and-loss system of accounting, and private property rights provide an efficient, interrelated system of incentives to guide and direct economic behavior,” Perry explains. Without personal motivation, capitalism cannot function as a system. An American free-market demands competition, which in turn produces individuals with a strong work ethic. Perry explains that incentives either play a minimal role or are entirely nonexistent in socialism because the government completely controls the market. Perry continues, “A centrally planned economy without market prices or profits, where property is owned by the state, is a system without an effective incentive mechanism to direct economic activity.” 1


By abolishing private property, the government, as a result, completely destroys individual work ethic. Why apply yourself in a government system in which you get nothing in return? By advocating for capitalism and a free, competitive market, we can continue to demonstrate that socialism only destroys economies and, ultimately, the livelihoods of others. 


About Andrew

Twitter: @keep_our_rights

Instagram: @keep_our_rights

Andrew Friedrick was born and raised in Jacksonville, Florida. He will be attending the University of North Florida in the fall. He loves all things related to sports, enjoys the outdoors, and is passionate about politics.

#Socialism #America #Capitalism

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