Let’s play a game: capitalism or socialism?
Socialism: an economic system where the means of production are publicly owned
Capitalism: an economic system where either the private or public ownership of the means of production are permitted.
- In this society, government enacts high income taxes, a small wealth tax, high inheritance tax, and corporate taxes. Government plays a central role in trustbusting, regulating natural monopolies, and preventing anticompetitive practices. Laws enforce restrict the highest vs. lowest paid at any company to be at most 100:1.
There is a strong welfare state that establishes food banks, homeless shelters, and work programs for the poorest in society. There is a high minimum wage.
Labor managed firms are encouraged by the government through low interest rate loans, corporate incentives, and subsidies. However, privately owned firms still exist. The split between privately owned and labor owned firms in the economy is approximately 50/50. Employees are free to work for a wage or join a labor managed firm if they so choose (although they will need to buy into the firm through pay deductions). Anyone is free to found a private company or labor managed firm if they can provide capital. The largest firms in this economy are private. A stock market exists for publicly traded, privately owned firms.
Some degree of wealth inequality exists, but due to the high taxation rates, the distribution is relatively flat, with the richest in society having 8 figure net worths at the very very top.
- Same as (1) except taxes are lower and the economy consists entirely of labor managed firms. No stock market exists. All individuals own part of the company they work for and nobody who is not part of the company may own a portion of it.
These labor managed firms compete in a free market. Some firms choose to maximize well-being of their employees, but most choose to maximize profit at the direction of their employees. As a result, there is a substantial degree of profit chasing, planned obsolescence, and increasing shareholder value at the expense of sustainability. Large companies advocate for their own interests first even if they would contradict the interests of societies at large. For example, a labor managed firm specializing in oil refinement lobbies against the adoption of green energy initiatives.
There is a high degree of wealth inequality due to low taxes and no minimum wage. Billionaires are those who had single digit employee numbers at unicorn companies. They exhibit a substantial degree of influence on the government.
Question: are (1) and (2) examples of capitalism or socialism?