Capitalism - The Best Solution of the Modern Economy or The Best Way to Get Rich

Foreword

Since the fall of the communist regimes in Europe, capitalism has been the succeeding ideology and still remains the main form of politics in today's world. Also, the revolutionaries who militated for the fall of the communist regime were impelled by the capitalist dream. The current essay aims to express a new vision upon capitalism, a vision which appeared fairly recently, and which was brought into view after the appearance of the economic crisis in 2007, which in my opinion, represents the future of economic thinking. The following words will try to picture the reality in which we live in, from the complex perspective of economical psychology. Hundreds and maybe thousands of economists have tried in the period previous to the crisis to explain mathematically, statistically and economically the reason why so many people were left without jobs, why wealthy people's fortunes decreased, why the wages have gone down and how it was possible for a global recession to occur. Although the veracity of these calculi is not to be contested, there is still a question whether our life can be governed by numbers. Is it really that our thoughts can be the result of a mathematical algorithm? Quite often it is, because there are surveys, economical studies and analyses that illustrate the rational behaviour of economic agents, based on their preferences. However, what happens when this behaviour becomes irrational? This is the point at which mathematics fails to provide an explanation. We are not prepared to accept and analyse the consequences of economically irrational behaviour. Therefore, the conclusion of the essay will refer strictly to these consequences. Economic psychology is a field that hasn't been researched as much as others, although in my opinion, its study would lead to more accurate answers about the causes of world crises.

George Akerlof, winner of the Nobal Prize in Economics, together with Robert Shiller explained in their book ‘Animal Spirits’ the way in which human psychology influences global economy, and therefore, capitalism. It is one of the few books which study this field of economical psychology, and its year of release, 2009, proves its recent character.

Although it might only be an illusion, I will proceed to demonstrate that this freedom that capitalism offers has released the haunter behaviour specific to the modern capitalist. This behaviour is in fact the key to the biggest issue of the actual system: exaggerated trust in the rationality of economical behaviour of the modern capitalist.

I. Why Capitalism?

The general fall of communism happened gradually, however the year of reference which is used for the extinction of European communism is 1989. It was then when the last European states obtained freedom from the communist oppression, and Romania was among these states. Hundreds of thousands, maybe millions of people died under the communist regimes as a consequence of the barbaric treatment to which the people were subject. But why did capitalism follow? Why did they not return to corporatism or maybe a milder and better structured socialism? The answer is simple and results in the biggest problem of the communist regime: freedom deprivation.

People felt the need to be free. The human race shares instincts with any other mammal on Earth, but what makes it different is self-consciousness and its superior intelligence. We do, however, have common instincts such as the predator instinct, survival and conservation instincts, mother of father instincts, and also the need to be free. Any animal is happier if it runs free without encountering obstacles. It is so that the capitalist regime, unlike any other, promised freedom without endangering the economical and social safety of a state. It assured justice to all citizens through respecting a set of laws which would not violate certain freedoms and rights such as freedom of speech, freedom to choose, the right to live, and so on. In theory, it is the perfect regime. I do agree with the fact that as we speak, capitalism is the best choice of all the other economical systems.