Capitalism is a form of governmental rule that allows industries to be privately owned for profits and lets the government create institutions that better our economy and society. On the other hand, Communism has government owned property to make everybody equal. The saying “Communism bad: Capitalism good” has been around since the cold war to enforce the belief that Communism was an abusing power that was bad for the people. So why is Communism seen as this no incentive, bad market, uncaring, governmental rule? I want to elaborate my understanding of a communistic market, specifically in Cuba, to see how it is harmful to the country. I will incorporate the reason my grandparents and their families made the brave decision to escape from Cuba and use facts seen from I, Pencil and Naked Economics to support my understanding of their market.
The market drove my grandparents and their families out of Cuba. The reasoning behind the market failure lies behind the communistic government. 1I, pencil talks about a successful market without a central government. 2Truth is, you need a government to help with problems that the market can’t automatically fix. The catch is, you need a good government…not just any. A good government, such as Capitalism, makes the market possible. A bad government, such as Communism, makes the market fail. 3Cuba’s government tries to be the sole provider of a good or service when there is no reason besides making everyone “equal”. I put equal in quotations because there is no such thing. There is an upper communist class being the government. Below them are the equals. For example they took my great-grandpas company to set a standard of “equality”. He used to make good money but the government took control of everything leading to a poor equal class and rich government. Since the government is far superior, the market failing doesn’t really affect them. Capitalism allows a free market by letting most of it run on its own which allows its people to maximize utility and profit. 4Countries without functioning governments, like Cuba, are places that are extremely expensive and difficult to conduct the simplest business because the people have no incentive to work hard because they get nothing in return. The Cuban government runs companies by telling people what to sell and for how much. Citizens get rewarded with a set wage that can hardly-if possible- let them buy basic necessities. That is how the market fails. Too much regulation from the government on companies causes more damage and inability to prosper. If you thought companies being taken was bad, try homes. Castro took the homes of my grandparents because “what right do they have for occupying that big house-even though they worked for it- when a larger family could live in it instead?” A good government is important in the success of a market which determines the success of an economy. Cuba fails in those standards. Proof of this failure are my grandparents, and anyone else who made money, who came to the realization that Fidel Castro was causing a failed market. They were losing goods, opportunity, and the ability to flee in a matter of years. That is how and why the communistic market failed in Cuba. My grandparents are alive to prove it.
1 Read, Leonard Edward, Richard M. Ebeling, and Milton Friedman. I, Pencil: My Family Tree. Irvington-on-Hudson, NY: Foundation for Economic Education, 2006.
2Charles Wheelan and Burton G Malkiel, Naked Economics: Undressing the Dismal Science (New York: Norton, W. W. & Company, 2010) page (65).
3 Charles Wheelan and Burton G Malkiel, Naked Economics: Undressing the Dismal Science (New York: Norton, W. W. & Company, 2010) page (82).
4 Charles Wheelan and Burton G Malkiel, Naked Economics: Undressing the Dismal Science (New York: Norton, W. W. & Company, 2010) page (65).
Image: “Has Social Media Killed Fidel Castro Again?,” world, January 9, 2015, accessed June 15, 2016, http://www.thedailybeast.com/articles/2015/01/09/has-social-media-killed-fidel-castro-again.html.