“Mog, let’s discuss a fascinating subject. Do you know what sort of ideal economy and politic would generate a better quality of life?”
“Are we discussing the merits between extremes, Yaw? Are you asking me to choose between capitalism and communism?”
“There is a third way, Mog. But before I go into that, let’s briefly describe the extremes.”
“Well, Yaw, capitalism is an economic model where individuals and privately-owned businesses control the economy and their activities are virtually free from government control. In the book, The Wealth of Nations, Adam Smith describes capitalists as those who pursue their own self-interests and are driven by a desire for profits. Very often, business leaders in a capitalist state have no consideration for the public interest, in terms of adverse effects on the environment or the public health.
“Competition should exist, but may not exist in capitalist industries where market power is controlled by firms who put up entry barriers to new companies, or exact controls through monopolies as in the supply of raw materials.
“This economic model is naturally unstable, alternating between periods of recession and inflation. When a recession results, there is a rise in unemployment and poverty. When it is an inflation, there is a general rise in prices and most people cannot reconcile this with their fixed incomes. The Great Depression where millions of people lost their jobs and homes was a result of capitalism. But some people in capitalist states are rich.
“The communist economic model, on the other hand, is government control of the economy. But the economic infrastructure of such a government does not complement the other extreme. Karl Marx would be the spokesman for describing this.
“What is the third economic model, Yaw?”
“It is called a Social Market Economy, Mog. It is both an economic system and a political structure whose aim is to improve the quality of life of all the people through a framework of policies and laws.
“This system safeguards competition, provides incentives, encourages enterprise and initiative, and ensures an economic framework that is balanced and stable.
“You see, Mog, political extremes gain the most support in countries with great economic problems.”
“It’s all a matter of putting yourself in the other person’s shoes, Yaw. If a capitalist should ever be poor, he will be happy to have a socialist government take care of his welfare. But while he is rich, he is content with stepping on those who are not.”