Let me start the discussion with some definitions. I define communism, or more generally collectivism, as any economic system that exhibits the following criteria,
1. Little to no property rights
2. little to no free trade
3. the means of production and the price of goods are controlled by government
I define capitalism as the following,
1. strong property rights
2. high levels of free trade
3. an overall laissez-faire economy where people are allowed to enter into whatever contractual agreements they like
4. An economic system where prices are allowed to signal scarcity – the more expensive something is, the more scarce and in demand it is
5. A government that protects property rights, enforces contracts, and holds up the rule of law
Why is capitalism superior to other forms of economic ideologies? One of the primary reasons is that because it has been implemented and seen to work – especially in comparison to other economic systems.
Walter Williams, professor of economics at George Mason University, explains the differences this way:
There’s no complete explanation for why some countries are affluent while others are poor, but there are some leads. Rank countries along a continuum according to whether they are closer to being free-market economies or whether they’re closer to socialist or planned economies. Then, rank countries by per-capita income. We will find a general, not perfect, pattern whereby those countries having a larger free-market sector produce a higher standard of living for their citizens than those at the socialist end of the continuum.
What is more important is that if we ranked countries according to how Freedom House or Amnesty International rates their human-rights guarantees, we’d see that citizens of countries with market economies are not only richer, but they tend to enjoy a greater measure of human-rights protections. While there is no complete explanation for the correlation between free markets, higher wealth and human-rights protections, you can bet the rent money that the correlation is not simply coincidental.
So we see here that the more capitalist a country becomes, especially compared to collectivist economies, the higher the standard of living and human rights are.
This is not just a pattern in the West, this pattern has been repeated all over the world. To see how the spread of capitalism around the world is affecting global poverty I recommend everybody watch this short ted talk by Hans Rosling, a Swedish professor on international health and economic development.
That is not to say that we don’t have more to learn on economics or that capitalism is perfect – we certainly do and it definitely isn’t, but any reasonable discussion on economics must first start off acknowledging what we know works and must work within that system. History has shown as clearly as it possibly can that a market oriented economy is superior, indeed vastly superior as far as standard of living for the poor and human rights go, to a government centered economy where prices are dictated by government fiat instead of by scarcity. Utopian aspirations may be good for establishing an end goal but actual economic implementation should be dictated by theory and empirical evidence, especially when so many lives depend on it.