Critical Review of “Capitalism vs.

Socialism – an Attempt to Analyse

the Competitiveness of Economic Systems”

“This article is written by Marian Zalesko which depicts a comparative analysis between
capitalism and socialism. The article starts by explaining how different economic systems were
adopted and their function in the twentieth century. Then the five main economic forms were
mentioned which includes primal, community, slavery, feudalism, capitalism and socialism. The
author also mentioned that he will be taking GDP per capita as a measure to compare the
countries that are practicing socialist or capitalist economic systems. However, the comparison is
only limited to the years 1950-1989 which seems a little unfair and unjust to such a vast and
complex subject. The author defined “economy” in his article from different perspectives
including David W Conklins who explains that the “phrase economic system refers to the
organizational arrangements and processes through which a society makes its production and
consumption decisions” while according to Wilkin, “economic system is a set of directly and
indirectly related institutions, through which the process of production, exchange and
distribution of products and services is achieved. The nature of institutions and relations between
them is decisive as far as the basis of the system is concerned: the set of objectives pursued by a
system, structure and mechanism of decision-making process, resource allocation mechanisms
and the distribution patterns of values generated”. The articles states that capitalism is always
viewed as a better economic system as compared to socialism. All reviews by Kowalik,
Samuelson and Schumpeter suggest that Capitalism only to guide people behavior, adds
rationality, free enterprise and maximizing profits. Moreover, socialism talked about social
justice and welfare. But the article should have shed some light on how capitalism destroyed the
economic system of America and how a socialist leader gave them a better direction. The author
then went on to take competitiveness as a form of economic analysis between countries to
compare the capitalist system with the socialist system. The article gives a detail overview of the
four levels identified by the German Development Institute which were meta, macro, meso and
micro. A detail explanation of all the levels and a graph helps the reader understand the levels of
competitiveness easily. Meta level helps in social cultural factors, macro level covers the state
policy, mesolevel covers the economic policies of the state while micro level deals with activities
of an enterprise. All these levels interacting creates competitiveness. The article suggest that this
was due to different institutional systems of the economy such as standards, markets and
organization which were highly developed in capitalist countries. After this the author went to
define why GDP per capita can be taken as a measure to compare economic system
competitiveness giving evidence that many researchers of competitiveness believe that its best
measure in an international context can be the volume of GDP per capita. The author gives clear
reasons with the help of evidence from Bruce R. Scott, mentioned before Jan Fagerberg, Martin
Srholec and Mark Knell or Anna Zielinska-Głębocka, among others stating that GDP per capita
can be used to analyse the economy at different levels including the economic system. The
article was ended with the words to two prominent economists, Peter F. Drucker, “Capitalism as
a social order and as a creed is the expression of the belief in economic progress as leading
toward the freedom and equality of the individual in the free and equal society” and J.H. de Soto
defines socialism “as system of institutional aggression on the free exercise of human action or
entrepreneurship”.”