The Western World Daily Readings on Geography Chapter 56 Europe Economic Geography II

CHAPTER 56 Europe Economic Geography II Communism Capitalism by from the Noun Project Which is better , capitalism or communism ?

The question that started the Cold War . As a child of the Cold War , I was taught that everything about capitalism is good , and everything about communism is bad . I sure that someone my age who grew up in the Soviet Union was taught the opposite . In reality , there are upsides and downsides to both economic systems . In this essay , we examine those pros and cons . THE UPSIDE OF CAPITALISM Europe rise to global dominance was largely the result of capitalism , and proof of the power of capitalism . The material wealth of the United States , West Germany , and South Korea when compared to that of the Soviet Union , East Germany , and North Korea during the Cold War is further proof . The power of capitalism is essentially based on two fundamental forces competition and incentive . Capitalism is an inherently competitive economic system . Businesses compete for profits . Think of Coke Pepsi , Apple , or Ford Chevy . Competition generally produces goods and services that are better and cheaper . Imagine that you own a company that produces a certain product , and one ofyour competitors finds 269

270 JOEL QUAM AND SCOTT CAMPBELL a way to make a better and cheaper version of that same product . If that the case , then you better improve your product . If you do , you run the risk of losing customers and going out of business . So , you improve your product . As a result , your competitor is forced to do the same . That forces you to be improve again , which forces your competitor to improve again , and so on . Competition yields constant improvement . Competition also exists in the workforce . Workers compete with one another , and coworkers compete with one another for promotions . It induces people to be a betterjob applicant perhaps by getting additional training or education or risk not getting a job . It induces workers to be more productive , because they want to be the person in their department that gets that promotion . Alongside competition is incentive . Incentive is the economic force that provides owners and workers with positive and negative reinforcements that lead to innovation and hard work . You may have heard the metaphor of the mule , the carrot , and the stick . It goes like this If you have a stubborn mule who refuses to walk , you can do two things . The first is to dangle a carrot in front of the mule to motivate it to walk . If that does work , you smack it with the stick until it starts to walk . This metaphor is about incentive . A positive reinforcement is the carrot the reward that motivates someone to be productive . A negative reinforcement is the stick the punishment of someone for being unproductive . Course grades are an example of positive and negative reinforcements . You know that if you study hard , you might get an A the carrot . You also know that if you do study hard , you might get an ' the stick . Positive reinforcements abound in capitalist economies . A business owner who sells a good product and treats her customers well is likely to make a bigger profit . An entrepreneur who takes risks and might come up with the proverbial idea . If you get your college degree , you more likely to earn a higher wage . If a worker is productive , he is more likely to get a raise and a promotion . Of course , negative reinforcements also exist . A business owner who sells a lousy product and treats her customers poorly is likely to make a lower profit , or go out of business . An entrepreneur who never takes the risk never reaps the reward . If you drop out of college , your wages will likely be lower . If you slack off at work , you probably wo get that raise or promotion , and you might get fired . In short , incentive drives up productivity , and is a primary reason why capitalist economies generate so much wealth . THE OF Created by from Noun

EUROPE ECONOMIC GEOGRAPHY II 271 Competition is one of the biggest reasons for capitalism successes , and also a primary reason for its problems . In a competition there are , by definition , winners and losers . Look no further than the United States . Despite residing in the wealthiest country on earth , nearly 40 million Americans live in poverty that greater than the total population of Canada . Consider Sam Walton , a man who lived the American dream . He was from a modest background , and became one of the wealthiest people in the world . But his innovation , destroyed tens of thousands of small , businesses . People get hired , and people do . People get a raise , and people do . Businesses succeed and businesses fail . For every successful restaurant , there is usually one that does last a year . And even in ideal economic times , capitalist countries rarely see unemployment fall below . In the United States , that million people , greater than the population of Indiana . In fact , many economists argue that It actually bad to have unemployment below , because it makes labor too expensive . That the downside of competition some people lose out . There is also the problem of incentive . The idea that capitalism rewards hard work is usually true . You probably know people who came from class backgrounds and who , through hard work , became quite successful . You also probably know a few people who have worked particularly hard and , as a result , have been particularly successful . Generally speaking , hard work leads to success , and slacking off usually does . But that is always true . You probably know people who have worked hard their whole lives , but who still struggle to make ends meet . And we all know the story of the spoiled rich kid the one who was born on third base and thinks he hit a triple who slacked off but still had the connections and advantages to make plenty of money . It is certainly true that the circumstances ofyour birth your social class , your place of birth , your ethnicity , your gender will create privileges and obstacles that have nothing to do with hard work or the lack of It . Finally , there is a flaw in assuming that all wealth comes from hard work . Oftentimes , the wealthy do earn the majority of their wealth through salaries , but through investments . can invest a relatively small percentage of their wealth In the stock market , and earn more money from that investment in a year than many Americans earn from a lifetime of work . In a capitalist economy , the easiest way to make a lot of money is to already have a lot of money . THE UPSIDE OF The upside of communism is simple , but profound . In a communist economy , the basic necessities are

272 JOEL QUAM AND SCOTT CAMPBELL guaranteed . Most citizens of communist Europe were provided with food , education , housing , health care , and employment . Homelessness , unemployment , and hunger were essentially eliminated . Universal health care was standard . College was free right up through a . It is not a coincidence that successful communist revolutions happen in poor countries , not rich ones . Ifa large percentage ofa country population lives in poverty , they are more likely to support communist movements . THE OF Some of the most enduring images of the fall of the Berlin Wall were those of East Germans driving their into West Berlin . Manufactured from 1957 to 1990 , and largely unchanged over those years , the Trabant was the default car for most East Germans . It was slow , loud , ugly , and had an engine better suited to a riding lawnmower . Its body was made ofa plastic resin , it belched smoke , and it had no gas gauge . In fact , it had no gas door ( drivers had to mix oil and gas together and pour it in under the hood ) When those rolled into West Germany , the home of legendary automakers like and Mercedes , they seemed to represent everything that had gone wrong under communism . The reason so many East Germans drove is because East Germany had only one the East German government . And this true of East German cars , it was true of nearly every manufactured good in nearly every country in the Soviet bloc . Every product had one manufacturer the government . And that lack of competition is why consumer products in communist economies were so bad . There was no better , cheaper option , so the products remained lousy and expensive ( not to mention scarce East Germans would sometimes wait years for the privilege of owning a Trabant ) Communism also lacked incentive . Workers were guaranteed jobs , but they also had little room for advancement . Those who Trabant Photo by , on , rose through ranks of communist economies usually did so because they were politically , not because they were more talented or worked harder . Imagine a steel worker in Poland in the . Each morning he woke up knowing two things . First , he knew that if he was the model employee , and worked as hard as he possibly could , he would probably still never get a raise or a promotion . Second , he knew that if he did work that hard at all , he would be fired . Worker productivity is key to economic growth and efficiency , and workers in the communist bloc were never terribly productive . This is not because they were lazy , but simply because they lacked incentive . Back to the course grade analogy . As was discussed , course grades are like incentive in capitalism . You have positive reinforcement the possibility of an A ' and you have negative reinforcement the possibility of an Imagine that , on the first day of class , your professor announced that everyone in the class was going to receive a , no matter what . You would leave class that day knowing two things . If you showed up every day , and studied harder than you ever studied , you would get a . You would also know that if you never studied at all and , in fact , never showed up again , you would still get a . It unlikely that your professor would ever see you again . This is not because you lazy , but simply because you would have little incentive to show up . In a sense , communism is an economic system in which everyone gets a . Ultimately , it can eliminate the ugly aspects of capitalism unemployment , poverty , wealth disparity , and shuttered businesses but it eliminates all of the good things about capitalism as well .

EUROPE ECONOMIC GEOGRAPHY II 273 At the end of the Cold War , most people of the Soviet bloc decided that the rewards of capitalism were worth the risks . They were ready to trade in their for a shot at a . Did You Know ?

abolished the death penalty , 1990 . The last people to be executed were who ruled communist for years and his wife , Elena . They were executed by firing squad on December , 1989 , three days after was forced from power . CITED AND ADDITIONAL BIBLIOGRAPHY . 2016 . Trabant . Generic (