Considering the flaws of both communism and capitalism, what would be a more perfect economic theory?

Question

Considering the major flaws of communism and the major flaws of capitalism, what would be a more perfect economic theory?

Answer 1

Assuming perfect economic theory does not take into account less economic factors (fairness, etc.) then the ideal is to have the market operate as perfectly as possible. So that's kinda like free market capitalism, but not BECAUSE markets are flawed for several reasons. There are external costs, and external benefits which are not accurately reflected in prices (pollution would be an external cost - a cost not paid principally by the participating parties). There are also asymmetries of information (health insurance is an example). And there is collusion among players in a market. The ideal system is the one which minimizes these imperfections, through specifically targetted legistlation.

This again is ignoring issues of inequality that we may or may not agree on, but again, if we are considering the capitalism/communism dichotomy, capitalism is the better way to err, because while it may lead to disparity between parties, all parties tend to be better off than otherwise. The poor in a market economy are wealthier than the poor in a control economy.

To respond to Sonday, Mao era communism did not bring China out of the agrerian society, it kept China from even being able to even produce sufficient food to feed its own populace. It was not until Mao's death, and his successor Deng Xiaoping started to introduce market influences that the Chinese economy began to bloom.

Answer 2

The two major flaws of capitalism is the instability (business cycles) and the extremes of inequality that it sometimes produces that if left un-checked can lead to political instability, for example the countries of Latin American.
The major flaws of Communism is the inefficiency of central planning which is necessary in a state run economy, and the concentration of power in government when it controls not only political but economic activity produces a totalitarian state.
Monetary policy over the last half century have tamed but not stopped the business cycles, and the social welfare states in Europe through trial and error have produced economies where income inequalities are much reduced. It remains to be seen if their solutions can work long term and still provide for increasing productivity and quality of life.
Communist system have failed on the ground of inefficiency of central planning, and as a political system, because it denies human nature and must remake mankind to succeed.
All other system tried from feudalism to theocracy have not produced high standards of living although in some cased did produce amazing stability, for example Ancient Egypt.

Answer 3

"nature of [govt] should be based on the nature of man"--Cicero
"communism doesnt work because people like to own things"--?

neither one that is completely.

USSR fell and capitalism dominates. USSR brought rapid growth into a historically agrarian society, to china too; an even poorer country in The 19th century.

1932 depression was resolved by greater involvement of govt.[subsidies, social sec, econ safety nets]

the more perfect economic theory lies somewhere between communism and capitalism, leaning towards capitalism.

in my opinion the U.S. comes closest to this idea. the problem isn't theory, its our representatives.

Answer 4

even though there isnt a perfect economic theory you can look at history for examples relating to the two....in my opinion America's got it right....in communism there is no middle class...and you need a middle to survive...then you wouldnt have what is needed for survival....such as food, clothing and shelter....the middle class consists of the people working for a living....the lower class hardly work or dont work at all...and the upper class have no need for work [for whatever reason that may be eg inheritance] or make more than the avergae person in the middle class...the economic structure needs the middle class...but if you look at karl marx's original ideas on commmunism it promises 'a classless society' which is impossible because youll have the people who rule and make the laws....and the people who dont...thats automatically two classes...then youll hae the people who cant find jobs or refuse to...making a third class...in capitalism we accept that we need classes and try to fin ways to make the classes flow better and maintain them in a fair way...hope that helps!!!

Answer 5

capitalism because effectiveness is maximized and costs are minimized - encourages trade and competition

however, capitalism has a higher social costs compared to communism. things like financial aids will probably be abolished because it is more beneficial to invest than to spend money on community.

Answer 6

IF your referring to communism as Marxism then I would have to say communism only because IF IT WERE ACTUALLY POSSIBLE it would be a perfect world