A Common Misunderstanding about Capitalism and Communism Through the Eyes of Innovation

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This paper argues that the theories of communism and capitalism do not need to be considered opposites or alternatives, but rather systems that satisfy different stages of humanity´s technological development. The argument derives from Maslow´s hierarchy of needs and a focus on the role of innovation within the systems. It is argued that capitalism focuses on the lower and communism on the higher layers of the hierarchy, which lays the basis for their inability to compete.

Posted for comments on 20 Feb 2018, 2:01 pm.

Comments (2)

  • Beniamino Callegari says:

    The paper tackles the long-standing issue of the relationship between capitalism and socialism from a Maslovian perspective: the gist of the argument is that capitalism is the best socio-economic system to satisfy the lowest layers of Maslow’s hierarchy of needs, while socialism provides the best conditions to satisfy the top layers of human wants. Therefore, it is argued, socialism is not a competitor of capitalism, and should not be evaluated as such, but its natural successor.

    The obvious spectre haunting the article is Marx’s, who is, surprisingly, barely mentioned. The argument is instead developed on the shoulders of the aforementioned Maslow, Schumpeter, Perez and Minsky. Therefore, while the position taken by the authors cannot be considered novel, the arguments used in support certainly are. In order to reach a judgement on the value of the article it is therefore necessary to analyse the quality of such arguments.

    According to the introduction, the main objective of the paper is to show that capitalism and communism satisfy different Maslovian needs: lower for capitalism, higher for socialism. The authors give to this statement a dynamic rather than static interpretation, and therefore correctly link the question to innovation theory. Yet the supposed capitalist focus on lower human needs is stated (p.5) rather than proven, or at least argued for. Explicit references to this effect are not provided. What is present, instead, is the argument that, according to Schumpeter, innovation is primarily technological in nature (p.6). But this argument is not to be found in Schumpeter, who in The Theory of Economic Development famously argued for the auxiliary nature of the technological dimension in the innovation process. A rather lengthy if pleasurable excursus on the phenomenon of business cycles, including Perez’s take on the subject, and financial instability, based on Minsky’s views, does not really address the issue. In fact, the section concludes by stating that the capitalist system is dependent on innovation. While I would no disagree, I fail to see the relevance with the original proposition that capitalism is focused on lower needs.

    The article continues by discussing the initial proposition that socialism would be more apt at creating the conditions for the satisfaction of higher wants. While an explicit description of socialism is missing, it is argued that socialism would essentially be a post-scarcity society, in which human beings would be free to focus on the satisfaction of higher needs. It might be argued, however, that any kind of post-scarcity society would be, by definition, able to reach such results and, since an explicit description of socialism is missing, it is unclear what exactly socialism would bring to the table, besides the enjoyment of an end of scarcity, brought, according to the paper, by capitalism.

    Some of these problems are partially solved by the next section, dedicated to the comparison between the two institutional blueprints. Here we can find what I believe to be the key argument of the paper: that technological innovation is bringing current societies closer to the edge of post-scarcity, and that capitalism is unable to deal constructively with the situation, creating instead social conditions conductive to the continuation of a scarcity regime, this time dictated by socio-economic phenomena rather than natural conditions. Socialism is indicated as the regime better suited to such a situation, which in fact is described as the necessary condition for its successful realization, in contrast with historical socialist experience.

    The argument brings the article to a close. There are many minor issues concerning the accuracy and clarity of various statements dispersed throughout the text, and personally I found the proposed interpretation of Schumpeter rather weak. But the main issue remains one of structure, with too much space dedicated to discussion of incidental elements, such as financial instability and business cycles, and too little attention spent on describing the core elements of the article, namely capitalism and socialism. In conclusion, while I consider the article a work-in-progress rather than a finished product, I think there is a possibility for the authors to advance an interesting new take on this venerable topic, although this would require a willingness to address the issues described above.

    • Dirk-Hinnerk Fischer says:

      Dear Beniamino,

      thank you very much for the comments.
      I believe that your critique regarding the sections focused on instabilities and the innovation cycles is correct. We may have emphasized these sections too much. While no one of our pre-submission reviewers pointed to this critique would it be, as I believe, a good posibility to streamline the paper. Our focus lay with establishing the inherent instability of capitalism in order to provide a wide enough basis for our argumentation, but I believe we may have overreached our objective. Luckily this is not a big challenge to cut these sections short and instead shed more light on Marx’s perspective and the definition of the two systems.

      Regarding the smaller issues: The mentioned misrepresentation of Schumpeter is an honest mistake. I don’t know how this slipped through, but luckily it is easily changed. Thank you for pointing this out.
      The mentioned inaccuracies of some of our discussion points, that you mention, probably derives from the rather short descriptions and definitions of the two systems we provided. We will of course go through the text again and control all discussion points for possible inaccuracy and clarity.

      I thank thank you again for your feedback. It absolutely aids to improve the quality of the paper. Thank you and best regards,

      (Dirk-Hinnerk Fischer)

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