Capitalism or Socialism to Reduce Inequality


So, I found this article where two people were discussing whether capitalism or socialism reduce inequality better. The main problem in the discussion was the ambiguity of the definitions they were using. It must be clear that the difference between capitalism and socialism is who owns what, and that the difference between a market economy and a non-market economy is who decides what gets produced and who gets to actually consume it.
Several points were discussed, among them:

Tax and redistribution, which end up being social democracy, not that capitalism is decreasing inequality. Also, they mention that richer societies are always less unequal, but the answer to that argument is that there are large parts of life where there isn’t any inequality left. Picture this, a 150 years ago, being poor meant having no food, actually starving to death. Nowadays, the gap measured in money is actually larger, but the gap in daily living standards isn’t as large as it used to be.

So, socialism and capitalism are terms that describe who owns the productive assets, but there is no real evidence that one is better than the other. The actual important distinction is between market and non-market economies. So, the problem is actually the wrong use of terms: capitalism doesn’t mean no taxes and no redistribution, nor socialism is defined by it. The distinction between these two isn’t that important. We do actually have examples of economic policies that do work in a broad spectrum. Take Hong Kong’s laissez faire, to the Nordic tax, from here we see that what matters is that markets do work, and non-markets don’t.


Melissa, that’s a very interesting article, and in this debate, such as in any debate in every topic, the definitions should be very clear because sometimes both parts are arguing the same but as the definitions aren’t clear enough, they think they’re proposing different things.

As you said in your conclusion, there’s no evidence that one is better than the other. There are succesful examples that land in the socialist and capitalist part, for the example of the nordic countries, where many things are owned and provided by the government, and they are in the first places in almost every ranking of welfare, and in spite of having that sistem of government, they are also one of the most free countries in the world, and according to the Legatum Institute, they are in the most prosperous countries in the world.

I think that every extreme isn’t good, so extreme capitalism, such as extreme socialism isn’t beneficious for a government. The clue is to reach the correct balance to reduce inequality being a more prosperous country everyday.


Miranda, A. (2016). Los países más prósperos del mundo. Available at: [Accessed May 9, 2018]