Sociology Now, Census Update

(laissez-faire). Companies like Wal-Mart resist the unioniza-
tion of their workers and undermine minimum wage regula-
tions. Other industries, like the airlines and automobile
manufacturers, agree to fare regulation or automotive
emission controls in return for a more stable economic envi-
ronment (state capitalism) and the promise that if they go
bankrupt, as Chrysler did in 1979, the government will bail
them out. And the massive public sector—federal, state, and
local bureaucracies and political systems—work as a kind of
welfare capitalism, attempting to ensure that everyone obtains
at least a minimum standard of living (welfare capitalism).

Socialism

Although capitalism became the dominant economic system
in the West by end of the eighteenth century, it was not with-
out its detractors. Utopians argued that it would be more
equitable to cooperate instead of compete, so that everyone
could share the goods and services. In the nineteenth century,
many socialist communes were founded in the United States,
where all property was commonly owned and all decisions
made as a body. However, no one tried it on a national level.
Later, Karl Marx argued that the pursuit of rational
self-interest was inhumane and oppressive. The bourgeoisie
(owners) kept most of the goods and services for themselves,
while the proletariat(workers) had no choice but to work for
them at wages barely high enough to ensure survival, with no
share of the profits. Marx hypothesized that the huge eco-
nomic gap between the groups would cause increasing hostility and resentment
and would eventually result in violent revolution.
Marx proposed to adapt socialism to national governments by ensuring that
workers rather than owners controlled the means of production and that everyone
would be treated fairly. Strong government controls would be put into place to ensure
equitable distribution of resource.
Socialismas an economic system is the exact opposite of laissez-faire capitalism,
offering:

■Collective ownership.Private property is limited, especially property used to

generate income. Goods and services are available equally to all, regardless of

individual wealth.

■Collective goals. Capitalism celebrates profit as the entrepreneurial spirit, but

socialism condemns profit as greed. Individuals should not attempt to make

profits for themselves; they should concentrate on the common good.

■Central planning. Socialism operates through a “command economy.” The

government controls all production and distribution.

On the national level, many countries, both rich and poor, have socialist economies,
but they allow for a degree of entrepreneurship, some profit, and differences in
individual wealth, resulting in a democratic socialism that looks and feels much like
welfare capitalism (Lichtheim, 1982; Rose and Ross, 1994). In Sweden, for
instance, about 12 percent of economic production is “nationalized” (state
controlled), and the rest is in private hands. High taxation, aimed especially at the

ECONOMIC SYSTEMS 427

JThe relationship between

corporations and government

is complex and depends on

the industry. Some companies

are less regulated than others.

In Europe, all utilities are

government controlled, but

the trend in the U.S. is toward

privatization. Some public

utilities are either heavily

regulated or the company is

actually a partnership

between government and

private interests.