How does Capitalism facilitate happiness? [closed]

Question

I would like to preface this with the disclaimer that I am fresh to Stack Exchange, so any pointers on what may have been a better Stack for my question, or simply how to better frame it, are greatly encouraged.

I am currently taking an ethics course, and have been a proponent for capitalism for some time due to my economic opinions. However, this class brought up the valid point that capitalism tends to leave some behind, and did so in a way that I found convincing through the metric of the 'Happiness Report.'

It would seem that Socialism is more conducive to a happy society, as it takes accountability for everyone's well-being. Capitalism, conversely, less conducive to happiness as it takes accountability for progression, output, and personal achievement - all of which seem content with leaving others behind.

I enjoy the values that capitalism (or, America and American Capitalism) bring about in society. But how does it effectively tackle happiness, especially when compared to Socialism? Should I grant that Socialism is objectively more conducive to a content people by creating a cooperative spirit amongst an innately social species?

What is capitalism's approach to facilitating happiness?

Answer 1

Happiness is hard to measure, both because it's intensely personal and also somewhat nebulous. It's also (in no small part for the reasons mentioned above) hard for an economic system to provide in an direct fashion. But proceeding from the (hopefully uncontroversial) idea that in general people would prefer more access to jobs/healthcare/infrastructure/retail goods than not, I will focus on those things since they are provided (or not provided) by a country's economic system.

In an economy with a high growth rate the worst off may well be better off on an absolute scale than their counterparts in a more egalitarian countries with a lower growth rate. So you can't just say "capitalism is ok with leaving some people behind", because those "left behind" may again be better off in an absolute sense. You can't just make the distinction from first principles that socialism is better for e.g. those at the bottom of the pile.

Of course, in reality, it's not so cut-and-dried: plenty of "socialist" economies (for some definition of socialism) have growth rates comparable to their capitalist counterparts, some have environmental/human rights records that are the absolute worst (doesn't sound very happiness-inducing despite my economic argument above), some have both of those above. Some "capitalist" countries (for some definition of capitalism) have generous welfare states, some don't.

So there isn't necessarily a clear-cut answer. American-style capitalism has trade-offs in the same way that European-style socialism does. Those trade-offs will be either more or less palatable depending on your convictions.

Which brings us to the moral dimension. Some people feel (and strongly so) that one or the other or both are immoral systems, regardless of the benefits they may or may not have in promoting utility (and hopefully therefor happiness). My objection to this viewpoint(s) is that unless one is a rather dogmatic absolutist the devil's in the details: the particular implementation of socialism/capitalism will matter more than the nominal over-arching structure.

Addendum

I got some push back in the comments about dodging the happiness issue which is the central tenet of the original question. I responded at the time with what was a bit of a dodge about happiness being difficult to properly measure (which is true but unsatisfying) but that people's preferences all other things being equal tends to be for more and/or better stuff.

Let's assume for argument's sake that billionaires are, on average, less happy than normies as defined by self-reported life satisfaction on surveys (fun fact, this is how "happiness" is usually defined in the context of comparing countries). Would you (assuming you're working/middle class yourself) trade places with one? Would you expect your life to be better if you did? I mean, if you didn't, then why the hell would you trade?

Don't get me wrong, I'm sure some altruistic souls would swap merely for the increased utility for their family/town/favorite charities, but I think most of us would not switch unless we expected it would improve our lives personally. And switch we would.

I think there's an logical extreme lying at the end of this sort of thing where everybody's prosperous and affluent yet afflicted with spiritual malaise. That certainly seems to be a stock trope in fiction of various media. And yet I have the feeling that when presented with even an obviously constructed false dichotomy, a fair number (most?) of us would choose prosperity.

All of this is a rather oblique way of saying that capitalism is a system of satisfying consumer preferences at the macro level. And if capitalism is failing to produce it, well, there are two ways to square that circle. One is to say that people must not really care about happiness as much as they care about 70" 4K OLED TVs. There are certainly people who make that argument. Maybe it's true, but in that case the problem isn't capitalism per se, the problem is that people suck and capitalism gives them the suckiness they crave.

But another alternative explanation is that there is a fundamentally important aspect of human utility that the definition of happiness the methodology is using is failing to capture. The aspect that makes us want to trade places with the billionaire, even if as in my thought experiment above it would mean having a lower self-reported level of life satisfaction. This is the argument I'm making here, that material prosperity matters, that it's important to real, everyday people, that it is correlated with and maybe a part of happiness for any reasonable real-world definition of "happiness", and that capitalism does an unusually good job among macro economic systems at providing it.

And my argument may be wrong. After all, there's at least one entire academic discipline about the subject. But I'm leary of saying that capitalism doesn't promote happiness, for the reasons above. That sounds like the kind of thing where the desired conclusion defined the initial criteria rather than the reverse.

Answer 2

What is capitalism's approach to facilitating happiness?

I'm going to reframe this as: Who is best-equipped to decide how you can you happy?

Capitalism's answer is you. You yourself are best-equipped to decide how you can be happy.

Socialism's answer is someone else. A politician, bureaucrat, subject matter expert, or someone else is better-equipped than you yourself to decide how you can be happy.

(This isn't unique to socialism; there's lots of other systems which share this quality.)

The degree to which capitalism gets this one correct is a matter of some discussion, but I think that generally falls beyond the scope of this specific question.

Answer 3

The problem with the words "capitalism" and "socialism" is that people use them pretty much any way they want, so they're not really too useful. But to give you some perspective, I'm going to show some examples that are at least consistent.

First, capitalism and socialism as economic theories. I'm not going to start with who first said some theory is capitalistic or socialistic - instead, I'm going to jump straight into the great fight between the two, which has been going on about since the start of European industrialization to about the second world war.

Both capitalism and socialism (as economic theories) were meant to explain how to best allocate resources. The problem is: we have some limited resources, and we want to use them in the way that produces as much wealth as possible. There's no "social" overlap here - the only concern is using limited resources to satisfy as many wants as possible, and satisfying more urgent wants before less urgent wants.

The capitalists say: the markets, with their prices continually changing to account for everything that happens in pretty much real time, are an efficient method of valuing the inherently subjective values that people have, as well as all the alternate production methods. That is, just looking at the prices of commodities and capital, you can see whether it makes more sense to (say) invest the capital you have in refining iron sulfide ores, or iron oxide ores. The same way, you can also decide whether it makes more sense to invest in iron production, or (say) wheat production. The more money you can make in any given venture (that is, the difference between the "ingredient" prices and "product" prices), the more urgent the need is, and the more efficient the use of resources. Note that we don't care about the absolute prices - only about the ratio between the cost of inputs, capital, outputs and throughput. That is, the most profitable venture can just as easily be producing a kilo of bread for 1 USD, as producing a single yacht for millions (which of course explains why people bother producing other things than the most expensive ones).

The socialists say: the markets are horribly inefficient. People are competing with each other, wasting lots of wealth in products that weren't sold for their expected value, advertising etc. A central authority could allocate all resources and capital according to the best needs of the people, and avoid all the losses incurred over the competition and uncertainty of the market. As a bonus, since the state would control all the means of production, there would be no profit margins - so instead of shifting the profits to the entrepreneur class, we can distribute them to everyone equally. Finally, since bigger ventures are inherently more efficient, managing production under one central authority will give us unprecedented production efficiency boosts - we can produce ten times as much with the same effort and investment.

The same way, income inequality wasn't about being fair ("should all people have the same income?"); it was about which way actually makes people better off.

The capitalists say: under free market conditions, profits go to the people who best satisfy the most urgent needs of the people. The income inequality is what motivates people to best serve other people - they expend their labor and capital for their own motives, with the result being investment flowing into the needs people find most urgent.

The socialists say: the profit the entrepreneur receives increases the costs of the product. If we remove the entrepreneur and replace him with a central authority (which would either take no profit, or some fixed amount specified by law), the people will be richer. With the productivity increases, we can afford a life where all wants will be satisfied and people will only work at their leisure.

At this point, the approach of both to the idea of happiness is the same - richer people are happier, so we want to make everyone as rich as possible given the resources we have available. The people will then use their part of the wealth in the way they desire, making them as happy as possible.

Both theories are addressing the same problem, and both have their predictions that can be verified in practice, as well as explored in thought. And that's what the main fight between capitalism and socialism was about - which one produces more satisfaction for people. As time went on, both were thoroughly tested. The main argument against socialism was that with no markets, there are no prices which represent the diverse subjective values of every single user of the market and the resources and capital available. The main argument against capitalism was that the markets delegate wealth to people who aren't directly involved in production (e.g. financiers, marketeers, traders, entrepreneurs, capitalists...), and it tends to partition the economy (e.g. you have 20 companies producing steel, each with its own factories, logistics, contracts... while under socialism, there would be just one company that could build the biggest possible factories, with just one company providing transportation etc.).

I'm not going to go into detail here - you can find entire books on the arguments for both the capitalist side and the socialist side. Of course, when socialist theories were tried in practice, it became pretty obvious that the capitalists were right at least in one thing - without the coordination that prices provide, allocation of resources becomes pretty much impossible. Socialists producers kept producing too much of some things, and too little of others; and fixed prices weren't able to cope with changing economic conditions - in capitalism, when some product becomes scarce (e.g. there's a drought that means there's less wheat), prices rise in response. This both encourages further investment (more farmers, buying grain from abroad etc.), and saving (people consume less of the thing that's scarce). In socialism, the same thing would require an edict that sets a new price, and a new plan that reallocates all the resources of the country (remember, all means of production belong to the state) as needed. This is extremely complicated, and was outright out of the question given the state of communications, technology etc. at the time. And keep in mind that socialist societies still had the capitalist countries to copy - the routinely adjusted their prices and production based on what they could find abroad.

So socialism as an economic theory was in a bit of a pickle. Their claimed increases in efficiency turned out to be anything but; indeed, the efficiency dropped so low that people in industrialized countries dropped into starvation, with the worst cases resulting in millions of deaths by starvation. That was something pretty hard to ignore for anyone but the hardest socialists - if socialist methods of production are so much more efficient than capitalist, how come starvation is a rare occurrence in capitalist countries but more common in socialist countries than even in places like czarist Russia? The promised increase in living conditions was based pretty much entirely on the massively increased productivity under socialism - since the reverse turned out to be the case, they needed some other method to promise wealth to the masses.

Of course, they didn't have to think of anything new. There's been hundreds of schools of socialism that had little in common with each other except for the central idea of countries (and sometimes the world) following one central plan. As it was said, "the biggest enemy of a socialist is a socialist with a different plan". But what emerged as a very successful political approach was the merging of capitalism and socialism - the idea that you can rely on capitalism and free markets to maintain most of the economic activity of a society, while imposing laws that regulate and control the markets for the good of the people. Of course, there's also been lots of offshoots that denied various theses of the capitalist schools; some fell back into the old mercantilist/nationalist ways ("free markets are fine, but foreign trade should be restricted"), guilds ("all trades should be regulated"), and many others - I'm going to skip over most of these.

The main idea is that you could use the superior production efficiency of capitalism (which they grudgingly had to admit) with the claimed increases of quality of life under socialism's expected productivity increases. The approaches are mostly interventionist - for example, imposing import fees to encourage domestic production instead of imports, having different taxes for different products and people etc. Each of these laws then has both immediate and secondary(+) effects.

For example, if your domestic steel producers have trouble competing with producers in other countries, the state can fix the import prices of steel at a level competitive to (or outright higher than) domestic prices. The immediate effect is that domestic steel producers will be better off - they'll have higher margins, they can afford to employ more people, invest into more marginal productions etc.; the state gains bonus income to help their spending. But of course, this comes at a cost to everyone else - the prices of steel are higher than they would have been, steel is produced with materials and in areas that aren't best suited to steel production, capital that has already been invested abroad is not going to pay off quite as well etc. And this needs some justification - you need to claim that the cost to everyone using steel (and state services paid for by the tax) is worth the increase to the conditions of the steel producers.

Now, various socialist schools give many different justifications (e.g. the classical nationalistic thought "domestic production is more stable/safer - we can't afford to rely on steel imports!"). But by far the most popular is this one: if we let people use their wealth to the best of their ability and according to their subjective values, they are going to waste it on unimportant things, rather than what's good for the society. So, for example, if we don't provide for people's healthcare, they are not going to provide for it themselves, because while they're still healthy, they will rather spend their money on (say) new shoes. If we don't forbid gambling, people are going to waste all their money in slot machines, while they drop deeper in debt and (say) starve. If we don't set by law how many bakeries there are to be per 1000 people, nobody will build any bakeries.

Suddenly, the socialists seem like the only party that cares about the people at all. Their explicit goals are to make people better, regardless of what the individuals themselves want. Things that are aligned with whatever the lawmaker thinks is better are supported (public education, theaters, healthcare, diesel engines, free bread...); while things that he thinks are bad are forbidden or taxed (alcohol, tobacco, drugs, incandescent light bulbs...).

Where does capitalism stand on this? It doesn't! Capitalism is an economic theory - a way of using the limited resources we have in the best way known possible. It points out the inefficiencies of all these socialist methods (e.g. "quality and/or availability of healthcare will suffer" or "import taxes only help the people they protect, and hurt everyone else - domestic and foreign"). But it doesn't tell you what to do with the wealth once you produce it - that's out of the scope of the problem. Ultimately, every good or bad thing entails a value judgement, and values are inherently subjective. Worse, they change all the time in response to the environment (e.g. a healthy person might be unwilling to pay $100 a month for health insurance, while as soon as he becomes gravely ill, he would be grudgingly willing to pay far more). Capitalism just tries to give everyone as much wealth as possible, in the only way that works on a global scale - satisfying the most urgent needs first. It doesn't try to control people - it just gives them more options. It doesn't try to force some sort of security on people - it gives them the resources to secure themselves, if they find the value trade-off favorable. It doesn't take away your responsibilities; neither does it steal your options.

So finally on the end of the spectrum, all the way to practical politics - socialism decides what's good for you. Capitalism lets you do the decision, for better and worse. If your "leading socialist" decides they want to encourage happiness, and that definition of happiness happens to be the same as yours, you might say that socialism encourages happiness. If it doesn't, you might say that socialism discourages happiness. Ultimately, all it does is take the choice away from you - it makes you follow the central plan, whatever it is.

As a final addendum, it seems that many people think that capitalism encourages competition, while socialism encourages cooperation. That's not true at all - capitalism is built from the ground up on cooperation across all of society. The competition is only a surface feature between people who are, well, competing for their place on the market. But those people are at the same time cooperating with everyone else in the society. Capitalism is not a zero-sum game - cooperation increases value for both parties, it doesn't take from one and give to another. For a trade to occur, you are giving away something of low value for something of high value - and the other party has it the same way. Both of you profit from the trade, because again, values are inherently subjective. That's why trade happens, and that's why trade (and cooperation) increases the wealth for everyone involved.

In contrast, in socialism (of the "not economical theory" kind; in proper terms, this would include movements like interventionism, protectionism, nationalism etc. etc.), everyone is competing for the special favors of the state. Getting the right law signed can make or break a business. If you can make the state award you a monopoly on some product or service (e.g. taxi services in a city), you benefit to the detriment of everyone else. If you ensure that your company gets subsidies, you benefit to the detriment of everyone else. If you ensure that your products receive an import tax, you benefit to the detriment of everyone else. In socialism (and protectionism of any kind), the default state is that everyone is competing with everyone else - and "winning" the competition almost always means getting special privileges for yourself, at cost to everyone else. Various schools of socialism differ in the exact approach taken, but the core remains - to be successful, you need political power. Even if noone in the whole country wants to buy your products, with enough political power you can force them to - the only power the consumers have is in their voting.

The best that can be said for happiness under socialism is that the state can force you to do something. Either you would have done that anyway, because you value that (e.g. you're the kind who would go to a theater at market prices, rather than requiring subsidies) - in which case capitalism would serve that value just as easily (though not necessarily for the same cost) - or you wouldn't. And if you wouldn't, you might find yourself happier - it's definitely possible that going just by your own instincts and value judgments, you'd miss an opportunity to be happy. If you force people to only work two hour days, they might end up happier. Or they might not. They might also drop all the way to joblessness (if their marginal productivity isn't enough to support their lifestyle with just two hours of work a day), which again might be both something that makes you more or less happy.

Ultimately, happiness is just another subjective value. Capitalism has a great track record of satisfying subjective values; socialism has a great track record of suppressing subjective values and replacing them with some design from above. And to see what actually makes you happy, you really need to be able to choose different lives - so you have something tangible to compare. In some ways, socialist societies made that easier (e.g. if engineer's wages are the same in every city, you can more freely move between cities to find which one suites you best); in others, worse (e.g. without the different wages and prices, there's no guidance on where to invest capital etc., so there might e.g. be no flat for you to move in).

Keep in mind that throughout, I was always talking about wealth, not money. Lots of people conflate capitalism with making money (and worse, money with wealth), but that's a serious misunderstanding. Someone living on their own farm, happy and having fun all day, with provisions for old age and illness etc., might very well be wealthier than the person with the most money in the world. Values are subjective, you see. Money is about trust - as it is said, you cannot eat money. If people stop accepting your money, it's utterly worthless. If you shipwreck on a deserted island with a hundred people, free market will tell you how to best use the resources you have to survive. Who brought how much money would have very little impact on the society you form. You will quickly find that only cooperation and division of labor helps you improve your living conditions - and cooperation and division of labor is what free markets are all about. Whether that leads to happiness is up to you, and you get the choice to steer life your way, as long as you're willing to invest in it.

Answer 4

Many things contribute to happiness:

• The belief that one has choice in many little things. When I go to the ice cream parlor, I can get dozens of tasty varieties. And the other ice cream parlor a few streets on has different kinds. A free market economy provides these choices to me.
• The belief that one has choice in big life decisions. I decided what I would study at university, I decided which jobs I would apply for afterward, I negotiated my salary and signed the contract. A free market economy provided these choices to me.

Of course the second bullet point contains some self-deception. I did not have the free choice what salary I would get and where I would work. At the time, the job seeker had a worse negotiating position than the employer.

Other things contribute to happiness as well:

• The belief that one will be cared for if misfortune strikes. This could be long illness or having bet on learning the wrong kind of job. Who needs a typesetter these days? If socialism works as advertised, it would provide this security.
• The belief that society is managed for the long-term benefit of all. No poisoning wells because that is cost-effective. If socialism works as advertised, it would provide this security.

Again there is self-deception. Historically, socialism didn't provide for people or the environment.

Answer 5

Capitalism should not be understood as an action by the government, but as a right asserted by the public. Supposing instead that Capitalism were by the government, it would seem like quite an oversight that government isn't doing anything to help many people.

But since Capitalism is the way the public sees itself (in capitalist places), the public doesn't place the responsibility to facilitate happiness (or care, or sustenance) on government but on the public, i.e. each other.

One objection to this might be, "but people are bad: how can the weak ever be happy if they depend on other people?" A typical Capitalist answer to this objection would be, "I agree that people are bad, and I think that people in government are bad, too. It's better to limit the power of each person to their own sphere, rather than entrusting too much power to those in government."

Answer 6

It doesn't and its fundamental strength is also its greatest weakness. Competition.

Competition creates stress and often competing in the market can lead to alienation and severe mental health issues.

From Forbes:

Money is only part of the story. Often, the majority of stress that job seekers incur spawns from smaller, less noticeable sources. Most causes of anxiety are not even recognizable to the person feeling low-grade waves of panic.

To quote, on stress:

Common effects of stress on your body

• Headache
• Muscle tension or pain
• Chest pain
• Fatigue
• Change in sex drive
• Stomach upset
• Sleep problems

Common effects of stress on your mood

• Anxiety
• Restlessness
• Lack of motivation or focus
• Feeling overwhelmed
• Irritability or anger
• Sadness or depression

Common effects of stress on your behavior

• Overeating or undereating
• Angry outbursts
• Drug or alcohol abuse
• Tobacco use
• Social withdrawal
• Exercising less often

..and this is outside the damage it does to children...

Poverty has a profound effect on specific circumstances, such as birth weight, infant mortality, language development, chronic illness, environmental exposure, nutrition, and injury. Child poverty also influences genomic function and brain development by exposure to toxic stress,2 a condition characterized by “excessive or prolonged activation of the physiologic stress response systems in the absence of the buffering protection afforded by stable, responsive relationships.”3 Children living in poverty are at increased risk of difficulties with self-regulation and executive function, such as inattention, impulsivity, defiance, and poor peer relationships.4 Poverty can make parenting difficult, especially in the context of concerns about inadequate food, energy, transportation, and housing.

The better position would be to ask "Is less brutal than socialism / communism" whatever position you're pushing against.

Peter Singer would argue that capitalism is likely an unethical system. He uses a classic example of a child drowning in a river. You have new shoes on. You would likely run in an help. However, similar situations are happening globally and are a result of our effort (business and market, capitalism). He would argue it's JUST as wrong.

Coltan is one of the best examples of his position. From the US Department of Labor

Furthermore, there were numerous reports of ongoing collaboration between members of the Armed Forces of the Democratic Republic of the Congo and non-state armed groups known for recruiting children, and the Armed Forces carried out extrajudicial killings of civilians, including children, due to their perceived support or affiliation with non-state armed groups. Children in the Democratic Republic of the Congo engage in the worst forms of child labor, including in the forced mining of gold, tin ore (cassiterite), tantalum ore (coltan), and tungsten ore (wolframite), and are used in armed conflict, sometimes as a result of forcible recruitment or abduction by non-state armed groups.

.. and the capacitors used by coltan are used in a wide variety of electronics:

They are also commonly used for power supply filtering on computer motherboards and cell phones due to their small size and long term stability, most often in surface mount form. Tantalum capacitors are also available in military specifications versions (MIL-SPEC), which offer tighter tolerances and a wider operating temperature range. They are a popular replacement for aluminum electrolytics in military applications because they do not tend to dry out and change capacitance over time. Medical electronics also rely on tantalum because of their high stability. Audio amplifiers sometimes use tantalum capacitors where stability is a critical factor.

So, the simple question is: Is slave labor for a piece of electronics, provided by capitalsim ethical?. According to Peter Singer, no.

This is a complex question. It depends on what position, ethically, you're taking. But, in my opinion it is not ethical and it's the system we use because it benefits the right people, but it is not the best system because it is ethical, it is not.

If the discussion is about whether or not capitalism is ethical, it isn't. You could take another position, but that particular, specific, narrow idea: "Is Capitalism ethical?" is demonstrably false according to data.

Answer 7

There is a misconception that socialism and capitalism are polar opposites, but this is not true as they are not mutually exclusive. That being said, I understand what is meant by the question. And that is Socialism and not socialism.

I will base my answer as if you mean socialism where the central power or government has a monopoly on resources including labor. On paper, this leads to equal distribution of resources as needed, where that need is determine by the central power. Happiness therefore comes from not having to compete for any resource and always having the expectation of receiving what is needed. This is described by the often quoted phrase: "From each according to his ability, to each according to his needs (or need)" - Karl Marx "Critique of the Gotha Program" (1875).

The fallacy of this happiness is that human nature is not taken into account. Forgive the religious tone but what can easily describe this human nature is the Catholic 7 deadly sins. The sins, throughout history have been part of settled societies. Unless someone gets an idea of how to get rid of that part of humanity, socialism in practice has to be forced on the citizens. The take away is that all the citizens have at least a baseline standard of living that can be supported by the society. There will be those that have more but no one has less than the baseline. The cost is that it is very difficult, but not impossible to change to a higher standard of living for those at the baseline.

To contrast, Governments who do Non-Socialism have a guarantee that some will be left out. To put it bluntly, some will not survive. How big a portion of society is in this group depends on too many variables. In socialist societies there are also some that will be left out, but they will not be that far from the baseline. That is the cost but the benefit is that it is easier to change one standard of living by the simple leverage of those sins of human nature. For example, people will tend to try to improve their standard because it is in their nature to want to (Greed, Gluttony, Vanity?). The alternate saying although I don't know the origin is: Give a man a fish and you feed him for a day, teach a man to fish and you feed them for a life time. The cost is obvious, there is always a group of people who for some reason don't like fish or don't have the ability to sit still while the fish is caught.

The argument for socialism is that there hasn't been the right leader or in Karl Marx beliefs there has not been the right circumstance for socialism to flourish. My conclusion is that unless human nature is changed, socialism will continue to be a failed experiment no matter how it is tried.

You can experiment on yourself. If you ever have a choice to move back in with your parents or live your own life, imagine what your standard of living would be in each case. How important is your decisions compare to having someone else make decisions for you.

Answer 8

Part of the problem is conflating the use of those words to have both economic and political meanings. The two systems are not as diametrically opposed as some might assume, if each is left to look after what it should be, rather than encroaching on the other.

Capitalism is, at its base, one way to manage economic activity. It supposes the ability to assign a certain level of legal standing to a company. And it also separates a company's owners from its direct management, via shares. It is not the only system available: you can have centrally planned economies, worker cooperatives, state-granted concessions and monopolies, family ownerships.

In practice, many of those alternative ways of managing economic actors have their own problems, so capitalism is often grudgingly accepted. Some of them don't scale, some naturally gravitate towards monopolies, some require bureaucrats to manage industries they have little knowledge of.

small-s Socialism, in many modern European democracies, is often less about direct management of economic production than it is about wealth redistribution and social safety nets via taxation and welfare. It doesn't have all that much to do with the 2nd S in USSR, i.e. Communism. Much as some politicians in nominally Socialist-lite parties admire Chavismo, which is more Communist in its nature than Socialist.

Socialism, even short of Communism, can wish to manage economic actors more directly. Under President Mitterand, in 1980, France nationalised a number of companies. The results were not that brilliant, neither economically, nor in term of accountability:

• the state has a direct interest in the well-being of its chosen companies or wealth-producing ministries. This can make it hard to be apply rules to constrain company behavior.

• the economic actors can often end up as monopolies. France Telecom, in the 1990s, would for example sell answering machines upwards of $400, compared to $100 for Japanese kits sold in the US. France Telecom, having a state-assigned network monopoly, only certified their own equipment, which meant no one had a choice.

• Prices with cellular networks did not drop until 3 providers were allowed on the market in total. Guess what: the 2 new private providers were purely creatures of the market.

• France's jobless grew from more than 1M pre 1980 to 3M by the time Mitterand retired.

Capitalism, on the other hand, can also quickly grow greedy, dodge regulations and taxes and try to maximize the profits of companies above all. Certainly, we currently face a problem where CEOs in many countries benefit disproportionately from gains, at the cost of workers and shareholders.

If both systems are enlisted not to oppose each other, but do what they do best, then a rough division of labor can end up as:

• Capitalism is used to structure companies that require large, risky investments. Free market, backed by antitrust laws, allows numerous companies to compete naturally against each other (compared to many European countries before the EU took over regulation, American companies were somewhat accountable through occasional fines and the Sherman Act). Capitalism also allows the gradual discovery of the most efficient systems in each field, through competition. Companies are not allowed to influence the legislative system overmuch through lobbying.

• Socialism, as often envisioned by its moderate supporters, is about maximizing the well-being of society as a whole, not about taking on direct economic management. That can be achieved by publicly provided health care and education, as well as welfare. These are NOT services that a fully free market approach is particularly well placed to provide. This will necessarily involve taxation and wealth redistribution. How much taxation is left up to the voters, but if the take is too big and the regulations too onerous, it will gradually kill wealth generation.

So, ideally, capitalism is one of the mechanisms (along with, for example, family and sole proprietorships) used to generate wealth. Social spending, judiciously managed by a responsible and accountable government, uses a part of that wealth to enhance collective well-being, as well as economic efficiency: ill-educated and sick workers are not great for modern knowledge companies.

In practice, some of the countries with some of the highest well-being indices, such as Scandinavian countries, walk a fairly tight line between allowing capitalism, while having very high redistribution of wealth and social services. But even those tax numbers have dropped by quite a bit since the 90s - they found they needed risk takers and entrepreneurs to take on new economic activities.

Finally, a well-regulated capitalistic economy allows a government to regulate companies at arms length, in an appropriately adversarial, rather than the unnaturally cozy relationships you sometime see in more state-managed systems.

Proponents of both the socialism and capitalism camp do the public a disservice when they dismiss the possibility of any useful role by the other side. That has been shown again and again, empirically, in the happiness outcome of countries veering too much one way or the other.

Certainly most voters in France would not support nationalization of companies, as it was carried out in 1980. It did not work. Greece has paid dearly for borrowing its way to a social spending it could not afford with its underdeveloped and uncompetitive economy. While the nominally free market US health system manages to be very costly, inefficient and leaves many in ill health and financial ruin.

Answer 9

I see there's already too many answers really, but you've hit on a really hairy issue here (welcome to the forum, by the way)

I think the discussion of capitalism vs socialism tends to be too simplistic. They are perhaps best described as 'ideological flavours' or ingredients, which are both needed in human society, and it seems clear (to me at least) that it isn't one or the other that makes people happy, but having the right balance between the 'selfishness' of capitalism and the 'altruism' of socialism; they need to keep each other in check. Unrestrained capitalism has often been demonstrated to cause growing inequality and discontent - as we see in the US at the moment, whereas unrestrained socialism can become a cloying silt over everything, which strangles the life out of everything.

Thus the high 'happiness index' of the Scandinavian countries, where we are half-heartedly socialist and exercise capitalism with a modicum of restraint. We don't have many incredibly rich, but on the other hand, there aren't all that many living in real poverty either, or so they say.

Answer 10

With a Socialist economy, what are the regular folks to do? Work for the state.

What are the low skilled to do? Work for the state.

What are the entrepreneurs to do? Work for the state.

If you work at a large company and wish to see what you can do left to your own devices, you're out of luck. You continue working up the corporate ladder, or give up and sit on the last rung you were ambitious enough to attain.

Many people aren't satisfied working for 'the man'. They want to hustle, to see what they're capable of. They start a small business as a plumber, contractor, accountant, lawyer, mechanic - there are so many choices. Let alone the guy or girl who wants to create the next Microsoft, Amazon, Google, etc. You don't often create those within a large corporate (or governmental) structure. People are free to dream and take chances.

If you let the socialist (state run) industries be run by innovative entrepreneurs like a Steve Jobs or Elon Musk and encourage that spirit within the state run agencies you might be able to give capitalism a run - but you need to always allow those ambitious risk takers and gifted folks the room to grow and run. The question is, would those folks have been able to attain the same level of innovation within a state run organization? I can only imagine how stifling it would be for people like that within an organization that didn't prize making things that had never been made before.

For those who are content to work for 'the man', not much would change I suspect. But even if they never did it, they could entertain the fantasy of going off on their own.

One more thing needs to be noted. The US and other capitalist economies aren't pure - there are many parts of daily life that are run by 'the state'. Law enforcement, military, road maintenance, etc. are usually run by the state - not private companies.

The hybrid economy most countries have adopted try to support the positive aspects of each model while attempting to combat their weaknesses.

Answer 11

Capitalism facilitates happiness to the extent it gives people the freedom to pursue wealth. It's debatable whether wealth/material goods actually bring happiness and also to what extent ordinary people are able to attain such wealth.

It's important to note that inequality/people being left behind is a natural phenomenon and not necessarily something caused by capitalism (though one could argue it encourages this in some cases). The key difference is that socialism attempts to balance out this inequality while capitalism does not (though it's often supplemented with welfare programs, etc). While this (socialism) sounds good in theory, it hasn't historically worked out well. It's at odds with the fact that people are not naturally equal, and left to their own devices, some will simply outperform and outgain others. So the question in regards to socialism is, is it possible to organize a society in this way, and is it worth the tradeoff(s)? I'm not sure we know the answer.

It's also possible to acknowledge that capitalism doesn't account for some of these issues, and tackle them without abandoning capitalism/embracing socialism. Many modern economies actually operate this way, through progressive tax systems, redistribution of wealth, etc.

Answer 12

Assume that some people are born with the trait of being especially, passionately, painfully acquisitive, or "greedy".

Leaving aside general happiness, and considering only selective contentment, one specific thing Capitalism is much better at than Socialism is publicly pleasing the greedy. A greedy person might still prosper under socialism, (though perhaps unethically or unlawfully), but that'd be nothing to be publicly proud of; the greedy person would have to live "in the closet" and always be looking for acceptable socialistic reasons to excuse and justify their personal preferences and actions.

Those closeted greedy preferences might become more harmful when kept secret. There would be two secret outlets for those with a greedy passion for advantage under socialism, both of which require deceit and often cruel pretense:

1. Getting more than their legally appropriate share.
2. Preventing others from obtaining their rightful share.

Such deceits and cruel pretenses might be very harmful to a socialist society. Perhaps no less harmful than the capitalistic method of letting the greedy compete with each other in markets.

Answer 13

It does not care.

Capitalism is a way to manage the exchange of goods. In capitalism, a farmer sells his products on the fee market; in socialism, the collective takes possession of the products and manages its distribution as well as the recompensation of the farmer.

As to social-welfare: that's independent of capitalism. In the US, healthcare is your private affair; in Europe, many (or most) countries provide public healthcare.

Individual happiness is nothing that the economic system takes into account. You can be a happy capitalist as well as a happy socialist.

Answer 14

Capitalism, conversely, less conducive to happiness as it takes accountability for progression, output, and personal achievement - all of which seem content with leaving others behind.

That is not quite an accurate assessment.

Consider the example of a contest. Out of 20 contestants, Billy finishes 15th. Does that mean Billy is now sad and feels left behind? Not necessarily.

Maybe Billy was consistently coming in last and thus is happy to have improved, regardless of not winning the competition. Not every personal victory is defined by an objective measure - other people value other win conditions.

For example, I recently moved to an apartment of below-average size to a house of above-average size. Regardless of my house not being the biggest mansion, it feels like a big milestone and achievement, and has been a source of pride/joy.

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It would seem that Socialism is more conducive to a happy society, as it takes accountability for everyone's well-being.

I am not staking any claim in the "everyone gets a trophy" discussion. However, it's an often recurring statement (by opponents) that trophies become meaningless/devalued if everyone gets the same one.
Note that this doesn't quite apply if winners/losers get different trophies or differently sized one; but it does apply if everyone gets the same thing, which is in scope for the socialism analogy.

The trophy is then no longer an incentive to play the game well. Coming from a socialist economy, while still not trying to inject my personal opinion into the matter, there are people who use the unemployment benefit as a means to not bother finding a job (this is not a fingerpointing accusation - I'm specifically trying to avoid finger-pointing here - I have encountered people who openly admit doing so).
This is the real-life analogy of not playing the game well because it doesn't net you anything more than when you don't put in the extra effort to play the game well. The extra effort has no added value, so why bother with it?

For capitalism, the argument isn't so much that it's about winning, but rather about incentivizing and reminding people to make an effort and receiving a reward relative to that effort.

When you make a resource universally available, people will eventually take it for granted; and forget about the effort required to provide the resource. A capitalist system acts as a constant reminder of the struggle requires to acquire these resources.

As a simple example, consider how many people would agree that the government should do more for the people, but also complain about having to pay extra taxes. Even if subconscious, people eventually think of "the government" as a remote entity that they are not a part of, and thus forget about their needed contribution to "the government".

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This is not intended as a pro-capitalist answer. I am merely focusing on providing counterarguments to OP's (seemingly pro-socialist) assumptions, which means I've been mostly focusing on the "good" parts of capitalism that OP missed.

Answer 15

Capitalism makes a country more productive. I would say look at the facts of today. America is more wealthy and more productive than Russia and has been for a long time. Does having more money facilitate more happiness? Yes for sure as America can buy more from Russia as it has more money and Russia have to buy less from America because it has less money.

Sorry if this answer seems somewhat naive or simple but this is the truth. Money matters and capitalism makes more or it.

Answer 16

Neither capitalism nor socialism was designed or implemented with the primary goal being to "facilitate happiness".

There is no "system" or "ism" which "facilitate happiness". "Happiness" is an individual choice. An individual has to decide to be "happy"; irrespective of their political condition, status or economic capacity. Some individuals do not deviate from their duties whether they are "happy" or "unhappy". Some individuals know who they are and do not entertain and have no need for such emotions as "happiness"; time and energy being too valuable to them to dedicate evaluating whether or not they are "happy". There is simply too much to be done, right now.

In general, there are only four trades, professions or ways of life people actively engage in; whatever "system" they might live under or institute themselves. The ethical behaviour is to perform duties to the highest degree possible. Such excellence cannot be restricted by a "system"; once an individual is the best at what they do: they shall be in demand by any and all "isms".

There are no boundaries such as "systems" or "isms" for such individuals; for example, specific scientists before and after World War II. This is the ethical approach to "facilitating" one's own "happiness", if that is what an individual decides to pursue. If such an individual does hone their talents to be the best in their field, they are well equipped to determine and demand their own "happiness" based on their own self-determination; fluently navigating any "ism" or "system" which might be in place in that region of this planet or the domain that individual produces their work in; negotiating the politics of the day as the sovereign; thereby controlling their own "economy" which is merely the human activity of using and managing human time and energy; scaled individually and "globally" or internationally.

It is individually unethical and to wait for a spook in the sky, ghost in the machine, government or nation, system, monarchy, "ism", religion, or political party to "facilitate" anything for them. Rather, it is the "inherent", "unalienable" right of the individual; a natural right; incapable of being assigned to or conferred by "isms", to pursue their own "happiness". The Virginia Declaration of Rights (Source: The U.S. National Archives and Records Administration) ("Written by George Mason, it was adopted by the Virginia Constitutional Convention on June 12, 1776")

Section 1. That all men are by nature equally free and independent and have certain inherent rights, of which, when they enter into a state of society, they cannot, by any compact, deprive or divest their posterity; namely, the enjoyment of life and liberty, with the means of acquiring and possessing property, and pursuing and obtaining happiness and safety.

and a relevant portion of the Preamble to the Declaration of Independence (Source: The U.S. National Archives and Records Administration)("In Congress, July 4, 1776."; see also The Declaration of Independence: A History (Source: The U.S. National Archives and Records Administration)) might be instructive for the subject matter of pursuing "happiness"

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.

Answer 17

To add to the answers posted so far, one can dispute the original assertion by looking at a real world.

People who are unhappy, react by trying to change their circumstances.

If socialism leads to happiness and capitalism to unhappiness, there would be loads and loads of people trying to migrate from capitalist societies to socialist ones.

In reality, tons of people always tried to migrate from more-socialist societies to more-capitalist, and almost nobody, in the opposite direction.

Answer 18

[Socialism] takes accountability for everyone's well-being

can in practice be a rather mixed blessing for someone who in fact is left behind, IMHO.

I'd like to argue that socialism is a high leverage product with respect to those who are left behind: it may very well be that fewer are left behind than in capitalism, but for those who are in fact left behind, the situation can be much harder than in capitalism.

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In Capitalism, the risk that someone may be (or rather: some ones will be) left behind is well-known. IMHO this knowledge (or acknowledgment of the risk/fact/problem) is important for finding ways to mitigate the effects. Here in Europe, we tend to have various social insurances for that reason. When I was in North America I noticed that collecting donations to help left-behind people was far more common and donations were far higher than what I was used to from Europe. I see these as two different approaches to deal with a known problem (and I do not judge one of them to be inherently better - IMHO they both have their advantages and disadvantages).

In contrast, someone left behind in socialism may easily be something-that-does-not-happen(TM), because The Socialist State does take care no-one is left behind. As it does-not-happen(TM), no counter measures are taken - they would be an unnecessary waste (example: AFAIK GDR abolished unemployment insurance at the end of the 1970s. They did have a constitutional right and duty to work, and at that time had a scarcity of workers. My point is that they apparently did not think the possibility that unemployment could happen again). IMHO claiming in particular that egality has been achieved can cause institutional blindness for those who are left behind in unforeseen ways. (I'm thinking this as opposed to an economic/political system where the risk of someone being left behind also in unforeseen ways is always "on the screen")

Now, denying that anyone is (or could be) left behind is in fact the opposite of taking accountability. But socialism offers a very tempting loophole out of this responsibility: the argument "as we did successfully implement socialism, i.e. egality is achieved, no-one is left behind any more".
(A second loophole, diffusion of responsibility, i.e. "the state" should take care of this, is not unique to socialism but a general problem. This is something I also see with the European-style social insurance: there's social insurance, I contribute by my fees and taxes, so there's no need to donate on top of that. And of course, the North American system which relies more on donations does also have the weakness that it relies on everyone realizing and acting accordingly that their contribution is needed.)

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Summary: Denying that there is a problem with people being left behind (or claiming that the problem has been solved*) IMHO can be just as much of a problem as the acknowledged problem of people being left behind.

* after all, if the problem of people being left behind has not been solved, that's not true socialism, is it?

Answer 19

Trying to account for happiness as a commodity is I'd say the crown of materialism. Happiness comes from within ultimately. But I'll attempt to answer whether capitalism inhibits happiness more than other systems.

Capitalism is the view accepting markets and their influence as an acceptable thing for the human society.

If there is extant training for everyone, such that everyone can contribute something to the market then capitalism turns out to be pretty ok.

How much market should we have? is a slider of sorts.

If it is not markets handle our public goods too so that those who cannot give anything to the market... die off; and if the markets are sufficiently regulated, so that the evolutionary nature of market does not find ways to undermine the rule of law, then markets are the system that least inhibit the pursuit of happiness.

It all comes down to how much goods and services people have to consume, and how much self-determination and dignity people have to live.

Because of the radical nature of Socialist political ideologies, often socialist regimes seek to have and tend to have too much power over people's lives. 1. They tend to deprive people of self determination, and 2. governments are inefficient at every thing because of the nature of incentives, so that people end up having less amount of goods and services to consume.

This occurs when socialism comes as a political ideology.

A prosperous society where everyone has a say and is empowered will naturally move towards socialist side of policies, because humans are naturally compassionate.

Answer 20

Given that happiness is an internal quality to individuals.

And given that I cannot inspect your interiority from within.

And given that language is known to be insufficient to express interiorities in knowable ways. (“Hermeneutics”)

Therefore your happiness and my happiness cannot be commensurated, they are incommensurable and cannot be measured together.

Therefore I cannot compare your happiness to my happiness without imposing my values (morals, politics, theology) on you.

The question is known to be unknowable in a meaningful way. Any attempt to answer the question will involve an attempt to impose a universal values system.

The question could be improved by specifying well known values systems which could then produce answers to “How does capitalism facilitate happiness for [Marx/Keynes/Mill/The Austrians/etc…]”

For example, in chapters six and seven of volume one of capital, in relation to proletarians, Marx observed that the price of labour power is the only commodity whose price is historically and culturally determined. To this extent, for Marx, capital imposes no absolute limit on the capacity of proletarians to experience the satisfaction of needs on the basis of purchasing use-values and attempting to make use of them. The limits imposed on the wage are historical and cultural and therefore may be modified absolutely within the limit of available use-values: however, the concrete situation of the proletariat only being able to sell its labour-power means that its relative political strength to extract an unlimited wage is conditioned by capital’s control over the necessities of labour. The standard form of this is a capital strike in that further investment is forecast (reasonably so) to be unable to produce profit in low composition of capital sectors; and, that due to mechanisation high composition of capital sectors employ limited numbers. Thus happiness in capital, for Marx, amongst proletarians, is disposed only to occur in the sectors most comparatively mechanised where workers can threaten the machine for wages (compare software engineering to flower picking.

Sadly for the bourgeoisie they are faced with the question of whether their human activity satisfies their mind, and whether the use-values they purchase adequately fulfil their use and need—the inadequacy of capacity for the purchase of needs is generally not present except in the case of Veblen Goods such as launching your car into space.

Answer 21

Your question is based on invalid premises. Comparing capitalism with socialism is a false dichotomy. Socialism is an ideology. Capitalism is an economic system. Socialism should be compared with liberalism (not in the American sense of the world but real liberalism, Adam Smith, John Locke and so on) while capitalism should be compared to planned economy.

To start with, I don't think I even need to argue why capitalism is better in every way compared to planned economy. The question then become "does a liberal society provide for more happiness among its citizens compared to a socialist society?" - I think you should post a new question about that because this question is gonna derail.