The Primary Goal of Socialism
The primary goal of socialism is to promote equality by eliminating the gap between the rich and the poor. The concept of socialism is close to that of communism since it campaigns for the abolishment of private property. The discussion on this essay seeks to evaluate the failures of socialism and its impacts on socialist nations. The paper will analyze the features of economic freedom and their relationships with human development and the prosperity of a country. In addition to this, the essay will discuss why nations with high Economic Freedom Index, are an attractive destination for private investors for research and development and production activities.
Socialism and its Impacts on Socialist Nations
Socialism advocates for equal distribution of private wealth and production through government agencies. The Soviet Union, China, and Cuba initiated a communist system that regulated all the private property to make them accessible to the public. Modern-day socialism is a democratic structure whose foundation is the control of social amenities and institutions by the government. The failure of socialist economies has in the past been attributed to the lack of sufficient technology and investment opportunities. However, these factors were supplemented by the intense production levels and availability of labor supply. Socialist nations operating on strict financial constraints have had the chance to take advantage of investment funds irrespective of the potential revenue incomes. Unfortunately, this approach has resulted in an economic shortage, whereby profit maximization has failed and is replaced by the limitation of resources which has led to reduced productivity and innovation (Simic 1024). Throughout the years, the inefficient allocation of resources has resulted in the shortages experienced in the economy which has become disruptive due to the modernization of planned economies of scale. As a result, socialist nations were forced to operate below their production capabilities.
Shortages and Declining Productivity
The shortages experienced within the economies of scale resulted in a decline in the supply of consumer goods, and the basic needs of consumers remained unmet. The growth of black markets led to the rise in consumer crisis with issues such as inadequate housing. Consequently, problems of unemployment, poverty and poor health outcomes increased since the output in the economy declined. The failure of socialist countries is as a result of the amount of power that the society exercises (Legates 17). For instance, communist nations such as the former Soviet Union, North Korea, China and Vietnam, the government have the power to control the economy from a central position. This means that the national government could dictate how businesses would operate and their level of productivity.
The Role of Government Control
Critiques suggest that power in socialist environments should be decentralized. Through the decentralization system, control will be utilized by those that are directly affected by the outcomes of the industries that are controlled (Legates 17). Therefore, nations can take responsibility and manage businesses which the majority of the population depends on. Government regulation and control on industries and the economy limit private ownership of property, lean on central planning which pushes markets to regulate its production and pricing. The government imposed statistics has resulted in distortions of the economy which has further made it challenging to implement socialist economic policies that are effective.
The Impact of Market Pricing
Market pricing has significantly influenced the success of socialist nations. The pricing approach implemented by the national government acts as the provision of rationality, distribution and efficient utilization of resources and the society's division of labor – which empowers the nation to effectively utilize their means of disposal (Gwartney and Lawson 56). On the other hand, the implementation of central planning leads to the elimination of rational planning by both the national government and the citizens of a nation. This is because the eradication of market planning leaves socialist countries without the economic data that will assist them in calculating the financial implications of central planning. For instance, in the former Soviet Union, socialist nations were characterized by a cruel, brutal and deadly tyranny that was as a result of collectivism (Simic 1030). Besides, the abolition of private property ownership contributed to the weakened and perverse inducements – whereby a person's universal access to power, wealth and status was determined by their position in the communist party.
The Relationship between Economic Freedom and Human Development
The structure of a free society is determined by its economic arrangement. Economic freedom provides the citizens of a country with the free will to participate in practice their social and political rights without any restrictions. For most citizens, the concept of economic freedom is crucial since they relate it to political liberty. However, for intellects, the aspect of economic freedom is received with contempt since they view it as a material side to life that assigns a person special treatment. Philosophers and economists that support the idea of economic freedom associate it with the belief of ownership of private property and free markets.
Main Features of Economic Freedom
The main features of economic freedom include; individual freedom of choice, equal opportunities to compete in the market, voluntary exchange and protection of individual rights and property. Societies and national policies support economic freedom when they protect individual rights and property and provide citizens with the power to participate in voluntary exchange (Gwartney and Lawson 57). Economic freedom empowers the citizens of a nation and provides them with economic, social and political opportunities which assist them to improve the quality of their life locally and internationally. The symbiotic relationship between economic freedom and prosperity is demonstrated by the standards of living in a country. For example, states that enjoy free economies expose its citizens to a higher standard of living as opposed to those with strict economies.
The Impact of Central Planning in Socialism
The characteristic of central planning in socialism discourages economic freedom and leads to a stagnant economy. This is because it robs people of their individualism and consumer choice. The measure of economic freedom and individual access to social amenities in socialist nations discourage human development and the creation of healthier societies (World Economic Forum 76). Through economic freedom, societies have achieved high levels of success since they have access to sufficient resources and opportunities. Greater economic freedom and accessibility to resources complement each other and empower individuals to attain an improved quality of life. Moreover, by improving the standards of living, the national government creates new opportunities for its citizens – which enable them to compete in the international markets and profit from global commerce.
Enhancing Economic Freedom
Governments can enhance economic freedom by initiating policies and legal structures that protect individual property rights. Moreover, economic freedom expects the government to abstain from misusing people's properties and enforcing policies that prevent people from freely participating in the labor markets. The national government limits economic freedom when they impose policies that trade taxes, government expenditure and legislation for consumer choice, voluntary exchange, and market participation. When the government refrains from activities that limit personal freedom, they increase democracy which empowers the citizens of a nation thus creating healthier societies that are productive that can freely manage their belongings without government interference.
Economic Freedom and National Development
Developing country benefit from economic freedom since it fosters national development and growth. The institutional level of economic freedom is based on a country's ability to depend on free and open markets for the allocation of resources as opposed to relying on government intervention (Gwartney and Lawson 57). Furthermore, to establish a greater economic front, institutions must create robust and reliable legal entities that endorse personal freedom and property rights. This way people will be able to maximize economic freedoms, improve per capita income and reduce poverty levels in a country. To measure the degree of economic freedom in a county, the level of taxes and government spending must be analyzed to understand the extent of a regulatory feature in the internal markets.
Economic Freedom and Global Commerce
Economic freedom does not abolish the role of the government in a nation. Greater economic freedom improves a country's human development by promoting high standards of living through education, literacy and life expectancy. As a result, private investors opt to invest in nations that enjoy high economic freedom since they have resources that reinforce prosperity, productivity and increase revenue income. Subsequently, greater economic freedoms suggest that a country has a stable political system which will support trade activities in a state by eliminating restrictions or policies that discourage investors from coming into the country (World Economic Forum 88). High economic freedoms in a country reduce the number of issues that must be delegated through a political system thus minimizing government participation. This way legislators can foster substantial conformity between investors and their nations through amicable policies that reinforce healthy business environments.
The Advantages of Economic Freedom
High economic freedoms create positive environments where industries can thrive, and people can freely participate in the marketplace. Countries that have greater economic freedom encourage voluntary exchange due to the existence of diverse markets with proportional representation. Therefore, citizens are empowered and can freely take part in global commerce due to the relationships fostered with international traders within their markets. Moreover, markets in countries with greater economic freedom provide sufficient resources for labor and production due to the increased literacy, education and life expectancy levels. The high levels of human development and growth attract potential investors into the nation due to its potential to increase productivity.
Conclusion
Socialist nations suffer from the economic bondage of poverty, illiteracy and insufficient resources. However, from this discussion, it is clear that the dilemma lies in the level of government control on resources. Government regulations, resource allocation, and intervention inhibit the market and price structures from performing as they are expected in a free society. Healthy societies are defined as those that empower its people and ensure that they are in a strong position to manage their properties and allocate resources without needing government assistance. Economic freedom is the foundation of human development and sustainable per capita income since it provides citizens with the abilities to access a wide range of resources and opportunities. The advantages of free markets go beyond national boundaries and assist citizens to gain global access to international markets.
Work cited
Burda, M., " Wylopsz, C. Macroeconomics. Oxford: Oxford University Press. 2013
Gwartney, J., " Lawson, R. Economic Freedom of The World.
Vancouver: The Fraser Institute. 2013
Legates, David. The Experiment: Capitalism versus Socialism. Journal of American Physicians and Surgeons; 2017. Volume 22 Number 1,
Simic, Ivan. Building Socialism in the Countryside: The Impact of Collectivization on Yugoslav Gender Relations. Journal of Social History. 2018. Volume 51, Issue 4, Pages 1023–1044.
World Economic Forum (WEF). The Inclusive Growth and Development Report 2017. 2017 Available at: http://www3.weforum.org/docs/WEF_Forum_IncGrwth_2017.pdf
