Capitalist and Socialist Countries

Capitalist and Socialist Countries

I contend that we like to place labels on countries. Most people consider our country to be a Capitalist Democracy. In reality, it is a semi-democratic Republic that fosters certain capitalist tendencies. If you are a Republican you fear that the country is moving to the left and in the wrong direction. If you are a Democrat you fear the opposite.

We tend to “label” countries. My opinion is that Democracy should carry a higher priority than the form of democracy.

The Democracy Index is an index compiled by the Economist Intelligence Unit (EIU), a UK-based company. It intends to measure the state of democracy in 167 countries, of which 166 are sovereign states and 164 are UN member states.

The index was first published in 2006, with updates for 2008, 2010, and later years. The index is based on 60 indicators grouped in five different categories, measuring pluralismcivil liberties, and political culture. In addition to a numeric score and a ranking, the index categorizes each country into one of four regime types: full democraciesflawed democracieshybrid regimes, and authoritarian regimes. See at: https://en.wikipedia.org/wiki/Democracy_Index

Since this scale is was developed by a firm in the UK you might think it biased in favor of that country. Interestingly, The UK only ranks 14th in the index with Scandinavian countries representing 4 out of the top 5 and New Zealand filling the other spot. The USA ranks 25th and is considered (by the index) to be a “flawed” democracy.

Capitalism is an ideology where the means of production is controlled by private business. This means that individual citizens run the economy without the government interfering in production or pricing. Instead, pricing is set by the free market. This means that value is based

The United States is one of the countries with a capitalist economy, which many citizens see as an essential part of democracy and building the “American Dream.” However, despite being one of the most well-known capitalist countries, the United States is not even in the top 10 list of most capitalistic countries, according to The Heritage Foundation and Global Finance Magazine reports, and not in the top 5 in this report. See at: https://worldpopulationreview.com/country-rankings/capitalist-countries

There are benefits and drawbacks to a capitalist economy. As far as the positive aspects, capitalism often drives the best products at the best prices. With capitalism, economic growth and innovation are also benefits. As far as drawbacks, capitalism has a few. One of the most significant disadvantages is that it does not provide for anyone that does not have skills. It also does not promote equality of opportunity. In short, some people may not get the opportunities that others receive.

Is the USA capitalist? The United States is referred to as a mixed market economy, meaning that it has characteristics of capitalism and socialism. The United States is a capitalist society where means of production are based on private ownership and operation for profit. The United States is not a totally capitalist society, however, because the economy has regulations, taxation, and some subsidization. The U.S. government has always had some role in the economy, but the economy was closer to a truly free market during some periods. The government has at least some partial control over education, roads, health care, and postal deliveries and provides subsidies to oil companies, financial companies, and agricultural producers. Additionally, private businesses must register with government agencies, and certain types of companies need government-approved licenses.

While we consider the Scandanavian countries to be Socialist systems, interestingly, all of the Scandinavian countries are ranked in the top 45 out of 150 countries on the Capitalist index. New Zealand and Australia are in the top 5.

Sweden ranks the lowest at 45th, but still has a high degree of economic freedom. While they are a small country of just over 10 million (3% the size of the USA) you will recognize many of their leading corporations: IKEA, Volvo, Saab, Spotify, and Ericsson. An examination of their economic and political system is interesting and will be the subject of a separate post to my blog.

1 thought on “Capitalist and Socialist Countries

  1. Dave, the ‘Socialist’ label is overused by the political right in this country. For starters, there are two broad flavors of socialism — authoritarian, most often Marxist-Leninist socialism, and democratic socialism, which split from the Marxist ‘true believers’ in the late 19th century (a guy named Bernstein led the charge), and now might be fairly described as how most developed nations in the world really work. In democratic socialism, all or nearly all means of production are privately-owned, i.e., ‘capitalism.’ But the excesses of capitalism are moderated by strong, government-directed social safety nets.
    In the United States, and probably the US alone, the term ‘socialist’ is understood by the political right-wing only in an ignorant, binary sense — communist tyranny, and terms like the social safety net and ‘social justice’ are therefore an anathema.
    So when anyone here in the US employs the term ‘socialist’ in a political context, he or she has no idea what they are talking about. And because they reflexively distrust knowledge and reason, they’re not going to learn.

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