In my experience, the basic difference between capitalism and socialism is often missed. Capitalism, it is thought, represents free markets, consumer choice, personal liberty, etc. And socialism represents “big government,” state intervention, and a utilitarian sacrifice of the individual in favor of the “greater good.”
At bottom, however, the distinction is much simpler: It comes down to the question of who owns the means of production. Capitalists advocate private ownership of the means of production, whereas socialists advocate collective ownership. As I argued in the previous post, collective ownership is democratic and private ownership is plutocratic.
Some time ago, I offered an overview of the Marxian critique of alienated labor and I think it gets to the heart of this issue. Private ownership of the means of production goes like this: A capitalist, seeking to make profit, purchases a factory and the equipment necessary to make a product which can then be sold in the marketplace. The capitalist then hires workers to come in and use this equipment to make said product. The capitalist repays the workers in the form of wages, but, in order to ensure the maximum amount of profit possible, he [the capitalist] drives the workers’ wages down as much as possible so that he can extract the surplus value of their labor and keep it as profit. This is what we call exploitation.
The long and short of it is that the workers are selling themselves to the capitalist in exchange for wages, which will then (hopefully) allow the worker to purchase life’s basic necessities (i.e., food, shelter, healthcare, etc.) on the marketplace. But to say that one’s basic necessities must be purchased is to say that one’s freedom must be purchased. It is after all undeniable that someone who has good food, is healthy and well-educated has greater access to opportunity than someone who does not.
The private ownership of the means of production, in other words, turns everything — including human lives — into a commodity. It is said that workers are free, but of what does this freedom consist? The freedom to sell oneself to this capitalist or that one? Either way, one can expect low wages, for not only does the capitalist seek profit for himself, but must also be competing with other companies, which means products must be sold at the lowest price possible (thereby cutting into the workers’ wages even more) and strategically planned obsolescence ensures that consumers will continue to purchase new products in the years to come.
All the while, Marx argues, the worker is alienated from herself, from her labor, from the product of her labor, and from her fellow workers, all of which have been turned into commodities. Contrary to popular belief, socialists maintain that human beings need meaningful work, which capitalism all too often denies us. We are forced to work mindless, meaningless jobs, creating and selling worthless, mass produced products, and competing with our fellow workers to make sure that, if anyone is going to be hungry tonight, it will not be me. It is therefore hardly surprising that we need external incentives to work these jobs!
What we need instead, I argue, is a world in which people can freely choose work that is meaningful to them without having to worry about whether or not it will put bread on the table. And who can do better work in any given field than someone who is doing it because they are truly passionate about it? (It is true that this model would likely result in the demise of the fast food industry, but something tells me we will find the strength to carry on.)
And here we find another fundamental difference between capitalism and socialism: individualism versus social holism. Socialists maintain that human beings are always and already social creatures. The cinematic, atomized, asocial, rugged individual is, according to this view, simply a fiction. This is important because it means that things are better for everyone involved when everyone has access to life’s basic necessities (crime rates, for example, drop significantly when everyone has access to food, education, and healthcare). It is not forced “charity”; it is living together as social creatures. And despite the fact that we are indoctrinated from day one with “rugged individualism” and talk of the evils of “human nature,” I think that the evidence overwhelmingly favors social holism.
The common notion, then, that I begin as a “private individual” who can “freely choose” to enter into contracts with other private individuals to exchange goods and services is, I think, deeply flawed. On this line of thinking, social interaction is nothing more than enlightened self-interest, rather than a fundamental part of being human. And if this individualist model is correct, it is easy to see why I should think I have no necessary responsibility to my fellow human beings.
And this detached individualism is precisely what capitalism requires. Altruism does not maximize profits — not directly, at least. Maximization of profit is, after all, the single and fundamental law of capitalism. And whether it is altruism or egoism that best serves this purpose seems to be utterly irrelevant. So while it is true that the “free market” may at times decide to favor the well-being of the people, it is only insofar as this course of action can be shown to be the most profitable. Placing inherent value in anything — including human beings — other than profit is fundamentally anti-capitalist. I see no way around this conclusion.
It is also commonly objected that the radical egalitarianism of socialism forces equality upon society. But exactly what unnatural equality is being enforced by ensuring that everyone has access to life’s basic necessities? Can one be more or less equal in regard to needing food? It seems to me that this is to say that human beings are not inherently valuable. After all, how can we affirm the inherent value of human life while requiring that one “earn” the things required to sustain said life? If we are not naturally equal in our deserving access to these necessities, we are not naturally equal in value as persons.
This is not to say that “everyone gets a trophy just for showing up.” Food is not a trophy. And to say that ensuring that all have access to life’s basic necessities is to “force equality” seems to be tantamount to affirming Social Darwinism (i.e., the strong, naturally unequal insofar as they are able to easily access life’s necessities, and bearing no responsibility to the weak, will succeed, while the weak, naturally unequal insofar as they are unable to easily access life’s necessities (whether through physical or mental disabilities, socioeconomic situation, etc.) will perish or be “weeded out”).
In the end, I see capitalism as deeply immoral. And while individual cases of its success may be presented (I do not deny that capitalism works perfectly well for some people — and not just greedy schmucks, but some honest, hardworking folks as well), an examination of the philosophical ideas that underpin capitalism demonstrates (quite conclusively, in my view) that the harms far outweigh any benefits. To reject capitalism is not to reject liberty and free choice, but instead exploitation, hierarchy, and otherwise anti-social, anti-democratic values.
Contrary to popular belief, socialism can offer a morally legitimate alternative. Personally, I do not advocate “state socialism,” but rather libertarian socialism, for I believe that worker-ownership of the means of production should mean just that — worker-ownership, not state ownership. In fact, “state socialism” is essentially capitalistic, in my view, insofar as the means of production are privately owned by a single entity (i.e., the state).
If we want democracy, we need socialism — libertarian socialism to be precise.
 I, for example, am currently pursuing a career in professional philosophy. I am fully aware of the fact that this is a risky endeavor, but I would rather take a risk to do something I love and am good at than to simply take a job that I know guarantees a steady paycheck. If this does not work out for me and I am unable to find a job, there are many who will say that it is my own fault for choosing such a difficult profession. In other words, it is my fault for foolishly choosing what I love over what pays well. Apparently I am to submit to the demands of the market first and foremost. Unfortunately, the instrumental rationality of the market places little value in things such as philosophy, and literature, so I suppose I am simply out of luck if my passions and talents lie in the humanities. A free market indeed!
 See, for example, the work of Frans de Waal.