A Good Example to Look at Communism and Capitalism Differences

In 1787 the British government hired sea captains to ship convicted felons to Australia. Conditions on board the ships were terrible and felons were starving and dying, because government just paid the captains per felon placed on board, so the captains didn’t care of them since they were already paid. When an economist suggested that the government paid for every felon arrived in Australia the captains had incentives to take care of the felons (Cowen and Tabarrok). This parable plots the idea that people work and do things better when they have a better reason to do it or an incentive. In a society, who creates the incentives are governments, institutions, and organizations, being the ones that have the “rules of the game” (Cowen and Tabarrok). They can decide in what way a society and an economy will be organized.

One of the incentives a government can give to their citizens is property rights. The University of California professor of economics Armen A. Alchian says that “a property right is the exclusive authority to determine how a resource is used, whether that resource is owned by government or by individuals” (Alchian). When something is owned by the state, that means that it belongs to all the citizens of that state; the government that is the ruler of the state takes the properties and try to reallocate them to the citizens in a better way. But that not always happens. Governments can be fallible and take an amount of those properties or redistribute them in an erroneous way. Also, there is a problem when the state owns properties: people have less incentive to work and innovate as happened in China with the Little Leap Forward campaign.

In 1978, in the Little Leap Forward in China, communist revolutionaries impose...

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... testimony of what is really happening in North Korea. Also photographs, as the one published by the U.S. Department of Defense of the Korean peninsula from outer space at night shows the incredible advantage of South Korea over North Korea. The communist system in North Korea evidentially has failed, and has carried its citizens to scarcity and misery. However capitalism has many critics too, and looking at them in the context of South and North Korea is important and helpful to economists.

Works Cited

"Poverty and Famine in North Korea". 2013. Poverties. .

Alchian, Armen A. "Property Rights." n.d. Library of Economics and Liberty. 10 November 2013 .

Cowen, Tyler and Alex Tabarrok. Modern Principles: Macroeconomics. New York: Worth Publishers, 2013.