Socialism vs Capitalism: From the perspective of Bhajipav Wala

A few days back, in the late evening around 2300 hours, I was famished and so thought of going out to eat something. As I moved across the street, I found a Bhajipav joint at a corner. I cruised myself there without a second thought. He seemed courteous, obliged, and happy to serve me even at this late hour. The Bhajipav served was utterly delicious and when it came to price — it was very low only 30 Rupees. When we’re happy because of food, empathy comes out naturally. I tried to enquire about the current business status and lifestyle of the owner and cook of the joint. He seemed satisfied with the kind of business he was getting by telling that his father was not able to do business like he’s doing because of some strict conditions then and he is able to do it because of some relief and transparency in the allocation of land and resources required. That made him content and happy in whatever he was getting. However, I felt that he deserved more. I started thinking that which socioeconomic model would help him to prosper.

Let us consider two main Models:

1. Socialism

2. Capitalism

Socialism:

The Definition of socialism goes like this,

“Population collectively owns and controls the means of production and distributes the results proportionally. ”

The underlined part is controlled by the state (or government — in other languages.).

Now, since the state owns and controls the mechanism of allocation of resources for production, the required resources for establishing the business would be with the State-controlled mechanism.

Now, the State assesses the viability of the business. This is done factoring the below points.

• What is the level of competition in a given proposed area of business?
• What is the level of resources it would allocate to do the things?
• What kind of resources the business would require?

If this assessment by the state falls in line, the business would finally get a green signal after a stringent validation process by the state.

What business needs to do?

• Get proper licenses to do the business (considering the questions above). This is issued by the state.
• Now state would have a considerable part in its profit scheme and deciding its business strategies since it should benefit society.
• So the business will be left with little or nothing to earn about, and if it wants to earn something, they will have to choose the wrong path.

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Systems, being never ideal — will exploit the condition of business in name of benefit to the state.

Now, as this bhajipav wala said, it was hard for his father to do the business. If we calibrate the above norms of the socialist economic model, he would have faced below problems:

1. Allocation of Land.

2. Stiff opposition from the already established businesses in the area (which are considered by the state — to curb “unnecessary” competition).

3. Possible “lack” of good contacts in the controlled state.

This would make the process of establishing a business almost impossible for an individual (this process takes YEARS.)

So instead of opening his own bhajipav joint, he will either join a big restaurant as a chef or will seat at home doing nothing(because following the same strategy for restaurants will have very few restaurants overall — and population will be increasing always — so end result “NO JOBS”).

So, despite having the proper talent to establish bhajipav joint, this guy’s father was never able to open the business. (At whose fault? The Government Official? No. Because of the socio-economic model. )

Let us consider the same example if the Socioeconomic model of Capitalism is employed.

Capitalism:

The definition goes like this:

“A Social and Economic System where both the means of production and associated trade are privately owned”

From the underlined part, it can be understood that State will not be controlling the fate of the businesses.

The process of establishing a business will not be hard and would not have any viability test. Capitalism works on the principle of a collective system of individual self-responsibility.

The Controlled state will just be consuming required taxes to “sustain” the state and run there quired government services. (Major sectors of Healthcare and education will still be under the radar.)

So, the bhajipav wala will now just need proper capital to establish the business. The land will be available from another private firm or the government will act as a firm and will give the land to the business considering the employment generation through business.

So the bhajipav wala will establish the business and will have full control over deciding the business strategies.

So, a Capitalist economy helped a bhaji pav wala to create his own business.

Now, again a question — how it can prosper?

This is basically a marketing question but needs a solid Capitalist system to back its answer. The State needs to encourage businesses to come forward. That’sentrepreneurship.

I never knew about the joint. I never had information about it. So we need an honest maven to spread the information.

There should be some website — something like “http://bringmybhaji.com” which would share the information about this bhaji pav joint and others as well.

http://Bringmybhaji.com will have the same norms to follow!

So, This way, two different socio-economic models can affect the businesses drastically. Even to the small businesses as well!

Note — No SocioEconomic model is perfect. Every model has its own advantage and disadvantage. Governing systems and legal systems change according to the model.

Originally published: April 2016