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Convergence theory holds that the current world economic systems, capitalism and communism are converging to form a hybrid economic system. During the Cold War period, the United States and the Union of Soviet Socialist Republic had different economic systems of capitalism and communism respectively, but with time, the two economic systems have been merging.
Characteristics associated with capitalism economic system are democracy, privatization of industries, amassing of wealth, free market share, and limited government interference with economic activities. In contrast, government’s control of economic activities, limited democracy space, state owned industries, communal wealth and restrained market share are characteristics associated with communist economic system.
The two contrasting economic systems worked during the Cold War era but currently, they are not keeping abreast with dynamics of economy relative to demographic changes.
Henslin observes that “despite their incompatible ideologies, both capitalist and socialist systems have adopted features from the other” (2010, p. 303). The convergence theory elucidates the nature of the hybrid economic system resulting from capitalism and communism. This essay explores convergence theory in the modern society together with major social benefits and drawbacks associated with capitalism.
The convergence theory explicitly describes the modern economic systems employed by most countries across the world. The world’s economy is very fragile and susceptible to globalization factors of economy, which spare none of the countries in the world.
Therefore, in a bid to keep abreast with world’s economies and globalization, virtually all countries are merging the ideologies of capitalism and communism in order to boost their economic development. Henslin argues that, “the convergence is so great that when western governments began stimulus plan to counter economic crisis, China joined in with a huge stimulus plan of its own” (2010, p.303).
Economic breakdown that threaten the stability of national and internal economies compelled developed countries to look into their economic systems and rethink on ways of stimulating economic growth amidst challenges of economic crisis. Thus, the economic stimulus plans aim at converging capitalism and communism ideologies so that hybrid economic systems can stimulate stalled economic growth.
The United States of America despite having economic system of capitalism has adopted various ideologies and practices of communism. For instance, the United States government has embarked on assisting the poor in the society by subsidizing housing, compensating unemployed people, setting minimum wages of all workers, creating welfare funds and advocating for social security for the retired. Furthermore, the United States is revoking ownership of many firms and buying industries thus embracing the ideologies of communism.
Henslin admits that, convergence is happening in the modern world as “…capitalists have assumed, reluctantly, that their system should provide workers with at least minimal support during unemployment, extended illness, and old age, while socialists have admitted reluctantly that profit and private ownership do motivate people to work harder” (2010, p.305). Hence, convergence theory depicts the kind of economic system employed in the modern society.
The economic system of capitalism has great social benefits as it encourages individual hard work and maximization of human resources. Since capitalism allows free market share and accumulation of private property without any interference from the government, it generates competitive society where people devote their time in enhancing their economic status and thus growth of the economy of a nation.
Despite the benefits, capitalism has drawbacks such as increased inequality in the society and marginalization of the poor. Islam argues that, “private property for Marx was the original sin that caused humanity’s expulsion from the Garden of Eden as it provided a legal basis for concentrating community wealth in a few powerful hands, the emergence of market exploitation and the class struggle” (2003, p.322). Hence, capitalism promotes inequality, which is a recipe that increases criminal activities in the society.
References
Henslin, J. (2010). Essentials of Sociology: A Down to Earth Approach (9th Ed.). New York: Prentice Hall
Islam, N. (2003) What Have We Learned from the Convergence Debate? Journal of Economic Surveys, 17 (3), 309–362.
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