7.1b Capitalism & Common Ownership Flashcards
Capitalism
Capitalism is an economic and political system where the resources and property in a society are owned privately by businesses.
Capitalists believe that goods and services should be produced to make a profit.
Under capitalism, the price of goods and services is determined by the market forces of demand and supply.
Capitalism does not believe that the government should own and have control over any business or industry in society.
Capitalism: Socialist Rejection
Socialism is opposed to capitalism.
Fundamentalist socialism rejects capitalism and wants it to be abolished and replaced by socialism.
Marxists are an example of fundamentalist socialists because they believe socialism can be achieved by a revolution against capitalism.
Revisionist socialists believe in reforming capitalism by the government providing welfare and redistributing wealth in society.
Social democracy is a form of revisionist socialism.
Capitalism: Examples
The 2008 financial crash provides socialists with an example of the problems with a capitalist economic system and the benefits of the co-operative movement.
Banks were involved in activities including manipulating the lending rate.
The Royal Bank of Scotland (RBS) was fined £390 million, and HSBC was fined £1.2 billion for allowing criminals to transfer money around the financial system.
These banks were not acting ethically and in the interests of the public or account holders.
Common ownership
Common ownership is when all property and resources in society are publicly owned and run by the government so that all people in society can benefit.
Common ownership is often called nationalisation.
Socialists believe common ownership will reduce inequality because resources can be allocated by the government to meet the needs of many people in society.
Fundamentalist socialists are in favour of common ownership.
Common ownership: Attlee’s government
Prime Minister Clement Attlee (1945-1951) nationalised the coal, gas, electricity and steel industries.
The Labour Party under Clement Attlee was committed to Clause Four (Clause IV) of the Labour Party Constitution [Clause Four was changed in 1995 by Tony Blair] which committed the party to common ownership.
Clause Four of the Labour Party Constitution stated common ownership would mean “the most equitable distribution” of resources “upon the basis of common ownership”.
Common ownership: National Health Service
Clement Attlee’s government (1945-1951) created the National Health Service (NHS) in 1948.
The National Health Service is an example of common ownership as it is owned by the state and provided for free to all people in society.
Common ownership: Jeremy Corbyn
Jeremy Corbyn, the Labour Party leader, has proposed nationalisation policies.
In 2017 and 2018 Jeremy Corbyn said that if he was elected Prime Minister he would nationalise the energy and rail industries, and the Royal Mail.
Common ownership: Case against Common Ownership
Common ownership could mean an increase in taxation to fund publicly owned services.
Common ownership could also increase the national debt because of increases in public spending. This means that future generations will have to pay off the debt.
Tony Blair reworded Clause Four to move away from associating the Labour Party with standing for common ownership in order to appeal to the electorate beyond Labour’s core members.
Common ownership:
A case against common ownership is the argument that the free market will make sure the economy is run more efficiently than it would under government control.
Only the free market is able to resolve the basic economic problem (meeting the infinite want of humans with a limited number of resources). Common ownership could lead to an inefficient allocation of the economy’s scarce resources.
Friedrich Hayek (1944 ‘Road to Serfdom’) supported the free market and was opposed to the government controlling the economy.
