Tuesday, June 18, 2024

Socialism Is Inimical to Private Investment

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By Henry Kyambalesa

The term “socialism” is generally used to refer to an economic and political ideology whose premise is for state ownership of non-human means or factors of production and distribution, and centralized planning and control of economic activities, particularly activities in key and strategic commercial and industrial sectors of a country’s economy.

The means or factors of production and distribution alluded to include land and the various forms of capital, such as raw materials, financial assets and institutions, manufacturing facilities, assembly plants, machinery and equipment, transportation facilities, service centers, and retail outlets.

In socialist countries, therefore, some elements of private ownership of the means or factors of production and distribution are permissible, particularly in non-strategic commercial and industrial sectors of such countries’ economies.

There are many socialism-related issues and risks associated with propositions and pronouncements by Karl Marx and Frederick Engels in the Manifesto for the Communist Party which cannot only scare or fan away private investors but prohibit them from investing their capital in a country whose economy is, by design, based on socialist ideals, or a country that has political parties which have the potential to secure the people’s mandate to form government.

Such issues and risks include the following:

(a) Eradication of what the duo referred to as bourgeois competition;

(b) Abolition of free trade and of buying and selling of commodities;

(c) Abolition of private property and replacing it with communal control of a country’s national economy through nationalization or expropriation of such property;

(d) Nationalization or expropriation of privately owned business entities and conversion of such entities into state-owned enterprises; and

(e) Imposition of price controls, which require business entities to charge prices prescribed by the government for their products irrespective of the costs associated with the creation of the products.

As commonsense and observation have taught us, international trade and private investment are two vital drivers of both economic growth and economic development. Clearly, therefore, countries that actively and zealously participate in cross-border trade and simultaneously create a conducive and hospitable environment for private investment, among other pursuits and endeavors, have a much greater chance of improving the livelihoods of the majority of their citizens.

In practically all affluent nations of the world today, privately owned and operated business undertakings are the major institutions that are in the forefront searching for efficient and effective ways and means for application in the creation and delivery of a cornucopia of high-quality goods and services at competitive prices.

In these nations, business entities are greatly depended upon to keep the stream of discoveries flowing in the form of consumer goods and services.

We, for example, know too well that the affluence being enjoyed by citizens in such countries as Canada, France, Japan, Great Britain, and the United States today is the direct outcome of a relentless quest for new and improved forms of technology in agriculture, agribusiness, commerce, and the manufacturing industries by privately owned and operated business entities.

Naïve socialists and communists worldwide are likely to point to China as an excellent example of a communist country whose economic outputs have continued to flood the entire world unlike any other country in modern history.

In this regard, News China (2019:1) in an editorial has summed up the actual reason for the country’s economic success in the following words: “China’s economic success in the past decades has been established on the premise of a liberalized and vital private sector.” And Chinese President Xi Jinping affirmed in a meeting on November 1, 2018 that the Chinese government will support the private sector to become bigger and stronger.

Private investors in the Chinese economy include indigenous capitalists and investors from a wide range of countries, including Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States of America.

As I noted in a previous article entitled “The Privatization of State-Owned Assets Explained,” what has happened to countries worldwide whose economies are, or have been, based on socialist ideals, should offer us guidance. In the following paragraphs, I have re-cited examples of socioeconomic ills associated with government ownership of the means of production and distribution.

(a) Cuba: The country’s economy is dominated by state-run enterprises. The government owns and operates most industries in the country. The country is currently experiencing the worst economic crisis in its history. Akin to Zambia’s unpalatable experiences during the late 1980s when the country’s commercial and industrial sectors were captained by state-owned enterprises, stores in Cuba no longer routinely stock products including eggs, flour, chickens, cooking oil, rice, powdered milk, and ground turkey.

These basic commodities disappear from shops for days or weeks. Hours-long lines appear within minutes of trucks showing up with new supplies, and shelves are often empty the same day.

(b) East Germany: East Germany had a command economy—an economy captained by State enterprises. It experienced economic problems similar to those experienced by other socialist countries worldwide. Prior to the end of World War II in 1945, a War that started in 1939, East Germany and West Germany were one country. After the War, Soviet forces occupied eastern Germany, while French, British and U.S. forces occupied the western half of the country.

The Berlin Wall was constructed by East Germany with the help of the now-defunct Soviet Union in 1961 to prevent the socialist country’s citizens from escaping to the more affluent and democratic West Germany.

At least 171 East Germans were killed trying to defect to West Germany, while more than 600 border guards and 4,400 other refugees “managed to cross the border [illegally] by jumping out of windows adjacent to the wall, climbing over … barbed wire, flying in hot air balloons, crawling through … sewers, and driving through unfortified parts of the Wall at high speeds”—History.com Editors, 2019.

The introduction of perestroika and glasnost in the former USSR by the Mikhail Gorbachev administration in 1987 and the eventual break-up of the USSR on December 26, 1991 occasioned the dismantling of the Berlin Wall, which separated communist East Germany and capitalist West Germany, in November 1989 and eventual reunification of the two countries into a united capitalist Germany upon the signing of a reunification treaty on August 31, 1990.

(c) Venezuela: Shortages of regulated food staples and basic necessities are widespread mainly following the country’s enactment of price controls and other socialist policies. The severity of the shortages has led to the largest refugee crisis ever recorded in the Americas. There are shortages of milk, meat, coffee, rice, oil, precooked flour, butter, toilet paper, medicines, and personal hygiene products.

Hours-long lines have become common, and those who wait in them disappointingly go back to their homes empty-handed. Some citizens have resorted to eating wild fruit and garbage.

The country has been governed for the past 20 years by the socialist PSUV party. From 1999 to his death in 2013, Hugo Chávez was president. He was succeeded by his right-hand man, Nicolás Maduro. During its two decades in power, the PSUV has gained control of numerous key economic institutions.

On September 24, 2019 in a speech delivered at the United Nations General Assembly in New York, Jair Bolsonaro, then President of Brazil, uttered the following words relating to the socioeconomic ills facing Venezuela: “It is fair to say [that] socialism is working in Venezuela—they are all poor.”

(d) Zimbabwe: The economic history of Zimbabwe began with the transition to majority rule in 1980 and Britain’s ceremonial granting of independence. The new government under Prime Minister Robert Mugabe promoted socialism and Marxist-type rule. Within 20 years, the country has had unprecedented socioeconomic woes, rampant corruption and political instability, which have continued to haunt the country to date.

Note: In October 2001, Zimbabwean president, the late Mr. Robert Mugabe, stunned the world by abandoning his country’s economic liberalization efforts. News headlines in this regard were self-explanatory: “Mugabe Returns Zimbabwe to Socialism” (Independent Online, 2001) and “Zimbabwe a Step Closer to Marxist-Style Economy” (Independent Online, 2001).

(e) The Soviet Union: The Soviet economy was based on State ownership of the means of production and distribution. In May 1985, newly “elected” Mikhail Gorbachev delivered a speech in which he publicly criticized the Soviet Union’s inefficient socialist / communist system.

This was followed by a February 1986 speech to the Communist Party Congress, in which he talked about the need for political and economic restructuring (that is, Perestroika) and called for a new era of transparency and openness—that is, Glasnost.

It was reasoned that the lack of open markets which could have provided price signals and incentives to direct economic activity led to waste and economic inefficiencies. The Union of Soviet Socialist Republics (USSR) ceased to exist on December 31, 1991.

35 COMMENTS

  1. Dr Membe here is an opportunity to guide the nation and challenge this wel articulated and evidence based article. Thanks for the engagement and sound arguments. Looking forward to the Socialist response

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    • Some African scholars, swallow some things without masticating. It is not true that “We, for example, know too well that the affluence being enjoyed by citizens in such countries as Canada, France, Japan, Great Britain, and the United States today is the direct outcome of a relentless quest for new and improved forms of technology in agriculture, agribusiness, commerce, and the manufacturing industries by privately owned and operated business entities” How can one swallow such Western propaganda as if its gospel truth?
      Noooo The affluence being enjoyed by these capitalist countries arose from slavery and colonisation. They paid nothing for the big harvests of slavery for 400 years.

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    • Then they stumbled upon goldmines and copper mines and diamond mines and Platinum mines whose minerals they never paid for but looted to make capitalism an immoral “success” .Nowadays they do want to show the world that they are feeling guilty about the looting of Africa, by donating some handfuls of their currency to our corrupt new governments.

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    • Which other countries have reaped from other countries on this planet? None except the capitalists. The socialists-China, USSR, Cuba, N Korea never went to conquer other countries for resources but focussed on developing themselves with their own resources. African economists should focus on calculating how much mineral and human resources were plundered by Europe. This can be calculated. Then presented to the UN for a proper repayment. The Europeans will always divert from this topic and will unleash brainwashed academics to influence Africans

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    • Africans should never forget how they were robbed by people who now come to pretend to be civilised. Civilised just because they dont use an assegai to kill. They use Nuclear bombs

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    • What socialism is inimical to private investment? One needs to give a working definition of what they mean by socialist. Europe nowadays has many socialist led governments. Socialist parties have won many elections in liberal democratic states. We are aware of capitalist states that practice socialist doctrine. What do you call Obama’s decision to come to the aid of banks in that US recession? Study the worldwe live in before coming up with stereotyped blanket statements that made sense only 100 years ago

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    • @Eng I cant explain everything for you. Go read up. But just a sniff: Denmark Sweden Norway etc benefited from what in business is called networking. They were surrounded by looting capitalist countries that had plenty of capital for growth so they provided their readymade market in the neighbourhood with required exports in construction resources such as timber even paper and pulp. Norway’s gas has a large market in Europe. Malaysia and the other Asian tigers had a network that reaped from Japan’s prosperity

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    • @Eng Dont turn a blind eye to how powerful networking, legal or illegal is. Rhodesia and South Africa survived sanctions because of networking. The tyrant regimes were well connected to resources from their kin in Europe. Thats why Kaunda when similarly isolated had noone, virtually no network, from the developed states to help him so his economy nosedived. Australia could receive all the required help from the UK and Europe, it was a limb of Britain as you can even see by its flag and head of state. Like I said go read the histories of these countries and compare that with Africa’s

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  2. One sided, historical rhetoric. Canada, France UK spend over 50% of their national budget on socil amenitieshealth, old age benefit, child benefit and numerous other benefits.
    Capitalism has also failed and beought miseries to majority of population in USA, now UK, Sri Lanka, Pakistan.
    Solution lies in middle path, enabling environment, but all sectors private driven with state generating enough taxes to look after vulnerables and citizens majority driven ecomy.

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  3. Good to see this ugly man still writing articles . Last time he attacked me for giving my view on the nonsense he writes. So I won’t anything

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  4. Then they stumbled upon goldmines and copper mines and diamond mines and Platinum mines whose minerals they never paid for but looted to make capitalism an immoral “success” .

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  5. The reality is the is no socialist country which enjoyes an a fluent life apart from poverty dispute abaundance if resources

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  6. Higher Taller, not all wealthy countries had colonies — such as Canada, Japan, the United States of America, Australia, Sweden, Switzerland, Finland, etc. — and, generally, none of these countries were active participants in the slave trade. Avoid commenting on issues you don’t understand. If you have anything to contribute to the debate, write an article citing examples of countries where the ideology of socialism has been implemented successfully and has benefited the citizenry.

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    • KISUMPA You are really useless. Avoid commenting on issues you don’t understand. That refers to you. The USA had nothing to do with slavery! Bwahahahahahahaha!

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    • I almost started commenting on Kisumpa’s opinion until I noticed that after he listed examples of countries that did not have colonies, he used the word “generally” when it came to countries that did not participate actively in slavery. All the same, countries never “actively participated” in the slave trade and/or slave ownership, individuals and families did. With respect to “colonialism,” countries were engaged in it, not individuals and/or families.

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  7. The South Korea and North Korea contrast is also relevant here. The weaknesses of communism are no longer a matter of ideology but observed practice from scientific experiments complete with controlled experiments.

  8. ONLY YOUNG ONES WHO DIDN’T LIVE IN THE HUMANISM ERA , WHICH WAS A SPECIAL TYPE OF SOCIALISM , CAN BE CHEATED By MEMBE , OUR PARENTS DIED WITHOUT LEAVING ANY PROPERTIES For INHERITANCE . OH ABASH SOCIALISM

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    • American farms and constructin workers were slave from West Africa, Mozambique and Tanzania.
      America was built on the sweat tear and blood of cruel slavery system.Once the colonising slave traders stole resources, built their infrastructure with forced labor and slaves, they cae up with economic colonising schemes and Zambia is a burning example. The day Zambia minerals are gone, the capitalist Infestors will go away to anothr country region to continue their looting.

      By the way I was in Australia and was taken to a farm peportedly owned by HH. Smell the rat?

  9. Domestic slavery and colonialism did not begin in 1800 as suggested. Up to today slave wages refers to exploitative wages and salaries. Practices and beliefs to that effect existed in Ancient Greece and Ancient Rome. Similar institutions were also tried in Asia with limited success. Ancient China controlled vast territories in Asia for centuries. History records indicate that China occupied Korea for centuries. After China depart from Korea, then Japan moved in. Until World War 2 broke out, Korea was an imperial Japanese colony. After World War 2, Korea got divided into two spheres of influence. These are: South Korea under US influence and North Korea under Soviet influence. Whether a reunified state of Korea will be socialist or capitalism or mixed remains to be seen.

  10. China a socialist country has more billionaires than any country…. forget the word socialism it’s only a name not an economic ideology.

  11. So this Kisumpa thinks Snoop dog, Jayzee, Kanye West, Will Smith, Michael Jackson, Jesse Jackson Beyonce are natives of America ka?
    Imwe baba, Why they are called African Americans is because their ancestors were from Africa where they were taken as SLAVES.

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  12. THE TRUTH IS THAT YOUR GRANDPARENTS WERE NO FORCED TO SELL THEIR FELLOW AFRICANS , WERE JUST CRUE AND VERY GREEDY. SOME CHIEFS AND THEIR KINGDOMS NEVER ALLOWED ANY MEMBER TO BE TAKEN OR SOLD AS A SLAVE . BUT YOUR GRANDPARENTS DID THAT . AND YOU HAVE INHERITED THAT SPIRIT OF SELFISHNESS AND EXPLOITATION, IT IS FOR THIS REASON THAT YOU ARE VERY MUCH AGAIST DEMOCRACY. ACCRDING TO HISTORY , CHINA WAS VERY WLL KNOWN FOR SLAVERY EVEN LONG BEFORE THE COMING OF THE ATLANTIC TRIANGULAR TRADE AND DEVELOPMENT OF PLANTATIONS IN THE AMERICAS . HISTORY HAS IT THAT CHINESE COULD EVEN ENSLAVE THEIR OWN RLATIVES. REMEMBER , IN SOCIALISM AND SLAVERY THERE IS HIGH DEGREE OF Dictatorship . IPLEASE LET PEOPLE BE FREE AND ENJOY ALL THE FREEDOMS GIVEN TO THEM BY THE CREATOR AND CONTROLLER OF EVERYTHING

  13. @Mrs Kiswapako by countries d’you mean government? Well Yes they did participate in slave trade. To attest to that, governments enacted and supervised laws from 1400 that allowed the business of slaves. You should know that capitalists and free market economies, do not allow government to participate in business.

    • When in 1804, slaves revolted to form the first black nation in Haiti the US president Thomas Jefferson– fearing that slaves gaining their independence would spread to the United States – ceased aid and sought the international isolation of Haiti. If you are looking for evidence of government participation in slavery there it is.

    • More and worse examples: The French government sought and obtained indemnity from Haiti for denying the European country earnings from slavery. Yes Haiti had to start paying France for its hard won freedom!
      Haiti was ordered to pay five annual instalments, of 30 million Francs, in order to compensate the former colonisers . The greedy French designed the payments to be so large that it would effectively create a “double debt”; You can read up on all this as I cant spoon-feed you. The West African ex colonies of France are still paying a similar indemnity for denying France its earnings from colonisation.

    • Do you see the hypocrites you live with on this planet? They want to be paid for enslaving black people but when Africa tries to seek compensation for slavery and colonisation they dont want the issue concluded. Yes Yes in 2001 Africa tried to claim her compensation at the UN conference in Durban South Africa and the real racists of the world could be seen. The motion was scuppered by the US and Israel and has never been revived

    • “[G]overnments enacted and supervised laws from 1400 that allowed the business of slaves.” The USA gained independence in 1776 from Britain, upon which the country devised its Constitution.

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