Explanation:
1. Capitalism
Arguments for capitalism tend to hold that it’s beneficial to society for there to be incentives to produce, own, and use capital goods like the magic wand, or that it’s wrong to forcibly prevent people from doing so. Here are four arguments for capitalism, stated briefly:
(1) Competition: ‘When individuals compete with each other for profits, this benefits the consumer.’[3]
Critique: Competition also may encourage selfish and predatory behavior. Competition can also occur in some socialist systems.[4]
(2) Freedom: ‘Preventing people from owning capital restricts their freedom. Seizing their income in the form of taxes may constitute theft.’[5]
Critiques: Maybe owning property, itself, restricts freedom, by excluding others from using it.[6] If I announce that I own something, I may be thereby announcing that I will force you not to use it. And maybe “freedom” requires the ability to pursue one’s own goals, which in turn requires some amount of wealth.[7] Further, if people must choose between work and starvation, then their choice to work may not be really “free” anyway.[8] And the general distribution of wealth is arguably the result of a morally arbitrary “natural lottery,”[9] which may not actually confer strict property-rights over one’s holdings.[10] I didn’t choose where I was born, nor my parents’ wealth, nor my natural talents, which allow me to acquire wealth. So perhaps it’s not a violation of my rights to take some of that property from me.
(3) Public Goods:[11] ‘When objects, including capital, must be shared with others, then no one is strongly motivated to produce them. In turn, society is poorer and labor is more difficult because production is inefficient.’[12]
Critique: People might be motivated to produce capital for altruistic reasons,[13] or may be coerced in some socialist systems to do so. Some putatively socialist systems allow for profitable production of capital goods.[14]
(4) Tragedy of the Commons: ‘When capital, natural resources, or the environment are publicly controlled, no one is strongly motivated to protect them.’[15]
Critique: As before, people might be motivated by altruism.[16] Some systems with partially-private control of capital may nevertheless qualify as socialist.[17]
2. Socialism
Arguments for socialism tend to hold that it’s unfair or harmful to have a system like in the story of the magic wand, a system with widespread wage labor and property income. Here are four arguments for socialism, stated briefly:
(1) Fairness: ‘It’s unfair to make money just by owning capital, as is possible only in a capitalist system.’[18]
Critique: Perhaps fairness isn’t as morally important as consent, freedom, property rights, or beneficial consequences. And perhaps wage laborers consent to work, and capital owners have property rights over their capital.[19]
(2) Inequality: ‘When people can privately own capital, they can use it to get even richer relative to the poor, and the wage laborers are left poorer and poorer relative to the rich, thereby worsening the inequality that already exists between capital-owners and wage-laborers.’[20]
Critiques: This is a disputable empirical claim.[21] And perhaps the ability to privately own capital encourages people to invest in building capital goods, thereby making goods and services cheaper. Further, perhaps monopolies commonly granted by social control over capital are “captured” by wealthy special-interests,[22] which harm the poor by enacting regressive laws.[23]
(3) Labor: ‘Wage laborers are alienated from their labor, exploited, and unfree because they must obey their bosses’ orders.’[24]
Critiques: If this alienation and exploitation are net-harmful to workers, then why do workers consent to work? If the answer is ‘because they’ll suffer severe hardship otherwise,’ then strictly speaking, this is a critique of allowing poverty, not a critique of allowing wage labor.
(4) Selfishness: ‘When people can privately own capital, they selfishly pursue profit above all else, which leads to further inequality, environmental degradation, non-productive industries, economic instability, colonialism, mass murder, and slavery.’
Critique: These are also disputable empirical claims. Maybe when people are given control over socially-owned capital, they selfishly extract personal wealth from it.[25] Maybe when the environment is socially controlled, everyone is individually motivated to over-harvest and pollute.[26] State intervention in the economy may be a major cause of the existence of non-productive industry, pollution, and economic instability.[27] Last, some of the worst perpetrators of historical evils are governments, not private corporations
