Socialism – Why It Always Fails

 

Two Reasons – Waste and Lack of Innovation.

Socialism is defined as government running a nation's economy. Socialism is the most failed economic system in human history and has left all of its victims poor and miserable, and many often dead from starvation.

On the other hand, Capitalism is the most successful economic system in human history and the only economic system to lift billions of people out of poverty.

For a company to succeed under Capitalism, it must provide the products and services with the quality and price that consumers are willing to pay without producing significantly more than what the free market is willing to purchase. The better it does this, the more profit it makes, which is the “reward” and “incentive” for being in business in the first place. If a company doesn't provide what people want to buy or produces much more than people are willing to buy, it has wasted the physical and human resources responsible for its products and services causing the company to lose money or profits to substantially shrink. When a company has produced an overstock of products that people are willing to purchase at the original price, Capitalistic companies monitor this and cut back on future production and/or are willing to cut prices to increase demand for their products so that they at least get something for their over production instead of nothing plus having to pay to store the unsaleable overstock, further adding to over production costs and therefore losses.

Socialist nations have none of these incentives and simply set socialist company sell prices and production “goals” to meet, whether or not those goals meet demand or are much more than demand, or are the price and quality that meet consumer wants and needs. Normally, they do not cut prices, nor reduce production quotas when their product sales are weak because governments have no incentive to do so. Nor do they increase production when product demand exceeds production goals, thus losing a profitable opportunity. Governments do not go out of business in these wasteful situations as do capitalistic companies.

Also, unlike capitalistic companies, Socialist government companies have no incentive to innovate. Unlike capitalist companies, there is no “reward” for doing so in a socialist nation, thus no incentive. That explains why the world's major innovative and wealthy companies originated right here in the United States – Microsoft, Apple, Amazon, Walmart, Home Depot, Google, Facebook, Tesla, Intel, etc.. Also explains why older, formerly successful companies that rest of their former laurels and do not compete aggressively and/or innovate shrink or go out of business – Sears, K-Mart, JCPenney, TWA, Pan Am, Grant's, A&P, Montgomery Wards, Radio Shack, Blockbusters, WoolWorths, etc..

Consequently, the people of Socialist governments, the victims of government waste, inefficiency, and lack of innovation, have much less wanted and needed products and services, and therefore much less wealth than the people of Capitalistic nations.